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As filed with the Securities and Exchange Commission on September 18, 2014.
Registration No. 333-198372

 
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933

VIVINT SOLAR, INC.
(Exact name of Registrant as specified in its charter)

 
					
Delaware	 	4931	 	45-5605880	
(State or other jurisdiction of
incorporation or organization)	 	(Primary Standard Industrial
Classification Code Number)	 	(I.R.S. Employer
Identification Number)	
3301 N. Thanksgiving Way, Suite 500
Lehi, Utah 84043
(877) 404-4129
(Address, including zip code and telephone number, including area code, of Registrant’s principal executive offices)

Gregory S. Butterfield
Chief Executive Officer and President
Vivint Solar, Inc.
3301 N. Thanksgiving Way, Suite 500
Lehi, Utah 84043
(877) 404-4129
(Name, address, including zip code and telephone number, including area code, of agent for service)

Copies to:
									
Larry W. Sonsini
Jeffrey D. Saper
Michael Nordtvedt
Wilson Sonsini Goodrich & Rosati,
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
(650) 493-9300	  		 	Shawn J. Lindquist
Chief Legal Officer, Executive Vice President and Secretary
Vivint Solar, Inc.
3301 N. Thanksgiving Way, Suite 500
Lehi, Utah 84043
(877) 404-4129	  		 	Kevin P. Kennedy
Igor Fert
Simpson Thacher & Bartlett LLP
2475 Hanover Street
Palo Alto, California 94304
(650) 251-5000	

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.   ¨
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):   ¨

Large accelerated filer	 	         ¨	  	Accelerated filer	 	¨	
				
Non-accelerated filer	 	         x         (Do not check  if a smaller reporting company)	  	Smaller reporting company	 	¨	

CALCULATION OF REGISTRATION FEE

 	
 	 	 	 	 	
Title of each class of Securities to be
Registered	 	Shares to be
Registred (1)	 	Proposed Maximum
Offering Price Per
Share	 	Proposed Maximum
Aggregate Offering
Price (2)	 	Amount of
Registration Fee (3)	
Common Stock $0.01 par value per share	 	23,690,000	 	$18.00	 	$426,420,000	 	$54,922.90	

 	(1)	Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as amended. Includes the additional shares that the underwriters have the option to purchase.	
 	(2)	Estimated solely for the purpose of calculating the registration fee.	
 	(3)	The Registrant previously paid $25,700 of the registration fee with the prior filings of this Registration Statement.	
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.

 

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The information in this prospectus is not complete and may be changed. We and the selling stockholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we and the selling stockholder are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.
 
Subject to Completion. Dated September 18, 2014
20,600,000 Shares

Vivint Solar, Inc.
Common Stock

This is an initial public offering of shares of common stock of Vivint Solar.
Vivint Solar is offering 20,600,000 shares to be sold in the offering.
Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price per share will be between $16.00 and $18.00. We have been approved to list our common stock on the New York Stock Exchange under the symbol “VSLR.”
We are an “emerging growth company” as defined under the federal securities laws, and, as such, may elect to comply with certain reduced public company reporting requirements for this and future filings.
After the completion of this offering, 313 Acquisition LLC, a stockholder and an affiliate of The Blackstone Group L.P., will continue to own a majority of the voting power of all outstanding shares of the common stock. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the New York Stock Exchange. See “Principal and Selling Stockholders.”
See “ Risk Factors ” on page 19 to read about factors you should consider before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 
									
 	  	Per Share	 	  	Total	 	
Initial public offering price	  	$	                        	  	  	$	                        	  	
Underwriting discount (1)	  	$	 	  	  	$	 	  	
Proceeds, before expenses, to us	  	$	 	  	  	$	 	  	
                                     
(1) In addition, we have agreed to reimburse the underwriters for certain FINRA-related expenses. See “Underwriting (Conflicts of Interest).”
To the extent that the underwriters sell more than 20,600,000 shares of common stock, the underwriters have the option to purchase up to an additional 3,090,000 shares from the selling stockholder at the initial public offering price less the underwriting discount. Vivint Solar will not receive any of the proceeds from the sale of the shares being sold by the selling stockholder.

The underwriters expect to deliver the shares against payment in New York, New York on     , 2014.

Goldman, Sachs & Co.	 	BofA Merrill Lynch	 	Credit Suisse	

Citigroup	 		 		 		 		
					
	 	Deutsche Bank Securities	 		 		 		
					
	 		 	Morgan Stanley	 		 		
					
	 		 		 	Barclays	 		
					
	 		 		 		 	Blackstone Capital Markets	
                                     
Prospectus dated     , 2014.

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VIVINT SOLAR PAY LESS FOR POWER TM
THE PROCESS
Hello
SALE/REFERRAL CONSULTATION DESIGN & ENGINEERING FINANCING MAINTENANCE MONITORING
THE BENEFITS OF SOLAR MARKET POTENTIAL
SOLAR MAKES SENSE. WHETHER IT’S COST SAVINGS, ENVIRONMENTAL IMPACT, OR JUST INTRODUCING CHOICE INTO AN INDUSTRY, THE ADVANTAGES ADD UP.
SAVE ENVIRONMENT CHOICE
VIVINT SOLAR INSTALLATIONS
TOTAL SOLAR PRODUCED IN 2013
TOTAL ENERGY PRODUCED IN 2013
LESS THAN 1% PENETRATION
*PVPS Report Snapshot of Global PV 1992-2013 Preliminary Trends Information from the IEA PVPS Programme
VIVINT SOLAR MEGAWATTS INSTALLED
2,669
532
AS OF JUNE 2012
2012
10,521
4,679
AS OF JUNE 2013
2013
8,625
AS OF JUNE 2014
2014
14.4
2.8
AS OF JUNE 2012
2012
58.0
24.4
AS OF JUNE 2013
2013
56.8
AS OF JUNE 2014
2014

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 TABLE OF CONTENTS
Prospectus

Prospectus Summary	 	 	1	  	
					
Summary Consolidated Financial and Other Data	 	 	15	  	
Risk Factors	 	 	19	  	
Special Note Regarding Forward-Looking Statements and Industry Data	 	 	59	  	
Use of Proceeds	 	 	61	  	
Dividend Policy	 	 	62	  	
Capitalization	 	 	63	  	
Dilution	 	 	65	  	
Selected Consolidated Financial and Other Data	 	 	67	  	
Management’s Discussion and Analysis of Financial Condition and Results of Operations	 	 	71	  	
					
Business	 	 	124	  	
Management	 	 	141	  	
Executive Compensation	 	 	153	  	
Certain Relationships and Related Party Transactions	 	 	172	  	
Principal and Selling Stockholders	 	 	184	  	
Description of Capital Stock	 	 	186	  	
Shares Eligible for Future Sale	 	 	196	  	
Material U.S. Federal Income Tax Consequences for Non-U.S. Holders of Common Stock	 	 	200	  	
Underwriting (Conflicts of Interest)	 	 	205	  	
Legal Matters	 	 	213	  	
Experts	 	 	213	  	
Where You Can Find Additional Information	 	 	213	  	
Index to Consolidated Financial Statements	 	 	F-1	  	
Through and including     , 2014 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

We, the selling stockholder and the underwriters have not authorized anyone to provide you with information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. We take no responsibility for, and provide no assurance as to the reliability of, any other information that others may give you.
For investors outside the United States: neither we, the selling stockholder nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States.
 
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We have rights to the trademark “Vivint Solar,” and “Solmetric” and “SunEye” are our trademarks in the United States and in certain other jurisdictions. This prospectus contains additional trade names, trademarks and service marks of other companies. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.
 
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 PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this prospectus. It does not contain all of the information that may be important to you and your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including the matters set forth under the sections of this prospectus captioned “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes.
Unless the context otherwise requires, the terms “Vivint Solar,” “the company,” “we,” “us” and “our” in this prospectus refer to Vivint Solar, Inc. and its subsidiaries, including Vivint Solar Holdings, Inc. References to “Vivint” refer to APX Parent Holdco, Inc. and its subsidiaries, including our sister company Vivint, Inc. Investment funds associated with or designated by The Blackstone Group L.P., which controls our principal stockholder, are referred to herein as “Blackstone” or “our sponsor.”
Vivint Solar
Our Mission
We are committed to providing a lower-cost, environmentally conscious alternative to traditional utility generated energy. We enable our customers to access the advantages of solar energy with little to no upfront costs to them through long-term contracts that generate recurring, predictable customer payments to us. We aim to provide best-in-class customer service and deploy technology that empowers our customers to take charge of their energy future.
Overview
We offer distributed solar energy — electricity generated by a solar energy system installed at customers’ locations — to residential customers based on 20-year contracts at prices below their current utility rates. Our customers pay little to no money upfront, typically realize savings of 15% to 30% relative to utility generated electricity immediately following system interconnection to the power grid and continue to benefit from guaranteed energy prices over the term of their contracts, insulating them against unpredictable increases in utility rates.
Our 20-year customer contracts generate predictable, recurring cash flows and establish a long-term relationship with homeowners. Through our investment funds, we own an interest in the solar energy systems we install and ownership of the solar energy systems allows us and the other fund investors to benefit from various local, state and federal incentives. Together, these cash flows and incentives facilitate our ability to obtain financing and to optimize our financial returns. Our sources of financing are designed to offset our direct installation costs and most, if not all, of our allocated overhead expenses. Our direct relationship with homeowners also facilitates our ability to control quality and provide high levels of customer service and provides us with an opportunity in the future to offer additional value-added products and services to our customers.
From our inception in May 2011 through June 30, 2014, we have experienced rapid growth, installing solar energy systems with an aggregate of 129.7 megawatts of capacity at more than 21,900 homes in seven states for an average solar energy system capacity of approximately 5.9 kilowatts. According to GTM Research, an industry research firm, we were the second largest

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installer of solar energy systems to the U.S. residential market with approximately 8% market share in 2013 and 9% in the first quarter of 2014, up from 1% in 2012, according to its ‘Q2 2014 PV Leaderboard’ report. We believe the key ingredients to our success include the following:
 
 	•	 	High growth industry with a significant addressable market .    The market for residential distributed solar energy is growing rapidly and disrupting the traditional electricity market. According to GTM Research, an industry research firm, the U.S. residential solar energy market is expected to grow at a compound annual growth rate, or CAGR, of approximately 37% from 2012 through 2018. Residential distributed solar has currently penetrated less than 1% of its total addressable market in the United States.	
 
 	•	 	Differentiated and highly scalable platform .      We have developed an integrated approach to providing distributed solar energy where we fully control the lifecycle of our customers’ experience including the initial professional consultation, design and engineering process, installation and ongoing monitoring and service. We deploy our sales force on a neighborhood-by-neighborhood basis, which allows us to cultivate a geographically concentrated customer base that reduces our costs and increases our operating efficiency. We couple this model with repeatable and highly scalable processes to establish warehouse facilities, assemble and train sales and installation teams and open new offices. We believe that our processes enable us to expand rapidly within existing markets and into new markets. We also believe that our direct sales model and integrated approach represent a differentiated platform unique in the industry that accelerates our growth by maximizing sales effectiveness, delivering high levels of customer satisfaction and driving cost efficiency.	
 
 	•	 	Long-term, highly visible, recurring cash flow .    Our customers typically sign 20-year contracts for solar electricity generated by the system owned by us and pay us directly over the term of their contracts. These customer contracts generate recurring monthly customer payments. As of June 30, 2014, the average estimated nominal contracted payments for our customer contracts exceeded $30,000, and there is the potential for additional payments if customers choose to renew their contracts at the end of the term. The solar energy systems we install are eligible for investment tax credits, or ITCs, accelerated tax depreciation and other governmental incentives. We have historically financed the assets created by substantially all of these contracts through investment funds, which reduces our cost of capital to finance our operations.	
We currently operate in Arizona, California, Hawaii, Maryland, Massachusetts, New Jersey and New York. We have chosen to initially introduce our solar energy systems in these states because the utility prices, sun exposure, climate conditions and regulatory policies in these states provide for the most compelling markets for distributed solar energy. We intend to continue our rapid growth by further increasing our presence in these existing markets and expanding our presence in other markets where distributed solar energy generation is an economically attractive alternative to purchasing power from utilities. Our standardized and efficient process for opening new offices enables us to begin operations quickly, and has in the past allowed us to obtain executed contracts within a day of opening a new office. During the 12 months ended June 30, 2014, we established 21 new sales offices in addition to the 16 sales offices in place as of June 30, 2013. The number of our active direct sellers grew from 153 to 489 over the same period.

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As of the date of this prospectus, we have raised 10 investment funds to which investors such as banks and other large financial investors have committed to invest approximately $543 million which will enable us to install solar energy systems of total fair market value approximating $1.3 billion. As of the date of this prospectus, we had tax equity commitments to fund approximately 81 MWs of future deployments. We are currently in negotiations with financial investors to create additional investment funds in 2014. We also expect to create additional investment funds with financial investors and potentially with corporate investors, and may also use debt, equity or other financing strategies to fund our operations. To that end, in September 2014, we entered into an aggregation credit facility pursuant to which we may borrow up to an aggregate of $350 million and, subject to certain conditions, up to an aggregate of $200 million in additional borrowings. In addition in August and September 2014, we received non-binding letters of intent from four financial institutions on a several basis in amounts equaling up to $300 million in the aggregate. We estimate such investments would be sufficient to fund approximately 133 MWs of future deployments. It is contemplated that each of the potential investment funds would adopt the partnership structure and be on terms similar to those of our existing investment funds that have adopted such structure, which terms may include conditions on our ability to draw on the financing commitments made by these funds. Such letters of intent are non-binding and do not constitute a commitment to invest. Although we cannot be certain when, if ever, such investment documentation will be executed, our current expectation is that forward investment documentation will be executed within the last quarter of 2014 or the first quarter of 2015 to fund investments at various times throughout 2015 and 2016. If we are unable to consummate these investments or establish the other investment funds that we intend to pursue during this period, we will be required to obtain additional financing in order to continue to grow our business or finance the deployment of solar energy systems using cash on hand until such additional financing has been secured.
We were founded in 2011 when Vivint, Inc., our sister company, a residential security solutions and home automation services provider, recognized an opportunity to replicate its strong direct-to-home sales model in the solar energy market. Vivint, Inc. had approximately 850,000 subscribers as of June 30, 2014, and we believe that there will be a continued opportunity to leverage our relationship with Vivint to offer our solar energy systems to its customers in markets that we serve.
Market Opportunity
The market for residential distributed solar energy is growing rapidly. According to research compiled by GTM Research, 494 megawatts of capacity was installed within the U.S. residential solar energy market in 2012 and 3,258 megawatts of capacity is expected to be installed in 2018, representing a CAGR of approximately 37%. This market possesses significant growth opportunities as compared to the total U.S. electricity market, as distributed solar energy has penetrated less than 1% of its total addressable market in the residential sector. We believe that there is a significant opportunity for distributed solar energy to continue to displace electricity generated from fossil fuels in the residential market.
The following recent trends have made solar energy a cost effective power source for homeowners in an increasing number of markets:
 
 	•	 	Declining solar energy system costs .    According to the Lawrence Berkeley National Laboratory, residential solar energy system costs decreased by 40% on a per watt	

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 	basis from 2005 through 2012, or 7% annually, for solar installations with capacities of 10 kilowatts or less.	
 
 	•	 	Rising retail electricity prices .    Average U.S. retail electricity prices from the power grid increased at a 3.3% CAGR from 2005 to 2012, according to the Energy Information Administration. In many of the markets we currently serve, the utility rates have increased faster than the national average.	
 
 	•	 	Lower cost of financing .    Financing for distributed solar energy has become increasingly available, reducing the cost of capital for distributed solar energy system providers. According to Bloomberg New Energy Finance, renewable energy tax equity investment commitments in 2013 totaled $7.1 billion. Securitization represents an emerging financing strategy that also has the potential to contribute to the declining cost of capital trend.	
The availability of various incentives has also contributed to the growth of U.S. residential solar installations:
 
 	•	 	Net Metering .    Net metering allows a homeowner to pay his or her local traditional utility only for their power usage net of production from the solar energy system installed on his or her house, transforming the conventional relationship between customers and traditional utilities. In addition to benefitting the homeowner economically, net metering is consistent with policy objectives of reducing peak electricity load and offsetting other potential sources of generation.	
 
 	•	 	Federal Investment Tax Credit .    Solar energy system owners are currently allowed to claim a tax credit that is equal to 30% of the system’s eligible tax basis, which is generally the fair market value of the system. By statute, this tax credit is scheduled to decrease to 10% on January 1, 2017. Although this scheduled reduction in the ITC will likely adversely impact growth in the distributed solar energy market, decreasing system costs, combined with increasing retail utility rates, are expected to partially mitigate the impact of such reduction.	
 
 	•	 	State and Local Incentives .    A variety of state and local incentives have been available to incentivize distributed solar energy adoption. In some states, including Arizona, California, Massachusetts and New York, rebates are available for the installation of residential solar energy systems. As of March 2014, twenty-nine states and the District of Columbia had enacted policies that require minimum amounts of renewable energy generation and 16 states, including Arizona, Massachusetts and New York, had enacted policies specifically requiring a minimum amount of solar or distributed renewable energy generation. In some states there is a market for solar renewable energy certificates, or SRECs, which can be used by utilities to meet these requirements.	
Increasing utility rates, decreasing solar energy system costs, the availability of incentives and the lower cost of financing now available to distributed solar energy installations have all contributed to reduce overall costs of distributed solar energy systems. As a result, a number of U.S. states are now achieving “grid parity,” the point at which the overall cost of retail distributed solar generated electricity matches the cost of retail utility generated electricity.

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Our Approach
We secure financing that enables our customers to access solar energy for little to no upfront cost to them. The key elements of our integrated approach to providing distributed solar energy include:

 
 	•	 	Professional consultation .    We deploy our direct-to-home sales force to provide in-person professional consultations to prospective customers to evaluate the feasibility of installing a solar energy system at their residence. Our sales closing and referral rates are enhanced by homeowners’ responsiveness to our direct-to-home, neighborhood-by-neighborhood outreach strategy.	
 
 	•	 	Design and engineering .    We have developed a streamlined process incorporating our proprietary software, which enables us to efficiently design and install a custom solar energy system that delivers significant customer savings. We continue to pursue technology innovation to integrate accurate system design into the initial in-person sales consultation as a competitive tool to enhance the customer experience and increase sales close rates.	
 
 	•	 	Installation .    We are a licensed contractor in every market we serve, and we are responsible for every customer installation. We manage the entire process from permitting through inspection to interconnection to the power grid, thereby making the system installation process simple and seamless for our customers. Controlling every aspect of the installation process allows us to minimize costs, ensure quality and deliver high levels of customer satisfaction.	
 
 	•	 	Monitoring and service .    We monitor the performance of all of our solar energy systems, leveraging a combination of internally developed solutions as well as capabilities provided by our suppliers. Currently, most of our existing solar energy systems use Enphase Energy, Inc.’s communications gateway device paired with its	

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 	monitoring service. We leverage the Enphase communications gateway and monitoring service to collect performance data and use this data to ensure we deliver quality operations and maintenance services for our solar energy systems.	
 
 	•	 	Referrals .    We believe that we generate a significant amount of sales through customer referrals. These referrals increase our neighborhood penetration rates, lower our customer acquisition costs and accelerate our growth. Our financial returns also benefit from the cost savings derived from increasing the density of installations in a neighborhood.	
Our Strengths
We believe the following strengths position us well to capitalize on the expected growth in the distributed solar energy market:
 
 	•	 	Differentiated sales model .    We deploy our sales force on a neighborhood-by-neighborhood basis, which allows us to cultivate a geographically concentrated customer base. We believe that this direct-to-home sales model improves sales effectiveness and reduces customer acquisition costs. We also believe this model reduces system installation costs given the efficiencies associated with working in a concentrated area.	
 
 	•	 	Integration and operational efficiency .    Our integrated approach to residential solar deployment coupled with our direct-to-home sales model enables us to ensure installation quality, reduce overall costs per system, enhance our competitiveness in existing and potential new markets and allows us to earn attractive financial returns on investment. We believe our cost structure, with its emphasis on variable compensation for our sales personnel and installers, allows us to offer homeowners competitive solar pricing and will continue to support rapid solar energy system installation growth.	
 
 	•	 	Funding available to accelerate growth .    As of the date of this prospectus, we have raised 10 investment funds to which investors such as banks and other large financial investors have committed to invest approximately $543 million which will enable us to install solar energy systems of total fair market value approximating $1.3 billion. As of the date of this prospectus, we had tax equity commitments to fund approximately 81 MWs of future deployments. We have developed strong, long-term relationships with leading tax equity and debt financing providers, several of whom have provided capital to us on multiple occasions, and we believe that these relationships position us well to raise additional financing.	
 
 	•	 	Relationship with Vivint .    Vivint, Inc., our sister company, had approximately 850,000 subscribers as of June 30, 2014, and we believe the opportunity to cross-sell to Vivint customers provides us with a competitive advantage by reducing customer acquisition costs and helping to accelerate our growth when we enter into new markets. Our relationship also allows continued utilization of best-practices for in-person sales techniques, process efficiencies between sales and equipment installation, and the latest technology innovations around customer care, data aggregation and deployment of adjacent, complementary technologies. We also expect to enter into an agreement with Vivint pursuant to which we will purchase internet gateway devices and energy management products from Vivint, which we believe will further enhance our value proposition.	

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 	•	 	Experienced management team .    Our executive management team members have track records of leading successful growth businesses and public companies, and have extensive experience across a broad range of disciplines. We believe the strength of our management team is a key ingredient to our continued success and ability to execute our strategy.	
Our Strategy
Our goal is to become the premier provider of distributed solar energy. Key elements of our strategy include:
 
 	•	 	Further penetrating our existing markets .     We believe the markets in which we currently operate continue to be significantly underpenetrated, and we intend to increase our presence in these markets by introducing our solar energy systems into new neighborhoods and communities in states in which we already have operations. We intend to leverage our brand and existing customer base to grow in these markets at lower customer acquisition and installation costs relative to our competitors.	
 
 	•	 	Expanding into new locations and commercial markets .    To enlarge our addressable market, we plan to expand our presence to new states and are considering the option of expanding into markets outside of the residential market, such as the small business market. We have a track record of entering new markets quickly and efficiently. During the 12 months ended June 30, 2014, we established 21 new sales offices in addition to the 16 sales offices that were in place as of June 30, 2013.	
 
 	•	 	Capitalizing on opportunities to increase sales and lower costs .    We intend to capitalize on our opportunities to increase sales and lower costs through internal development initiatives, acquisitions and alternative financing structures. We anticipate making additional investments in new technologies related to our system design and installation and ongoing customer service practices. Such investments will enable us to continue to improve our operating efficiency, cost structure and customer satisfaction. In addition, our management team has significant experience in successfully integrating acquisitions into their businesses, and we believe there are opportunities to acquire related businesses, talent and technology to drive sales and lower costs. Additionally, we intend to lower our cost of capital through alternative financing sources such as securitization by pooling and transferring certain of our solar energy systems and associated customer contracts into special purpose entities, or SPEs, and subsequently issuing and selling interests in these SPEs as securities.	
 
 	•	 	Building and leveraging strategic relationships .    We plan to build and leverage strategic relationships with new and existing partners to, among other things, grow our business and drive cost reductions. For example, in addition to our direct sales channel, we are currently exploring opportunities to sell solar energy systems to customers through a number of distribution channels including relationships with homebuilders, home improvement stores, large construction, electrical and roofing companies and other third parties that have access to large numbers of potential customers.	

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Risks Associated with Our Business and the Offering
Our business and our ability to execute our strategy are subject to many risks. Before making a decision to invest in our common stock, you should carefully consider all of the risks and uncertainties described in the section of this prospectus captioned “Risk Factors” immediately following this prospectus summary and all of the other information in this prospectus. These risks include, but are not limited to the following:
 
 	•	 	we need to enter into substantial additional financing arrangements to facilitate our customers’ access to our solar energy systems, and if financing is not available to us on acceptable terms when needed, our ability to continue to grow our business would be materially adversely impacted;	
 
 	•	 	a material reduction in the retail price of traditional utility generated electricity or electricity from other sources would harm our business, financial condition, results of operations and prospects;	
 
 	•	 	electric utility industry policies and regulations may present technical, regulatory and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for electricity from our solar energy systems;	
 
 	•	 	our business currently depends on the availability of rebates, tax credits and other financial incentives and the expiration, elimination or reduction of these rebates, credits or incentives, particularly the scheduled reduction in the ITC in 2017, could adversely impact our business;	
 
 	•	 	we rely on net metering and related policies to offer competitive pricing to our customers in all of our current markets, and changes to net metering policies may significantly reduce demand for electricity from our solar energy systems;	
 
 	•	 	our ability to remediate the material weakness in our internal control over financial reporting;	
 
 	•	 	if we fail to manage our recent and future growth effectively, including attracting, training and retaining sales personnel and solar energy system installers, we may be unable to execute our business plan, maintain high levels of customer service or adequately address competitive challenges; and	
 
 	•	 	our sponsor and its affiliates control us and their interests may conflict with ours or yours in the future.	
Corporate Information and History
We were incorporated in Delaware in 2011 when Vivint, Inc., a residential security solutions and home automation services provider, with approximately 850,000 subscribers as of June 30, 2014, recognized an opportunity to replicate its strong and scalable direct-to-home selling model in the solar energy market. Vivint offers a fully integrated and remotely accessible residential services platform that offers subscribers a suite of products and services including interactive security, life-safety, energy management and home automation.

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On November 16, 2012, investment funds affiliated with The Blackstone Group L.P. and certain co-investors, through 313 Acquisition LLC, acquired 100% of the equity interests of Vivint Solar, Inc. (then known as V Solar Holdings, Inc.) and Vivint. The acquisition was accomplished through certain mergers and related reorganization transactions pursuant to which each of Vivint and us became wholly owned subsidiaries of 313 Acquisition LLC, an entity wholly owned by Blackstone and its co-investors. Vivint Solar Holdings, Inc., our wholly owned subsidiary, wholly owns or partially owns a number of subsidiaries and other entities related to various solar energy system financing vehicles. Prior to this offering, we changed the name of this subsidiary to Vivint Solar Holdings, Inc. from Vivint Solar, Inc., our current name. 313 Acquisition LLC was formed to facilitate the acquisitions of Vivint and us. 313 Acquisition LLC is the selling stockholder in this offering. See the section of this prospectus captioned “Principal and Selling Stockholders.”
Our principal executive office is located at 3301 N. Thanksgiving Way, Suite 500, Lehi, Utah 84043. Our telephone number is (877) 404-4129. Our website address is www.vivintsolar.com. Information contained in, or that can be accessed through, our website is not a part of, and is not incorporated into, this prospectus and you should not rely on any such information in making the decision whether to purchase our common stock.

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Organizational Structure
The following chart summarizes our organizational structure and equity ownership immediately following the consummation of this offering. This chart is provided for illustrative purposes only and does not represent all legal entities affiliated with, or obligations of, our company.

Our Sponsor
Blackstone is one of the world’s leading investment and advisory firms. Blackstone’s alternative asset management businesses include the management of corporate private equity funds, real estate funds, hedge fund solutions, credit-oriented funds and closed-end mutual funds. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Through its different investment businesses, as of June 30, 2014, Blackstone had assets under management of approximately $279 billion.

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Immediately following this offering, 313 Acquisition LLC, which is controlled by our sponsor and its affiliates, will beneficially own approximately 78% of our common stock, or approximately 75% if the underwriters option to purchase additional shares is exercised in full. For a discussion of certain risks, potential conflicts and other matters associated with Blackstone’s control, see “Risk Factors—Risks Related to this Offering—We have elected to take advantage of the “controlled company” exemption to the corporate governance rules for NYSE-listed companies, which could make our common stock less attractive to some investors or otherwise harm our stock price” and “—Risks Related to this Offering—Our sponsor and its affiliates control us and their interests may conflict with ours or yours in the future.”

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The Offering
 
Common stock offered by us	20,600,000 shares	
 
Common stock to be outstanding after this offering	105,303,122 shares	
 
Option to purchase additional shares from the selling stockholder	3,090,000 by the selling stockholder	
 
Use of proceeds	We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $320.4 million, based on the assumed initial public offering price of $17.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus.	
 
 	Approximately $58.8 million of the net proceeds received by us from this offering will be used to repay borrowings incurred under revolving lines of credit with Vivint. We plan to use the remaining net proceeds that we receive in this offering for working capital and general corporate purposes. We may also use a portion of the net proceeds to acquire, license and invest in complementary products, technologies or businesses; however, we currently have no agreements or commitments to complete any such transaction. See “Use of Proceeds.”	
 
 	We will not receive any proceeds from the sale of shares of common stock offered by the selling stockholder if the underwriters exercise their option to purchase additional shares from the selling stockholder in this offering.	
 
Reserved Share Program	At our request, the underwriters have reserved for sale, at the initial public offering price, up to 5% of the shares offered by this prospectus for sale to business associates, friends and family of our officers, directors and Vivint service providers. Purchasers will be subject to a 180-day lock-up restriction with respect to any shares purchased through the reserved share program. If these persons purchase reserved shares it will reduce the number of shares available for sale to the general public. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus.	
 
NYSE symbol	“VSLR”	

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Conflicts of Interest	Affiliates of Blackstone Advisory Partners L.P. control 313 Acquisition LLC, which owns in excess of 10% of our issued and outstanding common stock and, as the selling stockholder in this offering, may receive in excess of 5% of the net proceeds of this offering if the underwriters exercise their option to purchase additional shares in full. Because Blackstone Advisory Partners L.P. is an underwriter in this offering and its affiliates may receive more than 5% of the net proceeds of this offering and because affiliates of Blackstone Advisory Partners L.P. control in excess of 10% of our issued and outstanding common stock, Blackstone Advisory Partners L.P. is deemed to have a “conflict of interest” under Rule 5121 of the Financial Industry Regulatory Authority, Inc., or FINRA. Accordingly, this offering will be conducted in accordance with Rule 5121. Pursuant to FINRA Rule 5121, the appointment of a “qualified independent underwriter” is not required in connection with this offering as the members primarily responsible for managing the public offering do not have a conflict of interest, are not affiliates of any member that has a conflict of interest and meet the requirements of paragraph (c)(12)(E) of FINRA Rule 5121. See “Underwriting—Conflicts of Interest.”	
The number of shares of our common stock to be outstanding immediately after this offering is based on 84,703,122 shares of our common stock outstanding as of June 30, 2014 after giving effect to the issuance and sale by us of 9,703,122 shares of common stock to 313 Acquisition LLC and two of our directors in August and September 2014 and excludes as of June 30, 2014:
 
 	•	 	9,728,681 shares of common stock issuable upon the exercise of options outstanding as of June 30, 2014, pursuant to our 2013 Omnibus Incentive Plan and an option granted outside of such plan with substantially the same terms as those granted pursuant to such plan with a weighted-average exercise price of $1.10 per share;	
 
 	•	 	320,000 shares of common stock issuable upon the exercise of options granted on July 7, 2014 at a weighted-average exercise price of $4.14 per share;	
 
 	•	 	4,068,966 shares of common stock reserved for issuance under our 2013 Omnibus Incentive Plan, 4,058,823 of which are reserved for the settlement of awards granted based on achieving certain performance conditions under our long-term incentive plan pools as described in the section of this prospectus captioned “Executive Compensation—Employee Benefit Plans—Long-Term Incentive Plan,” as of June 30, 2014; and	
 
 	•	 	8,800,000 shares of common stock reserved for future issuance under our 2014 Equity Incentive Plan on the date of this prospectus, and additional shares that become available under the plan pursuant to provisions thereof that provide for automatic annual increases in the number of shares reserved under the plan each year, as more fully described in the section of this prospectus captioned “Executive Compensation—Employee Benefit Plans—2014 Equity Incentive Plan.”	

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Except as otherwise indicated, all information in this prospectus assumes:
 
 	•	 	no exercise of outstanding options;	
 
 	•	 	the filing and effectiveness of our amended and restated certificate of incorporation, which will occur immediately prior to the closing of this offering; and	
 
 	•	 	no exercise by the underwriters of their option to purchase up to an additional 3,090,000 shares of common stock from the selling stockholder.	

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 SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
The following table sets forth summary historical consolidated financial and other data for the periods ended and at the dates indicated below. On November 16, 2012, we were acquired by our sponsor. We refer to the period from January 1, 2012 through November 16, 2012 as the Predecessor Period or Predecessor and the periods from November 17, 2012 through December 31, 2012, the year ended December 31, 2013, and the six months ended June 30, 2013 and 2014 as the Successor Periods or Successor. Our summary historical consolidated statement of operations data for the Predecessor Period, the period from November 17, 2012 to December 31, 2012 and the year ended December 31, 2013 presented in this table have been derived from our historical audited consolidated financial statements included elsewhere in this prospectus. The summary statements of operations data for each of the six-month periods ended June 30, 2013 and 2014 and the balance sheet data as of June 30, 2014 set forth below are derived from our unaudited quarterly consolidated financial statements included elsewhere in this prospectus and contain all adjustments, consisting of normal recurring adjustments, that management considers necessary for a fair presentation of our financial position and results of operations for the periods presented. See the section of this prospectus captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Basis of Presentation” for more information regarding the presentation of our consolidated financial statements. Operating results for the six-month periods are not necessarily indicative of results for a full financial year, or any other periods. Our historical results are not necessarily indicative of the results that may be expected in the future. The following summary financial data should be read in conjunction with the sections of this prospectus captioned “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

 	  	Predecessor	 	  	Successor	 	
 	  	Period from
January 1,
through
November 16,
2012	 	  	Period from
November 17,
though
December 31,
2012	 	 	Year Ended
December 31,
2013	 	 	Six
Months
Ended
June 30,
2013	 	 	Six
Months
Ended
June 30,
2014	 	
 	  	 	 	  	 	 	 	(Restated)	 	 	(Unaudited)	 	
 	  	(In thousands, except share and per share data)	 	
Statement of Operations Data:	  			 	  				 				 				 				
Revenue:	  			 	  				 				 				 				
Operating leases and incentives	  	$	183	  	  	$	109	  	 	$	5,864	  	 	 	1,793	  	 	$	8,667	  	
Solar energy system and product
sales	  	 	157	  	  	 	—	  	 	 	306	  	 	 	132	  	 	 	1,398	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	  	 	340	  	  	 	109	  	 	 	6,170	  	 	 	1,925	  	 	 	10,065	  	
Operating expenses:	  			 	  				 				 				 				
Cost of revenue — operating leases and incentives	  	 	3,302	  	  	 	1,018	  	 	 	19,004	  	 	 	8,013	  	 	 	27,646	  	
Cost of revenue — solar energy system and product sales	  	 	95	  	  	 	—	  	 	 	123	  	 	 	76	  	 	 	883	  	
Sales and marketing	  	 	1,471	  	  	 	533	  	 	 	7,348	  	 	 	2,890	  	 	 	11,009	  	
Research and development	  	 	—	  	  	 	—	  	 	 	—	  	 	 	—	  	 	 	972	  	
General and administrative	  	 	7,789	  	  	 	971	  	 	 	16,438	  	 	 	4,832	  	 	 	26,106	  	
Amortization of intangible assets	  	 	—	  	  	 	1,824	  	 	 	14,595	  	 	 	7,297	  	 	 	7,428	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses (1)	  	 	12,657	  	  	 	4,346	  	 	 	57,508	  	 	 	23,108	  	 	 	74,044	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from operations	  	 	(12,317	) 	  	 	(4,237	) 	 	 	(51,338	) 	 	 	(21,183	) 	 	 	(63,979	) 	
Interest expense	  	 	881	  	  	 	96	  	 	 	3,144	  	 	 	991	  	 	 	4,074	  	
Other expense	  	 	240	  	  	 	44	  	 	 	1,865	  	 	 	522	  	 	 	1,165	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before income taxes	  	 	(13,438	) 	  	 	(4,377	) 	 	 	(56,347	) 	 	 	(22,696	) 	 	 	(69,218	) 	
Income tax expense (benefit)	  	 	7	  	  	 	(1,074	) 	 	 	123	  	 	 	45	  	 	 	6,936	  	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	  	 	(13,445	) 	  	 	(3,303	) 	 	 	(56,470	) 	 	 	(22,741	) 	 	 	(76,154	) 	
Net loss attributable to non-controlling interests and redeemable non-controlling interests	  	 	(1,771	) 	  	 	(699	) 	 	 	(62,108	) 	 	 	(2,307	) 	 	 	(88,688	) 	

 
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 	  	Predecessor	 	  	Successor	 	
 	  	Period from
January 1,
through
November 16,
2012	 	  	Period from
November 17,
though
December 31,
2012	 	 	Year Ended
December 31,
2013	 	  	Six
Months
Ended
June 30,
2013	 	 	Six
Months
Ended
June 30,
2014	 	
 	  	 	 	  	 	 	 	(Restated)	 	  	(Unaudited)	 	
 	  	(In thousands, except share and per share data)	 	
Net income available (loss attributable) to stockholder	  	 	    (11,674	) 	  	 	(2,604	) 	 	 	5,638	  	  	 	(20,434	) 	 	 	12,534	  	
Accretion to redemption value of Series B redeemable preferred stock	  	 	(20,000	) 	  	 	—	  	 	 	—	  	  	 	—	  	 	 	—	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net income available (loss attributable) to common stockholder	  	$	(31,674	) 	  	$	(2,604	) 	 	$	5,638	  	  	 	$(20,434	) 	 	$	12,534	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net income per share available (loss attributable) to common stockholder (2) :	  			 	  				 				  				 				
Basic	  	$	(0.42	) 	  	$	(0.03	) 	 	$	0.08	  	  	$	(0.27	) 	 	$	0.17	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Diluted	  	$	(0.42	) 	  	$	(0.03	) 	 	$	0.07	  	  	$	(0.27	) 	 	$	0.16	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Weighted-average shares used in computing net income per share available (loss attributable) to common stockholder (2) :	  			 	  				 				  				 				
Basic	  	 	75,000,000	  	  	 	75,000,000	  	 	 	75,000,000	  	  	 	75,000,000	  	 	 	75,000,000	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Diluted	  	 	75,000,000	  	  	 	75,000,000	  	 	 	75,223,183	  	  	 	75,000,000	  	 	 	76,194,463	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Pro forma net income per share available to common stockholders (unaudited) (3) :	  			 	  				 				  				 				
Basic	  			 	  				 	$	0.09	  	  				 	$	0.16	  	
	  			 	  				 	 	 	 	  				 	 	 	 	
Diluted	  			 	  				 	$	0.09	  	  				 	$	0.16	  	
	  			 	  				 	 	 	 	  				 	 	 	 	
Weighted-average shares used in computing pro forma net income per share available to common stockholders (unaudited) (3) :	  			 	  				 				  				 				
Basic	  			 	  				 	 	86,445,874	  	  				 	 	87,814,512	  	
	  			 	  				 	 	 	 	  				 	 	 	 	
Diluted	  			 	  				 	 	86,669,057	  	  				 	 	89,008,975	  	

(1)	In connection with the finalization of this offering, we re-evaluated the estimate of the fair value of our common stock for financial reporting purposes with respect to the stock options granted to our employees during the period from January 1, 2014 through the date of this prospectus. As a result of this re-evaluation we currently expect to record approximately $0.4 million of stock-based compensation expense across multiple operating expense line items for options granted in 2014 through the date of this prospectus, which includes approximately $0.3 million of incremental stock-based compensation expense, associated with option grants made in the six months ended June 30, 2014. We also expect to record approximately $14.8 million in compensation expense in general and administrative expenses in our third quarter 2014 financial statements with respect to the September sale of common stock to Alex Dunn and an entity affiliated with Todd Pedersen, which represents the aggregate difference between the $10.667 per share purchase price and $17.00, the midpoint of the price range set forth on the cover page of this prospectus.	
(2)	See Note 18 to our audited consolidated financial statements for an explanation of the method used to calculate basic and diluted net income per share available (loss attributable) to common stockholder and the weighted-average number of shares used in the computation of the per share amounts.	
(3)	The pro forma basic and diluted net income per share available to common stockholders have been calculated assuming (1) the issuance and sale by us of an aggregate of 9,703,122 shares of our common stock to 313 Acquisition LLC and two of our directors in August and September 2014, (2) the repayment in full of outstanding borrowings under our revolving lines of credit, related party, using proceeds from our initial public offering of $58.8 million and (3) the assumed issuance of shares of common stock weighted for the period that the debt to be repaid was outstanding as if these transactions had occurred as of January 1, 2013. This assumes net proceeds of $320.4 million based on the initial public offering price of $17.00, the midpoint of the price range set forth on the cover of the prospectus, after deducting $21.0 million in underwriter discounts and commissions and estimated offering expenses of $8.8 million. The table in footnote 3 to the Selected Consolidated Financial and Other Data on page 69 sets forth the computation of the pro forma basic and diluted net income per share available to common stockholders.	

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 	  	As of June 30, 2014	 	
 	  	Actual	 	  	Pro Forma
As Adjusted (1)	 	
 	  	(In thousands)	 	
 	  	(Unaudited)	 	
Balance Sheet Data:	  				  				
Cash and cash equivalents	  	$	     25,230	  	  	$	    393,131	  	
Solar energy systems, net	  	 	364,965	  	  	 	364,965	  	
Total assets	  	 	566,250	  	  	 	935,651	  	
Short-term debt	  	 	75,500	  	  	 	—	  	
Long-term debt, net	  	 	—	  	  	 	78,300	  	
Revolving lines of credit, related party	  	 	57,290	  	  	 	—	  	
Redeemable non-controlling interests	  	 	104,342	  	  	 	104,342	  	
Total equity	  	 	127,474	  	  	 	551,365	  	

(1)	Gives effect to (a) the issuance and sale by us of an aggregate of 9,703,122 shares of our common stock to 313 Acquisition LLC and two of our directors in August and September 2014, (b) the incurrence of an aggregate of $87.0 million of term loan borrowings under our aggregation credit facility, net of discount of $8.7 million and the repayment of an aggregate of $75.5 million of term borrowings under our credit facility in September 2014, (c) the sale and issuance by us of 20,600,000 shares of common stock offered by this prospectus at an assumed initial public offering price of $17.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting $21.0 million in underwriting discounts and commissions and estimated offering expenses of $8.8 million and (d) the repayment of $57.3 million of borrowings outstanding as of June 30, 2014. Each $1.00 increase (decrease) in the assumed initial public offering price of $17.00 per share, would increase (decrease) each of cash and cash equivalents, total assets and total equity by approximately $19.4 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions and estimated offering expenses. We may also increase or decrease the number of shares we are offering. Each increase (decrease) of 1,000,000 shares offered by us would increase (decrease) each of cash and cash equivalents, total assets and total equity by approximately $16.0 million, assuming that the assumed initial public offering price remains the same, and after deducting the estimated underwriting discounts and commissions. The pro forma as adjusted information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at pricing.	
Key Operating Metrics:
We regularly review a number of metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

 	  	Year Ended December 31,	 	  	Six Months Ended June 30,	 	
 	  	2012	 	  	2013	 	  	2013	 	  	2014	 	
Solar energy system installations (1)	  	 	2,669	  	  	 	10,521	  	  	 	4,679	  	  	 	8,625	  	
Megawatts installed (2)	  	 	14.4	  	  	 	58.0	  	  	 	24.4	  	  	 	56.8	  	
			
 	  	As of December 31,	 	  	As of June 30,	 	
 	  	2012	 	  	2013	 	  	2013	 	  	2014	 	
Cumulative solar energy system installations (1)	  	 	    2,775	  	  	 	    13,296	  	  	 	    7,454	  	  	 	21,921	  	
Cumulative megawatts installed (2)	  	 	14.8	  	  	 	72.8	  	  	 	39.2	  	  	 	129.7	  	
Estimated nominal contracted payments remaining (in millions) (3)	  	$	89.2	  	  	$	394.1	  	  	$	223.3	  	  	$	647.5	  	
Estimated retained value under energy contracts (in millions) (4)	  	 	33.1	  	  	 	151.2	  	  	 	81.1	  	  	 	246.2	  	
Estimated retained value of renewal (in millions) (4)	  	 	8.5	  	  	 	39.2	  	  	 	21.5	  	  	 	63.7	  	
Estimated retained value (in millions) (4)	  	 	41.6	  	  	 	190.4	  	  	 	102.7	  	  	 	309.9	  	
Estimated retained value per watt (5)	  	 	2.83	  	  	 	2.62	  	  	 	2.63	  	  	 	2.39	  	

(1)	Includes the number of solar energy systems installed on customers’ premises. We track the number of solar energy system installations as of the end of a given period as an indicator of our historical growth and as an indicator of our rate of growth from period to period. For additional information about this metric, see the section of this prospectus captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Operating Metrics — Solar Energy System Installations.”	

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(2)	Megawatts installed represents the aggregate megawatt nameplate capacity of solar energy systems that have been installed during the applicable period. Cumulative megawatts installed represents the aggregate megawatt nameplate capacity of solar energy systems that have been installed. For additional information about this metric, see the section of this prospectus captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Operating Metrics — Megawatts Installed and Cumulative Megawatts Installed.”	
(3)	Estimated nominal contracted payments remaining equals the sum of the remaining cash payments that our customers are expected to pay over the term of their agreements with us for systems installed as of the measurement date. For a power purchase agreement, we multiply the contract price per kilowatt-hour by the estimated annual energy output of the associated solar energy system to determine the estimated nominal contracted payments. For a customer lease, we include the monthly fees and upfront fee, if any, as set forth in the lease. For additional information about this metric, see the section of this prospectus captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Operating Metrics — Estimated Nominal Contract Payments Remaining.”	
(4)	Estimated retained value represents the net cash flows, discounted at 6%, that we expect to receive from customers pursuant to long-term customer contracts net of estimated cash distributions to fund investors and estimated operating expenses for systems installed as of the measurement date. For purposes of the calculation, we aggregate the estimated retained value from the solar energy systems during the typical 20-year term of our contracts, which we refer to as estimated retained value under energy contracts, and the estimated retained value associated with an assumed 10-year renewal term following the expiration of the initial contract term, which we refer to as estimated retained value of renewal. To calculate estimated retained value of renewal, we assume all contracts are renewed at 90% of the contractual price in effect at the expiration of the initial term. For additional information about this metric, see the section of this prospectus captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Operating Metrics — Estimated Retained Value.”	
(5)	Estimated retained value per watt is calculated by dividing the estimated retained value as of the measurement date by the aggregate nameplate capacity of solar energy systems under long-term customer contracts that have been installed as of such date, and is subject to the same assumptions and uncertainties as estimated retained value. For additional information about this metric, see the section of this prospectus captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Operating Metrics — Estimated Retained Value.”	

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 RISK FACTORS
Investing in our common stock involves a substantial risk of loss. You should carefully consider these risk factors, together with all of the other information included in this prospectus, before you decide to purchase shares of our common stock. If any of the following risks occurred, it could materially adversely affect our business, financial condition or operating results. In that case, the trading price of our common stock could decline, and you may lose part or all of your investment. See the section of this prospectus captioned “Special Note Regarding Forward-Looking Statements and Industry Data.”
Risks Related to our Business
We need to enter into substantial additional financing arrangements to facilitate our customers’ access to our solar energy systems, and if financing is not available to us on acceptable terms when needed, our ability to continue to grow our business would be materially adversely impacted.
Our future success depends on our ability to raise capital from third-party investors on competitive terms to help finance the deployment of our solar energy systems. We seek to minimize our cost of capital in order to maintain the price competitiveness of the electricity produced by, or the lease payments for, our solar energy systems. If we are unable to establish new investment funds when needed, or upon desirable terms, to enable our customers’ access to our solar energy systems with little to no upfront cost to them, we may be unable to finance installation of our customers’ systems or our cost of capital could increase, either of which would have a material adverse effect on our business, financial condition, results of operations and prospects. As of the date of this prospectus, we have raised 10 investment funds to which investors such as banks and other large financial investors have committed to invest approximately $543 million which will enable us to install solar energy systems of total fair market value approximating $1.3 billion. As of the date of this prospectus, we had tax equity commitments to fund approximately 81 MWs of future deployments, which we estimate to be sufficient to fund solar energy systems with a total fair market value of approximately $405 million. The contract terms in certain of our investment fund documents impose conditions on our ability to draw on financing commitments from the fund investors, including if an event occurs that could reasonably be expected to have a material adverse effect on the fund or on us. If we do not satisfy such conditions due to events related to our business or a specific investment fund or developments in our industry or otherwise, and as a result we are unable to draw on existing commitments, our inability to draw on such commitments could have a material adverse effect on our business, liquidity, financial condition and prospects.
To meet the capital needs of our growing business, we will need to obtain additional financing from new investors and investors with whom we currently have arrangements. If any of the financial institutions that currently provide financing decide not to invest in the future due to general market conditions, concerns about our business or prospects or any other reason, or decide to invest at levels that are inadequate to support our anticipated needs or materially change the terms under which they are willing to provide future financing, we will need to identify new financial institutions and companies to provide financing and negotiate new financing terms.
In the past, we have at times been unable to establish investment funds in accordance with our plans, due in part to the relatively limited number of investors attracted to such types of funds,
 
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competition for such capital and the complexity associated with negotiating the agreements with respect to such funds. Delays in raising financing could cause us to delay entering into new markets and hiring additional personnel in support of our planned growth. Any future delays in capital raising could similarly cause us to delay deployment of a substantial number of solar energy systems for which we have signed power purchase agreements with customers. Our future ability to obtain additional financing depends on banks’ and other financing sources’ continued confidence in our business model and the renewable energy industry as a whole. It could also be impacted by the liquidity needs of such financing sources themselves. We face intense competition from a variety of other companies, technologies and financing structures for such limited investment capital. If we are unable to continue to offer a competitive investment profile, we may lose access to these funds or they may only be available to us on terms that are less favorable than those received by our competitors. For example, if we experience higher customer default rates than we currently experience in our existing investment funds, this could make it more difficult or costly to attract future financing. In our experience, there are a relatively small number of investors that generate sufficient profits and possess the requisite financial sophistication that can benefit from and have significant demand for the tax benefits that our investment funds can provide. Historically, in the distributed solar energy industry, investors have typically been large financial institutions and a few large, profitable corporations. Our ability to raise investment funds is limited by the relatively small number of such investors. Any inability to secure financing could lead us to cancel planned installations, could impair our ability to accept new customers and could increase our borrowing costs, any of which would have a material adverse effect on our business, financial condition, results of operations and prospects.
A material reduction in the retail price of traditional utility generated electricity or electricity from other sources would harm our business, financial condition, results of operations and prospects.
We believe that a significant number of our customers decide to buy solar energy because they want to pay less for electricity than what is offered by the traditional utilities. However, distributed residential solar energy has yet to achieve broad market adoption as evidenced by the fact that distributed solar has penetrated less than 1% of its total addressable market in the U.S. residential sector.
The customer’s decision to choose solar energy may also be affected by the cost of other renewable energy sources. Decreases in the retail prices of electricity from the traditional utilities or from other renewable energy sources would harm our ability to offer competitive pricing and could harm our business. The price of electricity from traditional utilities could decrease as a result of:
 
 	•	 	construction of a significant number of new power generation plants, including plants utilizing natural gas, nuclear, coal, renewable energy or other generation technologies;	
 
 	•	 	relief of transmission constraints that enable local centers to generate energy less expensively;	
 
 	•	 	reductions in the price of natural gas;	
 
 	•	 	utility rate adjustment and customer class cost reallocation;	
 
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 	•	 	energy conservation technologies and public initiatives to reduce electricity consumption;	
 
 	•	 	development of new or lower-cost energy storage technologies that have the ability to reduce a customer’s average cost of electricity by shifting load to off-peak times; and	
 
 	•	 	development of new energy generation technologies that provide less expensive energy.	
A reduction in utility electricity prices would make the purchase of electricity under our power purchase agreements or the lease of our solar energy systems less economically attractive. If the retail price of energy available from traditional utilities were to decrease due to any of these reasons, or other reasons, we would be at a competitive disadvantage, we may be unable to attract new customers and our growth would be limited.
Electric utility industry policies and regulations may present technical, regulatory and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for electricity from our solar energy systems.
Federal, state and local government regulations and policies concerning the electric utility industry, utility rate structures, interconnection procedures, and internal policies of electric utilities, heavily influence the market for electricity generation products and services. These regulations and policies often relate to electricity pricing and the interconnection of distributed electricity generation systems to the power grid. Policies and regulations that promote renewable energy have been challenged by traditional utilities and questioned by those in government and others arguing for less governmental spending and involvement in the energy market. To the extent that such views are reflected in government policy, the changes in such policies and regulations could adversely affect our results of operations, cost of capital and growth prospects.
In the United States, governments and the state public service commissions that determine utility rates continuously modify these regulations and policies. These regulations and policies could result in a significant reduction in the potential demand for electricity from our solar energy systems and could deter customers from entering into contracts with us. In addition, depending on the region, electricity generated by solar energy systems competes most effectively with the most expensive retail rates for electricity from the power grid, rather than the less expensive average price of electricity. Modifications to the utilities’ peak hour pricing policies or rate design, such as to a flat rate, would make our current products less competitive with the price of electricity from the power grid. For example, a shift in the timing of peak rates for utility-generated electricity to a time of day when solar energy generation is less efficient could make our solar energy system offerings less competitive and reduce demand for our offerings.
In addition, any changes to government or internal utility regulations and policies that favor electric utilities could reduce our competitiveness and cause a significant reduction in demand for our offerings or increase our costs or the prices we charge our customers. Certain jurisdictions have proposed allowing traditional utilities to assess fees on customers purchasing energy from solar energy systems or imposing a new charge that would disproportionately impact solar energy system customers who utilize net metering, either of which would increase the cost of energy to those customers and could reduce demand for our solar energy systems. For example, California has adopted and implemented Assembly Bill 327, which has directly revised the caps on net
 
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metering applicable to each utility in the state, and further mandates that the California Public Utilities Commission, or CPUC, study net metering and craft an updated program that may result in future charges being imposed on our customers in California. It is possible these charges could be imposed on not just future customers but our existing customers, causing a potentially significant consumer relations problem and harming our reputation and business. Due to the concentration of our business in California and Hawaii, which account for approximately 53% and 15% of our total installations as of June 30, 2014, respectively, any such changes in these markets would be particularly harmful to our business, results of operations and future growth.
Our business currently depends on the availability of rebates, tax credits and other financial incentives. The expiration, elimination or reduction of these rebates, credits or incentives could adversely impact our business.
Federal, state and local government bodies provide incentives to owners, end users, distributors, system integrators and manufacturers of solar energy systems to promote solar electricity in the form of rebates, tax credits and other financial incentives such as system performance payments, payments for renewable energy credits associated with renewable energy generation and exclusion of solar energy systems from property tax assessments. We rely on these governmental rebates, tax credits and other financial incentives to finance solar energy system installations. These incentives enable us to lower the price we charge customers for energy from, and to lease, our solar energy systems, helping to catalyze customer acceptance of solar energy with those customers as an alternative to utility provided power. However, these incentives may expire on a particular date, end when the allocated funding is exhausted or be reduced or terminated as solar energy adoption rates increase. These reductions or terminations often occur without warning. In addition, the financial value of certain incentives decrease over time. For example, the value of solar renewable energy credits, or SRECs, in a market tends to decrease over time as the supply of SREC producing solar energy systems installed in that market increases. If we overestimate the future value of these incentives, it could adversely impact our financial results.
The federal government currently offers a 30% investment tax credit, or the ITC, under Section 48(a) of the Internal Revenue Code for the installation of certain solar power facilities until December 31, 2016. By statute, the ITC is scheduled to decrease to 10% of the fair market value of a solar energy system on January 1, 2017, and the amounts that fund investors are willing to invest could decrease or we may be required to provide a larger allocation of customer payments to the fund investors as a result of this scheduled decrease. To the extent we have a reduced ability to raise investment funds as a result of this reduction, the rate of growth of installations of our residential solar energy systems would be negatively impacted. The ITC has been a significant driver of the financing supporting the adoption of residential solar energy systems in the United States and its scheduled reduction beginning in 2017, unless modified by an intervening change in law, will significantly impact the attractiveness of solar to these investors and potentially our business.
Applicable authorities may adjust or decrease incentives from time to time or include provisions for minimum domestic content requirements or other requirements to qualify for these incentives. Reductions in, eliminations or expirations of or additional application requirements for, governmental incentives could adversely impact our results of operations and ability to compete in our industry by increasing our cost of capital, causing us to increase the prices of our energy and solar energy systems and reducing the size of our addressable market. In addition, this would adversely impact our ability to attract investment partners and to form new investment funds and our ability to offer attractive financing to prospective customers.
 
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We rely on net metering and related policies to offer competitive pricing to our customers in all of our current markets, and changes to net metering policies may significantly reduce demand for electricity from our solar energy systems.
Our business benefits significantly from favorable net metering policies in states in which we operate. Net metering allows a homeowner to pay his or her local electric utility only for their power usage net of production from the solar energy system, transforming the conventional relationship between customers and traditional utilities. Homeowners receive credit for the energy that the solar installation generates to offset energy usage at times when the solar installation is not generating energy. In states that provide for net metering, the customer typically pays for the net energy used or receives a credit against future bills at the retail rate if more energy is produced than consumed. In some states and utility territories, customers are also reimbursed by the electric utility for net excess generation on a periodic basis.
Forty-three states, Puerto Rico and the District of Columbia have adopted some form of net metering. Each of the states where we currently serve customers has adopted some form of a net metering policy. In 2013, however, net metering programs were subject to regulatory scrutiny in some states, such as Arizona, California, Colorado, Idaho and Louisiana. Generally, the programs were upheld in their current form, though some were subject to minor modification and others, including California, have been designated for additional regulatory review in the next few years. In California, for example, the current net metering rules, as applied to the state’s three large investor-owned utilities (San Diego Gas and Electric Company, Southern California Edison Company and Pacific Gas and Electric Company), would generally be grandfathered for a period of 20 years, but only for systems installed prior to the earlier of July 1, 2017 or the date the applicable utility reaches its statutory net metering cap. This net metering cap is measured based on the nameplate capacity of net metered systems within the applicable utility’s service territory. Currently, the net metering cap for the three large investor-owned utilities are: 607 megawatts for San Diego Gas and Electric Company; 2,240 megawatts for Southern California Edison Company; and 2,409 megawatts for Pacific Gas and Electric Company. Once the net metering cap is reached for one of the three investor-owned utilities, customers of that utility seeking to net meter will be required to take service under the new net metering tariff. As of June 30, 2014, none of these investor-owned utilities had reached 50% of its net metering cap. The statute providing the current caps also provides that, once the new net metering rules are effective, there will be no net metering caps applied to these utilities.
Once the current net metering tariff is no longer available in California, it is unclear whether net metering customers will enjoy the same rate of credit for exporting electricity to the grid and monthly fees that apply only to net metering customers could be imposed.
If net metering caps in certain jurisdictions are reached while they are still in effect, or if the value of the credit that customers receive for net metering is significantly reduced, future customers may be unable to recognize the same level of cost savings associated with net metering that current customers enjoy. The absence of favorable net metering policies or of net metering entirely, or the imposition of new charges that only or disproportionately impact customers that use net metering would significantly limit customer demand for our solar energy systems and the electricity they generate and could adversely impact our business, results of operations and future growth.
 
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Technical and regulatory limitations may significantly reduce our ability to sell electricity from our solar energy systems in certain markets.
Technical and regulatory limits may curb our growth in certain key markets. For example, the Federal Energy Regulatory Commission, in promulgating the first form small generator interconnection procedures, recommended limiting customer-sited intermittent generation resources, such as our solar energy systems, to a certain percentage of peak load on a given electrical feeder circuit. Similar limits have been adopted by many states as a de facto standard and could constrain our ability to market to customers in certain geographic areas where the concentration of solar installations exceeds this limit. For example, Hawaiian electric utilities have adopted certain policies that limit distributed electricity generation in certain geographic areas. While these limits have constrained our growth in Hawaii, legislative and regulatory developments in Hawaii have generally allowed distributed electricity generation penetration beyond the electric utility imposed limitations. Future revisions, however, could result in limitations on deployment of solar energy systems in Hawaii, which accounted for approximately 15% of our total installations as of June 30, 2014 and would negatively impact our business. Furthermore, in certain areas, we benefit from policies that allow for expedited or simplified procedures related to connecting solar energy systems to the power grid. If such procedures are changed or cease to be available, our ability to sell the electricity generated by solar energy systems we install may be adversely impacted. As adoption of solar distributed generation rises along with the commercial operation of utility scale solar generation in key markets such as California, the amount of solar energy being fed into the power grid will surpass the amount planned for relative to the amount of aggregate demand. Some traditional utilities claim that in less than five years, solar generation resources may reach a level capable of producing an over-generation situation, which may require some solar generation resources to be curtailed to maintain operation of the grid. While the prospect of such curtailment is somewhat speculative, the adverse effects of such curtailment without compensation could adversely impact our business, results of operations and future growth.
We are not currently regulated as an electric utility under applicable law, but we may be subject to regulation as an electric utility in the future.
We are not regulated as an electric utility in any of the markets in which we currently operate. As a result, we are not subject to the various federal, state and local standards, restrictions and regulatory requirements applicable to traditional utilities. Any federal, state, or local regulations that cause us to be treated as an electric utility, or to otherwise be subject to a similar regulatory regime of commission-approved operating tariffs, rate limitations, and related mandatory provisions, could place significant restrictions on our ability to operate our business and execute our business plan by prohibiting, restricting or otherwise regulating our sale of electricity. If we were subject to the same state or federal regulatory authorities as public electric utilities in the United States or if new regulatory bodies were established to oversee our business in the United States, then our operating costs would materially increase.
Our business depends in part on the regulatory treatment of third-party owned solar energy systems.
Retail sales of electricity by non-utilities such as us face regulatory hurdles in some states and jurisdictions, including states and jurisdictions that we intend to enter where the laws and regulatory policies have not historically embraced competition to the service provided by the incumbent, vertically integrated electric utility. Some of the principal challenges pertain to whether
 
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non-customer owned systems qualify for the same levels of rebates or other non-tax incentives available for customer-owned solar energy systems, whether third-party owned systems are eligible at all for these incentives and whether third-party owned systems are eligible for net metering and the associated significant cost savings. Furthermore, in some states and utility territories third parties are limited in the way that they may deliver solar to their customers. In jurisdictions such as Arizona, Florida, Georgia, Iowa, Kentucky, North Carolina and Oklahoma and in Los Angeles, California, laws have been interpreted to prohibit the sale of electricity pursuant to our standard power purchase agreement, leading us and other residential solar energy system providers to use leases in lieu of power purchase agreements. Changes in law, reductions in, eliminations of or additional application requirements for, these benefits could reduce demand for our systems, adversely impact our access to capital and could cause us to increase the price we charge our customers for energy.
If the Internal Revenue Service makes a determination that the fair market value of our solar energy systems is materially lower than what we have reported in our fund tax returns, we may have to pay significant amounts to our investment funds, to our fund investors and/or the U.S. government. Such determinations could have a material adverse effect on our business, financial condition and prospects.
We report in our fund tax returns and we and our fund investors claim the ITC based on the fair market value of our solar energy systems. While the Internal Revenue Service has not audited the appraisals or fair market value determinations of any of our ITC investment funds to date, scrutiny with respect to fair market value determinations has increased industry-wide in recent years. If the Internal Revenue Service were to review the fair market value that we used to establish our basis for claiming ITCs on audit and determine that the ITCs previously claimed should be reduced, we would owe certain of our investment funds or our fund investors an amount equal to 30% of the investor’s share of the difference between the fair market value used to establish our basis for claiming ITCs and the adjusted fair market value determined by the Internal Revenue Service upon audit, plus any costs and expenses associated with a challenge to that fair market value, plus a gross up to pay for additional taxes. We could also be subject to tax liabilities, including interest and penalties based on our share of claimed ITCs. To date, we have not been required to make such payments under any of our investment funds.
Separate from the Internal Revenue Service fair market value determination for purposes of ITCs, the U.S. Treasury Department has issued subpoenas related to its cash grant program and reviewed the fair market value determinations of a number of other significant participants in residential solar investment funds. Although we were not a target of this investigation, after discussions with the U.S. Treasury Department in early 2013, we accepted approximately $2.5 million less in cash grant payments than we had originally anticipated, a reduction of approximately 12%, which reduction affected a single investment fund. Although we were not obligated to make any payments to the investor in such fund, this resulted in a reduction of the fund investor’s overall investment by approximately $1.0 million. We have no other existing cash grant investment funds as of the date of this prospectus, but if we were to enter into such funds in the future we may be required to engage in further discussions with, or otherwise be subject to investigation by, the U.S. Treasury Department in relation to applications for cash grants made by such funds.
 
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Our ability to provide solar energy systems to customers on an economically viable basis depends on our ability to finance these systems with fund investors who require particular tax and other benefits.
Solar energy systems that began construction or satisfied a safe harbor by incurring eligible project costs prior to the end of 2011 were eligible to receive a 30% federal cash grant paid by the U.S. Treasury Department under Section 1603 of the “American Recovery and Reinvestment Act of 2009,” or the U.S. Treasury grant. Substantially all of our solar energy systems installed to date have been eligible for ITCs or U.S. Treasury grants, as well as accelerated depreciation benefits. We have relied on, and will continue to rely on, financing structures that monetize a substantial portion of those benefits and provide financing for our solar energy systems. If, for any reason, we were unable to continue to monetize those benefits through these arrangements, we may be unable to provide solar energy systems for new customers and maintain solar energy systems for new and existing customers on an economically viable basis.
The availability of this tax-advantaged financing depends upon many factors, including:
 
 	•	 	our ability to compete with other renewable energy companies for the limited number of potential investment fund investors, each of which has limited funds and limited appetite for the tax benefits associated with these financings;	
 
 	•	 	the state of financial and credit markets;	
 
 	•	 	changes in the legal or tax risks associated with these financings; and	
 
 	•	 	non-renewal of these incentives or decreases in the associated benefits.	
Solar energy system owners are currently allowed to claim a tax credit that is equal to 30% of the system’s eligible tax basis, which is generally the fair market value of the system. By statute, this tax credit is scheduled to decrease to 10% on January 1, 2017. Moreover, potential fund investors must remain satisfied that the structures we offer qualify for the tax benefits associated with solar energy systems available to these investors, which depends both on the investors’ assessment of tax law and the absence of any unfavorable interpretations of that law. Changes in existing law and interpretations by the Internal Revenue Service and the courts could reduce the willingness of fund investors to invest in funds associated with these solar energy system investments. We cannot assure you that this type of financing will be available to us. Alternatively, new investment fund structures or other financing mechanisms may become available, and if we are unable to take advantage of these fund structures and financing mechanisms it may place us at a competitive disadvantage. If, for any reason, we are unable to finance solar energy systems through tax-advantaged structures or if we are unable to realize or monetize depreciation benefits, or if we are otherwise unable to structure investment funds in ways that are both attractive to investors and allow us to provide desirable pricing to customers, we may no longer be able to provide solar energy systems to new customers on an economically viable basis. This would have a material adverse effect on our business, financial condition, results of operations and prospects.
Rising interest rates could adversely impact our business.
Changes in interest rates could have an adverse impact on our business by increasing our cost of capital. For example, rising interest rates would increase our cost of capital and may negatively impact our ability to secure financing on favorable terms needed to build our solar energy systems.
 
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The majority of our cash flows to date have been from customer contracts that have been partially monetized under various investment fund structures. One of the components of this monetization is the present value of the payment streams from the customers who enter into these contracts. If the rate of return required by the fund investor rises as a result of a rise in interest rates, the present value of the customer payment stream and the total value that we are able to derive from monetizing the payment stream will each be reduced. Interest rates are at historically low levels, partially as a result of intervention by the U.S. Federal Reserve. The Federal Reserve has taken actions to begin the tapering off of this intervention and should these actions continue, it is likely that interest rates will rise, our costs of capital will increase and our ability to secure financing could be impeded. Rising interest rates could harm our business and financial condition.
Our investment funds contain arrangements which provide for priority distributions to fund investors until they receive their targeted rates of return. In addition, under the terms of certain of our investment funds, we may be required to make payments to the investors if certain tax benefits that are allocated to such investors are not realized as expected. Our financial condition may be adversely impacted if a fund is required to make these priority distributions for a longer period than anticipated to achieve the investors’ targeted rates of return or if we are required to make any tax related payments.
Our fund investors expect returns partially in the form of cash and, to enable such returns, our investment funds contain terms that contractually require the funds to make priority distributions to the fund investor, to the extent cash is available, until it achieves its targeted rate of return. The amounts of potential future distributions under these arrangements depends on the amounts and timing of receipt of cash flows into the investment fund, almost all of which is generated from customer payments related to solar energy systems that have been previously purchased (or leased, as applicable) by such fund. If such cash flows are lower than expected, the priority distributions to the investor may continue for longer than initially anticipated. Additionally, certain of our investment funds require that, under certain circumstances, we forego distributions from the fund that we are otherwise contractually entitled to so that such distributions can be redirected to the fund investor until it achieves the targeted return.
Our fund investors also expect returns partially in the form of tax benefits and, to enable such returns, our investment funds contain terms that contractually require us to make payments to the funds that are then used to make payments to the fund investor in certain circumstances so that the fund investor receives value equivalent to the tax benefits it expected to receive when entering into the transaction. The amounts of potential tax payments under these arrangements depend on the tax benefits that accrue to such investors from the funds’ activities.
Due to uncertainties associated with estimating the timing and amounts of these cash distributions and allocations of tax benefits to such investors, we cannot determine the potential maximum future impact on our cash flows or payments that we could have to make under these arrangements. We may agree to similar terms in the future if market conditions require it. Any significant payments that we may be required to make or distributions to us that are relinquished as a result of these arrangements could adversely affect our financial condition.
 
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We may incur substantially more debt or take other actions that could restrict our ability to pursue our business strategies.
In September 2014, we entered into an aggregation credit facility pursuant to which we may borrow up to an aggregate of $350 million and, subject to certain conditions, up to an aggregate of $200 million in additional borrowings. We are also party to revolving lines of credit with Vivint that allow us to incur from time to time up to $70.0 million in revolver borrowings and as of June 30, 2014, approximately $18.5 million of borrowing capacity was remaining under the revolving lines of credit. The credit facility restricts our ability to dispose of assets, incur indebtedness, incur liens, pay dividends or make other distributions to holders of our capital stock, repurchase our capital stock, make specified investments or engage in transactions with our affiliates. We and our subsidiaries may incur substantial additional debt in the future and any debt instrument we enter into in the future may contain similar restrictions. In addition, certain of our affiliates, including Vivint, are and may in the future be restricted in engaging in transactions with us pursuant to the terms of the instruments governing indebtedness incurred by them. These restrictions could inhibit our ability to pursue our business strategies. Furthermore, if we default on one of our debt instruments, and such event of default is not cured or waived, the lenders could terminate commitments to lend and cause all amounts outstanding with respect to the debt to be due and payable immediately, which in turn could result in cross acceleration under other debt instruments. Our assets and cash flow may not be sufficient to fully repay borrowings under all of our outstanding debt instruments if some or all of these instruments are accelerated upon a default.
Furthermore, there is no assurance that we will be able to enter into new debt instruments on acceptable terms. If we are unable to satisfy financial covenants and other terms under existing or new instruments or obtain waivers or forbearance from our lenders or if we are unable to obtain refinancing or new financings for our working capital, equipment and other needs on acceptable terms if and when needed, our business would be adversely affected.
Our business is concentrated in certain markets, putting us at risk of region specific disruptions.
As of June 30, 2014, approximately 53% and 15% of our total installations were in California and Hawaii, respectively, and 21 of our 37 offices were located in these states. In addition, we expect much of our near-term future growth to occur in California, further concentrating our customer base and operational infrastructure. Accordingly, our business and results of operations are particularly susceptible to adverse economic, regulatory, political, weather and other conditions in such markets and in other markets that may become similarly concentrated.
It is difficult to evaluate our business and prospects due to our limited operating history.
Since our formation in 2011, we have focused our efforts exclusively on the sales, financing, engineering, installation, maintenance and monitoring of solar energy systems for residential customers. We may be unsuccessful in significantly broadening our customer base through installation of solar energy systems within our current markets or in new markets we may enter. Our limited operating history, combined with the rapidly evolving and competitive nature of our industry, may not provide an adequate basis for you to evaluate our operating and financial results and business prospects. In addition, we have limited insight into emerging trends that may adversely impact our business, prospects and operating results.
 
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Additionally, due to our limited operating history, we do not have empirical evidence of the effect of our systems on the resale value of our customers’ houses. Due to the length of our customer contracts, the system deployed on a customer’s roof may be outdated prior to the expiration of the term of the customer contract reducing the likelihood of renewal of our contracts at the end of the 20-year term, and possibly increasing the occurrence of defaults. This could have an adverse effect on our business, financial condition, results of operations and cash flow. As a result, our limited operating history may impair our ability to accurately forecast our future performance and to invest accordingly.
A material weakness in our internal control over financial reporting relating to inadequate financial statement preparation and review procedures was identified in connection with the preparation of our consolidated financial statements and resulted in the restatement of certain of our financial statements.
In connection with the preparation, audits and interim reviews of our consolidated financial statements, we and our independent registered public accounting firm identified a material weakness in internal control over financial reporting. This material weakness was further evidenced by errors discovered during the preparation and review of our consolidated financial statements as of and for the six months ended June 30, 2014 which resulted in the restatement of our consolidated financial statements as of and for the year ended December 31, 2013 and as of and for the three months ended March 31, 2014. These errors included, but were not limited to: (1) incorrectly accounting for income taxes, (2) incorrect inputs in the HLBV method of attributing net income or loss to non-controlling interests and redeemable non-controlling interests and (3) the incorrect classification of paid-in-kind interest in our statement of cash flows.
Under standards established by the Public Company Accounting Oversight Board, a material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis. This material weakness resulted from several control deficiencies.
Specifically and in addition to the errors that resulted in the restatement discussed above, we and our independent registered public accounting firm identified a number of material errors and other audit adjustments and determined that we did not design and implement sufficient controls and processes and did not have a sufficient number of qualified accounting and finance personnel. Additionally, the nature of our investment funds increases the complexity of our accounting for the allocation of net income (loss) between our stockholders and non-controlling interests under the HLBV method and the calculation of our tax provision. As we enter into additional investment funds, which may have contractual provisions different from those of our existing funds, the calculation under the HLBV method and the calculation of our tax provision could become increasingly complicated. This additional complexity could increase the chance that we experience additional errors in the future, particularly because we have a material weakness in internal controls. In addition, our need to devote our resources to addressing this complexity could delay or prolong our remediation efforts and thereby prolong the existence of the material weakness. As a result, we and our independent registered public accounting firm determined that we did not have adequate procedures and controls and adequate personnel to ensure that accurate financial statements could be prepared on a timely basis.
 
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To remediate this material weakness, we believe that we must continue to add qualified accounting, finance and tax personnel, formalize and implement written policies and procedures for the review of account analyses, tax provisions, reconciliations and journal entries, and implement and improve systems to automate certain financial reporting processes and to improve efficiency and accuracy.
We have begun taking numerous steps and plan to take additional steps to remediate the underlying causes of the material weakness. The actions that we are taking are subject to ongoing senior management review as well as audit committee oversight. We cannot estimate how long it will take to remediate the material weakness, although we expect it will take at least a year and may take more than a year, and our initiatives may not prove to be successful in remediating this material weakness.
If in future periods we determine that this material weakness has not been remediated or we identify other material weaknesses in internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective, which could result in the loss of investor confidence. In addition, to date, the audit of our consolidated financial statements by our independent registered public accounting firm has included a consideration of internal control over financial reporting as a basis of designing their audit procedures, but not for the purpose of expressing an opinion on the effectiveness of our internal controls over financial reporting. When we cease to be an emerging growth company we will be required to have our independent registered accounting firm perform such an evaluation, and additional material weaknesses or other control deficiencies may be identified.
If we are unable to successfully remediate our current material weakness or avoid or remediate any future material weakness, our stock price may be adversely affected and we may be unable to maintain compliance with applicable stock exchange listing requirements.
We have incurred operating losses and may be unable to achieve or sustain profitability in the future.
We have incurred operating losses since our inception. We incurred net losses of $56.5 million and $76.2 million for the year ended December 31, 2013 and the six months ended June 30, 2014, respectively. We expect to continue to incur net losses from operations as we increase our spending to finance the expansion of our operations, expand our installation , engineering, administrative, sales and marketing staffs, and implement internal systems and infrastructure to support our growth. In addition, as a public company, we will incur significant additional legal, accounting and other expenses that we did not incur as a private company. We do not know whether our revenue will grow rapidly enough to absorb these costs, and our limited operating history makes it difficult to assess the extent of these expenses or their impact on our operating results. Our ability to achieve profitability depends on a number of factors, including:
 
 	•	 	growing our customer base;	
 
 	•	 	finding investors willing to invest in our investment funds;	
 
 	•	 	maintaining and further lowering our cost of capital;	
 
 	•	 	reducing the cost of components for our solar energy systems; and	
 
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 	•	 	reducing our operating costs by optimizing our sales, design and installation processes and supply chain logistics.	
Even if we do achieve profitability, we may be unable to sustain or increase our profitability in the future.
Substantially all of our business is conducted primarily using one channel, direct-selling.
While we are in the process of evaluating different distribution channels, currently substantially all of our business is conducted using direct-selling. We compete against companies that sell solar energy systems to customers through a number of distribution channels, including homebuilders, home improvement stores, large construction, electrical and roofing companies and other third parties and companies that access customers through relationships with third parties in addition to other direct-selling companies. This single distribution channel may place us at a disadvantage with consumers who prefer to purchase products through these other distribution channels. Additionally, we are vulnerable to changes in laws related to direct marketing as regulations have limited unsolicited residential sales calls and may impose additional restrictions. If additional laws affecting direct marketing are passed in the markets in which we operate, it would take time to train our sales force to comply with such laws, and we may be exposed to fines or other penalties for violations of such laws. If we fail to compete effectively through our direct-selling efforts or are not successful in executing our strategy to sell our solar energy systems through other channels, our financial condition, results of operations and growth prospects will be adversely affected.
We are highly dependent on our ability to attract, train and retain an effective sales force.
The success of our direct-selling channel efforts depends upon the recruitment, retention and motivation of a large number of sales personnel to compensate for a high turnover rate among sales personnel, which is a common characteristic of a direct-selling business. For example, approximately 43% of the sales force on January 1, 2013, were no longer providing services to us by the end of the year. In order to grow our business, we need to recruit, train and retain sales personnel on a continuing basis. Historically, we have recruited a large portion of our sales personnel from our sister company, Vivint. In the future, we expect that we will need to recruit greater numbers of our sales personnel from other sources and we may be unable to successfully do so.
Sales personnel are attracted to direct-selling by competitive earnings opportunities and so direct-sellers typically compete for sales personnel by providing a more competitive earnings opportunity than that offered by the competition. Competitors devote substantial effort to determining the effectiveness of such incentives so that they can invest in incentives that are the most cost effective or produce the best return on incentive. For example, we have historically compensated our sales personnel on a commission basis, based on the size of the solar energy systems they sell. Some sales personnel may prefer a compensation structure that also includes a salary and equity incentive component. We may need to adjust our compensation model to include such components, and these adjustments could adversely impact our operating results and financial performance.
 
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In addition to our sales compensation model, our ability to recruit, train and retain effective sales personnel could be harmed by additional factors, including:
 
 	•	 	any adverse publicity regarding us, our solar energy systems, our distribution channel, or our industry;	
 
 	•	 	lack of interest in, or the technical failure of, our solar energy systems;	
 
 	•	 	lack of a compelling product or income opportunity that generates interest for potential new sales personnel, or perception that other product or income opportunities are more attractive;	
 
 	•	 	any negative public perception of our sales personnel and direct-selling businesses in general;	
 
 	•	 	any regulatory actions or charges against us or others in our industry;	
 
 	•	 	general economic and business conditions; and	
 
 	•	 	potential saturation or maturity levels in a given market which could negatively impact our ability to attract and retain sales personnel in such market.	
We are subject to significant competition for the recruitment of sales personnel from other direct-selling companies and from other companies that sell solar energy systems in particular. It is therefore continually necessary to innovate and enhance our direct-selling and service model as well as to recruit and retain new sales personnel. If we are unable to do so, our business will be adversely affected.
A failure to hire and retain a sufficient number of employees in key functions would constrain our growth and our ability to timely complete our customers’ projects.
To support our growth, we need to hire, train, deploy, manage and retain a substantial number of skilled installers and electricians in the relevant markets. Competition for qualified personnel in our industry is increasing, particularly for skilled electricians and other personnel involved in the installation of solar energy systems. We also compete with the homebuilding and construction industries for skilled labor. As these industries seek to hire additional workers, our cost of labor may increase. In addition, we compensate our installers and electricians based on the number of solar energy systems they install. Companies with whom we compete to hire installers may offer an hourly rate or equity incentive component, which certain installers may prefer. Shortages of skilled labor could significantly delay a project or otherwise increase our costs. While we do not currently have any unionized employees, we have expanded, and may continue to expand, into areas such as the Northeast, where labor unions are more prevalent. The unionization of our labor force could also increase our labor costs.
Because we are a licensed electrical contractor in every jurisdiction in which we operate, we are required to employ licensed electricians. As we expand into new markets, we are required to hire and/or contract with seasoned licensed electricians in order for the company to qualify for the requisite state and local licenses. Because of the high demand for these seasoned licensed
 
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electricians, these individuals currently or in the future may demand greater compensation. In addition, our inability to attract and retain these qualifying electricians may adversely impact our ability to continue operations in current markets or expand into new areas.
If we cannot meet our hiring, retention and efficiency goals, we may be unable to complete our customers’ projects on time, in an acceptable manner or at all. Any significant failures in this regard would materially impair our growth, reputation, business and financial results. If we are required to pay higher compensation than we anticipate, these greater expenses may also adversely impact our financial results and the growth of our business.
Historically, we have only provided our offerings to residential customers, which could put us at a disadvantage relative to companies who also compete in other markets.
We have historically only provided our offerings to residential customers. We compete with companies who sell solar panels in the commercial and government markets, in addition to the residential market. While we are considering the option of expanding into markets outside of the residential market, such as the small business market, and while we believe that in the future we may have opportunities to expand our operations into other markets, there are no assurances that our design and installation systems will work for non-residential customers or that we will be able to compete successfully with companies with historical presences in such markets. Additionally, there is intense competition in the residential solar energy market in the markets in which we operate. As new entrants continue to enter into these markets, we may be unable to gain or maintain market share and we may be unable to compete with companies that earn revenue in both the residential market and non-residential markets.
We face competition from traditional regulated electric utilities, from less-regulated third party energy service providers and from new renewable energy companies.
The solar energy and renewable energy industries are both highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete with large traditional utilities. We believe that our primary competitors are the traditional utilities that supply electricity to our potential customers. Traditional utilities generally have substantially greater financial, technical, operational and other resources than we do. As a result, these competitors may be able to devote more resources to the research, development, promotion and sale of their products or respond more quickly to evolving industry standards and changes in market conditions than we can. Traditional utilities could also offer other value-added products or services that could help them to compete with us even if the cost of electricity they offer is higher than ours. In addition, a majority of utilities’ sources of electricity is non-solar, which may allow utilities to sell electricity more cheaply than electricity generated by our solar energy systems.
We also compete with companies that are not regulated like traditional utilities but that have access to the traditional utility electricity transmission and distribution infrastructure pursuant to state and local pro-competitive and consumer choice policies. These energy service companies are able to offer customers electricity supply-only solutions that are competitive with our solar energy system options on both price and usage of renewable energy technology while avoiding the long-term agreements and physical installations that our current fund-financed business model requires. This may limit our ability to attract new customers, particularly those who wish to avoid long-term contracts or have an aesthetic or other objection to putting solar panels on their roofs.
 
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We also compete with solar companies with business models that are similar to ours. In addition, we compete with solar companies in the downstream value chain of solar energy. For example, we face competition from purely finance driven organizations that acquire customers and then subcontract out the installation of solar energy systems, from installation businesses that seek financing from external parties, from large construction companies and utilities, and increasingly from sophisticated electrical and roofing companies. Some of these competitors specialize in the residential solar energy market, and some may provide energy at lower costs than we do. Further, some of our competitors are integrating vertically in order to ensure supply and to control costs. Many of our competitors also have significant brand name recognition and have extensive knowledge of our target markets. For us to remain competitive, we must distinguish ourselves from our competitors by offering an integrated approach that successfully competes with each level of products and services offered by our competitors at various points in the value chain. If our competitors develop an integrated approach similar to ours including sales, financing, engineering, manufacturing, installation, maintenance and monitoring services, this will reduce our marketplace differentiation.
As the solar industry grows and evolves, we will also face new competitors who are not currently in the market. Our industry is characterized by low technological barriers to entry and well-capitalized companies could choose to enter the market and compete with us. Our failure to adapt to changing market conditions and to compete successfully with existing or new competitors will limit our growth and will have a material adverse effect on our business and prospects.
Developments in alternative technologies or improvements in distributed solar energy generation may materially adversely affect demand for our offerings.
Significant developments in alternative technologies, such as advances in other forms of distributed solar power generation, storage solutions such as batteries, the widespread use or adoption of fuel cells for residential or commercial properties or improvements in other forms of centralized power production may materially and adversely affect our business and prospects in ways we do not currently anticipate. Any failure by us to adopt new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay deployment of our solar energy systems, which could result in product obsolescence, the loss of competitiveness of our systems, decreased revenue and a loss of market share to competitors.
We depend on a limited number of suppliers of solar energy system components and technologies to adequately meet anticipated demand for our solar energy systems. Due to the limited number of suppliers in our industry, the acquisition of any of these suppliers by a competitor or any shortage, delay, price change, imposition of tariffs or duties or other limitation in our ability to obtain components or technologies we use could result in sales and installation delays, cancellations and loss of market share.
We purchase solar panels, inverters and other system components from a limited number of suppliers, making us susceptible to quality issues, shortages and price changes. In 2013, Trina Solar Limited and Yingli Green Energy Americas, Inc. accounted for substantially all of our solar photovoltaic module purchases and Enphase Energy, Inc. accounted for all of our inverter purchases. If we fail to develop, maintain and expand our relationships with these or other suppliers, our ability to adequately meet anticipated demand for our solar energy systems may be adversely affected, or we may only be able to offer our systems at higher costs or after delays. If
 
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one or more of the suppliers that we rely upon to meet anticipated demand ceases or reduces production due to its financial condition, acquisition by a competitor or otherwise, is unable to increase production as industry demand increases or is otherwise unable to allocate sufficient production to us, it may be difficult to quickly identify alternate suppliers or to qualify alternative products on commercially reasonable terms, and our ability to satisfy this demand may be adversely affected. There are a limited number of suppliers of solar energy system components and technologies. While we believe there are other sources of supply for these products available, transitioning to a new supplier may result in additional costs and delays in acquiring our solar products and deploying our systems. These issues could harm our business or financial performance.
In addition, the acquisition of a component supplier or technology provider by one of our competitors could limit our access to such components or technologies and require significant redesigns of our solar energy systems or installation procedures and have a material adverse effect on our business. For example, the recent acquisition of Zep Solar, Inc., who sold us virtually all of the racking systems used in our hardware in 2013, by one of our competitors and the resulting limitation in our ability to acquire Zep Solar, Inc. products required us to redesign certain aspects of our systems to accommodate alternative racking hardware. While we are in the process of diversifying our racking providers, it is possible that sales and installation delays, cancellations and loss of market share may occur before we complete our transition to alternate suppliers. These risks are compounded by the fact that some of our investment funds require the use of designated equipment, and our inability to obtain any such required equipment could limit our ability to finance solar energy systems that we intend to place in those funds.
There have also been periods of industry-wide shortages of key components, including solar panels, in times of rapid industry growth. The manufacturing infrastructure for some of these components has a long lead-time, requires significant capital investment and relies on the continued availability of key commodity materials, potentially resulting in an inability to meet demand for these components. The solar industry is currently experiencing rapid growth and, as a result, shortages of key components, including solar panels, may be more likely to occur, which in turn may result in price increases for such components. Even if industry-wide shortages do not occur, suppliers may decide to allocate key components with high demand or insufficient production capacity to more profitable customers, customers with long-term supply agreements or customers other than us and our supply of such components may be reduced as a result.
Typically, we purchase the components for our solar energy systems on an as-needed basis and do not operate under long-term supply agreements. All of these purchases under these purchase orders are denominated in U.S. dollars. Since our revenue is also generated in U.S. dollars we are mostly insulated from currency fluctuations. However, since our suppliers often incur a significant amount of their costs by purchasing raw materials and generating operating expenses in foreign currencies, if the value of the U.S. dollar depreciates significantly or for a prolonged period of time against these other currencies this may cause our suppliers to raise the prices they charge us, which could harm our financial results. Since we purchase almost all of the solar photovoltaic modules we use from China, we are particularly exposed to exchange rate risk from increases in the value of the Chinese Renminbi. In addition, the U.S. government has recently imposed tariffs on solar cells manufactured in China and is investigating pricing practices concerning solar panels manufactured in China and Taiwan that contain solar cells produced in other countries, at the conclusion of which it could impose additional tariffs or duties. Any such tariffs or duties, or
 
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shortages, delays, price changes or other limitation in our ability to obtain components or technologies we use could limit our growth, cause cancellations or adversely affect our profitability, and result in loss of market share and damage to our brand.
Our operating results may fluctuate from quarter to quarter, which could make our future performance difficult to predict and could cause our operating results for a particular period to fall below expectations, resulting in a severe decline in the price of our common stock.
Our quarterly operating results are difficult to predict and may fluctuate significantly in the future. We have experienced seasonal and quarterly fluctuations in the past. However, given that we are an early-stage company operating in a rapidly growing industry, the true extent of these fluctuations may have been masked by our recent growth rates and thus may not be readily apparent from our historical operating results and may be difficult to predict. For example, the amount of revenue we recognize in a given period from our customer contracts is dependent in part on the amount of energy generated by solar energy systems under such contracts. As a result, revenue derived from power purchase agreements is impacted by seasonally shorter daylight hours in winter months. In addition, our ability to install solar energy systems is impacted by weather, as for example during the winter months in the Northeastern United States. Such delays can impact the timing of when we can install and begin to generate revenue from solar energy systems. As such, our past quarterly operating results may not be good indicators of future performance.
In addition to the other risks described in this “Risk Factors” section, the following factors could cause our operating results to fluctuate:
 
 	•	 	the expiration or initiation of any rebates or incentives;	
 
 	•	 	significant fluctuations in customer demand for our offerings;	
 
 	•	 	our ability to complete installations in a timely manner;	
 
 	•	 	the availability and costs of suitable financing;	
 
 	•	 	the amount and timing of sales of SRECs;	
 
 	•	 	our ability to continue to expand our operations, and the amount and timing of expenditures related to this expansion;	
 
 	•	 	actual or anticipated changes in our growth rate relative to our competitors;	
 
 	•	 	announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments;	
 
 	•	 	changes in our pricing policies or terms or those of our competitors, including traditional utilities; and	
 
 	•	 	actual or anticipated developments in our competitors’ businesses or the competitive landscape.	
 
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For these or other reasons, the results of any prior quarterly or annual periods should not be relied upon as indications of our future performance. In addition, our actual revenue, key operating metrics and other operating results in future quarters may fall short of the expectations of investors and financial analysts, which could have an adverse effect on the trading price of our common stock.
Our business has benefited from the declining cost of solar panels, and our financial results may be harmed now that the cost of solar panels has stabilized and could increase in the future.
The declining cost of solar panels and the raw materials necessary to manufacture them has been a key driver in the price we charge for electricity and customer adoption of solar energy. According to industry experts, solar panel and raw material prices are not expected to continue to decline at the same rate as they have over the past several years. In addition, growth in the solar industry and the resulting increase in demand for solar panels and the raw materials necessary to manufacture them may also put upward pressure on prices. The resulting prices could slow our growth and cause our financial results to suffer. In addition, in the past we have purchased virtually all of the solar panels used in our solar energy systems from manufacturers based in China which have benefited from favorable governmental policies by the Chinese government. If this governmental support were to decrease or be eliminated, our ability to purchase these products on competitive terms or to access specialized technologies from China could be restricted. Even if this support were to continue, the U.S. government could impose additional tariffs on solar cells manufactured in China. In 2012, the U.S. government imposed anti-dumping tariffs on Chinese crystalline silicon photovoltaic cells on a manufacturer specific basis with rates ranging from approximately 18.3% to 250.0%, and applicable countervailing duty rates ranging from approximately 14.8% to 16.0%. In January 2014, the U.S. government broadened its investigation of Chinese pricing practices in this area to include solar panels and modules produced in China containing solar cells manufactured in other countries. On June 10, 2014, the U.S. government issued a preliminary determination of countervailing subsidies by China and has proposed duties ranging from 18.6% to 35.2% on Chinese solar companies importing certain solar products into the United States, including our solar panel suppliers. On July 25, 2014, the U.S. government issued a separate preliminary determination imposing antidumping duties on imports of certain solar products from China. Although the exact applicability remains unclear, these duties are at rates of 26.3% to 165% for affected Chinese products, including our solar panel supplier Trina Solar. The U.S. government issued a separate preliminary determination relating to imports of solar products from Taiwan, with duties at rates from 20.9% to 27.6% for affected Taiwanese products (although we do not currently purchase Taiwanese products). To the extent that the U.S. government makes a final determination that U.S. market participants experience harm from these Chinese pricing practices, such solar panels and modules could become subject to these or additional tariffs. These combined tariffs would make such solar cells less competitively priced in the United States, and the Chinese and Taiwanese manufacturers may choose to limit the amount of solar equipment they sell into the United States. As a result, it may be easier for solar cell manufacturers located outside of China or Taiwan to increase the prices of the solar cells they sell into the United States. If we are required to pay higher prices, accept less favorable terms or purchase solar panels or other system components from alternative, higher-priced sources, our financial results will be adversely affected.
 
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The residual value of our solar energy systems at the end of the associated term of the lease or power purchase agreement may be lower than projected today and adversely affect our financial performance and valuation.
We intend to amortize the costs of our solar energy systems over 30 years for accounting purposes, which exceeds the period of the component warranties and the corresponding payment streams from our contracts with our customers. If we incur repair and maintenance costs on these systems after the warranties have expired and if they then fail or malfunction we will be liable for the expense of repairing these systems without a chance of recovery from our suppliers. In addition, we typically bear the cost of removing the solar energy systems at the end of the term of the customer contract if the customer does not renew his or her contract at the end of its term. Furthermore, it is difficult to predict how future environmental regulations may affect the costs associated with the removal, disposal or recycling of our solar energy systems. If the residual value of the systems is less than we expect at the end of the customer contract, after giving effect to any associated removal and redeployment costs, we may be required to accelerate all or some of the remaining unamortized costs. This could materially impair our future operating results and estimated retained value.
We act as the licensed general contractor for our customers and are subject to risks associated with construction, cost overruns, delays, regulatory compliance and other contingencies, any of which could have a material adverse effect on our business and results of operations.
We are a licensed contractor in every market we service and we are responsible for every customer installation. We are the general contractor, electrician, construction manager and installer for all our solar energy systems. We may be liable to customers for any damage we cause to their home, belongings or property during the installation of our systems. For example, we penetrate our customers’ roofs during the installation process and may incur liability for the failure to adequately weatherproof such penetrations following the completion of installation of solar energy systems. In addition, because the solar energy systems we deploy are high-voltage energy systems, we may incur liability for the failure to comply with electrical standards and manufacturer recommendations. Because our profit on a particular installation is based in part on assumptions as to the cost of such project, cost overruns, delays or other execution issues may cause us to not achieve our expected results or cover our costs for that project.
In addition, the installation of solar energy systems is subject to oversight and regulation in accordance with national, state and local laws and ordinances relating to building, fire and electrical codes, safety, environmental protection, utility interconnection and metering, and related matters. We also rely on certain of our employees to maintain professional licenses in many of the jurisdictions in which we operate, and our failure to employ properly licensed personnel could adversely affect our licensing status in those jurisdictions. It is difficult and costly to track the requirements of every authority having jurisdiction over our operations and our solar energy systems. Any new government regulations or utility policies pertaining to our systems, or changes to existing government regulations or utility policies pertaining to our systems, may result in significant additional expenses to us and our customers and, as a result, could cause a significant reduction in demand for our systems.
 
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Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant monetary penalties, operational delays and adverse publicity.
The installation of solar energy systems requires our employees to work at heights with complicated and potentially dangerous electrical systems. The evaluation and modification of buildings as part of the installation process requires our employees to work in locations that may contain potentially dangerous levels of asbestos, lead, mold or other materials known or believed to be hazardous to human health. We also maintain a fleet of more than 350 trucks and other vehicles to support our installers and operations. There is substantial risk of serious injury or death if proper safety procedures are not followed. Our operations are subject to regulation under the U.S. Occupational Safety and Health Act, or OSHA, the U.S. Department of Transportation, or DOT, and equivalent state laws. Changes to OSHA or DOT requirements, or stricter interpretation or enforcement of existing laws or regulations, could result in increased costs. If we fail to comply with applicable OSHA regulations, even if no work-related serious injury or death occurs, we may be subject to civil or criminal enforcement and be required to pay substantial penalties, incur significant capital expenditures or suspend or limit operations. Because our installation employees are compensated on a per project basis, they are incentivized to work more quickly than installers that are compensated on an hourly basis. While we have not experienced a high level of injuries to date, this incentive structure may result in higher injury rates than others in the industry and could accordingly expose us to increased liability. In the past, we have had workplace accidents and received citations from OSHA regulators for alleged safety violations, resulting in fines. Any such accidents, citations, violations, injuries or failure to comply with industry best practices may subject us to adverse publicity, damage our reputation and competitive position and adversely affect our business.
Problems with product quality or performance may cause us to incur expenses, may lower the residual value of our solar energy systems and may damage our market reputation and adversely affect our financial results.
We agree to maintain the solar energy systems installed on our customers’ homes during the length of the term of our customer contracts, which is typically 20 years. We are exposed to any liabilities arising from the systems’ failure to operate properly and are generally under an obligation to ensure that each system remains in good condition during the term of the agreement. As part of our operations and maintenance work, we provide a pass-through of the inverter and panel manufacturers’ warranty coverage to our customers, which generally range from 10 to 25 years. One of these third-party manufacturers could cease operations and no longer honor these warranties, leaving us to fulfill these potential obligations to our customers or to our fund investors without underlying warranty coverage. In most of our investment funds, the fund itself would bear this cost; however, in certain funds we would bear this cost with respect to such major equipment. Even if the investment fund bears the direct expense of such replacement equipment, we could suffer financial losses associated with a loss of production from the solar energy systems.
Beginning in 2014, we began structuring some customer contracts as solar energy system leases. To be competitive in the market our solar energy system leases contain a performance guarantee in favor of the lessee. Leases with performance guarantees require us to refund money to the lessee if the solar energy system fails to generate the minimum amount of electricity in a 12-month period. We may also suffer financial losses associated with such refunds if a performance guarantee payment is triggered.
 
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Although we have not had material claims in the past, we may incur material claims in the future. Our failure to accurately predict future claims could result in unexpected volatility in our financial condition. Because of the limited operating history of our solar energy systems, we have been required to make assumptions and apply judgments regarding a number of factors, including our anticipated rate of warranty claims, and the durability, performance and reliability of our solar energy systems. We have made these assumptions based on the historic performance of similar systems or on accelerated life cycle testing. Our assumptions could prove to be materially different from the actual performance of our systems, causing us to incur substantial expense to repair or replace defective solar energy systems in the future or to compensate customers for systems that do not meet their production guarantees. Equipment defects, serial defects or operational deficiencies also would reduce our revenue from power purchase agreements because the customer payments under such agreements are dependent on system production or require us to make refunds under the performance guarantees under our leases. Any widespread product failures or operating deficiencies may damage our market reputation and adversely impact our financial results.
We are responsible for providing maintenance, repair and billing on solar energy systems that are owned or leased by our investment funds on a fixed fee basis, and our financial performance could be adversely affected if our cost of providing such services is higher than we project.
We typically provide a five-year workmanship warranty to our investment funds for every system sold thereto. We are also generally obligated to cover the cost of maintenance, repair and billing on any solar energy systems that we sell or lease to our investment funds. We are subject to a maintenance services agreement under which we are required to operate and maintain the system, and perform customer billing services for a fixed fee that is calculated to cover our future expected maintenance and servicing costs of the solar energy systems in each investment fund over the term of the lease or power purchase agreement with the covered customers. If our solar energy systems require an above-average amount of repairs or if the cost of repairing systems were higher than our estimate, we would need to perform such repairs without additional compensation. If our solar energy systems, a majority of which are located in California and Hawaii, are damaged in the event of a natural disaster beyond our control, such as an earthquake, tsunami or hurricane, losses could be outside the scope of insurance policies or exceed insurance policy limits, and we could incur unforeseen costs that could harm our business and financial condition. We may also incur significant costs for taking other actions in preparation for, or in reaction to, such events. When required to do so under the terms of a particular investment fund, we purchase property and business interruption insurance with industry standard coverage and limits approved by the investor’s third-party insurance advisors to hedge against such risk, but such coverage may not cover our losses, and we have not acquired such coverage for all of our funds.
Product liability claims against us or accidents could result in adverse publicity and potentially significant monetary damages.
If one of our solar energy systems injured someone, then we could be exposed to product liability claims. In addition, it is possible that our products could injure our customer or third parties, or that our products could cause property damage as a result of product malfunctions, defects, improper installation, fire or other causes. We rely on our general liability insurance to cover product liability claims. Any product liability claim we face could be expensive to defend and divert
 
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management’s attention. The successful assertion of product liability claims against us could result in potentially significant monetary damages, penalties or fines, subject us to adverse publicity, damage our reputation and competitive position and adversely affect sales of our systems and other products. In addition, product liability claims, injuries, defects or other problems experienced by other companies in the residential solar industry could lead to unfavorable market conditions to the industry as a whole, and may have an adverse effect on our ability to attract new customers, thus affecting our growth and financial performance.
Failure by our component suppliers to use ethical business practices and comply with applicable laws and regulations may adversely affect our business.
We do not control our suppliers or their business practices. Accordingly, we cannot guarantee that they follow ethical business practices such as fair wage practices and compliance with environmental, safety and other local laws. A lack of demonstrated compliance could lead us to seek alternative suppliers, which could increase our costs and result in delayed delivery of our products, product shortages or other disruptions of our operations. Violation of labor or other laws by our suppliers or the divergence of a supplier’s labor or other practices from those generally accepted as ethical in the United States or other markets in which we do business could also attract negative publicity for us and harm our business.
Damage to our brand and reputation, or change or loss of use of our brand, would harm our business and results of operations.
We depend significantly on our reputation for high-quality products, best-in-class customer service and the brand name “Vivint Solar” to attract new customers and grow our business. If we fail to continue to deliver our solar energy systems within the planned timelines, if our offerings do not perform as anticipated or if we damage any of our customers’ properties or delay or cancel projects, our brand and reputation could be significantly impaired. Future technical improvements may allow us to offer lower prices or offer new technology to new customers; however, technical limitations in our current solar energy systems may prevent us from offering such lower prices or new technology to our existing customers. The inability of our current customers to benefit from technological improvements could cause our existing customers to lower the value they perceive our existing products offer and impair our brand and reputation.
We have focused particular attention on growing our direct sales force, leading us in some instances to take on candidates who we later determined did not fit our company culture. This has led to instances of customer complaints, some of which have affected our digital footprint on rating websites such as that for the Better Business Bureau. If we cannot manage our hiring and training processes to avoid these issues, our reputation may be harmed and our ability to attract new customers would suffer.
Given our past relationship with our sister company Vivint and the similarity in our names, customers may associate us with any problems experienced with Vivint, such as complaints with the Better Business Bureau. Because we have no control over Vivint, we may not be able to take remedial action to cure any issues Vivint has with its customers, and our brand and reputation may be harmed if we are mistaken for the same company.
In addition, if we were to no longer use, lose the right to continue to use, or if others use, the “Vivint Solar” brand, we could lose recognition in the marketplace among customers, suppliers
 
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and partners, which could affect our growth and financial performance, and would require financial and other investment, and management attention in new branding, which may not be as successful.
Marketplace confidence in our liquidity and long-term business prospects is important for building and maintaining our business.
Our financial condition, operating results and business prospects may suffer materially if we are unable to establish and maintain confidence about our liquidity and business prospects among consumers and within our industry. Our solar energy systems require ongoing maintenance and support. If we were to reduce operations, even years from now, buyers of our systems from years earlier might have difficulty in having us repair or service our systems, which remain our responsibility under the terms of our customer contracts. As a result, consumers may be less likely to purchase our solar energy systems now if they are uncertain that our business will succeed or that our operations will continue for many years. Similarly, suppliers and other third parties will be less likely to invest time and resources in developing business relationships with us if they are not convinced that our business will succeed. Accordingly, in order to build and maintain our business, we must maintain confidence among customers, suppliers and other parties in our liquidity and long-term business prospects. We may not succeed in our efforts to build this confidence.
If we fail to manage our recent and future growth effectively, we may be unable to execute our business plan, maintain high levels of customer service or adequately address competitive challenges.
We have experienced significant growth in recent periods with the cumulative capacity of our solar energy systems growing from 14.8 megawatts as of December 31, 2012 to 129.7 megawatts as of June 30, 2014, and we intend to continue to expand our business significantly within existing markets and in a number of new locations in the future. This growth has placed, and any future growth may place, a significant strain on our management, operational and financial infrastructure. In particular, we will be required to expand, train and manage our growing employee base and scale and otherwise improve our IT infrastructure in tandem with that headcount growth. Our management will also be required to maintain and expand our relationships with customers, suppliers and other third parties and attract new customers and suppliers, as well as manage multiple geographic locations.
In addition, our current and planned operations, personnel, IT and other systems and procedures might be inadequate to support our future growth and may require us to make additional unanticipated investment in our infrastructure. Our success and ability to further scale our business will depend, in part, on our ability to manage these changes in a cost-effective and efficient manner. If we cannot manage our growth, we may be unable to take advantage of market opportunities, execute our business strategies or respond to competitive pressures. This could also result in declines in quality or customer satisfaction, increased costs, difficulties in introducing new offerings or other operational difficulties. Any failure to effectively manage growth could adversely impact our business and reputation.
 
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We may not realize the anticipated benefits of past or future acquisitions, and integration of these acquisitions may disrupt our business and management.
We acquired Solmetric Corporation in January 2014 and in the future we may acquire additional companies, project pipelines, products or technologies or enter into joint ventures or other strategic initiatives. We may not realize the anticipated benefits of this acquisition or any other future acquisition, and any acquisition has numerous risks. These risks include the following:
 
 	•	 	difficulty in assimilating the operations and personnel of the acquired company;	
 
 	•	 	difficulty in effectively integrating the acquired technologies or products with our current technologies;	
 
 	•	 	difficulty in maintaining controls, procedures and policies during the transition and integration;	
 
 	•	 	disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues;	
 
 	•	 	difficulty integrating the acquired company’s accounting, management information and other administrative systems;	
 
 	•	 	inability to retain key technical and managerial personnel of the acquired business;	
 
 	•	 	inability to retain key customers, vendors and other business partners of the acquired business;	
 
 	•	 	inability to achieve the financial and strategic goals for the acquired and combined businesses;	
 
 	•	 	incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results;	
 
 	•	 	potential failure of the due diligence processes to identify significant issues with product quality, intellectual property infringement and other legal and financial liabilities, among other things;	
 
 	•	 	potential inability to assert that internal controls over financial reporting are effective; and	
 
 	•	 	potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions.	
Mergers and acquisitions of companies are inherently risky and, if we do not complete the integration of acquired businesses successfully and in a timely manner, we may not realize the anticipated benefits of the acquisitions to the extent anticipated, which could adversely affect our business, financial condition or results of operations.
 
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The loss of one or more members of our senior management or key employees may adversely affect our ability to implement our strategy.
We depend on our experienced management team, and the loss of one or more key executives could have a negative impact on our business. In particular, we are dependent on the services of our chief executive officer, Greg Butterfield. We also depend on our ability to retain and motivate key employees and attract qualified new employees. None of our key executives are bound by employment agreements for any specific term and we do not maintain key person life insurance policies on any of our executive officers. In addition, two-thirds of the outstanding options to purchase shares of our common stock granted to our key executives and other employees under our 2013 Omnibus Incentive Plan will vest if Blackstone receives a return on its invested capital at pre-established thresholds, subject to the employee’s continued service through the receipt of such return. While this offering would not itself constitute an event that would trigger vesting, subsequent sales by Blackstone of our common stock after we are public could result in the vesting of such options. As a result, the retention incentives associated with these options could lapse for all employees holding these options under our 2013 Omnibus Incentive Plan at the same time or times. This decrease in retention incentive could cause significant turnover after these options vest. We may be unable to replace key members of our management team and key employees if we lose their services. Integrating new employees into our team could prove disruptive to our operations, require substantial resources and management attention and ultimately prove unsuccessful. An inability to attract and retain sufficient managerial personnel who have critical industry experience and relationships could limit or delay our strategic efforts, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
The execution of our business plan and development strategy may be seriously harmed if integration of our senior management team is not successful.
Since August 2013, we have experienced and we may continue to experience significant changes in our senior management team. Specifically, eight members of our senior management team, including our chief executive officer and chief financial officer, have joined us since August 2013 and only one member of our senior management team has prior experience in the distributed solar energy industry. This lack of long-term experience working together and limited experience in the distributed solar energy industry may adversely impact our senior management team’s ability to effectively manage our business and accurately forecast our results, including revenue from our distributed solar energy systems and sales.
The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members and officers.
As a public company, we will be subject to the reporting requirements of the Exchange Act, the listing requirements of the New York Stock Exchange, or NYSE, and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results and maintain effective disclosure controls and procedures and internal control over financial reporting. To maintain and, if required, improve our disclosure controls and procedures and internal
 
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control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns which could harm our business and operating results. Although we have already hired additional employees to comply with these requirements, we may need to hire more employees in the future which will increase our costs and expenses. Moreover, our independent registered public accounting firm identified a material weakness in our internal control over financial reporting in connection with the preparation, audits and interim reviews of our consolidated financial statements, and if we fail to remediate this material weakness or, in the future, we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.
We also expect that being a public company will make it more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified executive officers and members of our board of directors, particularly to serve on our audit committee and compensation committee.
We may be subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies.
Third parties, including our competitors, may own patents or other intellectual property rights that cover aspects of our technology or business methods. Such parties may claim we have misappropriated, misused, violated or infringed third party intellectual property rights, and, if we gain greater recognition in the market, we face a higher risk of being the subject of claims that we have violated others’ intellectual property rights. Any claim that we violate a third party’s intellectual property rights, whether with or without merit, could be time-consuming, expensive to settle or litigate and could divert our management’s attention and other resources. If we do not successfully settle or defend an intellectual property claim, we could be liable for significant monetary damages and could be prohibited from continuing to use certain technology, business methods, content or brands. To avoid a prohibition, we could seek a license from third parties, which could require us to pay significant royalties, increasing our operating expenses. If a license is not available at all or not available on reasonable terms, we may be required to develop or license a non-violating alternative, either of which could require significant effort and expense. If we cannot license or develop a non-violating alternative, we would be forced to limit or stop sales of our offerings and may be unable to effectively compete. Any of these results would adversely affect our business, results of operations, financial condition and cash flows. To deter other companies from making intellectual property claims against us or to gain leverage in settlement negotiations, we may be forced to significantly increase the size of our intellectual property portfolio through internal efforts and acquisitions from third parties, both of which could require significant expenditures. However, a robust intellectual property portfolio may provide little or no deterrence, particularly for patent holding companies or other patent owners that have no relevant product revenues.
 
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We use “open source” software in our solutions, which may restrict how we distribute our offerings, require that we release the source code of certain software subject to open source licenses or subject us to possible litigation or other actions that could adversely affect our business.
We currently use in our solutions, and expect to continue to use in the future, software that is licensed under so-called “open source,” “free” or other similar licenses. Open source software is made available to the general public on an “as-is” basis under the terms of a non-negotiable license. We currently combine our proprietary software with open source software but not in a manner that we believe requires the release of the source code of our proprietary software to the public. We do not plan to integrate our proprietary software with open source software in ways that would require the release of the source code of our proprietary software to the public, however, our use and distribution of open source software may entail greater risks than use of third-party commercial software. Open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. In addition, if we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar offerings with lower development effort and time and ultimately could result in a loss of sales. We may also face claims alleging noncompliance with open source license terms or infringement or misappropriation of proprietary software. These claims could result in litigation, require us to purchase a costly license or require us to devote additional research and development resources to change our software, any of which would have a negative effect on our business and operating results. In addition, if the license terms for open source software that we use change, we may be forced to re-engineer our solutions, incur additional costs or discontinue the sale of our offerings if re-engineering could not be accomplished on a timely basis. Although we monitor our use of open source software to avoid subjecting our offerings to unintended conditions, few courts have interpreted open source licenses, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our offerings. We cannot guarantee that we have incorporated open source software in our software in a manner that will not subject us to liability, or in a manner that is consistent with our current policies and procedures.
The installation and operation of solar energy systems depends heavily on suitable solar and meteorological conditions. If meteorological conditions are unexpectedly unfavorable, the electricity production from our solar energy systems may be substantially below our expectations and our ability to timely deploy new systems may be adversely impacted.
The energy produced and revenue and cash receipts generated by a solar energy system depend on suitable solar, atmospheric and weather conditions, all of which are beyond our control. Furthermore, components of our systems, such as panels and inverters, could be damaged by severe weather, such as hailstorms or lightning. Although we maintain insurance to cover for many such casualty events, our investment funds would be obligated to bear the expense of repairing the damaged solar energy systems, sometimes subject to limitations based on our ability to successfully make warranty claims. Our economic model and projected returns on our systems require us to achieve certain production results from our systems and, in some cases, we guarantee these results for both our consumers and our investors. If the systems underperform for any reason, our financial results could suffer. Sustained unfavorable weather also could delay our installation of solar energy systems, leading to increased expenses and decreased revenue and
 
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cash receipts in the relevant periods. Weather patterns could change, making it harder to predict the average annual amount of sunlight striking each location where we install a solar energy system. This could make our solar energy systems less economical overall or make individual systems less economical. Any of these events or conditions could harm our business, financial condition, results of operations and prospects.
Disruptions to our solar monitoring systems could negatively impact our revenues and increase our expenses.
Our ability to accurately charge our customers for the energy produced by our solar energy systems depends on customers maintaining a broadband internet connection so that we may receive data regarding solar energy systems production from their home networks. We could incur significant expenses or disruptions of our operations in connection with failures of our solar monitoring systems, including failures of our customers’ home networks that would prevent us from accurately monitoring solar energy production. In addition, sophisticated hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of our systems. The costs to us to eliminate or alleviate viruses and bugs, or any problems associated with failures of our customers’ home networks could be significant, and the efforts to address these problems could result in interruptions, delays or cessation of service that may impede our sales, distribution or other critical functions. We have in the past experienced periods where some of our customers’ networks have been unavailable and, as a result, we have been forced to estimate the production of their solar energy systems. Such estimates may prove inaccurate and could cause us to underestimate the power being generated by our solar energy systems and undercharge our customers, thereby harming our results of operations.
We are exposed to the credit risk of our customers.
Our solar energy customers purchase energy or lease solar energy systems from us pursuant to one of two types of long-term contracts: a power purchase agreement or a lease. The power purchase agreement and lease terms are typically for 20 years, and require the customer to make monthly payments to us. Accordingly, we are subject to the credit risk of our customers. As of June 30, 2014, the average FICO score of our customers was approximately 750. As of June 30, 2014, customer defaults, in the aggregate, have been immaterial; however, we expect that the risk of customer defaults will increase as we grow our business. Due to the immaterial amount of customer defaults, our reserve for this exposure is minimal and our future exposure may exceed the amount of such reserves.
The Office of the Inspector General of the U.S. Department of Treasury has issued subpoenas to a number of significant participants in the rooftop solar energy installation industry and may take further action based on this ongoing investigation or for other reasons.
In July 2012, other companies that are significant participants in both the solar industry and the U.S. Treasury grant program received subpoenas from the U.S. Department of Treasury’s Office of the Inspector General to deliver certain documents in their possession related to their applications for U.S. Treasury grants and communications with certain other solar development companies or certain firms that appraise solar energy property for U.S. Treasury grant application purposes. The Inspector General is working with the Civil Division of the U.S. Department of
 
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Justice to investigate the administration and implementation of the U.S. Treasury grant program, including possible misrepresentations concerning the fair market value of the solar power systems submitted in grant applications by companies in the solar industry. While we have not been a direct target of this investigation to date, given our participation in the U.S. Treasury grant program, the Inspector General or the Department of Justice could broaden the investigation to include us. If it were broadened to include us, the period of time necessary to resolve the investigation would be uncertain, and the matter could require significant management and financial resources that could otherwise be devoted to the operation of our business. The Department of Justice could also decide to bring a civil action to recover amounts it believes were improperly paid to us. If it were successful in asserting this action, it could have a material adverse effect on our business, liquidity, financial condition and prospects.
A failure to comply with laws and regulations relating to our interactions with current or prospective residential customers could result in negative publicity, claims, investigations, and litigation, and adversely affect our financial performance.
Our business substantially focuses on contracts and transactions with residential customers. We must comply with numerous federal, state and local laws and regulations that govern matters relating to our interactions with residential consumers, including those pertaining to privacy and data security, consumer financial and credit transactions, home improvement contracts, warranties, and door-to-door solicitation. These laws and regulations are dynamic and subject to potentially differing interpretations, and various federal, state and local legislative and regulatory bodies may expand current laws or regulations, or enact new laws and regulations, regarding these matters. Changes in these laws or regulations or their interpretation could dramatically affect how we do business, acquire customers, and manage and use information we collect from and about current and prospective customers and the costs associated therewith. We strive to comply with all applicable laws and regulations relating to our interactions with residential customers. It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Our non-compliance with any such law or regulations could also expose the company to claims, proceedings, litigation and investigations by private parties and regulatory authorities, as well as substantial fines and negative publicity, each of which may materially and adversely affect our business. We have incurred, and will continue to incur, significant expenses to comply with such laws and regulations, and increased regulation of matters relating to our interactions with residential consumers could require us to modify our operations and incur significant additional expenses, which could have an adverse effect on our business, financial condition and results of operations.
Any unauthorized access to, or disclosure or theft of personal information we gather, store or use could harm our reputation and subject us to claims or litigation.
We receive, store and use personal information of our customers, including names, addresses, e-mail addresses, credit information and other housing and energy use information. We also store and use personal information of our employees. In addition, we currently utilize certain shared information and technology systems with Vivint. We take certain steps in an effort to protect the security, integrity and confidentiality of the personal information we collect, store or transmit, but there is no guarantee that inadvertent or unauthorized use or disclosure will not occur or that third parties will not gain unauthorized access to this information despite our efforts. Because techniques used to obtain unauthorized access or sabotage systems change frequently
 
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and generally are not identified until they are launched against a target, we and our suppliers or vendors, including Vivint, may be unable to anticipate these techniques or to implement adequate preventative or mitigation measures.
Unauthorized use or disclosure of, or access to, any personal information maintained by us or on our behalf, whether through breach of our systems, breach of the systems of our suppliers or vendors, including Vivint, by an unauthorized party, or through employee or contractor error, theft or misuse, or otherwise, could harm our business. If any such unauthorized use or disclosure of, or access to, such personal information were to occur, our operations could be seriously disrupted and we could be subject to demands, claims and litigation by private parties, and investigations, related actions, and penalties by regulatory authorities. In addition, we could incur significant costs in notifying affected persons and entities and otherwise complying with the multitude of federal, state and local laws and regulations relating to the unauthorized access to, or use or disclosure of, personal information. Finally, any perceived or actual unauthorized access to, or use or disclosure of, such information could harm our reputation, substantially impair our ability to attract and retain customers and have an adverse impact on our business, financial condition and results of operations.
We are involved, and may become involved in the future, in legal proceedings that, if adversely adjudicated or settled, could adversely affect our financial results.
We are, and may in the future become, party to litigation. For example, in December 2013 one of our former sales representatives filed a class-action lawsuit on behalf of himself and all similarly situated plaintiffs against us in the Superior Court of the State of California, County of San Diego. This action alleges certain violations of the California Labor Code and the California Business and Professions Code based on, among other things, alleged improper classification of sales representatives and sales managers, failure to pay overtime compensation, failure to provide meal periods, failure to provide accurate itemized wage statements, failure to pay wages on termination and failure to reimburse expenses. The complaint seeks unspecified damages including penalties and attorneys’ fees in addition to wages and overtime. On or about January 24, 2014, we filed an answer denying the allegations in the complaint and asserting various affirmative defenses. While we intend to defend against this action vigorously, the ultimate outcome of this case is presently not determinable as it is in a preliminary phase. We may become party to similar types of disputes in other jurisdictions. In general, litigation claims can be expensive and time consuming to bring or defend against and could result in settlements or damages that could significantly affect financial results and the conduct of our business. It is not possible to predict the final resolution of the litigation to which we currently are or may in the future become party, and the impact of certain of these matters on our business, prospects, financial condition, liquidity, results of operations and cash flows.
 
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Risks Related to our Relationship with Vivint
Vivint provides us with certain key services for our business. If Vivint fails to perform its obligations to us or if we do not find appropriate replacement services, we may be unable to perform these services or implement substitute arrangements on a timely and cost-effective basis on terms favorable to us.
We have historically relied on the technical, administrative and operational support of Vivint to run our business. In addition, Vivint has made available to us revolving lines of credit in the aggregate amount of up to $70.0 million. Some of the Vivint resources we are using include office space, information and technology resources and systems, purchasing services, operational and fleet services and marketing services. In addition, historically we have recruited a majority of our sales personnel from Vivint. In conjunction with this offering, we are in the process of separating our operations from those of Vivint and either creating our own financial, administrative, operational and other support systems or contracting with third parties to replace Vivint’s systems and services that will not be provided to us under the terms of the transition services agreement between us and Vivint described in the section of this prospectus captioned “Certain Relationships and Related Party Transactions—Agreements with Vivint—Expected Agreements with Vivint—Transition Services Agreement.” The implementation of new software support systems requires significant management time, support and cost, and there are inherent risks associated with implementing, developing, improving and expanding our core systems. We cannot be sure that these systems will be fully or effectively implemented on a timely basis, if at all. If we do not successfully implement these systems, our operations may be disrupted and our operating results could be harmed. In addition, the new systems may not operate as we expect them to, and we may be required to expend significant resources to correct problems or find alternative sources for performing these functions.
In order to successfully transition to our own systems, services and service providers and operate as a stand-alone business, we will enter into various agreements with Vivint in connection with the consummation of this offering. See the section of this prospectus captioned “Certain Relationships and Related Party Transactions—Agreements with Vivint—Expected Agreements with Vivint.” These include a master framework agreement providing the overall terms of the relationship and a transition services agreement detailing various information technology and back office support services that Vivint will provide. Vivint will provide each service until we agree that support from Vivint is no longer required for that service. The services provided under the transition services agreement may not be sufficient to meet our needs and we may not be able to replace these services at favorable costs and on favorable terms, if at all. Any failure or significant downtime in our own financial or administrative systems or in Vivint’s financial or administrative systems during the transition period and any difficulty in separating our operations from Vivint’s operations and integrating newly developed or acquired services into our business could result in unexpected costs, impact our results or prevent us from paying our suppliers and employees and performing other technical, administrative and operations services on a timely basis and could materially harm our business, financial condition, results of operations and cash flows.
Our historical financial information may not be representative of future results as a stand-alone public company.
The historical financial information we have included in this prospectus does not necessarily reflect what our financial position, results of operations or cash flows would have been
 
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had we operated separately from Vivint during the historical periods presented. The historical costs and expenses reflected in our consolidated financial statements include charges to certain corporate functions historically provided to us by Vivint. We and Vivint believe these charges are reasonable reflections of the historical utilization levels of these services in support of our business, however, these charges may not include all of the expenses that would have been incurred had we operated separately from Vivint during the historical periods presented. As a result, our historical financial information is not necessarily indicative of our future results of operations, financial position, cash flows or costs and expenses.
Our inability to resolve any disputes that arise between us and Vivint with respect to our past and ongoing relationships may adversely affect our financial results, and such disputes may also result in claims for indemnification.
Disputes may arise between Vivint and us in a number of areas relating to our past and ongoing relationships, including the following:
 
 	•	 	intellectual property, labor, tax, employee benefits, indemnification and other matters arising from our separation from Vivint;	
 
 	•	 	employee retention and recruiting;	
 
 	•	 	our ability to use, modify and enhance the intellectual property that we have licensed from Vivint;	
 
 	•	 	business combinations involving us;	
 
 	•	 	pricing for shared and transitional services;	
 
 	•	 	exclusivity arrangements;	
 
 	•	 	the nature, quality and pricing of products and services Vivint agrees to provide to us; and	
 
 	•	 	business opportunities that may be attractive to both Vivint and us.	
In conjunction with this offering, we are entering into certain agreements with Vivint as set forth in the section of this prospectus captioned “Certain Relationships and Related Party Transactions—Agreements with Vivint—Expected Agreements with Vivint.” Pursuant to the terms of the Non-Competition Agreement we are entering into with Vivint, we and Vivint each define our areas of business and our competitors, and agree not to directly or indirectly engage in the other’s business for three years. Such agreement may limit our ability to pursue attractive opportunities that we may have otherwise pursued.
Additionally, such agreement prohibits, for a period of five years, either Vivint or us from soliciting for employment any member of the other’s executive or senior management team, or any of the other’s employees who primarily manage sales, installation or services of the other’s products and services. The commitment not to solicit those employees lasts for 180 days after such employee finishes employment with us or Vivint. Historically we have recruited a majority of our sales personnel from Vivint. This agreement may require us to obtain personnel from other sources, and may limit our ability to continue scaling our business if we are unable to do so.
 
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Pursuant to the terms of the Marketing and Customer Relations Agreement we are entering into with Vivint, we and Vivint are required to compensate one another for sales leads that result in sales. Vivint may direct sales leads to other solar companies in markets in which we have not entered. However, once we enter a market, Vivint must exclusively direct to us all leads for customers and potential customers with an interest in solar. Vivint’s ability to sell leads to other solar providers in markets where we are not currently operating may adversely affect our ability to scale rapidly if we subsequently enter into such market as many of Vivint’s customers with solar inclinations may have already been referred to another solar company by the time we enter into such market.
We may not be able to resolve any potential conflicts relating to these agreements or otherwise, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party. In addition, we will have indemnification obligations under the intercompany services agreements we will enter into with Vivint, and disputes between us and Vivint may result in claims for indemnification. However, we do not currently expect that these indemnification obligations will materially affect our potential liability compared to what it would be if we did not enter into these agreements with Vivint.
Risks Related to this Offering
An active, liquid and orderly trading market for our common stock may not develop, our stock price may be volatile, and you may be unable to sell your shares at or above the offering price you paid.
Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which a trading market will develop or how liquid that market might become. The initial public offering price for our common stock will be determined by negotiations between us, the selling stockholder and representatives of the underwriters and may not be indicative of prices that will prevail in the trading market after the offering closes. The market price of our common stock could be subject to wide fluctuations in response to many risk factors listed in this section and others beyond our control, including:
 
 	•	 	changes in laws or regulations applicable to our industry or offerings;	
 
 	•	 	additions or departures of key personnel;	
 
 	•	 	the failure of securities analysts to cover our common stock after this offering;	
 
 	•	 	actual or anticipated changes in expectations regarding our performance by investors or securities analysts;	
 
 	•	 	price and volume fluctuations in the overall stock market;	
 
 	•	 	volatility in the market price and trading volume of companies in our industry or companies that investors consider comparable;	
 
 	•	 	share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;	
 
 	•	 	our ability to protect our intellectual property and other proprietary rights;	
 
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 	•	 	sales of our common stock by us or our stockholders;	
 
 	•	 	the expiration of contractual lock-up agreements;	
 
 	•	 	litigation or disputes involving us, our industry or both;	
 
 	•	 	major catastrophic events; and	
 
 	•	 	general economic and market conditions.	
Further, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. In addition, the stock prices of many renewable energy companies have experienced wide fluctuations that have often been unrelated to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may cause the market price of our common stock to decline. If the market price of our common stock after this offering does not exceed the initial public offering price, you may not realize any return on your investment and may lose some or all of your investment.
In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.
As an emerging growth company within the meaning of the Securities Act, we will utilize certain modified disclosure requirements, and we cannot be certain if these reduced requirements will make our common stock less attractive to investors.
We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies” including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We have in this prospectus utilized, and we plan in future filings with the SEC to continue to utilize, the modified disclosure requirements available to emerging growth companies. As a result, our stockholders may not have access to certain information they may deem important.
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies.”
 
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We could remain an ‘‘emerging growth company’’ for up to five years, or until the earliest of (1) the last day of the first fiscal year in which our annual gross revenue exceeds $1 billion, (2) the date that we become a ‘‘large accelerated filer’’ as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (3) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.
Our stock price could decline due to the large number of outstanding shares of our common stock eligible for future sale.
Sales of substantial amounts of our common stock in the public market following this offering, or the perception that these sales could occur, could cause the market price of our common stock to decline. These sales could also make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.
Upon completion of this offering, we will have 105,303,122 outstanding shares of common stock based on the number of shares outstanding as of June 30, 2014 after giving effect to the issuance and sale by us of an aggregate of 9,703,122 shares of our common stock to 313 Acquisition LLC and two of our directors in August and September 2014 and assuming no exercise of outstanding options after June 30, 2014. The shares sold pursuant to this offering will be immediately tradable without restriction, excluding any shares sold under our reserved share program. We, the selling stockholder and all of our directors and officers, as well as the other holders of substantially all shares of our common stock outstanding immediately prior to the completion of this offering, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock until 180 days following the date of this prospectus, except with the prior written consent of the representatives of the underwriters. After the expiration of the 180 day restricted period, these shares may be sold in the public market in the United States, subject to prior registration in the United States, if required, or reliance upon an exemption from U.S. registration, including, in the case of shares held by affiliates or control persons, compliance with the volume restrictions of Rule 144. Participants in the reserved share program, which provides for the sale of up to 5% of the shares offered by this prospectus, have agreed to similar restrictions for 180 days following the date of this prospectus, which restrictions may be waived with the prior written consent of the representatives of the underwriters.

Number of Shares
and % of Total
Outstanding	  	Date Available for Sale into Public Markets	
19,570,000
or 18.6%	  	Immediately after this offering (comprised of the shares sold in this offering other than shares sold as part of the reserved share program).	
		
85,733,122
or 81.4%	  	From time to time after the date 180 days after the date of this prospectus due to contractual obligations and lock-up agreements, upon expiration of their respective holding periods under Rule 144. However, the underwriters can waive the provisions of these lock-up agreements and allow these stockholders to sell their shares at any time, provided their respective holding periods under Rule 144 have expired.	
In addition, 676,467 shares reserved for future issuance under our Long-Term Incentive Plan will issue, vest and be immediately tradable without restriction on the date that is six months after the closing of this offering. An additional 2,705,889 shares reserved for future issuance under our Long-Term Incentive Plan will issue, vest and be immediately tradable without restriction at the
 
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later of (1) the date our sponsor and its affiliates achieve a specified return on their invested capital and (2) the date that is six months after the closing of this offering. On the date that is 18-months after the closing of this offering, 676,467 shares reserved for future issuance under our Long-Term Incentive Plan will issue, vest and be immediately tradable without restriction. For more information regarding the shares reserved under our Long Term Incentive Plan see the section of this prospectus under the caption “Shares Eligible for Future Sale.”
Further, options to purchase 9,728,681 shares remained outstanding as of June 30, 2014, one-third of which are subject to ratable time-based vesting over a five year period and will become immediately tradable once vested. The remaining two-thirds are subject to vesting upon certain performance conditions and the achievement of certain investment return thresholds by 313 Acquisition LLC and will vest and become immediately tradable as follows: (1) one-half of the shares vest (a) if 313 Acquisition LLC receives cash proceeds with respect to its holdings of our common stock in an amount that equals $250 million more than its cumulative investment in our common stock (which amount shall be equal to $75 million plus any amounts invested after November 16, 2012) or (b) if 240 days after the completion of this offering, our aggregate equity market capitalization exceeds $1 billion and (2) one-half of the shares vest when 313 Acquisition LLC receives cash proceeds with respect to its holdings of our common stock in an amount that equals $500 million more than its cumulative investment in our common stock (which amount shall be equal to $75 million plus any amounts invested after November 16, 2012).
Following the date that is 180 days after the completion of this offering, stockholders owning an aggregate of 84,703,122 shares will be entitled, under contracts providing for registration rights, to require us to register shares of our common stock owned by them for public sale in the United States, subject to the restrictions of Rule 144. In addition, we intend to file a registration statement to register the approximately 22,917,647 shares previously issued or reserved for future issuance under our equity compensation plans and agreements. Upon effectiveness of that registration statement, subject to the satisfaction of applicable exercise periods and, in certain cases, lock-up agreements with the representatives of the underwriters referred to above, the shares of common stock issued upon exercise of outstanding options will be available for immediate resale in the United States in the open market. Sales of our common stock as restrictions end or pursuant to registration rights may make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. These sales also could cause our stock price to fall and make it more difficult for you to sell shares of our common stock.
Our sponsor and its affiliates control us and their interests may conflict with ours or yours in the future.
Immediately following this offering, 313 Acquisition LLC, which is controlled by our sponsor and its affiliates, will beneficially own approximately 78% of our common stock, or 75% if the underwriters exercise their option to purchase additional shares in full. Moreover, under our organizational documents and the stockholders agreement with 313 Acquisition LLC that will be in effect by the completion of this offering, for so long as our existing owners and their affiliates retain significant ownership of us, we will agree to nominate to our board individuals designated by our sponsor, whom we refer to as the sponsor directors. In addition, for so long as 313 Acquisition LLC continues to own shares representing a majority of the total voting power, we will agree to nominate to our board individuals appointed by Summit Partners and Todd Pedersen. Even when our sponsor and its affiliates and certain of its co-investors cease to own shares of our stock representing a majority of the
 
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total voting power, for so long as our sponsor and its affiliates continue to own a significant percentage of our stock our sponsor will still be able to significantly influence the composition of our board of directors and the approval of actions requiring stockholder approval. In addition, under the stockholders agreement, affiliates of our sponsor will have consent rights with respect to certain actions involving our company, provided a certain aggregate ownership threshold is maintained collectively by our sponsor and its affiliates, together with Summit Partners, Todd Pedersen and Alex Dunn and their respective affiliates. Accordingly, for such period of time, our sponsor and certain of its co-investors will have significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers. In particular, for so long as our sponsor and its affiliates continue to own a significant percentage of our stock, our sponsor will be able to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude any unsolicited acquisition of our company. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our company and ultimately might affect the market price of our common stock.
Our sponsor and its affiliates engage in a broad spectrum of activities, including investments in the energy sector. In the ordinary course of their business activities, our sponsor and its affiliates may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. For example, affiliates of our sponsor regularly invest in utility companies that compete with solar energy and renewable energy companies such as ours. In addition, affiliates of our sponsor own interests in one of the largest solar power developers in India and may in the future make other investments in solar power, including in the United States. Our certificate of incorporation will provide that none of our sponsor, any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his or her director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. Our sponsor also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, our sponsor may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you.
We have elected to take advantage of the “controlled company” exemption to the corporate governance rules for NYSE-listed companies, which could make our common stock less attractive to some investors or otherwise harm our stock price.
Because we qualify as a “controlled company” under the corporate governance rules for NYSE-listed companies, we are not required to have a majority of our board of directors be independent, nor are we required to have a compensation committee or an independent nominating function. In light of our status as a controlled company, in the future we could elect not to have a majority of our board of directors be independent or not to have a compensation committee or nominating and governance committee. Accordingly, should the interests of 313 Acquisition LLC or our sponsor differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance rules for NYSE-listed companies. Our status as a controlled company could make our common stock less attractive to some investors or otherwise harm our stock price.
 
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Our management will have broad discretion over the use of the proceeds from this offering and may not apply the proceeds of this offering in ways that increase the value of your investment.
Our management will have broad discretion to use the net proceeds we receive from this offering and you will be relying on its judgment regarding the application of these proceeds. We expect to use the net proceeds from this offering as described under the section of this prospectus captioned “Use of Proceeds.” However, management may not apply the net proceeds of this offering in ways that increase the value of your investment.
Provisions in our certificate of incorporation, bylaws, stockholders agreement and under Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.
Our certificate of incorporation, bylaws and stockholders agreement contain provisions that could depress the trading price of our common stock by discouraging, delaying or preventing a change of control of our company or changes in our management that the stockholders of our company may believe advantageous. These provisions include:
 
 	•	 	establishing a classified board of directors so that not all members of our board of directors are elected at one time;	
 
 	•	 	authorizing “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt;	
 
 	•	 	limiting the ability of stockholders to call a special stockholder meeting;	
 
 	•	 	limiting the ability of stockholders to act by written consent;	
 
 	•	 	providing that the board of directors is expressly authorized to make, alter or repeal our bylaws;	
 
 	•	 	establishing advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings;	
 
 	•	 	requiring our sponsor to consent to certain actions, as described under the section of this prospectus captioned “Certain Relationships and Related Party Transactions—Agreements with Our Sponsor—Stockholders Agreement,” for so long as our sponsor, Summit Partners, Todd Pedersen and Alex Dunn or their respective affiliates collectively own, in the aggregate, at least 30% of our outstanding shares of common stock;	
 
 	•	 	the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, if Blackstone and its affiliates beneficially own, in the aggregate, less than 30% in voting power of the stock of the Company entitled to vote generally in the election of directors; and	
 
 	•	 	that certain provisions may be amended only by the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the	
 
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 	Company entitled to vote thereon, voting together as a single class, if Blackstone and its affiliates beneficially own, in the aggregate, less than 30% in voting power of the stock of the Company entitled to vote generally in the election of directors.	
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
 
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 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This prospectus contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to management. Some of the statements under “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” and elsewhere in this prospectus contain forward-looking statements. Forward-looking statements include all statements that are not historical facts and can be identified by words such as: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” and similar expressions that convey uncertainty of future events or outcomes, although not all forward-looking statements contain these words.
These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements in this prospectus include, but are not limited to, statements about:
 
 	•	 	federal, state and local regulations and policies governing the electric utility industry;	
 
 	•	 	the regulatory regime for our offerings and for third-party owned solar energy systems;	
 
 	•	 	technical limitations imposed by operators of the power grid;	
 
 	•	 	the continuation of tax rebates, credits and incentives, including changes to the rates of the ITC beginning in 2017;	
 
 	•	 	the calculation of estimated nominal contracted payments remaining, retained value, and certain other metrics based on forward-looking projections;	
 
 	•	 	the price of utility-generated electricity and electricity from other sources;	
 
 	•	 	our ability to finance the installation of solar energy systems;	
 
 	•	 	our ability to sustain and manage growth;	
 
 	•	 	our ability to further penetrate existing markets, expand into new markets and expand into markets for non-residential solar energy systems;	
 
 	•	 	our relationship with Vivint and our sponsor;	
 
 	•	 	our expected use of proceeds from this offering;	
 
 	•	 	our ability to manage our supply chain;	
 
 	•	 	the cost of solar panels and the residual value of solar panels after the expiration of our customer contracts;	
 
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 	•	 	our ability to maintain our brand and protect our intellectual property; and	
 
 	•	 	our expectations regarding remediation of the material weakness in our internal control over financial reporting.	
In addition, you should refer to the “Risk Factors” section of this prospectus for a discussion of other important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Further, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all, or as predictions of future events. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
This prospectus contains market data and industry forecasts that were obtained from industry publications. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates.
 
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 USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately $320.4 million from our sale of the 20,600,000 shares of common stock offered by us in this offering, based upon an assumed initial public offering price of $17.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting $21.0 million in estimated underwriting discounts and commissions and estimated offering expenses of $8.8 million to be paid by us.
Each $1.00 increase or decrease in the assumed initial public offering price of $17.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, net proceeds to us from the offering by approximately $19.4 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting an incremental $1.2 million in underwriting discounts and commissions. We may also increase or decrease the number of shares we are offering. Each increase (decrease) of 1,000,000 shares in the number of shares offered by us would increase (decrease) the net proceeds to us from this offering by approximately $16.0 million, assuming the assumed initial public offering price remains the same, and after deducting an incremental $1.0 million in underwriting discounts and commissions.
We will not receive any of the proceeds from the sale of common stock by the selling stockholder pursuant to the underwriters’ option to purchase additional shares, although we will bear the costs, other than the underwriting discounts and commissions, associated with the sale of these shares.
Approximately $58.8 million of the net proceeds received by us from this offering will be used to repay revolver borrowings incurred under revolving lines of credit with Vivint. We plan to use the remaining net proceeds that we receive in this offering for working capital and general corporate purposes. We may also use a portion of the net proceeds to acquire, license and invest in complementary products, technologies or businesses; however, we currently have no agreements or commitments to complete any such transaction.
As of June 30, 2014, we had an aggregate of $57.3 million in debt outstanding under the revolving lines of credit referred to above, which we incurred for working capital purposes. Such borrowings currently accrue interest at a rate of 7.5% or 12% per year and mature on January 1, 2016 and January 1, 2017 respectively, unless, in each case, the maturity is accelerated as a result of a change of control or an event of default.
Our management will have broad discretion in the application of the net proceeds that we receive in this offering, and investors will be relying on the judgment of our management regarding the treatment of these proceeds. Pending the uses described above, we plan to invest the net proceeds that we receive in this offering in short-term and intermediate-term investment-grade interest-bearing securities, such as certificates of deposit, commercial paper, money market accounts or direct or guaranteed obligations of the U.S. government.
 
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 DIVIDEND POLICY
We have never declared or paid any dividends on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. In addition, the terms of our future debt instruments may prohibit us from paying cash dividends on our common stock. Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws and provisions of our debt instruments and organizational documents, after taking into account our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant.
 
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 CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2014 on an actual basis, and a pro forma as adjusted basis to reflect (1) the issuance and sale by us of an aggregate of 9,703,122 shares of our common stock to 313 Acquisition LLC and two of our directors in August and September 2014, (2) the incurrence of an aggregate of $87.0 million of term loan borrowings under our aggregation credit facility, net of discount of $8.7 million, and the repayment of an aggregate of $75.5 million of term borrowings under our credit facility in September 2014, (3) the filing and effectiveness of our certificate of incorporation immediately prior to the closing of this offering, (4) our sale of 20,600,000 shares of common stock in this offering at an assumed initial public offering price of $17.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting $21.0 million in underwriting discounts and commissions and estimated offering expenses of $8.8 million and (5) our receipt of the net proceeds from that sale after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us and the application of such proceeds, including the repayment of $57.3 million of borrowings outstanding as of June 30, 2014.
You should read this table together with the sections of this prospectus captioned “Selected Consolidated Financial and Other Data,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Capital Stock” and our consolidated financial statements and related notes included elsewhere in this prospectus.

 	  	As of June 30, 2014	 	
 	  	Actual	 	  	Pro Forma
As Adjusted (1)	 	
 	  	(In thousands
except share and per share data)	 	
Cash and cash equivalents	  	$	25,230	  	  	$	 393,131	  	
	  	 	 	 	  	 	 	 	
Short-term debt	  	$	75,500	  	  	$	—	  	
Long-term debt, net	  	 	—	  	  	 	78,300	  	
Capital lease obligations	  	 	7,661	  	  	 	7,661	  	
Revolving lines of credit, related party	  	 	57,290	  	  	 	—	  	
Redeemable non-controlling interests	  	 	104,342	  	  	 	104,342	  	
Stockholders’ equity:	  				  				
Preferred stock, $0.01 par value per share; no shares authorized, issued or outstanding, actual; 10,000,000 shares authorized, no shares issued and outstanding, pro forma as adjusted	  	 	—	  	  	 	—	  	
Common stock, $0.01 par value per share; 100,000,000 shares authorized, 75,000,000 shares issued and outstanding, actual; 1,000,000,000 shares authorized, 105,303,122 shares issued and outstanding, pro forma as adjusted	  	 	750	  	  	 	1,053	  	
Additional paid-in capital	  	 	75,984	  	  	 	514,416	  	
Retained earnings	  	 	15,568	  	  	 	724,000	  	
	  	 	 	 	  	 	 	 	
Total stockholders’ equity	  	 	92,302	  	  	 	516,193	  	
Non-controlling interests	  	 	35,172	  	  	 	35,172	  	
	  	 	 	 	  	 	 	 	
Total equity	  	 	127,474	  	  	 	551,365	  	
	  	 	 	 	  	 	 	 	
Total capitalization	  	$	372,267	  	  	$	741,668	  	

(1)	Each $1.00 increase (decrease) in the assumed initial public offering price of $17.00 per share, the mid point of the price range set forth on the cover page of this prospectus, would increase (decrease) each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity, total equity and total capitalization by approximately $19.4 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting an incremental $1.2 million in underwriting discounts and commissions. We may also increase or decrease the number of shares we are offering. Each increase (decrease) of 1,000,000 shares	
 
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 	in the number of shares offered by us would increase (decrease) each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity, total equity and total capitalization by approximately $16.0 million, assuming that the assumed initial price to public remains the same, and after deducting an incremental $1.0 million in underwriting discounts and commissions. The pro forma as adjusted information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at pricing.	
The actual number of shares of common stock to be outstanding following this offering is based on 84,703,122 shares of common stock outstanding as of June 30, 2014 after giving effect to the issuance and sale by us of 9,703,122 shares of common stock to 313 Acquisition LLC and two of our directors in August and September, 2014 and excludes as of June 30, 2014:
 
 	•	 	9,728,681 shares of common stock issuable upon the exercise of options outstanding as of June 30, 2014, pursuant to our 2013 Omnibus Incentive Plan and an option granted outside of such plan with substantially the same terms as those granted pursuant to such plan with a weighted-average exercise price of $1.10 per share;	
 
 	•	 	320,000 shares of common stock issuable upon the exercise of options granted on July 7, 2014 at a weighted-average exercise price of $4.14 per share;	
 
 	•	 	4,068,966 shares of common stock reserved for issuance under our 2013 Omnibus Incentive Plan, 4,058,823 of which are reserved for the settlement of awards granted based on achieving certain performance conditions under our long-term incentive plan pools as described in the section of this prospectus captioned “Executive Compensation—Employee Benefit Plans—Long-Term Incentive Plan,” as of June 30, 2014; and	
 
 	•	 	8,800,000 shares of common stock reserved for future issuance under our 2014 Equity Incentive Plan on the date of this prospectus, and additional shares that become available under the plan pursuant to provisions thereof that provide for automatic annual increases in the number of shares reserved under the plan, as more fully described in the section of this prospectus captioned “Executive Compensation—Employee Benefit Plans—2014 Equity Incentive Plan.”	
 
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 DILUTION
Investors purchasing our common stock in this offering will experience immediate and substantial dilution in the pro forma as adjusted net tangible book value of their shares of common stock. Dilution in pro forma as adjusted net tangible book value represents the difference between the initial public offering price of our common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after the offering.
Historical net tangible book value per share represents our total tangible assets (total assets less intangible assets) less total liabilities and redeemable non-controlling interests divided by the number of shares of outstanding common stock. After giving effect to (1) the issuance and sale by us of 9,703,122 shares of our common stock in August and September 2014, (2) the filing and effectiveness of our certificate of incorporation immediately prior to the closing of this offering, (3) the issuance of 20,600,000 shares of common stock in this offering, (4) the receipt of the net proceeds from the sale of shares of common stock in this offering by us at an assumed initial public offering price of $17.00 per share (the midpoint of the price range set forth on the cover of this prospectus), after deducting $21.0 million in underwriting discounts and commissions and estimated offering expenses of $8.8 million and (5) the repayment of $58.8 million of borrowings as described in the section of this prospectus captioned “Use of Proceeds”, the pro forma as adjusted net tangible book value as of June 30, 2014 would have been approximately $489.4 million, or $4.65 per share. This represents an immediate increase in pro forma as adjusted net tangible book value of $2.66 per share to existing stockholders and an immediate dilution of $12.35 per share to new investors purchasing common stock in this offering.
The following table illustrates this dilution on a per share basis to new investors.

Assumed initial public offering price per share	  				  	$	17.00	  	
Historical net tangible book value per share as of June 30, 2014 adjusted for the equity issuances in August and September 2014, the drawdown of $87.0 million in September 2014, less applicable fees and expenses, and the repayment of the short-term debt.	  	$	1.99	  	  				
Increase in net tangible book value per share attributable to investors participating in this offering	  	 	2.66	  	  				
	  	 	 	 	  				
Pro forma as adjusted net tangible book value per share, as adjusted to give effect to this offering	  				  	 	4.65	  	
	  				  	 	 	 	
Dilution per share to investors participating in this offering	  				  	$	12.35	  	
	  				  	 	 	 	
Each $1.00 increase (decrease) in the assumed initial public offering price of $17.00 per share would increase (decrease) total consideration paid by new investors by approximately $19.4 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting an incremental $1.2 million in underwriting discounts and commissions. We may also increase or decrease the number of shares we are offering. An increase (decrease) of 1,000,000 in the number of shares offered by us would increase (decrease) total consideration paid by new investors by $16.0 million, assuming that the assumed initial public offering price remains the same, and after deducting an incremental $1.0 million in underwriting discounts and commissions.
 
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The following table summarizes, on a pro forma as adjusted basis as of June 30, 2014, the differences between the number of shares of common stock purchased from us, the total consideration and the weighted-average price per share paid by existing stockholders and by investors participating in this offering at an assumed initial public offering price of $17.00 per share, after deducting $21.0 million in underwriting discounts and commissions and estimated offering expenses of $8.8 million (in thousands, except share and per share amounts):

 	  	Shares Purchased	 	  	Total Consideration	 	  	Weighted -
Average
Price Per
Share	 	
 	  	Number	 	  	Percent	 	  	Amount	 	  	Percent	 	  			
Existing stockholders	  	 	84,703,122	  	  	 	80.4%	  	  	$	195,081	  	  	 	37.8%	  	  	$	2.30	  	
Investors participating in this offering	  	 	20,600,000	  	  	 	19.6   	  	  	 	320,388	  	  	 	62.2   	  	  	 	15.55	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  				
Total	  	 	105,303,122	  	  	 	100%	  	  	$	515,469	  	  	 	100%	  	  	 	4.90	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  				
If the underwriters’ option to purchase additional shares is exercised in full, sales by the selling stockholder in this offering will reduce the number of shares held by the existing stockholder to 81,613,122 shares, or approximately 77.5% of the total shares of our common stock outstanding after this offering and increase the number of shares purchased by new investors to 23,690,000 shares, or approximately 22.5% of the total shares of our common stock outstanding after this offering.
The actual number of shares of common stock to be outstanding following this offering is based on 84,703,122 shares of common stock outstanding as of June 30, 2014 after giving effect to the issuance and sale by us of an aggregate of 9,703,122 shares of common stock to 313 Acquisition LLC and two of our directors in August and September, 2014, and excludes:
 
 	•	 	9,728,681 shares of common stock issuable upon the exercise of options outstanding as of June 30, 2014, pursuant to our 2013 Omnibus Incentive Plan and an option granted outside of such plan with substantially the same terms as those granted pursuant to such plan with a weighted-average exercise price of $1.10 per share;	
 
 	•	 	320,000 shares of common stock issuable upon the exercise of options granted on July 7, 2014 at a weighted-average exercise price of $4.14 per share;	
 
 	•	 	4,068,966 shares of common stock reserved for issuance under our 2013 Omnibus Incentive Plan, 4,058,823 of which are reserved for the settlement of awards granted based on achieving certain performance conditions under our long-term incentive plan pools as described in the section of this prospectus captioned “Executive Compensation—Employee Benefit Plans—Long-Term Incentive Plan,” as of June 30, 2014; and	
 
 	•	 	8,800,000 shares of common stock reserved for future issuance under our 2014 Equity Incentive Plan on the date of this prospectus, and additional shares that become available under the plan pursuant to provisions thereof that provide for automatic annual increases in the number of shares reserved under the plan, as more fully described in the section of this prospectus captioned “Executive Compensation—Employee Benefit Plans—2014 Equity Incentive Plan.”	
To the extent that new options are issued under the equity benefit plans or we issue additional shares of common stock in the future, there will be further dilution to investors participating in this offering.
 
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 SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The following table sets forth selected historical consolidated financial and other data for the periods ended and at the dates indicated below. On November 16, 2012, we were acquired by our sponsor. We refer to the period from January 1, 2012 through November 16, 2012 as the Predecessor Period or Predecessor and the periods from November 17, 2012 through December 31, 2012, the year ended December 31, 2013, and the six months ended June 30, 2013 and 2014 as the Successor Periods or Successor. Our selected historical consolidated statement of operations data for the Predecessor Period, the period from November 17, 2012 to December 31, 2012 and the year ended December 31, 2013 presented in this table and the balance sheet data as of December 31, 2012 and 2013 have been derived from our historical audited consolidated financial statements included elsewhere in this prospectus. The statements of operations data for each of the six-month periods ended June 30, 2013 and 2014 and the balance sheet data as of June 30, 2014 set forth below are derived from our unaudited quarterly consolidated financial statements included elsewhere in this prospectus and contain all adjustments, consisting of normal recurring adjustments, that management considers necessary for a fair presentation of our financial position and results of operations for the periods presented. See the section of this prospectus captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Basis of Presentation” for more information regarding the presentation of our consolidated financial statements. Operating results for the six-month periods are not necessarily indicative of results for a full financial year, or any other periods. Our historical results are not necessarily indicative of the results that may be expected in the future. The following selected financial data should be read in conjunction with the sections of this prospectus captioned “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

 	 	Predecessor	 	 	Successor	 	
 	 	Period from
January 1,
through
November 16,
2012	 	 	Period from
November 17,
though
December 31,
2012	 	 	Year Ended
December 31,
2013	 	 	Six Months
Ended
June 30,
2013	 	 	Six Months
Ended
June 30,
2014	 	
 	 	 	 	 	 	 	 	(Restated)	 	 	(Unaudited)	 	
 	 	(In thousands, except share and per share data)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Statement of Operations Data:	 			 	 				 				 				 				
Revenue:	 			 	 				 				 				 				
Operating leases and incentives	 	$	183	  	 	$	109	  	 	$	5,864	  	 	$	1,793	  	 	$	8,667	  	
Solar energy system and product sales	 	 	157	  	 	 	—	  	 	 	306	  	 	 	132	  	 	 	1,398	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	 	 	340	  	 	 	109	  	 	 	6,170	  	 	 	1,925	  	 	 	10,065	  	
Operating expenses:	 			 	 				 				 				 				
Cost of revenue — operating leases and incentives	 	 	3,302	  	 	 	1,018	  	 	 	19,004	  	 	 	8,013	  	 	 	27,646	  	
Cost of revenue — solar energy system and product sales	 	 	95	  	 	 	—	  	 	 	123	  	 	 	76	  	 	 	883	  	
Sales and marketing	 	 	1,471	  	 	 	533	  	 	 	7,348	  	 	 	2,890	  	 	 	11,009	  	
Research and development	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	972	  	
General and administrative	 	 	7,789	  	 	 	971	  	 	 	16,438	  	 	 	4,832	  	 	 	26,106	  	
Amortization of intangible assets	 	 	—	  	 	 	1,824	  	 	 	14,595	  	 	 	7,297	  	 	 	7,428	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses(1)	 	 	12,657	  	 	 	4,346	  	 	 	57,508	  	 	 	23,108	  	 	 	74,044	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from operations	 	 	(12,317	) 	 	 	(4,237	) 	 	 	(51,338	) 	 	 	(21,183	) 	 	 	(63,979	) 	
Interest expense	 	 	881	  	 	 	96	  	 	 	3,144	  	 	 	991	  	 	 	4,074	  	
Other expense	 	 	240	  	 	 	44	  	 	 	1,865	  	 	 	522	  	 	 	1,165	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before income taxes	 	 	(13,438	) 	 	 	(4,377	) 	 	 	(56,347	) 	 	 	(22,696	) 	 	 	(69,218	) 	
Income tax expense (benefit)	 	 	7	  	 	 	(1,074	) 	 	 	123	  	 	 	45	  	 	 	6,936	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	 	(13,445	) 	 	 	(3,303	) 	 	 	(56,470	) 	 	 	(22,741	) 	 	 	(76,154	) 	
Net loss attributable to non-controlling interests and redeemable
non-controlling interests	 	 	(1,771	) 	 	 	(699	) 	 	 	(62,108	) 	 	 	(2,307	) 	 	 	(88,688	) 	

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 	 	Predecessor	 	 	Successor	 	
 	 	Period from
January 1,
through
November 16,
2012	 	 	Period from
November 17,
though
December 31,
2012	 	 	Year Ended
December 31,
2013	 	 	Six Months
Ended
June 30,
2013	 	 	Six Months
Ended
June 30,
2014	 	
 	 	 	 	 	 	 	 	(Restated)	 	 	(Unaudited)	 	
 	 	(In thousands, except share and per share data)	 	
Net income available (loss attributable) to stockholder	 	 	(11,674	) 	 	 	(2,604	) 	 	 	5,638	  	 	 	(20,434	) 	 	 	12,534	  	
Accretion to redemption value of Series B redeemable preferred stock	 	 	(20,000	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income available (loss attributable) to common stockholder	 	$	(31,674	) 	 	$	(2,604	) 	 	$	5,638	  	 	$	(20,434	) 	 	$	12,534	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income per share available (loss attributable) to common stockholder (2) :	 			 	 				 				 				 				
Basic	 	$	(0.42	) 	 	$	(0.03	) 	 	$	0.08	  	 	$	(0.27	) 	 	$	0.17	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	$	(0.42	) 	 	$	(0.03	) 	 	$	0.07	  	 	$	(0.27	) 	 	$	0.16	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average shares used in computing net income per share available (loss attributable) to common stockholder (2) :	 			 	 				 				 				 				
Basic	 	 	75,000,000	  	 	 	75,000,000	  	 	 	75,000,000	  	 	 	75,000,000	  	 	 	75,000,000	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	 	75,000,000	  	 	 	75,000,000	  	 	 	75,223,183	  	 	 	75,000,000	  	 	 	76,194,463	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pro forma net income per share available to common stockholders (unaudited) (3) :	 				 				 				 				 				
Basic	 				 				 	$	0.09	  	 				 	$	0.16	  	
	 				 				 	 	 	 	 				 	 	 	 	
Diluted	 				 				 	$	0.09	  	 				 	$	0.16	  	
	 				 				 	 	 	 	 				 	 	 	 	
Weighted-average shares used in computing pro forma net income per share available to common stockholders (unaudited) (3) :	 				 				 				 				 				
Basic	 				 				 	 	86,445,874	  	 				 	 	87,814,512	  	
	 				 				 	 	 	 	 				 	 	 	 	
Diluted	 				 				 	 	86,669,057	  	 				 	 	89,008,975	  	

(1)	In connection with the finalization of this offering, we re-evaluated the estimate of the fair value of our common stock for financial reporting purposes with respect to the stock options granted to our employees during the period from January 1, 2014 through the date of this prospectus. As a result of this re-evaluation we currently expect to record approximately $0.4 million of stock-based compensation expense across multiple operating expense line items for options granted in 2014 through the date of this prospectus, which includes approximately $0.3 million of incremental stock-based compensation expense, associated with option grants made in the six months ended June 30, 2014. We also expect to record approximately $14.8 million in compensation expense in general and administrative expenses in our third quarter 2014 financial statements with respect to the September sale of common stock to Alex Dunn and an entity affiliated with Todd Pedersen, which represents the aggregate difference between the $10.667 per share purchase price and $17.00, the midpoint of the price range set forth on the cover page of this prospectus.	
(2)	See Note 18 to our audited consolidated financial statements for an explanation of the method used to calculate basic and diluted net income per share available (loss attributable) to common stockholder and the weighted-average number of shares used in the computation of the per share amounts.	
 
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(3)	The pro forma basic and diluted net income per share available to common stockholders have been calculated assuming (1) the issuance and sale by us of an aggregate of 9,703,122 shares of common stock to 313 Acquisition LLC and two of our directors in August and September, 2014, (2) the repayment in full of outstanding borrowings under our revolving lines of credit, related party, using proceeds from our initial public offering of $57.3 million and (3) the assumed issuance of shares of common stock weighted for the period that the debt to be repaid was outstanding as if these transactions had occurred as of January 1, 2013. This assumes net proceeds of $320.4 million based on the initial public offering price of $17.00, the midpoint of the price range set forth on the cover of the prospectus, after deducting $21.0 million in underwriter discounts and commissions and estimated offering expenses of $8.8 million. The pro forma adjustment to eliminate the interest expense is equal to the actual interest expense recorded in the respective periods related to all borrowings under our revolving lines of credit, related party. The following table sets forth the computation of the pro forma basic and diluted net income per share available to common stockholders:	

 	 	Year Ended
December 31, 2013	 	 	Six Months Ended
June 30, 2014	 	
 	 	(In thousands, except share and per share
amounts)	 	
Numerator:	 				 				
Net income available to common stockholders	 	 	5,638	  	 	 	12,534	  	
Pro forma adjustment to eliminate the interest expense on outstanding borrowings to be repaid with the proceeds from the initial public offering	 	 	2,930	  	 	 	2,877	  	
Pro forma adjustment to reflect the tax effect at the statutory rate	 	 	(1,026	) 	 	 	(1,007	) 	
	 	 	 	 	 	 	 	 	
Net income available to common stockholders for pro forma earnings per share computation, basic and diluted	 	$	7,543	  	 	$	14,404	  	
	 	 	 	 	 	 	 	 	
Denominator:	 				 				
Weighted-average shares used in computing net income per share available to common stockholders, basic	 	 	75,000,000	  	 	 	75,000,000	  	
Pro forma adjustment to reflect shares issued to 313 Acquisition LLC in August and September 2014	 	 	9,703,122	  	 	 	9,703,122	  	
Pro forma adjustment to reflect shares issued in this offering used to repay outstanding borrowings	 	 	1,742,752	  	 	 	3,111,390	  	
	 	 	 	 	 	 	 	 	
Weighted-average shares used in computing pro forma net income per share available to common stockholders, basic	 	 	86,445,874	  	 	 	87,814,512	  	
	 	 	 	 	 	 	 	 	
Weighted-average shares used in computing net income per share available to common stockholders, diluted	 	 	75,223,183	  	 	 	76,194,463	  	
Pro forma adjustment to reflect shares issued to 313 Acquisition LLC in August and September 2014	 	 	9,703,122	  	 	 	9,703,122	  	
Pro forma adjustment to reflect shares issued in this offering used to repay outstanding borrowings	 	 	1,742,752	  	 	 	3,111,390	  	
	 	 	 	 	 	 	 	 	
Weighted-average shares used in computing pro forma net income per share available to common stockholders, diluted	 	 	86,669,057	  	 	 	89,008,975	  	
	 	 	 	 	 	 	 	 	
Pro forma net income per share available to common stockholders:	 				 				
Basic	 	$	0.09	  	 	$	0.16	  	
	 	 	 	 	 	 	 	 	
Diluted	 	$	0.09	  	 	$	0.16	  	

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 	  	As of December 31,	 	  	As of June 30,	 	
 	  	2012	 	  	2013 	 	  	2014	 	
 	  	 	 	  	(Restated)	 	  	(Unaudited)	 	
 	  	(In thousands)	 	
Balance Sheet Data:	  				  				  				
Cash and cash equivalents	  	$	11,650	  	  	$	6,038	  	  	$	25,230	  	
Solar energy systems, net	  	 	47,089	  	  	 	188,058	  	  	 	364,965	  	
Total assets	  	 	        132,087	  	  	 	        297,707	  	  	 	        566,250	  	
Revolving lines of credit, related party	  	 	15,000	  	  	 	41,412	  	  	 	57,290	  	
Short-term debt	  	 	—	  	  	 	—	  	  	 	75,500	  	
Redeemable non-controlling interests	  	 	17,741	  	  	 	73,265	  	  	 	104,342	  	
Total equity	  	 	71,323	  	  	 	80,621	  	  	 	127,474	  	
 
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 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes to those statements included elsewhere in this prospectus. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk Factors” and elsewhere in this prospectus.
Overview
We offer distributed solar energy to residential customers based on long-term contracts at prices below their current utility rates. Our customer focus, neighborhood-driven direct-to-home sales model, brand and operational efficiency have driven our rapid growth in solar energy installations. We believe our continued growth is disrupting the traditional electricity market by satisfying customers’ demand for increased energy independence and less expensive, more socially responsible electricity generation.
The following is a chronology of some of our key corporate milestones:
 
 	•	 	we were founded in May 2011 when Vivint, Inc., a residential security solutions and home automation services provider with approximately 850,000 subscribers as of June 30, 2014, recognized an opportunity to replicate its strong direct-to-home sales model in the solar energy market, and in July 2011 we installed our first solar energy system;	
 
 	•	 	in 2012, we installed an aggregate of 2,669 solar energy systems, which reflects an average of 51 solar energy system installations per week and as of December 31, 2012, we had installed solar energy systems with an aggregate of 14.8 megawatts of capacity to 2,775 homes in four states;	
 
 	•	 	in 2013, we installed an aggregate of 10,521 solar energy systems, which reflects an average of 202 solar energy system installations per week and as of December 31, 2013, we had installed solar energy systems with an aggregate of 72.8 megawatts of capacity to 13,296 homes in six states;	
 
 	•	 	for the six months ended June 30, 2014, we installed an aggregate of 8,625 solar energy systems, which reflects an average of 332 solar energy system installations per week and as of June 30, 2014, we had installed solar energy systems with an aggregate of 129.7 megawatts of capacity to more than 21,900 homes in seven states;	
 
 	•	 	in January 2014, we acquired Solmetric Corporation, a developer of photovoltaic installation software products, to enable us to install higher quality distributed solar energy systems in less time and at a lower cost;	
 
 	•	 	in September 2014, we entered in to an aggregation credit facility pursuant to which we may incur up to an aggregate of $350 million in term loan borrowing and, subject to certain conditions, up to an aggregate of $200 million in additional borrowings; and	
 
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 	•	 	as of the date of this prospectus, we have raised investment funds to which investors had committed an aggregate of approximately $543 million.	
We sell the electricity that our solar energy systems produce through long-term power purchase agreements or we lease our solar energy systems through long-term leases. Prior to the first quarter of 2014, all of our long-term customer contracts were structured as power purchase agreements. In the first quarter of 2014, we began offering leases to residential customers in connection with our entry into the Arizona market. In some jurisdictions, such as Arizona, Florida, Georgia, Iowa, Kentucky, North Carolina, Oklahoma and in Los Angeles, California, laws have been interpreted to prohibit the sale of electricity pursuant to our standard power purchase agreement. In such jurisdictions, however, a customer may lease a solar system so we and other residential solar providers enter into leases in lieu of power purchase agreements. Under either contract type, we install our solar energy system at our customer’s home and bill the customer monthly. In the power purchase agreement structure, we charge customers a fee per kilowatt hour based on the amount of electricity the solar energy system actually produces. In the lease structure, the customer’s monthly payment is fixed based on a calculation that takes into account expected solar energy generation. We provide our lease customers a production guarantee, under which we agree to make a payment at the end of each year to the customer if the solar energy system does not meet the guaranteed production level in the prior 12-month period. The power purchase agreement and lease terms are typically for 20 years, and virtually all the prices that we charge to our customers are subject to pre-determined annual fixed percentage price escalations as specified in the customer contract. Most of our current customer contracts contain price escalators ranging from 2.9% to 3.9% annually. We do not believe that either form of long-term customer contract is materially more advantageous to us than the other.
Our ability to offer long-term customer contracts depends in part on our ability to finance the installation of the solar energy systems by monetizing the resulting customer receivables and investment tax credits, accelerated tax depreciation and other incentives related to the solar energy systems. A number of market participants in our industry monetize federal tax credits through a variety of structured investments, also known as “tax equity.” Tax equity investments are generally structured as non-recourse project financings. In the context of the distributed solar energy market, tax equity investors make an upfront advance payment to a sponsor through an investment fund in exchange for a share of the tax attributes and cash flows emanating from an underlying portfolio of solar energy systems. In these tax equity investments, the U.S. federal tax attributes offset taxes that otherwise would have been payable on the investors’ other operations. As of the date of this prospectus, we have raised 10 investment funds to which investors such as banks and other large financial investors have committed to invest approximately $543 million. These commitments will enable us to install solar energy systems of total fair market value (as determined at the time of such investment) of approximately $1.3 billion, of which approximately $913 million has been installed. As of the date of this prospectus, we had tax equity commitments to fund approximately 81 MWs of future deployments. We are currently in negotiations with financial investors to create additional investment funds in 2014. We also expect to create additional investment funds with financial investors and potentially with corporate investors, and may also use debt, equity or other financing strategies to fund our operations. To that end, in August 2014 and September 2014, we received non-binding letters of intent from four financial institutions on a several basis in amounts equaling up to $300 million in the aggregate. We estimate such investments would be sufficient to fund approximately 133 MWs of future deployments. It is contemplated that each of the potential investment funds would adopt the
 
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partnership structure described above and be on terms similar to those of our existing investment funds that have adopted such structure, which terms may include conditions on our ability to draw on the financing commitments made by these funds. Such letters of intent are non-binding and do not constitute a commitment to invest. Although we cannot be certain when, if ever, such investment documentation will be executed, our current expectation is that forward investment documentation will be executed within the last quarter of 2014 or the first quarter of 2015 to fund investments at various times throughout 2015 and 2016. If we are unable to consummate these investments or establish the other investment funds that we intend to pursue during this period, we will be required to obtain additional financing in order to continue to grow our business or finance the deployment of solar energy systems using cash on hand until such additional financing has been secured.
We compete mainly with traditional utilities. In the markets we serve, our strategy is to price the energy we sell below prevailing retail electricity rates. As a result, the price our customers pay to buy energy from us varies depending on the state where the customer is located and the local traditional utility. In markets that are also served by other distributed solar energy system providers, the price we charge also depends on customer price sensitivity, the need to offer a compelling financial benefit and the price other solar energy companies charge in the region.
Components and direct labor comprise the substantial majority of the costs of our solar energy systems. We have adopted a commission-based compensation model for our sales force and a piece-rate compensation model for our installation personnel to allow us to operate our business with relatively low fixed costs. Under U.S. generally accepted accounting principles, or GAAP, the cost of revenue from our long-term customer contracts is comprised of the depreciation of the cost of the solar energy systems, which are depreciated for accounting purposes over 30 years, and the amortization of initial direct costs, which are amortized over 20 years. Cost of revenue under long-term customer contracts is also comprised of warehouse rent, utilities, fleet vehicle executory costs and the indirect costs related to the design, installation and interconnection of solar energy systems, such as personnel costs not directly associated to a solar energy system installation, which are not capitalized. For tax purposes, we utilize an accelerated depreciation schedule for our systems of six years.
Investment Funds
Our long-term customer contracts provide for recurring customer payments and the related solar energy systems are eligible for investment tax credits, accelerated tax depreciation, bonus depreciation (to the extent available under prior applicable law) and other government incentives. Our financial strategy is to monetize these benefits at the lowest cost of capital available. We share the economic benefit of this lower cost of capital with our customers by lowering the price they pay for electricity generated by the solar energy systems. We have established different types of investment funds with fund investors to implement our asset monetization strategy, including partnerships and inverted lease structures. We call these arrangements our investment funds. Fund investors recognize these as high-quality assets with a relatively low loss rate because these recurring customer payments are paid by individuals with high credit scores and generate attractive returns for investors due to the availability of investment tax credits, accelerated depreciation and certain other government incentives. As of June 30, 2014, the average FICO score of our customers was approximately 750. We contribute or sell the solar energy systems, customer contracts, and associated rights to the investment funds and receive cash and an equity
 
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interest in the fund. Depending on the nature of the investment fund, cash may be contributed to the investment fund by the investor upfront or in stages based on milestones associated with the design, construction or interconnection status of the solar energy systems. The cash contributed by the fund investor is used by the investment fund to purchase the solar energy systems developed by us. The investment funds own the solar energy systems, customer contracts and associated rights, and the monthly payments from customers are made directly to the investment funds. While typically the investment funds do not have express limits on their terms, the economic modeling of the funds is generally tied to the 20-year terms of the underlying customer agreements. We expect to receive ongoing cash distributions from the investment funds out of a portion of these monthly customer payments during operation of the solar energy systems. We use the cash received from the investment funds to cover our variable and fixed costs associated with installing the related solar energy systems. In the future, in addition to or in lieu of monetizing the value through investment funds, we may use debt, equity or other financing strategies to fund our operations. The allocation of the economic benefits (including incentives) among us and the fund investors and related accounting varies depending on the structure. Fund investors and their related investment committees have different levels of experience with particular fund structures. We negotiate with the fund investors and may be willing to accommodate a fund structure which best matches their experience while also providing us with the most attractive cost of capital.
As of the date of this prospectus, six of our investment funds were partnership structures. Under partnership structures, we and our fund investors contribute cash into a partnership company. The partnership uses this cash to acquire solar energy systems developed by us and sells energy from such systems to customers or directly leases the solar energy systems to customers. Prior to the fund investor receiving its contractual targeted rate of return on its investment, the fund investor receives substantially all of the value attributable to the long-term recurring customer payments, investment tax credits, accelerated tax depreciation and, in some cases, other government incentives. The target rate of return varies by investment fund. Typically fund investors require an after tax rate of return ranging from 7% to 13%, however, in certain circumstances fund investors have historically required rates of return up to 20%. After the fund investor receives a contractual targeted rate of return on its investment, we receive substantially all of the value attributable to the long-term recurring customer payments and the other incentives.
As of the date of this prospectus, four of our investment funds were inverted lease structures. Under our existing inverted lease structure, we and the fund investor set up a multi-tiered investment vehicle that is comprised of two partnership entities which facilitate the pass through of the tax benefits to the fund investors. In this structure we contribute solar energy systems to an “owner” partnership entity in exchange for interests in the owner partnership and the fund investors contribute cash to a “tenant” partnership in exchange for interests in the tenant partnership which in turn makes an investment in the owner partnership entity in exchange for interests in the owner partnership. The owner partnership distributes the cash contributions received from the tenant partnership to our wholly owned subsidiary that contributed the projects to the owner partnership. The owner partnership leases the contributed solar energy systems to the tenant partnership under a master lease, and the tenant partnership pays the owner partnership rent for those systems. The tenant partnership sells energy from the solar energy systems to customers and collects payments from the customers, or leases solar energy systems to customers and collects payments from the customers. Customer payments made to the tenant partnership are used to pay expenses (including fees to us), make master lease rent payments and pay preferred return distributions to the fund investor. The owner partnership distributes cash
 
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to us and the tenant partnership. As the tenant partnership is an investor in the owner partnership, this allows the fund investors to receive the tax benefits associated with investment tax credits as well as benefits associated with accelerated tax depreciation and operating losses associated with the ownership of the assets. Under our existing inverted lease structure inverted lease structure, a substantial portion of the value generated by the solar energy systems is provided to the fund investor for a specified period of time, which is generally based upon the period of time corresponding to the expiry of the recapture period associated with the investment tax credits. After that point in time, we receive substantially all of the value attributable to the long-term recurring customer payments and the other incentives.
The diagram below is an illustrative depiction of the typical relationships between the entities involved in our current inverted lease structures. The entity labeled “Vivint Solar Provider, LLC” is a wholly-owned indirect subsidiary responsible for providing operations and maintenance service to our investment funds. The entity labeled “Vivint Solar Developer, LLC” is our wholly-owned indirect subsidiary responsible for customer acquisition and installation of the solar energy systems prior to the systems being transferred to an investment fund. The entity labeled “Vivint Solar Manager, LLC” is a wholly-owned indirect subsidiary formed for each of these inverted lease investment funds to serve as fund manager in the applicable fund’s tenant partnership and owner partnership.

Compared to the partnership structure, our existing inverted lease structure in and of itself does not generally result in materially different overall economics to us or to the investor. However, given that the tenant partnership owns less than 100% interest in the assets, the fund investor in our existing inverted lease structures will be allocated less depreciation than in our existing partnership structure. The economics are negotiated on a fund-by-fund basis to meet the investor’s targeted return and other market terms. In the inverted lease structure, the aggregate amount of
 
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cash that we expect to receive (both distributions from the “owner” partnership and the fees paid to us) is, for an investment fund with similar overall economics, approximately the same as the aggregate amount of cash we would expect to receive from distributions in the partnership structure. The frequency of distributions, and the amount of each distribution, varies by fund and fund structure.
We have determined that we are the primary beneficiary in these partnership and inverted lease structures for accounting purposes. Accordingly, we consolidate the assets and liabilities and operating results of these partnerships in our consolidated financial statements. We recognize the fund investors’ share of the net assets of the investment funds as non-controlling interests and redeemable non-controlling interests in our consolidated balance sheets. Please see the section of this prospectus captioned “—Components of Results of Operations—Net Income Available (Loss Attributable) to Stockholders” for further discussion regarding how we attribute net income (loss) to the fund investors. We recognize the amounts that are contractually payable to these investors in each period as distributions to non-controlling interests and redeemable non-controlling interests in our consolidated statements of redeemable preferred stock, redeemable non-controlling interests and equity. Our statements of cash flows reflect cash received from these fund investors as proceeds from investment by non-controlling interests and redeemable non-controlling interests. Our statements of cash flows also reflect cash paid to these fund investors as distributions paid to non-controlling interests and redeemable non-controlling interests. We reflect any unpaid distributions to these fund investors as distributions payable to non-controlling interests and redeemable non-controlling interests in our consolidated balance sheets.
The terms and conditions of each investment fund vary significantly by investor and by fund. In our investment funds, the investor commitments range in size from approximately $9 million to $100 million, which allows us to finance portfolios of solar energy systems with a total fair market value (as determined at the time of such investment) ranging from approximately $40 million to approximately $235 million. The fund investor is only required to invest the committed capital if we achieve specified project development milestones within a specified time frame. Our investment funds also require that we meet certain capital deployment deadlines. If we fail to use all of a fund investor’s committed capital by any such deadline, we may be required to pay a fee for failure to utilize the committed capital. Through the date of this prospectus, we have not been required to pay any such fees. Our rights to receive cash distributions or other payments from the investment funds vary widely depending on a variety of factors, including the investment fund structure, the terms and conditions of the specific investment fund and the performance and composition of the investment fund portfolio of solar energy systems. We typically have an option to acquire all of the equity interests that our fund investors hold in the investment funds approximately six years after the last solar energy system in each investment fund is operational. In some of our earlier investment funds, the fund investor can require us to purchase its equity interest if we do not exercise our option to acquire the investor’s equity interest. If either of these options are exercised, then we are typically required to pay at least the fair market value of the fund investor’s equity interest. Following any such exercise we would receive 100% of the customer payments for the remainder of the term of the customer contracts. In the event these purchase options are not exercised, we are projected to receive greater than 75% of customer payments through the end of the term of the customer contract.
 
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Key Operating Metrics
We regularly review a number of metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. Some of our key operating metrics are estimates. These estimates are based on our management’s beliefs and assumptions and on information currently available to management. Although we believe that we have a reasonable basis for each of these estimates, we caution you that these estimates are based on a combination of assumptions that may not prove to be accurate over time, particularly given that a number of them involve estimates of cash flows up to 30 years in the future. Underperformance of the solar energy systems, payment defaults by our customers, cancellation of signed contracts, competition from other distributed solar energy companies, development in the distributed solar energy market and the energy market more broadly, technical innovation or other factors described under the section of this prospectus captioned “Risk Factors” could cause our actual results to differ materially from our calculations. Furthermore, while we believe we have calculated these key metrics in a manner consistent with those used by others in our industry, other companies may in fact calculate these metrics differently than we do now or in the future, which would reduce their usefulness as a comparative measure.
Solar Energy System Installations
We track the number of solar energy systems installed on customers’ premises as of the end of a given period as an indicator of our historical growth and as an indicator of our rate of growth from period to period.
The following table sets forth the number of solar energy systems we have installed during the periods presented:

 	  	Year Ended December 31,	 	  	Six Months Ended June 30,	 	
 	  	2012	 	  	2013	 	  	2013	 	  	2014	 	
Installations	  	 	2,669	  	  	 	10,521	  	  	 	4,679	  	  	 	8,625	  	
The following table sets forth the number of cumulative solar energy systems we have installed as of the dates presented:

 	  	As of December 31,	 	  	As of June 30,	 	
 	  	2012	 	  	2013	 	  	2013	 	  	2014	 	
Cumulative installations	  	 	2,775	  	  	 	13,296	  	  	 	7,454	  	  	 	21,921	  	
Megawatts Installed and Cumulative Megawatts Installed
We track the electricity-generating nameplate capacity of our solar energy systems as measured in megawatts. Because the size of solar energy systems varies greatly, we believe that tracking the aggregate megawatt nameplate capacity of the systems is an indicator of our growth rate. We track megawatts installed in a given period as an indicator of asset growth in the period and cumulative megawatts installed as of the end of a given period as an indicator of our historical growth.
Megawatts installed represents the aggregate megawatt nameplate capacity of solar energy systems that have been installed during the applicable period. Cumulative megawatts
 
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installed represents the aggregate megawatt nameplate capacity of solar energy systems that have been installed.
The following sets forth the megawatt nameplate capacity of solar energy systems we have installed during the periods presented:

 	  	Year Ended December 31,	 	  	Six Months Ended June 30,	 	
 	  	2012	 	  	2013	 	  	2013	 	  	2014	 	
Megawatts installed	  	 	14.4	  	  	 	58.0	  	  	 	24.4	  	  	 	56.8	  	
The following sets forth the cumulative megawatts we have installed as of the dates presented:

 	  	As of December 31,	 	  	As of June 30,	 	
 	  	2012	 	  	2013	 	  	2013	 	  	2014	 	
Cumulative megawatts installed	  	 	14.8	  	  	 	72.8	  	  	 	39.2	  	  	 	129.7	  	
Estimated Nominal Contracted Payments Remaining
Our long-term customer contracts create recurring customer payments over the 20-year term of the customer contract. We use a portion of the value created by these contracts that we refer to as “nominal contracted payments,” together with the value attributable to investment tax credits, accelerated depreciation, solar renewable energy certificates, or SRECs, state tax benefits and rebates, to cover the fixed and variable costs associated with installing solar energy systems.
We track the estimated nominal contracted payments remaining of our long-term customer contracts for installed systems as of specified dates. Estimated nominal contracted payments remaining equals the sum of the remaining cash payments that our customers are expected to pay over the term of the agreements with us for systems installed as of the measurement date. Estimated nominal contracted payments remaining does not reflect potential customer defaults or cancellations as such amounts have been de minimis to date. For a power purchase agreement, we multiply the contract price per kilowatt-hour by the estimated annual energy output of the associated solar energy system to determine the estimated nominal contracted payments. For a customer lease, we include the monthly fees and upfront fee, if any, as set forth in the lease. The estimated nominal contracted payments remaining for a particular power purchase agreement or lease decline as the payments are made. Estimated nominal contracted payments include value attributable to long-term customer contracts that are owned by our investment funds. Currently, fund investors have contractual rights to a portion of these nominal contracted payments.
Estimated nominal contracted payments remaining is a reporting metric forecasted as of specified dates. It is a forward-looking number, and we use judgment in developing the assumptions used to calculate it. The primary assumption in the calculation is the annual energy output of the associated solar energy systems, which is estimated based on typical annual sun hours given the system’s location, nameplate production capacity of the system, and estimated declines in the solar equipment productivity over the life of the system. Those assumptions may not prove to be accurate over time.
 
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The following table sets forth, with respect to our long-term customer contracts, the estimated nominal contracted payments remaining as of the end of each period presented:

 	  	As of December 31,	 	  	As of June 30,	 	
 	  	2012	 	  	2013	 	  	2013	 	  	2014	 	
 	  	(In millions)	 	
Estimated nominal contracted payments remaining	  	$	89.2	  	  	$	394.1	  	  	$	223.3	  	  	$	647.5	  	
In addition to the nominal contracted payments, our long-term customer contracts provide us with a post-contract renewal opportunity. Because our solar energy systems have an estimated life of 30 years, they will continue to have a useful life after the 20-year term of the long-term customer contract. At the end of the original contract term, we intend to offer our customers renewal contracts at a then-determined price. The solar energy systems will already be installed on the customer’s home, which we believe will facilitate customer acceptance of our renewal offer and result in limited additional costs to us.
Estimated Retained Value
Estimated retained value and estimated retained value per watt are key operating metrics because these amounts reflect the net cash flows we expect to receive from customers pursuant to long-term customer contracts and represent valuable future revenue streams created by our operations, but which are not yet recognized on our financial statements. Management and public investors consider these metrics to be important because they represent value created by us that is not yet recognized in our financial statements.
Estimated retained value represents the cash flows, discounted at 6%, that we expect to receive from customers pursuant to long-term customer contracts net of estimated cash distributions to fund investors and estimated operating expenses for systems installed as of the measurement date. For purposes of the calculation, we aggregate the estimated retained value from the solar energy systems during the typical 20-year term of our contracts, which we refer to as estimated retained value under energy contracts, and the estimated retained value associated with an assumed 10-year renewal term following the expiration of the initial contract term, which we refer to as estimated retained value of renewal.
Estimated retained value under energy contract considers the net cash flows during the initial 20-year term of our long-term customer contracts, and is based on the solar energy systems under long-term customer contracts that have been installed as of the measurement date. Estimated retained value under energy contract is defined as the forecasted net present value, discounted at 6%, of estimated nominal contracted payments remaining, net of estimated cash payments we believe we will be obligated to distribute to tax equity investors, and estimated expenses. All such estimated expenses associated with the operations, maintenance, and administrative activities of the solar energy systems are subtracted for the purpose of calculating estimated retained value. The anticipated expenses include accounting, reporting, audit, insurance, maintenance and repairs. These costs vary by investment fund based on the requirements of the particular fund and are estimated as a cost per watt or as a specific dollar amount. In aggregate we estimate these expenses to range from $0.60 to $0.80 per watt over the contract period and assumed renewal period. We also include the replacement cost of inverters,
 
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which have a 10 to 20-year warranty, with an estimated 2% annual price decline from current pricing. Our other costs and exposure related to this equipment is mainly covered by the applicable product’s warranty, which generally meet or exceed the life of the contract. Aside from the inverter replacement costs, we expect to incur routine operating costs which are mainly administrative in nature and estimated on our experience in the normal course of business. Expected distributions to fund investors vary between the different funds and are based on individual fund contract provisions. These distributions are estimated based on contracted rates, expected sun hours, and the production capacity of the solar equipment installed.
Estimated retained value of renewal is the forecasted net present value, discounted at 6%, of payments we would receive during an assumed 10-year renewal term following the expiration of the initial contract term, net of the same amounts described in estimated retained value under energy contract. To calculate estimated retained value of renewal, we assume all contracts are renewed at 90% of the contractual price in effect at expiration of the initial term. Such calculation is based on the solar energy systems under long-term customer contracts that have been installed as of the measurement date.

 	  	As of December 31,	 	  	As of June 30,	 	
 	  	2012	 	  	2013	 	  	2013	 	  	2014	 	
 	  	(In millions)	 	
Estimated retained value under energy contract	  	 	$              33.1	  	  	$	              151.2	  	  	$	              81.1	  	  	$	              246.2	  	
Estimated retained value of renewal	  	 	8.5	  	  	 	39.2	  	  	 	21.5	  	  	 	63.7	  	
Estimated retained value	  	 	41.6	  	  	 	190.4	  	  	 	102.7	  	  	 	309.9	  	
Estimated retained value per watt is calculated by dividing the estimated retained value as of the measurement date by the aggregate nameplate capacity of solar energy systems under long-term customer contracts that have been installed as of such date. We have chosen to initially introduce our solar energy systems in states where utility rates, climate conditions and regulatory policies provide for the most compelling market for distributed solar energy. Although we believe there are many other markets that have attractive economics for us, estimated retained value per watt will decrease over time because these markets are not as attractive as the ones in which we currently operate. We may experience disproportionate growth in markets that offer attractive incentives such as SRECs, the value of which is not reflected in estimated retained value. In addition, the estimated retained value associated with commercial and industrial solar energy systems is typically less than that for residential solar energy systems. To the extent we expand into the commercial and industrial market, estimated retained value per watt will also be adversely affected. Furthermore, other companies may calculate estimated retained value per watt (or a similar metric) differently than we do, which reduces its usefulness as a comparative measure.

 	  	As of December 31,	 	  	As of June 30,	 	
 	  	2012	 	  	2013	 	  	2013	 	  	2014	 	
Estimated retained value per watt	  	$	                2.83	  	  	$	                2.62	  	  	$	                2.63	  	  	$	                2.39	  	
Estimated retained value and estimated retained value per watt are reporting metrics forecasted as of specified dates. They are forward-looking numbers and we use judgment in developing the assumptions used to calculate them. Those assumptions may not prove to be accurate over time.
 
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We consider a discount rate of 6% to be appropriate based on recent market transactions that demonstrate that a portfolio of residential solar customer contracts is an asset class that can be securitized successfully on a long term basis, with a coupon of less than 5%. Estimated retained value of renewal assumes all contracts are renewed at 90% of the contractual price in effect at expiration of the initial term. We consider this to be appropriate based on the life expectancy of the equipment, which extends beyond the initial contract term, and the belief that customers will continue to receive value from the energy generated by the solar energy systems as compared to purchasing energy from utilities, assuming utility rates for residential electricity continue to increase at their historical pace. The tables below provide a range of estimated retained value amounts if different default, discount and renewal rate assumptions were used.

Estimated retained value and estimated retained value per watt amounts do not consider the impact of other events that could adversely affect the cash flows generated by the solar energy system during the contract term and anticipated renewal period. These events could include, but are not limited to, non-payment of obligated amounts by the customer, declines in utility rates for residential electricity or early contract termination by the customer as a result of the customer purchasing the solar energy system in connection with the sale of the home on which the solar energy system is installed. To date, such early terminations have been immaterial to our business.
 
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Factors Affecting Our Performance
Availability of Capital
Our future success depends on our ability to raise capital from third-party investors on competitive terms to help finance the deployment of our residential solar energy systems. There are a limited number of potential investment fund investors and the competition for these investments is intense. The principal tax credit on which fund investors in our industry rely is the ITC. By statute, the ITC is scheduled to decrease to 10% of the fair market value of a solar energy system on January 1, 2017 from 30% today, and the amounts that fund investors are willing to invest could decrease or we may be required to provide a larger allocation of customer payments to the fund investors as a result of this scheduled decrease. For certain of our investment funds, we are contractually required under certain circumstances to make payments to a fund investor so that the fund investor receives value equivalent to the tax benefits it expected to receive when entering into the transaction. For additional information regarding our investment funds see the section of this prospectus captioned “—Liquidity and Capital Resources—Sources of Funds—Investment Fund Commitments.” In addition, with funds that adopt a partnership structure, we contribute a portion of the cash that is used to acquire solar energy systems. We intend to create additional investment funds with financial investors and potentially with corporate investors, we will also use debt, equity or other financing strategies to fund our operations, including our obligations to make contributions to investment funds. Such other financing strategies may increase our cost of capital.
 
Government Incentives
Our cost of capital, the price we can charge for electricity, the cost of our systems and the demand for residential distributed solar energy is impacted by a number of federal, state and local government incentives and regulations, including: tax credits, particularly the ITC; tax abatements; rebate programs; net metering; and to a lesser extent, cash grants, particularly the U.S. Treasury grant program. While we have received U.S. Treasury grants with respect to some of the solar energy systems that we have installed in the past, we have no other existing cash grant investment funds as of the date of this prospectus. If we were to enter into cash grant funds in the future we may be required to engage in further discussions with, or otherwise be subject to investigation by, the U.S. Treasury Department in relation to applications for cash grants made by such funds. In addition, these programs have on occasion been challenged by incumbent utilities and questioned by those in government and others arguing for less governmental spending and involvement in the energy market. To the extent that such views are reflected in government policy, the reduction of such incentives could adversely affect our results of operations, cost of capital and growth prospects.
Cost of Solar Energy Systems
Since our inception, the cost of solar panels and the components necessary to manufacture them has declined, which has been a key driver in the price we charge for electricity and customer adoption of solar energy. We have purchased substantially all of the solar panels used in our solar energy systems from manufacturers based in China which have benefited from favorable governmental policies and subsidies by the Chinese government. More recently, solar
 
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panel and component prices have stabilized and could increase in the future. In January 2014, the U.S. government broadened its investigation of Chinese pricing practices in this area to include solar panels and modules produced in China containing solar cells manufactured in other countries, such as Taiwan. On June 10, 2014, the U.S. government issued a preliminary determination of countervailing subsidies by China and has proposed duties ranging from 18.6% to 35.2% on Chinese solar companies importing certain solar products into the United States, including our solar panel suppliers. On July 25, 2014, the U.S. government issued a separate preliminary determination imposing antidumping duties on imports of certain solar products from China. Although the exact applicability remains unclear, these duties are at rates of 26.3% to 165% for affected Chinese products, including our solar panel supplier Trina Solar. The U.S. government issued a separate preliminary determination relating to imports of solar products from Taiwan, with duties at rates from 20.9% to 27.6% for affected Taiwanese products (although we do not currently purchase Taiwanese products). To the extent that the U.S. government makes a final determination that U.S. market participants experience harm from these Chinese pricing practices, such solar panels and modules could become subject to these or additional tariffs. These combined tariffs would make such solar cells less competitively priced in the United States, and the Chinese and Taiwanese manufacturers may choose to limit the amount of solar equipment they sell into the United States. As a result, it may be easier for solar cell manufacturers located outside of China or Taiwan to increase the prices of the solar cells they sell into the United States. The cost of other components, such as inverters, racking systems and other electrical equipment, may also vary from period to period. If solar energy system costs begin to increase, whether as a result of these tariffs or because of the removal of government subsidies, we may be forced to pass these costs on to our customers and the value proposition for customers would decrease. Alternatively, our financial results would decrease if we did not pass these costs on to our customers.
Expansion into New Markets
We currently operate in Arizona, California, Hawaii, Maryland, Massachusetts, New Jersey and New York. We have chosen to initially introduce our solar energy systems in these states because the utility prices, sun exposure, climate conditions and regulatory policies in these states provide for the most compelling market for distributed solar energy. We believe that these states remain significantly underpenetrated. Accordingly, we intend to further penetrate these markets by introducing our solar energy systems into new neighborhoods and communities in states where we already have operations.
In recent years, the combination of declining solar energy system costs and increasing retail electricity prices have made distributed solar energy a cost effective power source for homeowners in an increasing number of markets. We plan to enlarge our addressable market by expanding into new states that present attractive economics for us and homeowners. We believe our scalable approach to entering new geographic markets significantly accelerates the time required for us to effectively sell in a particular market after establishing a new office.
During 2014 we plan to open at least 20 new offices in states in which we currently have operations and new states into which we are expanding.
Additionally, we are considering the option of expanding into markets outside of the residential market. These markets may include small businesses such as community retailers as
 
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well as larger retailers and manufacturers. Upon determination of our strategy with respect to commercial customers, we would pursue similar debt, equity, and other financing strategies consistent with our approach in the residential market, including creating investment funds, to help finance such systems.
Sales Channels
We employ a direct-to-home sales model because we believe it improves sales effectiveness. Currently, we ask potential customers to sign long-term customer contracts at no upfront cost to them and prior to us conducting a formal assessment of the home, designing a system, obtaining permits and other actions required prior to installation. As may be expected with a direct sales model, a large number of potential customers who sign long-term customer contracts ultimately elect not to have a system installed or the potential customers fail to meet our underwriting standards. We believe there are opportunities to improve the rate at which potential customers ultimately move forward through system installation, including by conducting the formal assessment of the home or installing a control panel on the day the contract is signed, or requiring potential customers to commit to a modest upfront fee that would be credited against payments under our contracts with them. We are currently evaluating such changes to determine if they can improve our signing to installation rate.
In addition to direct sales, we are currently exploring opportunities to sell solar energy systems to customers through a number of distribution channels, including relationships with home builders, large construction, electrical and roofing companies and other third parties such as home improvement stores that have access to large numbers of potential customers. We believe that such initiatives will contribute to our revenue growth. The potential impact of these initiatives on our financial results, however, is uncertain because while the price per kilowatt we can charge may be lower, we expect to benefit from more favorable cost structures by virtue of the larger nature of the installations.
Operations as a Stand-Alone Company
We rely on the administrative and operational support of Vivint, Inc. to run our business. Some of the Vivint resources we are using include office space, information and technology resources and systems, purchasing services, operational and fleet services and marketing services. In addition, Vivint has made available to us lines of credit providing for up to $70.0 million in revolver borrowings.
The historical financial information we have included in this prospectus does not necessarily reflect what our financial position, results of operations, cash flows or costs and expenses would have been had we operated separately from Vivint during the historical periods presented. The historical costs and expenses reflected in our consolidated financial statements include charges to certain corporate functions historically provided to us by Vivint. We and Vivint believe these charges are reasonable reflections of the historical utilization levels of these services in support of our business. Although we have made and are continuing to make investments to support our near and longer-term growth as a fully independent company, we will continue to have an ongoing relationship with Vivint which will provide services such as office space, information and technology resources and systems, purchasing services, operational and fleet services and marketing services, pursuant to a transition services agreement. Our continued expansion may exceed the capacity that Vivint is
 
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able to provide under the terms of such agreement. If Vivint is unable to satisfy its obligations thereunder on a timely basis, we may face difficulties in providing these services internally or implementing acceptable, substitute arrangements with third-party providers. As we obtain separate technologies and services, we may incur additional costs which may impact our operating results.
Sale of Common Stock
In August 2014, we issued and sold 2,671,875 shares of our common stock to 313 Acquisition LLC for $10.667 per share for aggregate proceeds of $28.5 million. In September 2014, we issued and sold an aggregate of 7,031,247 additional shares of our common stock to 313 Acquisition LLC, Alex Dunn and an entity affiliated with Todd Pedersen for $10.667 per share for aggregate proceeds of $75.0 million. However, as discussed in the section of this prospectus captioned “—Critical Accounting Policies and Estimates—Stock-Based Compensation,” in connection with the preparation of our financial statements for the six months ended June 30, 2004, we re-evaluated the estimate of the fair value of our common stock for financial reporting purposes in light of our progress with respect to the offering contemplated by this prospectus and the establishment of the price range set forth on the cover of this prospectus and determined that a straight line interpolation from the $2.93 fair value estimate as of December 31, 2013 suggested by an independent third party common stock valuation and the midpoint of the preliminary price range set forth on the cover page of this prospectus as of September 17, 2014 was an appropriate method of re-evaluating the fair value of our common stock for each of the equity transactions completed between January 1, 2014 and September 17, 2014, including the sale of common stock. As to the shares sold to 313 Acquisition LLC, we expect that the difference between the estimated fair value as of each of the closing dates and the purchase price will be recorded as an aggregate return of capital of $43.4 million within additional paid-in capital. As to the shares sold to Alex Dunn and the entity affiliated with Todd Pedersen, we expect to record approximately $14.8 million in compensation expense within general and administrative expense.
Basis of Presentation
The consolidated financial statements included within this prospectus are presented for the periods from January 1, 2012 through November 16, 2012, which we refer to as the Predecessor Period or Predecessor, as the context requires and November 17, 2012 through December 31, 2012, the year ended December 31, 2013, and the six months ended June 30, 2013 and 2014, which we refer to as the Successor Periods or Successor, as the context requires. In connection with our acquisition by 313 Acquisition LLC, which we refer to as the Acquisition, our assets and liabilities were adjusted to fair value on the closing date of the Acquisition by application of push-down accounting. Due to the change in the basis of accounting resulting from the Acquisition, the consolidated financial statements for the Predecessor Period and the Successor Periods are not comparable.
Components of Results of Operations
Revenue
We classify and account for long-term customer contracts as operating leases. We consider the proceeds from solar energy system rebate incentives offered by certain state and
 
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local governments to form part of the payments under our operating leases and recognize such payments as revenue over the contract term. We record revenue from our operating leases over the term of our long-term customer contracts, which is typically 20 years. We also apply for and receive SRECs in certain jurisdictions for power generated by our solar energy systems. We generally recognize revenue related to the sale of SRECs upon delivery. The market for SRECs is extremely volatile and sellers are often able to obtain better unit pricing by selling a large quantity of SRECs. As a result, we may sell SRECs infrequently, at opportune times and in large quantities and the timing and volume of our SREC sales may lead to fluctuations in our quarterly results. During 2013, approximately 5% of our revenue was attributable to SREC sales and less than 1% of our revenue was attributable to state and local rebates and incentives. During the six months ended June 30, 2014, approximately 8% of our revenue was attributable to SREC sales and 1% of our revenue was attributable to state and local rebates and incentives. On occasion we have sold solar energy systems for cash. In these instances, the revenue is recognized upon the solar energy system passing inspection by the responsible city department. Subsequent to our acquisition of Solmetric Corporation in the first quarter of 2014, we began recognizing revenue related to the sale of photovoltaic installation software products and devices, a portion of which consists of post-contract customer support.
Operating Expenses
Cost of Revenue
Cost of operating leases and incentives is comprised of the depreciation of the cost of the solar energy systems, which are depreciated for accounting purposes over 30 years, the amortization of initial direct costs, which are amortized over the term of the long-term customer contract, warehouse rent, utilities, fleet vehicle executory costs and the indirect costs related to the processing, account creation, design, installation and interconnection of solar energy systems, such as personnel costs not directly associated to a solar energy system installation, which are not capitalized. Under our direct sales model, a vast majority of payments to our direct sales personnel consist of commissions attributable to long-term customer contract acquisition. Capitalized initial direct costs consist of these commissions and other customer acquisition expenses. The cost of operating leases and incentives related to the sales of SRECs is limited to broker fees which are only paid in connection with certain transactions. Accordingly, the sale of SRECs in a quarter favorably impacts our operating results for that period. In future periods, we anticipate that the cost of operating leases and incentives revenue will continue to increase in dollar amount along with our operating leases and incentive revenue as we continue to expand sales coverage.
Cost of solar energy system and product sales consists of direct and indirect material and labor costs for solar energy systems. It also consists of materials, personnel costs, depreciation, facilities costs, other overhead costs, and infrastructure expenses associated with the manufacturing of the photovoltaic installation software products and devices.
Sales and Marketing Expenses
Sales and marketing expenses include personnel costs such as salaries, benefits, bonuses, sales commissions and stock-based compensation for our corporate sales and marketing employees and exclude costs related to our direct sales personnel which are accounted for as cost of revenue. Sales and marketing expenses also include advertising, promotional and
 
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other marketing-related expenses, certain allocated corporate overhead costs related to facilities and information technology, travel and professional services. In future periods, we anticipate sales and marketing costs to increase significantly in absolute dollars but remain relatively constant as a percentage of revenue as we continue to grow our headcount for sales employees and undertake new marketing initiatives to continue to grow our business.
Research and Development
Research and development expense is comprised primarily of salaries and benefits and other costs related to the development of photovoltaic installation software products and devices. Our software development costs to date have not been significant and therefore have not been capitalized. Research and development costs are charged to expense when incurred. In future periods we anticipate research and development costs to remain relatively stable in absolute dollars.
General and Administrative Expenses
General and administrative expenses include personnel costs such as salaries, bonuses and stock-based compensation, professional fees related to legal, human resources and accounting and structured finance services. General and administrative expenses also include certain allocated corporate overhead costs related to facilities and information technology, travel and professional services. We expect that general and administrative expenses will increase on an absolute basis and as a percentage of revenue to support the growth in our business and as a result of the additional costs we will incur as we continue to build a corporate infrastructure separate from Vivint, in addition to the additional costs of being a public reporting company and the costs related to managing an increasing number of investment fund arrangements. Our historical financial results include charges for the use of services provided by Vivint centralized departments and shared facilities. These costs were based on the actual cost incurred by Vivint without mark-up. The charges to us may not be representative of what the costs would have been had we operated separately from the Vivint businesses during the periods presented, however, we believe the amounts charged are representative of the incremental cost to Vivint to provide these services to us. In future periods we expect to continue to use certain of these services, such as office space, information and technology resources and systems, purchasing services, operational and fleet services and marketing services, from Vivint as part of the transition services agreement, which provides that we will be charged based upon the actual costs incurred.
Amortization of Intangible Assets
We recorded intangible assets at their fair value of $43.8 million as of the date of the Acquisition. Such intangible assets are being amortized over their estimated useful life of three years. In addition, we recorded finite-lived intangible assets of $3.7 million with useful lives ranging from five to ten years as part of the acquisition of Solmetric Corporation in January 2014. We also recorded $2.1 million related to in-process research and development which are subject to amortization upon completion of the project or impairment if the project is subsequently abandoned.
 
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Non-Operating Expenses
Interest Expense
Interest expense primarily consists of the interest charges associated with our indebtedness and the interest component of capital lease obligations. In the future we may incur additional indebtedness to fund our operations and our interest expense would correspondingly increase.
Other Expense
Other expense consists of interest and penalties primarily associated with employee payroll withholding tax payments which were not paid in a timely manner.
Provision for Income Taxes
We are subject to taxation in the United States, where all our business is conducted.
Our effective tax rates differ from the statutory rate primarily due to changes in the valuation allowance on our deferred taxes, state taxes, transactions with non-controlling interests and redeemable non-controlling interests, tax credits and nondeductible expenses. Our tax expense (benefit) is composed primarily of state and local minimum taxes paid, intercompany gains, tax credits and net operating losses that are being carried forward to future tax periods.
As of June 30, 2014, we had approximately $4.5 million of federal and $4.5 million of state net operating loss carryforwards, or collectively the NOLs, available to offset future taxable income, if any, which expire in varying amounts from 2031 through 2034 for federal and state tax purposes if unused. It is possible that we will not generate taxable income in time to use these NOLs before their expiration. In addition, under Section 382 of the Internal Revenue Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change federal NOLs to offset future taxable income. We have not yet completed a Section 382 analysis to determine if an ownership change will occur as a result of this offering. Until such analysis is completed, we cannot be sure that the full amount of the existing federal NOLs will be available, even if we generate taxable income before their expiration.
Net Income Available (Loss Attributable) to Stockholder
We determine the net income available (loss attributable) to stockholder by deducting from net loss the net loss attributable to non-controlling interests and redeemable non-controlling interests. The net loss attributable to non-controlling interests and redeemable non-controlling interests represents the investment fund investors’ allocable share in the results of operations of the investment funds, which we consolidate.
We have determined that the legal provisions in the contractual arrangements of the investment funds represent substantive profit-sharing arrangements, where the allocation to the partners differ from the stated ownership percentages. We have further determined that the appropriate methodology for attributing income and loss to the non-controlling interests and redeemable non-controlling interests each period is a balance sheet approach using the HLBV method. Under the HLBV method, the amounts of income and loss attributed to the non-controlling interests and redeemable non-controlling interests in the consolidated statements of operations reflect changes in the amounts the fund investors would hypothetically receive at each balance sheet date
 
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under the liquidation provisions of the contractual agreements of these funds, assuming the net assets of the respective investment funds were liquidated at recorded amounts determined in accordance with GAAP. The fund investors’ interest in the results of operations of these investment funds is determined as the difference in the non-controlling interests and redeemable non-controlling interests’ claim under the HLBV method at the start and end of each reporting period, after taking into account any capital transactions between the fund and the fund investors. For all of our investment funds, the application of HLBV is performed consistently, however, the results of that application and its impact on the income or loss allocated between us and the non-controlling interests and redeemable non-controlling interests depend on the respective funds’ specific contractual liquidation provisions. For all of our investment funds, the HLBV results are generally affected by, among other factors, the tax attributes allocated to the fund investors including tax bonus depreciation and investment tax credits or U.S. Treasury grants in lieu of the investment tax credits, the amount of preferred returns that have been paid to the fund investors by the investment funds, and the allocation of tax income or losses in a liquidation scenario.
Regardless of the investment fund structure, the contractual liquidation provisions of our existing funds provide that the allocation percentages between us and the investor change, or “flip,” under certain circumstances. Prior to the point at which the allocation percentage flips, the investor is entitled to receive most of the value generated by the solar energy systems; afterwards, we are entitled to receive most of the value. The difference between our current inverted lease structures and our current partnership structures that drives a significant impact on our results from the application of the HLBV method is how the flip point is determined. The result of this difference is described in detail in the following paragraphs.
For our existing investment funds which have adopted the partnership structure, the flip point is tied to the achievement of the fund investor’s targeted rate of return. The receipt of tax benefits by the fund investor count towards the achievement of such target, which reduces the amount distributable to the fund investor in a hypothetical liquidation under these funds’ contractual liquidation provisions. This results in a net loss attributable to the fund investor in the period in which these tax benefits are received as a result of our application of the HLBV method.
For our existing investment funds which have adopted the inverted lease structure, the flip point is typically tied to the passage of a period of time that corresponds to the expiration of the recapture period associated with ITCs. An investor in a fund with an inverted lease fund structure will receive tax benefits similar to an investor in a fund that has adopted a partnership structure; however, unlike the partnership investment fund structure, the receipt of tax benefits by the fund investor does not impact the amount distributable to the fund investor in a hypothetical liquidation under these funds’ contractual liquidation provisions. At the flip point, which typically corresponds to the end of the ITC recapture period, the fund investor’s claims on the net assets of the investment fund generally decreases. This is expected to result in a net loss attributable to the fund investor in the period when the flip occurs as a result of our application of the HLBV method.
These differences are a result of the specific contractual provisions for each of our existing funds and are not necessarily indicative of terms for our future partnership or inverted lease structures. Future investment funds may contain different features than those that we currently employ and, as a result, would not necessarily impact the HLBV calculation and resulting allocation of net income or loss in the same way that our existing funds do. For example, we may in the future enter into partnership structures in which the flip is based on the passage of time, and we would expect such funds to impact the HLBV calculation in ways that more closely resemble the impact of our current inverted lease funds than our current partnership funds.
 
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The HLBV calculation for both fund structures is also impacted by the difference between the cash received by us from the investment funds and the carrying value of the solar energy systems contributed to the investment funds. The purchase price paid for solar energy systems by an investment fund is based on the fair market value, as determined by an independent appraiser. As the Company consolidates the subsidiary that develops the solar energy systems as well as the investment fund, the sales of the solar energy systems are considered transactions under common control and therefore reflected at their historical cost (i.e., their carryover basis). Cash received in excess of the installed purchased solar energy systems’ carryover basis is treated as deemed distributions from the investment fund to the Company. In most cases, any excess of the purchase price over the carryover basis of the solar energy systems would result in allocations of income to us.
The HLBV calculation for both fund structures may also be affected by the timing of an investor’s cash contribution to the investment fund relative to the timing of the contribution or sale of the solar energy systems to the applicable investment fund. A portion of the solar energy systems purchased by, or contributed to, an investment fund are not installed at the time of purchase or contribution and therefore do not have any carryover basis allocated to them. Our wholly-owned subsidiary has an obligation to purchase, install, and provide the solar energy system equipment to an investment fund for any in-progress projects that were previously purchased by such fund. If our wholly-owned subsidiary does not ultimately provide the investment fund with the solar energy systems that it purchased, it is required to refund the purchase price to the investment fund. In these specific cases, we determined that the portion of the cash purchase price paid by an investment fund that relates to in-progress projects should be recorded as a receivable by the investment fund (i.e., representing the investment fund’s right to receive solar panels and related equipment for solar energy systems that are installed after the project is purchased by the investment fund). Given that our subsidiary controls the investment fund, we have accounted for the receivable balance (i.e., the entire cash balance paid to our subsidiary for the purchased, uninstalled solar energy systems) as a reduction in the investment fund’s members’ equity in accordance with GAAP. Initially, this results in the allocation of losses amongst the partners, primarily to the fund investor, because the GAAP equity balance is less than the tax capital account. When such solar energy systems are subsequently installed, the systems are recorded at their carryover basis as a common control transaction and the receivable balance is eliminated. With the elimination of the receivable, the investment fund’s member’s equity is increased to the extent of the carrying amount of the assets contributed which results in the reversal of a portion of the prior allocation of losses. In most cases, the reversal of such losses occurs within a short period of time, approximately three months. As discussed above, the difference between the receivable balance eliminated (i.e., the cash received for such solar energy systems) and the carryover basis of the installed solar energy systems is treated as deemed distributions from the investment fund to the Company, and as a result that portion of the prior allocation of losses is not reversed over time.
If the redemption value of our redeemable non-controlling interests exceeds their carrying value after attribution of income or loss under the HLBV method in any period, we will make an additional attribution of income to our redeemable non-controlling interests such that their carrying value will at least equal the redemption value.
We apply the HLBV method consistently across our investment funds; however, the impact on non-controlling interests and redeemable non-controlling interests may vary significantly period-to-period depending on the structure of the funds we enter into, the contractual liquidation
 
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provisions of such investment funds, the age of such investment funds and the timing of an investor’s cash contribution to the investment fund relative to the timing of the contribution or sale by us of the solar energy system to the applicable investment fund.
Results of Operations
We believe that a discussion of the results of operations for a partial year versus a full year would not be meaningful. We have therefore set forth a discussion comparing the results of operations for the year ended December 31, 2013 to the results of operations of the Successor Period from November 17, 2012 through December 31, 2012, combined with the results of operations of the Predecessor Period from January 1, 2012 through November 16, 2012. We have also provided a discussion comparing the results of operations for the six months ended June 30, 2014 to the results of operations for the six months ended June 30, 2013, both of which occurred in the Successor Period. The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes thereto included elsewhere in this prospectus. Certain financial information for the Successor Period is not comparable to the Predecessor Period due to the change in basis of accounting as a result of the Acquisition. This information includes, but may not be limited to, amortization expense, Acquisition transaction expenses and accretion to redemption value.
 
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The following table sets forth selected consolidated statements of operations data for each of the periods indicated.

 	 	Predecessor	 	 	Successor	 	
 	 	Period from
January 1,
through
November 16,
2012	 	 	Period from
November 17,
through
December 31,
2012	 	 	Year Ended
December 31,
2013	 	 	Six Months Ended
June 30	 	
 	 			 			 			 	2013	 	 	2014	 	
 	 	 	 	 	 	 	 	(Restated)	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	(In thousands)	 	 	 	 	 	 	 	
Revenue:	 			 	 				 				 				 				
Operating leases and incentives	 	$	183	  	 	$	109	  	 	$	5,864	  	 	$	1,793	  	 	$	8,667	  	
Solar energy system and product sales	 	 	157	  	 	 	—	  	 	 	306	  	 	 	132	  	 	 	1,398	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	 	 	340	  	 	 	109	  	 	 	6,170	  	 	 	1,925	  	 	 	10,065	  	
Operating expenses:	 			 	 				 				 				 				
Cost of revenue—operating leases and incentives	 	 	3,302	  	 	 	1,018	  	 	 	19,004	  	 	 	8,013	  	 	 	27,646	  	
Cost of revenue—solar energy system and product sales	 	 	95	  	 	 	—	  	 	 	123	  	 	 	76	  	 	 	883	  	
Sales and marketing	 	 	1,471	  	 	 	533	  	 	 	7,348	  	 	 	2,890	  	 	 	11,009	  	
Research and development	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	972	  	
General and administrative	 	 	7,789	  	 	 	971	  	 	 	16,438	  	 	 	4,832	  	 	 	26,106	  	
Amortization of intangible assets	 	 	—	  	 	 	1,824	  	 	 	14,595	  	 	 	7,297	  	 	 	7,428	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	12,657	  	 	 	4,346	  	 	 	57,508	  	 	 	23,108	  	 	 	74,044	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from operations	 	 	(12,317	) 	 	 	(4,237	) 	 	 	(51,338	) 	 	 	(21,183	) 	 	 	(63,979	) 	
Interest expense	 	 	881	  	 	 	96	  	 	 	3,144	  	 	 	991	  	 	 	4,074	  	
Other expense	 	 	240	  	 	 	44	  	 	 	1,865	  	 	 	522	  	 	 	1,165	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before income taxes	 	 	(13,438	) 	 	 	(4,377	) 	 	 	(56,347	) 	 	 	(22,696	) 	 	 	(69,218	) 	
Income tax expense (benefit)	 	 	7	  	 	 	(1,074	) 	 	 	123	  	 	 	45	  	 	 	6,936	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	 	(13,445	) 	 	 	(3,303	) 	 	 	(56,470	) 	 	 	(22,741	) 	 	 	(76,154	) 	
Net loss attributable to non-controlling interests and redeemable non-controlling interests	 	 	(1,771	) 	 	 	(699	) 	 	 	(62,108	) 	 	 	(2,307	) 	 	 	(88,688	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income available (loss attributable) to stockholder	 	 	(11,674	) 	 	 	(2,604	) 	 	 	5,638	  	 	 	(20,434	) 	 	 	12,534	  	
Accretion to redemption value of Series B redeemable preferred stock	 	 	(20,000	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income available (loss attributable) to common stockholder	 	$	(31,674	) 	 	$	(2,604	) 	 	$	5,638	  	 	$	(20,434	) 	 	$	12,534	  	

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Comparison of Six Months Ended June 30, 2013 and 2014
Revenue

 	    	Six Month Ended June 30,	 	  	$ Change
2013 to 2014	 	
 	    	        2013        	 	  	        2014        	 	  			
 	    	(In thousands)	 	
Total revenue	    	$	            1,925	  	  	$	          10,065	  	  	$	        8,140	  	
The $8.1 million increase in total revenue was primarily attributable to an increase of $6.2 million related to operating lease and incentives as the number of installed solar energy systems in service increased significantly for the six months ended June 30, 2014 compared to the same period in 2013. In addition, revenue from the sale of SRECs increased $0.7 million for the six months ended June 30, 2014 compared to the same period in 2013. Finally, subsequent to our acquisition of Solmetric Corporation in January 2014, we recognized revenue of $1.3 million related to the sale of photovoltaic installation software products and devices in the six months ended June 30, 2014.
Operating Expenses

 	    	Six Month Ended June 30,	 	  	$ Change
2013 to 2014	 	
 	    	        2013        	 	  	        2014        	 	  			
 	    	(In thousands)	 	
Operating expenses:	    				  				  				
Cost of revenue—operating leases and incentives	    	$	8,013	  	  	$	27,646	  	  	$	19,633	  	
Cost of revenue—solar energy system and product sales	    	 	76	  	  	 	883	  	  	 	807	  	
Sales and marketing	    	 	2,890	  	  	 	11,009	  	  	 	8,119	  	
Research and development	    	 	—	  	  	 	972	  	  	 	972	  	
General and administrative	    	 	4,832	  	  	 	26,106	  	  	 	21,274	  	
Amortization of intangible assets	    	 	7,297	  	  	 	7,428	  	  	 	131	  	
	    	 	 	 	  	 	 	 	  	 	 	 	
Total operating expenses	    	$	23,108	  	  	$	74,044	  	  	$	50,936	  	
	    	 	 	 	  	 	 	 	  	 	 	 	
Cost of Revenue .    The $19.6 million increase in cost of revenue—operating leases and incentives was primarily due to a $12.1 million increase in indirect costs related to the design, installation and interconnection of solar energy systems to the power grid that were expensed in the period and a $2.4 million increase in depreciation and amortization of solar energy systems, consistent with the significant growth in revenue over these periods. The facility and information technology expenses related to our agreements with Vivint and allocated to cost of revenue—operating leases and incentives increased by $2.5 million due to our increased headcount as well as increased square footage utilized by our employees. Other factors contributing to the increase in these expenses were the increase in travel costs related to design and installation activities of $1.2 million and the increases in fleet vehicle maintenance, insurance, warehouse and other related costs of $1.3 million. The $0.8 million increase in cost of revenue—solar energy system and product sales in the six months ended June 30, 2014 was primarily due to the costs of photovoltaic installation software products.
Sales and Marketing Expense.     The $8.1 million increase in sales and marketing expense was attributable to our continued efforts to grow our business by entering into new markets,
 
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opening new sales offices in various locations and increased hiring of sales and marketing personnel. Specifically, the higher expense level was attributable to increased compensation and benefits expense of $4.6 million, increased costs related to advertising, promotional and other marketing-related expenses of $2.8 million, increased travel expenses of $0.7 million and increased facility and information technology expenses allocated to sales and marketing related to our agreement with Vivint of $0.1 million.
Research and Development Expense.     The $1.0 million increase in research and development expense was attributable to photovoltaic installation software product and device development during the six months ended June 30, 2014. Prior to the acquisition of Solmetric Corporation in January 2014, we did not incur any research and development expenses.
General and Administrative Expense.     The $21.3 million increase in general and administrative expenses primarily resulted from a $13.9 million increase in professional service fees driven primarily from costs related to our anticipated initial public offering and preparations to become a public reporting company. In addition, compensation and benefits increased $6.2 million as we added headcount to support our growth, new corporate office computer equipment and software increased by $0.2 million, information technology expenses related to our agreement with Vivint allocated to general and administrative expenses increased by $0.3 million, and banking service charges increased by $0.2 million.
Amortization of Intangible Assets.     In connection with the Acquisition, we recorded intangible assets at their fair value of $43.8 million as of the date of the Acquisition for which amortization of $7.3 million is reflected in each of the six months ended June 30, 2013 and 2014. Additionally, as part of the acquisition of Solmetric Corporation in January 2014, we recorded additional intangible assets at their fair value of $5.8 million, of which $3.7 million is subject to amortization. The $0.1 million increase in amortization of intangible assets in the six months ended June 30, 2014 is a result of these acquired Solmetric intangible assets.
Non-Operating Expenses

 	  	   Six Month Ended June 30,   	 	  	$ Change
2013 to 2014	 	
 	  	        2013        	 	  	        2014        	 	  			
 	  	(In thousands)	 	
Interest expense	  	$	    991	  	  	$	    4,074	  	  	$	    3,083	  	
Other expense	  	 	522	  	  	 	1,165	  	  	 	643	  	
Interest Expense .    The $3.1 million increase in interest expense was primarily the result of additional borrowings. Of the $3.1 million increase, $2.1 million related to our revolving lines of credit with Vivint and $1.2 million related to the Bank of America, N.A. term loan credit facility entered into in May 2014, $0.7 million of which were loan fees. These increases were partially offset by a decrease of $0.2 million in interest expense related to the revolving line of credit that was terminated in June 2013.
Other Expense .    The $0.6 million increase in other expenses during the six months ended June 30, 2014 as compared to the prior period was comprised primarily of interest and penalties associated with payroll taxes from 2012 and 2013 that were not paid in a timely manner.
 
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Net Loss Attributable to Non-Controlling Interests and Redeemable Non-Controlling Interests

 	    	   Six Month Ended June 30,   	 	  	$ Change
2013 to 2014	 	
 	    	        2013        	 	  	2014	 	  			
 	    	(In thousands)	 	
Net loss attributable to non-controlling interests and redeemable non-controlling interests	    	$	         (2,307	) 	  	$	    (88,688	) 	  	$	    (86,381	) 	
The allocation of net loss to non-controlling interests and redeemable non-controlling interests as a percentage of our total net loss was 10% and 116% for the six months ended June 30, 2013 and 2014. The increase in net loss attributable to non-controlling interests and redeemable non-controlling interests was mainly due to the $88.4 million loss allocation from funds into which we sold assets. Due to the increase in the number of investment funds, loss allocations from funds into which we sold assets for the six months ended June 30, 2014 are greater compared to the six months ended June 30, 2013. These loss allocations are partially offset by a $2.0 million decrease in net loss attributable to redeemable non-controlling interests. Losses that are allocated to the fund investors under the HLBV method relate to hypothetical liquidation losses resulting from differences between the net assets of the investment fund and the partners’ respective tax capital accounts in the investment fund. Specifically, a large portion of the total loss allocated to the non-controlling interests was caused by a significant liquidation loss for a new fund which experienced differences between the GAAP net equity and the tax capital accounts due to the investment fund’s purchase of a large number of solar energy systems that were not yet installed. Losses to the fund investors were also driven by a reduction in certain fund investors’ claims on net assets due to the election of the partnership to take bonus depreciation allowances under Internal Revenue Code Section 179, as well as the receipt of ITCs which were primarily allocated to fund investors.
Comparison of Predecessor Period Ended November 16, 2012, Successor Period Ended December 31, 2012 and Year Ended December 31, 2013
Amounts in the “$ Change 2012 to 2013” column equal results of operations for the year ended December 31, 2013 less combined results of operations for the Successor Period from November 17, 2012 through December 31, 2012 and the results of operations for the Predecessor Period from January 1, 2012 through November 16, 2012.
Revenue

 	  	Predecessor	 	  	Successor	 	  	 	 	
 	  	Period from
January 1,
through
November 16,
2012	 	  	Period from
November 17,
through
December 31,
2012	 	  	Year Ended
December 31,
2013	 	  	$ Change
2012 to
2013	 	
 	  	 	 	  	(In thousands)	 	  	 	 	
Total revenue	  	$	        340	  	  	$	        109	  	  	$	    6,170	  	  	$	    5,721	  	
The $5.7 million increase in total revenue was primarily attributable to an increase of $5.2 million related to operating leases and incentives as the number of installed solar energy systems in service increased significantly from 2012 to 2013. In addition, sales of SRECs increased to $0.3 million in 2013 from $15,000 in 2012, and was recognized within operating leases and incentives revenue. We also had an increase of $0.1 million in solar energy system sales.
 
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Operating Expenses

 	  	Predecessor	 	  	Successor	 	  	 	 	
 	  	Period from
January 1,
through
November 16,
2012	 	  	Period from
November 17,
through
December 31,
2012	 	  	Year Ended
December 31,
2013	 	  	$ Change
2012 to
2013	 	
 	  	 	 	  	 	 	  	(Restated)	 	  	 	 	
 	  	(In thousands)	 	
Operating expenses:	  			 	  				  				  				
Cost of revenue—operating leases and incentives	  	$	3,302	  	  	$	1,018	  	  	$	19,004	  	  	$	14,684	  	
Cost of revenue—solar energy system and product sales	  	 	95	  	  	 	—	  	  	 	123	  	  	 	28	  	
Sales and marketing	  	 	1,471	  	  	 	533	  	  	 	7,348	  	  	 	5,344	  	
General and administrative	  	 	7,789	  	  	 	971	  	  	 	16,438	  	  	 	7,678	  	
Amortization of intangible assets	  	 	—	  	  	 	1,824	  	  	 	14,595	  	  	 	12,771	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total operating expenses	  	$	    12,657	  	  	$	        4,346	  	  	$	    57,508	  	  	$	    40,505	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Cost of Revenue .    The $14.7 million increase in cost of revenue—operating leases and incentives was primarily due to a $9.4 million increase in indirect costs related to the design, installation and interconnection of solar energy systems to the power grid that were expensed in the period and a $1.9 million increase in depreciation and amortization of solar energy systems, consistent with the significant growth in revenue over these periods. The facility and information technology expenses related to our agreements with Vivint and allocated to cost of revenue increased by $1.8 million due to our increased headcount as well as increased square footage utilized by our employees. Warehouse and other related costs increased by $1.1 million. We also experienced a $0.3 million increase in fleet vehicle maintenance and insurance and a $0.3 million increase in travel costs related to design and installation activities.
Sales and Marketing Expense.     The $5.3 million increase in sales and marketing expense was attributable to our continued efforts to grow our business by entering into new markets, opening new sales offices in various locations and increased hiring of sales and marketing personnel. Specifically, the higher expense level was attributable to increased compensation and benefits expense of $3.0 million, increased costs related to advertising, promotional and other related expenses of $2.0 million and increased travel expenses of $0.4 million.
General and Administrative Expense.     The $7.7 million increase in general and administrative expenses primarily resulted from a $5.1 million increase in compensation and benefits as we increased headcount to support our growth. In addition, professional service fees increased by $3.8 million, office supplies and postage increased by $0.6 million, information technology related to our agreement with Vivint allocated to general and administrative expenses increased by $0.4 million, insurance costs increased by $0.4 million, travel expenses increased by $0.4 million and banking service charges increased by $0.2 million. These increases were partially offset by Acquisition-related costs consisting of $2.7 million of special retention bonuses and other payments to employees and $1.0 million of transaction fees that were expensed in the Predecessor Period which did not occur in the Successor Periods.
 
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Amortization of Intangible Assets.     In connection with the Acquisition, we recorded intangible assets at their fair value of $43.8 million as of the date of the Acquisition for which amortization is reflected in the Successor Periods ended December 31, 2012 and 2013.
Non-Operating Expenses

 	  	Predecessor	 	 	Successor	 	 	 	 	
 	  	Period from
January 1,
through
November 16,
2012	 	 	Period from
November 17,
through
December 31,
2012	 	 	Year Ended
December 31,
2013	 	 	$ Change
2012 to
2013	 	
 	  	(In thousands)	 	
Interest expense	  	$	        881	  	 	$	        96	  	 	$	    3,144	  	 	$	    2,167	  	
Other expense	  	 	240	  	 	 	44	  	 	 	1,865	  	 	 	1,581	  	
Interest Expense .    The increase in interest expense was primarily the result of additional borrowings under our revolving lines of credit with Vivint.
Other Expense .    The increase in other expenses was comprised primarily of interest and penalties associated with payroll taxes that were not paid in a timely manner in 2012 and 2013.
Income Tax Expense (Benefit)

 	  	Predecessor	 	 	Successor	 	 	 	 	
 	  	Period from
January 1,
through
November 16,
2012	 	 	Period from
November 17,
through
December 31,
2012	 	 	Year
Ended
December 31,
2013	 	 	$ Change
2012 to
2013	 	
 	  	 	 	 	 	 	 	(Restated)	 	 	 	 	
 	  	(In thousands)	 	
Income tax expense (benefit)	  	$	                7	  	 	$	    (1,074)	  	 	$	    123	  	 	$	    1,190	  	
Income Tax Expense (Benefit) .    The $1.2 million increase in income tax expense (benefit) was a result of an increase in taxable income resulting from adjustments for permanent items, such as increases in losses attributable to non-controlling interests and redeemable non-controlling interests, intercompany sales, tax credits and other nondeductible expenses.
Net Loss Attributable to Non-Controlling Interests and Redeemable Non-Controlling Interests

 	  	Predecessor	 	 	Successor	 	 	 	 	
 	  	Period from
January 1,
through
November 16,
2012	 	 	Period from
November 17,
through
December 31,
2012	 	 	Year
Ended
December 31,
2013	 	 	$ Change
2012 to
2013	 	
 	  	 	 	 	 	 	 	(Restated)	 	 	 	 	
 	  	(In thousands)	 	
Net loss attributable to non-controlling interests and redeemable non-controlling interests	  	$	    (1,771)	  	 	$	        (699)	  	 	$	(62,108	) 	 	$	(59,638	) 	
The allocation of net loss to non-controlling interests and redeemable non-controlling interests as a percentage of our total net loss was 13%, 21%, and 110% for the Predecessor Period and the Successor Periods ended December 31, 2012 and 2013. The increase in net loss
 
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attributable to non-controlling interests and redeemable non-controlling interests was mainly due to the $57.5 million loss allocation from funds into which we were selling assets. The losses to the fund investors for the period ending December 31, 2013 are primarily driven by a reduction in certain fund investors’ claims on net assets due to the election of the partnership to take bonus depreciation allowances under Internal Revenue Code Section 179, as well as the receipt of investment tax credits which were primarily allocated to fund investors.
Accretion to Redemption Value of Series B Redeemable Preferred Stock

 	  	Predecessor	 	 	Successor	 	 	 	 	
 	  	Period from
January 1,
through
November 16,
2012	 	 	Period from
November 17,
through
December 31,
2012	 	 	Year
Ended
December 31,
2013	 	 	$ Change
2012 to
2013	 	
 	  	(In thousands)	 	
Accretion to redemption value of Series B redeemable preferred stock	  	$	(20,000	) 	 	$	    —	  	 	$	    —	  	 	$	20,000	  	
Immediately prior to the Acquisition, we had 8,342 shares of Series B redeemable preferred stock outstanding. Due to the change in control upon the Acquisition, we recorded $20.0 million to accrete Series B redeemable preferred stock to redemption value in relation to the redemption of such preferred stock in the Predecessor Period. We do not expect to incur similar charges in future periods as we no longer have redeemable preferred stock outstanding after the Acquisition.
 
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Quarterly Results of Operations
The following tables set forth our unaudited quarterly consolidated statements of operations data for each of the six quarters in the 18 month period ended June 30, 2014. We have prepared the quarterly data on a consistent basis with the audited consolidated financial statements included in this prospectus. In the opinion of management, the financial information reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of this data. This information should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this prospectus. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period.

 	  	Three Months Ended	 	
 	  	March 31,
2013	 	 	June 30,
2013	 	 	September 30,
2013	 	 	December 31,
2013	 	 	March 31,
2014	 	 	June 30,
2014	 	
 	  	 	 	 	 	 	 	 	 	 	(Restated)	 	 	 	 	
 	  	 	 	 	 	 	 	(In thousands)	 	 	 	 	 	 	 	
Revenue:	  				 				 				 				 				 				
Operating leases and incentives	  	$	568	  	 	$	1,225	  	 	$	2,123	  	 	$	1,948	  	 	$	2,863	  	 	$	5,804	  	
Solar energy system and product sales	  	 	24	  	 	 	108	  	 	 	151	  	 	 	23	  	 	 	644	  	 	 	754	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	  	 	592	  	 	 	1,333	  	 	 	2,274	  	 	 	1,971	  	 	 	3,507	  	 	 	6,558	  	
Operating expenses:	  				 				 				 				 				 				
Cost of revenue — operating leases and incentives	  	 	3,617	  	 	 	4,396	  	 	 	4,811	  	 	 	6,180	  	 	 	11,187	  	 	 	16,459	  	
Cost of revenue — solar energy system and product sales	  	 	15	  	 	 	61	  	 	 	32	  	 	 	15	  	 	 	398	  	 	 	485	  	
Sales and marketing	  	 	1,217	  	 	 	1,673	  	 	 	2,105	  	 	 	2,353	  	 	 	5,219	  	 	 	5,790	  	
Research and development	  	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	472	  	 	 	500	  	
General and administrative	  	 	1,796	  	 	 	3,036	  	 	 	5,135	  	 	 	6,471	  	 	 	12,354	  	 	 	13,752	  	
Amortization of intangible assets	  	 	3,649	  	 	 	3,648	  	 	 	3,649	  	 	 	3,649	  	 	 	3,737	  	 	 	3,691	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	10,294	  	 	 	12,814	  	 	 	15,732	  	 	 	18,668	  	 	 	33,367	  	 	 	40,677	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from operations	  	 	(9,702	) 	 	 	(11,481	) 	 	 	(13,458	) 	 	 	(16,697	) 	 	 	(29,860	) 	 	 	(34,119	) 	
Interest expense	  	 	425	  	 	 	566	  	 	 	963	  	 	 	1,190	  	 	 	1,401	  	 	 	2,673	  	
Other expense	  	 	168	  	 	 	354	  	 	 	541	  	 	 	802	  	 	 	888	  	 	 	277	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before income taxes	  	 	(10,295	) 	 	 	(12,401	) 	 	 	(14,962	) 	 	 	(18,689	) 	 	 	(32,149	) 	 	 	(37,069	) 	
Income tax expense (benefit)	  	 	485	  	 	 	(440	) 	 	 	31	  	 	 	47	  	 	 	4,394	  	 	 	2,542	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	  	 	(10,780	) 	 	 	(11,961	) 	 	 	(14,993	) 	 	 	(18,736	) 	 	 	(36,543	) 	 	 	(39,611	) 	
Net loss attributable to non-controlling interests and redeemable non-controlling interests	  	 	(2,121	) 	 	 	(186	) 	 	 	(37,848	) 	 	 	(21,953	) 	 	 	(43,584	) 	 	 	(45,104	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income available (loss attributable) to common stockholder	  	$	(8,659	) 	 	$	(11,775	) 	 	$	22,855	  	 	$	3,217	  	 	$	7,041	  	 	$	5,493	  	

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Quarterly Trends
Revenue
Operating leases and incentives revenue has generally increased quarter over quarter as a result of our continued increase in the number of installations of solar energy systems under power purchase agreements in new and existing markets. Operating leases and incentives revenue in the three months ended December 31, 2013 was lower than the preceding quarter due to the impact of seasonally shorter daylight hours in the winter.
Revenue from solar energy system and product sales fluctuated in 2013 as we only sold solar energy systems on occasion. Revenue from solar energy system and product sales in the first two quarters of 2014 is primarily from sales of photovoltaic installation software products and devices subsequent to our acquisition of Solmetric Corporation in January 2014.
Operating Expenses
Cost of operating leases and incentives revenue, which is comprised mainly of depreciation, has increased quarter over quarter primarily as a result of the increase in the number of installed solar energy systems under lease and power purchase agreements.
Cost of revenue from solar energy system and product sales has increased quarter over quarter primarily as a result of increased sales of photovoltaic installation software products and devices subsequent to our acquisition of Solmetric Corporation in January 2014.
Sales and marketing expenses have increased quarter over quarter as we have continued to increase our headcount for sales employees and undertake new marketing initiatives to continue to grow our business.
General and administrative expenses have increased quarter over quarter as a result of additional headcount and expenditures in order to support the growth of our business as well as the additional costs of preparing to be a public reporting company.
Amortization of intangible assets increased in the first two quarters of 2014 due to the finite-lived intangible assets of $3.7 million which we recorded as part of the acquisition of Solmetric Corporation in January 2014.
Non-Operating Expenses
Interest expense increased quarter over quarter due to additional borrowings in order to support our growth.
Other expense consists mainly of interest and penalties primarily associated with employee payroll withholding tax payments which were not paid in a timely manner. The decrease in other expense in the second quarter of 2014 was the result of our resolving the cause of such late employee payroll withholding tax payments.
 
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Net Loss Attributable to Non-controlling Interests and Redeemable Non-controlling Interests
As discussed in the section of this prospectus captioned “—Components of Results of Operations,” we apply the HLBV method in a consistent manner to all of our investment funds; however, as seen in the quarterly trend, the impact on non-controlling interests and redeemable non-controlling interests varies significantly period-to-period depending on the structure of the funds we enter into, the contractual liquidation provisions of such investment funds, the age of such investment funds and the timing of an investor’s cash contribution to the investment fund relative to the timing of the contribution or sale by us of the solar energy system to the applicable investment fund.
Seasonality
We have experienced seasonal fluctuations in our operations. For example, the amount of revenue we recognize in a given period from power purchase agreements is dependent in part on the amount of energy generated by solar energy systems under such contracts. As a result, operating leases and incentives revenue is impacted by seasonally shorter daylight hours in winter months. In addition, our ability to install solar energy systems is impacted by weather. For example, we have limited ability to install solar energy systems during the winter months in the Northeastern United States. Such delays can impact the timing of when we can install and begin to generate revenue from solar energy systems. However, given that we are an early stage company operating in a rapidly growing industry, the true extent of these fluctuations may have been masked by our recent growth rates and thus may not be readily apparent from our historical operating results and may be difficult to predict. As such, our historical operating results may not be indicative of future performance.
Liquidity and Capital Resources
As of June 30, 2014, we had cash and cash equivalents of $25.2 million, which consisted principally of cash and time deposits with high-credit-quality financial institutions. Since inception, we have financed our operations primarily from investment fund arrangements that we have formed with fund investors and, to a lesser extent, from borrowings. Our principal uses of cash are funding our operations, including the costs of acquisition and installation of solar energy systems, satisfaction of our obligations under our debt instruments and other working capital requirements. Our business model requires substantial outside financing arrangements to grow the business and facilitate the deployment of additional solar energy systems. Since we invest our available cash into purchases of new solar energy systems, our working capital balance was negative as of June 30, 2014. As we continue to grow our business, we anticipate that our negative working capital balance will also grow. The solar energy systems that are operational typically generate a positive return rate, however, in order to grow, we are dependent on financing from outside parties. If financing is not available to us on acceptable terms, if and when needed, we may be required to reduce planned spending, which could have a material adverse effect on our operations. While there can be no assurances, we anticipate raising additional required capital from new and existing investors. We believe our cash and cash equivalents, investment fund commitments, projected investment fund contributions and available borrowings as further described below will be sufficient to meet our anticipated cash needs for at least the next 12 months. However, due to our rapid growth and business expansion, combined with the outlay of significant upfront capital costs, the liquidity provided from this offering may be necessary to provide additional funding depending on our ability to secure adequate future financing and the rate at which our business continues to expand.
 
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Sources of Funds
Investment Fund Commitments
As of the date of this prospectus, we have raised 10 investment funds to which investors such as banks and other large financial investors have committed to invest approximately $543 million. These commitments will enable us to install solar energy systems of total fair market value (as determined at the time of such investment) of approximately $1.3 billion, of which approximately $913 million has been installed. The undrawn committed capital for these funds is approximately $165 million, which includes approximately $46 million in payments that will be received from fund investors upon interconnection to the respective utility grid of solar energy systems that have already been allocated to investment funds. As of the date of this prospectus, we had tax equity commitments to fund approximately 81 MWs of future deployments. We are currently in negotiations with financial investors to create additional investment funds in 2014. We also expect to create additional investment funds with financial investors and potentially with corporate investors, and may also use debt, equity or other financing strategies to fund our operations. To that end, in August and September 2014, we received non-binding letters of intent from four financial institutions on a several basis in amounts equaling up to $300 million in the aggregate. We estimate such investments would be sufficient to fund approximately 133 MWs of future deployments. It is contemplated that each of the potential investment funds would adopt the partnership structure and be on terms similar to those of our existing investment funds that have adopted such structure, which terms may include conditions on our ability to draw on the financing commitments made by these funds. Such letters of intent are non-binding and do not constitute a commitment to invest. Although we cannot be certain when, if ever, such investment documentation will be executed, our current expectation is that forward investment documentation will be executed within the last quarter of 2014 or the first quarter of 2015 to fund investments at various times throughout 2015 and 2016. If we are unable to consummate these investments or establish the other investment funds that we intend to pursue during this period, we will be required to obtain additional financing in order to continue to grow our business or finance the deployment of solar energy systems using cash on hand until such additional financing has been secured. We assign to our investment funds long-term customer contracts and related economic benefits associated with solar energy systems in accordance with the criteria of the specific funds. Upon such allocation and upon our satisfaction of the conditions precedent to drawing upon such commitments, we are able to draw down on the investment fund commitments. The conditions precedent to funding vary across our investment funds, but generally require that we have entered into a contract with the customer, that the customer meets certain credit criteria, that the solar energy system is expected to be eligible for the ITC, that we have a recent appraisal from an independent appraiser establishing the fair market value of the system and that the property is in an approved state. All of the capital contributed by our fund investors into the investment funds is, depending on the investment fund structure, either paid to us to acquire solar energy systems or distributed to us following our contribution of solar energy systems to the investment fund. Some fund investors have additional criteria that are specific to those investment funds. Once received by us, these proceeds are generally used for working capital to develop and deliver solar energy systems but may be used for any purpose.
 
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Debt Instruments
Aggregation Credit Facility .    In September 2014, we entered into an aggregation credit facility with an initial lender commitment of up to $350 million with certain financial institutions for which Bank of America, N.A. is acting as administrative agent. The aggregation credit facility provides that, upon the satisfaction of certain conditions, we may incur up to an aggregate of $200 million of additional term loan borrowings.
Prepayments are permitted under the aggregation credit facility, and the principal and accrued interest on any outstanding loans mature on March 12, 2018. Under the aggregation credit facility, interest on borrowings accrues at a floating rate equal to (1) a margin that varies between 3.25% during the period during which we may incur borrowings and 3.50% after such period plus either of (2)(a) LIBOR or (b) the greatest of (i) the Federal Funds Rate plus 0.5%, (ii) the administrative agent’s prime rate and (iii) LIBOR plus 1%.
The borrower under the aggregation credit facility is Vivint Solar Financing I, LLC, one of our indirect wholly owned subsidiaries, that in turn holds our interests in the managing members in our existing investment funds. These managing members guarantee the borrower’s obligations under the aggregation credit facility. In addition, Vivint Solar Holdings, Inc., has pledged its interests in the borrower, and the borrower has pledged its interests in the guarantors as security for the borrower’s obligations under the aggregation credit facility. The aggregation credit facility includes customary covenants, including covenants that restrict, subject to certain exceptions, the borrower’s and the guarantors’ ability to incur indebtedness, incur liens, make investments, make fundamental changes to their business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. Among other restrictions, the aggregation credit facility provides that the borrower may not incur any indebtedness other than that related to the aggregation credit facility or in respect of permitted swap agreements, and that the guarantors may not incur any indebtedness other than that related to the aggregation credit facility or as permitted under existing investment fund transaction documents. These restrictions do not impact our ability to enter into investment funds, including those that are similar to those we have entered into previously. As of the date of this prospectus, we had incurred an aggregate of $87.0 million in term loan borrowings under this agreement, of which we used approximately $75.7 million to repay the outstanding principal and accrued and unpaid interest under the May 2014 credit facility, and had remaining borrowing capacity of $263 million.
Our aggregation credit facility also contains certain customary events of default. If an event of default occurs, lenders under the aggregation credit facility will be entitled to take various actions, including the acceleration of amounts due under the aggregation credit facility and foreclosure on the interests of the borrower and the guarantors that have been pledged to the lenders.
Credit Facility .    In May 2014, we entered into a term loan credit facility with certain financial institutions for which Bank of America, N.A. was acting as administrative agent, under which we incurred an aggregate principal amount of $75.5 million in term loan borrowings. Under the credit facility, interest on borrowings accrued at a floating rate based on (1) LIBOR plus a margin equal to 4%, or (2) a rate equal to 3% plus the greatest of (a) the Federal Funds Rate plus 0.5%, (b) the administrative agent’s prime rate and (c) LIBOR plus 1%.
 
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The credit facility included customary covenants, including covenants that restrict, subject to certain exceptions, our ability to incur indebtedness, incur liens, make investments, make fundamental changes to our business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. As of June 30, 2014, we were in compliance with such covenants. The credit facility permitted prepayments without premium, and in September 2014 we repaid the outstanding term loan borrowings and accrued and unpaid interest under the credit facility with proceeds from the aggregation credit facility.
Related Party Revolving Lines of Credit .    In December 2012, we entered into a Subordinated Note and Loan Agreement with Vivint, pursuant to which we may incur up to $20.0 million in revolver borrowings. Interest accrues on these borrowings at 7.5% per year and accrued interest is paid-in-kind through additions to the principal amount on a semi-annual basis. Such additions to the principal amount do not reduce borrowing capacity under the revolving lines of credit. In December 2012, we incurred $15.0 million in revolver borrowings and in January through May 2013, we incurred an additional $5.0 million in revolver borrowings. In July 2013, we amended this agreement to provide for a maturity date of January 1, 2016. As of June 30, 2014, we had borrowed $20.0 million in aggregate under this agreement and as such did not have any remaining borrowing capacity available under this agreement.
In May 2013, we entered into a separate Subordinated Note and Loan Agreement with Vivint, pursuant to which we may incur up to $20.0 million in revolver borrowings. From May 2013 through December 2013, we incurred $18.5 million in revolver borrowings under the agreement. Accrued interest is paid-in-kind through additions to the principal amount on a semi-annual basis and interest accrued on these borrowings at 12% per year through November 2013 and 20% per year in December 2013. In January 2014, we amended and restated the agreement, pursuant to which we may incur up to an additional $30.0 million in revolver borrowings. In addition, the amendment provides that the interest on all borrowings under the agreement will accrue at a rate of 12% per year for the remaining term of the agreement. In April 2014, we amended the agreement to provide for a maturity date of January 1, 2017. In January 2014, we incurred an additional $13.0 million in revolver borrowings under the agreement. As of June 30, 2014, we had $35.0 million outstanding under such agreement, inclusive of paid-in-kind and accrued interest, and we had an aggregate of $18.5 million in borrowing capacity available under such agreement.
While prepayments are permitted under both of the loan agreements, the principal amount and accrued interest of each of the loans under the loan agreements is due upon the earliest to occur of (1) a change of control, (2) an event of default and (3) January 1, 2016 in the case of the first agreement or January 1, 2017 in the case of the second agreement. Our obligations to these lenders with respect to the loans are subordinate to our guaranty obligations to our investment funds. Neither of these loan agreements limit our ability to incur additional indebtedness.
Terminated Revolving Line of Credit .    In July 2012, we entered into a credit agreement with a financial institution. The credit agreement provided for a senior secured credit facility in aggregate principal amount of $15.0 million and which accrued interest at LIBOR plus 10% annually. In 2012, we incurred $6.5 million in debt under such agreement. We repaid all borrowings under and terminated this agreement in June 2013.
 
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Sale of Equity Securities
In August and September 2014, we issued and sold an aggregate of 9,703,122 shares of common stock to 313 Acquisition LLC, Alex Dunn and an entity affiliated with Todd Pedersen for $10.667 per share for aggregate gross proceeds of $103.5 million. If at any time prior to the earlier of (1) the offering contemplated by this prospectus and (2) September 3, 2015, we issue or sell shares of our common stock or any equivalents that would entitle the holder of such securities to acquire shares of our common stock in one or more transactions to an unrelated third party at a price per share of less than $10.667, then we must issue a number of additional shares of common stock to the holder of such securities equal to (1) the aggregate purchase price paid by the original purchaser divided by such lesser purchase price less (2) the aggregate number of shares purchased by the original purchaser. We obtained such financing to fund our growing operations without altering our existing plans and to bolster our financial condition in advance of this offering.
Use of Funds
Our principal uses of cash are funding our operations, including the costs of acquisition and installation of solar energy systems and other working capital requirements. Over the past two years, our revenue and operating expenses have increased from year to year due to the significant growth of our business. Currently, our capital expenditures excluding our solar energy systems are minimal, however, we anticipate that our capital expenditures will increase as we continue to grow our business.
We expect our operating cash requirements to increase in the future as we increase sales and marketing activities to expand into new markets and increase sales coverage in markets in which we currently operate. In addition, the agreements governing each of our investment funds include options that, when exercised, either require us to purchase, or allow us to elect to purchase, our fund investor’s interest in the investment fund. Generally, these options are exercisable for a set period of time beginning upon the later of (1) five to six years after the date on which the last solar energy system included in the fund has been placed into service, or (2) the date on which the fund investor achieves a specified return on their investment, or (3) any longer period of time during which the tax credits received by the funds could be subject to recapture. The purchase price for the fund investor’s interest varies by fund, but is generally the greater of a specified amount, which ranges from approximately $0.7 million to $7.0 million, or the fair market value of such interest at the time the option is exercised, or an amount which causes the fund investor to achieve a specified return on investment. No options have been exercised or become exercisable to date, however, such options are expected to become exercisable in the future and the exercise of one or more options could require us to expend significant funds. Regardless of whether these options are exercised, we will need to raise financing to support our operations, and such financing may not be available to us on acceptable terms, or at all. If we are unable to raise financing when needed, our operations and ability to execute our business strategy could be adversely affected. We may seek to raise financing through the sale of equity, equity-linked securities or the incurrence of indebtedness. Additional equity or equity-linked financing may be dilutive to our stockholders. If we raise funding through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations.
 
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Historical Cash Flows
The following table summarizes our cash flows for the periods indicated:

 	 	Predecessor	 	 	Successor	 	
 	 	Period from
January 1,
through
November 16,
2012	 	 	Period from
November 17,
through
December 31,
2012	 	 	Year Ended
December 31,
2013	 	 	Six Months Ended
June 30,	 	
 	 			 			 			 	2013	 	 	2014	 	
 	 	 	 	 	 	 	 	(Restated)	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	(In thousands)	 	 	 	 	 	 	 	
Consolidated cash flow data:	 			 	 				 				 				 				
Net cash used in operating activities	 	$	(2,890	) 	 	$	(1,209	) 	 	$	(20,873	) 	 	$	(5,772	) 	 	$	(58,217	) 	
Net cash used in investing activities	 	 	(15,308	) 	 	 	(8,014	) 	 	 	(127,522	) 	 	 	(49,798	) 	 	 	(164,047	) 	
Net cash provided by financing activities	 	 	18,113	  	 	 	    20,873	  	 	 	    142,783	  	 	 	        43,920	  	 	 	241,456	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (decrease) increase in cash and cash equivalents	 	$	(85	) 	 	$	11,650	  	 	$	(5,612	) 	 	$	(11,650	) 	 	$	        19,192	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Activities
For the six months ended June 30, 2014, we had a net cash outflow from operations of $58.2 million. The cash outflow primarily resulted from our net loss of $76.2 million and increases in prepaid tax asset of $23.8 million, accounts receivable of $1.7 million, prepaid and other current assets of $8.9 million and other non-current assets of $6.3 million as well as decreases in accrued compensation of $3.4 million and accounts payable to related parties of $0.8 million. The cash outflow was primarily offset by non-cash items such as $10.5 million of depreciation and amortization, $35.9 million of deferred income taxes, $2.9 million of non-cash interest expense, $0.8 million of stock-based compensation, $0.7 million of amortized deferred financing costs and increases in accounts payable of $5.1 million, accrued and other current liabilities of $6.1 million and deferred revenue of $0.7 million.
For the six months ended June 30, 2013, we had a net cash outflow from operations of $5.8 million. This cash outflow primarily resulted from our net loss of $22.7 million, increases in prepaid tax asset of $3.4 million and accounts receivable and other current assets of $2.1 million. The cash outflow was partially offset by non-cash items such as $8.0 million of depreciation and amortization, $2.4 million of deferred income taxes, $0.8 million of non-cash interest expense and increases in accounts payable of $3.4 million, accounts payable to related parties of $0.7 million, accrued compensation of $4.1 million, accrued and other current liabilities of $2.8 million and deferred revenue of $0.3 million.
In 2013, we had a net cash outflow from operations of $20.9 million. This cash outflow primarily resulted from our net loss of $56.5 million and increases in prepaid tax asset of $30.7 million, accounts receivable and other current assets of $4.1 million and other non-current assets of $0.7 million, partially offset by non-cash items such as depreciation and amortization of $16.6 million, deferred income taxes of $30.9 million and stock-based compensation of $0.3 million. The net cash outflow was also offset by increases in accrued compensation of $10.4 million, $2.9 million of non-cash interest expense,
 
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accounts payable to related parties of $2.6 million, accounts payable of $1.4 million, accrued and other current liabilities of $4.6 million and deferred revenue of $1.3 million.
In the Successor Period ended December 31, 2012, we had a net cash outflow from operations of $1.2 million. This cash outflow primarily resulted from our net loss of $3.3 million as well as a $1.1 million non-cash deferred income tax decrease, partially offset by non-cash items such as depreciation and amortization of $1.8 million and $0.8 million of allocated expenses from Vivint which were accounted for as capital contributions.
In the Predecessor Period, we had a net cash outflow from operations of $2.9 million primarily resulting from our net loss of $13.4 million partially offset by allocated expenses from Vivint which were accounted for as capital contributions totaling $4.0 million, increases in accrued and other current liabilities of $4.8 million and accounts payable to related parties of $1.7 million.
Investing Activities
For the six months ended June 30, 2014, we used $164.0 million in investing activities of which $150.4 million was associated with the design, acquisition and installation of solar energy systems, $12.0 million was related to the acquisition of Solmetric, $1.6 million was related to the change in restricted cash associated with our term loan credit facility entered into in May 2014 and $0.1 million was related to the purchase of property, partially offset by receipt of $0.2 million of U.S. Treasury grants associated with the solar energy systems.
For the six months ended June 30, 2013, we used $49.8 million in investing activities of which $53.0 million was related to the design, acquisition and installation of solar energy systems and $3.5 million was related to the change in restricted cash associated with the guaranty agreements with fund investors partially offset by receipt of $6.7 million of U.S. Treasury grants associated with the solar energy systems.
In 2013, we used $127.5 million in investing activities, $134.1 million of which was related to the design, acquisition and installation of solar energy systems partially offset by receipt of $10.1 million of U.S. Treasury grants associated with the solar energy systems. In addition, amounts held as restricted cash related to guarantees we have provided for certain investment funds increased by $3.5 million.
In the Successor Period ended December 31, 2012, we used $8.0 million in investing activities, $11.1 million of which was related to the design, acquisition and installation of solar energy systems offset by receipt of $3.1 million of U.S. Treasury grants associated with the solar energy systems.
In the Predecessor Period, we used $15.3 million in investing activities, $18.3 million of which was related to the design, acquisition and installation of solar energy systems partially offset by $3.2 million of U.S. Treasury grants received associated with these solar energy systems.
Financing Activities
For the six months ended June 30, 2014, we generated $241.5 million from financing activities primarily comprised of $157.4 million in proceeds from investments by various fund investors and paid distributions to fund investors of $1.9 million. In addition, we received $114.0 million and repaid $101.0 million under our revolving lines of credit with related parties and
 
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received $75.5 million under our term loan credit facility entered into in May 2014. We also repaid $1.1 million on our capital lease obligation and paid $1.4 million of deferred offering costs.
For the six months ended June 30, 2013, we generated $43.9 million from financing activities primarily resulting from $22.4 million and $23.5 million in proceeds from investments by various fund investors and revolving lines of credit from a related party, respectively, and paid distributions to fund investors of $0.9 million. In addition, we repaid $2.0 million on our revolving line of credit with a third party and $0.4 million on our capital lease obligation and received capital contributions from 313 Acquisition LLC of $1.4 million.
In 2013, we generated $142.8 million from financing activities primarily resulting from $123.2 million in proceeds from investments by various fund investors and paid distributions to fund investors of $2.3 million. During 2013, we received $83.5 million and repaid $60.0 million under our revolving lines of credit with related parties. Additionally, we also repaid $1.0 million on our capital lease obligation and $2.0 million on our revolving line of credit with a third party and received capital contributions from 313 Acquisition LLC of $1.4 million.
In the Successor Period ended December 31, 2012, we generated $20.9 million from financing activities. We generated $8.1 million in proceeds from investments by various fund investors partially offset by distributions paid to fund investors of $0.3 million. We received an additional $15.0 million and repaid $4.5 million under our revolving lines of credit with related parties. We also received $2.5 million on our revolving line of credit with a third party.
In the Predecessor Period, we generated $18.1 million from financing activities of which $5.0 million was proceeds from the issuance of redeemable preferred stock. In addition, we generated $9.2 million in proceeds from investments by various fund investors and received $4.0 million under our revolving line of credit with a third party.
Contractual Obligations
Set forth below is information concerning our contractual commitments and obligations as of December 31, 2013:

 	  	Payments Due by Period (1)(2)(3)	 	
 	  	Less Than
1 Year	 	  	1 to 3 Years	 	  	3 to 5 Years	 	  	More Than
5 Years	 	  	      Total      	 	
 	  	(In thousands)	 	
Revolving lines of credit, related party	  	$	—	  	  	$	21,444	  	  	$	19,968	  	  	$	—	  	  	$	41,412	  	
Distributions payable to non-controlling interests and redeemable non-controlling interests (4)	  	 	1,620	  	  	 	—	  	  	 	—	  	  	 	—	  	  	 	1,620	  	
Capital lease obligations and interest	  	 	1,508	  	  	 	2,466	  	  	 	156	  	  	 	—	  	  	 	4,130	  	
Operating lease obligations (5)	  	 	1,176	  	  	 	1,106	  	  	 	59	  	  	 	—	  	  	 	2,341	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	        4,304	  	  	$	      25,016	  	  	$	     20,183	  	  	$	            —	  	  	$	49,503	  	

(1)	Does not include amounts related to redemption options held by fund investors. The redemption price for the fund investors’ interest in the respective fund is equal to the sum of: (a) any unpaid, accrued priority return, and (i) the greater of: (x) a fixed price and (b) the fair market value of such interest at the date the option is exercised. Due to uncertainties associated with estimating the timing and amount of the redemption price, we cannot determine the potential future payments that we could have to make under these redemption options. As of December 31, 2013, the fund investors have contributed an aggregate of $140.7 million into the funds. For additional information, see Note 10 to our consolidated financial statements included elsewhere in this prospectus.	
 
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(2)	Does not include amounts related to the $75.5 million term loan credit facility, entered into in May 2014, with certain financial institutions for which Bank of America, N.A. is acting as administrative agent. Prepayments are permitted under the credit facility, and the principal and accrued interest on any outstanding loans mature on December 15, 2014. For additional information, see Note 11 to our consolidated financial statements included elsewhere in this prospectus. All funds under this facility were fully drawn as of June 30, 2014.	
(3)	Does not include amounts related to the $350 million aggregation credit facility entered into in September 2014 with certain financial institutions for which Bank of America, N.A. is acting as administrative agent. Prepayments are permitted under the aggregation credit facility, and the principal and accrued interest on any outstanding loans mature on March 12, 2018. For additional information, see Note 20 to our consolidated financial statements included elsewhere in this prospectus. As of September 17, 2014, we had incurred an aggregate of $87.0 million in term loan borrowings under this aggregation credit facility.	
(4)	Does not include any potential contractual obligations that may arise as a result of the contractual guarantees we have made with certain investors in our investment funds. The amounts of any potential payments we may be required to make depend on the amount and timing of future distributions to the relevant fund investors and the investment tax credits that accrue to such investors from the funds’ activities. Due to uncertainties associated with estimating the timing and amounts of distributions and likelihood of an event that may trigger repayment of any forfeiture or recapture of investment tax credits to such investors, we cannot determine the potential maximum future payments that we could have to make under these guarantees. As a result of these guarantees, as of December 31, 2013, we were required to hold a minimum balance of $5.0 million in the aggregate, which is classified as restricted cash, non-current on our consolidated balance sheet.	
(5)	Does not include payments we will make under non-cancelable leases we entered into in May and September 2014 in anticipation of relocating our corporate office space to Lehi, Utah. We expect to make payments under these leases of approximately $0.2 million for the remainder of 2014, beginning in September 2014 when the lease terms commence, $1.2 million for 2015 and $3.1 million to $3.6 million per year from 2016 to 2020.	
Off-Balance Sheet Arrangements
We include in our consolidated financial statements all assets and liabilities and results of operations of investment fund arrangements that we have entered into. We do not have any off-balance sheet arrangements.
Internal Control Over Financial Reporting
Prior to this offering, we were a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in connection with the preparation, audits and interim reviews of our consolidated financial statements, we and our independent registered public accounting firm identified a material weakness in internal control over financial reporting. Under standards established by the Public Company Accounting Oversight Board of the United States, a material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Specifically, we and our independent registered public accounting firm identified a number of material errors and other audit adjustments in connection with the preparation, audits and interim reviews of our consolidated financial statements which resulted in the restatement of our consolidated financial statements as of and for the year ended December 31, 2013 and as of and for the three months ended March 31, 2014. As a result, we and our independent registered public accounting firm determined that a material weakness in our internal controls over financial reporting continued to exist as of June 30, 2014.
As of December 31, 2013 and through June 30, 2014, we did not design and implement sufficient controls and processes and did not have a sufficient number of qualified accounting, finance and tax personnel. Additionally, the nature of our investment funds increases the
 
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complexity of our accounting for the allocation of net income (loss) between our stockholders and non-controlling interests under the HLBV method and the calculation of our tax provision. As we enter into additional investment funds, which may have contractual provisions different from those of our existing funds, the calculation under the HLBV method and the calculation of our tax provision could become increasingly complicated. This additional complexity could increase the chance that we experience additional errors in the future, particularly because we have a material weakness in internal controls. In addition, our need to devote our resources to addressing this complexity could delay or prolong our remediation efforts and thereby prolong the existence of the material weakness. As a result, we and our independent registered public accounting firm determined that we did not have adequate procedures and controls and adequate number of personnel to ensure that accurate financial statements could be prepared on a timely basis.
We have begun taking numerous steps and plan to take additional steps to remediate the underlying causes of the material weakness. In November 2013, we hired a new chief financial officer and a new vice president of finance and in January 2014, we hired a new corporate controller as well as additional finance and accounting personnel since January 2014, which significantly increases our finance and accounting team’s experience in GAAP and financial reporting for publicly traded companies. We are also in the process of formalizing and implementing written policies and procedures for the review of account analyses, reconciliations and journal entries. In January 2014, we engaged third-party consultants to provide support over our accounting and financial reporting process including assisting us with our evaluation of complex technical accounting matters. In addition, we expect to retain consultants to advise us on making further improvements to our internal controls over financial reporting. We believe that these additional resources will enable us to broaden the scope and quality of our controls relating to the oversight and review of financial statements and our application of relevant accounting policies. Furthermore, we plan to implement and improve systems to automate certain financial reporting processes and to improve efficiency and accuracy. However, these remediation efforts are still in process and have not yet been completed. Because of this material weakness, there is heightened risk that a material misstatement of our annual or quarterly financial statements will not be prevented or detected. We plan to complete this remediation process as quickly as possible. Although we expect it will take at least a year, we cannot estimate how long it will take to remediate this material weakness. In addition, the remediation steps we have taken, are taking and expect to take may not effectively remediate the material weakness, in which case our internal control over financial reporting would continue to be ineffective. We cannot guarantee that we will be able to complete our remedial actions successfully. Even if we are able to complete these actions successfully, these measures may not adequately address our material weakness and may take more than a year to complete. In addition, it is possible that we will discover additional material weaknesses in our internal control over financial reporting or that our existing material weakness will result in additional errors in or restatements of our financial statements.
Upon the completion of this offering, we will be required to disclose changes made in our internal controls and procedures on a quarterly basis. We will be required to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting commencing with the filing of our second annual report on Form 10-K. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. In addition, our independent registered public accounting firm will have to opine on the effectiveness of our internal control over financial reporting beginning at the date we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our management may conclude that our internal control over financial reporting is not
 
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effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may issue a report that is adverse if such firm is not satisfied with the level at which our controls are documented, designed, operated or reviewed. As a result, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff. Our remediation efforts may not enable us to avoid a material weakness in the future. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future.
The restatement of certain of our financial statements referred to above was the result of errors that included, but were not limited to: (1) incorrectly accounting for income taxes, (2) incorrect inputs in the HLBV method of attributing net income or loss to non-controlling interests and redeemable non-controlling interests and (3) the incorrect classification of paid-in-kind interest in our statement of cash flows. Additionally, other immaterial errors and reclassifications were made to conform to the current presentation.
The corrections to our accounting for certain taxable gains realized on the sales of solar energy systems to our investment funds resulted in our recording a prepaid tax asset of $30.7 million (net of amortization of $0.5 million), an income tax payable of $3.0 million shown in the line item accrued and other current liabilities and a reduction to deferred tax assets of $28.2 million (reflected as a component of deferred tax liability, net), as of December 31, 2013. The corrections also resulted in our recording a prepaid tax asset of $41.2 million (net of amortization of $0.9 million), an income tax payable of $3.0 million shown in the line item accrued and other current liabilities and a reduction to deferred tax assets of $38.2 million (reflected as a component of deferred tax liability, net), as of March 31, 2014. Additionally, income tax expense increased by $0.5 million for the year ended December 31, 2013 and by $0.4 million for the three months ended March 31, 2014.
Corrections for income taxes also included corrections related to the accounting for certain tax credits for solar energy systems that were placed in service in Hawaii and related to the calculation of federal investment tax credits. The Company will receive a cash refund for the Hawaii tax credits which are treated similarly to Treasury grants and result in a decrease to the cost basis of the solar energy systems, net of $2.1 million with a corresponding increase to other receivables included in prepaid expense and other current assets as of December 31, 2013. As of March 31, 2014, this change resulted in a decrease to the cost basis of the solar energy systems of $2.4 million, net of amortization of $0.1 million, with a corresponding increase to other receivables included in prepaid expense and other current assets. Additionally, the recognition of the federal investment tax credits decreased income tax expense by $4.5 million and increased deferred tax assets by $2.8 million as of and for the year ended December 31, 2013. The recognition of the investment tax credits decreased income tax expense by $0.8 million and increased deferred tax assets by $3.6 million as of and for the three months ended March 31, 2014.
Correcting the inputs to the HLBV method resulted in a decrease in net loss attributable to non-controlling interests and redeemable non-controlling interests by $1.1 million and $7.7 million and corresponding decreases in net income attributable to common stockholders for the year ended December 31, 2013 and for the three months ended March 31, 2014, respectively. In addition, non-controlling interests increased by $1.5 million and $8.9 million and redeemable non- controlling interests decreased by $0.5 million and $0.1 million as of December 31, 2013 and March 31, 2014, respectively.
 
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The reclassification of paid-in-kind interest accrued under our revolving lines of credit with Vivint on our statement of cash flows resulted in a $2.9 million and $1.4 million increase in non-cash interest expense included in cash flows from operating activities and a $2.9 million and $1.4 million decrease in proceeds from revolving lines of credit, related party included in cash flows from financing activities for the year ended December 31, 2013 and for the three months ended March 31, 2014, respectively.
In addition to the above, we also identified and corrected certain other immaterial errors related to solar energy systems, net, stock-based compensation, accrued compensation and income tax expense. We have reclassified certain amounts in prior-period financial statements to align with the presentation of the consolidated financial statements as of and for the six months ended June 30, 2014. Specifically, we have reclassified certain amounts from sales and marketing and general and administrative to cost of revenue—operating leases and incentives and distributions payable to redeemable non-controlling interests to accrued and other current liabilities.
Quantitative and Qualitative Disclosures about Market Risk
Our exposure to market risk for changes in interest rates relates primarily to our cash and cash equivalents and our indebtedness.
As of June 30, 2014, we had cash and cash equivalents of $25.2 million. Our cash equivalents are money market accounts and time deposits with maturities of three months or less at the time of purchase. Our primary exposure to market risk on these funds is interest income sensitivity, which is affected by changes in the general level of the interest rates in the United States. However, because of the short-term nature of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our consolidated financial statements.
In May 2014, we incurred an aggregate principal amount of $75.5 million in term borrowings under our credit facility, which borrowings accrue interest at floating rates. Currently, interest on such borrowings accrues at approximately 4.2%. If such borrowings had been outstanding as of December 31, 2013 and remained outstanding for all of 2014, the effect of a hypothetical 10% change in our floating interest rate on these borrowings would increase or decrease interest expense by approximately $0.3 million on an annual basis.
In September 2014, we entered into an aggregation credit facility that currently provides for the incurrence of up to $350 million of term loan borrowings, which borrowings accrue interest at floating rates. As of the date of this prospectus, we had incurred an aggregate of $87.0 million of term loan borrowings under such facility, which currently accrues interest at a rate of 3.8%. If the aggregation facility had been fully drawn at December 31, 2013 and remained outstanding for all of 2014, the effect of a hypothetical 10% change in our floating interest rate on these borrowings would increase or decrease interest expense by approximately $1.3 million on an annual basis.
All of our operations are in the United States and all purchases of our solar energy system components are denominated in U.S. dollars. However, our suppliers often incur a significant amount of their costs by purchasing raw materials and generating operating expenses in foreign currencies. If the value of the U.S. dollar depreciates significantly or for a prolonged period of time against these currencies (particularly the Chinese Renminbi), our suppliers may raise the prices they charge us, which could harm our financial results.
 
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Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. GAAP require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, cash flows and related footnote disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. Our future consolidated financial statements will be affected to the extent that our actual results materially differ from these estimates.
We believe that the assumptions and estimates associated with our principles of consolidation, revenue recognition, solar energy systems, net, performance guarantees, impairment of long-lived assets, goodwill impairment analysis, stock-based compensation, provision for income taxes and non-controlling interests and redeemable non-controlling interests have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.
Principles of Consolidation
We consider each of our investment funds to be a separate variable interest entity, or VIE. We use a qualitative approach in assessing the consolidation requirement for these VIEs. This approach focuses on determining whether we have the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether we have the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. All of these determinations involve significant management judgments and estimates. We have determined that we are the primary beneficiary in all of our operational VIEs. We evaluate our relationships with the VIEs on an ongoing basis to ensure that we continue to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.
Revenue Recognition
We sell the electricity that our solar energy systems produce through long-term power purchase agreements or we lease our solar energy systems through long-term leases. Prior to the first quarter of 2014, all of our long-term customer contracts were structured as power purchase agreements. In the first quarter of 2014, we began offering leases to residential customers in connection with our entry into the Arizona market. None of our leased solar energy systems had been placed in service as of June 30, 2014, and therefore no amounts were recorded in the period. On occasion, we have sold solar energy systems and photovoltaic installation software products and devices. We also derive a portion of our revenue from sales of SRECs. We recognize revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery or performance has occurred; (3) the sales price is fixed or determinable; and (4) collectability is reasonably assured.
Operating Leases and Incentives Revenue
Through June 30, 2014, we primarily generated revenue from power purchase agreements with residential customers, under which the customer agrees to purchase all of the power
 
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generated by the solar energy system for the 20-year term of the power purchase agreement. In the power purchase agreement structure, we charge a fixed fee per kilowatt hour based on the amount of electricity the solar energy system actually produces, with an annual fixed percentage price escalation to address the impact of inflation and utility rate increases over the period of the contract. Customers have not historically paid any money upfront.
We have determined that these power purchase agreements should be accounted for as operating leases after evaluating the following lease classification criteria: whether there is a transfer of ownership or bargain purchase option at the end of the lease, whether the lease term is greater than 75% of the useful life, or whether the present value of minimum lease payments exceeds 90% of the fair value at lease inception.
Because our customers are charged based upon the actual amount of power generated at rates specified under the contracts, we consider customer payments under the power purchase agreements to be contingent lease payments which are excluded from minimum lease payments used for purposes of assessing the lease classification criteria above. Accordingly, we recognize customer payments as earned, assuming the other revenue recognition criteria discussed above are met.
We also apply for and receive upfront rebates offered by certain state and local governments on behalf of our customers for systems installed on certain of our customers’ premises. We consider these rebates to be minimum lease payments which are generally recognized on a straight-line basis over the life of the power purchase agreement.
We apply for and receive SRECs in certain jurisdictions for power generated by our solar energy systems. We generally recognize revenue related to the sale of SRECs upon delivery, assuming the other revenue recognition criteria have been met.
Operating leases and incentives revenue is recorded net of sales tax collected.
In the first quarter of 2014, we began offering legal-form leases to customers in connection with our entry into the Arizona market. The customer agreements are structured as legal-form leases due to local regulations that can be read to prohibit the sale of electricity pursuant to our standard power purchase agreement. Pursuant to the lease agreements, the customers’ monthly payment is a pre-determined amount calculated based on the expected solar energy generation and includes an annual fixed percentage price escalation (to address the impact of inflation and utility rate increases) over the period of the contracts, which are 20 years. We provide our lease customers a production guarantee, under which we agree to make a payment at the end of each year to the customer if the solar energy systems do not meet the guaranteed production level in the prior 12-month period. As of June 30, 2014, no systems related to customer agreements structured as legal-form leases were placed in service and as such, we have not recognized any revenue related to these leases.
Solar Energy System and Product Sales
Revenue from solar energy system sales is recognized upon delivery of the solar energy system, which we consider to have occurred when the solar energy system has passed inspection by the responsible city department, assuming the other revenue recognition criteria have been met.
 
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As a result of the Solmetric acquisition, we now enter into revenue arrangements that may consist of multiple elements. Our typical multiple-element arrangements involve sales of (1) photovoltaic installation hardware devices containing software essential to the hardware product’s functionality, or the photovoltaic device, and (2) stand alone software, both including the implied right for the customer to receive post-contract customer support, or PCS, with the purchase of our products.
For sales of photovoltaic devices, we allocate revenue between (1) the photovoltaic device and (2) PCS using the relative selling price method. Because we have not sold these deliverables separately, vendor-specific objective evidence of fair value, or VSOE, is not available. Additionally, we are unable to reliably determine the selling prices of similar competitor products and upgrades on a stand alone basis to determine third-party evidence of selling price. As such, the allocation of revenue is based on our best estimate of selling price, or BESP. The objective of BESP is to determine the price at which we would transact a sale if the product or service was sold on a stand-alone basis.
We determine BESP for a product or service by considering multiple factors including, but not limited to, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices. The determination of BESP is made through consultation with and formal approval by our management, taking into consideration our marketing strategy.
Our process for determining BESPs involves management’s judgment and considers multiple factors that may vary over time depending upon the unique facts and circumstances related to each deliverable. Should future facts and circumstances change, our BESPs and the future rate of related amortization for PCS related to future sales of photovoltaic devices could change. Factors subject to change include the PCS provided, the estimated value of PCS, the estimated or actual costs incurred to provide PCS, and the estimated period PCS is expected to be provided.
The consideration allocated to the delivered photovoltaic device is recognized at the time of shipment provided that the four general revenue recognition criteria discussed above have been met. The consideration allocated to the PCS is deferred and recognized ratably over the four year estimated life of the devices and the period during which the related PCS is expected to be provided.
For sales of software with PCS, revenue is recognized based on software revenue recognition accounting guidance. Because we are not able to determine VSOE for the PCS, the only undelivered element of the arrangement, revenue from the entire arrangement is recognized ratably over four years, which is the expected life of the software and the period during which the related PCS is expected to be provided.
U.S. Treasury Grants and Investment Tax Credits
Certain solar energy systems remain eligible to receive U.S. Treasury grants in lieu of investment tax credits under Section 1603 of the American Recovery and Reinvestment Act of 2009, as amended by the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of December 2010. Prior to the installation of such eligible systems, we submit an application to receive a grant. After installation is complete and the solar energy system is interconnected to the power grid, we will request disbursement of the funds, which are typically based on 30% of the tax basis of eligible solar energy systems. Once we have been notified that the U.S. Treasury Department has approved the disbursement of the grant proceeds for a solar energy system, we record a reduction in
 
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the basis of the solar energy system in the amount of cash to be received at the grant approval date. A catch-up adjustment to reduce depreciation expense is recorded in the period in which the grant is approved by the U.S. Treasury Department to recognize the portion of the grant that matches proportionally the depreciation for the period between when the solar energy systems are interconnected to the power grid and when the grants are approved by the U.S. Treasury Department. Such catch-up adjustments have not been significant to date. For the solar energy systems which are not eligible to receive U.S. Treasury grants, we will apply for and receive investment tax credits under Section 48(a) of the Internal Revenue Code. The amount for the investment tax credit is equal to 30% of the value of eligible solar property.
We determine the fair market value of the solar energy systems using valuation techniques that, consistent with industry practice, consider various factors, such as the cost of producing the solar energy systems, the estimated price that could be obtained in the market from the sale of the solar energy systems and the present value of the economic benefits expected to be generated by the solar energy systems, determine the fair market values of such systems. We then present the fair market value to the U.S. Treasury Department when we apply for grants or to the IRS for purposes of claiming investment tax credits.
We receive minimal allocations of investment tax credits as the majority of such credits are allocated to the fund investor. Some of our investment funds obligate us to make certain fund investors whole for losses that the investors may suffer in certain limited circumstances resulting from the disallowance or recapture of investment tax credits as a result of the IRS assessment of the fair value of such systems. We have concluded that the likelihood of a recapture event is remote and consequently have not recorded any liability in the consolidated financial statements for any potential recapture exposure.
Solar Energy Systems, Net
Solar energy systems are stated at cost, less accumulated depreciation and amortization. As in the section captioned “—U.S. Treasury Grants” above, we also applied for and received U.S. Treasury grants related to our solar energy systems. We record the U.S. Treasury grants as a reduction in the basis of the solar energy systems at the approval date of the grant. This accounting treatment results in decreased depreciation expense related to these solar energy systems over their useful lives.
Depreciation and amortization expense is calculated using the straight-line method over the estimated useful lives of the respective assets as follows:

 	  	Useful Lives	
System equipment costs	  	30 Years	
Initial direct costs related to solar energy systems	  	Lease term (20 years)	
We commence depreciation of our solar energy systems once the respective systems have been installed and interconnected to the power grid.
The determination of the useful lives of assets included within solar energy systems involves significant management judgment.
 
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Solar Energy Performance Guarantees
Under our customer agreements that are structured as legal-form leases, we agree to make payments at the end of each year to our customers if the solar energy systems do not meet the guaranteed production level in the prior 12-month period. As of June 30, 2014, we had not placed in service any leased solar energy systems. Accordingly, we had not recorded any liabilities relating to these guarantees in this period.
Impairment of Long-Lived Assets and Indefinite-Lived Intangible Assets
The carrying amounts of our long-lived assets, including solar energy systems, property and intangible assets subject to depreciation and amortization, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Factors that we consider in deciding when to perform an impairment review include significant negative industry or economic trends, and significant changes or planned changes in our use of the assets. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. If the useful life is shorter than originally estimated, we amortize the remaining carrying value over the new shorter useful life. No impairment of any long-lived assets was identified for any of the periods presented.
We will assess (or test) indefinite-lived intangible assets that were acquired as part of the acquisition of Solmetric Corporation for impairment on an annual basis, or whenever events or changes in circumstances indicate that the fair value is less than its carrying value. To test these intangible assets for impairment, we compare the fair value of the indefinite-lived asset with its carrying amount. In the event the carrying value exceeds the fair value of the assets, the assets are written down to their fair value. There has been no impairment of indefinite-lived intangible assets during any of the periods presented.
Goodwill Impairment Analysis
Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and identifiable intangible assets acquired. We have goodwill recorded on our books as a result of push-down accounting from 313 Acquisition LLC applied as of the Acquisition date and our acquisition of Solmetric Corporation in January 2014. We have determined that we operate as one reporting unit. We perform our annual impairment test of goodwill as of October 1 st of each fiscal year or whenever events or circumstances change or occur that would indicate that goodwill might be impaired. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in the business climate, unanticipated competition, loss of key personnel, significant changes in the manner we use the acquired assets or the strategy for the overall business, significant negative industry or economic trends or significant underperformance relative to historical operations or projected future results of operations. In conducting the impairment test, we first assess qualitative factors, including those stated previously, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If the qualitative step is not passed, we perform a two-step impairment test whereby in the first step we must compare the fair value of the
 
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reporting unit with its carrying amount. If the carrying amount exceeds its fair value, we perform the second step of the goodwill impairment test to determine the amount of impairment. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying value of the goodwill. Any excess of the goodwill carrying value over the implied fair value is recognized as an impairment loss. We determined the two-step goodwill impairment test was not necessary based on the results of our qualitative assessment as of October 1, 2013.
Stock-Based Compensation
We have granted options at an exercise price per share not less than what the board of directors had determined was the fair market value per share of our underlying common stock on each date of grant. The common stock valuations were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation . Because our common stock is not currently publicly traded, the board of directors exercises significant judgment in determining the fair value of our common stock. Changes in judgments could have a material impact on our results of operations and financial position. Following completion of this offering and so long as our common stock is publicly traded, estimates regarding the fair value of our common stock will not be necessary.
The board of directors is comprised of a majority of non-employee directors that we believe have the relevant experience and expertise to determine a fair value of our common stock on each respective grant date. In the absence of a public trading market for our common stock, the board of directors, with input from management, considered numerous objective and subjective factors to determine the common stock’s fair value as of the date of each option grant, including our operating and financial performance, financial condition, current business conditions and projections, the market performance of companies in the industry in which we compete, the hiring of key personnel and the availability of tax equity and debt financing.
In connection with the preparation of our financial statements for the year ended December 31, 2013, we re-evaluated the estimate of the fair value of our common stock for financial reporting purposes. As part of that re-evaluation, we engaged a third-party valuation specialist to assist us in the valuation of our common stock as of September 30, 2013 and December 31, 2013 on a retrospective basis. The methodology used in connection with such valuation was a guideline public company approach which involved applying a revenue multiple derived from a number of comparable public companies to our revenue forecasts. As a result of applying this different methodology and following an assessment of our progress at each relevant date, for financial reporting purposes the fair value per common share for each of the options granted in September 2013 and October 2013 was adjusted.
In connection with the finalization of this offering, we re-evaluated the estimate of the fair value of our common stock for financial reporting purposes in light of our progress with respect to the offering contemplated by this prospectus and the establishment of the price range set forth on the cover of this prospectus and adjusted the fair value per share for each of the options granted in 2014. In conducting such re-evaluation, we determined that there was no single event that caused the increase in the fair value of our common stock. Given our rapid growth and improvement in our prospects enabled by additional completed and potential tax equity, debt and equity financings, we determined that a straight line interpolation from the $2.93 fair value estimate as of December 31,
 
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2013 suggested by the common stock valuation described in the immediately preceding paragraph and the midpoint of the preliminary price range as of September 17, 2014 was an appropriate method of re-evaluating the fair value of our common stock for each of the stock-based compensation and other equity transactions completed between January 1, 2014 and September 17, 2014. Based on this re-evaluation, we expect to record incremental stock-based compensation for the six months ended June 30, 2014 of approximately $266,000 in our third quarter 2014 financial statements.
The table below lists all grants of options to purchase our common stock made from January 1, 2013 through the date of this prospectus.

Grant Date	  	Number of
Shares
Underlying
Options	 	  	Exercise
Price Per
Share	 	  	Fair Value Per
Common Share
for Financial
Reporting
Purposes at
Grant Date	 	  	Intrinsic
Value of
Stock
option	 	
July 12, 2013	  	 	3,141,178	  	  	 	$     1.00	  	  	$	         1.00	  	  	$	—	  	
August 19, 2013	  	 	644,118	  	  	 	1.00	  	  	 	1.00	  	  	 	—	  	
September 3, 2013	  	 	3,529,412	  	  	 	1.00	  	  	 	1.47	  	  	 	0.47	  	
September 25, 2013	  	 	264,706	  	  	 	1.00	  	  	 	1.47	  	  	 	0.47	  	
January 24, 2014	  	 	2,278,677	  	  	 	1.30	  	  	 	4.29	  	  	 	2.99	  	
January 31, 2014	  	 	220,588	  	  	 	1.30	  	  	 	4.69	  	  	 	3.39	  	
February 11, 2014	  	 	661,765	  	  	 	1.30	  	  	 	5.25	  	  	 	3.95	  	
July 7, 2014	  	 	320,000	  	  	 	4.14	  	  	 	13.57	  	  	 	9.43	  	
Expense related to stock-based compensation granted to employees is measured and recognized in the financial statements based on the fair value of the awards granted. The fair value of each stock-based award is estimated on the grant date using the Black-Scholes-Merton option-pricing model. The stock-based compensation expense, net of forfeitures, is recognized on an accelerated attribution basis over the requisite service period of an award, which is generally the award’s vesting period.
Stock-based compensation expense for equity instruments issued to non-employees is recognized based on the estimated fair value of the equity instrument. The fair value of the non- employee awards is subject to remeasurement at each reporting period until services required under the arrangement are completed, which is the vesting date.
Use of the Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including (1) the fair value of the underlying common stock, (2) the expected term of the option, (3) the expected volatility of the price of our common stock, (4) risk-free interest rates and (5) the expected dividend yield of our common stock. The assumptions used in the option-pricing model represent our best estimates. These estimates involve inherent uncertainties and the application of our judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future.
 
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These assumptions and estimates are as follows:
 
 	•	 	Fair Value of Common Stock .    Because our common stock is not yet publicly traded, the fair value of common stock must be estimated. The fair values of the common stock underlying our stock-based awards were determined by our board of directors, which considered numerous objective and subjective factors to determine the fair value of common stock at each grant date.	
 
 	•	 	Expected Term .    The expected term represents the period that our option awards are expected to be outstanding. We utilized the simplified method in estimating the expected term of options granted. The simplified method deems the term to be the average of the time to vesting and the contractual life of the options. We also considered additional factors including the expected lives used by a peer group of companies within the industry that we consider to be comparable to our business.	
 
 	•	 	Expected Volatility .    As we do not have a trading history for our common stock, the expected stock price volatility is derived from the average historical stock volatilities of a peer group of public companies within our industry that we consider to be comparable to our business over a period equivalent to the expected term of the stock-based grants.	
 
 	•	 	Risk-Free Interest Rate .    The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the option’s expected term.	
 
 	•	 	Dividend Yield .    We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.	
A summary of the significant assumptions used to estimate the fair value of equity awards during the Predecessor Period and the Successor Periods ended December 31, 2012 and December 31, 2013 and June 30, 2013 and 2014 were as follows:

 	 	Predecessor	 	 	Successor	 	
 	 	Period from
January 1,
through
November 16,
2012	 	 	Period from
November 17,
through
December 31,
2012 	 	 	Year Ended
December 31,
2013	 	 	Six Months Ended
June 30,	 	
 	 			 			 			 	2013	 	 	2014	 	
Expected term (in years)	 	 	6.3	  	 	 	—	  	 	 	6.3	  	 	 	                  —	  	 	 	                  6.2	  	
Volatility	 	 	67.0	% 	 	 	—	  	 	 	80.0	% 	 	 	—	  	 	 	87.1	% 	
Risk-free interest rate	 	 	1.2	% 	 	 	—	  	 	 	1.7	% 	 	 	—	  	 	 	1.9	% 	
Dividend yield	 	 	0.0	% 	 	 	—	  	 	 	0.0	% 	 	 	—	  	 	 	0.0	% 	
In addition to assumptions used in the Black-Scholes-Merton option-pricing model, we must also estimate a forfeiture rate to calculate the stock-based compensation expense for our awards. Our forfeiture rate is based on an analysis of our actual forfeitures since the adoption of our equity award plan. We routinely evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover and expectations of future option exercise behavior. Changes in the estimated forfeiture rate can have a significant impact on our stock-
 
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based compensation expense as the cumulative effect of adjusting the forfeiture rate is recognized in the period the forfeiture estimate is changed. If a revised forfeiture rate is higher than the previously estimated forfeiture rate, an adjustment is made that will result in a decrease to the stock-based compensation expense recognized in the financial statements. If a revised forfeiture rate is lower than the previously estimated forfeiture rate, an adjustment is made that will result in an increase to the stock-based compensation expense recognized in the financial statements.
We will continue to use judgment in evaluating the expected term, expected volatility and forfeiture rate related to our stock-based compensation expense on a prospective basis. As we continue to accumulate additional data related to our common stock, we may have refinements to the estimates of our expected volatility, expected terms and forfeiture rates, which could materially impact our future stock-based compensation expense as it relates to the future grants of our stock-based awards.
We recorded stock-based compensation expense of $0.2 million, $0, $0.3 million, $0 and $0.8 million in the Predecessor Period and the Successor Periods ended December 31, 2012 and 2013 and the six months ended June 30, 2013 and 2014. In future periods, we expect stock-based compensation expense to increase, due in part to our existing unrecognized stock-based compensation expense and as we grant additional stock-based awards to continue to attract and retain our service providers.
From July 2013 to June 2014, we issued stock options to purchase 9,728,681 shares of common stock with time and performance conditions. These awards had an aggregate grant date fair value of $13.6 million to be recognized as stock-based compensation expense over the expected term. As of June 30, 2014 we had $14.6 million of unrecognized stock-based compensation expense related to the outstanding time and performance conditions awards. The aggregate grant date fair value and unrecognized stock-based compensation expense amounts reflect the re-valuation of the fair value of our common stock as discussed above. The time-based awards are expected to be recognized over a weighted average period of 2.6 years. No compensation expense has been recorded for awards with performance conditions as it is not probable that the performance conditions will be achieved. The fair value of our company has risen over the past year; because the fair value of the underlying stock is an important factor in valuing stock options, the compensation expense associated with option grants will rise in 2014 as we continue to grant additional options to our employees.
Provision for Income Taxes
We account for income taxes under an asset and liability approach. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards and other tax credits measured by applying currently enacted tax laws. A valuation allowance is provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized.
We sell solar energy systems to the investment funds. As the investment funds are consolidated by us, the gain on the sale of the solar energy systems is not recognized in the consolidated financial statements. However, this gain is recognized for tax reporting purposes. Since these transactions are intercompany sales for book purposes, any tax expense incurred related to these intercompany sales is deferred and recorded as a prepaid tax asset and amortized over the estimated useful life of the underlying solar energy systems which has been estimated to be 30 years.
 
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We determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. We use a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.
Our policy is to include interest and penalties related to unrecognized tax benefits, if any, within the provision for taxes in the consolidated statements of operations.
Non-Controlling Interests and Redeemable Non-Controlling Interests
Our non-controlling interests and redeemable non-controlling interests represent fund investors’ interests in the net assets of certain investment funds, which we consolidate, that we have entered into in order to finance the costs of solar energy systems under long-term customer contracts. We have determined that the provisions in the contractual arrangements of the investment funds represent substantive profit-sharing arrangements, which gives rise to the non-controlling interests and redeemable non-controlling interests. We have further determined that the appropriate methodology for attributing income and loss to the non-controlling interests and redeemable non-controlling interests each period is a balance sheet approach using the HLBV method. Under the HLBV method, the amounts of income and loss attributed to the non-controlling interests and redeemable non-controlling interests in the consolidated statements of operations reflect changes in the amounts the fund investors would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements of these funds, assuming the net assets of these respective investment funds were liquidated at recorded amounts. The fund investors’ interest in the results of operations of these investment funds is determined as the difference in the non-controlling interests and redeemable non-controlling interest’s claim under the HLBV method at the start and end of each reporting period, after taking into account any capital transactions between the fund and the fund investors.
Attributing income and loss to the non-controlling interests and redeemable non-controlling interests under the HLBV method requires the use of significant assumptions and estimates to calculate the amounts that fund investors would receive upon a hypothetical liquidation. Changes in these assumptions and estimates can have a significant impact on the amount that fund investors would receive upon a hypothetical liquidation.
We classify certain non-controlling interests with redemption features that are not solely within our control outside of permanent equity on our consolidated balance sheets. Redeemable non-controlling interests are reported using the greater of their carrying value at each reporting date as determined by the HLBV method or their estimated redemption value in each reporting period.
Estimating the redemption value of the redeemable non-controlling interests requires the use of significant assumptions and estimates. Changes in these assumptions and estimates can have a significant impact on the calculation of the redemption value.
 
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Emerging Growth Company Status
Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies.”
Recent Accounting Pronouncements
On May 28, 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for us on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.
 
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 BUSINESS
Overview
We offer distributed solar energy — electricity generated by a solar energy system installed at or near customers’ locations — to residential customers based on 20-year contracts at prices below their current utility rates. Our customers pay little to no money upfront, typically realize savings of 15% to 30% relative to utility-generated electricity immediately following system interconnection to the power grid and continue to benefit from guaranteed energy prices over the term of their contracts, insulating them against unpredictable increases in utility rates.
Our 20-year customer contracts generate predictable, recurring cash flows and establish a long-term relationship with homeowners. Through our investment funds, we own an interest in the solar energy systems we install and ownership of the solar energy systems allows us and the other fund investors to benefit from various local, state and federal incentives. Together, these cash flows and incentives facilitate our ability to obtain financing and to optimize our financial returns on investment. These cash flows are not impacted if a customer decides to move or sell the home prior to the end of the customer contract term because the customer contracts allow our customers to transfer their obligations to the new home buyer (subject to a creditworthiness determination). If the home buyer is not creditworthy or does not wish to assume the customer’s obligations, the contract allows us to require the customer to purchase the system. Our sources of financing are designed to offset our direct installation costs and most, if not all, of our allocated overhead expenses. Our direct relationship with homeowners also facilitates our ability to control quality and provide high levels of customer service and provides us with an opportunity to offer additional value-added products and services to our customers.
From our inception in May 2011 through June 30, 2014, we have experienced rapid growth, installing solar energy systems with an aggregate of 129.7 megawatts of capacity at more than 21,900 homes in seven states for an average solar energy system capacity of approximately 5.9 kilowatts. According to GTM Research, an industry research firm, we were the second largest installer of solar energy systems to the U.S. residential market with approximately 8% market share in 2013 and 9% in the first quarter of 2014 up from 1% in 2012, according to its ‘Q2 2014 PV Leaderboard’ report. We believe the key ingredients to our success include the following:
 
 	•	 	High growth industry with a significant addressable market .      The market for residential distributed solar energy is growing rapidly and disrupting the traditional electricity market. According to GTM Research, an industry research firm, the U.S. residential solar energy market is expected to grow at a compound annual growth rate, or CAGR, of approximately 37% from 2012 through 2018. Residential distributed solar has currently penetrated less than 1% of its total addressable market in the United States.	
 
 	•	 	Differentiated and highly scalable platform .      We have developed an integrated approach to providing distributed solar energy where we fully control the lifecycle of our customers’ experience including the initial professional consultation, design and engineering process, installation and ongoing monitoring and service. We deploy our sales force on a neighborhood-by-neighborhood basis, which allows us to cultivate a geographically concentrated customer base that reduces our costs and increases our operating efficiency. We couple this model with repeatable and highly scalable	
 
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 	processes to establish warehouse facilities, assemble and train sales and installation teams and open new offices. We believe that our processes enable us to expand rapidly within existing markets and into new markets. We also believe that our direct sales model and integrated approach represent a differentiated platform, unique in the industry that accelerates our growth by maximizing sales effectiveness, delivering high levels of customer satisfaction and driving cost efficiency.	
 
 	•	 	Long-term, highly visible, recurring cash flow .     Our customers typically sign 20-year contracts for solar electricity generated by the system owned by us and pay us directly over the term of their contracts. These customer contracts generate recurring monthly customer payments. As of June 30, 2014, the average estimated nominal contracted payment for our customer contracts exceeded $30,000, and there is the potential for additional payments if customers choose to renew their contracts at the end of the term. The solar energy systems we install are eligible for investment tax credits, or ITCs, accelerated tax depreciation and other governmental incentives. We have historically financed the assets created by substantially all of these contracts through investment funds, which reduces our cost of capital to finance our operations.	
As of the date of this prospectus, we have raised 10 investment funds to which investors such as banks have committed to invest approximately $543 million which will enable us to install solar energy systems of total fair market value approximating $1.3 billion. As of the date of this prospectus, we had tax equity commitments to fund approximately 81 MWs of future deployments, which we estimate to be sufficient to fund solar energy systems with a total fair market value of approximately $405 million. We intend to create additional investment funds with financial investors and potentially with corporate investors, and may also use debt, equity or other financing strategies to fund our operations.
We were founded in 2011 when Vivint, Inc., our sister company and a residential security solutions and home automation services provider, recognized an opportunity to replicate its strong direct-to-home sales model in the residential solar energy market. Vivint, Inc. had approximately 850,000 subscribers as of June 30, 2014, and we believe there will be a continued opportunity to leverage our relationship with Vivint to offer our solar energy systems to its customers in markets that we serve.
Market Opportunity
The market for residential distributed solar energy is growing rapidly and disrupting the traditional electricity market. According to research compiled by GTM Research, an industry research firm, 494 megawatts of capacity was installed within the U.S. residential solar energy market in 2012 and 2,135 megawatts of capacity is expected to be installed in 2016, the final year of the 30% federal investment tax credit, or ITC, for residential solar installations. In 2018, one year after the ITC is currently scheduled to decrease to 10%, 3,258 megawatts of capacity is expected to be installed within the U.S. residential solar energy market, representing a CAGR of approximately 37% from 2012. This market possesses significant growth opportunities as compared to the total U.S. electricity market, as distributed solar has penetrated less than 1% of its total addressable market in the residential sector. We believe that there is a significant opportunity for distributed solar energy to increasingly displace traditional retail electricity generated from fossil fuels.
 
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In recent years, declining solar energy system costs and increasing retail electricity prices have made distributed solar energy a cost effective power source for homeowners in an increasing number of markets. According to the Lawrence Berkeley National Laboratory, residential solar energy system costs decreased by 40% on a per watt basis from 2005 through 2012, or 7% annually for solar installations with capacities of 10 kilowatts or less. This trend, driven by the increased global production of solar panels and the resulting economies of scale, increased government incentives and declining solar panel raw material costs, has served to greatly increase the affordability of residential solar energy systems and benefit distributed solar providers.
Installed Prices of Residential PV Systems (10kW or less) as a Percent of Price in 2005

Source: Lawrence Berkeley National Laboratory
Over this same period, average U.S. retail electricity prices from the power grid increased at a 3.3% CAGR, according to the Energy Information Administration, or EIA. As retail electricity prices increase, the number of markets in which distributed solar energy generation is an economically viable alternative for utility customers is expected to increase and we expect the relative economics of distributed solar energy in those markets to continue to improve. In many of the markets we currently serve, the utility rates have increased faster than the national average. States that rely heavily on oil-fired energy generation, such as Hawaii, have seen energy prices increase significantly as the price of oil has increased. Other factors, including investments in aging infrastructure, plant retirement, declining load and regulatory obligations and production requirements, are contributing to an increase in retail electric prices in select markets. For example, from 2007 to 2012, according to the U.S. Energy Information Administration, utility rates increased 12% nationwide while over the same period rates in Hawaii and Arizona increased 55% and 17%, respectively. More broadly, in the past 20 years, the combined average residential utility rate in our top markets of California and Hawaii has doubled.
 
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Average Residential Retail Utility Rates, 2005 to 2012
(Cents/kWh)

Source: Energy Information Administration
Net metering is one of several key incentives that have enabled the growth of distributed solar in the United States. Net metering allows a homeowner to pay his or her local traditional utility only for their power usage net of production from the solar energy system installed on his or her roof, transforming the conventional relationship between customers and traditional utilities. Homeowners receive credit for the energy that the solar installation generates, and are reimbursed by the utility for excess generation in some utility markets. In states that allow for net metering, the customer typically pays for the net energy used or receives a credit against future bills at the retail rate if more energy is produced than consumed. Forty-three states, Puerto Rico and the District of Columbia have adopted some form of net metering. According to the EIA, the total number of net metered customers in the United States has grown at a CAGR of approximately 48%, from approximately 19,000 households in 2005 to approximately 300,000 households in 2012. Despite this rapid growth, in 2012 only 0.2% of all grid-connected households were engaged in some form of net metering. In 2013, however, net metering programs were subject to regulatory scrutiny in Arizona, California, Colorado, Idaho and Louisiana. Regulators in these states have considered imposing limits on the aggregate capacity of net metering generation, reducing the rate that net metering customers are paid for the power that they deliver back to the grid, whether the owner of a leased solar energy system is subject to property tax on the solar energy system and allegations that homeowners with net metered solar systems shift the costs of maintaining the electric grid onto non-solar ratepayers. Despite these considerations, regulators have generally upheld the programs in their current form, though some were subject to minor modification and others, including California, have been designated for additional review in the next few years.
Tax incentives, such as the ITC, accelerated depreciation and state incentives have also facilitated rapid growth in U.S. solar energy system installations. Solar energy system owners are generally allowed to claim a tax credit that is equal to 30% of the system’s eligible tax basis, which is generally the fair market value of the system. By statute, this tax credit is scheduled to decrease to 10% of the fair market value of a solar energy system on January 1, 2017. Although this scheduled reduction in the ITC will likely adversely impact growth in the distributed solar energy market, decreasing system costs, combined with increasing retail utility rates as described above, are expected to partially mitigate the impact of such reduction. In addition, industry sources have suggested that the reduction in the ITC in 2017 may be stepped down gradually over time, which we believe would further mitigate the impact of such reduction. The economics of purchasing a solar energy system are also improved by eligibility for accelerated depreciation, also known as the modified accelerated cost recovery system, or MACRS, depreciation which allows for the
 
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depreciation of equipment according to an accelerated schedule set forth by the Internal Revenue Service. The acceleration of depreciation creates a valuable tax benefit that reduces the overall cost of the solar energy system and increases the return on investment.
A number of market participants in our industry monetize federal tax credits through a variety of structured investments, also known as “tax equity.” Tax equity investments are generally structured as investments with limited recourse to us. In the context of the distributed solar energy market, tax equity investors make an upfront advance payment to a sponsor through an investment facility in exchange for a share of the tax attributes and cash flows emanating from an underlying portfolio of solar energy systems. In these tax equity investments, the U.S. federal tax attributes offset taxes that otherwise would have been payable on the investors’ other operations.
According to Bloomberg New Energy Finance, renewable energy tax equity investment commitments in 2013 totaled $7.1 billion. In recent years, renewable energy tax equity investment has shifted towards solar and away from other renewable energy investments such as wind, with solar accounting for 54% of 2013 renewable energy tax equity investment relative to 28% in 2012.
Additional financing alternatives for distributed solar energy have become increasingly available as the industry has developed. Securitization, which is the practice of pooling rights with respect to a large number of underlying contracts, such as power purchase agreements and leases, and selling interests in such pools as securities, represents an emerging financing strategy. Access to the capital markets through securitization may assist the solar energy market in achieving greater liquidity and provide an advantageous cost of capital to decrease further the cost of solar installations.
Increasing utility rates, decreasing component costs, the availability of incentives and the lower cost of financing have all contributed to reduce overall costs of distributed solar energy systems. As a result, a number of U.S. states are now achieving “grid parity,” the point at which the overall cost of solar-generated electricity matches the cost of utility-generated electricity. It is expected that the United States will achieve grid parity between 2014 and 2017. This prediction is based on a comparison of the estimated levelized cost of electricity in the solar photovoltaic market and the cost of grid generated retail electricity. The levelized cost of electricity in the solar photovoltaic market takes into account system costs, financing costs, insurance, operations and maintenance, depreciation and government incentives. The below graph shows the “Low Case,” “High Case” and “Base Case” scenarios, each based on varying assumptions. Specifically the three scenarios vary the estimates by increasing and decreasing capital costs per megawatt by 5%, the capacity factor by one percent and the discount rate by 1.5%.
 
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Solar Photovoltaic Market, The US Levelized Cost Of Electricity (LCOE) Comparison with Retail Electricity Prices, 2011-2025

Source: Solar Photovoltaic Power Market to 2020, page 288, GBI Research, 2011.
Our Approach
We secure financing that enables our customers to access solar energy for little to no upfront cost to them. The key elements of our integrated approach to providing distributed solar energy include:

 
 	•	 	Professional consultation .     We deploy our direct-to-home sales force to provide in-person professional consultations to prospective customers to evaluate the feasibility of installing a solar energy system at their residence. Our sales closing and referral rates are enhanced by homeowners’ responsiveness to our direct-to-home, neighborhood-by-neighborhood outreach strategy.	
 
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 	•	 	Design and engineering .     We have developed a streamlined process that enables us to efficiently design and install a custom solar energy system that delivers significant customer savings. This process, which incorporates proprietary software, standardized templates and data derived from on-site surveys, allows us to design each system to comply with complex and varied state and local regulations and optimize system performance on a per panel basis. We continue to pursue technology innovation to integrate accurate system design into the initial in-person sales consultation as a competitive tool to enhance the customer experience and increase sales close rates.	
 
 	•	 	Installation .      We are a licensed contractor in every market we serve and are responsible for every customer installation. Once we complete the system design, we obtain all necessary building permits and begin installation. Upon completion, we schedule all required inspections and arrange for interconnection to the power grid. By directly handling these logistics, we control quality and make the system installation process simple and seamless for our customers. During every step of this process, we keep our customers apprised of the project status with regular updates from our account representatives. Controlling every aspect of the installation process allows us to minimize costs, ensure quality and deliver high levels of customer satisfaction. In addition, we compensate our installation personnel on a piece-rate basis such that they are only paid upon successful installation, which we have found further enhances both efficiency and quality.	
 
 	•	 	Monitoring and service .     We monitor the performance of all of our solar energy systems, leveraging a combination of internally developed solutions as well as capabilities provided by our suppliers. Currently, most of our existing solar energy systems use Enphase Energy, Inc.’s communications gateway device paired with its monitoring service. We leverage the Enphase communications gateway and monitoring service to collect performance data and use this data to ensure we deliver quality operations and maintenance services for our solar energy systems. If services are required, our neighborhood driven strategy enables rapid response times.	
 
 	•	 	Referrals .     We believe that our commitment to creating the best possible experience for our customers along with our concentrated geographic deployment strategy has generated a significant amount of sales through customer referrals. These referrals increase our neighborhood penetration rates, lower our customer acquisition costs and accelerate our growth. Our financial returns also benefit from the cost savings derived from increasing the density of installations in a neighborhood. We have found that customer referrals increase in relation to our penetration of a particular market.	
Our Strengths
We believe the following strengths position us well to capitalize on the expected growth in the distributed solar energy market:
 
 	•	 	Differentiated sales model .     We deploy our sales force on a neighborhood-by-neighborhood basis, which allows us to cultivate a geographically concentrated customer base. We believe that this direct-to-home sales model improves sales effectiveness and reduces customer acquisition costs. We also believe this model reduces system installation costs given the efficiencies associated with working in a concentrated area.	
 
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 	•	 	Integration and operational efficiency .      Our integrated approach to residential solar deployment coupled with our direct-to-home sales model enables us to ensure installation quality, reduce overall costs per system, enhance our competitiveness in existing and potential new markets and allows us to earn attractive financial returns on investment. We believe our cost structure, with its emphasis on variable compensation for our sales personnel and installers, allows us to offer homeowners competitive solar pricing and will continue to support rapid solar energy system installation growth.	
 
 	•	 	Funding available to accelerate growth .      We finance the capital investment required for solar energy system installations primarily through investment funds we have formed with tax equity investors and, to a lesser extent, debt financing. As of the date of this prospectus, we have raised 10 investment funds to which investors such as banks and other large financial investors have committed to invest approximately $543 million which will enable us to install solar energy systems of total fair market value approximating $1.3 billion. As of the date of this prospectus, we had tax equity commitments to fund approximately 81 MWs of future deployments, which we estimate to be sufficient to fund solar energy systems with a total fair market value of approximately $405 million. In September 2014, we entered into an aggregation credit facility pursuant to which we may borrow up to an aggregate of $350 million and, subject to certain conditions, up to an aggregate of $200 million in additional borrowings. We have developed strong, long-term relationships with leading tax equity and debt financing providers, several of whom have provided capital to us on multiple occasions, and we believe that these relationships position us well to raise additional financing.	
 
 	•	 	Relationship with Vivint .      Vivint, Inc., our sister company, had approximately 850,000 subscribers as of June 30, 2014, and we believe the opportunity to cross-sell to Vivint customers provides us with a competitive advantage by reducing customer acquisition costs and helping to accelerate our growth when we enter into new markets. We also benefit from the fact that experienced Vivint, Inc. sales and customer services representatives often see positions at Vivint Solar as a natural progression after completing one or more summer sales seasons with Vivint, Inc. This source of experienced personnel further accelerates our growth and entry into new markets. Our relationship also allows continued utilization of best-practices for in-person sales techniques, process efficiencies between sales and equipment installation, and the latest technology innovations around customer care, data aggregation and deployment of adjacent, complementary technologies. We also expect to enter into an agreement with Vivint pursuant to which we will purchase internet gateway devices and energy management products from Vivint which we believe will further enhance our value proposition.	
 
 	•	 	Experienced management team .      Our executive management team members have track records of leading successful growth businesses and public companies, and have extensive experience across a broad range of disciplines, including sales, structured finance, engineering, legal and government affairs. We believe the strength of our management team is a key ingredient to our continued success and ability to execute our strategy.	
 
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Our Strategy
Our goal is to become the premier provider of distributed solar energy. Key elements of our strategy include:
 
 	•	 	Further penetrating our existing markets .     While we have chosen to initially introduce our solar energy systems in states whose utility prices, sun exposure, climate conditions and regulatory policies provide for the most compelling market for distributed solar energy, we believe even those states are still significantly underpenetrated. Accordingly, we intend to increase our presence in these markets by introducing our solar energy systems into new neighborhoods and communities in states in which we already have operations. We intend to leverage our brand and existing customer base to grow in these markets at lower customer acquisition and installation costs relative to our competitors.	
 
 	•	 	Expanding into new locations and commercial markets .     To enlarge our addressable market, we plan to expand our presence to new states and are considering the option of expanding into markets outside of the residential market, such as the small business market. We are making investments to introduce our solar energy systems into the residential market in other states that we believe present attractive economics for us and homeowners. We have a track record of entering new markets quickly and efficiently. During the 12 months ended June 30, 2014, we established 21 new sales offices to sell to residential customers in addition to the 16 sales offices as of June 30, 2013.	
 
 	•	 	Capitalizing on opportunities to increase sales and lower costs .     We intend to capitalize on our opportunities to increase sales and lower costs through internal development initiatives, acquisitions and alternative financing structures. We anticipate making additional investments in new technologies related to our system design and installation and ongoing customer service practices. Such investments will enable us to continue to improve our operating efficiency, cost structure and customer satisfaction. In addition, our management team has significant experience in successfully integrating acquisitions into their businesses, and we believe there are opportunities to acquire related businesses, talent and technology to drive sales and lower costs.	
 
 	•	 	Building and leveraging strategic relationships .     We plan to build and leverage strategic relationships with new and existing partners to grow our business and drive cost reductions. For example, in addition to our direct sales channel, we are currently exploring opportunities to sell solar energy systems to customers through a number of distribution channels including relationships with homebuilders, home improvement stores, large construction, electrical and roofing companies and other third parties that have access to large numbers of potential customers. Our ongoing relationship with Vivint, will give us continued attractive cross-selling opportunities and we expect to benefit from Blackstone’s network of strategic relationships. Additionally, we intend to lower our cost of capital through alternative financing sources such as securitization by pooling and transferring certain of our solar energy systems and associated customer contracts into special purpose entities, or SPEs, and subsequently issuing and selling interests in these SPEs as securities.	
 
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Customer Contracts
As of June 30, 2014, the average FICO score of our customers was approximately 750. Our solar energy customers purchase energy or lease solar energy systems from us pursuant to one of two types of long-term contracts: a power purchase agreement or a lease. Prior to the first quarter of 2014, all of our long-term contracts were structured as power purchase agreements. In the first quarter of 2014, we began offering leases in connection with our entry into the Arizona market. In the power purchase agreement structure, we charge customers a fee per kilowatt hour based on the amount of electricity the solar energy system actually produces. In the lease structure, the customer’s monthly payment is fixed based on a calculation that takes into account expected solar energy generation. The lease includes a production guarantee under which we agree to make a payment to the customer if his or her leased system does not meet the guaranteed production level. The power purchase agreement and lease terms are typically for 20 years, and all of the prices that we charge to our customers are subject to pre-determined annual fixed percentage price escalations as specified in the customer contract. Most of our current customer contracts contain price escalators ranging from 2.9% to 3.9% annually. Since January 2014, substantially all of our customer contracts contain an annual price escalator of 2.9%. Over the term of the agreement, we operate the system and agree to maintain it in good condition. Customers who buy energy from us under power purchase agreements or leases are covered by our workmanship warranty equal to the length of the term of these agreements.
Sales and Marketing
We place our integrated residential solar energy systems through a scalable sales organization that uses a direct-to-home sales model. We believe that a high-touch, customer-focused selling process is important before, during and after the sale of our products to maximize our sales success. The members of our sales force typically reside and work within the market they serve. We believe we also generate a significant amount of sales through customer referrals. We have found that customer referrals increase in relation to our penetration in a particular market and shortly after entering a new market become an increasingly effective way to market our solar energy systems. In addition to direct sales, we are currently exploring opportunities to sell solar energy systems to customers through a number of distribution channels, including relationships with home builders, home improvement stores, large construction, electrical and roofing companies and other third parties that have access to large numbers of potential customers.
We establish a sales office in each market that we enter. A typical sales team may consist of 15 to 20 sales representatives, depending on the sales region, which we refer to as sales managers, and one to two district managers. Sales managers are typically recruited by district managers. Historically, we have recruited a majority of our sales personnel from our sister company, Vivint, Inc., although increasingly we are recruiting sales personnel from other sources. These sales teams are supported by approximately 30 installation technicians and an operations manager. There are also regional managers who generally oversee 10 to 20 sales offices. During the 12 months ended June 30, 2014, we established 21 sales offices.
Our sales managers participate in a comprehensive training program, which includes operating as a team in existing markets prior to deployment to newly established offices. We believe this approach significantly accelerates the time we can effectively sell in a particular market after establishing a new office, and has in the past allowed us to obtain executed contracts within a day of opening a new office. Our sales managers also receive ongoing training throughout the year.
 
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We train our sales managers on sales techniques and applicable laws and regulations. We also train our sales managers to customize their consultative presentation according to the individual homeowner, based on guidelines and principles outlined in our training materials. We provide sales managers with real-time data on potential customers through a proprietary application provided to our sales managers to help them to sell in an efficient manner. Through the application, a sales manager can pre-screen potential customers directly from his or her mobile device, view maps of the sales area and track data for current and potential customers.
Operations and Suppliers
We purchase solar panels directly from multiple manufacturers. As of June 30, 2014, our primary solar panel suppliers were Trina Solar Limited, Yingli Green Energy Americas, Inc. and Canadian Solar, Inc. In 2013, Trina Solar Limited and Yingli Green Energy Americas, Inc. accounted for substantially all of our solar photovoltaic module purchases and Enphase Energy, Inc. accounted for substantially all of our inverter purchases. Historically, we procured racking systems primarily from Zep Solar, Inc., which was acquired by one of our competitors in 2013. In 2014, we began diversifying our racking providers. We have successfully transitioned away from using racking systems procured from Zep Solar, Inc., although we currently have a limited inventory remaining in certain of our markets which we are using primarily as replacement parts on service calls. Once that inventory is gone, we will no longer use any racking systems from Zep Solar, Inc. We believe that our new racking system providers will be able to meet all of our needs going forward, and we do not expect any interruption to our business as a result of, or following, this transition.
If we fail to develop, maintain and expand our relationships with these or other suppliers, our ability to meet anticipated demand for our solar energy systems may be adversely affected, or we may only be able to offer our systems at higher costs or after delays. If one or more of the suppliers that we rely upon to meet anticipated demand ceases or reduces production due to its financial condition, acquisition by a competitor or otherwise, it may be difficult to quickly identify alternate suppliers or to qualify alternative products on commercially reasonable terms, and our ability to satisfy this demand may be adversely affected.
We screen all suppliers and components based on expected cost, reliability, warranty coverage, ease of installation and other ancillary costs. We typically enter into master contract arrangements with our major suppliers that define the general terms and conditions of our purchases, including warranties, product specifications, indemnities, delivery and other customary terms. We typically purchase solar panels, inverters and racking on an as-needed basis from our suppliers at then prevailing prices pursuant to purchase orders issued under our master contract arrangements.
The declining cost of solar panels and the raw materials necessary to manufacture them has been a key driver in the price we charge for electricity and customer adoption of solar energy. According to industry experts, solar panel and raw material prices are not expected to continue to decline at the same rate as they have over the past several years. The resulting prices could slow our growth and cause our financial results to suffer. In addition, in the past we have purchased virtually all of the solar panels used in our solar energy systems from manufacturers based in China which have benefited from favorable governmental policies by the Chinese government. If this governmental support were to decrease or be eliminated, our ability to purchase these products on competitive terms or to access specialized technologies from China could be
 
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restricted. Even if this support were to continue, the U.S. government could impose tariffs on solar cells manufactured in China. In 2012, the U.S. government imposed anti-dumping tariffs on Chinese crystalline silicon photovoltaic cells on a manufacturer specific basis with rates ranging from approximately 18.3% to 250.0%, and applicable countervailing duty rates ranging from approximately 14.8% to 16.0%. In January 2014, the U.S. government recently broadened its investigation of Chinese pricing practices in this area to include solar panels and modules produced in China containing solar cells manufactured in other countries, such as Taiwan. On June 10, 2014, the U.S. government issued a preliminary determination of countervailing subsidies by China and has proposed duties ranging from 18.6% to 35.2% on Chinese solar companies importing certain solar products into the United States, including our solar panel suppliers. On July 25, 2014, the U.S. government issued a separate preliminary determination imposing antidumping duties on imports of certain solar products from China. Although the exact applicability remains unclear, these duties are at rates of 26.3% to 165.0% for affected Chinese products, including our solar panel supplier Trina Solar. The U.S. government issued a separate preliminary determination relating to imports of solar products from Taiwan, with duties at rates from 20.9% to 27.6% for affected Taiwanese products (although we do not currently purchase Taiwanese products). To the extent that the U.S. government makes a final determination that U.S. market participants experience harm from these Chinese and Taiwanese pricing practices, such solar panels and modules could become subject to these or additional tariffs. These combined tariffs would make such solar cells less competitively priced in the United States, and the Chinese and Taiwanese manufacturers may choose to limit the amount of solar equipment they sell into the United States. As a result, it may be easier for solar cell manufacturers located outside of China or Taiwan to increase the prices of the solar cells they sell into the United States. If we are required to pay higher prices, accept less favorable terms, or purchase solar panels or other system components from alternative, higher-priced sources, our financial results may be adversely affected.
We generally source the other products related to our solar energy systems, such as fasteners, wiring and electrical fittings, through a variety of distributors.
We currently operate in Arizona, California, Hawaii, Maryland, Massachusetts, New Jersey and New York. Our corporate headquarters are located in Utah. We manage inventory through our local warehouses and maintain a fleet of more than 350 trucks and other vehicles to support our installers and operations. This operational scale is fundamental to our business, as our field teams completed approximately 1,438 residential installations per month during the six month period ending June 30, 2014, while our project management teams simultaneously manage thousands of projects as they move through the stages of engineering, permitting, installation, maintenance and monitoring.
In the past we did not offer an express warranty to our power purchase agreement customers but we are obligated under those contracts to maintain the solar energy systems in good condition for the term of the contract, usually 20 years. We also do not offer a performance guarantee to our power purchase agreement customers as such customers pay only for the energy the system actually produces.
We currently offer an installation warranty that the solar energy systems under our customer contracts will be free from material defects in design and workmanship for the term of the contract as well as a warranty on roof penetrations in compliance with applicable state or local law.
 
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Some jurisdictions require solar energy system leases to contain a performance guarantee in favor of the lessee. Leases with performance guarantees require us to refund money to the lessee if the solar energy system fails to generate the minimum amount of electricity in a given term, as specified in the lease. We offer performance guarantees in certain leasing-only markets such as Arizona. In these markets, we compensate customers if their systems produce less energy than the guaranteed amount in any given year by making a payment to customers with under-performing systems.
We further offer a range of warranties on our solar energy systems to our investment funds. All of our systems feature a workmanship warranty during which we are obligated, at our cost and expense, to correct defects in our installation work, which depending on the particular investment fund, is for a period of either five or ten years. Generally our maintenance obligations to our investment funds do not include the cost of panels, inverters or racking, should such major components require replacement. The cost of such components are borne instead by the applicable fund, although we are obligated to install such equipment as part of our services covered by the agreed maintenance services fee. However, in certain of our investment funds, we bear the cost of such replacement equipment in addition to the cost of its installation. This obligation is satisfied by Vivint Solar Provider, LLC, which provides operations and maintenance services to each of our investment funds. As part of Vivint Solar Provider’s operations and maintenance work, we provide a pass-through of the inverter and panel manufacturers’ warranty coverage to our customers, which generally range from 10 to 25 years. Some of our investment funds require us to provide a back-stop of the manufacturers’ obligations under these warranties. We also provide ongoing service and repair during the entire term of the customer relationship, regardless of whether or not such repairs are covered by our or a manufacturer’s warranty. Costs associated with such ongoing service and repair have not been material.
Competition
We believe that our primary competitors are the traditional utilities that supply electricity to our potential customers. We compete with these traditional utilities primarily based on price (cents per kilowatt hour), predictability of future prices (by providing pre-determined annual price escalations) and the ease by which customers can switch to electricity generated by our solar energy systems. We believe that we compete favorably with traditional utilities based on these factors in the states where we offer our solar power purchase and solar energy leasing services.
We also compete with companies that are not regulated like traditional utilities but that have access to the traditional utility electricity transmission and distribution infrastructure pursuant to state and local pro-competitive and consumer choice policies and with solar companies with business models that are similar to ours, such as SolarCity Corporation. We believe that we compete favorably with these companies based on our customer service, including our speed from signing a customer agreement to installation, our in-house installation, operations and maintenance teams, and a results-focused back office that quickly and efficiently addresses customer inquiries.
In addition, we compete with solar companies in the downstream value chain of solar energy. For example, we face competition from purely finance driven organizations that acquire customers and then subcontract out the installation of solar energy systems, from installation businesses that seek financing from external parties, from large construction companies and
 
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utilities and increasingly from sophisticated electrical and roofing companies. These distributed energy competitors typically work in contractual arrangements with third parties, leaving the customer in the position of having to deal with different companies for different aspects of their solar energy systems. We believe that we compete favorably with these companies because we offer an integrated approach to residential solar energy systems, which includes in-house sales, financing, engineering, installation, maintenance and monitoring. Many of our competitors offer only a subset of the services we provide. Aside from simple cost efficiency, we offer distinct practical benefits as an all-in-one provider such as providing a single point of contact and accountability for our offerings during the relationship with our customers. Further, we are not dependent on installation subcontractors, enabling us to better scale our business while maintaining quality control.
Technology; Intellectual Property
As of June 30, 2014, we, through our wholly owned subsidiary Solmetric Corporation, or Solmetric, had five patents and six pending applications with the U.S. Patent and Trademark Office. These patents and applications relate to shade and site analysis. Our issued patents start expiring in 2026. While we do not currently have an extensive patent portfolio, we intend to file additional patent applications as we innovate through our research and development efforts.
Solmetric is best known for the “SunEye” hardware and “PV Designer” software product lines. Solmetric’s products are fundamental to our solar installation efforts and give us more accurate solar energy assessments during the pre-install process and fast and accurate performance testing during commissioning and operations and management. The SunEye is a handheld electronic tool that provides shade analysis. PV Designer allows layout and energy production estimates for the optimum photovoltaic design on a customer’s home.
As part of our strategy, we plan to continue to expand our technological capabilities through targeted acquisitions such as Solmetric, licensing technology and intellectual property from third parties, joint development relationships with partners and suppliers and other strategic initiatives as we strive to offer the industry’s best operational efficiency, performance prediction, operations and management.
Government Regulation and Incentives
Government Regulation
We are not regulated as a public utility in the United States under applicable national, state or other local regulatory regimes where we conduct business.
To operate our systems we obtain interconnection permission from the applicable local primary electric utility. Depending on the size of the solar energy system and local law requirements, interconnection permission is provided by the local utility and us and/or our customer. In almost all cases, interconnection permissions are issued on the basis of a standard process that has been pre-approved by the local public utility commission or other regulatory body with jurisdiction over net metering procedures. As such, no additional regulatory approvals are required once interconnection permission is given. We maintain a utility administration function, with primary responsibility for engaging with utilities and ensuring our compliance with interconnection rules.
 
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Our operations are subject to stringent and complex federal, state and local laws, including regulations governing the occupational health and safety of our employees and wage regulations. For example, we are subject to the requirements of the federal Occupational Safety and Health Act, as amended, or OSHA, the U.S. Department of Transportation, or DOT, and comparable state laws that protect and regulate employee health and safety. We strive to maintain compliance with applicable OSHA, DOT and similar government regulations; however, as discussed in the section captioned “Risk Factors—Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant monetary penalties, operational delays and adverse publicity,” there have been instances in which we experienced workplace accidents and received citations from regulators, resulting in fines. Such instances have not materially impacted our business or relations with our employees.
Government Incentives
Federal, state and local government bodies provide incentives to owners, end users, distributors, system integrators and manufacturers of solar energy systems to promote solar energy in the form of rebates, tax credits and other financial incentives such as system performance payments , payments for renewable energy credits associated with renewable energy generation and exclusion of solar energy systems from property tax assessments. These incentives enable us to lower the price we charge customers for energy from, and to lease, our solar energy systems, helping to catalyze customer acceptance of solar energy as an alternative to utility-provided power.
The Federal government currently offers a 30% investment tax credit under Section 48(a) of the Internal Revenue Code, or the ITC, for the installation of certain solar power facilities until December 31, 2016. By statute, this tax credit is scheduled to decrease to 10% on January 1, 2017, and we expect the reduction in the ITC to negatively impact the availability of tax equity financing and the economics of distributed solar energy financed using tax equity structures.
Solar energy systems that began construction or satisfied a safe harbor by incurring eligible project costs prior to the end of 2011 were eligible to receive a 30% federal cash grant paid by the U.S. Treasury Department under Section 1603 of the “American Recovery and Reinvestment Act of 2009,” or the U.S. Treasury grant, in lieu of the ITC. While we have received U.S. Treasury grants with respect to some of the solar energy systems that we have installed in the past, with limited exceptions, the U.S. Treasury grant program has ended and so we do not expect to receive U.S. Treasury grants in the future. In another of our financing arrangements, we will install solar energy systems using, in part, equipment that qualifies under the U.S. Treasury grant program. We will sell those systems to the investor, who will apply to receive the U.S. Treasury grants as the sole owner of such system.
The economics of purchasing a solar energy system are also improved by eligibility for accelerated depreciation, also known as the modified accelerated cost recovery system, or MACRS, depreciation which allows for the depreciation of equipment according to an accelerated schedule set forth by the Internal Revenue Service. The acceleration of depreciation creates a valuable tax benefit that reduces the overall cost of the solar energy system and increases the return on investment.
 
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Approximately half of the states offer a personal and/or corporate investment or production tax credit for solar energy that is additive to the ITC. Further, more than half of the states, and many local jurisdictions, have established property tax incentives for renewable energy systems that include exemptions, exclusions, abatements and credits.
Many state governments, traditional utilities, municipal utilities and co-operative utilities offer a rebate or other cash incentive for the installation and operation of a solar energy system or energy efficiency measures. Capital costs or “up-front” rebates provide funds to solar customers based on the cost, size or expected production of a customer’s solar energy system. Performance-based incentives provide cash payments to a system owner based on the energy generated by their solar energy system during a pre-determined period, and they are paid over that time period.
Many states also have adopted procurement requirements for renewable energy production. Thirty states and the District of Columbia have adopted a renewable portfolio standard that requires regulated utilities to procure a specified percentage of total electricity delivered to customers in the state from eligible renewable energy sources, such as solar energy systems, by a specified date. To prove compliance with such mandates, utilities must surrender renewable energy certificates, or SRECs to the applicable authority. Solar energy system owners such as our investment funds often are able to sell SRECs to utilities directly or in SREC markets.
Workforce
As of June 30, 2014, we had a total workforce of 2,288, including 527 service providers in sales and marketing, 667 employees in operations, 981 employees in installation, 92 employees in general and administrative and 21 employees in research and development. Our sales and marketing headcount includes 489 active direct sellers and 38 employees. We consider a direct sales person to be active if they completed at least four customer pre-surveys in the prior four weeks. Our operations personnel work primarily in installation, design and account management. Our general and administrative personnel work primarily in finance, business development, capital markets and human resources. Our research and development team is supplemented by additional personnel that we share with Vivint, Inc. through a shared services agreement. None of our service providers are represented by a labor union and we consider relations with our workers to be good.
Facilities
Our corporate headquarters and executive offices are currently located in Lehi, Utah, where we occupy approximately 37,229 square feet of office space. We recently entered into a lease with TCO-Canyon Park, LLC for 90,675 square feet of office space located in Orem, Utah. We also recently entered into a lease with T-Stat One, LLC for approximately 120,000 square feet of office space which will replace our current corporate headquarters and executive offices once renovations are completed in late 2015 or early 2016. Our other locations include warehouses in Arizona, California, Hawaii, Maryland, Massachusetts, New Jersey and New York.
We lease all of our facilities and we do not own any real property. We believe that our current facilities are adequate to meet our ongoing needs and that, if we require additional space, we will be able to obtain additional facilities on commercially reasonable terms.
 
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Legal Proceedings
In the normal course of business, we may from time to time be named as a party to various legal claims, actions and complaints. It is impossible to predict with certainty whether any resulting liability would have a material adverse effect on our financial position, results of operations or cash flows.
On or about December 26, 2013, Andrew Chavez, one of our former sales representatives, on behalf of himself and a purported class, filed a complaint for unspecified damages, injunctive relief and restitution in the Superior Court of the State of California in and for the County of San Diego against Vivint Solar Developer, LLC, one of our subsidiaries, and unnamed John Doe defendants. This action alleges certain violations of the California Labor Code and the California Business and Professions Code based on, among other things, alleged improper classification of sales representatives and sales managers, failure to pay overtime compensation, failure to provide meal periods, failure to provide accurate itemized wage statements, failure to pay wages on termination and failure to reimburse expenses. The complaint also seeks penalties of an unspecified amount associated with the alleged violations, interest on all economic damages and reasonable attorneys’ fees and costs. In addition, the complaint requests an injunction, which would enjoin us from similar violations of California’s Labor Code and Business and Professions Code, and restitution of costs to Chavez and the purported class members under California’s unfair competition law. On or about January 24, 2014, we filed an answer denying the allegations in the complaint and asserting various affirmative defenses. The parties are currently engaged in limited discovery and have agreed to participate in mediation on September 26, 2014. Although we cannot predict with certainty the ultimate resolution of this suit, we do not believe it will have a material adverse effect on our business, results of operations, cash flows or financial condition.
In addition, our sister company Vivint recently made us aware that the U.S. Attorney’s office for the State of Utah is engaged in an investigation that Vivint believes relates to certain political contributions made by some of Vivint’s executive officers that are our directors and some of Vivint’s employees. We have no reason to believe that we, our executive officers or employees are targets of such investigation.
 
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 MANAGEMENT
Executive Officers and Directors
The following table sets forth the names, ages and positions of our executive officers and directors as of September 15, 2014:

Name	  	Age	 	  	Position	
Executive Officers	  				  		
Gregory S. Butterfield	  	 	55	  	  	Chief Executive Officer and President, Director	
Dana C. Russell	  	 	52	  	  	Chief Financial Officer and Executive Vice President	
L. Chance Allred	  	 	36	  	  	Vice President, Sales	
Paul S. Dickson	  	 	29	  	  	Vice President, Operations	
Dwain A. Kinghorn	  	 	48	  	  	Chief Strategy and Innovations Officer	
Shawn J. Lindquist	  	 	44	  	  	Chief Legal Officer, Executive Vice President and Secretary	
Thomas G. Plagemann	  	 	51	  	  	Executive Vice President, Capital Markets	
			
Non-Employee Directors	  				  		
David F. D’Alessandro (3)	  	 	63	  	  	Director	
Alex J. Dunn	  	 	43	  	  	Director	
Bruce McEvoy (1)(2)	  	 	37	  	  	Director	
Todd R. Pedersen (3)	  	 	45	  	  	Director	
Joseph S. Tibbetts, Jr. (1)	  	 	61	  	  	Director	
Joseph F. Trustey (1)(2)	  	 	52	  	  	Director	
Peter F. Wallace (2)(3)	  	 	39	  	  	Chairman	
			
Key Employees	  				  		
Chris A. Lundell.	  	 	53	  	  	Chief Marketing Officer	
Jan E. Newman	  	 	54	  	  	Vice President, Business Development	
Daniel L. Rock	  	 	34	  	  	Vice President, Installation	
Tessa White	  	 	47	  	  	Vice President, Human Capital	

(1)	Member of the Audit Committee	
(2)	Member of the Compensation Committee	
(3)	Member of the Nominating and Governance Committee	
Executive Officers
Gregory S. Butterfield has served as our Chief Executive Officer and President since September 2013 and as a member of our board of directors since March 2014. From 2008 to 2013, Mr. Butterfield was a managing partner at SageCreek Partners, a business consulting firm. Mr. Butterfield has served as a director for RES Software, Inc., an information technology automation company, Needle, Inc., an ecommerce company, Omniture, Inc., an online marketing and web analytics company, Utah Valley University and Utah’s Technology Council. Mr. Butterfield was also the group president of Symantec Corporation, a computing security, storage and systems management company, and president and chief executive officer of Altiris, Inc., a software company. Mr. Butterfield led Altiris to eight consecutive years of revenue growth, took it public and eventually sold it to Symantec Corporation for nearly $1 billion. In 2008, Mr. Butterfield was invited to the World Economic Forum as a technology pioneer and was inducted into Utah’s Technology Hall of Fame in 2009. He was also the winner of the 2002 Ernst & Young Entrepreneur of the Year Award. Mr. Butterfield holds a B.S. in business management - finance from Brigham Young University. Mr. Butterfield has specific attributes that qualify him to serve as a member of our board
 
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of directors, including his experience taking a company public and his experience as a director of both public and private companies.
Dana C. Russell has served as our Chief Financial Officer and Executive Vice President since November 2013. From January 2013 to November 2013, Mr. Russell was the chief financial officer of Allegiance, Inc. a software company. Mr. Russell was an independent contractor, providing financial services and business consulting to a number of privately held organizations and individuals from May 2011 to December 2012. From June 2006 through April 2011, Mr. Russell was the senior vice president and chief financial officer of Novell, Inc., a publicly traded software and services company, which was acquired by The Attachmate Group, Inc. From July 1994 to June 2006, Mr. Russell held positions at Novell including, interim chief financial officer, vice president of finance, treasurer and corporate controller. He had broad responsibility overseeing financial and accounting functions as well as investor relations, tax, information services and technology, risk management, corporate development and facilities. Prior to 1994, Mr. Russell held other high-level accounting and finance positions at high tech companies and also worked as an auditor at PricewaterhouseCoopers LLP, a multinational professional services firm. Mr. Russell holds a master’s degree in accounting from Weber State University and holds a CPA license in the State of Utah.
L. Chance Allred has served as our Vice President of Sales since March 2012. From September 2006 to March 2012, Mr. Allred served as a founding partner and vice president of sales for Platinum Protection, LLC, a home security solutions company. From March 2000 to October 2006, Mr. Allred served in various positions for Vivint, Inc., a home automation and security company and our sister company. Mr. Allred holds a B.A. in marketing from Southern Utah University.
Paul S. Dickson , a member of our founding management team, has served as our Vice President of Operations since November 2013. From May 2011 to November 2013, Mr. Dickson served as our Vice President of Financing. Prior to joining our founding team, Mr. Dickson served as the director of smart grid and energy management for Vivint, Inc. from December 2010 to May 2011. From May 2007 to December 2010, Mr. Dickson co-founded and served as the president and chief executive officer of Meter Solutions Pros, LLC, an energy management and smart-grid business acquired by Vivint, Inc. Mr. Dickson holds a B.A. in public relations from Brigham Young University.
Dwain A. Kinghorn has served as our Chief Strategy and Innovations Officer since March 2014. From July 2008 to March 2014, Mr. Kinghorn served as a partner for SageCreek Partners, a business consulting firm. From April 2007 to July 2008, Mr. Kinghorn served as a vice president for Symantec Corporation, a computing security, storage and systems management company. From October 2000 to April 2007, Mr. Kinghorn served as the chief technology officer for Altiris, Inc., a software company. From May 1994 to September 2000, Mr. Kinghorn served as the founder and chief executive officer for Computing Edge, a systems management server company. From May 1989 to May 1994, Mr. Kinghorn served as a program manager for Microsoft Corporation, a computer software and electronics company. Mr. Kinghorn holds a B.S. in electrical and computer engineering from Brigham Young University.
Shawn J. Lindquist  has served as our Chief Legal Officer, Executive Vice President and Secretary since February 2014. From February 2010 to February 2014, Mr. Lindquist served as chief legal officer, executive vice president and secretary of Fusion-io, Inc., a leading provider of
 
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flash memory solutions for application acceleration, which was acquired by SanDisk Corporation in July 2014. From 2005 through January 2010, Mr. Lindquist served as chief legal officer, senior vice president and secretary of Omniture, Inc., an online marketing and web analytics company, through the completion and integration of the merger of Omniture with Adobe Systems Incorporated. Prior to Omniture, Mr. Lindquist was a corporate and securities attorney at Wilson Sonsini Goodrich & Rosati, the leading legal advisor to technology, life sciences and other growth enterprises worldwide. Mr. Lindquist also previously served as in-house corporate and mergers and acquisitions counsel for Novell, Inc., a software and services company, and as vice president and general counsel of a privately held, venture-backed company. Mr. Lindquist has also served as an adjunct professor of law at the J. Reuben Clark Law School at Brigham Young University. Mr. Lindquist holds a B.S. in business management - finance and a J.D. from Brigham Young University.
Thomas G. Plagemann has served as our Executive Vice President, Capital Markets since October 2013. Mr. Plagemann previously served as the head of energy, U.S. corporate & investment banking for Santander Global Banking & Markets from May 2012 to October 2013, and the global head of project finance and transaction execution at First Solar, Inc., a solar company from March 2011 to May 2012. Mr. Plagemann formed and served as the President of Grand Avenue Capital LLC from September 2010 through February 2011. From September 2009 to July 2010, Mr. Plagemann served as the head of mergers and acquisitions for the wind division of Infigen Energy Limited, a wind energy company. From September 2004 to September 2009, Mr. Plagemann served as the managing director of tax equity and energy investment at American International Group, Inc., an insurance and financial services company. Mr. Plagemann also has held positions at General Electric Capital Corporation and Deutsche Bank, and has served as a member of the board of directors of Solar Energy Industries Association since 2013. Mr. Plagemann holds a B.A. from the University of Minnesota and a master’s degree in international affairs from Columbia University.
Chris A. Lundell has served as our Chief Marketing Officer since October 2013. From March 2013 to September 2013, Mr. Lundell was the vice president of worldwide sales at EveryoneSocial.com, a social marketing platform. From October 2011 to December 2012, Mr. Lundell served as the president of the Americas for NEXThink, Inc., a systems management company. From August 2010 to October 2011, Mr. Lundell served as the chief marketing officer and chief operations officer for DOMO Technologies, Inc. (formerly Corda), where he was responsible for growing enterprise business intelligence and software business. From June 2004 to July 2010, Mr. Lundell served as vice president and general manager of the Asia Pacific operations of LANDesk Software Inc., an enterprise information technology solutions company. Prior to LANDesk, Mr. Lundell worked in various sales and marketing leadership roles at Novell, Inc., a software and services company. He has more than 25 years of experience in sales and marketing leadership management. Mr. Lundell holds a B.S. in business management - finance and an M.B.A. from Brigham Young University.
Jan E. Newman has served as our Vice President of Business Development since October 2013. Mr. Newman currently serves as a member of the board of directors for numerous private companies. From January 2010 to October 2013, Mr. Newman was a partner at SageCreek Partners, a business consulting firm. From April 2006 to January 2010, Mr. Newman served as a mission president for The Church of Jesus Christ of Latter-day Saints. From 1998 to 2006, Mr. Newman was founder and vice president of Altiris, Inc., a software company. From February 1996 to August 1998, Mr. Newman served as the founder and chief executive officer of KeyLabs,
 
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Inc., a third party software and technology testing and validation company. From March 1990 to February 1994, Mr. Newman served as the Executive Vice President for Novell, Inc., a software and services company. Mr. Newman holds a B.A. in French with a minor in computer science from Brigham Young University.
Daniel L. Rock , a member of our founding management team, has served as our Vice President of Installation since April 2011. From April 2002 through April 2011, Mr. Rock held several positions for Vivint, Inc., including operations manager and regional technician manager. In these positions, he managed hundreds of technicians, overseeing all aspects of training and licensing. Mr. Rock holds a B.A. in business management from Utah State University.
Tessa White has served as our Vice President of Human Capital since February 2014. From 2012 to 2014, Ms. White served as a Human Resources consultant for numerous fast-growth companies and growth equity firms such as Aviacode Incorporated, a cloud based medical solutions company and Progressive Finance, a financial services company. Prior to that, from 2009 to 2012, Ms. White served as vice president of human resources for HealthEquity, Inc., the oldest and largest dedicated health savings trustee in America. Her experience also includes a career as vice president of human capital for Ingenix, a division of United HealthGroup, Inc., which is a Fortune 50 company. Ms. White attended Utah State University as a journalism major.
Non-Employee Directors
David F. D’Alessandro has served as a member of our board of directors since August 2013. Since 2010, Mr. D’Alessandro has served as chairman of the board of directors of SeaWorld Entertainment, Inc. Mr. D’Alessandro also serves on the boards of directors of several private companies, including Vivint. He served as chairman, president and chief executive officer of John Hancock Financial Services, Inc. from 2000 to 2004, having served as president and chief operating officer of the same entity from 1996 to 2000, and guided it through a merger with ManuLife Financial Corporation in 2004. Mr. D’Alessandro served as president and chief operating officer of ManuLife in 2004. He is a former partner of the Boston Red Sox. A graduate of Syracuse University, he holds honorary doctorates from three colleges and serves as vice chairman of Boston University. Mr. D’Alessandro has specific attributes that qualify him to serve as a member of our board of directors, including his experience as a director of a newly public company.
Alex J. Dunn is a founder of Vivint Solar and has served as a member of our board of directors since November 2012. He also served as our Interim Chief Executive Officer from April 2013 through September 2013 and as our Chief Operating Officer from August 2011 to January 2013. Mr. Dunn has served as the president of Vivint, Inc. since November 2012 and previously served as chief operating officer for Vivint Inc. from January 2008 through September 2012. He served as vice president of business development for Vivint, Inc. from August 2005 until December 2007. Mr. Dunn also serves on the board of directors of Vivint. Before joining Vivint, Inc., he served as the deputy chief of staff to Governor Mitt Romney in Massachusetts. Mr. Dunn holds a B.S. in sociology from Brigham Young University. Mr. Dunn has specific attributes that qualify him to serve as a member of our board of directors, including having founded the company, his historical knowledge of our company and his experience with the direct-to-home sales model.
Bruce McEvoy has served as a member of our board of directors since November 2012. Mr. McEvoy is a Managing Director in the private equity group at Blackstone. Before joining
 
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Blackstone in 2006, Mr. McEvoy worked at General Atlantic from 2002 to 2004, and was a consultant at McKinsey & Company from 1999 to 2002. Mr. McEvoy currently serves on the board of directors of GCA Services Group, Inc., Performance Food Group Company, RGIS Inventory Specialists, SeaWorld Entertainment, Inc., Catalent Inc. and Vivint. Mr. McEvoy was formerly a director of DJO Orthopedics and Vistar Corporation. Mr. McEvoy graduated from Princeton University and Harvard Business School. Mr. McEvoy has specific attributes that qualify him to serve as a member of our board of directors, including his experience in private equity and his experience as a director of other public companies.
Todd R. Pedersen is a founder of Vivint Solar and has served as a member of our board of directors since November 2012 and served as our Chief Executive Officer from August 2011 through January 2013. Mr. Pedersen founded Vivint, and our sister company, in 1999 and currently serves as its chief executive officer. Mr. Pedersen also serves on the board of directors of Vivint. Mr. Pedersen was named the Ernst & Young Entrepreneur of the Year 2010 in the services category for the Utah Region. Mr. Pedersen has specific attributes that qualify him to serve as a member of our board of directors, including his historical knowledge of our company and his experience with the direct-to-home sales model.
Joseph S. Tibbetts, Jr.  has served as a member of our board of directors since August 2014. Mr. Tibbetts has served as the senior vice president and chief financial officer for Sapient Corporation, a publicly traded global services company since October 2006. He began serving as Sapient Corporation’s treasurer in December 2012 and was reappointed as Sapient Corporation’s chief accounting officer in June 2013, a role he previously held from 2009 to 2012. In addition to being Sapient Corporation’s chief financial officer, Mr. Tibbetts also served as Sapient Corporation’s managing director—SapientNitro Asia Pacific, for a period of approximately 18 months ending in 2012. Prior to joining Sapient Corporation, Mr. Tibbetts was the chief financial officer of Novell, Inc. from February 2003 to June 2006 and, prior to that, he held a variety of senior financial management positions at Charles River Ventures, Lightbridge, Inc., and SeaChange International, Inc. Mr. Tibbetts was also formerly a partner with Price Waterhouse LLP. Mr. Tibbetts holds a B.S. in business administration from the University of New Hampshire. Mr. Tibbetts has specific attributes that qualify him to serve as a member of our board of directors, including his experience as an executive officer of several public companies and his experience as a director of both public and private companies.
Joseph F. Trustey has served as a member of our board of directors since November 2012. Mr. Trustey is a managing director at Summit Partners, which he joined in 1992. Prior to joining Summit Partners, he worked as a consultant for Bain & Co., and as a captain in the U.S. Army. Mr. Trustey currently serves on the board of directors of numerous private companies. He has previously served on the board of directors for two public companies. Mr. Trustey received a B.A. in chemical engineering from the University of Notre Dame and an M.B.A. from Harvard Business School. Mr. Trustey has specific attributes that qualify him to serve as a member of our board of directors, including his experience as director of other public companies.
Peter F. Wallace has served as a member of our board of directors since November 2012 and chairman of the board since March 2014. Mr. Wallace is a senior managing director in the private equity group at Blackstone, which he joined in 1997. Mr. Wallace serves on the board of directors of AlliedBarton Security Services LLC, GCA Services Group, Inc., Michaels Stores, Inc., SeaWorld Entertainment, Inc., Vivint and the Weather Channel Companies. Mr. Wallace was
 
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formerly a director of Crestwood Midstream Partners LP, New Skies Satellites Holdings Ltd. and Pelmorex Media, Inc. Mr. Wallace received a B.A. in government from Harvard College. Mr. Wallace has specific attributes that qualify him to serve as a member of our board of directors, including his experience in private equity and his experience as a director of other public companies.
Messrs. Pedersen and Trustey were elected to our board pursuant to the terms of the governing documents of 313 Acquisition LLC.
Board Composition
Our business and affairs are managed under the direction of our board of directors. Following the completion of this offering, we expect our board of directors to initially consist of eight directors, of whom Messrs. D’Alessandro, Tibbetts and Trustey will be independent. As of the completion of this offering, our certificate of incorporation and bylaws will provide for a classified board of directors consisting of three classes of directors, each serving staggered three-year terms, as follows:
 
 	•	 	Our Class I directors will be Greg Butterfield, Joseph S. Tibbetts, Jr. and Todd Pederson, and their terms will expire at the annual meeting of stockholders to be held in 2015.	
 
 	•	 	Our Class II directors will be Bruce McEvoy, Joseph Trustey and David D’Alessandro, and their terms will expire at the annual meeting of stockholders to be held in 2016.	
 
 	•	 	Our Class III directors will be Peter Wallace and Alex Dunn, and their terms will expire at the annual meeting of stockholders to be held in 2017.	
Upon expiration of the term of a class of directors, directors for that class will be elected for three-year terms at the annual meeting of stockholders in the year in which that term expires. Each director’s term continues until the election and qualification of his successor or his earlier death, resignation or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of our board of directors may have the effect of delaying or preventing changes in control of our company.
In addition, we intend to enter into a stockholders agreement with 313 Acquisition LLC in connection with this offering. This agreement will grant affiliates of our sponsor, affiliates of Summit Partners and Todd Pedersen the right to designate nominees to our board of directors subject to the maintenance of certain ownership requirements in us. See the section of this prospectus “Certain Relationships and Related Party Transactions—Agreements with Our Sponsor—Stockholders Agreement” for additional information.
Board Leadership Structure
Our board of directors is led by the non-executive chairman. The chief executive officer position is separate from the chairman position. We believe that the separation of the chairman and chief executive officer positions is appropriate corporate governance for us at this time.
 
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Role of Board in Risk Oversight
Our board of directors has extensive involvement in the oversight of risk management related to us and our business and accomplishes this oversight through the regular reporting by our audit committee. Our audit committee represents the board of directors by periodically reviewing our accounting, reporting and financial practices, including the integrity of our consolidated financial statements, the surveillance of administrative and financial controls and our compliance with legal and regulatory requirements. Through its regular meetings with management, including the finance, legal and internal audit functions, the audit committee reviews and discusses all significant areas of our business and summarizes for the board of directors all areas of risk and the appropriate mitigating factors. In addition, our board of directors receives periodic detailed operating performance reviews from management.
Controlled Company Exemption
After the completion of this offering, affiliates of Blackstone will continue to beneficially own more than 50% of our common stock and voting power. As a result, (1) under the terms of the Stockholders Agreement, Blackstone will be entitled to nominate at least a majority of the total number of directors comprising our board of directors (see the section of this prospectus captioned “Certain Relationships and Related Party Transactions—Agreements with Our Sponsor—Stockholders Agreement”) and (2) we will be a “controlled company” within the meaning of the NYSE corporate governance standards. Under the NYSE corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards, including (1) the requirement that a majority of the board of directors consist of independent directors, (2) the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, (3) the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and (4) the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees. Following this offering, we intend to utilize these exemptions. As a result, following this offering, we will not have a majority of independent directors on our board of directors; and we will not have a nominating and corporate governance committee or a compensation committee that is composed entirely of independent directors. Also, such committees will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements. In the event that we cease to be a “controlled company,” we will be required to comply with these provisions within the transition periods specified in the NYSE corporate governance rules.
Board Committees
After the completion of this offering, the standing committees of our board of directors will consist of an audit committee, a compensation committee and a nominating and corporate governance committee. Our board of directors may from time to time establish other committees. Pursuant to the stockholders agreement, for so long as we qualify as a “controlled company” under NYSE listing standards and subject to applicable law, our sponsor has the right to designate a majority of the members of any committee of our board of directors. If we do not qualify as a
 
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“controlled company” under NYSE listing standards, our sponsor has the right, subject to applicable stock exchange listing standards and applicable law, to designate one member to each of the committees of our board of directors or such greater number of members that is as nearly proportionate to our sponsor’s representation on our board of directors as possible.
Our president and chief executive officer and other executive officers will regularly report to the non-executive directors and the audit, the compensation and the nominating and corporate governance committees to ensure effective and efficient oversight of our activities and to assist in proper risk management and the ongoing evaluation of management controls. We believe that the leadership structure of our board of directors provides appropriate risk oversight of our activities given the controlling interests held by Blackstone.
Audit Committee
The members of our audit committee are Messrs. McEvoy, Tibbetts and Trustey. Our audit committee chairperson, Mr. Tibbetts, is our audit committee financial expert, as that term is defined under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002, and possesses financial sophistication, as defined under the rules of the NYSE. Our board of directors has determined that each of Messrs. Tibbetts and Trustey satisfy the requirements for independence and financial literacy under the rules and regulations of the NYSE and the SEC. The purpose of the audit committee will be to prepare the audit committee report required by the SEC to be included in our proxy statement and to assist our board of directors in overseeing and monitoring:
 
 	•	 	the quality and integrity of our consolidated financial statements;	
 
 	•	 	our compliance with legal and regulatory requirements;	
 
 	•	 	our independent registered public accounting firm’s qualifications and independence;	
 
 	•	 	the performance of our internal audit function; and	
 
 	•	 	the performance of our independent registered public accounting firm.	
Our board of directors has adopted a written charter for the audit committee that will be available on our website upon the completion of this offering.
Compensation Committee
The members of our compensation committee are Messrs. Wallace, McEvoy and Trustey. Mr. Wallace is the chairperson of our compensation committee. The purpose of the compensation committee is to assist our board of directors in discharging its responsibilities relating to:
 
 	•	 	setting our compensation program and compensation of our executive officers and directors;	
 
 	•	 	monitoring our incentive and equity-based compensation plans; and	
 
 	•	 	preparing the compensation committee report required to be included in our proxy statement under the rules and regulations of the SEC.	
 
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Our board of directors has adopted a written charter for the compensation committee that will be available on our website upon the completion of this offering.
Nominating and Governance Committee
The members of our nominating and governance committee are Messrs. D’Alessandro, Pedersen and Wallace. Mr. D’Alessandro is the chairperson of our nominating and governance committee. The purpose of our nominating and corporate governance committee will be to assist our board of directors in discharging its responsibilities relating to:
 
 	•	 	identifying individuals qualified to become new directors, consistent with criteria approved by the board of directors, subject to the stockholders agreement with 313 Acquisition LLC;	
 
 	•	 	reviewing the qualifications of incumbent directors to determine whether to recommend them for reelection and selecting, or recommending that the board of directors select, the director nominees for the next annual meeting of stockholders;	
 
 	•	 	identifying directors qualified to fill vacancies on any of our board committees and recommending that the board of directors appoint the identified member or members to the applicable committee, subject to the stockholders agreement with 313 Acquisition LLC;	
 
 	•	 	reviewing and recommending to the board of directors corporate governance principles applicable to us;	
 
 	•	 	overseeing the evaluation of the board of directors and management; and	
 
 	•	 	handling such other matters that are specifically delegated to the committee by the board of directors from time to time.	
Our board of directors has adopted a written charter for the nominating and corporate governance committee that will be available on our website upon completion of this offering.
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee is an officer or employee of our company. None of our executive officers currently serves, or in the past year has served, as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of any entity that has one or more executive officers serving on our compensation committee. We are parties to certain transactions with Blackstone described in the section of this prospectus captioned “Certain Relationships and Related Party Transactions—Agreements with Our Sponsor.”
Non-Employee Director Compensation
Except as described below, our non-employee directors do not currently receive and have not in the past received any equity or cash compensation for their services as directors or as board committee members.
 
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In July 2013, an affiliate of Mr. D’Alessandro received equity awards in the form of 500,000 Class B units of 313 Acquisition LLC, which we refer to as the Class B Units, under the 313 Acquisition LLC Unit Plan. Historically, Mr. D’Alessandro has not been compensated directly by us for his service on our board of directors; however, from and after the date on which the registration statement of which this prospectus forms a part is declared effective, Mr. D’Alessandro will be eligible to participate in the outside director compensation policy described below.
The Class B Units are divided into three equal vesting portions, a time-vesting portion, a 2.0x exit-vesting portion, and a 3.0x exit-vesting portion.
 
 	•	 	Time-Vesting Units : On July 18, 2014, the 12-month anniversary of the date Mr. D’Alessandro began providing services to Vivint, 20% of the Class B units will vest, subject to Mr. D’Alessandro’s continued service as a board member of Vivint through such date. Thereafter, an additional 20% of the Class B units will vest every year until the option is fully vested, subject to continued service as a board member of Vivint through each vesting date. Notwithstanding the foregoing, the time-vesting Class B units will become fully vested upon a change of control, as defined in the securityholders agreement, that occurs while Mr. D’Alessandro is still serving as a board member of Vivint.	
 
 	•	 	2.0x Exit-Vesting Units : The 2.0x exit-vesting Class B Units vest if Blackstone receives cash proceeds in respect of its Class A units in Vivint, Inc. equal to (1) a return equal to 2.0x Blackstone’s cumulative invested capital in respect of the Class A units and (2) an annual internal rate of return of at least 20% on Blackstone’s cumulative invested capital in respect of its Class A units, subject to Mr. D’Alessandro’s continued service as a board member of Vivint through each vesting date.	
 
 	•	 	3.0x Exit-Vesting Units : The 3.0x exit-vesting Class B Units vest if Blackstone receives cash proceeds in respect of its Class A units in Vivint, Inc. equal to (1) a return equal to 3.0x Blackstone’s cumulative invested capital in respect of the Class A units and (2) an annual internal rate of return of at least 25% on Blackstone’s cumulative invested capital in respect of its Class A units, subject to Mr. D’Alessandro’s continued service as a board member of Vivint through each vesting date.	
If Mr. D’Alessandro ceases to serve on the board of directors of Vivint, all unvested time-vesting Class B units will be forfeited, and a percentage of the exit-vesting Class B units will be forfeited with such percentage equal to (1) 100%, if his service ceases prior to July 31, 2014, (2) 80%, if his service ceases prior to July 31, 2015, (3) 60%, if his service ceases prior to July 31, 2016, (4) 40%, if his service ceases prior to July 31, 2017, (5) 20%, if his service ceases prior to July 31, 2018 and (6) 0%, if his service ceases on or after July 31, 2018.
As a condition to receiving such Class B units, Mr. D’Alessandro was required to enter into a subscription agreement and become a party to the limited liability company agreement of 313 Acquisition LLC and a securityholders agreement. These agreements generally govern his rights with respect to the Class B units and contain certain rights and obligations of the parties thereto with respect to vesting, governance, distributions, indemnification, voting, transfer restrictions and rights, including put and call rights, tag-along rights, drag-along rights, registration rights and rights of first refusal, and certain other matters.
 
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The compensation committee has retained Frederic W. Cook & Co., Inc., or F.W. Cook, a compensation advisory firm, to provide recommendations on director compensation following this offering based on an analysis of market data compiled from certain public technology companies. Based on the recommendation of F.W. Cook, on June 24, 2014, our compensation committee recommended, and our board approved, an outside director compensation policy that will become applicable to all of our non-employee directors upon the effective date of the registration statement of which this prospectus forms a part. This policy was amended on September 15, 2014. The terms of the director compensation policy are described below.
Each non-employee director will be eligible to receive the following cash compensation, which will be paid quarterly in arrears on a prorated basis. Messrs. McEvoy, Trustey and Wallace have waived their right to receive cash compensation under this policy.

Annual retainer	  	$	55,000	  	
Annual retainer for audit committee chairperson	  	 	30,000	  	
Annual retainer for audit committee member	  	 	10,000	  	
Annual retainer for compensation committee chairperson	  	 	15,000	  	
Annual retainer for compensation committee member	  	 	7,500	  	
Annual retainer for nominating and governance committee chairperson	  	 	10,000	  	
Annual retainer for nominating and governance committee member	  	 	5,000	  	
In addition, other than as set forth below, each non-employee director will be granted an annual restricted stock unit award with a fair value equal to $130,000 on the date of each of our annual stockholder meetings. Messrs. Dunn, McEvoy, Pedersen, Trustey and Wallace have waived their right to receive equity compensation under this policy. Any person who becomes a non-employee director will receive a restricted stock unit award with a value equal to $130,000 multiplied by a fraction, the numerator of which is the number of months between the grant date and the anticipated month of our next annual stockholder meeting and the denominator of which is 12. For these purposes, the anticipated month of our next annual stockholder meeting is May 2015 and thereafter on the anniversary month of our last annual stockholder meeting preceding the grant date. The number of shares subject to the restricted stock unit awards will be determined by the closing price of our shares on the grant date of such award. Each restricted stock unit award will vest as to 100% of the underlying shares on the earlier of the first anniversary of the date of grant or the date of our next annual stockholder meeting first occurring after the date of grant, subject to continued service as a board member through such date. In the event of a change of control, each non-employee director will fully vest in his or her restricted stock units awards.
Following the adoption of our outside director compensation policy, we agreed to provide Messrs. D’Alessandro and Tibbetts with the same cash fees that will become payable to our other non-employee directors under the outside director compensation policy once it becomes effective. After the policy is effective, each director will receive the cash fees under the policy. In addition, Messrs. D’Alessandro and Tibbetts each will receive an initial award of 12,200 restricted stock units and 10,200 restricted stock units, respectively. The size of each award is based on the award each director would have received in connection with his joining our board of directors in April 2014 and August 2014, respectively, under the outside director compensation policy had it been effective as of their start dates. Each of these awards will become effective on the effective date of the registration statement on Form S-8 under the Securities Act we intend to file following completion of this offering and will vest on the day prior to the next annual meeting of our
 
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stockholders following our initial public offering, in each case, subject to the holder’s continued service on our board of directors.
In September 2014, we issued and sold an aggregate of 2,343,748 shares of common stock to Alex Dunn and an entity affiliated with Todd Pedersen for $10.667 per share for aggregate gross proceeds of $25.0 million. As discussed in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Stock-Based Compensation,” we re-evaluated the estimate of the fair value of our common stock for financial reporting purposes in light of our progress with respect to the offering contemplated by this prospectus and the establishment of the price range set forth on the cover of this prospectus. In conducting such re-evaluation, we determined that there was no single event that caused the increase in the fair value of our common stock. Given our rapid growth and improvement in our prospects enabled by additional completed and potential tax equity, debt and equity financings, we determined that a straight line interpolation from the $2.93 fair value estimate as of December 31, 2013 suggested by the common stock valuation discussed in the section of this prospectus captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Stock-Based Compensation” and the midpoint of the preliminary price range as of September 17, 2014 was an appropriate method of re-evaluating the fair value of our common stock for each of the equity transactions completed between January 1, 2014 and September 17, 2014, including the sale of securities to Alex Dunn and an entity affiliated with Todd Pedersen. Based on this re-evaluation, we expect to record approximately $14.8 million in compensation expense with respect to such sales for the three months ended September 30, 2014, which represents the aggregate difference between the $10.667 per share purchase price and $17.00, the midpoint of the price range set forth on the cover page of this prospectus.
Code of Business Conduct and Ethics
We will adopt a written code of business conduct and ethics that will apply to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. Following this offering, a copy of the code will be posted on the investor section of our website, www.vivintsolar.com. The inclusion of our website in this prospectus does not include or incorporate by reference the information on our website into this prospectus.
 
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 EXECUTIVE COMPENSATION
General Compensation Philosophy
Our general executive compensation philosophy is to provide programs that attract, motivate, reward and retain highly qualified executives and motivate them to pursue our corporate objectives while encouraging the creation of long-term value for our stockholders. We evaluate and reward our executive officers through compensation intended to motivate them to identify and capitalize on opportunities to grow our business and maximize stockholder value over time. We strive to provide an executive compensation program that is market competitive, rewards achievement of our business objectives and is designed to provide a foundation of fixed compensation (base salary) and a significant portion of performance-based compensation (short-term and long-term incentive opportunities) that are intended to align the interests of executives with those of our stockholders.
2013 Summary Compensation Table
The following table summarizes the compensation that we paid for the year ended December 31, 2013 to our principal executive officers, each of our two other most highly compensated executive officers and another former executive officer who would have been one of the two most highly compensated executive officer had he remained employed with us through December 31, 2013 (collectively, “named executive officers”). We refer to these officers in this prospectus as our named executive officers.

Name and Principal
Position	 	Year	 	 	Salary
            ($)             	 	 	Bonus
            ($)             	 	 	Option Awards
            ($)(11)            	 	 	Non-Equity
Incentive Plan
    Compensation    
($)(12)	 	 	All Other
    Compensation($)    	 	 	    Total ($)    	 	
Gregory S. Butterfield	 	 	2013	  	 	 	144,231	(1) 	 	 	—	  	 	 	2,505,883	  	 	 	64,658	  	 	 	—	  	 	 	2,714,772	  	
Chief Executive Officer and President	 				 				 				 				 				 				 				
Thomas Plagemann	 	 	2013	  	 	 	59,231	(2) 	 	 	525,000	(3) 	 	 	187,941	  	 	 	—	  	 				 	 	772,172	  	
Executive Vice President, Capital Markets	 				 				 				 				 				 				 				
Chance Allred	 	 	2013	  	 	 	200,000	  	 	 	50,000	(4) 	 	 	426,176	(5) 	 	 	80,000	  	 	 	—	  	 	 	756,176	  	
Vice President, Sales	 				 				 				 				 				 				 				
Todd Pedersen(6)	 	 	2013	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Former Chief Executive Officer and Current Director	 				 				 				 				 				 				 				
Alex Dunn(7)	 	 	2013	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Former Chief Executive Officer and Current Director	 				 				 				 				 				 				 				
Tanguy Serra(8)	 	 	2013	  	 	 	103,569	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	4,846	(9) 	 	 	108,415	  	
Former Chief Executive Officer	 				 				 				 				 				 				 				
Brendon Merkley(10)	 	 	2013	  	 	 	204,623	  	 	 	—	  	 	 	669,706	  	 	 	—	  	 	 	—	  	 	 	874,329	  	
Former Chief Operating Officer	 				 				 				 				 				 				 				

(1)	Mr. Butterfield was hired in September of 2013. This amount represents a pro-rated amount of his $500,000 base salary.	
(2)	Mr. Plagemann was hired in October of 2013. This amount represents a pro-rated amount of his $350,000 base salary.	
(3)	This amount represents a signing bonus.	
(4)	This amount represents a one-time performance reward bonus.	
(5)	Includes an option to purchase 617,647 shares of common stock granted to a trust established by Mr. Allred. Such option was granted outside of the 2013 Omnibus Plan; however, its terms are substantially similar to those of options granted under such plan.	
 
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(6)	Mr. Pedersen served as our chief executive officer from August 22, 2011 to January 24, 2013. Mr. Pedersen currently serves as one of our directors. He also serves as chief executive officer of Vivint, Inc. We did not compensate Mr. Pedersen for his role as our chief executive officer; however pursuant to an arrangement between us and Vivint, Inc., 25% of Mr. Pedersen’s Vivint, Inc. salary and bonus of $1.0 million in 2013 was allocated to us and we paid Vivint Inc. $250,000 in respect thereof.	
(7)	Mr. Dunn served as our chief operating officer from August 2011 to January 2013 and as our chief executive officer from April 1, 2013 to September 3, 2013. Mr. Dunn currently serves as one of our directors. He also serves as president of Vivint, Inc. We did not compensate Mr. Dunn for his role as our chief executive officer; however, pursuant to an arrangement between us and Vivint, Inc., 25% of Mr. Dunn’s Vivint, Inc. salary and bonus of $1.0 million in 2013 was allocated to us and we paid Vivint Inc. $250,000 in respect thereof.	
(8)	Mr. Serra served as our chief executive officer from January 24, 2013 to April 1, 2013.	
(9)	This amount represents taxable automobile reimbursement of $4,846.	
(10)	Mr. Merkley served as our chief operating officer in 2013 until his employment with us terminated in November 2013.	
(11)	Amounts shown in this column do not reflect dollar amounts actually received by our named executive officers. Instead, these amounts reflect the aggregate grant date fair value of each stock option granted, computed in accordance with the provisions of FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 14 to our consolidated financial statements included in this prospectus. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. All options granted to Mr. Merkley returned to the 2013 Omnibus Incentive Plan upon the termination of his employment with us. Each award was determined and approved by our board of directors in its discretion.	
(12)	The amounts reported in the Non-Equity Incentive Plan Compensation column for 2013 represent the amount earned and payable under the 2013 bonus plan based on each named executive officer’s target bonus opportunity as set forth in his offer letter and pro-rated for the number of days he was employed with us in 2013. These amounts were paid in 2014.	
Outstanding Equity Awards at December 31, 2013
The following table shows grants of stock options outstanding at December 31, 2013 held by each of our named executive officers.

Name	 	    Grant    
Date	 	 	Vesting
Start
Date	 	 	Number of
Securities
Underlying
    Unexercised    
Options (#)
Exercisable	 	 	Number of
Securities
Underlying
Unexercised
Options (#)
    Unexercisable    	 	 	Equity Incentive
Plan Awards:
Number of
Securities
Underlying
    Unexercised    
Unearned
Options (#)	 	 	Option
    Exercise    
Price ($)	 	 	Option
    Expiration    
Date	 	
Gregory S. Butterfield	 	 	09/03/13	  	 	 	09/03/13	  	 	 	—	  	 	 	1,176,470	(1)  	 	 	2,352,942	(2)  	 	 	1.00	  	 	 	09/03/23	  	
Thomas G. Plagemann	 	 	10/15/13	  	 	 	10/15/13	  	 	 	—	  	 	 	88,235	(1)  	 	 	176,471	(2)  	 	 	1.00	  	 	 	10/15/23	  	
Chance Allred	 	 	8/19/13	  	 	 	11/16/12	  	 	 	41,176	  	 	 	164,705	(1)  	 	 	411,765	(2)  	 	 	1.00	  	 	 	8/19/23	  	

(1)	The shares subject to the stock option vest over a five-year period in equal annual amounts, subject to the option holder maintaining his status as our employee through each vesting date. Upon a change of control, 100% of the unvested shares subject to the stock option vests and become immediately exercisable.	
(2)	The shares subject to the stock option vest as follows, subject to the option holder maintaining his status as our employee through each vesting date: (a) 1/2 of the shares vest (i) if 313 Acquisition LLC receives cash proceeds with respect to its holdings of our common stock in an amount that equals $250 million more than its cumulative investment in our common stock or (ii) if we complete a public offering and after 240 days our aggregate equity market capitalization exceeds one billion dollars and (b) 1/2 of the shares vest when 313 Acquisition LLC receives cash proceeds with respect to its holdings of our common stock in an amount that equals $500 million more than its cumulative investment in our common stock.	
Named Executive Officer Employment Arrangements
Gregory S. Butterfield
We have entered into a confirmatory employment letter with Gregory S. Butterfield, our chief executive officer and president. The confirmatory employment letter does not have a specific term and provides that Mr. Butterfield is an at-will employee. Mr. Butterfield’s current annual base salary is $500,000, and he is eligible for annual target incentive payments equal to 40% of his base salary.
 
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Thomas Plagemann
We entered into an employment agreement letter with Thomas Plagemann, our executive vice president, capital markets, effective as of October 15, 2013. The employment agreement has a five-year term and provides that Mr. Plagemann is an at-will employee. Mr. Plagemann’s current annual base salary is $350,000, and he is eligible for annual target incentive payments equal to 0.15% of tax equity financing raised by us.
Chance Allred
We have entered into a confirmatory employment letter with Chance Allred, our vice president, sales. The confirmatory employment letter does not have a specific term and provides that Mr. Allred is an at-will employee. Mr. Allred’s current annual base salary is $206,000, and he is eligible for annual target incentive payments equal to 40% of his base salary. A trust established by Mr. Allred was granted an option to purchase 617,647 shares of our common stock in August 2013. Although such grant was made outside of the 2013 Omnibus Plan, the provisions of such option are substantially similar to options granted pursuant to such plan.
Todd Pedersen and Alex Dunn
We have not entered into employment agreements with our former chief executive officers Todd Pedersen or Alex Dunn; however, as described in the footnotes to the “Summary Compensation Table” above, 25% of the cost of the 2013 salary and bonus paid by Vivint, Inc. to each of Messrs. Pedersen and Dunn in 2013 was allocated to, and paid by, us. In 2013, we paid Vivint, Inc. $250,000 in respect of each of Messrs. Pedersen’s and Dunn’s Vivint, Inc. salary and bonus, or an aggregate of $500,000. This arrangement will not be applicable in 2014 or future periods. For more information regarding this arrangement, and Messrs. Pedersen’s and Dunn’s employment with Vivint, Inc., see the section of this prospectus captioned “Certain Relationships and Related Party Transactions—Agreements with Vivint—Arrangement Regarding Vivint, Inc. Executive Officers.”
Named Executive Officer Severance and Change of Control Benefits
We have entered into agreements with certain key executives, including Messrs. Butterfield, Plagemann and Allred, to provide assurances of specified severance benefits to such executives whose employment is subject to involuntary termination. We believe that it is imperative to provide such individuals with severance benefits upon such involuntary terminations of employment to secure their continued dedication to their work, without the distraction of the negative economic consequences of potential termination.
Mr. Butterfield’s Severance Benefits
In June 2014, we entered into an involuntary termination protection agreement with Mr. Butterfield that provides for the severance benefits described below.
 
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If Mr. Butterfield’s employment is terminated either by us without “cause” (other than by reason of death or “disability”) or by Mr. Butterfield for “good reason” (as such terms are defined in his Agreement), and in each case the termination occurs outside of the period beginning six months prior to and ending 18 months following a “change of control” (as defined in his Agreement, and such period, the “Change of Control Period”), Mr. Butterfield will receive the following severance benefits:
 
 	•	 	an amount equal to 1.5x the sum of (1) Mr. Butterfield’s base salary rate as then in effect and (2) (a) if Mr. Butterfield has been employed with us for at least one year as of the date of his termination, the average of performance bonuses paid to Mr. Butterfield for each year Mr. Butterfield was employed by us during the three-year period immediately preceding the date of Mr. Butterfield’s termination or (b) if Mr. Butterfield has been employed with us for less than one year as of the date of his termination, Mr. Butterfield’s target annual performance bonus in effect for the fiscal year in which the termination occurs, which will be paid to Mr. Butterfield in equal installments over a period of 18 months following the date of termination;	
 
 	•	 	an amount equal to the pro-rata portion of the annual bonus paid to Mr. Butterfield in respect of the fiscal year ending immediately prior to the fiscal year in which Mr. Butterfield’s employment is terminated, which will be paid to Mr. Butterfield in equal installments over a period of 18 months following the date of termination; and	
 
 	•	 	continuing payments to reimburse Mr. Butterfield for COBRA continuation coverage for a period of up to 18 months, or, if such reimbursements would result in an excise tax, a lump sum payment of $36,000 in lieu of such reimbursements.	
If Mr. Butterfield’s employment is terminated either by us without cause (other than by reason of death or disability) or by Mr. Butterfield for good reason, and in each case the termination occurs during the Change of Control Period, Mr. Butterfield will receive the following severance benefits:
 
 	•	 	a lump sum payment of an amount equal to 3.0x (or 2.0x if the termination occurs after the third anniversary of the effective date of this offering) the sum of (1) Mr. Butterfield’s base salary rate as then in effect and (2) (a) if Mr. Butterfield has been employed with us for at least one year as of the date of his termination of employment, the average of performance bonuses paid to Mr. Butterfield for each year Mr. Butterfield was employed by us during the 3-year period immediately preceding the date of Mr. Butterfield’s termination, or (b) if Mr. Butterfield has been employed with us for less than one year as of the date of his termination, Mr. Butterfield’s target annual performance bonus in effect for the fiscal year in which the termination occurs;	
 
 	•	 	a lump sum payment equal to the pro-rata portion of the annual performance bonus that would have been paid to Mr. Butterfield had Mr. Butterfield been employed by us for the entire fiscal year in which Mr. Butterfield’s employment was terminated, based on actual performance for such fiscal year and assuming that any performance objectives that are based on individual performance are achieved at target levels;	
 
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 	•	 	100% of Mr. Butterfield’s then-outstanding equity awards will immediately vest and become exercisable and, with respect to equity awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at target levels; and	
 
 	•	 	continuing payments to reimburse Mr. Butterfield for COBRA continuation coverage for a period of up to 18 months, or lump sum payment of $36,000 in lieu of such reimbursements.	
In order to receive the severance benefits, Mr. Butterfield must sign and not revoke a release of claims in our favor and comply with certain restrictive covenants relating to noncompetition, nonsolicitation, and nondisparagement for a period of twelve months following the date of his termination.
In the event any of the payments provided for under this agreement or otherwise payable to Mr. Butterfield would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and could be subject to the related excise tax under Section 4999 of the Internal Revenue Code, he would be entitled to receive either full payment of benefits or such lesser amount which would result in no portion of the benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to such executive. This agreement does not require us to provide any tax gross-up payments.
Mr. Plagemann’s Severance Benefits
Pursuant to the employment agreement between us and Mr. Plagemann, if Mr. Plagemann’s employment is terminated by us without “cause” (other than as a result of death or “disability”) or by Mr. Plagemann for “good reason” (each defined in Mr. Plagemann’s employment agreement), Mr. Plagemann will receive a lump sum cash payment equal to the sum of (1) 100% of Mr. Plagemann’s most recent base salary, (2) $750,000 and (3) a cash payment equal to the costs of providing COBRA continuation coverage for Mr. Plagemann and his dependents for 12 months.
In order to receive the severance benefits under his employment agreement, Mr. Plagemann must sign and not revoke a release of claims in our favor and comply with the restrictive covenants in his employment agreement.
Mr. Allred’s Severance Benefits
We have entered into an involuntary termination protection agreement with Mr. Allred that provides for the severance benefits described below.
If Mr. Allred’s employment is terminated either by us without “cause” (other than by reason of death, or “disability”) or by Mr. Allred for “good reason” (as such terms are defined in his agreement), and in each case the termination occurs outside of the change of control period, Mr. Allred will receive the following severance benefits:
 
 	•	 	an amount equal to 1.0x the sum of (1) Mr. Allred’s base salary rate as then in effect, plus (2)(a) if Mr. Allred has been employed with us for at least one year as of the date	
 
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 	of his termination of employment, the average of performance bonuses paid to Mr. Allred for each year Mr. Allred was employed by us during the three-year period immediately preceding the date of Mr. Allred’s termination or (b) if Mr. Allred has been employed with us for less than one year as of the date of his termination of employment, Mr. Allred’s target annual performance bonus in effect for the fiscal year in which the termination occurs, which will be paid to Mr. Allred in equal installments over a period of 18 months;	
 
 	•	 	an amount equal to the pro-rata portion of the annual bonus paid to Mr. Allred in respect of the fiscal year ending immediately prior to the fiscal year in which Mr. Allred’s employment is terminated, which will be paid to Mr. Allred in equal installments over a period of 18 months following the date of termination; and	
 
 	•	 	continuing payments to reimburse Mr. Allred for COBRA continuation coverage for a period of up to 12 months, or if such reimbursements would result in an excise tax, a lump sum payment of $24,000 in lieu of such reimbursements.	
If Mr. Allred’s employment is terminated either by us without cause (other than by reason of death, or disability) or by Mr. Allred for good reason, and in each case the termination occurs during the change of control period, Mr. Allred will receive the following severance benefits:
 
 	•	 	a lump sum payment of an amount equal to 2.0x (or 1.5x, if the termination occurs after the third anniversary of the effective date of this offering) the sum of (1) Mr. Allred’s base salary rate as then in effect, plus (2)(a) if Mr. Allred has been employed with us for at least one year as of the date of his termination of employment, the average of performance bonuses paid to Mr. Allred for each year Mr. Allred was employed by us during the 3-year period immediately preceding the date of Mr. Allred’s termination or (b) if Mr. Allred has been employed with us for less than one year as of the date of his termination of employment, Mr. Allred’s target annual performance bonus in effect for the fiscal year in which the termination occurs;	
 
 	•	 	a lump sum payment equal to the pro-rata portion of the annual performance bonus that would have been paid to Mr. Allred had Mr. Allred been employed by us for the entire fiscal year in which Mr. Allred’s employment was terminated, based on actual performance for such fiscal year and assuming that any performance objectives that are based on individual performance are achieved at target levels;	
 
 	•	 	100% acceleration of Mr. Allred’s then-outstanding equity awards will immediately vest and become exercisable and, with respect to equity awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at target levels; and	
 
 	•	 	continuing payments to reimburse Mr. Allred for COBRA continuation coverage for a period of up to 18 months, or a lump sum payment of $36,000 in lieu thereof.	
In order to receive the severance benefits, Mr. Allred must sign and not revoke a release of claims in our favor and comply with certain restrictive covenants relating to noncompetition, nonsolicitation, and nondisparagement for a period of 12 months following the date of his termination.
 
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In the event any of the payments provided for under this agreement or otherwise payable to Mr. Allred would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and could be subject to the related excise tax under Section 4999 of the Internal Revenue Code, he would be entitled to receive either full payment of benefits or such lesser amount which would result in no portion of the benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to such executive. This agreement does not require us to provide any tax gross-up payments.
Employee Benefit Plans
2014 Equity Incentive Plan
General
Our board of directors adopted, and we expect our stockholders will approve, our 2014 Equity Incentive Plan. Subject to stockholder approval, the 2014 Equity Incentive Plan will become effective upon the business day immediately prior to the effective date of the registration statement of which this prospectus forms a part, and is not expected to be utilized until after the completion of this offering. Our 2014 Equity Incentive Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and any of our parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants.
Authorized Shares
A total of 8,800,000 shares of our common stock are reserved for issuance pursuant to the 2014 Equity Incentive Plan, of which no awards are issued and outstanding. In addition, the shares reserved for issuance under our 2014 Equity Incentive Plan will be increased by any shares that otherwise would be returned to the 2013 Omnibus Incentive Plan (as defined below) as the result of the expiration or termination of options (provided that the maximum number of shares that may be added to the 2014 Equity Incentive Plan pursuant to this provision is 14,117,647 shares). The number of shares available for issuance under the 2014 Equity Incentive Plan will also include an annual increase on the first day of each year beginning in 2015, equal to the least of:
 
 	•	 	8,800,000 shares;	
 
 	•	 	4% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; and	
 
 	•	 	such other amount as our board of directors may determine.	
Administration
Our compensation committee will administer our 2014 Equity Incentive Plan after the completion of the offering. In the case of options intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code, the committee will consist of two or more “outside directors” within the meaning of Section 162(m).
 
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Subject to the provisions of our 2014 Equity Incentive Plan, the administrator has the power to determine the terms of the awards, including the exercise price, the number of shares subject to each such award, the exercisability of the awards and the form of consideration, if any, payable upon exercise. The administrator also has the authority to amend existing awards to reduce their exercise price, to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the administrator and to institute an exchange program by which outstanding awards may be surrendered in exchange for awards with a higher or lower exercise price.
Stock Options
The exercise price of options granted under our 2014 Equity Incentive Plan must at least be equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed 10 years, except that with respect to any participant who owns 10% of the total combined voting power of all classes of our outstanding stock, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. Subject to the provisions of our 2014 Equity Incentive Plan, the administrator determines the term of all other options.
After the termination of service of an employee, director or consultant, he or she may exercise his or her option for the period of time stated in his or her award agreement to the extent that the option is vested on the date of termination. Generally, if termination is due to death or disability, the option will remain exercisable for 12 months. In all other cases, the option will generally remain exercisable for three months following the termination of service. An option may not be exercised later than the expiration of its term. However, if the exercise of an option is prevented by applicable law, the exercise period may be extended under certain circumstances.
Stock Appreciation Rights
Stock appreciation rights may be granted under our 2014 Equity Incentive Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. Subject to the provisions of our 2014 Equity Incentive Plan, the administrator determines the terms of stock appreciation rights, including when such rights become exercisable and whether to pay any increased appreciation in cash or with shares of our common stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant. After the termination of service of an employee, director or consultant, his or her stock appreciation right will be subject to the same exercise limitations as options described above.
Restricted Stock
Awards of restricted stock may be granted under our 2014 Equity Incentive Plan, which are grants of shares of our common stock that vest in accordance with terms and conditions established by the administrator. The administrator will determine the number of shares granted and may impose whatever conditions to vesting it determines to be appropriate (for example, the administrator may set restrictions based on the achievement of specific performance goals or continued service to us). The administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture.
 
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Restricted Stock Units
Awards of restricted stock units may be granted under our 2014 Equity Incentive Plan, which are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. The administrator determines the terms and conditions of restricted stock units including the number of units granted, the vesting criteria (which may include accomplishing specified performance criteria or continued service to us) and the form and timing of payment. The administrator, in its sole discretion may accelerate the time at which any restrictions will lapse or be removed.
Performance Units and Performance Shares
Awards of performance units and performance shares may be granted under our 2014 Equity Incentive Plan, which are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The administrator will establish organizational or individual performance goals in its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance units and performance shares to be paid out to participants. After the grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such performance units or performance shares. The administrator, in its sole discretion, may pay earned performance units or performance shares in the form of cash, in shares or in some combination thereof.
Non-Employee Directors. Our 2014 Equity Incentive Plan provides that all non-employee directors will be eligible to receive all types of awards (except for incentive stock options) under the 2014 Equity Incentive Plan. Our 2014 Equity Incentive Plan provides that in any given year a non-employee director will not receive (1) cash-settled awards having a grant date fair value greater than $400,000; and (2) stock-settled awards having a grant date fair value greater than $400,000, in each case, as determined under generally accepted accounting principles.
Please see “Management—Non-Employee Director Compensation” for a description of our non-employee director compensation policy.
Non-Transferability of Awards
Unless the administrator provides otherwise, our 2014 Equity Incentive Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.
Merger or Change in Control
Our 2014 Equity Incentive Plan provides that in the event of a merger or “change in control,” as defined in the 2014 Equity Incentive Plan, each outstanding award will be treated as the administrator determines, including that each outstanding award will be continued by the successor corporation or its parent or subsidiary. The administrator is not required to treat all awards similarly. If there is no continuation of outstanding awards, the awards will fully vest, all restrictions will lapse, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and the awards will become fully exercisable. The administrator will provide notice to the recipient that he or she has the right to exercise the option and stock appreciation
 
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right as to all of the shares subject to the award, all restrictions on restricted stock will lapse, and all performance goals or other vesting requirements. If the service of an outside director is terminated on or following a change in control, other than pursuant to a voluntary resignation, his or her options, stock appreciation rights, and restricted stock units, if any, will vest fully and become immediately exercisable, all restrictions on his or her restricted stock will lapse and all performance goals or other vesting requirements for his or her performance shares and units will be deemed achieved at 100% of target levels, and all other terms and conditions met.
Forfeiture and Clawback
All awards granted under the 2014 Equity Incentive Plan will be subject to recoupment under any clawback policy that we are required to adopt under applicable law. In addition, the administrator may provide in an award agreement that the recipient’s rights, payments, and benefits with respect to such award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of specified events. In the event of any accounting restatement, the recipient of an award may be required to repay a portion of the proceeds received in connection with the settlement of an award earned or accrued under certain circumstances.
Amendment; Termination
Our 2014 Equity Incentive Plan will automatically terminate in 2024, unless we terminate it sooner. The administrator has the authority to amend, suspend, or terminate our 2014 Plan provided such action does not impair the existing rights of any participant.
2013 Omnibus Incentive Plan
General
The 2013 Omnibus Incentive Plan was adopted by the board of directors and approved by our stockholders in July 2013, and most recently amended in January 2014. Under the Plan, we may grant stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and performance compensation awards to our current and prospective directors, officers, employees, consultants, advisors and other service providers.
A maximum of 13,500,000 shares of common stock are authorized for issuance under the 2013 Omnibus Incentive Plan, subject to adjustment in the case of certain events, as described in more detail below. The 2013 Omnibus Incentive Plan will be terminated in connection with this offering, and accordingly no shares will be available for issuance under the 2013 Omnibus Incentive Plan following the completion of this offering. The 2013 Omnibus Incentive Plan will continue to govern outstanding awards granted thereunder. As of June 30, 2014, options to purchase 9,728,681 shares of our common stock remained outstanding under our 2013 Omnibus Incentive Plan and the option granted to the trust established by Mr. Allred (which have provisions substantially similar to those granted under the 2013 Omnibus Plan) at a weighted-average exercise price of approximately $1.10 per share. There also have been 4,058,823 shares of common stock reserved for issuance under the 2013 Omnibus Incentive Plan for settling awards under the Long Term Incentive Plan, or LTIP.
Shares of common stock delivered in settlement of awards granted under the 2013 Omnibus Incentive Plan may be authorized and unissued shares, shares held in our treasury, shares purchased on the open market or by private purchase or a combination of the foregoing.
 
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Purpose
The 2013 Omnibus Incentive Plan is designed to provide a means through which we may attract and retain key personnel and to provide a means whereby our directors, officers, employees, consultants and advisors (and prospective directors, officers, employees, consultants and advisors) can acquire an equity interest in our company or be paid incentive compensation, including incentive compensation measured by reference to the value of shares of our common stock, thereby strengthening their commitment to the welfare of our company and aligning their interests with our stockholders.
Administration
Our board of directors (or such other committee designated by our board, including, without limitation, the full board of directors), which is referred to herein as the “committee,” administers the 2013 Omnibus Incentive Plan. Following the completion of this offering, the compensation committee of our board or directors (or a subcommittee of that committee to the extent required to comply with Rule 16b-3 promulgated under the Exchange Act and Section 162(m) of the Internal Revenue Code, in each case to the extent applicable to us at the time of any action) will administer it. The committee has sole and plenary authority to: (1) designate participants in the 2013 Omnibus Incentive Plan, (2) determine the type, size and other terms and conditions of awards, (3) interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the 2013 Omnibus Incentive Plan and any instrument or agreement relating to, or award granted under, the 2013 Omnibus Incentive Plan, (4) establish, amend, suspend or waive any rules and regulations and appoint such agents as it may deem appropriate for the proper administration of the 2013 Omnibus Incentive Plan and (5) make any other determination and take any other action deemed necessary or desirable for the administration of the 2013 Omnibus Incentive Plan. Unless otherwise prohibited by applicable law, rules or regulations, the committee may delegate any or all of the powers or responsibilities to any person or persons it determines, including, one or more of our officers.
Eligible Persons
Our employees (excluding, generally, those covered by a collective bargaining agreement), directors, officers, consultants and advisors (and prospective employees, directors, officers, consultants and advisors) are eligible to receive awards under the 2013 Omnibus Incentive Plan at the discretion of the committee.
Limitation on Awards
No more than 14,117,647 shares of our common stock may be delivered in the aggregate pursuant to the exercise of tax-qualified or incentive stock options. In addition, awards granted under the 2013 Omnibus Incentive Plan are, subject to adjustment in the case of certain events, as described in more detail below, subject to the following limitations:
 
 	•	 	grants of options or stock appreciation rights in respect of no more 2,250,000 shares of our common stock may be made to any individual participant during any single fiscal year;	
 
 	•	 	no more than 2,250,000 shares of our common stock may be delivered in respect of performance compensation awards denominated in shares of our common stock to any	
 
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 	individual participant for a single fiscal year during an applicable performance period (or with respect to each single fiscal year in the event an applicable performance period extends beyond a single fiscal year), or in the event such share denominated performance compensation award is paid in cash, other securities, other awards or other property, no more than the fair market value of such shares of the common stock on the last day of the applicable performance period;	
 
 	•	 	the maximum number of shares of our common stock granted during a single fiscal year to any non-employee director, taken together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $2,000,000 in total value; and	
 
 	•	 	the maximum amount that can be paid to any individual participant for a single fiscal year during an applicable performance period (or with respect to each single fiscal year in the event an applicable performance period extends beyond a single fiscal year) pursuant to a performance compensation award denominated in cash is $2,000,000.	
Types of Awards
Stock Options.   The committee may grant options to purchase shares of our common stock to eligible persons. Options may be either “incentive stock options,” as defined in Section 422(b) of the Internal Revenue Code, or options which do not meet the requirements of Section 422(b) of the Internal Revenue Code, referred to as non-qualified stock options.
The term of each option is specified in the applicable award agreement but may not exceed ten years from the date of grant (or five years from the date of grant in the case of incentive stock options held by certain individuals), except that following a public offering if a non-qualified stock option would expire at a time when trading of the common stock is prohibited by our insider trading policy (or any “blackout period” imposed by us), the term will automatically be extended to the 30th day following the end of such period. At the end of its term, an option will expire, but may also expire earlier upon certain terminations of employment or service. Options will become vested and exercisable as specified in the applicable award agreement. An offeree will not be permitted to exercise an option in a manner which the committee determines would violate applicable laws or applicable rules and regulations of any securities exchange on which our securities are listed and traded.
The aggregate purchase price is the per share exercise price multiplied by the number of shares the offeree is purchasing. The applicable per share exercise price is specified in the award agreement and may not be less than the fair market value of one share of the common stock on the date of grant (or in the case of incentive stock options held by certain individuals, 110% of such fair market value). An offeree may pay the aggregate exercise price by any means specified in the applicable award agreement. An offeree will not have any rights to dividends or other rights of a stockholder with respect to shares of common stock subject to such option until the offeree has given written notice of exercise of such option, paid in full for such shares and, if applicable, has satisfied any other conditions imposed by the committee pursuant to the 2013 Omnibus Incentive Plan.
If the offeree violates a restrictive covenant or engages in competitive activity, each as described in the offeree’s award agreement, all options will immediately terminate and expire.
 
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Stock Appreciation Rights
The committee may grant stock appreciation rights relating to the common stock to eligible persons, which may either be alone or in tandem with an option grant.
The term of each stock appreciation right is specified in the applicable award agreement but may not exceed ten years from the date of grant, except that following a public offering, if a stock appreciation right would expire at a time when trading of the common stock is prohibited by our insider trading policy (or any “blackout period” imposed by us), the term will automatically be extended to the 30th day following the end of such period. At the end of its term, a stock appreciation right will expire, but may also expire earlier upon certain terminations of employment or service, as described in more detail below. Stock appreciation rights will become vested and exercisable as specified in the applicable award agreement.
Subject to certain conditions, the committee may in its sole discretion substitute, without the offeree’s consent, stock appreciation rights for non-qualified stock options to purchase the same number of shares at the same exercise price as the substituted stock appreciation rights.
Restricted Stock and Restricted Stock Unit Awards
The committee may grant to eligible persons both shares of restricted stock or restricted stock units (which generally represent the right to receive, upon the expiration of the applicable restricted period, one share of the common stock, or, in its sole discretion of the committee, the cash value thereof (or any combination thereof)).
If the offeree receives a grant of restricted stock, subject to the other provisions of the 2013 Omnibus Incentive Plan, the offeree will generally have the rights and privileges of a stockholder as to such restricted stock (except, that if the lapsing of restrictions with respect to such restricted stock is contingent on satisfaction of performance conditions other than or in addition to the passage of time, any dividends payable on such shares of restricted stock will be retained, and delivered without interest to the offeree when the restrictions on such shares lapse).
If the offeree receives a grant of restricted stock units, the offeree will not have the rights and privileges of a stockholder unless or until the restricted stock unit is settled in common stock. However, if provided in the applicable award agreement, the offeree may be entitled to dividend equivalent payments, which will be reserved and be payable at the same time as the underlying restricted stock units are settled.
The restricted period with respect to restricted stock and restricted stock units will be set forth in an applicable award agreement and will lapse in such manner and on such date or dates determined by the committee.
Other Stock-Based Awards
The committee also may issue or grant unrestricted common stock, rights to receive grants of awards at a future date, or other awards denominated in our common shares alone or in tandem with other awards in such amounts as the committee may determine from time to time in its sole discretion. The terms applicable to these other stock-based awards will be set forth in the applicable award agreement.
 
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Performance Compensation Awards
The committee has the authority to designate any award granted under the 2013 Omnibus Incentive Plan as a performance compensation award intended to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code, to the extent applicable to us following our initial public offering. The committee also has the authority to make an award of a cash bonus and designate such bonus as a performance compensation award intended to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code, to the extent applicable to us following a public offering.
In connection with any performance compensation award, the committee has the sole discretion to select the length of the applicable performance period, the type(s) of awards, the performance criteria that will be used to establish the applicable performance goal(s), the manner of calculating the performance criteria it selects to use for such performance goal(s), and the kind(s) and/or level(s) of the performance goal(s) that is (are) to apply. The performance criteria that will be used to establish the applicable performance goal(s) may be based on the attainment of specific levels of performance by our company (and/or one or more affiliates, divisions or operational and/or business units, product lines, brands, business segments, administrative departments or any combination of the foregoing) and will be limited to those listed in the 2013 Omnibus Incentive Plan. The committee may also specify adjustments or modifications to be made to the calculation of a performance goal for a performance period, based on and in order to appropriately reflect the certain extraordinary and non-recurring events.
In determining the actual amount of an individual’s performance compensation award, the committee retains the discretion to reduce or eliminate the amount of the performance compensation award earned in the performance period through the use of negative discretion consistent with Section 162(m) of the Internal Revenue Code, to the extent applicable to us following a public offering.
Amendment
The committee may generally amend, alter, or suspend the 2013 Omnibus Incentive Plan in accordance with its terms.
Non-Transferability of Awards
An award granted under the 2013 Omnibus Incentive Plan will not be transferable or assignable by the offeree except by will or by the laws of descent and distribution.
Adjustment in the Event of Changes in Capitalization and Certain Other Events
In the event of certain capital events affecting us or unusual or nonrecurring events (including, without limitation, a change in control) affecting us, or our consolidated financial statements, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, then the committee will make any such necessary or appropriate adjustments in such manner as it may deem equitable, including without limitation, any or all of the following:
 
 	•	 	adjusting any or all of (1) the aggregate number of shares reserved for issuance under the 2013 Omnibus Incentive Plan, or any other limit applicable under the 2013 Omnibus	
 
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 	Incentive Plan with respect to the number of awards which may be granted, (2) the number of shares of our common stock or other securities (or number and kind of other securities or other property) which may be delivered in respect of awards or with respect to which awards may be granted and (3) the terms of any outstanding award;	
 
 	•	 	providing for a substitution or assumption of awards (or awards of an acquiring company), accelerating the exercisability of, lapse of restrictions on, or termination of, awards or providing for a period of time to exercise outstanding awards prior to the occurrence of such event (and any such award not so exercised will terminate upon the occurrence of such event); and	
 
 	•	 	cancelling any one or more outstanding awards and causing to be paid to the holders of vested awards the value of such awards, if any, as determined by the committee.	
Forfeiture and Clawback
The committee may provide in an award agreement that it has the sole discretion to cancel an award and require repayment by the offeree of any gain realized (or any amounts in excess of the amount the offeree should have received) on the vesting or exercise of such award if the offeree violates a non-competition, non-solicitation or non-disclosure covenant or agreement or if the offeree engages in certain activities that are adverse to our interests (including fraud or conduct that leads to a financial restatement) or constitute “cause,” as determined by the committee in its sole discretion. In addition, all awards are generally subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with applicable law.
Long-Term Incentive Plan
In July 2013, our board of directors approved the 2013 Long-term Incentive Plan, or the LTIP, that is comprised of six long-term incentive pools, each an LTIP Pool. The purpose of the LTIP is to attract and retain key service providers and strengthen their commitment to us by providing incentive compensation measured by reference to the value of the shares of our common stock. Eligible participants include nonemployees comprised of direct sales personnel who sell the solar energy system contracts, employees that install and maintain the solar energy systems and employees that help us recruit new employees.
Under the LTIP, each participant is eligible to earn a portion of the respective LTIP Pool based on the extent of achievement of certain pre-established performance objectives relating to the installation of solar energy systems as of a determination date. On a determination date, a participant’s share of the LTIP Pool is equal to the number of credits that the participant received for achieving the performance objectives as of the determination date measured against the total number of credits that all participants under that LTIP Pool received as of the determination date, subject to certain adjustments as described in the LTIP. Each LTIP specifies the formula for accruing credits under an LTIP Pool based on achieving the performance metrics. If a participant’s service terminates prior to a determination date, then his or her right to payment under the LTIP Pool generally will be forfeited for all subsequent determination dates, and any credits accrued as of the termination date shall not be used for purposes of calculating the payments for any other participant in that LTIP Pool.
 
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The determination date(s) and payment terms under each LTIP Pool (other than the LTIP Pool for certain employees that help us recruit new employees) are:
 
 	•	 	Initial Public Offering : following the closing of a public offering of our common stock pursuant to a registration statement, which shall include the closing of the offering pursuant to the registration statement of which this prospectus is made a part, a payment shall be made on the dates that are six months and 18 months following the closing each attributable to one-sixth of the LTIP Pool, measured as of such date, and the dates in which certain performance hurdles described in the LTIP are achieved at least six months following the closing each attributable to one-third of the LTIP Pool, measured as of such date. On each payment date, a participant’s portion of the LTIP Pool will be settled in a number of common shares issued under the 2013 Omnibus Incentive Plan with a fair market value as of the determination date equal to the value of such participant’s allocable portion of the LTIP Pool, subject to certain share restrictions described in the LTIP.	
 
 	•	 	Change of Control : On a change of control, a participant’s portion of the LTIP Pool will be established, and may be subject to reduction if the change of control does not result in the satisfaction of certain performance hurdles described in the LTIP. Each participant’s resulting payment will be made in three equal installments 30 days, nine months, and 18 months each following the closing. The form of payment will be cash, shares of our common stock or shares of capital stock of one of our affiliates, or a combination thereof. A participant generally must be providing service to us through each payment date to receive full payment, unless his or her service is terminated other than for cause, death, or disability each following a change of control, in which case, the participant will receive any unpaid portion of the payment triggered by a change of control, subject to the execution of a release of claims.	
The determination date(s) and payment terms for the LTIP Pool for certain employees that help us recruit new employees will be established upon an initial public offering or change of control. Upon an initial public offering, a participant’s portion of the LTIP Pool will be settled in the form of stock appreciation rights under the 2013 Omnibus Incentive Plan with an intrinsic value equal to the value of participant’s portion of the LTIP Pool as of the determination date. The stock appreciation rights will become automatically exercised in installments as to one-sixth on each date that is six months and 18 months following the closing of the initial public offering, and as to one-third on each date in which certain performance hurdles described in the LTIP are achieved after six months following the closing of the initial public offering. A participant generally must be providing service to us through each exercise date for the stock appreciation rights to become exercisable on that date, unless his or her service is terminated other than for cause, death, or disability each following an initial public offering, in which case the stock appreciation rights will be exercised within a period of time following the termination date, subject to the execution of a release of claims. Upon a change of control, a participant’s portion of the LTIP Pool will be settled and become payable in the same manner as participants in the other LTIP Pools described above.
The maximum number of shares of our common stock reserved under the 2013 Omnibus Incentive Plan that are available for settling awards under all LTIP Pools is 4,058,823.
The receipt of payments under the LTIP is subject to the participant’s compliance with certain restrictive covenants during and for a period following the participant’s termination date.
 
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Awards under each LTIP Pool will not be transferable or assignable by the participant except by will or by the laws of descent and distribution.
In the event of certain capital events affecting us or unusual or nonrecurring events, including, without limitation, a change in control, affecting us, or our financial statements, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, then our board of directors will make any such necessary or appropriate adjustments in such manner as it may deem equitable under the LTIP.
Our board of directors may generally amend, alter, suspend, discontinue or terminate an LTIP Pool, provided that any amendments that materially impair a participant’s rights under an LTIP Pool must be consented to by that participant or a majority of participants in that LTIP Pool.
Executive Incentive Compensation Plan
On June 24, 2014, our board of directors adopted an Executive Incentive Compensation Plan, which we refer to as our Bonus Plan. Our Bonus Plan will allow our compensation committee to provide cash incentive awards to selected employees, including our NEOs, based upon performance goals established by our compensation committee. Pursuant to the Bonus Plan, our compensation committee, in its sole discretion, will establish a target award for each participant and a bonus pool, with actual awards payable from such bonus pool, with respect to the applicable performance period.
Under the Bonus Plan, our compensation committee, in its sole discretion, will determine the performance goals applicable to awards, which goals may include, without limitation: attainment of research and development milestones, bookings, business divestitures and acquisitions, cash flow, cash position, contract awards or backlog, customer renewals, customer retention rates from an acquired company, subsidiary, business unit or division, earnings (which may include earnings before interest and taxes, earnings before taxes, and net taxes), earnings per share, expenses, gross margin, growth in stockholder value relative to the moving average of the S&P 500 Index or another index, installs, internal rate of return, inventory turns, inventory levels, market share, net income, net profit, net sales, new product development, new product invention or innovation, number of customers, operating cash flow, operating expenses, operating income, operating margin, overhead or other expense reduction, product defect measures, product release timelines, productivity, profit, retained earnings, return on assets, return on capital, return on equity, return on investment, return on sales, revenue, revenue growth, sales results, sales growth, stock price, time to market, total stockholder return, working capital, and individual objectives such as peer reviews or other subjective or objective criteria. As determined by our compensation committee, performance goals that include our financial results may be determined in accordance with GAAP, or such financial results may consist of non-GAAP financial measures and any actual results may be adjusted by our compensation committee for one-time items or unbudgeted or unexpected items and/or payments when determining whether the performance goals have been met. The goals may be on the basis of any factors our compensation committee determines relevant, and may be on an individual, divisional, business unit or company-wide basis. The performance goals may differ from participant to participant and from award to award.
 
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Our compensation committee may, in its sole discretion and at any time, increase, reduce or eliminate a participant’s actual award, or increase, reduce or eliminate the amount allocated to the bonus pool for a particular performance period. The actual award may be below, at or above a participant’s target award, in our compensation committee’s discretion. Our compensation committee may determine the amount of any reduction on the basis of such factors as it deems relevant, and it is not be required to establish any allocation or weighting with respect to the factors it considers.
Actual awards are paid in cash (or its equivalent) in a single lump sum as soon as practicable after the end of the performance period during which they are earned and after they are approved by our compensation committee, but in no event later than the 15 th day of the third month of the fiscal year following the date the award has been earned. Unless otherwise determined by our compensation committee, to earn an actual award, a participant must be employed by us (or an affiliate of ours) through the date the bonus is paid. Accordingly, an award is not considered earned until paid.
Our board of directors, in its sole discretion, may alter, suspend or terminate the Bonus Plan provided such action does not, without the consent of the participant, alter or impair the rights or obligations under any award theretofore earned by such participant.
313 Acquisition LLC Unit Arrangements: Todd Pedersen and Alex Dunn
In November 2012, Messrs. Pedersen and Dunn each received equity awards in the form of 23,242,280.97 Class B units of 313 Acquisition LLC under the 313 Acquisition LLC Unit Plan.
The Class B units are divided into a time-vesting portion (one-third of the Class B units granted), a 2.0x exit-vesting portion (one-third of the Class B units granted), and a 3.0x exit-vesting portion (one-third of the Class B units granted).
 
 	•	 	Time-Vesting Units : 12 months after the initial “vesting reference date” (as defined in the applicable award agreement), 20% of the Class B units will vest, subject to continued employment through such date. Thereafter, an additional 20% of their time-vesting Class B units will vest every year until he is fully vested, subject to his continued employment with 313 Acquisition LLC or its subsidiaries through each vesting date. Notwithstanding the foregoing, the time-vesting Class B units will become fully vested upon a change of control (as defined in the securityholders agreement signed by each award holder) that occurs while each of them is still employed with 313 Acquisition LLC or its subsidiaries. In addition, upon a qualifying termination, if a change of control occurs during the one-year period following such termination all unvested Class B units will be fully accelerated.	
 
 	•	 	2.0x Exit-Vesting Units : The 2.0x exit-vesting Class B units vest if Blackstone receives cash proceeds in respect of its Class A units in 313 Acquisition LLC equal to (x) a return equal to 2.0x Blackstone’s cumulative invested capital in respect of the Class A units and (y) an annual internal rate of return of at least 20% on Blackstone’s cumulative invested capital in respect of its Class A units, and subject to continued employment with 313 Acquisition LLC or its subsidiaries through each vesting date. In addition, upon a qualifying termination, if a change of control occurs during the one-year period following such termination all unvested Class B units will be fully accelerated.	
 
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 	•	 	3.0 Exit-Vesting Units : The 3.0x exit-vesting Class B units vest if Blackstone receives cash proceeds in respect of its Class A units in 313 Acquisition LLC equal to (x) a return equal to 3.0x Blackstone’s cumulative invested capital in respect of the Class A units and (y) an annual internal rate of return of at least 25% on Blackstone’s cumulative invested capital in respect of its Class A units, and subject to continued employment with 313 Acquisition LLC or its subsidiaries through each vesting date. In addition, if a qualifying termination occurs and a change of control occurs during the one-year period following such termination, all unvested time-vesting Class B units will be fully accelerated.	
As a condition to receiving such Class B units, each of Messrs. Pedersen and Dunn was required to enter into a subscription agreement and to become a party to the limited liability company agreement of 313 Acquisition LLC as well as a securityholders agreement. These agreements generally govern their rights with respect to the Class B units and contain certain rights and obligations of the parties thereto with respect to vesting, governance, distributions, indemnification, voting, transfer restrictions and rights, including put and call rights, tag-along rights, drag-along rights, registration rights and rights of first refusal, and certain other matters.
401(k) Plan
We participate in a tax-qualified retirement plan sponsored by Vivint that provides our eligible employees with an opportunity to save for retirement on a tax advantaged basis. Employees are able to participate in the 401(k) plan after completion of one year of employment in which the employee worked at least 1,000 hours and participants are able to defer a portion of their eligible compensation. All participants’ interests in their deferrals are 100% vested when contributed. The 401(k) plan permits us to make matching contributions and profit sharing contributions to eligible participants. We have not provided a discretionary company match to employee contributions during the periods presented. All participants’ interests in any matching and profit sharing contributions are 100% vested after three years. Pre-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. The 401(k) plan is intended to qualify under Sections 401(a) and 501(a) of the Internal Revenue Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan and all contributions are deductible by us when made.
 
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 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
We describe below transactions and series of similar transactions, during our last two fiscal years, to which we were a party or will be a party, in which:
 
 	•	 	the amounts involved exceeded or will exceed $120,000; and	
 
 	•	 	any of our directors, executive officers or beneficial holders of more than 5% of any class of our capital stock had or will have a direct or indirect material interest.	
Other than as described below, there has not been, nor is there any currently proposed, transactions or series of similar transactions to which we have been or will be a party other than compensation arrangements, which are described where required under “Executive Compensation.”
Sale of Equity Securities
In August and September 2014, we issued and sold an aggregate of 9,703,122 shares of common stock to 313 Acquisition LLC, Alex Dunn and an entity affiliated with Todd Pedersen for $10.667 per share for aggregate gross proceeds of $103.5 million. If at any time prior to the earlier of (1) the offering contemplated by this prospectus and (2) September 3, 2015, we issue or sell shares of our common stock or any equivalents that would entitle the holder of such securities to acquire shares of our common stock in one or more transactions to an unrelated third party at a price per common share of less than $10.667, then we must issue a number of additional shares of common stock to the holder of such securities equal to (1) the aggregate purchase price paid by the original purchaser divided by such purchase price less (2) the aggregate number of shares purchased by the original purchaser. We obtained such financing to fund our growing operations without altering our existing plans and to bolster our financial condition in advance of this offering.
Agreements with Our Sponsor
Support and Services Agreement
We entered into a support and services agreement, or the Support and Services Agreement, with 313 Acquisition LLC, Blackstone Capital Partners VI L.P. and Blackstone Management Partners L.L.C., or BMP, an affiliate of Blackstone. Under the Support and Services Agreement, as part of the Acquisition, BMP received a $750,000 transaction fee as consideration for undertaking due diligence investigations and financial and structural analysis and providing corporate strategy and other advice and negotiation assistance in connection with the Acquisition. In addition, on a joint and several basis with 313 Acquisition LLC, we agreed to reimburse BMP for any out-of-pocket expenses incurred by BMP and its affiliates and to indemnify BMP and its affiliates and related parties in connection with the provision of services under the Support and Services Agreement.
Under the Support and Services Agreement, we also, jointly with 313 Acquisition LLC, retroactively to the date of the Acquisition, engaged BMP to arrange for Blackstone’s portfolio operations group to provide support services customarily provided by Blackstone’s portfolio operations group to Blackstone’s private equity portfolio companies of a type and amount determined by such portfolio services group to be warranted and appropriate. BMP will invoice us for such services based on the time spent by the relevant personnel providing such services during the applicable period and Blackstone’s allocated costs of such personnel, but in no event shall we be obligated to pay more than $500,000 during any calendar year.
 
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Through June 30, 2014, we have not made any payments to BMP pursuant to the Support and Services Agreement.
In connection with this offering, the parties intend to terminate the Support and Services Agreement, provided that the provisions relating to indemnification and certain other provisions will survive termination. We do not expect to be required to pay BMP any fees in connection with such termination.
Tax Equity Funds
We have entered into three investment fund transactions with two affiliates of our sponsor, Blackstone Holdings I L.P. and Stoneco IV Corporation. These funds provided for investment by such subsidiaries of $40 million, $50 million and $20 million, with projected aggregated fund sizes (in terms of value of solar energy systems owned) of $84.7 million, $107 million and $42.8 million, respectively. Further details of these and our other investment funds may be found in the section of this prospectus captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Stockholders Agreement
In connection with this offering, we intend to enter into a stockholders agreement with 313 Acquisition LLC, which is an affiliate of our sponsor, Summit Partners, Todd Pedersen and Alex Dunn.
Board Composition
This agreement will require us to nominate a number of individuals designated by our sponsor for election as our directors at any meeting of our stockholders, each a sponsor director, such that, upon the election of each such individual and each other individual nominated by or at the direction of our board of directors or a duly-authorized committee of the board, as a director of our company, the number of sponsor directors serving as directors of our company will be equal to: (1) if our pre-IPO owners and their affiliates together continue to beneficially own at least 50% of the shares of our common stock entitled to vote generally in the election of our directors as of the record date for such meeting, the lowest whole number that is greater than 50% of the total number of directors comprising our board of directors; (2) if our pre-IPO owners and their affiliates together continue to beneficially own at least 40% (but less than 50%) of the shares of our common stock entitled to vote generally in the election of our directors as of the record date for such meeting, the lowest whole number that is at least 40% of the total number of directors comprising our board of directors; (3) if our pre-IPO owners and their affiliates together continue to beneficially own at least 30% (but less than 40%) of the total shares of our common stock entitled to vote generally in the election of our directors as of the record date for such meeting, the lowest whole number that is at least 30% of the total number of directors comprising our board of directors; (4) if our pre-IPO owners and their affiliates together continue to beneficially own at least 20% (but less than 30%) of the total shares of our common stock entitled to vote generally in the election of our directors as of the record date for such meeting, the lowest whole number that is at least 20% of the total number of directors comprising our board of directors; and (5) if our pre-IPO owners and their affiliates together continue to beneficially own at least 5% (but less than 20%) of the total shares of our common stock entitled to vote generally in the election of our directors as of the record date for such meeting, the lowest whole number that is at least 10% of the total number of directors comprising our board of directors. In addition, the stockholders agreement will require
 
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us to nominate one individual designated by Summit Partners and one individual designated by Todd Pedersen, each a majority ownership director, for election as our directors at any meeting of our stockholders for so long as our pre-IPO owners and their affiliates together continue to beneficially own at least 50% of the shares of our common stock entitled to vote generally in the election of our directors as of the record date for such meeting.
For so long as the stockholders agreement remains in effect, sponsor directors may be removed only with the consent of our sponsor and majority ownership directors may be removed only with the consent of Summit Partners or Mr. Pedersen, as applicable. In the case of a vacancy on our board created by the removal or resignation of a sponsor director or a majority ownership director, the stockholders agreement will require us to nominate an individual designated by our sponsor or by Summit Partners or Mr. Pedersen, as applicable, for election to fill the vacancy.
Board Committees
Under the stockholders agreement, for so long as we qualify as a “controlled company” under NYSE listing standards and subject to applicable law, our sponsor has the right to designate a majority of the members of any committee of our board of directors. If we do not qualify as a “controlled company” under NYSE listing standards, our sponsor has the right, subject to applicable stock exchange listing standards and applicable law, to designate at least one member to each of the committees of our board of directors or such greater number of members that is as nearly proportionate to our sponsor’s representation on our board of directors as possible.
Investor Approvals
The stockholders agreement also provides that for so long as our sponsor, Summit Partners, Todd Pedersen and Alex Dunn or their respective affiliates collectively own, in the aggregate, at least 30% of the shares of our common stock entitled to vote generally in the election of our directors and our sponsor is entitled to designate at least one director pursuant to the stockholders agreement, our sponsor must approve in advance certain of our significant business decisions, including each of the following:
 
 	•	 	changes in the size or composition of our board of directors or any committee of our board of directors;	
 
 	•	 	any changes in the nature of our business or operations as of the date of the stockholders agreement;	
 
 	•	 	our or any of our subsidiaries’ entry into any voluntary liquidation, dissolution or commencement of bankruptcy or insolvency proceedings, the decision not to oppose any similar proceeding commenced by a third party, the adoption of a plan with respect to any of the foregoing or any reorganization or recapitalization;	
 
 	•	 	the consummation of a change of control;	
 
 	•	 	entering into any agreement providing for any acquisition or divestiture of the assets or equity interests of any other entity involving consideration payable or receivable by us or any of our subsidiaries in excess of $100 million in the aggregate in any single transaction or series of transactions during any 12-month period;	
 
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 	•	 	incurring any indebtedness by us (including through capital leases, the issuance of debt securities or the guarantee of indebtedness of another entity) or entry into tax equity financing in excess of $200 million in the aggregate in any single transaction or series of transactions;	
 
 	•	 	any issuance of equity securities for an aggregate consideration in excess of $100 million;	
 
 	•	 	entering into joint ventures or similar business alliance involving investment by us or any of our subsidiaries having an aggregate value in excess of $100 million;	
 
 	•	 	any amendment, modification or waiver of the stockholders agreement or the employee stockholders agreement; and	
 
 	•	 	any amendment, modification or waiver of our amended and restated certificate of incorporation or amended and restated bylaws.	
The above-described provisions of the stockholders agreement will remain in effect until our sponsor is no longer entitled to nominate a sponsor director pursuant to the stockholders agreement, unless our sponsor requests that they terminate at an earlier date.
Registration Rights Agreement
In connection with this offering, we intend to enter into a registration rights agreement that will provide Blackstone an unlimited number of “demand” registrations and customary “piggyback” registration rights. Additionally, Todd Pedersen, Alex Dunn, certain investment funds affiliated with Summit Partners, whose managing director, Joseph Trustey, is one of our directors, and Black Horse Holdings, LLC, a co-investor in 313 Acquisition LLC, will also have customary “piggyback” registration rights. The registration rights agreement will also provide that we will pay certain expenses relating to such registrations and indemnify the registration rights holders against certain liabilities which may arise under the Securities Act.
Indemnification Agreements
We have entered into indemnification agreements with our directors and officers. These agreements will require us to indemnify these individuals to the fullest extent permitted by Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors or executive officers, we have been informed that in the opinion of the SEC such indemnification is against public policy and is therefore unenforceable.
There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.
Advisory Agreement
In May 2014, we entered into an advisory agreement with Blackstone Advisory Partners L.P., or BAP, an affiliate of our sponsor, under which BAP will provide financial advisory and placement services related to our financing of residential solar energy systems. Under the agreement, we are required to pay a placement fee to BAP upon the consummation of a tax equity financing. This placement fee ranges from 0.75% to 1.5% of the transaction capital, depending on
 
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the identity of the investor and whether the financing relates to residential or commercial projects. This agreement replaces a substantially similar agreement we entered into with BAP. Under the old agreement we had paid an aggregate total of approximately $3.5 million to BAP through June 30, 2014.
Related Party Debt
Related Party Revolving Lines of Credit
In December 2012, we entered into a Subordinated Note and Loan Agreement with Vivint, pursuant to which we may incur up to $20.0 million in revolver borrowings. Accrued interest is paid-in-kind through additions to the principal amount on a semi-annual basis and interest accrued on these borrowings at 7.5% per year through December 2013.
In December 2012, we incurred $15.0 million in revolver borrowings and from January 2013 through May 2013, we incurred an additional $5.0 million in revolver borrowings. Interest accrues on these borrowings at 7.5% per year and accrued interest is paid in kind through additions to the principal amount on a semi-annual basis. In July 2013, we amended and restated this agreement to provide for a maturity date of January 1, 2016.
In May 2013, we entered into a separate Subordinated Note and Loan Agreement with Vivint, pursuant to which we may incur up to $20.0 million in revolver borrowings. From May 2013 through December 2013, we incurred $18.5 million in revolver borrowings under the agreement. Accrued interest is paid-in-kind through additions to the principal amount on a semi-annual basis and interest accrued on these borrowings at 12% per year through November 2013 and 20% per year in December 2013. In January 2014, we entered into an amendment to the agreement, pursuant to which we may incur up to an additional $30.0 million in revolver borrowings. In addition, the amendment provides that the interest on all borrowings under the agreement will accrue at a rate of 12% per year for the remaining term of the agreement. Interest is paid in kind through additions to the principal amount on a semi-annual basis. In April 2014, we amended the agreement to provide for a maturity date of January 1, 2017.
While prepayments are permitted under both of the loan agreements, the principal amount and accrued interest of each of the loans under the loan agreements is due upon the earliest to occur of (1) a change of control, (2) an event of default and (3) January 1, 2016 in the case of the first agreement or January 1, 2017 in the case of the second agreement. In connection with the entry into the loan agreements, we have guaranteed certain obligations of our subsidiaries to our investment funds. Our obligations to Vivint with respect to the loans are subordinate to such guaranty obligations and all of our other indebtedness.
Investment Fund Related Loans
In July 2013, we entered into a Subordinated Note and Loan Agreement with Vivint, for a one-day loan of $40.0 million to obtain funding for a solar investment fund and immediately repaid the full amount the next day. The imputed interest on these borrowings was not significant.
In November 2013, we entered into a Subordinated Note and Loan Agreement with Vivint for a one-day loan of $20.0 million to obtain funding for a solar investment fund and immediately repaid the full amount the next day. The imputed interest on these borrowings was not significant.
 
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Agreements with Vivint
Turnkey Full-Service Sublease Agreement
On June 20, 2013, we entered into a Turnkey Full-Service Sublease Agreement, or the Sublease Agreement, with Vivint, Inc. which was applied retroactively to be in effect as of January 1, 2013. This agreement specifies the terms under which we sublease up to 60,000 square feet of corporate office space in Provo, Utah from Vivint, Inc. and requires Vivint, Inc. to provide us with certain services. Under the Sublease Agreement, we pay Vivint, Inc. $3.41 per rentable square foot per month and $86.54 per month per a specified number of employees. In connection with this offering and a planned move to independent office space, we have amended and restated this agreement to focus exclusively on the real estate issues at the Provo headquarters and are addressing certain services that Vivint, Inc. continues to provide to us under the Transition Services Agreement and related agreements. See “— Expected Agreements with Vivint” below.
Administrative Services Agreement
On June 1, 2011, we entered into an Administrative Services Agreement, or the Service Agreement with Vivint, Inc., which was terminated effective as of December 31, 2013. The Service Agreement required Vivint, Inc. to provide us with certain administrative, managerial and account management services. In exchange for the services, we agreed to pay Vivint, Inc. an administrative fee of up to $20.00 per account per month plus $0.04 per kilowatt hour of electricity generated by the solar equipment each month for each customer account. The terms of the Service Agreement prevent us from competing with Vivint, Inc. until December 31, 2016 with respect to residential home automation, control, energy management and security systems, and prevents Vivint, Inc. from competing with us with respect to the installation of solar energy systems on residential rooftops. The Service Agreement imposes confidentiality obligations on both parties, which survive termination.
Trademark / Service Mark License Agreement
On June 1, 2011, we and Vivint, Inc. entered into a Trademark / Service Mark License Agreement, or the Trademark Agreement. Pursuant to the Trademark Agreement, Vivint, Inc. granted us and our subsidiaries a non-exclusive license to use certain Vivint marks, subject to certain quality control requirements, in exchange for a fee per month of $0.01 per kilowatt hour of electricity generated by the solar equipment each month for each customer account. On June 10, 2013, the Trademark Agreement was amended and restated to grant us a royalty-free, non-exclusive license to the marks, and was applied retroactively to be in effect as of January 1, 2013. We may only use the marks to manufacture, purchase and distribute our solar energy systems for residential rooftop installation, as well as in advertising and promotional material. Vivint, Inc. generally must consent to any sublicense of the marks. In connection with this offering, we intend to terminate this agreement and do not expect any additional costs as a result of this termination. See “— Expected Agreements with Vivint” below.
Master Backup Maintenance Service Agreement
On January 23, 2014, Vivint Solar Provider, LLC, one of our wholly owned subsidiaries, and Vivint entered into a Master Backup Maintenance Services Agreement, or the Master
 
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Maintenance Agreement, pursuant to which Vivint Solar Provider, LLC, engaged Vivint, Inc. as a backup provider of, among other obligations, specified maintenance, operations and customer services tasks related to our solar energy systems owned by third parties. The Master Maintenance Agreement provides the framework for a form agreement to be entered into by Vivint, Inc. and our investment funds. The form agreement requires Vivint, Inc., upon certain triggering events, primarily the default of Vivint Solar Provider, LLC, to provide certain services and maintenance that it was providing. These services are to be provided at the cost incurred by Vivint, Inc. in providing such services plus 10%. The agreement also requires each party to maintain certain levels of insurance coverage. In addition, Vivint Solar Provider, LLC, granted Vivint, Inc. a power of attorney to perform services and otherwise take action on behalf of Vivint Solar Provider, LLC, under the agreements covered by the agreement. Either party may terminate the agreement if the other fails to perform its material obligations and such failure is not remedied within 30 days of receipt of notice or upon the occurrence of a force majeure event that prevents such party from performing its obligations for a continuous 180 day period. Vivint Solar Provider, LLC, Vivint, Inc., and one of our investment funds entered into an addendum to the agreement, which provide that such investment fund would receive the backup services under the agreement. Vivint Solar Provider, LLC may also terminate the agreement if Vivint becomes insolvent or by providing 60 days’ prior written notice to Vivint. In connection with this offering, we intend to terminate this agreement. See “— Expected Agreements with Vivint” below.
Arrangement Regarding Vivint, Inc. Executive Officers
Pursuant to an arrangement between us and Vivint, Inc., in each of 2012 and 2013, 25% of Messrs. Pedersen and Dunn’s Vivint salary and bonus was allocated to, and paid by, us. In 2012 and 2013, Vivint, Inc. charged us an aggregate of $269,111 and $500,000, respectively, pursuant to that arrangement. This arrangement will not be applicable in 2014 or future periods.
The employment agreements between 313 Acquisition LLC and each of Messrs. Pedersen and Dunn contain substantially similar terms and the principal terms of their agreements that relate to salary and bonus are summarized below.
Each employment agreement was entered into on November 16, 2012, provides for a term ending on November 16, 2017 and extends automatically for additional one-year periods unless either Vivint or the executive elects not to extend the term. Under the employment agreements, each executive is eligible to receive a minimum base salary, specified below, and an annual bonus based on the achievement of specified financial goals for Vivint, Inc. for fiscal years 2013 and beyond. If these goals are achieved, the executive may receive an annual incentive cash bonus equal to a percentage of his base salary as provided below.
Mr. Pedersen’s employment agreement provides that he is to serve as Vivint, Inc.’s chief executive officer and is eligible to receive a base salary from Vivint, Inc. of $500,000, subject to periodic adjustments as may be approved by Vivint’s board of directors. Mr. Pedersen is also eligible to receive a bonus from Vivint of 50% to 250% of his annual base salary at the end of the fiscal year if specified targets are achieved.
Mr. Dunn’s employment agreement provides that he is to serve as Vivint, Inc.’s president and is eligible to receive a base salary of $500,000, subject to periodic adjustments as may be approved by Vivint’s board of directors. Mr. Dunn is also eligible to receive a bonus from Vivint of 50% to 250% of his annual base salary at the end of the fiscal year if specified targets are achieved.
 
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The employment agreements contain the method for determining Mr. Pedersen and Mr. Dunn’s bonus for any given year. The agreements provide that the calculation of any bonus will be determined based on the achievement of performance objectives, with targets for “threshold,” “target,” and “high” achievement of the specified objectives.
Expected Agreements with Vivint
In connection with this offering, we have negotiated on an arm’s-length basis and will enter into a number of agreements with Vivint, Inc. related to services and other support that Vivint has provided and will provide to us, including:
 
 	•	 	Master Intercompany Framework Agreement . This agreement establishes a framework for the ongoing relationship between us and Vivint. This agreement contains master terms regarding the protection of each other’s confidential information, and master procedural terms, such as notice procedures, restrictions on assignment, interpretive provisions, governing law and dispute resolution. We and Vivint each make customary representations and warranties that will apply across all of the agreements between us, and we each agree not to damage the value of the goodwill associated with the “VIVINT” or “VIVINT SOLAR” marks. Vivint agrees to provide us notice if Vivint plans to stop using or to abandon rights in the “VIVINT” mark in any country or jurisdiction, and we are permitted to take steps to prevent abandonment of the “VIVINT” mark. We each also agree not to make public statements about each other without the consent of the other or disparage one another.	
 
 	•	 	Non-Competition Agreement . In this agreement, we and Vivint each define our current areas of business and our competitors, and agree not to directly or indirectly engage in the other’s business for three years. Our area of business is defined as selling renewable energy and energy storage products and services. Vivint’s area of business is defined as residential and commercial automation and security products and services, energy management (i.e., wireless or remote management and control of energy controlling or consuming devices in a residence, including thermostats, HVAC, lighting, other appliances and in-house consumption monitoring), products and services for accessing and using the Internet, products and services for the storage, access, retrieval, and sharing of data, fixed and mobile data services, audio/video entertainment services, healthcare and wellness services, content distribution network services, wholesale cloud computing services, demand response services and information security. We and Vivint may each engage in the business of energy inverters, aggregate consumption monitoring and micro-grid technology. Vivint may sell products and services to our competitors other than SolarCity Corporation. We may purchase products and services from specified Vivint competitors. Although we may not engage in the Vivint business for three years, Vivint may engage in our business in markets where we are not yet operating, including by selling customer leads to our competitors (other than SolarCity Corporation). We believe this arrangement will validate a market and increase demand for our products and services in that market. Once we begin operating in a market, Vivint will provide those leads exclusively to us. This agreement permits us and Vivint to make investments of up to 2.5% in any publicly traded company without violating the commitments in this agreement. This agreement also permits us to obtain financing from a Vivint competitor. Finally, in this agreement we also each agree that for five years, unless we or Vivint obtain prior written permission	
 
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 	from the other’s president, neither of us will solicit for employment any member of the other’s executive or senior management team, or any of the other’s employees who primarily manage sales, installation or servicing of the other’s products and services. The commitment not to solicit those employees lasts for 180 days after the employee finishes employment with us or Vivint. General purpose employment advertisements and contact initiated by an employee are not, however, considered solicitation.	
 
 	•	 	Transition Services Agreement . Pursuant to this agreement Vivint will provide to us various enterprise services that it had previously provided to us prior to the offering, including services relating to information technology and infrastructure, human resources and employee benefits, administration services and facilities-related services. Vivint will perform the services with the same degree of care and diligence that Vivint takes in performing services for its own operations. Vivint will also provide us with reasonable assistance with our eventual transition to providing those services in-house or through the use of third-party service providers. We will pay Vivint, Inc. a sum of $313,000 per month for the services, which represents Vivint’s good faith estimate of their full cost of providing the services to us, without markup or surcharge. As we transition any service from Vivint to an alternate provider or in-house, the fees paid to Vivint will be reduced accordingly except for any third party license fees related to services Vivint obtains for us that cannot be terminated or assigned to us. The agreement will also account for the possibility that new services will be required from Vivint that were not initially addressed in the agreement. The initial term of this agreement is expected to be six months; however, we and Vivint hope to complete the transition of the services contemplated by this agreement as soon as commercially practicable.	
 
 	•	 	Product Development and Supply Agreement . Pursuant to this agreement, one of our wholly owned subsidiaries will collaborate with Vivint, Inc. to develop certain monitoring and communications equipment that will be compatible with other equipment used in our solar energy systems and will replace equipment we currently procure from third parties. In connection with the design work conducted by it, we grant Vivint a non-exclusive license to use our intellectual property rights (other than our trademarks) that exist as of the date of the agreement or that we develop outside of the agreement, as well as any improvements or modifications to such intellectual property rights, and any materials, information, data, designs, software or other technology that we make available to Vivint, in each case, solely in connection with its performance under the agreement. Further, Vivint grants us a non-exclusive license to use Vivint’s intellectual property rights (other than our trademarks) that exist as of the date of the agreement or that it develops outside of the agreement, as well as improvements or modifications of such intellectual property rights, in each case, solely in connection with the products we will purchase from Vivint under the agreement.	
If Vivint is successful in developing compatible and functionally equivalent equipment, then we may purchase and deploy such equipment in connection with installation of solar energy systems. We are not obligated to issue purchase orders for such equipment or to purchase a minimum quantity; however, if we include quantities in a monthly forecast that we provide to Vivint, then we are obligated to purchase 90% of such stated quantity. We may also purchase a greater quantity than expressed in the
 
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forecast, subject to certain limitations. The unit price for equipment we purchase is fixed on an annual basis and is based upon Vivint’s fully loaded costs associated with procuring and supplying such equipment, without markup. If we purchase equipment, Vivint agrees to provide basic services for the life of the equipment, including cloud services, data storage and customer support. These basic services are included in the unit price for the equipment when we purchase it and Vivint is obligated perform these basic services notwithstanding termination of the agreement. The equipment includes a one-year warranty covering defects in workmanship, materials and design, and Vivint warrants that its services are performed to certain standards. Each party agrees to use good faith efforts to install the equipment in connection with their respective services in order to enhance cross-selling opportunities. If a party installs equipment and the other party wants to later use it in connection with the services it provides, then the non-installing party is required to make a one-time payment to the installing party in an amount equal to 50% of the unit price of such equipment.
The initial term of the agreement is three years, and it will automatically renew for successive one-year periods unless either party elects otherwise.
 
 	•	 	Marketing and Customer Relations Agreement. This agreement governs various cross-marketing initiatives between the companies, in particular the provision of sales leads from each company to the other. Sales leads resulting in installations, as well as sales to each other’s customers (whether or not a lead is provided), generate commissions payable between the parties. The commission rate is 50% of the applicable fully loaded commission that is paid to the paying party’s sales personnel performing similar lead generation services; this is intended to properly incentivize leads while accounting for the somewhat lower level of effort required for lead generation as opposed to outright sales. The term of this agreement, including the term of the schedules defining the terms of the mutual lead generation program, is three years.	
 
 	•	 	Sublease Agreement . This agreement will provide for the short-term (estimated to be less than six months) sublease of space by us at the Morinda building (separate from the Provo headquarters). Similar to the Sublease Agreement described above, this agreement is focused only on real estate issues and certain specifically related services at the Morinda building. Other services at this location, in particular IT and similar services, are provided pursuant to the Transition Services Agreement.	
 
 	•	 	Bill of Sale . This agreement governs the transfer of certain assets such as office equipment from Vivint to us.	
 
 	•	 	Trademark License Agreement . Pursuant to this agreement, the licensor, a subsidiary majority-owned by Vivint and minority-owned by us, will grant us a royalty-free exclusive license to the trademark “VIVINT SOLAR” in the field of selling renewable energy or energy storage products and services. The agreement enables us to sublicense the Vivint Solar trademark to our subsidiaries and to certain third parties, such as suppliers and distributors, to the extent necessary for us to operate our business. The agreement governs how we may use and display the Vivint Solar trademark and provides that we may create new marks that incorporate “VIVINT SOLAR” with licensor’s reasonable approval. The agreement also provides that the	
 
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 	licensor will apply to register Vivint Solar trademarks as reasonably requested by us, and that we will work together with the licensor in enforcing and protecting the Vivint Solar trademarks. The agreement is perpetual but may be terminated voluntarily by us or by the licensor if (1) a court finds that we have materially breached the agreement and not cured such breach within 30 days after notice, (2) we become insolvent, make an assignment for the benefit of creditors, or become subject to bankruptcy proceedings, (3) one of the parties (or Vivint, with respect to the licensor) is acquired by a competitor of the other party, or (4) we cease using the “VIVINT SOLAR” mark worldwide. Vivint retains ownership of the Vivint trademark and we have no right to use “Vivint” except as part of “VIVINT SOLAR”.	
Employee Stockholders Agreement
We have entered into an employee stockholders agreement with 313 Acquisition LLC. Pursuant to the employee stockholders agreement and the grant of an irrevocable proxy in favor of 313 Acquisition LLC executed by each employee pursuant thereto, employee stockholders are required to vote their shares as directed by 313 Acquisition LLC, including for the removal and appointment of directors, in connection with amendments to our organizational documents, the merger, security exchange, combination or consolidation with any other person or persons, the sale, lease or exchange of all or substantially all of our property and our assets and our subsidiaries on a consolidated basis, and our reorganization, recapitalization, liquidation, dissolution or winding-up as directed by 313 Acquisition LLC. Employee optionholders are required to become a party to this agreement prior to exercising options under our 2013 Omnibus Incentive Plan.
The employee stockholders agreement also imposes restrictions on transfers of the shares. Pursuant to the employee stockholders agreement, employee stockholders may not transfer our shares, subject to limited exceptions, until the date that is the earlier of (1) the first anniversary of a public offering (or, if later, the first anniversary of such employee stockholder’s date of hire by us) and (2) the occurrence of a change of control. During the term of the employee stockholders agreement, each employee stockholder has the right to exercise certain tag-along rights in connection with certain proposed sales by 313 Acquisition LLC subject to customary exceptions. In addition, if 313 Acquisition LLC elects to consummate a transaction that would result in a change of control, each employee stockholder is required to consent to and raise no objections to the proposed transaction and, at the request of 313 Acquisition LLC, and take all actions reasonably necessary to cause the consummation of such transaction on the terms proposed by 313 Acquisition LLC.
Policies and Procedures for Related Party Transactions
The audit committee of our board of directors has the primary responsibility for reviewing and approving transactions with related parties. Our audit committee charter provides that the audit committee shall review and approve in advance any related party transactions.
We have adopted a formal written policy providing that our executive officers, directors, nominees for election as directors, beneficial owners of more than 5% of any class of our voting stock, any member of the immediate family of any of the foregoing persons, and any firm, corporation or other entity in which any of the foregoing persons is employed, is a general partner or principal or in a similar position, or in which such person has a 5% or greater beneficial ownership interest, is not permitted to enter into a related party transaction with us without the
 
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consent of our audit committee, subject to the exceptions described below. In approving or rejecting any such proposal, our audit committee is to consider the relevant facts and circumstances available and deemed relevant to our audit committee, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. Our audit committee is expected to determine that certain transactions will not require audit committee approval, including certain employment arrangements of executive officers, director compensation, transactions with another company at which a related party’s only relationship is as a non-executive employee or beneficial owner of less than 5% of that company’s shares, transactions where a related party’s interest arises solely from the ownership of our common stock and all holders of our common stock received the same benefit on a pro rata basis, and transactions available to all employees generally.
 
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 PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth the beneficial ownership of our common stock as of September 15, 2014 and as adjusted to reflect the sale of common stock in this offering, for:
 
 	•	 	each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock;	
 
 	•	 	each of our executive officers;	
 
 	•	 	each of our directors;	
 
 	•	 	all of our executive officers and directors as a group; and	
 
 	•	 	the selling stockholder.	
We have determined beneficial ownership in accordance with the rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose, including for purposes of Sections 13(d) and 13(g) of the Securities Act. Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and sole investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.
Applicable percentage of beneficial ownership prior to this offering is based on 84,703,122 shares of common stock outstanding as of September 15, 2014. Applicable percentage ownership after this offering is based on 105,303,122 shares of common stock to be outstanding after this offering, after giving effect to the issuance of 20,600,000 shares of our common stock that we expect to be sold in this offering, and assuming no exercise of the underwriters’ option to purchase additional shares. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of such person, we deemed to be outstanding all shares of common stock subject to options held by the person that are currently exercisable or exercisable within 60 days of September 15, 2014. We did not deem such shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
 
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Except as otherwise noted below, the address for each person or entity listed in the table is c/o Vivint Solar, Inc., 3301 N. Thanksgiving Way, Suite 500, Utah 84043.

Name of Beneficial Owner	 	Shares
Beneficially
Owned
Prior to this
Offering	 	 	Number of
Shares
Subject
to the
Underwriters’
Option	 	 	Shares Beneficially Owned
After this Offering	 	
	 			 			 	Assuming the
Underwriters’
Option is not
Exercised	 	 	Assuming the
Underwriters’
Option is Exercised
in Full	 	
	 	    Number    	 	 	    Percentage    	 	 			 	    Number    	 	 	    Percentage    	 	 	    Number    	 	 	    Percentage    	 	
5% Stockholder and Selling Stockholder	   	 				 				 				 				 				 				
313 Acquisition LLC(1)	 	 	82,359,374	  	 	 	97.2	% 	 	 	3,090,000	  	 	 	82,359,374	  	 	 	78.2	% 	 	 	79,269,374	  	 	 	75.3	% 	
Executive Officers and Directors	 				 				 				 				 				 				 				
Gregory S. Butterfield(2)	 	 	235,294	  	 	 	*	  	 	 	-	  	 	 	235,294	  	 	 	*	  	 	 	235,294	  	 	 	*	  	
Dana C. Russell	 	 	-	  	 	 	*	  	 	 	-	  	 	 	-	  	 	 	*	  	 	 	-	  	 	 	*	  	
Chance Allred(3)	 	 	41,176	  	 	 	*	  	 	 	-	  	 	 	41,176	  	 	 	*	  	 	 	41,176	  	 	 	*	  	
Paul S. Dickson(4)	 	 	39,410	  	 	 	*	  	 	 	-	  	 	 	39,410	  	 	 	*	  	 	 	39,410	  	 	 	*	  	
Dwain Kinghorn	 	 	-	  	 	 	*	  	 	 	-	  	 	 	-	  	 	 	*	  	 	 	-	  	 	 	*	  	
Shawn J. Lindquist	 	 	-	  	 	 	*	  	 	 	-	  	 	 	-	  	 	 	*	  	 	 	-	  	 	 	*	  	
Thomas Plagemann(5)	 	 	17,647	  	 	 	*	  	 	 	-	  	 	 	17,647	  	 	 	*	  	 	 	17,647	  	 	 	*	  	
David F. D’Alessandro	 	 	-	  	 	 	*	  	 	 	-	  	 	 	-	  	 	 	*	  	 	 	-	  	 	 	*	  	
Alex Dunn(6)	 	 	468,749	  	 	 	*	  	 	 	-	  	 	 	468,749	  	 	 	*	  	 	 	468,749	  	 	 	*	  	
Bruce McEvoy(7)	 	 	-	  	 	 	*	  	 	 	-	  	 	 	-	  	 	 	*	  	 	 	-	  	 	 	*	  	
Todd Pedersen(8)	 	 	1,874,999	  	 	 	2.2	% 	 	 	-	  	 	 	1,874,999	  	 	 	1.8	% 	 	 	1,874,999	  	 	 	1.8%	  	
Joseph S. Tibbetts, Jr.	 	 	-	  	 	 	*	  	 	 	-	  	 	 	-	  	 	 	*	  	 	 	-	  	 	 	-	  	
Joseph F. Trustey	 	 	-	  	 	 	*	  	 	 	-	  	 	 	-	  	 	 	*	  	 	 	-	  	 	 	*	  	
Peter F. Wallace(7)	 	 	-	  	 	 	*	  	 	 	-	  	 	 	-	  	 	 	*	  	 	 	-	  	 	 	*	  	
All current executive officers and directors as a group (13 persons)(9)	 	 	2,677,275	  	 	 	3.2	% 	 	 	-	  	 	 	2,677,275	  	 	 	2.5	% 	 	 	2,677,275	  	 	 	2.5%	  	

*	Represents beneficial ownership of less than 1%.	
(1)	Represents 82,359,374 shares held by 313 Acquisition LLC, a Delaware limited liability company. 313 Acquisition LLC is managed by a board of managers and Blackstone Capital Partners VI L.P. (“BCP VI”), as managing member. The members of the board of managers of 313 Acquisition LLC are Peter Wallace, Bruce McEvoy, Alex Dunn, Joseph Trustey, Todd Pedersen and David F. D’Alessandro. Blackstone Management Associates VI L.L.C. is the general partner of BCP VI. BMA VI L.L.C. is the sole member of Blackstone Management Associates VI L.L.C. Blackstone Holdings III L.P. is the managing member of BMA VI L.L.C. The general partner of Blackstone Holdings III L.P. is Blackstone Holdings III GP L.P. The general partner of Blackstone Holdings III GP L.P. is Blackstone Holdings III GP Management L.L.C. The sole member of Blackstone Holdings III GP Management L.L.C. is The Blackstone Group L.P. The general partner of The Blackstone Group L.P. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. The foregoing Blackstone entities and Stephen A. Schwarzman may be deemed to beneficially own all the outstanding shares of our common stock beneficially owned by 313 Acquisition LLC. Each of such Blackstone entities and Mr. Schwarzman disclaim beneficial ownership of such shares of our common stock held by 313 Acquisition LLC. The address of each of such Blackstone entities and Mr. Schwarzman is c/o The Blackstone Group L.P., 345 Park Avenue, New York, New York 10154. In addition to funds affiliated with Blackstone, principal holders of limited liability company interests in 313 Acquisition LLC include entities affiliated with Summit Partners L.P., Todd Pedersen and Alex Dunn. The address of 313 Acquisition LLC is 4931 N. 300 W., Provo, Utah 84604.	
(2)	Includes 235,294 shares issuable upon exercise of options exercisable within 60 days after September 15, 2014.	
(3)	Includes 41,176 shares issuable upon exercise of options exercisable within 60 days after September 15, 2014.	
(4)	Includes 39,410 shares issuable upon exercise of options exercisable within 60 days after September 15, 2014.	
(5)	Includes 17,647 shares issuable upon exercise of options exercisable within 60 days after September 15, 2014.	
(6)	Mr. Dunn sits on the board of managers and is a member of 313 Acquisition LLC, but has no individual investment or voting control over the shares beneficially owned by 313 Acquisition LLC.	
(7)	Mr. McEvoy and Mr. Wallace are each employees of our sponsor and members of the board of managers of 313 Acquisition LLC, but each disclaim beneficial ownership of shares beneficially owned by our sponsor and its affiliates. Mr. McEvoy and Mr. Wallace are each employees of affiliates of The Blackstone Group L.P., but each disclaim beneficial ownership of the limited liability company interests in 313 Acquisition LLC beneficially owned by our sponsor. The address for Mr. McEvoy and Mr. Wallace is c/o The Blackstone Group L.P., 345 Park Avenue, New York, New York 10154.	
(8)	Includes 1,874,999 shares held by the Pedersen Family Trust. Mr. Pedersen sits on the board of managers and is a member of 313 Acquisition LLC, but has no individual investment or voting control over the shares beneficially owned by 313 Acquisition LLC.	
(9)	Includes 333,527 shares issuable upon exercise of options held by our current executive officers and directors exercisable within 60 days after September 15, 2014.	
 
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 DESCRIPTION OF CAPITAL STOCK
The following is a summary of the rights of our capital stock. This summary is not complete. For more detailed information, please see our certificate of incorporation and bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part.
Immediately following the completion of this offering, our authorized capital stock will consist of 1,010,000,000 shares, with a par value of $0.01 per share, of which:
 
 	•	 	1,000,000,000 shares will be designated as common stock; and	
 
 	•	 	10,000,000 shares will be designated as preferred stock.	
As of June 30, 2014, we had outstanding 75,000,000 shares of common stock, held by one stockholder of record, and no shares of preferred stock. Subsequent to June 30, 2014, we issued and sold an additional aggregate of 9,703,122 shares of our common stock to 313 Acquisition LLC and two of our directors. In addition, as of June 30, 2014, we had outstanding options to acquire 9,728,681 shares of common stock that will remain outstanding if they are not exercised prior to the closing of this offering, and 4,058,823 shares of common stock reserved for issuance under our 2013 Omnibus Incentive Plan upon the settlement of awards granted based on achieving certain performance conditions under our Long-Term Incentive Plan pools.
Common Stock
Holders of our common stock are entitled to one vote for each share held of record on all matters on which stockholders are entitled to vote generally, including the election or removal of directors. The holders of our common stock do not have cumulative voting rights in the election of directors.
Upon our liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of our common stock will be entitled to receive pro rata our remaining assets available for distribution. Holders of our common stock do not have preemptive, subscription, redemption or conversion rights. The common stock will not be subject to further calls or assessment by us. There will be no redemption or sinking fund provisions applicable to the common stock. All shares of our common stock that will be outstanding at the time of the completion of the offering will be fully paid and non-assessable. The rights, powers, preferences and privileges of holders of our common stock will be subject to those of the holders of any shares of our preferred stock we may authorize and issue in the future.
Preferred Stock
Our certificate of incorporation authorizes our board of directors to establish one or more series of preferred stock. Unless required by law or by the NYSE, the authorized shares of preferred stock will be available for issuance without further action by you. Our board of directors is able to determine, with respect to any series of preferred stock, the powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, including, without limitation:
 
 	•	 	the designation of the series;	
 
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 	•	 	the number of shares of the series, which our board of directors may, except where otherwise provided in the preferred stock designation, increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares then outstanding);	
 
 	•	 	whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;	
 
 	•	 	the dates at which dividends, if any, will be payable;	
 
 	•	 	the redemption rights and price or prices, if any, for shares of the series;	
 
 	•	 	the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;	
 
 	•	 	the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of our company;	
 
 	•	 	whether the shares of the series will be convertible into shares of any other class or series, or any other security, of our company or any other entity, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made;	
 
 	•	 	restrictions on the issuance of shares of the same series or of any other class or series; and	
 
 	•	 	the voting rights, if any, of the holders of the series.	
We could issue a series of preferred stock that could, depending on the terms of the series, impede or discourage an acquisition attempt or other transaction that some, or a majority, of the holders of our common stock might believe to be in their best interests or in which the holders of our common stock might receive a premium for your common stock over the market price of the common stock. Additionally, the issuance of preferred stock may adversely affect the holders of our common stock by restricting dividends on the common stock, diluting the voting power of the common stock or subordinating the liquidation rights of the common stock. As a result of these or other factors, the issuance of preferred stock could have an adverse impact on the market price of our common stock.
Anti-Takeover Effects of Delaware Law, Our Certificate of Incorporation and Bylaws and Our Stockholders Agreement
Our certificate of incorporation, bylaws and the Delaware General Corporation Law, or DGCL, contain provisions, which are summarized in the following paragraphs, that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors. These provisions are intended to avoid costly takeover battles, reduce our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize stockholder value in connection with any unsolicited offer to acquire us. However, these provisions may have an anti-
 
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takeover effect and may delay, deter or prevent a merger or acquisition of our company by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the prevailing market price for the shares of common stock held by stockholders.
Undesignated Preferred Stock
As discussed above, our board of directors has the ability to designate and issue preferred stock with voting or other rights or preferences that could deter hostile takeovers or delay changes in our control or management.
Board Classification
Our certificate of incorporation provides that our board of directors will be divided into three classes of directors, with the classes to be as nearly equal in number as possible, and with the directors serving three-year terms. As a result, approximately one-third of our board of directors will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of our board of directors. Our certificate of incorporation and bylaws provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed from time to time exclusively pursuant to a resolution adopted by the board of directors with a maximum of 15 directors.
Business Combinations
We have opted out of Section 203 of the DGCL; however, our certificate of incorporation contains similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless:
 
 	•	 	prior to such time, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;	
 
 	•	 	upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or	
 
 	•	 	at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of at least 66 2/3% of our outstanding voting stock that is not owned by the interested stockholder.	
Generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with that person’s affiliates and associates, owns, or within the previous three years owned, 15% or more of our outstanding voting stock. For purposes of this section only, “voting stock” has the meaning given to it in Section 203 of the DGCL.
 
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Under certain circumstances, this provision will make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with us for a three-year period. This provision may encourage companies interested in acquiring our company to negotiate in advance with our board of directors because the stockholder approval requirement would be avoided if our board of directors approves either the business combination or the transaction which results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our board of directors and may make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.
Our certificate of incorporation provides that Blackstone and its affiliates, and any of their respective direct or indirect transferees and any group as to which such persons are parties, do not constitute “interested stockholders” for purposes of this provision.
Removal of Directors; Vacancies
Under the DGCL, unless otherwise provided in our certificate of incorporation, directors serving on a classified board may be removed by the stockholders only for cause. Our certificate of incorporation provides that directors may be removed with or without cause upon the affirmative vote of a majority in voting power of all outstanding shares of stock entitled to vote thereon, voting together as a single class; provided, however, at any time when Blackstone and its affiliates beneficially own, in the aggregate, less than 30% in voting power of the stock of our company entitled to vote generally in the election of directors, directors may only be removed for cause, and only by the affirmative vote of holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of our company entitled to vote thereon, voting together as a single class. In addition, our certificate of incorporation also provides that, subject to the rights granted to one or more series of preferred stock then outstanding or the rights granted under the stockholders agreement with affiliates of Blackstone, any newly created directorship on our board of directors that results from an increase in the number of directors and any vacancies on our board of directors will be filled only by the affirmative vote of a majority of the remaining directors, even if less than a quorum, by a sole remaining director or by the stockholders; provided, however, at any time when Blackstone and its affiliates beneficially own, in the aggregate, less than 30% in voting power of our stock entitled to vote generally in the election of directors, any newly created directorship on the board of directors that results from an increase in the number of directors and any vacancy occurring in the board of directors may only be filled by a majority of the directors then in office, although less than a quorum or by a sole remaining director (and not by the stockholders).
No Cumulative Voting
Under Delaware law, the right to vote cumulatively does not exist unless the certificate of incorporation specifically authorizes cumulative voting. Our certificate of incorporation does not authorize cumulative voting. Therefore, stockholders holding a majority in voting power of the shares of our stock entitled to vote generally in the election of directors will be able to elect all our directors.
Special Stockholder Meetings
Our certificate of incorporation provides that special meetings of our stockholders may be called at any time only by or at the direction of the board of directors or the chairman of the board
 
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of directors; provided, however, at any time when Blackstone and its affiliates beneficially own, in the aggregate, at least 30% in voting power of the stock of our company entitled to vote generally in the election of directors, special meetings of our stockholders shall also be called by the board of directors or the chairman of the board of directors at the request of Blackstone and its affiliates. Our bylaws prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers or changes in control or management of our company.
Requirements for Advance Notification of Director Nominations and Stockholder Proposals
Our bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors. For any matter to be “properly brought” before a meeting, a stockholder will have to comply with advance notice requirements and provide us with certain information. Generally, to be timely, a stockholder’s notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. Our bylaws also specify requirements as to the form and content of a stockholder’s notice. Our bylaws allow the chairman of the meeting at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings that may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions will not apply to Blackstone and its affiliates so long as the stockholders agreement remains in effect. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to influence or obtain control of our company.
Stockholder Action by Written Consent
Pursuant to Section 228 of the DGCL, any action required to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of our stock entitled to vote thereon were present and voted, unless our certificate of incorporation provides otherwise. Our certificate of incorporation will preclude stockholder action by written consent at any time when Blackstone and its affiliates beneficially own, in the aggregate, less than 30% in voting power of the stock of our company entitled to vote generally in the election of directors.
Supermajority Provisions
Our certificate of incorporation and bylaws will provide that our board of directors is expressly authorized to make, alter, amend, change, add to, rescind or repeal, in whole or in part, our bylaws without a stockholder vote in any matter not inconsistent with Delaware law and our certificate of incorporation. For as long as Blackstone and its affiliates beneficially own, in the aggregate, at least 30% in voting power of the stock of our company entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws by our stockholders will require the affirmative vote of a majority in voting power of the outstanding shares of our stock present in person or represented by proxy at the meeting of stockholders and entitled
 
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to vote on such amendment, alteration, change, addition, rescission or repeal. At any time when Blackstone and its affiliates beneficially own, in the aggregate, less than 30% in voting power of all outstanding shares of the stock of our company entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws by our stockholders will require the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of our company entitled to vote thereon, voting together as a single class.
The DGCL provides generally that the affirmative vote of a majority of the outstanding shares entitled to vote thereon, voting together as a single class, is required to amend a corporation’s certificate of incorporation, unless the certificate of incorporation requires a greater percentage. Our certificate of incorporation provides that at any time when Blackstone and its affiliates beneficially own, in the aggregate, less than 30% in voting power of the stock of our company entitled to vote generally in the election of directors, the following provisions in our certificate of incorporation may be amended, altered, repealed or rescinded only by the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of our company entitled to vote thereon, voting together as a single class:
 
 	•	 	the provision requiring a 66 2/3% supermajority vote for stockholders to amend our bylaws;	
 
 	•	 	the provisions providing for a classified board of directors (the election and term of our directors);	
 
 	•	 	the provisions regarding resignation and removal of directors;	
 
 	•	 	the provisions regarding competition and corporate opportunities;	
 
 	•	 	the provisions regarding entering into business combinations with interested stockholders;	
 
 	•	 	the provisions regarding stockholder action by written consent;	
 
 	•	 	the provisions regarding calling special meetings of stockholders;	
 
 	•	 	the provisions regarding filling vacancies on our board of directors and newly created directorships;	
 
 	•	 	the provisions eliminating monetary damages for breaches of fiduciary duty by a director; and	
 
 	•	 	the amendment provision requiring that the above provisions be amended only with a 66 2/3% supermajority vote.	
The combination of the classification of our board of directors, the lack of cumulative voting and the supermajority voting requirements will make it more difficult for our existing stockholders to replace our board of directors as well as for another party to obtain control of us by replacing our board of directors. Because our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for existing stockholders or another party to effect a change in management.
 
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These provisions may have the effect of deterring hostile takeovers or delaying or preventing changes in control of us or our management, such as a merger, reorganization or tender offer. These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of our company. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions are also intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts.
Investor Approvals
In connection with this offering, we intend to enter into a stockholders agreement with 313 Acquisition LLC, which is an affiliate of our sponsor, Summit Partners, Todd Pedersen and Alex Dunn. The stockholders agreement also provides that for so long as our sponsor, Summit Partners, Todd Pedersen and Alex Dunn or their respective affiliates collectively own, in the aggregate, at least 30% of the shares of our common stock entitled to vote generally in the election of our directors and our sponsor is entitled to designate at least one director pursuant to the stockholders agreement, our sponsor must approve in advance certain of our significant business decisions, including each of the following:
 
 	•	 	changes in the size or composition of our board of directors or any committee of our board of directors;	
 
 	•	 	any changes in the nature of our business or operations as of the date of the stockholders agreement;	
 
 	•	 	our or any of our subsidiaries’ entry into any voluntary liquidation, dissolution or commencement of bankruptcy or insolvency proceedings, the decision not to oppose any similar proceeding commenced by a third party, the adoption of a plan with respect to any of the foregoing or any reorganization or recapitalization;	
 
 	•	 	the consummation of a change of control;	
 
 	•	 	entering into any agreement providing for any acquisition or divestiture by us of the assets or equity interests of any other entity involving consideration payable or receivable by us or any of our subsidiaries in excess of $100 million in the aggregate in any single transaction or series of transactions during any twelve-month period;	
 
 	•	 	incurring any indebtedness by us (including through capital leases, the issuance of debt securities or the guarantee of indebtedness of another entity) or entry into tax equity financing in excess of $200 million in the aggregate in any single transaction or series of transactions;	
 
 	•	 	any issuance of equity securities for an aggregate consideration in excess of $100 million;	
 
 	•	 	entering into joint ventures or similar business alliance involving investment by us or any of our subsidiaries having an aggregate value in excess of $100 million;	
 
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 	•	 	any amendment, modification or waiver of the stockholders agreement or the employee stockholders agreement; and	
 
 	•	 	any amendment, modification or waiver of our amended and restated certificate of incorporation or amended and restated bylaws.	
The above-described provisions of the stockholders agreement will remain in effect until our sponsor is no longer entitled to nominate a sponsor director pursuant to the stockholders agreement, unless our sponsor requests that they terminate at an earlier date. See the section of this prospectus captioned “Certain Relationships and Related Party Transactions—Agreements with Our Sponsor—Stockholders Agreement” for additional information.
Dissenters’ Rights of Appraisal and Payment
Under the DGCL, with certain exceptions, our stockholders will have appraisal rights in connection with a merger or consolidation of our company. Pursuant to the DGCL, stockholders who properly request and perfect appraisal rights in connection with such merger or consolidation will have the right to receive payment of the fair value of their shares as determined by the Delaware Court of Chancery.
Stockholders’ Derivative Actions
Under the DGCL, any of our stockholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of our shares at the time of the transaction to which the action relates or such stockholder’s stock thereafter devolved by operation of law.
Exclusive Forum
Our certificate of incorporation will provide that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any (1) derivative action or proceeding brought on behalf, to the fullest extent permitted by law, of our company, (2) action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to our company or our stockholders, (3) action asserting a claim against our company or any of our directors or officers arising pursuant to any provision of the DGCL or our certificate of incorporation or our bylaws or (4) action asserting a claim against us or any of our directors or officers governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our certificate of incorporation. However, the enforceability of similar forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be unenforceable.
Conflicts of Interest
Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or
 
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stockholders. Our certificate of incorporation will, to the maximum extent permitted from time to time by Delaware law, renounce any interest or expectancy that we have in, or right to be offered an opportunity to participate in, specified business opportunities that are from time to time presented to our officers, directors or stockholders or their respective affiliates, other than those officers, directors, stockholders or affiliates who are our or our subsidiaries’ employees. Our certificate of incorporation will provide that, to the fullest extent permitted by law, none of Blackstone or any of its affiliates (including Vivint and its affiliates), Summit Partners or any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from (1) engaging in a corporate opportunity in the same or similar lines of business in which we or our affiliates now engage or propose to engage or (2) otherwise competing with us or our affiliates. In addition, to the fullest extent permitted by law, if Blackstone, Summit Partners or any non-employee director acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself or himself or its or his affiliates or for us or our affiliates, such person will have no duty to communicate or offer such transaction or business opportunity to us or any of our affiliates and they may take any such opportunity for themselves or offer it to another person or entity. Our certificate of incorporation will not renounce our interest in any business opportunity that is expressly offered to a non-employee director solely in his or her capacity as a director or officer of our company. To the fullest extent permitted by law, no business opportunity will be deemed to be a potential corporate opportunity for us unless we would be permitted to undertake the opportunity under our certificate of incorporation, we have sufficient financial resources to undertake the opportunity and the opportunity would be in line with our business.
Limitations on Liability of and Indemnification of Officers and Directors
The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties, subject to certain exceptions. Our certificate of incorporation includes a provision that eliminates the personal liability of directors for monetary damages for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. The effect of these provisions is to eliminate the rights of us and our stockholders, through stockholders’ derivative suits on our behalf, to recover monetary damages from a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. However, exculpation does not apply to any director if the director has acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or derived an improper benefit from his or her actions as a director.
Our bylaws provide that we must indemnify and advance expenses to our directors and officers to the fullest extent authorized by the DGCL. We also are expressly authorized to carry directors’ and officers’ liability insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification and advancement provisions and insurance are useful to attract and retain qualified directors and executive officers.
The limitation of liability, indemnification and advancement provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely
 
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affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
We currently are party to indemnification agreements with certain of our directors and officers. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. See the section of this prospectus captioned “Certain Relationships and Related Party Transactions—Indemnification Agreements” for additional information.
There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare Trust Company, N.A. The transfer agent’s address is 250 Royall Street, Canton, MA 02121.
Listing
Our common stock has been approved for listing on the NYSE under the symbol “VSLR.”
 
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 SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for shares of our common stock. Future sales of shares of our common stock in the public market after this offering, and the availability of shares for future sale, could adversely affect the market prices prevailing from time to time. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nonetheless, sales of substantial amounts of our common stock, or the perception that these sales could occur, could adversely affect prevailing market prices for our common stock and could impair our future ability to raise equity capital.
Upon the completion of this offering, a total of 105,303,122 shares of common stock will be outstanding. Of these shares, 19,570,000 shares of common stock sold in this offering by us and any shares sold by us or the selling stockholder upon exercise of the underwriters’ option to purchase additional shares but excluding shares sold pursuant to our reserved share program, will be freely tradable in the public market without restriction or further registration under the Securities Act, unless these shares are held by “affiliates,” as that term is defined in Rule 144 under the Securities Act. At our request, the underwriters have reserved for sale, at the initial public offering price, up to approximately 5% of the shares offered by this prospectus for sale to business associates, friends and family of our officers, directors and Vivint service providers through the reserved share program. Participants in the reserved share program will be subject to a 180-day lock-up restriction with respect to the shares purchased through such program.
The remaining outstanding shares of our common stock will be deemed “restricted securities” as that term is defined under Rule 144. Restricted securities may be sold in the public market only if their offer and sale is registered under the Securities Act or if the offer and sale of those securities qualify for an exemption from registration, including exemptions provided by Rules 144 and 701 under the Securities Act, which are summarized below.
As a result of the lock-up agreements and market stand-off provisions described below and the provisions of Rules 144 or 701, and assuming no exercise of the underwriters’ option to purchase additional shares and all of the shares allocated to the reserved share program are sold, the shares of our common stock that will be deemed “restricted securities” will be available for sale in the public market following the completion of this offering as follows:

Date	  	Number of
Shares	 	
On the date of this prospectus (comprised of the shares sold in this offering other than shares sold as part of the reserved share program)	  	 	19,570,000	  	
At various times beginning more than 180 days after the date of this prospectus	  	 	85,733,122	  	
Pursuant to our Long-Term Incentive Plan, 4,058,823 shares are reserved for future issuance and will issue, vest and be immediately tradable as follows: (1) one-sixth on the date that is six months following the closing of this offering, (2) one-sixth on the date that is 18 months following the closing of this offering, (3) one-third of the shares on the later of (a) the date that is six months following the closing of this offering and (b) the date our sponsor and its affiliates have received cash proceeds in respect of their shares of common stock held from time to time by them in an amount that equals $250 million more than their cumulative invested capital in respect of their shares of common stock (which amount shall be equal to $75 million plus any amounts invested after November 16, 2012) and (4) one-third of the shares on the later of (a) the date that is six months
 
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following the closing of this offering and (b) the date our sponsor and its affiliates have received cash proceeds in respect of their shares of common stock held from time to time by them in an amount that equals $500 million more than their cumulative invested capital in respect of their shares of common stock (which amount shall be equal to $75 million plus any amounts invested after November 16, 2012).
In addition, of the 9,728,681 shares of our common stock that were subject to stock options outstanding as of June 30, 2014, options to purchase 198,920 shares of common stock were vested as of June 30, 2014 and will be eligible for sale 180 days following the effective date of this offering. One-third of these shares are subject to ratable time-based vesting over a five year period and will become immediately tradable once vested. The remaining two-thirds are subject to vesting upon certain performance conditions and the achievement of certain investment return thresholds by 313 Acquisition LLC and will vest and become immediately tradable as follows: (1) one-half of the shares vest (a) if 313 Acquisition LLC receives cash proceeds with respect to its holdings of our common stock in an amount that equals $250 million more than its cumulative investment in our common stock (which amount shall be equal to $75 million plus any amounts invested after November 16, 2012) or (b) if 240 days after the completion of this offering, our aggregate equity market capitalization exceeds $1 billion and (2) one-half of the shares vest when 313 Acquisition LLC receives cash proceeds with respect to its holdings of our common stock in an amount that equals $500 million more than its cumulative investment in our common stock (which amount shall be equal to $75 million plus any amounts invested after November 16, 2012).
Rule 144
In general, persons who have beneficially owned restricted shares of our common stock for at least six months, and any affiliate of ours who owns either restricted or unrestricted shares of our common stock, are entitled to sell their securities without registration with the SEC under an exemption from registration provided by Rule 144 under the Securities Act.
In general, a person who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell their securities provided that (1) such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, a sale, (2) we have been subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale and (3) we are current in our Exchange Act reporting at the time of sale.
Persons who have beneficially owned restricted shares of our common stock for at least six months, but who are our affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following:
 
 	•	 	1% of the number of shares of our common stock then outstanding, which will equal approximately 1,053,031 shares immediately after the completion of this offering based on 84,703,122 shares of common stock outstanding as of September 15, 2014; and	
 
 	•	 	the average weekly trading volume of our common stock on the NYSE during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.	
 
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Such sales by affiliates must also comply with the manner of sale, current public information and notice provisions of Rule 144.
Rule 701
In general, under Rule 701 a person who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been one of our affiliates during the immediately preceding 90 days may sell these shares in reliance upon Rule 144, but without being required to comply with the notice, manner of sale, public information requirements or volume limitation provisions of Rule 144. Rule 701 also permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling such shares pursuant to Rule 701. As of June 30, 2014, no shares of our outstanding common stock had been issued in reliance on Rule 701 as a result of exercises of stock options and issuance of restricted stock. However, substantially all Rule 701 shares are subject to lock-up agreements as described below and will become eligible for sale upon the expiration of the restrictions set forth in those agreements.
Registration Statement on Form S-8
We intend to file a registration statement on Form S-8 under the Securities Act to register all of the shares of common stock issued or reserved for issuance under our stock option plans. These registration statements will become effective immediately upon filing. Shares covered by these registration statements will then be eligible for sale in the public markets, subject to vesting restrictions, any applicable lock-up agreements described below and Rule 144 limitations applicable to affiliates.
Lock-up Agreements
We, the selling stockholder and all of our directors and officers, as well as the other holders of substantially all shares of our common stock outstanding immediately prior to the completion of this offering, have agreed with the underwriters that, for a period of 180 days following the date of this prospectus, subject to certain exceptions, we and they will not, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of or hedge any of our shares of common stock, any options to purchase shares of our common stock, or any securities convertible into, or exchangeable for or that represent the right to receive shares of our common stock. Participants in the reserved share program will be subject to a 180-day lock-up restriction with respect to the shares purchased through such program. The representatives of the underwriters, in their sole discretion, may at any time release all or any portion of the shares from the restrictions in such agreements.
The lock-up agreements do not contain any pre-established conditions to the waiver by the representatives of the underwriters on behalf of the underwriters of any terms of the lock-up agreements. Any determination to release shares subject to the lock-up agreements would be based on a number of factors at the time of determination, including but not necessarily limited to the market price of the common stock, the liquidity of the trading market for the common stock, general market conditions, the number of shares proposed to be sold and the timing, purpose and terms of the proposed sale.
 
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Registration Rights
In connection with this offering, we intend to enter into a registration rights agreement that will provide Blackstone an unlimited number of “demand” registrations and customary “piggyback” registration rights. Additionally, Todd Pedersen, Alex Dunn, certain investment funds affiliated with Summit Partners, whose managing director, Joseph Trustey, is one of our directors, and Black Horse Holdings, LLC, a co-investor in 313 Acquisition LLC, will also have customary “piggyback” registration rights. The registration rights agreement will also provide that we will pay certain expenses relating to such registrations and indemnify the registration rights holders against certain liabilities which may arise under the Securities Act. Securities registered under any such registration statement will be available for sale in the open market unless restrictions apply. See the section of this prospectus captioned “Certain Relationships and Related Party Transactions—Agreements with Our Sponsor—Registration Rights Agreement.”
 
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 MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES FOR
NON-U.S. HOLDERS OF COMMON STOCK
The following is a summary of the material U.S. federal income tax consequences to non-U.S. holders (as defined below) of the purchase, ownership and disposition of our common stock, but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, Treasury Regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income tax consequences different from those set forth below. We have not sought any ruling from the Internal Revenue Service, or the IRS, with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions.
This summary also does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction, or under U.S. federal gift, generation-skipping and, except to the limited extent set forth below, estate tax laws. In addition, this discussion does not address the potential application of the U.S. federal tax on net investment income or any tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:
 
 	•	 	banks, insurance companies or other financial institutions (except to the extent specifically set forth below);	
 
 	•	 	persons subject to the alternative minimum tax;	
 
 	•	 	tax-exempt organizations;	
 
 	•	 	controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax;	
 
 	•	 	dealers in securities or currencies;	
 
 	•	 	traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;	
 
 	•	 	persons that own, or are deemed to own, more than 5% of our capital stock (except to the extent specifically set forth below);	
 
 	•	 	certain former citizens or long-term residents of the United States;	
 
 	•	 	persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction;	
 
 	•	 	persons who acquire our common stock through the exercise of employee stock options or otherwise as compensation for services;	
 
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 	•	 	persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Internal Revenue Code; or	
 
 	•	 	persons deemed to sell our common stock under the constructive sale provisions of the Internal Revenue Code.	
In addition, if a partnership (including any entity classified as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold our common stock and partners in such partnerships should consult their tax advisors.
You are urged to consult your tax advisor with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and disposition of our common stock arising under the U.S. federal estate, generation-skipping or gift tax rules or under the laws of any state, local, non-U.S. or other taxing jurisdiction or under any applicable tax treaty.
Non-U.S. Holder Defined
For purposes of this discussion, you are a non-U.S. holder if you are a beneficial owner of our common stock (other than a partnership or entity classified as a partnership for U.S. federal income tax purposes) that is not:
 
 	•	 	an individual citizen or resident of the United States (for U.S. federal income tax purposes);	
 
 	•	 	a corporation or other entity taxable as a corporation for U.S. federal income tax purposes created or organized in the United States or under the laws of the United States or any political subdivision thereof;	
 
 	•	 	an estate whose income is subject to U.S. federal income tax regardless of its source; or	
 
 	•	 	a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (y) which has made an election to be treated as a U.S. person.	
Distributions
We have not made any distributions on our common stock and do not intend to do so in the foreseeable future. However, if we do make distributions on our common stock, those payments will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, they will constitute a return of capital and will first reduce your basis in our common stock, but not below zero. Any excess will be treated as gain from the sale of stock and will be treated as described below under “Gain on Disposition of Common Stock.”
 
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Any dividend paid to you generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty. In order to receive a reduced treaty rate, you must provide us with an IRS Form W-8BEN, or W-8BEN-E or other applicable version of IRS Form W-8 certifying qualification for the reduced rate. A non-U.S. holder eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the non-U.S. holder’s behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or our paying agent, either directly or through other intermediaries.
Dividends received by you that are effectively connected with your conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, attributable to a permanent establishment maintained by you in the United States) are generally exempt from such withholding tax. In order to obtain this exemption, you must provide us with an IRS Form W-8ECI or other applicable version of IRS Form W-8 properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty.
Gain on Disposition of Common Stock
Subject to the discussion below regarding recent legislative withholding developments, a non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:
 
 	•	 	the gain is effectively connected with your conduct of a U.S. trade or business (and, if an income tax treaty applies, the gain is attributable to a permanent establishment maintained by you in the U.S.);	
 
 	•	 	you are an individual who is present in the U.S. for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or	
 
 	•	 	our common stock constitutes a U.S. real property interest by reason of our status as a “United States real property holding corporation,” or USRPHC, for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the disposition and your holding period for our common stock.	
We believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our common stock is regularly traded on an established securities market, such common stock will be treated as U.S. real property interests only if you actually or constructively hold more than five percent of such regularly traded common stock at any time during the shorter of the five-year period preceding your disposition of, or your holding period for, our common stock.
 
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If you are a non-U.S. holder described in the first bullet above, you will be required to pay tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates, and a corporate non-U.S. holder described in the first bullet above also may be subject to the branch profits tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty. If you are an individual non-U.S. holder described in the second bullet above, you will be required to pay a flat 30% tax on the gain derived from the sale, which tax may be offset by U.S. source capital losses for the year. You should consult any applicable income tax or other treaties that may provide for different rules.
Federal Estate Tax
Our common stock beneficially owned by an individual who is not a citizen or resident of the United States (as defined for U.S. federal estate tax purposes) at the time of death generally will be includable in the decedent’s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.
Backup Withholding and Information Reporting
Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address and the amount of tax withheld, if any. A similar report is sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in your country of residence.
Payments of dividends or of proceeds on the disposition of stock made to you may be subject to information reporting and backup withholding at a current rate of 28% unless you establish an exemption, for example, by properly certifying your non-U.S. status on a Form W-8BEN, or W-8BEN-E or other applicable version of IRS Form W-8. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S. person as defined under the Internal Revenue Code.
Backup withholding is not an additional tax. Any amounts withheld from a payment to you under the backup withholding rules will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund, provided that the required information or returns are furnished to the IRS in a timely manner.
Foreign Account Tax Compliance
U.S. legislation commonly referred to as the Foreign Account Tax Compliance Act or “FATCA” imposes withholding tax at a rate of 30% on dividends on and gross proceeds from the sale or other disposition of our common stock paid to “foreign financial institutions” (as specially defined under these rules), unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding the U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or otherwise establishes an exemption. FATCA also generally imposes a U.S. federal withholding tax of 30% on dividends on the gross proceeds of a disposition of our common stock paid to a “non-financial foreign entities” (as specially defined for purposes of these rules) unless such entity provides the withholding agent with a certification identifying certain
 
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substantial direct and indirect U.S. owners of the entity, certifies that there are none or otherwise establishes an exemption. Under certain transition rules, withholding under FATCA on withholdable payments to foreign financial institutions and non-financial foreign entities is expected to apply after December 31, 2016 with respect to gross proceeds of a sale or other disposition of stock in a U.S. corporation, including our common stock, and after June 30, 2014 with respect to dividends on our common stock. An intergovernmental agreement between the United States and an applicable foreign country may modify the requirements described in this paragraph. Non-U.S. holders should consult their own tax advisors regarding the possible implications of FATCA on their investment in our common stock.
Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax consequences of the purchase, ownership and disposition of our common stock, including the consequences of any proposed change in applicable laws .
 
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 UNDERWRITING (CONFLICTS OF INTEREST)
We, the selling stockholder and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC are the representatives of the underwriters.

Underwriters	  	Number of Shares	 	
Goldman, Sachs & Co.	  				
Merrill Lynch, Pierce, Fenner & Smith
                   Incorporated	  				
Credit Suisse Securities (USA) LLC	  				
Citigroup Global Markets Inc.	  				
Deutsche Bank Securities Inc.	  				
Morgan Stanley & Co. LLC	  				
Barclays Capital Inc.	  				
Blackstone Advisory Partners L.P.	  				
	  	 	 	 	
                   Total	  	 	20,600,000	  	
	  	 	 	 	
The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.
If the underwriters sell more shares than the total number set forth in the table above, the underwriters have an option to buy up to an additional 3,090,000 shares from the selling stockholder to cover such sales. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.
The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by us and the selling stockholder. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares.
Paid by us

 	  	No Exercise	 	  	Full Exercise	 	
Per Share	  	$	                	  	  	$	                	  	
Total	  	$	 	  	  	$	 	  	
Paid by the Selling Stockholder

 	  	No Exercise	 	  	Full Exercise	 	
Per Share	  	$	          —	  	  	$	                	  	
Total	  	$	—	  	  	$	 	  	
Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $         per share from the initial public offering
 
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price. After the initial offering of shares, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.
We, our officers and directors and holders of substantially all of our common stock, including the selling stockholder, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our or their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives. This agreement does not apply to any existing employee benefit plans. See “Shares Available for Future Sale” for a discussion of certain transfer restrictions.
Prior to the offering, there has been no public market for the shares. The initial public offering price has been negotiated between us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.
Our common stock has been approved for listing on the New York Stock Exchange under the symbol “VSLR.”
In connection with the offering, the underwriters may purchase and sell shares of our common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. “Naked” short sales are any sales in excess of such option. The underwriters must close out any such naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our stock, and together with the imposition of the penalty bid, may stabilize,
 
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maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on NYSE, in the over-the-counter market or otherwise.
The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.
We estimate that the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $8.8 million and are payable by us. We have agreed to reimburse the underwriters for the reasonable fees and disbursements of counsel to the underwriters in connection with the review by and clearance of the offering with FINRA of the terms of the sale of the shares of common stock in an amount not to exceed $30,000 in the aggregate. The underwriters have agreed to reimburse us for certain fees and expenses incurred in connection with the offering.
In August and September 2014, we issued and sold 7,359,374 shares of our common stock to 313 Acquisition LLC, an affiliate of Blackstone Advisory Partners, L.P., an underwriter in this offering, in a private placement at a purchase price of $10.667 per share for aggregate proceeds of $78.5 million. A portion of the securities attributable to Blackstone Advisory Partners, L.P. or its affiliates’ direct economic interest (as determined under FINRA Rules) are deemed to be underwriting compensation pursuant to FINRA Rule 5110. Such securities may not be sold during this offering or sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the shares for a period of 180 days immediately following this offering.
We and the selling stockholder have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.
Reserved Share Program
At our request, the underwriters have reserved for sale, at the initial public offering price, up to 5% of the shares offered by this prospectus for sale to business associates, friends and family of our officers, directors and Vivint service providers. Purchasers will be subject to a 180-day lock-up restriction with respect to any shares purchased through the reserved share program, which restriction may be waived with the prior written consent of the representatives. If these persons purchase reserved shares it will reduce the number of shares available for sale to the general public. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, no offer of shares may be made to the public in that Relevant Member State other than:
 
 	(a)	to any legal entity which is a qualified investor as defined in the Prospectus Directive;	
 
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 	(b)	to fewer than 100, or, if the Relevant Member State has implemented the relevant portion of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives; or	
 
 	(c)	in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares shall require us or the representatives to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.	
For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC (including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
United Kingdom
Each underwriter has represented and agreed that:
 
 	(a)	it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to us; and	
 
 	(b)	it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.	
Hong Kong
The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
 
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Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.
Japan
The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
Dubai
This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.
 
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Switzerland
The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document nor any other offering or marketing material relating to the offering, the Company, the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.
Australia
No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, or the ASIC, in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.
Any offer in Australia of the shares may only be made to persons, or the Exempt Investors, who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.
The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.
This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.
 
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Material Relationships
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include tax equity financing, sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to us and to persons and entities with relationships with the issuer, for which they received or will receive customary fees and expenses. In May 2014, we entered into a credit facility with certain financial institutions for which Bank of America, N.A., an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, is acting as administrative agent. In addition, in September 2014, we entered into an aggregation credit facility with certain financial institutions for which Bank of America, N.A. is acting as administrative agent.
In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of our company.
Goldman Sachs Bank USA, an affiliate of Goldman, Sachs & Co., one of the underwriters of this offering, has long-standing relationships with Todd R. Pedersen and Alex J. Dunn, two of our directors. These relationships include banking services and personal loans, some of which are outstanding. In addition, on September 2, 2014, Goldman Sachs Bank USA made a term loan in the amount of $20.0 million to The Pedersen Family Trust, or, the Trust, dated September 2, 2010 and a term loan in the amount of $5.0 million to Mr. Dunn, or, collectively, the 2014 Loans. The Trust and Mr. Dunn used the net proceeds of the 2014 Loans to purchase an aggregate of 2,343,748 shares of our common stock in a private placement on September 3, 2014 at a purchase price of $10.667 per share. The 2014 Loans are unsecured and accrue interest at market rates. We are not a party to the 2014 Loans or any other loans between Goldman Sachs Bank USA and Mr. Pedersen, the Trust or Mr. Dunn.
Conflicts of Interest
Affiliates of Blackstone Advisory Partners L.P. control 313 Acquisition LLC, which owns in excess of 10% of our issued and outstanding common stock and, as the selling stockholder in this offering, may receive in excess of 5% of the net proceeds of this offering if the underwriters exercise their option to purchase additional shares in full. Because Blackstone Advisory Partners L.P. is an underwriter in this offering and its affiliates may receive more than 5% of the net proceeds of this offering and because affiliates of Blackstone Advisory Partners L.P. control in excess of 10% of our issued and outstanding common stock, Blackstone Advisory Partners L.P. is deemed to have a “conflict of interest” under Rule 5121 of the Financial Industry Regulatory Authority, Inc., or FINRA. Accordingly, this offering will be conducted in accordance with FINRA Rule 5121. Pursuant to FINRA Rule 5121, the appointment of a “qualified independent underwriter” is not required in connection with this offering as the members primarily responsible for managing the public offering do not have a conflict of interest, are not affiliates of any member that has a conflict of interest and meet the requirements of paragraph (c)(12)(E) of FINRA
 
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Rule 5121. Pursuant to FINRA Rule 5121, Blackstone Advisory Partners L.P. will not confirm any sales to any account over which it exercises discretionary authority without the specific written approval of the account holder.
In addition, an affiliate of Blackstone Advisory Partners L.P. provides certain strategic and structuring advice and assistance to us pursuant to the 2014 Advisory Agreement and has provided certain services to us under the Support and Services Agreement. In connection with this offering, the parties intend to terminate the Support and Services Agreement. See the section of this prospectus captioned “Certain Relationships and Related Party Transactions—Agreements with our Sponsor.”
 
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 LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California. Simpson Thacher & Bartlett LLP, Palo Alto, California has acted as counsel for the underwriters in connection with certain legal matters related to this offering. An investment vehicle comprised of selected partners of Simpson Thacher & Bartlett LLP, members of their families, related persons and others owns an interest representing less than 1% of the capital commitments of funds affiliated with The Blackstone Group L.P.
 EXPERTS
The consolidated financial statements of Vivint Solar, Inc. as of December 31, 2012 and 2013 (restated), and for the period from January 1, 2012 to November 16, 2012 (Predecessor), and for the period from November 17, 2012 through December 31, 2012 and for the year ended December 31, 2013 (restated) (Successor) appearing in this prospectus and registration statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
 WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement, some items of which are contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or document referred to are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit.
You may read and copy the registration statement, including the exhibits and schedules thereto, at the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov. As a result of this offering, we will become subject to the information and reporting requirements of the Securities Exchange Act of 1934 and, in accordance with this law, will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC’s Public Reference Room and the website of the SEC referred to above. We also maintain a website at www.vivintsolar.com. Upon completion of this offering, you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only.
 
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 Vivint Solar, Inc.
 Consolidated Financial Statements

 	  	Page	 	
Report of Independent Registered Public Accounting Firm	  	 	F-2	  	
Consolidated Balance Sheets	  	 	F-3	  	
Consolidated Statements of Operations	  	 	F-4	  	
Consolidated Statements of Redeemable Preferred Stock, Redeemable Non-Controlling Interests and Equity	  	 	F-5	  	
Consolidated Statements of Cash Flows	  	 	F-6	  	
Notes to Consolidated Financial Statements	  	 	F-7	  	
 
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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Vivint Solar, Inc.
We have audited the accompanying consolidated balance sheets of Vivint Solar, Inc. as of December 31, 2012 and December 31, 2013 (restated), and the related consolidated statements of operations, redeemable preferred stock, redeemable non-controlling interests and equity, and cash flows for the period from January 1, 2012 through November 16, 2012 (Predecessor), for the period from November 17, 2012 through December 31, 2012 and for the year ended December 31, 2013 (restated) (Successor). These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Vivint Solar, Inc. at December 31, 2012 and 2013 (restated), and the consolidated results of its operations and its cash flows for the period from January 1, 2012 to November 16, 2012 (Predecessor), the period from November 17, 2012 through December 31, 2012 and the year ended December 31, 2013 (restated) (Successor), in conformity with U.S. generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, the financial statements as of and for the year ended December 31, 2013 have been restated to correct errors related to the accounting for income taxes, non-controlling interests and the cash flow statement’s classification of paid-in-kind interest.
/s/ Ernst & Young LLP
Salt Lake City, Utah
May 14, 2014
except for Note 2, as to which the date is August 26, 2014
 
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 Vivint Solar, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data and footnote 1)

 	 	As of
December 31,	 	 	As of
June 30,
2014	 	
 	 	2012	 	 	2013	 	 			
 	 	 	 	 	(Restated)	 	 	(Unaudited)	 	
ASSETS	 				 				 				
Current assets:	 				 				 				
Cash and cash equivalents	 	$	11,650	  	 	$	6,038	  	 	$	25,230	  	
Accounts receivable, net	 	 	96	  	 	 	608	  	 	 	2,520	  	
Inventories, net	 	 	—	  	 	 	—	  	 	 	564	  	
Restricted cash, current	 	 	—	  	 	 	—	  	 	 	1,600	  	
Prepaid expenses and other current assets	 	 	211	  	 	 	5,938	  	 	 	14,894	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total current assets	 	 	11,957	  	 	 	12,584	  	 	 	44,808	  	
Restricted cash, non-current	 	 	1,500	  	 	 	5,000	  	 	 	5,000	  	
Solar energy systems, net	 	 	47,089	  	 	 	188,058	  	 	 	364,965	  	
Property, net	 	 	—	  	 	 	3,640	  	 	 	26,433	  	
Intangible assets, net	 	 	41,959	  	 	 	27,364	  	 	 	25,658	  	
Goodwill	 	 	29,545	  	 	 	29,545	  	 	 	36,355	  	
Prepaid tax asset, net	 	 	—	  	 	 	30,738	  	 	 	54,538	  	
Other non-current assets, net	 	 	37	  	 	 	778	  	 	 	8,493	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL ASSETS (1)	 	$	132,087	  	 	$	297,707	  	 	$	566,250	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND TOTAL EQUITY	 				 				 				
Current liabilities:	 				 				 				
Accounts payable	 	$	11,196	  	 	$	25,356	  	 	$	49,612	  	
Accounts payable, related party	 	 	476	  	 	 	3,068	  	 	 	2,307	  	
Distributions payable to non-controlling interests and redeemable non-controlling interests	 	 	171	  	 	 	1,576	  	 	 	3,942	  	
Revolving line of credit	 	 	2,000	  	 	 	—	  	 	 	—	  	
Short-term debt	 	 	—	  	 	 	—	  	 	 	75,500	  	
Accrued compensation	 	 	2,157	  	 	 	15,491	  	 	 	18,983	  	
Current portion of deferred revenue	 	 	—	  	 	 	68	  	 	 	131	  	
Current portion of capital lease obligation	 	 	—	  	 	 	1,275	  	 	 	2,486	  	
Accrued and other current liabilities	 	 	1,439	  	 	 	10,307	  	 	 	19,775	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total current liabilities	 	 	17,439	  	 	 	57,141	  	 	 	172,736	  	
Capital lease obligation, net of current portion	 	 	—	  	 	 	2,486	  	 	 	5,175	  	
Revolving lines of credit, related party	 	 	15,000	  	 	 	41,412	  	 	 	57,290	  	
Deferred tax liability, net	 	 	10,584	  	 	 	41,510	  	 	 	78,650	  	
Deferred revenue, net of current portion	 	 	—	  	 	 	1,272	  	 	 	1,942	  	
Build-to-suit lease liability	 	 	—	  	 	 	—	  	 	 	18,641	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities (1)	 	 	43,023	  	 	 	143,821	  	 	 	334,434	  	
Commitments and contingencies (Note 17)	 				 				 				
Redeemable non-controlling interests	 	 	17,741	  	 	 	73,265	  	 	 	104,342	  	
Stockholder’s equity:	 				 				 				
Common stock, $0.01 par value—100,000,000 authorized, 75,000,000 shares issued and outstanding as of December 31, 2012 and 2013 and June 30, 2014 (unaudited)	 	 	750	  	 	 	750	  	 	 	750	  	
Additional paid-in capital	 	 	73,177	  	 	 	75,049	  	 	 	75,984	  	
(Accumulated deficit) retained earnings	 	 	(2,604	) 	 	 	3,034	  	 	 	15,568	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total stockholder’s equity	 	 	71,323	  	 	 	78,833	  	 	 	92,302	  	
Non-controlling interests	 	 	—	  	 	 	1,788	  	 	 	35,172	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total equity	 	 	71,323	  	 	 	80,621	  	 	 	127,474	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND TOTAL EQUITY	 	$	132,087	  	 	$	297,707	  	 	$	566,250	  	

 

(1)	The Company’s consolidated assets as of December 31, 2012 and 2013 and June 30, 2014 include $34.4 million, $156.2 million (restated) and $316.2 million (unaudited), consisting of assets of variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs. These assets include solar energy systems, net, of $33.4 million, $152.6 million (restated) and $308.1 million (unaudited) as of December 31, 2012 and 2013 and June 30, 2014; cash and cash equivalents of $1.0 million, $3.1 million (restated) and $6.2 million (unaudited) as of December 31, 2012 and 2013 and June 30, 2014; and accounts receivable, net, of $16,000, $0.5 million and $1.9 million (unaudited) as of December 31, 2012 and 2013 and June 30, 2014. The Company’s consolidated liabilities as of December 31, 2012 and 2013 and June 30, 2014 included $0.2 million, $2.9 million and $5.9 million (unaudited) of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include distributions payable to non-controlling interests and redeemable non-controlling interests of $0.2 million, $1.6 million and $3.9 million (unaudited) as of December 31, 2012 and 2013 and June 30, 2014; and deferred revenue of $0, $1.3 million and $2.0 million (unaudited) as of December 31, 2012 and 2013 and June 30, 2014. See further description in Note 12—Investment Funds.	
See accompanying notes to consolidated financial statements.
 
F-3

Table of Contents
 Vivint Solar, Inc.
Consolidated Statements of Operations
(In thousands, except share and per share data)

 	 	Predecessor	 	 	Successor	 	
 	 	Period from
January 1,
through
November 16,
2012	 	 	Period from
November 17,
through
December 31,
2012	 	 	Year Ended
December 31,
2013	 	 	Six Months Ended
June 30,	 	
 	 			 			 			 	2013	 	 	2014	 	
 	 	 	 	 	 	 	 	(Restated)	 	 	(Unaudited)	 	
Revenue:	 			 	 				 				 				 				
Operating leases and incentives	 	$	183	  	 	$	109	  	 	$	5,864	  	 	$	1,793	  	 	$	8,667	  	
Solar energy system and product sales	 	 	157	  	 	 	—	  	 	 	306	  	 	 	132	  	 	 	1,398	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	 	 	340	  	 	 	109	  	 	 	6,170	  	 	 	1,925	  	 	 	10,065	  	
Operating expenses:	 			 	 				 				 				 				
Cost of revenue—operating leases and incentives	 	 	3,302	  	 	 	1,018	  	 	 	19,004	  	 	 	8,013	  	 	 	27,646	  	
Cost of revenue—solar energy system and product sales	 	 	95	  	 	 	—	  	 	 	123	  	 	 	76	  	 	 	883	  	
Sales and marketing	 	 	1,471	  	 	 	533	  	 	 	7,348	  	 	 	2,890	  	 	 	11,009	  	
Research and development	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	972	  	
General and administrative	 	 	7,789	  	 	 	971	  	 	 	16,438	  	 	 	4,832	  	 	 	26,106	  	
Amortization of intangible assets	 	 	—	  	 	 	1,824	  	 	 	14,595	  	 	 	7,297	  	 	 	7,428	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	12,657	  	 	 	4,346	  	 	 	57,508	  	 	 	23,108	  	 	 	74,044	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from operations	 	 	(12,317	) 	 	 	(4,237	) 	 	 	(51,338	) 	 	 	(21,183	) 	 	 	(63,979	) 	
Interest expense	 	 	881	  	 	 	96	  	 	 	3,144	  	 	 	991	  	 	 	4,074	  	
Other expense	 	 	240	  	 	 	44	  	 	 	1,865	  	 	 	522	  	 	 	1,165	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before income taxes	 	 	(13,438	) 	 	 	(4,377	) 	 	 	(56,347	) 	 	 	(22,696	) 	 	 	(69,218	) 	
Income tax expense (benefit)	 	 	7	  	 	 	(1,074	) 	 	 	123	  	 	 	45	  	 	 	6,936	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	 	(13,445	) 	 	 	(3,303	) 	 	 	(56,470	) 	 	 	(22,741	) 	 	 	(76,154	) 	
Net loss attributable to non-controlling interests and redeemable non-controlling interests	 	 	(1,771	) 	 	 	(699	) 	 	 	(62,108	) 	 	 	(2,307	) 	 	 	(88,688	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income available (loss attributable) to stockholder	 	 	(11,674	) 	 	 	(2,604	) 	 	 	5,638	  	 	 	(20,434	) 	 	 	12,534	  	
Accretion to redemption value of Series B redeemable preferred stock	 	 	(20,000	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income available (loss attributable) to common stockholder	 	$	(31,674	) 	 	$	(2,604	) 	 	$	5,638	  	 	$	(20,434	) 	 	$	12,534	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income per share available (loss attributable) to common stockholder:	 			 	 				 				 				 				
Basic	 	$	(0.42	) 	 	$	(0.03	) 	 	$	0.08	  	 	$	(0.27	) 	 	$	0.17	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	$	(0.42	) 	 	$	(0.03	) 	 	$	0.07	  	 	$	(0.27	)  	 	$	0.16	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average shares used in computing net income per share available (loss attributable) to common stockholder:	 			 	 				 				 				 				
Basic	 	 	75,000,000	  	 	 	75,000,000	  	 	 	75,000,000	  	 	 	75,000,000	  	 	 	75,000,000	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	 	75,000,000	  	 	 	75,000,000	  	 	 	75,223,183	  	 	 	75,000,000	  	 	 	76,194,463	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.
 
F-4

Table of Contents
 Vivint Solar, Inc.
Consolidated Statements of Redeemable Preferred Stock, Redeemable Non-Controlling Interests and Equity
(In thousands)

 	 	Series B
Redeemable
Preferred Stock	 	 	Redeemable
Non-
Controlling
Interests	 	 	  	 	Series A
Preferred Stock	 	 	Common Stock	 	 	Additional
Paid-in
Capital	 	 	Retained
Earnings
(Accumulated
Deficit)	 	 	Total
Stockholder’s
Equity
(Deficit)	 	 	Non-
Controlling
Interests	 	 	Total
Equity
(Deficit)	 	
 	 	Shares	 	 	Amount	 	 			 		 	Shares	 	 	Amount	 	 	Shares	 	 	Amount	 	 			 			 			 			 			
Predecessor:	 				 				 				 	 	 				 				 				 				 				 				 				 				 				
Balance—January 1, 2012	 	 	4	  	 	$	5,000	  	 	$	224	  	 	 	 	 	25	  	 	$	—	  	 	 	50	  	 	$	1	  	 	$	1,378	  	 	$	(2,164	) 	 	$	(785	) 	 	$	—	  	 	$	(785	) 	
Issuance of Series B redeemable preferred stock	 	 	4	  	 	 	5,000	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Accretion to redemption value of Series B redeemable preferred stock	 	 	—	  	 	 	20,000	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(5,542	) 	 	 	(14,458	) 	 	 	(20,000	) 	 	 	—	  	 	 	(20,000	) 	
Stock-based compensation expense	 	 	—	  	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	155	  	 	 	—	  	 	 	155	  	 	 	—	  	 	 	155	  	
Noncash contributions for services	 	 	—	  	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	4,009	  	 	 	—	  	 	 	4,009	  	 	 	—	  	 	 	4,009	  	
Contributions from redeemable non-controlling interests	 	 	—	  	 	 	—	  	 	 	9,193	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Distributions to redeemable non-controlling interests	 	 	—	  	 	 	—	  	 	 	(197	) 	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Net loss	 	 	—	  	 	 	—	  	 	 	(1,771	) 	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(11,674	) 	 	 	(11,674	) 	 	 	—	  	 	 	(11,674	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance—November 16, 2012	 	 	8	  	 	 	30,000	  	 	 	7,449	  	 	 	 	 	25	  	 	 	—	  	 	 	50	  	 	 	1	  	 	 	—	  	 	 	(28,296	) 	 	 	(28,295	) 	 	 	—	  	 	 	(28,295	) 	
 	 	
Successor:	 				 				 				 	 	 				 				 				 				 				 				 				 				 				
Noncash capital contribution related to the Acquisition	 	 	—	  	 	 	—	  	 	 	10,620	  	 	 	 	 	—	  	 	 	—	  	 	 	75,000	  	 	 	750	  	 	 	72,380	  	 	 	—	  	 	 	73,130	  	 	 	—	  	 	 	73,130	  	
Noncash contributions for services	 	 	—	  	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	797	  	 	 	—	  	 	 	797	  	 	 	—	  	 	 	797	  	
Contributions from redeemable non-controlling interests	 	 	—	  	 	 	—	  	 	 	8,147	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Distributions to redeemable non-controlling interests	 	 	—	  	 	 	—	  	 	 	(327	) 	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Net loss	 	 	—	  	 	 	—	  	 	 	(699	) 	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(2,604	) 	 	 	(2,604	) 	 	 	—	  	 	 	(2,604	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance—December 31, 2012	 	 	—	  	 	 	—	  	 	 	17,741	  	 	 	 	 	—	  	 	 	—	  	 	 	75,000	  	 	 	750	  	 	 	73,177	  	 	 	(2,604	) 	 	 	71,323	  	 	 	—	  	 	 	71,323	  	
Stock-based compensation expense-as restated	 	 	—	  	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	294	  	 	 	—	  	 	 	294	  	 	 	—	  	 	 	294	  	
Noncash contributions for services	 	 	—	  	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	160	  	 	 	—	  	 	 	160	  	 	 	—	  	 	 	160	  	
Capital contribution from Parent	 	 	—	  	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	1,418	  	 	 	—	  	 	 	1,418	  	 	 	—	  	 	 	1,418	  	
Contributions from non-controlling interests and redeemable non-controlling interests	 	 	—	  	 	 	—	  	 	 	63,154	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	60,000	  	 	 	60,000	  	
Distributions to non-controlling interests and redeemable non-controlling interests	 	 	—	  	 	 	—	  	 	 	(3,064	) 	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(670	) 	 	 	(670	) 	
Net income (loss)-as restated	 	 	—	  	 	 	—	  	 	 	(4,566	) 	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	5,638	  	 	 	5,638	  	 	 	(57,542	) 	 	 	(51,904	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance—December 31, 2013-as restated	 	 	    —	  	 	 	—	  	 	 	73,265	  	 	 	 	 	    —	  	 	 	—	  	 	 	75,000	  	 	 	750	  	 	 	75,049	  	 	 	3,034	  	 	 	78,833	  	 	 	1,788	  	 	 	80,621	  	
Stock-based compensation expense (unaudited)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	816	  	 	 	—	  	 	 	816	  	 	 	—	  	 	 	816	  	
Noncash contributions for services (unaudited)	 	 	—	  	 	 	—	  	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	119	  	 	 	—	  	 	 	119	  	 	 	—	  	 	 	119	  	
Contributions from non-controlling interests and redeemable non-controlling interests (unaudited)	 	 	—	  	 	 	—	  	 	 	33,916	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	123,530	  	 	 	123,530	  	
Distributions to non-controlling interests and redeemable non-controlling interests (unaudited)	 	 	—	  	 	 	—	  	 	 	(2,508	) 	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(1,789	) 	 	 	(1,789	) 	
Net income (loss) (unaudited)	 	 	—	  	 	 	—	  	 	 	(331	) 	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	12,534	  	 	 	12,534	  	 	 	(88,357	) 	 	 	(75,823	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance—June 30, 2014 (unaudited)	 	 	—	  	 	$	—	  	 	$	104,342	  	 	 	 	 	—	  	 	$	—	  	 	 	75,000	  	 	$	750	  	 	$	75,984	  	 	$	15,568	  	 	$	92,302	  	 	$	35,172	  	 	$	127,474	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.
 
F-5

Table of Contents
 Vivint Solar, Inc.
Consolidated Statements of Cash Flows
(In thousands)

 	 	Predecessor	 	 	  	 	Successor	 	
 	 	Period from
January 1,
through
November 16, 2012	 	 	  	 	Period from
November 17,
through
December 31,
2012	 	 	Year Ended
December 31,
2013	 	 	Six Months
Ended
June 30,	 	
 	 			 	  	 			 			 	2013	 	 	2014	 	
 	 	 	 	 	  	 	 	 	 	(Restated)	 	 	(Unaudited)	 	
CASH FLOWS FROM OPERATING ACTIVITIES:	 				 	 	 				 				 				 				
Net loss	 	$	(13,445	) 	 	 	 	$	(3,303	) 	 	$	(56,470	) 	 	$	(22,741	) 	 	$	(76,154	) 	
Adjustments to reconcile net loss to net cash used in operating activities:	 				 	 	 				 				 				 				
Depreciation and amortization	 	 	72	  	 	 	 	 	18	  	 	 	1,984	  	 	 	708	  	 	 	3,009	  	
Amortization of intangible assets	 	 	—	  	 	 	 	 	1,824	  	 	 	14,595	  	 	 	7,297	  	 	 	7,501	  	
Stock-based compensation	 	 	155	  	 	 	 	 	—	  	 	 	294	  	 	 	—	  	 	 	816	  	
Amortization of deferred financing costs	 	 	161	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	667	  	
Noncash contributions for services	 	 	4,009	  	 	 	 	 	797	  	 	 	160	  	 	 	82	  	 	 	119	  	
Noncash interest expense	 	 	—	  	 	 	 	 	—	  	 	 	2,930	  	 	 	794	  	 	 	2,877	  	
Deferred income taxes	 	 	—	  	 	 	 	 	(1,075	) 	 	 	30,927	  	 	 	2,385	  	 	 	35,865	  	
Changes in operating assets and liabilities, net of acquisitions:	 				 	 	 				 				 				 				
Accounts receivable, net	 	 	(41	) 	 	 	 	 	(52	) 	 	 	(512	) 	 	 	(303	) 	 	 	(1,701	) 	
Inventories, net	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	16	  	
Prepaid expenses and other current assets	 	 	(988	) 	 	 	 	 	(102	) 	 	 	(3,605	) 	 	 	(1,845	) 	 	 	(8,928	) 	
Prepaid tax asset, net	 	 	—	  	 	 	 	 	—	  	 	 	(30,738	) 	 	 	(3,366	) 	 	 	(23,800	) 	
Other non-current assets, net	 	 	(9	) 	 	 	 	 	(19	) 	 	 	(741	) 	 	 	(93	) 	 	 	(6,271	) 	
Accounts payable	 	 	363	  	 	 	 	 	286	  	 	 	1,425	  	 	 	3,409	  	 	 	5,091	  	
Accounts payable, related party	 	 	1,701	  	 	 	 	 	741	  	 	 	2,592	  	 	 	698	  	 	 	(761	) 	
Accrued compensation	 	 	375	  	 	 	 	 	498	  	 	 	10,367	  	 	 	4,136	  	 	 	(3,351	) 	
Deferred revenue	 	 	—	  	 	 	 	 	—	  	 	 	1,340	  	 	 	291	  	 	 	680	  	
Accrued and other current liabilities	 	 	4,757	  	 	 	 	 	(822	) 	 	 	4,579	  	 	 	2,776	  	 	 	6,108	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in operating activities	 	 	(2,890	) 	 	 	 	 	(1,209	) 	 	 	(20,873	) 	 	 	(5,772	) 	 	 	(58,217	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM INVESTING ACTIVITIES:	 				 	 	 				 				 				 				
Payments for the cost of solar energy systems	 	 	(18,306	) 	 	 	 	 	(11,083	) 	 	 	(134,138	) 	 	 	(53,042	) 	 	 	(150,449	) 	
Payment in connection with business acquisition, net of cash acquired	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(12,040	) 	
Payments for property	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(148	) 	
Change in restricted cash	 	 	(152	) 	 	 	 	 	—	  	 	 	(3,500	) 	 	 	(3,500	) 	 	 	(1,600	) 	
Proceeds from U.S. Treasury grants	 	 	3,150	  	 	 	 	 	3,069	  	 	 	10,116	  	 	 	6,744	  	 	 	190	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	 	 	(15,308	) 	 	 	 	 	(8,014	) 	 	 	(127,522	) 	 	 	(49,798	) 	 	 	(164,047	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM FINANCING ACTIVITIES:	 				 	 	 				 				 				 				
Proceeds from issuance of redeemable preferred stock	 	 	5,000	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	
Proceeds from investment by non-controlling interests and redeemable non-controlling interests	 	 	9,193	  	 	 	 	 	8,147	  	 	 	123,154	  	 	 	22,360	  	 	 	157,446	  	
Distributions paid to non-controlling interests and redeemable non-controlling interests	 	 	(80	) 	 	 	 	 	(274	) 	 	 	(2,284	) 	 	 	(934	) 	 	 	(1,932	) 	
Proceeds from revolving line of credit	 	 	4,000	  	 	 	 	 	2,500	  	 	 	—	  	 	 	—	  	 	 	—	  	
Proceeds from short-term debt	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	75,500	  	
Payments on revolving lines of credit	 	 	—	  	 	 	 	 	(4,500	) 	 	 	(2,000	) 	 	 	(2,000	) 	 	 	—	  	
Proceeds from revolving lines of credit, related party	 	 	—	  	 	 	 	 	15,000	  	 	 	83,482	  	 	 	23,483	  	 	 	114,000	  	
Payments on revolving lines of credit, related party	 	 	—	  	 	 	 	 	—	  	 	 	(60,000	) 	 	 	—	  	 	 	(101,000	) 	
Principal payments on capital lease obligations	 	 	—	  	 	 	 	 	—	  	 	 	(987	) 	 	 	(407	) 	 	 	(1,115	) 	
Payments for deferred offering costs	 	 	—	  	 	 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	(1,443	) 	
Capital contribution from Parent	 	 	—	  	 	 	 	 	—	  	 	 	1,418	  	 	 	1,418	  	 	 	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by financing activities	 	 	18,113	  	 	 	 	 	20,873	  	 	 	142,783	  	 	 	43,920	  	 	 	241,456	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	 	 	(85	) 	 	 	 	 	11,650	  	 	 	(5,612	) 	 	 	(11,650	) 	 	 	19,192	  	
CASH AND CASH EQUIVALENTS—Beginning of period	 	 	85	  	 	 	 	 	—	  	 	 	11,650	  	 	 	11,650	  	 	 	6,038	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
CASH AND CASH EQUIVALENTS—End of period	 	$	—	  	 	 	 	$	11,650	  	 	$	6,038	  	 	$	—	  	 	$	25,230	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:	 				 	 	 				 				 				 				
Cash paid for interest	 	$	313	  	 	 	 	$	96	  	 	$	206	  	 	$	206	  	 	$	528	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash paid for income taxes	 	$	1	  	 	 	 	$	—	  	 	$	4	  	 	$	—	  	 	$	20	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
NONCASH INVESTING AND FINANCING ACTIVITIES:	 				 	 	 				 				 				 				
Vehicles acquired under capital leases	 	$	—	  	 	 	 	$	—	  	 	$	4,749	  	 	$	3,842	  	 	$	5,014	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accretion to redemption value of Series B redeemable preferred stock	 	$	20,000	  	 	 	 	$	—	  	 	$	—	  	 	$	—	  	 	$	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accrued distributions to non-controlling interests and redeemable non-controlling interests	 	$	117	  	 	 	 	$	53	  	 	$	1,450	  	 	$	(183	) 	 	$	2,365	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Capital contribution related to the Acquisition	 	$	—	  	 	 	 	$	71,658	  	 	$	—	  	 	$	—	  	 	$	—	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Costs of solar energy systems included in accounts payable, accrued compensation and other accrued liabilities	 	$	13,243	  	 	 	 	$	(439	) 	 	$	19,946	  	 	$	13,170	  	 	$	29,109	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property acquired under build-to-suit agreements	 	$	—	  	 	 	 	$	—	  	 	$	—	  	 	$	—	  	 	$	18,641	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Receivable for tax credit recorded as a reduction to solar energy system costs	 	$	—	  	 	 	 	$	—	  	 	$	2,122	  	 	$	—	  	 	$	643	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.
 
F-6

Table of Contents
 Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
1.	 	Organization	
Vivint Solar, Inc. (formerly known as “V Solar Holdings, Inc.”) was incorporated as a Delaware corporation on August 12, 2011, and changed its name to Vivint Solar, Inc. from V Solar Holdings, Inc., on April 29, 2014. Vivint Solar, Inc. and its subsidiaries are collectively referred to as the “Company.” The Company commenced operations in May 2011. The Company offers solar energy to residential customers through long-term customer contracts, such as power purchase agreements and solar energy system leases. The Company enters into these long-term customer contracts through a sales organization that uses a direct-to-home sales model. The long-term customer contracts are typically for 20 years and require the customer to make monthly payments to the Company. Through the acquisition of Solmetric Corporation (“Solmetric”) in the first quarter of 2014, the Company also offers photovoltaic installation software products and devices. The Company’s headquarters are located in Utah.
The Company has formed various investment funds to monetize the recurring customer payments under its long-term customer contracts and the investment tax credits, accelerated tax depreciation and other incentives associated with residential solar energy systems. The Company uses the cash received from the investment funds to finance a portion of the Company’s variable and fixed costs associated with installing the residential solar energy systems.
On November 16, 2012 (the “Acquisition Date”), investment funds affiliated with The Blackstone Group L.P. (the “Sponsor”) and certain co-investors (collectively, the “Investors”), through 313 Acquisition LLC (“313”), acquired 100% of the equity interests of APX Group, Inc. (“Vivint”) and the Company (the “Acquisition”). The Acquisition was accomplished through certain mergers and related reorganization transactions pursuant to which the Company became a direct wholly owned subsidiary of 313, an entity owned by the Investors. The impact of the mergers resulted in a change to the Company’s capital structure which is reflected as a noncash capital contribution related to the Acquisition in the Company’s consolidated statements of redeemable preferred stock, redeemable non-controlling interests and equity.
Since inception and continuing after the Acquisition, the Company has relied upon Vivint and certain of its affiliates for many of its administrative, managerial, account management and operational services. The Company was consolidated by Vivint as a variable interest entity prior to the Acquisition, and continues to be an affiliated entity and related party subsequent to the Acquisition. The Company has entered into various agreements and transactions with Vivint and its affiliates related to these services. See Note 16—Related Party Transactions.
The Company’s business model requires substantial outside financing arrangements to grow the business and facilitate the deployment of additional solar energy systems. If financing is not available to the Company on acceptable terms, if and when needed, the Company may be required to reduce planned spending, which could have a material adverse effect on the Company’s operations. The Company believes that cash on hand plus investment fund commitments and other financing commitments will be sufficient to meet the Company’s cash needs at least through the end of the year. While there can be no assurances, the Company anticipates raising additional required capital from new and existing investors.
 
F-7

Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
2.	 	Restatement of Consolidated Financial Statements as of and for the year ended December 31, 2013	
The consolidated financial statements as of December 31, 2013 and for the year then ended have been restated to correct certain errors. The correction of these errors impacted the accounting for income taxes, the attribution of net income or loss to non-controlling interests and redeemable non-controlling interests and the classification of paid-in-kind interest on the consolidated statement of cash flows. These consolidated financial statements also include corrections for certain other immaterial errors and reclassifications to conform to the current presentation. There was no impact to retained earnings as of January 1, 2013. The effects of these items on the consolidated financial statements as of December 31, 2013 and for the year then ended are summarized in the following tables (tickmarks in the following tables correspond to the explanations below the tables):
Consolidated Balance Sheet
(in thousands)

 	 	As of December 31, 2013	 	
 	 	As
Previously
Reported	 	 	Adjustments	 	 	As
Restated	 	
ASSETS	 				 				 				
Current assets:	 				 				 				
Cash and cash equivalents	 	$	6,038	  	 	$	—	  	 	$	6,038	  	
Accounts receivable, net	 	 	608	  	 	 	—	  	 	 	608	  	
Prepaid expenses and other current assets (b)(e)	 	 	823	  	 	 	5,115	  	 	 	5,938	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total current assets	 	 	7,469	  	 	 	5,115	  	 	 	12,584	  	
Restricted cash	 	 	5,000	  	 	 	—	  	 	 	5,000	  	
Solar energy systems, net (b)(e)	 	 	190,085	  	 	 	(2,027	) 	 	 	188,058	  	
Property, net	 	 	3,640	  	 	 	—	  	 	 	3,640	  	
Intangible assets, net	 	 	27,364	  	 	 	—	  	 	 	27,364	  	
Goodwill	 	 	29,545	  	 	 	—	  	 	 	29,545	  	
Prepaid tax asset, net (a)	 	 	—	  	 	 	30,738	  	 	 	30,738	  	
Other non-current assets	 	 	778	  	 	 	—	  	 	 	778	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL ASSETS	 	$	263,881	  	 	$	33,826	  	 	$	297,707	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND TOTAL EQUITY	 				 				 				
Current liabilities:	 				 				 				
Accounts payable	 	$	25,356	  	 	$	—	  	 	$	25,356	  	
Accounts payable, related party	 	 	3,068	  	 	 	—	  	 	 	3,068	  	
Distributions payable to redeemable non-controlling interests (f)	 	 	1,620	  	 	 	(44	) 	 	 	1,576	  	
Accrued compensation (e)	 	 	15,396	  	 	 	95	  	 	 	15,491	  	
Current portion of deferred revenue	 	 	68	  	 	 	—	  	 	 	68	  	
Current portion of capital lease obligation	 	 	1,275	  	 	 	—	  	 	 	1,275	  	
Accrued and other current liabilities (a)(e)(f)	 	 	7,225	  	 	 	3,082	  	 	 	10,307	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total current liabilities	 	 	54,008	  	 	 	3,133	  	 	 	57,141	  	
Capital lease obligation, net of current portion	 	 	2,486	  	 	 	—	  	 	 	2,486	  	
Revolving lines of credit, related party	 	 	41,412	  	 	 	—	  	 	 	41,412	  	
Deferred tax liability, net (a)(e)	 	 	13,352	  	 	 	28,158	  	 	 	41,510	  	
Deferred revenue, net of current portion	 	 	1,272	  	 	 	—	  	 	 	1,272	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities	 	 	112,530	  	 	 	31,291	  	 	 	143,821	  	
Commitments and contingencies	 				 				 				
Redeemable non-controlling interests (c)	 	 	73,718	  	 	 	(453	) 	 	 	73,265	  	
Stockholder’s equity:	 				 				 				
Common stock, $0.01 par value—100,000,000 authorized, 75,000,000 shares issued and outstanding as of December 31, 2013	 	 	750	  	 	 	—	  	 	 	750	  	
Additional paid-in capital (e)	 	 	75,168	  	 	 	(119	) 	 	 	75,049	  	
Retained earnings (Accumulated deficit) (a)(b)(c)(e)	 	 	1,435	  	 	 	1,599	  	 	 	3,034	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total stockholders’ equity	 	 	77,353	  	 	 	1,480	  	 	 	78,833	  	
Non-controlling interests (c)	 	 	280	  	 	 	1,508	  	 	 	1,788	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total equity	 	 	77,633	  	 	 	2,988	  	 	 	80,621	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND TOTAL EQUITY	 	$	263,881	  	 	$	33,826	  	 	$	297,707	  	

F-8

Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Consolidated Statement of Operations
(in thousands)

 	  	For the year ended
December 31, 2013	 	
 	  	As Previously
Reported	 	 	Adjustments	 	 	As Restated	 	
Revenue:	  				 				 				
Operating leases and incentives	  	$	5,864	  	 	$	—	  	 	$	5,864	  	
Solar energy system and product sales	  	 	306	  	 	 	—	  	 	 	306	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	  	 	6,170	  	 	 	—	  	 	 	6,170	  	
Operating expenses:	  				 				 				
Cost of revenue—operating leases and incentives (e)(f)	  	 	15,632	  	 	 	3,372	  	 	 	19,004	  	
Cost of revenue—solar energy system and product sales	  	 	123	  	 	 	—	  	 	 	123	  	
Sales and marketing (e)(f)	  	 	9,809	  	 	 	(2,461	) 	 	 	7,348	  	
Research and development	  	 	—	  	 	 	—	  	 	 	—	  	
General and administrative (e)(f)	  	 	17,468	  	 	 	(1,030	) 	 	 	16,438	  	
Amortization of intangible assets	  	 	14,595	  	 	 	—	  	 	 	14,595	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	57,627	  	 	 	(119	) 	 	 	57,508	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Loss from operations	  	 	(51,457	) 	 	 	119	  	 	 	(51,338	) 	
Interest expense	  	 	3,144	  	 	 	—	  	 	 	3,144	  	
Other expense	  	 	1,865	  	 	 	—	  	 	 	1,865	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Loss before income taxes	  	 	(56,466	) 	 	 	119	  	 	 	(56,347	) 	
Income tax expense (benefit) (a)(b)(e)	  	 	2,658	  	 	 	(2,535	) 	 	 	123	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net loss	  	 	(59,124	) 	 	 	2,654	  	 	 	(56,470	) 	
Net loss attributable to non-controlling interests and redeemable non-controlling interests (c)	  	 	(63,163	) 	 	 	1,055	  	 	 	(62,108	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to common stockholder	  	$	4,039	  	 	$	1,599	  	 	$	5,638	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income per share attributable to common stockholder:	  				 				 				
Basic	  	$	0.05	  	 	$	0.03	  	 	$	0.08	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Diluted	  	$	0.05	  	 	$	0.02	  	 	$	0.07	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average shares used in computing net income per share available to common stockholder:	  				 				 				
Basic	  	 	75,000,000	  	 	 	—	  	 	 	75,000,000	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Diluted	  	 	75,223,183	  	 	 	—	  	 	 	75,223,183	  	

F-9

Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Consolidated Statement of Cash Flows
(in thousands)

 	  	For the year ended
December 31, 2013	 	
 	  	As
Previously
Reported	 	 	Adjustments	 	 	As
Restated	 	
CASH FLOWS FROM OPERATING ACTIVITIES:	  				 				 				
Net loss (a)(b)(e)	  	$	(59,124	) 	 	$	2,654	  	 	$	(56,470	) 	
Adjustments to reconcile net loss to net cash provided by operating activities:	  				 				 				
Depreciation and amortization	  	 	1,984	  	 	 	—	  	 	 	1,984	  	
Amortization of intangible assets	  	 	14,595	  	 	 	—	  	 	 	14,595	  	
Stock-based compensation (e)	  	 	413	  	 	 	(119	) 	 	 	294	  	
Noncash contributions for services	  	 	160	  	 	 	—	  	 	 	160	  	
Noncash interest expense (d)	  	 	—	  	 	 	2,930	  	 	 	2,930	  	
Deferred income taxes (a)(b)(e)	  	 	2,768	  	 	 	28,159	  	 	 	30,927	  	
Changes in operating assets and liabilities:	  				 				 				
Accounts receivable, net	  	 	(512	) 	 	 	—	  	 	 	(512	) 	
Prepaid expenses and other current assets, net (a)(b)(e)	  	 	(612	) 	 	 	(2,993	) 	 	 	(3,605	) 	
Prepaid tax asset, net (a)	  	 	—	  	 	 	(30,738	) 	 	 	(30,738	) 	
Other non-current assets, net	  	 	(741	) 	 	 	—	  	 	 	(741	) 	
Accounts payable	  	 	1,425	  	 	 	—	  	 	 	1,425	  	
Accounts payable, related party	  	 	2,592	  	 	 	—	  	 	 	2,592	  	
Accrued compensation	  	 	10,367	  	 	 	—	  	 	 	10,367	  	
Deferred revenue	  	 	1,340	  	 	 	—	  	 	 	1,340	  	
Accrued and other current liabilities (a)(b)	  	 	1,542	  	 	 	3,037	  	 	 	4,579	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in operating activities	  	 	(23,803	) 	 	 	2,930	  	 	 	(20,873	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM INVESTING ACTIVITIES:	  				 				 				
Payments for the cost of solar energy systems	  	 	(134,138	) 	 	 	—	  	 	 	(134,138	) 	
Change in restricted cash	  	 	(3,500	) 	 	 	—	  	 	 	(3,500	) 	
Proceeds from U.S. Treasury grants	  	 	10,116	  	 	 	—	  	 	 	10,116	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(127,522	) 	 	 	—	  	 	 	(127,522	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM FINANCING ACTIVITIES:	  				 				 				
Proceeds from investment by non-controlling interests and redeemable non-controlling interests	  	 	123,154	  	 	 	—	  	 	 	123,154	  	
Distributions paid to non-controlling interests and redeemable non-controlling interests	  	 	(2,284	) 	 	 	—	  	 	 	(2,284	) 	
Payments on revolving line of credit	  	 	(2,000	) 	 	 	—	  	 	 	(2,000	) 	
Proceeds from revolving lines of credit, related party (d)	  	 	86,412	  	 	 	(2,930	) 	 	 	83,482	  	
Payments on revolving lines of credit, related party	  	 	(60,000	) 	 	 	—	  	 	 	(60,000	) 	
Principal payments on capital lease obligations	  	 	(987	) 	 	 	—	  	 	 	(987	) 	
Capital contribution from Parent	  	 	1,418	  	 	 	—	  	 	 	1,418	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by financing activities	  	 	145,713	  	 	 	(2,930	) 	 	 	142,783	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
NET DECREASE IN CASH AND CASH EQUIVALENTS	  	 	(5,612	) 	 	 	—	  	 	 	(5,612	) 	
CASH AND CASH EQUIVALENTS — Beginning of period	  	 	11,650	  	 	 	—	  	 	 	11,650	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
CASH AND CASH EQUIVALENTS — End of period	  	$	6,038	  	 	$	—	  	 	$	6,038	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:	  				 				 				
Cash paid for interest	  	$	206	  	 	$	—	  	 	$	206	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash paid for income taxes	  	$	4	  	 	$	—	  	 	$	4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
NONCASH INVESTING AND FINANCING ACTIVITIES:	  				 				 				
Vehicles acquired under capital leases	  	$	4,749	  	 	$	—	  	 	$	4,749	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Accretion to redemption value of Series B redeemable preferred stock	  	$	—	  	 	$	—	  	 	$	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Accrued distributions to non-controlling interests and redeemable non-controlling interests	  	$	1,450	  	 	$	—	  	 	$	1,450	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Capital contribution related to the Acquisition	  	$	—	  	 	$	—	  	 	$	—	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Costs of solar energy systems included in accounts payable, accrued compensation and other accrued liabilities (e)	  	$	19,851	  	 	$	95	  	 	$	19,946	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Receivable for tax credit recorded as a reduction to cost of solar energy systems (b)	  	$	—	  	 	$	2,122	  	 	$	2,122	  	

F-10

Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
The summary of the adjustments is as follows:
 
 	(a)	The Company corrected its accounting for certain taxable gains realized on the sales of solar energy systems to its investment funds. The Company sells solar energy systems to the investment funds. As the investment funds are consolidated by the Company, the gain on the sale of the solar energy systems was not recognized in the consolidated financial statements. However, this gain is recognized for tax reporting purposes. Since these transactions are intercompany sales, any tax expense incurred related to these intercompany sales is being deferred and amortized over the estimated useful life of the underlying solar energy systems which has been estimated to be 30 years. Accordingly, the Company has recorded a prepaid tax asset of $30.7 million (net of amortization of $0.5 million), an income tax payable of $3.0 million included in accrued and other current liabilities and a reduction to deferred tax assets of $28.2 million (reflected as a component of deferred tax liability, net), as of December 31, 2013. Additionally, income tax expense increased by $0.5 million for the year ended December 31, 2013 as a result of the current year amortization of the prepaid tax asset.	
 
 	(b)	The Company corrected its accounting for certain tax credits:	
 
 	•	 	The Company is eligible for a tax credit for solar energy systems that were placed into service in Hawaii in the year ended December 31, 2013. This tax credit was improperly excluded from the Company’s tax provision for the year ended December 31, 2013. With inclusion of this credit in its 2013 tax return, the Company will elect to receive a cash refund equal to the excess of the credit over the Hawaii income tax payments. This cash refund option for Hawaii tax credits is not available for federal investment tax credits. As a result, the cash refund is recorded quarterly upon calculating the Company’s tax provision and is accounted for as a decrease to the cost basis of the solar energy systems, net (similar to Treasury grants) of $2.1 million with a corresponding increase to other receivables included in prepaid expense and other current assets as of December 31, 2013. Unlike the Treasury grant process, there is no approval process to receive Hawaii tax credits. Therefore, the Company is able to recognize the Hawaii tax credits earlier than Treasury grants.	
 
 	•	 	The Company is eligible for federal investment tax credits which were previously understated by $4.5 million in the year ended December 31, 2013. The federal investment tax credits are accounted for under the flow-through method of accounting. As permitted in ASC 740-10-25-46, under the “flow-through” method of accounting, the tax benefit from an investment tax credit is recorded as a reduction of federal income taxes in the period that the credit is generated. The recognition of the investment tax credits decreased income tax expense by $4.5 million and increased deferred tax assets, current by $2.8 million as of and for the year ended December 31, 2013.	
 
F-11

Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
 	(c)	The Company corrected two errors related to items which are inputs in its attribution of net income or loss to its non-controlling interests and redeemable non-controlling interests under the HLBV method. First, the Company corrected historical tax depreciation associated with the solar energy systems owned by the investment funds. The Company determined that the depreciation start dates for tax reporting purposes for the solar energy systems owned by the investment funds should have been when the solar energy systems are interconnected to the power grid. Previously, the Company used the installation dates as the depreciation start dates for tax purposes. This correction affected the amounts of taxable income and loss allocated amongst partners of the investment funds and, in turn, the balance of the partner’s tax capital accounts and the gain or loss allocable under the HLBV method. Second, the Company corrected certain other errors which impacted the GAAP net assets for each investment fund, which in turn impacted the hypothetical liquidation proceeds used in the application of the HLBV method. The total impact of correcting these errors was to decrease net loss attributable to non-controlling interests and redeemable non-controlling interests by $1.1 million and consequently decrease net income attributable to common stockholders for the year ended December 31, 2013. In addition, non-controlling interests increased by $1.5 million and redeemable non-controlling interests decreased by $0.5 million as of December 31, 2013.	
 
 	(d)	In the consolidated statement of cash flows for the year ended December 31, 2013, the Company reclassified $2.9 million, representing paid-in-kind interest in connection with its related party revolving lines of credit, from proceeds from revolving lines of credit, related party in cash flows from financing activities to noncash interest expense, a reconciling item in the calculation of cash flows from operating activities.	
 
 	(e)	The Company identified and corrected other immaterial errors related to stock compensation expense, solar energy systems, net, accrued compensation, income taxes and other immaterial adjustments.	
 
 	(f)	The Company has reclassified amounts in prior-period financial statements to align with the presentation of the consolidated financial statements as of and for the six months ended June 30, 2014. Specifically, the Company has reclassified certain amounts from sales and marketing and general and administrative to cost of revenue—operating leases and incentives and distributions payable to redeemable non-controlling interests to accrued and other current liabilities.	
 
F-12

Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
3.	 	Restatement of Consolidated Financial Statements as of and for the three months ended March 31, 2014 (Unaudited)	
The unaudited consolidated financial statements as of March 31, 2014 and for the three months then ended have been restated to correct certain errors. The correction of these errors impacted the accounting for income taxes, the attribution of net income or loss to non-controlling interests and redeemable non-controlling interests and the classification of paid-in-kind interest on the consolidated statement of cash flows. These consolidated financial statements also include corrections for certain other immaterial errors and reclassifications to conform to the current presentation. The effects of these items on the consolidated financial statements as of March 31, 2014 and for the three months then ended are summarized in the following tables (tickmarks in the following tables correspond to the explanations below the tables):
Consolidated Balance Sheet
(in thousands)

 	 	As of March 31, 2014	 	
 	 	As
Previously
Reported	 	 	Adjustments	 	 	As
Restated	 	
ASSETS	 				 				 				
Current assets:	 				 				 				
Cash and cash equivalents	 	$	13,425	  	 	$	—	  	 	$	13,425	  	
Accounts receivable, net	 	 	1,446	  	 	 	—	  	 	 	1,446	  	
Inventories, net	 	 	493	  	 	 	—	  	 	 	493	  	
Prepaid expenses and other current assets (b)(e)	 	 	2,069	  	 	 	8,441	  	 	 	10,510	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total current assets	 	 	17,433	  	 	 	8,441	  	 	 	25,874	  	
Restricted cash	 	 	5,000	  	 	 	—	  	 	 	5,000	  	
Solar energy systems, net (b)(e)	 	 	257,397	  	 	 	(2,256	) 	 	 	255,141	  	
Property, net	 	 	5,720	  	 	 	—	  	 	 	5,720	  	
Intangible assets, net	 	 	29,421	  	 	 	—	  	 	 	29,421	  	
Goodwill (e)	 	 	36,318	  	 	 	37	  	 	 	36,355	  	
Prepaid tax asset, net (a)	 	 	—	  	 	 	41,246	  	 	 	41,246	  	
Other non-current assets	 	 	1,858	  	 	 	—	  	 	 	1,858	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL ASSETS	 	$	353,147	  	 	$	47,468	  	 	$	400,615	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND TOTAL EQUITY	 				 				 				
Current liabilities:	 				 				 				
Accounts payable	 	$	34,388	  	 	$	—	  	 	$	34,388	  	
Accounts payable, related party	 	 	1,434	  	 	 	—	  	 	 	1,434	  	
Distributions payable to redeemable non-controlling interests (e)	 	 	2,412	  	 	 	10	  	 	 	2,422	  	
Revolving line of credit	 	 	—	  	 	 	—	  	 	 	—	  	
Accrued compensation (e)	 	 	13,143	  	 	 	162	  	 	 	13,305	  	
Current portion of deferred revenue	 	 	119	  	 	 	—	  	 	 	119	  	
Current portion of capital lease obligation	 	 	1,903	  	 	 	—	  	 	 	1,903	  	
Accrued and other current liabilities (a)(e)	 	 	10,534	  	 	 	2,792	  	 	 	13,326	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total current liabilities	 	 	63,933	  	 	 	2,964	  	 	 	66,897	  	
Capital lease obligation, net of current portion	 	 	3,835	  	 	 	—	  	 	 	3,835	  	
Revolving lines of credit, related party	 	 	55,812	  	 	 	—	  	 	 	55,812	  	
Deferred tax liability, net (a)(e)	 	 	21,578	  	 	 	39,042	  	 	 	60,620	  	
Deferred revenue, net of current portion	 	 	1,648	  	 	 	—	  	 	 	1,648	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total liabilities	 	 	146,806	  	 	 	42,006	  	 	 	188,812	  	
Commitments and contingencies	 				 				 				
Redeemable non-controlling interests (c)	 	 	82,743	  	 	 	(123	) 	 	 	82,620	  	
Stockholder’s equity:	 				 				 				
Common stock, $0.01 par value—100,000,000 authorized, 75,000,000 shares issued and outstanding as of March 31, 2014	 	 	750	  	 	 	—	  	 	 	750	  	
Additional paid-in capital (e)	 	 	75,669	  	 	 	(119	) 	 	 	75,550	  	
Retained earnings (Accumulated deficit) (a)(b)(c)(e)	 	 	13,271	  	 	 	(3,196	) 	 	 	10,075	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total stockholders’ equity	 	 	89,690	  	 	 	(3,315	) 	 	 	86,375	  	
Non-controlling interests (c)	 	 	33,908	  	 	 	8,900	  	 	 	42,808	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
Total equity	 	 	123,598	  	 	 	5,585	  	 	 	129,183	  	
	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND TOTAL EQUITY	 	$	353,147	  	 	$	47,468	  	 	$	400,615	  	

F-13

Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Consolidated Statement of Operations
(in thousands)

 	  	For the Three Months Ended
March 31, 2014	 	
 	  	As Previously
Reported	 	 	Adjustments	 	 	As Restated	 	
Revenue:	  				 				 				
Operating leases and incentives	  	$	2,863	  	 	$	—	  	 	$	2,863	  	
Solar energy system and product sales	  	 	644	  	 	 	—	  	 	 	644	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	  	 	3,507	  	 	 	—	  	 	 	3,507	  	
Operating expenses:	  				 				 				
Cost of revenue—operating leases and incentives (b)(e)(f)	  	 	9,344	  	 	 	1,843	  	 	 	11,187	  	
Cost of revenue—solar energy system and product sales	  	 	398	  	 	 	—	  	 	 	398	  	
Sales and marketing (e)(f)	  	 	6,802	  	 	 	(1,583	) 	 	 	5,219	  	
Research and development	  	 	472	  	 	 	—	  	 	 	472	  	
General and administrative (e)(f)	  	 	12,706	  	 	 	(352	) 	 	 	12,354	  	
Amortization of intangible assets	  	 	3,737	  	 	 	—	  	 	 	3,737	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	33,459	  	 	 	(92	) 	 	 	33,367	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Loss from operations	  	 	(29,952	) 	 	 	92	  	 	 	(29,860	) 	
Interest expense	  	 	1,401	  	 	 	—	  	 	 	1,401	  	
Other expense	  	 	888	  	 	 	—	  	 	 	888	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Loss before income taxes	  	 	(32,241	) 	 	 	92	  	 	 	(32,149	) 	
Income tax expense (benefit) (a)(b)(e)	  	 	7,237	  	 	 	(2,843	) 	 	 	4,394	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net loss	  	 	(39,478	) 	 	 	(2,935	) 	 	 	(36,543	) 	
Net loss attributable to non-controlling interests and redeemable non-controlling interests (c)	  	 	(51,314	) 	 	 	7,730	  	 	 	(43,584	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to common stockholder	  	$	11,836	  	 	$	(4,795	) 	 	$	7,041	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income per share attributable to common stockholder:	  				 				 				
Basic	  	$	0.16	  	 	$	(0.07	) 	 	$	0.09	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Diluted	  	$	0.16	  	 	$	(0.07	) 	 	$	0.09	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average shares used in computing net income per share available to common stockholder:	  				 				 				
Basic	  	 	75,000,000	  	 	 	—	  	 	 	75,000,000	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Diluted	  	 	76,064,324	  	 	 	—	  	 	 	76,064,324	  	

F-14

Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Consolidated Statement of Cash Flows
(in thousands)

 	  	For the Three Months Ended
March 31, 2014	 	
 	  	As
Previously
Reported	 	 	Adjustments	 	 	As
Restated	 	
CASH FLOWS FROM OPERATING ACTIVITIES:	  				 				 				
Net loss (a)(b)(e)	  	$	(39,478	) 	 	$	2,935	  	 	$	(36,543	) 	
Adjustments to reconcile net loss to net cash provided by operating activities:	  				 				 				
Depreciation and amortization	  	 	1,309	  	 	 	—	  	 	 	1,309	  	
Amortization of intangible assets	  	 	3,737	  	 	 	—	  	 	 	3,737	  	
Stock-based compensation	  	 	437	  	 	 	—	  	 	 	437	  	
Noncash contributions for services	  	 	64	  	 	 	—	  	 	 	64	  	
Noncash interest expense (d)	  	 	—	  	 	 	1,399	  	 	 	1,399	  	
Deferred income taxes (a)(b)(e)	  	 	6,988	  	 	 	10,848	  	 	 	17,836	  	
Changes in operating assets and liabilities:	  				 				 				
Accounts receivable, net	  	 	(628	) 	 	 	—	  	 	 	(628	) 	
Inventories, net	  	 	86	  	 	 	—	  	 	 	86	  	
Prepaid expenses and other current assets, net (a)(b)(e)	  	 	(1,195	) 	 	 	(2,938	) 	 	 	(4,133	) 	
Prepaid tax asset, net (a)	  	 	—	  	 	 	(10,508	) 	 	 	(10,508	) 	
Other non-current assets, net	  	 	(904	) 	 	 	—	  	 	 	(904	) 	
Accounts payable	  	 	4,000	  	 	 	—	  	 	 	4,000	  	
Accounts payable, related party (e)	  	 	(1,633	) 	 	 	(1	) 	 	 	(1,634	) 	
Accrued compensation (e)	  	 	(4,634	) 	 	 	(90	) 	 	 	(4,724	) 	
Deferred revenue	  	 	373	  	 	 	—	  	 	 	373	  	
Accrued and other current liabilities (b)	  	 	2,025	  	 	 	(246	) 	 	 	1,779	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in operating activities	  	 	(29,453	) 	 	 	1,399	  	 	 	(28,054	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM INVESTING ACTIVITIES:	  				 				 				
Payments for the cost of solar energy systems	  	 	(59,771	) 	 	 	—	  	 	 	(59,771	) 	
Payment in connection with business acquisition, net of cash acquired	  	 	(12,040	) 	 	 	—	  	 	 	(12,040	) 	
Payments for property	  	 	(61	) 	 	 	—	  	 	 	(61	) 	
Proceeds from U.S. Treasury grants	  	 	128	  	 	 	—	  	 	 	128	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(71,744	) 	 	 	—	  	 	 	(71,744	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM FINANCING ACTIVITIES:	  				 				 				
Proceeds from investment by non-controlling interests and redeemable non-controlling interests	  	 	95,885	  	 	 	—	  	 	 	95,885	  	
Distributions paid to non-controlling interests and redeemable non-controlling interests	  	 	(1,081	) 	 	 	—	  	 	 	(1,081	) 	
Proceeds from revolving lines of credit, related party (d)	  	 	91,399	  	 	 	(1,399	) 	 	 	90,000	  	
Payments on revolving lines of credit, related party	  	 	(77,000	) 	 	 	—	  	 	 	(77,000	) 	
Principal payments on capital lease obligations	  	 	(444	) 	 	 	—	  	 	 	(444	) 	
Payments for deferred offering costs	  	 	(175	) 	 	 	—	  	 	 	(175	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by financing activities	  	 	108,584	  	 	 	(1,399	) 	 	 	107,185	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
NET DECREASE IN CASH AND CASH EQUIVALENTS	  	 	7,387	  	 	 	—	  	 	 	7,387	  	
CASH AND CASH EQUIVALENTS — Beginning of period	  	 	6,038	  	 	 	—	  	 	 	6,038	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
CASH AND CASH EQUIVALENTS — End of period	  	$	13,425	  	 	$	—	  	 	$	13,425	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:	  				 				 				
Cash paid for income taxes	  	$	6	  	 	$	—	  	 	$	6	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
NONCASH INVESTING AND FINANCING ACTIVITIES:	  				 				 				
Vehicles acquired under capital leases	  	$	2,436	  	 	$	—	  	 	$	2,436	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Accrued distributions to non-controlling interests and redeemable non-controlling interests	  	$	837	  	 	$	—	  	 	$	837	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Costs of solar energy systems included in accounts payable, accrued compensation and other accrued liabilities (e)	  	$	8,497	  	 	$	143	  	 	$	8,354	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Receivable for tax credit recorded as a reduction to costs of solar energy systems (b)	  	$	—	  	 	$	387	  	 	$	387	  	

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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
The summary of the adjustments is as follows:
 
 	(a)	The Company corrected its accounting for certain taxable gains realized on the sales of solar energy systems to its investment funds. The Company sells solar energy systems to the investment funds. As the investment funds are consolidated by the Company, the gain on the sale of the solar energy systems was not recognized in the consolidated financial statements. However, this gain is recognized for tax reporting purposes. Since these transactions are intercompany sales, any tax expense incurred related to these intercompany sales is being deferred and amortized over the estimated useful life of the underlying solar energy systems which has been estimated to be 30 years. Accordingly, the Company has recorded a prepaid tax asset of $41.2 million (net of amortization of $0.9 million), an income tax payable of $3.0 million included in accrued and other current liabilities and a reduction to deferred tax assets of $38.2 million (reflected as a component of deferred tax liability, net), as of March 31, 2014. Additionally, income tax expense increased by $0.4 million for the three months ended March 31, 2014 as a result of the current period amortization of the prepaid tax asset.	
 
 	(b)	The Company corrected its accounting for certain tax credits:	
 
 	•	 	The Company is eligible for a tax credit for solar energy systems that were placed into service in Hawaii in the three months ended March 31, 2014. This tax credit was improperly excluded from the Company’s tax provision for the three months ended March 31, 2014. With inclusion of this credit in its 2014 tax return, the Company will elect to receive a cash refund equal to the excess of the credit over the Hawaii income tax payments. This cash refund option for Hawaii tax credits is not available for federal investment tax credits. As a result, the cash refund is recorded quarterly upon calculating the Company’s tax provision and is accounted for as a decrease to the cost basis of the solar energy systems, net (similar to Treasury grants) of $2.4 million, net of amortization of $0.1 million, with a corresponding increase to other receivables included in prepaid expense and other current assets as of March 31, 2014. Unlike the Treasury grant process, there is no approval process to receive Hawaii tax credits. Therefore, the Company is able to recognize the Hawaii tax credits earlier than Treasury grants.	
 
 	•	 	The Company is eligible for federal investment tax credits which were previously understated by $3.6 million in the three months ended March 31, 2014. The federal investment tax credits are accounted for under the flow-through method of accounting. As permitted in ASC 740-10-25-46, under the “flow-through” method of accounting, the tax benefit from an investment tax credit is recorded as a reduction of federal income taxes in the period that the credit is generated. The recognition of the investment tax credits in the three months ended March 31, 2014 increased deferred tax assets by $3.6 million and decreased income tax expense by $0.8 million.	
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
 	(c)	The Company corrected two errors related to items which are used as inputs in its attribution of net income or loss to its non-controlling and redeemable non-controlling interests under the HLBV method. First, the Company corrected historical tax depreciation associated with the solar energy systems owned by the investment funds. The Company determined that the depreciation start dates for tax reporting purposes for the solar energy systems owned by the investment funds should have been when the solar energy systems are interconnected to the power grid. Previously, the Company used the installation dates as the depreciation start dates for tax purposes. This correction affected the amounts of taxable income and loss allocated amongst partners of the investment funds and, in turn, the balance of partner’s tax capital accounts and the gain or loss allocable under the HLBV method. Second, the Company corrected certain other errors which impacted the GAAP net assets for each investment fund, which in turn impacted the hypothetical liquidation proceeds used in the application of the HLBV method. The total impact of correcting these errors was to decrease net loss attributable to non-controlling interests and redeemable non-controlling interests by $7.7 million and consequently decrease net income attributable to common stockholders for the three months ended March 31, 2014. In addition, non-controlling interests increased by $8.9 million and redeemable non-controlling interests decreased by $0.1 million as of March 31, 2014.	
 
 	(d)	In the consolidated statement of cash flows for the three months ended March 31, 2014, the Company reclassified $1.4 million, representing paid-in-kind interest in connection with its related party revolving lines of credit, from proceeds from revolving lines of credit, related party in cash flows from financing activities to noncash interest expense, a reconciling item in the calculation of cash flows from operating activities.	
 
 	(e)	The Company identified and corrected other immaterial errors related to solar energy systems, net, accrued compensation, income taxes and other immaterial adjustments.	
 
 	(f)	The Company has reclassified amounts in prior-period financial statements to align with the presentation of the consolidated financial statements as of and for the six months ended June 30, 2014. Specifically, the Company has reclassified certain amounts from sales and marketing and general and administrative to cost of revenue—operating leases and incentives.	
 
4.	 	Summary of Significant Accounting Policies	
Basis of Presentation and Principles of Consolidation
The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company uses a qualitative approach in assessing the consolidation requirement for variable interest entities (“VIEs”). This approach focuses on determining whether the Company has the
 
F-17

Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether the Company has the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. For all periods presented, the Company has determined that it is the primary beneficiary in all of its operational VIEs. For additional information, see Note 12—Investment Funds. The Company evaluates its relationships with the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.
We refer to the period from January 1, 2012 through November 16, 2012 as the Predecessor Period or Predecessor and the periods from November 17, 2012 through December 31, 2012, the year ended December 31, 2013, and the six months ended June 30, 2013 and 2014 as the Successor Periods or Successor. The audited consolidated financial statements are presented as three separate periods: Predecessor Period and November 17, 2012 through December 31, 2012 and the year ended December 31, 2013. The Company’s assets and liabilities were adjusted to fair value on the closing date of the Acquisition by application of push-down accounting. Due to the change in the basis of accounting resulting from the Acquisition, the consolidated financial statements for the Predecessor Period and the Successor Periods are not necessarily comparable.
The consolidated financial statements reflect all of the costs of doing business, including the allocation of expenses incurred by Vivint on behalf of the Company. For additional information, see Note 16—Related Party Transactions. These expenses were allocated to the Company on a basis that was considered to fairly or reasonably reflect the utilization of the services provided to, or the benefit obtained by, the Company. The allocations may not, however, reflect the expense the Company would have incurred as an independent company for the periods presented, and may not be indicative of the Company’s future results of operations and financial position.
Reclassifications
The Company has reclassified certain amounts in prior-period financial statements to conform to the current period presentation. Specifically, the Company has reclassified certain costs previously included in sales and marketing and general and administrative expense to cost of revenue—operating leases and incentives on the consolidated statements of operations for the Predecessor Period and for the Successor Period ended December 31, 2012.
Unaudited Interim Financial Information
The accompanying consolidated balance sheet as of June 30, 2014, the consolidated statements of operations and cash flows for the six months ended June 30, 2013 and 2014 and the consolidated statements of redeemable preferred stock, redeemable non-controlling interests and equity for the six months ended June 30, 2014 are unaudited. The unaudited interim financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations and cash flows for the six months ended June 30, 2013 and 2014. The financial data and the other information disclosed in these notes to the consolidated financial statements related
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
to these six month periods are unaudited. The results of the six months ended June 30, 2014 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2014 or for any other interim period or other future year.
Stock Split
In July 2013, the board of directors approved a 750,000-for-1 stock split of common stock. All share and per share information for the Successor Periods referenced throughout the consolidated financial statements and accompanying notes have been retroactively adjusted to reflect this stock split.
Segment Information
The Company’s chief operating decision maker is its Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company has one business activity and no segment managers are accountable for operations or operating results beyond revenues. Accordingly, the Company operates as a single operating and reporting segment.
The following table sets forth the Company’s revenue by major product:

 	  	Predecessor	 	  	Successor	 	
 	  	Period from
January 1,
through
November 16,
2012	 	  	Period from
November 17,
through
December 31,
2012	 	  	Year Ended
December 31,
2013	 	  	Six Months Ended
June 30,	 	
 	  			  			  			  	2013	 	  	2014	 	
 	  	 	 	  	(In thousands)	 	  	 	 	  	(Unaudited)	 	
Revenue:	  				  				  				  				  				
Operating leases and incentives	  	$	183	  	  	$	109	  	  	$	5,864	  	  	$	1,793	  	  	$	8,667	  	
Solar energy system sales	  	 	157	  	  	 	—	  	  	 	306	  	  	 	132	  	  	 	96	  	
Photovoltaic installation devices and software	  	 	—	  	  	 	—	  	  	 	—	  	  	 	—	  	  	 	1,302	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total revenue	  	$	340	  	  	$	109	  	  	$	6,170	  	  	$	1,925	  	  	$	10,065	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Use of Estimates
The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company regularly makes significant estimates and assumptions including, but not limited to, estimates that affect the Company’s principles of consolidation, revenue recognition, the useful lives of solar energy systems, the valuation and recoverability of intangible assets and goodwill acquired, useful lives of intangible assets, recoverability of long-lived assets, the recognition and measurement of loss contingencies, the valuation of stock-based compensation, the determination of valuation allowances associated with deferred tax assets, and the valuation of non-controlling interests and redeemable non-controlling interests. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash and cash equivalents. Cash equivalents consist principally of time deposits and money market accounts with high quality financial institutions.
Restricted Cash
The Company’s guaranty agreements with certain of its fund investors require the maintenance of minimum cash balances. Such minimum cash balances are classified as restricted cash, non-current. For additional information, see Note 12—Investment Funds. Additionally, in May 2014 the Company deposited $1.6 million (unaudited) into a separate interest reserve account in accordance with the terms of its loan credit facility with Bank of America, N.A. Such balance is classified as restricted cash, current. For additional information, see Note 11—Debt Obligations.
Accounts Receivable, Net
Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. Accounts receivable also include unbilled accounts receivable, which result from monthly power generation under power purchase agreements not yet invoiced as of the end of the reporting period. The Company estimates its allowance for doubtful accounts based upon the collectability of the receivables in light of historical trends and adverse situations that may affect customers’ ability to pay. Revisions to the allowance are recorded as an adjustment to bad debt expense. After appropriate collection efforts are exhausted, specific accounts receivable deemed to be uncollectible are charged against the allowance in the period they are deemed uncollectible. Recoveries of accounts receivable previously written-off are recorded as credits to bad debt expense. The Company had an allowance for doubtful accounts of $0, $23,000 and $0.1 million (unaudited) as of December 31, 2012 and 2013 and June 30, 2014.
Inventories
Inventories consist of components related to photovoltaic installation software products and devices and are stated at the lower of cost, on a first-in, first-out basis, or market. The Company did not have inventories prior to the acquisition of Solmetric in January 2014.
Concentrations of Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The associated risk of concentration for cash and cash equivalents is mitigated by banking with creditworthy institutions. At certain times, amounts on deposit exceed Federal Deposit Insurance Corporation insurance limits. The Company does not require collateral or other security to support accounts receivable. The Company is not dependent on any single customer. The loss of a customer would not adversely impact the Company’s operating results or financial position.
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
The Company purchases solar panels, inverters and other system components from a limited number of suppliers. Two suppliers accounted for approximately 63% and 20% of the solar photovoltaic module purchases for the year ended December 31, 2012. The same two suppliers each individually accounted for over 48% of these purchases for the year ended December 31, 2013 and 50% (unaudited) and 38% (unaudited) for the six months ended June 30, 2014. One supplier accounted for substantially all of the Company’s inverter purchases for the years ended December 31, 2012 and 2013 and for the six months ended June 30, 2014 (unaudited). If these suppliers fail to satisfy the Company’s requirements on a timely basis or if the Company fails to develop, maintain and expand its relationship with these suppliers, the Company could suffer delays in being able to deliver or install its solar energy systems, experience a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results.
The Company’s customers under long-term customer contracts are primarily located in California, Hawaii, Maryland, Massachusetts, New Jersey and New York. Future operations could be affected by changes in the economic conditions in these and other geographic areas, by changes in the demand for renewable energy generated by solar panel systems or by changes or eliminations of solar energy related government incentives.
Fair Value of Financial Instruments
Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
 
 	•	 	Level I – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;	
 
 	•	 	Level II – Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and	
 
 	•	 	Level III – Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.	
The Company’s financial instruments consist of Level I and Level II assets and liabilities. See Note 5—Fair Value Measurements.
 
F-21

Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
U.S. Treasury Grants and Investment Tax Credits
Certain solar energy systems remain eligible to receive U.S. Treasury grants under Section 1603 of the American Recovery and Reinvestment Act of 2009, as amended by the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of December 2010. Prior to installation of such eligible systems, the Company submits an application to receive a grant. After installation is complete and the solar energy system is interconnected to the power grid, the Company will request disbursement of the funds, which is typically based on 30% of the tax basis of eligible solar energy systems. Once the Company has been notified that the U.S. Treasury Department has approved the disbursement of the grant proceeds for a solar energy system, the Company records a reduction in the basis of the solar energy system in the amount of cash to be received, at the grant approval date. A catch-up adjustment to depreciation expense is recorded in the period in which the grant is approved by the U.S. Treasury Department to recognize the portion of the grant that proportionally matches the depreciation for the period between when the solar energy systems are interconnected to the power grid and when the grants are approved by the U.S. Treasury Department. Such catch-up adjustments have not been significant to date.
Solar energy systems which are not eligible to receive U.S. Treasury grants will apply for and receive investment tax credits under Section 48(a) of the Internal Revenue Code. The amount for the investment tax credit is equal to 30% of the value of eligible solar property. The Company receives minimal allocations of investment tax credits as the majority of such credits are allocated to the fund investor. Some of the Company’s investment funds obligate it to make certain fund investors whole for losses that the investors may suffer in certain limited circumstances resulting from the disallowance or recapture of investment tax credits as a result of the IRS assessment of the fair value of such systems. The Company has concluded that the likelihood of a recapture event is remote and consequently has not recorded any liability in the consolidated financial statements for any potential recapture exposure. If it becomes probable that a U.S. Treasury grant is required to be repaid, the Company will assess whether it is necessary to derecognize any grant (or portion thereof) in accordance with ASC 450.
Solar Energy Systems, Net
The Company sells energy to customers through power purchase agreements or leases solar energy systems to customers through leases. From inception through December 31, 2013, customers only purchased energy under the power purchase agreement structure. The Company has determined that these contracts should be accounted for as operating leases and, accordingly, solar energy systems are stated at cost, less accumulated depreciation and amortization. In the first quarter of 2014, the Company began offering leases to customers in connection with its entry into the Arizona market. As of June 30, 2014 the Company has not interconnected any of its leased solar energy systems to the power grid and therefore depreciation and amortization of these solar energy systems have not yet begun (unaudited).
Solar energy systems, net is comprised of system equipment costs and initial direct costs related to solar energy systems. System equipment costs include components such as solar panels, inverters, racking systems and other electrical equipment, as well as costs for design and
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
installation activities once a long-term customer contract has been executed. Initial direct costs related to solar energy systems consist of sales commissions and other direct customer acquisition expenses. System equipment costs and initial direct costs are capitalized and recorded within solar energy systems, net.
As noted under the heading “U.S. Treasury Grants”, we apply for and receive U.S. Treasury grants related to our solar energy systems. We record the U.S. Treasury grants as a reduction in the basis of the solar energy systems at the approval date of the grant. This accounting treatment results in decreased depreciation of such solar energy systems over their useful lives.
Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the respective assets as follows:

 	  	Useful Lives	
System equipment costs	  	30 years	
Initial direct costs related to solar energy systems	  	Lease term (20 years)	
System equipment costs are depreciated and initial direct costs are amortized once the respective systems have been installed and interconnected to the power grid. As of December 31, 2012 and 2013, and June 30, 2014, the Company had recorded costs of $47.1 million, $190.1 million (restated) and $370.1 million (unaudited) in solar energy systems, of which $14.7 million, $132.3 million and $221.6 million (unaudited) related to systems that had been interconnected to the power grid, with accumulated depreciation and amortization of $18,000, $2.1 million and $5.1 million (unaudited).
Property, Net
The Company’s property consists primarily of capital lease arrangements of fleet vehicles used for transportation and installation of solar energy systems and assets under build-to-suit lease agreements. Prior to February 2013, Vivint or its subsidiaries leased the vehicles and charged the Company for the costs of the fleet vehicle leases. In February 2013, the leases were assigned to the Company and were determined to be capital lease arrangements. Vehicles leased under capital leases are depreciated over the life of the lease term, which is typically 36 months, using the straight-line method. As of December 31, 2013 and June 30, 2014, the Company had vehicles under capital lease arrangements of $4.8 million and $9.7 million (unaudited) and accumulated depreciation of $1.2 million and $2.3 million (unaudited). The Company had no vehicles under capital lease arrangements as of December 31, 2012.
The Company capitalizes assets and records a corresponding build-to-suit lease liability related to two build-to-suit lease agreements entered into in May 2014 as the Company is considered the owner, for accounting purposes, during the construction period. As of June 30, 2014, the Company has capitalized $18.6 million (unaudited), included in property, net, with an offset to build-to-suit lease liability related to these arrangements which are still in the construction period.
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
As of June 30, 2014, the Company also had $0.3 million (unaudited), net of accumulated depreciation of $48,000 (unaudited), of other property which consisted primarily of computers, tools and furniture that were acquired as part of the acquisition of Solmetric, with useful lives between three and five years that are depreciated using the straight-line method.
Impairment of Long-Lived Assets
The carrying amounts of the Company’s long-lived assets, including solar energy systems and intangible assets subject to depreciation and amortization, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the new shorter useful life. No impairment of any long-lived assets was identified for any of the periods presented.
Intangible Assets
Finite-lived intangible assets, which consist of customer contracts, customer relationships, trade marks/trade names and developed technology, are initially recorded at fair value and presented net of accumulated amortization. Intangible assets are amortized on a straight-line basis over their estimated useful lives.
The Company amortizes customer contracts over three years, customer relationships over five years, trademarks/trade names over 10 years and developed technology over five to eight years.
In-process research and development reflects research and development projects that have not yet been completed, and are capitalized as indefinite-lived intangibles subject to amortization upon completion or impairment if the assets are subsequently impaired or abandoned. In-process research and development projects were acquired in January 2014 as part of the Solmetric acquisition. The Company assesses (or tests) indefinite-lived intangible assets for impairment on an annual basis, or whenever events or changes in circumstances indicate that the fair value is less than its carrying value. To test these intangible assets for impairment, the Company compares the fair value of the indefinite-lived asset with its carrying amount. In the event the carrying value exceeds the fair value of the assets, the assets are written down to their fair value. There has been no impairment of indefinite-lived intangible assets during any of the periods presented.
Goodwill and Impairment Analysis
Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and intangible assets acquired. The Company has goodwill recorded on its books as a result of push-down accounting applied as of the Acquisition Date as well as its
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
acquisition of Solmetric. The Company’s impairment test is based on a single operating segment and reporting unit structure. The Company performs its annual impairment test of goodwill as of October 1 st of each fiscal year or whenever events or circumstances change that would indicate that goodwill might be impaired. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in the business climate, unanticipated competition, loss of key personnel, significant changes in the manner the Company uses the acquired assets or the strategy for the overall business, significant negative industry or economic trends or significant underperformance relative to historical operations or projected future results of operations. In conducting the impairment test, the Company first assesses qualitative factors, including those stated previously, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If the qualitative step is not passed, the Company performs a two-step impairment test whereby in the first step, the Company must compare the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying value of the goodwill. Any excess of the goodwill carrying value over the implied fair value is recognized as an impairment loss. The Company determined the two-step goodwill impairment test was not necessary based on the results of its qualitative assessment and concluded that it was more likely than not that the fair value of its reporting unit was greater than its respective carrying value as of October 1, 2013. The Company did not have any goodwill prior to the Acquisition.
Prepaid Tax Asset, Net
Prepaid tax asset consists of tax expense related to intercompany sales which is deferred and amortized over the useful life of the underlying solar energy systems, estimated to be 30 years.
Other Non-Current Assets
Other non-current assets primarily consist of advances receivable due from related parties. On occasion, the Company provides advance payments of compensation to direct-sales personnel. The advance is repaid as a reduction of the direct-sales personnel’s future compensation. The Company has established an allowance related to advances to direct-sales personnel who have terminated their employment agreement with the Company. These are non-interest bearing advances.
Deferred Offering Costs
Deferred offering costs, which consist of direct incremental legal, consulting, banking and accounting fees relating to the anticipated initial public offering (“IPO”), are capitalized. The deferred offering costs will be offset against IPO proceeds upon the consummation of the offering. In the event the offering is terminated, deferred offering costs will be expensed. As of June 30, 2014, the Company recorded $6.2 million (unaudited) of deferred offering costs in other non-current assets, net on the consolidated balance sheets. No amounts were deferred as of December 31, 2012 and 2013.
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Deferred Financing Costs
Costs incurred in connection with obtaining debt financing are deferred and amortized utilizing the straight-line method, which approximates the effective-interest method, over the term of the related financing. The Company did not incur and has not recognized deferred financing costs in connection with the revolving line of credit or the revolving lines of credit, related party after the Acquisition. Amortization expense on deferred financing costs recognized and included in interest expense in the consolidated statements of operations totaled $0.2 million for the Predecessor Period. There was no amortization expense related to deferred financing costs for the Successor Periods ended December 31, 2012 and 2013 and the six months ended June 30, 2013 (unaudited). The Company recorded deferred financing costs of $2.6 million (unaudited) as of June 30, 2014, in connection with the Bank of America, N.A. term loan credit facility entered into in May 2014, and recorded related amortization expense of $0.7 million (unaudited).
Distributions Payable to Non-Controlling Interests and Redeemable Non-Controlling Interests
As discussed in Note 12—Investment Funds, the Company and fund investors have formed various investment funds which the Company consolidates as the Company has determined that it is the primary beneficiary of these VIEs. These VIEs are required to pay cumulative cash distributions to their respective fund investors. The Company accrues amounts payable to fund investors in distributions payable to non-controlling interests and redeemable non-controlling interests in its consolidated balance sheets.
Deferred Revenue
Deferred revenue includes rebates and incentives received from utility companies and various government agencies which are recognized as revenue over the related lease term of 20 years. Additionally, subsequent to the Solmetric acquisition in January 2014, the Company also defers revenue from its multiple element arrangements. See Revenue Recognition below.
Warranties
The Company warrants solar energy systems sold to customers for one year against defects in material or installation workmanship. The manufacturers’ warranties on the solar energy system components, which is typically passed through to the customers, has a typical product warranty period of 10 years and a limited performance warranty period of 25 years. The Company warrants its photovoltaic installation software products and devices for one to two years against defects in materials or installation workmanship.
The Company generally provides for the estimated cost of warranties at the time the related revenue is recognized. The Company assesses the accrued warranty regularly and adjusts the amounts as necessary based on actual experience and changes in future estimates. Accrued warranty is recorded as a component of accrued and other current liabilities on the consolidated balance sheets and was not significant as of December 31, 2012 and 2013 and June 30, 2014 (unaudited).
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Solar Energy Performance Guarantees
Under customer agreements that are structured as legal-form leases, the Company guarantees certain specified minimum solar energy production output for the solar energy systems. Failure to reach the minimum thresholds specified in the legal-form leases could result in the Company being required to pay back a portion of the previously remitted lease payments from customers. The Company monitors the solar energy systems to ensure that these minimum levels of energy production are being achieved and evaluates if any amounts are due to its customers. The Company has not recorded any liabilities relating to these guarantees as none of the systems under lease agreements have been interconnected to the power grid as of June 30, 2014 (unaudited).
Comprehensive Loss
As the Company has no other comprehensive loss, comprehensive loss is the same as net loss for all periods presented.
Revenue Recognition
The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery or performance has occurred; (3) the sales price is fixed or determinable; and (4) collectability is reasonably assured. The Company generates revenue through power purchase agreements, rebate incentives, solar renewable energy certificates (“SRECs”) sales and solar energy system sales. Revenue associated with power purchase agreements, leases, rebate incentives and SRECs are included within operating leases and incentives revenue. The Company also recognizes revenue related to the sale of photovoltaic installation software products and devices within solar energy system and product sales.
Operating Leases and Incentives Revenue
The Company’s primary revenue-generating activity consists of entering into long-term power purchase agreements with residential customers, under which the customer agrees to purchase all of the power generated by the solar energy system for the term of the contract, which is 20 years. The agreement includes a fixed price per kilowatt hour with a fixed annual price escalation percentage (to address the impact of inflation and utility rate increases over the period of the contract). Customers have not historically been charged for installation or activation of the solar energy system. For all power purchase agreements, the Company assesses the probability of collectability on a customer-by-customer basis through a credit review process that evaluates their financial condition and ability to pay.
The Company has determined that power purchase agreements should be accounted for as operating leases after evaluating and concluding that none of the following lease classification criteria are met: whether there is a transfer of ownership or bargain purchase option at the end of the lease, whether the lease term is greater than 75% of the useful life, or whether the present value of minimum lease payments exceeds 90% of the fair value at lease inception. As customer payments under a power purchase agreement are dependent on power generation, they are considered contingent
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
rentals and are excluded from future minimum annual lease payments. Revenue from power purchase agreements is recognized based on the actual amount of power generated at rates specified under the contracts, assuming the other revenue recognition criteria discussed above are met.
Operating leases and incentives revenue is recorded net of sales tax collected.
The Company considers upfront rebate incentives earned from such systems to be minimum lease payments which are recognized on a straight-line basis over the life of the long-term customer contracts, assuming the other revenue recognition criteria discussed above are met. A catch-up adjustment is recorded in the period in which the revenue related to the rebate is determined to be reasonably assured, which is generally upon receipt of the rebate, to recognize the portion of the rebate that matches proportionally the life of the long-term customer contract. Such catch-up adjustments have not been significant to date. The portion of rebates recognized within operating leases and incentives was $18,000 for the year ended December 31, 2013 and $2,000 (unaudited) and $52,000 (unaudited) for the six months ended June 30, 2013 and 2014. There were no rebates recognized within operating leases and incentives for the Predecessor Period and the Successor Period from November 17, 2012 through December 31, 2012.
In the first quarter of 2014, the Company began offering legal-form leases to customers in connection with its entry into the Arizona market. The customer agreements are structured as legal-form leases due to local regulations that can be read to prohibit the sale of electricity pursuant to the Company’s standard power purchase agreement. Pursuant to the lease agreements, the customers’ monthly payments are a pre-determined amount calculated based on the expected solar energy generation by the system and includes an annual fixed percentage price escalation (to address the impact of inflation and utility rate increases) over the period of the contracts, which are 20 years. The Company provides its lease customers a production guarantee, under which the Company agrees to make a payment at the end of each year to the customer if the solar energy systems do not meet a guaranteed production level in the prior 12-month period. As of June 30, 2014, no systems related to the legal-form leases have been interconnected to the power grid and as such, no revenue has been recognized related to these leases.
The Company applies for and receives SRECs in certain jurisdictions for power generated by its solar energy systems. When SRECs are granted, the Company typically sells them to other companies directly, or to brokers, to assist them in meeting their own mandatory emission reduction or conservation requirements. The Company recognizes revenue related to the sale of these certificates upon delivery, assuming the other revenue recognition criteria discussed above are met. The portion of SRECs included in operating leases and incentives was $15,000 and $0.3 million for the Predecessor Period and the year ended December 31, 2013 and $97,000 (unaudited) and $0.8 million (unaudited) for the six months ended June 30, 2013 and 2014. There were no SRECs included in operating leases and incentives revenue for the Successor Period from November 17, 2012 through December 31, 2012.
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Solar Energy System and Product Sales
Revenue from solar energy system sales is recognized upon the solar energy system passing an inspection by the responsible city department after completion of system installation assuming the remaining revenue recognition criteria discussed above have been met.
Revenue from the sale of photovoltaic installation software products and devices is recognized upon delivery of the product to the customer assuming the remaining revenue recognition criteria discussed above have been met.
Multiple-Element Arrangements
The Company enters into revenue arrangements from the sale of photovoltaic installation software products and devices that consist of multiple elements. Each element in a multiple element arrangement must be evaluated to determine whether it represents a separate unit of account. An element constitutes a separate unit of account when it has standalone value and delivery of an undelivered element is both probable and within the Company’s control.
The Company’s typical multiple-element arrangements involve sales of (1) photovoltaic installation hardware devices containing software essential to the hardware product’s functionality (“photovoltaic device”) and (2) stand alone software, both including the implied right for the customer to receive post-contract customer support (“PCS”) with the purchase of the Company’s products. PCS includes the implied right to receive, on a when and if available basis, future unspecified software upgrades and features as well as bug fixes, email and telephone support.
For sales of photovoltaic devices, the Company allocates revenue between (1) the photovoltaic device and (2) PCS using the relative selling price method. Because the Company has not sold these deliverables separately, vendor-specific objective evidence of fair value (“VSOE”) is not available. Additionally, the Company is unable to reliably determine the selling prices of similar competitor products and upgrades on a stand alone basis to determine third-party evidence of selling price. As such, the allocation of revenue is based on the Company’s best estimate of selling price (“BESP”).
The Company determines BESP for a product or service by considering multiple factors including, but not limited to, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices. The determination of BESP is made through consultation with and formal approval by the Company’s management, taking into consideration the Company’s marketing strategy.
The consideration allocated to the delivered photovoltaic device is recognized at the time of shipment provided that the four general revenue recognition criteria discussed above have been met. The consideration allocated to the PCS is deferred and recognized ratably over the four year estimated life of the devices and the period during which the related PCS is expected to be provided.
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
For sales of software with PCS, revenue is recognized based on software revenue recognition accounting guidance. Because the Company is not able to determine VSOE for the PCS, revenue from the entire arrangement is recognized ratably over four years which is the economic life over which the upgrades are expected to be provided.
Cost of Revenue
Cost of Revenue—Operating Leases and Incentives
Cost of revenue—operating leases and incentives is primarily comprised of the depreciation of the cost of the solar energy systems and the amortization of capitalized initial direct costs. It also includes other costs related to the processing, account creation, design, installation, interconnection, and servicing of solar energy systems that are not capitalized, such as personnel costs not directly associated to a solar energy system installation, warehouse rent and utilities, and fleet vehicle executory costs. The cost of revenue for the sales of SRECs is limited to broker fees which are paid in connection with certain SREC transactions.
Cost of Revenue—Solar Energy System and Product Sales
Cost of revenue—solar energy system and product sales consists of direct and indirect material and labor costs for solar energy systems. It also consists of materials, personnel costs, depreciation, facilities costs, other overhead costs, and infrastructure expenses associated with the manufacturing of the photovoltaic installation software products and devices.
Research and Development
Research and development expense is primarily comprised of salaries and benefits associated with research and development personnel and other costs related to photovoltaic installation software product and device development. Research and development costs are charged to expense when incurred. The Company’s research and development expenses were $1.0 million (unaudited) for the six months ended June 30, 2014. Prior to the acquisition of Solmetric in January 2014, the Company did not incur any research and development expenses.
Advertising Costs
Advertising costs are expensed when incurred and are included in sales and marketing expenses in the consolidated statements of operations. The Company’s advertising expense was $0.2 million, $0.2 million, $1.3 million, $0.6 million (unaudited) and $1.8 million (unaudited) for the Predecessor Period and the Successor Periods ended December 31, 2012 and 2013 and for the six months ended June 30, 2013 and 2014.
Other Expense
The Company incurred $0.2 million, $44,000, $1.9 million, $0.5 million (unaudited) and $1.2 million (unaudited) in interest and penalties primarily associated with employee payroll
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
withholding tax payments that were not paid in a timely manner for the Predecessor Period and the Successor Periods ended December 31, 2012 and 2013 and for the six months ended June 30, 2013 and 2014.
Income Taxes
The Company accounts for income taxes under an asset and liability approach. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards, and other tax credits measured by applying currently enacted tax laws. A valuation allowance is provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized.
The Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company uses a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.
The Company’s policy is to include interest and penalties related to unrecognized tax benefits, if any, within income tax expense (benefit) in the consolidated statements of operations.
Stock-Based Compensation
Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of each employee stock option is estimated on the date of grant using the Black-Scholes-Merton option-pricing valuation model. The Company recognizes compensation costs using the accelerated attribution method for all employee stock-based compensation awards that are expected to vest over the requisite service period of the awards, which is generally the awards’ vesting period. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Stock-based compensation expense for equity instruments issued to non-employees is recognized based on the estimated fair value of the equity instrument. The fair value of the non-employee awards is subject to remeasurement at each reporting period until services required under the arrangement are completed, which is the vesting date.
Post-Employment Benefits
The Company participates in a 401(k) Plan sponsored by Vivint that covers all of the Company’s eligible employees. The Company did not provide a discretionary company match to employee contributions during any of the periods presented.
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Non-Controlling Interests and Redeemable Non-Controlling Interests
Non-controlling interests and redeemable non-controlling interests represent fund investors’ interest in the net assets of certain investment funds, which the Company has entered into in order to finance the costs of solar energy systems. The Company has determined that the provisions in the contractual arrangements represent substantive profit-sharing arrangements. The Company has further determined that the appropriate methodology for attributing income and loss to the non-controlling interests and redeemable non-controlling interests each period is a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, the amounts of income and loss attributed to the non-controlling interests and redeemable non-controlling interests in the consolidated statements of operations reflect changes in the amounts the fund investors would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements of these structures, assuming the net assets of these funding structures were liquidated at recorded amounts. The fund investors’ non-controlling interest in the results of operations of these funding structures is determined as the difference in the non-controlling interests’ claim under the HLBV method at the start and end of each reporting period, after taking into account any capital transactions, such as contributions or distributions, between the fund and the fund investors.
The Company classifies certain non-controlling interests with redemption features that are not solely within the control of the Company outside of permanent equity on its consolidated balance sheets. Redeemable non-controlling interests are reported using the greater of their carrying value at each reporting date as determined by the HLBV method or their estimated redemption fair value in each reporting period.
Loss Contingencies
The Company is subject to the possibility of various loss contingencies arising in the ordinary course of business. The Company considers the likelihood of loss or impairment of an asset, or the incurrence of a liability, as well as the Company’s ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. If the Company determines that a loss is possible and the range of the loss can be reasonably determined, then the Company discloses the range of the possible loss. The Company regularly evaluates current information available to determine whether an accrual is required, an accrual should be adjusted or a range of possible loss should be disclosed.
Recent Accounting Pronouncements
On May 28, 2014, the Financial Accounting Services Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
 
5.	 	Fair Value Measurements	
The Company measures and reports its cash equivalents at fair value. The following tables set forth the fair value of the Company’s financial assets measured on a recurring basis by level within the fair value hierarchy (in thousands):

 	  	June 30, 2014	 	
 	  	Level I	 	  	Level II	 	  	Level III	 	  	Total	 	
 	  	(Unaudited)	 	
Financial Assets	  				
Time deposits	  	$	—	  	  	$	1,900	  	  	$	—	  	  	$	1,900	  	
Money market funds	  	 	620	  	  	 	—	  	  	 	—	  	  	 	620	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total financial assets	  	$	    620	  	  	$	    1,900	  	  	$	        —	  	  	$	    2,520	  	

																	
 	  	December 31, 2013	 	
 	  	Level I	 	  	Level II	 	  	Level III	 	  	Total	 	
Financial Assets	  				
Time deposits	  	$	—	  	  	$	1,900	  	  	$	—	  	  	$	1,900	  	
Money market funds	  	 	620	  	  	 	—	  	  	 	—	  	  	 	620	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total financial assets	  	$	    620	  	  	$	    1,900	  	  	$	        —	  	  	$	    2,520	  	

 	  	December 31, 2012	 	
 	  	Level I	 	  	Level II	 	  	Level III	 	  	Total	 	
Financial Assets	  				
Time deposits	  	$	—	  	  	$	100	  	  	$	—	  	  	$	100	  	
Money market funds	  	 	20	  	  	 	—	  	  	 	—	  	  	 	20	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total financial assets	  	$	20	  	  	$	100	  	  	$	—	  	  	$	120	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The carrying amounts of certain financial instruments of the Company, consisting of cash and cash equivalents excluding time deposits; accounts receivable; accounts payable; accounts payable, related party; distributions payable to redeemable non-controlling interests, short-term debt; and the short-term revolving line of credit (all Level I) approximate fair value due to their relatively short maturities. Time deposits (Level II) approximate fair value due to their short-term nature (30 days) and, upon renewal, the interest rate is adjusted based on current market rates. The Company’s total long-term debt, which is comprised of two related party revolving lines of credit, is carried at cost and was $15.0 million, $41.4 million and $57.3 million (unaudited) as of December 31, 2012 and 2013 and June 30, 2014. The Company has estimated the fair value of its related party revolving lines of credit to be $13.2 million, $39.0 million and $55.9 million (unaudited) as of December 31, 2012 and 2013 and June 30, 2014. The estimation of the fair value of the Company’s total long-term debt is based on rates for companies with similar credit ratings and issuances at approximately the same time period and in the same market environment. The Company did not have realized gains or losses related to financial assets for any of the periods presented.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
6.	 	Acquisition	
Acquisition of the Company by Investors
As described in Note 1—Organization, the Acquisition was completed on November 16, 2012. The purchase price agreed to in the purchase agreement with the Investors was $75.0 million. At the Acquisition Date, the purchase price was subsequently adjusted to $73.1 million based on the carrying balances of the liabilities assumed and a net worth adjustment of $0.4 million. The net purchase consideration transferred was (in thousands):

Cash	  	$	    73,130	  	
Less: Cash acquired	  	 	(1,472	) 	
	  	 	 	 	
Total purchase consideration	  	$	71,658	  	
	  	 	 	 	
In connection with the Acquisition, the total consideration of $71.7 million paid by the Investors was used for the purchase of all outstanding stock, settlement of the Predecessor’s subordinated debt and related party payables with Vivint and its subsidiaries, settlement of other liabilities of the Predecessor incurred in connection with the Acquisition and settlement of stock-based awards. The Acquisition is reflected as a noncash supplemental disclosure on the consolidated statements of cash flows as no cash flowed through the Company’s accounts. The Company incurred $2.7 million of costs related to special retention bonuses and other payments to employees directly related to the Acquisition and $1.0 million of transaction fees, comprised of investment banking, advisory, legal and accounting fees that were expensed in the Predecessor Period. These expenses are included in general and administrative expenses in the Predecessor Period in the consolidated statements of operations.
Pursuant to the terms of the purchase agreement, $9.5 million of the purchase consideration was placed in escrow and is being held for general representations and warranties, rather than specific contingencies or specific assets or liabilities of the Company. The Company has no right to these funds, nor does it have a direct obligation associated with them. Accordingly, the Company does not include the escrow funds in its consolidated balance sheets. The escrow is expected to be released in 2014.
The estimated fair values of the assets acquired and liabilities assumed are based on information obtained from various sources including third party valuations, management’s internal valuation and historical experience. The fair values of the customer contracts intangible asset and the redeemable non-controlling interest were determined using the income approach and significant estimates relate to assumptions as to the future economic benefits to be received, cash flow projections and discount rates.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed (in thousands):

Current assets acquired	  	$	171	  	
Solar energy systems	  	 	39,532	  	
Customer contracts	  	 	43,783	  	
Goodwill	  	 	29,545	  	
Current liabilities assumed	  	 	(15,111	) 	
Deferred tax liability, net	  	 	(11,643	) 	
Revolving line of credit	  	 	(4,000	) 	
Redeemable non-controlling interests	  	 	(10,619	) 	
	  	 	 	 	
Total	  	$	    71,658	  	
	  	 	 	 	
The redeemable non-controlling interests represent the fair value of an investor’s interest in the investment funds acquired as part of the Acquisition. The Company has determined that it is the primary beneficiary of the investment funds and, accordingly, consolidates the financial position and results of operations of the investment funds in the consolidated financial statements.
Goodwill, which represents the purchase price in excess of the fair value of net assets acquired, is not expected to be deductible for income tax purposes. This goodwill is reflective of the expected growth in the business, partly based on historical performance, related to the operating leases and incentives revenue that will be generated over the next 20 years from current customers and the expected continued growth of the Company’s customer base through its existing and growing sales channels.
For tax purposes, the acquired intangible assets are not amortized. Accordingly, a deferred tax liability of $16.3 million was recorded for the difference between the book and tax basis related to the intangible assets. Additionally, a deferred tax asset of $4.7 million was recorded as a result of the Company’s net operating losses.
Unaudited Pro Forma Information
The following pro forma financial information is based on the historical financial statements of the Company and presents the Company’s results as if the Acquisition had occurred as of January 1, 2012 (in thousands):

 	  	For the Year Ended
December 31, 2012	 	
Pro forma revenue	  	$	            449	  	
Pro forma net loss	  	 	(26,604	) 	
Pro forma net loss attributable to common stockholder	  	 	(24,134	) 	
The unaudited pro forma financial information combines the Company’s results of operations as if the Acquisition had occurred as of January 1, 2012. The pro forma results include the acquisition accounting effects resulting from the Acquisition such as the amortization charges
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
from acquired intangible assets, reversal of interest expense related to the revolving line of credit, reversal of costs related to special retention bonuses and other payments to employees and transaction costs directly related to the Acquisition and reversal of the accretion to redemption value of Series B redeemable preferred stock and related tax effects. The pro forma information presented does not purport to present what the actual results would have been had the Acquisition actually occurred on January 1, 2012, nor is the information intended to project results for any future period.
Solmetric Acquisition (unaudited)
In January 2014, the Company completed the acquisition of Solmetric, a developer and manufacturer of photovoltaic installation software products and devices. The purchase price agreed to in the purchase agreement with Solmetric was $12.0 million plus a net working capital adjustment resulting in total cash purchase consideration of $12.2 million. In connection with the acquisition of Solmetric, the total consideration of $12.2 million was used for the purchase of all outstanding stock and options of Solmetric, settlement of Solmetric’s short-term promissory note, and settlement of other liabilities including employee-related liabilities of Solmetric incurred in connection with the acquisition. The Company incurred $0.3 million of costs related to retention bonuses to key Solmetric employees and $59,000 of transaction fees, all of which have been included in the various line items of the consolidated statements of operations for the six months ended June 30, 2014.
Pursuant to the terms of the purchase agreement, $1.0 million of the purchase consideration was placed in escrow and is being held for general representations and warranties, rather than specific contingencies or specific assets or liabilities of the Company. The Company has no right to these funds, nor does it have a direct obligation associated with them. Accordingly, the Company does not include the escrow funds in its consolidated balance sheets. Notwithstanding any prior claims to the escrow fund due to a breach of representations and warranties, the escrow is expected to be released upon the one year anniversary of the acquisition of Solmetric.
The estimated fair values of the assets acquired and liabilities assumed are based on information obtained from various sources including third party valuations, management’s internal valuation and historical experience. The fair values of the intangible assets related to customer relationships, trade names and trademarks, developed technology and in process research and development were determined using the income approach and significant estimates relate to assumptions as to the future economic benefits to be received, cash flow projections and discount rates.
The purchase price has been preliminarily allocated based on the estimated fair value of net assets acquired and liabilities assumed at the date of the acquisition. The preliminary purchase price allocation is subject to further refinement and may require significant adjustments to arrive at the final purchase price allocation. These adjustments will primarily relate to working capital adjustments and income tax-related items. We expect the purchase price allocation to be completed within 12 months of the acquisition date.
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed (in thousands):

Cash acquired	  	$	139	  	
Inventories	  	 	580	  	
Other current assets acquired	  	 	221	  	
Property	  	 	77	  	
Customer relationships	  	 	738	  	
Trade names and trademarks	  	 	1,664	  	
Developed technology	  	 	1,295	  	
In process research and development	  	 	2,097	  	
Goodwill	  	 	6,810	  	
Deferred tax liability, net	  	 	(1,232	) 	
Current liabilities assumed	  	 	(210	) 	
	  	 	 	 	
Total	  	$	    12,179	  	
	  	 	 	 	
Goodwill, which represents the purchase price in excess of the fair value of net assets acquired, is not expected to be deductible for income tax purposes. This goodwill is reflective of the value derived from the Company utilizing Solmetric’s advanced technology to improve the installation and efficacy of its solar panels as well as the expected growth in the Solmetric business, based on its historical performance and the expectation of continued growth as the solar industry expands.
For tax purposes, the acquired intangible assets are not amortized. Accordingly, a deferred tax liability of $2.2 million was recorded for the difference between the book and tax basis related to the intangible assets. Additionally, a deferred tax asset of $1.0 million was recorded mainly as a result of Solmetric’s net operating losses.
Financial results for Solmetric since the acquisition date are included in the results of operations for the six months ended June 30, 2014. Solmetric contributed $1.3 million of revenues and $0.2 million of net loss from the date of the acquisition through June 30, 2014.
Unaudited Pro Forma Information
The following pro forma financial information is based on the historical financial statements of the Company and presents the Company’s results as if the acquisition of Solmetric had occurred as of January 1, 2013 (in thousands):

 	  	For the Six
Months Ended
June 30,
2013	 	 	For the Six
Months Ended
June 30,
2014	 	
Pro forma revenue	  	$	2,594	  	 	$	10,224	  	
Pro forma net loss	  	 	(22,384	) 	 	 	(75,996	) 	
Pro forma net loss attributable to common stockholder	  	 	(20,077	) 	 	 	12,692	  	
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
The pro forma results include the accounting effects resulting from the acquisition of Solmetric such as the amortization charges from acquired intangible assets, reversal of costs related to special retention bonuses and other payments to employees and transaction costs directly related to the acquisition of Solmetric, elimination of intercompany sales and reversal of the related tax effects. The pro forma information presented does not purport to present what the actual results would have been had the acquisition of Solmetric actually occurred on January 1, 2013, nor is the information intended to project results for any future period.
 
7.	 	Solar Energy Systems	
As of December 31, 2012 and 2013 and June 30, 2014, solar energy systems, net consisted of the following (in thousands):

 	  	As of December 31,	 	 	As of June 30,	 	
 	  	2012	 	 	2013	 	 	2014	 	
 	  	 	 	 	(Restated)	 	 	(Unaudited)	 	
System equipment costs	  	$	43,026	  	 	$	167,883	  	 	$	321,607	  	
Initial direct costs related to solar energy systems	  	 	4,081	  	 	 	22,250	  	 	 	48,477	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Solar energy systems	  	 	47,107	  	 	 	190,133	  	 	 	370,084	  	
Less: Accumulated depreciation and amortization	  	 	(18	) 	 	 	(2,075	) 	 	 	(5,119	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Solar energy systems, net	  	$	    47,089	  	 	$	    188,058	  	 	$	    364,965	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The Company recorded depreciation and amortization expense related to solar energy systems of $72,000, $18,000 and $2.0 million for the Predecessor Period and the Successor Periods ended December 31, 2012 and 2013, and $0.5 million (unaudited) and $3.0 million (unaudited) for the six months ended June 30, 2013 and 2014.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
8.	 	Intangible Assets	
Intangible assets consisted of the following (in thousands):

 	  	As of December 31,	 	 	As of June 30,	 	
 	  	2012	 	 	2013	 	 	2014	 	
 	  	 	 	 	 	 	 	(Unaudited)	 	
Cost:	  				 				 				
Customer contracts	  	$	43,783	  	 	$	43,783	  	 	$	43,783	  	
Customer relationships	  	 	—	  	 	 	—	  	 	 	738	  	
Trademarks/trade names	  	 	—	  	 	 	—	  	 	 	1,664	  	
Developed technology	  	 	—	  	 	 	—	  	 	 	1,295	  	
In-process research and development	  	 	—	  	 	 	—	  	 	 	2,097	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total carrying value	  	 	43,783	  	 	 	43,783	  	 	 	49,577	  	
				
Accumulated amortization:	  				 				 				
Customer contracts	  	 	(1,824	) 	 	 	(16,419	) 	 	 	(23,716	) 	
Customer relationships	  	 	—	  	 	 	—	  	 	 	(62	) 	
Trademarks/trade names	  	 	—	  	 	 	—	  	 	 	(69	) 	
Developed technology	  	 	—	  	 	 	—	  	 	 	(72	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total accumulated amortization	  	 	(1,824	) 	 	 	(16,419	) 	 	 	(23,919	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total intangible assets, net	  	$	    41,959	  	 	$	    27,364	  	 	$	    25,658	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The Company recorded amortization expense of $1.8 million, $14.6 million, $7.3 million (unaudited) and $7.5 million (unaudited) for the Successor Periods ended December 31, 2012 and 2013 and the six months ended June 30, 2013 and 2014 which was included in amortization of intangible assets in the consolidated statements of operations. Prior to the Acquisition on November 16, 2012, the Company did not have any recorded intangible assets, and therefore did not record amortization expense for the Predecessor Period.
As of December 31, 2013, expected amortization expense for the unamortized intangible assets is as follows (in thousands):

Year Ending December 31:	  	Amounts	 	
2014	  	$	14,594	  	
2015	  	 	12,770	  	
	  	 	 	 	
Total amortization expense	  	$	    27,364	  	

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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
9.	 	Accrued Compensation	
As of December 31, 2012 and 2013 and June 30, 2014, accrued compensation consisted of the following (in thousands):

 	  	As of December 31,	 	  	As of June 30,
2014	 	
 	  	    2012    	 	  	    2013    	 	  			
 	  	 	 	  	(Restated)	 	  	(Unaudited)	 	
Accrued commissions	  	$	1,239	  	  	$	4,206	  	  	$	11,041	  	
Accrued payroll	  	 	117	  	  	 	3,142	  	  	 	7,543	  	
Accrued employee taxes	  	 	801	  	  	 	8,143	  	  	 	399	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total accrued compensation	  	$	    2,157	  	  	$	    15,491	  	  	$	    18,983	  	

10.	 	Accrued and Other Current Liabilities	
As of December 31, 2012 and 2013 and June 30, 2014, accrued and other current liabilities consisted of the following (in thousands):

 	  	As of December 31,	 	  	As of June 30,
2014	 	
 	  	    2012    	 	  	    2013    	 	  			
 	  	 	 	  	(Restated)	 	  	(Unaudited)	 	
Sales and use tax payable	  	$	1,057	  	  	$	5,299	  	  	$	8,518	  	
Accrued penalties and interest	  	 	103	  	  	 	1,909	  	  	 	2,736	  	
Accrued professional fees	  	 	–	  	  	 	–	  	  	 	4,742	  	
Income tax payable	  	 	–	  	  	 	3,061	  	  	 	3,053	  	
Other accrued expenses	  	 	279	  	  	 	38	  	  	 	726	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total accrued and other current liabilities	  	$	    1,439	  	  	$	    10,307	  	  	$	    19,775	  	

11.	 	Debt Obligations	
As of December 31, 2012 and 2013 and June 30, 2014, debt consisted of the following (in thousands):

 	  	As of December 31,	 	  	As of June 30,
2014	 	
 	  	    2012    	 	  	    2013    	 	  			
 	  	 	 	  	 	 	  	(Unaudited)	 	
Revolving line of credit	  	$	2,000	  	  	$	—	  	  	$	—	  	
Revolving lines of credit, related party	  	 	15,000	  	  	 	41,412	  	  	 	57,290	  	
Short-term debt	  	 	—	  	  	 	—	  	  	 	75,500	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total debt	  	 	17,000	  	  	 	41,412	  	  	 	132,790	  	
Less: Current portion	  	 	2,000	  	  	 	—	  	  	 	75,500	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total long-term portion of debt	  	$	    15,000	  	  	$	    41,412	  	  	$	    57,290	  	

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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Minimum payments on the Company’s outstanding debt as of December 31, 2013 were as follows (in thousands):

Year Ending December 31:	  	Amounts	 	
2014	  	$	—	  	
2015	  	 	—	  	
2016	  	 	21,444	  	
2017	  	 	19,968	  	
	  	 	 	 	
Total	  	$	    41,412	  	
	  	 	 	 	
Revolving Lines of Credit, Related Party
In December 2012 and amended in July 2013, the Company entered into a Subordinated Note and Loan Agreement with Vivint pursuant to which the Company may incur revolver borrowings of up to $20.0 million (“December 2012 Loan Agreement”). In December 2012, the Company incurred $15.0 million in revolver borrowings. From January 2013 through May 2013, the Company incurred an additional $5.0 million in revolver borrowings. Interest accrues on these borrowings at 7.5% per year, and accrued interest is paid-in-kind through additions to the principal amount on a semi-annual basis. Interest expense for the Successor Periods ended December 31, 2012 and 2013 was $9,000 and $1.5 million, and for the six months ended June 30, 2013 and 2014 was $0.6 million (unaudited) and $0.9 million (unaudited). There was no interest expense for the Predecessor Period. While prepayments are permitted, the principal amount and accrued interest is payable by the Company upon the earliest to occur of (1) a change of control, (2) an event of default and (3) January 1, 2016. As of June 30, 2014, the Company had an aggregate of $0 (unaudited) in borrowing capacity available under such agreement. The Company’s obligations under the December 2012 Loan Agreement are subordinate to the Company’s guaranty obligations to its investment funds and all other indebtedness of the Company.
In May 2013, the Company entered into a separate Subordinated Note and Loan Agreement with APX Parent Holdco, Inc., pursuant to which the Company may incur up to $20.0 million in revolver borrowings (“May 2013 Loan Agreement”). From May 2013 through December 2013, the Company incurred $18.5 million in principal borrowings under the agreement. Interest accrued on these borrowings at 12% per year through November 2013 and 20% per year thereafter, and accrued interest is paid-in-kind through additions to the principal amount on a semi-annual basis. In January 2014, the Company amended and restated the May 2013 Loan Agreement, pursuant to which the Company may incur an additional $30.0 million in revolver borrowings, resulting in a total borrowing capacity of $50.0 million, with interest on the borrowings accruing at a rate of 12% per year for the remaining term of the agreement. From January 2014 through June 2014, the Company incurred an aggregate of $114.0 million (unaudited) in revolver borrowings under the May 2013 Loan Agreement of which $101.0 million (unaudited) was repaid within one to eight days from the respective borrowing date. None of these borrowings individually exceeded the borrowing capacity of $50.0 million. As of June 30, 2014, the Company had $31.5 million (unaudited) of principal borrowings outstanding and $18.5 million (unaudited) in borrowing capacity available under such agreement.
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Interest expense for the year ended December 31, 2013 and the six months ended June 30, 2013 and 2014 was $1.5 million, $0.1 million (unaudited) and $2.0 million (unaudited). There was no associated interest expense for the Predecessor Period, the Successor Period from November 17, 2012 through December 31, 2012. While prepayments are permitted, the principal amount and accrued interest is payable by the Company upon the earliest to occur of (1) a change of control, (2) an event of default, and (3) January 1, 2017. The Company’s obligation under the May 2013 Loan Agreement is subordinate to the Company’s guaranty obligations to its investment funds and all other indebtedness of the Company.
As of December 31, 2013 and June 30, 2014, the total borrowings under both the December 2012 Loan Agreement and the May 2013 Loan Agreement are $41.4 million and $57.3 million (unaudited). These amounts include $38.5 million and $51.5 million (unaudited) of principal borrowings and $2.9 million and $5.8 million (unaudited) of paid-in-kind and accrued interest.
In July 2013, the Company entered into a Subordinated Note and Loan Agreement with APX Parent Holdco, Inc. for a one day loan of $40.0 million to obtain funding for an investment fund and repaid the full amount the next day. The imputed interest on the principal amount was not significant.
In November 2013, the Company entered into a Subordinated Note and Loan Agreement with APX Parent Holdco, Inc. for a one day loan of $20.0 million to obtain funding for an investment fund and repaid the full amount the next day. The imputed interest on the principal amount was not significant.
Revolving Line of Credit
In July 2012, the Company entered into a credit agreement with a financial institution pursuant to which it could incur up to $15.0 million in revolver borrowings. In 2012, the Company incurred $6.5 million in principal borrowings under the agreement. The interest rate on these borrowings accrued at a rate equal to the London Interbank Offer Rate (“LIBOR”) plus 10%. The weighted-average interest rate of short-term borrowings was 10.5% for both the Predecessor Period and the Successor Periods ended December 31, 2012 and 2013. The Company repaid all borrowings and terminated the agreement in June 2013. Interest expense was approximately $0.1 million, $87,000 and $0.2 million in the Predecessor Period and the Successor Periods ended December 31, 2012 and 2013, and $0.2 million (unaudited) in the six months ended June 30, 2013. No interest expense was recorded for the six months ended June 30, 2014 (unaudited) as the agreement was terminated in June 2013.
Bank of America, N.A. Term Loan Credit Facility (Unaudited)
In May 2014, the Company entered into a term loan credit facility for an aggregate principal amount of $75.5 million with certain financial institutions for which Bank of America, N.A. is acting as administrative agent. As of June 30, 2014, the Company had borrowed $75.5 million in aggregate under this credit facility and as such did not have any remaining borrowing capacity available under this agreement. Prepayments are permitted under the credit facility, and the
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
principal and accrued interest on any outstanding loans mature on December 15, 2014. Under the credit facility, the Company may incur on the term borrowings, interest on which will accrue at a floating rate based on (1) LIBOR plus a margin equal to 4%, or (2) a rate equal to 3% plus the greatest of (a) the Federal Funds Rate plus 0.5%, (b) the administrative agent’s prime rate and (c) LIBOR plus 1%. Interest expense from inception of the credit facility in May 2014 through June 30, 2014 was approximately $0.5 million (unaudited).
The credit facility includes customary covenants, including covenants that restrict, subject to certain exceptions, the Company’s ability to incur indebtedness, incur liens, make investments, make fundamental changes to the Company’s business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. As of June 30, 2014, the Company was in compliance with all such covenants. In addition, a $1.6 million interest reserve amount was deposited in an interest reserve account with the administrative agent.
This credit facility also contains certain customary events of default. If an event of default occurs, lenders under the credit facility will be entitled to take various actions, including the acceleration of all amounts due under the credit facility.
 
12.	 	Investment Funds	
The Company has formed investment funds and raised capital to fund the purchase of solar energy systems that will be contributed to or purchased by the investment fund. For discussion purposes, these nine investment funds, including one arrangement with a large financial institution, are referred to as Fund A through Fund I.
The Company consolidates the investment funds, and all intercompany balances and transactions between the Company and the investment funds are eliminated in the consolidated financial statements. The Company determined that each of these investment funds meets the definition of a VIE. The Company uses a qualitative approach in assessing the consolidation requirement for VIEs, which focuses on determining whether the Company has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether the Company has the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE.
The Company has considered the provisions within the contractual arrangements which grant it power to manage and make decisions that affect the operation of these VIEs, including determining the solar energy systems and associated long term customer contracts to be sold or contributed to the VIE, and installation, operation, and maintenance of the solar energy systems. The Company considers that the rights granted to the other investors under the contractual arrangements are more protective in nature rather than participating rights. As such, the Company has determined it is the primary beneficiary of the VIEs for all periods presented. The Company evaluates its relationships with the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. Fund investors for Funds D, E and H are managed indirectly by the Sponsor and accordingly are considered related parties. As of December 31, 2012 and 2013 and June 30, 2014, the fund investors had contributed a cumulative total of $17.6 million, $140.7 million and $298.2 million (unaudited) into the VIEs, of which $0, $60.0 million and $110.0 million (unaudited) were contributed by related parties.
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
All funds, except for Fund F, were operational as of June 30, 2014. The Company did not have any assets, liabilities or activity associated with Fund F. Total available committed capital under Fund F was $50.0 million (unaudited) as of June 30, 2014.
Under the related agreements, cash distributions of income and other receipts by the fund, net of agreed-upon expenses and estimated expenses, tax benefits and detriments of income and loss, and tax benefits of tax credits, are assigned to the fund investor and Company’s subsidiary as specified in contractual arrangements. Certain of these arrangements have call and put options to acquire the investor’s equity interest as specified in the contractual agreements.
The Company has aggregated the financial information of the investment funds in the table below. The aggregate carrying value of these funds’ assets and liabilities (after elimination of intercompany transactions and balances) in the Company’s consolidated balance sheets as of December 31, 2012 and 2013 and June 30, 2014, were as follows (in thousands):

 	  	As of December 31,	 	  	As of
June 30,
2014	 	
 	  	2012	 	  	2013	 	  			
 	  	 	 	  	(Restated)	 	  	(Unaudited)	 	
Assets	  				  				  				
Current Assets:	  				  				  				
Cash and cash equivalents	  	$	979	  	  	$	3,092	  	  	$	6,211	  	
Accounts receivable, net	  	 	16	  	  	 	544	  	  	 	1,880	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total current assets	  	 	995	  	  	 	3,636	  	  	 	8,091	  	
Solar energy systems, net	  	 	33,437	  	  	 	152,565	  	  	 	308,130	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total Assets	  	$	    34,432	  	  	$	    156,201	  	  	$	316,221	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Liabilities	  				  				  				
Current Liabilities:	  				  				  				
Distributions payable to non-controlling interests and redeemable non-controlling interests	  	$	171	  	  	$	1,576	  	  	$	3,942	  	
Current portion of deferred revenue	  	 	—	  	  	 	68	  	  	 	93	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total current liabilities	  	 	171	  	  	 	1,644	  	  	 	4,035	  	
Deferred revenue, net of current portion	  	 	—	  	  	 	1,272	  	  	 	1,864	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total Liabilities	  	$	171	  	  	$	2,916	  	  	$	5,899	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Guarantees
With respect to the investment funds, the Company and the fund investor have entered into guaranty agreements under which the Company guarantees the performance of certain obligations of its subsidiaries to the investment funds. These guarantees do not result in the Company being required to make payments to the fund investors unless such payments are mandated by the investment fund governing documents and the investment fund fails to make such payment. In addition, as a result of the guaranty arrangements in certain funds, as of December 31, 2012 and 2013 and June 30, 2014, the Company is required to hold minimum cash balances of $1.5 million, $5.0 million and $5.0 million (unaudited), in the aggregate, which are classified as restricted cash on the consolidated balance sheets.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
The Company is contractually obligated to make certain VIE investors whole for losses that the investors may suffer in certain limited circumstances resulting from the disallowance or recapture of investment tax credits. The Company has concluded that the likelihood of a recapture event is remote and consequently has not recorded any liability in the consolidated financial statements for any potential recapture exposure. The maximum potential future payments that the Company could have to make under this obligation would depend on the IRS successfully asserting upon audit that the fair market values of the solar energy systems sold or transferred to the funds as determined by the Company exceeded the allowable basis for the systems for purposes of claiming ITCs. The fair market values of the solar energy systems and related ITCs are determined and the ITCs are allocated to the fund investors in accordance with the funds governing agreements. Due to uncertainties associated with estimating the timing and amounts of distributions, the likelihood of an event that may trigger repayment, forfeiture or recapture of ITCs to such investors, and the fact that the Company cannot determine how the IRS will evaluate system values used in claiming ITCs, the Company cannot determine the potential maximum future payments that are required under these guarantees.
If Fund A does not have sufficient cash flows to make a stated cash distribution to the fund investor each annual period, the Company’s subsidiary (which is the managing member of the fund) is obligated to contribute additional cash sufficient to allow the investment fund to make such distribution to the fund investor. The Company has not made payments under its guarantee of performance of the obligations of the subsidiary in prior periods because Fund A has generated sufficient cash flow to make the stated cash distributions to the fund investor. The Company has determined that the maximum potential exposure under the guarantee to Fund A is not significant.
 
13.	 	Redeemable Non-Controlling Interests, Redeemable Preferred Stock, and Equity	
Common Stock
Immediately prior to the Acquisition, the Company had 25,000 shares of Series A common stock and 25,000 shares of Series B common stock outstanding. In connection with the Acquisition, all outstanding shares of Series A common stock and Series B common stock were purchased and subsequently cancelled. After the Acquisition the Company had 75,000,000 shares of common stock.
The Company had shares of common stock reserved for issuance as follows:

 	  	As of
December 31,
2013	 	  	As of
June 30,
2014	 	
 	  	 	 	  	(Unaudited)	 	
Options issued and outstanding	  	 	6,608,826	  	  	 	9,728,681	  	
Long-term incentive plan	  	 	4,058,823	  	  	 	4,058,823	  	
Options available for grant under equity incentive plans	  	 	2,567,645	  	  	 	330,143	  	
	  	 	 	 	  	 	 	 	
Total	  	 	13,235,294	  	  	 	14,117,647	  	
	  	 	 	 	  	 	 	 	
As of December 31, 2012, the Company did not have any shares of common stock reserved for issuance.
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Redeemable Non-Controlling Interests and Non-Controlling Interests
Funds A, B, C and I each include a right for the non-controlling interest holder to elect to require the Company’s wholly owned subsidiary to purchase all of its membership interests in the fund after a stated period of time (each, a “Put Option”). In Fund A, the Company’s wholly owned subsidiary has the right to elect to require the non-controlling interest holder to sell all of its membership units to the Company’s wholly owned subsidiary (the “Call Option”) after the expiration of the non-controlling interest holder’s Put Option. In Funds B, C and I, the Company’s wholly owned subsidiary has a Call Option for a stated period prior to the effectiveness of the Put Option. In Funds D, E, G and H there is a Call Option which is exercisable after a stated period of time.
The purchase price for the fund investor’s interest in Funds A, B, C and I under the Put Options is the greater of fair market value at the time the option is exercised and $0.7 million, $2.1 million, $3.3 million and $4.1 million (unaudited). The Put Options for Funds A, B, C and I are exercisable beginning on the date that specified conditions are met for each respective fund. None of the Put Options are expected to become exercisable prior to 2017.
The purchase price for the fund investors’ interest under the Call Options varies by fund, but is generally the greater of a specified amount, which ranges from approximately $0.7 million to $7.0 million, the fair market value of such interest at the time the option is exercised, or an amount which causes the fund investor to achieve a specified return on investment. The Call Options for Funds A, B, C, D and E are exercisable beginning on the date that specified conditions are met for each respective fund. None of the Call Options are expected to become exercisable prior to 2018.
Because the Put Options represent redemption features that are not solely within the control of the Company, the non-controlling interest in these funds is presented outside of permanent equity. Redeemable non-controlling interests are reported using the greater of their carrying value at each reporting date (which is impacted by attribution under the HLBV method) or their estimated redemption value in each reporting period. The carrying value of redeemable non-controlling interests at December 31, 2012 and 2013 and June 30, 2014 (unaudited) was greater than the redemption value.
Redeemable Preferred Stock
In January 2012, the Company issued 4,171 shares of Series B redeemable preferred stock at $1,199 per share for aggregate gross proceeds of $5.0 million. The Company classified the Series B redeemable preferred stock outside of permanent equity as it was redeemable at the option of the holder or upon a change in control.
Immediately prior to the Acquisition, the Company had 25,000 shares of Series A preferred stock and 8,342 shares of Series B redeemable preferred stock outstanding. Due to the change in control upon the Acquisition, the Company recorded accretion of $20.0 million in relation to the redemption of the Series B redeemable preferred stock. All outstanding shares of the Series A preferred stock were purchased and subsequently cancelled in connection with the Acquisition. Accordingly, the Company did not have any authorized or outstanding redeemable preferred stock or preferred stock as of December 31, 2012 and 2013 and June 30, 2014.
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
14.	 	Stock Option Plans	
2011 Incentive Plan
The Company granted 650 stock options under the Company’s 2011 Stock Incentive Plan (“2011 Plan”). As part of the Acquisition in November 2012, the vesting of outstanding options under the 2011 Plan was accelerated based on the terms of the option agreements. During the Predecessor Period, the Company recorded compensation expense of $0.2 million. In addition, the 2011 Plan was terminated as part of the Acquisition and all then-outstanding options were settled.
No stock options were outstanding during the Successor Period from November 17, 2012 through December 31, 2012.
2013 Omnibus Incentive Plan
In July 2013, the Company adopted a new incentive plan in order to attract and retain key personnel. Under the Company’s 2013 Omnibus Incentive Plan (“Omnibus Plan”), the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and performance compensation awards to its current and prospective directors, officers, employees, consultants, advisors and other service providers. As of June 30, 2014, a maximum of 13,500,000 (unaudited) shares of common stock are authorized for issuance under the Omnibus Plan, subject to adjustment in the case of certain events. In August 2013, the Company granted an option to purchase 617,647 shares of common stock outside of the Omnibus Plan; however the provisions of such option were substantially similar to those of the options granted pursuant to the Omnibus Plan. The applicable per share exercise price may not be less than fair value of the Company’s common stock on the date of the grant (or in the case of incentive stock options held by certain individuals, 110% of such fair value). Nonqualified stock options may not be granted with an exercise price of less than 100% of the fair value of the common stock on the date of grant. The term of each option is specified in the applicable award agreement but generally may not exceed ten years from the date of grant (or five years from the date of grant in the case of incentive stock options held by certain individuals).
During 2013 and the first quarter of 2014, the Company granted options of which one-third are subject to ratable time-based vesting over a five year period (“service condition”) and two-thirds are subject to vesting upon certain performance conditions and the achievement of certain investment return thresholds by 313.
The Company has determined that it is not probable that the performance conditions will be achieved, and as such no compensation relating to awards with performance conditions was recorded as of June 30, 2014. All recognized stock compensation expense is related to the time-based vesting conditions for the year ended December 31, 2013 and the six months ended June 30, 2014 (unaudited). As of June 30, 2014, there are 6.5 million (unaudited) options that are subject to performance conditions.
 
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Table of Contents
Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
A summary of stock option activity is as follows (in thousands, except share and per share amounts):

 	  	Shares
Underlying
Options	 	 	Weighted-
Average
Exercise
Price	 	  	Weighted
Average
Remaining
Contractual
Term	 	  	Aggregate
Intrinsic
Value	 	
Outstanding—December 31, 2012	  	 	—	  	 	$	        —	  	  				  				
Granted	  	 	7,579	  	 	 	1.00	  	  				  				
Exercised	  	 	—	  	 	 	—	  	  				  				
Cancelled	  	 	(970	) 	 	 	1.00	  	  				  				
	  	 	 	 	 				  				  				
Outstanding—December 31, 2013	  	 	6,609	  	 	$	1.00	  	  				  	$	12,755	  	
	  	 	 	 	 				  				  				
Granted (unaudited)	  	 	3,161	  	 	 	1.30	  	  				  				
Exercised (unaudited)	  	 	—	  	 	 	—	  	  				  				
Cancelled (unaudited)	  	 	(41	) 	 	 	1.00	  	  				  				
	  	 	 	 	 				  				  				
Outstanding—June 30, 2014 (unaudited)	  	 	9,729	  	 	$	1.10	  	  				  	$	  29,600	  	
	  	 	 	 	 				  				  				
Options vested and exercisable—December 31, 2013	  	 	186	  	 	$	1.00	  	  	 	9.5	  	  	$	359	  	
	  	 	 	 	 				  				  				
Options vested and exercisable—June 30, 2014 (unaudited)	  	 	199	  	 	$	1.02	  	  	 	9.1	  	  	$	622	  	
	  	 	 	 	 				  				  				
Options vested and expected to vest—December 31, 2013	  	 	2,001	  	 	$	1.00	  	  	 	9.6	  	  	$	3,862	  	
	  	 	 	 	 				  				  				
Options vested and expected to vest—June 30, 2014 (unaudited)	  	 	        2,940	  	 	$	1.10	  	  	 	9.3	  	  	$	8,947	  	
	  	 	 	 	 				  				  				
The weighted-average grant-date fair value of options granted during the year ended December 31, 2013 and the six months ended June 30, 2014 was $0.91 and $2.44 (unaudited) per share. There were no options exercised during the periods presented. Intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that had exercise prices that were lower than the fair value per share of the common stock on the date of exercise.
As of December 31, 2013 and June 30, 2014, there were approximately $4.9 million (restated) and $14.6 million (unaudited) of total unrecognized stock-based compensation expense, net of estimated forfeitures related to nonvested time-based and performance condition stock options. As of December 31, 2013 and June 30, 2014, the time-based awards are expected to be recognized over the weighted average period of 2.7 years (restated) and 2.6 years (unaudited).
The total fair value of options vested for the year ended December 31, 2013 and the six months ended June 30, 2014 was $0.1 million and $32,000 (unaudited).
Long-term Incentive Plan
In July 2013, the Company’s board of directors approved 4,058,823 shares of common stock for six Long-term Incentive Plan Pools (“LTIP Pools”) that comprise the 2013 Long-term Incentive Plan (the “LTIP”). The purpose of the LTIP is to attract and retain key service providers and strengthen their commitment to the Company by providing incentive compensation measured
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
by reference to the value of the shares of the Company’s common stock. Eligible participants include nonemployees, which is comprised of direct sales personnel, who sell the solar energy system contracts, employees that install and maintain the solar energy systems and employees that recruit new employees to the Company.
Based on the terms of the agreement, participants are allocated a portion of the LTIP Pools relative to the performance of other participants. LTIP awards to employees are considered to be granted when the allocation of the LTIP Pools to each participant is fixed which occurs once a performance condition is met. The performance conditions include the execution of a public offering or change of control or a declaration of a payment by the compensation committee. In addition, after the performance condition is achieved, participants must fulfill service or other conditions based on shareholder return to vest in the award. In the event of a public offering, all outstanding awards will be granted to individual participants and expense associated with the units will be recognized for the awards with a service or other stockholder return condition over the vesting period. In April 2014, the Company amended the LTIP. See Note 19 – Subsequent Events. No LTIP awards have been granted to employees as of June 30, 2014 (unaudited).
Nonemployee awards are granted and will be measured on the date on which the performance is complete which is the date the service or other performance conditions are achieved. The Company recognizes stock-based compensation expense based on the lowest aggregate fair value of the non-employee awards at the reporting date.
The Company has not recognized any expense related to the LTIP in any of the periods presented.
Determination of Fair Value of Stock Options
The Company estimates the fair value of stock options granted on each grant date using the Black-Scholes-Merton option pricing model and applies the accelerated attribution method for expense recognition. The fair values were estimated on each grant date for the Predecessor Period and the year ended December 31, 2013 and the six months ended June 30, 2013 and 2014, with the following weighted-average assumptions:

 	  	Predecessor	 	 	   	  	Successor	 	
 	  	Period from
January 1,
through
November 16,
2012	 	 	   	  	Period from
November 17,
through
December 31,
2012 (1)	 	  	Year Ended
December 31,
2013	 	 	Six Months Ended
June 30,	 	
 	  			 	   	  			  			 	2013 (1)	 	  	2014	 	
 	  	 	 	 	   	  	 	 	  	 	 	 	(Unaudited)	 	
Expected term (in years)	  	 	6.3	  	 	 	  	 	—	  	  	 	6.3	  	 	 	—	  	  	 	6.2	  	
Volatility	  	 	67.0	% 	 	 	  	 	—	  	  	 	80.0	% 	 	 	—	  	  	 	87.1	% 	
Risk-free interest rate	  	 	1.2	% 	 	 	  	 	—	  	  	 	1.7	% 	 	 	—	  	  	 	1.9	% 	
Dividend yield	  	 	0.0	% 	 	 	  	 	—	  	  	 	0.0	% 	 	 	—	  	  	 	0.0	% 	

(1)	No stock options were outstanding during the Successor Period from November 17, 2012 through December 31, 2012 or the six months ended June 30, 2013 (unaudited).	
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Use of the Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including (1) the fair value of the underlying common stock, (2) the expected term of the option, (3) the expected volatility of the price of the Company’s common stock, (4) risk-free interest rates and (5) the expected dividend yield of the Company’s common stock. The assumptions used in the option-pricing model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future.
These assumptions and estimates are as follows:
 
 	•	 	Fair Value of Common Stock.     Because the Company’s common stock is not publicly traded, the fair value of common stock must be estimated. The fair values of the common stock underlying the Company’s stock-based awards were determined by the Company’s board of directors, which considered numerous objective and subjective factors to determine the fair value of common stock at each grant date. These factors included, but were not limited to, the lack of marketability of the Company’s common stock and developments in the business.	
 
 	•	 	Expected Term.     The expected term represents the period that the Company’s option awards are expected to be outstanding. The Company utilized the simplified method in estimating the expected term of its options granted. The simplified method deems the term to be the average of the time to vesting and the contractual life of the options. The Company also considered additional factors including the expected lives used by a peer group of companies within the industry that it considers to be comparable to its business.	
 
 	•	 	Expected Volatility.     The volatility is derived from the average historical stock volatilities of a peer group of public companies within the Company’s industry that it considers to be comparable to its business over a period equivalent to the expected term of the stock-based grants. The Company did not rely on implied volatilities of traded options in the industry peers’ common stock because of the low volume of activity.	
 
 	•	 	Risk-Free Interest Rate.     The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the option’s expected term.	
 
 	•	 	Dividend Yield.     The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero.	
The Company estimates potential forfeitures of stock grants and adjusts stock-based compensation expense accordingly. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
estimates. Changes in estimated forfeitures will be recognized in the period of change and will also impact the amount of stock-based compensation expenses to be recognized in future periods.
Stock-based compensation was included in operating expenses as follows (in thousands):

 	 	Predecessor	 	 	Successor	 	
 	 	Period from
January 1,
through
November 16,
2012	 	 	Period from
November 17,
through
December 31,
2012	 	 	Year Ended
December 31,
2013	 	 	Six Months
Ended June 30,	 	
 	 			 			 			 	2013	 	 	2014	 	
 	 	 	 	 	 	 	 	(Restated)	 	 	(Unaudited)	 	
Cost of revenue—operating leases and incentives	 	$	—	  	 	$	—	  	 	$	6	  	 	$	—	  	 	$	55	  	
Sales and marketing	 	 	—	  	 	 	—	  	 	 	51	  	 	 	—	  	 	 	190	  	
General and administrative	 	 	155	  	 	 	—	  	 	 	237	  	 	 	—	  	 	 	571	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total stock-based compensation	 	$	            155	  	 	$	              —	  	 	$	            294	  	 	$	            —	  	 	$	            816	  	

15.	 	Income Taxes	
The income tax provision (benefit) is composed of the following (in thousands):

 	  	Predecessor	 	 	   	  	Successor	 	
 	  	Period from January 1,
through
November 16, 2012	 	 	   	  	Period from
November 17, through
December 31, 2012	 	 	Year Ended
December 31, 2013	 	
 	  	 	 	 	  	  	 	 	 	(Restated)	 	
Current:	  				 	 	  				 				
Federal	  	$	            —	  	 	 	  	$	            —	  	 	$	            2,492	  	
State	  	 	7	  	 	 	  	 	1	  	 	 	569	  	
	  	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total current provision	  	 	7	  	 	 	  	 	1	  	 	 	3,061	  	
Deferred:	  				 	 	  				 				
Federal	  	 	—	  	 	 	  	 	(932	) 	 	 	(2,900	) 	
State	  	 	—	  	 	 	  	 	(143	) 	 	 	(38	) 	
	  	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total deferred provision (benefit)	  	 	—	  	 	 	  	 	(1,075	) 	 	 	(2,938	) 	
	  	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total provision (benefit) for income taxes	  	$	7	  	 	 	  	$	(1,074	) 	 	$	123	  	

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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
The Company operates in only one federal jurisdiction, the United States. The following table presents a reconciliation of the tax benefit computed at the statutory federal rate and the Company’s tax expense (benefit) for the period presented (in thousands):

 	  	Predecessor	 	 	   	 	Successor	 	
 	  	Period from January 1,
through
November 16, 2012	 	 	   	 	Period from
November 17, through
December 31, 2012	 	 	Year Ended
December 31, 2013	 	
 	  	 	 	 	   	 	 	 	 	(Restated)	 	
Income tax benefit—computed as 35% of pretax loss	  	$	(4,569	) 	 	 	 	$	(1,488	) 	 	$	(19,721	) 	
Effect of non-controlling interests and redeemable non-controlling interests	  	 	602	  	 	 	 	 	238	  	 	 	21,737	  	
Effect of nondeductible acquisition costs	  	 	—	  	 	 	 	 	270	  	 	 	—	  	
Effect of nondeductible expenses	  	 	25	  	 	 	 	 	—	  	 	 	1,439	  	
State and local income tax expenses	  	 	(378	) 	 	 	 	 	(94	) 	 	 	343	  	
Prepaid tax asset	  	 	—	  	 	 	 	 	—	  	 	 	474	  	
Valuation allowance	  	 	4,325	  	 	 	 	 	—	  	 	 	—	  	
Effect of tax credits	  	 	—	  	 	 	 	 	—	  	 	 	(4,472	) 	
Other	  	 	2	  	 	 	 	 	—	  	 	 	323	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	  	$	7	  	 	 	 	$	            (1,074)	  	 	$	        123	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	
The total income tax expense for the six months ended June 30, 2013 and 2014 of $45,000 (unaudited) and $6.9 million (unaudited) was determined based on the Company’s consolidated quarterly effective tax rate of negative 0.2% and negative 10.0% (calculated on a discrete basis for the six months ended June 30, 2014). The variations between the consolidated quarterly effective tax rate and the U.S. federal statutory rate are primarily attributable to the effect of non-controlling interests and redeemable non-controlling interests, tax credits and nondeductible expenses.
Deferred income taxes reflect the impact of temporary differences between assets and liabilities for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards, and other tax credits measured by applying currently enacted tax laws. The following table presents significant components of the Company’s deferred tax assets and liabilities for the periods presented (in thousands):

 	 	As of December 31,	 	
 	 	2012	 	 	2013	 	
 	 	 	 	 	(Restated)	 	
Deferred tax assets:	 				 				
Accruals and reserves	 	$	            482	  	 	$	            714	  	
Net operating losses	 	 	5,254	  	 	 	—	  	
Tax credits	 	 	—	  	 	 	2,776	  	
Investment in solar funds	 	 	1,118	  	 	 	166	  	
	 	 	 	 	 	 	 	 	
Gross deferred tax assets	 	 	6,854	  	 	 	3,656	  	
Deferred tax liabilities:	 				 				
Depreciation and amortization	 	 	(16,397	) 	 	 	(10,993	) 	
Investment in solar funds	 	 	(1,041	) 	 	 	(31,039	) 	
	 	 	 	 	 	 	 	 	
Gross deferred tax liabilities	 	 	(17,438	) 	 	 	(42,032	) 	
	 	 	 	 	 	 	 	 	
Net deferred tax liabilities	 	$	(10,584	) 	 	$	38,376	  	

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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
The Company’s 2013 tax balances have been restated to correctly account for certain taxable gains realized on the sales of solar energy systems to its investment funds. The Company sells solar energy systems to the investment funds. As the investment funds are consolidated by the Company, the gain on the sale of the solar energy systems was not recognized in the consolidated financial statements. However, this gain is recognized for tax reporting purposes. Since these transactions are intercompany sales, any tax expense incurred related to these intercompany sales should be deferred and amortized over the estimated useful life of the underlying solar energy systems which has been estimated to be 30 years. Accordingly, the Company has recorded a prepaid tax asset, net of $30.7 million and $54.5 million (unaudited) as of December 31, 2013 and June 30, 2014.
The Company’s valuation allowance increased by $4.3 million during the Predecessor Period. As a result of the Acquisition, the Company’s valuation allowance of $4.7 million was released in purchase accounting and the Company switched from a net deferred tax asset to a net deferred tax liability position. The future reversal of deferred tax liabilities will produce a sufficient source of future taxable income of the necessary character and in the necessary periods and jurisdictions to support the realization of the deferred tax assets. As such, no valuation allowance is required as of December 31, 2013. As of December 31, 2013, the current portion of deferred tax assets of $3.1 million is included in prepaid and other current assets.
As of December 31, 2012, December 31, 2013 and June 30, 2014 the Company had approximately $13.5 million, $0 and $4.5 million (unaudited) of federal and $13.5 million, $0 and $4.5 million (unaudited) of state net operating loss carryforwards, or collectively the NOLs, available to offset future taxable income. These NOLs expire in varying amounts from 2031 through 2034 for federal tax purposes and from 2031 through 2034 for state tax purposes if unused. Based on the restatement of 2013 tax balances, discussed above, the Company anticipates existing federal and state NOLs will be utilized by taxable gains in 2013 and future periods. The Company expects to generate federal and state NOLs through June 30, 2014 that will be utilized in the second half of 2014 or carried back to offset taxable income on the 2013 tax return.
The Company reported investment tax credits of $4.5 million for the year ended December 31, 2013. The Company accounts for its federal investment tax credits under the flow- through method of accounting. The Company’s ability to utilize these credits may be limited under Internal Revenue Code 383.
Utilization of NOLs and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar provisions. The annual limitation may result in the expiration of NOLs and credits before utilization. The Company has not completed an analysis to determine if an ownership change will occur as a result of this offering. Until such analysis is completed, the Company cannot be sure that the full amount of any NOLs or credits generated prior to the offering date will be available, even if the Company generates taxable income before their expiration.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Uncertain Tax Positions
As of December 31, 2012 and 2013, the Company had no unrecognized tax benefits. There was no interest and penalties accrued for any uncertain tax positions as of December 31, 2012 and 2013. The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized benefits will increase or decrease within 12 months of the year ended December 31, 2013. The Company is subject to taxation and files income tax returns in the United States, and various state and local jurisdictions. Due to the Company’s net losses, substantially all of its federal, state and local income tax returns since inception are still subject to audit.
 
16.	 	Related Party Transactions	
The Company’s operations included the following related party transactions (in thousands):

 	  	Predecessor	 	  	Successor	 	
 	  	Period from
January 1,
through
November 16,
2012	 	  	Period from
November 17,
through
December 31,
2012	 	  	Year Ended
December 31,
2013	 	  	Six Months
Ended June 30,	 	
 	  			  			  			  	2013	 	  	2014	 	
 	  	 	 	  	 	 	  	 	 	  	(Unaudited)	 	
Cost of revenue—operating leases and incentives	  	$	246	  	  	$	73	  	  	$	1,558	  	  	$	599	  	  	$	2,405	  	
Sales and marketing	  	 	406	  	  	 	131	  	  	 	866	  	  	 	288	  	  	 	997	  	
General and administrative	  	 	        3,624	  	  	 	        614	  	  	 	        2,323	  	  	 	            483	  	  	 	3,239	  	
Interest expense (1)	  	 	—	  	  	 	9	  	  	 	2,924	  	  	 	923	  	  	 	        2,878	  	

(1)	Includes revolving lines of credit, related party. See Note 11—Debt Obligations.	
Vivint Services
In 2011, and amended February 2012 and June 2012, the Company entered into an administrative services agreement (the “Service Agreement”) with Vivint. The Company paid Vivint a monthly fee in exchange for certain administrative, managerial and account management services based on kilowatt hours produced by the solar energy systems each month. The Service Agreement was terminated effective December 2013.
In June 2013, the Company entered into a full service sublease agreement (the “Sublease Agreement”) with Vivint which replaced the Service Agreement and was applied retroactively to be in effect as of January 1, 2013. Under the Sublease Agreement, Vivint provided various administrative services, such as management, human resources, information technology, and facilities and use of corporate office space to the Company. The Company pays Vivint a monthly services fee and rent based on headcount and square footage used.
In 2011, and amended June 2013, the Company entered into a trademark / service mark license agreement (“Trademark Agreement”) with Vivint, pursuant to which the Company paid Vivint a monthly fee in exchange for rights to use certain trademarks, based on kilowatt hours produced by the solar energy systems each month. In June 2013, the Trademark Agreement was
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
amended and restated to grant the Company a royalty-free, non-exclusive license to use certain Vivint marks, subject to certain quality control requirements and was applied retroactively to be in effect as of January 1, 2013.
The Company incurred fees under these agreements of $68,000, $21,000 and $1.2 million for the Predecessor Period and the Successor Periods ended December 31, 2012 and 2013 and $0.6 million (unaudited) and $4.1 million (unaudited) for the six months ended June 30, 2013 and 2014, reflecting the amount of services provided by Vivint on behalf of the Company. No fees were incurred related to the Sublease Agreement in the Predecessor Period and the Successor Period ended December 31, 2012.
The Company and Vivint identified additional costs incurred by Vivint on behalf of the Company for services performed in addition to those services and amounts covered by the existing services agreements. These costs included direct costs incurred by Vivint on behalf of the Company, including sales, client account management, installations and servicing, and other administrative functions, as well as estimates related to overhead costs allocated to the Company. Estimates of the cost of time spent on the Company’s operations by certain executives and costs related to information technology support and services were allocated to the Company. These estimates were generally allocated on square footage utilized by the Company’s employees, the Company’s ratio of headcount compared to Vivint’s headcount, or the amount of time spent by certain executives on the Company’s operations. Management believes that the method used to allocate the costs in accordance with the agreements and the allocation of corporate overhead costs as described above is a fair and reasonable reflection of the utilization of the services provided to, or the benefit received by, the Company during the periods presented. The allocations may not, however, reflect the expense the Company would have incurred as an independent company for the periods presented. Actual costs that may have been incurred if the Company had been a stand-alone company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed in-house or strategic decisions made in the areas such as information technology and infrastructure.
The Company has recorded expenses of $4.0 million and $0.8 million and corresponding capital contributions from Vivint during the Predecessor Period and the Successor Period from November 17, 2012 through December 31, 2012 reflecting the value of the services provided by Vivint on behalf of the Company in excess of the amounts already recorded under the service agreements described above. Beginning in January 2013, the Company reimbursed Vivint for these additional costs. The Company incurred expenses of $1.7 million and $0.5 million (unaudited) during the year ended December 31, 2013 and the six months ended June 30, 2013 relating to these additional costs. No expenses relating to these additional costs were incurred during the six months ended June 30, 2014 (unaudited).
Payables to Vivint recorded in accounts payable, related party were $0.5 million, $3.1 million and $2.3 million (unaudited) as of December 31, 2012 and 2013 and June 30, 2014. These payables include amounts due to Vivint related to the services agreements and additional costs allocated, as well as other miscellaneous intercompany payables including freight, healthcare cost reimbursements, and ancillary purchases.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
313 Incentive Units Plan
As of December 31, 2013 and June 30, 2014, incentive units from 313 have been granted to certain board members of the Company. Such board members are also employees of Vivint. As a result, the related compensation expense has been allocated between the two companies based on the net equity of the respective companies at the Acquisition. The Company recorded expense of $0.2 million, $82,000 (unaudited) and $119,000 (unaudited) and a corresponding noncash capital contribution from 313 during the Successor Period ended December 31, 2013 and during the six months ended June 30, 2013 and 2014 (unaudited). No incentive units were granted in the Predecessor Period and the Successor Period from November 17, 2012 through December 31, 2012. The incentive units are subject to time-based and performance-based vesting conditions, with one-third subject to ratable time-based vesting over a five year period and two-thirds subject to the achievement of certain investment return thresholds by the sponsor and its affiliates. 313 has determined that it is not probable that the performance conditions will be achieved, and as such, all allocated stock compensation expense is related to the time-based vesting conditions for the year ended December 31, 2013 and during the six months ended June 30, 2013 and 2014. The fair value of stock-based awards is measured at the grant date and is recognized as expense over the board members’ requisite service period.
Advisory Agreements
At the time of the Acquisition, the Company entered into a support and services agreement with Blackstone Capital Partners VI LP (“BCP”) and Blackstone Management Partners LLC (“BMP”), under which BCP and BMP will provide advice to the Company on, among other things, finance, operations, human resources and legal. Under the agreement, BCP and BMP are paid, in aggregate, an annual management fee in the amount of the greater of a minimum annual fee, which is initially defined as $0, or 1.5% of consolidated earnings before interest, taxes, depreciation and amortization. BCP and BMP did not receive an annual management fee during the Predecessor Period and the Successor Periods ended December 31, 2012 and 2013 and during the six months ended June 30, 2013 and 2014 (unaudited). The support and services agreement expires upon the earlier to occur of (1) initial public offering of the Company, (2) BCP’s beneficial ownership of less than 9.9% of the common stock of the Company and such stake having a fair value of less than $5.0 million and (3) November 16, 2022.
Effective May 2013, the Company entered into an advisory agreement with Blackstone Advisory Partners L.P., an affiliate of the Sponsor (“BAP”), under which BAP will provide financial advisory and placement services related to the Company’s financing of residential solar energy systems. Under the agreement, BAP is paid a placement fee ranging from 0% to 2% of the transaction capital, depending on the identity of the investor and how contact with the investor is established. The Company incurred fees under this agreement of $1.3 million and $2.2 million (unaudited) for the year ended December 31, 2013 and the six months ended June 30, 2014. The Company did not incur any fees under this agreement for the Predecessor Period, the Successor Period from November 17, 2012 through December 31, 2012 or the six months ended June 30, 2013 (unaudited). The amounts were recorded in general and administrative expense in the Company’s consolidated statements of operations.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
In May 2014, the Company entered into an advisory agreement with Blackstone Advisory Partners L.P., or BAP, an affiliate of the Company’s sponsor, under which BAP will provide financial advisory and placement services related to the Company’s financing of residential solar energy systems. Under the agreement, the Company is required to pay a placement fee to BAP upon the consummation of a tax equity financing. This placement fee ranges from 0.75% to 1.5% of the transaction capital, depending on the identity of the investor and whether the financing relates to residential or commercial projects. This agreement replaced the 2013 advisory agreement.
Terminated Advisory Agreements
Prior to the Acquisition, the Company had a management agreement with certain of its former investors (“Jupiter Parties”), pursuant to which they were paid an annual management fee. Jupiter Parties received management fees of $0.2 million during the Predecessor Period which were included in general and administrative expense in the Company’s consolidated statements of operations. The agreement was terminated in conjunction with the Acquisition, and as such no fees were paid during the Successor Periods ended December 31, 2012 and 2013 and the six months ended June 30, 2013 and 2014 (unaudited).
Advances Receivable, Related Party
Amounts due from direct-sales personnel were $37,000, $0.7 million and $1.9 million (unaudited) as of December 31, 2012 and 2013 and June 30, 2014. During the year ended December 31, 2013 and the six months ended June 30, 2014, the Company provided a reserve of $0.4 million and $0.6 million (unaudited) related to advances to direct-sales personnel who have terminated their employment agreement with the Company. No reserve was necessary during the Predecessor Period or Successor Period from November 17, 2012 through December 31, 2012.
Capital Contribution from 313
In April 2013, the Company received a $1.4 million capital contribution from 313. No other cash contributions were received during the Successor Period from November 17, 2012 through December 31, 2012 or the year ended December 31, 2013 or the six months ended June 30, 2013 and 2014 (unaudited).
Investment Funds
Fund investors for Funds D, E and H are indirectly managed by the Sponsor and accordingly are considered related parties. See Note 12—Investment Funds.
 
17.	 	Commitments and Contingencies	
Capital Leases
The Company leases fleet vehicles which are accounted for as capital leases and are included in property, net.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Future minimum lease payments under capital leases as of December 31, 2013 are as follows (in thousands):

Year Ending December 31:	  	Amounts	 	
2014	  	$	1,508	  	
2015	  	 	1,543	  	
2016	  	 	923	  	
2017	  	 	150	  	
2018	  	 	6	  	
Thereafter	  	 	—	  	
	  	 	 	 	
Total minimum lease payments	  	 	4,130	  	
Less amount representing interest	  	 	369	  	
	  	 	 	 	
Present value of capital lease obligations	  	 	3,761	  	
Less current portion	  	 	1,275	  	
	  	 	 	 	
Long-term portion	  	$	    2,486	  	
	  	 	 	 	
For the year ended December 31, 2013 and the six months ended June 30, 2013 and 2014, all depreciation on vehicles under capital leases totaling $1.2 million, $0.4 (unaudited) and $1.2 million (unaudited) was capitalized in solar energy systems, net. There was no depreciation on vehicles under capital leases for the Predecessor Period or the Successor Period from November 17, 2012 through December 31, 2012.
Non-Cancelable Operating Leases
The Company entered into lease agreements for warehouses and related equipment from 2011 through 2013, located in states in which the Company conducts operations. As part of the acquisition of Solmetric in January 2014, the Company added an additional lease agreement for Solmetric office space. The equipment lease agreements, the longest of which is 12-months, include basic renewal options for an additional set period, continued renting by the month, or return of the unit.
For all non-cancelable lease arrangements, there are no bargain renewal options, penalties for failure to renew, or any guarantee by the Company of the lessor’s debt or a loan from the Company to the lessor related to the leased property. These leases have been classified and accounted for as non-cancelable operating leases. Aggregate operating lease expense was $0.3 million, $0.1 million and $1.2 million for the Predecessor Period and the Successor Periods ended December 31, 2012 and 2013, and $0.5 million (unaudited) and $1.4 million (unaudited) for the six months ended June 30, 2013 and 2014.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Future minimum lease payments under non-cancelable operating leases as of December 31, 2013, are as follows (in thousands):

Year Ending December 31:	  	Amounts	 	
2014	  	$	1,176	  	
2015	  	 	717	  	
2016	  	 	389	  	
2017	  	 	59	  	
2018 and thereafter	  	 	—	  	
	  	 	 	 	
Total minimum payments	  	$	    2,341	  	
	  	 	 	 	
Build-to-Suit Lease Arrangements
In May 2014, the Company entered into non-cancelable leases in anticipation of relocating its corporate office space to Lehi, Utah. Under these agreements, the Company will make lease payments of approximately $0.2 million in 2014, beginning on the lease commencement date starting September 2014.
Because of its involvement in certain aspects of the construction related to these leases, the Company is deemed the owner of the building, for accounting purposes during the construction period. Accordingly the Company has recorded assets of $18.6 million (unaudited), included in property, net, and a corresponding build-to-suit lease liability as of June 30, 2014 related to these arrangements which are still in the construction period.
Letters of Credit
On December 31, 2012, the Company entered into a $0.1 million stand-by letter of credit agreement related to a four-year forward contract to sell SRECs. The agreement expired on December 31, 2013. As of December 31, 2013, the Company had a $1.8 million stand-by letter of credit related to a three-year forward contract to sell SRECs entered into in November 2013. The agreement expires in January 2017. As the Company expects to be able to deliver the SRECs required under the forward contracts, no liability has been accrued.
Indemnification Obligations
From time to time, the Company enters into contracts that contingently require it to indemnify parties against claims. These contracts primarily relate to provisions in the Company’s services agreements with related parties that may require the Company to indemnify the related parties against services rendered; and certain agreements with the Company’s officers and directors under which the Company may be required to indemnify such persons for liabilities. In addition, under the terms of the agreements related to the Company’s investment funds and other material contracts, the Company may also be required to indemnify fund investors and other third parties for liabilities. The Company has not recorded a liability related to these indemnification provisions and the indemnification arrangements have not had any significant impact to the Company’s consolidated financial statements to date.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Legal Proceedings
On or about December 26, 2013, one of the Company’s former sales representatives, on behalf of himself and a purported class, filed a complaint for damages, injunctive relief and restitution in the Superior Court of the State of California in and for the County of San Diego against Vivint Solar Developer, LLC, one of the Company’s subsidiaries, and unnamed John Doe defendants. This action alleges certain violations of the California Labor Code and the California Business and Professions Code based on, among other things, alleged improper classification of sales representatives and sales managers, failure to pay overtime compensation, failure to provide meal periods, failure to provide accurate itemized wage statements, failure to pay wages on termination and failure to reimburse expenses. On or about January 24, 2014, the Company filed an answer denying the allegations in the complaint and asserting various affirmative defenses. The Company has not recorded any amounts related to this proceeding in its consolidated financial statements.
In addition to the matter discussed above, in the normal course of business, the Company has from time to time been named as a party to various legal claims, actions and complaints. While the outcome of these matters cannot be predicted with certainty, the Company does not currently believe that the outcome of any of these claims will have a material adverse effect, individually or in the aggregate, on its consolidated financial position, results of operations or cash flows.
The Company accrues for losses that are probable and can be reasonably estimated. The Company evaluates the adequacy of its legal reserves based on its assessment of many factors, including interpretations of the law and assumptions about the future outcome of each case based on available information.
 
18.	 	Basic and Diluted Net Income (Loss) Per Share	
The Company computes basic earnings (loss) per share by dividing net earnings or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could be exercised or converted into common shares, and is computed by dividing net earnings or loss available to common stockholders by the weighted average number of common shares outstanding plus the effect of potentially dilutive shares to purchase common stock.
As a result of the Acquisition, the Company’s capital structure consists of 75,000,000 shares of common stock outstanding. Net loss per share reflects the Company’s post-Acquisition capital structure for all periods on a consistent basis as net loss per share calculations based on the Predecessor capital structure would not be meaningful to users of these consolidated financial statements.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
The following table sets forth the computation of the Company’s basic and diluted net income per share available (loss attributable) to common stockholders for the Predecessor Period and the Successor Periods ended December 31, 2012 and 2013 and June 30, 2013 and 2014 (in thousands, except share and per share amounts):

 	 	Predecessor	 	 	   	 	Successor	 	
 	 	Period from
January 1,
through
November 16,
2012	 	 	   	 	Period from
November 17,
through
December 31,
2012	 	 	Year Ended
December 31,
2013	 	 	Six Months Ended
June 30,	 	
 	 			 		 			 			 	2013	 	 	2014	 	
 	 	 	 	 	   	 	 	 	 	(Restated)	 	 	(Unaudited)	 	
Numerator:	 				 	 	 				 				 				 				
Net income available (loss attributable) to common stockholder	 	$	(31,674	) 	 	 	 	$	(2,604	) 	 	$	5,638	  	 	$	(20,434	) 	 	$	12,534	  	
Denominator:	 				 	 	 				 				 				 				
Shares used in computing net income per share available (loss attributable) to common stockholder, basic	 	 	75,000,000	  	 	 	 	 	75,000,000	  	 	 	75,000,000	  	 	 	75,000,000	  	 	 	75,000,000	  	
Weighted-average effect of potentially dilutive shares to purchase common stock	 	 	—	  	 	 	 	 	—	  	 	 	223,183	  	 	 	—	  	 	 	1,194,463	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Shares used in computing net income per share available (loss attributable) to common stockholder, diluted	 	 	75,000,000	  	 	 	 	 	75,000,000	  	 	 	75,223,183	  	 	 	75,000,000	  	 	 	76,194,463	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income per share available (loss attributable) to common stockholder	 				 	 	 				 				 				 				
Basic	 	$	(0.42	) 	 	 	 	$	(0.03	) 	 	$	0.08	  	 	$	(0.27	) 	 	$	0.17	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	$	(0.42	) 	 	 	 	$	(0.03	) 	 	$	0.07	  	 	$	(0.27	) 	 	$	0.16	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
As of December 31, 2013 and June 30, 2014, stock options for 4,405,884 and 6,483,825 (unaudited) underlying shares of common stock granted under the Omnibus Plan and an option granted outside of the Omnibus Plan with terms substantially similar to those granted under the Omnibus Plan were subject to performance conditions which had not yet been met. Accordingly, these options were not included in the computation of diluted EPS. In addition, awards to be granted under the LTIP Pools were not included in the computation of diluted EPS as these awards had either not been granted or were subject to performance conditions which had not yet been met as of June 30, 2014 (unaudited).
 
19.	 	Subsequent Events	
For the Company’s consolidated financial statements as of and for the year ended December 31, 2013, the Company has evaluated subsequent events through May 14, 2014, which is the date the financial statements were available to be issued.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Investment Funds
In January 2014, total available financing under one of the existing fund arrangements was increased by $30.0 million. Additionally, in February and April 2014, subsidiaries of the Company entered into three solar investment fund arrangements in aggregate, which are considered to be VIEs. Two of the three fund arrangements are with existing fund investors, of which one is considered a related party. The total commitment under the solar investment fund arrangements are $20.0 million, $75.0 million and $50.0 million.
Revolving Line of Credit, Related Party
In January 2014, the Company amended and restated the May 2013 Loan Agreement, pursuant to which the Company may incur an additional $30.0 million in revolver borrowings, with interest on the borrowings accruing at a rate of 12% per year for the remaining term of the agreement. In January 2014, the Company incurred $13.0 million in revolver borrowings under the May 2013 Loan Agreement. In April 2014, the Company amended the agreement to extend the maturity date to the earliest to occur of (1) a change of control, (2) an event of default, and (3) January 1, 2017.
Bank of America, N.A. Term Loan Credit Facility
In May 2014, the Company entered into a term loan credit facility for an aggregate principal amount of $75.5 million with certain financial institutions for which Bank of America, N.A. is acting as administrative agent.
Prepayments are permitted under the credit facility, and the principal and accrued interest on any outstanding loans mature on December 15, 2014. Under the credit facility, the Company may incur on the term borrowings, interest on which will accrue at a floating rate based on (1) LIBOR plus a margin equal to 4%, or (2) a rate equal to 3% plus the greatest of (a) the Federal Funds Rate plus 0.5%, (b) the administrative agent’s prime rate and (c) LIBOR plus 1%.
The credit facility includes customary covenants, including covenants that restrict, subject to certain exceptions, the Company’s ability to incur indebtedness, incur liens, make investments, make fundamental changes to the Company’s business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions. In addition, a $1.6 million interest reserve amount was deposited in an interest reserve account with the administrative agent.
This credit facility also contains certain customary events of default. If an event of default occurs, lenders under the credit facility will be entitled to take various actions, including the acceleration of all amounts due under the credit facility.
Long-term Incentive Plan Amendment
In April 2014, the Company amended five of six of the LTIP Pools. The amendment modified the date on which each participant’s award is fixed from the date of a public offering to a subsequent date based on fulfilling certain service or other performance conditions based on stockholder returns, which will be the same date on which the award vests. The Company does not expect to record stock-based compensation expense as a result of the modification as no stock-based compensation expense has been recognized historically for the LTIP.
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
Amendment to Outstanding Options
In April 2014, the Company amended the vesting schedules of certain options outstanding under the Omnibus Plan and an option granted outside of the Omnibus Plan with terms substantially similar to those granted under the Omnibus Plan. The amendment impacted options with performance conditions and provides that a portion of the participant’s options vest upon the Company’s aggregate market capitalization being equal to or exceeding $1 billion at the end of any trading day at least 240 days following the completion of a public offering. The Company does not expect to record stock-based compensation expense as a result of the modification as no stock-based compensation expense has been historically recognized for the options with performance conditions. In the event the Company achieves the amended performance condition, it will record stock-based compensation based on the value at the modification date.
 
20.	 	Subsequent Events (unaudited)	
For the Company’s interim consolidated financial statements as of and for the six months ended June 30, 2014, the Company has evaluated subsequent events through August 26, 2014, which is the date the financial statements were available to be issued.
In July 2014, the Company entered into non-cancellable operating leases in anticipation of moving certain of its operations to Orem, Utah. Under these agreements, the Company will make lease payments of approximately $0.5 million for the remainder of 2014 and $1.1 million to $1.6 million per year from 2015 to 2017.
In July 2014, a wholly owned subsidiary of the Company entered into a solar investment fund arrangement with a fund investor. The total commitment under the solar investment fund arrangement is $100.0 million. The Company’s wholly owned subsidiary has the right to elect to require the fund investor to sell all of its membership units to the Company’s wholly owned subsidiary beginning on the date that certain conditions are met. The purchase price for the fund investor’s interest is the greater of fair market value at the time the option is exercised and a specified amount. The option is not expected to become exercisable prior to 2022. The Company has not yet completed its assessment of whether the fund arrangement is a VIE.
Pursuant to the terms of the purchase agreement for the Acquisition of the Company by Investors in November 2012, $9.5 million of the purchase consideration was placed in escrow and was held for general representations and warranties, rather than specific contingencies or specific assets or liabilities of the Company. The escrow was released in July 2014. The Company had no right to these funds, nor did it have a direct obligation associated with them. Accordingly, the release of the escrow funds will have no impact on the Company’s consolidated balance sheets.
In August and September 2014, the Company issued and sold an aggregate of 9,703,122 shares of common stock to 313 Acquisition LLC and two of its directors for $10.667 per share for aggregate gross proceeds of $103.5 million. If at any time prior to the earlier of (1) the offering contemplated by this prospectus, and (2) September 3, 2015, the Company issues or sells shares of its common stock or any equivalents that would entitle the holder of such securities to acquire shares of the Company’s common stock in one or more transactions to an unrelated third party at a price per common share of less than $10.667, then the Company must issue a number of additional shares to the holder of such securities of common stock equal to (1) the aggregate
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
purchase price paid by the original purchaser divided by such lesser purchase price less (2) the aggregate number of shares purchased by the original purchaser. We obtained such financing to fund our growing operations without altering our existing plans and to bolster our financial condition in advance of this offering.
In September 2014, a wholly owned subsidiary of the Company entered into a solar investment fund arrangement with a fund investor. The total commitment under the solar investment fund arrangement is $100.0 million. The Company’s wholly owned subsidiary has the right to elect to require the fund investor to sell all of its membership units to the Company’s wholly owned subsidiary beginning on the date that certain conditions are met. The purchase price for the fund investor’s interest is the greater of fair market value at the time the right is exercised and specified amounts. The right is not expected to become exercisable prior to 2021. The Company has not yet completed its assessment of whether the fund arrangement is a VIE.
In September 2014, the Company entered into a non-cancellable lease with the current landlord of its Thanksgiving Point lease whereby the Company will move into another building being constructed by the Landlord in the same general location. It is anticipated that this new building will be completed during the first quarter of 2016. At the time the new building is completed, the original Thanksgiving Point lease will be terminated. The terms of the new Thanksgiving Point lease will be similar as those of the former Thanksgiving Point lease, with the exception that the Company will be leasing additional space. Under this new lease agreement, the Company will make lease payments of approximately $3.1 million to $3.6 million per year from 2016 to 2020.
In September 2014, the Company entered into an aggregation credit facility pursuant to which the Company may borrow up to an aggregate of $350 million and, subject to certain conditions, up to an additional aggregate of $200 million in borrowings with certain financial institutions for which Bank of America, N.A. is acting as administrative agent.
Prepayments are permitted under the aggregation credit facility, and the principal and accrued interest on any outstanding loans mature on March 12, 2018. Under the aggregation credit facility, interest on borrowings accrues at a floating rate equal to (1) a margin that varies between 3.25% during the period during which the Company may incur borrowings plus 3.50% after such period and either (2)(a) LIBOR or (b) the greatest of (i) the Federal Funds Rate plus 0.5%, (ii) the administrative agent’s prime rate and (iii) LIBOR plus 1%.
The borrower under the aggregation credit facility is Vivint Solar Financing I, LLC, one of our indirect wholly owned subsidiaries, that in turn holds the Company’s interests in the managing members in the Company’s existing investment funds. These managing members guarantee the borrower’s obligations under the aggregation credit facility. In addition, Vivint Solar Holdings, Inc. has pledged its interests in the borrower, and the borrower has pledged its interests in the guarantors as security for the borrower’s obligations under the aggregation credit facility. The aggregation credit facility includes customary covenants, including covenants that restrict, subject to certain exceptions, the borrower’s, and the guarantors’ ability to incur indebtedness, incur liens, make investments, make fundamental changes to their business, dispose of assets, make certain
 
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Vivint Solar, Inc.
Notes to Consolidated Financial Statements
 
types of restricted payments or enter into certain related party transactions. Among other restrictions, the aggregation credit facility provides that the borrower may not incur any indebtedness other than that related to the aggregation credit facility or in respect of permitted swap agreements, and that the guarantors may not incur any indebtedness other than that related to the aggregation credit facility or as permitted under existing investment fund transaction documents. These restrictions do not impact the Company’s ability to enter into investment funds, including those that are similar to those we have entered into previously. As of the date of this prospectus, the Company had incurred an aggregate of $87.0 million in term loan borrowings under this agreement, of which we used approximately $75.7 million to repay the outstanding principal and accrued and unpaid interest under the May 2014 credit facility, and had a remaining borrowing capacity of $263 million.
The aggregation credit facility also contains certain customary events of default. If an event of default occurs, lenders under the aggregation credit facility will be entitled to take various actions, including the acceleration of amounts due under the aggregation credit facility and foreclosure on the interests of the borrower and the guarantors that have been pledged to the lenders.
 
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 13.  Other Expenses of Issuance and Distribution.
The following table sets forth all expenses to be paid by the Registrant, other than underwriting discounts and commissions, in connection with this offering. All amounts shown are estimates except for the SEC registration fee and the FINRA filing fee.

 	  	Amount to be
Paid	 	
SEC registration fee	  	$	54,923	  	
FINRA filing fee	  	 	64,463	  	
Exchange listing fee	  	 	250,000	  	
Accounting fees and expenses	  	 	4,740,000	  	
Legal fees and expenses	  	 	2,750,000	  	
Printing and engraving expenses	  	 	750,000	  	
Transfer agent and registrar fees and expenses	  	 	15,000	  	
Miscellaneous	  	 	175,614	  	
	  	 	 	 	
Total	  	 	8,800,000	  	
	  	 	 	 	
Item 14.  Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law authorizes a corporation’s board of directors to grant, and authorizes a court to award, indemnity to officers, directors and other corporate agents.
As permitted by Section 102(b)(7) of the Delaware General Corporation Law, the Registrant’s certificate of incorporation includes provisions that eliminate the personal liability of its directors and officers for monetary damages for breach of their fiduciary duty as directors and officers.
In addition, as permitted by Section 145 of the Delaware General Corporation Law, the certificate of incorporation and bylaws of the Registrant provide that:
 
 	•	 	The Registrant shall indemnify its directors and officers for serving the Registrant in those capacities or for serving other business enterprises at the Registrant’s request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful.	
 
 	•	 	The Registrant may, in its discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law.	
 
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 	•	 	The Registrant is required to advance expenses, as incurred, to its directors and officers in connection with defending a proceeding, except that such director or officer shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification.	
 
 	•	 	The Registrant will not be obligated pursuant to the bylaws to indemnify a person with respect to proceedings initiated by that person, except with respect to proceedings authorized by the Registrant’s board of directors or brought to enforce a right to indemnification.	
 
 	•	 	The rights conferred in the certificate of incorporation and bylaws are not exclusive, and the Registrant is authorized to enter into indemnification agreements with its directors, officers, employees and agents and to obtain insurance to indemnify such persons.	
 
 	•	 	The Registrant may not retroactively amend the bylaw provisions to reduce its indemnification obligations to directors, officers, employees and agents.	
The Registrant’s policy is to enter into separate indemnification agreements with each of its directors and officers that provide the maximum indemnity allowed to directors and executive officers by Section 145 of the Delaware General Corporation Law and also to provide for certain additional procedural protections. The Registrant also maintains directors and officers insurance to insure such persons against certain liabilities.
These indemnification provisions and the indemnification agreements entered into between the Registrant and its officers and directors may be sufficiently broad to permit indemnification of the Registrant’s officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act.
The underwriting agreement filed as Exhibit 1.1 to this registration statement provides for indemnification by the underwriters of the Registrant and its officers and directors for certain liabilities arising under the Securities Act and otherwise.
Item 15.  Recent Sales of Unregistered Securities.
The following list sets forth information regarding all unregistered securities sold by us in the past three years. No underwriters were involved in the sales and the certificates representing the securities sold and issued contain legends restricting transfer of the securities without registration under the Securities Act or an applicable exemption from registration.
(1)        In December 2011, as part of a re-organization, the registrant issued and sold (a) 25,000 shares of its Series A preferred stock to a total of eight accredited investors, (b) 25,000 shares of Series A common stock to a total of eight accredited investors and (c) 25,000 shares of Series B common Stock to a total of 15 accredited investors. These shares were issued and sold in exchange for all the outstanding capital stock of Vivint Solar Holdings, Inc.
(2)        From December 29, 2011 through January 27, 2012, the registrant issued and sold 8,342.36 shares of its Series B preferred stock to a total of 11 accredited investors for aggregate proceeds of $10,000,000.
 
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(3)        On July 12, 2013, the registrant granted to a trust established by one of its employees an option to purchase 617,647 shares of its common stock at an exercise price of $1.00 per share.
(4)        From July 12, 2013 through July 16, 2014, the registrant granted to certain employees and executives under the registrant’s 2013 Omnibus Incentive Plan options to purchase an aggregate of 10,442,797 shares of its common stock at exercise prices ranging from $1.00 to $4.14 per share.
(5)        In July 2013, the registrant adopted the 2013 Long-term Incentive Plan, or the LTIP, that is comprised of six long-term incentive pools, each an LTIP Pool, and reserved for issuance an aggregate of 4,058,823 shares of common stock. A participant in an LTIP Pool is eligible to earn a portion of the respective LTIP Pool based on the extent of achievement of certain pre-established performance objectives relating to the installation of solar energy systems as of a determination date, and subject to his or her continued service with us. The determination dates under the LTIP generally are certain dates following a public offering of our common stock pursuant to a registration statement and a change of control. Payment under an LTIP Pool may be made in cash, shares of our common stock, other shares, and/or any of the combination of the foregoing, subject to certain limitations in the LTIP. The LTIP Pools were established to attract and retain key service providers and strengthen their commitment to us by providing incentive compensation measured by reference to the value of the shares of our common stock.
(6)        In August 2014, the registrant issued and sold 2,671,875 shares of its common stock to a single accredited investor at a price of $10.667 per share.
(7)        In September 2014, the registrant issued and sold 7,031,247 shares of its common stock to three accredited investors at a price of $10.667 per share.
The offers, sales and issuances of the securities described in Items (1), (2), (3), (6) and (7) were exempt from registration under the Securities Act under Section 4(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions was an accredited investor and had adequate access, through employment, business or other relationships, to information about the registrant.
The offers, sales and issuances of the securities described in Items (4) and (5) were exempt from registration under the Securities Act under Rule 701 in that the transactions were made pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of such securities were the registrant’s employees, consultants or directors and received the securities under the registrant’s 2013 Omnibus Incentive Plan or the 2013 Long-term Incentive Plan or the LTIP. The recipients of securities in each of these transactions represented their intention to acquire the securities for investment only and not with view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions.
 
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Item 16.  Exhibits and Financial Statement Schedules.
(a)        Exhibits.

Exhibit
        Number        	 	Description	
  1.1*	 	Form of Underwriting Agreement	
  3.1*	 	Form of Certificate of Incorporation, to be effective upon closing of the offering	
  3.2#	 	Form of Bylaws, to be effective upon closing of the offering	
  4.1*	 	Specimen Common Stock Certificate of the registrant	
  4.2*	 	Form of Registration Rights Agreement by and among the registrant and the investors named therein	
  5.1*	 	Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation	
10.1#+	 	Form of Director and Executive Officer Indemnification Agreement	
10.2#+	 	2013 Omnibus Incentive Plan, as amended, and forms of agreements thereunder	
10.3*+	 	2014 Equity Incentive Plan, and forms of agreements thereunder	
10.4A#+	 	Amended and Restated 2013 Long-Term Incentive Pool Plan for District Sales Managers, and forms of agreements thereunder	
10.4B#+	 	Amended and Restated 2013 Long-Term Incentive Pool Plan for Operations Leaders, and forms of agreements thereunder	
10.4C#+	 	2013 Long-Term Incentive Pool Plan for Recruiting Regional Sales Managers, and forms of agreements thereunder	
10.4D#+	 	Amended and Restated 2013 Long-Term Incentive Pool Plan for Regional Managers (Technicians), and forms of agreements thereunder	
10.4E*+	 	Amended and Restated 2013 Long-Term Incentive Pool Plan for Regional Sales Managers, and forms of agreements thereunder	
10.4F#+	 	Amended and Restated 2013 Long-Term Incentive Pool Plan for Sales Managers, and forms of agreements thereunder	
10.5*+	 	Form of 313 Acquisition LLC Unit Plan	
10.6#+	 	Executive Incentive Compensation Plan, and forms of agreements thereunder	
10.7#+	 	Form of Involuntary Termination Protection Agreement between the Registrant and certain of its officers	
10.8*+	 	Letter Agreement, dated August 28, 2014, with Gregory S. Butterfield	
10.9#+	 	Employment Agreement, dated September 25, 2013, with Thomas Plagemann	
10.10*+	 	Letter Agreement, dated August 28, 2014, with L. Chance Allred	
10.11#	 	Subordinated Note and Loan Agreement between the registrant and APX Group, Inc., dated December 27, 2012	
10.11A#	 	First Amendment to Note and Loan Agreement between the registrant and APX Group, Inc., dated July 26, 2013	
10.12#	 	Amended and Restated Subordinated Note and Loan Agreement between the registrant and APX Parent Holdco, Inc., dated January 20, 2014	
10.12A#	 	First Amendment to Amended and Restated Subordinated Note and Loan Agreement between the registrant and APX Parent Holdco, Inc., dated April 25, 2014	
10.13#†	 	Credit Agreement between us, as a guarantor, Vivint Solar Holdings, Inc., as the borrower, and Bank of America, N.A. as administrative agent, collateral agent and lender, dated May 1, 2014	
10.14#	 	Form of Stockholders Agreement by and among the registrant and other parties thereto	
10.15#	 	Form of Master Intercompany Framework Agreement between the registrant and Vivint, Inc.	
10.16#	 	Form of Transition Services Agreement between the registrant and Vivint, Inc.	
10.17#	 	Form of Non-Competition Agreement between the registrant and Vivint, Inc.	
10.18#	 	Form of Product Development and Supply Agreement between Vivint Solar Developer, LLC and Vivint, Inc.	
 
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Table of Contents

Exhibit
        Number        	 	Description	
10.19#	 	Form of Marketing and Customer Relations Agreement between Vivint Solar Developer, LLC and Vivint, Inc.	
10.20A#	 	Form of Trademark Assignment Agreement between Vivint Solar Licensing LLC and Vivint, Inc.	
10.20B#	 	Form of Trademark Assignment Agreement between the registrant and Vivint, Inc.	
10.21#	 	Form of Full-Service Sublease Agreement between the registrant and Vivint, Inc.	
10.21A#	 	Form of Amended and Restated Full-Service Sublease Agreement between the registrant and Vivint, Inc.	
10.22#	 	Form of Bill of Sale and Assignment between the registrant and Vivint, Inc.	
10.23#	 	Form of Limited Liability Company Agreement of Vivint Solar Licensing, LLC, between the registrant and Vivint, Inc.	
10.24#	 	Form of Trademark License Agreement between the registrant and Vivint Solar Licensing, LLC	
10.25#	 	Engagement Letter between the registrant and Blackstone Advisory Partners L.P. dated as of May 30, 2014	
10.26#	 	Lease Agreement between the registrant and Thanksgiving Park Five, LLC dated as of May 5, 2014	
10.27#	 	Sublease Agreement between the registrant, Thanksgiving Park, LLC and Durham Jones & Pinegar, P.C. dated as of May 19, 2014	
10.28#	 	Canyon Park Technology Center Office Building Lease Agreement between the registrant and TCU-Canyon Park, LLC	
10.29*†	 	Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, between Vivint Solar Mia Manager, LLC and Blackstone Holdings Finance Co. L.L.C., dated as of July 16, 2013	
10.29A*†	 	First Amendment to the Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, between Vivint Solar Mia Manager, LLC and Blackstone Holdings Finance Co. L.L.C., dated as of September 12, 2013	
10.29B#	 	Second Amendment to Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, between Vivint Solar Mia Manager, LLC and Blackstone Holdings Finance Co. L.L.C., dated as of August 31, 2013	
10.30*†	 	Development, EPC and Purchase Agreement by and among Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Mia Project Company, LLC dated as of July 16, 2013	
10.30A*	 	First Amendment to Development, EPC and Purchase Agreement by and among, Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Mia Project Company, LLC dated as of January 13, 2014	
10.30B*	 	Second Amendment to Development, EPC and Purchase Agreement by and among, Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Mia Project Company, LLC dated as of April 25, 2014	
10.31*	 	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Mia Project Company, LLC, dated as of July 16, 2013	
10.32#	 	Guaranty by Vivint Solar, Inc. in favor of Blackstone Holdings Finance Co. L.L.C. and Vivint Solar Mia Project Company, LLC, dated as of July 16, 2013	
10.33*†	 	Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC, between Vivint Solar Aaliyah Manager, LLC and Stoneco IV Corporation, dated as of November 5, 2013	
10.33A*†	 	First Amendment to Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC, between Vivint Solar Aaliyah Manager, LLC and Stoneco IV Corporation, dated as of January 13, 2014	
10.34*†	 	Development, EPC and Purchase Agreement by and among Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Aaliyah Project Company, LLC dated as of November 5, 2013	
 
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Table of Contents

Exhibit
        Number        	 	Description	
10.34A*	 	First Amendment to Development, EPC and Purchase Agreement by and among, Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Aaliyah Project Company, LLC dated as of January 13, 2014	
10.34B*†	 	Second Amendment to Development, EPC and Purchase Agreement by and among Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Aaliyah Project Company, LLC dated as of February 13, 2014	
10.35*	 	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Aaliyah Project Company, LLC, dated as of November 5, 2013	
10.36#	 	Guaranty by Vivint Solar, Inc. in favor of Stoneco IV Corporation, LLC and Vivint Solar Aaliyah Project Company, LLC, dated November 5, 2013	
10.37*†	 	Limited Liability Company Agreement of Vivint Solar Rebecca Project Company, LLC between Vivint Solar Rebecca Manager, LLC and Blackstone Holdings I L.P., dated as of February 13, 2014	
10.38*†	 	Development, EPC and Purchase Agreement by and among Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Rebecca Project Company, LLC dated as of February 13, 2014	
10.39*	 	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Rebecca Project Company, LLC, dated as of February 13, 2014	
10.40#	 	Guaranty by Vivint Solar, Inc. in favor of Blackstone Holdings I L.P. and Vivint Solar Rebecca Project Company, LLC, dated as of February 13, 2014	
10.41#	 	Subscription Agreement between the registrant and 313 Acquisition LLC, dated August 14, 2014	
10.42*†	 	Long Term Product Supply Agreement between Vivint Solar Developer, LLC and Enphase Energy, Inc., dated as of August 11, 2014	
10.43*	 	Subscription Agreement between the registrant and the investors named therein, dated September 3, 2014	
10.44*†	 	Loan Agreement, among Vivint Solar Financing I, LLC, Bank of America, N.A. and the parties named therein, dated as of September 12, 2014	
10.45*†	 	Collateral Agency and Depositary Agreement among Vivint Solar Financing I, LLC, Bank of America, N.A. and the parties named therein, dated as of September 12, 2014	
10.46*†	 	Pledge and Security Agreement among Vivint Solar Financing I, LLC, Bank of America, N.A. and the parties named therein, dated as of September 12, 2014	
10.47*	 	Lease Termination Agreement between the registrant and Thanksgiving Park Five, LLC, dated September 15, 2014	
10.48*	 	Lease Agreement between the registrant and T-Stat One, LLC, dated August 12, 2014	
21.1*	 	List of subsidiaries of the Registrant	
23.1*	 	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm	
23.2*	 	Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.1)	
24.1#	 	Powers of Attorney (included in page II-8 to this registration statement)	

*	Filed herewith.	
**	To be filed by amendment.	
#	Previously filed.	
+	Indicates a management contract or compensatory plan.	
†	Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.	
(b) Financial statement schedules.
Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes thereto.
 
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Table of Contents
Item 17.  Undertakings.
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned hereby undertakes that:
(1)        For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2)        For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
 
II-7

Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Amendment No. 1 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lehi, State of Utah, on September 18, 2014.

VIVINT SOLAR, Inc.	
		
By:    	 	/s/ Gregory S. Butterfield	
	 	Gregory S. Butterfield	
	 	Chief Executive Officer and President	
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the registration statement has been signed by the following persons in the capacities and on the dates indicated below:

Signature	  	Title	 	Date	
/s/ Gregory S. Butterfield
Gregory S. Butterfield	  	Chief Executive Officer and President, Director
(Principal Executive Officer)	 	September 18, 2014	
			
/s/ Dana C. Russell
Dana C. Russell	  	Chief Financial Officer
(Principal Accounting and Financial Officer)	 	September 18, 2014	
			
*
David F. D’Alessandro	  	Director	 	September 18, 2014	
			
*
Alex J. Dunn	  	Director	 	September 18, 2014	
			
*
Bruce McEvoy	  	Director	 	September 18, 2014	
			
*
Todd R. Pedersen	  	Director	 	September 18, 2014	
			
*
Joseph F. Trustey	  	Director	 	September 18, 2014	
			
*
Peter F. Wallace	  	Director	 	September 18, 2014	
			
*
Joseph S. Tibbetts	  	Director	 	September 18, 2014	

*By:    	 	/s/ Dana C. Russell	
	 	Dana C. Russell
Attorney-in-fact	
 
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Table of Contents
EXHIBIT INDEX

Exhibit
        Number        	 	Description	
  1.1*	 	Form of Underwriting Agreement	
  3.1*	 	Form of Certificate of Incorporation, to be effective upon closing of the offering	
  3.2#	 	Form of Bylaws, to be effective upon closing of the offering	
  4.1*	 	Specimen Common Stock Certificate of the registrant	
  4.2*	 	Form of Registration Rights Agreement by and among the registrant and the investors named therein	
  5.1*	 	Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation	
10.1#+	 	Form of Director and Executive Officer Indemnification Agreement	
10.2#+	 	2013 Omnibus Incentive Plan, as amended, and forms of agreements thereunder	
10.3*+	 	2014 Equity Incentive Plan, and forms of agreements thereunder	
10.4A#+	 	Amended and Restated 2013 Long-Term Incentive Pool Plan for District Sales Managers, and forms of agreements thereunder	
10.4B#+	 	Amended and Restated 2013 Long-Term Incentive Pool Plan for Operations Leaders, and forms of agreements thereunder	
10.4C#+	 	2013 Long-Term Incentive Pool Plan for Recruiting Regional Sales Managers, and forms of agreements thereunder	
10.4D#+	 	Amended and Restated 2013 Long-Term Incentive Pool Plan for Regional Managers (Technicians), and forms of agreements thereunder	
10.4E*+	 	Amended and Restated 2013 Long-Term Incentive Pool Plan for Regional Sales Managers, and forms of agreements thereunder	
10.4F#+	 	Amended and Restated 2013 Long-Term Incentive Pool Plan for Sales Managers, and forms of agreements thereunder	
10.5*+	 	Form of 313 Acquisition LLC Unit Plan	
10.6#+	 	Executive Incentive Compensation Plan, and forms of agreements thereunder	
10.7#+	 	Form of Involuntary Termination Protection Agreement between the Registrant and certain of its officers	
10.8*+	 	Letter Agreement, dated August 28, 2014, with Gregory S. Butterfield	
10.9#+	 	Employment Agreement, dated September 25, 2013, with Thomas Plagemann	
10.10*+	 	Letter Agreement, dated August 28, 2014, with L. Chance Allred	
10.11#	 	Subordinated Note and Loan Agreement between the registrant and APX Group, Inc., dated December 27, 2012	
10.11A#	 	First Amendment to Note and Loan Agreement between the registrant and APX Group, Inc., dated July 26, 2013	
10.12#	 	Amended and Restated Subordinated Note and Loan Agreement between the registrant and APX Parent Holdco, Inc., dated January 20, 2014	
10.12A#	 	First Amendment to Amended and Restated Subordinated Note and Loan Agreement between the registrant and APX Parent Holdco, Inc., dated April 25, 2014	
10.13#†	 	Credit Agreement between us, as a guarantor, Vivint Solar Holdings, Inc., as the borrower, and Bank of America, N.A. as administrative agent, collateral agent and lender, dated May 1, 2014	
10.14#	 	Form of Stockholders Agreement by and among the registrant and other parties thereto	
10.15#	 	Form of Master Intercompany Framework Agreement between the registrant and Vivint, Inc.	
10.16#	 	Form of Transition Services Agreement between the registrant and Vivint, Inc.	
10.17#	 	Form of Non-Competition Agreement between the registrant and Vivint, Inc.	
10.18#	 	Form of Product Development and Supply Agreement between Vivint Solar Developer, LLC and Vivint, Inc.	
10.19#	 	Form of Marketing and Customer Relations Agreement between Vivint Solar Developer, LLC and Vivint, Inc.	

Table of Contents

Exhibit
        Number        	 	Description	
10.20A#	 	Form of Trademark Assignment Agreement between Vivint Solar Licensing LLC and Vivint, Inc.	
10.20B#	 	Form of Trademark Assignment Agreement between the registrant and Vivint, Inc.	
10.21#	 	Form of Full-Service Sublease Agreement between the registrant and Vivint, Inc.	
10.21A#	 	Form of Amended and Restated Full-Service Sublease Agreement between the registrant and Vivint, Inc.	
10.22#	 	Form of Bill of Sale and Assignment between the registrant and Vivint, Inc.	
10.23#	 	Form of Limited Liability Company Agreement of Vivint Solar Licensing, LLC, between the registrant and Vivint, Inc.	
10.24#	 	Form of Trademark License Agreement between the registrant and Vivint Solar Licensing, LLC	
10.25#	 	Engagement Letter between the registrant and Blackstone Advisory Partners L.P. dated as of May 30, 2014	
10.26#	 	Lease Agreement between the registrant and Thanksgiving Park Five, LLC dated as of May 5, 2014	
10.27#	 	Sublease Agreement between the registrant, Thanksgiving Park LLC and Durham Jones & Pinegar, P.C. dated as of May 19, 2014	
10.28#	 	Canyon Park Technology Center Office Building Lease Agreement between the registrant and TCU-Canyon Park, LLC	
10.29*†	 	Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, between Vivint Solar Mia Manager, LLC and Blackstone Holdings Finance Co. L.L.C., dated as of July 16, 2013	
10.29A*†	 	First Amendment to the Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, between Vivint Solar Mia Manager, LLC and Blackstone Holdings Finance Co. L.L.C., dated as of September 12, 2013	
10.29B#	 	Second Amendment to Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, between Vivint Solar Mia Manager, LLC and Blackstone Holdings Finance Co. L.L.C., dated as of August 31, 2013	
10.30*†	 	Development, EPC and Purchase Agreement by and among, Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Mia Project Company, LLC dated as of July 16, 2013	
10.30A*	 	First Amendment to Development, EPC and Purchase Agreement by and among Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Mia Project Company, LLC dated as of January 13, 2014	
10.30B*	 	Second Amendment to Development, EPC and Purchase Agreement by and among, Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Mia Project Company, LLC dated as of April 25, 2014	
10.31*	 	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Mia Project Company, LLC, dated as of July 16, 2013	
10.32#	 	Guaranty by Vivint Solar, Inc. in favor of Blackstone Holdings Finance Co. L.L.C. and Vivint Solar Mia Project Company, LLC, dated as of July 16, 2013	
10.33*†	 	Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC, between Vivint Solar Aaliyah Manager, LLC and Stoneco IV Corporation, dated as of November 5, 2013	
10.33A*†	 	First Amendment to Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC, between Vivint Solar Aaliyah Manager, LLC and Stoneco IV Corporation, dated as of January 13, 2014	
10.34*†	 	Development, EPC and Purchase Agreement by and among Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Aaliyah Project Company, LLC dated as of November 5, 2013	
10.34A*	 	First Amendment to Development, EPC and Purchase Agreement by and among, Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Aaliyah Project Company, LLC dated as of January 13, 2014	

Table of Contents

Exhibit
        Number        	 	Description	
10.34B*†	 	Second Amendment to Development, EPC and Purchase Agreement by and among Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Aaliyah Project Company, LLC dated as of February 13, 2014	
10.35*	 	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Aaliyah Project Company, LLC, dated as of November 5, 2013	
10.36#	 	Guaranty by Vivint Solar, Inc. in favor of Stoneco IV Corporation, LLC and Vivint Solar Aaliyah Project Company, LLC, dated November 5, 2013	
10.37*†	 	Limited Liability Company Agreement of Vivint Solar Rebecca Project Company, LLC between Vivint Solar Rebecca Manager, LLC and Blackstone Holdings I L.P., dated as of February 13, 2014	
10.38*†	 	Development, EPC and Purchase Agreement by and among Vivint Solar Developer, LLC, Vivint Solar Holdings, Inc., and Vivint Solar Rebecca Project Company, LLC dated as of February 13, 2014	
10.39*	 	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Rebecca Project Company, LLC, dated as of February 13, 2014	
10.40#	 	Guaranty by Vivint Solar, Inc. in favor of Blackstone Holdings I L.P. and Vivint Solar Rebecca Project Company, LLC, dated as of February 13, 2014	
10.41#	 	Subscription Agreement between the registrant and 313 Acquisition LLC, dated August 14, 2014	
10.42*†	 	Long Term Product Supply Agreement between Vivint Solar Developer, LLC and Enphase Energy, Inc., dated as of August 11, 2014	
10.43*	 	Subscription Agreement between the registrant and the investors named therein, dated September 3, 2014	
10.44*†	 	Loan Agreement, among Vivint Solar Financing I, LLC, Bank of America, N.A. and the parties named therein, dated as of September 12, 2014	
10.45*†	 	Collateral Agency and Depositary Agreement among Vivint Solar Financing I, LLC, Bank of America, N.A. and the parties named therein, dated as of September 12, 2014	
10.46*†	 	Pledge and Security Agreement among Vivint Solar Financing I, LLC, Bank of America, N.A. and the parties named therein, dated as of September 12, 2014	
10.47*	 	Lease Termination Agreement between the registrant and Thanksgiving Park Five, LLC, dated September 15, 2014	
10.48*	 	Lease Agreement between the registrant and T-Stat One, LLC, dated August 12, 2014	
21.1*	 	List of subsidiaries of the Registrant.	
23.1*	 	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm	
23.2*	 	Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.1)	
24.1#	 	Powers of Attorney (included in page II-8 to this registration statement)	

*	Filed herewith.	
**	To be filed by amendment.	
#	Previously filed.	
+	Indicates a management contract or compensatory plan.	
†	Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.	

Exhibit 1.1
Vivint Solar, Inc.
Common Stock, par value $0.01

Underwriting Agreement
[ — ], 2014
Goldman, Sachs & Co.
Merrill Lynch, Pierce, Fenner & Smith
                     Incorporated
Credit Suisse Securities (USA) LLC
    As representatives of the several Underwriters
        named in Schedule I hereto
c/o Goldman, Sachs & Co.
200 West Street
New York, NY 10282-2198
c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
One Bryant Park
New York, NY 10036
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue
New York, NY 10010-3629
Ladies and Gentlemen:
Vivint Solar, Inc., a Delaware corporation (the “ Company ”), proposes, subject to the terms and conditions stated herein, to issue and sell to the Underwriters named in Schedule I hereto (the “ Underwriters ”) [ — ] shares of common stock, par value $0.01 per share (“ Common Stock ”) of the Company and the stockholder of the Company named in Schedule II hereto (the “ Selling Stockholder ”) proposes, subject to the terms and conditions stated herein, to sell to the Underwriters, at the election of the Underwriters, up to [ — ] shares of Common Stock. The [ — ] shares to be sold by the Company are herein called the “ Firm Shares ” and the [ — ] shares to be sold by the Selling Stockholder are herein called the “ Optional Shares ”. The Firm Shares and the Optional Shares that the Underwriters elect to purchase pursuant to Section 3 hereof are herein collectively called the “ Shares ”.
1. The Company represents and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S–1 (File No. 333-198372) (the “ Initial Registration Statement ”) in respect of the Shares has been filed with the Securities and Exchange Commission (the “ Commission ”); the Initial Registration Statement and any post-effective amendment thereto, each in the form heretofore delivered to you, and, excluding

exhibits thereto, to you for each of the other Underwriters, have been declared effective by the Commission in such form; other than a registration statement, if any, increasing the size of the offering (a “ Rule 462(b) Registration Statement ”), filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “ Securities Act ”), which became effective upon filing, no other document with respect to the Initial Registration Statement has heretofore been filed with the Commission; and no stop order suspending the effectiveness of the Initial Registration Statement, any post-effective amendment thereto or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose has been initiated or, to the Company’s knowledge, threatened by the Commission (any preliminary prospectus included in the Initial Registration Statement or filed with the Commission pursuant to Rule 424(a) of the rules and regulations of the Commission under the Securities Act is hereinafter called a “ Preliminary Prospectus ”; the various parts of the Initial Registration Statement and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and including the information contained in the form of final prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act in accordance with Section 6(a) hereof and deemed by virtue of Rule 430A under the Securities Act to be part of the Initial Registration Statement at the time it was declared effective, each as amended at the time such part of the Initial Registration Statement became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective, are hereinafter collectively called the “ Registration Statement ”; the Preliminary Prospectus relating to the Shares that was included in the Registration Statement immediately prior to the Applicable Time (as defined in Section 1(c) hereof) is hereinafter called the “ Pricing Prospectus ”; such final prospectus, in the form first filed pursuant to Rule 424(b) under the Securities Act, is hereinafter called the “ Prospectus ”; any “issuer free writing prospectus” as defined in Rule 433 under the Securities Act relating to the Shares is hereinafter called an “ Issuer Free Writing Prospectus ”); any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Securities Act is hereinafter called a “ Section 5(d) Communication ”; and any Section 5(d) Communication that is a written communication within the meaning of Rule 405 under the Securities Act is hereinafter called a “ Section 5(d) Writing ”;
(b) No order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Securities Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated or Credit Suisse Securities (USA) LLC (together, the “ Representatives ” or “ you ”) expressly for use therein (which information is limited to the information specified in the “blood letter” dated the date hereof and is hereinafter referred to as “ Underwriter Information ”) or by a Selling Stockholder expressly for use in the preparation of the answers therein to Items 7 and 11(m) of Form S–1;
(c) For the purposes of this Agreement, the “ Applicable Time ” is [    :         ]m (Eastern time) on the date of this Agreement; the Pricing Prospectus, as supplemented by the information listed on Schedule III(c) hereto, taken together (collectively, the “ Pricing Disclosure Package ”), as of the Applicable Time, did not include any untrue statement of a material fact or
 
2

omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Free Writing Prospectus listed on Schedule III(a) hereto does not conflict with the information contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus and each such Issuer Free Writing Prospectus, as supplemented by and taken together with the Pricing Disclosure Package, as of the Applicable Time, and each Section 5(d) Writing listed on Schedule III(b) hereto at the time such communication was used did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in the Pricing Disclosure Package, an Issuer Free Writing Prospectus or Section 5(d) Writing in reliance upon and in conformity with Underwriter Information or by a Selling Stockholder expressly for use in the preparation of the answers therein to Items 7 and 11(m) of Form S–1;
(d) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Securities Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to each part of the Registration Statement and any amendment thereto and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with Underwriter Information or by a Selling Stockholder expressly for use in the preparation of the answers therein to Items 7 and 11(m) of Form S–1;
(e) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included in the Pricing Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, there has not been any change in the capital stock (other than as a result of (i) the exercise of stock options, the vesting of restricted stock units or the granting of stock options or restricted stock units pursuant to the Company’s equity incentive plans or (ii) the repurchase of shares of capital stock pursuant to agreements providing for an option to repurchase or a right of first refusal on behalf of the Company, in each case as such (A) equity incentive plans, (B) outstanding options and restricted stock units and (C) agreements are described in the Pricing Prospectus) or material change in long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole (a “ Material Adverse Effect ”), otherwise than as set forth or contemplated in the Pricing Prospectus;
(f) The Company and its subsidiaries do not own any fee interest in real property. The Company and its subsidiaries have valid title to all personal property (other than Intellectual Property, which is addressed exclusively in Section 1(r) hereof) owned by them, free and clear of all liens, encumbrances and defects except such as are described in the Pricing Prospectus
 
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or such as do not materially affect the value of such property and do not materially interfere with the use made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them, to the Company’s knowledge, under valid leases subject to any site access rights (whether construed as leases, easements, licenses or rights of way) under the Company’s customer agreements and such other exceptions that do not materially affect the value of such property and buildings or materially interfere with the use made of such property and buildings by the Company and its subsidiaries;
(g) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Pricing Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it leases real property or conducts any business so as to require such qualification, except where the failure to be so qualified or be in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; each “significant subsidiary” (as defined in Rule 1-02 of Regulation S-X under the Securities Act) of the Company is listed on Schedule V hereto (together, the “ Subsidiaries ”) and has been duly organized and is validly existing as a corporation, limited liability company or other entity in good standing under the laws of its jurisdiction of organization, with power and authority (corporate and other) to own its properties and conduct its business as described in the Pricing Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it leases real property or conducts any business so as to require such qualification; and each other subsidiary of the Company has been duly incorporated or formed, as applicable, and is validly existing as a corporation or limited liability company, as applicable, and in good standing under the laws of its jurisdiction of incorporation or formation;
(h) The Company has an authorized capitalization as set forth in the Pricing Prospectus and all of the outstanding shares of capital stock of the Company, including the Shares to be sold by the Selling Stockholder, have been duly authorized and validly issued and are fully paid and non-assessable and conform in all material respects to the description of the Common Stock contained in the Pricing Disclosure Package and the Prospectus; and all of the issued shares of capital stock or limited liability company interests, as applicable, of each subsidiary of the Company have been duly authorized and validly issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims;
(i) The Shares to be issued and sold by the Company to the Underwriters hereunder have been duly authorized and, when issued and delivered against payment therefor as provided herein, will be validly issued and fully paid and non-assessable and will conform in all material respects to the description of the Common Stock contained in the Pricing Disclosure Package and the Prospectus;
(j) Neither the Company nor any of its subsidiaries has taken, directly or indirectly, any action that was designed to or that has constituted or that might reasonably be expected to cause or result in the manipulation of the price of any security of the Company to facilitate the sale of the Shares;
 
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(k) The issue and sale of the Shares to be sold by the Company and the compliance by the Company with this Agreement and the consummation of the transactions herein contemplated will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the Certificate of Incorporation or By-laws or similar organizational documents of the Company or any of its subsidiaries or (iii) result in any violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, except in the case of (i) and (iii) for such violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue of the Shares to be sold by the Company and the sale of the Shares or the consummation by the Company of the transactions contemplated by this Agreement, except for the registration under the Securities Act of the Shares, the approval by the Financial Industry Regulatory Authority (“ FINRA ”) of the underwriting terms and arrangements and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters, except where the failure to obtain any such consents, approvals, authorizations, orders, registrations or qualifications would not impair, in any material respect, the ability of the Company to issue and sell the Shares or to consummate the transactions contemplated by this Agreement;
(l) Neither the Company nor any of its subsidiaries is (i) in violation of its Certificate of Incorporation or By-laws or similar organizational documents, as applicable, or (ii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except in the case of (ii) for such defaults as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;
(m) The statements set forth in the Pricing Prospectus and Prospectus under the caption “Description of Capital Stock”, insofar as they purport to constitute a summary of the terms of the Common Stock, under the caption “Material U.S. Federal Income Tax Consequences for Non-U.S. Holders of Common Stock” and under the caption “Shares Eligible for Future Sale”, insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair in all material respects;
(n) Other than as set forth in the Pricing Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries or, to the Company’s knowledge, any officer or director of the Company is a party or of which any property or assets of the Company or any of its subsidiaries or, to the Company’s knowledge, any officer or director of the Company is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect; and, to the Company’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others;
 
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(o) Neither the Company nor any of its subsidiaries is, and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Pricing Prospectus, will not be an “investment company”, as such term is defined in the Investment Company Act of 1940, as amended (the “ Investment Company Act ”);
(p) At the time of filing the Initial Registration Statement the Company was not and is not an “ineligible issuer,” as defined under Rule 405 under the Securities Act;
(q) Ernst & Young LLP, which has certified certain financial statements of the Company and its subsidiaries, is an independent registered public accounting firm as required by the Securities Act and the rules and regulations of the Commission thereunder;
(r) The Company and its subsidiaries own, possess or can acquire on reasonable terms sufficient rights to all material Intellectual Property (defined below) used in the conduct of the business as now conducted by them. “Intellectual Property” means trademarks, trade names, patent rights, copyrights, domain names, trade secrets, inventions, technology, know-how and other intellectual property rights. Except as disclosed in the Pricing Prospectus or as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) there are no ownership rights of third parties to any of the Intellectual Property owned by the Company or its subsidiaries; (ii) to the Company’s knowledge, there is no infringement, misappropriation, breach, default or other violation, or the occurrence of any event that with notice or the passage of time would constitute any of the foregoing, by third parties of any of the Intellectual Property of the Company or its subsidiaries; (iii) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the Company’s or any subsidiary’s rights in or to, or the violation of any of the license terms of, any of their Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (iv) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity, enforceability or scope of any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (v) there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company or any subsidiary infringes, misappropriates or otherwise violates any Intellectual Property owned by others and the Company is unaware of any fact or circumstance that would form a reasonable basis for any such claim; and (vi) none of the Intellectual Property used by the Company or its subsidiaries in their businesses has been obtained or is being used by the Company or its subsidiaries in violation of any contractual obligation binding on the Company or any of its subsidiaries;
(s) (i) There are no strikes or other labor disputes against the Company or any of its subsidiaries pending or, to the knowledge of the Company, threatened; and (ii) hours worked by and payment made to employees of the Company or any of its subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable laws dealing with such matters, except, in the case of (i) and (ii), as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect;
(t) Except as described in the Pricing Prospectus and the Prospectus, there are no contracts, agreements or understandings between the Company and any person granting such person the right (other than rights which have been waived in writing or otherwise satisfied) to (i) require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the
 
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Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Securities Act or (ii) preemptive or other rights to subscribe for the Shares;
(u) Except as described in the Pricing Prospectus and the Propsectus, the Company has not sold or issued any shares of Common Stock during the six-month period preceding the date of the Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or S of, the Securities Act, other than shares issued pursuant to employee benefit plans, stock option plans or other employee compensation plans or pursuant to outstanding options, rights or warrants;
(v) Since the date as of which information is given in the Pricing Prospectus and the Prospectus and except as described in the Pricing Prospectus and the Prospectus, the Company has not (i) issued or granted any securities, other than pursuant to employee benefit plans, stock option plans or other employee compensation plans or pursuant to outstanding options, rights or warrants, (ii) incurred any liability or obligation, direct or contingent, other than liabilities and obligations that were incurred in the ordinary course of business, (iii) entered into any material transaction not in the ordinary course of business or (iv) declared or paid any dividend on its capital stock;
(w) The Company and its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the business in which it is engaged; none of the Company or any of its Subsidiaries has been refused any insurance coverage sought or applied for; and none of the Company or any of its Subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect;
(x) The Company and each of its subsidiaries (i) are in compliance with all, and have not violated any, laws, regulations, ordinances, rules, orders, judgments, decrees, permits or other legal requirements of any governmental authority, including without limitation any international, national, state, provincial, regional, or local authority, relating to the protection of human health or safety, the environment, or natural resources, or to hazardous or toxic substances or wastes, pollutants or contaminants (“ Environmental Laws ”) applicable to such entity, which compliance includes, without limitation, obtaining, maintaining and complying with all permits and authorizations and approvals required by Environmental Laws to conduct their respective businesses, and (ii) have not received notice of any actual or alleged violation of Environmental Laws, or of any potential liability for or other obligation concerning the presence, disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except where the failure to comply with such Environmental Laws would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as described in the Pricing Prospectus and the Prospectus, (A) there are no proceedings that are pending, or known to be contemplated, against the Company or any of its subsidiaries under Environmental Laws in which a governmental authority is also a party, other than such proceedings regarding which it is reasonably believed no monetary sanctions of $100,000 or more will be imposed, (B) the Company and its subsidiaries are not aware of any issues regarding compliance with Environmental Laws, or liabilities or other obligations under Environmental Laws or concerning hazardous or toxic substances or wastes, pollutants or contaminants, that could reasonably be expected to have a Material Adverse Effect on the
 
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capital expenditures, earnings or competitive position of the Company and its subsidiaries taken as a whole, and (C) none of the Company and its subsidiaries anticipates incurring material capital expenditures relating to compliance with Environmental Laws;
(y) The Company maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) that complies with the requirements of the Exchange Act and has been designed by the Company’s principal executive officer and principal financial officer, or under their supervision , to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (it being understood that this subsection shall not require the Company to comply with Section 404 of the Sarbanes-Oxley Act of 2002 as of an earlier date than it would otherwise be required to so comply under applicable law). Except as disclosed in the Pricing Prospectus, the Company’s internal control over financial reporting is effective and the Company is not aware of any material weaknesses in its internal control over financial reporting;
(z) Since the date of the latest audited financial statements included in the Pricing Prospectus, there has been no change in the Company’s internal control over financial reporting that has materially and adversely affected, or is reasonably likely to materially and adversely affect, the Company’s internal control over financial reporting;
(aa) The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that material information relating to the Company and its subsidiaries is made known to the Company’s principal executive officer and principal financial officer by others within those entities; and such disclosure controls and procedures are effective;
(bb) This Agreement has been duly authorized, executed and delivered by the Company;
(cc) The statistical and market-related data included under the captions “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” in the Pricing Prospectus and the Prospectus are based on or derived from estimates and sources that the Company believes to be reliable and accurate in all material respects;
(dd) Except as described in the Pricing Prospectus and such as were repaid in full prior to the filing of the Initial Registration Statement, the Company has not, directly or indirectly, including through any subsidiary, extended or maintained credit, or arranged for the extension of credit, or renewed any extension of credit, in the form of a personal loan to or for any of its directors or executive officers;
(ee) Except as described in the Pricing Prospectus and the Prospectus, no relationship, direct or indirect, exists between or among the Company, on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company, on the other hand, that is required to be described in the Pricing Prospectus and the Prospectus which is not so described;
(ff) Except as described in the Pricing Prospectus and the Prospectus, the Company and each of its subsidiaries have filed all material federal, state, local and foreign income and
 
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franchise tax returns required to be filed through the date hereof, subject to permitted extensions, and have paid all material taxes due thereon. No material tax deficiency has been determined adversely to the Company or any of its subsidiaries and the Company does not have any knowledge of any tax deficiencies;
(gg) Neither the Company nor any of its subsidiaries or controlled affiliates, nor any director or officer thereof, nor, to the Company’s knowledge, any employee, agent or representative of the Company or of any of its subsidiaries or controlled affiliates, has taken any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to influence official action or secure an improper advantage for the Company; and the Company and its subsidiaries and controlled affiliates have conducted their businesses in compliance in all material respects with applicable anti-corruption laws and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws in all material respects;
(hh) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Company and its subsidiaries possess, and are in compliance with the terms of, all certificates, authorizations, franchises, licenses and permits (“ Licenses ”) necessary to the conduct of the business now conducted and the Company and its subsidiaries have not received any notice of proceedings relating to the revocation or modification of any Licenses;
(ii) The operations of the Company and its subsidiaries are and have been conducted at all times in material compliance with all applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “ USA PATRIOT Act ”), and the applicable anti-money laundering statutes of jurisdictions where the Company and its subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Anti-Money Laundering Laws ”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened;
(jj) (i) The Company represents that neither the Company nor any of its subsidiaries (collectively, the “ Entity ”) or, to the knowledge of the Entity, any director, officer, employee, agent, affiliate or representative of the Entity, is an individual or entity (“ Person ”) that is, or is owned or controlled by a Person that is: (1) the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control (“ OFAC ”), the United Nations Security Council (“ UNSC ”), the European Union (“ EU ”), Her Majesty’s Treasury (“ HMT ”), or other relevant sanctions authority (collectively, “ Sanctions ”), or (2) located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, North Korea, Sudan and Syria); (ii) The Entity represents and covenants that it will not, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture
 
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partner or other Person: (1) to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or (2) in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise); (iii) The Entity represents and covenants that, for the past 5 years, it has not knowingly engaged in, is not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions;
(kk) The Entity represents and covenants that, for the past 5 years, it has not knowingly engaged in, is not now knowingly engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions;
(ll) There are no contracts or other documents of a character required to be described in the Registration Statement, the Pricing Prospectus or the Prospectus or to be filed as an exhibit to the Registration Statement which are not described or filed as required. Each description of a contract, document or other agreement in the Registration Statement, the Pricing Prospectus and the Prospectus accurately reflects in all material respects the terms of the contract, document or other agreement;
(mm) Except as pre-approved in accordance with the requirements set forth in Section 10A of the Exchange Act, as amended, Ernst & Young LLP have not been engaged by the Company to perform any “prohibited activities” (as defined in such Section 10A);
(nn) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Company and its subsidiaries have complied, and are presently in compliance, with its privacy policies and other legal obligations regarding the collection, use, transfer, storage, protection, disposal and disclosure by the Company and its subsidiaries of personally identifiable information;
(oo) Except as would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, no fund investor has withdrawn its tax equity commitments or notified the Company of an unwillingness or inability to fund its tax equity commitments;
(pp) From the time of initial confidential submission of a registration statement relating to the Shares with the Commission (or, if earlier, the first date on which a Section 5(d) Communication was made) through the date hereof, the Company has been and is an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act (an “ Emerging Growth Company ”);
(pp) Other than as set forth in the Pricing Disclosure Package, none of the following events has occurred or exists: (i) a failure to fulfill the obligations, if any, under the minimum funding standards of Section 302 of the United States Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), and the regulations and published interpretations thereunder with respect to a Plan, determined without regard to any waiver of such obligations or extension of any amortization period; (ii) an audit or investigation by the Internal Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other federal or state governmental agency or any foreign regulatory agency with respect to any Plan; or (iii) any violation of law or applicable qualification standards, with respect to any Plan, except, in the case of (i), (ii) and (iii), as would not, individually or in the aggregate, reasonably
 
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be expected to have a Material Adverse Effect. Other than as set forth in the Pricing Disclosure Package, none of the following events has occurred or is reasonably likely to occur: (i) an increase in the aggregate amount of contributions required to be made to all Plans in the current fiscal year of the Company and its subsidiaries compared to the amount of such contributions made in the most recently completed fiscal year of the Company and its subsidiaries; (ii) an increase in the “accumulated post-retirement benefit obligations” (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 715) of the Company and its subsidiaries compared to the amount of such obligations in the most recently completed fiscal year of the Company and its subsidiaries; (iii) liability under Title IV of ERISA with respect to any Plan; or (iv) the filing of a material claim by one or more employees or former employees of the Company or any of its subsidiaries related to their employment, except, in the case of (i), (ii), (iii) and (iv) of this sentence, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. For purposes of this paragraph, the term “Plan” means a plan (within the meaning of Section 3(3) of ERISA) subject to Title IV of ERISA that is sponsored, maintained or contributed to by the Company or any of its subsidiaries and with respect to which the Company or any of its subsidiaries may have any liability;
(qq) The Company has not taken any action that may be considered to be a “road show” (as defined in Rule 433(h)(4) of the Securities Act) at any time prior to the date that is 21 days after the date by which the Company has publicly filed on EDGAR (as defined below) any confidentially submitted registration statement, all amendments thereto as well as any correspondence with the staff related thereto; and
(rr) Neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against any of them or any Underwriter for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Shares.
2. The Selling Stockholder represents and warrants to, and agrees with, each of the Underwriters and the Company that:
(a) Except (i) as will have been obtained on or prior to the Time of Delivery for the registration under the Securities Act of the Shares, (ii) as may be required under foreign or state securities or Blue Sky laws or by FINRA or by the Exchange (as defined herein) in connection with the purchase and distribution of the Shares by the Underwriters and (iii) as would not reasonably be expected to impair, in any material respect, the ability of the Selling Stockholder to fulfill its obligations under this Agreement, all consents, approvals, authorizations and orders necessary for the execution and delivery by the Selling Stockholder of this Agreement and the Power of Attorney and the Custody Agreement hereinafter referred to, and for the sale and delivery of the Shares to be sold by the Selling Stockholder hereunder, have been obtained; and such Selling Stockholder has full right, power and authority to enter into this Agreement, the Power of Attorney and the Custody Agreement, and to sell, assign, transfer and deliver the Shares to be sold by the Selling Stockholder hereunder;
(b) The sale of the Shares to be sold by the Selling Stockholder hereunder and the compliance by such Selling Stockholder with this Agreement, the Power of Attorney and the Custody Agreement, and the consummation of the transactions herein and therein contemplated will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any statute, indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Selling Stockholder is a
 
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party or by which the Selling Stockholder is bound or to which any of the property or assets of the Selling Stockholder is subject, nor will such action result in any violation of (ii) the provisions of the Limited Liability Company Agreement of the Selling Stockholder or (iii) any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Selling Stockholder or any of its subsidiaries or any property or assets of the Selling Stockholder, except in the case of (i) and (iii), as would not, individually or in the aggregate, reasonably be expected to impair, in any material respect, the Selling Stockholder’s ability to fulfill its obligations under this Agreement; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental body or agency is required for the performance by the Selling Stockholder of its obligations under this Agreement, the Power of Attorney and the Custody Agreement, and the consummation by the Selling Stockholder of the transactions contemplated by this Agreement, the Power of Attorney and the Custody Agreement, in connection with the Shares to be sold by the Selling Stockholder hereunder, except the registration under the Securities Act of the Shares, the approval by FINRA of the underwriting terms and arrangements and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters;
(c) The Selling Stockholder has, and immediately prior to each Time of Delivery (as defined in Section 5(a) hereof) the Selling Stockholder will have, good and valid title to the Shares to be sold by the Selling Stockholder hereunder at such Time of Delivery, free and clear of all liens, encumbrances, equities or claims; and, upon delivery of such Shares and payment therefor pursuant hereto, good and valid title to such Shares, free and clear of all liens, encumbrances, equities or claims, will pass to the several Underwriters;
(d) On or prior to the date of the Pricing Prospectus, the Selling Stockholder has executed and delivered to the Underwriters an agreement substantially in the form of Annex IV hereto;
(e) The Selling Stockholder has not taken and will not take, directly or indirectly, any action that is designed to or that has constituted or might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares;
(f) To the extent that any statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto are made in reliance upon and in conformity with written information furnished to the Company by the Selling Stockholder pursuant to Items 7 and 11(m) of Form S–1 expressly for use therein (the “ Selling Stockholder Information ”), such Registration Statement and Preliminary Prospectus did, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will, when they become effective or are filed with the Commission, as the case may be, conform in all material respects to the requirements of the Securities Act and the rules and regulations of the Commission thereunder and not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;
(g) In order to document the Underwriters’ compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions herein contemplated, the Selling Stockholder will deliver to you prior to or at the First Time of Delivery a properly completed and executed United States Treasury Department Form W-9 (or other applicable form or statement specified by Treasury Department regulations in lieu thereof);
 
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(h) Certificates in negotiable form representing all of the Shares to be sold by the Selling Stockholder hereunder have been placed in custody under a Custody Agreement, in the form heretofore furnished to you (the “ Custody Agreement ”), duly executed and delivered by the Selling Stockholder to ComputerShare Trust Company, N.A., as custodian (the “ Custodian ”), and the Selling Stockholder has duly executed and delivered a Power of Attorney, in the form heretofore furnished to you (the “ Power of Attorney ”), appointing the persons indicated in Schedule II hereto, and each of them, as the Selling Stockholder’s attorneys-in-fact (the “ Attorneys-in-Fact ”) with authority to execute and deliver this Agreement on behalf of the Selling Stockholder, to determine the purchase price to be paid by the Underwriters to the Selling Stockholder as provided in Section 3 hereof, to authorize the delivery of the Shares to be sold by the Selling Stockholder hereunder and otherwise to act on behalf of the Selling Stockholder in connection with the transactions contemplated by this Agreement and the Custody Agreement;
(i) The Shares represented by the certificates held in custody for the Selling Stockholder under the Custody Agreement are subject to the interests of the Underwriters hereunder; the arrangements made by the Selling Stockholder for such custody, and the appointment by the Selling Stockholder of the Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable; the obligations of the Selling Stockholder hereunder shall not be terminated by operation of law, whether by the dissolution of the Selling Stockholder, or by the occurrence of any other event; if the Selling Stockholder should be dissolved, or if any other such event should occur, before the delivery of the Shares to be sold by the Selling Stockholder hereunder, certificates representing the Shares to be sold by the Selling Stockholder hereunder shall be delivered by or on behalf of the Selling Stockholder in accordance with the terms and conditions of this Agreement and of the Custody Agreements; and actions taken by the Attorneys-in-Fact pursuant to the Powers of Attorney shall be as valid as if such death, incapacity, termination, dissolution or other event had not occurred, regardless of whether or not the Custodian, the Attorneys-in-Fact, or any of them, shall have received notice of such death, incapacity, termination, dissolution or other event; and
(j) The Selling Stockholder is not prompted by any material non-public information concerning the Company or any of its subsidiaries that is not disclosed in the Pricing Prospectus to sell its Shares pursuant to this Agreement.
3. Subject to the terms and conditions herein set forth, (a) the Company agrees to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at a purchase price per share of $[ — ], the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto and (b) in the event and to the extent that the Underwriters shall exercise the election to purchase Optional Shares as provided below, the Selling Stockholder, as and to the extent indicated in Schedule II hereto agrees to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Selling Stockholder, at the purchase price per share set forth in clause (a) of this Section 3, that portion of the number of Optional Shares as to which such election shall have been exercised (to be adjusted by you so as to eliminate fractional shares) determined by multiplying such number of Optional Shares by a fraction, the numerator of which is the maximum number of Optional Shares which such Underwriter is entitled to purchase as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the maximum number of Optional Shares that all of the Underwriters are entitled to purchase hereunder.
 
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The Selling Stockholder, as and to the extent indicated in Schedule II hereto, hereby grants to the Underwriters the right to purchase at their election up to an aggregate of [ — ] Optional Shares, at the purchase price per share set forth in the paragraph above, for the sole purpose of covering sales of shares in excess of the number of Firm Shares, provided that the purchase price per Optional Share shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm Shares but not payable on the Optional Shares. Any such election to purchase Optional Shares may be exercised only by written notice from you to the Attorneys-in-Fact, given within a period of 30 calendar days after the date of this Agreement and setting forth the aggregate number of Optional Shares to be purchased and the date on which such Optional Shares are to be delivered, as determined by you but in no event earlier than the First Time of Delivery (as defined in Section 5(a) hereof) or, unless you and the Attorneys-in-Fact otherwise agree in writing, earlier than two or later than ten business days after the date of such notice.
4. Upon the authorization by you of the release of the Firm Shares, the several Underwriters propose to offer the Firm Shares for sale upon the terms and conditions set forth in the Prospectus.
5. (a) The Shares to be purchased by each Underwriter hereunder, in definitive form, and in such authorized denominations and registered in such names as the Representatives may request upon at least forty-eight hours’ prior notice to the Company and the Selling Stockholder shall be delivered by or on behalf of the Company and the Selling Stockholder to Goldman, Sachs & Co., through the facilities of the Depository Trust Company (“ DTC ”), for the account of such Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the accounts specified by the Company and the Custodian to Goldman, Sachs & Co. at least forty-eight hours in advance. The Company and the Selling Stockholder will cause the certificates representing the Shares to be made available for checking and packaging at least twenty-four hours prior to the Time of Delivery (as defined below) with respect thereto at the office of DTC or its designated custodian (the “ Designated Office ”). The time and date of such delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New York City time, on [ — ], 2014 or such other time and date as the Representatives, the Company and the Attorneys-in-Fact may agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m., New York time, on the date specified by the Representatives in each written notice given by the Representatives of the Underwriters’ election to purchase such Optional Shares, or such other time and date as the Representatives, the Company and the Attorneys-in-Fact may agree upon in writing. Such time and date for delivery of the Firm Shares is herein called the “ First Time of Delivery ”, each such time and date for delivery of the Optional Shares, if not the First Time of Delivery, is herein called the “ Second Time of Delivery ”, and each such time and date for delivery is herein called a “ Time of Delivery ”.
(b) The documents to be delivered at each Time of Delivery by or on behalf of the parties hereto pursuant to Section 9 hereof, including the cross receipt for the Shares and any additional documents requested by the Underwriters pursuant to Section 9(l) hereof will be delivered at the offices of Simpson Thacher & Bartlett LLP, 2475 Hanover Street, Palo Alto, CA 94304 (the “ Closing Location ”), and the Shares will be delivered at the Designated Office, all at such Time of Delivery. A meeting will be held at the Closing Location at 12:00 p.m., New York City time, on the New York Business Day next preceding such Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Agreement, “ New York Business Day ” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York City are generally authorized or obligated by law or executive order to close.
 
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6. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the Commission’s close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Securities Act; to make no further amendment or any supplement to the Registration Statement or the Prospectus prior to the last Time of Delivery that shall be disapproved by you promptly after reasonable notice thereof; to advise you, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any amendment or supplement to the Prospectus has been filed and to furnish you with copies thereof; to file promptly all materials required to be filed by the Company with the Commission pursuant to Rule 433(d) under the Securities Act; to advise you, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus in respect of the Shares, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus relating to the Shares or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may reasonably request to qualify the Shares for offering and sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Shares, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction or subject itself to taxation in any such jurisdiction in which it was not otherwise subject to taxation;
(c) Prior to 10:00 a.m., New York City time, on the New York Business Day next succeeding the date of this Agreement (or such later time as may be agreed to by you and the Company) and from time to time, to furnish the Underwriters with written and electronic copies of the Prospectus in New York City in such quantities as you may reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Securities Act) is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Shares and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Securities Act) is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus in order to comply with the Securities Act, to notify you and upon your request to prepare and furnish without charge to each Underwriter and to any dealer (whose name and address the Underwriters shall furnish to the Company) in securities as many written and electronic copies as you may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus that will correct such statement or omission or effect such compliance;
 
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(d) To make generally available to its securityholders as soon as practicable (which may be satisfied by filing with EDGAR (as defined below)), but in any event not later than sixteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Securities Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);
(e) (i) During the period beginning from the date hereof and continuing to and including the date 180 days after the date of the Prospectus (the “ Company Lock-Up Period ”), not to (A) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, or file with the Commission a registration statement under the Securities Act relating to, any securities of the Company that are substantially similar to the Shares, including but not limited to any options or warrants to purchase shares of Common Stock or any securities that are convertible into or exchangeable for, or that represent the right to receive, Common Stock or any such substantially similar securities, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, or (B) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock or any such other securities, whether any such transaction described in clause (A) or (B) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise (other than (1) the issuance and sale of the Shares of Common Stock to be sold pursuant to this Agreement, (2) the issuance by the Company of shares of Common Stock or securities convertible into, exchangeable for or that represent the right to receive shares of Common Stock, in each case pursuant to equity incentive plans described in the Pricing Prospectus, (3) the issuance by the Company of shares of Common Stock upon the exercise of an option or upon the exercise, conversion or exchange of exercisable, convertible or exchangeable securities described in the Pricing Prospectus, (4) the issuance by the Company of shares of Common Stock or securities convertible into, exchangeable for or that represent the right to receive shares of Common Stock in connection with (a) the acquisition by the Company or any of its subsidiaries of the securities, business, technology, property or other assets of another person or entity or pursuant to an employee benefit plan assumed by the Company in connection with such acquisition, or (b) the Company’s joint ventures, equipment leasing arrangements, debt financings and other strategic transactions or (5) the filing of any registration statement on Form S-8 relating to securities granted or to be granted pursuant to the Company’s equity incentive plans that are described in the Pricing Prospectus or any assumed employee benefit plan contemplated by clause (4); provided that the aggregate number of shares of Common Stock that the Company may sell or issue or agree to sell or issue pursuant to clause (4) shall not exceed 10% of the total number of shares of Common Stock outstanding immediately following the completion of the transactions contemplated by this Agreement; and provided , further , that in the case of clauses (2) through (4), (i) each recipient of such securities shall execute and deliver to you, on or prior to the issuance of such securities, a lock-up agreement substantially to the effect set forth in Annex IV hereto and (ii) the Company shall enter stop transfer instructions with the Company’s transfer agent and registrar on such securities, which the Company agrees it will not waive or amend without the prior written consent of each of the Representatives;
(ii) If the Representatives, in their sole discretion, agree to release or waive the restrictions in a lock up letter delivered pursuant to Section 9(j) hereof for an officer or director of the Company and provide the Company with notice of the impending release or waiver at least three business days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Annex III hereto through a major news service at least two business days before the effective date of the release or waiver;
 
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(f) To furnish to its stockholders as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders ‘ equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), to make available to its stockholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail; provided, however, that the Company may satisfy the requirements of this subsection by filing such information through the Commission’s Electronic Data Gathering, Analysis and Retrieval System (“ EDGAR ”);
(g) During a period of three years from the effective date of the Registration Statement, so long as the Company is subject to the reporting requirements of either Section 13 or 15(d) of the Exchange Act, to furnish to you copies of all reports or other communications (financial or other) furnished to stockholders, and to deliver to you (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange on which any class of securities of the Company is listed; and (ii) such additional information concerning the business and financial condition of the Company as you may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its stockholders generally or to the Commission); provided, however, that the Company shall not be required to provide documents (y) that are available through EDGAR or (z) the provision of which would require public disclosure by the Company under Regulation FD;
(h) To use the net proceeds received by it from the sale of the Shares pursuant to this Agreement in the manner specified in the Pricing Prospectus under the caption “Use of Proceeds”;
(i) To use its best efforts to list, subject to notice of issuance, the Shares on the New York Stock Exchange (the “ Exchange ”);
(j) If the Company elects to rely upon Rule 462(b), the Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of this Agreement, and the Company shall at the time of filing either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Securities Act;
(k) Upon request of any Underwriter, to furnish, or cause to be furnished, to such Underwriter an electronic version of the Company’s trademarks, servicemarks and corporate logo for use on the website, if any, operated by such Underwriter for the purpose of facilitating the on-line offering of the Shares (the “ Company License ”); provided, however, that the Company License shall be used solely for the purpose described above, is granted without any fee and may not be assigned or transferred;
(l) To promptly notify you if the Company ceases to be an Emerging Growth Company at any time prior to the later of (i) completion of the distribution of the Shares within the meaning of the Securities Act and (ii) completion of the Company Lock-Up Period;
(m) The Company represents and agrees that (i) it has not engaged in, or authorized any other person to engage in, any Section 5(d) Communications and has not distributed, or authorized any other person or entity to distribute, any Section 5(d) Writings except, in each case, for Section 5(d)
 
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Communications and Section 5(d) Writings engaged in or distributed (x) with the prior written consent of each of the Representatives that are listed on Schedule III(b) hereto and (y) to entities that are qualified institutional buyers (as defined in Rule 144A under the Securities Act) or institutions that are accredited investors (as defined in Rule 501(a) under the Securities Act); and (ii) reconfirms that the Underwriters have been authorized to act on its behalf in engaging in Section 5(d) Communications; and
(n) Each Underwriter represents and agrees that any Section 5(d) Communications undertaken by it were with entities that are qualified institutional buyers as defined in Rule 144A under the Securities Act or institutions that are accredited investors as defined in Rule 501(a) under the Securities Act.
7. The Company represents and agrees that, without the prior consent of each of the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a “free writing prospectus” as defined in Rule 405 under the Securities Act; each Selling Stockholder represents and agrees that, without the prior consent of the Company and each of the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a free writing prospectus; and each Underwriter represents and agrees that, without the prior consent of the Company and each of the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a free writing prospectus; any such free writing prospectus the use of which has been consented to by the Company and each of the Representatives is listed on Schedule III(a) hereto;
(a) The Company has complied and will comply with the requirements of Rule 433 under the Securities Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission or retention where required and legending; and the Company represents that it has satisfied and agrees that it will satisfy the conditions under Rule 433 under the Securities Act to avoid a requirement to file with the Commission any electronic road show; and
(b) The Company agrees that if at any time following issuance of an Issuer Free Writing Prospectus or Section 5(d) Writing any event occurred or occurs as a result of which such Issuer Free Writing Prospectus or Section 5(d) Writing would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to each of the Representatives and, if requested by the Representatives, will prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus, Section 5(d) Writing or other document that will correct such conflict, statement or omission; provided, however, that this representation and warranty shall not apply to any statements or omissions in an Issuer Free Writing Prospectus or Section 5(d) Writing made in reliance upon and in conformity with Underwriter Information or by a Selling Stockholder expressly for use in the preparation of the answers therein to Items 7 and 11(m) of Form S–1.
8. The Company and the Selling Stockholder covenant and agree with one another and with the several Underwriters that (a) the Company will pay or cause to be paid: (i) the fees, disbursements and expenses of the Company’s counsel and accountants in connection with the registration of the Shares under the Securities Act; (ii) all expenses in connection with the preparation, printing, reproduction and filing of the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (iii) all expenses in connection with any Section 5(d) Communications, including the cost of preparing printing and
 
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reproducing any Section 5(d) Writings; (iv) the cost of printing, this Agreement, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Shares; (v) all expenses in connection with the qualification of the Shares for offering and sale under state securities laws as provided in Section 6(b) hereof, including the reasonable, documented fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky survey; (vi) all fees and expenses in connection with listing the Shares on the Exchange; (vii) the filing fees incident to, and the reasonable, documented fees and disbursements of counsel for the Underwriters in connection with, any required review by FINRA of the terms of the sale of the Shares; provided, however, that the Company shall not be obligated to pay the fees (excluding disbursements) of counsel to the Underwriters set forth in (v) and (vii) above to the extent such fees exceed $30,000; (viii) the fees, disbursements and expenses of one counsel for the Selling Stockholder in connection with the registration of the Shares under the Securities Act, provided such fees, disbursements and expenses incurred by such counsel for the Selling Stockholder are reasonable; (ix) the cost of preparing stock certificates; if applicable (x) the cost and charges of any transfer agent or registrar, and (xi) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section 8; provided, however, that the Underwriters shall pay or reimburse amounts paid by the Company and its representatives for (A) all of the costs and expenses incurred for the use of any private aircraft and ground transportation used in connection with the “road show” undertaken in connection with the marketing and selling of the offering of the Shares; (B) all costs incurred for meeting or presentation events hosted in connection with the road show; (C) all costs and expenses incurred for car services used in connection with the road show; (D) all costs and expenses incurred for hotel accommodations, rental car and meal expenses for and commercial airline travel by any employee or representative of the Company in connection with the road show; and (E) $40,000 of expenses incurred by the Company pursuant to clause (a)(ii) above; and (b) the Selling Stockholder will pay or cause to be paid all costs and expenses incident to the performance of the Selling Stockholder’s obligations hereunder which are not otherwise specifically provided for in this Section 8, including (i) any fees and expenses of counsel for the Selling Stockholder (including all fees and expenses not paid for by the Company pursuant to clause (a)(viii) above), and (ii) all expenses and taxes incident to the sale and delivery of the Shares to be sold by the Selling Stockholder to the Underwriters hereunder. In connection with the preceding sentence, Goldman, Sachs & Co. agrees to pay New York State stock transfer tax, and the Selling Stockholder agrees to reimburse Goldman, Sachs & Co. for associated carrying costs if such tax payment is not rebated on the day of payment and for any portion of such tax payment not rebated. It is understood, however, that the Company shall bear, and the Selling Stockholder shall not be required to pay or to reimburse the Company for, the cost of any other matters not directly relating to the sale and purchase of the Shares pursuant to this Agreement, and that, except as provided in this Section 8, and Sections 10 and 13 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, stock transfer taxes on resale of any of the Shares by them, any advertising expenses connected with any offers they may make, and all travel expenses of the Underwriters and their representatives in connection with the road show, including the cost of any aircraft chartered in connection with the road show, and all lodging and meal expenses of the Underwriters and their representatives in connection with the road show.

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9. The obligations of the Underwriters hereunder, as to the Shares to be delivered at each Time of Delivery, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company and the Selling Stockholder herein are, at and as of such Time of Delivery, true and correct, the condition that the Company and the Selling Stockholder shall have performed all of its and their obligations hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Securities Act within the applicable time period prescribed for such filing by the rules and regulations under the Securities Act and in accordance with Section 6(a) hereof; all material required to be filed by the Company pursuant to Rule 433(d) under the Securities Act shall have been filed with the Commission within the applicable time period prescribed for such filing by Rule 433; if the Company has elected to rely upon Rule 462(b) under the Securities Act, the Rule 462(b) Registration Statement shall have become effective by 10:00 p.m., Washington, D.C. time, on the date of this Agreement; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission no stop order suspending or preventing the use of the Prospectus or any Issuer Free Writing Prospectus shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to your reasonable satisfaction;
(b) Simpson Thacher & Bartlett LLP, counsel for the Underwriters, shall have furnished to you such written opinion or opinions, dated such Time of Delivery, in form and substance satisfactory to you, with respect to the issuance and sale of the Shares, the Registration Statement and the Prospectus as well as such related matters as you may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;
(c) Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the Company, shall have furnished to you their written opinion (a form of which is attached as Annex I hereto), dated such Time of Delivery, in form and substance satisfactory to you;
(d) Counsel for the Selling Stockholder, as indicated in Schedule II hereto, shall have furnished to you their written opinion (a form of which is attached as Annex II hereto), dated such Time of Delivery, in form and substance satisfactory to you;
(e) On the date of the Prospectus, at 9:30 a.m., New York City time, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at each Time of Delivery, Ernst & Young LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you;
(f) (i) The Company and its subsidiaries, taken as a whole, shall not have sustained since the date of the latest audited financial statements included in the Pricing Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus, and (ii) since the respective dates as of which information is given in the Pricing Prospectus there shall not have been any change in the capital stock (other than as a result of (i) the exercise of stock options, the vesting of restricted stock units or the granting of stock options or restricted stock units pursuant to the Company’s equity incentive plans or (ii) the repurchase of shares of capital stock pursuant to agreements providing for an option to repurchase or a right of first refusal on behalf of the Company, in each case as such (A) equity incentive plans, (B) outstanding options and restricted stock units and (C) agreements are described in the Pricing Prospectus) or any material change in long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the
 
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Company and its subsidiaries, otherwise than as set forth or contemplated in the Pricing Prospectus, the effect of which, in any such case described in clause (i) or (ii), is in your judgment so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the Pricing Prospectus;
(g) On or after the Applicable Time (i) no downgrading shall have occurred in the rating accorded the Company’s debt securities by any “nationally recognized statistical rating organization”, as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company’s debt securities;
(h) On or after the Applicable Time there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the Exchange; (ii) a suspension or material limitation in trading in the Company’s securities on the Exchange; (iii) a general moratorium on commercial banking activities declared by Federal or New York authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in your judgment makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the Prospectus;
(i) The Shares to be sold at such Time of Delivery shall have been duly listed, subject to notice of issuance, on the Exchange;
(j) The Company shall have obtained and delivered to the Underwriters executed copies of an agreement from the parties listed on Schedule IV hereto, substantially to the effect set forth in Annex IV hereof in form and substance satisfactory to you;
(k) The Company shall have complied with the provisions of Section 6(c) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement;
(l) The Company and the Selling Stockholder shall have furnished or caused to be furnished to you at such Time of Delivery certificates of officers of the Company and of the Selling Stockholder, respectively, satisfactory to you as to the accuracy of the representations and warranties of the Company and the Selling Stockholder, respectively, herein at and as of such Time of Delivery, as to the performance by the Company and the Selling Stockholder of all of their respective obligations hereunder to be performed at or prior to such Time of Delivery, as to such other matters as you may reasonably request, and the Company shall have furnished or caused to be furnished certificates as to the matters set forth in subsections (a) and (f) of this Section 9; and
(m) On the date of the Prospectus, at 9:30 a.m., New York City time, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at each Time of Delivery, the Chief Financial Officer of the Company, in his capacity as such, shall have furnished to you a letter or letters, dated the respective dates of delivery hereof, in form and substance satisfactory to you.
10. (a) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject,
 
21

under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any Section 5(d) Writing prepared or authorized by the Company, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or any Section 5(d) Writing in reliance upon and in conformity with Underwriter Information.
(b) The Selling Stockholder will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Issuer Free Writing Prospectus or any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any Section 5(d) Writing prepared or authorized by the Company, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus in reliance upon and in conformity with the Selling Stockholder Information; and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred provided, however, that the Selling Stockholder shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or any Section 5(d) Writing in reliance upon and in conformity with Underwriter Information; provided, further, that the liability of the Selling Stockholder pursuant to this subsection (b) shall not exceed the product of the number of Shares sold by the Selling Stockholder including any Optional Shares and the initial public offering price of the Shares (the “ Selling Stockholder Net Proceeds ”) as set forth in the Prospectus.
(c) Each Underwriter will indemnify and hold harmless the Company and each Selling Stockholder against any losses, claims, damages or liabilities to which the Company or such Selling Stockholder may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement
 
22

thereto, or any Issuer Free Writing Prospectus, or any Section 5(d) Writing, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or any Section 5(d) Writing, in reliance upon and in conformity with Underwriter Information; and will reimburse the Company and the Selling Stockholder for any legal or other expenses reasonably incurred by the Company or the Selling Stockholder in connection with investigating or defending any such action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection (a), (b) or (c) of this Section 10 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability that it may have to any indemnified party under such subsection unless and to the extent it has been materially prejudiced through the forfeiture by the indemnifying party of substantial rights and defenses. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 10 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a), (b) or (c) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Stockholder on the one hand and the Underwriters on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (d) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Selling Stockholder on the one hand and the Underwriters on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The
 
23

relative benefits received by the Company and the Selling Stockholder on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (net of underwriting discounts and commissions but before deducting other expenses) received by the Company and the Selling Stockholder bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Selling Stockholder on the one hand or the Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Selling Stockholder and each of the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (e) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission and (ii) the Selling Stockholder’s obligation to contribute any amount under this subsection (e) is limited in the manner and to the extent set forth in Section 10(b) and the Selling Stockholder shall not be required to contribute any amount in excess of the Selling Stockholder Net Proceeds. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this subsection (e) to contribute are several in proportion to their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholder under this Section 10 shall be in addition to any liability that the Company and the Selling Stockholder may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of each Underwriter and each person, if any, who controls any Underwriter within the meaning of the Securities Act and each broker-dealer affiliate of any Underwriter; and the obligations of the Underwriters under this Section 10 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company or any Selling Stockholder within the meaning of the Securities Act.
11. (a) If any Underwriter shall default in its obligation to purchase the Shares that it has agreed to purchase hereunder at a Time of Delivery, you may in your discretion arrange for you or another party or other parties to purchase such Shares on the terms contained herein. If within thirty-six hours after such default by any Underwriter you do not arrange for the purchase of such Shares, then the Company and the Selling Stockholder shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to you to purchase such Shares on such terms. In the event that, within the respective prescribed periods, you notify the Company and the Selling Stockholder that you have so arranged for the purchase of such Shares, or the Company or a Selling Stockholder notifies you that it has so arranged for the purchase of such
 
24

Shares, you or the Company or the Selling Stockholder shall have the right to postpone such Time of Delivery for a period of not more than seven calendar days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments to the Registration Statement or any amendments or supplements to the Prospectus that in your opinion may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any person substituted under this Section 11 with like effect as if such person had originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you, the Company and the Selling Stockholder as provided in subsection (a) above, the aggregate number of such Shares that remains unpurchased does not exceed one-eleventh of the aggregate number of all the Shares to be purchased at such Time of Delivery, then the Company and the Selling Stockholder shall have the right to require each non-defaulting Underwriter to purchase the number of Shares that such Underwriter agreed to purchase hereunder at such Time of Delivery and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Shares which such Underwriter agreed to purchase hereunder) of the Shares of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you, the Company and the Selling Stockholder as provided in subsection (a) above, the aggregate number of such Shares that remains unpurchased exceeds one-eleventh of the aggregate number of all of the Shares to be purchased at such Time of Delivery, or if the Company and the Selling Stockholder shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement (or, with respect to a Second Time of Delivery, the obligations of the Underwriters to purchase and of the Company and the Selling Stockholder to sell the Optional Shares) shall thereupon terminate, without liability on the part of any non-defaulting Underwriter, the Company or the Selling Stockholder, except for the expenses to be borne by the Company, the Selling Stockholder and the Underwriters as provided in Section 8 hereof and the indemnity and contribution agreements in Section 10 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
12. The respective indemnities, agreements, representations, warranties and other statements of the Company, the Selling Stockholder and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, or any of the Selling Stockholder, or any officer or director or controlling person of the Company, or any controlling person of any Selling Stockholder, and shall survive delivery of and payment for the Shares.
13. If this Agreement shall be terminated pursuant to clauses (i), (iii), (iv) or (v) of Section 9(h) or Section 11 hereof, neither the Company nor the Selling Stockholder shall then be under any liability to any Underwriter except as provided in Sections 8 and 10 hereof; but, if for any other reason, any Shares are not delivered by or on behalf of the Company and the Selling Stockholder as provided herein, the Company and the Selling Stockholder pro rata (based on the number of Shares to be sold by the Company and such Selling Stockholder hereunder), will reimburse the Underwriters through
 
25

you for all reasonable, documented out-of-pocket expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Shares not so delivered, but the Company and the Selling Stockholder shall then be under no further liability to any Underwriter except as provided in Sections 8 and 10 hereof.
14. In all dealings hereunder, you shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by you; and in all dealings with any Selling Stockholder hereunder, you and the Company shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of such Selling Stockholder made or given by any or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to each of the Representatives in care of (a) Goldman, Sachs & Co., 200 West Street, New York, New York 10282, Attention: Registration Department; (b) Merrill Lynch, Pierce, Fenner & Smith Incorporated, One Bryant Park, New York, New York 10036, Attention ECM Legal; and (c) Credit Suisse Securities (USA) LLC, Eleven Madison Avenue, New York, New York 10010, Attention: LCD-IBD; if to any Selling Stockholder shall be delivered or sent by mail, telex or facsimile transmission to counsel for such Selling Stockholder at its address set forth in Schedule II hereto; if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth on the cover of the Registration Statement, Attention: Chief Legal Officer; and if to any stockholder that has delivered a lock-up letter described in Section 9(j) hereof shall be delivered or sent by mail to his or her respective address provided in Schedule IV hereto or such other address as such stockholder provides in writing to the Company; provided, however, that any notice to an Underwriter pursuant to Section 10(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters’ Questionnaire or telex constituting such Questionnaire, which address will be supplied to the Company or the Selling Stockholder by you upon request; provided, further, that notices under subsection 6(e) and the lock-up agreements referred to in Section 9(j) shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to each of the Representatives in care of (a) Goldman, Sachs & Co., 200 West Street, New York, New York 10282, Attention: Control Room; (b) Merrill Lynch, Pierce, Fenner & Smith Incorporated, One Bryant Park, New York, New York 10036, Attention ECM Legal; and (c) Credit Suisse Securities (USA) LLC, Eleven Madison Avenue, New York, New York 10010, Attention: LCD-IBD. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.
In accordance with the requirements of the USA PATRIOT Act, the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Company and the Selling Stockholder, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters to properly identify their respective clients.
15. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and the Selling Stockholder and, to the extent provided in Sections 10 and 12 hereof, the officers and directors of the Company and each person who controls the Company, any Selling Stockholder or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Shares from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.
 
26

16. Time shall be of the essence of this Agreement. As used herein, the term “business day” shall mean any day when the Commission’s office in Washington, D.C. is open for business.
17. The Company and the Selling Stockholder acknowledge and agree that (i) the purchase and sale of the Shares pursuant to this Agreement is an arm’s-length commercial transaction between the Company and the Selling Stockholder, on the one hand, and the several Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not the agent or fiduciary of the Company or any Selling Stockholder, (iii) no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company or any Selling Stockholder with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company or any Selling Stockholder on other matters) or any other obligation to the Company or any Selling Stockholder except the obligations expressly set forth in this Agreement and (iv) the Company and each Selling Stockholder has consulted its own legal and financial advisors to the extent it deemed appropriate. The Company and each Selling Stockholder agrees that it will not claim that the Underwriters, or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company or any Selling Stockholder, in connection with such transaction or the process leading thereto.
18. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company, the Selling Stockholder and the Underwriters, or any of them, with respect to the subject matter hereof.
19. THIS AGREEMENT AND ANY MATTERS RELATED TO THIS TRANSACTION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAWS OF THE STATE OF NEW YORK. The Company agrees that any suit or proceeding arising in respect of this agreement or our engagement will be tried exclusively in the U.S. District Court for the Southern District of New York or, if that court does not have subject matter jurisdiction, in any state court located in The City and County of New York and the Company agrees to submit to the jurisdiction of, and to venue in, such courts.
20. The Company, each Selling Stockholder and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
21. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.
22. Without limiting the applicability of Section 3 hereof or any other provision of this Agreement, with respect to any Underwriter who is affiliated with any person or entity engaged to act as an investment adviser on behalf of a client who has a direct or indirect interest in the Shares being sold by the Selling Stockholder, the Shares being sold to such Underwriter shall not include any shares of Common Stock attributable to such client (with any such shares instead being allocated and sold to the other Underwriters) and, accordingly, the fees or other amounts received by such Underwriter in connection with the transactions contemplated hereby shall not include any fees or other amounts attributable to such client.
 
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23. Notwithstanding anything herein to the contrary, the Company and the Selling Stockholder are authorized to disclose to any persons the U.S. federal and state income tax treatment and tax structure of the potential transaction and all materials of any kind (including tax opinions and other tax analyses) provided to the Company and the Selling Stockholder relating to that treatment and structure, without the Underwriters imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, “tax treatment” means U.S. federal and state income tax treatment, and “tax structure” is limited to any facts that may be relevant to that treatment.
If the foregoing is in accordance with your understanding, please sign and return to us counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement among each of the Underwriters, the Company and the Selling Stockholder. It is understood that your acceptance of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company and the Selling Stockholder for examination, upon request, but without warranty on your part as to the authority of the signers thereof.
 
28

			
Very truly yours,	
	
VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title:	 		
[Signature Page to Underwriting Agreement]

Any person executing and delivering this Agreement as Attorney-in-Fact for a Selling Stockholder represents by so doing that he has been duly appointed as Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing and binding Power-of-Attorney that authorizes such Attorney-in-Fact to take such action.

THE SELLING STOCKHOLDER NAMED IN SCHEDULE II HERETO	
		
By:	 	 	
Name:	 		
Title:	 		
	 	As Attorney-in-Fact acting on behalf of the Selling Stockholder named in Schedule II to this Agreement.	
[Signature Page to Underwriting Agreement]

Accepted as of the date hereof
in New York, New York

GOLDMAN, SACHS & CO.	
		
By:	 	 	
Name:	 		
Title:	 		
	
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED	
		
By:	 	 	
Name:	 		
Title:	 		
	
CREDIT SUISSE SECURITIES (USA) LLC	
		
By:	 	 	
Name:	 		
Title:	 		
On behalf of each of the Underwriters
[Signature Page to Underwriting Agreement]

SCHEDULE I

 	  	 	  	Number of
Optional	
 	  	 	  	Shares to be	
 	  	Total Number of	  	Purchased if	
 	  	Firm Shares	  	Maximum Option	
Underwriter	  	to be Purchased	  	Exercised	
Goldman, Sachs & Co.	  		  		
Merrill Lynch, Pierce, Fenner & Smith
                      Incorporated	  		  		
Credit Suisse Securities (USA) LLC	  		  		
Citigroup Global Markets Inc.	  		  		
Morgan Stanley & Co. LLC	  		  		
Deutsche Bank Securities Inc.	  		  		
Barclays Capital Inc.	  		  		
	  	 	  	 	
Total	  		  		

SCHEDULE II

 	  	 	 	  	Number of
Optional	
 	  	 	 	  	Shares to be	
 	  	Total Number of	 	  	Sold if	
 	  	Firm Shares	 	  	Maximum Option	
 	  	to be Sold	 	  	Exercised	
The Company.	  				  		
			
The Selling Stockholder:	  				  		
313 Acquisition, LLC(a)	  	 	—  	  	  		
	  	 	 	 	  	 	
Total	  	 	—  	  	  		

(a)	This Selling Stockholder is represented by [Name and Address of Counsel] and has appointed [Names of Attorneys-in-Fact (not less than two)] , and each of them, as the Attorneys-in-Fact for such Selling Stockholder.	
[Signature Page to Underwriting Agreement]

SCHEDULE III
 
(a)	Issuer Free Writing Prospectuses not included in the Pricing Disclosure Package:	
[None]
 
(b)	Section 5(d) Writings:	
[None]
 
(c)	Information other than the Pricing Prospectus that comprise the Pricing Disclosure Package:	
The initial public offering price per share for the Shares is $[ — ]
The number of Shares purchased by the Underwriters is [ — ].
[Add any other pricing disclosure.]

SCHEDULE IV

Name of Stockholder	  	Address	

SCHEDULE V

Name of Subsidiary	  	Jurisdiction of Incorporation or Formation	
Vivint Solar Holdings, LLC	  	Delaware	
Vivint Solar Developer, LLC	  	Delaware	
Vivint Solar Liberty Manager, LLC	  	Delaware	
Vivint Solar Margaux Manager, LLC	  	Delaware	
Vivint Solar Fund III Manager, LLC	  	Delaware	
Vivint Solar Fund III Owner, LLC	  	Delaware	

ANNEX I
FORM OF OPINION OF
COUNSEL FOR THE COMPANY

ANNEX II
FORM OF OPINION OF
COUNSEL FOR THE SELLING STOCKHOLDER

ANNEX III
[FORM OF PRESS RELEASE]
Vivint Solar, Inc.
[Date]
Vivint Solar, Inc. announced today that Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC, the lead book-running managers in the recent public sale of [ — ] shares of the Company’s common stock, are [waiving] [releasing] a lock-up restriction with respect to [ — ] shares of the Company’s common stock held by [certain officers or directors] [an officer or director] of the Company. The [waiver] [release] will take effect on             , 20[ — ], and the shares may be sold on or after such date.
This press release is not an offer for sale of the securities in the United States or in any other jurisdiction where such offer is prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933, as amended.

ANNEX IV
Vivint Solar, Inc.
Lock-Up Agreement
            , 2014
Goldman, Sachs & Co.
Merrill Lynch, Pierce, Fenner & Smith
                     Incorporated
Credit Suisse Securities (USA) LLC
    As representatives of the several Underwriters
c/o Goldman, Sachs & Co.
200 West Street
New York, NY 10282-2198
c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
One Bryant Park
New York, NY 10036
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue
New York, NY 10010-3629
 
 	Re:	Vivint Solar, Inc. - Lock-Up Agreement	
Ladies and Gentlemen:
The undersigned understands that Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC, as representatives (the “Representatives”), propose to enter into an Underwriting Agreement (the “Underwriting Agreement”) on behalf of the several Underwriters named in Schedule I to such agreement (collectively, the “Underwriters”), with Vivint Solar, Inc., a Delaware corporation (the “Company”), and the Selling Stockholder named in Schedule II to such agreement, providing for a public offering (the “Public Offering”) of shares (the “Shares”) of the common stock, $0.01 par value, of the Company (the “Common Stock”), pursuant to a Registration Statement on Form S-1 to be filed with the Securities and Exchange Commission (the “SEC”).
In consideration of the agreement by the Underwriters to offer and sell the Shares, and of other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the undersigned agrees that, during the period specified in the following paragraph (the “Stockholder Lock-Up Period”), the undersigned will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of Common Stock, or any options or warrants to purchase any

shares of Common Stock, or any securities convertible into, exchangeable for or that represent the right to receive shares of Common Stock, whether now owned or hereafter acquired, owned directly by the undersigned (including holding as a custodian) or with respect to which the undersigned has beneficial ownership within the rules and regulations of the SEC (collectively the “Undersigned’s Shares”) other than any Shares sold to the Underwriters pursuant to the Underwriting Agreement or as otherwise provided herein. The foregoing restriction is expressly agreed to preclude the undersigned from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Undersigned’s Shares even if such shares would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to any of the Undersigned’s Shares or with respect to any security that includes, relates to, or derives any significant part of its value from such shares.
The Stockholder Lock-Up Period will commence on the date of this Lock-Up Agreement and continue for 180 days after the date set forth on the final prospectus (the “Prospectus”) used to sell the Shares (the “Public Offering Date”) pursuant to the Underwriting Agreement.
If the undersigned is an officer or director of the Company, (1) the undersigned further agrees that the foregoing restrictions shall be equally applicable to any issuer-directed Shares the undersigned may purchase in the Public Offering, (2) the Representatives agree that, at least three business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of any shares of Common Stock, the Representatives will notify the Company of the impending release or waiver, and (3) the Company has agreed or will agree in the Underwriting Agreement to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver. Any release or waiver granted by the Representatives hereunder to any such officer or director shall only be effective two business days after the publication date of such press release. The provisions of this paragraph will not apply if (a) the release or waiver is effected solely to permit a transfer not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in this Lock-Up Agreement to the extent and for the duration that such terms remain in effect at the time of the transfer.
Notwithstanding the foregoing, the undersigned may:
(a) transfer the Undersigned’s Shares:
(i) as a bona fide gift or gifts;
(ii) to any trust, partnership, limited liability company or other entity for the direct or indirect benefit of the undersigned or the immediate family of the undersigned or, if the undersigned is a trust, to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust;
(iii) by will or the laws of descent (including transfers to a nominee or custodian in connection therewith);

(iv) in connection with transactions by any person other than the Company relating to Common Stock acquired in open market transactions after the Public Offering Date, provided that in the case of this clause (iv) no public reports or filings (including under Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) reporting a reduction in beneficial ownership of shares of Common Stock shall be required or voluntarily made during the Stockholder Lock-Up Period;
(v) if the undersigned is a corporation, limited liability company, partnership or other business entity, (A) to another corporation, limited liability company, partnership or other business entity that controls, is controlled by or managed by or is under common control with the undersigned or (B) as part of a distribution to any stockholder, member or limited partner of the undersigned or to the estate of any such stockholder, member or limited partner;
(vi) to the undersigned’s affiliates or to any investment fund or other entity controlled or managed by the undersigned;
(vii) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (i), (ii), (iv), (v) and (vi) above;
(viii) to the Company, as forfeitures to satisfy any income, employment or tax withholding and remittance obligations of the undersigned or the employer of the undersigned in connection with the vesting of restricted stock, restricted stock units or other incentive awards settled in shares of Common Stock held by the undersigned, provided that such restricted stock, restricted stock units or other incentive awards (A) are outstanding as of the date of the Prospectus and (B) were issued pursuant to an employee benefit plan disclosed in the Prospectus;
(ix) to the Company, in connection with the receipt of shares of Common Stock upon the “net” or “cashless” exercise of options to purchase shares of Common Stock for purposes of exercising such options, including the payment of taxes due as a result of such exercise, with respect to stock options outstanding as of the date of the Prospectus and described therein, provided that any such shares of Common Stock received upon such exercise shall be subject to the terms of this Lock-Up Agreement;
(x) to the Company or its parent entities, in connection with the repurchase or forfeiture of shares of Common Stock issued pursuant to an employee benefit plan disclosed in the Prospectus or pursuant to the agreements pursuant to which such shares were issued;
(xi) pursuant to a bona fide third-party tender offer, merger, consolidation or other similar transaction made to all holders of the Company’s capital stock involving a change of control of the Company, provided that in the event that such tender offer, merger, consolidation or other such transaction is not completed, the Undersigned’s Shares shall remain subject to the provisions of this Lock-Up Agreement;
(xii) pursuant to an order of a court or regulatory agency; or
(xiii) with the prior written consent of each of the Representatives on behalf of the Underwriters;

provided, however, that (1) in the case of subclauses (i), (ii), (v), (vi) and (vii) it shall be a condition to the transfer or distribution that (Y) each transferee, donee, trustee or distributee shall execute an agreement stating that such transferee, donee, trustee or distributee is receiving and holding such capital stock subject to the provisions of this Lock-Up Agreement and there shall be no further transfer of such capital stock except in accordance with this Lock-Up Agreement and (Z) any such transfer or distribution shall not involve a disposition for value, other than with respect to any such transfer or disposition for which the transferor or distributor receives (a) equity interests of such transferee or (b) such transferee’s interests in the transferor; and (2) in the case of subclauses (i), (ii), (iii), (v), (vi) and (vii) it shall be a condition to the transfer or distribution that (X) no public reports or filings (including under Section 16 of the Exchange Act) reporting a reduction in beneficial ownership of shares of Common Stock shall be voluntarily made during the Stockholder Lock-Up Period in connection with such transfer or distribution, (Y) if any public reports or filings (including under Section 16 of the Exchange Act) reporting a reduction in beneficial ownership of shares of Common Stock shall be required during the Stockholder Lock-Up Period in connection with such transfer or distribution, the undersigned shall provide Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC prior written notice informing them of such report or filing and (Z) other than with respect to transfers pursuant to clause (iii), such report or filing shall disclose that such transferee, donee, trustee or distributee, as the case may be, agrees to be bound in writing by the restrictions set forth herein; and
(b) enter into a written plan meeting the requirements of Rule 10b5-1 under the Exchange Act after the date of this Lock-Up Agreement relating to the sale of the Undersigned’s Shares, provided that (i) the securities subject to such plan may not be sold until after the expiration of the Stockholder Lock-Up Period and (ii) no public announcement or filing under the Exchange Act shall be required or voluntarily made by any person in connection therewith other than general disclosure in Company periodic reports to the effect that the Company’s directors and officers may enter into such trading plans from time to time.
For purposes of this Lock-Up Agreement, “immediate family” shall mean any relationship by blood, marriage, domestic partnership or adoption, not more remote than first cousin. The undersigned now has, and, except as contemplated by clause (a) above or as described in the Prospectus, for the duration of this Lock-Up Agreement will have, valid title to the Undersigned’s Shares, free and clear of all liens, encumbrances, and claims whatsoever. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the Undersigned’s Shares except in compliance with the foregoing restrictions.
Notwithstanding anything to the contrary contained herein, this Lock-Up Agreement will automatically terminate and the undersigned will be released from all of his, her or its obligations hereunder upon the earliest to occur, if any, if (i) the Company advises the Representatives in writing that it has determined not to proceed with the Public Offering, (ii) the Company files an application to withdraw the registration statement related to the Public Offering, (iii) the Underwriting Agreement (other than the provisions thereof that survive termination) shall terminate or be terminated prior to payment for and delivery of the shares of Common Stock to be sold thereunder, and (iv) December 31, 2014, the Underwriting Agreement has not been executed.

The undersigned hereby consents to receipt of this Lock-Up Agreement in electronic form and understands and agrees that this Lock-Up Agreement may be signed electronically. In the event that any signature is delivered by facsimile transmission, electronic mail, or otherwise by electronic transmission evidencing an intent to sign this Lock-Up Agreement, such facsimile transmission, electronic mail or other electronic transmission shall create a valid and binding obligation of the undersigned with the same force and effect as if such signature were an original. Execution and delivery of this Lock-Up Agreement by facsimile transmission, electronic mail or other electronic transmission is legal, valid and binding for all purposes.
The undersigned understands that the Company and the Underwriters are relying upon this Lock-Up Agreement in proceeding toward consummation of the Public Offering. The undersigned further understands that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors, and assigns. This Lock-Up Agreement and any claim, controversy or dispute arising under or related to this Lock-Up Agreement shall be governed by and construed in accordance with the laws of the State of New York.

Very truly yours,	

Exact Name of [Share][Option]holder	

Authorized Signature	

Title	

Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
VIVINT SOLAR, INC.
Vivint Solar, Inc., a corporation organized and existing under the laws of the State of Delaware (the “ Corporation ”), certifies that:
A. The name of the Corporation is Vivint Solar, Inc.
B. The Corporation’s original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on August 17, 2011 under the name of “V Solar Holdings, Inc.”
C. This Amended and Restated Certificate of Incorporation was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware and by written consent of the stockholders of the Corporation in accordance with Section 228 of the General Corporation Law of the State of Delaware, and restates, integrates and further amends the provisions of the Corporation’s Certificate of Incorporation, as amended.
D. The text of the Corporation’s Certificate of Incorporation, as amended and restated, is hereby amended, integrated and restated to read in its entirety as set forth in EXHIBIT A attached hereto.

IN WITNESS WHEREOF, Vivint Solar, Inc. has caused this Amended and Restated Certificate of Incorporation to be signed by Gregory Butterfield, a duly authorized officer of the Corporation, on             , 2014.

 
 	
Gregory Butterfield, President and CEO	

EXHIBIT A
ARTICLE I
The name of the Corporation is Vivint Solar, Inc.
ARTICLE II
The purpose of this Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “ DGCL ”).
ARTICLE III
The address of the Corporation’s registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, 19801. The name of its registered agent at such address is The Corporation Trust Company.
ARTICLE IV
4.1 Authorized Capital Stock . The total number of shares of all classes of capital stock that the Corporation is authorized to issue is 1,010,000,000 shares, consisting of 1,000,000,000 shares of Common Stock, having a par value of $0.01 per share (the “ Common Stock ”), and 10,000,000 shares of Preferred Stock, having a par value of $0.01 per share (the “ Preferred Stock ”).
4.2 Increase or Decrease in Authorized Capital Stock . The number of authorized shares of Preferred Stock or Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote generally in the election of directors, irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), voting together as a single class, without a separate vote of the holders of the class or classes the number of authorized shares of which are being increased or decreased, unless a vote by any holders of one or more series of Preferred Stock is required by the express terms of any series of Preferred Stock as provided for or fixed pursuant to the provisions of Section 4.4 of this Article IV.
4.3 Common Stock .
(a) The holders of shares of Common Stock shall be entitled to one vote for each such share on each matter properly submitted to the stockholders on which the holders of shares of Common Stock are entitled to vote. Except as otherwise required by law or this amended and restated certificate of incorporation (this “ Certificate of Incorporation ” which term, as used herein, shall mean the certificate of incorporation of the Corporation, as amended from time to time, including the terms of any certificate of designations of any series of Preferred Stock), and subject to the rights of the holders of Preferred Stock, at any annual or special meeting of the stockholders the holders of shares of Common Stock shall have the right to vote for the election of directors and on all other matters properly submitted to a vote of the stockholders; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation that
 
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relates solely to the terms, number of shares, powers, designations, preferences, or relative participating, optional or other special rights (including, without limitation, voting rights), or to qualifications, limitations or restrictions thereon, of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one more other such series, to vote thereon pursuant to this Certificate of Incorporation (including, without limitation, by any certificate of designations relating to any series of Preferred Stock) or pursuant to the DGCL.
(b) Subject to the rights of the holders of Preferred Stock, the holders of shares of Common Stock shall be entitled to receive such dividends and other distributions (payable in cash, property or capital stock of the Corporation) when, as and if declared thereon by the board of directors of the Corporation (the “ Board ”) from time to time out of any assets or funds of the Corporation legally available therefor and shall share equally on a per share basis in such dividends and distributions.
(c) In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, and subject to the rights of the holders of Preferred Stock in respect thereof, the holders of shares of Common Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of Common Stock held by them.
4.4 Preferred Stock .
(a) The Preferred Stock may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board (authority to do so being hereby expressly vested in the Board). The Board is further authorized, subject to limitations prescribed by law, to fix by resolution or resolutions and to set forth in a certification of designations filed pursuant to the DGCL the powers, designations, preferences and relative, participation, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, if any, of any wholly unissued series of Preferred Stock, including without limitation authority to fix by resolution or resolutions the designation of the series, the number of shares of the series, whether dividends, if any, will be cumulative or non-cumulative and dividend rate of the series, the dates at which dividends, if any, will be payable, the redemption rights and price or prices, if any, for shares of the series, the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series, the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation, whether the shares of the series will be convertible into shares of any other class or series, or any other security, of the Corporation or any other entity, restrictions on the issuance of shares of the same series or of any other class or series, and the voting rights, if any, of the holders of the series.
(b) The Board is further authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any series, the number of which was fixed by it, subsequent to the issuance of shares of such series then outstanding, subject to the powers, preferences and rights, and the qualifications, limitations and restrictions thereof stated in the Certificate of Incorporation or the resolution of the Board originally fixing the number of shares of such series. If the number of shares of any series is so decreased, then the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.
 
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ARTICLE V
5.1 General Powers . Except as otherwise provided in this Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.
5.2 Number of Directors; Election; Term .
(a) Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, the number of directors that constitutes the entire Board of the Corporation shall not exceed fifteen (15) directors, the exact number of directors to be determined from time to time solely by resolution of the Board.
(b) Subject to the special rights of holders of any series of Preferred Stock to elect directors, effective upon the closing date (the “ Effective Date ”) of the initial sale of shares of Common Stock in the Corporation’s initial public offering pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, the directors of the Corporation (other than those directors elected by the special vote of the holders of one or more series of Preferred Stock, as applicable) shall be divided into three classes as nearly equal in size as is practicable, hereby designated Class I, Class II and Class III. The Board is authorized to assign members of the Board already in office to their respective classes. The term of office of the initial Class I directors shall expire at the first annual meeting of the stockholders following the Effective Date, the term of office of the initial Class II directors shall expire at the second annual meeting of the stockholders following the Effective Date and the term of office of the initial Class III directors shall expire at the third annual meeting of the stockholders following the Effective Date. At each annual meeting of stockholders, commencing with the first annual meeting of stockholders following the Effective Date, each of the successors elected to replace the directors of a Class whose term shall have expired at such annual meeting shall be elected to hold office until the third annual meeting next succeeding his or her election and until his or her respective successor shall have been duly elected and qualified. Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, if the number of directors that constitutes the Board is changed, any newly created directorships or decrease in directorships shall be so apportioned by the Board among the classes as to make all classes as nearly equal in number as is practicable, provided that no decrease in the number of directors constituting the Board shall shorten the term of any incumbent director.
(c) Notwithstanding the foregoing provisions of this Section 5.2, and subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, each director shall serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation, or removal.
(d) Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.
(e) During any period when the holders of any series of Preferred Stock have the right to elect additional directors, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions, and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, resignation, retirement, disqualification or
 
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removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total authorized number of directors of the Corporation shall be reduced accordingly.
5.3 Removal . Any or all of the directors (other than the directors elected by the holders of any series of Preferred Stock of the Corporation, voting separately as a series or together with one or more other such series, as the case may be) may be removed at any time either with or without cause by the affirmative vote of a majority in voting power of all outstanding shares of stock of the Corporation entitled to vote thereon, voting as a single class; provided, however, that at any time when The Blackstone Group L.P. (together with its affiliates (including, without limitation, Blackstone Group Management L.L.C.), subsidiaries, successors and assigns (other than the Corporation and its subsidiaries), collectively, “ Blackstone ”) beneficially owns, in the aggregate, less than 30% in voting power of the stock of the Corporation entitled to vote generally in the election of directors, any such director or all such directors may be removed only for cause and only by the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class. For the purposes of this Certificate of Incorporation, beneficial ownership of shares shall be determined in accordance with Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).
5.4 Vacancies and Newly Created Directorships . Subject to the rights granted to the holders of any one or more series of Preferred Stock then outstanding or the rights granted pursuant to the Stockholders Agreement, expected to be dated as of            , 2014, by and among the Corporation and certain affiliates of Blackstone (as the same may be amended, supplemented, restated or otherwise modified from time to time, the “ Stockholders Agreement ”), any newly created directorship on the Board that results from an increase in the number of directors and any vacancy occurring in the Board (whether by death, resignation, retirement, disqualification, removal or other cause) shall be filled by the affirmative vote of a majority of the directors then in office, although less than a quorum, by a sole remaining director or by the stockholders; provided, however, that at any time when Blackstone beneficially owns, in the aggregate, less than 30% in voting power of the stock of the Corporation entitled to vote generally in the election of directors, any newly created directorship on the Board that results from an increase in the number of directors and any vacancy occurring in the Board shall be filled only by the affirmative vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director (and not by the stockholders). Any director elected to fill a vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall be elected and qualified, or until his or her earlier death, resignation, retirement, disqualification or removal.
5.5 Committees .
(a) Until such time as the Corporation ceases to be a Controlled Company, (i) Blackstone shall have the right (but not the obligation) to designate a majority of the members of each committee of the Board except to the extent that a designee of Blackstone is not permitted to serve on a committee under applicable law, rule, regulation or listing standards and (ii) any additional members of any committee shall be determined by the Board. For the purposes of this Section 5.5, “ Controlled Company ” means a company that is a “controlled company” within the meaning of such term under the New York Stock Exchange rules or the rules of such other stock exchange or securities market on which shares of Common Stock are then listed or quoted.
 
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(b) Following such time as the Corporation ceases to be a Controlled Company, the composition of each committee of the Board shall be determined by the Board, subject to compliance with applicable law, rule, regulation or listing standards; provided that Blackstone shall have the right (but not the obligation) to designate to each such committee of the Board at least one member or such greater number of members that is as nearly proportionate to the representation of Blackstone on the Board as possible except to the extent that a designee of Blackstone is not permitted to serve on a committee under applicable law, rule, regulation or listing standards.
ARTICLE VI
6.1 Amendment of this Certificate of Incorporation . Notwithstanding anything contained in this Certificate of Incorporation to the contrary and subject to the rights granted pursuant to the Stockholders Agreement, at any time when Blackstone beneficially owns, in the aggregate, less than 30% in voting power of the stock of the Corporation entitled to vote generally in the election of directors, in addition to any vote required by applicable law, the following provisions in this Certificate of Incorporation may be amended, altered, repealed or rescinded, in whole or in part, or any provision inconsistent therewith or herewith may be adopted, only by the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class: Article V, this Article VI, Article VII, Article VIII, Article IX and Article X.
6.2 Amendment of Bylaws . Subject to the rights granted pursuant to the Stockholders Agreement, the Board is expressly authorized to make, repeal, alter, amend and rescind, in whole or in part, the bylaws of the Corporation (as in effect from time to time, the “ Bylaws ”) without the assent or vote of the stockholders in any manner not inconsistent with the laws of the State of Delaware or this Certificate of Incorporation. Notwithstanding anything to the contrary contained in this Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote of the stockholders, at any time when Blackstone beneficially owns, in the aggregate, less than 30% in voting power of the stock of the Corporation entitled to vote generally in the election of directors, in addition to any vote of the holders of any class or series of capital stock of the Corporation required herein (including any certificate of designation relating to any series of Preferred Stock), the Bylaws or applicable law, the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required in order for the stockholders of the Corporation to alter, amend, repeal or rescind, in whole or in part, any provision of the Bylaws or to adopt any provision inconsistent therewith.
ARTICLE VII
7.1 Action by Written Consent of Stockholders . At any time when Blackstone beneficially owns, in the aggregate, at least 30% in voting power of the stock of the Corporation entitled to vote generally in the election of directors, any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the books in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be made by hand, or by certified or registered mail, return receipt requested. At any time when
 
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Blackstone beneficially owns, in the aggregate, less than 30% in voting power of the stock of the Corporation entitled to vote generally in the election of directors, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent in writing by such holders; provided, however, that any action required or permitted to be taken by the holders of Preferred Stock, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly so provided by the applicable certificate of designation relating to such series of Preferred Stock.
7.2 Annual Meetings . An annual meeting of stockholders for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, if any, on such date, and at such time as shall be fixed exclusively by resolution of the Board or a duly authorized committee thereof.
7.3 Special Meetings . Except as otherwise required by law and subject to the rights of the holders of any series of Preferred Stock, special meetings of the stockholders of the Corporation for any purpose or purposes may be called at any time only by or at the direction of the Board or the Chairman of the Board; provided, however, that at any time when Blackstone beneficially owns, in the aggregate, at least 30% in voting power of the stock of the Corporation entitled to vote generally in the election of directors, special meetings of the stockholders of the Corporation for any purpose or purposes shall also be called by or at the direction of the Board or the Chairman of the Board at the request of Blackstone.
7.4 Advance Notice . Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation.
ARTICLE VIII
8.1 Limitation of Director Liability . To the fullest extent permitted by the DGCL, as it presently exists or may hereafter be amended from time to time, no director of the Corporation, nor Blackstone, with respect to action taken by Blackstone pursuant to Section 5.5 of this Certificate of Incorporation, shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation (and Blackstone with respect to actions taken pursuant to Section 5.5) shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Neither the amendment nor repeal of this Article VIII, nor the adoption of any provision of this Certificate of Incorporation, nor, to the fullest extent permitted by the DGCL, any modification of law shall eliminate, reduce or otherwise adversely affect any right or protection of a current or former director of the Corporation or Blackstone existing at the time of such amendment, repeal, adoption or modification.
ARTICLE IX
9.1 Corporate Opportunities . In recognition and anticipation that (a) certain directors, principals, officers, employees and/or other representatives of The Blackstone Group L.P. (the “ Original Stockholder ”) and its Affiliates (as defined below) may serve as directors, officers or agents of the Corporation, (b) the Original Stockholder and its Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, and (c) members of the Board who are not employees of
 
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the Corporation (“ Non-Employee Directors ”) and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, the provisions of this Article IX are set forth to regulate and define the conduct of certain affairs of the Corporation with respect to certain classes or categories of business opportunities as they may involve any of the Original Stockholder, the Non-Employee Directors or their respective Affiliates and the powers, rights, duties and liabilities of the Corporation and its directors, officers and stockholders in connection therewith.
9.2 None of (a) the Original Stockholder or any of its Affiliates or (b) any Non-Employee Director (including any Non-Employee Director who serves as an officer of the Corporation in both his or her director and officer capacities) or his or her Affiliates (the Persons (as defined below) identified in (a) and (b) above being referred to, collectively, as “ Identified Persons ,” and, individually, as an “ Identified Person ”) shall, to the fullest extent permitted by law, have any duty to refrain from directly or indirectly (i) engaging in the same or similar business activities or lines of business in which the Corporation or any of its Affiliates now engages or proposes to engage or (ii) otherwise competing with the Corporation or any of its Affiliates, and, to the fullest extent permitted by law, no Identified Person shall be liable to the Corporation or its stockholders or to any Affiliate of the Corporation for breach of any fiduciary duty solely by reason of the fact that such Identified Person engages in any such activities. To the fullest extent permitted by law, the Corporation hereby renounces any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity which may be a corporate opportunity for an Identified Person and the Corporation or any of its Affiliates, except as provided in Section 9.3. Subject to Section 9.3, in the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself, herself or himself and the Corporation or any of its Affiliates, such Identified Person shall, to the fullest extent permitted by law, have no duty to communicate or offer such transaction or other business opportunity to the Corporation or any of its Affiliates and, to the fullest extent permitted by law, shall not be liable to the Corporation or its stockholders or to any Affiliate of the Corporation for breach of any fiduciary duty as a stockholder, director or officer of the Corporation solely by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for itself, herself or himself, or offers or directs such corporate opportunity to another Person.
9.3 The Corporation does not renounce its interest in any corporate opportunity offered to any Non-Employee Director (including any Non-Employee Director who serves as an officer of this Corporation) if such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the Corporation, and the provisions of Section 9.2 of this Article IX shall not apply to any such corporate opportunity.
9.4 In addition to and notwithstanding the foregoing provisions of this Article IX, a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Corporation if it is a business opportunity that (a) the Corporation is neither financially or legally able, nor contractually permitted to undertake, (b) from its nature, is not in the line of the Corporation’s business or is of no practical advantage to the Corporation or (c) is one in which the Corporation has no interest or reasonable expectancy.
9.5 For purposes of this Article IX, (a) “ Affiliate ” shall mean (i) in respect of the Original Stockholder, any Person that, directly or indirectly, is controlled by the Original Stockholder, controls the Original Stockholder or is under common control with the Original Stockholder and shall include any principal, member, director, partner, stockholder, officer, employee or other representative of any of the foregoing (other than the Corporation and any entity that is controlled by the Corporation), (ii) in respect of a Non-Employee Director, any Person that, directly or indirectly, is controlled by such Non-Employee
 
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Director (other than the Corporation and any entity that is controlled by the Corporation) and (iii) in respect of the Corporation, any Person that, directly or indirectly, is controlled by the Corporation; and (b) “ Person ” shall mean any individual, corporation, general or limited partnership, limited liability company, joint venture, trust, association or any other entity.
9.6 To the fullest extent permitted by law, any Person purchasing or otherwise acquiring any interest in any shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article IX.
ARTICLE X
10.1 Business Combinations; Section 203 . The Corporation hereby expressly elects not to be governed by Section 203 of the DGCL.
10.2 Exceptions . Notwithstanding the foregoing, the Corporation shall not engage in any business combination (as defined below), at any point in time at which the Corporation’s Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, with any interested stockholder (as defined below) for a period of three (3) years following the time that such stockholder became an interested stockholder, unless:
(a) prior to such time, the Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, or
(b) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock (as defined below) of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or
(c) at or subsequent to such time, the business combination is approved by the Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock of the Corporation which is not owned by the interested stockholder.
10.3 Definitions . For purposes of this Article X, references to:
(a) “ affiliate ” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person.
(b) “ associate ,” when used to indicate a relationship with any person, means: (i) any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting stock; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person.
(c) “ Blackstone Direct Transferee ” means any person that acquires (other than in a registered public offering) directly from Blackstone or any of its affiliates or successors or any “group”, or any member of any such group, of which such persons are a party under Rule 13d-5 of the Exchange Act beneficial ownership of 15% or more of the then outstanding voting stock of the Corporation.
 
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(d) “ Blackstone Indirect Transferee ” means any person that acquires (other than in a registered public offering) directly from any Blackstone Direct Transferee or any other Blackstone Indirect Transferee beneficial ownership of 15% or more of the then outstanding voting stock of the Corporation.
(e) “ business combination ,” when used in reference to the Corporation and any interested stockholder of the Corporation, means:
i. any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (A) with the interested stockholder, or (B) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation Section (b) of this Article X is not applicable to the surviving entity;
ii. any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation;
iii. any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (B) pursuant to a merger under Section 251(g) of the DGCL; (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the interested stockholder became such; (D) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock; or (E) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (C)-(E) of this subsection (iii) shall there be an increase in the interested stockholder’s proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation (except as a result of immaterial changes due to fractional share adjustments);
iv. any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder; or
v. any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subsections (i) through (iv) above) provided by or through the Corporation or any direct or indirect majority-owned subsidiary.
 
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(f) “ control ,” including the terms “ controlling ,” “ controlled by ” and “ under common control with ,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of the outstanding voting stock of the Corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this Section, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.
(g) “ interested stockholder ” means any person (other than the Corporation or any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of 15% or more of the outstanding voting stock of the Corporation, or (ii) is an affiliate or associate of the Corporation and was the owner of 15% or more of the outstanding voting stock of the Corporation at any time within the three (3) year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder; and the affiliates and associates of such person; but “interested stockholder” shall not include (A) Blackstone, any Blackstone Direct Transferee, any Blackstone Indirect Transferee or any of their respective affiliates or successors or any “group”, or any member of any such group, to which such persons are a party under Rule 13d-5 of the Exchange Act, or (B) any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of any action taken solely by the Corporation, provided that such person shall be an interested stockholder if thereafter such person acquires additional shares of voting stock of the Corporation, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an interested stockholder, the voting stock of the Corporation deemed to be outstanding shall include stock deemed to be owned by the person through application of the definition of “owner” below but shall not include any other unissued stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
(h) “ owner ,” including the terms “ own ” and “ owned ,” when used with respect to any stock, means a person that individually or with or through any of its affiliates or associates:
i. beneficially owns such stock, directly or indirectly; or
ii. has (A) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person’s affiliates or associates until such tendered stock is accepted for purchase or exchange; or (B) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to ten (10) or more persons; or
iii. has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (b) of subsection (2) above), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock.
 
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(i) “ person ” means any individual, corporation, partnership, unincorporated association or other entity.
(j) “ stock ” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest.
(k) “ voting stock ” means stock of any class or series entitled to vote generally in the election of directors.
ARTICLE XI
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director or officer of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim against the Corporation or any director or officer of the Corporation arising pursuant to any provision of the DGCL or this Certificate of Incorporation or the Bylaws (as either may be amended and/or restated from time to time), or (d) any action asserting a claim governed by the internal affairs doctrine. To the fullest extent permitted by law, any person purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consents to the provisions of this Article XI.
ARTICLE XII
If any provision or provisions of this Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service or for the benefit of the Corporation to the fullest extent permitted by law.
 
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Exhibit 4.1

016570| 003590|127C|RESTRICTED||4|057-423 COMMON STOCK PAR VALUE $0.01 vivint.solar COMMON STOCK THIS CERTIFICATE IS TRANSFERABLE IN CANTON, MA, JERSEY CITY, NJ AND GOLDEN, CO Shares ** 000000 ****** * * * 000000 * * * * * * * * * 000000 * * * * * * * * * 000000 * * * * * * * * * 000000 * * Certificate Number VS 000000 VIVINT SOLAR, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE THIS CERTIFIES THAT MR. SAMPLE & MRS. SAMPLE & MR. SAMPLE & MRS. SAMPLE SEE REVERSE FOR CERTAIN DEFINITIONS is the owner of ZERO HUNDRED THOUSAND ZERO HUNDRED AND ZERO FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF Vivint Solar, Inc. (hereinafter called the “Company”), transferable on the books of the Company in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby, are issued and shall be held subject to all of the provisions of the Articles of Incorporation, as amended, and the By-Laws, as amended, of the Company (copies of which are on file with the Company and with the Transfer Agent), to all of which each holder, by acceptance hereof, assents. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar. Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers. Chief Exective Officer VIVINT SOLAR, INC. SEAL AUGUST 12, 2011 DELAWARE DATED <<Month Day, Year>> COUNTERSIGNED AND REGISTERED: COMPUTERSHARE TRUST COMPANY, N.A. TRANSFER AGENT AND REGISTRAR, Secretary SECURITY INSTRUCTIONS ON REVERSE VIVINT SOLAR, INC. By AUTHORIZED SIGNATURE A123456 vivint.solar PO BOX 43004, Providence, RI 02940-3004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 CUSIP XXXXXX XX X Holder ID XXXXXXXXXX Insurance Value 1,000,000.00 Number of Shares 123456 DTC 12345678 123456789012345 Certificate Numbers Num/No. Denom. Total 1234567890/1234567890 1 1 1 1234567890/1234567890 2 2 2 1234567890/1234567890 3 3 3 1234567890/1234567890 4 4 4 1234567890/1234567890 5 5 5 1234567890/1234567890 6 6 6 Total Transaction 7

VIVINT SOLAR, INC. THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS A SUMMARY OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THE COMPANY AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND RIGHTS AND THE VARIATIONS IN RIGHTS PREFERENCES AND LIMITATIONS DETERMINED FOR EACH SERIES, WHICH ARE FIXED BY THE ARTICLES OF INCORPORATION OF THE COMPANY, AS AMENDED. AND THE RESOLUTIONS OF THE BOARD OF DIRECTORS OF THE COMPANY, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO DETERMINE VARIATIONS FOR FUTURE SERIES SUCH REQUEST MAY BE MADE TO THE OFFICE OF THE SECRETARY OF THE COMPANY OR TO THE TRANSFER AGENT THE BOARD OF DIRECTORS MAY REQUIRE THE OWNER OF A LOST OR DESTROYED STOCK CERTIFICATE OR HIS LEGAL REPRESENTATIVES TO GIVE THE COMPANY A BOND TO INDEMNIFY IT AND ITS TRANSFER AGENTS AND REGISTRARS AGAINST ANY CLAIM THAT MAY BE MADE AGAINST THEM ON ACCOUNT OF THE ALLEGED LOSS OR DESTRUCTION OF ANY SUCH CERTIFICATE The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations TEN COM as tenants in common UNIF GIFT MIN ACT - (Cust) Custodian (Minor) TEN ENT - as tenants by the entireties under Uniform Gifts to Minors Act (State) JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF TRF MIN ACT - (Cust) Custodian (until age ) (Minor) under Uniform Transfers to Minors Act (State) Additional abbreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer unto ILLEGIBLE ILLEGIBLE of the Class A Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Shares Attorney to transfer the said stock on the books of the within-named Company with full power of substitution in the premises. Dated: 20 Signature: Signature: ILLEGIBLE Notice: The signature to this assignment ILLEGIBLE

Exhibit 4.2

REGISTRATION RIGHTS AGREEMENT
by and among
VIVINT SOLAR, INC.
and
the other parties hereto
Dated as of [•], 2014

TABLE OF CONTENTS

 	  	Page	 	
ARTICLE I DEFINITIONS 1	  				
		
SECTION 1.1 Certain Definitions.	  	 	1	  	
		
SECTION 1.2 Other Definitional Provisions; Interpretation	  	 	5	  	
		
ARTICLE II REGISTRATION RIGHTS 5	  				
		
SECTION 2.1 Piggyback Rights	  	 	6	  	
		
SECTION 2.2 Demand Registration	  	 	7	  	
		
SECTION 2.3 Registration Procedures	  	 	9	  	
		
SECTION 2.4 Other Registration-Related Matters	  	 	13	  	
		
ARTICLE III INDEMNIFICATION 15	  				
		
SECTION 3.1 Indemnification by the Company	  	 	15	  	
		
SECTION 3.2 Indemnification by the Holders and Underwriters	  	 	16	  	
		
SECTION 3.3 Notices of Claims, Etc.	  	 	16	  	
		
SECTION 3.4 Contribution	  	 	17	  	
		
SECTION 3.5 Other Indemnification	  	 	18	  	
		
SECTION 3.6 Non-Exclusivity	  	 	18	  	
		
ARTICLE IV OTHER 18	  				
		
SECTION 4.1 Notices	  	 	18	  	
		
SECTION 4.2 Assignment	  	 	19	  	
		
SECTION 4.3 Amendments; Waiver	  	 	19	  	
		
SECTION 4.4 Third Parties	  	 	20	  	
		
SECTION 4.5 Governing Law	  	 	20	  	
		
SECTION 4.6 Jurisdiction	  	 	20	  	
		
SECTION 4.7 MUTUAL WAIVER OF JURY TRIAL	  	 	20	  	
 
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SECTION 4.8 Specific Performance	  	 	20	  	
		
SECTION 4.9 Entire Agreement	  	 	20	  	
		
SECTION 4.10 Severability	  	 	21	  	
		
SECTION 4.11 Counterparts	  	 	21	  	
		
SECTION 4.12 Effectiveness	  	 	21	  	
		
SECTION 4.13 Confidentiality	  	 	21	  	
 
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the “ Agreement ”) is dated as of [•], 2014 and is by and among Vivint Solar, Inc., a Delaware corporation (the “ Company ”), Blackstone (as defined below), Summit (as defined below), Black Horse (as defined below) and each of the Director Stockholders (as defined below).
RECITALS
WHEREAS, the Company is currently contemplating an underwritten initial public offering (“ IPO ”) of shares of its Common Stock (as defined below); and
WHEREAS, the Company desires to grant registration rights to Blackstone, Summit, Black Horse and the Director Stockholders on the terms and conditions set out in this Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Definitions. As used in this Agreement:
“ Affiliate ” has the meaning ascribed thereto in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof.
“ Agreement ” has the meaning set forth in the preamble.
“ Black Horse ” means the entities listed on the signature pages hereto under the heading Black Horse” and their successors and permitted assigns, who may holders of Registrable Securities upon a distribution by Blackstone of shares of Common Stock to its members, limited partners or stockholders.
“ Blackstone ” means the entities listed on the signature pages hereto under the heading “Blackstone.”
“ Blackstone Entities ” means the entities comprising Blackstone, their respective Affiliates and the successors and permitted assigns of the entities and their respective Affiliates.
“ Board ” means the board of directors of the Company.
“ Business Day ” means a day other than a Saturday, Sunday, federal or New York State holiday or other day on which commercial banks in New York City are authorized or required by law to close.
“ Closing Date ” means the date of completion of the IPO.
“ Company ” has the meaning set forth in the preamble.

“ Common Stock ” means the shares of common stock, par value $0.01 per share, of the Company, and any other capital stock of the Company into which such common stock is reclassified or reconstituted.
“ Control ” (including its correlative meanings, “ Controlled by ” and “ under common Control with ”) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of a Person.
“ Demand Party ” has the meaning set forth in Section 2.2(a).
“ Director Stockholder ” means each of Dunn and Pedersen.
“ Dunn ” means Alex Dunn, his Affiliates and the successors and permitted assigns of Alex Dunn and his Affiliates, who may become holders of Registrable Securities upon a distribution by Blackstone of shares of Common Stock to its members, limited partners or stockholders.
“ Exchange Act ” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
“ FINRA ” means the Financial Industry Regulatory Authority, Inc.
“ Governmental Authority ” means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“ Holder ” means each member of Blackstone, Summit, Black Horse and each Director Stockholder that is a holder of Registrable Securities or Securities exercisable, exchangeable or convertible into Registrable Securities or any Transferee of such Person to whom registration rights are assigned pursuant to Section 4.2. For the avoidance of doubt, “Holder” shall include those Persons who become holders of Registrable Securities after the date of this Agreement as a result of any distribution by Blackstone of shares of Common Stock to its members, limited partners or stockholders.
“ Indemnified Party ” and Indemnified Parties ” have the meanings set forth in Section 3.1.
“ IPO ” has the meaning set forth in the recitals.
“ Law ” means any statute, law, regulation, ordinance, rule, injunction, order, decree, governmental approval, directive, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority.
“ Lockup Period ” has the meaning set forth in Section 2.4(d)(i).
 
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“ Pedersen ” means Todd Pedersen, his Affiliates and the successors and permitted assigns of Todd Pedersen and his Affiliates, who may become holders of Registrable Securities upon a distribution by Blackstone of shares of Common Stock to its members, limited partners or stockholders.
“ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a cooperative, an unincorporated organization, or other form of business organization, whether or not regarded as a legal entity under applicable Law, or any Governmental Authority or any department, agency or political subdivision thereof.
“ Public Offering ” means a public offering of equity securities of the Company or any successor thereto or any Subsidiary of the Company pursuant to a registration statement declared effective under the Securities Act.
“ Registrable Securities ” means all shares of Common Stock and any Securities into which the Common Stock may be converted or exchanged pursuant to any merger, consolidation, sale of all or any part of its assets, corporate conversion or other extraordinary transaction of the Company held by a Holder (whether now held or hereafter acquired, and including any such Securities received by a Holder (x) upon the conversion or exchange of, or pursuant to such a transaction with respect to, other Securities held by such Holder and (y) as a distribution of shares of Common Stock by Blackstone to its members, limited partners or stockholders). As to any Registrable Securities, such Securities will cease to be Registrable Securities when:
 
 	(a)	a registration statement covering such Registrable Securities has been declared effective and such Registrable Securities have been disposed of pursuant to such effective registration statement;	
 
 	(b)	such Registrable Securities shall have been sold pursuant to Rule 144 or 145 (or any similar provision then in effect) under the Securities Act;	
 
 	(c)	such Registrable Securities may be sold pursuant to Rule 144 or 145 (or any similar provision then in effect) without limitation thereunder on volume or manner of sale, unless such Registrable Securities are held by a Holder that beneficially owns 5% or more of the then outstanding shares of Common Stock; or	
 
 	(d)	such Registrable Securities cease to be outstanding.	
“ Registration Expenses ” means any and all expenses incurred in connection with the performance of or compliance with this Agreement, including:
 
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 	(a)	all SEC, stock exchange, or FINRA registration fees and expenses (including, if applicable, the fees and expenses of any “qualified independent underwriter,” as such term is defined in Rule 5121 of FINRA, and of its counsel);	
 
 	(b)	all fees and expenses of complying with securities or blue sky Laws (including fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities);	
 
 	(c)	all printing, messenger and delivery expenses;	
 
 	(d)	the reasonable fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits and/or “cold comfort” letters required by or incident to such performance and compliance;	
 
 	(e)	any fees and disbursements of underwriters customarily paid by the issuers or sellers of Securities, including liability insurance if the Company so desires or if the underwriters so require, and the reasonable fees and expenses of any special experts retained in connection with the requested registration, but excluding underwriting discounts and commissions and transfer taxes, if any;	
 
 	(f)	the reasonable fees and out-of-pocket expenses of not more than one law firm (as selected by the Holders of a majority of the Registrable Securities included in such registration) incurred by all the Holders in connection with the registration;	
 
 	(g)	the costs and expenses of the Company relating to analyst and investor presentations or any “road show” undertaken in connection with the registration and/or marketing of the Registrable Securities (including the reasonable out-of-pocket expenses of the Holders); and	
 
 	(h)	any other fees and disbursements customarily paid by the issuers of securities.	
“ SEC ” means the U.S. Securities and Exchange Commission or any successor agency.
“ Securities ” means capital stock, limited partnership interests, limited liability company interests, beneficial interests, warrants, options, notes, bonds, debentures, and other securities, equity interests, ownership interests and similar obligations of every kind and nature of any Person.
“ Securities Act ” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
 
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“ Subsidiary ” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which: (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (ii) if a limited liability company, partnership, association or other business entity, a majority of the total voting power of stock (or equivalent ownership interest) of the limited liability company, partnership, association or other business entity is at the time owned or Controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or Control the managing director or general partner of such limited liability company, partnership, association or other business entity.
“ Summit ” means the entities listed on the signature pages hereto under the heading “Summit” and their successors and permitted assigns, who may become holders of Registrable Securities upon a distribution by Blackstone of shares of Common Stock to its members, limited partners or stockholders.
“ Transfer ” (including its correlative meanings, “ Transferor ”, “ Transferee ” and “ Transferred ”) shall mean, with respect to any security, directly or indirectly, to sell, contract to sell, give, assign, hypothecate, pledge, encumber, grant a security interest in, offer, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any economic, voting or other rights in or to such security. When used as a noun, “ Transfer ” shall have such correlative meaning as the context may require.
SECTION 1.2 Other Definitional Provisions; Interpretation .
(a) The words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, and references in this Agreement to a designated “Article” or “Section” refer to an Article or Section of this Agreement unless otherwise specified.
(b) The headings in this Agreement are included for convenience of reference only and do not limit or otherwise affect the meaning or interpretation of this Agreement.
(c) The meanings given to terms defined herein are equally applicable to both the singular and plural forms of such terms.
 
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ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1 Piggyback Rights .
(a) If at any time following expiration of the Lockup Period (or, if earlier, such time as the Demand Party exercises a demand right pursuant to Section 2.2(a)) the Company proposes to register Securities for public sale (whether proposed to be offered for sale by the Company or by any other Person) under the Securities Act (other than a registration on Form S-4 or S-8, or any successor or other forms promulgated for similar purposes) in a manner which would permit registration of Registrable Securities for sale to the public under the Securities Act, it will, at each such time following expiration of the Lockup Period (or if earlier, such time as the Demand Party exercises a demand right pursuant to Section 2.2(a)), give prompt written notice (which notice shall specify the intended method or methods of disposition) to the Holders of its intention to do so and of such Holder’s rights under this Section 2.1. Upon the written request of any Holder made within fifteen (15) days after the receipt of any such notice (which request shall specify the number of Registrable Securities intended to be disposed of by such Holder), the Company will use its reasonable best efforts to effect the registration under the Securities Act of all Registrable Securities which the Holders have so requested to be registered; provided that: (i) if, at any time after giving written notice of its intention to register any Securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to proceed with the proposed registration of the Securities to be sold by it, the Company may, at its election, give written notice of such determination to the Holders and, thereupon, the Company shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses incurred in connection therewith) without prejudice to the rights of the Demand Party to request that such registration be effected as a registration under Section 2.2(a); and (ii) if such registration involves an underwritten offering, the Holders of Registrable Securities requesting to be included in the registration must, upon the written request of the Company, sell their Registrable Securities to the underwriters on the same terms and conditions as apply to the other Securities being sold through underwriters under such registration, with, in the case of a combined primary and secondary offering, only such differences, including any with respect to representations and warranties, indemnification and liability insurance, as may be customary or appropriate in combined primary and secondary offerings.
(b) Expenses . The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2.1.
(c) Priority in Piggyback Registrations . If a registration pursuant to this Section 2.1 involves an underwritten offering and the managing underwriter advises the Company in writing (a copy of which shall be provided to the Holders) that, in its opinion, the number of Registrable Securities and other Securities requested to be included in such registration exceeds the number which can be sold in such offering, so as to be likely to have a material and adverse effect on the price, timing or distribution of the Securities offered in such offering, then the Company will include in such registration: (i) first, the Securities the Company proposes to sell for its own account; and (ii) second, such number of Registrable Securities requested to be included in such registration which, in the opinion of such managing underwriter,
 
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can be sold without having the material and adverse effect referred to above, which number of Registrable Securities shall be allocated pro rata among the Registrable Securities held by all such requesting Holders on the basis of the relative number of Registrable Securities requested to be included in such registration by each such Holder (provided that any Securities thereby allocated to any such Holder that exceed such Holder’s request will be reallocated among the remaining requesting Holders in like manner). Any other selling holders of the Company’s Securities (other than transferees to whom a Holder has assigned its rights under this Agreement) will be included in an underwritten offering only with the consent of Holders holding a majority of the shares being sold in such offering.
(d) Excluded Transactions . The Company shall not be obligated to effect any registration of Registrable Securities under this Section 2.1 incidental to the registration of any of its Securities in connection with:
(i) the IPO;
(ii) a registration statement filed to cover issuances under employee benefits plans or dividend reinvestment plans; or
(iii) any registration statement relating solely to the acquisition or merger after the date hereof by the Company or any of its Subsidiaries of or with any other businesses.
(e) Plan of Distribution, Underwriters and Counsel . If a registration pursuant to this Section 2.1 involves an underwritten offering, the Holders of a majority of the Registrable Securities included in such underwritten offering shall have the right to (i) determine the plan of distribution, (ii) select the investment banker or bankers and managers to administer the offering, including the lead managing underwriter (provided that such investment banker or bankers and managers shall be reasonably satisfactory to the Company), and (iii) select counsel for the selling Holders.
(f) Shelf Takedowns . In connection with any shelf takedown (whether pursuant to Section 2.2(f) or at the initiative of the Company), the Holders may exercise “piggyback” rights in the manner described in this Agreement to have included in such takedown Registrable Securities held by them that are registered on such shelf registration statement.
SECTION 2.2 Demand Registration .
(a) General . At any time, upon the written request of any Blackstone Entity (the “ Demand Party ”) requesting that the Company effect the registration under the Securities Act of Registrable Securities and specifying the amount and intended method of disposition thereof (including, but not limited to, an underwritten public offering), the Company will (i) promptly give written notice of such requested registration to the other Holders and other holders of Securities entitled to notice of such registration, if any, and (ii) as expeditiously as possible, use its reasonable best efforts to file a registration statement to effect the registration under the Securities Act of:
 
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(i) such Registrable Securities which the Company has been so requested to register by the Demand Party in accordance with the intended method of disposition thereof; and
(ii) the Registrable Securities of other Holders which the Company has been requested to register by written request given to the Company within fifteen (15) days after the giving of such written notice by the Company.
Notwithstanding the foregoing, the Company shall not be obligated to file a registration statement relating to any registration request under this Section 2.2(a):
(x) within a period of one hundred eighty (180) days (or such lesser period as the managing underwriters in an underwritten offering may permit) after the effective date of any other registration statement relating to any registration request under this Section 2.2(a) or relating to any registration referred to in Section 2.1; or
(y) if, in the good faith judgment of a majority of the disinterested members of the Board, the Company is in possession of material non-public information the disclosure of which would be materially adverse to the Company and would not otherwise be required under Law, in which case the filing of the registration statement may be delayed until the earlier of the second Business Day after such conditions shall have ceased to exist and the 60th day after receipt by the Company of the written request from a Demand Party to register Registrable Securities under this Section 2.2(a); provided that the Company shall not effect such a delay more than two times in any twelve (12) month period.
(b) Form . Each registration statement prepared at the request of a Demand Party shall be effected on such form as reasonably requested by the Demand Party, including by a shelf registration pursuant to Rule 415 under the Securities Act on a Form S-3 (or any successor rule or form thereto) if so requested by the Demand Party and if the Company is then eligible to effect a shelf registration and use such form for such disposition.
(c) Expenses . The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2.2.
(d) Plan of Distribution, Underwriters and Counsel . If a requested registration pursuant to this Section 2.2 involves an underwritten offering, the Holders of a majority of the Registrable Securities included in such underwritten offering shall have the right to (i) determine the plan of distribution, (ii) select the investment banker or bankers and managers to administer the offering, including the lead managing underwriter (provided that such investment banker or bankers and managers shall be reasonably satisfactory to the Company) and (iii) select counsel for the selling Holders.
(e) Priority in Demand Registrations . If a requested registration pursuant to this Section 2.2 involves an underwritten offering and the managing underwriter advises the Company in writing (a copy of which shall be provided to the Holders) that, in its opinion, the number of Registrable Securities requested to be included in such registration (including
 
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Securities of the Company which are not Registrable Securities) exceeds the number which can be sold in such offering, so as to be likely to have a material and adverse effect on the price, timing or distribution of the Securities offered in such offering, then the number of such Registrable Securities to be included in such registration shall be allocated pro rata among Registrable Securities held by the Demand Party and other parties that have requested that their Registrable Securities be sold pursuant to Section 2.1(a), if any, on the basis of the relative number of Registrable Securities requested to be included in such registration by each such Holder (provided that any Securities thereby allocated to any such Holder that exceed such Holder’s request will be reallocated among all such remaining parties in like manner). Any other selling holders of the Company’s Securities (other than transferees to whom a Holder has assigned its rights under this Agreement) will be included in an underwritten offering only with the consent of Holders holding a majority of the shares being sold in such offering.
(f) Shelf Takedowns . Upon the written request of the Demand Party at any time and from time to time, the Company will facilitate in the manner described in this Agreement a “takedown” of the Demand Party’s Registrable Securities off of an effective shelf registration statement. Upon the written request of the Demand Party, the Company will file and seek the effectiveness of a post-effective amendment to an existing shelf registration statement in order to register up to the number of the Demand Party’s Registrable Securities previously taken down off of such shelf by the Demand Party and not yet “reloaded” onto such shelf registration statement.
(g) Additional Rights . Except as expressly provided in this Agreement, the Company shall not grant to any Person the right to request or require the Company to register any equity Securities of the Company, or any Securities convertible, exchangeable or exercisable for or into such Securities, or amend any grant of such a right, without the prior written consent of the Holders holding a majority of the Registrable Securities subject to this Agreement. In the event the Company engages in a merger or consolidation in which the shares of Common Stock are converted into Securities of another company, appropriate arrangements will be made so that the registration rights provided under this Agreement continue to be provided to Holders by the issuer of such Securities. To the extent such new issuer, or any other company acquired by the Company in a merger or consolidation, was bound by registration rights that would conflict with the provisions of this Agreement, the Company will use its best efforts to modify any such “inherited” registration rights so as not to interfere in any material respects with the rights provided under this Agreement, unless otherwise agreed by Holders then holding a majority of Registrable Securities.
SECTION 2.3 Registration Procedures . If and whenever the Company is required to file a registration statement with respect to, or to use its reasonable best efforts to effect or cause the registration of, any Registrable Securities under the Securities Act as provided in this Agreement, the Company will as expeditiously as possible:
 
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(a) promptly prepare and file with the SEC a registration statement on an appropriate form with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become effective; provided , however , that the Company may discontinue any registration of Securities which it has initiated for its own account at any time prior to the effective date of the registration statement relating thereto (and, in such event, the Company shall pay the Registration Expenses incurred in connection therewith); and provided , further , that before filing a registration statement or prospectus, or any amendments or supplements thereto, the Company will (i) furnish to counsel for the sellers of Registrable Securities covered by such registration statement copies of all documents proposed to be filed, which documents will be subject to the review of such counsel, (ii) fairly consider such reasonable changes in any such documents prior to or after the filing thereof as the counsel to the sellers of Registrable Securities being sold may request, and (iii) make such of the representatives of the Company as shall be reasonably requested by the sellers of the Registrable Securities being sold available for discussion of such documents;
(b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period not in excess of two (2) years (which period shall not be applicable in the case of a shelf registration effected pursuant to a request under Section 2.2(b)) and to comply with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Securities covered by such registration statement during such period in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement; provided that before filing a registration statement or prospectus, or any amendments or supplements thereto, the Company will (i) furnish to counsel for the sellers of Registrable Securities covered by such registration statement copies of all documents proposed to be filed, which documents will be subject to the review of such counsel, (ii) fairly consider such reasonable changes in any such documents prior to or after the filing thereof as the counsel to the sellers of Registrable Securities being sold may request, and (iii) make such of the representatives of the Company as shall be reasonably requested by the sellers of the Registrable Securities being sold available for discussion of such documents;
(c) furnish to each seller of such Registrable Securities such number of copies of such registration statement and of each amendment and supplement thereto (in each case including all exhibits filed therewith, including any documents incorporated by reference), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and summary prospectus), in conformity with the requirements of the Securities Act, and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities by such seller;
(d) use its reasonable best efforts to register or qualify such Registrable Securities covered by such registration in such jurisdictions as each seller shall reasonably request, and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller;
(e) use its reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities;
 
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(f) notify each seller of any such Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the Company’s becoming aware that the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request of any such seller, prepare and furnish to such seller a reasonable number of copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;
(g) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its Security holders, as soon as reasonably practicable (but not more than eighteen (18) months) after the effective date of the registration statement, an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act;
(h) (i) use its reasonable best efforts to list such Registrable Securities on any securities exchange on which other Securities of the Company are then listed if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange; and (ii) use its reasonable best efforts to provide a transfer agent and registrar for such Registrable Securities covered by such registration statement not later than the effective date of such registration statement;
(i) enter into such customary agreements (including an underwriting agreement in customary form), which may include indemnification provisions in favor of underwriters and other Persons in addition to, or in substitution for the indemnification provisions hereof, and take such other actions as sellers of a majority of such Registrable Securities or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;
(j) obtain a “cold comfort” letter or letters from the Company’s independent public accountants in customary form and covering matters of the type customarily covered by “cold comfort” letters as the seller or sellers of a majority of such Registrable Securities shall reasonably request;
(k) make available for inspection by any seller of such Registrable Securities covered by such registration statement, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by any such seller or any such underwriter, all pertinent financial and other records, pertinent corporate documents and properties of the Company, and cause all of the Company’s officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;
 
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(l) notify counsel for the Holders of Registrable Securities included in such registration statement and the managing underwriter or agent, immediately, and confirm the notice in writing: (i) when the registration statement, or any post-effective amendment to the registration statement, shall have become effective, or any supplement to the prospectus or any amendment to any prospectus shall have been filed; (ii) of the receipt of any comments from the SEC; (iii) of any request of the SEC to amend the registration statement or amend or supplement the prospectus or for additional information; and (iv) of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, or of the institution or threatening of any proceedings for any of such purposes;
(m) provide each Holder of Registrable Securities included in such registration statement reasonable opportunity to comment on the registration statement, any post-effective amendments to the registration statement, any supplement to the prospectus or any amendment to any prospectus;
(n) make every reasonable effort to prevent the issuance of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus and, if any such order is issued, to obtain the withdrawal of any such order at the earliest possible moment;
(o) if requested by the managing underwriter or agent or any Holder of Registrable Securities covered by the registration statement, promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or agent or such Holder reasonably requests to be included therein, including, with respect to the number of Registrable Securities being sold by such Holder to such underwriter or agent, the purchase price being paid therefor by such underwriter or agent and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering; and make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after being notified of the matters incorporated in such prospectus supplement or post-effective amendment;
(p) cooperate with the Holders of Registrable Securities covered by the registration statement and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Securities to be sold under the registration statement, and enable such Securities to be in such denominations and registered in such names as the managing underwriter or agent, if any, or the Holders may request;
(q) use its reasonable best efforts to make available the executive officers of the Company to participate with the Holders of Registrable Securities and any underwriters in any “road shows” that may be reasonably requested by the Holders in connection with distribution of Registrable Securities;
(r) obtain for delivery to the Holders of Registrable Securities being registered and to the underwriter or agent an opinion or opinions from counsel for the Company in customary form and in form, substance and scope reasonably satisfactory to such Holders, underwriters or agents and their counsel; and
 
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(s) cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA.
SECTION 2.4 Other Registration-Related Matters .
(a) The Company may require any Person that is Transferring Securities in a Public Offering pursuant to Sections 2.1 or 2.2 to furnish to the Company in writing such information regarding such Person and pertinent to the disclosure requirements relating to the registration and the distribution of the Registrable Securities which are included in such Public Offering as the Company may from time to time reasonably request in writing.
(b) Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.3(f), it will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until its receipt of the copies of the amended or supplemented prospectus contemplated by Section 2.3(f) and, if so directed by the Company, each Holder will deliver to the Company or destroy (at the Company’s expense) all copies, other than permanent file copies then in their possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. If the Company gives any such notice, the period for which the Company will be required to keep the registration statement effective will be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 2.3(f) to and including the date when each seller of Registrable Securities covered by such registration statement has received the copies of the supplemented or amended prospectus contemplated by Section 2.3(f).
(c) Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.3(l)(iv), it will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until the lifting of such stop order, other order or suspension or the termination of such proceedings and, if so directed by the Company, each Holder will deliver to the Company or destroy (at the Company’s expense) all copies, other than permanent file copies then in its possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. If the Company gives any such notice, the period for which the Company will be required to keep the registration statement effective will be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 2.3(l)(iv) to and including the date when such stop order, other order or suspension is lifted or such proceedings are terminated.
(d) (i) Each Holder (x) hereby agrees, with respect to the Registrable Securities owned by such Holder, to be bound by any and all restrictions on the sale, disposition, distribution, hedging or other Transfer of any interest in Registrable Securities imposed on
 
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Blackstone, Summit, Black Horse or the Director Stockholders and/or their respective Affiliates in connection with the IPO by the underwriters managing such offering for the duration of the term of such restriction (the period in which such sale, disposition, distribution, hedging or other Transfer of any interest is restricted, the “ Lockup Period ”) and (y) will, in connection with a Public Offering of the Company’s equity Securities (whether for the Company’s account or for the account of any Holder or Holders, or both), upon the request of the Company or of the underwriters managing any underwritten offering of the Company’s Securities, agree in writing not to effect any sale, disposition or distribution of Registrable Securities (other than those included in the Public Offering) without the prior written consent of the managing underwriter for such period of time commencing seven (7) days before and ending one hundred eighty (180) days (or such earlier date as the managing underwriter shall agree) after the effective date of such registration; provided that the Company shall cause all directors and officers of the Company, Holders of more than 5% of the Registrable Securities and all other Persons with registration rights with respect to the Company’s Securities (whether or not pursuant to this Agreement) to enter into agreements similar to those contained in this Section 2.4(d)(i) (without regard to this proviso); and (ii) the Company and its Subsidiaries will, in connection with an underwritten Public Offering of the Company’s Securities in respect of which Registrable Securities are included, upon the request of the underwriters managing such offering, agree in writing not to effect any sale, disposition or distribution of equity Securities of the Company (other than those included in such Public Offering, offered pursuant to Section 2.2(f), offered on Form S-8, issuable upon conversion of Securities or upon the exercise of options, or the grant of options in the ordinary course of business pursuant to then-existing management equity plans or equity-based employee benefit plans or as otherwise permitted by Section 6(e)(i) of the Underwriting Agreement dated [•], 2014 by and among the Company, Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC as representatives of the several underwriters named in Schedule I thereto, in each case outstanding on the date a notice is given by the Company pursuant to Section 2.1(a) or a request is made pursuant to Section 2.2(a), as the case may be), without the prior written consent of the managing underwriter, for such period of time commencing seven (7) days before and ending one hundred eighty (180) days (or such earlier date as the managing underwriter shall agree) after the effective date of such registration.
(e) With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of Securities of the Company to the public without registration after such time as a public market exists for Registrable Securities, the Company agrees:
(i) to make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its Securities to the public;
(ii) to use its commercially reasonable efforts to then file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and
 
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(iii) so long as a Holder owns any Registrable Securities, to furnish to such Holder promptly upon request: (A) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its Securities to the public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); (B) a copy of the most recent annual or quarterly report of the Company; and (C) such other reports and documents of the Company as such Holder may reasonably request in availing itself or himself of any rule or regulation of the SEC allowing such Holder to sell any such Securities without registration.
(f) Counsel to represent Holders of Registrable Securities shall be selected by the Holders of at least a majority of the Registrable Securities included in the relevant registration.
(g) Each of the parties hereto agrees that the registration rights provided to the Holders herein are not intended to, and shall not be deemed to, override or limit any other restrictions on Transfer to which any such Holder may otherwise be subject.
ARTICLE III
INDEMNIFICATION
SECTION 3.1 Indemnification by the Company . If any registration of any Securities of the Company under the Securities Act pursuant to Section 2.1 or 2.2, the Company hereby indemnifies and agrees to hold harmless, to the fullest extent permitted by Law, each Holder who sells Registrable Securities covered by such registration statement, each Affiliate of such Holder and their respective directors and officers or general and limited partners (and the directors, officers, employees, Affiliates and controlling Persons of any of the foregoing), each other Person who participates as an underwriter in the offering or sale of such Securities and each other Person, if any, who controls such Holder or any such underwriter within the meaning of the Securities Act (each, and “ Indemnified Party ” and collectively, the “ Indemnified Parties ”), against any and all losses, claims, damages or liabilities, joint or several, and reasonable and documented expenses to which such Indemnified Party may become subject under the Securities Act, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Party is a party thereto) arise out of or are based upon: (a) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Securities were registered under the Securities Act, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or any other such disclosure document (including reports and other documents filed under the Exchange Act and any document incorporated by reference therein) or related document or report; (b) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in the case of a prospectus, in the light of the circumstances when they were made; or (c) any violation or alleged violation by the
 
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Company or any of its Subsidiaries of any federal, state, foreign or common law rule or regulation applicable to the Company or any of its Subsidiaries and relating to action or inaction in connection with any such registration, disclosure document or related document or report, and the Company will reimburse such Indemnified Party for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the Company will not be liable to any Indemnified Party in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, in any such preliminary, final or summary prospectus, or any amendment or supplement thereto in reliance upon and in conformity with written information with respect to such Indemnified Party furnished to the Company by such Indemnified Party expressly for use in the preparation thereof. Such indemnity will remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and will survive the Transfer of such Securities by such Holder or any termination of this Agreement.
SECTION 3.2 Indemnification by the Holders and Underwriters . The Company may require, as a condition to including any Registrable Securities in any registration statement filed in accordance with Section 2.1 or 2.2, that the Company shall have received an undertaking reasonably satisfactory to it from the Holder of such Registrable Securities or any prospective underwriter to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 3.1) the Company, all other Holders or any prospective underwriter, as the case may be, and any of their respective Affiliates, directors, officers and controlling Persons, with respect to any untrue statement in or omission from such registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement, if such untrue statement or omission was made in reliance upon and in conformity with written information with respect to such Holder or underwriter furnished to the Company by such Holder or underwriter expressly for use in the preparation of such registration statement, preliminary, final or summary prospectus or amendment or supplement, or a document incorporated by reference into any of the foregoing. Such indemnity will remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of the Holders, or any of their respective Affiliates, directors, officers or controlling Persons and will survive the Transfer of such Securities by such Holder. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds actually received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.
SECTION 3.3 Notices of Claims, Etc . Promptly after receipt by an Indemnified Party hereunder of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Article III, such Indemnified Party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided that the failure of the Indemnified Party to give notice as provided herein will not relieve the indemnifying party of its obligations under Section 3.1 or 3.2, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an Indemnified Party, unless in such Indemnified Party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, the
 
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indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel selected by the Holders of at least a majority of the Registrable Securities included in the relevant registration, and after notice from the indemnifying party to such Indemnified Party of its election so to assume the defense thereof, the indemnifying party will not be liable to such Indemnified Party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation. If, in such Indemnified Party’s reasonable judgment, having common counsel would result in a conflict of interest between the interests of such indemnified and indemnifying parties, then such Indemnified Party may employ separate counsel reasonably acceptable to the indemnifying party to represent or defend such Indemnified Party in such action, it being understood, however, that the indemnifying party will not be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all such Indemnified Parties (and not more than one separate firm of local counsel at any time for all such Indemnified Parties) in such action. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.
SECTION 3.4 Contribution . If the indemnification provided for hereunder from the indemnifying party is unavailable to an Indemnified Party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein for reasons other than those described in the proviso in the first sentence of Section 3.1, then the indemnifying party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and Indemnified Parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and Indemnified Parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or Indemnified Parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party under this Section 3.4 as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds actually received by such Holder upon the sale of the Registrable Securities giving rise to such contribution obligation.
The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 3.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
 
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SECTION 3.5 Other Indemnification . Indemnification similar to that specified in this Article III (with appropriate modifications) shall be given by the Company and each seller of Registrable Securities with respect to any required registration or other qualification of Securities under any Law or with any Governmental Authority other than as required by the Securities Act.
SECTION 3.6 Non-Exclusivity . The obligations of the parties under this Article III will be in addition to any liability which any party may otherwise have to any other party.
ARTICLE IV
OTHER
SECTION 4.1 Notices . Any notice, request, instruction or other document to be given hereunder by any party hereto to another party hereto shall be in writing and shall be deemed given (a) when delivered personally, (b) five (5) Business Days after being sent by certified or registered mail, postage prepaid, return receipt requested, (c) one (1) Business Day after being sent by Federal Express or other nationally recognized overnight courier, or (d) if transmitted by facsimile, if confirmed within 24 hours thereafter by a signed original sent in the manner provided in clause (a), (b) or (c) to parties at the following addresses (or at such other address for a party as shall be specified by prior written notice from such party):
if to the Company:
Vivint Solar, Inc.
4931 North 300 West
Provo, Utah 84604
Attention: Chief Legal Officer
Fax:                 (801) 229-7714
with a copy (not constituting notice) to:
Wilson Sonsini Goodrich & Rosati, P.C.
701 Fifth Avenue, Suite 5100
Seattle, WA 98104
Attention: Michael Nordtvedt, Esq.
Fax:                 (206) 883-2699
if to Blackstone:
The Blackstone Group L.P.
345 Park Avenue
New York, NY 10154
Attention: Peter Wallace
Fax:                 (212) 583-5710
 
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with a copy (not constituting notice) to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Attention: Peter Martelli, Esq.
                 Edgar Lewandowski, Esq.
Fax:        (212) 455-2502
if to Summit:
[Summit Partners L.P.]
[Address]
Attention: [•]
Fax: [•]
[if to Black Horse:
[Address]
[Address]
Attention: [•]
Fax: [•]]
if to a Director Stockholder:
313 Acquisition LLC
4931 North 300 West
Provo, Utah 84604
Attention: Alex Dunn; Todd Pedersen
Fax:                 (801) 377-4116
SECTION 4.2 Assignment . Neither the Company nor any Holder shall assign all or any part of this Agreement without the prior written consent of the Company and Blackstone; provided , however , that, without the prior written consent of the Company, any Blackstone Entity may assign its rights and obligations under this Agreement in whole or in part to (x) any of its Affiliates and (y) any Person who becomes a holder of Registrable Securities upon a distribution by such Blackstone Entity of shares of Common Stock to its members, limited partners or stockholders that becomes a party hereto by executing and delivering an assignment and joinder agreement to the Company, substantially in the form of Exhibit A to this Agreement. Except as otherwise provided herein, this Agreement will inure to the benefit of and be binding on the parties hereto and their respective successors and permitted assigns.
SECTION 4.3 Amendments; Waiver . This Agreement may be amended, supplemented or otherwise modified only by a written instrument executed by the Company and the Holders holding a majority of the Registrable Securities subject to this Agreement; provided that no such amendment, supplement or other modification shall adversely affect the economic interests of any Holder hereunder disproportionately to other Holders without the written consent of such Holder. For the avoidance of doubt, no consent pursuant to this Section 4.3 shall be
 
-19-

required in connection with any amendment or revision to Schedule A unless such amendment or revision is to remove a Holder from such schedule at a time when such Holder would otherwise be entitled to registration rights herein. No waiver by any party of any of the provisions hereof will be effective unless explicitly set forth in writing and executed by the party so waiving. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including without limitation, any investigation by or on behalf of any party, will be deemed to constitute a waiver by the party taking such action of compliance with any covenants or agreements contained herein. The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach.
SECTION 4.4 Third Parties . This Agreement does not create any rights, claims or benefits inuring to any person that is not a party hereto nor create or establish any third party beneficiary hereto.
SECTION 4.5 Governing Law . This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.
SECTION 4.6 Jurisdiction . The Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware) shall have exclusive jurisdiction over the parties with respect to any dispute or controversy between them arising under or in connection with this agreement and, by execution and delivery of this agreement, each of the parties to this Agreement submits to the exclusive jurisdiction of those courts, including but not limited to the in personam and subject matter jurisdiction of those courts, waives any objections to such jurisdiction on the grounds of venue or forum non conveniens, the absence of in personam or subject matter jurisdiction and any similar grounds, consents to service of process by mail (in accordance with the notice provisions of this Agreement) or any other manner permitted by Law, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement.
SECTION 4.7 MUTUAL WAIVER OF JURY TRIAL . THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT.
SECTION 4.8 Specific Performance . Each of the parties hereto acknowledges and agrees that if there is any breach of this Agreement by any of them, the non-breaching party would be irreparably harmed and could not be made whole by monetary damages. Each party accordingly agrees to waive the defense in any action for specific performance that a remedy at law would be adequate and that the parties, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of this Agreement.
SECTION 4.9 Entire Agreement . This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof. There are no agreements, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein. This Agreement supersedes all other
 
-20-

prior agreements and understandings between the parties with respect to such subject matter. For the avoidance of doubt, this Agreement supersedes all other registration rights with respect to the Company’s Common Stock that are forth in the Securityholders Agreement dated as of November 16, 2012 among 313 Acquisition LLC and the other parties thereto.
SECTION 4.10 Severability . If one or more of the provisions, paragraphs, words, clauses, phrases or sentences contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, paragraph, word, clause, phrase or sentence in every other respect and of the remaining provisions, paragraphs, words, clauses, phrases or sentences hereof shall not be in any way impaired, it being intended that all rights, powers and privileges of the parties hereto shall be enforceable to the fullest extent permitted by Law.
SECTION 4.11 Counterparts . This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original and all of which together will be deemed to be one and the same instrument.
SECTION 4.12 Effectiveness .
This Agreement shall become effective, as to any Holder, as of the date signed by the Company and countersigned by such Holder.
SECTION 4.13 Confidentiality .
Blackstone, Summit, Black Horse and each Director Stockholder agrees that all material non-public information provided pursuant to or in accordance with the terms of this Agreement shall be kept confidential by the person to whom such information is provided, until such time as such information becomes public other than through violation of this provision. Notwithstanding the foregoing, any party may disclose the information (1) if required to do so by any law, rule, regulation, order, decree or subpoena of any governmental agency or authority or court or (2) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard such information by such Person.
[ Remainder of Page Intentionally Left Blank ]
 
-21-

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

COMPANY	
	
VIVINT SOLAR, INC.	
		
By:	 	 	
	 	Name:	
	 	Title:	
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

 

BLACKSTONE
 
313 ACQUISITION LLC	
		
By:	 	 	
	 	Name:
Title:	
 
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

			
SUMMIT	
	
SUMMIT PARTNERS GROWTH EQUITY FUND VIII-A, L.P.	
		
By:	 	Summit Partners GE VIII, L.P., its General Partner	
		
By:	 	Summit Partners GE VIII, LLC, its Managing Member	
		
By:	 	 	
	 	Name: Joseph F. Trustey	
	 	Title: Managing Director	
	
SUMMIT PARTNERS GROWTH EQUITY FUND VIII-B, L.P.	
		
By:	 	Summit Partners GE VIII, L.P., its General Partner	
		
By:	 	Summit Partners GE VIII, LLC, its Managing Member	
		
By:	 	 	
	 	Name: Joseph F. Trustey	
	 	Title: Managing Director	
	
SUMMIT INVESTORS I, LLC	
		
By:	 	Summit Investors Management, LLC, its Manager	
		
By:	 	Summit Partners, L.P., its Manager	
		
By:	 	Summit Master Company, LLC, its General Partner	
		
By:	 	 	
	 	Name: Joseph F. Trustey	
	 	Title: Managing Director	
 
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

							
SUMMIT INVESTORS I (UK), L.P.	
		
By:	 	Summit Investors Management, LLC, its General Partner	
		
By:	 	Summit Partners, L.P., its Manager	
		
By:	 	Summit Master Company, LLC, its General Partner	
		
By:  	 	 	
	 	Name: Joseph F. Trustey	
	 	Title: Managing Director	
 
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

					
BLACK HORSE	
	
BLACK HORSE HOLDINGS LLC	
		
By:  	 	 	
	 	Name:	
	 	Title:	
 
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

			
DIRECTOR STOCKHOLDERS	
		
By:  	 	 	
	 	Name: Alex Dunn	
		
By:	 	 	
	 	Name: Todd Pedersen	

PEDERSEN FAMILY TRUST	
		
By:  	 	 	
	 	Name:                                                                      	
	 	Title:                                                                       	
 
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

Exhibit A
FORM OF ASSIGNMENT AND JOINDER
[            ], 20    
Reference is made to the Registration Rights Agreement, dated as of [            ] 2014, by and among Vivint Solar, Inc. (the “Company”), Blackstone (as defined therein) and the other parties thereto (the “ Registration Rights Agreement ”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Registration Rights Agreement.
Pursuant to Section 4.2 of the Registration Rights Agreement, [313 Acquisition LLC] (the “ Assignor ”) in its capacity as a Blackstone Entity in the Registration Rights Agreement hereby assigns [in part][ or: in full] its rights and obligations under the Registration Rights Agreement to each of [            ], [            ] and [            ] (each, an “ Assignee ” and collectively, the “ Assignees ”). [For the avoidance of doubt, the Assignor will remain a party to the Registration Rights Agreement following the assignment in part of its rights and obligations thereunder to the undersigned Assignees.]
Each undersigned Assignee hereby agrees to and does become party to the Registration Rights Agreement as a Blackstone Party and Holder. This assignment and joinder shall serve as a counterpart signature page to the Registration Rights Agreement and by executing below each undersigned Assignee is deemed to have executed the Registration Rights Agreement with the same force and effect as if originally named a party thereto and each Assignee’s shares of Common Stock shall be included as Registrable Securities under the Registration Rights Agreement.
[ Remainder of Page Intentionally Left Blank. ]

IN WITNESS WHEREOF, the undersigned have duly executed this assignment and joinder as of date first set forth above.

ASSIGNOR:
 
[313 ACQUISITION LLC]	
		
By:	 	 	
	 	Name:
Title:	
	
ASSIGNEES:
 
        [Signature Blocks to Come]	

Exhibit 5.1

	  	650 Page Mill Road
Palo Alto, CA 94304-1050
 
PHONE 650.493.9300
FAX 650.493.6811
www.wsgr.com	
 
September 17, 2014
Vivint Solar, Inc.
3301 N. Thanksgiving Way, Suite 500
Lehi, Utah 84003
 
Re:	Registration Statement on Form S-1	
Ladies and Gentlemen:
This opinion is furnished to you in connection with the Registration Statement on Form S-1 (Registration No. 333-198372), as amended (the “ Registration Statement ”), filed by Vivint Solar, Inc. (the “ Company ”) with the Securities and Exchange Commission in connection with the registration under the Securities Act of 1933, as amended, of 23,690,000 shares of the Company’s common stock, $0.01 par value per share (the “ Shares ”), of which up to 20,600,000 shares will be issued and sold by the Company and up to 3,090,000 shares will be sold by a selling stockholder (the “ Selling Stockholder ”) upon exercise of an option to purchase additional shares granted to the underwriters by the Selling Stockholder. We understand that the Shares are to be sold to the underwriters for resale to the public as described in the Registration Statement and pursuant to an underwriting agreement, substantially in the form filed as an exhibit to the Registration Statement, to be entered into by and among the Company, the Selling Stockholder and the underwriters (the “ Underwriting Agreement ”).
We are acting as counsel for the Company in connection with the sale of the Shares by the Company and the Selling Stockholder. In such capacity, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments as we have deemed necessary for the purposes of rendering this opinion. In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity with the originals of all documents submitted to us as copies, the authenticity of the originals of such documents and the legal competence of all signatories to such documents.
We express no opinion herein as to the laws of any state or jurisdiction other than the General Corporation Law of the State of Delaware (including the statutory provisions and all applicable judicial decisions interpreting those laws) and the federal laws of the United States of America.
On the basis of the foregoing, we are of the opinion, that (1) the Shares to be issued and sold by the Company have been duly authorized and, when such Shares are issued and paid for in accordance with the terms of the Underwriting Agreement, will be validly issued, fully paid and nonassessable, and (2) the Shares to be sold by the Selling Stockholder have been duly authorized and are validly issued, fully paid and nonassessable.
 
AUSTIN        BEIJING        BRUSSELS         GEORGETOWN, DE        HONG KONG        LOS ANGELES        NEW YORK
PALO ALTO        SAN DIEGO        SAN FRANCISCO        SEATTLE        SHANGHAI        WASHINGTON, DC

September 17, 2014
Page 2
 
We consent to the use of this opinion as an exhibit to the Registration Statement, and we consent to the reference of our name under the caption “Legal Matters” in the prospectus forming part of the Registration Statement.
Very truly yours,
/s/ WILSON SONSINI GOODRICH & ROSATI
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

Exhibit 10.3
VIVINT SOLAR, INC.
2014 EQUITY INCENTIVE PLAN

			
1.	  	Purposes of the Plan.	  	 	  2	  	
			
2.	  	Shares Subject to the Plan.	  	 	  2	  	
			
3.	  	Administration of the Plan.	  	 	  3	  	
			
4.	  	Stock Options.	  	 	  5	  	
			
5.	  	Restricted Stock.	  	 	  7	  	
			
6.	  	Restricted Stock Units.	  	 	  7	  	
			
7.	  	Stock Appreciation Rights.	  	 	  8	  	
			
8.	  	Performance Stock Units and Performance Shares.	  	 	  9	  	
			
9.	  	Performance Awards.	  	 	  9	  	
			
10.	  	Outside Director Limitations.	  	 	10	  	
			
11.	  	Leaves of Absence/Transfer Between Locations/Change of Status.	  	 	10	  	
			
12.	  	Transferability of Awards.	  	 	11	  	
			
13.	  	Adjustments; Dissolution or Liquidation.	  	 	11	  	
			
14.	  	Change in Control	  	 	11	  	
			
15.	  	Tax Matters.	  	 	13	  	
			
16.	  	Other Terms.	  	 	13	  	
			
17.	  	Term of Plan.	  	 	14	  	
			
18.	  	Amendment and Termination of the Plan.	  	 	14	  	
			
19.	  	Conditions Upon Issuance of Shares.	  	 	15	  	
			
20.	  	Stockholder Approval.	  	 	15	  	
			
21.	  	Definitions.	  	 	16	  	

1. Purposes of t h e Plan.
The purposes of this Plan are to attract and retain personnel for positions with the Company, to provide additional incentive to Employees, Directors, and Consultants (collectively, “Service Providers”), and to promote the success of the Company’s business.
The Plan permits the grant of Incentive Stock Options to Employees and the grant of Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Stock Units, and Performance Awards to any Service Provider.
2. Shares Subject to the Plan.
(a) Allocation of Shares to Plan . The maximum aggregate number of Shares that may be issued under the Plan is:
(i) 8,800,000 Shares, plus
(ii) any Shares subject to outstanding awards granted under the Company’s V Solar Holdings, Inc. 2013 Omnibus Incentive Plan (the “Existing Plan”) that, after the Registration Date, expire or otherwise terminate without having been exercised in full and any Shares issued under awards granted under the Existing Plan that, after the Registration Date, are forfeited to the Company, tendered to or withheld by the Company for payment of exercise or tax withholding, or repurchased by the Company, with the maximum number of Shares to be added to the Plan under Section 2(a)(ii) equal to 14,117,647 Shares, plus
(iii) any additional Shares that become available for issuance under the Plan under Sections 2(b) and 2(c).
The Shares may be authorized but unissued Common Stock or Common Stock issued and then reacquired by the Company.
(b) Automatic Share Reserve Increase . The number of Shares available for issuance under the Plan will be increased on the first day of each Fiscal Year beginning with the 2015 Fiscal Year, in an amount equal to the least of
(i) 8,800,000 Shares,
(ii) 4% of the total number of Shares outstanding on the last day of the immediately preceding Fiscal Year, and
(iii) a lower number of Shares determined by the Administrator.
(c) Lapsed Awards .
(i) Options and Stock Appreciation Rights . If an Option or Stock Appreciation Right expires or becomes unexercisable without having been exercised in full or is surrendered under an Exchange Program, the unissued Shares subject to the Option or Stock Appreciation Right will become available for future issuance under the Plan.
(ii) Stock Appreciation Rights . Only Shares actually issued pursuant to a Stock Appreciation Right (i.e., the net Shares issued) will cease to be available under the Plan; all remaining Shares originally subject to the Stock Appreciation Right will remain available for future issuance under the Plan.
(iii) Full-Value Awards . Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares, Performance Stock Units or stock-settled Performance Awards that are reacquired by the Company or are forfeited to the Company will become available for future issuance under the Plan.
 
- 2 -

(iv) Withheld Shares . Shares used to pay the Exercise Price of an Award or to satisfy tax withholding obligations related to an Award will become available for future issuance under the Plan.
(v) Cash-Settled Awards . If any portion of an Award under the Plan is paid to a Participant in cash rather than Shares, that cash payment will not reduce the number of Shares available for issuance under the Plan.
(d) Incentive Stock Options . The maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal 200% of the aggregate Share number stated in Sections 2(a)(i) and 2(a)(iii) plus, to the extent allowable under Code Section 422, any Shares that become available for issuance under the Plan under Sections 2(b) and 2(c).
(e) Adjustment . The numbers provided in Sections 2(a), 2(b), and 2(d) will be adjusted as a result of changes in capitalization referred to in Section 13.
(f) Substitute Awards . If the Committee grants Awards in substitution for equity compensation awards outstanding under a plan maintained by an entity acquired by or consolidated with the Company, the grant of those substitute Awards will not decrease the number of Shares available for issuance under the Plan.
3. Administration of the Plan.
(a) Procedure .
(i) General . The Plan will be administered by the Board or a Committee of the Board constituted to satisfy Applicable Laws (the “Administrator”). Different Administrators may administer the Plan with respect to different groups of Service Providers. The Board may retain the authority to concurrently administer the Plan with a Committee and may revoke the delegation of some or all authority previously delegated.
(ii) Further Delegation . To the extent permitted by Applicable Laws, the Board or a Committee may delegate to 1 or more Officers the authority to grant Options, Stock Appreciation Rights, and other Awards except Restricted Stock to Employees of the Company or any of its Subsidiaries who are not Officers, provided that the delegation must specify any limitations on the authority, including the total number of Shares that may be subject to the Awards granted by such Officer(s). Such delegation may be revoked. Any such Awards will be granted on the form of Award Agreement most recently approved for use by the Board or a Committee made up solely of Directors, unless the resolutions delegating the authority permit the Officer(s) to use a different form of Award Agreement approved by the Board or a Committee made up solely of Directors. The Board or a Committee may delegate to an Officer who is also a Director the authority to grant Restricted Stock, but such authority will be delegated to such individual in his or her capacity as a Director.
(iii) Section 162(m) . Unless an Award is granted and administered solely by a Committee of 2 or more “outside directors” within the meaning of Code Section 162(m), it will not qualify as “performance-based compensation” within the meaning of Code Section 162(m).
(b) Powers of the Administrator . Subject to the Plan, any limitations on delegations specified by the Board, and Applicable Laws, the Administrator will have the authority, in its sole discretion to make any determinations deemed necessary or advisable to administer the Plan including:
(i) to determine the Fair Market Value;
 
- 3 -

(ii) to approve forms of Award Agreements for use under the Plan (provided that all forms of Award Agreement must be approved by the Board or Committee of Directors acting as the Administrator);
(iii) to select the Service Providers to whom Awards may be granted and grant Awards to such Service Providers;
(iv) to determine the number of Shares to be covered by each Award granted;
(v) to determine the terms and conditions, not inconsistent with the Plan, of any Award granted. Such terms and conditions may include, but are not limited to, the Exercise Price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating to an Award;
(vi) to institute and determine the terms and conditions of an Exchange Program;
(vii) to interpret the Plan and make any decisions necessary to administer the Plan;
(viii) to establish, amend and rescind rules relating to the Plan, including rules relating to sub-plans established to satisfy laws of jurisdictions other than the United States or to qualify Awards for favorable tax treatment under laws of jurisdictions other than the United States;
(ix) to interpret, modify or amend each Award (subject to Section 18), including extending the Expiration Date and the post-termination exercisability period of such modified or amended Awards;
(x) to allow Participants to satisfy tax withholding obligations in any manner permitted by Section 15;
(xi) to delegate ministerial duties to any of the Company’s employees;
(xii) to authorize any person to take any steps and execute, on behalf of the Company, any documents required for an Award previously granted by the Administrator to be effective; and
(xiii) to allow Participants to defer the receipt of the payment of cash or the delivery of Shares otherwise due to any such Participants under an Award.
(c) Termination of Status .
(i) Unless a Participant is on a leave of absence approved by the Company as set forth in Section 11, the Participant’s status as a Service Provider will end at midnight at the end of the last day in the primary work location in which the Participant actively provides services for a member of the Company Group (the “Termination of Status Date”). The Administrator has the sole discretion to determine the date on which a Participant stops actively providing services and whether a Participant may still be considered to be providing services while on a leave of absence and the Administrator may delegate this decision, other than with respect to Officers, to the Company’s senior human resources officer.
(ii) This termination of status as a Service Provider will occur regardless of the reason for such termination even if the termination is later found to be invalid, in breach of employment laws in the jurisdiction where Participant is providing services, or in violation of the terms of Participant’s employment or service agreement, if any such agreement exists.
 
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(iii) Unless otherwise expressly provided in an Award Agreement or otherwise determined by the Administrator, a Participant’s right to vest in any Award under the Plan will cease as of the Termination of Status Date and will not be extended by any notice period, whether arising under contract, statute or common law, including any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is providing services.
(d) Grant Date . The grant date of an Award (“Grant Date”) will be the date that the Administrator makes the determination granting such Award, or may be a later date if such later date is designated by the Administrator on the date of the determination or under an automatic grant policy. Notice of the determination will be provided to each Participant within a reasonable time after the Grant Date.
(e) Waiver . The Administrator may waive any terms, conditions or restrictions.
(f) Fractional Shares . Except as otherwise provided by the Administrator, any fractional Shares that result from the adjustment of Awards will be canceled. Any fractional Shares that result from vesting percentages will be accumulated and vested on the date that an accumulated full Share is vested.
(g) Electronic Delivery . The Company may deliver by e-mail or other electronic means (including posting on a website maintained by the Company or by a third party under contract with the Company or one of its Subsidiaries) another member of the Company Group all documents relating to the Plan or any Award and all other documents that the Company is required to deliver to its security holders (including prospectuses, annual reports and proxy statements).
(h) Choice of Law; Choice of Forum . The Plan, all Awards and all determinations made and actions taken under the Plan, to the extent not otherwise governed by the laws of the United States, will be governed by the laws of the State of Delaware without giving effect to principles of conflicts of law. For purposes of litigating any dispute that arises under this Plan, a Participant’s acceptance of an Award is his or her consent to the jurisdiction of the State of Delaware, and agree that any such litigation will be conducted in Delaware Court of Chancery, or the federal courts for the United States for the District of Delaware, and no other courts, regardless of where a Participant’s services are performed.
(i) Effect of Administrator’s Decision . The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.
4. Stock Options.
(a) Stock Option Award Agreement . Each Option will be evidenced by an Award Agreement that will specify the number of Shares subject to the Option, its per share exercise price (“Exercise Price”), its Expiration Date, and such other terms and conditions as the Administrator determines. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. An Option not designated as an Incentive Stock Option is a Nonstatutory Stock Option.
(b) Exercise Price . The Exercise Price for the Shares to be issued upon exercise of an Option will be determined by the Administrator.
(c) Form of Consideration . The Administrator will determine the acceptable forms of consideration for exercising an Option and those forms of consideration will be described in the Award Agreement. The consideration may consist of any combination of the following, to the extent permitted by Applicable Laws:
(i) cash;
(ii) check;
(iii) promissory note;
 
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(iv) other Shares, provided that such Shares have a fair market value on the date of surrender equal to the aggregate Exercise Price of the Shares as to which such Option will be exercised. To the extent not prohibited by the Administrator, this shall include the ability to tender Shares to exercise the Option and then use the Shares received on exercise to exercise the Option with respect to additional Shares;
(v) consideration received by the Company under a cashless exercise arrangement (whether through a broker or otherwise) implemented by the Company for the exercise of Options;
(vi) consideration received by the Company under a net exercise program under which Shares are withheld from otherwise deliverable Shares; and
(vii) any other consideration or method of payment to issue Shares (provided that other forms of considerations may only be approved by the Board or a Committee of Directors).
(d) Incentive Stock Option Limitations .
(i) The Exercise Price of an Incentive Stock Option may not be less than 100% of the Fair Market Value on the Grant Date.
(ii) To that extent that the aggregate Fair Market Value of the Shares with respect to which incentive stock options under Code Section 422(b) are exercisable for the first time by a Participant during any calendar year (under all plans and agreements of the Company Group) exceeds $100,000, the Options whose value exceeds $100,000 will be treated as Nonstatutory Stock Options. Incentive stock options will be considered in the order in which they were granted. For this purpose the Fair Market Value of the Shares subject to an option will be determined as of the Grant Date of each option.
(iii) The Expiration Date of an Incentive Stock Option will be the day prior to the 10 th anniversary of the Grant Date or any shorter period provided in the Award Agreement, subject to clause (iv) below.
(iv) The following rules apply to Incentive Stock Options granted to Participants who own stock representing more than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary:
(1) the Expiration Date of the Incentive Stock Option may not be after the day prior to the 5 th anniversary of the Grant Date;
(2) the Exercise Price may not be less than 110% of the Fair Market Value on the Grant Date.
If an Option is designated in the Administrator action that granted it as an incentive stock option but the terms of the Option do not comply with Sections 4(d)(iv)(1) and 4(d)(iv)(2), then the Option will not qualify as an Incentive Stock Option.
(e) Exercise of Option . An Option will be deemed exercised when the Company receives: (i) a notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. An Option may not be exercised for a fraction of a Share. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for purchase under the Option, by the number of Shares as to which the Option is exercised.
 
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(f) Expiration of Options . Subject to Section 4(d), an Option granted under the Plan will expire upon the date determined by the Administrator and set forth in the Award Agreement.
(g) Tolling of Expiration . If exercising an Option prior to its expiration is not permitted because of Applicable Laws, other than the rules of any stock exchange or quotation system on which the Common Stock is listed or quoted, the Option will remain exercisable until 30 days after the first date on which exercise would no longer be prevented by such provisions. If this would result in the Option remaining exercisable past its Expiration Date, then it will remain exercisable only until the end of the later of (x) the first day on which its exercise would not be prevented by Section 19(a) and (y) its Expiration Date.
5. Restricted Stock.
(a) Restricted Stock Award Agreement . Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction (if any), the number of Shares granted, and such other terms and conditions as the Administrator determines. Unless the Administrator determines otherwise, Shares of Restricted Stock will be held in escrow until the end of the Period of Restriction applicable to such Shares. All grants of Restricted Stock and interpretative decisions about Restricted Stock may only be made by the Board or a Committee of Directors.
(b) Restrictions :
(i) Except as provided in this Section 5 or the Award Agreement, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated until the end of the Period of Restriction applicable to such Shares.
(ii) During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.
(iii) During the Period of Restriction, Service Providers holding Shares of Restricted Stock will not be entitled to receive dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise. If the Administrator provides that dividends and distributions will be received and any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid and, unless the Administrator determines otherwise, the Company will hold such Shares until the restrictions on the Shares of Restricted Stock with respect to which they were paid have lapsed.
(iv) Except as otherwise provided in this Section 5 or an Award Agreement, Shares of Restricted Stock covered by each Restricted Stock Award made under the Plan will be released from escrow when practicable after the last day of the applicable Period of Restriction.
(v) The Administrator may impose, prior to grant, or remove any restrictions on Shares of Restricted Stock.
6. Restricted Stock Units.
(a) Restricted Stock Unit Award Agreement . Each Award of Restricted Stock Units will be evidenced by an Award Agreement that will specify the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units.
(b) Vesting Criteria and Other Terms . The Administrator will set vesting criteria that, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit, or individual goals (that may include continued employment or service), or any other basis determined by the Administrator in its sole discretion.
 
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(c) Earning Restricted Stock Units . Upon meeting the applicable vesting criteria, the Participant will have earned the Restricted Stock Units and will be paid as determined in Section 6(d). The Administrator may reduce or waive any criteria that must be met to earn the Restricted Stock Units.
(d) Form and Timing of Payment . Payment of earned Restricted Stock Units will be made when practicable after the date set forth in the Award Agreement and determined by the Administrator. The Administrator may settle earned Restricted Stock Units in cash, Shares, or a combination of both.
7. Stock Appreciation Rights.
(a) Stock Appreciation Right Award Agreement . Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the Exercise Price (which may not be less than 100% of Fair Market Value on the Grant Date), its Expiration Date, the conditions of exercise, and such other terms and conditions as the Administrator determines.
(b) Payment of Stock Appreciation Right Amount . When a Participant exercises a Stock Appreciation Right, he or she will be entitled to receive a payment from the Company equal to:
(i) the difference between the Fair Market Value on the date of exercise and the Exercise Price; multiplied by
(ii) the number of Shares with respect to which the Stock Appreciation Right is exercised.
Payment upon Stock Appreciation Right exercise may be made in cash, in Shares of equivalent value, or any combination of cash and Shares with the determination of form of payment made by the Administrator. Shares issued upon exercise of a Stock Appreciation Right will be issued in the name of the Participant. Until Shares are issued (as evidenced by the entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to a Stock Appreciation Right, notwithstanding the exercise of the Stock Appreciation Right. The Company will issue (or cause to be issued) such Shares promptly after the Stock Appreciation Right is exercised. A Stock Appreciation Right may not be exercised for a fraction of a Share. Exercising a Stock Appreciation Right in any manner will decrease the number of Shares thereafter available, both for the Plan and for purchase under the Stock Appreciation Right, by the number of Shares as to which the Stock Appreciation Right is exercised.
(c) Expiration of Stock Appreciation Rights . A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator in its sole discretion and set forth in the Award Agreement.
(d) Tolling of Expiration . If exercising an Stock Appreciation Right prior to its expiration is not permitted because of Applicable Laws, other than the rules of any stock exchange or quotation system on which the Common Stock is listed or quoted, the Stock Appreciation Right will remain exercisable until 30 days after the first date on which exercise would no longer be prevented by such provisions. If this would result in the Stock Appreciation Right remaining exercisable past its Expiration Date, then it will remain exercisable only until the end of the later of (x) the first day on which its exercise would not be prevented by Section 19(a) and (y) its Expiration Date.
 
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8. Performance Stock Units and Performance Shares.
(a) Award Agreement . Each Award of Performance Stock Units/Shares will be evidenced by an Award Agreement that will specify the time period during which the performance objectives or other vesting provisions will be measured is the (“Performance Period”), and material terms of the Award. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service) or any other basis determined by the Administrator.
(b) Value of Performance Stock Units/Shares . Each Performance Unit will have an initial value established by the Administrator on or before the Grant Date. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the Grant Date.
(c) Performance Objectives and Other Terms . The Administrator will set performance objectives or other vesting provisions (that may include continued employment or service). These objectives or vesting provisions may determine the number or value of Performance Stock Units/Shares paid out.
(d) Earning of Performance Stock Units/Shares . After an applicable Performance Period has ended, the holder of Performance Stock Units/Shares will be entitled to receive a payout of the number of Performance Stock Units/Shares earned by the Participant over the Performance Period. The Administrator may reduce or waive any performance objectives or other vesting provisions for such Performance Unit/Share.
(e) Payment of Performance Stock Units/Shares . Payment of earned Performance Stock Units/Shares will be made when practicable after the end of the applicable Performance Period. Payment with respect to earned Performance Stock Units/Shares may be made in cash, in Shares of equivalent value, or any combination of cash and Shares with the determination of form of payment made by the Administrator.
(f) Performance Stock Units/Shares . If a Participant has not accepted an Award of Performance Stock Units/Shares or has not taken all administrative and other steps (e.g. setting up an account with a broker designated by the Company) necessary for the Company to issues Shares pursuant to such Performance Stock Units/Shares prior to a vesting date, then any Shares that would otherwise be issued pursuant to such Performance Stock Units/Shares on such vesting date will be forfeited 30 days after such Participant’s Termination of Status Date and the Performance Stock Units/Shares that have not been earned will be forfeited to the Company for no consideration unless otherwise provided by the Administrator.
9. Performance Awards.
(a) Award Agreement . Each Performance Award will be evidenced by an Award Agreement that will specify the Performance Period, and material terms of the Award. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service) or any other basis determined by the Administrator.
(b) Value of Performance Awards . Each Performance Award’s target and maximum payout values will be established by the Administrator on or before the Grant Date.
(c) Performance Objectives and Other Terms . The Administrator will set performance objectives or other vesting provisions (that may include continued employment or service). These objectives or vesting provisions will determine the value of Performance Awards Payouts.
(d) Payment of Performance Awards . Payment of earned Performance Awards will be made when practicable after the end of the applicable Performance Period. Payment with respect to earned Performance Awards will be made in cash, in Shares of equivalent value, or any combination of cash and Shares with the determination of form of payment made by the Administrator at the time of payment.
 
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10. Outside Director Limitations.
(a) Cash-Settled Awards . No Outside Director may be granted, in any Fiscal Year, cash-settled Awards with a grant date fair value (determined under U.S. generally accepted accounting principles) of more than $400,000. Awards granted to an individual while he or she was an Employee, or while he or she was a Consultant but not an Outside Director, will not count for purpose of this limitation.
(b) Stock-Settled Awards . No Outside Director may be granted, in any Fiscal Year, stock-settled Awards with a grant date fair value (determined under U.S. generally accepted accounting principles) of more than $400,000. Awards granted to an individual while he or she was an Employee, or while he or she was a Consultant but not an Outside Director, will not count for purpose of this limitation.
11. Leaves of Absence/Transfer Between Locations/Change of Status.
(a) General . Unless otherwise provided by the Administrator, a Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) any transfer between locations of the Company or other members of the Company Group.
(b) Vesting . Unless a leave policy approved by the Administrator provides otherwise or it is otherwise required by Applicable Law, vesting of Awards granted under the Plan will continue only for Participants on an approved leave of absence.
(c) Incentive Stock Option Status . If a leave of absence exceeds 3 months and reemployment upon expiration of such leave is not guaranteed by statute or contract, then 3 months following the 1st day of such leave a Participant will not be treated as an employee for incentive stock option purposes. If reemployment upon expiration of a leave of absence approved by the Company is not guaranteed by statute or contract, then 6 months following the 1st day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.
(d) Protected Leaves .
(i) Any leave of absence by a Participant will be subject to any Applicable Laws that apply to leaves of absence.
(ii) For a Participant on a military leave, if required by Applicable Laws, vesting will continue for the longest period that vesting continues under any other statutory or company-approved leave of absence. When a Participant returns from military leave (under conditions that would entitle him or her to such protection under the Uniformed Services Employment and Reemployment Rights Act), the Participant will be given vesting credit to the same extent as if the Participant had continued to provide services to the Company through the military leave.
(e) Changes in Status . If a Participant who is an Employee has a reduction in hours worked, the Administrator may unilaterally:
(i) make a corresponding reduction in the number of Shares or cash amount subject to any portion of an Award that is scheduled to vest or become payable after the date of such extend leave or reduction in hours; and
(ii) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award.
If any such reduction occurs, the Participant will have no right to any portion of the Award that is reduced or extended.
(f) Determinations . The effect of a Company-approved leave of absence, a transfer, or a Participant’s reduction in hours of employment or service on the vesting of an Award shall be determined,
 
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under policies reviewed by the Administrator, by the Company’s senior human resources officer or other person performing that function or, with respect to Directors or Officers by the Compensation Committee of the Board, any such determination will be final.
12. Transferability of Awards.
(a) General Rule . Unless determined otherwise by the Administrator, or otherwise required by Applicable Laws, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, the Award will be limited by any additional terms and conditions imposed by the Administrator. Any unauthorized transfer of an Award will be void.
(b) Domestic Relations Orders . If approved by the Administrator, an Award may be transferred under a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulations Section 1.421-1(b)(2). An Incentive Stock Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.
(c) Limited Transfers for the Benefit of Family Members . The Administrator may permit an Award or Share issued under this Plan to be assigned or transferred subject to the applicable limitations, set forth in the General Instructions to Form S-8 Registration Statement under the Securities Act, if applicable, and any other Applicable Laws.
(d) Permitted Transferees . Any individual or entity to whom an Award is transferred will be subject to all of the terms and conditions applicable to the Participant who transferred the Award, including the terms and conditions in this Plan and the Award Agreement. If an Award is unvested then the service of the Participant will continue to determine whether the Award will vest and any Expiration Date.
13. Adjustments; Dissolution or Liquidation.
(a) Adjustments . If any extraordinary dividend or other extraordinary distribution (whether in cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to acquire securities of the Company, other change in the corporate structure of the Company affecting the Shares, or any similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto) affecting the Shares occurs (including, without limitation, a Change in Control), the Administrator, to prevent diminution or enlargement of the benefits or potential benefits intended to be provided under the Plan, will adjust the number and class of shares that may be delivered under the Plan and/or the number, class, and price of shares covered by each outstanding Award, and the numerical Share limits in Section 2 in such a manner as it deems equitable. Notwithstanding the foregoing, the conversion of any convertible securities of the Company and ordinary course repurchases of shares or other securities of the Company will not be treated as an event that will require adjustment.
(b) Dissolution or Liquidation . In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant when practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action .
14. Change in Control
(a) If a Change in Control or a merger of the Company with or into another corporation or other entity occurs, each outstanding Award will be treated as the Administrator determines, including, without limitation, that such Award be continued by the successor corporation or a Parent or Subsidiary of the successor corporation.
 
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(b) The Administrator need not take the same action or actions with respect to all Awards or portions thereof or with respect to all Participants. The Administrator may take different actions with respect to the vested and unvested portions of an Award. The Administrator will not be required to treat all Awards similarly in the transaction.
(c) Continuation . An Award will be considered continued if, following the Change in Control or merger:
(i) the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration received by the holders of a majority of the outstanding Shares); provided, however, that if the consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon exercising an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Stock Unit, Performance Share or Performance Award, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control; or
(ii) the Award is terminated in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Participant’s rights as of the date of the occurrence of the transaction. Any such cash or property may be subjected to any escrow applicable to holder of Common Stock in the Change of Control. If as of the date of the occurrence of the transaction the Administrator determines that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment. The amount of cash or property can be subjected to vesting and paid to the Participant over the original vesting schedule of the Award.
(iii) Notwithstanding anything in this Section 14(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not invalidate an otherwise valid Award assumption.
(d) The Administrator will have authority to modify Awards in connection with a Change in Control:
(i) in a manner that causes them to lose their tax-preferred status,
(ii) to terminate any right a Participant has to exercise an Option prior to vesting in the Shares subject to the Option (i.e., “early exercise”), so that following the closing of the transaction the Option may only be exercised to the extent it is vested;
(iii) to reduce the Exercise Price subject to the Award in a manner that is disproportionate to the increase in the number of Shares subject to the Award, as long as the amount that would be received upon exercise of the Award immediately before and immediately following the closing of the transaction is equivalent and the adjustment complies with Treasury Regulation Section 1.409A-1(b)(v)(D); and
(iv) to suspend a Participant’s right to exercise an Option during a limited period of time preceding and or following the closing of the transaction without Participant consent if such suspension is administratively necessary or advisable to permit the closing of the transaction.
 
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(e) Non-Continuation . If the successor corporation does not continue for an Award (or some portion such Award), the Participant will fully vest in (and have the right to exercise) an additional 100% of the then-unvested Shares subject to his or her outstanding Options and Stock Appreciation Rights, all restrictions on an additional 100% of the Participant’s outstanding Restricted Stock and Restricted Stock Units will lapse, and, regarding 100% of Participant’s outstanding Awards with performance-based vesting, all performance goals or other vesting criteria will be treated as achieved at 100% of target levels and all other terms and conditions met. In no event will vesting an Award accelerate as to more than 100% of the Award. If Options or Stock Appreciation Rights are not continued if a Change in Control or a merger of the Company with or into another corporation or other entity occurs, the Administrator will notify the Participant in writing or electronically that the Participant’s vested Options or Stock Appreciation Rights (after considering the foregoing vesting acceleration, if any) will be exercisable for a period of time determined by the Administrator in its sole discretion and all of the Participant’s Options or Stock Appreciation Rights will terminate upon the expiration of such period (whether vested or unvested).
(f) Outside Director Awards . With respect to Awards granted to an Outside Director that are continued, if on the date of or following such continuation the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant (unless such resignation is at the request of the acquirer), then the Participant will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Shares underlying such Award, including those Shares not otherwise vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be treated as achieved at 100% of target levels and all other terms and conditions met.
15. Tax Matters.
(a) Withholding Requirements . Prior to the delivery of any Shares or cash under an Award (or exercise thereof) or such earlier time as any tax withholding obligations are due, the Company may deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any taxes (including the Participant’s social tax obligations) required to be withheld with respect to such Award (or exercise thereof).
(b) Withholding Arrangements . The Administrator, in its sole discretion and under such procedures as it may specify from time to time, may permit or may require a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (a) paying cash, (b) electing to have the Company withhold otherwise deliverable cash (including cash from the sale of Shares issued to Participant) or Shares having a fair market value equal to the minimum statutory amount required to be withheld, (c) delivering to the Company already-owned Shares having a fair market value equal to the minimum statutory amount required to be withheld, or (d) requiring the Participant to engage in a cashless exercise transaction (whether through a broker or otherwise) implemented by the Company in connection with the Plan. The fair market value of the Shares to be withheld or delivered will be determined as of the date the taxes must be withheld.
(c) Compliance With Code Section 409A . Except as otherwise determined by the Administrator, it is intended that Awards will be designed and operated so that they are either exempt from the application of, or comply with, the requirements of Code Section 409A so that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A and the Plan and each Award Agreement will be interpreted consistent with this intent. This Section 15(c) is not a guarantee to any Participant of the consequences of his or her Awards.
16. Other Terms.
(a) No Effect on Employment or Service . Neither the Plan nor any Award will confer upon a Participant any right regarding continuing the Participant’s relationship as a Service Provider with the Company or member of the Company Group, nor will they interfere with the Participant’s right, or the Participant’s employer’s right, to terminate such relationship with or without cause, to the extent permitted by Applicable Laws.
 
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(b) Forfeiture Events .
(i) All Awards granted under the Plan will be subject to recoupment under any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Laws. In addition, the Administrator may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Administrator determines necessary or appropriate, including but not limited to a reacquisition right regarding previously acquired Shares or other cash or property. Unless this Section 16(b) is specifically mentioned and waived in an Award Agreement or other document, no recovery of compensation under a clawback policy or otherwise will give a Participant the right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company.
(ii) The Administrator may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of such Participant’s status as Service Provider for cause or any act by a Participant, whether before or after such Participant’s Termination Status Date that would constitute cause for termination of such Participant’s status as a Service Provider.
(iii) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, any Participant who knowingly or through gross negligence engaged in the misconduct, or who knowingly or through gross negligence failed to prevent the misconduct, and any Participant who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, shall reimburse the Company the amount of any payment in settlement of an Award earned or accrued during the 12 month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document embodying such financial reporting requirement.
17. Term of Plan.
Subject to Section 20, the Plan will become effective upon the later to occur of (i) its adoption by the Board or (ii) the business day immediately prior to the Registration Date. It will continue in effect for a term of 10 years from the date adopted by the Board, unless terminated earlier under Section 18.
18. Amendment and Termination of the Plan .
(a) Amendment and Termination . The Board or Compensation Committee of the Board may amend, alter, suspend or terminate the Plan.
(b) Stockholder Approval . The Company will obtain stockholder approval of any Plan amendment to the extent necessary or desirable to comply with Applicable Laws.
(c) Consent of Participants Generally Required . Subject to Section 18(d) below, no amendment, alteration, suspension or termination of the Plan or an Award under it will materially impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it regarding Awards granted under the Plan prior to such termination.
 
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(d) Exceptions to Consent Requirement .
(i) A Participant’s rights will not be deemed to have been impaired by any amendment, alteration, suspension or termination if the Administrator, in its sole discretion, determines that the amendment, alteration, suspension or termination taken as a whole, does not materially impair the Participant’s rights, and
(ii) Subject to any limitations of Applicable Laws, the Administrator may amend the terms of any one or more Awards without the affected Participant’s consent even if it does materially impair the Participant’s right if such amendment is done
(1) in a manner permitted under the Plan;
(2) to maintain the qualified status of the Award as an Incentive Stock Option under Code Section 422;
(3) to change the terms of an Incentive Stock Option, if such change results in impairment of the Award only because it impairs the qualified status of the Award as an Incentive Stock Option under Code Section 422;
(4) to clarify the manner of exemption from, or to bring the Award into compliance with, Code Section 409A; or
(5) to comply with other Applicable Laws.
19. Conditions Upon Issuance of Shares.
(a) Legal Compliance . Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws. If required by the Administrator, issuance will be further subject to the approval of counsel for the Company with respect to such compliance. The inability of the Company to obtain authority from any regulatory body having jurisdiction or to complete or comply with the requirements of any Applicable Laws will relieve the Company of any liability regarding the failure to issue or sell such Shares as to which such authority, registration, qualification or rule compliance was not obtained and the Administrator reserves the authority, without the consent of a Participant, to terminate or cancel Awards with or without consideration in such a situation.
(b) Investment Representations . As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant during any such exercise that the Shares are being purchased only for investment and with no present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
(c) Failure to Accept Award . If a Participant has not accepted an Award or has not taken all administrative and other steps (e.g. setting up an account with a broker designated by the Company) necessary for the Company to issue Shares upon the vesting, exercise, or settlement of the Award prior to the first date the Shares subject such Award are scheduled to vest, then the Award will be cancelled on such date and the Shares subject to such Award immediately will revert to the Plan for no additional consideration unless otherwise provided by the Administrator.
20. Stockholder Approval.
The Plan will be subject to approval by the stockholders of the Company within 12 months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
 
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21. Definitions.
The following definitions are used in this Plan:
(a) “ Applicable Laws ” means the requirements relating to the administration of equity-based awards and the related issuance of Shares under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and, only to the extent applicable with respect to an Award or Awards, the tax, securities or exchange control laws of any jurisdictions other than the United States where Awards are, or will be, granted under the Plan. Reference to a section of an Applicable Law or regulation related to that section shall include such section or regulation, any valid regulation issued under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
(b) “ Award ” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Stock Units or Performance Shares.
(c) “ Award Agreement ” means the written or electronic agreement setting forth the terms applicable to an Award granted under the Plan. The Award Agreement is subject to the terms of the Plan.
(d) “ Board ” means the Board of Directors of the Company.
(e) “ Change in Control ” means the occurrence of any of the following events:
(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“ Person ”), acquires ownership of the stock of the Company that, with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company; provided, however, that for this subsection, the acquisition of additional stock by any one Person, who prior to such acquisition is considered to own more than 50% of the total voting power of the stock of the Company will not be considered a Change in Control. Further, if the stockholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately prior to the change in ownership, direct or indirect beneficial ownership of 50% or more of the total voting power of the stock of the Company, such event shall not be considered a Change in Control under this section 21(e)(i). For this purpose, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities; or
(ii) A change in the effective control of the Company which occurs on the date a majority of members of the Board is replaced during any 12 month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the appointment or election. For this section 21(e)(ii), if any Person is in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or
(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the 12 month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for this Section 21(e)(iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets:
(1) a transfer to an entity controlled by the Company’s stockholders immediately after the transfer, or
 
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(2) a transfer of assets by the Company to:
(A) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock,
(B) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company,
(C) a Person, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company, or
(D) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in subsections 21(e)(iii)(2)(A) to 21(e)(iii)(2)(C).
For this definition, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. For this definition, persons will be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
A transaction will not be a Change in Control:
(iv) unless the transaction qualifies as a change in control event within the meaning of Code Section 409A; or
(v) if its sole purpose is to (1) change the state of the Company’s incorporation, or (2) create a holding company owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
(f) “ Code ” means the Internal Revenue Code of 1986. Reference to a section of the Code or regulation related to that section shall include such section or regulation, any valid regulation issued under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
(g) “ Committee ” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board.
(h) “ Common Stock ” means the common stock of the Company.
(i) “ Company ” means Vivint Solar, Inc., a Delaware corporation, or any successor thereto.
(j) “ Company Group ” means the Company, any Parent or Subsidiary of the Company, and any entity that, from time to time and at the time of any determination, directly or indirectly, is in control of, is controlled by or is under common control with the Company.
(k) “ Consultant ” means any natural person engaged by a member of the Company Group to render bona fide services to such entity, provided the services (i) are not in connection with the offer or sale of securities in a capital raising transaction, and (ii) do not directly promote or maintain a market for the Company’s securities. A Consultant must be a person to whom the issuance of Shares registered on Form S-8 under the Securities Act is permitted.
(l) “ Director ” means a member of the Board.
(m) “ Employee ” means any person, including Officers and Directors, employed by the Company or any member of the Company Group. However, with respect to Incentive Stock Options, an Employee must be employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will constitute “employment” by the Company.
 
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(n) “ Exchange Act ” means the U.S. Securities Exchange Act of 1934.
(o) “ Exchange Program ” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for awards of the same type (which may have higher or lower Exercise Prices and different terms), awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the Exercise Price of an outstanding Award is increased or reduced. The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion.
(p) “ Expiration Date” means the last day on which an Option or Stock Appreciation Right may be exercised. Any exercise must be completed by 5:00 PM in Salt Lake City, Utah on such date.
(q) “ Fair Market Value ” means, as of any date, the value of a Share, determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the New York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market of The NASDAQ Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported by such source as the Administrator determines to be reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or, if no bids and asks were reported on that date on the last Trading Day such bids and asks were reported), as reported by such source as the Administrator determines to be reliable;
(iii) For any Awards granted on the Registration Date, the Fair Market Value will be the initial price to the public set forth in the final prospectus included within the registration statement in Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Company’s Common Stock; or
(iv) Absent an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator.
Notwithstanding the foregoing, if the determination date for the Fair Market Value occurs on a weekend, holiday or other non-Trading Day, the Fair Market Value will be the price as determined under subsections (i) through (ii) above on the immediately preceding Trading Day, unless otherwise determined by the Administrator. In addition, for purposes of determining the fair market value of shares for any reason other than the determination of the Exercise Price of Options or Stock Appreciation Rights, fair market value will be determined by the Administrator in a manner compliant with Applicable Laws and applied consistently for such purpose. Note that the determination of fair market value for purposes of tax withholding may be made in the Administrator’s sole discretion subject to Applicable Laws and is not required to be consistent with the determination of Fair Market Value for other purposes.
(r) “ Fiscal Year ” means the fiscal year of the Company.
(s) “ Incentive Stock Option ” means an Option that is intended to qualify and does qualify as an incentive stock option within the meaning of Code Section 422.
(t) “ Nonstatutory Stock Option ” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
 
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(u) “ Officer ” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act.
(v) “ Option ” means a stock option granted under the Plan.
(w) “ Outside Director ” means a Director who is not an Employee.
(x) “ Parent ” means a “parent corporation,” whether now or hereafter existing, as defined in Code Section 424(e).
(y) “ Participant ” means the holder of an outstanding Award.
(z) “Performance Awards ” means an Award which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine and which will be settled for cash, Shares or other securities or a combination of the foregoing under Section 9.
(aa) “ Performance Share ” means an Award denominated in Shares which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine under Section 8.
(bb) “ Performance Stock Units ” means an Award which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing under Section 8.
(cc) “ Period of Restriction ” means the period during which the transfer of Shares of Restricted Stock is subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.
(dd) “ Plan ” means this 2014 Equity Incentive Plan.
(ee) “ Registration Date ” means the effective date of the first registration statement filed by the Company and declared effective under Section 12(b) of the Exchange Act, with respect to any class of the Company’s securities.
(ff) “ Restricted Stock ” means Shares issued under a Restricted Stock award under Section 5, or issued as a result of the early exercise of an Option.
(gg) “ Restricted Stock Unit ” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted under Section 6. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.
(hh) “ Rule 16b-3 ” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, in effect when discretion is being exercised with respect to the Plan.
(ii) “ Section 16(b) ” means Section 16(b) of the Exchange Act.
(jj) “ Securities Act ” means Securities Act of 1933, as amended.
(kk) “ Service Provider ” means an Employee, Director or Consultant.
(ll) “ Share ” means a share of Common Stock.
(mm) “ Stock Appreciation Right ” means an Award, granted alone or in connection with an Option, that under Section 7 is designated as a Stock Appreciation Right.
 
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(nn) “ Subsidiary ” means a “subsidiary corporation” as defined in Code Section 424(f).
(oo) “ Trading Day ” means a day on which the applicable stock exchange or national market system is open for trading.
 
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Exhibit 10.4E
V Solar Holdings, Inc.
Amended and Restated
2013 Long-Term Incentive Pool Plan
for Regional Sales Managers
Section 1. Purpose . The purpose of the V Solar Holdings, Inc. Amended and Restated 2013 Long-Term Incentive Pool Plan for Regional Sales Managers is to:
(a) provide a means through which V Solar Holdings, Inc. (the “ Company ”) and its Affiliates may attract and retain key Regional Sales Managers (and prospective Regional Sales Managers); and
(b) provide a means whereby Regional Sales Managers (and prospective Regional Sales Managers) of the Company and its Affiliates can be paid incentive compensation measured by reference to the value of shares of the Company’s Common Stock, thereby strengthening their commitment to the welfare of the Company and its Affiliates and aligning their interests with those of the Company’s direct and indirect stockholders.
Section 2. Definitions . Capitalized terms used in the Plan shall have the meanings assigned such terms herein or in Appendix A (Definitions).
Section 3. Eligibility .
(a) Any Regional Sales Manager of the Company or its Affiliates shall be eligible to be designated a Participant by the Committee.
(b) Unless otherwise provided for in an Award Agreement, when a Participant ceases to be a Regional Sales Manager or otherwise ceases to satisfy the eligibility requirements for participation in this Plan (the last date of such participation, the “ Cessation Date ”), but continues to provide Services, such Participant shall be eligible to continue to receive payments in respect of LTIP Credits accrued on or prior to the Cessation Date pursuant to Section 5 and otherwise in accordance with the Plan, provided that such Participant shall not accrue any additional LTIP Credits in this Plan after the Cessation Date. Such a Participant may be eligible to participate in other long-term incentive plans of the Company or its Affiliates, but LTIP credits accrued under any other such plan shall not constitute “LTIP Credits” under this Plan.
(c) An individual actively accruing benefits under a similar long-term incentive plan of the Company shall not be eligible to accrue LTIP Credits with respect to the same period of time under this Plan, unless otherwise provided by the Committee in the Award Agreement.
Section 4. Allocation of LTIP Credits; Calculation of LTIP Share .
(a) Grant of Awards . From time to time, the Committee may make awards of LTIP credits (each, an “ LTIP Credit ”) to Participants under the Plan (each, an “ Award ”) which shall be evidenced by a written award agreement (each, an “ Award Agreement ”). Awards may be expressed as a right, subject to satisfaction of the terms and conditions of the Award, to receive a stipulated number of LTIP Credits or a number of LTIP Credits derivable by a formula; provided that if no such number of LTIP Credits or formula is specified in the Award Agreement, then the number of LTIP Credits issued under such Award shall be determined pursuant to Section 4(b).

(b) Allocation of LTIP Credits . Unless otherwise provided in the applicable Award Agreement, each Participant shall accrue LTIP Credits as set forth below. All determinations related to the allocation of LTIP Credits shall be reasonably determined by the Committee in good faith and shall be binding and final on all Participants.
 
 	(i)	LTIP Credits, Generally . Each Participant will be allocated one LTIP Credit for each installed solar-generating power system sold by such Participant or such Participant’s region on or after May 1, 2011 (except to the extent such LTIP Credits are canceled pursuant to Section 4(b)(ii)).	
 
 	(ii)	Cancelations . If any solar power purchase contract is canceled by a customer or not assigned by a customer to a new purchaser of a home (other than cancelations as a result of the purchase by the customer of the power-generating equipment provided pursuant to such contract), then any LTIP Credits originally generated by the installation for such buyer will be canceled and cease to be outstanding for purposes of making future calculations hereunder.	
 
 	(iii)	Calculating LTIP Credits . A Participant’s LTIP Credits for any Measurement Period shall be determined in good faith by the Committee for purposes of making such payment, with the Committee’s decisions binding and final on all Participants.	
(c) Calculation of LTIP Share . Unless otherwise provided in the applicable Award Agreement, a Participant’s share of the LTI Pool (the “ LTIP Share ”), as of any Determination Date, shall be a fraction (x) the numerator of which shall be such Participant’s LTIP Credits accrued during all Measurement Periods through such Determination Date and (y) the denominator of which shall be the total number of LTIP Credits assigned to all Participants (excluding Terminated Participants) during all Measurement Periods through such Determination Date. All determinations related to the calculation of the LTIP Share shall be determined by the Committee in good faith and shall be binding and final on all Participants.
Section 5. Allocation of LTIP Share; Timing and Amount of Payments . Satisfaction of Awards shall occur as described in either sub-section (a), sub-section (b), sub-section (c), or a combination of either sub-sections (a) or (b) and (c), below.
(a) Public Offering .
 
 	(i)	Following the occurrence of a Public Offering of the Company (or any other similar event specified in the sole discretion of the Committee), on each Determination Date, each Participant with an outstanding Award who continues to provide Services through such Determination Date shall be issued a number of shares of Common Stock under the Company’s Stock Plan with a Fair Market Value on such Determination Date equal to such Participant’s LTIP Share of the Distributable Portion of the LTI Pool.	
 
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 	(ii)	The Determination Dates following a Public Offering and the respective Distributable Portions of the LTI Pool shall be:	

Determination Date	  	Distributable Portion of LTI Pool	
		
Date that is six months following the closing of the Public Offering	  	Portion of the LTI Pool attributable to 36,764 hypothetical stock options, measured as of the applicable Determination Date	
		
Date that is 18 months following the closing of the Public Offering	  	Portion of the LTI Pool attributable to 36,764 hypothetical stock options, measured as of the applicable Determination Date	
		
Later of (x) the date on which the First Performance Hurdle has been satisfied and (y) the date that is six months following the closing of the Public Offering	  	Portion of the LTI Pool attributable to 73,530 hypothetical stock options, measured as of the applicable Determination Date	
		
Later of (x) the date on which the Second Performance Hurdle has been satisfied and (y) the date that is six months following the closing of the Public Offering	  	Portion of the LTI Pool attributable to 73,530 hypothetical stock options, measured as of the applicable Determination Date	
(b) Change of Control . Upon the occurrence of a Change of Control (or any other similar event specified in the sole discretion of the Committee), each Participant with an outstanding Award shall be eligible to be paid an amount equal to the product of (1) the Participant’s LTIP Share, (2) the LTI Pool (less any amounts previously distributed under the LTI Pool) and (3) the Vested Percentage (such product, the “ Change of Control Payment Amount ”), which payment may be made in one of the following forms, as determined by the Committee in its sole discretion: (w) cash, (x) shares of Common Stock valued at Fair Market Value, (y) shares of Common Stock or units of capital stock of Parent or one of Parent’s majority-owned Subsidiaries that beneficially owns, directly or indirectly, a majority of the voting power of the Company’s capital stock (“ Alternative Equity ”) valued at Fair Market Value (measured as though all references to shares of Common Stock in such definition of “Fair Market Value” were replaced with Alternative Equity), or (z) any combination thereof. The Change of Control Payment Amount will be paid to a Participant in installments as follows:
 
 	(i)	One-third of the Change of Control Payment Amount shall be paid within 30 days of the consummation of such Change of Control (unless the Participant ceases to provide Services before such consummation date, in which case the Change of Control Payment shall be forfeited);	
 
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 	(ii)	One-third of the Change of Control Payment Amount shall be paid on the date that is nine (9) months after the date of the consummation of such Change of Control (unless the Participant ceases to provide Services before such date, in which case the unpaid portion of the Change of Control Payment shall be forfeited); and	
 
 	(iii)	One-third of the Change of Control Payment Amount shall be paid on the date that is 18 months after the date of the consummation of such Change of Control (unless the Participant ceases to provide Services before such date, in which case the unpaid portion of the Change of Control Payment shall be forfeited);	
provided that if a Participant’s Services are terminated by the Participant’s employer after the consummation of a Change of Control other than for Cause (or as a result of the Participant’s death or disability (as defined in the employer’s long-term disability insurance plan)), then subject to and conditioned upon the execution and non-revocation of a General Release by such Participant, any unpaid portion of the Change of Control Payment Amount shall be paid to such Participant within 30 days of such termination of Services.
(c) Other Payments . The Committee may, at any time in its sole discretion, declare a payment from the LTI Pool, in which case each Participant with an outstanding Award shall be paid an amount equal to such Participant’s LTIP Share of the payment amount so declared by the Committee, which payment may be made in one of the forms described in Section 4(b); provided that any such payments, (i) together with all other payments made pursuant to this Section 4(c), shall not exceed an amount equal to the product of (A) the Vested Percentage and (B) the LTI Pool at the time of such payment; and (ii) shall reduce the payment made in respect of the LTI Pool on the Distribution Date immediately following the date such payment was made.
(d) Adjustment to LTI Pool . For the avoidance of doubt, any payment made pursuant to Section 5 shall constitute a payment pursuant to the LTI Pool and shall, therefore, reduce the amount of the LTI Pool available for future distributions, as described in the definition of “LTI Pool.”
Section 6. Administration .
(a) The Committee shall administer the Plan.
(b) Subject to the provisions of the Plan and applicable law, the Committee shall have the sole and plenary authority, in addition to other express powers and authorizations conferred on the Committee by the Plan, to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the terms and conditions of any Award; (iv) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, shares of Common Stock, other securities (including Alternative Equity), other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (v) determine whether, to what extent and under what circumstances the delivery of cash, shares of Common
 
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Stock, other securities (including Alternative Equity), other Awards or other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the Participant or of the Committee; (vi) interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any instrument or agreement relating to, or Award granted under, the Plan; (vii) establish, amend, suspend, or waive any rules and regulations and appoint such agents as the Committee shall deem appropriate for the proper administration of the Plan; and (viii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.
(c) Except to the extent prohibited by applicable law or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. The Committee may revoke any such allocation or delegation at any time. Without limiting the generality of the foregoing, the Committee may delegate to one or more officers of the Company or any of its Affiliates the authority to act on behalf of the Committee with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Committee herein, and which may be so delegated as a matter of law.
(d) Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award or any documents evidencing Awards granted pursuant to the Plan shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all persons or entities, including, without limitation, the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any stockholder of the Company.
(e) No member of the Board, the Committee or any employee or agent of the Company (each such person, an “ Indemnifiable Person ”) shall be liable for any action taken or omitted to be taken or any determination made with respect to the Plan or any Award hereunder (unless constituting fraud or a willful criminal act or omission). Each Indemnifiable Person shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense (including attorneys’ fees) that may be imposed upon or incurred by such Indemnifiable Person in connection with or resulting from any action, suit or proceeding to which such Indemnifiable Person may be a party or in which such Indemnifiable Person may be involved by reason of any action taken or omitted to be taken or determination made under the Plan or any Award Agreement and against and from any and all amounts paid by such Indemnifiable Person with the Company’s approval, in settlement thereof, or paid by such Indemnifiable Person in satisfaction of any judgment in any such action, suit or proceeding against such Indemnifiable Person, and the Company shall advance to such Indemnifiable Person any such expenses promptly upon written request (which request shall include an undertaking by the Indemnifiable Person to repay the amount of such advance if it shall ultimately be determined as provided below that the Indemnifiable Person is not entitled to be indemnified); provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing
 
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right of indemnification shall not be available to an Indemnifiable Person to the extent that a final judgment or other final adjudication (in either case not subject to further appeal) binding upon such Indemnifiable Person determines that the acts or omissions or determinations of such Indemnifiable Person giving rise to the indemnification claim resulted from such Indemnifiable Person’s fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the Company’s certificate of incorporation or bylaws. The foregoing right of indemnification shall not be exclusive of or otherwise supersede any other rights of indemnification to which such Indemnifiable Persons may be entitled under the Company’s certificate of incorporation or bylaws, as a matter of law, individual indemnification agreement or contract or otherwise, or any other power that the Company may have to indemnify such Indemnifiable Persons or hold them harmless.
(f) Notwithstanding anything to the contrary contained in the Plan, the Board may, in its sole discretion, at any time and from time to time, grant Awards and administer the Plan with respect to such Awards. Any such actions by the Board shall be subject to the applicable rules of any securities exchange or inter-dealer quotation system on which the shares of Common Stock is listed or quoted. In any such case, the Board shall have all the authority granted to the Committee under the Plan.
Section 7. Amendment and Termination; Changes in Capital Structure and Similar Events .
(a) The Committee may amend, alter, suspend, discontinue, or terminate the Plan and/or any Award, or any portion thereof, at any time; provided that no such amendment, alteration, suspension, discontinuation or termination shall be made without shareholder approval, if such shareholder approval is necessary to comply with any tax or regulatory requirement applicable to the Plan; and provided , further , that any such amendment, alteration, suspension, discontinuance or termination (including without limitation any change effected by amendment, restatement, modification or waiver relating to any agreement cross-referenced herein (collectively, an “ Amendment ”)) that would impair the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be effective without the consent of either (x) the affected Participant or (y) a number of Participants with a majority of the then outstanding LTIP Credits. Notwithstanding the foregoing, (i) the Committee may terminate the Plan and pay Participants the Vested Percentage of the LTI Pool pursuant to Section 4(c)(iii) without any shareholder approval or Participant consent at any time, in which case this Plan shall be terminated following such payment without any further obligation on the Company thereafter and (ii) the Committee may amend the method of calculating and allocating LTIP Credits (including, without limitation, imposition of or amendment to annual minimum performance requirements for any Participant to be allocated LTIP Credits under the Plan in respect of a Measurement Period) on a prospective basis without any shareholder approval or Participant consent at any time.
(b) In the event of (a) any dividend or other distribution (whether in the form of cash, shares of Common Stock, other securities or other property and excluding any dividend or distribution used to satisfy indebtedness of Parent and/or its Affiliates and Subsidiaries), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of shares of Common Stock or other
 
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securities of the Company, issuance of warrants or other rights to acquire shares of Common Stock or other securities of the Company, or other similar corporate transaction or event (including, without limitation, a Change of Control) that affects the shares of Common Stock, or (b) unusual or nonrecurring events (including, without limitation, a Change of Control) affecting the Company or any Subsidiary or Affiliate, or the financial statements of the Company or any Subsidiary or Affiliate, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, such that in either case an adjustment is determined by the Committee in its sole discretion to be necessary or appropriate, then the Committee shall make any such adjustments in such manner as it may deem equitable, including without limitation, any or all of the following:
 
 	(i)	adjusting any or all of (A) the number of hypothetical Stock Options in the LTI Pool (and the kind of securities thereunder) and the number and type of securities which may be delivered in respect of Awards and (B) the Exercise Price with respect to any Award;	
 
 	(ii)	providing for a substitution or assumption of Awards (or awards of an acquiring company), accelerating the exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time (which shall not be required to be more than ten (10) days) for Participants to exercise outstanding Awards prior to the occurrence of such event (and any such Award not so exercised shall terminate upon the occurrence of such event); and	
 
 	(iii)	canceling any one or more outstanding Awards and causing to be paid to the holders holding Awards the value of such Awards, if any, as determined by the Committee (which if applicable may be based upon the price per share of Common Stock received or to be received by other stockholders of the Company in such event), including without limitation, in the case of an outstanding or hypothetical Stock Options, the Intrinsic Value thereof (which may be zero).	
provided , however , that in the case of any “equity restructuring” (within the meaning of the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor pronouncement thereto)), the Committee shall make an equitable or proportionate adjustment to outstanding Awards to reflect such equity restructuring.
Payments to holders pursuant to clause (iii) above shall be made in cash or, in the sole discretion of the Committee, in the form of such other consideration necessary for a Participant to receive property, cash, or securities (or combination thereof) as such Participant would have been entitled to receive upon the occurrence of the transaction if the Participant had been, immediately prior to such transaction, the holder of the number of shares of Common Stock covered by the Award at such time (less any applicable Exercise Price). In addition, prior to any payment or adjustment contemplated under this Section 7(b), the Committee may require a Participant to (A)
 
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represent and warrant as to the unencumbered title to his Awards, (B) bear such Participant’s pro rata share of any post-closing indemnity obligations, and be subject to the same post-closing purchase price adjustments, escrow terms, offset rights, holdback terms, and similar conditions as the other holders of Stock, and (C) deliver customary transfer documentation as reasonably determined by the Committee.
Section 8. General Provisions .
(a) Nontransferability . No Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or an Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
(b) Tax Withholding .
 
 	(i)	A Participant shall be required to pay to the Company or any Affiliate in cash or its equivalent ( e.g ., check), and the Company or any Affiliate shall have the right and is hereby authorized to withhold, from any cash, shares of Common Stock, other securities or other property deliverable under any Award or from any compensation or other amounts owing to a Participant, the amount (in cash, shares of Common Stock, other securities or other property) of any required withholdings or taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Committee or the Company to satisfy all obligations for the payment of such withholdings and taxes.	
 
 	(ii)	Without limiting the generality of clause (i) above, the Committee may, in its sole discretion, permit a Participant to satisfy, in whole or in part, the foregoing withholding liability by (A) the delivery of shares of Common Stock or Alternative Equity (which are not subject to any pledge or other security interest) owned by the Participant having a Fair Market Value equal to such withholding liability or (B) having the Company withhold from the number of shares of Common Stock or Alternative Equity otherwise issuable or deliverable pursuant to the exercise or settlement of the Award a number of shares of Common Stock or Alternative Equity with a Fair Market Value equal to such withholding liability, provided that with respect to shares of Common Stock or Alternative Equity withheld pursuant to clause (B), the number of such shares of Common Stock or Alternative Equity may not have a Fair Market Value greater than the minimum required statutory withholding liability.	
 
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(c) No Claim to Awards; No Rights to Continued Services; Waiver . No employee, advisor or consultant of the Company or an Affiliate or Subsidiary, or other person, shall have any claim or right to be granted an Award under the Plan or, having been selected for the grant of an Award, to be selected for a grant of any other Award. There is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant and may be made selectively among Participants, whether or not such Participants are similarly situated. Neither the Plan nor any action taken hereunder shall be construed as giving any Participant any right to be retained in the Service of the Company or an Affiliate or Subsidiary. The Company and any of its Affiliates and Subsidiaries may at any time dismiss a Participant from Services, free from any liability or any claim under the Plan. By accepting an Award under the Plan, a Participant shall thereby be deemed to have waived any claim to continued exercise or vesting of an Award or to damages or severance entitlement related to non-continuation of the Award beyond the period provided under the Plan or any Award Agreement.
(d) Designation and Change of Beneficiary . Each Participant may file with the Committee a written designation of one or more persons as the beneficiary(ies) who shall be entitled to receive the amounts payable with respect to an Award, if any, due under the Plan upon his or her death. A Participant may, from time to time, revoke or change his or her beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling; provided , however , that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary designation is filed by a Participant, the beneficiary shall be deemed to be his or her spouse or, if the Participant is unmarried at the time of death, his or her estate.
(e) No Rights as a Stockholder . Except as otherwise specifically provided in the Plan or any Award Agreement, no person shall be entitled to the privileges of ownership in respect of shares of Common Stock which are subject to Awards hereunder until such shares of Common Stock have been issued or delivered to that person.
(f) Governing Law . The Plan shall be governed by and construed in accordance with the internal law of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of law provisions thereof that would direct the application of the law of any other jurisdiction. Any suit, action or proceeding with respect to this Plan, or any judgment entered by any court in respect of any thereof, shall be brought exclusively in any court of competent jurisdiction in Salt Lake City, Utah, and each of the Company and the Participant hereby submits to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding or judgment. Each of the Participant and the Company hereby irrevocably waives (i) any objections which it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Plan brought in any court of competent jurisdiction in Salt Lake City, Utah, (ii) any claim that any such suit, action or proceeding brought in any such court has been brought in any inconvenient forum and (iii) any right to a jury trial.
 
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(g) Severability . If any provision of the Plan or any Award, Award Agreement, or Amendment is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or entity or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be construed or deemed stricken as to such jurisdiction, person or entity or Award and the remainder of the Plan and any such Award shall remain in full force and effect.
(h) No Trust or Fund Created . Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate, on the one hand, and a Participant or other person or entity, on the other hand. No provision of the Plan or any Award shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Participants shall have no rights under the Plan other than as unsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of Services, they shall have the same rights as other employees under general law.
(i) Non-Qualified Deferred Compensation . This Plan and Awards hereunder are designed to be exempt from the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”) and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that the Committee determines that any amounts payable hereunder will incur additional tax under Section 409A of the Code and related Department of Treasury guidance, the Committee may in its sole discretion (a) adopt such amendments to the Plan and appropriate policies and procedures, including amendments and policies with retroactive effect, necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Plan and Awards hereunder and/or (b) take such other actions necessary or appropriate to comply with the requirements of Section 409A of the Code and related Department of Treasury guidance, including such Department of Treasury guidance and other interpretive materials as may be issued after the Effective Date.
Section 9. Effectiveness . The Plan shall be effective as of July 31, 2013 (the “ Effective Date ”) and shall continue in effect, as amended from time to time, until terminated pursuant to Section 7.
 
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Appendix A
Definitions
“ Affiliate ” means (i) any person or entity that directly or indirectly controls, is controlled by or is under common control with the Company or Parent and/or (ii) to the extent provided by the Committee, any person or entity in which the Company or Parent has a significant interest. The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of voting or other securities, by contract or otherwise.
“ Board ” means (i) prior to a Public Offering, the board of directors of the Parent and (ii) following (A) a Public Offering or (B) the date Parent ceases to be the “beneficial owner” (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act (or any successor rule thereto)), directly or indirectly, of 80% or more of the total voting power of the voting equity of the Company, the board of directors of the Company.
“ Cause ”, in the case of a particular Award, unless the applicable Award Agreement states otherwise, shall have the meaning ascribed to such term in the Participant’s then-current employment agreement, and if not so defined, or no such employment agreement exists, “Cause” shall mean (A) the Participant’s continued failure substantially to perform the Participant’s employment duties (other than as a result of total or partial incapacity due to physical or mental illness), (B) dishonesty in the performance of the Participant’s employment duties, (C) an act or acts on the Participant’s part constituting (x) what would be classified as a felony under the laws of the United States or any state thereof or (y) what would be classified as a misdemeanor involving moral turpitude under the law of the United States or any state thereof, (D) use, possession, sale, or purchase of controlled substances or alcohol during working hours or on the job site or being under the influence of controlled substances or alcohol during working hours or on the job site, (E) the Participant’s willful malfeasance or willful misconduct in connection with the Participant’s employment duties or any act or omission which is or could reasonably be expected to be injurious to the financial condition or business reputation of the Company or any of its Subsidiaries or Affiliates, (F) the Participant’s fraud or misappropriation, embezzlement or misuse of funds or property belonging to the Company or an Affiliate or Subsidiary or (G) the occurrence of any Restrictive Covenant Violation; provided that none of the foregoing events shall constitute Cause unless Participant fails to cure such event and remedy any adverse or injurious consequences arising from such event within 10 days after the receipt of written notice from the Company of the event which constitutes Cause (except that no cure or remedy period shall be provided if the event or such consequences are not capable of being cured and remedied).
“ Change of Control ” shall mean (i) the sale or disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, as a whole, to any Person or Group other than Parent or Sponsor (or an Affiliate of Parent or Sponsor) or (ii) any Person or Group, other than Parent or Sponsor (or an Affiliate of Parent or Sponsor), is or becomes the “beneficial owner” (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act (or any successor rule thereto)), directly or indirectly, of 50% or more of the total voting power of the voting equity of the Company, including by way of merger, consolidation or otherwise and Parent and Sponsor (or an Affiliate of Parent or Sponsor) cease to directly or indirectly control the Board.
 
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“ Committee ” shall mean either (i) the Board or (ii) any committee to which the Board delegates its authority in respect of this Plan.
“ Common Stock ” shall mean the Company’s common stock.
“ Determination Date ” shall mean, following a Public Offering, the dates specified in Section 5(a)(ii), and following a Change of Control, the date of the consummation of such Change of Control.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and any successor thereto. Reference in the Plan to any section of (or rule promulgated under) the Exchange Act shall be deemed to include any rules, regulations or other interpretative guidance under such section or rule, and any amendments or successor provisions to such section, rules, regulations or guidance.
“ Exercise Price ” means the option price per share of Common Stock for each Stock Option.
“ Fair Market Value ” shall mean, on a given date, (i) if the Common Stock is listed on a national securities exchange, the closing price of the Common Stock reported on the primary exchange on which the Common Stock is listed and traded on such date, or, if there are no such sales on that date, then on the last preceding date on which such sales were reported; (ii) if the Common Stock is not listed on any national securities exchange but is quoted in an inter-dealer quotation system on a last-sale basis, the average between the closing bid price and ask price reported on such date, or, if there is no such sale on that date, then on the last preceding date on which a sale was reported; or (iii) if the Common Stock is not listed on a national securities exchange or quoted in an inter-dealer quotation system on a last-sale basis, the amount determined by the Board (or, after a Public Offering, the Committee) in good faith to be the fair market value of the Common Stock.
“ First Performance Hurdle ” shall mean that Sponsor shall have received cash proceeds in respect of its shares of Common Stock held from time to time by Sponsor in an amount that equals $250,000,000 more than Sponsor’s cumulative invested capital in respect of its shares of Common Stock (which amount shall be deemed to be $75,000,000, plus any amounts invested after November 16, 2012 and through such date of determination).
“ General Release ” shall mean a general release of claims in favor of the Company and its affiliates, and their respective officers, directors, and employees, in such standard form as the Company may adopt from time to time.
“ Group ” means “group” as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act (or any successor section thereto).
 
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“ Intrinsic Value ” shall mean, as of any Determination Date in respect of a Stock Option, the amount by which the Fair Market Value of a share of Common Stock exceeds the Exercise Price under such Stock Option.
“ LTI Pool ” as of any Determination Date, shall mean an amount equal to the Intrinsic Value of 220,588 hypothetical Stock Options issued under the Stock Plan with an Exercise Price equal to $1.00 each (such number and such Exercise Price subject to adjustments as provided in the Stock Plan), less the amount of any payments or distributions from the LTI Pool prior to such Determination Date made pursuant to Section 5. All determinations related to the calculation of the LTI Pool shall be reasonably determined by the Committee in good faith and shall be binding and final on all Participants.
“ Measurement Period ” shall mean the Company’s fiscal year (or such other period determined by the Committee from time to time).
“ Parent ” means 313 Acquisition LLC, a Delaware limited liability company.
“ Participant ” shall mean an individual providing Services as a Regional Sales Manager (or an individual providing services to a legal entity acting as a Regional Sales Manager) selected by the Committee to receive an Award under the Plan.
“ Person ” means any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).
“ Plan ” shall mean this V Solar Holdings, Inc. Amended and Restated 2013 Long-Term Incentive Pool Plan for Regional Sales Managers (as amended, modified or supplemented from time to time).
“ Public Offering ” shall mean any offering by the Company of Common Stock to the public pursuant to an effective registration statement under the Securities Act.
“ Regional Sales Manager ” shall mean an individual providing Services (or an individual providing services to a legal entity which provides Services) to the Company as a Regional Sales Manager.
“ Restrictive Covenant Violation ” means the Participant’s breach of any provision of any agreement (including any Award Agreement) with the Company or any Affiliate or Subsidiary (whether currently in existence or arising in the future from time to time, and whether entered into pursuant to the Plan or otherwise) containing covenants regarding non-competition, non-solicitation, non-disparagement and/or non-disclosure obligations.
“ Second Performance Hurdle ” shall mean that Sponsor shall have received cash proceeds in respect of its shares of Common Stock held from time to time by Sponsor in an amount that equals $500,000,000 more than Sponsor’s cumulative invested capital in respect of its shares of Common Stock (which amount shall be deemed to be $75,000,000, plus any amounts invested after November 16, 2012 and through such date of determination).
 
13

“ Service Recipient ” with respect to a Participant shall mean the Company or one of its Affiliates (or any combination thereof) that engages the Services of such Participant at the time he or she is granted an Award hereunder (or that will prospectively engage the Services of such Participant following such grant).
“ Services ” means (i) a Participant’s employment if the Participant is an employee of the Company (or, following a Change in Control, any successor of the Company or the acquiring entity) or any of its Affiliates (or Parent or one of its Subsidiaries) or (ii) a Participant’s services as an advisor or consultant, if the Participant is an advisor or consultant to the Company (or, following a Change in Control, any successor of the Company or the acquiring entity) or any of its Affiliates (or Parent or one of its Subsidiaries).
“ Sponsor ” shall mean The Blackstone Group, L.P. and its Affiliates.
“ Stock Option ” means a Stock Option issued under the Stock Plan.
“ Stock Plan ” means the V Solar Holdings, Inc. 2013 Omnibus Incentive Plan, as amended from time to time.
“ Subsidiary ” means, with respect to any specified Person:
(a) any corporation, association or other business entity of which more than 50% of the total voting power of shares of such entity’s voting securities (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and
(b) any partnership (or any comparable foreign entity) (A) the sole general partner (or functional equivalent thereof) or the managing general partner of which is such Person or Subsidiary of such Person or (B) the only general partners (or functional equivalents thereof) of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).
“ Terminated Participant ” shall mean any Participant holding an Award whose Services with the Service Recipient is terminated for any reason. For the avoidance of doubt, a Participant who ceases to be a Regional Sales Manager, but continues to provide Services in another capacity shall not be a Terminated Participant.
“ Vested Percentage ” as of any Determination Date shall mean (x) if the First Performance Hurdle has not been satisfied, 33.33%, or (y) if the First Performance Hurdle has been satisfied, but the Second Performance Hurdle has not been satisfied, 66.66%, or (z) if the First Performance Hurdle and the Second Performance Hurdle have been satisfied, 100%.
 
14

V Solar Holdings, Inc. 2013 Long-Term Incentive Pool Plan
for Regional Sales Managers
Notice of Award and Award Agreement

Dear                      ,	  	October 7, 2013	
You (“ Participant ”) have been designated as eligible to participate in the 2013 Long-Term Incentive Pool Plan for Regional Sales Managers (the “ Plan ”) of V Solar Holdings, Inc. (the “ Company ”). Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Plan.
As an eligible Participant, you will have an opportunity to be paid incentive compensation measured by reference to the value of shares of the Company’s Common Stock (an “ Award ”). Your Award is subject to the terms of the Plan and this letter (your “ Award Agreement ”).
In order to accept your Award, you must agree to be bound by the restrictive covenants set forth in Appendix A to this Award Agreement and fully incorporated herein. In addition, you must acknowledge receipt of a copy of the Plan, which is attached hereto as Exhibit A. By signing this Award Agreement and accepting the Award, you acknowledge and agree that you have reviewed this Award Agreement and the Plan in their entirety, have had an opportunity to obtain the advice of counsel prior to executing this Award Agreement, and fully understand all provisions of this Award Agreement (including Appendix A), and the Plan.
If you have any questions about your Award or this Award Agreement, please contact Chance Allred at challred@vivintsolar.com or 801.234.6368. Please indicate whether or not you choose to accept the Award on the terms set forth in this Award Agreement and the Plan, and return a copy by pdf to 1stopsolar@vivint.com by October 18, 2013.

Sincerely,	
	
V SOLAR HOLDINGS, INC.	
		
By:	 	 	
Name: Greg Butterfield	
Title: CEO & President	
 
q	I accept the Award on the terms set forth in this Award Agreement and the Plan.	
 
q	I do not accept the Award.	

Signed: 	 	 	
		
Name:	 	 	
CONFIDENTIAL: This document contains trade secrets and confidential information owned by V Solar Holdings, Inc. and/or its affiliates (collectively, the “ Company ”). Access to and use of this information is strictly limited and controlled by the Company. This document may not be copied, distributed, or otherwise disclosed outside of the Company’s facilities or systems, except as expressly authorized in writing by the General Counsel or the Chief Executive Officer of the Company.

Appendix A
Restrictive Covenants
1. Non-Competition; Non-Solicitation; Non-Disparagement .
(a) The Participant acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:
(i) During the Participant’s Services with the Company or its Affiliates or Subsidiaries (the “ Employment Term ”) and for a period of one year following the date the Participant ceases to be employed by the Company or its Affiliates or Subsidiaries, or any such longer period as may be agreed to between the Participant and the Company or any Affiliate (the “ Restricted Period ”), the Participant will not, whether on the Participant’s own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (for the purposes of this Appendix A, a “ Person ”), directly or indirectly solicit or assist in soliciting the business of any then-current or prospective client or customer of any member of the Restricted Group in competition with the Restricted Group in the Business.
(ii) During the Restricted Period, the Participant will not directly or indirectly:
(A) engage in the Business anywhere in the United States, or in any geographical area that is within 100 miles of any geographical area where the Restricted Group engages in the Business, including, for the avoidance of doubt, by entering into the employment of or rending any services to a Core Competitor, except where such employment or services do not relate in any manner to the Business;
(B) acquire a financial interest in, or otherwise become actively involved with, any Person engaged in the Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or
(C) intentionally and adversely interfere with, or attempt to adversely interfere with, business relationships between the members of the Restricted Group and any of their clients, customers, suppliers, partners, members or investors.
(iii) Notwithstanding anything to the contrary in this Appendix A, the Participant may, directly or indirectly own, solely as an investment, securities of any Person engaged in a Business (including, without limitation, a Core Competitor) which are publicly traded on a national or regional stock exchange or on the over-the-counter market if the Participant (i) is not a controlling person of, or a member of a group which controls, such person and (ii) does not, directly or indirectly, own 2% or more of any class of securities of such Person.
(iv) During the Employment Term and the Restricted Period, the Participant will not, whether on the Participant’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
(A) solicit or encourage any employee of the Restricted Group to leave the employment of the Restricted Group;
 
CONFIDENTIAL: This document contains trade secrets and confidential information owned by V Solar Holdings, Inc. and/or its affiliates (collectively, the “ Company ”). Access to and use of this information is strictly limited and controlled by the Company. This document may not be copied, distributed, or otherwise disclosed outside of the Company’s facilities or systems, except as expressly authorized in writing by the General Counsel or the Chief Executive Officer of the Company.

(B) hire any executive-level employee, key personnel, or manager-level employee (i.e., any operations manager or district sales manager) who was employed by the Restricted Group as of the date of the Participant’s termination of employment with the Company or who left the employment of the Restricted Group coincident with, or within one year prior to or after, the termination of the Participant’s employment with the Company; or
(C) encourage any consultant of the Restricted Group to cease working with the Restricted Group.
(v) For purposes of this Agreement:
(A) “ Restricted Group ” shall mean, collectively, the Company and its subsidiaries and, to the extent engaged in the Business, their respective Affiliates (including The Blackstone Group L.P. and its Affiliates).
(B) “ Business ” shall mean (1) origination, installation, or monitoring services related to residential or commercial security, life-safety, energy management or home automation services, (2) installation or servicing of residential or commercial solar panels or sale of electricity generated by solar panels, (3) design, engineering or manufacturing of technology or products related to residential or commercial security, life-safety, energy management or home automation services and/or (4) provision of television, wireless voice and/or data services, including internet, through a common internet connectivity pipeline into the home.
(C) “ Core Competitor ” shall mean ADT Security Services/Tyco Integrated Security, Security Networks, LLC, Protection 1, Inc., Protect America, Inc., Stanley Security Solutions, Inc., Vector Security, Inc., Slomins, Inc., Monitronics International, Inc., Life Alert, Comcast Corporation, Time Warner, Inc., AT&T Inc., Verizon Communications, Inc., DISH Network Corp., DIRECTV, Pinnacle, JAB Wireless, Inc., Clearwire Corporation, CenturyLink, Inc., Cox Communication, Inc. and any of their respective Affiliates and current or future dealers, and Sungevity, Inc., RPS, Sunrun Inc., Solar City Corporation, Clean Power Finance, SunPower Corporation, Corbin Solar Solutions LLC, Galkos Construction, Inc., Zing Solar, Terrawatt, Inc., and any of their respective Affiliates or current or future dealers.
(vi) Notwithstanding the foregoing, if Executive’s principal place of employment is located in California, then the provisions of Sections 1(a)(i) and 1(a)(ii) of this Appendix A shall not apply following Executive’s termination of employment to the extent any such provision is prohibited by applicable California law.
(b) During the Employment Term and the three-year period beginning immediately following the Employment Term, the Participant agrees not to make, or cause any other person to make, any communication that is intended to criticize or disparage, or has the effect of criticizing or disparaging, the Company or any of its affiliates, agents or advisors (or any of its or their respective employees, officers or directors), it being understood that comments made in the Participant’s good faith performance of his duties hereunder shall not be deemed disparaging or defamatory for purposes of this Agreement. Nothing set forth herein shall be interpreted to prohibit the Participant from responding truthfully to incorrect public statements, making truthful statements when required by law, subpoena or court order and/or from responding to any inquiry by any regulatory or investigatory organization.

(c) It is expressly understood and agreed that although the Participant and the Company consider the restrictions contained in this Section 1 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Appendix A is an unenforceable restriction against the Participant, the provisions of this Appendix A shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Appendix A is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.
(d) The period of time during which the provisions of this Section 1 shall be in effect shall be extended by the length of time during which the Participant is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief.
(e) The provisions of Section 1 hereof shall survive the termination of the Participant’s employment for any reason.
2. Confidentiality; Intellectual Property .
(a) Confidentiality .
(i) The Participant will not at any time (whether during or after the Participant’s employment with the Company) (x) retain or use for the benefit, purposes or account of the Participant or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company (other than the Participant’s professional advisers who are bound by confidentiality obligations or otherwise in performance of the Participant’s duties under the Participant’s employment and pursuant to customary industry practice), any non-public, proprietary or confidential information —including without limitation trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals — concerning the past, current or future business, activities and operations of the Company, its Affiliates or Subsidiaries and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“ Confidential Information ”) without the prior written authorization of the Board.
(ii) “ Confidential Information ” shall not include any information that is (a) generally known to the industry or the public other than as a result of the Participant’s breach of this covenant; (b) made legitimately available to the Participant by a third party without breach of any confidentiality obligation of which the Participant has knowledge; or (c) required by law to be disclosed; provided that with respect to subsection (c) the Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and reasonably cooperate with any attempts by the Company to obtain a protective order or similar treatment.
(iii) Except as required by law, the Participant will not disclose to anyone, other than the Participant’s family (it being understood that, in this Agreement, the term “family” refers to the Participant, the Participant’s spouse, children, parents and spouse’s parents) and advisors,

the existence or contents of this Agreement; provided that the Participant may disclose to any prospective future employer the provisions of this Appendix A. This Section 2(a)(iii) shall terminate if the Company publicly discloses a copy of this Agreement (or, if the Company publicly discloses summaries or excerpts of this Agreement, to the extent so disclosed).
(iv) Upon termination of the Participant’s employment with the Company for any reason, the Participant shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its Affiliates or Subsidiaries; and (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in the Participant’s possession or control (including any of the foregoing stored or located in the Participant’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information, except that the Participant may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.
(b) Intellectual Property .
(i) If the Participant creates, invents, designs, develops, contributes to or improves any works of authorship, inventions, intellectual property, materials, documents or other work product (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“ Works ”), either alone or with third parties, at any time during the Participant’s employment by the Company and within the scope of such employment and/or with the use of any the Company resources (“ Company Works ”), the Participant shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all of the Participant’s right, title, and interest therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition, other intellectual property laws, and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company. If the Participant creates any written records (in the form of notes, sketches, drawings, or any other tangible form or media) of any Company Works, the Participant will keep and maintain same. The records will be available to and remain the sole property and intellectual property of the Company at all times.
(ii) The Participant shall take all requested actions and execute all requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Company Works.
(iii) The Participant shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. The Participant shall comply with all relevant policies and guidelines of the Company that are from time to time previously disclosed to the Participant, including regarding the protection of Confidential Information and intellectual property and potential conflicts of interest.

(iv) The provisions of Section 2 hereof shall survive the termination of the Participant’s employment for any reason.
3. Repayment of Proceeds . If the Participant’s Services terminated by the Company or an Affiliate with Cause or a Restrictive Covenant Violation occurs, or the Company discovers after any termination of Participant’s Services that grounds for a termination with Cause existed at the time thereof, then the Participant shall be required to pay to the Company, within 10 business days’ of the Company’s request to the Participant therefor, an amount equal to the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) the Participant received either in cash, shares of Common Stock, or Alternative Equity in respect of Participant’s Award, or upon the sale or other disposition of, or dividends or distributions in respect of, any such equity. Any reference in this Agreement to grounds existing for a termination with Cause shall be determined without regard to any notice period, cure period or other procedural delay or event required prior to finding of, or termination for, Cause. The foregoing remedy shall not be exclusive.

V Solar Holdings, Inc.
2013 Long-Term Incentive Pool Plan
for Regional Sales Managers
Agreement to Amendments
April 23, 2014
Dear Participant:
Reference is made to your Notice of Award and Award Agreement, which was agreed to and accepted by you, pursuant to which you were designated a Participant in the 2013 Long-Term Incentive Pool Plan for Regional Sales Managers (the “ Plan ”) of V Solar Holdings, Inc. (the “ Company ”). Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Plan.
The Committee has reviewed the Plan, and determined that certain amendments to the Plan are advisable and in the long-term interests of all Participants under the Plan, and has approved the amendment and restatement of the Plan (the “ Amended and Restated Plan ”) in the form attached hereto as Exhibit A .
Please indicate your agreement to the terms of the Amended and Restated Plan by signing below and returning a copy by pdf to Olivia Crellin at ocrellin@vivintsolar.com by Tuesday, April 29, 2014. If you have any questions, contact Shawn Lindquist at (801) 229-6850 or slindquist@vivintsolar.com .
Sincerely,
V Solar Holdings, Inc.

Shawn J. Lindquist
Chief Legal Officer and Executive Vice President

ACKNOWLEDGED AND AGREED TO BY PARTICIPANT	
		
Signed: 	 	 	

Name: 	 	 	
	 	(Please print full name)	

Address:  	 	 	

 
			
Dated: April      , 2014	

Exhibit 10.5
FORM OF
313 Acquisition LLC Unit Plan
SECTION 1. Purpose . The purpose of this 313 Acquisition LLC Unit Plan (the “Plan”) is to promote the interests of 313 Acquisition LLC, a Delaware limited liability company (the “ Company ”) and its Subsidiaries, and their respective Affiliates, by (i) attracting and retaining exceptional officers and other employees, non-employee directors and consultants of the Company and its Subsidiaries and (ii) enabling such individuals to acquire an equity interest in and participate in the long-term growth and financial success of the Company.
SECTION 2. Definitions . Capitalized terms used in this Plan but not expressly defined in this Plan shall have the respective meanings ascribed such terms in the LLC Agreement (as defined below). As used in this Plan, the following terms shall have the meanings set forth below:
“ Award ” shall mean the grant of the right to purchase and/or acquire Class A Units and/or Class B Units.
“ Company ” has the meaning specified in the Section 1 hereof.
“ Effective Date ” shall mean November [ — ], 2012, which is the date on which this Plan was initially adopted by the Board.
“ LLC Agreement ” shall mean the Amended and Restated Limited Liability Company Agreement of the Company, dated as of November [ — ], 2012, as may be amended, modified or supplemented from time to time.
“ Participant ” shall mean any officer or other employee, non-employee director or consultant of the Company or its Subsidiaries eligible for an Award under Section 5 and selected by the Board to receive an Award under this Plan.
“ Plan ” has the meaning specified in the Section 1 hereof.
“ Securityholders Agreement ” means the Securityholders Agreement, dated as of November [ — ], 2012, by and among the Company and each of the Members party thereto, as it may be amended or supplemented from time to time.
“ Subscription Agreement ” shall mean any written agreement, contract, or other instrument or document (which may include provisions of an employment agreement to which the Company is a party) evidencing any Award granted hereunder.
SECTION 3. Units Subject to this Plan . The total number of Units that may be issued pursuant to Awards under this Plan is [ — ], allocated among the classes of Units as follows:
(a) 300,000,000 purchased or granted Class A Units; and

(b) [ — ] purchased or granted Class B Units.
Units which are subject to Awards which terminate or lapse without any payment in respect thereof may be granted again under this Plan.
SECTION 4. Administration .
(a) This Plan shall be administered by the Board. Subject to the terms of this Plan and applicable law, and in addition to other express powers and authorizations conferred on the Board by this Plan, the Board shall have full power and authority to: (i) designate Participants; (ii) determine the number and/or class of Units to be covered by an Award; (iii) determine the terms and conditions of any Award; (iv) determine whether, to what extent, and under what circumstances Awards may be settled, exercised, canceled, forfeited, or suspended; (v) interpret, administer, reconcile any inconsistency, correct any default and/or supply any omission in this Plan and any instrument or agreement relating to an Award made under this Plan; (vi) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of this Plan; and (vii) make any other determination and take any other action that the Board deems necessary or desirable for the administration of this Plan.
(b) All designations, determinations, interpretations, and other decisions under or with respect to this Plan or any Award shall be within the sole discretion of the Board, may be made at any time and shall be final, conclusive, and binding upon all persons, including the Company, any Subsidiary, any Participant, any holder or beneficiary of any Award, and any member of the Company.
SECTION 5. Eligibility . Any officer or other employee, non-employee director or consultant to the Company or any of its Subsidiaries (including any prospective officer, employee, non-employee director or consultant) shall be eligible to be designated a Participant.
SECTION 6. Awards .
(a) Grant . Subject to the provisions of this Plan, the Board shall have sole and complete authority to determine the Participants to whom Awards shall be granted, the purchase price, if any, of an Award, the number and class or classes of Units to be covered by each Award and the conditions and restrictions applicable to the Award.
(b) Subject to LLC Agreement/Securityholders Agreement . As a condition to the grant of an Award, the Participant will be required to become a party to a Subscription Agreement, the LLC Agreement, and the Securityholders’ Agreement. All Awards granted hereunder and Units acquired will be held subject to the terms and conditions of the LLC Agreement, the Securityholders Agreement, and the applicable Subscription Agreement.
 
2

(c) Adjustments . Notwithstanding any other provisions in the LLC Agreement to the contrary, in the event of any change in the outstanding Units after the Effective Date by reason of any equity dividend or split, reverse equity split, reorganization, recapitalization, reclassification, merger, consolidation, spin-off, combination, or transaction or exchange of Units or other corporate exchange, or any distribution to Members of equity or cash (other than regular cash distributions) or any transaction similar to the foregoing (regardless of whether outstanding Units are changed), the Board in its sole discretion and without liability to any Person shall make such substitution or adjustment or proportionate adjustment, if any, as it deems to be equitable, as to (i) the vesting terms under any Subscription Agreement, (ii) the distribution priorities contained in the LLC Agreement and/or (iii) any other affected terms of any Award.
SECTION 7. Amendment and Termination .
(a) Amendments to this Plan . The Board may amend, alter, suspend, discontinue, or terminate this Plan or any portion thereof at any time; provided that any such amendment, alteration, suspension, discontinuance, or termination that would be reasonably expected to have a material adverse effect on the rights of any Participant or other holder of an Award theretofore granted shall not be effective without the consent of the affected Participant.
(b) Amendments to Awards . The Board may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination not expressly contemplated by this Plan that would be reasonably expected to have a material adverse effect on the rights of any outstanding Award shall not be effective without the consent of the affected Participant.
SECTION 8. General Provisions .
(a) No Rights to Awards . No person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants or beneficiaries of Awards. The terms and conditions of Awards and the Board’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).
(b) Certificates . All certificates, if any, evidencing Units or other securities of the Company or any Subsidiary delivered under this Plan shall be subject to such stop transfer orders and other restrictions as the Board may deem advisable under this Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such securities are then listed, and any applicable Federal or state laws, and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
(c) Withholding . A Participant may be required to pay to the Company or any Subsidiary and the Company or any Subsidiary shall have the right and is hereby authorized to withhold from any payment due or transfer made under any Award or under this Plan or from any compensation or other amount owing to a Participant the amount (in cash, securities, or other property) of any applicable withholding taxes in respect of an Award or any payment or transfer under an Award or under this Plan and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes.
 
3

(d) No Right to Employment . The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of, or in any consulting relationship with, the Company or any Subsidiary. Further, the Company or a Subsidiary may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under this Plan, unless otherwise expressly provided in this Plan or in any Subscription Agreement.
(e) Governing Law . The validity, construction, and effect of this Plan shall be determined in accordance with the laws of the State of Delaware applicable to contracts made and to be performed therein.
(f) Severability . If any provision of this Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or Award, or would disqualify this Plan or any Award under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Board, materially altering the intent of this Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award and the remainder of this Plan and any such Award shall remain in full force and effect.
SECTION 9. Term of this Plan .
(a) Effective Date . This Plan shall be effective as of the Effective Date.
(b) Expiration Date . No Award shall be granted under this Plan after the tenth anniversary of the Effective Date. Unless otherwise expressly provided in this Plan or in an applicable Subscription Agreement, any Award granted hereunder may, and the authority of the Board to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under any such Award shall, continue after such date.
* * *
 
4

Exhibit 10.8

Vivint Solar, Inc.
4931 North 300 West
Provo, Utah 84604
1.877.404.4129	  		
simply brighter • www.vivintsolar.com
August 28, 2014
Mr. Gregory S. Butterfield
1360 Grove Drive
Alpine, Utah 84004
Dear Greg:
This agreement clarifies that your official employer is Vivint Solar, Inc. (“Vivint Solar” or the “Company”), and will not be Vivint Solar Developer, LLC any longer. The terms of your employment will remain the same and they are described below so that the Company and you can confirm that we have the same understanding.
You will continue in your role as Chief Executive Officer and President, which is a full-time position, reporting to the Board of Directors of the Company, and based at the Company’s offices in Provo, Utah. This agreement describes the essential elements of your employment with Vivint Solar and expressly supersedes any and all previous employment agreements you may have had with Vivint Solar Developer, LLC, Vivint Solar, or any other Company affiliates, whether written or oral, express or implied, other than: (1) the involuntary termination protection agreement previously entered into between you and the Company as of June 27, 2014 (the “Severance Agreement”); and (2) the indemnification agreement previously entered into between you and the Company dated as of April 29, 2014 (the “Indemnification Agreement”).

Compensation:	
		
Base Salary:	  	You will continue to be paid an annual base salary of $500,000, payable in bi-monthly increments and in accordance with the Company’s payroll policies and practices.	
		
MBO Bonus:	  	You will be eligible to participate in the Company’s annual executive bonus program with a target incentive bonus of 40% of your annual salary, earned and determined at the sole discretion of Vivint Solar and based on multiple factors, including, but not limited to, achievement of individual and Company performance objectives. A significant purpose of our bonus program is retention, therefore to earn a bonus, you must be an employee on the date Vivint Solar pays such bonus, and you will not earn or be entitled to any pro rata bonus payments if your employment ends for any reason prior to such date. All earned bonuses will be paid in accordance with Vivint Solar’s policies and practices regarding incentive compensation awards.
 	
Long-term Incentives:	  	You previously have been granted the long-term equity incentive award(s) (the “Equity Incentive Award(s)”) under the 2013 Omnibus Incentive Plan (the “Plan”) that are set forth on Exhibit A . The Equity Incentive Award(s) remain subject to the terms and conditions applicable to awards granted under the Plan and the agreement between you and the Company. Your status as a continuous service provider under the terms and conditions of the Plan has not been affected by this agreement or your employment moving to Vivint Solar, and does not modify applicable vesting requirements.	

			
		
	  	Any vesting is subject to your continued employment with the Company through applicable vesting dates. No rights are earned or accrued until such time that vesting occurs, nor does the grant confer any right to continued vesting or employment. You acknowledge that you have no rights or claims to equity of the Company other than the Equity Incentive Award(s) listed on Exhibit A .	
		
Employee Benefits:	  	We maintain certain employee benefits plans, and you will continue to be able to participate in those plans for which you meet the eligibility requirements. To the extent that any employee contribution is owed for such benefits, you will continue to be responsible for paying the employee portion, which will be deducted from your pay.
 
The Company will also continue to lease and insure, on substantially similar terms as in effect currently, a vehicle for your use as your primary business vehicle.	
		
Holidays; Out of Office Time:	  	We believe in work-life balance. We currently recognize nine (9) paid holidays each calendar year. A calendar of Company-paid holidays is available through Human Resources. Out of office time is managed and coordinated directly with your manager and in accordance with Company policy for employees exempt from overtime laws in the state where you work.	
		
Vivint Solar Policies and Employment Conditions:	  	You agree to review the Company’s employee handbook, and you agree to thoroughly familiarize yourself with the policies contained in the handbook and other corporate policies of Vivint Solar and to abide by them. Additionally, from time to time, the Company may adopt new policies or make important changes to existing policies and will communicate information about its policies to you by way of electronic mail notification, the Vivint Solar intranet or otherwise, and you agree to thoroughly review such policy communications and to abide by them. The Company may modify salaries, bonuses and benefits from time to time.	
		
Withholdings and Taxes:	  	All forms of compensation referred to in this agreement are subject to reduction to reflect applicable withholdings and payroll taxes.	
		
Employment
Relationship:	  	Your employment with the Company is for no specific period of time and continues to be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without notice or cause. Any contrary representations that may have been made to you are superseded by this agreement. This is the full and complete agreement between you and the Company on this term. Although your job, duties, compensation and benefits may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and by the Chief Legal Officer of the Company.    	
 
Page 2 of 3

			
		
	  	In addition, as a condition of employment with Vivint Solar, you will be required to sign the Company’s standard At-Will Employment Agreement, attached hereto as Exhibit B , which requires, among other provisions, the assignment of patent rights to any invention made during your employment at the Company, and non-disclosure of Company proprietary information. Also, in the event of any dispute or claim relating to or arising out of our employment relationship, you and the Company agree that (i) any and all disputes between you and the Company shall be fully and finally resolved by binding arbitration, and (ii) you are waiving any and all rights to a jury trial.	
		
Miscellaneous:	  	This agreement, the Severance Agreement, the Indemnification Agreement, and the At-Will Employment Agreement set forth the terms of your employment with Vivint Solar and supersede and replace any prior understandings or agreements, whether oral or written, express or implied, related to the subject matter hereof. This agreement is entered into without reliance upon any promise, warranty or representation, written or oral, express or implied, other than those expressly contained herein, and it supersedes any other such promises, warranties, representations or agreements. It may not be amended or modified except by a written instrument signed by you and the Chief Legal Officer of Vivint Solar. If any provision of this agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this agreement, which will remain in full force and effect. This agreement will be construed and interpreted in accordance with the laws of the State of Utah, without reference to the choice of law provisions thereof.	
We have a dynamic organization and look forward to continuing to work with you both to strengthen Vivint Solar and enable you to strengthen your own skills and expertise. Please sign this letter and the At-Will Employment Agreement (Exhibit B) where indicated and return the same to us promptly.
Sincerely,

/s/ Dana C. Russell	
Dana C. Russell
Chief Financial Officer and
Executive Vice President
Vivint Solar, Inc.	

Accepted and Agreed:	  		
		
/s/ Gregory S. Butterfield	  	28 August 2014	
Gregory S. Butterfield	  	        DATE	
 
Page 3 of 3

EXHIBIT A
Equity Incentive Award under the Vivint Solar 2013 Omnibus Incentive Plan

Grant Date	  	Grant Type	 	  	Shares of
Common Stock	 	  	Exercise Price	 	  	Vest Base Date	 	
September 3, 2013	  	 	Non-Qualified Stock Option	  	  	 	3,529,412	  	  	$	1.00	  	  	 	September 3, 2013	  	

EXHIBIT B
At-Will Employment Agreement

 

AT-WILL EMPLOYMENT AGREEMENT
This AT-WILL EMPLOYMENT AGREEMENT is entered into as of the date set forth on the signature page below (this “ Agreement ”), by the UNDERSIGNED EMPLOYEE (the “ Employee ”) in favor of VIVINT SOLAR, INC., a Delaware corporation (the “ Company ”). For good and valuable consideration, the receipt and sufficiency of which is hereby established, Employee agree as follows:
1. Definitions.
(a) “ Confidential Information ” means any present or future information belonging to the Company that pertains to the Company’s business, whether developed by Employee or by other Company employees, contractors, or agents, that is confidential or proprietary in nature, and that is not generally known in the public domain. Confidential Information includes, without limitation, information regarding the Company’s finances, financial condition, operations, business plans, business opportunities, purchasing activities, suppliers or potential suppliers, costs of materials, pricing, margins, sales, markets, marketing strategies, plans and ideas, customers, customer lists, customer agreements, customer purchases, customer documents, potential customers, employees, employee compensation, technical data, research, product plans, products, methodologies, services, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, trade secrets, Confidential Materials, Inventions, Employment Inventions, Intellectual Property, or any other confidential business information of the Company that is disclosed to or obtained by Employee, directly or indirectly, whether in writing, orally, by observation or electronically (through email, computer disk, DVD, CD-ROM, or other electronic means).
(b) “ Confidential Materials ” means any tangible medium containing Confidential Information, including but not limited to paper, electronic or magnetic media, prototypes, products, and other materials.
(c) “ Employment Inventions ” means any Invention or part thereof conceived, developed, reduced to practice, or created by Employee which is:
(i) conceived, developed, reduced to practice, or created by the Employee: (1) within the scope of the Employee’s employment with the Company; (2) on the Company’s time; or (3) with the aid, assistance, or use of any of the Company’s property, equipment, facilities, supplies, resources, or Intellectual Property;
(ii) the result of any work, services, or duties performed by the Employee for the Company;
(iii) related to the industry or trade of the Company; or
(iv) related to the current or demonstrably anticipated business, research, or development of the Company.
(d) “ Intellectual Property ” means any and all patents, copyrights, trademarks, service marks, trade secrets, know how, technology, ideas, or computer software belonging to the Company or its affiliates.
(e) “ Inventions ” means any and all inventions, products, formulations, discoveries, ideas, developments, improvements, technology, know-how, products, devices, structures, equipment, processes, methods, techniques, formulas, trade secrets, texts, research, program, software, computer programs, source codes, data, designs, works of authorship, and or other materials, whether or not published, patented, copyrighted, registered or suitable therefor, and all intellectual property rights therein, to the extent they relate to the Company’s past, present, future, or anticipated business, research, development or trade.

	  	1	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

(f) “ Pre-Existing Inventions ” means any and all inventions, discoveries, ideas, original works of authorship, developments, improvements, trade secrets and other proprietary information or intellectual property rights owned by Employee or in which Employee has an interest prior to, or separate from, Employee’s employment with the Company, including, without limitation, any such inventions that qualifies fully under the provisions of California Labor Code Section 2870, Del.Code tit. 19, § 805, N.C.Gen.Stat. §§ 66-57.1, and Utah Code § 34-39-3(1) (attached hereto as Exhibit A ).
(g) “ Restricted Business ” means providing products and/or services that are substantially similar to or competitive with those offered or provided by the Company or any of its subsidiaries at any time during the Restricted Period or for which the Company or any of its subsidiaries has adopted a plan or authorized a budget prior to the effective date of Employee’s last day of employment, including (without limitation) providing services, as an employee or otherwise to the following companies: Sungevity, Inc., RPS, Sunrun Inc., SolarCity Corporation, Clean Power Finance, SunPower Corporation, Corbin Solar Solutions LLC, Galkos, Construction, Inc., Zing Solar, Terrawatt, Inc., and any of their respective affiliates or current or future dealers.
(h) “ Restricted Period ” means the period of time beginning with the date the Employee begins his or her employment with the Company and ending twelve (12) months after the date the Employee left his or her employment with the Company.
(i) “ Restricted Territory ” means the geographic area consisting of each of the states, territories, districts, and lands of the United States, and any other geographic area in which the Company or any of its affiliates conducts, has conducted within the immediately preceding year, or has proposed to conduct within the immediately preceding year, its business.
2. At-Will Employment . Employee represents and agrees that this Agreement is not, and shall not be construed as, an offer or contract of employment for any period, an offer or guarantee of future employment, or an offer or guarantee of a future contractual relationship. Pursuant to the Vivint Solar Employee Handbook, Employee is an employee “at will” and subject to termination at any time. Employee understands that any representation to the contrary is not valid unless obtained in writing and signed by the Chief Executive Officer of the Company. Employee acknowledges that this employment relationship may be terminated at any time, with or without good cause or for any or no cause, at the option either of the Company or Employee, with or without notice.
3. Policies and Practices . Employee agrees to abide by all of the Company’s rules, regulations, handbooks, manuals, training, policies, practices and procedures, including, but not limited to, the Vivint Solar Employee Handbook. The Company, in its sole and absolute discretion, may from time to time amend, modify or revise its rules, regulations, handbooks, manuals, policies, practices and procedures.
4. Background Check . Employee understands and agrees that employment with the Company is contingent on the Company’s receipt, evaluation, and approval of a background check concerning Employee. By signing this Agreement, Employee acknowledges and agrees that it has received, read, and understands the Background Check Disclosure and Authorization that is attached hereto as Exhibit D . Employee agrees to provide to the Company a duly executed Authorization of Background Investigation, in the form attached hereto as Exhibit D .
5. Covenant of Ownership and Disclosure of Developments .
(a) Employee agrees to promptly disclose to the Company the existence, use, and/or manner of operation of any and all Employment Inventions.
(b) Employee acknowledges and agrees that all Employment Inventions are the sole and exclusive property of the Company. Employee hereby assigns to the Company any and all copyrights, patent rights, trade secrets, and other rights that Employee may have in any Employment

	  	2	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

Invention. Employee agrees to take all actions reasonably requested by the Company, both during and after the term of Employee’s employment, to assign to the Company and to establish, perfect, exercise or protect the Company’s rights in any Employment Inventions or title thereto, including without limitation, assisting in obtaining or registering copyrights, patents, trademarks or similar intellectual property rights and executing assignments to the Company. If the Company is unable, because of Employee’s mental or physical incapacity, geographic distance or for any other reason, to obtain Employee’s approval or signature on any document necessary or useful to claim, secure, extend, protect or enforce any right in intellectual property to which the Company has a reasonable claim, then Employee hereby appoints the Company and its duly authorized officers as Employee’s agent and attorney-in-fact to act for Employee for the purpose of accomplishing such act with the same legal force and effect as if executed by Employee. Employee will not incorporate any inventions, discoveries, ideas, original works of authorship, developments, improvements, trade secrets and other proprietary information or intellectual property rights owned by any third party into any Invention without the Company’s prior written permission.
(c) Employee will inform the Company in writing prior to incorporating any Pre-Existing Inventions into any Invention or otherwise utilizing any such Pre-Existing Inventions in the course of Employee’s employment with the Company; and the Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, transferable worldwide license (with the right to grant and authorize sublicenses) to make, have made, use, import, offer for sale, sell, reproduce, distribute, modify, adapt, prepare derivative works of, display, perform, and otherwise exploit such Pre-Existing Inventions, without restriction, including, without limitation, as part of or in connection with such Invention, and to practice any method related thereto. Employee has attached hereto as Exhibit B , a list describing all Pre-Existing Inventions or, if no such list is attached, represents and warrants that there are no such Pre-Existing Inventions. Furthermore, Employee represents and warrants that if any Pre-Existing Inventions are included on Exhibit B , they will not materially affect Employee’s ability to perform all obligations under this Agreement.
6. Confidentiality and Non-Disclosure Agreement .
(a) Covenant to Safeguard Confidential Information . In connection with Employee’s Services hereunder, Employee may receive or have access to Confidential Information and Confidential Materials. Employee acknowledges and agrees that:
(i) All Confidential Information shall remain the sole property of the Company;
(ii) All Confidential Information belonging to the Company is valuable, special and unique to the Company’s business, that the Company’s business depends upon such Confidential Information, and that the Company wishes to protect such Confidential Information by keeping it confidential for the use and benefit of the Company;
(iii) Employee shall keep all Confidential Information confidential and will not, without the prior written consent of the Company’s Chief Executive Officer or General Counsel, disclose (whether directly or through some other person or entity), in whole or in part, and will not use such information, directly or indirectly, for any purpose other than as expressly allowed by the Company;
(iv) Employee shall not use the Company’s Confidential Information for Employee’s direct or indirect benefit or for the direct or indirect benefit of any person or entity other than the Company;
(v) Employee shall not aid, encourage, or allow any other person or entity to use the Company’s Confidential Information without authorization;

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(vi) Employee shall use reasonable and diligent efforts to protect the confidentiality of the Company’s Confidential Information;
(vii) Employee shall use the Company’s Confidential Information solely to fulfill the duties of Employee’s employment relationship with the Company and not otherwise to use such information for Employee’s benefit or the benefit of others;
(viii) Employee shall not use, view, or access Confidential Information where it can be seen or viewed by unauthorized persons, and not to leave such information or materials where they can be seen or accessed by unauthorized persons;
(ix) Employee shall notify the Company if Employee becomes aware of any loss, misuse, wrongful disclosure, or other unauthorized access of the Company’s Confidential Information by any person;
(x) Employee shall take all other reasonable steps necessary, or reasonably requested by the Company, to safeguard the Company’s Confidential Information from unauthorized disclosure or use; and
(xi) Employee shall not disclose to the Company any trade secrets or confidential information of party to whom Employee owes a duty of confidentiality.
(b) Permission to Notify . Employee authorizes the Company to notify others, including (without limitation) the Employee’s current or future clients, of the terms of this Agreement and the Employee’s covenants and obligations hereunder.
(c) Return of Information . Upon the request of the Company, or upon the termination of Employee’s employment with the Company, Employee shall deliver promptly (and in no event later than two (2) business days after termination) to the Company all Confidential Information and other documents or materials belonging to the Company (including all copies thereof), and all other property belonging to the Company, which are in Employee’s possession, custody or control.
(d) Notice of Compelled Disclosure . In the event that Employee or anyone to whom Employee transmits any Confidential Information (“ Compelled Person ”) becomes legally compelled (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand, or other similar judicial or other compulsory process) to disclose any of the Confidential Information, such Compelled Person will provide the Company with prompt written notice so that it may seek a protective order or other appropriate remedy to protect and preserve the confidentiality of such Confidential Information and/or waive compliance with the provisions of this Agreement. In the event that such a protective order or other remedy is not obtained, or compliance with the provisions of this Agreement is waived, Employee shall disclose or furnish only that portion of the Confidential Information that Employee is legally required to produce and will exercise his or her best efforts to obtain reliable assurance that the Confidential Information will be kept confidential to the greatest extent possible. This provision shall not restrict an Employee who is requested by a law enforcement agency not to provide such notice to the Company.
7. Former Employer Information . Employee agrees that (i) he/she will not, during employment with the Company, improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer or other person or entity; and (ii) Employee will not bring onto the premises of the Company any document, electronic data, or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
8. Covenant Not to Solicit Employees . To the fullest extent permitted under applicable law, Employee agrees that during his/her employment and for a period of twelve (12) months immediately following the termination of his/her relationship with the Company for any reason, whether voluntary or

	  	4	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

involuntary, with or without cause, Employee will not directly or indirectly solicit any of the Company’s employees to leave their employment at the Company. Employee agrees that nothing in this Section shall affect his/her continuing obligations under this Agreement during and after this twelve (12) month period, including, without limitation, Employee’s obligations under the Confidentiality and Non-Disclosure Agreement section in this Agreement.
9. Covenant Not to Solicit Customers . This Covenant Not to Solicit Customers applies to Employee if he/she is employed by the Company outside of California. This Covenant Not to Solicit Customers does not apply to Employee if he/she is employed by the Company in California. During the Restricted Period, Employee will not directly or indirectly engage in the following conduct, nor will Employee aid, abet, assist, encourage, or influence others to do so: Induce or attempt to induce, solicit or attempt to solicit, or encourage or attempt to encourage, in any capacity, on Employee’s behalf or on behalf of any other firm, person, or entity, any current or former customer of the Company (herein defined as a “ Vivint Solar Customer ”) to terminate a contract with the Company or any other entity, or to allow such contract to be canceled, not renewed, or to enter into a contract with another company. Employee acknowledges and agrees that (i) the names, addresses, product specifications, pricing, and information regarding Vivint Solar Customers and the Company, are the confidential and proprietary information of the Company (collectively, “ Proprietary Information ”); and (ii) Employee shall not, nor shall it permit any other person or entity within its control, to sell, disclose, or otherwise disseminate Proprietary Information (each, “ Improper Disclosure ”). Employee promises not to engage in any Improper Disclosure during or after his/her employment with the Company.
10. Covenant Not to Compete . This Covenant Not to Compete applies to Employee if he/she is employed by the Company outside of California. This Covenant Not to Compete does not apply to Employee if he/she is employed by the Company in California.
(a) To the maximum extent permitted under applicable law, during the Restricted Period, Employee shall not, in any manner, directly or indirectly, in the Restricted Territory: (i) engage or invest in; (ii) own, manage, operate, finance, control; (iii) participate in the ownership, management, operation, financing, or control of; or (iv) be employed by, work for or with, or in any way assist, any business, person, firm, corporation, partnership, limited liability company, governmental or private entity, or any other entity of whatever kind, engaged in the Restricted Business.
(b) Nothing contained in this Agreement shall prohibit Employee from being a passive owner of not more than two percent (2%) of the outstanding stock of any class of a corporation, any securities of which are publicly traded, so long as Employee has no active participation in the business of such corporation.
(c) During the Restricted Period, Employee shall communicate the contents of this Agreement to any person (including any business) that Employee intends to be retained or employed by, associated with, or represent and which Employee knows is engaged in the Restricted Business in the Restricted Territory.
11. Tolling of Covenants . If a court of competent jurisdiction determines that Employee has violated any of Employee’s obligations under this Agreement, then the Restricted Period will automatically be extended by a period of time equal in length to the period during which such violation or violations occurred.
12. Reasonableness of Covenants . Employee acknowledges and understands that the covenants of Employee under this Agreement are limited to the extent necessary to protect the legitimate business interests of the company, including the loss of goodwill, unfair competition and to preserve the Company’s Confidential Information. Employee expressly acknowledges and agrees that the respective covenants and agreements contained herein are reasonable as to both scope and time.
EMPLOYEE ACKNOWLEDGES AND UNDERSTANDS THAT HIS OR HER STRICT COMPLIANCE WITH THE COVENANTS HEREUNDER IS A MATERIAL CONDITION OF THIS AGREEMENT, AND THAT THE COMPANY WOULD NOT HAVE ENGAGED, OR CONTINUED TO ENGAGE, EMPLOYEE WITHOUT THIS AGREEMENT.

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13. Requests for Clarification . In the event Employee is uncertain as to the meaning of any provision of this Agreement or its application to any particular information, document, item or activity, Employee should inquire in writing to the Chief Executive Officer, General Counsel, and/or Human Resources Director of the Company, specifying any areas of uncertainty. The Company will respond in writing within a reasonable time and will endeavor to clarify any areas of uncertainty, including such things as whether it considers particular information or documents to be Confidential Information, and will endeavor to explain any provisions of this Agreement.
14. Remedies for Breach of the Covenants . Employee recognizes that the Company’s business interest in maintaining the confidentiality of its Confidential Information, its relationships and goodwill with its customers, and the stability of its work force, is so great that the remedy at law for Employee’s breach or threatened breach of the covenants contained in this Agreement may be an inadequate remedy. Employee agrees that, in the event of a breach or threatened breach by Employee of any of the covenants contain in this Agreement, a court of competent jurisdiction may issue a restraining order or an injunction against Employee, restraining or enjoining Employee from engaging in conduct or actions that violate the said covenant. In addition, the Company shall be entitled to any and all other remedies available to the Company at law or in equity, and no action by the Company in pursuing a given remedy shall constitute an election to forego other remedies.
15. Arbitration and Equitable Relief . This Arbitration provision applies to Employee if he/she is employed by the Company outside of California. This Arbitration provision does not apply to Employee if he/she is employed by the Company in California. Instead, the Arbitration provision attached hereto as Exhibit C applies to Employee if he/she is employed by the Company in California.
(a) Arbitration . IN CONSIDERATION OF MY EMPLOYMENT WITH THE COMPANY, ITS PROMISE TO ARBITRATE ALL EMPLOYMENT-RELATED DISPUTES AND MY RECEIPT OF THE COMPENSATION, PAY RAISES AND OTHER BENEFITS PAID TO ME BY THE COMPANY, AT PRESENT AND IN THE FUTURE, I AGREE THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES WITH ANYONE (INCLUDING THE COMPANY AND ANY EMPLOYEE, OFFICER, DIRECTOR, SHAREHOLDER OR BENEFIT PLAN OF THE COMPANY, IN THEIR CAPACITY AS SUCH OR OTHERWISE), ARISING OUT OF, RELATING TO, OR RESULTING FROM MY EMPLOYMENT WITH THE COMPANY OR THE TERMINATION OF MY EMPLOYMENT WITH THE COMPANY, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION UNDER THE ARBITRATION PROVISIONS SET FORTH IN THE UTAH UNIFORM ARBITRATION ACT (THE “ RULES ”) AND PURSUANT TO UTAH LAW. THE FEDERAL ARBITRATION ACT SHALL CONTINUE TO APPLY WITH FULL FORCE AND EFFECT NOTWITHSTANDING THE APPLICATION OF PROCEDURAL RULES SET FORTH IN THE ACT. I AGREE THAT I MAY ONLY COMMENCE AN ACTION IN ARBITRATION, OR ASSERT COUNTERCLAIMS IN AN ARBITRATION, ON AN INDIVIDUAL BASIS AND, THUS, I HEREBY WAIVE MY RIGHT TO COMMENCE OR PARTICIPATE IN ANY CLASS OR COLLECTIVE ACTION(S) AGAINST THE COMPANY, AS PERMITTED BY LAW. DISPUTES THAT I AGREE TO ARBITRATE, AND THEREBY AGREE TO WAIVE ANY RIGHT TO A TRIAL BY JURY, INCLUDE ANY STATUTORY CLAIMS UNDER LOCAL, STATE, OR FEDERAL LAW, INCLUDING, BUT NOT LIMITED TO, CLAIMS UNDER TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION ACT, THE SARBANES-OXLEY ACT, THE WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT, THE FAIR CREDIT REPORTING ACT, THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, THE FAMILY AND MEDICAL LEAVE ACT, THE UTAH ANTIDISCRIMINATION ACT, CLAIMS OF HARASSMENT, DISCRIMINATION AND WRONGFUL TERMINATION, AND ANY STATUTORY OR COMMON LAW CLAIMS. NOTWITHSTANDING THE FOREGOING, I UNDERSTAND THAT NOTHING IN THIS AGREEMENT CONSTITUTES A WAIVER OF MY RIGHTS UNDER SECTION 7 OF THE NATIONAL LABOR RELATIONS ACT. I FURTHER UNDERSTAND THAT THIS AGREEMENT TO ARBITRATE ALSO APPLIES TO ANY DISPUTES THAT THE COMPANY MAY HAVE WITH ME.

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(b) Procedure . I AGREE THAT ANY ARBITRATION WILL BE ADMINISTERED BY JUDICIAL ARBITRATION & MEDIATION SERVICES, INC. (“JAMS”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (THE “JAMS RULES”), WHICH ARE AVAILABLE AT http://www.jamsadr.com/rules-employment-arbitration/ AND FROM HUMAN RESOURCES. I UNDERSTAND THAT THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, EXCEPT AS PROHIBITED BY LAW, AND UNDERSTAND THAT EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE ATTORNEYS’ FEES AND COSTS. I AGREE TAT THE ARBITRATOR SHALL HAVE THE POWER TO DECIDE ANY MOTIONS BROUGHT BY ANY PARTY TO THE ARBITRATION, INCLUDING MOTIONS FOR SUMMARY JUDGMENT AND/OR ADJUDICATION, AND MOTIONS TO DISMISS, PRIOR TO ANY ARBITRATION HEARING. I AGREE THAT THE ARBITRATOR SHALL ISSUE A WRITTEN DECISION ON THE MERITS. I ALSO AGREE THAT THE ARBITRATOR SHALL HAVE THE POWER TO AWARD ANY REMEDIES AVAILABLE UNDER APPLICABLE LAW. I AGREE THAT THE DECREE OR AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED AS A FINAL AND BINDING JUDGMENT IN ANY COURT HAVING JURISDICTION THEREOF. I AGREE THAT THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH UTAH LAW, INCLUDING THE UTAH RULES OF CIVIL PROCEDURE AND THE UTAH RULES OF EVIDENCE, AND THAT THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL UTAH LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO RULES OF CONFLICT OF LAW. TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH UTAH LAW, UTAH LAW SHALL TAKE PRECEDENCE. I AGREE THAT THE DECISION OF THE ARBITRATOR SHALL BE IN WRITING. I AGREE THAT ARBITRATION UNDER THIS AGREEMENT SHALL BE CONDUCTED IN UTAH COUNTY, UTAH.
(c) Remedy . EXCEPT AS PROVIDED BY THE RULES AND THIS AGREEMENT, ARBITRATION SHALL BE THE SOLE, EXCLUSIVE AND FINAL REMEDY FOR ANY DISPUTE BETWEEN ME AND THE COMPANY. ACCORDINGLY, EXCEPT AS PROVIDED FOR BY THE RULES AND THIS AGREEMENT, NEITHER I NOR THE COMPANY WILL BE PERMITTED TO PURSUE COURT ACTION REGARDING CLAIMS THAT ARE SUBJECT TO ARBITRATION.
(d) Availability of Injunctive Relief . I AGREE THAT ANY PARTY MAY ALSO PETITION THE COURT FOR INJUNCTIVE RELIEF WHERE EITHER PARTY ALLEGES OR CLAIMS A VIOLATION OF THE AT-WILL EMPLOYMENT, CONFIDENTIAL INFORMATION, INVENTION ASSIGNMENT, AND ARBITRATION AGREEMENT BETWEEN ME AND THE COMPANY OR ANY OTHER AGREEMENT REGARDING TRADE SECRETS, INTELLECTUAL PROPERTY, CONFIDENTIAL INFORMATION, PROPRIETARY INFORMATION, NONCOMPETITION OR NONSOLICITATION. I UNDERSTAND THAT ANY BREACH OR THREATENED BREACH OF SUCH AN AGREEMENT WILL CAUSE IRREPARABLE INJURY AND THAT MONEY DAMAGES WILL NOT PROVIDE AN ADEQUATE REMEDY THEREFOR AND BOTH PARTIES HEREBY CONSENT TO THE ISSUANCE OF AN INJUNCTION WITHOUT POSTING OF A BOND. IN THE EVENT EITHER PARTY SEEKS INJUNCTIVE RELIEF, THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER REASONABLE COSTS AND ATTORNEYS’ FEES WITHOUT REGARD FOR THE PREVAILING PARTY IN THE FINAL JUDGMENT, IF ANY. SUCH ATTORNEYS’ FEES AND COSTS SHALL BE RECOVERABLE ON WRITTEN DEMAND AT ANY TIME, INCLUDING, BUT NOT LIMITED TO, PRIOR TO ENTRY OF A FINAL JUDGMENT, IF ANY, BY THE COURT, AND MUST BE PAID WITHIN THIRTY (30) DAYS AFTER DEMAND OR ELSE SUCH AMOUNTS SHALL BE SUBJECT TO THE ACCRUAL OF INTEREST AT A RATE EQUAL TO.
(e) Administrative Relief . I UNDERSTAND THAT THIS AGREEMENT DOES NOT PROHIBIT ME FROM PURSUING AN ADMINISTRATIVE CLAIM WITH A LOCAL, STATE, OR FEDERAL ADMINISTRATIVE BODY OR GOVERNMENT AGENCY THAT IS AUTHORIZED TO ENFORCE OR ADMINISTER LAWS RELATED TO EMPLOYMENT, INCLUDING, BUT NOT LIMITED TO, THE UTAH LABOR COMMISSION, THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, THE NATIONAL LABOR RELATIONS BOARD, OR THE WORKERS’ COMPENSATION BOARD. THIS AGREEMENT DOES, HOWEVER, PRECLUDE ME FROM PURSUING COURT ACTION REGARDING ANY SUCH CLAIM, EXCEPT AS PERMITTED BY LAW.

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(f) Voluntary Nature of Agreement . I ACKNOWLEDGE AND AGREE THAT I AM EXECUTING THIS AGREEMENT VOLUNTARILY AND WITHOUT ANY DURESS OR UNDUE INFLUENCE BY THE COMPANY OR ANYONE ELSE. I FURTHER ACKNOWLEDGE AND AGREE THAT I HAVE CAREFULLY READ THIS AGREEMENT AND THAT I HAVE ASKED ANY QUESTIONS NEEDED FOR ME TO UNDERSTAND THE TERMS, CONSEQUENCES, AND BINDING EFFECT OF THIS AGREEMENT AND FULLY UNDERSTAND IT, INCLUDING THAT I AM WAIVING MY RIGHT TO A JURY TRIAL. FINALLY, I AGREE THAT I HAVE BEEN PROVIDED AN OPPORTUNITY TO SEEK THE ADVICE OF AN ATTORNEY OF MY CHOICE BEFORE SIGNING THIS AGREEMENT.
16. Miscellaneous .
(a) Notices . All notices, requests, demands, and other communications required or permitted to be given under this Agreement by any Party shall be in writing delivered, if to the Company, to the address set forth below, and if to Employee, to the address set forth on the signature page hereto, or to such other address as any Party may designate from time to time by written notice to all other Parties. Each such notice, request, demand, or other communication shall be deemed given and effective, as follows: (i) if sent by hand delivery, upon delivery; (ii) if sent by first-class U.S. Mail, postage prepaid, upon the earlier to occur of receipt or three (3) days after deposit in the U.S. Mail; (iii) if sent by a recognized prepaid overnight courier service, one (1) day after the date it is given to such service; (iv) if sent by facsimile, upon receipt of confirmation of successful transmission by the facsimile machine; and (v) if sent by email, upon acknowledgement of receipt by the recipient.

VIVINT SOLAR, INC.	
Address:	  	4931 North 300 West	
City, State Zip:	  	Provo, Utah 84604	
Attention:	  	Tessa White
HR Director	
WITH COPY TO:

VIVINT SOLAR, INC.	
Address:	  	4931 North 300 West	
City, State Zip:	  	Provo, Utah 84604	
Attention:	  	Jim F. Lundberg
Associate General Counsel	
(b) Survival . The provisions of this Agreement shall survive the termination of Employee’s employment with the Company.
(c) Severability . If any provision of this Agreement shall be held by a court of competent jurisdiction to be invalid, unenforceable, or void, such provision shall be enforced to the fullest extent permitted by applicable law, and the remainder of this Agreement shall remain in full force and effect. In the event that the time period or scope of any provision is declared by a court of competent jurisdiction to exceed the maximum time period or scope that such court deems enforceable, then such court shall reduce the time period or scope to the maximum time period or scope permitted by law. In the event that the scope of any provision is declared by a court of competent jurisdiction to exceed the maximum scope that such court deems enforceable, then such court shall reduce the scope to the maximums scope permitted by law.
(d) Binding Effect . This Agreement shall be binding upon and inure to the benefit of Employee and his/her respective heirs, legal representatives, successors, and permitted assigns. Except as otherwise expressly provided in this Agreement, or by operation of law, neither this Agreement nor any

	  	8	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

of the rights, interests, or obligations hereunder may be assigned by Employee without the prior written consent of the Company. The Company may assign, transfer, or sell its rights under this Agreement, in its sole and absolute discretion, without the consent of Employee.
(e) Attorneys’ Fees and Costs . In the event that either Party commences an action to enforce the terms of this Agreement, or to seek damages or injunctive relief for the alleged breach thereof, the prevailing Party shall be entitled to collect from the non-prevailing Party its, his or her reasonable attorneys’ fees and costs incurred therein.
(f) Amendments and Waivers . The failure of either Party to require the performance of any term or obligation of this Agreement, or the waiver by either Party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. This Agreement may only be amended, waived, or modified by an instrument in writing signed by all of the Parties. No modification, waiver, or amendment of this Agreement shall be effective or binding against the Company unless signed by the Company’s Chief Executive Officer or General Counsel.
(g) Choice of Law . This agreement shall be governed by, and construed under, the internal laws of the state of Utah, without reference to conflicts of laws rules thereof.
(h) Submission to Jurisdiction . This Submission to Jurisdiction applies to Employee if he/she is employed by the Company outside of California. Each Party irrevocably consents and agrees that any action, proceeding, or other litigation by or against any other Party or Parties with respect to any claim or cause of action based upon or arising out of or related to this Agreement or the transactions contemplated hereby, shall be brought and tried exclusively in the state and federal courts located in the City of Salt Lake, County of Salt Lake, in the State of Utah, and any such legal action or proceeding may be removed to the aforesaid courts. By execution and delivery of the Agreement, each Party accepts, for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts. Each Party hereby irrevocably waives (a) any objection which it may now or hereafter have to the laying of venue with respect any such action, proceeding, or litigation arising out of or in connection with this Agreement or the transactions contemplated hereby brought in the aforesaid courts, and (b) any right to stay or dismiss any such action, proceeding, or litigation brought before the aforesaid courts on the basis of forum non-conveniens . Each Party further agrees that personal jurisdiction over it may be affected by service of process by certified mail, postage prepaid, addressed as provided in Section 15(a) of this Agreement, and when so made shall be as if served upon it personally within the State of Utah.
(i) Submission to Jurisdiction (California Employee). This Submission to Jurisdiction applies to Employee if he/she is employed by the Company in California. Each Party irrevocably consents and agrees that any action, proceeding, or other litigation by or against any other Party or Parties with respect to any claim or cause of action based upon or arising out of or related to this Agreement or the transactions contemplated hereby, shall be brought and tried exclusively in the state and federal courts located in the City of Los Angeles, in the State of California, and any such legal action or proceeding may be removed to the aforesaid courts. By execution and delivery of the Agreement, each Party accepts, for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts. Each Party hereby irrevocably waives (a) any objection which it may now or hereafter have to the laying of venue with respect any such action, proceeding, or litigation arising out of or in connection with this Agreement or the transactions contemplated hereby brought in the aforesaid courts, and (b) any right to stay or dismiss any such action, proceeding, or litigation brought before the aforesaid courts on the basis of forum non-conveniens . Each Party further agrees that personal jurisdiction over it may be affected by service of process by certified mail, postage prepaid, addressed as provided in Section 15(a) of this Agreement, and when so made shall be as if served upon it personally within the State of California.
(j) Headings . The Article, Section, and Paragraph headings used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

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(k) Counterparts . This Agreement may be executed by Employee by facsimile, email, or digital signature, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A facsimile, digital signature, or portable document format (“pdf”) signature page shall constitute an original for purposes hereof.
[SIGNATURE PAGES FOLLOW]

	  	10	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

BY SIGNING THIS AGREEMENT, EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS CAREFULLY READ AND FULLY UNDERSTANDS ALL OF THE PROVISIONS OF THIS AGREEMENT AND THAT EMPLOYEE IS VOLUNTARILY ENTERING INTO THIS AGREEMENT.
Dated as of:                                                                                                                           

EMPLOYEE :	
		
Signature:	 	 	
		
Print Full Name:	 	 	
		
Address:	 	 	
		
City, State ZIP:	 	 	
		
E-Mail:	 	 	
CONFIDENTIAL : This document contains trade secrets and confidential information owned by Vivint Solar, Inc. and/or its affiliates (collectively, the “ Company ”). Access to and use of this information is strictly limited and controlled by the Company. This document may not be copied, distributed, or otherwise disclosed outside of the Company’s facilities or systems, except as expressly authorized in writing by the General Counsel or the Chief Executive Officer of the Company, except as permitted by applicable law.

	  	[SIGNATURE PAGE]	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

EXHIBIT A
to At-Will Employment Agreement
CALIFORNIA LABOR CODE SECTION 2870
INVENTION ON OWN TIME-EXEMPTION FROM AGREEMENT
“(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:
(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.”
N.C.GEN.STAT. §§ 66-57.1
Any provision in an employment agreement which provides that the employee shall assign or offer to assign any of his rights in an invention to his employer shall not apply to an invention that the employee developed entirely on his own time without using the employer’s equipment, supplies, facility or trade secret information except for those inventions that
(i) relate to the employer’s business or actual or demonstrably anticipated research or development, or
(ii) result from any work performed by the employee for the employer.
To the extent a provision in an employment agreement purports to apply to the type of invention described, it is against the public policy of this State and is unenforceable. The employee shall bear the burden of proof in establishing that his invention qualifies under this section.
DEL.CODE TIT. 19, § 805
Any provision in an employment agreement which provides that the employee shall assign or offer to assign any of the employee’s rights in an invention to the employee’s employer shall not apply to an invention that the employee developed entirely on the employee’s own time without using the employer’s equipment, supplies, facility or trade secret information, except for those inventions that:
(1) Relate to the employer’s business or actual or demonstrably anticipated research or development; or
(2) Result from any work performed by the employee for the employer.
To the extent a provision in an employment agreement purports to apply to the type of invention described, it is against the public policy of this State and is unenforceable. An employer may not require a provision of an employment agreement made unenforceable under this section as a condition of employment or continued employment.
UTAH CODE § 34-39-3(1)
(1) An employment agreement between an employee and his employer is not enforceable against the employee to the extent that the agreement requires the employee to assign or license, or to offer to assign or license, to the employer any right or intellectual property in or to an invention that is:
(a) created by the employee entirely on his own time; and
(b) not an employment invention.

	  	EXHIBIT A	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

EXHIBIT B
to At-Will Employment Agreement
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP

Title	  	Date	  	Identifying Number or Brief Description	

	  		  		
         No inventions or improvements
         Additional Sheets Attached

				
Date:	 	 	 		 	 	
	 		 		 	Signature	

	 		 		 	Name of Employee (typed or printed)	

	  	EXHIBIT B	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

EXHIBIT C
to At-Will Employment Agreement
A RBITRATION AND E QUITABLE R ELIEF
This Arbitration provision applies to Employee only if he/she is employed by and works for the Company in California. This Arbitration provision does not apply to Employee if he/she is employed by the Company outside of California. Instead, the Arbitration provision set forth in Section 14 applies to Employee if he/she is employed by the Company outside of California.
(a) Arbitration . IN CONSIDERATION OF MY EMPLOYMENT WITH THE COMPANY, ITS PROMISE TO ARBITRATE ALL EMPLOYMENT-RELATED DISPUTES, AND MY RECEIPT OF THE COMPENSATION, PAY RAISES, AND OTHER BENEFITS PAID TO ME BY THE COMPANY, AT PRESENT AND IN THE FUTURE, I AGREE THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES WITH ANYONE (INCLUDING THE COMPANY AND ANY EMPLOYEE, OFFICER, DIRECTOR, SHAREHOLDER, OR BENEFIT PLAN OF THE COMPANY, IN THEIR CAPACITY AS SUCH OR OTHERWISE), ARISING OUT OF, RELATING TO, OR RESULTING FROM MY EMPLOYMENT WITH THE COMPANY OR THE TERMINATION OF MY EMPLOYMENT WITH THE COMPANY, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION UNDER THE ARBITRATION PROVISIONS SET FORTH IN THE UTAH UNIFORMA ARBITRATION ACT (THE “ ACT ”), AND PURSUANT TO UTAH LAW. THE FEDERAL ARBITRATION ACT SHALL CONTINUE TO APPLY WITH FULL FORCE AND EFFECT NOTWITHSTANDING THE APPLICATION OF PROCEDURAL RULES SET FORTH IN THE ACT. DISPUTES THAT I AGREE TO ARBITRATE, AND THEREBY AGREE TO WAIVE ANY RIGHT TO A TRIAL BY JURY, INCLUDE ANY STATUTORY CLAIMS UNDER LOCAL, STATE, OR FEDERAL LAW, INCLUDING, BUT NOT LIMITED TO, CLAIMS UNDER TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION ACT, THE SARBANES-OXLEY ACT, THE WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT, THE FAIR LABOR STANDARDS ACT, THE FAMILY AND MEDICAL LEAVE ACT, THE UTAH ANTIDISCRIMINATION ACT, CLAIMS OF HARASSMENT, DISCRIMINATION, AND WRONGFUL TERMINATION, AND ANY OTHER STATUTORY OR COMMON LAW CLAIMS. NOTWITHSTANDING THE FOREGOING, I UNDERSTAND THAT NOTHING IN THIS AGREEMENT CONSTITUTES A WAIVER OF MY RIGHTS UNDER SECTION 7 OF THE NATIONAL LABOR RELATIONS ACT. I FURTHER UNDERSTAND THAT THIS AGREEMENT TO ARBITRATE ALSO APPLIES TO ANY DISPUTES THAT THE COMPANY MAY HAVE WITH ME.
(b) Procedure . I AGREE THAT ANY ARBITRATION WILL BE ADMINISTERED BY JUDICIAL ARBITRATION & MEDIATION SERVICES, INC. (“ JAMS ”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (THE “ JAMS RULES ”), WHICH ARE AVAILABLE AT http://www.jamsadr.com/rules-employment-arbitration/ AND FROM HUMAN RESOURCES. I AGREE THAT THE ARBITRATOR SHALL HAVE THE POWER TO DECIDE ANY MOTIONS BROUGHT BY ANY PARTY TO THE ARBITRATION, INCLUDING MOTIONS FOR SUMMARY JUDGMENT AND/OR ADJUDICATION, AND MOTIONS TO DISMISS AND DEMURRERS, APPLYING THE STANDARDS SET FORTH UNDER THE UTAH RULES OF CIVIL PROCEDURE. I AGREE THAT THE ARBITRATOR SHALL ISSUE A WRITTEN DECISION ON THE MERITS. I ALSO AGREE THAT THE ARBITRATOR SHALL HAVE THE POWER TO AWARD ANY REMEDIES AVAILABLE UNDER APPLICABLE LAW, AND THAT THE ARBITRATOR SHALL AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY, WHERE PROVIDED BY APPLICABLE LAW. I AGREE THAT THE DECREE OR AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED AS A FINAL AND BINDING JUDGMENT IN ANY COURT HAVING JURISDICTION THEREOF. I UNDERSTAND THAT THE COMPANY WILL PAY FOR ANY ADMINISTRATIVE OR HEARING FEES CHARGED BY THE ARBITRATOR OR JAMS EXCEPT THAT I SHALL PAY ANY FILING FEES ASSOCIATED WITH ANY ARBITRATION THAT I INITIATE, BUT ONLY SO MUCH OF THE FILING FEES AS I WOULD HAVE INSTEAD PAID HAD I FILED A COMPLAINT IN A COURT OF LAW. I AGREE THAT THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN

	  	EXHIBIT C	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

ACCORDANCE WITH UTAH LAW, INCLUDING THE UTAH RULES OF CIVIL PROCEDURE AND THE UTAH RULES OF EVIDENCE, AND THAT THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL UTAH LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO RULES OF CONFLICT OF LAW. TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH UTAH LAW, UTAH LAW SHALL TAKE PRECEDENCE. I AGREE THAT ANY ARBITRATION UNDER THIS AGREEMENT SHALL BE CONDUCTED IN LOS ANGELES COUNTY, CALIFORNIA.
(c) Remedy . EXCEPT AS PROVIDED BY THE ACT AND THIS AGREEMENT, ARBITRATION SHALL BE THE SOLE, EXCLUSIVE, AND FINAL REMEDY FOR ANY DISPUTE BETWEEN ME AND THE COMPANY. ACCORDINGLY, EXCEPT AS PROVIDED FOR BY THE ACT AND THIS AGREEMENT, NEITHER I NOR THE COMPANY WILL BE PERMITTED TO PURSUE OR PARTICIPATE IN COURT ACTION REGARDING CLAIMS THAT ARE SUBJECT TO ARBITRATION.
(d) Administrative Relief . I UNDERSTAND THAT THIS AGREEMENT DOES NOT PROHIBIT ME FROM PURSUING AN ADMINISTRATIVE CLAIM WITH A LOCAL, STATE, OR FEDERAL ADMINISTRATIVE BODY OR GOVERNMENT AGENCY THAT IS AUTHORIZED TO ENFORCE OR ADMINISTER LAWS RELATED TO EMPLOYMENT, INCLUDING, BUT NOT LIMITED TO, THE DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING, THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, THE NATIONAL LABOR RELATIONS BOARD, OR THE WORKERS’ COMPENSATION BOARD. THIS AGREEMENT DOES, HOWEVER, PRECLUDE ME FROM PURSUING COURT ACTION REGARDING ANY SUCH CLAIM, EXCEPT AS PERMITTED BY LAW.
(e) Voluntary Nature of Agreement . I ACKNOWLEDGE AND AGREE THAT I AM EXECUTING THIS AGREEMENT VOLUNTARILY AND WITHOUT ANY DURESS OR UNDUE INFLUENCE BY THE COMPANY OR ANYONE ELSE. I ACKNOWLEDGE AND AGREE THAT I HAVE RECEIVED A COPY OF THE TEXT OF CALIFORNIA LABOR CODE SECTION 2870 IN EXHIBIT A . I FURTHER ACKNOWLEDGE AND AGREE THAT I HAVE CAREFULLY READ THIS AGREEMENT AND THAT I HAVE ASKED ANY QUESTIONS NEEDED FOR ME TO UNDERSTAND THE TERMS, CONSEQUENCES, AND BINDING EFFECT OF THIS AGREEMENT AND FULLY UNDERSTAND IT, INCLUDING THAT I AM WAIVING MY RIGHT TO A JURY TRIAL . FINALLY, I AGREE THAT I HAVE BEEN PROVIDED AN OPPORTUNITY TO SEEK THE ADVICE OF AN ATTORNEY OF MY CHOICE BEFORE SIGNING THIS AGREEMENT.

	  	EXHIBIT C	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

EXHIBIT D
to At-Will Employment Agreement
BACKGROUND CHECK DISCLOSURE AND AUTHORIZATION FORM
Disclosure Regarding Background Investigation
Vivint Solar Inc., (the “ Company ”) may request, for lawful employment purposes, background information about you from a consumer reporting agency in connection with your employment or application for employment (including independent contractor assignments, as applicable). This background information may be obtained in the form of consumer reports and/or investigative consumer reports (commonly known as “ background reports ”). These background reports may be obtained at any time after receipt of your authorization and, if you are hired or engaged by the Company, throughout your employment or your contract period.
A consumer reporting agency will prepare or assemble the background reports for the Company. HireRight, Inc. is located and can be contacted by mail at 5151 California, Irvine, CA 92617, and HireRight can be contacted by phone at (800) 400-2761. Information about HireRight’s privacy practices is available at www.hireright.com/Privacy-Policy.aspx .
The background report may contain information concerning your character, general reputation, personal characteristics, and mode of living. Where permitted by, and in accordance with, applicable law, the types of information that may be obtained include, but are not limited to: social security number verifications; address history; criminal records and history; public court records; driving records; accident history; worker’s compensation claims; bankruptcy filings; educational history verifications (e.g., dates of attendance, degrees obtained); employment history verifications (e.g., dates of employment, salary information, reasons for termination, etc.); personal and professional references checks; professional licensing and certification checks; drug/alcohol testing results, and drug/alcohol history in violation of law and/or company policy; and other information bearing on your character, general reputation, personal characteristics, mode of living and credit standing.
This information may be obtained from private and public record sources, including, as appropriate: government agencies and courthouses; educational institutions; former employers; personal interviews with sources such as neighbors, friends and associates; and other information sources.
You may request more information about the nature and scope of any investigative consumer reports by contacting the Company. A summary of your rights under the Fair Credit Reporting Act is also being provided to you.

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

ADDITIONAL STATE LAW DISCLOSURES
If you are an Arizona, California, Maryland, Massachusetts, New Jersey or New York applicant, employee or contractor, please also note:
ARIZONA: If we request an investigative consumer report, you have the right, upon request, to be informed by HireRight about the contents of its file used for the purpose of making the consumer report on you, including all facts, allegations, and sources upon which the report was based and the names of those requesting the report in the past six months. Ariz. Rev. Stat. § 44-1693(A)(4).
CALIFORNIA: The text of California’s Investigative Consumer Reporting Agencies Act is located at California Civil Code section 1786 et seq. The background information requested by the Company may be in the form of an “investigative consumer report” as defined by California Civil Code section 1786(c). Pursuant to California Civil Code section 1786.22, you may view the file maintained on you by HireRight during normal business hours. You may also obtain a copy of this file, upon submitting proper identification and paying the costs of duplication services, by appearing at HireRight’s offices in person, during normal business hours and on reasonable notice, or by certified mail. You may also receive a summary of the file by telephone, upon submitting proper identification and written request. HireRight has trained personnel available to explain your file to you, including any coded information, and will provide a written explanation of any coded information contained in your file. If you appear in person, you may be accompanied by one other person, provided that person furnishes proper identification. “Proper identification” includes documents such as a valid driver’s license, social security account number, military identification card, and credit cards. If you cannot identify yourself with such information, HireRight may require additional information concerning your employment and personal or family history to verify your identity. Cal. Civ. Code § 1786 et seq.
MARYLAND: If we request an investigative consumer report, you have the right, upon written request, to be informed about the nature and scope of the investigation. Md. Code Ann., Com. Law § 14-1204.
MASSACHUSETTS: If we request an investigative consumer report, you have the right, upon written request, to a copy of the report. Mass. Gen. Laws Ann. ch. 93, § 60.
NEW JERSEY: If we request an investigative consumer report, you have the right, upon written request, to a copy of the report. N.J. Stat. Ann. § 56:11-28.
NEW YORK: You have the right, upon written request, to be informed of whether or not an investigative consumer report was requested. If an investigative consumer report is requested, you have the right, upon request, to be provided with the name and address of the consumer reporting agency furnishing the report. You may inspect and receive a copy of the report by contacting that agency. Attached below is additional information about New York Correction Law Article 23-A. N.Y. Gen. Bus. Law § 380-b-c.

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

ADDITIONAL NEW YORK LAW DISCLOSURE
If you are a New York applicant, employee or contractor, please also note:
NEW YORK CORRECTION LAW
ARTICLE 23-A
LICENSURE AND EMPLOYMENT OF PERSONS PREVIOUSLY
CONVICTED OF ONE OR MORE CRIMINAL OFFENSES
Section 750. Definitions.
751. Applicability.
752. Unfair discrimination against persons previously convicted of one or more criminal offenses prohibited.
753. Factors to be considered concerning a previous criminal conviction; presumption.
754. Written statement upon denial of license or employment.
755. Enforcement.
§750. Definitions. For the purposes of this article, the following terms shall have the following meanings:
(1) “Public agency” means the state or any local subdivision thereof, or any state or local department, agency, board or commission.
(2) “Private employer” means any person, company, corporation, labor organization or association which employs ten or more persons.
(3) “Direct relationship” means that the nature of criminal conduct for which the person was convicted has a direct bearing on his fitness or ability to perform one or more of the duties or responsibilities necessarily related to the license, opportunity, or
job in question.
(4) “License” means any certificate, license, permit or grant of permission required by the laws of this state, its political subdivisions or instrumentalities as a condition for the lawful practice of any occupation, employment, trade, vocation, business, or profession. Provided, however, that “license” shall not, for the purposes of this article, include any license or permit to own, possess, carry, or fire any explosive, pistol, handgun, rifle, shotgun, or other firearm.
(5) “Employment” means any occupation, vocation or employment, or any form of vocational or educational training. Provided, however, that “employment” shall not, for the purposes of this article, include membership in any law enforcement agency.
§751. Applicability. The provisions of this article shall apply to any application by any person for a license or employment at any public or private employer, who has previously been convicted of one or more criminal offenses in this state or in any other jurisdiction, and to any license or employment held by any person whose conviction of one or more criminal offenses in this state or in any other jurisdiction preceded such employment or granting of a license, except where a mandatory forfeiture, disability or bar to employment is imposed by law, and has not been removed by an executive pardon, certificate of relief from disabilities or certificate of good conduct. Nothing in this article shall be construed to affect any right an employer may have with respect to an intentional misrepresentation in connection with an application for employment made by a prospective employee or previously made by a current employee.

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

§752. Unfair discrimination against persons previously convicted of one or more criminal offenses prohibited. No application for any license or employment, and no employment or license held by an individual, to which the provisions of this article are applicable,
shall be denied or acted upon adversely by reason of the individual’s having been previously convicted of one or more criminal offenses, or by reason of a finding of lack of “good moral character” when such finding is based upon the fact that the individual has previously been convicted of one or more criminal offenses, unless:
(1) There is a direct relationship between one or more of the previous criminal offenses and the specific license or employment sought or held by the individual; or
(2) the issuance or continuation of the license or the granting or continuation of the employment would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.
§753. Factors to be considered concerning a previous criminal conviction; presumption.
1. In making a determination pursuant to section seven hundred fifty-two of this chapter, the public agency or private employer shall consider the following factors:
(a) The public policy of this state, as expressed in this act, to encourage the licensure and employment of persons previously convicted of one or more criminal offenses.
(b) The specific duties and responsibilities necessarily related to the license or employment sought or held by the person.
(c) The bearing, if any, the criminal offense or offenses for which the person was previously convicted will have on his fitness or ability to perform one or more such duties or responsibilities.
(d) The time which has elapsed since the occurrence of the criminal offense or offenses.
(e) The age of the person at the time of occurrence of the criminal offense or offenses.
(f) The seriousness of the offense or offenses.
(g) Any information produced by the person, or produced on his behalf, in regard to his rehabilitation and good conduct.
(h) The legitimate interest of the public agency or private employer in protecting property, and the safety and welfare of specific individuals or the general public.
2. In making a determination pursuant to section seven hundred fifty-two of this chapter, the public agency or private employer shall also give consideration to a certificate of relief from disabilities or a certificate of good conduct issued to the applicant, which
certificate shall create a presumption of rehabilitation in regard to the offense or offenses specified therein.
§754. Written statement upon denial of license or employment. At the request of any person previously convicted of one or more criminal offenses who has been denied a license or employment, a public agency or private employer shall provide, within thirty days of a request, a written statement setting forth the reasons for such denial.
§755. Enforcement.
1. In relation to actions by public agencies, the provisions of this article shall be enforceable by a proceeding brought pursuant to article seventy-eight of the civil practice law and rules.

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

2. In relation to actions by private employers, the provisions of this article shall be enforceable by the division of human rights pursuant to the powers and procedures set forth in article fifteen of the executive law, and, concurrently, by the New York city commission on human rights.

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

Para informacion en español, visite www.consumerfinance.gov/learnmore o escribe a la Consumer Financial Protection Bureau, 1700 G Street N.W. Washington, D.C. 20006.
A S UMMARY OF Y OUR R IGHTS U NDER THE F AIR C REDIT R EPORTING A CT
The federal Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. There are many types of consumer reporting agencies, including credit bureaus and specialty agencies (such as agencies that sell information about check writing histories, medical records, and rental history records). Here is a summary of your major rights under the FCRA. For more information, including information about additional rights, go to www.consumerfinance.gov/learnmore or write to: Consumer Financial Protection Bureau, 1700 G Street N.W. Washington, D.C. 20006.
 
 	•	 	You must be told if information in your file has been used against you. Anyone who uses a credit report or another type of consumer report to deny your application for credit, insurance, or employment – or to take another adverse action against you – must tell you, and must give you the name, address, and phone number of the agency that provided the information.	
 
 	•	 	You have the right to know what is in your file. You may request and obtain all the information about you in the files of a consumer reporting agency (your “file disclosure”). You will be required to provide proper identification, which may include your Social Security number. In many cases, the disclosure will be free. You are entitled to a free file disclosure if:	
 
 	•	 	a person has taken adverse action against you because of information in your credit report;	
 
 	•	 	you are the victim of identity theft and place a fraud alert in your file;	
 
 	•	 	your file contains inaccurate information as a result of fraud;	
 
 	•	 	you are on public assistance;	
 
 	•	 	you are unemployed but expect to apply for employment within 60 days.	
In addition, all consumers will be entitled to one free disclosure every 12 months upon request from each nationwide credit bureau and from nationwide specialty consumer reporting agencies. See www.consumerfinance.gov/learnmore for additional information.
 
 	•	 	You have the right to ask for a credit score. Credit scores are numerical summaries of your credit-worthiness based on information from credit bureaus. You may request a credit score from consumer reporting agencies that create scores or distribute scores used in residential real property loans, but you will have to pay for it. In some mortgage transactions, you will receive credit score information for free from the mortgage lender.	
 
 	•	 	You have the right to dispute incomplete or inaccurate information. If you identify information in your file that is incomplete or inaccurate, and report it to the consumer reporting agency, the agency must investigate unless your dispute is frivolous. See www.consumerfinance.gov/learnmore for an explanation of dispute procedures.	
 
 	•	 	Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information. Inaccurate, incomplete or unverifiable information must be removed or corrected, usually within 30 days. However, a consumer agency may continue to report information it has verified as accurate.	
 
 	•	 	Consumer reporting agencies may not report outdated negative information. In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old.	
 
 	•	 	Access to your file is limited. A consumer reporting agency may provide information about you only	

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

to people with a valid need – usually to consider an application with a creditor, insurer, employer, landlord, or other business. The FCRA specifies those with a valid need for access.
 
 	•	 	You must give your consent for reports to be provided to employers. A consumer reporting agency may not give out information about you to your employer, or a potential employer, without your written consent given to the employer. Written consent generally is not required in the trucking industry. For more information, go to www.consumerfinance.gov/learnmore .	
 
 	•	 	You may limit “prescreened” offers of credit and insurance you get based on information in your credit report. Unsolicited “prescreened” offers for credit and insurance must include a toll-free phone number you can call if you choose to remove your name and address from the lists these offers are based on. You may opt-out with the nationwide credit bureaus at 1-888-567-8688.	
 
 	•	 	You may seek damages from violators. If a consumer reporting agency, or, in some cases, a user of consumer reports or a furnisher of information to a consumer reporting agency violates the FCRA, you may be able to sue in state or federal court.	
 
 	•	 	Identity theft victims and active duty military personnel have additional rights. For more information, visit www.consumerfinance.gov/learnmore .	

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

States may enforce the FCRA, and many states have their own consumer reporting laws. In some cases, you may have more rights under state law. For more information, contact your state or local consumer protection agency or your state Attorney General. For information about your federal rights, contact:

TYPE OF BUSINESS:	 	CONTACT:	
1.a. Banks, savings associations, and credit unions with total assets of over $10 billion and their affiliates.
 
b. Such affiliates that are not banks, savings associations, or credit unions also should list, in addition to the Bureau:
 
2. To the extent not included in item 1 above:
 
a. National banks, federal savings associations, and federal branches and federal agencies of foreign banks
 
b. State member banks, branches and agencies of foreign banks (other than federal branches, federal agencies, and insured state branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act
 
c. Nonmember Insured Banks, Insured State Branches of Foreign Banks, and insured state savings associations
 
d. Federal Credit Unions
 
3. Air carriers
 
4. Creditors Subject to Surface Transportation Board
 
5. Creditors Subject to Packers and Stockyards Act
 
6. Small Business Investment Companies
 
7. Brokers and Dealers
 
8. Federal Land Banks, Federal Land Bank Associations, Federal Intermediate Credit Banks, and Production Credit Associations
 
9. Retailers, Finance Companies, and All Other Creditors Not Listed Above	 	a. Bureau of Consumer Financial Protection
1700 G Street NW
Washington, DC 20006
 
b. Federal Trade Commission: Consumer Response Center – FCRA
Washington, DC 20580
(877) 382-4357
 
a. Office of the Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street, Suite 3450
Houston, TX 77010-9050
 
b. Federal Reserve Consumer Help Center
P.O. Box 1200
Minneapolis, MN 55480
 
c. FDIC Consumer Response Center
1100 Walnut Street, Box #11
Kansas City, MO 64106
 
d. National Credit Union Administration
Office of Consumer Protection (OCP)
Division of Consumer Compliance and Outreach (DCCO)
1775 Duke Street
Alexandria, VA 22314
Asst. General Counsel for Aviation Enforcement & Proceedings
Department of Transportation
400 Seventh Street SW
Washington, DC 20590
Office of Proceedings, Surface Transportation Board
Department of Transportation
1925 K Street NW
Washington, DC 20423
 
Nearest Packers and Stockyards Administration area supervisor
 
Associate Deputy Administrator for Capital Access
United States Small Business Administration
406 Third Street, SW, 8 th Floor
Washington, DC 20416
Securities and Exchange Commission
100 F St NE
Washington, DC 20549
Farm Credit Administration
1501 Farm Credit Drive
McLean, VA 22102-5090
FTC Regional Office for region in which the creditor operates or Federal Trade Commission: Consumer Response Center – FCRA
Washington, DC 20580
(877) 382-4357	

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

AUTHORIZATION OF BACKGROUND INVESTIGATION
I have carefully read and understand this Disclosure and Authorization form and the attached summary of rights under the Fair Credit Reporting Act. By my signature below, I consent to preparation of background reports by a consumer reporting agency such as HireRight, Inc., and to the release of such background reports to the Company and its designated representatives and agents, for the purpose of assisting the Company in making a determination as to my eligibility for employment (including independent contractor assignments, as applicable), promotion, retention or for other lawful employment purposes. I understand that if the Company hires me or contracts for my services, my consent will apply, and the Company may obtain background reports, throughout my employment or contract period.
I understand that information contained in my employment or contractor application, or otherwise disclosed by me before or during my employment or contract assignment, if any, may be used for the purpose of obtaining and evaluating background reports on me. I also understand that nothing herein shall be construed as an offer of employment or contract for services.
I hereby authorize law enforcement agencies, learning institutions (including public and private schools and universities), information service bureaus, record/data repositories, courts (federal, state and local), motor vehicle records agencies, my past or present employers, the military, and other individuals and sources to furnish any and all information on me that is requested by the consumer reporting agency.
By my signature below, I also certify the information I provided on and in connection with this form is true, accurate and complete. I agree that this form in original, faxed, photocopied or electronic (including electronically signed) form, will be valid for any background reports that may be requested by or on behalf of the Company.
¨   Please check this box if you would like to receive (whenever you have such right under the applicable state law) a free copy of your background report if one is obtained on you by the Company.
Date:                                                                                                                           

EMPLOYEE :	
		
Signature:	 	 	
		
Print Full Name:	 	 	
		
Address:	 	 	
		
City, State Zip:	 	 	

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

Exhibit 10.10

Vivint Solar, Inc.
4931 North 300 West
Provo, Utah 84604
1.877.404.4129	  		
simply brighter • www.vivintsolar.com
August 28, 2014
Mr. L. Chance Allred
1278 N 730 E
Pleasant Grove, UT 84062
Dear Chance:
This agreement clarifies that your official employer is Vivint Solar, Inc. (“Vivint Solar” or the “Company”), and will not be Vivint Solar Developer, LLC any longer. The terms of your employment will remain the same and they are described below so that the Company and you can confirm that we have the same understanding.
You will continue in your role as Vice President, Sales, which is a full-time position, reporting to the Chief Executive Officer and President, and based at the Company’s offices in Provo, Utah. This agreement describes the essential elements of your employment with Vivint Solar and expressly supersedes any and all previous employment agreements you may have had with Vivint Solar Developer, LLC, Vivint Solar, or any other Company affiliates, whether written or oral, express or implied, other than: (1) the involuntary termination protection agreement between you and the Company dated as of August 28, 2014 (the “Severance Agreement”); and (2) the indemnification agreement between you and the Company dated as of August 28, 2014 (the “Indemnification Agreement”).
Compensation:

Base Salary:	  	You will continue to be paid an annual base salary of $206,000, payable in bi-monthly increments and in accordance with the Company’s payroll policies and practices.	
		
MBO Bonus:	  	You will be eligible to participate in the Company’s annual executive bonus program with a target incentive bonus of 40% of your annual salary, earned and determined at the sole discretion of Vivint Solar and based on multiple factors, including, but not limited to, achievement of individual and Company performance objectives. A significant purpose of our bonus program is retention, therefore to earn a bonus, you must be an employee on the date Vivint Solar pays such bonus, and you will not earn or be entitled to any pro rata bonus payments if your employment ends for any reason prior to such date. All earned bonuses will be paid in accordance with Vivint Solar’s policies and practices regarding incentive compensation awards.	
		
Long-term Incentives:	  	You (by way of your trust, The 1340 Holdings Trust, Michael R. Cahill, Trustee) have previously have been granted the long-term equity incentive award (the “Equity Incentive Award”) evidenced by that certain Nonqualified Stock Option Agreement executed and delivered by the parties thereto on May 13, 2014 (the “Option Agreement”), described on Exhibit A . The Equity Incentive Award remain subject to the terms and conditions set forth in the Option Agreement. Your status as a continuous service provider under the terms and conditions of the Option Agreement has not been affected by this agreement or your employment moving to Vivint Solar, and does not modify applicable vesting requirements.	

			
		
	  	Any vesting is subject to your continued employment with the Company through applicable vesting dates. No rights are earned or accrued until such time that vesting occurs, nor does the grant confer any right to continued vesting or employment. You acknowledge that neither you nor any of your affiliates (including The 1340 Holdings Trust, Michael R. Cahill, Trustee) have any rights or claims to equity of the Company other than the Equity Incentive Award listed on Exhibit A .	

THE FOREGOING PROVISION ENTITLED “LONG-TERM INCENTIVES” IS HEREBY ACKNOWLEDGED AND CONFIRMED AS ACCURATE BY THE 1340 HOLDINGS TRUST, MICHAEL R. CAHILL, TRUSTEE:	
	
/s/ Michael R. Cahill	
(Signature)	
	 		
Name:	 	The 1340 Holdings Trust	
By:	 	Michael R. Cahill, Trustee	
	 	7371 Prairie Falcon Road, Suite 120	
	 	Las Vegas, Nevada 89128	

			
Employee Benefits:	  	We maintain certain employee benefits plans, and you will continue to be able to participate in those plans for which you meet the eligibility requirements. To the extent that any employee contribution is owed for such benefits, you will continue to be responsible for paying the employee portion, which will be deducted from your pay.	
		
Holidays; Out of Office Time:	  	We believe in work-life balance. We currently recognize nine (9) paid holidays each calendar year. A calendar of Company-paid holidays is available through Human Resources. Out of office time is managed and coordinated directly with your manager and in accordance with Company policy for employees exempt from overtime laws in the state where you work.	
		
Vivint Solar Policies and Employment Conditions:	  	You agree to review the Company’s employee handbook, and you agree to thoroughly familiarize yourself with the policies contained in the handbook and other corporate policies of Vivint Solar and to abide by them. Additionally, from time to time, the Company may adopt new policies or make important changes to existing policies and will communicate information about its policies to you by way of electronic mail notification, the Vivint Solar intranet or otherwise, and you agree to thoroughly review such policy communications and to abide by them. The Company may modify salaries, bonuses and benefits from time to time.    	
 
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Withholdings and Taxes:	  	All forms of compensation referred to in this agreement are subject to reduction to reflect applicable withholdings and payroll taxes.	
		
Employment
Relationship:	  	Your employment with the Company is for no specific period of time and continues to be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without notice or cause. Any contrary representations that may have been made to you are superseded by this agreement. This is the full and complete agreement between you and the Company on this term. Although your job, duties, compensation and benefits may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and by the Chief Executive Officer of the Company.	
		
	  	In addition, as a condition of employment with Vivint Solar, you will be required to sign the Company’s standard At-Will Employment Agreement, attached hereto as Exhibit B , which requires, among other provisions, the assignment of patent rights to any invention made during your employment at the Company, and non-disclosure of Company proprietary information. Also, in the event of any dispute or claim relating to or arising out of our employment relationship, you and the Company agree that (i) any and all disputes between you and the Company shall be fully and finally resolved by binding arbitration, and (ii) you are waiving any and all rights to a jury trial.	
		
Miscellaneous:	  	This agreement, the Severance Agreement, the Indemnification Agreement, the Option Agreement and the At-Will Employment Agreement set forth the terms of your employment with Vivint Solar and supersede and replace any prior understandings or agreements, whether oral or written, express or implied, related to the subject matter hereof. This agreement is entered into without reliance upon any promise, warranty or representation, written or oral, express or implied, other than those expressly contained herein, and it supersedes any other such promises, warranties, representations or agreements. It may not be amended or modified except by a written instrument signed by you and the Chief Executive Officer of Vivint Solar. If any provision of this agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this agreement, which will remain in full force and effect. This agreement will be construed and interpreted in accordance with the laws of the State of Utah, without reference to the choice of law provisions thereof.	
 
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We have a dynamic organization and look forward to continuing to work with you both to strengthen Vivint Solar and enable you to strengthen your own skills and expertise. Please sign this letter and the At-Will Employment Agreement (Exhibit B) where indicated and return the same to us promptly.
Sincerely,
/s/ Greg Butterfield
Greg Butterfield
Chief Executive Officer
Vivint Solar
Accepted and Agreed:

/s/ L. Chance Allred	  		  	Sep. 4 2014	
L. Chance Allred	  		  	    DATE	
 
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EXHIBIT A
Equity Incentive Award

Grant Date	  	Grant Type	 	 	Shares of
Common
Stock	 	  	Exercise
Price	 	  	Vest Base Date	 	
August 19, 2013	  	 	Non-Qualified Stock Option	* 	 	 	617,647	  	  	$	1.00	  	  	 	November 16, 2012	  	
 
*	As evidenced by that certain Nonqualified Stock Option Agreement executed and delivered by the parties thereto on May 13, 2014 to replace the erroneously signed nonqualified stock option agreement made as of the Grant Date among the same parties.	

THE FOREGOING IS ACKNOWLEDGED AND CONFIRMED ACCURATE AND CORRECT:	
	
/s/ Michael R. Cahill	
	 	(Signature)	
		
Name:	 	The 1340 Holdings Trust	
By:	 	Michael R. Cahill, Trustee
7371 Prairie Falcon Road, Suite 120
Las Vegas, Nevada 89128	

			
	
/s/ Chance Allred	
	 	(Signature)	
		
Name;	 	Chance Allred
6184 West 10760 North
Highland, Utah 84003	

EXHIBIT B
At-Will Employment Agreement

 

AT-WILL EMPLOYMENT AGREEMENT
This AT-WILL EMPLOYMENT AGREEMENT is entered into as of the date set forth on the signature page below (this “ Agreement ”), by the UNDERSIGNED EMPLOYEE (the “ Employee ”) in favor of VIVINT SOLAR, INC., a Delaware corporation (the “ Company ”). For good and valuable consideration, the receipt and sufficiency of which is hereby established, Employee agree as follows:
1. Definitions.
(a) “ Confidential Information ” means any present or future information belonging to the Company that pertains to the Company’s business, whether developed by Employee or by other Company employees, contractors, or agents, that is confidential or proprietary in nature, and that is not generally known in the public domain. Confidential Information includes, without limitation, information regarding the Company’s finances, financial condition, operations, business plans, business opportunities, purchasing activities, suppliers or potential suppliers, costs of materials, pricing, margins, sales, markets, marketing strategies, plans and ideas, customers, customer lists, customer agreements, customer purchases, customer documents, potential customers, employees, employee compensation, technical data, research, product plans, products, methodologies, services, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, trade secrets, Confidential Materials, Inventions, Employment Inventions, Intellectual Property, or any other confidential business information of the Company that is disclosed to or obtained by Employee, directly or indirectly, whether in writing, orally, by observation or electronically (through email, computer disk, DVD, CD-ROM, or other electronic means).
(b) “ Confidential Materials ” means any tangible medium containing Confidential Information, including but not limited to paper, electronic or magnetic media, prototypes, products, and other materials.
(c) “ Employment Inventions ” means any Invention or part thereof conceived, developed, reduced to practice, or created by Employee which is:
(i) conceived, developed, reduced to practice, or created by the Employee: (1) within the scope of the Employee’s employment with the Company; (2) on the Company’s time; or (3) with the aid, assistance, or use of any of the Company’s property, equipment, facilities, supplies, resources, or Intellectual Property;
(ii) the result of any work, services, or duties performed by the Employee for the Company;
(iii) related to the industry or trade of the Company; or
(iv) related to the current or demonstrably anticipated business, research, or development of the Company.
(d) “ Intellectual Property ” means any and all patents, copyrights, trademarks, service marks, trade secrets, know how, technology, ideas, or computer software belonging to the Company or its affiliates.
(e) “ Inventions ” means any and all inventions, products, formulations, discoveries, ideas, developments, improvements, technology, know-how, products, devices, structures, equipment, processes, methods, techniques, formulas, trade secrets, texts, research, program, software, computer programs, source codes, data, designs, works of authorship, and or other materials, whether or not published, patented, copyrighted, registered or suitable therefor, and all intellectual property rights therein, to the extent they relate to the Company’s past, present, future, or anticipated business, research, development or trade.

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(f) “ Pre-Existing Inventions ” means any and all inventions, discoveries, ideas, original works of authorship, developments, improvements, trade secrets and other proprietary information or intellectual property rights owned by Employee or in which Employee has an interest prior to, or separate from, Employee’s employment with the Company, including, without limitation, any such inventions that qualifies fully under the provisions of California Labor Code Section 2870, Del.Code tit. 19, § 805, N.C.Gen.Stat. §§ 66-57.1, and Utah Code § 34-39-3(1) (attached hereto as Exhibit A ).
(g) “ Restricted Business ” means providing products and/or services that are substantially similar to or competitive with those offered or provided by the Company or any of its subsidiaries at any time during the Restricted Period or for which the Company or any of its subsidiaries has adopted a plan or authorized a budget prior to the effective date of Employee’s last day of employment, including (without limitation) providing services, as an employee or otherwise to the following companies: Sungevity, Inc., RPS, Sunrun Inc., SolarCity Corporation, Clean Power Finance, SunPower Corporation, Corbin Solar Solutions LLC, Galkos, Construction, Inc., Zing Solar, Terrawatt, Inc., and any of their respective affiliates or current or future dealers.
(h) “ Restricted Period ” means the period of time beginning with the date the Employee begins his or her employment with the Company and ending twelve (12) months after the date the Employee left his or her employment with the Company.
(i) “ Restricted Territory ” means the geographic area consisting of each of the states, territories, districts, and lands of the United States, and any other geographic area in which the Company or any of its affiliates conducts, has conducted within the immediately preceding year, or has proposed to conduct within the immediately preceding year, its business.
2. At-Will Employment . Employee represents and agrees that this Agreement is not, and shall not be construed as, an offer or contract of employment for any period, an offer or guarantee of future employment, or an offer or guarantee of a future contractual relationship. Pursuant to the Vivint Solar Employee Handbook, Employee is an employee “at will” and subject to termination at any time. Employee understands that any representation to the contrary is not valid unless obtained in writing and signed by the Chief Executive Officer of the Company. Employee acknowledges that this employment relationship may be terminated at any time, with or without good cause or for any or no cause, at the option either of the Company or Employee, with or without notice.
3. Policies and Practices . Employee agrees to abide by all of the Company’s rules, regulations, handbooks, manuals, training, policies, practices and procedures, including, but not limited to, the Vivint Solar Employee Handbook. The Company, in its sole and absolute discretion, may from time to time amend, modify or revise its rules, regulations, handbooks, manuals, policies, practices and procedures.
4. Background Check . Employee understands and agrees that employment with the Company is contingent on the Company’s receipt, evaluation, and approval of a background check concerning Employee. By signing this Agreement, Employee acknowledges and agrees that it has received, read, and understands the Background Check Disclosure and Authorization that is attached hereto as Exhibit D . Employee agrees to provide to the Company a duly executed Authorization of Background Investigation, in the form attached hereto as Exhibit D .
5. Covenant of Ownership and Disclosure of Developments .
(a) Employee agrees to promptly disclose to the Company the existence, use, and/or manner of operation of any and all Employment Inventions.
(b) Employee acknowledges and agrees that all Employment Inventions are the sole and exclusive property of the Company. Employee hereby assigns to the Company any and all copyrights, patent rights, trade secrets, and other rights that Employee may have in any Employment

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Invention. Employee agrees to take all actions reasonably requested by the Company, both during and after the term of Employee’s employment, to assign to the Company and to establish, perfect, exercise or protect the Company’s rights in any Employment Inventions or title thereto, including without limitation, assisting in obtaining or registering copyrights, patents, trademarks or similar intellectual property rights and executing assignments to the Company. If the Company is unable, because of Employee’s mental or physical incapacity, geographic distance or for any other reason, to obtain Employee’s approval or signature on any document necessary or useful to claim, secure, extend, protect or enforce any right in intellectual property to which the Company has a reasonable claim, then Employee hereby appoints the Company and its duly authorized officers as Employee’s agent and attorney-in-fact to act for Employee for the purpose of accomplishing such act with the same legal force and effect as if executed by Employee. Employee will not incorporate any inventions, discoveries, ideas, original works of authorship, developments, improvements, trade secrets and other proprietary information or intellectual property rights owned by any third party into any Invention without the Company’s prior written permission.
(c) Employee will inform the Company in writing prior to incorporating any Pre-Existing Inventions into any Invention or otherwise utilizing any such Pre-Existing Inventions in the course of Employee’s employment with the Company; and the Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, transferable worldwide license (with the right to grant and authorize sublicenses) to make, have made, use, import, offer for sale, sell, reproduce, distribute, modify, adapt, prepare derivative works of, display, perform, and otherwise exploit such Pre-Existing Inventions, without restriction, including, without limitation, as part of or in connection with such Invention, and to practice any method related thereto. Employee has attached hereto as Exhibit B , a list describing all Pre-Existing Inventions or, if no such list is attached, represents and warrants that there are no such Pre-Existing Inventions. Furthermore, Employee represents and warrants that if any Pre-Existing Inventions are included on Exhibit B , they will not materially affect Employee’s ability to perform all obligations under this Agreement.
6. Confidentiality and Non-Disclosure Agreement .
(a) Covenant to Safeguard Confidential Information . In connection with Employee’s Services hereunder, Employee may receive or have access to Confidential Information and Confidential Materials. Employee acknowledges and agrees that:
(i) All Confidential Information shall remain the sole property of the Company;
(ii) All Confidential Information belonging to the Company is valuable, special and unique to the Company’s business, that the Company’s business depends upon such Confidential Information, and that the Company wishes to protect such Confidential Information by keeping it confidential for the use and benefit of the Company;
(iii) Employee shall keep all Confidential Information confidential and will not, without the prior written consent of the Company’s Chief Executive Officer or General Counsel, disclose (whether directly or through some other person or entity), in whole or in part, and will not use such information, directly or indirectly, for any purpose other than as expressly allowed by the Company;
(iv) Employee shall not use the Company’s Confidential Information for Employee’s direct or indirect benefit or for the direct or indirect benefit of any person or entity other than the Company;
(v) Employee shall not aid, encourage, or allow any other person or entity to use the Company’s Confidential Information without authorization;

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(vi) Employee shall use reasonable and diligent efforts to protect the confidentiality of the Company’s Confidential Information;
(vii) Employee shall use the Company’s Confidential Information solely to fulfill the duties of Employee’s employment relationship with the Company and not otherwise to use such information for Employee’s benefit or the benefit of others;
(viii) Employee shall not use, view, or access Confidential Information where it can be seen or viewed by unauthorized persons, and not to leave such information or materials where they can be seen or accessed by unauthorized persons;
(ix) Employee shall notify the Company if Employee becomes aware of any loss, misuse, wrongful disclosure, or other unauthorized access of the Company’s Confidential Information by any person;
(x) Employee shall take all other reasonable steps necessary, or reasonably requested by the Company, to safeguard the Company’s Confidential Information from unauthorized disclosure or use; and
(xi) Employee shall not disclose to the Company any trade secrets or confidential information of party to whom Employee owes a duty of confidentiality.
(b) Permission to Notify . Employee authorizes the Company to notify others, including (without limitation) the Employee’s current or future clients, of the terms of this Agreement and the Employee’s covenants and obligations hereunder.
(c) Return of Information . Upon the request of the Company, or upon the termination of Employee’s employment with the Company, Employee shall deliver promptly (and in no event later than two (2) business days after termination) to the Company all Confidential Information and other documents or materials belonging to the Company (including all copies thereof), and all other property belonging to the Company, which are in Employee’s possession, custody or control.
(d) Notice of Compelled Disclosure . In the event that Employee or anyone to whom Employee transmits any Confidential Information (“ Compelled Person ”) becomes legally compelled (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand, or other similar judicial or other compulsory process) to disclose any of the Confidential Information, such Compelled Person will provide the Company with prompt written notice so that it may seek a protective order or other appropriate remedy to protect and preserve the confidentiality of such Confidential Information and/or waive compliance with the provisions of this Agreement. In the event that such a protective order or other remedy is not obtained, or compliance with the provisions of this Agreement is waived, Employee shall disclose or furnish only that portion of the Confidential Information that Employee is legally required to produce and will exercise his or her best efforts to obtain reliable assurance that the Confidential Information will be kept confidential to the greatest extent possible. This provision shall not restrict an Employee who is requested by a law enforcement agency not to provide such notice to the Company.
7. Former Employer Information . Employee agrees that (i) he/she will not, during employment with the Company, improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer or other person or entity; and (ii) Employee will not bring onto the premises of the Company any document, electronic data, or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.
8. Covenant Not to Solicit Employees . To the fullest extent permitted under applicable law, Employee agrees that during his/her employment and for a period of twelve (12) months immediately following the termination of his/her relationship with the Company for any reason, whether voluntary or

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involuntary, with or without cause, Employee will not directly or indirectly solicit any of the Company’s employees to leave their employment at the Company. Employee agrees that nothing in this Section shall affect his/her continuing obligations under this Agreement during and after this twelve (12) month period, including, without limitation, Employee’s obligations under the Confidentiality and Non-Disclosure Agreement section in this Agreement.
9. Covenant Not to Solicit Customers . This Covenant Not to Solicit Customers applies to Employee if he/she is employed by the Company outside of California. This Covenant Not to Solicit Customers does not apply to Employee if he/she is employed by the Company in California. During the Restricted Period, Employee will not directly or indirectly engage in the following conduct, nor will Employee aid, abet, assist, encourage, or influence others to do so: Induce or attempt to induce, solicit or attempt to solicit, or encourage or attempt to encourage, in any capacity, on Employee’s behalf or on behalf of any other firm, person, or entity, any current or former customer of the Company (herein defined as a “ Vivint Solar Customer ”) to terminate a contract with the Company or any other entity, or to allow such contract to be canceled, not renewed, or to enter into a contract with another company. Employee acknowledges and agrees that (i) the names, addresses, product specifications, pricing, and information regarding Vivint Solar Customers and the Company, are the confidential and proprietary information of the Company (collectively, “ Proprietary Information ”); and (ii) Employee shall not, nor shall it permit any other person or entity within its control, to sell, disclose, or otherwise disseminate Proprietary Information (each, “ Improper Disclosure ”). Employee promises not to engage in any Improper Disclosure during or after his/her employment with the Company.
10. Covenant Not to Compete . This Covenant Not to Compete applies to Employee if he/she is employed by the Company outside of California. This Covenant Not to Compete does not apply to Employee if he/she is employed by the Company in California.
(a) To the maximum extent permitted under applicable law, during the Restricted Period, Employee shall not, in any manner, directly or indirectly, in the Restricted Territory: (i) engage or invest in; (ii) own, manage, operate, finance, control; (iii) participate in the ownership, management, operation, financing, or control of; or (iv) be employed by, work for or with, or in any way assist, any business, person, firm, corporation, partnership, limited liability company, governmental or private entity, or any other entity of whatever kind, engaged in the Restricted Business.
(b) Nothing contained in this Agreement shall prohibit Employee from being a passive owner of not more than two percent (2%) of the outstanding stock of any class of a corporation, any securities of which are publicly traded, so long as Employee has no active participation in the business of such corporation.
(c) During the Restricted Period, Employee shall communicate the contents of this Agreement to any person (including any business) that Employee intends to be retained or employed by, associated with, or represent and which Employee knows is engaged in the Restricted Business in the Restricted Territory.
11. Tolling of Covenants . If a court of competent jurisdiction determines that Employee has violated any of Employee’s obligations under this Agreement, then the Restricted Period will automatically be extended by a period of time equal in length to the period during which such violation or violations occurred.
12. Reasonableness of Covenants . Employee acknowledges and understands that the covenants of Employee under this Agreement are limited to the extent necessary to protect the legitimate business interests of the company, including the loss of goodwill, unfair competition and to preserve the Company’s Confidential Information. Employee expressly acknowledges and agrees that the respective covenants and agreements contained herein are reasonable as to both scope and time.
EMPLOYEE ACKNOWLEDGES AND UNDERSTANDS THAT HIS OR HER STRICT COMPLIANCE WITH THE COVENANTS HEREUNDER IS A MATERIAL CONDITION OF THIS AGREEMENT, AND THAT THE COMPANY WOULD NOT HAVE ENGAGED, OR CONTINUED TO ENGAGE, EMPLOYEE WITHOUT THIS AGREEMENT.

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13. Requests for Clarification . In the event Employee is uncertain as to the meaning of any provision of this Agreement or its application to any particular information, document, item or activity, Employee should inquire in writing to the Chief Executive Officer, General Counsel, and/or Human Resources Director of the Company, specifying any areas of uncertainty. The Company will respond in writing within a reasonable time and will endeavor to clarify any areas of uncertainty, including such things as whether it considers particular information or documents to be Confidential Information, and will endeavor to explain any provisions of this Agreement.
14. Remedies for Breach of the Covenants . Employee recognizes that the Company’s business interest in maintaining the confidentiality of its Confidential Information, its relationships and goodwill with its customers, and the stability of its work force, is so great that the remedy at law for Employee’s breach or threatened breach of the covenants contained in this Agreement may be an inadequate remedy. Employee agrees that, in the event of a breach or threatened breach by Employee of any of the covenants contain in this Agreement, a court of competent jurisdiction may issue a restraining order or an injunction against Employee, restraining or enjoining Employee from engaging in conduct or actions that violate the said covenant. In addition, the Company shall be entitled to any and all other remedies available to the Company at law or in equity, and no action by the Company in pursuing a given remedy shall constitute an election to forego other remedies.
15. Arbitration and Equitable Relief . This Arbitration provision applies to Employee if he/she is employed by the Company outside of California. This Arbitration provision does not apply to Employee if he/she is employed by the Company in California. Instead, the Arbitration provision attached hereto as Exhibit C applies to Employee if he/she is employed by the Company in California.
(a) Arbitration . IN CONSIDERATION OF MY EMPLOYMENT WITH THE COMPANY, ITS PROMISE TO ARBITRATE ALL EMPLOYMENT-RELATED DISPUTES AND MY RECEIPT OF THE COMPENSATION, PAY RAISES AND OTHER BENEFITS PAID TO ME BY THE COMPANY, AT PRESENT AND IN THE FUTURE, I AGREE THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES WITH ANYONE (INCLUDING THE COMPANY AND ANY EMPLOYEE, OFFICER, DIRECTOR, SHAREHOLDER OR BENEFIT PLAN OF THE COMPANY, IN THEIR CAPACITY AS SUCH OR OTHERWISE), ARISING OUT OF, RELATING TO, OR RESULTING FROM MY EMPLOYMENT WITH THE COMPANY OR THE TERMINATION OF MY EMPLOYMENT WITH THE COMPANY, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION UNDER THE ARBITRATION PROVISIONS SET FORTH IN THE UTAH UNIFORM ARBITRATION ACT (THE “ RULES ”) AND PURSUANT TO UTAH LAW. THE FEDERAL ARBITRATION ACT SHALL CONTINUE TO APPLY WITH FULL FORCE AND EFFECT NOTWITHSTANDING THE APPLICATION OF PROCEDURAL RULES SET FORTH IN THE ACT. I AGREE THAT I MAY ONLY COMMENCE AN ACTION IN ARBITRATION, OR ASSERT COUNTERCLAIMS IN AN ARBITRATION, ON AN INDIVIDUAL BASIS AND, THUS, I HEREBY WAIVE MY RIGHT TO COMMENCE OR PARTICIPATE IN ANY CLASS OR COLLECTIVE ACTION(S) AGAINST THE COMPANY, AS PERMITTED BY LAW. DISPUTES THAT I AGREE TO ARBITRATE, AND THEREBY AGREE TO WAIVE ANY RIGHT TO A TRIAL BY JURY, INCLUDE ANY STATUTORY CLAIMS UNDER LOCAL, STATE, OR FEDERAL LAW, INCLUDING, BUT NOT LIMITED TO, CLAIMS UNDER TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION ACT, THE SARBANES-OXLEY ACT, THE WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT, THE FAIR CREDIT REPORTING ACT, THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, THE FAMILY AND MEDICAL LEAVE ACT, THE UTAH ANTIDISCRIMINATION ACT, CLAIMS OF HARASSMENT, DISCRIMINATION AND WRONGFUL TERMINATION, AND ANY STATUTORY OR COMMON LAW CLAIMS. NOTWITHSTANDING THE FOREGOING, I UNDERSTAND THAT NOTHING IN THIS AGREEMENT CONSTITUTES A WAIVER OF MY RIGHTS UNDER SECTION 7 OF THE NATIONAL LABOR RELATIONS ACT. I FURTHER UNDERSTAND THAT THIS AGREEMENT TO ARBITRATE ALSO APPLIES TO ANY DISPUTES THAT THE COMPANY MAY HAVE WITH ME.

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(b) Procedure . I AGREE THAT ANY ARBITRATION WILL BE ADMINISTERED BY JUDICIAL ARBITRATION & MEDIATION SERVICES, INC. (“JAMS”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (THE “JAMS RULES”), WHICH ARE AVAILABLE AT http://www.jamsadr.com/rules-employment-arbitration/ AND FROM HUMAN RESOURCES. I UNDERSTAND THAT THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, EXCEPT AS PROHIBITED BY LAW, AND UNDERSTAND THAT EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE ATTORNEYS’ FEES AND COSTS. I AGREE TAT THE ARBITRATOR SHALL HAVE THE POWER TO DECIDE ANY MOTIONS BROUGHT BY ANY PARTY TO THE ARBITRATION, INCLUDING MOTIONS FOR SUMMARY JUDGMENT AND/OR ADJUDICATION, AND MOTIONS TO DISMISS, PRIOR TO ANY ARBITRATION HEARING. I AGREE THAT THE ARBITRATOR SHALL ISSUE A WRITTEN DECISION ON THE MERITS. I ALSO AGREE THAT THE ARBITRATOR SHALL HAVE THE POWER TO AWARD ANY REMEDIES AVAILABLE UNDER APPLICABLE LAW. I AGREE THAT THE DECREE OR AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED AS A FINAL AND BINDING JUDGMENT IN ANY COURT HAVING JURISDICTION THEREOF. I AGREE THAT THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH UTAH LAW, INCLUDING THE UTAH RULES OF CIVIL PROCEDURE AND THE UTAH RULES OF EVIDENCE, AND THAT THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL UTAH LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO RULES OF CONFLICT OF LAW. TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH UTAH LAW, UTAH LAW SHALL TAKE PRECEDENCE. I AGREE THAT THE DECISION OF THE ARBITRATOR SHALL BE IN WRITING. I AGREE THAT ARBITRATION UNDER THIS AGREEMENT SHALL BE CONDUCTED IN UTAH COUNTY, UTAH.
(c) Remedy . EXCEPT AS PROVIDED BY THE RULES AND THIS AGREEMENT, ARBITRATION SHALL BE THE SOLE, EXCLUSIVE AND FINAL REMEDY FOR ANY DISPUTE BETWEEN ME AND THE COMPANY. ACCORDINGLY, EXCEPT AS PROVIDED FOR BY THE RULES AND THIS AGREEMENT, NEITHER I NOR THE COMPANY WILL BE PERMITTED TO PURSUE COURT ACTION REGARDING CLAIMS THAT ARE SUBJECT TO ARBITRATION.
(d) Availability of Injunctive Relief . I AGREE THAT ANY PARTY MAY ALSO PETITION THE COURT FOR INJUNCTIVE RELIEF WHERE EITHER PARTY ALLEGES OR CLAIMS A VIOLATION OF THE AT-WILL EMPLOYMENT, CONFIDENTIAL INFORMATION, INVENTION ASSIGNMENT, AND ARBITRATION AGREEMENT BETWEEN ME AND THE COMPANY OR ANY OTHER AGREEMENT REGARDING TRADE SECRETS, INTELLECTUAL PROPERTY, CONFIDENTIAL INFORMATION, PROPRIETARY INFORMATION, NONCOMPETITION OR NONSOLICITATION. I UNDERSTAND THAT ANY BREACH OR THREATENED BREACH OF SUCH AN AGREEMENT WILL CAUSE IRREPARABLE INJURY AND THAT MONEY DAMAGES WILL NOT PROVIDE AN ADEQUATE REMEDY THEREFOR AND BOTH PARTIES HEREBY CONSENT TO THE ISSUANCE OF AN INJUNCTION WITHOUT POSTING OF A BOND. IN THE EVENT EITHER PARTY SEEKS INJUNCTIVE RELIEF, THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER REASONABLE COSTS AND ATTORNEYS’ FEES WITHOUT REGARD FOR THE PREVAILING PARTY IN THE FINAL JUDGMENT, IF ANY. SUCH ATTORNEYS’ FEES AND COSTS SHALL BE RECOVERABLE ON WRITTEN DEMAND AT ANY TIME, INCLUDING, BUT NOT LIMITED TO, PRIOR TO ENTRY OF A FINAL JUDGMENT, IF ANY, BY THE COURT, AND MUST BE PAID WITHIN THIRTY (30) DAYS AFTER DEMAND OR ELSE SUCH AMOUNTS SHALL BE SUBJECT TO THE ACCRUAL OF INTEREST AT A RATE EQUAL TO.
(e) Administrative Relief . I UNDERSTAND THAT THIS AGREEMENT DOES NOT PROHIBIT ME FROM PURSUING AN ADMINISTRATIVE CLAIM WITH A LOCAL, STATE, OR FEDERAL ADMINISTRATIVE BODY OR GOVERNMENT AGENCY THAT IS AUTHORIZED TO ENFORCE OR ADMINISTER LAWS RELATED TO EMPLOYMENT, INCLUDING, BUT NOT LIMITED TO, THE UTAH LABOR COMMISSION, THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, THE NATIONAL LABOR RELATIONS BOARD, OR THE WORKERS’ COMPENSATION BOARD. THIS AGREEMENT DOES, HOWEVER, PRECLUDE ME FROM PURSUING COURT ACTION REGARDING ANY SUCH CLAIM, EXCEPT AS PERMITTED BY LAW.

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(f) Voluntary Nature of Agreement . I ACKNOWLEDGE AND AGREE THAT I AM EXECUTING THIS AGREEMENT VOLUNTARILY AND WITHOUT ANY DURESS OR UNDUE INFLUENCE BY THE COMPANY OR ANYONE ELSE. I FURTHER ACKNOWLEDGE AND AGREE THAT I HAVE CAREFULLY READ THIS AGREEMENT AND THAT I HAVE ASKED ANY QUESTIONS NEEDED FOR ME TO UNDERSTAND THE TERMS, CONSEQUENCES, AND BINDING EFFECT OF THIS AGREEMENT AND FULLY UNDERSTAND IT, INCLUDING THAT I AM WAIVING MY RIGHT TO A JURY TRIAL. FINALLY, I AGREE THAT I HAVE BEEN PROVIDED AN OPPORTUNITY TO SEEK THE ADVICE OF AN ATTORNEY OF MY CHOICE BEFORE SIGNING THIS AGREEMENT.
16. Miscellaneous .
(a) Notices . All notices, requests, demands, and other communications required or permitted to be given under this Agreement by any Party shall be in writing delivered, if to the Company, to the address set forth below, and if to Employee, to the address set forth on the signature page hereto, or to such other address as any Party may designate from time to time by written notice to all other Parties. Each such notice, request, demand, or other communication shall be deemed given and effective, as follows: (i) if sent by hand delivery, upon delivery; (ii) if sent by first-class U.S. Mail, postage prepaid, upon the earlier to occur of receipt or three (3) days after deposit in the U.S. Mail; (iii) if sent by a recognized prepaid overnight courier service, one (1) day after the date it is given to such service; (iv) if sent by facsimile, upon receipt of confirmation of successful transmission by the facsimile machine; and (v) if sent by email, upon acknowledgement of receipt by the recipient.

VIVINT SOLAR, INC.	
Address:	  	4931 North 300 West	
City, State Zip:	  	Provo, Utah 84604	
Attention:	  	Tessa White
HR Director	
WITH COPY TO:

VIVINT SOLAR, INC.	
Address:	  	4931 North 300 West	
City, State Zip:	  	Provo, Utah 84604	
Attention:	  	Jim F. Lundberg
Associate General Counsel	
(b) Survival . The provisions of this Agreement shall survive the termination of Employee’s employment with the Company.
(c) Severability . If any provision of this Agreement shall be held by a court of competent jurisdiction to be invalid, unenforceable, or void, such provision shall be enforced to the fullest extent permitted by applicable law, and the remainder of this Agreement shall remain in full force and effect. In the event that the time period or scope of any provision is declared by a court of competent jurisdiction to exceed the maximum time period or scope that such court deems enforceable, then such court shall reduce the time period or scope to the maximum time period or scope permitted by law. In the event that the scope of any provision is declared by a court of competent jurisdiction to exceed the maximum scope that such court deems enforceable, then such court shall reduce the scope to the maximums scope permitted by law.
(d) Binding Effect . This Agreement shall be binding upon and inure to the benefit of Employee and his/her respective heirs, legal representatives, successors, and permitted assigns. Except as otherwise expressly provided in this Agreement, or by operation of law, neither this Agreement nor any

	  	8	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

of the rights, interests, or obligations hereunder may be assigned by Employee without the prior written consent of the Company. The Company may assign, transfer, or sell its rights under this Agreement, in its sole and absolute discretion, without the consent of Employee.
(e) Attorneys’ Fees and Costs . In the event that either Party commences an action to enforce the terms of this Agreement, or to seek damages or injunctive relief for the alleged breach thereof, the prevailing Party shall be entitled to collect from the non-prevailing Party its, his or her reasonable attorneys’ fees and costs incurred therein.
(f) Amendments and Waivers . The failure of either Party to require the performance of any term or obligation of this Agreement, or the waiver by either Party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. This Agreement may only be amended, waived, or modified by an instrument in writing signed by all of the Parties. No modification, waiver, or amendment of this Agreement shall be effective or binding against the Company unless signed by the Company’s Chief Executive Officer or General Counsel.
(g) Choice of Law . This agreement shall be governed by, and construed under, the internal laws of the state of Utah, without reference to conflicts of laws rules thereof.
(h) Submission to Jurisdiction . This Submission to Jurisdiction applies to Employee if he/she is employed by the Company outside of California. Each Party irrevocably consents and agrees that any action, proceeding, or other litigation by or against any other Party or Parties with respect to any claim or cause of action based upon or arising out of or related to this Agreement or the transactions contemplated hereby, shall be brought and tried exclusively in the state and federal courts located in the City of Salt Lake, County of Salt Lake, in the State of Utah, and any such legal action or proceeding may be removed to the aforesaid courts. By execution and delivery of the Agreement, each Party accepts, for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts. Each Party hereby irrevocably waives (a) any objection which it may now or hereafter have to the laying of venue with respect any such action, proceeding, or litigation arising out of or in connection with this Agreement or the transactions contemplated hereby brought in the aforesaid courts, and (b) any right to stay or dismiss any such action, proceeding, or litigation brought before the aforesaid courts on the basis of forum non-conveniens . Each Party further agrees that personal jurisdiction over it may be affected by service of process by certified mail, postage prepaid, addressed as provided in Section 15(a) of this Agreement, and when so made shall be as if served upon it personally within the State of Utah.
(i) Submission to Jurisdiction (California Employee). This Submission to Jurisdiction applies to Employee if he/she is employed by the Company in California. Each Party irrevocably consents and agrees that any action, proceeding, or other litigation by or against any other Party or Parties with respect to any claim or cause of action based upon or arising out of or related to this Agreement or the transactions contemplated hereby, shall be brought and tried exclusively in the state and federal courts located in the City of Los Angeles, in the State of California, and any such legal action or proceeding may be removed to the aforesaid courts. By execution and delivery of the Agreement, each Party accepts, for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts. Each Party hereby irrevocably waives (a) any objection which it may now or hereafter have to the laying of venue with respect any such action, proceeding, or litigation arising out of or in connection with this Agreement or the transactions contemplated hereby brought in the aforesaid courts, and (b) any right to stay or dismiss any such action, proceeding, or litigation brought before the aforesaid courts on the basis of forum non-conveniens . Each Party further agrees that personal jurisdiction over it may be affected by service of process by certified mail, postage prepaid, addressed as provided in Section 15(a) of this Agreement, and when so made shall be as if served upon it personally within the State of California.
(j) Headings . The Article, Section, and Paragraph headings used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

	  	9	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

(k) Counterparts . This Agreement may be executed by Employee by facsimile, email, or digital signature, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A facsimile, digital signature, or portable document format (“pdf”) signature page shall constitute an original for purposes hereof.
[SIGNATURE PAGES FOLLOW]

	  	10	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

BY SIGNING THIS AGREEMENT, EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS CAREFULLY READ AND FULLY UNDERSTANDS ALL OF THE PROVISIONS OF THIS AGREEMENT AND THAT EMPLOYEE IS VOLUNTARILY ENTERING INTO THIS AGREEMENT.
Dated as of:                                                                                                                           

EMPLOYEE :	
		
Signature:	 	 	
		
Print Full Name:	 	 	
		
Address:	 	 	
		
City, State ZIP:	 	 	
		
E-Mail:	 	 	
CONFIDENTIAL : This document contains trade secrets and confidential information owned by Vivint Solar, Inc. and/or its affiliates (collectively, the “ Company ”). Access to and use of this information is strictly limited and controlled by the Company. This document may not be copied, distributed, or otherwise disclosed outside of the Company’s facilities or systems, except as expressly authorized in writing by the General Counsel or the Chief Executive Officer of the Company, except as permitted by applicable law.

	  	[SIGNATURE PAGE]	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

EXHIBIT A
to At-Will Employment Agreement
CALIFORNIA LABOR CODE SECTION 2870
INVENTION ON OWN TIME-EXEMPTION FROM AGREEMENT
“(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:
(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.”
N.C.GEN.STAT. §§ 66-57.1
Any provision in an employment agreement which provides that the employee shall assign or offer to assign any of his rights in an invention to his employer shall not apply to an invention that the employee developed entirely on his own time without using the employer’s equipment, supplies, facility or trade secret information except for those inventions that
(i) relate to the employer’s business or actual or demonstrably anticipated research or development, or
(ii) result from any work performed by the employee for the employer.
To the extent a provision in an employment agreement purports to apply to the type of invention described, it is against the public policy of this State and is unenforceable. The employee shall bear the burden of proof in establishing that his invention qualifies under this section.
DEL.CODE TIT. 19, § 805
Any provision in an employment agreement which provides that the employee shall assign or offer to assign any of the employee’s rights in an invention to the employee’s employer shall not apply to an invention that the employee developed entirely on the employee’s own time without using the employer’s equipment, supplies, facility or trade secret information, except for those inventions that:
(1) Relate to the employer’s business or actual or demonstrably anticipated research or development; or
(2) Result from any work performed by the employee for the employer.
To the extent a provision in an employment agreement purports to apply to the type of invention described, it is against the public policy of this State and is unenforceable. An employer may not require a provision of an employment agreement made unenforceable under this section as a condition of employment or continued employment.
UTAH CODE § 34-39-3(1)
(1) An employment agreement between an employee and his employer is not enforceable against the employee to the extent that the agreement requires the employee to assign or license, or to offer to assign or license, to the employer any right or intellectual property in or to an invention that is:
(a) created by the employee entirely on his own time; and
(b) not an employment invention.

	  	EXHIBIT A	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

EXHIBIT B
to At-Will Employment Agreement
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP

Title	  	Date	  	Identifying Number or Brief Description	

	  		  		
         No inventions or improvements
         Additional Sheets Attached

				
Date:	 	 	 		 	 	
	 		 		 	Signature	

	 		 		 	Name of Employee (typed or printed)	

	  	EXHIBIT B	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

EXHIBIT C
to At-Will Employment Agreement
A RBITRATION AND E QUITABLE R ELIEF
This Arbitration provision applies to Employee only if he/she is employed by and works for the Company in California. This Arbitration provision does not apply to Employee if he/she is employed by the Company outside of California. Instead, the Arbitration provision set forth in Section 14 applies to Employee if he/she is employed by the Company outside of California.
(a) Arbitration . IN CONSIDERATION OF MY EMPLOYMENT WITH THE COMPANY, ITS PROMISE TO ARBITRATE ALL EMPLOYMENT-RELATED DISPUTES, AND MY RECEIPT OF THE COMPENSATION, PAY RAISES, AND OTHER BENEFITS PAID TO ME BY THE COMPANY, AT PRESENT AND IN THE FUTURE, I AGREE THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES WITH ANYONE (INCLUDING THE COMPANY AND ANY EMPLOYEE, OFFICER, DIRECTOR, SHAREHOLDER, OR BENEFIT PLAN OF THE COMPANY, IN THEIR CAPACITY AS SUCH OR OTHERWISE), ARISING OUT OF, RELATING TO, OR RESULTING FROM MY EMPLOYMENT WITH THE COMPANY OR THE TERMINATION OF MY EMPLOYMENT WITH THE COMPANY, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION UNDER THE ARBITRATION PROVISIONS SET FORTH IN THE UTAH UNIFORMA ARBITRATION ACT (THE “ ACT ”), AND PURSUANT TO UTAH LAW. THE FEDERAL ARBITRATION ACT SHALL CONTINUE TO APPLY WITH FULL FORCE AND EFFECT NOTWITHSTANDING THE APPLICATION OF PROCEDURAL RULES SET FORTH IN THE ACT. DISPUTES THAT I AGREE TO ARBITRATE, AND THEREBY AGREE TO WAIVE ANY RIGHT TO A TRIAL BY JURY, INCLUDE ANY STATUTORY CLAIMS UNDER LOCAL, STATE, OR FEDERAL LAW, INCLUDING, BUT NOT LIMITED TO, CLAIMS UNDER TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION ACT, THE SARBANES-OXLEY ACT, THE WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT, THE FAIR LABOR STANDARDS ACT, THE FAMILY AND MEDICAL LEAVE ACT, THE UTAH ANTIDISCRIMINATION ACT, CLAIMS OF HARASSMENT, DISCRIMINATION, AND WRONGFUL TERMINATION, AND ANY OTHER STATUTORY OR COMMON LAW CLAIMS. NOTWITHSTANDING THE FOREGOING, I UNDERSTAND THAT NOTHING IN THIS AGREEMENT CONSTITUTES A WAIVER OF MY RIGHTS UNDER SECTION 7 OF THE NATIONAL LABOR RELATIONS ACT. I FURTHER UNDERSTAND THAT THIS AGREEMENT TO ARBITRATE ALSO APPLIES TO ANY DISPUTES THAT THE COMPANY MAY HAVE WITH ME.
(b) Procedure . I AGREE THAT ANY ARBITRATION WILL BE ADMINISTERED BY JUDICIAL ARBITRATION & MEDIATION SERVICES, INC. (“ JAMS ”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (THE “ JAMS RULES ”), WHICH ARE AVAILABLE AT http://www.jamsadr.com/rules-employment-arbitration/ AND FROM HUMAN RESOURCES. I AGREE THAT THE ARBITRATOR SHALL HAVE THE POWER TO DECIDE ANY MOTIONS BROUGHT BY ANY PARTY TO THE ARBITRATION, INCLUDING MOTIONS FOR SUMMARY JUDGMENT AND/OR ADJUDICATION, AND MOTIONS TO DISMISS AND DEMURRERS, APPLYING THE STANDARDS SET FORTH UNDER THE UTAH RULES OF CIVIL PROCEDURE. I AGREE THAT THE ARBITRATOR SHALL ISSUE A WRITTEN DECISION ON THE MERITS. I ALSO AGREE THAT THE ARBITRATOR SHALL HAVE THE POWER TO AWARD ANY REMEDIES AVAILABLE UNDER APPLICABLE LAW, AND THAT THE ARBITRATOR SHALL AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY, WHERE PROVIDED BY APPLICABLE LAW. I AGREE THAT THE DECREE OR AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED AS A FINAL AND BINDING JUDGMENT IN ANY COURT HAVING JURISDICTION THEREOF. I UNDERSTAND THAT THE COMPANY WILL PAY FOR ANY ADMINISTRATIVE OR HEARING FEES CHARGED BY THE ARBITRATOR OR JAMS EXCEPT THAT I SHALL PAY ANY FILING FEES ASSOCIATED WITH ANY ARBITRATION THAT I INITIATE, BUT ONLY SO MUCH OF THE FILING FEES AS I WOULD HAVE INSTEAD PAID HAD I FILED A COMPLAINT IN A COURT OF LAW. I AGREE THAT THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN

	  	EXHIBIT C	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

ACCORDANCE WITH UTAH LAW, INCLUDING THE UTAH RULES OF CIVIL PROCEDURE AND THE UTAH RULES OF EVIDENCE, AND THAT THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL UTAH LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO RULES OF CONFLICT OF LAW. TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH UTAH LAW, UTAH LAW SHALL TAKE PRECEDENCE. I AGREE THAT ANY ARBITRATION UNDER THIS AGREEMENT SHALL BE CONDUCTED IN LOS ANGELES COUNTY, CALIFORNIA.
(c) Remedy . EXCEPT AS PROVIDED BY THE ACT AND THIS AGREEMENT, ARBITRATION SHALL BE THE SOLE, EXCLUSIVE, AND FINAL REMEDY FOR ANY DISPUTE BETWEEN ME AND THE COMPANY. ACCORDINGLY, EXCEPT AS PROVIDED FOR BY THE ACT AND THIS AGREEMENT, NEITHER I NOR THE COMPANY WILL BE PERMITTED TO PURSUE OR PARTICIPATE IN COURT ACTION REGARDING CLAIMS THAT ARE SUBJECT TO ARBITRATION.
(d) Administrative Relief . I UNDERSTAND THAT THIS AGREEMENT DOES NOT PROHIBIT ME FROM PURSUING AN ADMINISTRATIVE CLAIM WITH A LOCAL, STATE, OR FEDERAL ADMINISTRATIVE BODY OR GOVERNMENT AGENCY THAT IS AUTHORIZED TO ENFORCE OR ADMINISTER LAWS RELATED TO EMPLOYMENT, INCLUDING, BUT NOT LIMITED TO, THE DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING, THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, THE NATIONAL LABOR RELATIONS BOARD, OR THE WORKERS’ COMPENSATION BOARD. THIS AGREEMENT DOES, HOWEVER, PRECLUDE ME FROM PURSUING COURT ACTION REGARDING ANY SUCH CLAIM, EXCEPT AS PERMITTED BY LAW.
(e) Voluntary Nature of Agreement . I ACKNOWLEDGE AND AGREE THAT I AM EXECUTING THIS AGREEMENT VOLUNTARILY AND WITHOUT ANY DURESS OR UNDUE INFLUENCE BY THE COMPANY OR ANYONE ELSE. I ACKNOWLEDGE AND AGREE THAT I HAVE RECEIVED A COPY OF THE TEXT OF CALIFORNIA LABOR CODE SECTION 2870 IN EXHIBIT A . I FURTHER ACKNOWLEDGE AND AGREE THAT I HAVE CAREFULLY READ THIS AGREEMENT AND THAT I HAVE ASKED ANY QUESTIONS NEEDED FOR ME TO UNDERSTAND THE TERMS, CONSEQUENCES, AND BINDING EFFECT OF THIS AGREEMENT AND FULLY UNDERSTAND IT, INCLUDING THAT I AM WAIVING MY RIGHT TO A JURY TRIAL . FINALLY, I AGREE THAT I HAVE BEEN PROVIDED AN OPPORTUNITY TO SEEK THE ADVICE OF AN ATTORNEY OF MY CHOICE BEFORE SIGNING THIS AGREEMENT.

	  	EXHIBIT C	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

EXHIBIT D
to At-Will Employment Agreement
BACKGROUND CHECK DISCLOSURE AND AUTHORIZATION FORM
Disclosure Regarding Background Investigation
Vivint Solar Inc., (the “ Company ”) may request, for lawful employment purposes, background information about you from a consumer reporting agency in connection with your employment or application for employment (including independent contractor assignments, as applicable). This background information may be obtained in the form of consumer reports and/or investigative consumer reports (commonly known as “ background reports ”). These background reports may be obtained at any time after receipt of your authorization and, if you are hired or engaged by the Company, throughout your employment or your contract period.
A consumer reporting agency will prepare or assemble the background reports for the Company. HireRight, Inc. is located and can be contacted by mail at 5151 California, Irvine, CA 92617, and HireRight can be contacted by phone at (800) 400-2761. Information about HireRight’s privacy practices is available at www.hireright.com/Privacy-Policy.aspx .
The background report may contain information concerning your character, general reputation, personal characteristics, and mode of living. Where permitted by, and in accordance with, applicable law, the types of information that may be obtained include, but are not limited to: social security number verifications; address history; criminal records and history; public court records; driving records; accident history; worker’s compensation claims; bankruptcy filings; educational history verifications (e.g., dates of attendance, degrees obtained); employment history verifications (e.g., dates of employment, salary information, reasons for termination, etc.); personal and professional references checks; professional licensing and certification checks; drug/alcohol testing results, and drug/alcohol history in violation of law and/or company policy; and other information bearing on your character, general reputation, personal characteristics, mode of living and credit standing.
This information may be obtained from private and public record sources, including, as appropriate: government agencies and courthouses; educational institutions; former employers; personal interviews with sources such as neighbors, friends and associates; and other information sources.
You may request more information about the nature and scope of any investigative consumer reports by contacting the Company. A summary of your rights under the Fair Credit Reporting Act is also being provided to you.

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

ADDITIONAL STATE LAW DISCLOSURES
If you are an Arizona, California, Maryland, Massachusetts, New Jersey or New York applicant, employee or contractor, please also note:
ARIZONA: If we request an investigative consumer report, you have the right, upon request, to be informed by HireRight about the contents of its file used for the purpose of making the consumer report on you, including all facts, allegations, and sources upon which the report was based and the names of those requesting the report in the past six months. Ariz. Rev. Stat. § 44-1693(A)(4).
CALIFORNIA: The text of California’s Investigative Consumer Reporting Agencies Act is located at California Civil Code section 1786 et seq. The background information requested by the Company may be in the form of an “investigative consumer report” as defined by California Civil Code section 1786(c). Pursuant to California Civil Code section 1786.22, you may view the file maintained on you by HireRight during normal business hours. You may also obtain a copy of this file, upon submitting proper identification and paying the costs of duplication services, by appearing at HireRight’s offices in person, during normal business hours and on reasonable notice, or by certified mail. You may also receive a summary of the file by telephone, upon submitting proper identification and written request. HireRight has trained personnel available to explain your file to you, including any coded information, and will provide a written explanation of any coded information contained in your file. If you appear in person, you may be accompanied by one other person, provided that person furnishes proper identification. “Proper identification” includes documents such as a valid driver’s license, social security account number, military identification card, and credit cards. If you cannot identify yourself with such information, HireRight may require additional information concerning your employment and personal or family history to verify your identity. Cal. Civ. Code § 1786 et seq.
MARYLAND: If we request an investigative consumer report, you have the right, upon written request, to be informed about the nature and scope of the investigation. Md. Code Ann., Com. Law § 14-1204.
MASSACHUSETTS: If we request an investigative consumer report, you have the right, upon written request, to a copy of the report. Mass. Gen. Laws Ann. ch. 93, § 60.
NEW JERSEY: If we request an investigative consumer report, you have the right, upon written request, to a copy of the report. N.J. Stat. Ann. § 56:11-28.
NEW YORK: You have the right, upon written request, to be informed of whether or not an investigative consumer report was requested. If an investigative consumer report is requested, you have the right, upon request, to be provided with the name and address of the consumer reporting agency furnishing the report. You may inspect and receive a copy of the report by contacting that agency. Attached below is additional information about New York Correction Law Article 23-A. N.Y. Gen. Bus. Law § 380-b-c.

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

ADDITIONAL NEW YORK LAW DISCLOSURE
If you are a New York applicant, employee or contractor, please also note:
NEW YORK CORRECTION LAW
ARTICLE 23-A
LICENSURE AND EMPLOYMENT OF PERSONS PREVIOUSLY
CONVICTED OF ONE OR MORE CRIMINAL OFFENSES
Section 750. Definitions.
751. Applicability.
752. Unfair discrimination against persons previously convicted of one or more criminal offenses prohibited.
753. Factors to be considered concerning a previous criminal conviction; presumption.
754. Written statement upon denial of license or employment.
755. Enforcement.
§750. Definitions. For the purposes of this article, the following terms shall have the following meanings:
(1) “Public agency” means the state or any local subdivision thereof, or any state or local department, agency, board or commission.
(2) “Private employer” means any person, company, corporation, labor organization or association which employs ten or more persons.
(3) “Direct relationship” means that the nature of criminal conduct for which the person was convicted has a direct bearing on his fitness or ability to perform one or more of the duties or responsibilities necessarily related to the license, opportunity, or
job in question.
(4) “License” means any certificate, license, permit or grant of permission required by the laws of this state, its political subdivisions or instrumentalities as a condition for the lawful practice of any occupation, employment, trade, vocation, business, or profession. Provided, however, that “license” shall not, for the purposes of this article, include any license or permit to own, possess, carry, or fire any explosive, pistol, handgun, rifle, shotgun, or other firearm.
(5) “Employment” means any occupation, vocation or employment, or any form of vocational or educational training. Provided, however, that “employment” shall not, for the purposes of this article, include membership in any law enforcement agency.
§751. Applicability. The provisions of this article shall apply to any application by any person for a license or employment at any public or private employer, who has previously been convicted of one or more criminal offenses in this state or in any other jurisdiction, and to any license or employment held by any person whose conviction of one or more criminal offenses in this state or in any other jurisdiction preceded such employment or granting of a license, except where a mandatory forfeiture, disability or bar to employment is imposed by law, and has not been removed by an executive pardon, certificate of relief from disabilities or certificate of good conduct. Nothing in this article shall be construed to affect any right an employer may have with respect to an intentional misrepresentation in connection with an application for employment made by a prospective employee or previously made by a current employee.

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

§752. Unfair discrimination against persons previously convicted of one or more criminal offenses prohibited. No application for any license or employment, and no employment or license held by an individual, to which the provisions of this article are applicable,
shall be denied or acted upon adversely by reason of the individual’s having been previously convicted of one or more criminal offenses, or by reason of a finding of lack of “good moral character” when such finding is based upon the fact that the individual has previously been convicted of one or more criminal offenses, unless:
(1) There is a direct relationship between one or more of the previous criminal offenses and the specific license or employment sought or held by the individual; or
(2) the issuance or continuation of the license or the granting or continuation of the employment would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.
§753. Factors to be considered concerning a previous criminal conviction; presumption.
1. In making a determination pursuant to section seven hundred fifty-two of this chapter, the public agency or private employer shall consider the following factors:
(a) The public policy of this state, as expressed in this act, to encourage the licensure and employment of persons previously convicted of one or more criminal offenses.
(b) The specific duties and responsibilities necessarily related to the license or employment sought or held by the person.
(c) The bearing, if any, the criminal offense or offenses for which the person was previously convicted will have on his fitness or ability to perform one or more such duties or responsibilities.
(d) The time which has elapsed since the occurrence of the criminal offense or offenses.
(e) The age of the person at the time of occurrence of the criminal offense or offenses.
(f) The seriousness of the offense or offenses.
(g) Any information produced by the person, or produced on his behalf, in regard to his rehabilitation and good conduct.
(h) The legitimate interest of the public agency or private employer in protecting property, and the safety and welfare of specific individuals or the general public.
2. In making a determination pursuant to section seven hundred fifty-two of this chapter, the public agency or private employer shall also give consideration to a certificate of relief from disabilities or a certificate of good conduct issued to the applicant, which
certificate shall create a presumption of rehabilitation in regard to the offense or offenses specified therein.
§754. Written statement upon denial of license or employment. At the request of any person previously convicted of one or more criminal offenses who has been denied a license or employment, a public agency or private employer shall provide, within thirty days of a request, a written statement setting forth the reasons for such denial.
§755. Enforcement.
1. In relation to actions by public agencies, the provisions of this article shall be enforceable by a proceeding brought pursuant to article seventy-eight of the civil practice law and rules.

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

2. In relation to actions by private employers, the provisions of this article shall be enforceable by the division of human rights pursuant to the powers and procedures set forth in article fifteen of the executive law, and, concurrently, by the New York city commission on human rights.

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

Para informacion en español, visite www.consumerfinance.gov/learnmore o escribe a la Consumer Financial Protection Bureau, 1700 G Street N.W. Washington, D.C. 20006.
A S UMMARY OF Y OUR R IGHTS U NDER THE F AIR C REDIT R EPORTING A CT
The federal Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. There are many types of consumer reporting agencies, including credit bureaus and specialty agencies (such as agencies that sell information about check writing histories, medical records, and rental history records). Here is a summary of your major rights under the FCRA. For more information, including information about additional rights, go to www.consumerfinance.gov/learnmore or write to: Consumer Financial Protection Bureau, 1700 G Street N.W. Washington, D.C. 20006.
 
 	•	 	You must be told if information in your file has been used against you. Anyone who uses a credit report or another type of consumer report to deny your application for credit, insurance, or employment – or to take another adverse action against you – must tell you, and must give you the name, address, and phone number of the agency that provided the information.	
 
 	•	 	You have the right to know what is in your file. You may request and obtain all the information about you in the files of a consumer reporting agency (your “file disclosure”). You will be required to provide proper identification, which may include your Social Security number. In many cases, the disclosure will be free. You are entitled to a free file disclosure if:	
 
 	•	 	a person has taken adverse action against you because of information in your credit report;	
 
 	•	 	you are the victim of identity theft and place a fraud alert in your file;	
 
 	•	 	your file contains inaccurate information as a result of fraud;	
 
 	•	 	you are on public assistance;	
 
 	•	 	you are unemployed but expect to apply for employment within 60 days.	
In addition, all consumers will be entitled to one free disclosure every 12 months upon request from each nationwide credit bureau and from nationwide specialty consumer reporting agencies. See www.consumerfinance.gov/learnmore for additional information.
 
 	•	 	You have the right to ask for a credit score. Credit scores are numerical summaries of your credit-worthiness based on information from credit bureaus. You may request a credit score from consumer reporting agencies that create scores or distribute scores used in residential real property loans, but you will have to pay for it. In some mortgage transactions, you will receive credit score information for free from the mortgage lender.	
 
 	•	 	You have the right to dispute incomplete or inaccurate information. If you identify information in your file that is incomplete or inaccurate, and report it to the consumer reporting agency, the agency must investigate unless your dispute is frivolous. See www.consumerfinance.gov/learnmore for an explanation of dispute procedures.	
 
 	•	 	Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information. Inaccurate, incomplete or unverifiable information must be removed or corrected, usually within 30 days. However, a consumer agency may continue to report information it has verified as accurate.	
 
 	•	 	Consumer reporting agencies may not report outdated negative information. In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old.	
 
 	•	 	Access to your file is limited. A consumer reporting agency may provide information about you only	

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

to people with a valid need – usually to consider an application with a creditor, insurer, employer, landlord, or other business. The FCRA specifies those with a valid need for access.
 
 	•	 	You must give your consent for reports to be provided to employers. A consumer reporting agency may not give out information about you to your employer, or a potential employer, without your written consent given to the employer. Written consent generally is not required in the trucking industry. For more information, go to www.consumerfinance.gov/learnmore .	
 
 	•	 	You may limit “prescreened” offers of credit and insurance you get based on information in your credit report. Unsolicited “prescreened” offers for credit and insurance must include a toll-free phone number you can call if you choose to remove your name and address from the lists these offers are based on. You may opt-out with the nationwide credit bureaus at 1-888-567-8688.	
 
 	•	 	You may seek damages from violators. If a consumer reporting agency, or, in some cases, a user of consumer reports or a furnisher of information to a consumer reporting agency violates the FCRA, you may be able to sue in state or federal court.	
 
 	•	 	Identity theft victims and active duty military personnel have additional rights. For more information, visit www.consumerfinance.gov/learnmore .	

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

States may enforce the FCRA, and many states have their own consumer reporting laws. In some cases, you may have more rights under state law. For more information, contact your state or local consumer protection agency or your state Attorney General. For information about your federal rights, contact:

TYPE OF BUSINESS:	 	CONTACT:	
1.a. Banks, savings associations, and credit unions with total assets of over $10 billion and their affiliates.
 
b. Such affiliates that are not banks, savings associations, or credit unions also should list, in addition to the Bureau:
 
2. To the extent not included in item 1 above:
 
a. National banks, federal savings associations, and federal branches and federal agencies of foreign banks
 
b. State member banks, branches and agencies of foreign banks (other than federal branches, federal agencies, and insured state branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act
 
c. Nonmember Insured Banks, Insured State Branches of Foreign Banks, and insured state savings associations
 
d. Federal Credit Unions
 
3. Air carriers
 
4. Creditors Subject to Surface Transportation Board
 
5. Creditors Subject to Packers and Stockyards Act
 
6. Small Business Investment Companies
 
7. Brokers and Dealers
 
8. Federal Land Banks, Federal Land Bank Associations, Federal Intermediate Credit Banks, and Production Credit Associations
 
9. Retailers, Finance Companies, and All Other Creditors Not Listed Above	 	a. Bureau of Consumer Financial Protection
1700 G Street NW
Washington, DC 20006
 
b. Federal Trade Commission: Consumer Response Center – FCRA
Washington, DC 20580
(877) 382-4357
 
a. Office of the Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street, Suite 3450
Houston, TX 77010-9050
 
b. Federal Reserve Consumer Help Center
P.O. Box 1200
Minneapolis, MN 55480
 
c. FDIC Consumer Response Center
1100 Walnut Street, Box #11
Kansas City, MO 64106
 
d. National Credit Union Administration
Office of Consumer Protection (OCP)
Division of Consumer Compliance and Outreach (DCCO)
1775 Duke Street
Alexandria, VA 22314
Asst. General Counsel for Aviation Enforcement & Proceedings
Department of Transportation
400 Seventh Street SW
Washington, DC 20590
Office of Proceedings, Surface Transportation Board
Department of Transportation
1925 K Street NW
Washington, DC 20423
 
Nearest Packers and Stockyards Administration area supervisor
 
Associate Deputy Administrator for Capital Access
United States Small Business Administration
406 Third Street, SW, 8 th Floor
Washington, DC 20416
Securities and Exchange Commission
100 F St NE
Washington, DC 20549
Farm Credit Administration
1501 Farm Credit Drive
McLean, VA 22102-5090
FTC Regional Office for region in which the creditor operates or Federal Trade Commission: Consumer Response Center – FCRA
Washington, DC 20580
(877) 382-4357	

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

AUTHORIZATION OF BACKGROUND INVESTIGATION
I have carefully read and understand this Disclosure and Authorization form and the attached summary of rights under the Fair Credit Reporting Act. By my signature below, I consent to preparation of background reports by a consumer reporting agency such as HireRight, Inc., and to the release of such background reports to the Company and its designated representatives and agents, for the purpose of assisting the Company in making a determination as to my eligibility for employment (including independent contractor assignments, as applicable), promotion, retention or for other lawful employment purposes. I understand that if the Company hires me or contracts for my services, my consent will apply, and the Company may obtain background reports, throughout my employment or contract period.
I understand that information contained in my employment or contractor application, or otherwise disclosed by me before or during my employment or contract assignment, if any, may be used for the purpose of obtaining and evaluating background reports on me. I also understand that nothing herein shall be construed as an offer of employment or contract for services.
I hereby authorize law enforcement agencies, learning institutions (including public and private schools and universities), information service bureaus, record/data repositories, courts (federal, state and local), motor vehicle records agencies, my past or present employers, the military, and other individuals and sources to furnish any and all information on me that is requested by the consumer reporting agency.
By my signature below, I also certify the information I provided on and in connection with this form is true, accurate and complete. I agree that this form in original, faxed, photocopied or electronic (including electronically signed) form, will be valid for any background reports that may be requested by or on behalf of the Company.
¨   Please check this box if you would like to receive (whenever you have such right under the applicable state law) a free copy of your background report if one is obtained on you by the Company.
Date:                                                                                                                           

EMPLOYEE :	
		
Signature:	 	 	
		
Print Full Name:	 	 	
		
Address:	 	 	
		
City, State Zip:	 	 	

	  	EXHIBIT D	  	A T -W ILL E MPLOYMENT A GREEMENT
(Rev. 6/2014)	

Exhibit 10.29
*** Text Omitted and Filed Separately with the Securities Exchange Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406
EXECUTION VERSION

 
LIMITED LIABILITY COMPANY AGREEMENT
OF
Vivint Solar Mia Project Company, LLC
dated as of July 16, 2013

 
THE SECURITIES (MEMBERSHIP INTERESTS) REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR REGISTERED OR QUALIFIED UNDER ANY SECURITIES OR BLUE SKY LAWS OF ANY STATE OR JURISDICTION. THEREFORE , THE SECURITIES MAY NOT BE SOLD , PLEDGED , HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR THE APPLICABLE STATE SECURITIES OR BLUE SKY LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD TO THE PROPOSED TRANSFER OR , IN THE OPINION OF LEGAL COUNSEL ACCEPTABLE TO THE COMPANY , REGISTRATION OR QUALIFICATION UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES OR BLUE SKY LAWS IS NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER.

TABLE OF CONTENTS

 	 	 	  	Page	 	
		
ARTICLE I DEFINITIONS	  	 	1	  	
			
Section 1.1.	 	Definitions.	  	 	1	  	
Section 1.2.	 	Other Definitional Provisions.	  	 	22	  	
		
ARTICLE II CONTINUATION; OFFICES; TERM	  	 	22	  	
			
Section 2.1.	 	Formation of the Company.	  	 	22	  	
Section 2.2.	 	Name, Office and Registered Agent.	  	 	22	  	
Section 2.3.	 	Purpose; No Partnership Intended.	  	 	23	  	
Section 2.4.	 	Term.	  	 	23	  	
Section 2.5.	 	Organizational and Fictitious Name Filings; Preservation of Limited Liability.	  	 	23	  	
		
ARTICLE III RIGHTS AND OBLIGATIONS OF THE MEMBERS	  	 	24	  	
			
Section 3.1.	 	Members; Membership Interests.	  	 	24	  	
Section 3.2.	 	Actions by the Members.	  	 	25	  	
Section 3.3.	 	Management Rights.	  	 	26	  	
Section 3.4.	 	Other Activities.	  	 	26	  	
Section 3.5.	 	No Right to Withdraw.	  	 	26	  	
Section 3.6.	 	Limitation of Liability of Members.	  	 	26	  	
Section 3.7.	 	No Liability for Deficits.	  	 	27	  	
Section 3.8.	 	Company Property.	  	 	27	  	
Section 3.9.	 	Retirement, Resignation, Expulsion, Incompetency, Bankruptcy or Dissolution of a Member.	  	 	27	  	
Section 3.10.	 	Withdrawal of Capital.	  	 	28	  	
Section 3.11.	 	Representations and Warranties.	  	 	28	  	
Section 3.12.	 	Other Covenants.	  	 	33	  	
Section 3.13.	 	Removal of Managing Member.	  	 	34	  	
		
ARTICLE IV CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; MEMBER LOANS	  	 	34	  	
			
Section 4.1.	 	Capital Contributions.	  	 	34	  	
Section 4.2.	 	Capital Accounts.	  	 	35	  	
Section 4.3.	 	Member Loans.	  	 	36	  	
		
ARTICLE V ALLOCATIONS	  	 	37	  	
			
Section 5.1.	 	Allocations.	  	 	37	  	
Section 5.2.	 	Adjustments.	  	 	38	  	
Section 5.3.	 	Tax Allocations.	  	 	39	  	
Section 5.4.	 	Transfer or Change in Membership Interest.	  	 	40	  	
 
Limited Liability Company Agreement of
Vivint Solar Mia Project Company, LLC
 
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ARTICLE VI DISTRIBUTIONS	  	 	41	  	
			
Section 6.1.	 	Distributions.	  	 	41	  	
Section 6.2.	 	Withholding Taxes.	  	 	41	  	
Section 6.3.	 	Limitations upon Distributions.	  	 	42	  	
Section 6.4.	 	No Return of Distributions.	  	 	42	  	
Section 6.5.	 	Calculation of Internal Rate of Return.	  	 	42	  	
		
ARTICLE VII ACCOUNTING AND RECORDS	  	 	44	  	
			
Section 7.1.	 	Reports.	  	 	44	  	
Section 7.2.	 	Books and Records and Inspection.	  	 	45	  	
Section 7.3.	 	Bank Accounts, Notes and Drafts.	  	 	46	  	
Section 7.4.	 	Financial Statements.	  	 	47	  	
Section 7.5.	 	Partnership Status and Tax Elections.	  	 	47	  	
Section 7.6.	 	Company Tax Returns.	  	 	48	  	
Section 7.7.	 	Tax Audits.	  	 	48	  	
Section 7.8.	 	Cooperation.	  	 	50	  	
Section 7.9.	 	Fiscal Year.	  	 	50	  	
		
ARTICLE VIII MANAGEMENT	  	 	50	  	
			
Section 8.1.	 	Management.	  	 	50	  	
Section 8.2.	 	Managing Member.	  	 	51	  	
Section 8.3.	 	Major Decisions.	  	 	53	  	
Section 8.4.	 	Officers.	  	 	54	  	
Section 8.5.	 	Costs & Expenses.	  	 	54	  	
Section 8.6.	 	Separateness.	  	 	54	  	
		
ARTICLE IX TRANSFERS AND INDEMNIFICATION	  	 	56	  	
			
Section 9.1.	 	Transfers.	  	 	56	  	
Section 9.2.	 	Conditions Applicable to All Transfers.	  	 	56	  	
Section 9.3.	 	Certain Permitted Transfers.	  	 	57	  	
Section 9.4.	 	Purchase Option.	  	 	58	  	
Section 9.5.	 	Regulatory and Other Authorizations and Consents.	  	 	59	  	
Section 9.6.	 	Admission.	  	 	60	  	
Section 9.7.	 	Security Interest Consent.	  	 	61	  	
Section 9.8.	 	Indemnity.	  	 	61	  	
Section 9.9.	 	No Duplication.	  	 	64	  	
Section 9.10.	 	Survival.	  	 	64	  	
Section 9.11.	 	Final Date for Assertion of Indemnity Claims.	  	 	64	  	
 
Limited Liability Company Agreement of
Vivint Solar Mia Project Company, LLC
 
ii

							
Section 9.12.	 	Reasonable Steps to Mitigate.	  	 	64	  	
Section 9.13.	 	Net of Insurance Benefits.	  	 	65	  	
Section 9.14.	 	No Consequential Damages.	  	 	65	  	
Section 9.15.	 	Payment of Indemnification Claims.	  	 	65	  	
		
ARTICLE X DISSOLUTION AND WINDING-UP	  	 	65	  	
			
Section 10.1.	 	Events of Dissolution.	  	 	65	  	
Section 10.2.	 	Distribution of Assets.	  	 	66	  	
Section 10.3.	 	Certificate of Cancellation.	  	 	67	  	
Section 10.4.	 	In-Kind Distributions.	  	 	67	  	
		
ARTICLE XI MISCELLANEOUS	  	 	67	  	
			
Section 11.1.	 	Notices.	  	 	67	  	
Section 11.2.	 	Amendment.	  	 	68	  	
Section 11.3.	 	Partition.	  	 	68	  	
Section 11.4.	 	Waivers and Modifications.	  	 	68	  	
Section 11.5.	 	Severability.	  	 	68	  	
Section 11.6.	 	Successors; No Third-Party Beneficiaries.	  	 	68	  	
Section 11.7.	 	Entire Agreement.	  	 	69	  	
Section 11.8.	 	Governing Law.	  	 	69	  	
Section 11.9.	 	Further Assurances.	  	 	69	  	
Section 11.10.	 	Counterparts.	  	 	69	  	
Section 11.11.	 	Dispute Resolution.	  	 	69	  	
Section 11.12.	 	Confidentiality and Publicity.	  	 	71	  	
Section 11.13.	 	Joint Efforts.	  	 	72	  	
Section 11.14.	 	Specific Performance.	  	 	72	  	
Section 11.15.	 	Survival.	  	 	72	  	
Section 11.16.	 	Recourse Only to Member.	  	 	72	  	
Section 11.17.	 	Costs, Expenses, Fees.	  	 	73	  	
 
Limited Liability Company Agreement of
Vivint Solar Mia Project Company, LLC
 
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ANNEX I	 	Members and Membership Interests	  		
			
SCHEDULES	 		  		
Schedule 4.2(d)	 	Initial Capital Accounts	  		
Schedule 9	 	Transfer Representations and Warranties	  		
			
EXHIBITS	 		  		
Exhibit A	 	Form of Membership Interest Certificate	  		
Exhibit B	 	Base Case Model	  		
Exhibit C	 	Insurance Requirements	  		
Exhibit D	 	Form of Note	  		
 
Limited Liability Company Agreement of
Vivint Solar Mia Project Company, LLC
 
iv

LIMITED LIABILITY COMPANY AGREEMENT
OF
VIVINT SOLAR MIA PROJECT COMPANY, LLC
Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, a Delaware limited liability company (the “ Company ”), dated as of July 16, 2013 (the “ Effective Date ”), by and between Vivint Solar Mia Manager, LLC, a Delaware limited liability company (“ Sponsor Sub ”), and Blackstone Holdings Finance Co. L.L.C., a Delaware limited liability company (“ Investor ”).
RECITALS
1. The Company was formed by virtue of its Certificate of Formation filed with the Secretary of State of the State of Delaware on July 2, 2013 (the “ Certificate of Formation ”).
2. The Company has been formed to own and operate photovoltaic systems.
3. Sponsor Sub and Investor desire to describe their respective rights and obligations as members of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions .
Capitalized terms used but not defined in this Agreement have the meanings assigned to them in the Master EPC Agreement. As used in this Agreement, the following terms have the respective meanings set forth below:
“ Act ” means the Delaware Limited Liability Company Act, Delaware Code Ann. 6, Sections 18-101, et seq . and any successor statute, as the same may be amended from time to time.
“ Adjusted Capital Account ” means, with respect to any Member, the Capital Account of such Member (a) increased by the amount of potential deficit that the Member is deemed obligated to restore, calculated as described in the next to last sentence of Treasury Regulations Section 1.704-2(g)(1) and the next to last sentence of Treasury Regulations Section 1.704-2(i)(5) and (b) decreased by such Member’s share of the items described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
 
Limited Liability Company Agreement of
Vivint Solar Mia Project Company, LLC

“ Affiliate ” of a specified Person means any Person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such specified Person. As used in this definition of Affiliate, the term “ control ” of a specified Person, including, with correlative meanings, the terms, “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of such Person’s management or policies, whether through the ownership of voting securities, by contract or otherwise; provided , however , that notwithstanding the foregoing, for purposes of this Agreement, the Company will not be treated as an Affiliate of any Member, and Investor will not be treated as an Affiliate of Sponsor or Sponsor Sub.
“ Agreement ” means this Limited Liability Company Agreement, together with all schedules and exhibits hereto, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Applicable Laws ” means all applicable laws of any Governmental Authority, including, without limitation, laws relating to consumer leasing and protection and any ordinances, judgments, decrees, injunctions, writs and orders or like actions of any Governmental Authority and rules and regulations of any federal, regional, state, county, municipal or other Governmental Authority.
“ Appraisal Method ” means one appraiser shall be appointed by the Class A Member and one appraiser shall be appointed by the Class B Member, in each case, within fifteen (15) calendar days of a Member invoking the procedure described in this definition and delivering notice thereof to the other Members, which appraisers shall attempt to agree upon the fair market value of the Class A Membership Interests. If either the Class A Member or the Class B Member does not appoint its appraiser within the fifteen (15) calendar day period referenced in the immediately preceding sentence, the Member that has appointed an appraiser may deliver written notice to the other Member regarding its failure to appoint an appraiser within the required time period, and if such other Member does not appoint an appraiser within five (5) Business Days after receiving such notice, the determination of the appraiser that has been appointed shall be conclusive and binding on the Members. If the appraisers appointed by the Class A Member and the Class B Member are unable to agree upon the fair market value of the Class A Membership Interests within thirty (30) calendar days after the appointment of the second of such appraisers, the two appraisers shall appoint a third appraiser. In such case, the average of the determinations of the three appraisers shall be conclusive and binding on the Members, unless the determination of one independent appraiser is disparate from the middle determination by more than twice the amount by which the third determination is disparate from the middle determination, in which case the determination of the most disparate appraiser shall be excluded, and the average of the remaining two determinations shall be conclusive and binding on the Members. Any appraiser shall be qualified, and have at least three years of experience, in appraising PV Systems. The Class A Member and the Class B Member, respectively, shall bear their own costs in appointing their respective appraiser and shall evenly split the costs of any third appraiser.
“ Bankruptcy ” of a Person means the occurrence of any of the following events: (a) the filing by such Person of a voluntary case or the seeking of relief under any chapter of Title 11 of the United States Bankruptcy Code, as now constituted or hereafter amended (the
 
Limited Liability Company Agreement of
Vivint Solar Mia Project Company, LLC
 
2

“ Bankruptcy Code ”), (b) the making by such Person of a general assignment for the benefit of its creditors, (c) the admission in writing by such Person of its inability to pay its debts as they mature, (d) the filing by such Person of an application for, or consent to, the appointment of any receiver or a permanent or interim trustee of such Person or of all or any portion of its property, including the appointment or authorization of a trustee, receiver or agent under Applicable Law or under a contract to take charge of its property for the purposes of enforcing a lien against such property or for the purpose of general administration of such property for the benefit of its creditors, (e) the filing by such Person of a petition seeking a reorganization of its financial affairs or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law or statute, (f) an involuntary case is commenced against such Person by the filing of a petition under any chapter of Title 11 of the Bankruptcy Code and within sixty (60) days after the filing thereof either the petition is not dismissed or the order for relief is not stayed or dismissed, (g) an order, judgment or decree is entered appointing a receiver or a permanent or interim trustee of such Person or of all or any portion of its property, including the entry of an order, judgment or decree appointing or authorizing a trustee, receiver or agent to take charge of the property of such Person for the purpose of enforcing a lien against such property or for the purpose of general administration of such property for the benefit of the creditors of such Person, and such order, judgment or decree shall continue unstayed and in effect for a period of sixty (60) days, or (h) an order, judgment or decree is entered, without the approval or consent of such Person, approving or authorizing the reorganization, insolvency, readjustment of debt, dissolution or liquidation of such Person under any such law or statute, and such order, judgment or decree shall continue unstayed and in effect for a period of sixty (60) days. The foregoing definition of “Bankruptcy” is intended to replace and shall supersede the definition of “Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the Act.
“ Bankruptcy Code ” is defined in the definition of the term “Bankruptcy”.
“ Base Case Model ” means a computer model agreed to by Sponsor and Investor showing the estimated economic results that the parties expect from ownership of Projects and the assumptions to be used in projecting when Investor shall reach the Target Internal Rate of Return. The Base Case Model as of the date hereof is attached as Exhibit B .
“ Business Day ” means any day other than Saturday, Sunday and any other day on which banks in New York are authorized to be closed.
“ Calculation Date ” means March 31, June 30, September 30 and December 31 of each year (or if such day is not a Business Day, the next Business Day).
“ Capital Account ” is defined in Section 4.2(a) .
“ Capital Contribution ” means, with respect to any Member, the amount of money and the initial Gross Asset Value of any property contributed to the Company with respect to the Membership Interests in the Company held or purchased by such Member.
“ Cash Difference ” is defined in Section 6.5(d) .
 
Limited Liability Company Agreement of
Vivint Solar Mia Project Company, LLC
 
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“ Cashflow Shortfall ” is defined in Section 4.3(a) .
“ Certificate of Formation ” is defined in the recitals of this Agreement.
“ Change of Member Control ” means with respect to any Class B Member, an event in which a Person or Persons who prior to a transaction or series of transactions, individually or collectively possessed directly or indirectly, legally or beneficially:
(a) Fifty percent (50%) or more of the equity, capital or profits interests of such Class B Member; or
(b) control of such Class B Member through the ownership of voting securities with the power to direct the management or policies of such Class B Member or otherwise;
and as a result of a consummation of any transaction or series of transactions (including any merger or consolidation), such Person or Persons individually or collectively fail to maintain, whether directly or indirectly, legally or beneficially, either of the elements of control listed in clause (a)  or clause (b)  above. Notwithstanding the foregoing, neither the direct nor indirect sale, transfer or other disposition of equity, capital or profits interests of, or of the ownership of voting securities with the power to direct the management or policies of, Sponsor shall constitute a Change of Member Control.
“ Class A Member ” means a Member holding one or more Class A Membership Interests. As of the Effective Date and for so long as Investor owns any Class A Membership Interests, Investor is a Class A Member.
“ Class A Membership Interests ” is defined in Section 3.1(b) .
“ Class B Member ” means a Member holding one or more Class B Membership Interests. As of the Effective Date and for so long as Sponsor Sub owns any Class B Membership Interests, Sponsor Sub is a Class B Member.
“ Class B Membership Interests ” is defined in Section 3.1(b) .
“ Code ” means the Internal Revenue Code of 1986, as amended, or any successor federal tax statute.
“ Company ” is defined in the preamble to this Agreement.
“ Company Minimum Gain ” means the amount of minimum gain there is in connection with nonrecourse liabilities of the Company, calculated in the manner described in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
“ Confidential Information ” is defined in Section 11.12(a) .
“ Consultation ” or “ Consult ” means to confer with and reasonably consider and take into account the reasonable suggestions, comments or opinions of another Person.
 
Limited Liability Company Agreement of
Vivint Solar Mia Project Company, LLC
 
4

“ Corporate Tax Rate ” means 35%.
“ Curative Flip Allocation ” is defined in Section 6.5(e) .
“ Customer Agreement ” is defined in the Master EPC Agreement.
“ Depreciation ” means for each Fiscal Year or part thereof, an amount equal to the depreciation, amortization or other cost recovery deduction allowable for federal income tax purposes with respect to an asset for such Fiscal Year or part thereof, except that if the Gross Asset Value of an asset differs from its adjusted basis at the beginning of such Fiscal Year, then the depreciation, amortization or other cost recovery deduction for such Fiscal Year or part thereof shall be (a) the amount described in Treasury Regulations Section 1.704-3(d)(2) if the remedial method referred to in Treasury Regulations Section 1.704-3(d) is used, and (b) otherwise an amount that bears the same ratio to such Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for the period bears to the adjusted tax basis. If the asset has a zero adjusted tax basis, then the depreciation, amortization or other cost recovery deduction under clause (b) above shall be determined under a method reasonably selected by the Managing Member and agreed to by Members representing a Required Majority Vote.
“ Designated Transfers ” is defined in Section 9.5(a) .
“ Developer ” means Vivint Solar Developer, LLC, a Delaware limited liability company.
“ Development ” means the acquisition, ownership, financing, leasing, occupation, design, development, construction, equipping, testing, repair, operation, maintenance, use and interconnection of a Project, and the sale of electricity and/or any attributes therefrom.
“ Dispute ” is defined in Section 11.11(a) .
“ Disputing Member ” is defined in Section 11.11(a) .
“ Distributable Cash ” means, as of any Distribution Date, all cash, cash equivalents and liquid investments held by the Company as of such date less all operating and maintenance expenses and reserves that, in the reasonable judgment of the Managing Member, are necessary or appropriate for the operation of the Company or the Projects consistently with Prudent Industry Standards.
“ Distribution Date ” means March 31, June 30, September 30 and December 31 of each year (or if such day is not a Business Day, the next Business Day).
“ Effective Date ” is defined in the preamble to this Agreement.
“ Exercise Notice ” is defined in Section 9.4(a) .
“ Federal Power Act ” means Chapter 12 of Title 16 of the United States Code, as amended.
 
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“ Fiscal Year ” is defined in Section 7.9 .
“ Fixed Tax Assumptions ” means the following assumptions: (a) the Company is a partnership for federal income tax purposes; (b) the Class A Member is a partner in the Company for federal income tax purposes, (c) the Company is the owner of each Project for federal income tax purposes; (d) the allocations of each item of income, gain, loss, deduction and credit set forth in this Agreement to the Members will be respected by the IRS either because they have “substantial economic effect” or are otherwise consistent with the Members’ interests in the Company within the meaning of Section 704(b) of the Code; (e) the transactions described in the Transaction Documents have “economic substance” within the meaning of Section 7701(o) of the Code; (f) each Class A Member is and will continue to be subject to federal income tax at the Corporate Tax Rate, (g) state, local, foreign or other non-United States federal income taxes are inapplicable and (h) each Class A Member will be able to fully utilize all regular federal income tax benefits allocated to it from the Company.
“ Flip Date ” means the later of (a) the date that is five (5) full years after the last date a Project owned by the Company is Placed in Service and (b) the last day of the calendar month in which the Class A Member achieves an Internal Rate of Return equal to or greater than the Target Internal Rate of Return.
“ GAAP ” means (a) generally accepted accounting principles in the United States of America as in effect from time to time, consistently applied; or (b) upon mutual agreement of the parties hereto, internationally recognized generally accepted accounting principles, consistently applied.
“ Governmental Approval ” means any authorization, consent, approval, ruling, tariff, rate, certification, waiver, exemption, filing, variance or order of, or any notice to or registration by or with, any Governmental Authority.
“ Governmental Authority ” means any foreign, federal, state, local or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrating body or other governmental authority having jurisdiction or effective control over the Company or any Project, or if the context requires, the Sponsor Sub or Investor.
“ Gross Asset Value ” means, with respect to any asset, the asset’s adjusted tax basis for federal income tax purposes, except as follows:
(a) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the Gross Fair Market Value of such asset as of the date of contribution; provided that the initial Gross Asset Values of the assets contributed to the Company pursuant to Section 4.2(d) shall be as shown in Schedule 4.2(d) ;
(b) the Gross Asset Values of all Company assets shall be adjusted to equal their respective Gross Fair Market Values at the times described in Section 4.2(c) ;
 
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(c) the Gross Asset Value of any item of Company assets distributed to any Member shall be adjusted to equal the Gross Fair Market Value of such asset on the date of distribution;
(d) the Gross Asset Values of all Company assets shall be adjusted to reflect any adjustments to the adjusted basis of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that such adjustments are required to be taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m); provided , however , that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that the Managing Member determines that an adjustment pursuant to subsection (b) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d) ; and
(e) if the Gross Asset Value of an asset has been determined or adjusted pursuant to subsection (a) , (b)  or (d)  above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset.
“ Gross Fair Market Value ” means, with respect to any asset, the fair market value of the asset as reasonably determined by the Managing Member and agreed to by Members representing a Required Majority Vote.
“ Guarantee ” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (a) to secure, purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to provide collateral security, to take-or-pay, or to maintain financial statement conditions or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.
“ Guaranty Agreement ” means the Guaranty dated as of the date hereof, made by Sponsor in favor of the Investor and the Company.
“ Host Customer ” is defined in the Master EPC Agreement.
“ HSR Act ” means the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended and the regulations adopted thereunder.
“ Indebtedness ” means, with respect to any Person at any date of determination (without duplication), (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person as an account party in respect of letters of credit or other similar instruments (including contingent reimbursement obligations with respect thereto), (d) all of the
 
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obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six (6) months after the date of purchasing such property or service or taking delivery and title thereto or the completion of such services, and payment deferrals arranged primarily as a method of raising funds to acquire such property or service, (e) all monetary obligations of such Person and its Subsidiaries under any leasing or similar arrangement which have been (or, in accordance with GAAP, should be) classified as capitalized leases, (f) all monetary obligations of such Person with respect to any interest rate hedge, cap, floor, swap, option or other interest rate hedge agreement entered into after the date hereof, (g) all Indebtedness (as defined in clauses (a) through (f)  of this definition) of other Persons secured by a lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, and (h) all Indebtedness (as defined in clauses (a) through (f)  of this definition) of other Persons guaranteed by such Person.
“ Indemnified Costs ” means Investor Indemnified Costs or Sponsor Indemnified Costs, as the context requires.
“ Indemnified Party ” means an Investor Indemnified Party or Sponsor Indemnified Party, as the context requires.
“ Indemnifying Party ” means Sponsor Sub or Investor, as the context requires.
“ Independent Accounting Firm ” means Ernst & Young LLP or a nationally recognized third-party accounting firm that (a) is not an Affiliate of either Member, and (b) is mutually agreed upon by the Members.
“ Interested Member ” means a Member (or Affiliate of a Member) having a pecuniary interest in a transaction or claim other than a pecuniary interest resulting from such Member’s interest in the Company.
“ Internal Rate of Return ” means the discount rate that causes “A” to equal “B” in present-value terms where “A” is the sum of the present values as of the first Purchase Date for the first Tranche purchased under the Master EPC Agreement, calculated on a quarterly basis, of (a) the Tax Credits allocated to the Class A Member, and (b) the tax savings from deductions and losses that the Class A Member is allocated, and (c) cash that is distributed to the Class A Members), and (d) cash received by the Class A Member in connection with the Class B Member’s exercise of the Purchase Option, and (e) any indemnity payments by the Class B Member to the Class A Member that substitute for amounts in clauses (a) , (b) , (c)  and (d) , and where “B” is the sum of the present values as of the first Purchase Date for the first Tranche purchased under the Master EPC Agreement, calculated on a quarterly basis, of (f) the Capital Contributions that the Class A Member makes to the Company, and (g) the tax detriment from (i) any taxable income or gain allocated to the Class A Member, and (ii) the receipt by the Class A Member of cash in connection with the exercise of the Purchase Option, and (h) any payment made by the Class A Member to any tax authority after and solely as a result of an audit with respect to any Project or the Company (other than in connection with the incorrectness of a Fixed Tax Assumption, unless such Fixed Tax Assumption is incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents). The tax savings and tax detriment will be calculated assuming the accuracy of the Fixed Tax Assumptions.
 
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“ Investor ” is defined in the preamble to this Agreement.
“ Investor Contribution Cap ” means for all Projects purchased, $***.
“ Investor Indemnified Costs ” means, with respect to any Investor Indemnified Party, subject to ARTICLE IX , any and all damages, losses, claims, liabilities, demands, charges, suits, penalties, costs and reasonable expenses (including (i) court costs and reasonable attorneys’ fees and expenses of one law firm for all Investor Indemnified Parties plus one law firm of local counsel where any relevant Project is located and (ii) any recapture or disallowance of, or inability to claim, the Tax Credits assumed in the Base Case Model) incurred by such Investor Indemnified Parties resulting from or relating to (a) any breach or default by the Class B Member of any representation, warranty, covenant, indemnity or agreement under this Agreement or any other Transaction Document or (b) any claim for fraud, gross negligence or willful misconduct on the part of the Class B Member relating to this Agreement or any other Transaction Document.
“ Investor Indemnified Parties ” means Investor and any Person to whom Investor Transfers any portion of its Class A Membership Interests in accordance with ARTICLE IX , and each of their respective Affiliates and each of their respective shareholders, partners, members, officers, directors, employees, agents and other representatives, and their respective successors and assigns.
“ IRR Report ” is defined in Section 7.1(b) .
“ IRS ” means the Internal Revenue Service or any successor agency.
“ Knowledge of Investor ” means the actual knowledge, after due inquiry, as of the Effective Date, of one or more of the following persons holding the following titles at Investor: Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, and General Counsel.
“ Knowledge of Sponsor Sub ” means the actual knowledge, after due inquiry, as of the Effective Date, of one or more of the following persons holding the following titles at Sponsor: Alex Dunn (Chief Executive Officer and President), Brendon Merkley (Chief Operating Officer), Paul Dickson (Vice President of Finance), and Dan Black (General Counsel); provided , however , that for matters relating to a Host Customer, “Knowledge” will be limited to the representations and warranties made by such Host Customer in the applicable Customer Agreement without Sponsor Sub undertaking further inquiry or due diligence, unless any one of the persons described above has actual knowledge that a representation or warranty is untrue.
“ Lien ” means any lien, security interest, mortgage, hypothecation, encumbrance or other restriction on title or property interest.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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“ Maintenance Services Agreement ” means that certain Maintenance Services Agreement by and between the Company and MSA Provider, dated as of the date hereof and as amended from time to time.
“ Major Decisions ” means any of the following actions:
(a) Acquisition of any Project (including any Substituted Project) under the Master EPC Agreement, such approval not to be withheld if the conditions of Sections 2.3 and 2.5 of the Master EPC Agreement with respect to that Project have been met in the reasonable determination of the Investor and such approval treated as automatically rejected unless Class A Member informs Managing Member that it approves the acquisition of such PV Systems prior to the expiration of the applicable Review Period or Substituted Project Review Period, as the case may be;
(b) Sale, lease or disposition of any Company assets with a value in excess of $25,000, individually or in the aggregate in any calendar year, other than (i) following the Flip Date, (A) sales of electric power, other than through a Customer Agreement, and (B) the transfer of any related RECs or other environmental credits, (ii) the transfer of an asset that is worn out, obsolete, or no longer necessary or useful for the operation of the applicable Project, (iii) transfer of a Customer Agreement by a Host Customer in accordance with the provisions therein and the Maintenance Services Agreement, (iv) the sale of a PV System to a Host Customer pursuant to such Host Customer’s Customer Agreement or (v) as otherwise set forth in this Agreement;
(c) Any joint venture, merger, consolidation or other business combination of or involving the Company;
(d) Any issuance by the Company of a Guarantee;
(e) Any issuance or redemption by the Company of any Membership Interests or other equity interest of any kind in the Company, or any warrants, rights or options to acquire the same, or any security convertible into any of the foregoing;
(f) Pursuing, initiating or settling any claim, litigation or arbitration with an amount in controversy that equals or exceeds $25,000, individually or in the aggregate in any calendar year, or which includes consent to or award of an injunction, specific performance or other equitable relief;
(g) Incurrence or voluntary prepayment of any Indebtedness on behalf of the Company in excess of $25,000 at any time outstanding in the aggregate; provided , that this limitation shall not apply to any Member Loans incurred in accordance with Section 4.3 ;
(h) Any amendment or cancellation of the Certificate of Formation of the Company or any Transaction Document (other than the Maintenance Services Agreement, which is covered in clause (s) below), if the amendment or termination, in the reasonable estimation of the Managing Member, without due inquiry, would have a Material Adverse Change, individually or collectively, on the Class A Members;
 
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(i) The admission of any additional member in the Company, other than pursuant to the terms of this Agreement;
(j) Making or committing to make any capital expenditures, other than (i) as contemplated by the Customer Agreements or the Maintenance Services Agreement, (ii) expenditures required by law or necessary to prevent or mitigate an emergency situation or to preserve the value of the Project’s property or assets, or (iii) capital expenditures not in excess of $25,000 individually or in the aggregate in any calendar year;
(k) Entering into any new contract on behalf of the Company with any Affiliate of a Member (not including any renewals of existing contracts on the same terms as the expiring agreement) or any extension or replacement of a Transaction Document with the same or another Affiliate of any such Member;
(l) Execution and delivery of instruments requested by MSA Provider under the Maintenance Services Agreement except for ministerial or administrative changes made in the Ordinary Course of Business;
(m) Encumbering or granting any Liens on the assets or rights of the Company other than (in each case) Permitted Liens;
(n) Hiring any employees, entering into or adopting any bonus, profit sharing, thrift, compensation, option, pension, retirement, savings, welfare, deferred compensation, employment, termination, severance or other employee benefit plan, agreement, trust, fund, policy or arrangement for the benefit or welfare of any directors, officers or employees of the Company;
(o) Causing the Company to elect under Treasury Regulations Section 301.7701-3 or any comparable provision of state or local income tax law, to be classified as an association;
(p) Making any tax election other than as provided herein or that is inconsistent with the assumptions contained in the Base Case Model;
(q) Applying for or claiming any grant or Tax credit (including any Tax credit under Section 45 of the Code) that would reduce the amount of the Tax Credits available under Section 48 of the Code;
(r) Entering into any contract or taking any action that in the reasonable estimation of the Class A Member would threaten the availability of Tax Credits or tax depreciation with respect to any PV System assumed in the Base Case Model;
(s) (i) Subject to the proviso in Section 8.2(a)(ii) , (A) materially amending, (B) canceling, suspending, renewing (unless in the case of the Maintenance Services Agreement such renewal is on substantially similar terms and conditions as the Maintenance Services Agreement that is being renewed), terminating or entering into replacement contracts (unless in the case of the Maintenance Services Agreement such replacement is on substantially similar terms and conditions as the Maintenance Services Agreement that is
 
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being replaced) for, in each case of subclauses (A) and (B), the Maintenance Services Agreement or the Master EPC Agreement, (ii) assigning, releasing or relinquishing the material rights or obligations of any party to the Maintenance Services Agreement or the Master EPC Agreement, or (iii) resolving any material dispute relating to the Maintenance Services Agreement or the Master EPC Agreement, provided that the materiality qualifier in in clause (i) , (ii)  or (iii)  is solely with regard to the Company or all of the Projects taken as a whole;
(t) Lending any funds of the Company to any Person;
(u) Changing, amending or substituting the insurance required to be maintained by the Company pursuant to this Agreement in a manner that would cause such insurance to be materially different from the insurance requirements attached hereto as Exhibit C ;
(v) Changing the Company’s methods of accounting or accounting policies and procedures as in effect on the date hereof, except as required by GAAP, or changing the Independent Accounting Firm;
(w) Hiring counsel to assist in a Tax audit or to represent the Company in a Tax controversy or consenting to any Tax audit adjustment;
(x) Subject to clause (b) , causing the Company to permit (A) possession or control of property of the Company by any Member or (B) the assignment, transfer, sale, lease, pledge or other disposition of rights of the Company in specific property of the Company, for other than a Company purpose or other than for the benefit of the Company;
(y) Changing the assumptions set forth in the Base Case Model or the Tracking Model other than in accordance with the terms of this Agreement;
(z) Making, or causing the Company to make, any advance payments of compensation or other consideration to the Managing Member or any of its Affiliates;
(aa) Commingling the assets of the Company with the funds or other assets of any other Person;
(bb) Taking or filing any action or instituting any proceedings in Bankruptcy on behalf of the Company;
(cc) Dissolving or winding up of the Company;
(dd) Causing the Company to engage in any business or activity that is not within the purpose of the Company, as set forth in its organizational documents, or to change such purpose;
(ee) Adding any new manufacturer to the approved vendors listed on Schedule 13 of the Master EPC Agreement;
 
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(ff) Causing the Company to take any action that could reasonably be expected by Managing Member to result in an event of default, or that would result in the acceleration of any material obligation or termination of any material right, under any Transaction Document;
(gg) Entering into, amending, canceling, suspending, renewing (unless such renewal is on substantially similar terms and conditions as the existing contract) or terminating contracts for goods and services requiring the Company to make expenditures in excess of $25,000 individually or in the aggregate in any calendar year; provided , that this limitation shall not apply to the Company’s engagement agreement with the Independent Accounting Firm for services to be provided by the Independent Accounting Firm as contemplated by this Agreement; and
(hh) Requesting Non-Included System Services under the Maintenance Services Agreement with a value of greater than $25,000 in any calendar year.
“ Manager ” is defined in Section  3.13(b) .
“ Managing Member ” is defined in Section 8.2 .
“ Master EPC Agreement ” means that certain Development, EPC and Purchase Agreement, dated as of the date hereof (as may be amended, restated, supplemented or otherwise modified from time to time), by and between the Company, Developer and Sponsor, and each Transfer Notice and Bill of Sale (as each term is defined in the Master EPC Agreement) thereunder.
“ Material Adverse Change ” means, with respect to any Person, a fact, event or circumstance that, alone or when taken with other events or conditions occurring or existing concurrently with such event or condition, (a) has or is reasonably expected to have a material adverse effect on the business, operations, condition (financial or otherwise), assets, liabilities or properties of such Person, (b) has or is reasonably expected to have any material adverse effect on the validity or enforceability of the Transaction Documents, (c) materially impairs or is reasonably expected to materially impair the ability of such Person to meet or perform its obligations under the Transaction Documents, or (d) has or is reasonably expected to have any material adverse effect on such Person’s rights under the Transaction Documents.
“ Maximum Liability ” means, with respect to a party, $***. For the avoidance of doubt, (a) any indemnification of Sponsor Sub by the Company or any indemnification of the Company by Sponsor Sub shall not be included in calculating whether the Maximum Liability applicable to Sponsor Sub has been or will be exceeded, and (b) any indemnification of the Investor by the Company or any indemnification of the Company by Investor shall not be included in calculating whether the Maximum Liability applicable to Investor has been or will be exceeded.
“ Member ” means any Person executing this Agreement as of the date of this Agreement as a member of the Company or any Person admitted to the Company as a member as provided in this Agreement (each in the capacity of a member of the Company), but does not include any Person who has ceased to be a member of the Company.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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“ Member Loan ” means any loan or advance made by a Class A Member or Class B Member, pursuant to Section 4.3 .
“ Member Nonrecourse Debt ” means “partner nonrecourse debt” as defined in Treasury Regulations Section 1.704-2(b)(4).
“ Member Nonrecourse Deduction ” means “partner nonrecourse deduction” as defined in Treasury Regulations Section 1.704-2(i)(2).
“ Membership Interest ” means the entire interest of a Member in the Company, including rights to distributions (liquidating or otherwise), allocations of profits and losses, and to vote, consent or approve or receive information, if any.
“ Minimum Gain Attributable to Member Nonrecourse Debt ” means the amount of minimum gain there is in connection with a Member Nonrecourse Debt, calculated in the manner described in Treasury Regulations Section 1.704-2(i)(3).
“ MSA Provider ” means Vivint Solar Provider, LLC, a Delaware limited liability company, as provider under the Maintenance Services Agreement or any successor thereto.
“ Net Income ” and “ Net Loss ” mean, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such Fiscal Year or other period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss) with the following adjustments:
(a) any income of the Company that is exempt from federal income tax, to the extent not otherwise taken into account in computing Net Income or Net Loss pursuant to this paragraph, shall be added to such taxable income or loss;
(b) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as expenditures under Section 705(a)(2)(B) pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), to the extent not otherwise taken into account in computing Net Income or Net Loss pursuant to this paragraph, shall be subtracted from such taxable income or loss;
(c) in the event the Gross Asset Value of any Company asset is adjusted pursuant to subsections (b) , (c)  or (d)  of the definition of “Gross Asset Value” herein, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss;
(d) gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;
 
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(e) any items that are specially allocated pursuant to the provisions of Section 5.2 and Section 5.3 shall not be taken into account in computing Net Income or Net Loss; and
(f) in lieu of depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation.
“ Nonrecourse Deduction ” means a deduction for spending that is funded out of nonrecourse borrowing by the Company or that is otherwise attributable to a “nonrecourse liability” of the Company within the meaning of Treasury Regulations Section 1.704-2.
“ Notice ” is defined in Section 11.1 .
“ Operations Report ” is defined in Section 7.1(a) .
“ Option Purchase Price ” is defined in Section 9.4(b) .
“ Ordinary Course of Business ” means the ordinary conduct of business consistent with custom and practice for residential solar energy electric generation businesses in the United States (including with respect to quantity and frequency).
“ Percentage Interest ” means the percentage interest shown for a Member in Schedule 4.2(d) as updated from time to time.
“ Permits ” means any license, consent, permit, authorization, requirement, environmental plan, notice, filing, certification, exemption, waiver, tariff, franchise, variance, order, decision, registration, ruling and other approval or permission required under any Applicable Law for the Development of the Project, including as to zoning, road crossing, environmental protection, pollution, sanitation, energy regulation, safety, siting or building, obtained or required to be obtained by or on behalf of the Company from any Governmental Authority.
“ Permitted Encumbrances ” means Liens provided for under the Transaction Documents, liens for Taxes not yet due and payable, to the extent adequate reserves have been made consistent with GAAP, and restrictions on transfer of the Membership Interests under any applicable federal, state or foreign securities law.
“ Permitted Investments ” means any of the following having a maturity of not greater than one year from the date of issuance thereof: (a) readily marketable direct obligations of the government of the United States of America or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the government of the United States of America, (b) insured certificates of deposit of or time deposits with any commercial bank that is a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c) below, is organized under the laws of
 
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the United States or any State thereof and has combined capital and surplus of at least $1,000,000,000.00 or (c) commercial paper issued by any corporation organized under the laws of any State of the United States and rated at least “Prime-1” (or the then-equivalent grade) by Moody’s Investors Service, Inc. or “A-1” (or the then-equivalent grade) by Standard & Poor’s Corporation.
“ Permitted Liens ” means (a) liens for taxes not yet due or that are being contested in good faith by appropriate proceedings, to the extent adequate reserves have been made consistent with GAAP, (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, employees’, contractors’, operators’, vendors’ or other similar liens or charges securing the payment of expenses not yet due and payable that are incurred in the Ordinary Course of Business, (c) liens securing obligations or duties (other than Indebtedness) to any Governmental Authority arising in the Ordinary Course of Business (including under licenses and permits held by the Investor and under all Applicable Laws and orders of any Governmental Authority), (d) easements, rights-of-way, restrictions (including zoning restrictions), covenants, licenses, encroachments, protrusions and other similar charges or encumbrances on or with respect to real property that do not secure Indebtedness or materially interfere with the ordinary conduct of the Company’s business, (e) liens incurred or deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment or other social security or to secure performance of statutory obligations, surety bonds, performance bonds and other similar obligations and (f) any other liens agreed to in writing by Sponsor Sub and Investor.
“ Permitted Transfers ” is defined in Section 9.3 .
“ Person ” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, or governmental entity or any department or agency thereof.
“ Placed in Service ” means that all of the following events have occurred with respect to a PV System: (a) the PV System has been installed, tested and shown capable of operating in a reliable and continuous manner for its intended purpose; (b) legal title to and control over the PV System and all components thereof have been conveyed to the Company; and (c) all licenses and permits needed to operate the PV System (including authority from the local utility to commence parallel operation) and to put the PV System to its intended use of using it to generate electricity for sale to a Host Customer have been obtained.
***
***
“ Pre-Flip Period ” means the period commencing on the Effective Date and ending on (and including) the Flip Date.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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***
“ Prohibited Transferee ” means any Person which is, or whose Affiliate is, (i) adverse in any pending or threatened action involving any Member (or Affiliate thereof) or the Company (unless the Members, excluding the transferor, have consented to such transferee), (ii) a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or (iii) during the Recapture Period, a Tax Exempt Entity.
“ Project ” is defined in the Master EPC Agreement.
“ Projected Flip Date ” means March 31, 2019.
“ Prudent Industry Standards ” means the practices, methods, equipment, specifications and standards of safety, as the same may change from time to time, as are used or approved by a significant portion of the residential rooftop distributed solar electric generation industry operating in the applicable Project States in residential rooftop distributed solar electric generating systems or facilities of a type and size similar to the Projects as good, safe and prudent engineering practices in connection with the design, construction, operation, maintenance, repair and use of electrical and other equipment, facilities and improvements of such residential rooftop distributed solar electric generating system or facility, with commensurate standards of safety, performance, dependability, efficiency and economy in each case in light of the facts known and circumstances existing at the time any decision is made or action is taken, that would be expected to accomplish the desired result in a manner materially consistent with Applicable Law, permits, codes, and equipment manufacturer’s recommendations.
“ Purchase Date ” means the date that a Tranche is purchased under the Master EPC Agreement.
“ Purchase Option ” is defined in Section 9.4(a) .
“ Purchased Systems ” is defined in the Master EPC Agreement.
“ PV System ” is defined in the Master EPC Agreement.
“ Quarter ” means a fiscal quarter.
“ REC ” means a renewable energy credit or certificate representing any and all environmental credits, benefits, emissions reductions, offsets and allowances, howsoever entitled, that are created or otherwise arise from a PV System’s generation of electricity, including but not limited to solar renewable energy certificates that may be used in connection
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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with a state’s renewable portfolio standard and in each case resulting from the avoidance of the emission of any gas, chemical or other substance attributable to the generation of solar energy by the PV System, but excluding any and all federal, state and local tax attributes (including Tax Credits).
“ Recapture Period ” means the period commencing on the Effective Date and ending on the fifth anniversary of the last date that a Project owned by the Company is Placed in Service.
“ Reference Rate ” means the rate of interest published in The Wall Street Journal as the prime lending rate or “prime rate”, with adjustments in that varying rate to be made on the same date as any change in that rate is so published.
“ Removal Event ” means the occurrence of any of the following events:
(a) any representation or warranty made by the Class B Member or the Managing Member in this Agreement or any Transaction Document shall have been false or misleading, and such breach or default has or could reasonably be expected to have a Material Adverse Change on the Company or the Class A Member as reasonably determined by the Class A Member;
(b) any breach or default by the Class B Member, the Managing Member or the Company under any covenant or obligation under a Transaction Document to which it is a party, and such breach or default has or could reasonably be expected to have a Material Adverse Change on the Company or the Class A Member as reasonably determined by the Class A Member (unless the action or inaction that has led directly to such breach or default has been directed, accepted or approved by the Class A Member or Investor in writing);
(c) the occurrence and continuance of any event of default as to the Class B Member, the Managing Member or the Company, after any applicable notice and cure period has expired, under any Transaction Document to which such Person is a party, and such event of default has or could reasonably be expected to have a Material Adverse Change on the Company or the Class A Member as reasonably determined by the Class A Member (unless the action or inaction that has led directly to such event of default has been directed, accepted or approved by the Class A Member in writing);
(d) the Class B Member, the Managing Member, the Company or the Project violates any material Applicable Law (unless the action or inaction that has led directly to such violation has been directed, accepted or approved by Class A Member or Investor in writing), and such violation has or could reasonably be expected to have a Material Adverse Change on the Company;
(e) the Managing Member, Class B Member or the Company engages in fraud, willful misconduct or gross negligence, or breaches a fiduciary duty;
(f) any Bankruptcy or insolvency of the Class B Member, the Managing Member or the Company, whether voluntary or involuntary, and in the case of an
 
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involuntary Bankruptcy proceeding, not stayed or dismissed within sixty (60) days, or the foreclosure or involuntary transfer of Membership Interests held by the Managing Member;
(g) the Managing Member ceases to be an Affiliate of the Class B Member; or
(h) a failure by the Managing Member to enforce the rights of the Company under any Transaction Document.
“ Representatives ” means, with respect to any Person, the managing member(s) and the officers, directors, employees, representatives or agents (including investment bankers, financial advisors, attorneys, accountants, brokers and other advisors) of such Person, to the extent that such officer, director, employee, representative or agent of such Person is acting in his or her capacity as an officer, director, employee, representative or agent of such Person.
“ Required Majority Vote ” is defined in Section 8.3(b) .
“ Restricted Investor Transferee ” means a Person who is (a) a direct competitor of Sponsor or its Affiliates in the residential or commercial PV System design, installation, finance or operation and maintenance industry, or any other then-business segment of Sponsor or its Affiliates (including but not limited to Sponsor’s home automation, security and wireless internet business segments) or (b) an Affiliate of any such direct competitor.
***
“ Restricted Transferee ” means, *** with respect to a Transfer by Investor, a Restricted Investor Transferee.
“ Review Period ” is defined in the Master EPC Agreement.
“ Securities Act ” means the Securities Act of 1933, as amended.
“ Sharing Percentage ” is defined in Section 5.1 .
“ Shortfall Funding Date ” is defined in Section 4.3(a) .
“ Shortfall Notice ” is defined in Section 4.3(a) .
“ Sponsor ” means Vivint Solar, Inc.
“ Sponsor Indemnified Costs ” means, with respect to any Sponsor Indemnified Party, subject to ARTICLE IX , any and all damages, claims, liabilities, demands, charges, suits, penalties, costs, and reasonable expenses (including court costs and reasonable attorneys’ fees and expenses of one law firm for all Sponsor Indemnified Parties plus one law firm of local counsel for each Project State in which relevant Projects are located) incurred by such Sponsor
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Indemnified Parties resulting from or relating to any Third Party Claim to the extent resulting from or relating to (a) any breach or default by Investor or Class A Member of any representation, warranty, covenant, indemnity or agreement under this Agreement or any other Transaction Document or (b) any claim for fraud, gross negligence or willful misconduct on the part of Investor or Class A Member relating to this Agreement or any other Transaction Document.
“ Sponsor Indemnified Parties ” means Sponsor Sub and any Person to whom Sponsor Sub Transfers its Membership Interests in accordance with ARTICLE IX , and each of their respective Affiliates and each of their respective shareholders, partners, members, officers, directors, employees, agents and other representatives, and their respective successors and assigns.
“ Sponsor Sub ” is defined in the preamble to this Agreement.
“ Subsidiary ” means, with respect to any Person, any corporation, partnership, limited liability company, joint venture or other entity of which such Person (either alone or through or together with any other Person pursuant to any agreement, arrangement, contract or other commitment) owns, directly or indirectly, 50% or more of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.
“ System Purchase Price ” is defined in the Master EPC Agreement.
“ Target Internal Rate of Return ” means an after-tax Internal Rate of Return of ***%.
“ Tax ” or “ Taxes ” (and with correlative meaning, “ Taxable ” and “ Taxing ”) means:
(a) any taxes, customs, duties, charges, fees, levies, penalties or other assessments imposed by any federal, state, local or foreign taxing authority, including, but not limited to, income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, net worth, employment, occupation, payroll, withholding, social security, alternative or add-on minimum, ad valorem, transfer, stamp, or environmental tax, or any other tax, custom, duty, fee, levy or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax, or additional amount attributable thereto; and
(b) any liability for the payment of amounts with respect to payment of a type described in clause (a) , including as a result of being a member of an affiliated, consolidated, combined or unitary group, as a result of succeeding to such liability as a result of merger, conversion or asset transfer or as a result of any obligation under any tax sharing arrangement or tax indemnity agreement.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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“ Tax Credits ” means energy credits under Section 48 of the Code or any successor to such section.
“ Tax Exempt Entity ” means (a) a “tax-exempt entity” or “tax-exempt controlled entity” as those terms are defined in Section 168(h) of the Code, (b) a Person described in Section 50(b)(3) or (4) of the Code, (c) a Person whose ownership of a Membership Interest would result in a disallowance or reduction of Tax Credits pursuant to Section 50(d) of the Code or (d) any other Person whose ownership of a Membership Interest would result in a recapture or disallowance of, or inability to claim, the Tax Credits or accelerated Depreciation deductions assumed in the Base Case Model.
“ Tax Loss Contest ” is defined in Section 7.7(c) .
“ Tax Matters Partner ” is defined in Section 7.7(a) .
“ Tax Return ” means any return, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including any IRS Form K-1 issued to Members by the Company, information return, claim for refund, amended return or declaration of estimated Tax.
“ Third Party Claim ” means any claim, action or proceeding made or brought by any Person who is not a Member or an Affiliate of a Member.
“ Third Party Penalty Claim ” is defined in Section 9.8(c) .
“ Tracking Model ” means a computer model in the form of the Base Case Model that reflects actual results of the Company using the calculation conventions in Section 6.5 , but with each of the Fixed Tax Assumptions remaining unchanged (except to the extent a Fixed Tax Assumption is incorrect due to a breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents.
“ Tranche ” is defined in the Master EPC Agreement.
“ Transactions ” means the transactions described in the Transaction Documents.
“ Transaction Documents ” means this Agreement, the Guaranty Agreement, the Master EPC Agreement and the Maintenance Services Agreement.
“ Transfer ” is defined in Section 9.1 .
“ Treasury Regulations ” means the federal income tax regulations (including temporary regulations) promulgated under the Code by the United States Department of Treasury, as such regulations may be amended from time to time. All references herein to specific sections of the Treasury Regulations shall be deemed also to refer to any corresponding provisions of succeeding regulations.
“ True-Up Base Case Model ” is defined in the Master EPC Agreement.
 
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“ True-Up Report ” is defined in the Master EPC Agreement.
“ UCC ” means the Uniform Commercial Code of any applicable jurisdiction.
Section 1.2. Other Definitional Provisions .
(a) As used in this Agreement and in any certificate or other documents made or delivered pursuant hereto or thereto, financial and accounting terms not defined in this Agreement or in any such certificate or other document, and financial and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under GAAP. To the extent that the definitions of financial and accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Agreement or in any such certificate or other document shall control.
(b) The words “hereof”, “herein”, “hereunder”, and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Section references contained in this Agreement are references to Sections in this Agreement unless otherwise specified. The term “including” shall mean “including without limitation”.
(c) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.
(d) Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, restated, supplemented or otherwise modified and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein.
(e) Any references to a Person are also to its permitted successors and assigns.
ARTICLE II
CONTINUATION; OFFICES; TERM
Section 2.1. Formation of the Company .
The Members hereby acknowledge the formation of the Company as a limited liability company pursuant to the Act, the Certificate of Formation and this Agreement.
Section 2.2. Name, Office and Registered Agent .
(a) The name of the Company shall be “Vivint Solar Mia Project Company, LLC” or such other name or names as may be agreed to by the Members from time to time. The principal office of the Company shall be c/o Vivint Solar, Inc., 4931 N 300 W, Provo, UT 84604. The Members may at any time change the location of such office to another location; provided that the Managing Member gives prompt written notice of any such change to the registered agent of the Company.
 
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(b) The registered office of the Company in the State of Delaware is located at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle. The registered agent of the Company for service of process at such address is The Corporation Trust Company. The registered office and registered agent may be changed by the Managing Member at any time in accordance with the Act; provided that the Managing Member gives prompt written notice of any such change to all Members. The registered agent’s primary duty as such is to forward to the Company at its principal office and place of business any notice that is served on it as registered agent.
Section 2.3. Purpose; No Partnership Intended .
(a) The nature of the business or purpose to be conducted or promoted by the Company is: (i) to engage in the transactions contemplated by the Transaction Documents and Customer Agreements; (ii) to engage in the acquisition, construction, installation, lease, ownership and sale, and the operation, management, maintenance and financing of the Projects and all other rights and assets necessary for the ownership and operation of such Projects and (iii) to engage in any lawful act or activity, enter into any agreement and to exercise any powers permitted to limited liability companies formed under the Act that are incidental to or necessary, suitable or convenient for the accomplishment of the purposes specified above.
(b) The Company shall exist for the purposes and business specified in Section 2.3(a) and, other than for purposes of determining the status of the Company under the Code and the applicable Treasury Regulations and under any applicable state, municipal or other income tax law or regulation, this Agreement shall not be deemed to create a partnership under the Delaware Revised Uniform Partnership Act, company, joint venture or other arrangement among the Members with respect to any actions whatsoever other than the purposes and business specified in Section 2.3(a) and the activities related thereto.
Section 2.4. Term .
The term of the Company commenced on the Effective Date and shall continue indefinitely.
Section 2.5. Organizational and Fictitious Name Filings; Preservation of Limited Liability .
Prior to the Company’s conducting business in any jurisdiction other than Delaware, the Managing Member shall, on behalf of the Company, register the Company as a foreign limited liability company and file such fictitious or trade names, statements or certificates in such jurisdictions and offices as necessary or appropriate for the conduct of the Company’s business. The Managing Member shall take any and all other actions as may be reasonably necessary or appropriate to perfect and maintain the status of the Company as a limited liability company under the laws of Delaware and any other state or jurisdiction other than Delaware in which the Company engages in business and continue the Company as a limited liability company and to protect the limited liability of the Members as contemplated by the Act.
 
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ARTICLE III
RIGHTS AND OBLIGATIONS OF THE MEMBERS
Section 3.1. Members; Membership Interests .
(a) The names of the Members, their addresses, contact information and Membership Interests held are listed on Annex I . Annex I shall be amended from time to time by the Managing Member without requiring the consent of any Member to reflect the change in a Member’s name, address or contact information, the withdrawal of any Member, the admission of any additional Member, Transfers of Membership Interests or the issuance of additional Membership Interests, in each case pursuant to and in accordance with the terms and conditions of this Agreement. The Managing Member shall, upon each amendment to Annex I , provide each Member, on a confidential basis for informational purposes, with a copy of such amended Annex I .
(b) The Membership Interests comprise one hundred (100) Class A Membership Interests (the “ Class A Membership Interests ”) and one hundred (100) Class B Membership Interests (the “ Class B Membership Interests ”).
(c) The Class A Membership Interests and the Class B Membership Interests shall (i) have the rights and obligations ascribed to such Membership Interests in this Agreement and the Act; (ii) be recorded in a register of Membership Interests, which register the Managing Member shall maintain; (iii) be transferable only on recordation of such Transfer in the register of Membership Interests, which recordation the Managing Member shall make, upon compliance with the provisions of ARTICLE IX ; and (iv) be personal property. The Members hereby specify, acknowledge and agree that all Membership Interests are securities governed by Article 8 and all other provisions of the UCC, and pursuant to the terms of Section 8-103(c) of the UCC such interests shall be “securities” for all purposes under such Article 8 and under all other provisions of the UCC. All Membership Interests shall be represented by certificates substantially in the form attached hereto as Exhibit A , shall be recorded in a register thereof maintained by the Company, and shall be subject to such rules for the issuance thereof in compliance with this Agreement, as the Managing Member may from time to time determine. The Managing Member is expressly authorized to execute the certificates on behalf of the Company.
(d) The Company shall be entitled to treat the registered holder of a Membership Interest, as shown in the register of Membership Interests referred to in Section 3.1 of this Agreement, as a Member for all purposes of this Agreement, except that the Managing Member may record in the register of Membership Interests any security interest of a secured party pursuant to any security interest permitted by this Agreement.
(e) If a Member Transfers all of its Membership Interest to another Person pursuant to and in accordance with the terms set forth in ARTICLE IX , the transferor shall automatically cease to be a Member.
 
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Section 3.2. Actions by the Members .
(a) Except as otherwise permitted by this Agreement (including Section 3.2(e) below), all actions of the Members shall be taken at meetings of the Members which may be called by any Member for any reason and shall be called by the Managing Member within ten (10) calendar days following the written request of a Member. The Members may conduct any Company business at any such meeting that is permitted under the Act or this Agreement. Meetings shall be at a reasonable time and place. Accurate minutes of any meeting shall be taken and filed with the minute books of the Company. Following each meeting, the minutes of the meeting shall be sent promptly to each Member.
(b) Members may participate in any meeting of the Members by means of conference telephone or other communications equipment so that all persons participating in the meeting can hear each other or by any other means permitted by law. Such participation shall constitute presence in person at such meeting.
(c) The presence in person or by proxy of Members owning more than 50% of the aggregate Class A Membership Interests and more than 50% of the aggregate Class B Membership Interests shall constitute a quorum for purposes of transacting business at any meeting of the Members.
(d) Written notice stating the place, day and hour of the meeting of the Members, and the purpose or purposes for which the meeting is called, shall be delivered by or at the direction of the Managing Member, to each Member of record entitled to vote at such meeting not less than five (5) Business Days nor more than thirty (30) calendar days prior to the meeting. Notwithstanding the foregoing, meetings of the Members may be held without notice so long as all the Members are present in person or by proxy.
(e) Any action may be taken by the Members without a meeting if such action is authorized or approved by the written consent of Members representing sufficient Membership Interests to authorize or approve such action pursuant to this Agreement at a meeting of all of the Members. The Members may conduct any Company business or take any action required of Members under this Agreement through written consent. Where action is authorized by written consent no prior notice is required, and no meeting of Members needs to be called or noticed. A copy of any action taken by written consent must be sent promptly to all Members, and all actions by written consent shall be filed with the minute books of the Company.
(f) The Managing Member is hereby authorized by the Members to take any and all actions on behalf of the Company subject, in the case of Major Decisions and any transaction with an Interested Member, to the approval requirements in Section 8.3 .
(g) The voting power of each Membership Interest for purposes of any vote, consent or approval of Members required under this Agreement or the Act shall be as follows:
(i) each Class A Membership Interest shall entitle its holder to one vote;
(ii) each Class B Membership Interest shall entitle its holder to one vote; and
(iii) each Member shall cast all of its votes of a particular class as one block of votes.
 
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Section 3.3. Management Rights
Except as otherwise provided under Section 8.3(d) , no Member, in its capacity as such, other than the Managing Member, shall have any right, power or authority to take part in the management or control of the business of, or transact any business for, the Company, to sign for or on behalf of the Company or to bind the Company in any manner whatsoever. Except as otherwise provided herein, the Managing Member shall not hold out or represent to any third party that any other Member has any such power or right or that any Member is anything other than a member in the Company. A Member shall not be deemed to be participating in the control of the business of the Company by virtue of its possessing or exercising any rights set forth in this Agreement or the Act or any other agreement relating to the Company. No Member or its Affiliates shall have any duty, fiduciary or otherwise, to refrain from engaging in the same or similar activities or lines of business as the Company, the Members or any Affiliates thereof, and no Member or any Affiliate thereof shall be liable to the Company, any Member or any Affiliate thereof by reason of any such activities.
Section 3.4. Other Activities .
Notwithstanding any duty otherwise existing at law or in equity, any Member may engage in or possess an interest in other business ventures of every nature and description, independently or with others, even if such activities compete directly with the business of the Company, and neither the Company nor any of the Members will have any rights by virtue of this Agreement in and to such independent ventures or any income, profits or property derived from them.
Section 3.5. No Right to Withdraw .
Subject to Section 9.3 and Section 9.4 , no Member will have any right to voluntarily resign or otherwise withdraw from the Company without the prior written consent of all remaining Members of the Company which consent may be given or withheld in their sole and absolute discretion.
Section 3.6. Limitation of Liability of Members .
(a) Notwithstanding anything to the contrary set forth in this Agreement or under Applicable Law, neither the Managing Member nor any other Member will be liable to the Company, any Member (including the Managing Member), or any other equity holder in or creditor of the Company for any action taken by or on behalf of the Company, except (i) for such actions as constitute gross negligence, fraud or willful misconduct of such Member, and (ii) as otherwise provided in ARTICLE IX . Without limiting or reducing the foregoing, each Member’s liability will be limited as set forth in the Act. Except as otherwise required by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, will be the debts, obligations and liabilities solely of the Company, and the Members of the Company will not be obligated personally for any of such debts, obligations or liabilities solely by reason of being a Member of the Company.
 
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(b) Each of the Members will be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any other Person who is a Member, or any officer or employee of the Company, or by any other individual as to matters the Members reasonably believe are within such other individual’s professional or expert competence, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits or losses of the Company or any other facts pertinent to the existence and amount of assets from which distribution to the Members might properly be paid.
(c) To the extent that, at law or in equity, a Member, in its capacity as a member or manager of the Company or otherwise, has duties (including fiduciary duties) or liabilities relating thereto to the Company or to any Member or other Person bound by this Agreement more expansive than those set forth in Section 3.6(a) , such duties and liabilities are hereby limited to the extent permitted under the Act to those set forth in Section 3.6(a) ; provided that this Section 3.6(c) or Section 3.6(a) will not be construed to limit obligations or liabilities expressly provided for in this Agreement (including the obligations with respect to Capital Contributions) or any other Transaction Document; provided , further , that these limitations shall not apply to Removal Events or a breach by any Member of its respective representations or covenants set forth herein. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Member, in its capacity as a member or manager of the Company or otherwise, otherwise existing at law or in equity, are agreed by the Members to replace such other duties and liabilities of such Member.
Section 3.7. No Liability for Deficits .
Except to the extent otherwise provided by law with respect to third-party creditors of the Company, none of the Members will be liable to the Company for any deficit in its Capital Account, nor will such deficits be deemed assets of the Company.
Section 3.8. Company Property .
All property owned by the Company, whether real or personal, tangible or intangible and wherever located, will be deemed to be owned by the Company, and no Member, individually, will have any ownership of such property.
Section 3.9. Retirement, Resignation, Expulsion, Incompetency, Bankruptcy or Dissolution of a Member .
The retirement, resignation, expulsion, Bankruptcy or dissolution of a Member will not, in and of itself, dissolve the Company. The successors in interest to the bankrupt Member shall, for the purpose of settling the estate, have all of the rights of such Member, including the same rights and subject to the same limitations that such Member would have had under the provisions of this Agreement to Transfer its Membership Interest. A successor in interest to a Member will not become a substituted Member except as provided in this Agreement.
 
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Section 3.10. Withdrawal of Capital .
No Member will have the right to withdraw capital from the Company or to receive or demand distributions (except as contemplated under Section 4.1(b) and except as to distributions to which it is entitled under ARTICLE VI ) or return of its Capital Contributions until the Company is dissolved in accordance with this Agreement and applicable provisions of the Act. No Member will be entitled to demand or receive any interest on its Capital Contributions.
Section 3.11. Representations and Warranties .
(a) The Sponsor Sub, in its capacity as Class B Member and Managing Member, represents and warrants to the Company and each other Member, that all of the statements in this Section 3.11 shall be true and correct as of the Effective Date:
(i) Organization , Good Standing , Etc . Sponsor Sub is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation. Sponsor Sub has the limited liability company power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Sponsor Sub is duly qualified to do business and is in good standing under the laws of each jurisdiction that its business requires it to be so qualified, except where the failure to be so qualified would not adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Sponsor Sub or the Company.
(ii) Authority . Sponsor Sub has the limited liability company power and authority to enter into the Transaction Documents to which it is a party, to perform its obligations under such Transaction Documents and to consummate the transactions contemplated thereby. The execution and delivery by Sponsor Sub of the Transaction Documents to which it is a party and the consummation by Sponsor Sub of the transactions contemplated thereby have been duly and validly authorized by all necessary action required on the part of Sponsor Sub, and such Transaction Documents have been duly and validly executed and delivered by Sponsor Sub. Each of the Transaction Documents to which Sponsor Sub is a party constitutes the legal, valid and binding obligation of Sponsor Sub, enforceable against it in accordance with the terms, subject to the effects of Bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors’ rights and remedies generally and to general principles of equity.
(iii) No Conflicts . The execution and delivery by Sponsor Sub of the Transaction Documents to which it is a party and the performance by Sponsor Sub of its obligations under such Transaction Documents will not (A) violate any constitution, statute, law, ordinance, judgment, settlement, writ, regulation, rule, injunction, order, decree, ruling, charge or other restriction of any Governmental Authority having jurisdiction, (B) conflict with or cause a breach of any provision in the organizational documents of Sponsor Sub, or (C) cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, note, bond, mortgage, indenture, agreement, license, intellectual property license or right, instrument, decree, judgment or other arrangement to which Sponsor Sub is a party or under which
 
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any of them is bound or to which any of their assets is subject (or result in the imposition of a security interest or encumbrance upon any such assets), except (in the case of clauses (A) and (C) ) for any that would not adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Sponsor Sub or the Company.
(iv) No Consent . All consents, approvals and filings then required to be obtained or made by Sponsor Sub to execute, deliver and perform the Transaction Documents to which it is a party shall have been obtained or made and shall be in full force and effect.
(v) Absence of Litigation . There are no pending or, to the Knowledge of Sponsor Sub, threatened claims, disputes, governmental investigations, suits, actions (including, without limitation, non-judicial real or personal property foreclosure actions), arbitrations, legal, administrative or other proceedings of any nature, domestic or foreign, criminal or civil, at law or in equity, of, in, or before any Governmental Authority or before any arbitrator, and Sponsor Sub is not subject to any outstanding injunction, judgment, order, decree, ruling or charge, other than in each case any such instance that would not reasonably be expected to adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Sponsor Sub or the Company.
(vi) Acknowledgment . Sponsor Sub acknowledges that, except with respect to the representations and warranties expressly made by Investor and the Company in the Transaction Documents, neither Investor nor the Company has made any representation or warranty, either express or implied, under the Transaction Documents. Without limiting the foregoing, Sponsor Sub acknowledges that neither Investor nor the Company has made any representation or warranty with respect to Sponsor Sub’s, or the Company’s, eligibility to claim investment tax credits or the availability of other tax benefits or savings except as expressly set forth herein.
(vii) Accredited Investor . Sponsor Sub is an “Accredited Investor” as such term is defined in Regulation D under the Securities Act. It has had a reasonable opportunity to ask questions of and receive answers from Investor concerning (A) Investor, (B) the Company, and (C) the Class B Membership Interests, and all such questions have been answered to the full satisfaction of Sponsor Sub. Sponsor Sub understands that the Class B Membership Interests have not been registered under the Securities Act in reliance on an exemption therefrom, and that the Class B Membership Interests must be held indefinitely unless the sale thereof is registered under the Securities Act, or an exemption from registration is available thereunder, and that Investor is under no obligation to register the Membership Interests. Sponsor Sub is acquiring the Class B Membership Interests for its own account and not for the account of any other person and not with a view to distribution or resale to others.
(viii) Taxes .
(A) Sponsor Sub is an entity disregarded as separate from its owner for U.S. federal tax purposes, and such owner (I) is a “United States person” within the meaning of Section 7701(a)(30) of the Code, and (II) is not subject to withholding under Section 1445 or Section 1446 of the Code.
 
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(B) No Taxes shall be imposed on the Company as a result of any obligation under any tax sharing arrangement, tax indemnity agreement or other similar contract entered into by the Sponsor Sub, the Company or any of their Affiliates prior to the Effective Date.
(C) The Company is a newly-formed entity that has not yet filed and has not yet been required to file any Tax Returns.
(D) No Person has extended or waived the application of any statute of limitations of any jurisdiction regarding the assessment or collection of any Tax of or with respect to the Company and no power of attorney has been granted by or with respect to the Company with regard to any matters relating to Taxes.
(E) No Taxes of or with respect to the Company are being contested, and there are no audits, claims, assessments, levies, administrative or judicial proceedings pending, threatened, proposed (tentatively or definitely) or contemplated against, or regarding Taxes of or with respect to, the Company.
(F) Immediately prior to the Effective Date the Company was a “disregarded entity” for federal income tax purposes and had been such an entity since it was formed. No election has been filed to treat the Company as a corporation for federal, state or local income tax purposes.
(G) The Company has no subsidiaries.
(H) The participation of Sponsor Sub as a Member will not cause any part of the assets of the Company to be characterized as “tax exempt use property” within the meaning of Section 168(h) of the Code and will not cause the Company to be an entity to which the provisions of Section 46(f) of the Code, as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990, applies.
(b) The Managing Member makes the following additional representations and warranties as to the Company to each other Member as of the Effective Date:
(i) Assets and Liabilities . The Company is not a party to any contracts or agreements other than as contemplated herein. Prior to the Company’s execution and delivery of the Transaction Documents to which the Company is a party, it had no liabilities. It has no debts or other liabilities other than as contemplated in the Transaction Documents or the Customer Agreements.
(ii) Employee Matters . The Company has no employees and has not maintained, sponsored, administered or participated in any employee benefit plan or arrangement.
 
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(c) Investor makes the following representations and warranties to the Company and each other Member as of the Effective Date:
(i) Organization, Good Standing, Etc . Investor is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation. Investor has the company power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Investor is duly qualified to do business and is in good standing under the laws of each jurisdiction that its business requires it to be so qualified, except where the failure to be so qualified would not adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Investor or the Company.
(ii) Authority . Investor has the company power and authority to enter into the Transaction Documents to which it is a party, to perform its obligations under such Transaction Documents and to consummate the transactions contemplated thereby. The execution and delivery by Investor of the Transaction Documents to which it is a party and the consummation by Investor of the transactions contemplated thereby have been duly and validly authorized by all necessary action required on the part of Investor, and such Transaction Documents have been duly and validly executed and delivered by Investor. Each of the Transaction Documents to which Investor is a party constitutes the legal, valid and binding obligation of Investor, enforceable against it in accordance with the terms, subject to the effects of Bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors’ rights and remedies generally and to general principles of equity.
(iii) No Conflicts . The execution and delivery by Investor of the Transaction Documents to which it is a party and the performance by Investor of its obligations under such Transaction Documents will not (A) violate any constitution, statute, law, ordinance, judgment, settlement, writ, regulation, rule, injunction, order, decree, ruling, charge or other restriction of any Governmental Authority having jurisdiction, (B) conflict with or cause a breach of any provision in the organizational documents of Investor, or (C) cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, note, bond, mortgage, indenture, agreement, license, intellectual property license or right, instrument, decree, judgment or other arrangement to which Investor is a party or under which it is bound or to which any of its assets is subject (or result in the imposition of a security interest or encumbrance upon any such assets), except (in the case of clauses (A) and (C) ) for any that would not reasonably be expected to adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Investor or the Company.
 
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(iv) No Consent . All consents, approvals and filings then required to be obtained or made by Investor to execute, deliver and perform the Transaction Documents to which it is a party shall have been obtained or made and shall be in full force and effect.
(v) Absence of Litigation . There are no pending or, to the Knowledge of Investor, threatened claims, disputes, governmental investigations, suits, actions (including, without limitation, non-judicial real or personal property foreclosure actions), arbitrations, legal, administrative or other proceedings of any nature, domestic or foreign, criminal or civil, at law or in equity, of, in, or before any Governmental Authority or before any arbitrator, and Investor is not subject to any outstanding injunction, judgment, order, decree, ruling or charge, other than in each case any such instance that would not reasonably be expected to adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Investor or the Company.
(vi) Accredited Investor . Investor is an “Accredited Investor” as such term is defined in Regulation D under the Securities Act. It has had a reasonable opportunity to ask questions of and receive answers from Sponsor Sub concerning (A) the Company, and (B) the Class A Membership Interests, and all such questions have been answered to the full satisfaction of Investor. Investor understands that the Class A Membership Interests have not been registered under the Securities Act in reliance on an exemption therefrom, and that the Class A Membership Interests must be held indefinitely unless the sale thereof is registered under the Securities Act, or an exemption from registration is available thereunder, and that Investor is under no obligation to register the Membership Interests. Investor is acquiring the Class A Membership Interests for its own account and not for the account of any other person and not with a view to distribution or resale to others.
(vii) Information and Investment Intent . Investor recognizes that investment in the Membership Interests involves substantial risks. It acknowledges that any financial projections that may have been provided to it are based on assumptions of future operating results developed by Sponsor Sub and Sponsor Sub’s advisers and, therefore, represent their best good faith estimate of future results based on assumptions about certain events (some of which are beyond the control of Sponsor Sub and the Company). It understands that no assurances or representations can be given that the actual results of the operations of the Company will conform to the projected results for any period. It has relied solely on its own legal, tax and financial advisers for its evaluation of an investment in the Membership Interests and not on the advice of Sponsor Sub or Company or any of their respective legal, tax or financial advisers (with the exception of Sponsor Sub’s representations, on which Investor has relied and will rely).
(viii) Acknowledgment . Investor acknowledges that, except with respect to the representations and warranties expressly made by Sponsor Sub and the Company in the Transaction Documents, neither Sponsor Sub nor the Company has made
 
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any representation or warranty, either express or implied, under the Transaction Documents. Without limiting the foregoing, Investor acknowledges that neither Sponsor Sub nor the Company has made any representation or warranty with respect to Investor’s or the Company’s eligibility to claim investment tax credits or the availability of other tax benefits or savings, except as specifically provided herein.
(ix) Government Regulation . Investor is not subject to regulation under the Federal Power Act and is not subject to regulation as an “electric utility,” under applicable state law. No governmental approvals are required for Investor to acquire the Class A Membership Interests.
(x) Domestic Status . Investor is an entity disregarded as separate from its owner for U.S. federal tax purposes, and such owner (A) is a “United States person” within the meaning of Section 7701(a)(30) of the Code and (B) is not subject to withholding under Section 1445 or Section 1446 of the Code.
(xi) Tax Character . The participation of Investor as a Member will not cause any part of the assets of the Company to be characterized as “tax-exempt use property” within the meaning of Section 168(h) of the Code and will not cause the Company to be an entity to which the provisions of Section 46(f) of the Code, as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990, applies.
Section 3.12. Other Covenants .
(a) United States Person . Each Member covenants to the Company and each other Member that it (or, if it is an entity disregarded as separate from its owner for U.S. federal tax purposes, its owner for such purposes) will remain a “United States person” within the meaning of Section 7701(a)(30) of the Code and will not be subject to withholding under Section 1446 of the Code.
(b) Tax Character . Each Member covenants to the Company and each other Member that it is and will remain for federal income tax purposes either a corporation (and not an “S-corporation”) that is not a Tax Exempt Entity or a disregarded entity; provided , however , if, for federal income tax purposes, a Class B Member is a disregarded entity, then each beneficial owner of such Class B Member (or if such beneficial owner is a partnership or disregarded entity, then each beneficial owner of such partnership or disregarded entity) is and will remain an individual or corporation (and not a “S-corporation”, partnership or disregarded entity) that is not a Tax Exempt Entity. The participation of such Member as a Member will not cause any part of the assets of the Company to be characterized as “tax-exempt use property” within the meaning of Section 168(h) of the Code and will not cause the Company to be an entity to which the provisions of Section 46(f) of the Code, as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990, applies.
(c) Sources of Funding for Purchase of Projects . The sole sources of funding for the purchase of the Projects by the Company shall be the Capital Contributions of the Members.
 
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Section 3.13. Removal of Managing Member .
(a) Within ten (10 Business Days after the occurrence of a Removal Event, the Managing Member shall give the Class A Member written notice thereof. If a Removal Event occurs, the Class A Member is entitled to remove the Managing Member by giving sixty (60) days’ written notice to the Managing Member of such removal, which shall take effect upon the expiration of such sixty (60)-day period unless the Managing Member cures such Removal Event within such sixty (60)-day period (and as a result of such cure such Removal Event shall be deemed not to have occurred and the Managing Member will not be subject to removal as Managing Member as a result of such Removal Event).
(b) If the Managing Member is so removed pursuant to Section 3.13(a) , the Class A Member shall elect a Person to succeed to all the rights, and to perform all of the obligations set forth for the Managing Member hereunder (the “ Manager ”), subject to the Company and/or the Manager obtaining any necessary prior governmental approvals. The Person selected as the Manager shall (A) be either (i) an entity that, within the preceding six (6) years has owned or operated for a continuous period of at least three (3) years solar photovoltaic systems with an aggregate electricity output of at least 20 megawatts, or (ii) such other entity which is approved by the Class A Member (such approval not to be unreasonably withheld or delayed) and (B) not be a direct competitor of the Managing Member (or any of its Affiliates). The entity chosen as Manager shall execute a counterpart to this Agreement.
ARTICLE IV
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; MEMBER LOANS
Section 4.1. Capital Contributions .
(a) The Members shall make Capital Contributions to the Company on the Effective Date in the amounts shown in Schedule 4.2(d) . In the case of Capital Contributions to fund payments required to be made on a Purchase Date under the Master EPC Agreement for a particular Tranche, the Class A Member shall contribute, subject to Section 4.1(c) , that amount, as determined pursuant to the Base Case Model for such Tranche, that will allow the Class A Member to reach the applicable Target Internal Rate of Return by the Projected Flip Date. Notwithstanding the foregoing, in no event shall the Class A Members contribute more than ***% of a payment required to be made under the Master EPC Agreement for a particular Tranche. The Class B Member shall make a Capital Contribution for the remainder of such payments required to pay the Net Purchase Price payable on that Purchase Date.
(b) If the True-Up Report delivered under the Master EPC Agreement indicates that the System Purchase Price for all Purchased Systems has left a balance owed to Developer, then, subject to Section 4.1(c) , the Class A Member shall contribute the amount the True-Up Base Case Model projects will allow the Class A Member to reach its Target Internal Rate of Return by the Projected Flip Date (but in no event more than ***% of the amount owed to Developer), and the Class B Member shall make a Capital Contribution for the remainder. If the True-Up Report indicates that the System Purchase Price for all Purchased Systems has left a
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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credit owed to the Company, then upon receipt of the refund from Developer, the Company shall distribute the refund, as a return of capital, to the Class A Member up to the amount the True-Up Base Case Model projects will allow the Class A Member to reach its Target Internal Rate of Return by the Projected Flip Date, and the Company shall distribute the remainder of the refund to the Class B Member as a return of capital. For the avoidance of doubt, distributions made to Members under this Section 4.1(b) shall not reduce or have any effect on the Members’ Capital Contributions.
(c) Notwithstanding anything to the contrary in this Agreement, the total amount of capital contributed by the Class A Member under Section 4.1(a) , Section 4.1(b) and any other provision in this Agreement will not exceed the Investor Contribution Cap.
(d) The Members will have no obligation to make any Capital Contributions other than as described in this Section 4.1 . All Capital Contributions required to be made under Section 4.1(a) and Section 4.1(b) will be made no later than when the Company is required to make payments under the Master EPC Agreement.
(e) Notwithstanding the above, the obligation of the Class A Members to make Capital Contributions to fund any payments required under the Master EPC Agreement for a particular Tranche shall be subject to the Class B Member’s making its Capital Contribution for its portion of the respective payment and Developer’s satisfaction of the conditions precedent in Section 2.3 of the Master EPC Agreement.
Section 4.2. Capital Accounts.
(a) A capital account (a “ Capital Account ”) shall be established and maintained for each Member in the manner required by the Treasury Regulations under Section 704(b) of the Code.
(b) A Member’s Capital Account shall be increased by (i) the amount of money the Member contributes to the Company, (ii) the net value of any other property the Member contributes to the Company ( i.e. , the fair market value of the property net of liabilities secured by the property that the Company is considered to assume or take subject to under Section 752 of the Code), (iii) the Net Income and items thereof allocated to the Member under Section 5.1, and (iv) any items of income and gain allocated to the Member, including any income or gain that is exempted from tax. A Member’s Capital Account shall be decreased by (A) the amount of money distributed to the Member by the Company, (B) the net value of any other property distributed to the Member by the Company (i.e. the fair market value of the property net of liabilities secured by the property that the Member is considered to assume or take subject to under Section 752 of the Code), (C) the Net Loss and items thereof allocated to the Member under Section 5.1, and (D) any items of loss or deduction allocated to the Member. The Members’ Capital Accounts shall be maintained and adjusted as required by the provisions of Treasury Regulations Sections 1.704-1(b)(2)(iv) and 1.704-1(b)(4), including adjustments to reflect the allocations to the Members of depreciation, depletion, amortization and gain or loss as computed for book purposes rather than the allocation of the corresponding items as computed for tax purposes, as required by Treasury Regulations Section 1.704-1(b)(2)(iv)(g).
 
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(c) The Company’s property shall be revalued, and the Capital Accounts of the Members shall be reset to reflect a revaluation as directed by Treasury Regulations Section 1.704-1(b)(2)(iv)(f), immediately prior to the following events: (i) if any new or existing Member makes a more than de minimis Capital Contribution in exchange for new or additional Membership Interests, (ii) if more than a de minimis amount of money or other property is distributed by the Company to a Member to redeem all or any portion of its Membership Interest, or (iii) if the Company is liquidated within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g).
(d) For federal income tax purposes, each of the initial Members will be treated as acquiring an interest in a new partnership in exchange for its initial Capital Contribution on the Effective Date and as each Member makes additional Capital Contributions its Capital Account will increase. The Company will be a disregarded subsidiary of Sponsor for federal income tax purposes prior to receiving the initial Capital Contributions. The initial Capital Account balances and Percentage Interest of each Member on the Effective Date are shown in Schedule 4.2(d) .
(e) The Capital Account balances and Percentage Interest of each Member are shown in Schedule 4.2(d) . The Managing Member shall update Schedule 4.2(d) from time to time as necessary to keep the information current. Any such updating will be consistent with the manner in which this ARTICLE IV requires that the Capital Accounts be maintained. Any reference in this Agreement to Schedule 4.2(d) will be treated as a reference to Schedule 4.2(d) as amended and in effect from time to time.
(f) If all or a portion of a Membership Interest in the Company is transferred in accordance with the terms of this Agreement, then the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the Membership Interest so transferred.
(g) The provisions of this Agreement relating to maintenance of Capital Accounts are intended to comply with Treasury Regulations Sections 1.704-1 and 1-704-2, and will be interpreted and applied in a manner consistent with such Treasury Regulations or any successor provision.
Section 4.3. Member Loans .
(a) If the Company does not have sufficient cash to pay its obligations (a “ Cashflow Shortfall ”) and the Managing Member determines in its reasonable discretion to request a member loan under this Section 4.3 , the Managing Member shall give each Member notice (a “ Shortfall Notice ”) of such Cashflow Shortfall not later than thirty (30) days prior to the date such funds are needed (the “ Shortfall Funding Date ”). Each Member shall have twenty (20) days after receipt of a Shortfall Notice to notify the Manager that it wishes to participate in loans to the Company in connection with any Cashflow Shortfall, and each such notice from a Member shall include the amount such Member wishes to provide. In the event that more than one Member elects to participate in loans to the Company under this Section 4.3 , such Members shall be allowed to participate ratably in proportion to the Sharing Percentage of all such participating Members. Member Loans by Members described in this Section 4.3 shall be repaid on each Distribution Date solely out of Distributable Cash that would otherwise be distributed to
 
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Members after any distributions required to be made pursuant to Section 4.1(b) or Section 6.1(a)(i)(A) are made, on a pro rata basis in accordance with the amount each such Member participates in such Member Loans. Each Member Loan shall be pari passu with all other Member Loans pursuant to this Section 4.3 , and no Member shall have the right to accelerate the repayment of such loan.
(b) Any Member Loan made by any Member pursuant to this Section 4.3 shall bear interest at a rate equal to the lesser of (i) the Target Internal Rate of Return or (ii) the Reference Rate plus two percent (2%), unless a lower rate of interest is otherwise agreed to by any such Member in its sole discretion. Interest on each Member Loan pursuant to this Section 4.3 shall accrue and, if not paid in accordance with this Section 4.3 , be compounded to the principal amount thereof on each Distribution Date.
(c) A Member Loan made by any Member pursuant to this Section 4.3 shall be evidenced by a note substantially in the form of Exhibit D . The Company shall, and the Managing Member shall cause the Company to, apply in accordance with the provisions of this Section 4.3 all amounts of Distributable Cash to the payment of principal of all outstanding Member Loans (together with accrued interest thereon and all other amounts due in respect thereof) made pursuant to this Section 4.3 and, unless and until the outstanding principal amount of all such Member Loans together with all interest thereon and all other amounts due in respect thereof is repaid in full, there shall be no distributions to the Members under this Agreement pursuant to ARTICLE VI or otherwise, except in each case distributions required to be made pursuant to Section 4.1(b) or Section 6.1(a)(i)(A) .
(f) Each Member Loan by any Member pursuant to this Section 4.3 constitutes a loan from such Member to the Company and is not a Capital Contribution.
ARTICLE V
ALLOCATIONS
Section 5.1. Allocations .
Except as provided in Section 5.2 or Section 10.2 , Net Income and Net Loss, and each item of income, gain, loss, deduction and credit of the Company for each Fiscal Year or any other period, shall be allocated among the Members as follows:
(a) During the Pre-Flip Period, ***% to the Class A Members and ***% to the Class B Members; and
(b) for the period beginning after the Flip Date,
(i) first, to the Class A Members, Net Income or items of income or gain in an amount equal to the amount distributed, or to be distributed, to such Members pursuant to Section 6.1(a)(ii)(A) for such Fiscal Year or other period; and
(ii) second, of the remaining Net Income, Net Loss, and items of income, gain, loss, deduction and credit, ***% to the Class A Members and ***% to the Class B Members.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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If there is more than one Class A Member or Class B Member, allocations to the Class A Members or the Class B Members, as applicable, pursuant to this Section 5.1 shall be shared among the Class A Members or the Class B Members, as the case may be, in proportion to their respective Percentage Interests. Each Member’s Percentage Interest multiplied by its percentage allocation applicable to such Member under subparagraphs (a)  and (b)(ii) of this Section 5.1 as in effect at any time and from time to time shall be referred to as that Member’s “ Sharing Percentage .”
Section 5.2. Adjustments .
The following adjustments shall be made in the allocations in Section 5.1 to comply with Treasury Regulations Section 1.704-1(b) and Section 1.704-2:
(a) In any Fiscal Year in which there is a net decrease in Company Minimum Gain, income and gain in the amount of the net decrease shall be allocated to Members in the ratio required by Treasury Regulations Section 1.704-2 or any successor provision. This clause is intended to constitute a “minimum gain chargeback” as provided by Treasury Regulations Section 1.704-2(f) and this clause will be construed accordingly.
(b) In any Fiscal Year in which there is a net decrease in Minimum Gain Attributable to Member Nonrecourse Debt, then income or gain in the amount of the net decrease shall be allocated to each Member who was considered to have had a share of such Minimum Gain Attributable to Member Nonrecourse Debt at the beginning of the Fiscal Year in the ratio required by Treasury Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii) or any successor provisions. This clause is intended to constitute a “chargeback of partner nonrecourse debt minimum gain” as provided by Treasury Regulations Section 1.704-2(i)(4) and this clause will be construed accordingly.
(c) Each Member’s Adjusted Capital Account balance for purposes of making other allocations under this ARTICLE V will be the balance after taking into account the allocations under Sections 5.2(a) and (b) .
(d) No losses or deductions may be allocated to a Member to the extent the allocation would lead or add to a deficit in the Member’s Adjusted Capital Account. Losses or deductions that cannot be allocated to a Member by reason of this Section 5.2(d) shall be allocated to the other Members in proportion to their Sharing Percentages, subject to the limitation in the preceding sentence.
(e) In the event any Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of gross income and gain shall be specially allocated to the Member in an
 
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amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, any deficit in the Member’s Adjusted Capital Account as quickly as possible. However, an allocation shall be made under this Section 5.2(e) only if and to the extent that the Member would have a deficit in its Adjusted Capital Account after all other allocations provided for in Section 5.1 and Section 5.2 have been tentatively made as if this Section 5.2(e) were not in this Agreement. This clause is intended to constitute a “qualified income offset” as provided by Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and this clause will be construed accordingly.
(f) In the event that any Member has a deficit in its Adjusted Capital Account at the end of any Fiscal Year or other period after all the other allocations in Section 5.1 and Section 5.2 (other than Section 5.2(e) ) have been taken into account, then the Member shall be specially allocated items of Company income and gain as quickly as possible to eliminate the deficit to the extent permitted under Section 471 of the Code.
(g) Member Nonrecourse Deductions will be allocated in the manner specified in Treasury Regulations Section 1.704-2(i)(1). Nonrecourse Deductions for any Fiscal Year shall be allocated to the Members in the same ratio as other partnership items under Section 5.1 or Section 10.2(c) and Section 10.2(d) , as applicable.
(h) If the Company distributes property to a Member in liquidation of the Membership Interest of the Member and there is an adjustment in the adjusted tax basis of Company property under Section 734(b) of the Code, there shall be a corresponding adjustment to the Capital Account of the Member receiving the distribution. If the Company distributes cash to a Member in excess of its outside basis in its Membership Interest, leading to an adjustment in the inside basis of the Company property under Section 743(b) of the Code, solely for purposes of adjusting Capital Accounts of the Members, the adjustment in the inside basis shall be treated as gain or loss and be allocated among the Members in the same ratio as other gain or loss for the Fiscal Year in which the adjustment occurs. This provision is intended to comply with Treasury Regulations Sections 1.704-1(b)(2)(iv)(m)(2) and (4) and shall be interpreted consistently therewith.
(i) The allocations in this Section 5.2 are intended to comply with the Treasury Regulations. To the extent the Company can do so consistently with the Treasury Regulations, such allocations (including those likely to occur in the future) shall be taken into account in allocating other items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocation of other items and the allocations pursuant to this Section 5.2 shall be equal to the net amount of the allocations under this ARTICLE V and Section 10.2 to each Member that would have been made if this Agreement did not have clauses (a) through (i) of this Section 5.2 .
Section 5.3. Tax Allocations .
(a) All tax items of Company income, gain, deduction, loss and credit for each Fiscal Year or other period shall be allocated in the same proportions as Net Income and Net Loss for such Fiscal Year were allocated under Section 5.1 and Section 5.2 .
 
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(b) Notwithstanding Section 5.3(a) , if, as a result of contributions of property by a Member to the Company or an adjustment to the Gross Asset Value of Company assets pursuant to this Agreement, there is a difference between the adjusted basis of an item of Company property for federal income tax purposes and as determined under the definition of Gross Asset Value, allocations of income, gain, loss and deduction shall be made among the Members so as to take into account the difference using the traditional method described in Treasury Regulations Section 1.704-3(b).
(c) Allocations pursuant to this Section 5.3 are solely for purposes of federal, state and local income taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account.
(d) To the extent that an adjustment to the adjusted tax basis of any Company asset is made pursuant to Section 743(b) of the Code as the result of a purchase of a Membership Interest in the Company, any adjustment to the depreciation, amortization, gain or loss resulting from such adjustment shall affect the transferee only and shall not affect the Capital Account of the transferor or transferee. In such case, the transferee shall be required to provide to the Company (i) information about the allocation of any step-up or step-down in basis to the Company’s assets and (ii) the depreciation or amortization method for any step-up in basis to the Company’s assets.
(e) The Members are aware of the tax consequences of the allocations made by this Section 5.3 and agree to be bound by the provisions of this Section 5.3 in reporting their shares of items of Company income, gain, loss, deduction and credit.
Section 5.4. Transfer or Change in Membership Interest .
If the respective Membership Interests or allocation ratios described in this ARTICLE V of the existing Members in the Company change or if a Membership Interest is Transferred in compliance with this Agreement to any other Person, then, for the Fiscal Year or other period in which the change or Transfer occurs, Net Income and Net Loss shall be allocated, as between the Members for the Fiscal Year in which the change occurs or between the transferor and transferee, by taking into account their varying interests using any method permitted by Section 706 of the Code and the Treasury Regulations (such as an interim-closing-of-the-books or a proration method) as agreed to by the Members.
 
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ARTICLE VI
DISTRIBUTIONS
Section 6.1. Distributions .
(a) Except as otherwise provided in Section 4.1(b) , this ARTICLE VI or Section 10.2 , Distributable Cash shall be distributed to the Members as follows:
(i) for each Distribution Date during the Pre-Flip Period,
(A) First, *** immediately preceding such Distribution Date, plus any *** for any prior Distribution Date; and
(B) Second, ***% of the remainder to the Class A Members, and ***% of the remainder to the Class B Members; and
(ii) for each Distribution Date thereafter,
(A) First, *** immediately preceding such Distribution Date, plus any *** for any prior Distribution Date; and
(B) Second, ***% of the remainder to Class A Members, and ***% of the remainder to Class B Members.
(b) Distributions pursuant to this Section 6.1 shall be made by the Managing Member on each Distribution Date, unless otherwise indicated.
(c) Notwithstanding anything to the contrary set forth in Section 6.1(a), any indemnity or similar payments for a Tax Loss paid to the Company pursuant to the Master EPC Agreement or otherwise received by the Company that compensate the Company for (or otherwise substitute for) Tax Credits, deductions or losses that would have been allocated pursuant to Section 5.1(a) shall be distributed ***% to the Class A Members and ***% to the Class B Members within five (5) Business Days after the receipt of such payments by the Company.
Section 6.2. Withholding Taxes .
(a) If the Company is required to withhold Taxes with respect to any allocation or distribution to any Member pursuant to any applicable federal, state or local Tax laws, the Company may, after first notifying the Member and permitting the Member, if legally permitted, to contest the applicability of such Taxes, withhold such amounts and make such payments to Taxing authorities as are necessary to ensure compliance with such Tax laws. Any funds withheld by reason of this Section 6.2 will nonetheless be deemed distributed to the Member in question for all purposes under this Agreement. If the Company did not withhold from actual distributions any amounts it was required to withhold, the Company may, at its option, (i) require the Member to which the withholding was credited to reimburse the Company for such withholding, or (ii) reduce any subsequent distributions to that Member by the amount of such withholding. This obligation of a Member to reimburse the Company for Taxes that were required to be withheld shall continue after such Member Transfers its Membership Interests in the Company. Each Member agrees to furnish the Company with any representations and forms as will reasonably be requested by the Company to assist it in determining the extent of, and in fulfilling, any withholding obligations it may have.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Section 6.3. Limitations upon Distributions .
No distribution shall be made if such distribution would violate any contract or agreement to which the Company is then a party or any Applicable Law then applicable to the Company.
Section 6.4. No Return of Distributions .
Any distribution of cash or property pursuant to this Agreement shall be treated as a compromise within the meaning of Section 18-502(b) of the Act (subject to the adjustments provided in Section 6.5(d) and Section 6.5(e) ) and, to the full extent permitted by law, any Member receiving the payment of any such money or distribution of any such property will not be required to return any such money or property to any Person, the Company or any creditor of the Company. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Member is obligated to return such money or property, then such obligation will be the obligation of such Member and not of the other Members. Without limiting the generality of the foregoing, a deficit Capital Account of a Member will not be deemed to be a liability of such Member nor an asset or property of the Company.
Section 6.5. Calculation of Internal Rate of Return .
(a) Tracking Progress . The Managing Member shall track the progress of the Class A Member in reaching the Target Internal Rate of Return and make reports to the Members as contemplated in ARTICLE VII .
(b) Notice of Date . The Managing Member shall notify the Members in writing on or before the earlier of (i) fifteen (15) calendar days before the Calculation Date upon which the Managing Member expects the Class A Member to achieve the Target Internal Rate of Return and (ii) thirty (30) calendar days before making any liquidating distributions in connection with a liquidation of the Company under Section 10.1 . The notice shall include the Tracking Model showing the Managing Member’s calculations and, in the case of a notice delivered in connection with a liquidation, the allocations and distributions that the Managing Member proposes to make to the Class A Member under Section 10.2 in light of the calculations.
(c) Calculation Conventions . The Managing Member shall use the following assumptions and conventions to calculate the Internal Rate of Return:
(i) It will assume that each of the Fixed Tax Assumptions is correct, except to the extent a Fixed Tax Assumption is incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents. In all other respects, Tax Credits and taxable income and loss of the Company for any taxable period will be calculated based on the amounts actually allocated in accordance with the federal income tax accounting methods and tax elections actually used with respect to such period by the Company in the preparation of its federal income tax reports and returns, or as adjusted on any amended return or as a result of a federal income tax audit of the Company or the Class A Member; provided however , any adverse tax results (including any recapture, loss or disallowance of all or a portion of a Tax Credit) will be ignored for purposes of such calculation if
 
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caused by (A) the breach of a representation or covenant by the Class A Member in this Agreement, (B) the Class A Member taking a position on any Tax Return that is inconsistent with the Company Tax Returns unless in the opinion of nationally recognized tax counsel selected by the Class A Member and reasonably acceptable to the Class B Member the position taken by the Class A Member is more likely than not correct, or (C) a Transfer by the Class A Member of all or a portion of its Membership Interest. Notwithstanding anything in this Agreement to the contrary, the calculation of Tax Credits and taxable income and loss will not take into account Section 199 of the Code.
(ii) Each Class A Member will be assumed to have owned its Membership Interest since the Effective Date.
(iii) The taxable income and loss of the Company will be treated as earned ratably during the Fiscal Year or other period with the result that the Taxes on such income, gain or benefit from the losses allocated to the Class A Members will be treated as having been paid or received in four equal installments on the respective estimated tax payment dates for a December 31 corporate taxpayer during the Fiscal Year or other period, except that Tax Credits for placing in service any Projects during a Fiscal Year or other period will be treated as earned on the last day of the Quarter in which Tax Credit is actually earned and except that, in the Fiscal Year or other period in which the Flip Date occurs, the taxable income or loss allocated to the Class A Member for the Pre-Flip Period will be allocated ratably to each of the four estimated tax payment dates during the Fiscal Year or other period, and the post-Flip Date amounts will be treated similarly.
(d) End-of-Year True Up . If the federal income Tax Return that the Company files for the Fiscal Year in which the Target Internal Rate of Return is treated as having been achieved suggests that the Target Internal Rate of Return was not achieved in the month the Company assumed for reasons other than inaccuracy of the Fixed Tax Assumptions (unless they are incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents) or the calculation assumptions and conventions in Section 6.5(c) , then the Managing Member will recalculate when the Target Internal Rate of Return was achieved and send a new notice to the Members that will be subject to the same dispute resolution procedures in Section 11.11(b) as the original notice; provided that a disagreeing Member must notify the Managing Member of its disagreement with the revised calculation within sixty (60) calendar days after receipt. The Managing Member shall also calculate the shortfall in or excess Distributable Cash, in present-value terms using the Target Internal Rate of Return as the discount rate, that the Class A Member received as a consequence of the earlier miscalculation. The shortfall or excess will be grossed up (without duplication for any tax detriment taken into account in calculating when the Target Internal Rate of Return was reached) for income taxes payable thereon assuming an income tax rate equal to the Corporate Tax Rate, calculated by dividing such shortfall or excess by 100% minus such income tax rate (such shortfall or excess increased by the tax gross up, the “ Cash Difference ”). Once the revised calculation becomes final, the percentages in Section 6.1 will be adjusted to the maximum extent necessary to correct, on a present-value basis calculated at the Target Internal Rate of Return, the Cash Difference. The revised percentages will remain in effect until the Cash Difference has been eliminated.
 
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(e) Curative Flip Allocations . If, after filing the federal income Tax Return for the year in which the Company treated the Target Internal Rate of Return as having been achieved, there is a change in the taxable income or loss or Tax Credits the Company reported for the period through the end of the month in which the Target Internal Rate of Return was assumed to have been achieved for reasons other than inaccuracy of the Fixed Tax Assumptions (unless they are incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents) or the calculation assumptions and conventions in Section 6.5(c) and the Company has not yet made liquidating distributions under Section 10.2 , then there will be a “ Curative Flip Allocation .” The Managing Member will determine the difference between the Target Internal Rate of Return and the Internal Rate of Return the Class A Members actually achieved through the last Distribution Date the Company distributed cash under Section 6.1(a)(i) . The sharing percentages in Section 6.1 will be adjusted for subsequent distributions to the maximum extent necessary to increase or decrease (as appropriate) the Class A Members’ Internal Rate of Return to the Target Internal Rate of Return as of such date. Such change in sharing percentages will remain in effect until, and to the extent necessary so that, the difference between the Target Internal Rate of Return and the actual Internal Rate of Return is eliminated. The Internal Rate of Return the Class A Members actually achieved will be calculated using the Fixed Tax Assumptions (unless they are incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents) and the calculation assumptions and conventions in Section 6.5(c) . If an event occurs that would have triggered a Curative Flip Allocation but for the fact that the Class B Members have already purchased the Membership Interests of the Class A Members under Section 9.4 of this Agreement or but for the fact that the Company has liquidated, then, as appropriate, the Class B Members will pay in cash, within thirty (30) calendar days after such event, the economic equivalent of the Curative Flip Allocation as additional purchase price for the Class A Membership Interests, or the Class A Members will pay in cash, within thirty (30) calendar days after such event, the economic equivalent of the Curative Flip Allocation as a reduction in purchase price for the Class A Membership Interests.
ARTICLE VII
ACCOUNTING AND RECORDS
Section 7.1. Reports .
(a) The Managing Member will prepare and deliver to each Member (i) after the end of each Quarter a written report regarding the performance of the Host Customers under the Customer Agreements (an “ Operations Report ”), it being understood that delivery to the Company of a report in the form of Exhibit E to the Maintenance Services Agreement shall satisfy this obligation; (ii) at least two calendar days prior to each distribution made under ARTICLE VI , a written report calculating the distributions for the relevant Distribution Date; and (iii) after the end of each Quarter a written report regarding (A) electricity generated by and (B) RECs and Government Incentives arising from the Projects owned by the Company, it being understood that delivery to the Company of a report in the form of Exhibit F to the Maintenance Services Agreement shall satisfy this obligation.
 
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(b) At least once every Fiscal Year during the Recapture Period and thereafter at least once every Quarter, the Managing Member will (i) run the Tracking Model and calculate whether the Class A Member has reached the Target Internal Rate of Return, and (ii) not later than sixty (60) days after the end of each Fiscal Year during the Recapture Period and thereafter after the end of each Quarter, send the Class A Member a report showing where it believes the Class A Member is in relation to the Target Internal Rate of Return (the “ IRR Report ”).
(c) The Managing Member will, at least once every Quarter from the Effective Date through the end of the first complete Quarter following the end of the Recapture Period, notify each Member in writing of each event during any prior Quarter that resulted in any recapture or disallowance of, or inability to claim, any Tax Credits.
(d) The Managing Member will submit to each Member (i) any notice of a breach, default or event of default received by the Managing Member under any Customer Agreement or Transaction Document within five (5) Business Days after the Managing Member’s receipt thereof and (ii) notice of any default by a counterparty under any Customer Agreement or Transaction Document within five (5) Business Days after Managing Member’s knowledge thereof, which (in the case of clause (ii) ) in the Managing Member’s determination, would reasonably be expected to adversely affect in a material manner all of the Projects owned by the Company taken as a whole, the Company or any Member.
Section 7.2. Books and Records and Inspection .
(a) The Managing Member will, on behalf of the Company, maintain full and accurate books of account, financial records and supporting documents, which will in all material respects reflect, completely, accurately and in reasonable detail, each transaction of the Company, and such other matters as are customarily entered into the records or maintained by Persons engaged in a business of like character or as are required by law. The books of account, financial records, and supporting documents and the other documents and writings of the Company will be kept and maintained by the Managing Member at the principal office of the Company. The financial records and reports of the Company will be kept in accordance with GAAP and kept on an accrual basis.
(b) In addition to and without limiting the generality of Section 7.2(a) , the Managing Member will, on behalf of the Company, maintain at the Company’s principal office:
(i) true and full information regarding the status of the financial condition of the Company, including any financial statements for the three (3) most recent years;
(ii) promptly after becoming available, a copy of the Company’s federal, state and local income Tax Returns for each year;
(iii) minutes of the proceedings of the Members and the Managing Member;
 
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(iv) a current list of the name and last known business, residence or mailing address of each Member;
(v) a copy of this Agreement, the Company’s Certificate of Formation, and all amendments thereto, together with executed copies of any written powers of attorney pursuant to which such agreements and Certificates of Formation and all amendments thereto have been executed and copies of written consents of Members;
(vi) true and full information regarding the amount of cash and a description and statement of the agreed value of any other property and services contributed by each Member, and the date upon which each became a Member; and
(vii) copies of records that would enable a Member to determine the Member’s relative shares of the Company’s distributions and the Member’s relative voting rights.
(c) Upon at least five (5) Business Days’ prior notice to the Managing Member, all books and records of the Company will be open to inspection and copying by any of the Members or their Representatives during business hours and at such Member’s expense, for any purpose reasonably related to such Member’s interest in the Company; provided that any such inspection or copying is conducted in a manner which does not unreasonably interfere with the Company’s business.
Section 7.3. Bank Accounts, Notes and Drafts .
(a) All funds not reasonably required for the near-term working capital needs of the Company or to fund distributions on the next Distribution Date will be placed in Permitted Investments, which investments will have a maturity appropriate for the anticipated cash flow needs of the Company. All Company funds will be deposited and held in accounts that are separate from all other accounts maintained by the Members, and the Company’s funds will not be commingled with any other funds of any other Person, including the Managing Member, any Member or any Affiliate (other than the Company itself as applicable) of the Managing Member or a Member.
(b) The Members acknowledge that the Managing Member may maintain Company funds in accounts, money market funds, certificates of deposit, other liquid assets in excess of the insurance provided by the Federal Deposit Insurance Corporation, or other depository insurance institutions and that the Managing Member shall not be accountable or liable for any loss of such funds resulting from failure or insolvency of the depository institution, so long as any such maintenance of funds is in compliance with Section 7.3(a) .
(c) Checks, notes, drafts and other orders for the payment of money shall be signed by such Persons as the Managing Member from time to time may authorize. When the Managing Member so authorizes, the signature of any such Person may be a facsimile.
 
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Section 7.4. Financial Statements .
(a) Within sixty (60) calendar days after the end of each Quarter (excluding the Quarter ending on the last day of each Fiscal Year), the Managing Member shall furnish to each Member unaudited financial statements prepared in accordance with GAAP with respect to such Quarter for the Company consisting of (A) a balance sheet showing the Company’s financial position as of the end of such Quarter, (B) profit and loss statements for the Company for such Quarter, and (C) a statement of cash flows for the Company for such Quarter.
(b) As soon as practical after the end of each Fiscal Year, but in any event within one hundred twenty (120) calendar days after the end of the Fiscal Year, the Managing Member shall furnish to each Member financial statements with respect to such Fiscal Year for the Company, prepared in accordance with GAAP, that are audited and certified by the Independent Accounting Firm, consisting of (A) a balance sheet showing the Company’s financial position as of the end of such Fiscal Year, (B) profit and loss statements for the Company for such Fiscal Year, (C) a statement of cash flows for the Company for such Fiscal Year and (D) related footnotes.
Section 7.5. Partnership Status and Tax Elections .
(a) The Members intend that the Company will be taxed as a partnership for United States federal, state and local income tax purposes. The Members agree not to elect to be excluded from the application of Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state statute with respect to their Membership Interests and agree not to elect for the Company to be treated as a corporation, or an association taxable as a corporation, under the Code or any similar state statute.
(b) The Company shall make the following elections on the appropriate Tax Returns:
(i) to the extent permitted under Section 706 of the Code, to adopt as the Company’s taxable year a year that ends on December 31 as long as such taxable year remains the Company’s “majority interest taxable year,” as defined in Treasury Regulations Section 1.706-1(b)(2);
(ii) to adopt the accrual method of accounting;
(iii) if a distribution of the Company’s property as described in Section 734 of the Code occurs or a transfer of Membership Interest as described in Section 743 of the Code occurs, on request in writing from any Member, to elect, pursuant to Section 754 of the Code to adjust the basis of the Company’s properties;
(iv) to elect to amortize the organizational expenses of the Company ratably over a period of one hundred eighty (180) months as permitted by Section 709(b) of the Code;
(v) to elect out of any “bonus depreciation” otherwise available under Section 168(k) of the Code; and
(vi) if approved in writing by Members representing a Required Majority Vote, any other election the Managing Member may deem appropriate.
 
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(c) The Company shall file an election under Section 6231(a)(1)(B)(ii) of the Code and the Treasury Regulations thereunder to treat the Company as a partnership to which the provisions of Sections 6221 through 6234 of the Code, inclusive, apply.
(d) At the request of the Class A Member, the Managing Member shall engage the Independent Accounting Firm to perform a cost segregation report in respect of any PV Systems identified by the Class A Member.
Section 7.6. Company Tax Returns .
The Managing Member shall prepare all Tax Returns of the Company, in Consultation with the Members. The Managing Member, in Consultation with the other Members, may extend the time for filing any such Tax Returns as provided for under applicable statutes. The Managing Member shall, on behalf of the Company, retain the Independent Accounting Firm to prepare or review Tax Returns and information returns for the Company. Each Member shall provide such information, if any, as may be reasonably needed by the Company for purposes of preparing such Tax Returns; provided that such information is readily available from regularly maintained accounting records. At least thirty (30) calendar days prior to filing Tax Returns and information returns, the Managing Member shall deliver to the other Members for their review a copy of the Tax Returns and information returns in the form proposed to be filed, and shall incorporate all reasonable changes or comments to such proposed Tax Returns and information returns requested by the other Members at least ten (10) calendar days prior to the filing date for such returns. After taking into account any such requested changes, the Managing Member shall, on behalf of the Company, file such Tax Returns in a timely manner, taking into account any applicable extensions. Within one hundred twenty (120) calendar days after the end of each calendar year, the Managing Member shall, on behalf of the Company, deliver to each Member a copy of the Tax Returns and information returns as filed, together with any additional tax-related information in the possession of the Managing Member or the Company that such Member may reasonably and timely request in order to prepare its own income Tax Returns. The Company shall bear the costs of the preparation and filing of the Tax Returns, including the fees of the Independent Accounting Firm.
Section 7.7. Tax Audits .
(a) The Managing Member is hereby designated as the “tax matters partner,” as that term is defined in Section 6231(a)(7) of the Code (the “ Tax Matters Partner ”), of the Company, with all of the rights, duties and powers provided for in Sections 6221 through 6234 of the Code, inclusive, provided however that in the case of a removal of the Managing Member after the occurrence of any Removal Event, the Investor shall have the right to assume the rights and duties of the Tax Matters Partner and to be designated as such. The Managing Member is hereby directed and authorized to take whatever steps it, in its reasonable discretion, deems necessary or desirable to perfect such designation, including filing any forms or documents with the IRS and taking such other action as may from time to time be required under the Treasury Regulations. The Managing Member shall remain as the Tax Matters Partner so long as it retains any ownership interests in the Company unless the Investor assumes the rights and duties of the Tax Matters Partner under the proviso to the first sentence of this paragraph.
 
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(b) The Tax Matters Partner, in Consultation with the other Members, shall use reasonable commercial efforts to direct the defense of any claims made by any tax authority to the extent that such claims relate to the adjustment of Company items at the Company level and, in connection therewith, shall cause the Company to retain and to pay the fees and expenses of counsel and other advisors chosen by the Tax Matters Partner in Consultation with the other Members. The Tax Matters Partner shall promptly deliver to each Member a copy of all notices, communications, reports and writings received from the IRS by the Company or the Tax Matters Partner relating to or potentially resulting in an adjustment of Company items, shall promptly advise each Member of the substance of any conversations with the tax authorities in connection therewith and shall keep the Members advised of all developments with respect to any proposed adjustments that come to its attention. In addition, the Tax Matters Partner shall (i) provide each Member with a draft copy of any correspondence or filing to be submitted by the Company in connection with any administrative or judicial proceedings relating to the determination of Company items at the Company level reasonably in advance of such submission, (ii) consider in good faith incorporating all changes or comments to such correspondence or filing requested by any Member and (iii) provide each Member with a final copy of such correspondence or filing. The Tax Matters Partner will provide each Member with notice reasonably in advance of any meetings or conferences with respect to any administrative or judicial proceedings relating to the determination of Company items at the Company level (including any meetings or conferences with counsel or advisors to the Company with respect to such proceedings) and each Member shall have the right to participate, at its sole cost and expense, in any such meetings or conferences.
(c) The Tax Matters Partner shall not, without a Required Majority Vote, (i) except in the case of any claim by the IRS that could give rise to an indemnity claim under this Agreement or any other Transaction Document in respect of federal income taxes or the loss of federal income tax benefits (a “ Tax Loss Contest ”), commence a judicial action (including filing a petition as contemplated in Section 6226(a) or Section 6228 of the Code) with respect to a federal income tax matter or appeal any adverse determination of a judicial tribunal; (ii) enter into a settlement agreement with the IRS which purports to bind the Members; (iii) intervene in any action as contemplated by Section 6226(b) of the Code; (iv) file any request contemplated in Section 6227(c) of the Code; or (v) except in the case of a Tax Loss Contest, enter into an agreement extending the period of limitations as contemplated in Section 6229(b)(1)(B) of the Code. Any cost or expense incurred by the Tax Matters Partner in connection with its duties as Tax Matters Partner shall be paid by the Company.
(d) If for any reason the IRS disregards the election made by the Company pursuant to Section 7.5(c) and commences any audit or proceeding in which it makes a claim, or proposes to make a claim, against any Member that could reasonably be expected to result in the disallowance or adjustment of any items of income, gain, loss, deduction or credit (including Tax Credits) allocated to such Member by the Company, then such Member shall promptly advise the other Members of the same, and such Member, in Consultation with the other Members, shall at the expense of the Company use best efforts to convert the portion of such audit or proceeding that relates to such items into a proceeding at the level of the Company consistent with the
 
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election of the Company pursuant to Section 7.5(c) . In the case of any such audit or proceeding involving the Investor for a tax period prior to or including the Flip Date, if the Investor is not successful in converting the portion of such audit or proceeding that relates to such items into a proceeding at the level of the Company, the Company shall reimburse the Investor for all reasonable costs and expenses, including reasonable attorneys’ fees, in contesting such claim.
(e) If any Member intends to file, pursuant to Section 6227 of the Code, a request for an administrative adjustment of any such partnership item of the Company, or to file a petition under Sections 6226, 6228 or other Sections of the Code with respect to any such partnership item or any other tax matter involving the Company, such Member shall, at least thirty (30) calendar days prior to any such filing, notify the other Members of such intent, which notification must include a reasonable description of the contemplated action and the reasons for such action; provided , however , that this Section 7.7(e) shall not relieve such Member’s obligation to use all commercially reasonable efforts to convert a Member level proceeding into a Company level proceeding as provided in Section 7.7(d) .
Section 7.8. Cooperation .
Subject to the provisions of this ARTICLE VII , each Member shall provide the other Members with such assistance as may reasonably be requested by such other Members in connection with the preparation of any Tax Return, any audit or other examination by any taxing authority, or any judicial or administrative proceedings relating to the liability for any Taxes with respect to the operations of the Company or the allowance or disallowance or recapture of any Tax Credits relating to the PV Systems.
Section 7.9. Fiscal Year .
The fiscal year of the Company (the “ Fiscal Year ”) shall be a year that ends on December 31.
ARTICLE VIII
MANAGEMENT
Section 8.1. Management .
Each of the Members acknowledges and agrees that the Managing Member shall have the authority, powers and responsibilities set forth herein. Except (a) for Major Decisions, (b) matters subject to approval pursuant to Section 8.4 , and (c) as otherwise required by Applicable Laws, the powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under the direction of, the Managing Member, who shall take all actions for and on behalf of the Company not otherwise provided for in this Agreement. In addition, the Members may, with the consent of the Managing Member, vest in the Managing Member the authority to take actions for and on behalf of the Company not otherwise provided for in this Agreement. Any such action shall require a Required Majority Vote.
 
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Section 8.2. Managing Member .
(a) The Managing Member shall be the Member designated to act as such hereunder from time to time in accordance with the provisions of this Section 8.2 or, if such Member is removed as Managing Member pursuant to Section 3.13 , the Manager (except for any references in this Agreement to the Managing Member in its capacity as a Member and not as a manager of the Company if such Manager is not a Member) (the “ Managing Member ”). The initial Managing Member shall be Sponsor Sub. Subject to the requirements for Major Decisions and the limits of the Managing Member’s authority under this Agreement, the obligations of the Managing Member, in addition to those set forth in this Agreement, shall include:
(i) Enforcing the Maintenance Services Agreement and the Master EPC Agreement on behalf of the Company;
(ii) Subject to the requirements for Major Decisions, upon the termination of the Maintenance Services Agreement, causing the Company to replace such Maintenance Services Agreement in accordance with Section 8.3 and Section 3.2(f) and, to the extent such replacement Maintenance Services Agreement is not with an Affiliate of Sponsor Sub, the operator (or an Affiliate thereof, if the operator’s obligations thereunder are being guaranteed by such Affiliate) under such replacement Maintenance Services Agreement shall have at least three years of experience operating and maintaining photovoltaic panels;
(iii) Delivering to each other Member all reports and notices delivered by MSA Provider under the Maintenance Services Agreement and by Developer under the Master EPC Agreement;
(iv) Causing the Company or the MSA Provider on the Company’s behalf to prepare and submit all filings of any nature which are required to be made by the Company under any Applicable Laws;
(v) Causing the Company or the MSA Provider on the Company’s behalf (as contemplated by the Maintenance Services Agreement) to procure and maintain, or cause to be procured and maintained by the Company, all material Governmental Approvals and Permits (if any) required for the Company and the Projects, to the extent applicable;
(vi) Causing the Company or the MSA Provider on the Company’s behalf (as contemplated by the Maintenance Services Agreement) to comply with the terms and conditions of the Customer Agreements, the Transaction Documents, and all material Governmental Approvals, Permits and Applicable Laws;
(vii) Causing the Company, whether at the request of the Class A Member or otherwise, to enforce compliance by their counterparties with the terms and conditions of all contracts under which the Company has any rights, including, without limitation, the Transaction Documents and the Customer Agreements, as contemplated by the Maintenance Services Agreement;
 
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(viii) Managing the Company’s cash balances according to investment guidelines set forth in Section 7.3 and making distributions out of Distributable Cash as provided under the relevant provisions of this Agreement;
(ix) Causing the Company or the MSA Provider on the Company’s behalf to manage local public relations and government relations, Host Customer contacts and other similar activities with respect to each Project; provided , however , that the Managing Member may not undertake any public relations activity on behalf of or in the name of any Member absent that Member’s express prior written consent, which such Member may freely withhold;
(x) Entering into an agreement with Sponsor, as agent on behalf of the Company, whereby Sponsor agrees to (i) complete and submit all applications and other filings required to be submitted in connection with the registration and procurement of RECs, (ii) with respect to each REC, use commercially reasonable efforts to sell such REC generated by the Projects on behalf of the Company to third parties, and (iii) take such other action as may be reasonably necessary to effectuate the foregoing in accordance with Applicable Laws; and
(xi) To the extent commercially reasonable, causing the Company to complete and submit applications and other filings required for the Company to receive the Government Incentives related to the Projects.
(b) In addition to the actions permitted pursuant to Section 8.2(a) , and in no event in limitation thereof, the Manager shall provide the following services to the Company:
(i) Insurance . The Managing Member shall cause the Company or the MSA Provider on the Company’s behalf to procure insurance coverage for, and in the name of, the Company at the Company’s expense, as required under this Agreement and any of the Transaction Documents and Customer Agreements and enforce the Company’s rights to insurance coverage, defense and indemnification; provided , however , that in the event (but only for so long as) the required property insurance is not available to the Company on commercially reasonable terms as determined in accordance with Exhibit C , Managing Member’s sole obligation under this clause (i)  shall be to cause the Company or the MSA Provider on the Company’s behalf to procure such property insurance coverage as is then available to the Company on commercially reasonable terms.
(ii) Insurance Claims . The Managing Member shall cause the Company or the MSA Provider on the Company’s behalf to adjust insurance claims with insurance carriers to ensure equitable recovery for property damage and business interruption claims. Adjustment of such a claim shall include: (A) filing proof of loss with all applicable supporting documentation, (B) site inspection, (C) negotiations with insurance carriers, and (D) ensuring that insurance proceeds be deposited and distributed in accordance with the terms and conditions of this Agreement, the Transaction Documents and the Customer Agreements. In the event of a liability claim, the Managing Member shall oversee the defense of the claim.
(iii) ***
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(c) In the event of a failure by the Managing Member to make timely payments of amounts due under the Maintenance Services Agreement at any time when the Company has adequate and available funds for such payment, any such late fee or interest charge in connection therewith shall be paid directly out of funds otherwise intended to be distributed to the Class B Member pursuant to Section 6.1 , which shall be deemed to have been distributed to the Class B Member upon such payment.
Section 8.3. Major Decisions .
(a) In addition to any other approval required by Applicable Laws or this Agreement, Major Decisions are reserved to the Members, and none of the Company, the Managing Member, or any officer thereof shall do or take or make or approve any Major Decisions without the vote required pursuant to Section 8.3(b) below.
(b) Other than the Major Decisions referred to in clause (bb)  of the definition of the term “ Major Decisions ” which shall require the approval of all Members, in the Pre-Flip Period the affirmative vote, consent or approval of a majority of the holders of the Class A Membership Interests and a majority of the holders of the Class B Membership Interests shall be required to authorize or approve a Major Decision, and, after the Flip Date, consent or approval of holders of a majority of the voting rights related to all outstanding Membership Interests shall be required to authorize or approve such Major Decision (the percentage applicable at the time a Major Decision will be made is referred to herein as a “ Required Majority Vote ”). Except as otherwise expressly provided in this Agreement, no separate vote, consent or approval of either Class A Member, acting as a class, or Class B Members, acting as a class, shall be required to authorize or approve any matter for which a vote, consent or approval of Members is required under this Agreement.
(c) The decision of each Member as to whether or not to consent to any Major Decision shall be in the sole discretion of such Member. A request for consent shall be sent by the Managing Member to each Member as provided in Section 11.1 .
(d) Notwithstanding anything to the contrary in this Agreement, if and to the extent the Managing Member fails to enforce the rights of the Company under any agreement between the Company, on the one hand, and MSA Provider, Developer, Sponsor, Managing Member, or any of their Affiliates (the “ Sponsor Related Parties ”), on the other hand, each Class A Member shall have the right to enforce such rights (but only such rights) on behalf and in the name of the Company, if the Managing Member has not commenced and thereafter continued proper enforcement actions within fifteen (15) Business Days (or earlier to the extent required to preserve the rights and remedies of the Company under any such agreement) after written notice from a Class A Member specifying such failure.
 
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Section 8.4. Officers .
(a) The Managing Member may, from time to time, designate one or more officers with such titles as may be designated by the Managing Member to act in the name of the Company with such authority as may be delegated to such officer(s) by the Managing Member. Without limiting the foregoing, any such officer shall act pursuant to such delegated authority until such officer is removed by the Managing Member. The Managing Member shall be liable for actions of the officer(s) granted authority hereunder, arising under the Transaction Documents. Any action taken by an officer designated by the Managing Member shall constitute the act of and serve to bind the Company. In dealing with the officers acting on behalf of the Company, no person or entity shall be required to inquire into the authority of the officers to bind the Company. Persons and entities dealing with the Company are entitled to rely conclusively on the power and authority of any officer set forth in this Agreement and any instrument designating such officer and the authority delegated to him or her.
(b) Initially, the officers of the Company shall be as follows:

Name	  	Title	
		
Alex Dunn	  	President and CEO	
Brendon Merkley	  	Chief Operating Officer	
Paul Dickson	  	Vice President of Financing	
Dan Black	  	Secretary and General Counsel	
Matt Woolsey	  	Treasurer and Controller	
(c) Each officer may sub-delegate the authority granted by the Managing Member to any other officer or employee of the Company.
Section 8.5. Costs & Expenses .
All reasonable costs and expenses incurred on behalf of the Company by the Managing Member to the extent approved by the Members shall be borne by the Company and shall be reimbursed to the Managing Member by the Company; provided , however , that Managing Member shall not be permitted to pass through any out-of-pocket expense that (a) Managing Member has expressly agreed in this Agreement to pay or (b) that are customary items of overhead (including, without limitation, office supplies, office expenses, office space, employee salaries, utilities, internet access, cellular phone service, computers, software and tools of the trade used by Managing Member to perform its management duties).
Section 8.6. Separateness . Each of the Members and the Managing Member acknowledges that the Company is to be formed and operated as a special purpose entity, distinct and separate from any Member or its Affiliates. Accordingly, the Managing Member shall cause the Company to maintain its existence separate and distinct from any other Person, including taking the following actions:
(a) maintaining in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware and obtaining and preserving its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and each other instrument or agreement necessary or appropriate to properly administer this Agreement and permit and effectuate the transactions contemplated hereby and thereby;
 
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(b) maintaining its own deposit accounts, separate from those of each Member and any of their respective officers and Affiliates;
(c) conducting all material transactions between the Company and any of its Affiliates on an arm’s length basis and on commercially reasonable terms;
(d) allocating fairly and reasonably the cost of any shared overhead expenses, including office space, with the Managing Member and the Class B Members and any of their respective officers and Affiliates;
(e) conducting its affairs separately from those of each Member and its officers and Affiliates, and maintaining accurate and separate books, records and accounts and financial statements;
(f) acting solely in its own limited liability company name and not that of any other Person;
(g) not holding itself out as having agreed to pay or Guarantee, or as otherwise being liable for, the obligations of any Member and any of such Member’s respective officers and Affiliates;
(h) not making any loans or extending any Indebtedness to, or acquiring any Indebtedness of, the Members or their respective Affiliates;
(i) not creating, granting or suffering to exist any Liens (other than Permitted Liens) on property of the Company (except as contemplated by the Customer Agreements and the Transaction Documents);
(j) not acquiring any asset other than any asset conveyed to the Company pursuant to any of the Customer Agreements or Transaction Documents or purchased by the Company in accordance with the Customer Agreements or Transaction Documents;
(k) maintaining all of its assets in its own name and not commingling its assets with those of any other Person;
(l) paying its own operating expenses and other liabilities out of its own funds;
(m) observing all limited liability company formalities, including maintaining meeting minutes or record meeting and acting on behalf of itself only pursuant to due authorization, required hereby and by the Certificate of Formation;
(n) maintaining adequate capital for the normal obligations reasonably foreseeable in light of its contemplated business operations;
 
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(o) not acquiring obligations or the securities of any Member or any of such Member’s officers and Affiliates, except as required under the Customer Agreements or Transaction Documents;
(p) holding itself out to the public as a legal entity separate and distinct from any other Person, including the Members;
(q) correcting any known misunderstanding regarding its separate identity;
(r) not forming, acquiring or holding any subsidiaries (except as contemplated by the Customer Agreements or Transaction Documents); and
(s) not identifying itself as a department or division of any Member or any of such Member’s respective officers and Affiliates.
The failure of the Company to comply with any of the foregoing provisions of this Section 8.6 shall not affect the status of the Company as a separate legal Person or the limited liability of the Members, or their respective Affiliates.
ARTICLE IX
TRANSFERS AND INDEMNIFICATION
Section 9.1. Transfers .
Each Member may only sell, transfer, assign, convey, pledge, mortgage, encumber, hypothecate or otherwise dispose of all or any part of its Membership Interests or any interest, rights or obligations with respect thereto, directly or indirectly (including through a Change of Member Control) (any such action, a “ Transfer ”) in compliance with this ARTICLE IX . Any attempted Transfer that does not comply with this ARTICLE IX shall be null and void and of no force or effect whatsoever.
Section 9.2. Conditions Applicable to All Transfers .
Except as otherwise provided in this ARTICLE IX , all Transfers of Membership Interests must satisfy the following conditions:
(a) The transferring Member must give notice of the proposed Transfer to each of the Members not less than ten (10) calendar days prior to the effective date of the proposed Transfer;
(b) The transferring Member and the prospective transferee each execute, acknowledge and deliver to the Company such instruments of transfer and assignment with respect to such Transfer and such other instruments as are reasonably satisfactory in form and substance to the other Members to effect such Transfer and confirm the transferor’s intention that the transferee become a Member in its place with respect to the Membership Interests so transferred, and the prospective transferee makes the representations, warranties and covenants set forth in Section 3.11 and Section 3.12 as of the date of such Transfer that had been made or agreed to by the transferring Member;
 
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(c) The transferee executes, adopts and acknowledges this Agreement, and executes such other agreements as the Managing Member may reasonably deem necessary or appropriate to confirm the undertaking of the transferee to be bound by the terms of this Agreement and to assume the obligations of the transferor under this Agreement (to the extent the transferor is to be released from such obligations);
(d) The Transfer will not violate any securities laws or any other applicable federal or state laws or the order of any court having jurisdiction over the Company or any of its assets, or any Project;
(e) In the case of a Transfer during the Recapture Period, the Transfer will not cause (i) the Company to terminate under Section 708(b)(1)(B) of the Code, unless the transferor has indemnified the other Members against any adverse tax effects in a manner acceptable to the other Members; (ii) the restrictions on use of Company losses in Section 470 of the Code to apply to the Company or the Members; (iii) the assets of the Company to turn wholly or partly into “tax-exempt use property” within the meaning of Section 168(h) of the Code; or (iv) the assets of the Company to become subject wholly or partly to the alternative depreciation system in Section 168(g) of the Code;
(f) The Transfer will not cause the Company to be classified as a corporation for federal income tax purposes;
(g) The Transfer shall not relieve the transferring Member of its obligation to make Capital Contributions pursuant to Section 4.1 , and the Transfer will not be made to a Restricted Transferee;
(h) The Transfer will not be made to a Prohibited Transferee; and
(i) The Transfer will not result in any recapture, loss or disallowance of all or a portion of a Tax Credit.
Section 9.3. Certain Permitted Transfers .
Except as otherwise provided in this Section 9.3 , notwithstanding Section 9.2 , the following Transfers (the “ Permitted Transfers ”) may be made at any time and from time to time, without restriction and without notice to, approval of, filing with, consent by, or other action of or by, any Member or other Person, so long as, in the case of a Transfer by a Class B Member, such Transfer does not result, and is not reasonably expected to result, in any recapture, loss or disallowance of all or a portion of a Tax Credit:
(a) The grant of any security interest in any Membership Interest pursuant to any pledge or security agreement any Member may enter into with lenders; provided , however , that the requirements in Section 9.2(a) , Section 9.2(d) , Section 9.2(e) , Section 9.2(f) and Section 9.2(h) shall be satisfied in respect of any such grant of a security interest;
 
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(b) Any Transfer in connection with any foreclosure or other exercise of remedies in respect of any Membership Interest subject to a security interest referred to in Section 9.3(a) ; provided , however , that the requirements in Sections 9.2(a) through 9.2(f) and Section 9.2(h) shall be satisfied in respect of any such Transfer;
(c) Any Transfer to a non-Member Affiliate in accordance with Section 9.4 ; provided , however , that the requirements in Section 9.2(b) , Section 9.2(c) , Section 9.2(d) , Section 9.2(e) , Section 9.2(f) and Section 9.2(h) shall be satisfied in respect of any such Transfer;
(d) A sale of Class A Membership Interests pursuant to Section 9.4 of this Agreement; and
(e) Any Transfer of a Class A Membership Interest by Investor after the Recapture Period; provided , that the requirements in Section 9.2(a) through Section 9.2(d) and in Section 9.2(f) through Section 9.2(h) shall be satisfied.
No Permitted Transfer shall release the transferring Member from any liabilities to the Company or the other Members arising prior to or in connection with such Permitted Transfer.
Section 9.4. Purchase Option .
(a) The Class B Member (or any Affiliate of a Class B Member designated by it) shall have the right, at any time within one hundred eighty (180) days after the Flip Date, to acquire all (but not less than all) of the Class A Membership Interests (the “ Purchase Option ”), upon giving the Class A Member thirty (30) calendar days’ prior written notice of an election to exercise the Purchase Option (the “ Exercise Notice ”). Any Exercise Notice, if given, may be revoked by the Class B Member by written notice to the Class A Member at any time; provided that if the Exercise Notice is so revoked, the Class B Member shall reimburse the Class A Member for all of the Class A Member’s incurred costs and expenses (including the costs of any appraisal referred to in Section 9.4(b) and the reasonable legal counsel fees and disbursements) incurred by the Class A Member in connection with such Exercise Notice being given and the Class A Member’s activities related thereto.
(b) The consideration for the Transfer of the Class A Membership Interests to the Class B Member pursuant to the Purchase Option during the period referred to in Section 9.4(a) (such amount, the “ Option Purchase Price ”) will be the higher of: (i) the fair market value of the Class A Membership Interests as of the Flip Date as agreed by the Class A Member and the Class B Member or, if they are unable to agree, by appraisal conducted by an appraiser selected jointly by the Class A Member and the Class B Member (or, if they are unable to agree upon a single appraiser within fifteen (15) days, by appraisal in accordance with the Appraisal Method, which shall be final and binding on all Members), and (ii) $***.
(c) If the Purchase Option is exercised, the closing of such Transfer shall occur on the Business Day that is (i) sixty (60) calendar days after the applicable Exercise Notice is given or (ii) such later date as may be required to obtain any applicable consents or approvals or satisfy any reporting or waiting period under any Applicable Laws.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(d) If the Purchase Option is exercised, at the closing of the Transfer, (i) the Class B Member shall pay the consideration described in Section 9.4(b) (by wire transfer of immediately available United States dollars to such United States bank accounts as the Class A Member may designate in a written notice to the Class B Member no later than five (5) Business Days prior to the closing date for the Transfer pursuant to the Purchase Option), and (ii) the Class A Member shall take the following actions: (A) the Class A Member shall Transfer to the Class B Member, all right, title and interest in and to the Class A Membership Interests, free and clear of all Liens other than Permitted Encumbrances; (B) the Class A Member shall be deemed to have made the representations on Schedule 9 attached hereto to such Class B Member and the Company; and (C) the Class A Member shall take all such further actions and execute, acknowledge and deliver all such further documents that are necessary to effectuate the Transfer of the Class A Membership Interests contemplated by this Section 9.4 . Upon the closing of such Transfer, (1) all of such Class A Member’s obligations and liabilities associated with the Class A Membership Interests that are the subject of such Transfer will terminate except those obligations and liabilities accrued through the date of such closing, (2) the Class A Member shall have no further rights as a Member, and (3) all the rights, obligations and liabilities associated with the Class A Membership Interests that are the subject of such Transfer shall become the rights, obligations and liabilities of each Person acquiring such Class A Membership Interests. The Class B Member will pay all reasonable costs and expenses incurred by the Class A Member in connection with the Transfer, including reasonable attorneys’ fees and the amount of any sales, use, realty transfer or similar Taxes payable in connection with such Transfer; provided , however , that the obligation of the Class B Member to pay such expenses pursuant to this sentence shall not exceed $***.
(e) The Class B Member may transfer its rights set forth in this Section 9.4 to any of its Affiliates.
Section 9.5. Regulatory and Other Authorizations and Consents .
(a) In connection with any Transfer pursuant to Section 9.4 and any Transfer of Class A Membership Interests (the “ Designated Transfers ”), each Member involved shall use all commercially reasonable efforts to obtain all authorizations, consents, orders and approvals of, give all notices to and make all filings with, all Governmental Authorities and third parties that may be or become necessary for the Designated Transfers, and its execution and delivery of, and the performance of its obligations under, this Agreement or other Transaction Documents in connection with any such Designated Transfer, and will cooperate fully with the other Members in promptly seeking to obtain all such authorizations, consents, orders and approvals, giving such notices and making such filings, including the provision to such third parties and Governmental Authorities of such financial statements and other publicly available financial information with respect to such Member, as such third parties or Governmental Authorities may reasonably request; provided , however , that no Member involved shall have any obligation to pay any consideration to obtain any such consents. In addition, the Members involved shall keep each other reasonably apprised of their efforts to obtain necessary consents and waivers from third parties or Governmental Authorities and the responses of such third parties and Governmental Authorities to requests to provide such consents and waivers.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(b) Without limiting the generality of Section 9.5(a) , each Member shall make such filings as may be required under the HSR Act, the Federal Power Act and any state Applicable Laws relating to the ownership or control of the Projects.
(i) To the extent required by the HSR Act, each Member involved in a Designated Transfer shall (A) file or cause to be filed, as promptly as practicable but in no event later than the fifteenth Business Day after the delivery of any Exercise Notice, as applicable, with the Federal Trade Commission and the United States Department of Justice, all reports and other documents required to be filed by such Member under the HSR Act concerning the Designated Transfer and (B) promptly comply with or cause to be complied with any requests by the Federal Trade Commission or the United States Department of Justice for additional information concerning the Designated Transfer, in each case so that the initial 30-day waiting period applicable under the HSR Act shall expire as soon as practicable. Each Member involved in a Designated Transfer agrees to request, and to cooperate with the other Members involved in requesting, early termination of any applicable waiting period under the HSR Act. The Class B Member, if involved in a Designated Transfer, shall be responsible for the filing fees incurred by all Members involved in the Designated Transfer in connection with the initial filings required by the HSR Act in connection with the Designated Transfer. Except as expressly provided in the prior sentence with respect to filing fees, each Member involved in a Designated Transfer will be responsible for its own fees and expenses, including any fees and expenses of counsel, accountants or other professional advisors.
(ii) To the extent required by the Federal Power Act, each Member involved in a Designated Transfer shall as promptly as practicable but, in the event of a Transfer pursuant to Section 9.4 no later than the tenth Business Day after the delivery of any Exercise Notice, provide to the Company, the Managing Member and/or the acquiror as applicable, information needed for such entity to file an application for approval of the Designated Transfer under Section 203 of the Federal Power Act. To the extent required by the regulations of FERC, within thirty (30) days of a Designated Transfer, the transferee of the Membership Interests, or at the request and the sole cost and expense of such transferee the Company, shall file with FERC a Notice of Self-Recertification of any Projects larger than one (1) MW, aggregated within one (1) mile, including a completed FERC Form 556.
Section 9.6. Admission .
Any transferee of all or part of any Membership Interests pursuant to a Transfer made in accordance with this Agreement shall be admitted to the Company as a substitute Member upon its execution of a counterpart to this Agreement.
 
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Section 9.7. Security Interest Consent .
If the Class B Member grants a security interest in any Class B Membership Interest in compliance with Section 9.3(a) , upon request by such Class B Member, each Class A Member will execute and deliver to any person holding such security interest (for itself and for the benefit of other lenders) such acknowledgments, consents or other instruments as such person may reasonably request to confirm that such grant and any foreclosure or other exercise of remedies in respect of such Class B Membership Interest constitutes a Permitted Transfer under this Agreement. If any Class A Member grants a security interest in any Class A Membership Interest in compliance with this Agreement, upon request by such Class A Member, the Class B Member will execute and deliver to any person holding such security interest (for itself and for the benefit of other lenders) such acknowledgments, consents or other instruments as such person may reasonably request to confirm that such grant and any foreclosure or other exercise of remedies in respect of such Class A Membership Interest constitutes a Permitted Transfer under this Agreement.
Section 9.8. Indemnity .
(a) The Class B Member agrees to indemnify, defend and hold harmless the Investor Indemnified Parties from and against any and all Investor Indemnified Costs, and the Class A Member agrees to indemnify, defend and hold harmless the Sponsor Indemnified Parties from and against any and all Sponsor Indemnified Costs; provided , however , that except with respect to Investor Indemnified Costs or Sponsor Indemnified Costs resulting from fraud, gross negligence or willful misconduct, or with respect to Taxes, in no event will any Class A Member’s or Class B Member’s aggregate obligation to indemnify the Indemnified Parties hereunder exceed the Maximum Liability.
(b) No claim for indemnification may be made with respect to any Indemnified Costs (other than with respect to Taxes, fraud, gross negligence, willful misconduct or failure to pay any amount due to Indemnified Parties under any Transaction Document) until the aggregate amount of such Indemnified Costs sought by (or previously sought by) the Sponsor Indemnified Parties or the Investor Indemnified Parties, as applicable, under this Agreement and all other Transaction Documents exceeds $***; provided that once such threshold amount of claims has been reached, then the relevant Indemnified Party and its Affiliates shall have the right to be indemnified with respect to all such claims, including amounts that were not previously paid because such threshold had not been reached; provided , further , that once such threshold has been reached, no individual claim or claims below $*** may be presented for indemnification, but individual claims that are less than such amount may be aggregated for the purpose of satisfying such threshold, and all claims outstanding at the end of each Fiscal Year may be presented for indemnification without regard to the amount thereof. Claims for indemnification under this Agreement and the other Transaction Documents shall not be duplicative of one another and shall not allow for duplicative recoveries.
(c) An Indemnified Party shall give written notice to the Indemnifying Party within ten (10) Business Days after it has actual knowledge of commencement or assertion of any Third Party Claim in respect of which the Indemnified Party may seek indemnification under this Section 9.8 . Such notice shall state the nature and basis of such Third Party Claim and the events and the amounts thereof to the extent known. Any failure to so notify the Indemnifying
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Party shall not relieve the Indemnifying Party from any liability that the Indemnifying Party may have to the Indemnified Party under this ARTICLE IX , except to the extent the failure to give such notice materially and adversely prejudices the Indemnifying Party. In case any such action, proceeding or claim is brought against an Indemnified Party, so long as the Indemnifying Party has acknowledged in writing to the Indemnified Party that it is liable for such Third Party Claim pursuant to this Section 9.8 , the Indemnifying Party shall be entitled to participate in and, unless in the reasonable judgment of the Indemnified Party a conflict of interests between it and the Indemnifying Party may exist in respect of such Third Party Claim or such Third Party Claim entails a material risk of criminal penalties or civil fines or non-monetary sanctions being imposed on the Indemnified Party (a “ Third Party Penalty Claim ”), to assume the defense thereof, with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnified Party, and after notice from the Indemnifying Party to the Indemnified Party of its election so to assume the defense thereof, except as otherwise provided herein, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation or defending such portion of such Third Party Penalty Claim; provided the parties agree that the handling of any Tax contests involving the Company will be governed by Section 7.7 .
(d) In the event that (i) the Indemnifying Party advises an Indemnified Party that the Indemnifying Party will not contest a claim for indemnification hereunder, (ii) the Indemnifying Party fails, within twenty (20) Business Days of receipt of any indemnification notice to notify, in writing, such Indemnified Party of its election to defend, settle or compromise, at its sole cost and expense, any such Third Party Claim (or discontinues its defense at any time after it commences such defense) or (iii) in the reasonable judgment of the Indemnified Party, a conflict of interests between it and the Indemnifying Party exists in respect of such Third Party Claim or the action or claim is a Third Party Penalty Claim, then the Indemnified Party may, at its option, defend, settle or otherwise compromise or pay such action or claim or Third Party Claim, in each case at the sole cost and expense of the Indemnifying Party. In any event, unless and until the Indemnifying Party elects in writing to assume and does so assume the defense of any such claim, proceeding or action, the Indemnifying Party shall be liable for the Indemnified Party’s reasonable costs and expenses arising out of the defense, settlement or compromise of any such action, claim or proceeding. The Indemnified Party shall cooperate to the extent commercially reasonable with the Indemnifying Party in connection with any negotiation or defense of any such action or claim by the Indemnifying Party. The Indemnifying Party shall keep the Indemnified Party fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.
(e) If the Indemnifying Party elects to defend any such action or claim, then the Indemnified Party shall be entitled to participate in such defense with counsel of its choice at its sole cost and expense unless otherwise specified herein; provided that any such participation of the Indemnified Party shall be at the Indemnifying Party’s sole cost and expense to the extent such participation relates to a Third Party Penalty Claim. If the Indemnifying Party does not assume such defense, the Indemnified Party shall keep the Indemnifying Party apprised at all times as to the status of the defense; provided , however , that the failure to keep the Indemnifying Party so informed shall not affect the obligations of the Indemnifying Party hereunder. Except as otherwise provided by Section 9.8(d) , the Indemnifying Party shall not be liable for any
 
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settlement of any action, claim or proceeding effected without its written consent; provided , however , that the Indemnifying Party shall not unreasonably withhold, delay or condition any such consent. Notwithstanding anything in this Section 9.8 to the contrary, the Indemnifying Party shall not, without the Indemnified Party’s prior written consent, (i) settle or compromise any claim or consent to entry of judgment in respect thereof which involves any condition other than payment of money by the Indemnified Party, (ii) settle or compromise any claim or consent to entry of judgment in respect thereof without first demonstrating to the Indemnified Party the ability to pay such claim or judgment, or (iii) settle or compromise any claim or consent to entry of judgment in respect thereof that does not include, as an unconditional term thereof, the giving by the claimant or the plaintiff to the Indemnified Party, a full and complete release from all liability in respect of such claim.
(f) If the amount of any Indemnified Costs, at any time after the making of an indemnity payment in respect thereof, is reduced by recovery, settlement or otherwise under any insurance coverage (excluding any proceeds from self insurance or flow through insurance policies) or under any claim, recovery, settlement or payment by or against any other entity, the amount of such reduction, less any costs, expenses or premiums incurred in connection therewith, must promptly be repaid by the Indemnified Party to the Indemnifying Party net of any Taxes imposed upon the Indemnified Party in respect of such amounts (but taking into account any Tax benefit the Indemnified Party receives as a result of such payment). Upon making any indemnity payment (other than any indemnity payment relating to Taxes), the Indemnifying Party will, to the extent of such indemnity payment, be subrogated to all rights of the Indemnified Party against any third party, except third parties that provide insurance coverage to the Indemnified Party or its Affiliates, in respect of the Indemnified Costs to which the indemnity payment relates. Without limiting the generality or effect of any other provision hereof, each such Indemnified Party and the Indemnifying Party shall duly execute upon request all instruments reasonably necessary to evidence and perfect the above described subrogation rights, and otherwise cooperate in the prosecution of such claims at the direction of the Indemnifying Party. Nothing in this Section 9.8 will be construed to require any Member to obtain or maintain any insurance coverage.
(g) For Tax reporting purposes, to the maximum extent permitted by Applicable Law, each party will agree to treat all amounts paid under any of the provisions of this ARTICLE IX as an adjustment to the Capital Contribution made by Investor in exchange for its Class A Membership Interests or the Capital Contribution made by Sponsor Sub in exchange for its Class B Membership Interests (or otherwise as a non-taxable reimbursement, contribution or return of capital, as the case may be). To the extent any such indemnification payment is includable as income of the Indemnified Party or its Affiliates as determined by agreement of the parties or, if there is no agreement, by an opinion of a nationally-recognized Tax counsel reasonably selected by the Indemnified Party that such amount is *** includable as income of the recipient or its Affiliates, the amount of the payment shall be increased by the amount of any federal income Tax required to be paid by the Indemnified Party or its Affiliates on the receipt or accrual of the indemnification payment, including, for this purpose, the amount of any such Tax required to be paid by the Indemnified Party or its Affiliates on the receipt or accrual of the additional amount required to be added to such payment pursuant to this
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Section 9.8(g) , assuming full taxability at the Corporate Tax Rate. Any payment made under this ARTICLE IX shall be reduced by the present value (as determined on the basis of a discount rate equal to 15% per annum and the same assumptions about taxability and tax rates) of any federal income tax benefit to be realized by the Indemnified Party or its Affiliate by reason of the facts and circumstances giving rise to such indemnification.
Section 9.9. No Duplication .
Any liability for indemnification under this ARTICLE IX shall be determined without duplication of recovery. Without limiting the generality of the prior sentence, if a statement of facts, condition or event constitutes a breach of more than one representation, warranty, covenant or agreement which is subject to the indemnification obligation in Section 9.8 or under another Transaction Document, only one recovery of Indemnified Costs per Indemnified Party shall be allowed.
Section 9.10. Survival .
All representations, warranties, covenants and obligations made or undertaken by a party hereto in any Transaction Document shall survive until the final date for any assertion of claims as forth in Section 9.11 , if and as applicable, or as otherwise provided in the Transaction Documents.
Section 9.11. Final Date for Assertion of Indemnity Claims .
All claims by an Indemnified Party for indemnification pursuant to this ARTICLE IX resulting from breaches of representations or warranties in ARTICLE III shall be forever barred unless the other party is notified within twenty-four (24) months after the date such representation or warranty was made; provided that, notwithstanding the foregoing, the representations and warranties in Section 3.11(a)(viii) , Section 3.11(b) , Section 3.11(c)(x) , or Section 3.11(c)(xi) shall survive until six (6) months following the expiration of the applicable statute of limitations (taking into account any waivers or extensions thereof); provided , further , that if written notice of a claim for indemnification has been given by an Indemnified Party on or prior to the last day of the respective foregoing period, then the obligation of the other party to indemnify such Indemnified Party pursuant to this ARTICLE IX shall survive with respect to such claim until such claim is finally resolved.
Section 9.12. Reasonable Steps to Mitigate .
Each Indemnified Party will take, at the Indemnifying Party’s own reasonable cost and expense, all reasonable commercial steps identified by Indemnifying Party to the Indemnified Parties to mitigate all Indemnified Costs (other than any such Indemnified Costs with respect to Taxes), which steps may include availing itself of any defenses, limitations, rights of contribution, claims against third Persons and other rights at law or equity. The Indemnified Parties will provide such evidence and documentation of the nature and extent of the Indemnified Costs as may be reasonably requested by the Indemnifying Party.
 
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Section 9.13. Net of Insurance Benefits .
All Indemnified Costs shall be net of insurance recoveries from insurance policies of the Company to the extent that any proceeds of such policies, less any costs, expenses or premiums incurred by the Company in connection therewith, are distributed by Company to the Indemnified Party; provided , however , such amount shall account for any costs or expenses incurred by the Indemnified Party in connection with obtaining insurance proceeds with respect to any breach or nonperformance hereunder.
Section 9.14. No Consequential Damages .
Indemnified Costs shall not include, and an Indemnifying Party shall have no obligation to indemnify any Indemnified Party for or in respect of, any consequential, special, incidental, exemplary, statutory, or punitive damages of any nature including but not limited to damages for lost profits or revenues or the loss of use of such profits or revenues (other than in each case revenues from Customer Agreements, Government Incentives or sales of RECs), increased costs of purchasing or providing equipment, materials, labor, services, debt service fees or penalties, or damages for lost opportunities; provided , however , that a loss, disallowance or recapture of, or inability to claim Tax Credits or other adverse tax consequences shall not be treated as consequential, special, incidental, exemplary, statutory, or punitive damages for purposes of this Agreement.
Section 9.15. Payment of Indemnification Claims .
All claims for indemnification shall be paid by the Indemnifying Party in immediately available funds in U.S. dollars. Any undisputed portion of an indemnification claim shall be paid promptly by the Indemnifying Party to the Indemnified Parties involved. An Indemnifying Party may dispute any portion of an indemnification claim, provided , however , that such disputed indemnification claim shall be paid promptly by the Indemnifying Party to the Indemnified Party together with interest at a rate equal to 5% per annum upon the final determination of the payable amount of the claim (if any) by a court of competent jurisdiction.
ARTICLE X
DISSOLUTION AND WINDING-UP
Section 10.1. Events of Dissolution .
The Company shall be dissolved upon the first to occur of the following:
(a) the written consent of each of the Members to dissolve the Company, but only on the effective date of dissolution specified by the Members in such writing at the time of such consent;
(b) entry of a decree of judicial dissolution under Section 18-802 of the Act;
(c) the issuance of a final, nonappealable court order which makes it unlawful for the business of the Company to be carried on; or
 
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(d) the termination of the legal existence of the last remaining Member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining Member of the Company unless the Company is continued in a manner permitted by this Agreement or the Act.
Section 10.2. Distribution of Assets .
(a) The Members hereby appoint the Managing Member to act as the liquidator upon the occurrence of one of the events in Section 10.1 . Upon the occurrence of such an event, the liquidator will proceed diligently to wind up the affairs of the Company and make final distributions as provided herein and in the Act. The liquidator may sell, and will use commercially reasonable efforts to obtain the best possible price for, any or all Company property, including to Members. In no event, without the approval of Members by Required Majority Vote, will a sale to a Member be for an amount that is less than fair market value (determined by the Appraisal Method if the Members (by Required Majority Vote) are unable to agree on the fair market value).
(b) The liquidator will first pay, satisfy or discharge from Company funds all of the debts, liabilities and obligations of the Company (including all expenses incurred in liquidation), including Member Loans, or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash escrow fund for contingent, conditional or unmatured liabilities in such amount and for such term as the liquidator may reasonably determine) in the order of priority as provided by law.
(c) All assets of the Company will be treated as if sold, and the gain or loss treated as realized on those assets will be allocated first to Members with deficits in their Capital Accounts (in the ratio of the deficits if more than one Member’s Capital Account is in deficit) to eliminate the deficits.
(d) Remaining gain or loss will be allocated next among the Class A Members in an effort to set the Capital Account of each Class A Member at a level that will allow it to reach the Target Internal Rate of Return out of the liquidating distributions if the Target Internal Rate of Return has not already been achieved and, thereafter, in the ratio as provided in Section 5.1(b) . Notwithstanding subsections (c) and (d) , the Class B Member will be allocated at least ***%, and the Class A Member will be allocated at least ***%, of any gain or loss at liquidation.
(e) After the allocations in subsections (c) and (d)  have been made, cash and property will be distributed to Members pro rata in the amount of the positive balances in their Capital Accounts by the end of the Fiscal Year in which the liquidation occurs (or, if later, within ninety (90) calendar days after such liquidation).
(f) The distribution of cash and property to a Member in accordance with the provisions of this Section 10.2 constitutes a complete return to the Member of its Capital Contributions and a complete distribution to the Member on its Membership Interests in the Company of all the Company’s property and constitutes a compromise to which all Members
 
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have consented within the meaning of Section 18-502(b) of the Act. If the assets of the Company remaining after the payment or discharge of the debts and liabilities of the Company are insufficient to return Capital Contributions of each Member, such Member shall have no recourse against the Company or any other Member.
Section 10.3. Certificate of Cancellation .
(a) When all debts, liabilities and obligations have been paid and discharged or adequate provisions have been made therefor and all of the remaining property and assets have been distributed to the Members, a certificate of cancellation shall be executed and filed by the liquidator with the Secretary of State of the State of Delaware, which certificate shall set forth the information required by Section 18-203 of the Act.
(b) Upon the filing of the certificate of cancellation, the existence of the Company shall cease.
(c) All costs and expenses in fulfilling the obligations under this Section 10.3 shall be borne by the Company.
Section 10.4. In-Kind Distributions . There shall be no distribution of assets of the Company in-kind without a prior Required Majority Vote approving such distribution.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Notices .
Unless otherwise provided herein, any offer, acceptance, election, approval, consent, certification, request, waiver, notice or other communication required or permitted to be given hereunder (each referred to as a “ Notice ”), shall be in writing and delivered (a) in person, (b) by registered or certified mail with postage prepaid and return receipt requested, (c) by recognized overnight courier service with charges prepaid or (d) by facsimile or electronic mail transmission, directed to the intended recipient at the address of such Member set forth on Schedule 4.2(d) attached hereto (as applicable) or at such other address as any Member hereafter may designate to the others in accordance with a Notice under this Section 11.1 . A Notice or other communication will be deemed delivered on the earliest to occur of (i) its actual receipt when delivered in person, (ii) the fifth Business Day following its deposit in registered or certified mail, with postage prepaid, and return receipt requested, (iii) the second Business Day following its deposit with a recognized overnight courier service or (iv) the date of receipt of a facsimile or electronic mail or, if such date of receipt is not a Business Day, the next Business Day following such date of receipt, provided the sender can and does provide evidence of successful transmission. Any Notice or other communication received on a day that is not a Business Day or later than 5:00 p.m., New York, New York time, on a Business Day shall be deemed to be received on the next Business Day.
 
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Section 11.2. Amendment .
Except for an amendment of Schedule 4.2(d) hereto in accordance with the terms of this Agreement, an amendment of Annex I in accordance with Section 3.1(a) , and a Transfer of Membership Interests and the admission of a new Member in accordance with the terms of this Agreement, this Agreement may be changed, modified or amended only by an instrument in writing duly executed by Members representing a Required Majority Vote; provided , that any amendment of this Agreement after the Flip Date shall not materially impair the rights of the Class A Member unless the Class A Member has consented to such amendment.
Section 11.3. Partition .
Each of the Members hereby irrevocably waives, to the extent it may lawfully do so, any right that such Member may have to maintain any action for partition with respect to the Company property.
Section 11.4. Waivers and Modifications .
Any consent or waiver, express, implied or deemed, to or of any breach or default by any Person in the performance by that Person of its obligations with respect to the Company or any action inconsistent with this Agreement is not a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person with respect to the Company or any other such action. Failure on the part of a Person to insist in any one or more instances upon strict performance of any provisions of this Agreement, to take advantage of any of its rights hereunder, or to declare any Person in default with respect to the Company, irrespective of how long that failure continues, does not constitute a waiver by that Person of its rights with respect to that Person or its rights with respect to that default until the applicable statute of limitations period has lapsed. All waivers and consents hereunder shall be in writing duly executed by Members representing a Required Majority Vote of the Members affected by such waiver or consent and shall be delivered to the other Members in the manner set forth in Section 11.1 .
Section 11.5. Severability .
Except as otherwise provided in the succeeding sentence, every term and provision of this Agreement is intended to be severable, and if any term or provision of this Agreement is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the legality or validity of the remainder of this Agreement. The preceding sentence shall be of no force or effect if the consequence of enforcing the remainder of this Agreement without such illegal or invalid terms or provision would be to cause any party to this Agreement to lose the benefit of its economic bargain.
Section 11.6. Successors; No Third-Party Beneficiaries .
This Agreement is binding on and inures to the benefit of the Members and their respective heirs, legal representatives, successors and permitted assigns. Nothing in this Agreement shall provide any benefit to any third party (other than the Company) or entitle any third party (other than the Company) to any claim, cause of action, remedy or right of any kind, it being the intent of the Members that this Agreement shall not be construed as a third-party beneficiary contract. To the full extent permitted by law, no creditor or other third party having
 
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dealings with the Company shall have the right to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and permitted assigns. None of the rights of the Members herein set forth to make Capital Contributions or loans to the Company shall be deemed an asset of the Company for any purpose by any creditor or other third party.
Section 11.7. Entire Agreement .
This Agreement, including the schedules attached hereto or incorporated herein by reference, constitutes the entire agreement of the Members with respect to the matters covered herein. This Agreement supersedes all prior agreements and oral understandings among the parties hereto with respect to such matters.
Section 11.8. Governing Law .
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, excluding any conflict of laws rule or principle that might refer the governance or construction of this Agreement to the law of another jurisdiction.
Section 11.9. Further Assurances .
In connection with this Agreement and the transactions contemplated hereby, each Member shall execute and deliver any additional documents and instruments and perform any additional acts that may be reasonably required or useful to carry out the intent and purpose of this Agreement and as are not inconsistent with the terms hereof.
Section 11.10. Counterparts .
This Agreement may be executed in any number of counterparts, each of which may be delivered by facsimile transmission or electronically in .PDF format and each of which shall be an original but all of which together will constitute one instrument, binding upon all parties hereto, notwithstanding that all of such parties may not have executed the same counterpart.
Section 11.11. Dispute Resolution .
(a) This Section 11.11 shall apply to any dispute arising under or related to this Agreement (whether arising in contract, tort or otherwise, and whether arising at law or in equity), including (i) any dispute regarding the construction, interpretation, performance, validity or enforceability of any provision of this Agreement or whether any Person is in compliance with, or breach of, any provisions of this Agreement, and (ii) the applicability of this Section 11.11 to a particular dispute. Notwithstanding the foregoing, this Section 11.11 shall not apply to any matters that, pursuant to the provisions of this Agreement, are to be resolved by a vote of the Members (including through the Managing Member). Any dispute to which this Section 11.11 applies is referred to herein as a “ Dispute .” With respect to a particular Dispute, each Member that is a party to such Dispute is referred to herein as a “ Disputing Member .”
 
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(b) If a Dispute arises, the Disputing Members shall attempt to resolve such Dispute through the following procedure: (i) first, the representatives of each of the Disputing Members shall promptly meet (whether by phone or in person) in a good faith attempt to resolve the Dispute; (ii) second, if the Dispute is still unresolved after twenty (20) calendar days following the commencement of the negotiations described Section 11.11(b)(i) , then the designated executive officer of each Disputing Member shall meet (whether by phone or in person) in a good faith attempt to resolve the Dispute; and (iii) third, if the Dispute is still unresolved after ten (10) calendar days following the commencement of the negotiations described in clause (ii) , then any Disputing Member may take such Dispute to litigation.
(c) If any Member raises a Dispute with respect to the Managing Member’s Internal Rate of Return calculation, such Disputing Member shall notify the Managing Member and the other Members not more than thirty (30) days after such Disputing Member has received the applicable Internal Rate of Return calculation notice. In such event, the Members and the Managing Member shall consider the issues raised or in Dispute and discuss such issues with each other and attempt to reach a mutually satisfactory agreement. If notice of Dispute is not given by any Member within such period, each calculation in the Internal Rate of Return will be final and binding on the Member. If the Dispute as to the Managing Member’s calculations is not promptly resolved within ten (10) Business Days of such notification of the Dispute, the Members and the Managing Member shall each promptly present their interpretations to an Independent Accounting Firm, and shall instruct the Independent Accounting Firm to determine the correct amount of the calculations in dispute (if applicable, in accordance with the methodology set forth in Section 6.5 or Section 7.1 ) and to resolve the dispute promptly, but in no event more than twenty (20) Business Days after having the dispute submitted to it. The Independent Accounting Firm will make a determination as to each of the items in dispute, which must be (i) in writing, (ii) furnished to each Member and the Managing Member and (iii) made in accordance with this Agreement, and which determination, absent manifest error, will be conclusive and binding on all Members. Each Member shall use reasonable efforts to cause the Independent Accounting Firm to render its decision as soon as reasonably practicable, including by promptly complying with all reasonable requests by the Independent Accounting Firm for information, books, records and similar items. In the event the Independent Accounting Firm determines that any of the calculations in dispute were incorrect such that distributions to the Class A Members were reduced by more than ***% over a period of one Fiscal Year or longer, the fees and expenses of the Independent Accounting Firm shall be borne by the Class B Members (pro rata in proportion to their Percentage Interests). In all other cases the fees and expenses of the Independent Accounting Firm shall be borne by the Disputing Member disputing any of the calculations (if more than one, pro rata in proportion to their Percentage Interests).
(d) Notwithstanding the foregoing, any Disputes under this Section 11.11 shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law. The Members hereby irrevocably submit to the non-exclusive jurisdiction of any state or federal court in the State of New York with respect to any action or proceeding arising out of or relating to any such Dispute. Each Member hereto irrevocably and unconditionally waives trial by jury in any action, suit or proceeding relating to a Dispute and for any counterclaim with respect thereto.
 
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Section 11.12. Confidentiality and Publicity .
(a) Confidential Information . The Members shall, and shall cause their Affiliates and their respective stockholders, members, Subsidiaries and Representatives to, hold confidential all information they may have or obtain concerning Sponsor Sub, Sponsor, Investor, the Company, and their respective assets, business, operations or prospects or this Agreement (the “ Confidential Information ”); provided , however , that Confidential Information shall not include information that (i) becomes generally available to the public other than as a result of a disclosure by a Member or any of its Representatives, or (ii) becomes available to a Member or any of its Representatives on a nonconfidential basis prior to its disclosure by the Company or its Representatives. In addition, each Member hereby acknowledges its obligations under the United States federal securities laws.
(b) Legally Compelled Disclosure . Confidential Information may be disclosed (i) as required or requested to be disclosed by a Member or any of its Affiliates or their respective stockholders, members, Subsidiaries or Representatives as a result of any Applicable Laws or rule or regulation of any stock exchange, the National Association of Insurance Commissioners or other regulatory authority having jurisdiction over such Member, or (ii) as required or requested by the IRS in connection with the PV System or Tax Credits relating thereto, including in connection with a request for any private letter ruling, any determination letter or any audit. If a party becomes compelled by legal or administrative process to disclose any Confidential Information, such party shall, to the extent permitted by Applicable Laws, provide the other Members with prompt Notice so that the other Members may seek a protective order or other appropriate remedy or waive compliance with the non-disclosure provisions of this Section 11.12 with respect to the information required to be disclosed. If such protective order or other remedy is not obtained, or such other Members waive compliance with the non-disclosure provisions of this Section 11.12 with respect to the information required to be disclosed, the first party shall furnish only that portion of such information that it is advised, by opinion of counsel, is legally required to be furnished and shall exercise reasonable efforts, at the other Members’ expense, to obtain reliable assurance that confidential treatment will be accorded such information, including, in the case of disclosures to the IRS described in clause (ii) above, to obtain reliable assurance that, to the maximum extent permitted by Applicable Laws, such information will not be made available for public inspection pursuant to Section 6110 of the Code.
(c) Disclosure to Representatives . Notwithstanding the foregoing, a Member may disclose Confidential Information received by it to its employees, consultants, legal counsel, lenders, potential lenders, investors, potential investors (subject to Section 11.12(d) ), agents or other Representatives who have a need to know such information; provided that such Member informs each such Person who has access to the Confidential Information of the confidential nature of such Confidential Information, the terms of this Agreement, and that such terms apply to them. The Members shall ensure that each such Person complies with the terms of this Agreement and that any Confidential Information received by such Member is kept confidential.
(d) Other Permitted Disclosures . Nothing herein shall be construed as prohibiting a party hereunder from using such Confidential Information in connection with (i) any claim against another Member hereunder, (ii) any exercise by a party hereunder of any of
 
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its rights hereunder, or (iii) a disposition by a Member of all or a portion of its Membership Interest or a disposition of an equity interest in such Member or its Affiliates, provided that such potential purchaser shall have entered into a confidentiality agreement with respect to Confidential Information on customary terms used in confidentiality agreements in connection with corporate acquisitions before any such information may be disclosed.
(e) Publicity . Prior to any Member (other than Investor or its Affiliates) making a public announcement respecting the Company or any Project that references Investor or any of its Affiliates (for the avoidance of doubt, for purposes of this Agreement, Sponsor shall not be treated as an Affiliate of Investor), such Member shall have obtained the prior written consent of Investor.
Section 11.13. Joint Efforts .
To the full extent permitted by law, neither this Agreement nor any ambiguity or uncertainty herein will be construed against any of the parties hereto, whether under any rule of construction or otherwise. On the contrary, this Agreement has been prepared by the joint efforts of the respective attorneys for, and has been reviewed by, each of the parties hereto.
Section 11.14. Specific Performance .
The Members agree that irreparable damage will result if this Agreement is not performed in accordance with its terms, and the Members agree that any damages available at law for a breach of this Agreement would not be an adequate remedy. Therefore, to the full extent permitted by law, the provisions hereof and the obligations of the Members hereunder shall be enforceable in a court of equity, or other tribunal with jurisdiction, by a decree of specific performance, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies and all other remedies provided for in this Agreement shall, however, be cumulative and not exclusive and shall be in addition to any other remedies that a Member may have under this Agreement, at law or in equity.
Section 11.15. Survival .
Subject to Section 9.11 , all indemnities and reimbursement obligations made pursuant to this Agreement shall survive dissolution and liquidation of the Company until expiration of the longest applicable statute of limitations (including extensions and waivers) with respect to the matter for which a Person would be entitled to be indemnified or reimbursed, as the case may be.
Section 11.16. Recourse Only to Member .
The sole recourse of the Company for performance of the obligations of any Member hereunder shall be against such Member and its assets and not against any assets or property of any present or future stockholder, partner, member, officer, employee, servant, executive, director, agent, authorized representative or Affiliate of such Member.
 
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Section 11.17. Costs, Expenses, Fees .
Except as otherwise provided in Section 9.4 and Section 9.5 , each Member shall be responsible for its own costs and expenses in connection with the Transaction Documents; provided that Class B Member shall reimburse Investor for up to $*** of any out-of-pocket transaction costs and expenses (including legal fees) actually incurred by Investor in connection with the transactions contemplated under the Transaction Documents (in addition to Class B Member’s obligations under Section 9.4 and Section 9.5 ).
[Remainder of this page intentionally left blank.]
 
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IN WITNESS WHEREOF, the parties, each a Member, have caused this Limited Liability Company Agreement to be signed by their respective duly authorized officers as of the date first above written.

VIVINT SOLAR MIA MANAGER, LLC	
		
By:	 	/s/ Paul Dickson	
	 	Name:	 	Paul Dickson	
	 	Title:	 	Vice President of Financing	
	
BLACKSTONE HOLDINGS FINANCE CO. L.L.C.	
		
By:	 	/s/ Lawrence A. Tosi	
	 	Name:	 	Lawrence A. Tosi	
	 	Title:	 	CFO	
Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC

Annex I
Members and Membership Interests

Class A Member	  	Number of Class A
Membership Interests Owned	 	  	Percentage of Class A
Membership Interests Owned	 	
Blackstone Holdings Finance Co. L.L.C.
c/o The Blackstone Group L.P.
345 Park Avenue
New York, New York 10154
Attn: John Finley
Fax: 212-583-5749
John.Finley@Blackstone.com
 
Chaim Miller
Chaim.Miller@Blackstone.com
 
Joe Rocco
Joe.Rocco@Blackstone.com
 
Treasury-Operations@Blackstone.com	  	 	100	  	  	 	100	% 	

Class B Member	  	Number of Class B
Membership Interests Owned	 	  	Percentage of Class B
Membership Interests Owned	 	
Vivint Solar Mia Manager, LLC,
c/o Vivint Solar, Inc.
4931 N 300 W
Provo, UT 84604
Attn: Paul Dickson, VP of Financing
E-Mail: pdickson@vivintsolar.com
Fax: (801) 765-5705	  	 	100	  	  	 	100	% 	

Schedule 4.2(d)
Initial Capital Accounts

Member Name and Address	  	Capital Account Balance	 	  	Percentage Interest	 	
Blackstone Holdings Finance Co. L.L.C.
c/o The Blackstone Group L.P.
345 Park Avenue
New York, New York 10154
Attn: John Finley
Fax: 212-583-5749
John.Finley@Blackstone.com
 
Chaim Miller
Chaim.Miller@Blackstone.com
 
Joe Rocco
Joe.Rocco@Blackstone.com
 
Treasury-Operations@Blackstone.com	  	$	***	  	  	 	***	% 	
			
Vivint Solar Mia Manager, LLC,
c/o Vivint Solar, Inc.
4931 N 300 W
Provo, UT 84604
Attn: Paul Dickson, VP of Financing
E-Mail: pdickson@vivintsolar.com
Fax: (801) 765-5705	  	$	***	  	  	 	***	% 	
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	

Schedule 9
Transfer Representations and Warranties
(a) [The Class A Member] is a [ — ] duly organized, validly existing and in good standing under the laws of [ — ] and has all requisite [ — ] power and authority to reconvey the Class A Membership Interests as contemplated by the Agreement.
(b) [The Class A Member] owns directly [100%] of the Company’s outstanding Class A Membership Interests to the extent that is what it was sold under the [Agreement] [other transfer documentation].
(c) [The Class A Member] has absolute record and beneficial ownership and title to all of the Membership Interests held by [the Class A Member] to the extent that is what it was sold under the [Agreement] [other transfer documentation], free and clear of any Liens except Permitted Encumbrances.
(d) The assignment effecting the Transfer of the Class A Membership Interests from [the Class A Member] to [the Class B Member] has been duly and validly executed and delivered by [the Class A Member] and constitutes [the Class A Member’s] legal, valid and binding obligation, enforceable against it in accordance with its terms (subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws from time to time in effect relating to the rights and remedies of creditors as well as to general principles of equity whether considered at law or in equity).
(e) Neither the execution, delivery and performance by [the Class A Member] of the assignment effecting the Transfer of the Class A Membership Interests from [the Class A Member] to [the Class B Member] nor the consummation of the transactions contemplated thereby will (i) conflict with or result in any breach of any provision of the organizational documents of [the Class A Member], (ii) violate or conflict with (or give rise to any right of termination, cancellation or acceleration under) any of the terms, conditions or provisions of any contract or other instrument or obligation that [the Class A Member] is a party to or by which [the Class A Member] is bound; or (iii) violate any Applicable Laws or any material license, franchise, permit or other authorization applicable to or affecting [the Class A Member] or any of its respective assets.
(f) No declaration, filing or registration with, or notice to, or authorization, consent or approval of any Governmental Authority or any other Person that has not been made or obtained on or before the date hereof is necessary for the execution, delivery and performance by [the Class A Member] of the assignment effecting the Transfer of the Class A Membership Interests from [the Class A Member] to [the Class B Member] or the consummation by any such Person of the transactions contemplated thereby.

Exhibit A
Certificate of Membership Interest
See attached.

CERTIFICATE OF CLASS [A/B] MEMBERSHIP INTEREST

Certificate
No. [A/B]-[ — ]	 	[Company]
a Delaware limited liability company	 	Class [A/B]
Membership Interests	
The Class [A/B] Membership Interests represented by this Certificate of Class [A/B] Membership Interest (this “Certificate”) and the Class [A/B] Membership Interests evidenced hereby shall constitute a “security” within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware, and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.
THIS CERTIFIES THAT [ — ], a [ — ] [ — ], is the registered holder of [ — ] Class [A/B] Membership Interests of Vivint Solar Mia Project Company, LLC, a Delaware limited liability company (the “Company”), representing 100% of the Class [A/B] Membership Interests in the Company.
IN WITNESS WHEREOF, the duly authorized officers of the Company have executed this Certificate as of this      day of             , 2013.

By:	 	 	 		 	By:	 	 	
	 	Name:	 		 		 	Name:	
					
	 	Title:	 		 		 	Title:	

THE CLASS [A/B] MEMBERSHIP INTERESTS REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER ANY SECURITIES LAW AND THE TRANSFERABILITY OF SUCH CLASS [A/B] MEMBERSHIP INTERESTS IS RESTRICTED. SUCH CLASS [A/B] MEMBERSHIP INTERESTS MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED OR TRANSFERRED, NOR WILL ANY ASSIGNEE, VENDEE, TRANSFEREE OR ENDORSEE THEREOF BE RECOGNIZED AS HAVING ACQUIRED ANY SUCH CLASS [A/B] MEMBERSHIP INTERESTS BY THE ISSUER FOR ANY PURPOSES, UNLESS (I) A REGISTRATION UNDER THE SECURITIES ACT OF 1933 (AS AMENDED) WITH RESPECT TO SUCH CLASS [A/B] MEMBERSHIP INTERESTS SHALL THEN BE IN EFFECT AND SUCH TRANSFER HAS BEEN QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS, OR (II) SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS.
ADDITIONALLY, NO CLASS [A/B] MEMBERSHIP INTERESTS REPRESENTED BY THIS INSTRUMENT MAY BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT AS PROVIDED IN THE LIMITED LIABILITY COMPANY AGREEMENT OF THE COMPANY, COPIES OF WHICH ARE ON FILE IN THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON REQUEST AND WITHOUT CHARGE TO ANY HOLDER.

For Value Received ,                      hereby sell(s), assign(s) and transfer(s) unto                                          Class [A/B] Membership Interests represented by the within Certificate, and do(es) hereby irrevocably constitute and appoint                                          Attorney to transfer the said Class [A/B] Membership Interests on the books of the within named Company with full power of substitution in the premises.

Dated:	 	 	
		
By:	 	 	

Exhibit B
Base Case Model
See attached.

Exhibit C
Insurance
Coverage :
The Company shall procure and maintain in full force and effect the following minimum insurance coverages, at its sole expense, as set forth below. All such insurance carried shall be placed with such insurers having a minimum A.M. Best rating of A-IX, and be in such form, with such other terms, conditions, limits and deductibles (subject to the minimum insurance coverages below):
(A) All Risk Property Insurance . The Company shall maintain all risk property insurance covering against physical loss or damage to the Projects, including fire and extended coverage. Such insurance coverage shall cover each and every component of the Project, per policy terms and conditions. Such insurance coverage shall be written on a full replacement cost basis, shall include an agreed amount endorsement waiving any coinsurance penalty, and shall include expediting expense coverage in an amount not less than $50,000. Such insurance coverage may be subject to deductibles not to exceed $250,000 for each and every occurrence.
(B) Commercial General Liability . The Company shall maintain third party liability insurance coverage written on an occurrence basis with a limit of liability of not less than $1,000,000. Such insurance shall include coverage for premises/operations, pollution arising out of hostile fire, contractual liability, independent contractors, products/completed operations, property damage and personal injury liability.
(C) Workers’ Compensation/Employer’s Liability . If the Company has any employees, the Company shall maintain Workers’ Compensation insurance in accordance with statutory provisions covering accidental injury, illness or death of any such employee while at work or in the scope of his or her employment with the Company, and Employer’s Liability insurance in an amount not less than $1,000,000. Exclusions for occupational disease shall be limited to employers’ liability only.
(D) Business Auto . If applicable, the Company shall maintain Business Auto insurance covering owned, non-owned, leased, hired or borrowed vehicles of the Company, if any, against bodily injury or property damage. Such insurance coverage shall have a combined single limit of liability of not less than $1,000,000.
(E) Excess/Umbrella Liability . The Company shall maintain Excess/Umbrella Liability insurance written on an occurrence basis and providing coverage limits in excess of the primary limits applying under policies described in subsections (B), (C) (employers’ liability only), and (D) above. Such insurance coverage shall have a limit of liability of not less than $10,000,000. Such insurance coverage shall include a drop down provision in the event of exhaustion of underlying limits or aggregates and apply on a following form basis to the primary coverage.

Endorsements :
The Company shall cause its insurance coverages to be endorsed as follows (all such endorsements with respect to the Class A Member to be as of the Effective Date):
(A) Each Class A Member shall be an additional insured and Loss Payee with respect to the Property All Risk and any other applicable First Party insurance. Each Class A Member shall be additional insured with respect to the General Liability, Automobile and Umbrella Liability policies.
(B) Such other endorsements, or independent instruments, furnished to each Class A Member, will provide that (i) the insurance companies will give each Class A Member at least ten (10) calendar days prior written notice, in the case of nonpayment of premiums, or thirty (30) calendar days prior written notice, in all other cases, before any such policy or policies of insurance shall be canceled, (ii) in as much as the liability policies are written to cover more than one insured, all terms, conditions, insuring agreements and endorsements of the liability policies, with the exception of the limits of liability and products completed operations, shall operate in the same manner as if there were a separate policy covering each insured, (iii) such insurance is primary without right of contribution of any other insurance carried by or on behalf of each Class A Member with respect to its interests as such in the Project and (iv) coverage shall not be cancelled except after thirty (30) calendar days’ prior written notice, or ten (10) days’ prior written notice in the event of cancellation for nonpayment of premium, has been given to the each Class A Member.
General :
In the event any property insurance (including the limits or deductibles thereof) hereby required to be maintained, other than insurance required by law to be maintained, shall not be available and commercially feasible in the commercial insurance market, no Class A Member shall unreasonably withhold their agreement to waive such requirement to the extent the maintenance thereof is not so available; provided , however , that: (i) the Company shall first request any such waiver in writing ten (10) Business Days prior to the policy renewal, which request shall be accompanied by written reports prepared by the Company’s insurance broker certifying that such property insurance is not reasonably available and commercially feasible in the commercial insurance market for projects of similar type and capacity (and, in any case where the required amount is not so available, certifying as to the maximum amount which is so available) and explaining in detail the basis for such conclusions, such insurance advisers and the form and substance of such reports to be reasonably acceptable to the Class A Member; (ii) at any time after the granting of any such waiver, the Class A Member may request, and the Company shall furnish to the Class A Member within fifteen (15) calendar days after such request, supplemental reports reasonably acceptable to the Class A Member from such insurance advisers updating their prior reports and reaffirming such conclusion; (iii) any such waiver shall be effective only so long as such property insurance shall not be available and commercially feasible in the commercial insurance market, it being understood that the failure of the Company to timely furnish any such supplemental report shall be conclusive evidence that such waiver is no longer effective because such condition no longer exists, but that such failure is not the only way to establish such nonexistence; and (iv) the Company shall procure such property insurance coverage as is then available to the Company on commercially reasonable terms.

Exhibit D
Form of Note

$[        ]	  	[            ], 20[    ]
New York, New York	
FOR VALUE RECEIVED, Vivint Solar Mia Project Company LLC, a Delaware limited liability company (the “ Company ”), hereby promises to pay to [                    ] (the “ Member ”), into [INSERT ACCOUNT INFORMATION], the principal sum of $[AMOUNT EQUAL TO THE MEMBER LOAN] as a Member Loan made by the Member to the Company pursuant to the Limited Liability Company Agreement of the Company dated as of [ — ], 2013, by and between Blackstone Holdings Finance Co. L.L.C. and Vivint Solar Mia Manager, LLC (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ LLC Agreement ”), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the LLC Agreement and on the schedule attached hereto, and to pay interest on the unpaid principal amount of each such Member Loan, into such account, in like money and funds, for the period commencing on the date of such Member Loan until such Member Loan shall be paid in full, at the rate per annum and on the dates provided in the LLC Agreement and on the schedule attached hereto (unless such interest is compounded to the principal amount of the Member Loan in accordance with Section 4.3(b) of the LLC Agreement).
The date, amount, and interest rate of each Member Loan made by the Member to the Company, and each payment made on account of the principal thereof, shall be recorded by the Member on its books and, prior to any transfer of this Note, endorsed by the Member on the schedule attached hereto or any continuation thereof, provided that the failure of the Member to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under the LLC Agreement or hereunder in respect of the Member Loans made by the Member.
This Note evidences Member Loans made by the Member under the LLC Agreement. Terms used but not defined in this Note have the respective meanings assigned to them in the LLC Agreement.
This Note shall be governed by, and construed in accordance with, the law of the State of New York.
[SIGNATURE PAGE FOLLOWS]

			
VIVINT SOLAR MIA PROJECT COMPANY, LLC	
		
By:	 	 	
	 	Name:	
	 	Title:	

Schedule of Member Loans
This Note evidences Member Loans made under the within-described LLC Agreement to the Company, on the dates, in the principal amounts, bearing interest at the rates set forth below and subject to the payments, prepayments and compounding set forth below:

Date	  	Principal
Amount of
Loan	  	Interest Rate	  	Amount Paid,
Prepaid, or
Compounded	  	Notation
Made by	

	  		  		  		  		

Exhibit 10.29A
*** Text Omitted and Filed Separately with the Securities Exchance Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406
FIRST AMENDMENT
TO THE
LIMITED LIABILITY COMPANY AGREEMENT
OF
VIVINT SOLAR MIA PROJECT COMPANY, LLC
This FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY AGREEMENT OF VIVINT SOLAR MIA PROJECT COMPANY, LLC (this “ Amendment ”), is executed as of September 12, 2013 and effective as of August 5, 2013, by and between Vivint Solar Mia Manager, LLC, a Delaware limited liability company (“ Sponsor Sub ”), and Blackstone Holdings Finance Co. L.L.C., a Delaware limited liability company (“ Investor ”).
W I T N E S S E T H :
WHEREAS, Sponsor Sub and Investor entered into that certain Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, dated as of July 16, 2013 (the “ LLC Agreement ”);
WHEREAS, Vivint Solar Mia Project Company, LLC (“ Purchaser ”), Vivint Solar Developer, LLC (“ VSD ”), and Vivint Solar, Inc. (“ VSI ” and together with VSD, the “ Sellers ”) entered into that certain Development, EPC and Purchase Agreement dated as of July 16, 2013 (the “ EPC Agreement ”);
WHEREAS, on August 5, 2013, pursuant to Section 2.2(d) of the EPC Agreement, Sellers substituted certain projects for Deficient Projects and Cancelled Projects;
WHEREAS, as a result of such substitution, pursuant to Section 2.3(e) of the EPC Agreement, Sellers delivered an updated Base Case Model; and
WHEREAS, Sponsor Sub and Investor wish to amend certain terms and conditions in the LLC Agreement to reflect the updated Base Case Model, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and mutual agreements hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS . Capitalized terms used but not defined herein have the meanings set forth in the LLC Agreement.
2. AMENDMENT . Effective as of the date hereof, the parties hereto hereby amend the LLC Agreement as follows:
(a) Section 1.1 of the LLC Agreement is hereby amended by adding the phrase “, as may be amended, restated, modified or supplemented from time to time by all of the Members” at the end of the first sentence of the definition of “ Base Case Model ” and by deleting the phrase “as of the date hereof” from the last sentence of the definition of “ Base Case Model ” and replacing it with “as of September 12, 2013”;

(b) Section 1.1 of the LLC Agreement is hereby amended by deleting the date “March 31, 2019” from the definition of “ Projected Flip Date ” and replacing it with “June 30, 2019”;
(c) Section 1.1 of the LLC Agreement is hereby amended by deleting the word “***%” from the definition of “ Target Internal Rate of Return ” and replacing it with “***%”; and
(d) Exhibit B to the LLC Agreement is hereby amended by deleting the Base Case Model attached as Exhibit B in its entirety and replacing it with the Base Case Model attached hereto as Appendix A.
3. MISCELLANEOUS .
3.1 Effect on LLC Agreement . The foregoing amendments are limited in effect, shall apply only as expressly set forth in this Amendment and shall not constitute modifications or amendments of any other provisions of the LLC Agreement. The LLC Agreement as so modified remains in full force and effect and is hereby ratified and confirmed by the parties hereto in all respects.
3.2 Headings . The headings of the several sections and subsections of this Amendment are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Amendment.
3.3 Successors and Assigns . This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
3.4 Counterparts . This Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.
3.5 Governing Law . THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT OF LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR CONSTRUCTION OF THIS AMENDMENT TO THE LAW OF ANOTHER JURISDICTION.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Amendment as of the date first above written.

VIVINT SOLAR MIA MANAGER, LLC	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	VP of Financing	
	
BLACKSTONE HOLDINGS FINANCE CO.,
L.L.C.	
		
By:	 	/s/ Laurance A. Tosi	
Name:	 	Laurance A. Tosi	
Title:	 	CFO	

Appendix A
Base Case Model.
See attached.

Exhibit 10.30
*** Text Omitted and Filed Separately with the Securities Exchange Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406
EXECUTION VERSION
DEVELOPMENT, EPC AND PURCHASE AGREEMENT
by and among
VIVINT SOLAR DEVELOPER, LLC
a Delaware limited liability company
and
VIVINT SOLAR, INC.
a Delaware corporation
and
VIVINT SOLAR MIA PROJECT COMPANY, LLC
a Delaware limited liability company
Dated as of July 16, 2013
Development, EPC and Purchase Agreement

TABLE OF CONTENTS

 	 	 	  	Page	 	
		
ARTICLE 1 DEFINED TERMS	  	 	1	  	
			
1.1	 	Defined Terms.	  	 	1	  	
1.2	 	Capitalized Terms.	  	 	9	  	
1.3	 	Construction.	  	 	10	  	
		
ARTICLE 2 PURCHASE OF PROJECTS	  	 	10	  	
			
2.1	 	Presentation and Review of Tranches; Purchase.	  	 	10	  	
2.2	 	Completion of Purchased Systems.	  	 	13	  	
2.3	 	Conditions Precedent to the Obligations of Purchaser.	  	 	16	  	
2.4	 	Conditions Precedent to the Obligations of Seller.	  	 	18	  	
2.5	 	Conditions Precedent to the Obligations of Both Parties.	  	 	18	  	
		
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS	  	 	19	  	
			
3.1	 	Representations, Warranties and Covenants of Seller.	  	 	19	  	
3.2	 	Representations and Warranties of Purchaser.	  	 	25	  	
3.3	 	No Other Seller Representations.	  	 	25	  	
3.4	 	Defects Warranty.	  	 	26	  	
3.5	 	Insurance.	  	 	26	  	
		
ARTICLE 4 TERMINATION	  	 	26	  	
			
4.1	 	Termination.	  	 	26	  	
4.2	 	Procedure and Effect of Termination.	  	 	27	  	
4.3	 	Indemnification by Seller.	  	 	28	  	
4.4	 	Indemnification by Purchaser.	  	 	29	  	
4.5	 	LIMITATION OF LIABILITY.	  	 	29	  	
4.6	 	Indemnification Procedures.	  	 	30	  	
		
ARTICLE 5 DISPUTE RESOLUTION	  	 	30	  	
			
5.1	 	Good Faith Negotiations.	  	 	30	  	
5.2	 	SUBMISSION TO JURISDICTION.	  	 	31	  	
		
ARTICLE 6 GENERAL PROVISIONS	  	 	31	  	
			
6.1	 	Exhibits and Schedules.	  	 	31	  	
6.2	 	Amendment, Modification and Waiver.	  	 	31	  	
6.3	 	Severability.	  	 	32	  	
6.4	 	Expenses.	  	 	32	  	
 
Development, EPC and Purchase Agreement
 
-i-

TABLE OF CONTENTS
(continued)

 	 	 	  	Page	 	
			
6.5	 	Parties in Interest.	  	 	32	  	
6.6	 	Notices.	  	 	32	  	
6.7	 	Counterparts.	  	 	34	  	
6.8	 	Entire Agreement.	  	 	35	  	
6.9	 	Governing Law.	  	 	35	  	
6.10	 	Public Announcements.	  	 	35	  	
6.11	 	Assignment.	  	 	35	  	
6.12	 	Relationship of Parties.	  	 	35	  	
6.13	 	Successors and Assigns.	  	 	36	  	
6.14	 	Access.	  	 	36	  	
6.15	 	Purchaser Member Authorization.	  	 	36	  	
 
Development, EPC and Purchase Agreement
 
-ii-

			
Schedules :	  		
		
Schedule 1	  	List of Purchased Systems and Associated Customer Agreements	
Schedule 2	  	Form of Tranche Presentation Certificate	
Schedule 3	  	Forms of Customer Agreements	
	  	California – Version 2.5	
	  	California – Version 2.6	
	  	Hawaii – Version 2.5	
	  	Hawaii – Version 2.6	
	  	Massachusetts – Version 2.5	
	  	Massachusetts – Version 2.6	
	  	New Jersey – Version 2.5	
	  	New Jersey – Version 2.6	
Schedule 4	  	Form of Bill of Sale and Assignment	
Schedule 5	  	Form of Closing Request	
Schedule 6	  	Form of Transfer Notice	
Schedule 7	  	Form of Deficient Project and Cancelled Project Report	
Schedule 8	  	Form of Change Order Report	
Schedule 9	  	Form of Substitution Report	
Schedule 10	  	Form of True-Up Report	
Schedule 11	  	Form of Completion Certificate	
Schedule 12	  	Performance Tests	
Schedule 13	  	Approved Suppliers	
Schedule 14	  	Insurance Requirements	
 
Development, EPC and Purchase Agreement
 
-iii-

DEVELOPMENT, EPC AND PURCHASE AGREEMENT
This DEVELOPMENT, EPC AND PURCHASE AGREEMENT is made and entered into as of July 16, 2013 (the “ Effective Date ”), by and among Vivint Solar Developer, LLC, a Delaware limited liability company (“ VSD ”), Vivint Solar, Inc., a Delaware corporation (“ VSI ”, together with VSD, the “ Sellers ” and each a “ Seller ”), and Vivint Solar Mia Project Company, LLC, a Delaware limited liability company (“ Purchaser ”). The use of “ Party ” herein means each Seller or Purchaser, and “ Parties ” means the Sellers and Purchaser.
RECITALS
1. Each Seller is in the business of providing photovoltaic systems for use on residential properties.
2. Each Seller is experienced in the design, engineering, equipment procurement, installation, commissioning, construction and testing of such photovoltaic systems.
3. Purchaser desires to purchase, and each Seller desires to sell, such photovoltaic systems for installation and use on residential properties on the terms and subject to the conditions described herein.
4. Purchaser desires that each Seller design, engineer, procure, install, commission, construct and performance test the photovoltaic systems on a turnkey, fixed-price basis, and each Seller desires to perform such services.
5. In order to facilitate such purchases and the design, engineering, equipment procurement, installation, commissioning, construction and testing of such photovoltaic systems, the Parties wish to enter into this Agreement covering the period commencing on the date of this Agreement and ending at the expiration of the Term (defined below).
NOW THEREFORE, in consideration of the respective representations, warranties, covenants, agreements and conditions hereinafter set forth, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows:
AGREEMENT
ARTICLE 1
DEFINED TERMS
1.1 Defined Terms.
As used herein, the following terms have the following meanings:
“ Accepted Project ” is defined in Section 2.1(d) .
“ Affiliate ” means, with respect to any Person, a Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with the Person specified; provided , however , that Purchaser and Investor shall not be considered Affiliates of a Seller or Sponsor for purposes of this Agreement.
 
Development, EPC and Purchase Agreement

“ Agreement ” means this Development, EPC and Purchase Agreement, together with all schedules and exhibits hereto, as amended, restated, supplemented or otherwise modified from time to time.
“ Applicable Laws ” means all applicable laws of any Governmental Authority, including, without limitation, laws relating to consumer leasing and protection and any ordinances, judgments, decrees, injunctions, writs and orders or like actions of any Governmental Authority and rules and regulations of any federal, regional, state, county, municipal or other Governmental Authority.
“ Appraisal ” is defined in Section 2.3(h) .
“ Appraisal Deficiency Notice ” means an official promulgation or written notification from the Internal Revenue Service that would have the effect of lowering the fair market value of, or Purchaser’s tax basis in, any Project.
“ Assets ” means, with respect to any Person, all right, title and interest of such Person in land, properties, buildings, improvements, fixtures, foundations, assets and rights of any kind, whether tangible or intangible, real, personal or mixed, including contracts, equipment, systems, books and records, proprietary rights, intellectual property, Permits, rights under or pursuant to all warranties, representations and guarantees, cash, accounts receivable, deposits and prepaid expenses.
“ Base Case Model ” is defined in the LLC Agreement.
“ Bill of Sale ” is defined in Section 2.1(g) .
“ Business Day ” means any day other than Saturday, Sunday and any other day on which banks in New York are authorized to be closed.
“ Cancelled Project ” means a PV System (a) that a Seller has removed from the Tranche due to a delay in the completion schedule or other reasons or (b) for which the related Customer Agreement is cancelled or terminated, in each case, before such PV System is Placed in Service, but after such PV System has been Purchased by Purchaser.
“ Capital Contribution ” is defined in the LLC Agreement.
“ Change Order ” is defined in Section 2.2(e) .
“ Change Order Credit ” is defined in Section 2.2(e) .
“ Change Order Debit ” is defined in Section 2.2(e) .
“ Change Order Report ” is defined in Section 2.2(e) .
“ Closing Request ” is defined in Section 2.1(f) .
 
Development, EPC and Purchase Agreement
 
2

“ Code ” means the Internal Revenue Code of 1986, as amended, or any successor federal tax statute.
“ Completion Certificate ” means a certificate signed by an authorized officer of Seller in substantially the form of Schedule 11 .
“ Completion Deadline ” means December 31, 2013.
“ Control ” means, with respect to a Person, the possession, directly or indirectly, of the power to direct or cause the direction of such Person’s management or policies, whether through the ownership of voting securities, by contract or otherwise.
“ Customer Agreement ” means, in respect of each PV System, a power purchase agreement with a Host Customer in one of the forms attached to Schedule 3 applicable to the Project State where such Host Customer is located, together with all other agreements, instruments and documents incorporated therein by the terms thereof (or such other form as is approved in writing by Investor), except for any immaterial deviations from such form that do not affect the rights and obligations of the parties thereto.
“ Deduction Loss ” is defined in Section 4.3(c) .
“ Deficient Project ” means an Accepted Project which is not a Cancelled Project but for which the PV System for such Project is not Placed in Service by the Completion Deadline.
“ Deficient Project and Cancelled Project Report ” is defined in Section 2.2(d) .
“ Dispute ” is defined in Section 5.1 .
“ Effective Date ” is defined in the preamble.
“ Environmental Law ” means all Applicable Laws pertaining to the environment, human health or safety, or natural resources, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the Superfund Amendments and Reauthorization Act of 1986, the Emergency Planning and Community Right to Know Act (42 U.S.C. §§ 11001 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), the Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Federal Water Pollution Control Act (also known as the Clean Water Act) (33 U.S.C. §§ 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.), the Endangered Species Act (16 U.S.C. §§ 1531 et seq.), the Migratory Bird Treaty Act (16 U.S.C. §§ 703 et seq.), the Bald Eagle Protection Act (16 U.S.C. §§ 668 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. §§ 2701 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et seq.), and the Occupational Safety and Health Act of 1970, to the extent that it relates to the handling of and exposure to hazardous or toxic materials or similar substances, and any similar or analogous state and local statutes or regulations promulgated thereunder, and decisional law of any Governmental Authority, as each of the foregoing may be amended or supplemented from time to time in the future, in each case to the extent applicable with respect to the property or operation to which application of the term “Environmental Law” relates.
 
Development, EPC and Purchase Agreement
 
3

“ FERC ” means the Federal Energy Regulatory Commission or any successor agency.
“ FICO® Score ” means a score based on the credit risk rating system established and maintained by the Fair Isaac Corporation.
“ Final Determination ” means the earliest to occur of: (a) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other order has become final after all allowable appeals (other than appeals to the United States Supreme Court) by either party to the action have been exhausted or the time for filing such appeals has expired, (b) a closing agreement entered into (i) under Section 7121 of the Code or any other settlement agreement entered into in connection with an administrative or judicial proceeding and (ii) with the written consent of a Seller (such consent not to be unreasonably withheld, conditioned or delayed), (c) the expiration of the time for instituting suit with respect to the claimed deficiency, or (d) the expiration of the time for instituting a claim for refund, or if such a claim was filed, the expiration of the time for instituting suit with respect thereto.
“ Flip Date ” is defined in the LLC Agreement.
“ GAAP ” means (a) generally accepted accounting principles in the United States of America as in effect from time to time, consistently applied; or (b) upon mutual agreement of the Parties, internationally recognized generally accepted accounting principles, consistently applied.
“ Governmental Authority ” means any foreign, federal, state, local or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrating body or other governmental authority having jurisdiction or effective control over a Seller, Purchaser, their respective Affiliates or any Project.
“ Government Incentive ” means a payment, including, without limitation, a payment in respect of any performance-based incentive or rebates, by a utility, electric distribution company or federal, state or local Governmental Authority or quasi-governmental agency, and any extension of the program (including by converting the program into a refundable tax credit or tax refund program), in each case as an inducement to a utility customer, solar company or installer to install or use solar equipment, except that neither (a) Tax Credits and depreciation deductions for U.S. federal income tax purposes nor (b) any credits or payments available under any Host Customer’s utility’s “net metering” program for energy generated by the applicable Project that are reserved to such Host Customer under the applicable Customer Agreement shall be considered Government Incentives.
“ Host Customer ” means a residential customer under a Customer Agreement whose property where the PV System is installed is located in a Project State.
“ Indemnifying Party ” is defined in Section 4.6 .
“ Indemnitee ” is defined in Section 4.6 .
 
Development, EPC and Purchase Agreement
 
4

“ In-Service Date ” has the meaning assigned to that term in the applicable Customer Agreement.
“ Installation ” is defined in Section 2.2(a) .
“ Investor ” is defined in the LLC Agreement.
“ Investor Contribution Cap ” is defined in the LLC Agreement.
“ Knowledge of Investor ” means the actual knowledge, after due inquiry, as of the Effective Date and each Purchase Date, of one or more of the following persons (together with any successor person holding the same title or the functional equivalent without supplanting or replacing any of the following persons, whose actual knowledge after due inquiry shall remain “Knowledge”) holding the following titles at Investor: Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer and General Counsel.
“ Knowledge of a Seller ” or “ Knowledge of such Seller ” means with respect to a Seller, the actual knowledge, after due inquiry, as of the Effective Date and each Purchase Date, of one or more of the following persons holding the following titles at such Seller: Alex Dunn (Chief Executive Officer and President), Brendon Merkley (Chief Operating Officer), Paul Dickson (Vice President of Finance), and Dan Black (General Counsel); provided , however , that for matters relating to a Host Customer, “Knowledge” shall be limited to the representations and warranties made by such Host Customer in Customer Agreements without such Seller undertaking further inquiry or due diligence, unless any one of the persons described above has actual knowledge that a representation or warranty is untrue.
“ kW ” means kilowatt.
“ Lien ” means any lien, security interest, mortgage, hypothecation, encumbrance or other restriction on title or property interest.
“ LLC Agreement ” means that certain Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, a Delaware limited liability company, made and entered into as of the date hereof, as amended, restated, supplemented or otherwise modified from time to time.
“ Loss ” means any claim, demand, suit, loss, liability, damage, obligation, payment, cost, fee, Tax, penalty or expense (including, without limitation, the cost and expense of any action, suit, proceeding, assessment, judgment, settlement or compromise relating thereto and reasonable attorneys’ fees and reasonable disbursements in connection therewith).
“ Maintenance Services Agreement ” means that certain Maintenance Services Agreement, dated as of the date hereof, between MSA Provider and Purchaser.
“ Managing Member ” is defined in the LLC Agreement.
“ Material Adverse Change ” means, with respect to any Person, a fact, event or circumstance that, alone or when taken with other events or conditions occurring or existing
 
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concurrently with such event or condition, (a) has or is reasonably expected to have a material adverse effect on the business, operations, condition (financial or otherwise), assets, liabilities or properties of such Person, (b) has or is reasonably expected to have any material adverse effect on the validity or enforceability of the Transaction Documents, (c) materially impairs or is reasonably expected to materially impair the ability of such Person to meet or perform its obligations under the Transaction Documents, or (d) has or is reasonably expected to have any material adverse effect on such Person’s rights under the Transaction Documents.
“ Minimum Credit Criteria ” means (a) a FICO® Score for an individual Host Customer of *** or greater from Equifax, TransUnion, Experian or other nationally-recognized consumer rating agency, and (b) after giving effect to all Purchases under this Agreement (i) *** % of the Customer Agreements are with Host Customers that have a FICO® Score *** from Equifax, TransUnion, Experian or other nationally-recognized consumer rating agency and (ii) *** Host Customers whose FICO® Scores from Equifax, TransUnion, Experian or other nationally-recognized consumer rating agency are *** or greater.
“ MW ” means megawatt.
“ MSA Provider ” is defined in the LLC Agreement.
“ Net Purchase Price ” is defined in Section 2.1(f) .
“ Non-Accepted Project ” is defined in Section 2.1(d) .
“ Ordinary Course of Business ” means the ordinary conduct of business consistent with custom and practice for residential rooftop distributed solar electricity generation businesses in the United States (including with respect to quantity and frequency).
“ Party ” or “ Parties ” is defined in the preamble.
“ Performance Test ” means each and every test required under the Customer Agreement as a requirement for achieving the In-Service Date, as more particularly described in Schedule 12 .
“ Permit ” means any permit, franchise, lease, order, license, notice, certification, approval, exemption, qualification, right or authorization from or registration, notice or filing with any Governmental Authority.
“ Permitted Liens ” means (a) liens for taxes not yet due or that are being contested in good faith by appropriate proceedings, to the extent adequate reserves have been made consistent with GAAP, (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, employees’, contractors’, operators’, vendors’ or other similar liens or charges securing the payment of expenses not yet due and payable that are incurred in the Ordinary Course of Business, (c) liens securing obligations or duties (other than Indebtedness) to any Governmental Authority arising in the Ordinary Course of Business (including under licenses and permits held by the Purchaser and under all Applicable Laws and orders of any Governmental Authority), (d)
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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easements, rights-of-way, restrictions (including zoning restrictions), covenants, licenses, encroachments, protrusions and other similar charges or encumbrances on or with respect to real property that do not secure Indebtedness of Purchaser or its Affiliates or materially interfere with the ownership, installation or operation of the Projects in the Ordinary Course of Business, (e) liens incurred or deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment or other social security or to secure performance of statutory obligations, surety bonds, performance bonds and other similar obligations and (f) any other liens agreed to in writing by Sponsor Sub and Investor.
“ Person ” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, or governmental entity or any department or agency thereof.
“ Placed in Service ” is defined in the LLC Agreement.
“ Placed in Service Date ” in respect of a PV System means the date such PV System is Placed in Service.
“ Project ” means a PV System installed or to be installed, and used or to be used to generate electricity for sale to a Host Customer under a Customer Agreement as contemplated under this Agreement, associated rights under the applicable Customer Agreement, and all other related rights to the extent applicable thereto, including, without limitation, all parts and manufacturer’s warranties and rights to access Host Customer data, and all Permits and Real Property Rights necessary for the operation of the PV System and the sale of electricity pursuant to the related Customer Agreement, and all rights pursuant to any related Government Incentives and RECs.
“ Project States ” means California, Hawaii, Massachusetts and New Jersey.
“ Prudent Industry Standards ” means the practices, methods, equipment, specifications and standards of safety, as the same may change from time to time, as are used or approved by a significant portion of the residential rooftop distributed solar electric generation industry operating in the applicable Project States in residential rooftop distributed solar electric generating systems or facilities of a type and size similar to the Projects as good, safe and prudent engineering practices in connection with the design, construction, operation, maintenance, repair and use of electrical and other equipment, facilities and improvements of such residential rooftop distributed solar electric generating system or facility, with commensurate standards of safety, performance, dependability, efficiency and economy, in each case in light of the facts known and circumstances existing at the time any decision is made or action is taken, that would be expected to accomplish the desired result in a manner materially consistent with Applicable Law, Permits, codes, and equipment manufacturer’s recommendations.
“ Purchase ” means each purchase of a PV System pursuant to Section 2.1(b) .
“ Purchase Date ” means the date on which the System Purchase Price is due for a particular PV System.
 
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“ Purchased Systems ” means all PV Systems purchased by Purchaser from a Seller pursuant to Section 2.1 .
“ Purchaser ” is defined in the preamble.
“ Purchaser Indemnified Parties ” is defined in Section 4.3(a) .
“ PV System ” means a residentially hosted roof-top solar electric generating system, including photovoltaic panels, racks, wiring and other electrical devices, conduits, weatherproof housings, hardware, one or more inverters, remote monitoring systems, connectors, meters, disconnects and over current devices.
“ Qualified Appraiser ” means Novogradac & Company LLP or a nationally recognized third-party appraiser that (a) is qualified to appraise independent electric generating businesses, (b) has been engaged in the appraisal or business valuation and consulting business for no fewer than five (5) years, (c) is not an Affiliate of either Purchaser or any Seller, and (iv) is mutually agreed upon by both the applicable Seller and Purchaser.
“ Real Property Rights ” is defined in Section 3.1(m) .
“ RECs ” is defined in the LLC Agreement.
“ Refund Credit ” means any of the (a) Change Order Credit and (b) Removed Project Credit.
“ Removed Project Credit ” is defined in Section 2.2(d) .
“ Replacement Appraisal ” is defined in Section 2.3(h) .
“ Review Period ” is defined in Section 2.1(d) .
“ Seller ” or “ Sellers ” is defined in the preamble.
“ Seller Indemnified Parties ” is defined in Section 4.4 .
“ Sponsor ” is defined in the LLC Agreement.
“ Sponsor Guaranty ” means that certain Guaranty, dated as of the date hereof, by Vivint Solar, Inc. in favor of Purchaser and Investor.
“ STC DC ” means standard test conditions direct current.
“ Substituted Project ” is defined in Section 2.2(d) .
“ Substituted Project Review Period ” is defined in Section 2.2(f) .
“ Substitution Report ” means a report substantially in the form of Schedule 9 , for each affected Tranche, that (a) indicates which Deficient Projects and Cancelled Projects are proposed to be replaced with Substituted Projects, (b) describes any increase or decrease in system size pursuant to each change or substitution, (c) describes any increase or decrease in the tax bases or fair market values of Projects pursuant to each such change and (d) lists all Substituted Projects.
 
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“ System Purchase Price ” is defined in Section 2.1(e) .
“ Tax ” or “ Taxes ” (and with correlative meaning, “ Taxable ” and “ Taxing ”) is defined in the LLC Agreement.
“ Tax Credit Loss ” is defined in Section 4.3(c) .
“ Tax Credits ” is defined in the LLC Agreement.
“ Tax Loss ” is defined in Section 4.3(c) .
“ Term ” means the period commencing on the Effective Date and ending upon termination pursuant to ARTICLE 4 .
“ Tranche ” is defined in Section 2.1(c) .
“ Tranche Presentation Certificate ” means a list of PV Systems, substantially in the form of Schedule 2 , that are being presented as part of a Tranche, including, for each Project: (a) the Host Customer, (b) the address of the PV System, (c) the kW size of each PV System to be installed, (d) the System Purchase Price for a Project and (e) the FICO® Score for the Host Customer from any nationally recognized consumer rating agency.
“ Transaction Documents ” means this Agreement, the LLC Agreement, the Maintenance Services Agreement, the Sponsor Guaranty, any Transfer Notice executed and delivered pursuant to this Agreement, any subcontract entered into by a Seller under Section 2.2(a) of this Agreement and any Bill of Sale executed and delivered pursuant to this Agreement.
“ Transfer Notice ” is defined in Section 2.1(g) .
“ True-Up Base Case Model ” is defined in Section 2.2(g) .
“ True-Up Report ” is defined in Section 2.2(g) .
“ VSD ” is defined in the preamble.
“ VSH Entities ” means V Solar Holdings, Inc., a Delaware corporation, and its direct and indirect subsidiaries.
“ VSI ” is defined in the preamble.
“ Warranty ” is defined in Section 3.4 .
1.2 Capitalized Terms .
Capitalized terms used but not defined in this Agreement have the same meaning as in the LLC Agreement.
 
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1.3 Construction .
Unless the context otherwise requires, the singular shall include the plural, the masculine shall include the feminine and neuter, and vice versa. The term “includes” or “including” shall mean “including without limitation”. The terms “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the schedules and exhibits hereto and certificates delivered hereunder) and not to any particular provision of this Agreement. References to a section, article, exhibit or schedule shall mean a section, article, exhibit or schedule to this Agreement, and reference to a given agreement or instrument shall be a reference to that agreement or instrument as amended, restated, supplemented or otherwise modified through the date as of which such reference is made.
ARTICLE 2
PURCHASE OF PROJECTS
2.1 Presentation and Review of Tranches; Purchase .
(a) General . Each Seller shall present proposed Tranches of Projects to Purchaser in the manner described in Section 2.1(c) . As set out in Section 2.1(d) , Purchaser shall have the Review Period to review the Projects after which each Seller shall present a Closing Request to add the Accepted Projects to the applicable part of Schedule 1 . Concurrently with the presentation of each Closing Request, each Seller shall provide Purchaser with copies of the closing documents listed in Section 2.1(g) for the Projects identified in the Closing Request.
(b) Purchase . During the Term and subject to the terms and conditions hereof, Purchaser shall purchase from each Seller, subject to the provisions of Section 2.2 and Section 2.3 , all right, title and interest of such Seller in each Project described in the applicable part of Schedule 1 (which Schedule 1 shall be updated by such Seller after each Purchase Date, including to remove any Deficient Projects and Cancelled Projects, reflect any Change Orders and add any Substituted Projects). The consummation of the purchase of each Project in a Tranche and the payment of the System Purchase Price of each such Project shall take place pursuant to this Agreement on expiration of the applicable Review Period, subject to all of the conditions in Section 2.3 and Section 2.4 for such Project having been satisfied.
(c) Presentation of Tranches . Not more frequently than once each calendar month between the Effective Date and the Completion Deadline, a Seller shall present a Tranche Presentation Certificate to Purchaser listing Projects that are reasonably expected to satisfy the conditions in Section 2.3 on the Purchase Date for such tranche (such collection of Projects, a “ Tranche ”).
(d) Purchaser’s Review of Tranches . Upon Purchaser’s receipt of a Tranche Presentation Certificate, Purchaser shall respond within ten (10) Business Days (the “ Review Period ”) regarding its review of the Projects proposed to be included in the Tranche and whether it agrees that such Projects are reasonably expected to satisfy the conditions in Section 2.3 . Purchaser shall purchase each Project that Purchaser approves in writing (an “ Accepted Project ”) within five (5) Business Days following the end of the Review Period. A Project shall
 
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automatically be deemed an Accepted Project unless Purchaser informs the applicable Seller in writing prior to the expiration of the Review Period that the Project is being rejected (each such rejected Project, a “ Non-Accepted Project ”); provided , however , that Purchaser shall have no discretion to reject any Project that satisfies all of the conditions in Section 2.3 . Upon receipt by a Seller of any such notice of a Non-Accepted Project, such Seller shall have until the day that is three (3) Business Days prior to the Purchase Date for the Tranche to notify Purchaser in writing that such Seller has cured all deficiencies in the relevant Non-Accepted Project or to demonstrate that such Project satisfies all of the conditions in Section 2.3 , in each case to the written satisfaction of Purchaser, upon which such Non-Accepted Project shall become an Accepted Project to be included in such Tranche; provided that, following the cure of any deficiency, such Seller instead may present any such Non-Accepted Project again in a future Tranche.
(e) Determination of System Purchase Price . The price for each Project (the “ System Purchase Price ”) purchased under this Agreement shall be indicated in each Seller’s Tranche Presentation Certificate. The System Purchase Price shall equal the price calculated by multiplying (i) the dollar-per-watt direct current as established in the most recent Appraisal applicable to the Project State where the Project is located, subject to Section 2.3(h) , and (ii) the STC DC nameplate rating of the PV System for such Project. The purchase price for the Tranche shall be the aggregate of the System Purchase Prices for all Accepted Projects in the Tranche; provided , however , that in no event shall Purchaser be obligated to make a purchase hereunder that causes the total Capital Contributions of the Investor to exceed the Investor Contribution Cap. The System Purchase Price for each Project shall be paid in cash by Purchaser on each Purchase Date as described in Section 2.1(g) .
(f) Closing Request . A Seller, or the Sellers, as applicable, shall send a notice in the form of Schedule 5 (a “ Closing Request ”) that shall list the Projects that will be purchased on the Purchase Date, the System Purchase Price for each Project, the aggregate of the System Purchase Prices for all the Projects in the Tranche payable on the Purchase Date, and the aggregate amount of Change Orders in respect of all Purchased Systems to date (including a notation identifying the Change Orders that were not previously incorporated into the calculation of the Net Purchase Price for prior Purchase Dates) and shall also specifically indicate the net amount, after taking into account any outstanding Refund Credit, payable on the Purchase Date (the “ Net Purchase Price ”).
(g) Closing . Subject to satisfaction of the conditions set forth in Section 2.3 , on each Purchase Date, the Net Purchase Price for the Projects in the Tranche purchased on such Purchase Date shall be payable by Purchaser to the applicable Seller. On the Purchase Date, the applicable Seller shall deliver or cause to be delivered to Purchaser the following documents for each Tranche:
(1) a notice substantially in the form of Schedule 6 (the “ Transfer Notice ”) associated with the Projects in each such Tranche;
(2) the Bill of Sale and Assignment substantially in the form of Schedule 4 (the “ Bill of Sale ”);
 
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(3) a revised Schedule 1 adding any new Accepted Projects purchased on the Purchase Date and the associated Customer Agreements and, if applicable, removing any Cancelled Projects or Deficient Projects, reflecting any Change Orders and adding any Substituted Projects;
(4) a copy of the duly executed Customer Agreement for each Project in such Tranche;
(5) any Permits required for the construction of each Project in such Tranche; and
(6) a certificate of non-foreign status from such Seller meeting the requirements of Treasury Regulation Section 1.1445-2(b)(2) and dated as of the Purchase Date.
(h) Title . Subject to Section 2.2 , on each Purchase Date, a Seller sells, conveys, assigns, transfers and delivers unto Purchaser all of such Seller’s right, title and interest in, to and under the Projects being purchased on such date (whether or not complete and including the Customer Agreements that are part thereof), and Purchaser purchases and assumes all of such Seller’s right, title, interest in and obligations with respect to such Projects (including the Customer Agreements that are part thereof). Notwithstanding the foregoing, a Seller shall remain liable for all of Purchaser’s obligations under each Customer Agreement until the In-Service Date thereunder.
(i) Risk of Loss . From and after the Purchase Date for an Accepted Project, all risk of loss or damage to such Project shall be borne by Purchaser; provided , that the passing of the risk of loss shall not, in any respect, excuse a Seller from completing installation of any Project or performing any of its obligations under the Transaction Documents to which such Seller is a party or relieve such Seller of its obligations to reimburse Purchaser for losses resulting from the actions of such Seller, its Affiliates or its subcontractors. If any Accepted Project becomes a Deficient Project or Cancelled Project, all risk of loss or damage to such Project shall pass back to such Seller and, if the Customer Agreements related thereto have not been terminated, such Customer Agreements shall be reassigned to such Seller by Purchaser.
(j) Sales . Provided that Purchaser is not in default under any Transaction Document, and subject to the terms and conditions hereof, the Sellers shall sell Projects that meet the criteria in Section 2.3 to Purchaser under this Agreement; provided , however , that this provision shall in no way obligate the Sellers to sell to Purchaser, or otherwise restrict the Sellers from pursuing alternative transactions in respect of, any solar energy generation system, including any PV Systems that do not meet the criteria in Section 2.3 or as to which the conditions in Section 2.4 have not been satisfied.
(k) Information to Purchaser . After the Purchase of a Project (including without limitation any Project purchased from VSI), VSD hereby agrees, at no cost to Purchaser, to:
(1) provide Purchaser with access via VSD’s web portal to the information regarding such Project in the possession of VSD or any VSH Entity, which will
 
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include, as such information becomes available, among other things, descriptions of installation services performed by VSD or any VSH Entity, follow-up activities, if any, materials, serial numbers and other information relevant to Provider’s maintenance activities; and
(2) provide such information regarding such Project as is reasonably requested by Purchaser and available to VSD or the VSH Entities or that VSD or the VSH Entities are able to obtain through the use of commercially reasonable efforts (it being understood that such information will not include information regarding the maintenance or operation of Projects after their applicable In-Service Dates, to which VSD shall provide access pursuant to clause (k)(1) ).
(l) Transfer of RECs and Government Incentives . Commencing on each Purchase Date, all RECs and Government Incentives associated with the installation, ownership, use or operation of each PV System being purchased by Purchaser on such Purchase Date shall be, as between the applicable Seller and Purchaser and to the extent transferable pursuant to Applicable Laws, part of such Seller’s rights related to the Project that are transferred to Purchaser.
2.2 Completion of Purchased Systems .
A Seller shall complete the installation of each applicable Purchased System that was purchased by Purchaser from such Seller as follows:
(a) PV System Installation . Such Seller shall procure the materials and take such other steps as are required to install, test and complete such PV System and shall cause such PV System to be Placed in Service (the foregoing steps collectively being referred to herein as “ Installation ”) without further compensation or reimbursement from Purchaser. Installation of each PV System by such Seller shall be consistent with the applicable Customer Agreement, all manufacturer and design specifications and warranties relating to the relevant PV System, Prudent Industry Standards and all Applicable Laws and material Permits. Such Seller shall be authorized to enter into subcontracts for the performance of its obligations herein, provided that any such subcontract shall be on commercially reasonable terms and shall expressly provide for (i) the assignment of the warranty rights thereunder to Purchaser and (ii) the assignment of the entire contract to Purchaser upon a default of such Seller hereunder or thereunder. Such Seller shall remain liable for the compliance in full of its obligations hereunder regardless of whether they may have been subcontracted or not. Such Seller shall pay all amounts owed to its subcontractors and vendors in connection with the Installation of each PV System on a timely basis and shall hold Purchaser harmless against any claims asserted by such parties whether before or after the transfer of title to the Purchaser. Within five (5) Business Days after a breach or default by a Seller or any of its Affiliates, or after acquiring Knowledge of such Seller of a breach or default of any other Person, under any subcontract relating to one or more Purchased Systems, such Seller shall provide Purchaser written notice of such breach or default.
(b) Completion Certificate . On or before the tenth Business Day of each calendar month, the Sellers, as applicable, shall deliver to Purchaser a Completion Certificate listing all such PV Systems that were Placed in Service in the prior month. If a
 
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Purchased System is not Placed in Service by the Completion Deadline, then such PV System shall become a Deficient Project subject to Section 2.2(d) . Concurrently with the delivery of the Completion Certificate, the Sellers, as applicable, shall also deliver to Purchaser a copy of the form of warranty issued by each manufacturer or supplier of panels, inverters or racking (to the extent not previously provided to Purchaser) that satisfies the requirements of Section 3.4 .
(c) Performance Tests . Each Seller shall perform the Performance Tests for each Purchased System that was purchased by Purchaser from such Seller under this Agreement. Such Seller’s technical personnel (or, when applicable, the installer or manufacturer’s personnel, with such Seller’s supervision) shall operate the PV Systems during the Performance Tests. If a PV System fails to pass the Performance Tests, then such Seller shall take corrective actions and repeat the Performance Tests until such PV System successfully completes the Performance Tests or the Completion Deadline, whichever occurs first.
(d) Deficient Projects and Cancelled Projects . A Seller shall remove any Accepted Projects Purchased by Purchaser from it and are included in a Tranche that are Deficient Projects or Cancelled Projects. A Seller shall revise and update the applicable portion of Schedule 1 to remove such Deficient Projects and Cancelled Projects. A Seller shall either (i) provide a credit to Purchaser toward the purchase of additional PV Systems in a subsequent Tranche in the amount of the aggregate of the System Purchase Prices for such Deficient Projects and Cancelled Projects (the “ Removed Project Credit ”) to be applied in connection with payment of the aggregate of the System Purchase Prices of a Tranche in the Closing Request for that Tranche, which Removed Project Credit shall be calculated in a report, substantially in the form of Schedule 7 , describing the Deficient Projects and Cancelled Projects not previously reported (the “ Deficient Project and Cancelled Project Report ”) or (ii) substitute another PV System that meets all of the conditions in Section 2.3 (a “ Substituted Project ”) for any Deficient Project or Cancelled Project that was previously Purchased by Purchaser (and not otherwise previously reported in a prior Substitution Report or a Deficient Project and Cancelled Project Report) by delivering a Substitution Report in accordance with Section 2.2(f) ; provided that any such substitution shall occur no later than the Completion Deadline. For the avoidance of doubt, all right, title and interest in and to any Cancelled Project or Deficient Project removed from the Tranche shall pass back to such Seller. Notwithstanding anything to the contrary contained herein, in connection with any substitution of any Substituted Project for any Cancelled Project or Deficient Project, the applicable Seller and Purchaser shall cooperate in good faith to execute any documents and to take such other actions as may be necessary or advisable to carry out the intent of this Section 2.2 .
(e) Change Orders Under Customer Agreements . Following the relevant Purchase Date and prior to the Placed in Service Date of any PV System, a Seller may agree to change orders under or amendments to the Customer Agreement relating to the size, layout or design of such PV System (a “ Change Order ”). A Seller may agree to Change Orders in its sole discretion. A Seller shall deliver to Purchaser a report, substantially in the form of Schedule 8 (a “ Change Order Report ”), describing the economic impact of all Change Orders through the date of such Change Order Report and previously not reported in a Closing Request. The Change Order Report will (A) identify all Change Orders agreed to through the date of the Change Order Report and not previously reported in a Closing Request, (B) describe any increase or decrease in system size pursuant to each such Change Order, and (C) describe any
 
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increase or decrease in System Purchase Price as a consequence of each such Change Order. If the Change Order Report indicates that the aggregate System Purchase Prices for all Projects that were subject to Change Orders have resulted in a net credit balance (the “ Change Order Credit ”) or debit balance to Purchaser (the “ Change Order Debit ”), such Seller may (i) pay such credit or debit by including the Change Order Credit or the Change Order Debit in the subsequent Closing Request or (ii) in the case of a Change Order Credit, substitute one or more Substituted Projects in accordance with Section 2.2(f) (each of which Substituted Projects shall meet the conditions for PV Systems under Section 2.3 ); provided that any such substitution shall occur no later than the Completion Deadline. Such Seller shall revise Schedule 1 to reflect the information relating to the Change Order; provided further , that in no event will Purchaser be obligated to make a payment hereunder that causes the total Capital Contributions of the Investor in connection with Purchased Systems to exceed the Investor Contribution Cap.
(f) Substitution . A Seller shall provide written notice of any proposed Substituted Project to Purchaser in the Substitution Report, and Purchaser shall have a period of ten (10) days (the “ Substituted Project Review Period ”) from receipt of the Substitution Report to confirm that the conditions in Section 2.3 have been met with respect to each such proposed Substituted Project. Each such proposed Substituted Project shall be deemed accepted unless Purchaser informs such Seller in writing within the applicable Substituted Project Review Period that any such proposed Substituted Project is rejected; provided , however , that Purchaser shall have no discretion to reject any Project that satisfies all of the conditions in Section 2.3 . The Purchase Date for the Substituted Projects purchased under this Section 2.2(f) shall be the expiration of the applicable Substituted Project Review Period or, if such date is not a Business Day, then the first Business Day following the expiration of the applicable Substituted Project Review Period. On the Purchase Date for the Substituted Projects, all right, title and interest in and to any Substituted Project shall pass to Purchaser and such Seller shall revise and update Schedule 1 to reflect the relevant Substituted Project information (as shown in the Substitution Report).
(g) True-Up Report . No later than twenty (20) Business Days following the Completion Deadline, VSD shall deliver to Purchaser a true-up report that contains the information specified in Schedule 10 (the “ True-Up Report ”) and a revised Base Case Model that reflects the information in the True-Up Report (the “ True-Up Base Case Model ”). If the True-Up Report indicates that the aggregate of the System Purchase Prices for all Purchased Systems has left a net credit balance or debit balance, such balance, plus 5% interest thereon accruing from the date the Party owed the credit effectively advanced the amounts now being credited, shall be paid in cash to the applicable Sellers by Purchaser or to Purchaser by VSD (on behalf of both Sellers), whichever is appropriate, within ten (10) calendar days after issuance of the True-Up Report; provided , however , that (i) no True-Up Report will include information on, or require a payment in connection with, any Deficient Projects, Cancelled Projects or Change Orders to the extent a Refund Credit has already been utilized or a Substituted Project has been substituted therefor, and (ii) in no event will Purchaser be obligated to make a payment hereunder that causes the total Capital Contributions of the Investor in connection with Purchased Systems to exceed the Investor Contribution Cap.
 
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2.3 Conditions Precedent to the Obligations of Purchaser .
The obligations of Purchaser to consummate the Purchase of the Projects comprising a Tranche shall be subject to the satisfaction by a Seller (or Sellers, as applicable), of each of the following conditions precedent with respect to such Projects:
(a) Each of the representations and warranties of such Seller in Section 3.1 *** that is qualified as to materiality or by Material Adverse Change shall be true and correct, and such representations that are not so qualified shall be true and correct in all material respects, in each case as of the relevant Purchase Date;
(b) Each of such Seller *** has performed or complied with all obligations and covenants required by this Agreement *** to be performed or complied with by it at or prior to the relevant Purchase Date, except where such failure to perform or comply would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole, Seller ***;
(c) Such Seller has delivered to Purchaser a Closing Request and a Transfer Notice with respect to the Purchase of the applicable Tranche;
(d) Such Seller has executed and delivered the Bill of Sale;
(e) Such Seller shall have delivered an updated Base Case Model for the applicable Tranche;
(f) The Tax Credit is in effect and is reasonably expected to be available as of the anticipated Placed in Service Dates for each Project comprising the Tranche in an amount equal to 30% of the applicable System Purchase Price;
(g) Prior to the initial Purchase Date, Purchaser has received an opinion from counsel to such Seller as to the enforceability of each of the Transaction Documents to which such Seller is a party and as to such other corporate matters as are customarily included in similar opinions, each such opinion in form and substance reasonably satisfactory to Purchaser;
(h) Purchaser has received appraisals from the Qualified Appraiser, in form and substance reasonably satisfactory to Purchaser (each such appraisal, an “ Appraisal ”), and which are dated no earlier than six (6) months prior to the applicable Purchase Date, showing the fair market value of new photovoltaic systems of the kind as, and in the State of the United States of America of, the PV Systems being purchased on the relevant Purchase Date under this Agreement expressed in terms of dollars per watt of installed capacity; provided , that notwithstanding anything to the contrary in this clause (h) , (i) in the event that Purchaser, such Seller or one of their Affiliates receives an Appraisal Deficiency Notice, (A) the System Purchase Price for each Project comprising the applicable Tranche shall be determined in a manner consistent with such Appraisal Deficiency Notice until such time as Purchaser has received a new Appraisal from the Qualified Appraiser in form and substance satisfactory to Purchaser (a “ Replacement Appraisal ”), and (B) upon acceptance of such Replacement Appraisal, the System Purchase Price for any such Project purchased after such acceptance shall
 
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thereafter be determined in accordance with Section 2.1(e) using such Replacement Appraisal, and (ii) in the event that Purchaser notifies such Seller that it requires an additional Appraisal, (A) such additional Appraisal will be at the Purchaser’s expense, (B) the Purchaser shall be entitled to exercise the right to request such additional Appraisals no more often than every six (6) months, (C) such Appraisal will be done by the Qualified Appraiser and (D) as a condition to Purchaser’s obligation to purchase Projects under this Agreement following such request, Purchaser shall have received such Appraisal from the Qualified Appraiser, in form and substance reasonably satisfactory to the Purchaser, which shall be used to determine the System Purchase Price in accordance with Section 2.1(e) unless and until such additional Appraisal is replaced by a Replacement Appraisal;
(i) All manufacturer’s warranties in respect of the PV System for each Project comprising the Tranche are transferable, and will be transferred, to Purchaser upon Purchase of such Project;
(j) The PV System for each Project has not been “placed in service” as that term is used in Sections 48 and 168 of the Code;
(k) Such Seller shall certify to Purchaser in the Transfer Notice that such Seller reasonably expects the PV System for such Project to be Placed in Service by the applicable Completion Deadline;
(l) Such Seller shall certify to Purchaser in the Transfer Notice that such Seller has complied with all other applicable provisions of this Agreement and that such Seller and its Affiliates have complied with each applicable Customer Agreement, except as would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole;
(m) A Customer Agreement for the PV System for such Project is in effect in the applicable form attached to Schedule 3 ;
(n) The Host Customers meet the Minimum Credit Criteria, and each Host Customer’s FICO® Score has been delivered to the Investor;
(o) Each Host Customer for such Project is located in a Project State, and the address of each such Host Customer has been delivered to Investor;
(p) No material default or event of default of such Seller *** has occurred and is continuing under any Transaction Document;
(q) No Host Customer is described in Code Section 50(b)(3) or (4);
(r) Assuming that all of the Projects in the same Tranche as such Project are sold to the Purchaser and Placed in Service, the aggregate amount of all Capital Contributions of Investor to Purchaser, including all Capital Contributions to be made by Investor to Purchaser on the Purchase Date with respect to such Tranche and made by Investor to Purchaser prior to the Purchase Date for such Project, will not exceed the Investor Contribution Cap;
 
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(s) Such Seller shall have made available to Purchaser, via such Seller’s web portal, on which site the following shall be delivered:
(1) a copy of the site plan and CAD designs used for the Projects; and
(2) a copy of the executed Customer Agreement for such Project; and
(t) The insurance that is required to be procured and maintained pursuant to Section 8.2(b)(i) of the LLC Agreement shall have been procured and shall be in full force and effect.
2.4 Conditions Precedent to the Obligations of a Seller .
The obligations of a Seller to consummate the Purchase of each Project comprising a Tranche shall be subject to the satisfaction by Purchaser of each of the following conditions precedent for such Project:
(a) Each of the representations and warranties of Purchaser in Section 3.2 that is qualified as to materiality or by Material Adverse Change shall be true and correct, and such representations that are not so qualified shall be true and correct in all material respects, in each case as of the relevant Purchase Date;
(b) All consents, approvals and filings then required to be obtained or made by Purchaser to execute, deliver and perform the Transaction Documents to which it is a party shall have been obtained or made and shall be in full force and effect as of the relevant Purchase Date;
(c) Purchaser has executed and delivered the Bill of Sale; and
(d) The Tax Credits are in effect and are reasonably expected to remain in effect as of the anticipated Placed in Service Date for the PV System for such Project.
2.5 Conditions Precedent to the Obligations of Both Parties .
The obligations of Purchaser and a Seller, or the Sellers, as applicable, to consummate the Purchase of a Tranche of Projects shall be subject to the satisfaction of each of the following conditions precedent for such Tranche:
(a) Orders . No temporary restraining order, preliminary or permanent injunction or other legally binding award, judgment, decree, ruling, verdict or other decision issued by any Governmental Authority applicable directly to a Party, its business or properties, or the transactions contemplated hereby shall be in effect that (i) impairs, restrains, prohibits, adversely alters or invalidates the Installation or operation of such Tranche of Projects, any of the Transaction Documents or material Permits, or the applicable Customer Agreement, in each case which would be reasonably expected to adversely affect in a material manner such Tranche of Projects taken as a whole or (ii) enjoins, prohibits or otherwise prevents the consummation of the transactions contemplated hereby.
 
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(b) Proceedings . No claims, disputes, governmental investigations, suits, actions (including, without limitation, non-judicial real or personal property foreclosure actions), arbitrations, legal, administrative or other proceedings of any nature, domestic or foreign, criminal or civil, at law or in equity, shall have been instituted or threatened in writing and remain pending, in each case that has a reasonable likelihood of success, that (i) seek (A) to impair, restrain, prohibit, adversely alter or invalidate the Installation or operation of the Projects, any of the Transaction Documents or material Permits, or the applicable Customer Agreement or (B) to prohibit the operation of the Projects in accordance with the applicable Customer Agreement, in each case which would adversely affect in a material manner such Tranche of Projects taken as a whole or (ii) does or would enjoin, prohibit or otherwise prevent, or seek to enjoin, prohibit or otherwise prevent the consummation of the transactions contemplated hereby.
(c) Laws . No Applicable Law shall have been enacted or shall be deemed applicable to the transactions contemplated by this Agreement that makes the consummation of such transactions illegal.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Representations, Warranties and Covenants of Sellers .
Each Seller represents, warrants and covenants to Purchaser as follows as of the Effective Date and each Purchase Date with respect to the Projects to be purchased from such Seller on such Purchase Date (for the avoidance of doubt on a Purchase Date Seller makes such representations, warranties and covenants only if Purchaser purchases any Project from such Seller on such Purchase Date) that:
(a) Organization and Good Standing . Such Seller is a limited liability company or a corporation, as applicable, duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, lease and operate its business as currently conducted. Such Seller is duly qualified to do business and is in good standing under the laws of each jurisdiction that its business, as currently being conducted, shall require it to be so qualified, except where the failure to be so qualified would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or such Seller.
(b) Authorization, Execution and Enforceability . Such Seller has full power and authority to execute and deliver the Transaction Documents and the Customer Agreements to which it is a party and to consummate the transactions contemplated thereby. The execution and delivery by such Seller of the Transaction Documents and Customer Agreements to which it is a party and the consummation by such Seller of the transactions contemplated thereby have been duly and validly authorized by all necessary company or corporate action required on the part of such Seller, and such Transaction Documents and Customer Agreements
 
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have been duly and validly executed and delivered by such Seller. Each of the Transaction Documents and the Customer Agreements to which such Seller is a party constitutes the legal, valid and binding agreement of such Seller, enforceable against such Seller in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at law).
(c) No Violation . The execution and delivery by such Seller and its Affiliates of the Transaction Documents and the Customer Agreements do not, and the performance by such Seller and its Affiliates of their obligations hereunder and thereunder, as applicable, shall not (i) violate any laws, statutes, rules, regulations, ordinances, judgments, settlements, orders, decrees, injunctions and writs of any Governmental Authority having jurisdiction, (ii) conflict with or cause a breach of any provision in the charter, bylaws or other organizational document of such Seller or such Affiliates, as applicable, or (iii) cause a breach of, constitute a default under, cause the acceleration of, create in any counterparty the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, note, bond, mortgage, indenture, agreement, license, intellectual property licenses or rights, instrument, decree, judgment or other arrangement to which such Seller or such Affiliates are parties or under which such Seller or such Affiliates are bound or to which any of their Assets is subject (or result in the imposition of a Lien upon any such Assets), except in the case of clause (i)  or clause (iii)  as would not, individually or in the aggregate, would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or such Seller.
(d) No Consent . All consents, approvals and filings then required to be obtained or made by such Seller and its Affiliates to execute, deliver and perform the Transaction Documents and Customer Agreements to which they are parties have been obtained or made and are in full force and effect, except where the failure to obtain or make such consents, approvals or filings would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or Seller.
(e) Legal Proceedings . There are no pending or, to the Knowledge of such Seller, threatened claims, disputes, governmental investigations, suits, actions (including, without limitation, non-judicial real or personal property foreclosure actions), arbitrations, legal, administrative or other proceedings of any nature, domestic or foreign, criminal or civil, at law or in equity, by or against or otherwise affecting such Seller or any Purchased System that would reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or such Seller, provided that the foregoing representation, as it relates to legal proceedings involving a Host Customer, is made only to the Knowledge of such Seller.
(f) Transaction Documents and Customer Agreements .
(1) None of such Seller, *** or, to the Knowledge of such Seller, any other party to a Transaction Document has breached any provision of, or defaulted under the terms of, any Transaction Document that remains uncured and no event or circumstance has occurred that would, with the passage of time, result in such a breach or default, except where
 
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any such breach or default would not adversely affect in a material manner all of the Projects taken as a whole or such Seller. The consummation of the transactions contemplated by this Agreement would not give any party to any Transaction Document the right to terminate or alter the terms of such contract or a right to claim damages thereunder.
(2) The Customer Agreement for each of the Projects included in the applicable Tranche is in full force and effect, and neither such Seller nor, to the Knowledge of such Seller, the relevant Host Customer has breached any provision of, or defaulted under the terms of, the underlying Customer Agreement that remains uncured and no event or circumstance has occurred that would, with the passage of time, result in such a breach or default, except where any such breach or default would not adversely affect in a material manner all of the Projects taken as a whole or such Seller. None of Sellers or any of the VSH Entities is a party to any contract, instrument, commitment, agreement or other legally binding arrangement with any Host Customer in relation to PV Systems other than the Customer Agreements to which such Host Customer is a party.
(g) Taxes .
(1) All the components of each Purchased System constitute “energy property” within the meaning of Section 48(a)(3)(A)(i) of the Code.
(2) None of such Projects has been “placed in service” within the meaning of Sections 48 and 168 of the Code. No Person has claimed with respect to such Projects or any property that is part of such Projects, on any Tax return, any depreciation or amortization deductions. The total fair market value of any previously used property included in each Purchased System will not be more than twenty percent (20%) of the total value of such Purchased System.
(3) No Person has applied for any grant under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009, as amended, with respect to any asset of such Projects.
(4) The fair market value of each Purchased System is equal to at least the installed capacity of such Purchased System in watts multiplied by the amount per watt set forth in the Appraisal for the Project State where such Purchased System is located with respect to the Tranche that includes such Purchased System.
(5) Such Seller shall, and shall cause its Affiliates to, report in all documents, filings and accounting statements that the amount realized on the sale of a Project to Purchaser is the System Purchase Price for such Project.
(6) Neither such Seller nor any of its Affiliates has received an Appraisal Deficiency Notice on or prior to the Effective Date.
(7) No Host Customer is described in Sections 50(b)(3) or (4) of the Code.
 
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(8) No Person has requested or received, with respect to any Purchased System, any permission to operate or similar form, Permit or other document.
(9) No Purchased System is “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code.
(10) Each Purchased System is in a Project State.
(h) Compliance with Applicable Laws . Such Seller and each of its subcontractors engaged pursuant to Section 2.2(a) of this Agreement is in compliance with all Applicable Laws with respect to developing, constructing, leasing, installing, operating and maintaining such Projects and the entering into, and performance of obligations under, any Customer Agreement associated with a Project included in the applicable Tranche, except where the failure to be in compliance would not adversely affect in a material manner all of the Projects taken as a whole, such Seller or Purchaser’s (or any of its direct or indirect equity owner’s) ability to claim Tax Credits equal to 30% of the System Purchase Price and depreciation or amortization deductions on such Project.
(i) New Goods and Services . All equipment, parts and materials furnished in connection with each PV System for such Projects shall be new, unused and undamaged.
(j) Information . The written information furnished by such Seller *** to Purchaser and Investor, their respective consultants, advisors and attorneys, and the Qualified Appraiser (i) in the Transaction Documents or any other certificates or reports delivered pursuant to the terms of this Agreement, or (ii) for posting on https://bxftp.watchdox.com or https://investor.vivintsolar.com, in each case in connection with such Projects (including, without limitation, information provided in each Completion Certificate) or the transactions contemplated by the Transaction Documents, is true, complete and correct in all material respects and does not omit any material information necessary to make such information not adversely misleading when taken as a whole in light of the circumstances under which it is provided.
(k) Permits . All material Permits required under the Customer Agreement or otherwise to install, test and use the PV System for such Project to generate electricity for sale to the Host Customer have been obtained apart from a letter from the local utility authorizing parallel operation and such other Permits that are of a ministerial nature and are not required to be obtained prior to the Purchase Date under Applicable Law. Neither such Seller nor any of its Affiliates has received written notice from any Governmental Authority regarding any revocation, withdrawal, suspension, cancellation or termination of any Permit, except where such revocation, withdrawal, suspension, cancellation or termination would not adversely affect in a material manner all of the Projects taken as a whole, such Seller or Purchaser’s (or any of its direct or indirect equity owner’s) ability to claim Tax Credits equal to 30% of the System Purchase Price for such Project and depreciation or amortization on such Project.
 
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(l) Warranties . As of the date each PV System for such Projects is Placed in Service, all warranties relating to such PV System from any manufacturer of any part thereof shall be in full force and effect in all material respects and shall have been assigned to Purchaser. The Bill of Sale effectively assigns all of the rights of such Seller and its Affiliates in, to and under all warranties relating to such PV System to Purchaser.
(m) Title; Personal Property . Such Seller has good title to, and is the owner of, each such Project, and each such Project is free and clear of all Liens of any third Person, other than Permitted Liens. Legal title and ownership of each such Project shall, on the applicable Purchase Date, upon consummation of the Purchase thereof pursuant to this Agreement, pass to and remain with Purchaser, free and clear of all Liens (other than Permitted Liens). All Permitted Liens have been released on or before the applicable Placed in Service Date.
(n) Intellectual Property . Such Seller owns or has a valid license to all intellectual property that is reasonably necessary to install, operate and maintain such Projects, which licenses, pursuant to this Agreement, shall be transferred to Purchaser upon Purchase of the relevant Projects. The Bill of Sale effectively assigns all of the rights of such Seller in such licenses to Purchaser. To the Knowledge of such Seller, there are no pending or threatened claims, actions, judicial or other adversary proceedings, disputes or disagreements concerning any item of such intellectual property that would adversely affect in a material manner such Projects taken as a whole or such Seller.
(o) Real Property Rights . All of such Seller’s real property rights and other rights with respect to Host Customers’ real property contained in the Customer Agreements for such Projects (the “ Real Property Rights ”) are sufficient for the full performance and enforcement of all of such Seller’s rights, remedies and obligations with respect to such Projects (including under the Customer Agreements for such Projects), and such Seller has not been informed in writing by any owner or lessor of the real property associated with such Real Property Rights that such Seller is in breach of its obligations relating to such Real Property Rights or that such Real Property Rights have been challenged or terminated.
(p) Environmental Matters . Except for matters that have not adversely affected in a material manner all of the Projects taken as a whole or Seller, (i) such Seller is, at all times has been, and reasonably expects to continue to be, in compliance with all Environmental Laws, (ii) to the Knowledge of such Seller, no such Project is in violation of Environmental Laws and (iii) such Seller has not received written notice from any Governmental Authority of an actual or potential violation of or liability under any Environmental Laws with respect to any Project. Such Seller shall indemnify and hold Purchaser harmless from any expenses, damages or amounts payable, including to the Host Customer, as a result of a breach of any Environmental Law by such Seller related to the Purchased Systems or the Installation thereof.
(q) No Condemnation . No condemnation is pending or threatened with respect to any such Project, or any portion thereof material to the ownership or operation of any such Project, and no unrepaired casualty exists with respect to any such Project or any portion thereof material to the ownership or operation of any such Project or the sale of electricity therefrom.
 
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(r) Energy Regulatory Matters .
(1) The sale of each such Project to Purchaser will not (A) cause Purchaser, the Investor or any of their direct or indirect owners to become subject to, or not exempt from, regulation under the Federal Power Act or the Public Utility Holding Company Act of 2005, (B) require the approval of any Governmental Authority pursuant to state or local law, or (C) cause Purchaser, the Investor or any of their direct or indirect owners to become subject to, or not exempt from, regulation as a “public utility”, “electric utility” or similar designation under state or local law.
(2) The PV System for each such Project is a qualifying facility pursuant to 18 C.F.R. § 292.101(b)(1) and a qualifying small power production facility pursuant to 18 C.F.R. § 292.203(a) of FERC’s regulations and has or will have, together with all other PV Systems of all such Projects located within a mile of each such Project, a power production capacity of no more than twenty (20) MW (AC) and, to the extent required under FERC regulations to preserve such status, such Seller shall have filed or will file with FERC a notice of self-certification, or have obtained or will obtain from FERC an order granting certification, with respect to such status.
(s) DISCLAIMERS . EXCEPT AS OTHERWISE AGREED BY A SELLER (INCLUDING IN SECTION 3.4 ) AND EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 3 , ANY TRANSFER NOTICE DELIVERED PURSUANT TO THIS AGREEMENT, AND THE OTHER TRANSACTION DOCUMENTS, THE PV SYSTEMS ARE BEING DELIVERED BY SUCH SELLER TO PURCHASER “AS IS, WHERE IS” AND SUCH SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO LIABILITIES, OPERATIONS OF THE PV SYSTEMS OR PROJECTS, VALUE OR QUALITY OF THE PV SYSTEMS OR PROJECTS OR THE PROSPECTS (FINANCIAL AND OTHERWISE), RISKS AND OTHER INCIDENTS OF THE PV SYSTEMS OR PROJECTS. EXCEPT AS OTHERWISE AGREED BY SUCH SELLER AND EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 3 , ANY TRANSFER NOTICE DELIVERED PURSUANT TO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, SUCH SELLER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO SUCH SELLER OR THE PV SYSTEMS OR PROJECTS, OR ANY PART THEREOF.
 
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3.2 Representations and Warranties of Purchaser .
Purchaser represents and warrants, with respect to itself, to each Seller as follows as of the Effective Date:
(a) Organization, Good Standing, Etc . Purchaser is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, and has the requisite limited liability company power and authority to own, lease and operate its properties and to carry on its business as being conducted on the date hereof.
(b) Authority . Purchaser has the requisite power and authority to enter into this Agreement and the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby or thereby. This Agreement (assuming due authorization, execution and delivery by Sellers) constitutes, and upon execution and delivery by Purchaser of the other Transaction Documents to which it is a party the Transaction Documents shall constitute, the valid and binding obligations of Purchaser, enforceable against it in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors’ rights and remedies generally and to general principles of equity.
(c) No Violation . The execution and delivery by Purchaser of this Agreement and the other Transaction Documents to which Purchaser is a party do not, and the performance by Purchaser of Purchaser’s obligations hereunder and thereunder shall not, (i) violate any laws, statutes, rules, regulations, ordinances, judgments, settlements, orders, decrees, injunctions and writs of any Governmental Authority having jurisdiction over Purchaser, (ii) conflict with or cause a breach of any provision in the charter, bylaws or other organizational document of Purchaser, or (iii) cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, license, instrument, decree, judgment or other arrangement to which Purchaser is a party or under which it is bound or to which any of its Assets are subject (or result in the imposition of a Lien upon any such Assets) except (in the case of this clause (iii) ) for any that would not materially impair or be reasonably expected to materially impair the ability of Purchaser to meet or perform its obligations under the Transaction Documents.
(d) Legal Proceedings . There is no pending or, to Knowledge of Investor, threatened litigation, claim, action, suit, proceeding or governmental investigation against Purchaser or which seeks the issuance of an order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement, other than any such instance that would not materially impair or be reasonably expected to materially impair the ability of Purchaser to meet or perform its obligations under the Transaction Documents.
3.3 No Other Seller Representations .
Without limiting the foregoing, except with respect to the representations and warranties of each Seller set forth in ARTICLE 3 or expressly set forth as representations and warranties in the other Transaction Documents, no Seller makes any representation or warranty in this Agreement with respect to Purchaser’s eligibility to claim Tax Credits. Purchaser specifically acknowledges that no representation or warranty has been made by any Seller about the accuracy of any projections, estimates or budgets, future revenues, future results from operations, future cash flows, the future condition of the Projects or any assets of such Seller or Purchaser, or the future financial condition of such Seller or Purchaser.
 
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3.4 Defects Warranty.
Each Seller warrants, with respect to each Project purchased by Purchaser under this Agreement from such Seller, that such Seller’s installation of the PV System for such Project shall be free from material defects in design of workmanship as of the date of installation for a period of *** from the date of installation (the “ Warranty ”); provided , however , that this Warranty shall not include any warranty statements beyond the scope of this Warranty. Upon a breach of the Warranty, the applicable Seller will, upon notice from Purchaser or Host Customer of a valid Warranty claim, at such Seller’s sole option, either repair or replace any defective parts or construction. Such Seller shall have reasonable access to the applicable Project site to the extent permitted by the Customer Agreements, as necessary to perform its Warranty obligations under this Agreement. All costs for the removal, replacement and reinstallation of all equipment and materials necessary to gain access to defective PV Systems and any other costs relating to corrective or remedial action shall be borne by the applicable Seller. This Warranty applies solely to the PV Systems and does not include (x) roof repair or maintenance or (y) site work, including but not limited to, grading and landscape maintenance, if applicable; provided , however , the applicable Seller shall, at its expense, repair any damage to the roof or Project site caused by such Seller, its Affiliates or its subcontractors. Panels, inverters and racking for each Project shall be procured from the approved vendors listed on Schedule 13 unless otherwise reasonably consented in writing by Investor ( provided that no such approval or consent of Investor shall be required with respect to vendors from whom any equipment other than panels, inverters or racking is procured) and either (a) the warranties therefor shall by their terms run to the benefit of the Person that owns such equipment or the solar system into which such equipment is incorporated or (b) VSD or VSI, as applicable, shall transfer or cause to be transferred the warranties therefor by such manufacturers to Purchaser (which for panels shall be at least twenty (20) years from the date of installation and for inverters and racking shall be at least ten (10) years from the date of installation). Except as expressly set forth in this Section 3.4 , neither Seller is providing any warranty with respect to any panels, inverters, racking or any other component of any Project.
3.5 Insurance . Each Seller will procure and maintain or cause to be procured and maintained, at its sole cost and expense, insurance substantially in the types and amounts listed in Schedule 14 attached hereto covering the activities of its employees and representatives in connection with this Agreement.
ARTICLE 4
TERMINATION
4.1 Termination .
(a) The obligations to purchase and sell PV Systems under this Agreement shall automatically terminate on the earlier of (i) the Completion Deadline and (ii) the date on which any change in Applicable Laws takes effect that amends the Code so as to eliminate or reduce the value of the Tax Credit, but only to the extent such change in Applicable Laws would affect Projects to be sold pursuant to this Agreement after such date. For the avoidance of doubt, no such termination shall diminish, terminate or suspend the Parties’ other rights and obligations under this Agreement.
 
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(b) Without limiting a Seller’s or Purchaser’s ability to exercise any right or remedy to which it is entitled hereunder or under any of the Transaction Documents, this Agreement may be terminated prior to the first Purchase Date:
(1) if a Seller or Purchaser voluntarily commences bankruptcy, insolvency, reorganization, stay, moratorium or similar debtor-relief proceedings, or makes an assignment for the benefit of creditors, by Purchaser or a Seller, as applicable;
(2) if insolvency, receivership, reorganization, bankruptcy, or similar proceedings shall have been commenced against a Seller or Purchaser and such proceedings remain undismissed or unstayed for a period of sixty (60) calendar days, by Purchaser or a Seller, as applicable;
(3) by a Seller or Purchaser, upon twenty (20) Business Days’ prior written notice to Purchaser or a Seller or the Sellers, as applicable, in the event a Seller or the Sellers, as applicable (with respect to a termination by Purchaser) or Purchaser (with respect to a termination by the Sellers) is in material breach of a representation, warranty, covenant or agreement contained in this Agreement, and such breach has not been cured during such twenty (20) Business Day period and such breach would reasonably be expected to result in a Material Adverse Change on the non-defaulting Party; provided , however , that the Party (or the Parties, as applicable) seeking termination pursuant to this subsection (b)(3) is (or are, as applicable) not in breach in any material respects of its (or their, as applicable) representations, warranties, covenants or agreements contained in this Agreement;
(4) automatically and without further action by any Party on the date on which the LLC Agreement is terminated; and
(5) by the mutual written consent of the Sellers and Purchaser.
4.2 Procedure and Effect of Termination .
(a) The Party desiring to terminate this Agreement pursuant to Section 4.1 shall give written notice of such termination to the other Parties in accordance with Section 6.6 , specifying the provision pursuant to which such termination is effected.
(b) If this Agreement is terminated pursuant to Section 4.1(b) by a Seller, Purchaser, or all Parties then this Agreement shall be terminated in its entirety as of the date of such termination with no liability on the part of any Party hereto; provided , however , that (i) the agreements contained in this Section 4.2 , ARTICLE 5 and ARTICLE 6 shall survive the termination and (ii) no such termination shall relieve any Party of any liability or damages resulting from any breach by that Party of this Agreement or affect the rights of the other Parties to indemnification for such breach nor shall any such termination relieve any Party of any obligations that arose pursuant to this Agreement prior to such termination.
 
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4.3 Indemnification by Seller .
(a) VSD shall defend, indemnify and hold harmless Purchaser, its respective members, the Affiliates of each, and its and their respective officers, directors, employees and agents (“ Purchaser Indemnified Parties ”) from and against (i) any Losses (other than Tax Losses), to the extent arising out of or in connection with (A) the negligence, fraud or willful misconduct of Sellers, their Affiliates or their subcontractors or (B) any breach by Sellers of any of their representations, warranties or covenants in this Agreement or the other Transaction Documents and (ii) any Losses (other than Tax Losses) from third party claims or demands arising under or relating to any Seller’s performance or nonperformance under this Agreement; provided , however , in no event will any Seller be responsible for any such Losses to the extent caused by Purchaser’s gross negligence or willful misconduct.
(b) From and after the applicable Purchase Date, VSD will indemnify, defend and hold harmless Purchaser Indemnified Parties from any claims or liens (other than Permitted Liens) brought or filed in connection with the Projects that were purchased from the Sellers. VSD will discharge any such claim or lien within thirty (30) days after becoming aware of such claim or lien. Failure to so discharge shall entitle the Purchaser to pay such claim or lien and seek reimbursement from VSD for such discharged claim or lien, or to set off the amounts owed to VSD hereunder ***.
(c) If as a result of the breach or inaccuracy of any representation or warranty set forth herein or the breach of any covenant herein any Purchaser Indemnified Party for U.S. federal income tax purposes shall lose the benefit of, shall not have the right to claim, shall suffer a disallowance or deferral of, shall suffer a delay in claiming, shall be required to recapture or shall not claim (as the result of a Final Determination or a written opinion of independent counsel selected by Purchaser and reasonably acceptable to a Seller that there is not at least a “more likely than not” position for such claim) all or any portion of the Tax Credits (a “ Tax Credit Loss ”) or cost recovery (depreciation) deductions (a “ Deduction Loss ” and, together with a Tax Credit Loss, a “ Tax Loss ”) assumed in the Base Case Model, then VSD shall pay to Purchaser the amount determined pursuant to Section 4.3(d) hereof.
(d) (1) If a Tax Loss as defined in Section 4.3(c) hereof shall occur, then VSD shall pay to Purchaser (i) in the case of a Tax Credit Loss, the amount, if any, of the Tax Credit lost, disallowed or recaptured reduced by any Tax Savings arising as a result of the Tax Credit Loss, (ii) in the case of a Deduction Loss, the amount, if any, by which the sum of the present values as of the date of the indemnity payment of the additional U.S. federal income taxes payable by each Purchaser Indemnified Party as a result of such Deduction Loss (computed using a discount rate of 15%) exceeds any Tax Savings arising as a result of the Deduction Loss, (iii) the amount of any U.S. federal interest, penalties, fines or additions to tax payable by each Purchaser Indemnified Party, and (iv) the net amount of any additional U.S. federal income Taxes payable by each Purchaser Indemnified Party, if any, as the result of (A) the inclusion of any payment made pursuant to this Section 4.3(d) in taxable income or (B) the increase in any Tax Loss as a result of any payment made pursuant to this Section 4.3 . As used herein, “ Tax Savings ” shall mean the sum of the present values as of the date of the indemnity payment of the reductions in the U.S. federal income taxes payable by each Purchaser Indemnified Party as a result of the Tax Credit Loss or Deduction Loss, as the case may be (computed using a discount rate of 15%).
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement
 
28

(2) For Tax reporting purposes, to the maximum extent permitted by the Code, each Party will agree to treat all amounts paid pursuant to this Section 4.3 as a non-taxable reimbursement of System Purchase Price. To the extent any such payment is includable as income of a Purchaser Indemnified Party as determined as a result of a Final Determination, by agreement of the Parties or, if there is no Final Determination or agreement, by an opinion of a nationally-recognized Tax counsel selected by the Purchaser Indemnified Party and reasonably acceptable to VSD that such amount is *** includable as income of the Purchaser Indemnified Party, the amount of the payment shall be increased by the amount of any U.S. federal income tax required to be paid by the Purchaser Indemnified Party upon the receipt or accrual of the payment. For purposes of calculating the amount of the U.S. federal income taxes required to be paid by each Purchaser Indemnified Party as a result of an amount paid pursuant to this Section 4.3 , including for purposes of determining the U.S. federal income tax required to be paid if a payment pursuant to this Section 4.3 is includable as income of a Purchaser Indemnified Party (and, in each case, any resulting Tax Savings), (A) each Purchaser Indemnified Party shall be deemed to have paid or to be required to pay U.S. federal income taxes for the relevant periods at the maximum marginal rates generally applicable to corporations in the taxable years in question and (B) it will be assumed that each Purchaser Indemnified Party will have sufficient taxable income to fully utilize on a current basis any tax benefits resulting from a Tax Loss or the events giving rise thereto.
(3) Any payment due to Purchaser from VSD pursuant to this Section 4.3 shall be paid within twenty (20) days after receipt by a Seller of a written demand therefor accompanied by a written statement describing in reasonable detail such Tax Loss and the computation of the amount so payable.
4.4 Indemnification by Purchaser .
Purchaser shall defend, indemnify and hold harmless each Seller, its Affiliates and its and their respective members, officers, directors, employees and agents (“ Seller Indemnified Parties ”) from and against (i) any Losses to the extent arising out of or in connection with (A) the negligence, fraud or willful misconduct of Purchaser or (B) any breach by Purchaser of any of its representations, warranties or covenants in this Agreement or the other Transaction Documents and (ii) any Losses from third-party claims or demands arising under or relating to Purchaser’s performance or nonperformance of Purchaser’s obligations under this Agreement; provided , however , in no event will Purchaser be responsible for any such Losses of a Seller to the extent caused by such Seller’s gross negligence or willful misconduct.
4.5 LIMITATION OF LIABILITY .
EXCEPT AS MAY BE EXPRESSLY PROVIDED HEREIN AND EXCEPT FOR INDEMNIFIED THIRD PARTY CLAIMS PURSUANT TO SECTION 4.3 OR SECTION 4.4 , AS APPLICABLE, IN NO EVENT WILL PURCHASER OR ANY SELLER BE LIABLE TO THE SELLERS OR PURCHASER, AS APPLICABLE, UNDER THIS AGREEMENT OR OTHERWISE FOR CONSEQUENTIAL, SPECIAL, INCIDENTAL, EXEMPLARY, STATUTORY, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT; PROVIDED THAT A LOSS OR INABILITY TO CLAIM TAX CREDITS OR
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement
 
29

OTHER ADVERSE TAX CONSEQUENCES SHALL NOT BE TREATED AS CONSEQUENTIAL, SPECIAL, INCIDENTAL, EXEMPLARY, STATUTORY, OR PUNITIVE DAMAGES. IN ADDITION, WHETHER ANY ACTION OR CLAIM IS BASED ON WARRANTY, CONTRACT, TORT OR OTHERWISE, UNDER NO CIRCUMSTANCES SHALL THE TOTAL LIABILITY OF PURCHASER OR THE TOTAL AGGREGATE LIABILITY OF BOTH SELLERS ARISING OUT OF OR RELATED TO THIS AGREEMENT EXCEED ***; PROVIDED THAT SUCH LIMITATION SHALL NOT APPLY TO REDUCE ANY PARTY’S OBLIGATION TO INDEMNIFY ANOTHER PARTY (A) TO THE EXTENT OF THE PROCEEDS OF INSURANCE OTHERWISE PAYABLE TO THE INDEMNIFYING PARTY, OR (B) FOR LOSSES CAUSED BY THE GROSS NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT OF THE INDEMNIFYING PARTY.
4.6 Indemnification Procedures .
Except with respect to Taxes, each of a Seller’s obligations in Section 4.3 and Purchaser’s obligations in Section 4.4 above (each of a Seller and Purchaser, as applicable, the “ Indemnifying Party ”) with respect to any third party claim are contingent upon the Seller Indemnified Parties or the Purchaser Indemnified Parties (each, as applicable, the “ Indemnitee ”), promptly notifying the Indemnifying Party in writing of such claim and promptly tendering the control of the defense and settlement of any such claim to the Indemnifying Party at the Indemnifying Party’s expense and with the Indemnifying Party’s choice of counsel. In connection with the foregoing, the indemnification obligation of Indemnifying Party to the Indemnitee shall be reduced if and to the extent the failure of an Indemnitee to provide such notice and tender of control actually prejudices the outcome of any such claim; provided that the foregoing shall not apply so long as the Managing Member of Purchaser is an Affiliate of a Seller. The Indemnitee shall also cooperate with the Indemnifying Party, at the Indemnifying Party’s expense, in defending or settling such claim and the Indemnitee may join in defense with counsel of its choice at its own expense. An Indemnifying Party may not, without the prior written consent (such consent not to be unreasonably withheld) of an Indemnitee, settle, compromise or consent to the entry of any judgment regarding a third party claim, the defense of which has been assumed by the Indemnifying Party unless such settlement, compromise or consent (a) does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the Indemnitee; and (b) does not contain any equitable order, judgment or term that in any manner affects, restrains or interferes with the business of the Indemnitee or any of the Indemnitee’s Affiliates. An Indemnitee may not settle, compromise or consent to the entry of any judgment regarding any third party claim for which indemnification is sought and the defense of which has not been assumed by the Indemnifying Party, without the prior written consent of the Indemnifying Party, such consent not to be unreasonably withheld or delayed.
ARTICLE 5
DISPUTE RESOLUTION
5.1 Good Faith Negotiations .
In the event that any question, dispute, difference or claim arises out of or in connection
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement
 
30

with this Agreement, including any question regarding its existence, validity, performance or termination (a “ Dispute ”), of which a Seller (or the Sellers, as applicable) or Purchaser has provided notice to Purchaser or a Seller or the Sellers, as applicable, senior management personnel from such Seller (or Sellers, as applicable) and Purchaser shall meet and diligently attempt in good faith to resolve the Dispute within a period of thirty (30) calendar days following one Party’s written request to the other Party for such a meeting. If, however, a Seller (or the Sellers, as applicable) or Purchaser refuses or fails to so meet, or the Dispute is not resolved by negotiation, then Purchaser or a Seller (or the Sellers as applicable), may pursue such remedies available to it (or them as applicable) at law or in equity, subject to the provisions of this Agreement, including Section 5.2 .
5.2 SUBMISSION TO JURISDICTION .
THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING RELATING TO A DISPUTE AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO. EACH PARTY HEREBY AUTHORIZES AND ACCEPTS SERVICE OF PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST IT AS CONTEMPLATED BY THIS SECTION 5.2 BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO ITS ADDRESS FOR THE GIVING OF NOTICES AS SET FORTH IN SECTION 6.6 . NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
ARTICLE 6
GENERAL PROVISIONS
6.1 Exhibits and Schedules .
All Exhibits and Schedules attached hereto are incorporated herein by reference.
6.2 Amendment, Modification and Waiver .
This Agreement may not be amended or modified except by an instrument in writing signed by the Party against which enforcement of such amendment or modification is sought. Any failure of Seller or Purchaser to comply with any obligation, covenant, agreement or condition contained herein may be waived only if set forth in an instrument in writing signed by the Party to be bound thereby, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure.
Each Party’s rights and remedies under this Agreement are intended to be distinct, separate and cumulative and no such right or remedy therein or herein mentioned, whether exercised by such Party or not, is intended to be an exclusion or a waiver of any of the others.
 
Development, EPC and Purchase Agreement
 
31

6.3 Severability .
If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Applicable Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner materially adverse to any Party.
6.4 Expenses .
Each Party shall be responsible for all of its own legal costs, fees and expenses in connection with the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party; provided , that VSD shall reimburse Investor for up to $*** of any out-of-pocket transaction costs and expenses (including legal fees) actually incurred by Investor in connection with the transactions contemplated hereunder, regardless of whether such transaction occurs, and VSD shall make such reimbursement payment by the earlier of (a) ten (10) Business Days after Investor provides VSD with written evidence of Investor’s incurrence of any such costs and expenses and (b) the first Purchase Date.
6.5 Parties in Interest .
This Agreement shall be binding upon and, except as provided below, inure solely to the benefit of each Party and their successors and assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement.
6.6 Notices .
All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, by a nationally recognized overnight courier, by facsimile, or by electronic mail transmission or mailed by registered or certified mail (return receipt requested) to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):
 
 	(a)	If to VSD, to:	
Vivint Solar Developer, LLC
4931 N 300 W
Provo, UT 84604
Attn: Paul Dickson, VP of Financing
Facsimile: (801) 765-5705
Email: pdickson@vivintsolar.com
With copies to:
Vivint Solar Developer, LLC
4931 N 300 W
Provo, UT 84604
Attn: C. Dan Black, General Counsel
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement
 
32

Facsimile: (801) 765-5746
Email: dblack@vivintsolar.com
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, NY 10005
Attn: Mark L. Regante
Facsimile: (212) 822-5236
Email: mregante@milbank.com
 
 	(b)	If to VSI, to:	
Vivint Solar, Inc.
4931 N 300 W
Provo, UT 84604
Attn: Paul Dickson, VP of Financing
Facsimile: (801) 765-5705
Email: pdickson@vivintsolar.com
With copies to
Vivint Solar, Inc.
4931 N 300 W
Provo, UT 84604
Attn: C. Dan Black, General Counsel
Facsimile: (801) 765-5746
Email: dblack@vivintsolar.com
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, NY 10005
Attn: Mark L. Regante
Facsimile: (212) 822-5236
Email: mregante@milbank.com
 
 	(c)	If to Purchaser, to:	
Vivint Solar Mia Project Company, LLC
4931 N 300 W
Provo, UT 84604
Attn: Paul Dickson, VP of Financing
Facsimile: (801) 765-5705
Email: pdickson@vivintsolar.com
With copies to:
Vivint Solar, Inc.
4931 N 300 W
 
Development, EPC and Purchase Agreement
 
33

Provo, UT 84604
Attn: C. Dan Black, General Counsel
Facsimile: (801) 765-5746
Email: dblack@vivintsolar.com
Blackstone Holdings Finance Co. L.L.C.
c/o The Blackstone Group L.P.
345 Park Avenue
New York, New York 10154
Attn: John Finley
Facsimile: (212) 583-5749
Email: John.Finley@Blackstone.com
and
Attn: Chaim Miller
Email: Chaim.Miller@Blackstone.com
and
Attn: Joe Rocco
Email: Joe.Rocco@Blackstone.com
and
Email: Treasury-Operations@Blackstone.com
All notices and other communications given in accordance herewith shall be deemed given (i) on the date of delivery, if hand delivered, (ii) on the date of receipt, if faxed or sent by electronic mail, or if such date is not a Business Day, the next Business Day following the date of receipt, provided sender can and does provide evidence of successful transmission, (iii) on the fifth Business Day after the date of mailing, if mailed by registered or certified mail, return receipt requested, or (iv) on the second Business Day after the date of sending, if sent by a nationally recognized overnight courier; provided that a notice given in accordance with this Section 6.6 but received on any day other than a Business Day or after 5:00 pm New York, New York time, on a Business Day in the place of receipt shall be deemed given on the next Business Day in that place.
6.7 Counterparts .
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
 
Development, EPC and Purchase Agreement
 
34

6.8 Entire Agreement .
This Agreement constitutes the entire agreement among the Parties and supersedes all prior agreements, letters of intent and understandings, both written and oral, among the Parties with respect to the subject matter hereof.
6.9 Governing Law .
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING RELATING TO A DISPUTE HEREUNDER AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.
6.10 Public Announcements .
Except for statements made or press releases issued pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934 or as otherwise required by law, neither the Sellers nor Purchaser shall issue, or permit any of their respective Affiliates to issue, any press release or otherwise make any public statements with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other Party; provided that the Sellers shall not make any public announcement regarding this Agreement which has not been approved in writing by the Investor.
6.11 Assignment .
This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No Party shall assign this Agreement without the prior written consent of the other Parties, in its sole discretion; provided that a Seller and Purchaser may each assign this Agreement and any rights or obligations hereunder to any of its respective lenders as collateral security (and each of the Sellers and Purchaser hereby agrees to execute a third-party consent and direct agreement with such lender in connection therewith); provided , further that, notwithstanding anything to the contrary in this Agreement, at any time, without the prior written consent of Purchaser or Investor, VSI may assign any or all of its rights and obligations under this Agreement to VSD so long as VSD has all of the Permits required to perform the Installation, warranty and other services in Hawaii required by this Agreement, and immediately upon such assignment, VSI shall be automatically released of all of its obligations and liabilities under this Agreement to the extent of such assignment (except that, for the avoidance of doubt, no such assignment by VSI shall satisfy, modify or reduce its obligations under the Sponsor Guaranty). Any attempted assignment of this Agreement other than in strict accordance with this Section 6.11 shall be null and void and of no force or effect.
6.12 Relationship of Parties .
This Agreement does not constitute a joint venture, association or partnership between the Parties. No express or implied term, provision or condition of this Agreement shall create, or shall be deemed to create, an agency, joint venture, partnership or any fiduciary relationship between the Parties.
 
Development, EPC and Purchase Agreement
 
35

6.13 Successors and Assigns .
This Agreement shall inure to the benefit of each Party and each Party’s successors and permitted assigns, and shall be binding upon and enforceable against each Party and each Party’s successors and permitted assigns.
6.14 Access .
Purchaser hereby grants each Seller and its authorized agents, employees and subcontractors the right to access any Purchased Project for the purpose of such Seller performing its obligations under this Agreement. Each Seller hereby accepts such access rights and access rights granted pursuant to the applicable Customer Agreement and further accepts the conditions at the site of each Purchased Project as they exist and acknowledges that Purchaser has no obligation to grant such Seller additional access rights or to change the conditions at such Project site. Such access rights granted pursuant to this Agreement will automatically expire immediately upon the termination or expiration of this Agreement.
6.15 Purchaser Member Authorization .
Notwithstanding anything in this Agreement to the contrary, Purchaser and each Seller hereby agree and acknowledge that, with respect to any direction, consent or approval described in this Agreement that Purchaser may provide that is governed by Section 8.3 of the LLC Agreement, a Seller shall not take any such direction of Purchaser or act under this Agreement unless Purchaser represents to such Seller in writing that the required member consents under such Section 8.3 of the LLC Agreement have been obtained.
[Remainder of page intentionally left blank]
 
Development, EPC and Purchase Agreement
 
36

IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be signed on its behalf as of the date first written above.

SELLERS :	
	
VIVINT SOLAR DEVELOPER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Financing	
	
VIVINT SOLAR, INC.,
a Delaware corporation	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Financing	
	
PURCHASER :	
	
VIVINT SOLAR MIA PROJECT COMPANY, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Financing	
 
Development, EPC and Purchase Agreement

Schedule 1
List of Purchased Systems and Associated Customer Agreements
Part I. VSD Purchased Systems and Associated Customer Agreements

No.	  	Job ID	  	Host
Customer	  	Host Address	  	Description of PV
System
(Size and Cost)	  	Purchase Date	  	Installation Date
(or expected
Installation
Date)	
1.	  		  		  		  		  		  		
2.	  		  		  		  		  		  		
3.	  		  		  		  		  		  		
4.	  		  		  		  		  		  		
5.	  		  		  		  		  		  		
6.	  		  		  		  		  		  		
7.	  		  		  		  		  		  		
8.	  		  		  		  		  		  		
9.	  		  		  		  		  		  		
10.	  		  		  		  		  		  		
11.	  		  		  		  		  		  		
12.	  		  		  		  		  		  		
13.	  		  		  		  		  		  		
14.	  		  		  		  		  		  		
15.	  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Part II. VSI Purchased Systems and Associated Customer Agreements

No.	  	Job ID	  	Host
Customer	  	Host Address	  	Description of PV
System
(Size and Cost)	  	Purchase Date	  	Installation Date
(or expected
Installation
Date)	
1.	  		  		  		  		  		  		
2.	  		  		  		  		  		  		
3.	  		  		  		  		  		  		
4.	  		  		  		  		  		  		
5.	  		  		  		  		  		  		
6.	  		  		  		  		  		  		
7.	  		  		  		  		  		  		
8.	  		  		  		  		  		  		
9.	  		  		  		  		  		  		
10.	  		  		  		  		  		  		
11.	  		  		  		  		  		  		
12.	  		  		  		  		  		  		
13.	  		  		  		  		  		  		
14.	  		  		  		  		  		  		
15.	  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Schedule 2
Form of Tranche Presentation Certificate
TRANCHE PRESENTATION CERTIFICATE
This Tranche Presentation Certificate, dated                     , is issued pursuant to Section 2.1(c) of the Development, EPC and Purchase Agreement, dated as of July 16, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Mia Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meaning as in the Agreement.
[Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”) hereby requests acceptance of this Tranche in the amount described in item (iv) below and certifies that, with respect to all Projects constituting this Tranche (the “ Tranche Projects ”):
 
 	(i)	each Tranche Project meets all applicable conditions set forth in Section 2.1 of the Agreement, and Seller reasonably expects each Tranche Project to meet all conditions set forth in Section 2.3 of the Agreement on the Purchase Date for such Tranche Project;	
 
 	(ii)	(A) all representations and warranties of Seller set forth in Section 3.1 of the Agreement and of Seller *** are true and correct as of the date hereof, (B) Seller reasonably expects that such representations and warranties shall be true and correct as of the Purchase Date for such Tranche Projects, (C) Seller and *** have complied with all of the covenants and other obligations in the Agreement *** with which they are required to comply at or prior to the date hereof and (D) Seller reasonably expects that they will have complied with all of the covenants and other obligations in the Agreement *** with which Seller and *** are required to comply at or prior to the Purchase Date for such Tranche Projects;	
 
 	(iii)	the name and address of each potential Host Customer, the size of each Tranche Project to be installed at such Host Customer’s property, and the System Purchase Price for each Tranche Project is set forth on Schedule 1 hereto;	
 
 	(iv)	the aggregate System Purchase Price for all of the Tranche Projects is                      Dollars ($            );	
 
 	(v)	the FICO® Score for each Host Customer of the Tranche Projects is set forth on Schedule 1 hereto;	
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement

 	(vi)	the status of construction with respect to each Tranche Project is set forth on Schedule 1 hereto;	
 
 	(vii)	Attached hereto as Annex 1 is a copy of the Base Case Model updated to reflect the Tranche Projects;	
 
 	(viii)	fully executed copies of each Customer Agreement included with each Tranche Project will be made available by Seller to Purchaser via electronic transmission;	
 
 	(ix)	copies of the manufacturer’s warranties to the equipment used or to be used in the each of the Tranche Projects have been delivered to Purchaser by Seller; and	
 
 	(x)	Seller will deliver all information and documents requested by Purchaser pursuant to this Tranche Presentation Certificate.	

Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title: ]	 		
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

Schedule 1 to Tranche Presentation Certificate

Job
ID	  	Host
Customer
Name	  	Address	  	System
Purchase
Price	  	Projected
ITC	  	Appraisal	  	PV
System
Size
(KW)	  	FICO ®
Score	  	Gross Capital
Contribution	  	Removed
Project
Credit	  	Change
Order
Debit	  	Projected
Capital
Contribution
for Tranche	  	Projected
Capital
Contribution
from
Investor	  	Projected
Capital
Contribution
from
Managing
Member	  	Structural
Engineer	  	CAD
Drawing	  	PPA	  	Performance
Test	  	Construction
Status
(Installation
Date)	

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Annex 1
Updated Base Case Model
[See attached]
 
Development, EPC and Purchase Agreement

Schedule 3
Forms of Customer Agreements
[See attached]
 
Development, EPC and Purchase Agreement

Schedule 4
Form of Bill of Sale and Assignment
BILL OF SALE AND ASSIGNMENT
This BILL OF SALE AND ASSIGNMENT is made and entered into as of [                    ], by and between Vivint Solar Mia Project Company, LLC, a Delaware limited liability company (“ Purchaser ”), and [Vivint Solar Developer, LLC, a Delaware limited liability company][Vivint Solar, Inc., a Delaware corporation] (“ Seller ”). Purchaser and Seller are referred to collectively herein as the “Parties”. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Development, EPC and Purchase Agreement dated as of July 16, 2013, by and among, Purchaser, [Vivint Solar Developer, LLC][Vivint Solar, Inc.] and Seller (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”).
RECITALS
WHEREAS, pursuant to the Agreement, Seller agreed to sell, and Purchaser agreed to purchase, Projects for an amount of consideration equal to the System Purchase Price of each Project.
WHEREAS, it is the Parties’ intention to reflect the transfer of the Projects that may be purchased by Purchaser from Seller pursuant to Section 2.1 of the Agreement, including without limitation the transfer of the PV Systems comprising such Projects, warranties related thereto, associated Customer Agreements and related rights thereto, and related Permits, Government Incentives and RECs, by the execution and delivery of this Bill of Sale and Assignment.
WHEREAS, the Parties now desire to carry out the intent and purpose of the Agreement by Seller’s execution and delivery to Purchaser of this Bill of Sale and Assignment as evidence of the sale, conveyance, assignment, transfer and delivery to Purchaser of any and all Purchased Systems and the assignment of the associated Customer Agreements and related rights.
NOW, THEREFORE, in consideration of the covenants, promises and representations set forth herein and in the Agreement and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Seller does hereby, effective from and after the date hereof, sell, convey, assign, transfer and deliver unto Purchaser all of Seller’s right, title and interest in, to and under the Projects identified on the Closing Request attached hereto as Annex 1 (the “ Purchased Projects ”), to Purchaser and its successors and assigns for their exclusive use and benefit forever, and free and clear of all Liens other than Permitted Liens. Purchaser hereby purchases and assumes all of Seller’s right, title and interest in and obligations with respect to each of such Projects, including without limitation any warranties arising in connection with the PV Systems for such Projects, on the date hereof, and Purchaser hereby assumes all of Seller’s rights and obligations under each Customer Agreement and Permit included as part of such Projects, all as consistent with the Agreement. For the avoidance of doubt, the transfers of rights under this paragraph 1 do not include a license to use any proprietary monitoring intellectual property of Vivint Solar, Inc.
 
Development, EPC and Purchase Agreement

2. Each Party shall reasonably cooperate with the other Party, execute and deliver, or cause to be executed and delivered, all such other instruments and take all such other actions as a Party may reasonably be requested to take at any time after the date hereof in order to effectuate the provisions and purposes of this Bill of Sale and Assignment and the Agreement and the transactions contemplated hereby and thereby, to vest title in the Purchased Projects more effectively in Purchaser, and to put Purchaser in exclusive possession and absolute and total control of the Purchased Projects.
3. Seller hereby constitutes and appoints Purchaser and its successors and assigns, the true and lawful attorney of Seller, with full power of substitution for Seller and in its name and stead or otherwise, for the benefit of Purchaser and its successors and assigns, to take the following actions in relation to the Purchased Projects:
(a) to demand and receive from time to time any and all Purchased Projects hereby sold, conveyed, assigned, transferred and delivered and give receipts and releases for and in respect of the same and any part thereof;
(b) to institute and prosecute in the name of and at the expense of Seller or otherwise, but for the benefit of Purchaser, any and all proceedings at law, in equity or otherwise, which Purchaser may deem proper in order to collect, assert or enforce any claim, right or title of any kind in and to the Purchased Projects hereby given, transferred, sold, conveyed, assigned and delivered, and to defend or compromise any and all actions, suits or proceedings in respect of any of the Purchased Projects; and
(c) to do all such acts and things in relation to the Purchased Projects as Purchaser shall deem advisable.
4. Seller hereby declares that the appointment made and the powers hereby granted are coupled with an interest and are and shall be irrevocable by Seller in any manner and for any reason.
5. Each of the Parties shall use its commercially reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable laws, and execute and deliver such documents and other papers, as may be required to carry out the provisions of this Bill of Sale and Assignment and consummate and make effective the transactions contemplated by this Bill of Sale and Assignment.
6. Each of the Parties acknowledges and agrees that neither the representations and warranties nor the rights and remedies of the Parties under the Agreement shall be deemed to be enlarged, modified or altered in any way by this Bill of Sale and Assignment (but each of such representations and warranties shall apply to this Bill of Sale and Assignment), and, to the extent there shall arise a conflict between this Bill of Sale and Assignment and the Agreement, the Agreement shall control.
 
Development, EPC and Purchase Agreement

7. This Bill of Sale and Assignment shall bind and shall inure to the benefit of the respective Parties and their assigns, transferees and successors.
8. This Bill of Sale and Assignment shall be construed and enforced in accordance with the laws of the State of New York.
9. This Bill of Sale and Assignment may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
[Remainder of page intentionally left blank]
 
Development, EPC and Purchase Agreement

IN WITNESS WHEREOF, this Bill of Sale and Assignment has been duly executed and delivered by a duly authorized representative of each of the Parties as of the date first above written.

SELLER :	
	
[VIVINT SOLAR DEVELOPER, LLC,
a Delaware limited liability company	
		
By:	 	 	
Name:	 		
Title:]	 		
	
[VIVINT SOLAR, INC.,
a Delaware corporation	
		
By:	 	 	
Name:	 		
Title:]	 		
	
PURCHASER :	
	
VIVINT SOLAR MIA PROJECT COMPANY, LLC,
a Delaware limited liability company	
		
By:	 	 	
Name:	 		
Title:	 		
 
Development, EPC and Purchase Agreement

ANNEX 1
Closing Request
[To be attached]
 
Development, EPC and Purchase Agreement

Schedule 5
Form of Closing Request
CLOSING REQUEST
This Closing Request, dated                     , is issued pursuant to Section 2.1 of the Development, EPC and Purchase Agreement, dated as of July 16, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Mia Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defied herein shall have the same meaning as in the Agreement.
1. [Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”) hereby notifies Purchaser that the Purchase Date for the Tranche described in the Tranche Presentation Certificate, dated as of [DATE of Tranche Presentation Certificate], is [DATE]. Such Purchase Date is at least two (2) Business Days after the date of this Closing Request and no earlier than five (5) Business Days after the end of the Review Period for such Tranche.
2. Attached hereto as Schedule 1 is a list of all Accepted Projects that will be included in such Tranche, which includes the System Purchase Price for each such Project.
3. The aggregate of the System Purchase Prices for all of the Accepted Projects in the Tranche is $[ — ].
4. Credits and Refunds:
a. [The Removed Project Credit specified in the Deficient Project and Cancelled Project Report dated [DATE], which has not been applied to System Purchase Prices for any other Tranche and is being applied to the aggregate of the System Purchase Prices for the Tranche hereof, is $[ — ]].
b. [The Change Order Credit specified in the Change Order Report dated [DATE], which has not been applied to System Purchase Prices for any other Tranche and is being applied to the aggregate of the System Purchase Prices for the Tranche hereof, is $[ — ]].
c. [The Change Order Debit specified in the Change Order Report dated [DATE], which has not been applied to System Purchase Prices for any other Tranche and is being applied to the aggregate of the System Purchase Prices for the Tranche hereof, is $[ — ]].
d. [The total Refund Credit being applied is $[Insert sum of Removed Project Credit and Change Order Credit less Change Order Debit].]
 
Development, EPC and Purchase Agreement

5. Change Orders:
 
 	a.	The aggregate change in kW size due to Change Orders between the Effective Date and the date hereof is [ — ] kW, and the aggregate change in kW size due to Change Orders for which a Change Order Credit is being applied to the aggregate of the System Purchase Prices for the Tranche hereof is [ — ] kW.	
 
 	b.	The aggregate amount of kW for which a System Purchase Price (including with respect to any Projects set forth in this Closing Request) has been paid in accordance with Section 2.1 of the Agreement as of the date hereof (adjusted for Deficient Projects, Cancelled Projects and Substituted Projects in accordance with Section 2.2(d) and Section 2.2(f)) is [ — ] kW.	
 
 	6.	On the Purchase Date, the Net Purchase Price of $[Insert the amount in Section 3 minus the amount in Section 4(d)] shall be wired by Purchaser to the following account:	
[INSERT BANK ACCOUNT INFORMATION]

Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title: ]	 		
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

Schedule 1 to Closing Request
LIST OF ACCEPTED PROJECTS TO BE INCLUDED IN TRANCHE

Job ID	  	Host Customer	  	Address	  	Title of
Agreement	  	System Size	  	System Purchase
Price	  	Net Purchase
Price	

	  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Schedule 6
Form of Transfer Notice
TRANSFER NOTICE
This Transfer Notice, dated                      (the “ Transfer Notice Date ”), is issued pursuant to the Development, EPC and Purchase Agreement, dated as of July 16, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Mia Project Company, LLC (“ Purchaser ”). Capitalized terms have the same meaning as in the Agreement.
The undersigned, a duly elected executive officer of [Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”), hereby certifies to Purchaser as follows:
 
 	1.	The undersigned is a duly elected executive officer of Seller currently holding the title below his or her signature and printed name.	
 
 	2.	Seller reasonably believes each of the Projects described on the attached Schedule 1 will be Placed in Service within the following calendar quarter and in no event later than the Completion Deadline.	
 
 	3.	The undersigned has reviewed each of the conditions precedent to consummate a Purchase of each of the Projects described on the attached Schedule 1 , and each such condition precedent has been satisfied.	
 
 	4.	Seller has complied with the applicable provisions of the Agreement and each applicable Customer Agreement, except as would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or Seller.	
 
 	5.	The information in Schedule 1 is complete and accurate.	

SELLER :	
	
[VIVINT SOLAR DEVELOPER, LLC,
a Delaware limited liability company	
		
By:	 	 	
Name:	 		
Title:]	 		
 
Development, EPC and Purchase Agreement

			
[VIVINT SOLAR, INC.,	
a Delaware corporation	
		
By:	 	 	
Name:	 		
Title:]	 		
 
Development, EPC and Purchase Agreement

Schedule 1 to Transfer Notice

Job
ID	  	Host
Customer
Name	  	Address	  	System
Purchase
Price	  	Projected
ITC	  	Appraisal	  	PV
System
Size
(KW)	  	FICO ®
Score	  	Gross Capital
Contribution	  	Removed
Project
Credit	  	Change
Order
Debit	  	Projected
Capital
Contribution
for Tranche	  	Projected
Capital
Contribution
from
Investor	  	Projected
Capital
Contribution
from
Managing
Member	  	Structural
Engineer	  	CAD
Drawing	  	Site
Photo	  	Performance
Test	  	Construction
Status
(Installation
Date)	

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Schedule 7
Form of Deficient Project and Cancelled Project Report
DEFICIENT PROJECT AND CANCELLED PROJECT REPORT
This Deficient Project and Cancelled Project Report, dated                     , is issued pursuant to Section 2.2(d) of the Development, EPC and Purchase Agreement, dated as of July 16, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Mia Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meanings as in the Agreement.
[Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”) hereby notifies Purchaser that (i) each of the PV Systems described on the attached Schedule A are Deficient Projects or Cancelled Projects (the “ Removed Projects ”), (ii) the aggregate System Purchase Price for the Removed Projects identified on Schedule A results in a credit balance to Purchaser in the amount of $[ — ] (the “ Removed Project Credit ”) and Purchaser shall receive a credit in the amount of the Removed Project Credit [in the Closing Request dated [DATE]][in the True-Up Report].
Each of the Removed Projects shall be removed from Schedule 1 to the Agreement, and all right, title and interest in and to, and all risk of loss or damage to, the Removed Projects shall pass back to Seller. A revised Schedule 1 to the Agreement is attached hereto as Schedule B .

Seller :	 		
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title: ]	 		
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

Schedule A to Deficient Project and Cancelled Project Report
List of Removed Projects

Job ID	  	Host Customer	  	Address	  	Title of
Agreement	  	System Size	  	System Purchase
Price	  	Net Purchase
Price	

	  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Schedule 8
Form of Change Order Report
CHANGE ORDER REPORT
This Change Order Report, dated                     , is issued pursuant to Section 2.2(e) of the Development, EPC and Purchase Agreement, dated as of July 16, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Mia Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meanings as in the Agreement.
Schedule A hereto (i) identifies all Change Orders through the date of this Change Order Report that have not previously been reported in a Closing Request, (ii) describes any increases or decreases in the system size pursuant to each such Change Order and (iii) describes any increases or decreases in the System Purchase Price pursuant to each such Change Order identified.
[Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”) hereby notifies Purchaser that the increases and decreases in the System Purchase Price for each Project affected by the Change Orders identified on Schedule A results in a [net credit balance to Purchaser in the amount of $[ — ] (the “ Change Order Credit ”)][net debit balance to Purchaser in the amount of $[ — ] (the “ Change Order Debit ”)], and Purchaser shall receive a [credit][debit] in the amount of the [Change Order Credit][Change Order Debit] in the [Closing Request dated [ — ]][True-Up Report].
The revised system sizes and System Purchase Price for each Project affected by such Change Orders shall be deemed to be the system size and system cost for such Project listed on Schedule 1 to the Agreement, and Seller shall revise Schedule 1 to reflect such information. A revised Schedule 1 to the Agreement is attached hereto as Schedule B .

Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title: ]	 		
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

Schedule 9
Form of Substitution Report
SUBSTITUTION REPORT
This Substitution Report, dated                     , is issued pursuant to Section 2.2(f) of the Development, EPC and Purchase Agreement, dated as of July 16, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Mia Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meanings as in the Agreement. [Vivint Solar Developer, LLC][Vivint Solar, Inc.] is hereinafter referred to as “ Seller ”.
1. Schedule 1 hereto is the Change Order Report describing the economic impact of all Change Orders agreed to through the date of the Change Order Report and not previously reported in a prior Substitution Report or Closing Request.
2. Schedule 2 hereto identifies all Accepted Projects in the Tranche that were determined to be Deficient Projects or Cancelled Projects through the date of this Substitution Report (including the System Purchase Prices therefor under the original Closing Request) and not previously reported in a prior Substitution Report or Closing Request.
3. Schedule 3 lists all Projects that are substituted for the above-referenced Deficient Projects and Cancelled Projects and in connection with any Change Orders that decrease the system sizes of any Projects (“ Substituted Projects ”) and the System Purchase Prices thereof. Purchaser shall have a Substituted Project Review Period of ten (10) days to confirm the conditions under Section 2.3 of the Agreement have been met with respect to the Substituted Projects. Each Substituted Project shall be a Non-Accepted Project unless Purchaser informs Seller in writing by the end of the Substituted Project Review Period that a proposed Substituted Project is an Accepted Project. The Purchase Date for the Substituted Projects that become Accepted Projects shall be the expiration of the applicable Substituted Project Review Period or, if such expiration does not occur on a Business Day, the first Business Day following such expiration.
4. A revised Schedule 1 to the Agreement is attached hereto as Schedule 4 .
5. A revised Schedule 1 to the applicable Transfer Notice is attached hereto as Schedule 5 .
6. A Closing Request for the Substituted Projects is being delivered by Seller to Purchaser concurrently with this Substitution Report. A Bill of Sale and Assignment and a Transfer Notice each dated the date of the Purchase Date of the Substituted Projects included in this Substitution Report shall be delivered by Seller to the Purchaser with respect to such Substituted Projects.
 
Development, EPC and Purchase Agreement

			
Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title: ]	 		
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

Schedule 10
Form of True-Up Report
TRUE-UP REPORT
This True-Up Report, dated                     , is issued pursuant to Section 2.2(g) of the Development, EPC and Purchase Agreement, dated as of [ — ], 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC (“ VSD ”), Vivint Solar, Inc. (“ VSI ”, together with VSD, the “ Sellers ”) and Vivint Solar Mia Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meanings as in the Agreement.
Part A of Schedule 1 hereto (i) identifies all Change Orders, (ii) describes any increases or decreases in the system size pursuant to each such Change Order and (iii) describes any increases or decreases in the System Purchase Price of the PV Systems pursuant to each such Change Order identified.
Part B of Schedule 1 hereto identifies all Deficient Projects and Cancelled Projects (including the System Purchase Price thereof under the original Closing Request).
Part C of Schedule 1 hereto lists all Projects that were substituted for the above-referenced Deficient Projects and Cancelled Projects which decrease the system sizes of any Projects (“ Substituted Projects ”) and the System Purchase Price thereof.
Part D of Schedule 1 hereto lists the total amounts that were netted out of or added to a System Purchase Price on a Purchase Date as set forth in a Closing Request to take into account the prior payment from Purchaser to a Seller associated with the related Deficient Project, Cancelled Project or Change Order being credited, debited or refunded on such related Purchase Date.
Part E of Schedule 1 hereto is a copy of the True-Up Base Case Model.
The Sellers hereby notify Purchaser that the increases and decreases in the System Purchase Price for each Project affected by the Changes Orders, Deficient Projects, Cancelled Projects and/or Substituted Projects, as applicable, identified on Schedule 1 hereto results in a net credit balance in favor of [Purchaser][the Sellers] in the amount of $[ — ][,including a net credit balance in favor of Purchaser from VSD in the amount of $[ — ] and a net credit balance in favor of Purchaser from VSI in the amount of $[ — ][, including a net credit balance in favor of VSD in the amount of $[ — ] and a net credit balance in favor of VSI in the amount of $[ — ]]. [VSD shall on its own behalf and on VSI’s behalf pay Purchaser][Each Seller hereby requests that Purchaser distributes to such Seller] in cash such amount within ten (10) days after the date of this True-Up Report.
A revised Schedule 1 to the Agreement reflecting the revised system sizes and System Purchase Price for each Project affected by such Change Orders, Deficient Projects, Cancelled Projects and/or Substituted Projects, as applicable, is attached hereto, and the revised system size and system cost for each such Project shall be deemed to be the system size and system cost listed on Schedule 1 to the Closing Request for each such Project.
 
Development, EPC and Purchase Agreement

Each Seller certifies that the applicable information in Schedule 1 is complete and accurate.

Sellers:	
	
VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title:	 		
	
VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title:	 		
 
Development, EPC and Purchase Agreement

Schedule 11
Form of Completion Certificate
COMPLETION CERTIFICATE
This Completion Certificate, dated                     , is issued pursuant to Section 2.2(b) of the Development, EPC and Purchase Agreement, dated as of July 16, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Mia Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meaning as in the Agreement.
The undersigned, being the                      of [Vivint Solar Developer, LLC][Vivint Solar, Inc.] (the “ Seller ”), does hereby certify that he/she is duly authorized to certify and does hereby certify on behalf of the Seller as follows:
1. Each of the representations and warranties of Seller in Section 3.1 of the Agreement and [of Seller *** in any *** ] that is qualified as to materiality or by Material Adverse Change is true and correct, and such representations that are not so qualified is true and correct in all material respects, in each case as of the date hereof;
2. The information provided in Schedule 1 attached hereto is complete and accurate as of the date hereof.
3. Seller certifies that (i) installation of the Projects described on the attached Schedule 1 (the “ Completed Systems ”) was completed on the dates set forth therein, (ii) each Completed System passed the Performance Tests and was Placed in Service on the respective dates stated in Schedule 1 (each date a “ Completion Date ”), (iii) each Completed System passed inspection by the appropriate government building inspector on the respective dates stated in Schedule 1 (each date an “ Inspection Date ”) and the local electric utility where each Completed System is located sent a written communication with respect to each Completed System dated as of the respective dates stated in Schedule 1 authorizing parallel operation (each date a “ Utility Approval Date ”), (iv) all permits, governmental authorizations and other local utility approvals required for the installation and operation of each Completed System have been received, (v) prior to being Placed in Service, title to, and control over, each Completed System has been conveyed to Purchaser, (vi) each Completed System has been supplying electricity on a regular and continuous basis to the Host Customer under the applicable Customer Agreement since the respective dates stated on Schedule 1 (each date a “ Commercial Operation Date ”), which are no earlier than the dates on which the respective Completed Systems were Placed in Service, (vii) all warranties relating to the Completed System from any manufacturer of any part thereof are in full force and effect, (viii) each Completed System is in working order, and (x) the system cost for each Completed System is as stated on Schedule 1 .
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement

			
Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title: ]	 		
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

Schedule 1 to Completion Certificate

Job ID	  	Host Customer Name	  	Address	  	PV System
Size	  	Completion Date	  	Inspection
Date	  	Utility
Approval
Date	  	Commercial
Operation
Date	  	System
Purchase
Price	

	  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Schedule 12
Performance Tests
Upon completion of installation, the applicable Seller will run the system for 5 minutes and measure power output (peak kW energy production) at the inverter during such time. Each Performance Test will be successfully completed if the power output reading at the inverter matches the seasonally-adjusted and weather-adjusted expected output of the PV System.
 
Development, EPC and Purchase Agreement

Schedule 13
Approved Suppliers
Racking
 
•	 	Zep Solar, Inc.	
Inverters
 
•	 	Enphase Energy, Inc.	
Panels
 
•	 	Canadian Solar, Inc.	
 
•	 	Yingli Green Energy Americas, Inc.	
 
•	 	Trina Solar (U.S.), Inc.	
 
Development, EPC and Purchase Agreement

Schedule 14
Insurance Requirements
Each Seller, at its sole cost, and before commencement of the work or service to be performed under the Agreement, shall procure and maintain the following coverages with insurers rated by A.M. Best as A-IX or higher:
 
 	1.1	WORKERS’ COMPENSATION AND EMPLOYERS’ LIABILITY	
 
 	1.1.1	Workers’ compensation and basic employers’ liability insurance for all employees in accordance with Applicable Law, with a minimum limit of $1,000,000.	
 
 	1.2	COMMERCIAL GENERAL LIABILITY	
 
 	1.2.1	Comprehensive or commercial general liability insurance written on an occurrence basis with a combined single limit of at least $1,000,000 per occurrence and $2,000,000 in the aggregate, including premises and operations liability, owners’ and contractors’ protective, products and completed operations liability, blanket contractual liability, personal injury liability, bodily injury and “broad form” property damage coverage, blanket contractual liability, completed operations, explosion and collapse hazard coverage. The insurance shall cover all of such Seller’s operations.	
 
 	1.3	BUSINESS AUTO	
 
 	1.3.1	Comprehensive automobile liability insurance with bodily injury, death and property damage with combined single limits of at least $1,000,000 per occurrence covering vehicles owned, hired or non-owned.	
 
 	1.4	PROPERTY INSURANCE	
 
 	1.4.1	Property insurance covering such Seller’s tools and equipment.	
 
 	1.5	BUILDER’S RISK INSURANCE	
 
 	1.5.1	Builder’s Risk Insurance – Installation Floater with a coverage limit of $25,000 per job site, $250,000 per occurrence and $5,000,000 in the aggregate shall be written on an all-risk, replacement cost basis.	
 
 	1.6	ADDITIONAL INSURANCE PROVISIONS	
 
 	1.6.1	Such Seller shall provide Purchaser with a certificate of insurance, properly completed and signed by an authorized insurance company representative, before the commencement of work or service.	
 
Development, EPC and Purchase Agreement

 	1.6.2	Such Seller’s Commercial General Liability and Business Automobile Liability policies shall name Purchaser, its members and Affiliates, and their respective officers, agents, representatives and employees as additional insureds for work performed under or incidental to this Agreement.	
 
 	1.6.3	Commercial General Liability, including products and completed operations, shall be maintained for a minimum of three (3) years following the completion of work or service contemplated in this Agreement.	
 
 	1.6.4	The limits of insurance or applicable deductibles shall not limit the liability of such Seller or relieve such Seller of any liability or financial responsibility.	
 
 	1.6.5	Any deductible or self-insured retention shall be the responsibility of such Seller.	
 
 	1.6.6	Such insurance as is afforded by any policies contemplated by this Agreement for the benefit of Purchaser shall be primary and non-contributory as respects any claims, losses or liability arising directly or indirectly from such Seller’s operations.	
 
 	1.6.7	In the event and for so long as any property insurance (including the limits or deductibles thereof) hereby required by this Schedule 14 to be maintained, other than insurance required by law to be maintained, shall not be available on commercially reasonable terms in the commercial insurance market, Purchaser shall not unreasonably withhold its agreement to waive such requirement to the extent the maintenance thereof is not so available or, to the extent applicable, may allow such Seller to obtain the best available property insurance comparable to the requirements of this Schedule 14 on commercially reasonable terms then available in the commercial insurance market.	
 
Development, EPC and Purchase Agreement

Exhibit 10.30A
Execution Version
FIRST AMENDMENT TO
DEVELOPMENT, EPC AND PURCHASE AGREEMENT
(PROJECT MIA)
This FIRST AMENDMENT TO DEVELOPMENT, EPC AND PURCHASE AGREEMENT (this “ First Amendment ”) is executed as of January 13, 2014 and effective as of December 31, 2013 by and among Vivint Solar Developer, LLC, a Delaware limited liability company (“ VSD ”), Vivint Solar, Inc., a Delaware corporation (“ VSI ”, together with VSD, the “ Sellers ” and each a “ Seller ”), and Vivint Solar Mia Project Company, LLC, a Delaware limited liability company (“ Purchaser ”).
RECITALS
WHEREAS, Sellers and Purchaser are each a party to that certain Development, EPC and Purchase Agreement dated as of July 16, 2013 (the “ Agreement ”). Initially capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Agreement.
WHEREAS, the Parties desire to amend the Agreement, effective as of December 31, 2013, as set forth herein to modify certain provisions within the Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, of mutual promises of the parties hereto and of other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Parties hereby agree as follows:
 
1.	The following defined term in Section 1.1 of the Agreement is hereby deleted in its entirety and the following new definition is inserted in its stead, to read as follows:	
“ Completion Deadline ” means March 31, 2014.
 
2.	Miscellaneous .	
 
 	a.	Ratification of Agreement . All other terms and conditions of the Agreement remain in full force and effect unless amended by the foregoing changes or any additional amendments made in a writing executed by all of the parties hereto. In the event of a conflict or ambiguity between this First Amendment and the Agreement, this First Amendment will control.	
 
 	b.	Burden and Benefit . The covenants and agreements contained herein shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and permitted assigns of the respective parties hereto.	
 
 	c.	Governing Law . This First Amendment shall be construed and enforced in accordance with the laws of the State of New York.	
 
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 	d.	Counterparts . This First Amendment may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties shall not have signed the same counterpart.	
 
 	e.	Separability of Provisions . Each provision of this First Amendment shall be considered separable and if for any reason any provision which is not essential to the effectuation of the basic purposes of this First Amendment is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this First Amendment which are valid so long as the economic and legal substance of this First Amendment is not affected in any manner materially adverse to any Party.	
 
 	f.	Entire Agreement . This First Amendment, the Agreement and the documents referred to herein and therein (including the schedules and exhibits attached hereto and thereto) set forth all (and are intended by all parties to be an integration of all) of the representations, promises, agreements and understandings among the parties hereto with respect to the subject matter herein and therein, and there are no representations, promises, agreements or understandings, oral or written, express or implied, among them other than as set forth or incorporated herein or therein.	
[signature page follows]
 
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IN WITNESS WHEREOF, the parties have set their signatures to this First Amendment to Development, EPC and Purchase Agreement as of the date first written above.

SELLERS :	
	
VIVINT SOLAR DEVELOPER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
	
VIVINT SOLAR, INC.,
a Delaware corporation	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
	
PURCHASER :	
	
VIVINT SOLAR MIA PROJECT COMPANY,
LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
Acknowledged, Agreed and Consented to by the Members of Purchaser :

BLACKSTONE HOLDINGS I LP,	
a Delaware limited partnership	
		
By:	 	/s/ Laurance A. Tosi	
Name:	 	Laurance A. Tosi	
Title:	 	CFO	
	
VIVINT SOLAR MIA MANAGER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
Signature Page to First Amendment to Development, EPC and Purchase Agreement
(Project Mia)

Exhibit 10.30B
SECOND AMENDMENT TO
DEVELOPMENT, EPC AND PURCHASE AGREEMENT
(PROJECT MIA)
This SECOND AMENDMENT TO DEVELOPMENT, EPC AND PURCHASE AGREEMENT (this “ Second Amendment ”) is dated as of April 25, 2014 and effective as of March 31, 2014 by and among Vivint Solar Developer, LLC, a Delaware limited liability company (“ VSD ”), Vivint Solar, Inc., a Delaware corporation (“ VSI ”, together with VSD, the “ Sellers ” and each a “ Seller ”), and Vivint Solar Mia Project Company, LLC, a Delaware limited liability company (“ Purchaser ”).
RECITALS
WHEREAS, Sellers and Purchaser are each a party to that certain Development, EPC and Purchase Agreement, dated as of July 16, 2013, as modified by that certain First Amendment to Development, EPC and Purchase Agreement, effective as of December 31, 2013 (collectively, the “ Agreement ”). Initially capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Agreement.
WHEREAS, the Parties desire to amend the Agreement as set forth herein to modify certain provisions within the Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, of mutual promises of the parties hereto and of other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Parties hereby agree as follows:
 
1.	The following defined term in Section 1.1 of the Agreement is hereby deleted in its entirety and the following new definition is inserted in its stead, to read as follows:	
“ Completion Deadline ” means July 31, 2014.
 
2.	Miscellaneous .	
 
 	a.	Ratification of Agreement . All other terms and conditions of the Agreement remain in full force and effect unless amended by the foregoing changes or any additional amendments made in a writing executed by all of the parties hereto. In the event of a conflict or ambiguity between this Second Amendment and the Agreement, this Second Amendment will control.	
 
 	b.	Burden and Benefit . The covenants and agreements contained herein shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and permitted assigns of the respective parties hereto.	
 
 	c.	Governing Law . This Second Amendment shall be construed and enforced in accordance with the laws of the State of New York.	
 
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 	d.	Counterparts . This Second Amendment may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties shall not have signed the same counterpart.	
 
 	e.	Separability of Provisions . Each provision of this Second Amendment shall be considered separable and if for any reason any provision which is not essential to the effectuation of the basic purposes of this Second Amendment is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this Second Amendment which are valid so long as the economic and legal substance of this Second Amendment is not affected in any manner materially adverse to any Party.	
 
 	f.	Entire Agreement . This Second Amendment, the Agreement and the documents referred to herein and therein (including the schedules and exhibits attached hereto and thereto) set forth all (and are intended by all parties to be an integration of all) of the representations, promises, agreements and understandings among the parties hereto with respect to the subject matter herein and therein, and there are no representations, promises, agreements or understandings, oral or written, express or implied, among them other than as set forth or incorporated herein or therein.	
[signature page follows]

	 	2	 	S ECOND A MENDMENT TO
D EVELOPMENT , EPC  AND  P URCHASE  A GREEMENT
(Project Mia)	

IN WITNESS WHEREOF, the parties have set their signatures to this Second Amendment to Development, EPC and Purchase Agreement as of the date first written above.

SELLERS :	
	
VIVINT SOLAR DEVELOPER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President of Capital Markets	
	
VIVINT SOLAR, INC.,
a Delaware corporation	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President of Capital Markets	
	
PURCHASER :	
	
VIVINT SOLAR MIA PROJECT COMPANY,
LLC,
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President of Capital Markets	
Acknowledged, Agreed and Consented to by the Members of Purchaser :

BLACKSTONE HOLDINGS I LP,	
a Delaware limited partnership	
		
By:	 	/s/ Laurance A. Tosi	
Name:	 	Laurance A. Tosi	
Title:	 	CFO	
	
VIVINT SOLAR MIA MANAGER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President of Capital Markets	
[SIGNATURE PAGE]

	 		 	S ECOND A MENDMENT TO
D EVELOPMENT , EPC  AND  P URCHASE  A GREEMENT
(Project Mia)	

Exhibit 10.31
EXECUTION VERSION
MAINTENANCE SERVICES AGREEMENT
This MAINTENANCE SERVICES AGREEMENT, dated as of July 16, 2013 (the “ Effective Date ”), is entered into by and between Vivint Solar Provider, LLC, a Delaware limited liability company (“ Provider ”), and Vivint Solar Mia Project Company, LLC, a Delaware limited liability company (the “ Company ,” and together with Provider, the “ Parties ,” and each, a “ Party ”).
RECITALS
WHEREAS, the Company desires to engage Provider to provide certain maintenance services on the terms and subject to the conditions as more fully described in this Agreement, and Provider is willing to provide such services on those terms and conditions;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . The following capitalized terms used in this Agreement have the following meanings:
“ Accounting Fee ” is defined in Section 2.1(d) .
“ Accounting Services ” means the services listed in Part 1 of Exhibit A .
“ Administrative Services ” means the services listed in Part 2 of Exhibit A .
“ Affiliate ” means, with respect to any Person, a Person that directly, or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common Control with, the Person specified; provided , however , that Provider and Developer, on the one hand, and the Company, on the other hand, shall not be considered Affiliates for purposes of this Agreement.
“ Agreement ” means this Maintenance Services Agreement, together with all schedules and exhibits hereto, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Applicable Laws ” means all applicable laws of any Governmental Authority, including, without limitation, laws relating to consumer leasing and protection and any ordinances, judgments, decrees, injunctions, writs and orders or like actions of any Governmental Authority and rules and regulations of any federal, regional, state, county, municipal or other Governmental Authority.

“ Business Day ” means any day other than Saturday, Sunday and any other day on which banks in New York are authorized to be closed.
“ Company ” is defined in the preamble of this Agreement.
“ Company Indemnitee ” is defined in Section 4.2 .
“ Company Permits ” is defined in Section 2.7(c) .
“ Control ” means, with respect to a Person, the possession, directly or indirectly, of the power to direct or cause the direction of such Person’s management or policies, whether through the ownership of voting securities, by contract or otherwise.
“ Covered Projects ” is defined in Section 2.1(a) .
“ Customer Agreement ” means, in respect of each Covered Project, the “Customer Agreement” as defined in the EPC Agreement with respect to such Covered Project.
“ Default Rate ” means, for any day, the sum of (a) ten percent (10%) per annum plus (b) the prime rate published in The Wall Street Journal for such day or, if The Wall Street Journal ceases to publish for any reason such rate of interest, the prime lending rate as set forth on the Bloomberg page PRIMBB Index (or successor page) for such day.
“ Effective Date ” is defined in the preamble of this Agreement.
“ Emergency Services ” is defined in Section 2.2 .
“ EPC Agreement ” means that certain Development, EPC and Purchase Agreement, by and between Vivint Solar Developer, LLC, Sponsor and the Company, dated as of the date hereof, as may be amended, restated, supplemented or otherwise modified from time to time.
“ Force Majeure Event ” means any act or event that prevents the Party claiming to be affected by the Force Majeure Event from performing its obligations in accordance with this Agreement, if such act or event is beyond the reasonable control, and not the result of the fault or negligence, of the Party claiming to be affected by the Force Majeure Event, and such Party had been unable to overcome such act or event with the exercise of due diligence (including the expenditure of reasonable sums). “Force Majeure Event” shall include action by a Governmental Authority ( provided , that such action has been resisted in good faith by all reasonable legal means); the failure to act on the part of any Governmental
 
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Authority ( provided , that such action has been timely requested and diligently pursued); national or regional third party labor disputes, civil strike, work stoppage, slow-down or lock-out; flood, earthquake, fire, lightning or wind; epidemic, war, terrorism, riot, economic sanction or embargo; civil disturbance; act of god; unavailability of electricity from the utility grid, equipment, supplies or products; failure of equipment not utilized by or under the control of the Party claiming to be affected by the Force Majeure Event; or any “Force Majeure Event” under and as defined in any Customer Agreement.
“ Government Incentive ” means a payment, including, without limitation, a payment in respect of any performance-based incentive or rebates, by a utility, electric distribution company or federal, state or local Governmental Authority or quasi-governmental agency, and any extension of the program (including by converting the program into a refundable tax credit or tax refund program), in each case as an inducement to a utility customer, solar company or installer to install or use solar equipment, except that neither (a) Tax Credits and depreciation deductions for U.S. federal income tax purposes nor (b) any credits or payments available under any Host Customer’s utility’s “net metering” program for energy generated by the applicable Project that are reserved to such Host Customer under the applicable Customer Agreement shall be considered Government Incentives.
“ Governmental Authority ” means any foreign, federal, state, local or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrating body or other governmental authority having jurisdiction or effective control over Provider, the Company, their respective Affiliates or any Project.
“ Host Customer ” means a residential customer under a Customer Agreement for a Covered Project.
“ Indemnifiable Loss ” means any claim, demand, suit, loss, liability, damage, obligation, payment, cost, Tax, penalty or expense (including, without limitation, the cost and expense of any action, suit, proceeding, assessment, judgment, settlement or compromise relating thereto and reasonable attorneys’ fees and reasonable disbursements in connection therewith) for personal injury or property damage.
“ Indemnifying Party ” is defined in Section 4.3 .
“ Indemnitee ” is defined in Section 4.3 .
“ Initial Term ” is defined in Section 3.1 .
“ Insolvent ” means (a) a Party has filed a voluntary petition in bankruptcy or has been adjudicated as bankrupt or insolvent, or has filed any petition or answer or consent seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future applicable federal, state
 
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or other statute or law relative to bankruptcy, insolvency or other relief for debtors, or has sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator or liquidator of such Party or of all or any substantial part of its properties (the term “acquiesce,” as used in this definition, includes the failure to file a petition or motion to vacate or discharge any order, judgment or decree within fifteen (15) calendar days after entry of such order, judgment or decree); (b) a court of competent jurisdiction has entered an order, judgment or decree approving a petition filed against a Party seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy act, or any other present or future applicable federal, state or other statute or law relating to bankruptcy, insolvency or other relief for debtors, and such Party has acquiesced and such decree has remained unvacated and unstayed for a total of sixty (60) calendar days (whether or not consecutive) from the date of entry thereof, or a trustee, receiver, conservator or liquidator of such Party has been appointed with the consent or acquiescence of such Party and such appointment has remained unvacated and unstayed for a total of sixty (60) calendar days, whether or not consecutive; (c) a Party has admitted in writing its inability to pay its debts as they mature; (d) a Party has given notice to any governmental body of insolvency or pending insolvency, or suspension or pending suspension of operations; (e) a Party has made an assignment for the benefit of creditors or taken any other similar action for the protection or benefit of creditors; or (f) an involuntary case is commenced against a Party by the filing of a petition under any chapter of Title 11 of the United States Bankruptcy Code, as now constituted or hereafter amended, and within sixty (60) days after the filing thereof either the petition is not dismissed or the order for relief is not stayed or dismissed.
“ Investor ” is defined in the LLC Agreement.
“ Lien ” means any lien, security interest, mortgage, hypothecation, encumbrance or other restriction on title or property interest.
“ LLC Agreement ” means that certain Limited Liability Company Agreement of the Company, dated as of the date hereof, by and between Vivint Solar Mia Manager, LLC, a Delaware limited liability company, and Blackstone Holdings Finance Co. L.L.C., a Delaware limited liability company, as may be amended, restated, supplemented or otherwise modified from time to time.
“ Maintenance Log ” is defined in Section 2.5 .
“ Maintenance Services Fee ” is defined in Section 2.1(b) .
“ Management and Administrative Fee ” is defined in Section 2.1(c) .
“ Managing Member ” is defined in the LLC Agreement.
 
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“ Material Adverse Change ” means, with respect to any Person, a fact, event or circumstance that, alone or when taken with other events or conditions occurring or existing concurrently with such event or condition, (a) has or is reasonably expected to have a material adverse effect on the business, operations, condition (financial or otherwise), assets, liabilities or properties of such Person, (b) has or is reasonably expected to have any material adverse effect on the validity or enforceability of this Agreement, (c) materially impairs or is reasonably expected to materially impair the ability of such Person to meet or perform its obligations under this Agreement, or (d) has or is reasonably expected to have any material adverse effect on such Person’s rights under this Agreement.
“ Maximum Liability ” means, with respect to a Party, an amount equal to the total amount paid or to be paid by one Party to the other Party under the terms of this Agreement in any given year.
“ Non-Included System Services ” means services other than System Services and services ancillary thereto.
“ Parties ” or “ Party ” is defined in the preamble of this Agreement.
“ Parts ” means components of a PV System.
“ Permit ” means any permit, franchise, lease, order, license, notice, certification, approval, exemption, qualification, right or authorization from or registration, notice or filing with any Governmental Authority.
“ Permitted Liens ” is defined in the LLC Agreement.
“ Person ” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization or governmental entity or any department or agency thereof.
“ Project ” is defined in the EPC Agreement.
“ Project States ” is defined in the EPC Agreement.
“ Provider ” is defined in the preamble of this Agreement.
“ Provider Indemnitee ” is defined in Section 4.1 .
“ Provider Permits ” is defined in Section 2.7(a) .
“ Prudent Industry Standards ” means the practices, methods, equipment, specifications and standards of safety, as the same may change from time to time, as are used or approved by a significant portion of the residential rooftop distributed solar electric generation industry operating in the applicable Project States in residential
 
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rooftop distributed solar electric generating systems or facilities of a type and size similar to the Projects as good, safe and prudent engineering practices in connection with the design, construction, operation, maintenance, repair and use of electrical and other equipment, facilities and improvements of such residential rooftop distributed solar electric generating system or facility, with commensurate standards of safety, performance, dependability, efficiency and economy, in each case in light of the facts known and circumstances existing at the time any decision is made or action is taken, that would be expected to accomplish the desired result in a manner materially consistent with applicable law, regulation, permits, codes, standards and equipment manufacturer’s recommendations.
“ PV System ” is defined in the EPC Agreement.
“ REC ” is defined in the LLC Agreement.
“ REC Services ” has the meaning set forth in paragraph 8 of Part 3 of Exhibit A .
“ Renewal Term ” is defined in Section 3.1 .
“ Sponsor ” is defined in the LLC Agreement.
“ Subcontractor ” means any person to whom Provider subcontracts any of its obligations under this Agreement, including the vendors and any person to whom such obligations are further subcontracted of any tier.
“ System Services ” means, collectively, the services listed in Part 3 of Exhibit A and all other obligations of Provider under ARTICLE II , other than the Accounting Services and the Administrative Services.
“ Tax ” or “ Taxes ” means:
(a) any taxes, customs, duties, charges, fees, levies, penalties or other assessments imposed by any federal, state, local or foreign taxing authority, including, but not limited to, income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, net worth, employment, occupation, payroll, withholding, social security, alternative or add-on minimum, ad valorem, transfer, stamp, or environmental tax, or any other tax, custom, duty, fee, levy or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax, or additional amount attributable thereto; and
(b) any liability for the payment of amounts with respect to payment of a type described in clause (a) , including as a result of being a member of an affiliated, consolidated, combined or unitary group, as a result of succeeding to such liability as a result of merger, conversion or asset transfer or as a result of any obligation under any tax sharing arrangement or tax indemnity agreement.
 
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“ Tax Credits ” means energy credits under Section 48 of the Internal Revenue Code of 1986, as amended, or any successor to such section.
“ Tax Return ” means any return, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including any information return, claim for refund, amended return or declaration of estimated Tax.
“ Term ” is defined in Section 3.1 .
“ Termination Notice ” is defined in Section 3.2(c) .
“ Third Party Claim ” means any claim, action or proceeding made or brought by any Person who is not a Party or an Affiliate of a Party.
Section 1.2 Construction . Unless the context otherwise requires, the singular shall include the plural, the masculine shall include the feminine and neuter, and vice versa. The term “includes” or “including” shall mean “including without limitation”. The terms “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the schedules and exhibits hereto and certificates delivered hereunder) and not to any particular provision of this Agreement. References to a section, article, exhibit or schedule shall mean a section, article, exhibit or schedule to this Agreement, and reference to a given agreement or instrument shall be a reference to that agreement or instrument as modified, amended, supplemented or restated through the date as of which such reference is made.
ARTICLE II
MAINTENANCE SERVICES; STANDARDS
Section 2.1 In General .
(a) Provider will provide the System Services for the Projects listed on Exhibit C hereto (the “ Covered Projects ”) to the Company throughout the Term. System Services will commence for each individual Covered Project when such Covered Project is “Placed in Service” under and as defined in the EPC Agreement. It is the intention of the Parties that Exhibit C shall include all Projects purchased by the Company under the EPC Agreement, which are not later deemed Cancelled Projects or Deficient Projects (as such terms are defined in the EPC Agreement), and shall not include Projects no longer owned by the Company (including due to termination of the underlying Customer Agreement); and the Parties shall execute updates to Exhibit C as necessary to reflect the addition or removal of Covered Projects.
 
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(b) The Company will compensate Provider for the System Services, other than the Non-Included System Services, by paying Provider a fee of $1,893 per quarter per DC megawatt of installed nameplate capacity of the Covered Projects that have successfully passed the applicable Performance Test under and as defined in the EPC Agreement, prorated for any capacity not available for a full quarter, and escalating annually beginning on the first anniversary hereof in an amount equal to 2% of the fee per DC megawatt paid for the preceding year (the “ Maintenance Services Fee ”). Provider will invoice the Company for System Services on a quarterly basis within thirty (30) calendar days following the end of each calendar quarter (with the invoice being pro rated for any period in which System Services were not provided for a particular Project for the entire quarter). Payment will be due to Provider at the address or to the account indicated in the invoice within ten (10) calendar days after the Company receives such invoice. If such payment is not received by Provider within such ten (10) calendar day period, the payment will be considered late and will bear interest at the Default Rate (or the highest rate permissible under Applicable Law, if less) until paid.
(c) The Company will compensate Provider for Administrative Services by paying Provider a monthly fee in an amount equal to 15% of the total gross revenues received in the prior month by the Company from Host Customers in respect of electricity sales from Covered Projects under the Customer Agreements (the “ Management and Administrative Fee ”). Within thirty (30) days following the end of each month, Provider will notify the Company of the total gross revenues received in the prior month by the Company from Host Customers in respect of electricity sales from PV Systems under the Customer Agreements, and will invoice the Company for the Management and Administrative Fee based on such revenues. Payment will be due to Provider at the address or to the account indicated in the invoice within ten (10) calendar days after the Company receives such invoice, subject to the Company’s contest rights under Section 9.12 . If such payment is not received by Provider within such ten (10) day period, the payment will be considered late and will bear interest at the Default Rate (or the highest rate permissible under Applicable Law, if less) until paid.
(d) The Company will compensate Provider for Accounting Services by paying Provider an annual accounting fee of $25,000, escalating annually beginning on the first anniversary hereof in an amount equal to 2% of the fee paid for the preceding year (the “ Accounting Fee ”). Provider will invoice the Company for Accounting Services on an annual basis within thirty (30) calendar days following the end of each calendar year (with the invoice being pro rated for any period in which Accounting Services were not provided for the entire calendar year). Payment will be due to Provider at the address or to the account indicated in the invoice within ten (10) calendar days after the Company receives such invoice, subject to the Company’s contest rights under Section 9.12 . If such payment is not received by Provider within such ten (10) calendar day period, the payment will be considered late and will bear interest at the Default Rate (or the highest rate permissible under Applicable Law, if less) until paid.
 
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Section 2.2 Non-Included System Services . If the Company desires Provider to perform any Non-Included System Services, then the Company will submit a written request for such services to Provider. If Provider agrees to provide the Non-Included System Services, it will do so in accordance with the provisions of this Agreement. Provider will not perform Non-Included System Services until the Parties have reached agreement in writing setting forth what the Non-Included System Services will cost. Notwithstanding the foregoing, if Provider determines, in accordance with Prudent Industry Standards, that it must furnish any Non-Included System Services on an emergency basis in order to prevent an imminent danger of injury, loss or damage (“ Emergency Services ”), if the situation allows, Provider shall attempt to notify the Company via telephone and email (using the telephone number and email address provided for the Company in Section 9.2 below) prior to the performance of any Emergency Services. Should Provider be unable to notify or contact the Company prior to providing any Emergency Services, Provider shall be authorized to perform such Emergency Services without prior approval from the Company and shall notify the Company immediately thereafter in writing specifying the nature of the emergency and the Emergency Services performed; provided that Provider (a) will not have any duty to perform such Emergency Services nor will it incur any liability or obligation by reason of not performing any such Emergency Services and (b) shall cease to perform Emergency Services and not incur any costs and/or expenses in connection therewith immediately after such imminent danger of injury, loss or damage to a Project has passed without the prior consent of the Company (it being agreed and understood that no reimbursement shall be owing by the Company to Provider for Emergency Services performed in violation of this proviso (b) ). Provider shall perform any such Emergency Services in accordance with the provisions of this Agreement. The Company shall reimburse Provider for all reasonable expenses associated with Provider’s performance of any such Emergency Services, except to the extent such Emergency Services are required due to (i) the negligence of or failure of Vivint Solar Developer, LLC to install the applicable Covered Project in accordance with the terms of the EPC Agreement and the costs therefor are covered under the warranty provided in Section 3.4 of the EPC Agreement, solely if Provider is then an Affiliate of Vivint Solar Developer, LLC or (ii) Provider’s negligence or its failure to perform its material obligations under this Agreement.
Section 2.3 Standard of Performance . Provider shall perform its services under this Agreement in accordance with Applicable Law, Prudent Industry Standards, all material Company Permits with respect to each applicable Covered Project, and in compliance with the terms and conditions of the Customer Agreements, except to the extent the Company instructs Provider not to do so in the event the Company is contesting in good faith the validity or application of any such Applicable Law or such term and condition of the Customer Agreement, in any reasonable manner.
Section 2.4 Access . The Company hereby grants Provider and its authorized agents, employees and Subcontractors a license to access the Projects for the purpose of Provider performing its obligations under this Agreement; provided , that such license shall be subject to the restrictions in the Customer Agreements on the Company’s rights to access the Projects. Such license will automatically expire immediately upon the termination or expiration of this Agreement.
 
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Section 2.5 Maintenance Log . Provider will keep and maintain, in accordance with Prudent Industry Standards, a separate maintenance log for each Covered Project in a paper or electronic format (“ Maintenance Log ”). The Maintenance Log will contain, among other things, descriptions of maintenance services performed by Provider, follow-up activities, if any, that are required, material and equipment costs, and other information relevant to Provider’s maintenance activities. Provider shall furnish to the Company the Maintenance Log upon the Company’s request and immediately prior to the expiration or earlier termination of this Agreement, provided that Provider shall not be obligated to furnish to the Company the Maintenance Log more than once per calendar year unless such request is in connection with the expiration or earlier termination of this Agreement.
Section 2.6 Remote Monitoring . For purposes of determining when repair services are necessary, Provider will monitor and evaluate, in accordance with Prudent Industry Standards, the information gathered through remote monitoring of each Covered Project as well as the maintenance and inspection reports; provided that no such monitoring or evaluating (or lack thereof) will relieve Provider of any of its obligations under this Agreement.
Section 2.7 Permits .
(a) Provider will be responsible, at Provider’s sole cost and expense, for procuring, obtaining, maintaining and complying with all material Permits required to perform the System Services under this Agreement other than Company Permits (“ Provider Permits ”).
(b) The Company agrees to cooperate with and assist Provider in obtaining all Provider Permits required to perform the System Services, and Provider will reimburse the Company for its reasonable costs in providing such assistance.
(c) The Company shall obtain and maintain all Permits (i) that are required for the general ownership, operation and maintenance of the Projects or (ii) that Provider may, from time to time, notify the Company are required by Applicable Laws to be obtained by the Company in its name in order to allow Provider to perform the System Services but excluding the Provider Permits (collectively, the “ Company Permits ”). Upon the Company’s request, Provider shall reasonably cooperate with the Company with respect to obtaining all Company Permits.
 
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Section 2.8 Reporting .
(a) Within thirty (30) days after the end of each month, Provider will deliver to the Company (i) a report on Host Customer collections (by “Tranche” as defined in the EPC Agreement), developments and proposed actions in the form of Exhibit D and (ii) a report of project operations, in the form of Exhibit E .
(b) Provider will deliver the notices, information and reports described in paragraphs 1 , 4 , 5 and 8 of Part 3 of Exhibit A as and when contemplated thereunder.
Section 2.9 Access to Data and Meters .
Throughout the Term, and thereafter to the extent relevant to calculations necessary for periods prior to the end of the Term and subject to any confidentiality obligation owed to any third party and to any restrictions on disclosure of information that may be subject to intellectual property rights restricting disclosure, the Company will allow Provider:
(a) access to all data relating to the electricity production of any Covered Project and the weather conditions at each site where a Covered Project is located; and
(b) access to all data from all meters.
Provider will be entitled to use the foregoing data for its internal purposes and make such data available to third parties for analysis.
Section 2.10 Manufacturer Warranty . To the extent that manufacturer warranties cover replacement and repair of covered equipment during the Term, Provider, on behalf of the Company, shall use commercially reasonable efforts to submit, process and pursue, at the Company’s sole cost and expense, warranty coverage; provided , that the Company shall have no obligation to pay costs of Provider in connection with pursuit of warranty coverage, the costs of which are covered under the warranty provided in Section 3.4 of the EPC Agreement or are required to be indemnified by Vivint Solar Developer, LLC under the EPC Agreement, solely if Provider is then an Affiliate of Vivint Solar Developer, LLC. The Company will provide such full and complete cooperation as Provider may reasonably require in connection with the submission, processing and pursuit of warranty coverage.
Section 2.11 Sales, Use and Other Similar Taxes .
(a) The consideration payable pursuant to Sections 2.1(b) , 2.1(c) , 2.1(d) and 2.2 shall, except as otherwise provided in this Section 2.11 , exclude any and all Taxes imposed on the sale of the services described in Sections 2.1(b) , 2.1(c) , 2.1(d) and 2.2 , and any and all Taxes otherwise imposed on, sustained or incurred with respect to, or applicable to, such services; provided , that the Company shall bear any and all sales, use and other similar taxes imposed on the sale of such services. Provider shall properly and timely collect from the Company and remit any such sales, use and other similar taxes if required to do so by Applicable Laws.
 
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(b) Provider shall cooperate with the Company and take any reasonably requested action in order to minimize any sales, use or other similar taxes imposed on the sale of the services described in Sections 2.1(b) , 2.1(c) , 2.1(d) and 2.2 , including providing sales and use tax exemption certificates or other documentation necessary to support Tax exemptions. Provider agrees to provide the Company such information and data as reasonably requested from time to time, and to fully cooperate with the Company, in connection with (i) the reporting of any sales, use or other similar taxes payable pursuant to this Agreement, (ii) any audit relating to any such sales, use or other similar taxes, or (iii) any assessment, refund, claim or proceeding relating to any such sales, use or other similar taxes.
Section 2.12 Assignment of Renewable Energy Credits .
(a) Assignment of Renewable Energy Credits . The Company hereby grants, conveys, transfers, assigns, and delivers unto Provider (or its designee), without recourse to the Company, all of the Company’s rights, title and interest in and to all RECs solely so that the Provider may perform the REC Services on behalf of the Company in accordance with Prudent Industry Standards. Until any sale of RECs to a third party, Provider shall keep all RECs free and clear of all Liens (except for Permitted Liens). After any such sale and until its delivery to the Company of the purchase price for such REC Provider shall keep its right to receive such purchase price and such amounts received free of all Liens. Subject to the provisions of Section 2.12(d) of this Agreement, the Company hereby delegates, without recourse by Provider to the Company, any and all duties, obligations, responsibilities, claims, demands and other commitments in connection with the RECs, as applicable, unto Provider.
(b) Acceptance of Assignment of Renewable Energy Credits . Provider hereby accepts and assumes the RECs and accepts the delegation under Section 2.12(a) of this Agreement from the date hereof.
(c) Transfer of Renewable Energy Credit Proceeds . Provider hereby covenants that it will transfer any and all proceeds generated by the sale of any RECs to the Company in accordance with the stated REC Services.
(d) Reversion of Renewable Energy Credits upon Termination . Upon the expiration of this Agreement in accordance with Section 3.1 or a termination of this Agreement in accordance with Sections 3.2 or any other provision herein, any RECs that remain with the Provider that have not been sold shall automatically be transferred back to the Company and all right, title and interest in such RECs shall automatically revert back to the Company without any further action of the Parties required, and all rights to receive payment for any RECs that have been sold but for which Provider has
 
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not received payment shall be immediately assigned to the Company, without any further action required by the Company. Prior to any such expiration or promptly upon any such termination, Provider shall, on behalf of Company and at Provider’s sole cost, make such applications to the pertinent Governmental Authorities or other third parties as may be required to establish and shall establish one or more accounts within the attribute tracking systems or generation information systems that are recognized by Governmental Authorities for the purpose of tracking and trading RECs. Provider shall deliver to the Company all account information, application materials, statements of qualification and other documentation as may be required for the Company to create, receive, track and transfer RECs after such an expiration or termination. The Provider’s obligations under this Section 2.12(d) shall survive the expiration or termination of this Agreement.
(e) Cooperation and Assistance. The Company agrees to cooperate with and assist Provider in obtaining and completing any documentation required to perform the REC Services.
ARTICLE III
TERM AND TERMINATION
Section 3.1 Term . The initial term of this Agreement, including, without limitation, the period during which System Services are to be provided for the Covered Project, shall commence on the Effective Date and shall thereafter continue for a period of twenty-five (25) years (the “ Initial Term ”), unless and until earlier terminated pursuant to the provisions of this Agreement. After the Initial Term, this Agreement shall automatically renew for successive one-year terms (each, a “ Renewal Term ”), unless a written notice of non-renewal is given by either Party to the other Party at least one hundred eighty (180) calendar days prior to the expiration of the Initial Term or then applicable Renewal Term. In the event that either Party delivers a notice of non-renewal pursuant to the immediately preceding sentence, or in the event that this Agreement is otherwise terminated in accordance with its terms, Provider will, for a period of one hundred eighty (180) calendar days following the delivery or receipt of such notice, as applicable, use commercially reasonable efforts to assist a replacement provider selected by the Company in assuming the duties, responsibilities and obligations of Provider hereunder. The Initial Term and all subsequent Renewal Terms, if any, are referred to collectively as the “ Term .”
Section 3.2 Termination .
(a) Termination by the Company . The Company may terminate this Agreement immediately upon the occurrence of any of the following:
(i) Provider becomes Insolvent;
 
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(ii) any failure of Provider to pay any amount owed to the Company under this Agreement (and not contested under Section 9.12 ) within ten (10) Business Days after the due date for such payment; provided that the Company has first provided at least ten (10) calendar days’ prior written notice to Provider of its intention to terminate for such failure pursuant to Section 3.2 below and Provider does not pay such due amount within such ten (10) calendar day period;
(iii) any failure by Provider to perform any of its material obligations under this Agreement, which failure is not remedied within thirty (30) calendar days after written notice of such failure from the Company to Provider; provided that if (x) such failure can be remedied, (y) such failure cannot reasonably be remedied within such thirty (30) calendar day period, and (z) Provider commences cure of such failure within such thirty (30) calendar day period and thereafter diligently seeks to remedy the failure, then the Company will not be entitled to terminate this Agreement until such time as Provider ceases reasonable efforts to cure such failure unless such failure continues for a period of a ninety (90) calendar days from the original written notice from the Company; or
(iv) a Force Majeure Event occurs that prevents Provider from providing a material part of the System Services for a continuous period of at least ninety (90) calendar days; and the Company reasonably concludes such prevention is not reasonably likely to be remedied within a further period of ninety (90) calendar days.
(b) Termination by Provider . Provider may terminate this Agreement in the event of any of the following:
(i) the Company becomes Insolvent;
(ii) any failure of the Company to pay any amount owed to Provider under this Agreement (and not contested under Section 9.12 ) within ten (10) Business Days after the due date for such payment; provided that Provider has first provided at least ten (10) calendar days’ prior written notice to the Company and Investor of its intention to terminate for such failure pursuant to Section 3.2(c) below and the Company does not pay such due amount within such ten (10) calendar day period; or
(iii) any failure by the Company to perform any of its material obligations under this Agreement, which failure, if not a payment breach, is not remedied within thirty (30) calendar days of written notice of such failure from Provider to the Company; provided that if (A) such failure can be remedied, (B) such failure cannot reasonably be remedied within such thirty (30) calendar day period, and (C) the Company commences cure of such failure within such thirty (30) calendar day period and thereafter diligently seeks to remedy such failure, then Provider will not be entitled to terminate this Agreement until such time as the Company ceases reasonable efforts to cure such failure unless such failure continues for a period of ninety (90) calendar days from the original written notice from Provider.
 
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(c) Notice . A notice of termination given pursuant to the foregoing provisions of this Section 3.2 (the “ Termination Notice ”) must specify in reasonable detail the circumstances giving rise to the Termination Notice. Except to the extent otherwise provided herein, this Agreement will terminate on the date specified in the Termination Notice, which date will be no earlier than the date upon which the applicable Party is entitled to effect such termination as provided above.
(d) Preservation of Rights . Termination of this Agreement will not affect any rights or obligations as between the Parties that may have accrued prior to such termination or that expressly or by implication are intended to survive termination, whether resulting from the event giving rise to termination or otherwise.
ARTICLE IV
INDEMNIFICATION
Section 4.1 Indemnification of Provider by the Company . The Company will indemnify, defend and hold harmless Provider, its officers, directors, employees, members, partners, Affiliates and agents (each, a “ Provider Indemnitee ”) from and against any and all Indemnifiable Losses asserted against or suffered by any Provider Indemnitee in any way relating to, resulting from or arising out of or in connection with any Third Party Claims against a Provider Indemnitee, in each case, to the extent arising out of or in connection with (i) the gross negligence, fraud or willful misconduct of the Company, its Affiliates or its Subcontractors (other than Provider), (ii) any breach by the Company of any of the representations, warranties or covenants of the Company under this Agreement or (iii) a default under the Customer Agreement as a result of a breach by the Company of its obligations hereunder; provided that in each case, the Company will have no obligation to indemnify Provider with respect to any Indemnifiable Losses resulting from (a) the gross negligence, fraud or willful misconduct of Provider, its Affiliates or its Subcontractors (other than the Company), (b) the breach by Provider of any of its covenants or warranties under this Agreement, or (c) so long as the Managing Member is an Affiliate of Provider, the breach by the Managing Member of any of its covenants or warranties under the LLC Agreement.
Section 4.2 Indemnification of the Company by Provider . Provider will indemnify, defend and hold harmless the Company, its officers, employees, members, partners, Affiliates and agents (each, a “ Company Indemnitee ”) from and against any and all Indemnifiable Losses asserted against or suffered by any Company Indemnitee in any way relating to, resulting from or arising out of or in connection with any Third Party Claims against a Company Indemnitee, in each case, to the extent arising out of or in connection with (i) the gross negligence, fraud or willful misconduct of Provider, its
 
15

Affiliates or its Subcontractors, (ii) any breach by Provider of any of the representations, warranties or covenants of Provider under this Agreement or (iii) a default under the Customer Agreement as a result of a breach by Provider of its obligations hereunder; provided that in each case, Provider will have no obligation to indemnify the Company either with respect to any Indemnifiable Losses resulting from the gross negligence, fraud or willful misconduct of the Company, its Affiliates or Subcontractors (other than Provider) or the breach by the Company of any of its covenants or warranties under this Agreement.
Section 4.3 Indemnification Procedures . Each of the Company’s obligations in Section 4.1 and Provider’s obligations in Section 4.2 above (each of Company and Provider, as applicable, the “ Indemnifying Party ”) are contingent upon the Provider Indemnitee or the Company Indemnitee, as applicable (each, the “ Indemnitee ”), promptly notifying the Indemnifying Party in writing of the Third Party Claim and, except with respect to Taxes, promptly tendering the control of the defense and settlement of any such Third Party Claim to the Indemnifying Party at the Indemnifying Party’s expense and with the Indemnifying Party’s choice of counsel. In connection with the foregoing, the indemnification obligation of Indemnifying Party to the Indemnitee shall be reduced if and to the extent the failure of an Indemnitee to provide such notice and tender of control actually prejudices the outcome of any such claim; provided , however , that the foregoing notice requirement shall not apply if Provider or one of its Affiliates is the Managing Member at such time. The Indemnitee shall also cooperate with the Indemnifying Party, at the Indemnifying Party’s expense, in defending or settling such Third Party Claim and the Indemnitee may join in defense with counsel of its choice at its own expense. An Indemnifying Party may not, without the prior written consent (such consent not to be unreasonably withheld) of an Indemnitee, settle, compromise or consent to the entry of any judgment regarding a Third Party Claim the defense of which has been assumed by the Indemnifying Party unless such settlement, compromise or consent (i) does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the Indemnitee; and (ii) does not contain any equitable order, judgment or term that in any manner affects, restrains or interferes with the business of the Indemnitee or any of the Indemnitee’s Affiliates. An Indemnitee may not settle, compromise or consent to the entry of any judgment regarding any Third Party Claim for which indemnification is sought and the defense of which has not been assumed by the Indemnifying Party, without the prior written consent of the Indemnifying Party, such consent not to be unreasonably withheld or delayed. Each Indemnifying Party’s obligations under Section 4.1 or Section 4.2 , as applicable, shall survive the expiration or termination of this Agreement.
ARTICLE V
FORCE MAJEURE
Section 5.1 If either Party (subject to Section 3.2(a)(iii) in the case of Provider) is rendered wholly or in part unable to perform its obligations under this Agreement because of a Force Majeure Event, then such Party will be excused from whatever performance is affected by the Force Majeure Event; provided that:
 
16

(a) such Party will, as soon as is reasonably possible but in any event no later than ten (10) Business Days (i) upon the occurrence of the Force Majeure Event, give the other Party written notice describing the particulars of the occurrence, and (ii) after termination of the Force Majeure Event, give the other Party written notice summarizing the effects of the Force Majeure Event and the actions taken in connection therewith;
(b) the suspension of performance will be of no greater scope and of no longer duration than is required by the Force Majeure Event;
(c) no obligation of such Party that arose before the occurrence causing the suspension of performance and that could and should have been fully performed before such occurrence through the exercise of commercially reasonable efforts or pursuant to the terms of this Agreement will be excused as a result of such occurrence; and
(d) no Force Majeure Event shall excuse any Party from its payment obligations under this Agreement.
ARTICLE VI
LIMITATIONS ON LIABILITY
Section 6.1 Aggregate Limit of Liability .
(a) In no event will any Party be liable under this Agreement to another Party for any lost profits (other than revenues from Customer Agreements, Government Incentives or sales of RECs) of, or any consequential, special, incidental, exemplary, statutory or punitive damages incurred by, the other Party to this Agreement; provided that this provision will in no way limit any such liability of a Party to another Party under any other agreement between the Parties; provided , further , that a loss, disallowance or recapture of, or inability to claim, Tax Credits or accelerated depreciation or cost recovery deductions shall not be treated as consequential, special, incidental, exemplary, statutory or punitive damages for purposes of this Agreement.
(b) In no event will one Party be liable under this Agreement to the other Party for an aggregate amount in any given year in excess of the Maximum Liability for such year unless and to the extent such liability is (i) the result of (A) fraud, gross negligence or willful misconduct of a Party, (B) the failure of a Party to pay any amount due under this Agreement or (C) a claim for indemnity asserted by a Party on account of a Third Party Claim against such Party, or (ii) with respect to Taxes.
 
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties of the Company .
(a) The Company is a limited liability company duly organized and existing in good standing under the laws of the State of Delaware.
(b) The Company possesses all requisite power and authority to enter into and perform this Agreement and to carry out the transactions contemplated herein.
(c) The Company’s execution, delivery and performance of this Agreement have been duly authorized and this Agreement has been duly executed and delivered and constitutes the Company’s legal, valid and binding obligation, enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency and other legal principles pertaining to creditors’ rights.
(d) Except as otherwise contemplated herein, no material consent or approvals are required in connection with the execution, delivery and performance by the Company of this Agreement.
(e) The execution, delivery and performance by the Company of this Agreement will not (i) violate any Applicable Law applicable to the Company, (ii) result in any breach of, or constitute any default under, any material contractual obligation of the Company or (iii) result in, or require, the imposition of any Lien on any of the properties or revenues of the Company.
Section 7.2 Representations and Warranties of Provider .
(a) Provider is a limited liability company duly organized and existing in good standing under the laws of the State of Delaware.
(b) Provider possesses all requisite power and authority to enter into and perform this Agreement and to carry out the transactions contemplated herein.
(c) Provider’s execution, delivery and performance of this Agreement have been duly authorized and this Agreement has been duly executed and delivered and constitutes Provider’s legal, valid and binding obligation, enforceable against Provider in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency and other legal principles pertaining to creditors’ rights.
(d) Except as otherwise contemplated herein, no material consent or approvals are required in connection with the execution, delivery and performance by Provider of this Agreement.
 
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(e) The execution, delivery and performance by Provider of this Agreement will not (i) violate any Applicable Law applicable to Provider, (ii) result in any breach of, or constitute any default under, any material contractual obligation of Provider or (iii) result in, or require, the imposition of any Lien on any of the properties or revenues of Provider.
ARTICLE VIII
INSURANCE
Section 8.1 Provider will procure and maintain or cause to be procured and maintained during the Term, at its sole cost and expense, insurance substantially in the types and amounts listed in Exhibit B covering the activities of its employees and representatives in connection with this Agreement; provided that, if the same is not available at commercially reasonable rates and commercially reasonable terms and Provider obtains the prior written consent of Investor, not to be unreasonably withheld, conditioned or delayed, Provider may procure alternate types and amounts of insurance.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Independent Contractors . The Parties acknowledge that Provider will perform its obligations under this Agreement and act at all times as an independent contractor, and nothing in this Agreement will be interpreted or applied so as to make the relationship of any of the Parties that of partners, joint venturers or anything other than independent contractors, and the Parties expressly disclaim any intention to create a partnership, joint venture, association or other such relationship. Neither Party is granted any right on behalf of the other Party to assume or create any obligation or responsibility binding such other Party. None of Provider’s employees, Subcontractors or any such Subcontractor’s employees will be or will be considered to be employees of the Company. Provider will be fully responsible for the payment of all wages, salaries, benefits and other compensation to its employees and all amounts due and owing to Subcontractors.
Section 9.2 Notices . Any notice required or authorized to be given hereunder or any other communication provided for under the terms of this Agreement will be in writing and will be delivered personally, by reputable next Business Day express courier services or by electronic mail or facsimile transmission addressed to the relevant Party at the address stated below or at any other address notified by that Party as its address for service. Any notice so given personally shall be deemed to have been served on delivery, any notice so given by express courier service shall be deemed to have been served the next Business Day after the same shall have been delivered to the relevant courier, and any notice so given by electronic mail or facsimile transmission shall be deemed to have been served on transmission and receipt of confirmation of successful transmission during normal business hours (or if successful transmission occurs after normal business hours, then on the next succeeding Business Day). The Parties’ addresses for notice and service are:
 
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	 	To Provider:	  	Vivint Solar Provider, LLC	
	 		  	c/o Vivint Solar, Inc.	
	 		  	4931 N. 300 West	
	 		  	Provo, UT 84604	
	 		  	Attn: Paul Dickson	
	 		  	Facsimile: (801) 765-5705	
	 		  	Email: pdickson@vivintsolar.com	
			
	 	With a copy to:	  	Vivint Solar, Inc.	
	 		  	4931 N. 300 West	
	 		  	Provo, UT 84604	
	 		  	Attn: Dan Black	
	 		  	Facsimile: (801) 765-5746	
	 		  	Email: dblack@vivintsolar.com	
			
	 	To the Company:	  	Vivint Solar Mia Project Company, LLC	
	 		  	c/o Vivint Solar, Inc.	
	 		  	4931 N. 300 West	
	 		  	Provo, UT 84604	
	 		  	Attn: Paul Dickson	
	 		  	Facsimile: (801) 765-5705	
	 		  	Email: pdickson@vivintsolar.com	
			
	 	With copies to:	  	Vivint Solar, Inc.	
	 		  	4931 N. 300 West	
	 		  	Provo, UT 84604	
	 		  	Attn: Dan Black	
	 		  	Facsimile: (801) 765-5746	
	 		  	Email: dblack@vivintsolar.com	
			
	 		  	Blackstone Holdings Finance Co. L.L.C.
c/o The Blackstone Group L.P.	
	 		  	345 Park Avenue	
	 		  	New York, NY 10154	
	 		  	Attn: John Finley	
	 		  	Fax: 212-583-5749	
	 		  	John.Finley@Blackstone.com	
 
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	 		  	Chaim Miller	
	 		  	Chaim.Miller@Blackstone.com	
			
	 		  	Joe Rocco	
	 		  	Joe.Rocco@Blackstone.com	
			
	 		  	Treasury-Operations@Blackstone.com	
Section 9.3 Governing Law . This Agreement will be governed by and construed in accordance with the law of the State of New York applicable to contracts made and to be performed in the State of New York. THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING RELATING TO A DISPUTE AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.
Section 9.4 Amendment, Modification and Waiver . This Agreement may not be amended or modified except by an instrument in writing signed by the Party against which enforcement of such amendment or modification is sought. Any failure of a Party to comply with any obligation, covenant, agreement or condition contained herein may be waived only if set forth in an instrument in writing signed by the other Party, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure.
Section 9.5 Rights and Remedies . Each Party’s rights and remedies under this Agreement are intended to be distinct, separate and cumulative and no such right or remedy therein or herein mentioned, whether exercised by such Party or not, is intended to be an exclusion or a waiver of any of the others.
Section 9.6 Entire Agreement . This Agreement reflects the Parties’ entire agreement with respect to the matters covered by the Agreement and supersedes any prior agreements, commitments, drafts, communication, discussions and understandings, oral or written, with respect thereto.
Section 9.7 Further Assurances . The Parties agree to do such further acts and things and execute and deliver such additional agreements and instruments as the other may reasonably require to consummate, evidence or confirm the agreements contained herein in the matters contemplated hereby.
Section 9.8 Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under all Applicable Laws and regulations. If, however, any provision of this Agreement is prohibited by or invalid under any such law or regulation in any jurisdiction, it will as to such jurisdiction be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it will be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provisions of this Agreement, or the validity or effectiveness of such provision in any other jurisdiction.
 
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Section 9.9 Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 9.10 Assignment . Neither Party may assign its rights or obligations hereunder without the prior written consent of the other Party, which consent will not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, without the need for consent from the other Party, (a) either Party may upon written notice transfer or assign this Agreement to any person or entity succeeding to all or substantially all of the assets of such Party or to a successor entity in a merger or acquisition transaction, and (b) either Party may collaterally assign this Agreement to any of its lenders as security; provided , however , that any such assignee shall agree to be bound by the terms and conditions hereof. No assignment of such rights or obligations may be made by either Party with respect to less than all of the Covered Projects.
Section 9.11 Company Member Authorization . Notwithstanding anything in this Agreement to the contrary, Provider and the Company hereby agree and acknowledge that, with respect to any direction, consent or approval described in this Agreement that the Company may provide that is governed by Section 8.3 of the LLC Agreement, Provider shall not take any such direction of the Company or act under this Agreement unless the Company represents to Provider in writing that the required member consents under such Section 8.3 of the LLC Agreement have been obtained. For such purpose, Provider acknowledges and agrees that “Class A Members” are intended third-party beneficiaries of this Agreement. For any consents required from, or notices to, Investor under this Agreement, Provider acknowledges and agrees that Investor is an intended third-party beneficiary of this Agreement.
Section 9.12 Payment Dispute . In the event that any Party disputes any amount payable hereunder, such amount shall be placed into a segregated escrow account as security for amounts in dispute until such time as the dispute is fully and finally resolved. Interest on such escrowed amount shall be paid to the prevailing Party in the dispute. Each Party agrees to cooperate in good faith in establishing an escrow account with an independent escrow agent for the purposes of this provision.
Section 9.13 Performance During Dispute . Provider shall continue to perform its obligations under this Agreement during the pendency of any dispute.
[Signature Pages Follow]
 
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IN WITNESS WHEREOF, Provider and the Company have each duly executed this Agreement as of the Effective Date.

COMPANY :	
	
VIVINT SOLAR MIA PROJECT
COMPANY, LLC,	
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
	 	Name:   Paul Dickson	
	 	Title:     Vice President of Financing	
	
PROVIDER :	
	
VIVINT SOLAR PROVIDER, LLC ,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
	 	Name:   Paul Dickson	
	 	Title:     Vice President of Financing	

EXHIBIT A
Part 1: SCOPE OF ACCOUNTING SERVICES
1. Books and Records
 
 	•	 	Provider shall maintain complete and accurate financial books of accounts, financial records and supporting documents in accordance with Section 7.2(a) of the LLC Agreement and make such books and records available for inspection in accordance with Section 7.2(c) of the LLC Agreement.	
 
 	•	 	Provider shall prepare, or cause to be prepared by an “Independent Accounting Firm” (as defined in the LLC Agreement), the Company’s financial statements required to be delivered pursuant to Section 7.4 of the LLC Agreement.	
2. Tax Accounting
 
 	•	 	Except for Tax Returns described in paragraph 9 of Part 3 of this Exhibit A , Provider shall prepare, or cause to be prepared, all Tax Returns of the Company in accordance with Sections 7.5 and 7.6 of the LLC Agreement.	
Part 2: SCOPE OF ADMINISTRATIVE SERVICES
1. Company Bank Accounts
 
 	•	 	Provider shall maintain, in the name and for the exclusive benefit of the Company, accounts at one or more banks or other financial institutions in accordance with Section 7.3 of the LLC Agreement.	
 
 	•	 	Provider shall, in the name and for the exclusive benefit of the Company, make any investments with funds not required for the near-term working capital needs of the Company in accordance with Section 7.3 of the LLC Agreement.	
2. Other Services
 
 	•	 	Provider shall represent the Company in business matters with third parties in consultation with the Managing Member and present to the Company for execution such additional documents reasonably deemed necessary or desirable by Provider to effectuate the transactions and agreements authorized by the Company.	
 
A-1

 	•	 	Provider shall provide such readily available information to the Company as it may reasonably request from time to time.	
 
 	•	 	Provider shall perform on behalf of the Company all reporting and other routine administrative responsibilities reasonably believed by the Company to be required to appropriately maintain the limited liability company documents of the Company.	
Part 3: SCOPE OF SYSTEM SERVICES
Provider shall provide all services required for the operation, maintenance and performance of the obligations of the Company as required by the Customer Agreements or as otherwise determined by Provider in its discretion, including but not limited to:
1. Operation and Maintenance :
 
 	•	 	Provider will (i) keep all Covered Projects in good repair, good operating condition, appearance and working order in compliance with the manufacturer’s recommendations, the Customer Agreements, all manufacturer’s warranties and the Company’s standard practices (but in no event less than Prudent Industry Standards), (ii) properly service all components of all Covered Projects following the manufacturer’s written operating and servicing procedures and in accordance with the Customer Agreements, and (iii) replace any Part of a Covered Project as provided in Part 3, paragraph 2 of this Exhibit A and make modifications and alterations to a Covered Project as provided in Part 3 , paragraph 3 of this Exhibit A .	
 
 	•	 	Upon request by the Company, Provider shall promptly furnish or cause to be furnished to the Company such information as may be required to enable the Company to file any reports required to be filed by the Company with any Governmental Authority because of the Company’s ownership of any Covered Project.	
2. Replacement of Parts :
 
 	•	 	In accordance with the Customer Agreements, Provider will promptly replace or cause to be replaced all Parts that may from time to time be incorporated or installed in or attached to a Covered Project and that may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged	
 
A-2

 	beyond repair or permanently rendered unfit for use under the Customer Agreements for any reason whatsoever, except as otherwise provided in Part 3, paragraph 3 of this Exhibit A ; provided that the Company shall bear sole responsibility for the cost and expense of all replacement panels, inverters and racking not covered by a manufacturer’s warranty, so long as the unavailability of a manufacturer’s warranty is not due to the failure of the Provider to comply with any such manufacturer’s warranty.	
 
 	•	 	Provider may, in accordance with the Customer Agreements, remove in the ordinary course of maintenance, service, repair, overhaul or testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use; provided that Provider, except as otherwise provided in Part 3 , paragraph 3 of this Exhibit A , will replace such Parts as promptly as practicable. All replacement Parts will be free and clear of all Liens (except in the case of replacement property temporarily installed on an emergency basis and solely for such time as necessary to permanently install the definitive property) and will be in as good operating condition as, and will have a value and utility at least equal to, the Parts replaced assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof; provided that the Company shall bear sole responsibility for the cost and expense of all replacement panels, inverters and racking not covered by a manufacturer’s warranty, so long as the unavailability of a manufacturer’s warranty is not due to the failure of the Provider to comply with any such manufacturer’s warranty.	
3. Alterations, Modifications and Additions :
 
 	•	 	Provider will make such alterations and modifications in and additions to Covered Projects as may be required from time to time to comply with Applicable Law, Prudent Industry Standards and the terms of the applicable Customer Agreements; provided , however , that Provider may, in good faith, contest the validity or application of any such Applicable Law in any reasonable manner, but diligently and in good faith, and only if there is no material risk of the loss or forfeiture of a Covered Project or any interest therein or breach of the related Customer Agreement; and provided further , that Provider’s failure to make (or cause to be made) any such alterations, modifications or additions will not constitute noncompliance with the requirements of this paragraph 3 or a breach of Provider’s undertaking hereunder for so long a period as may be necessary to remedy such failure, if such failure can be remedied, so long as during such period Provider is using due diligence and best efforts to remedy such failure.	
 
A-3

4. Customary Information : Provider will furnish or cause to be furnished to the Company:
 
 	•	 	promptly upon its receipt of notice thereof, or an officer of Provider becoming aware of the existence thereof, a notice stating that a breach of, or a default under, any contractual obligation of the Company or another party that could reasonably be expected to adversely affect in a material manner the Company or all of the Covered Projects taken as a whole and specifying the nature and period of existence thereof and what action Provider has taken or is taking or proposes to take with respect thereto; and	
 
 	•	 	from time to time such other information regarding the Covered Projects as the Company may reasonably request.	
5. Reports of Liability :
 
 	•	 	Provider shall give prompt written notice to the Company upon its receipt of notice of, or an officer of Provider becoming aware of, the occurrence of any accident that could reasonably be expected to adversely affect in a material manner the Company or all of the Projects taken as a whole (whenever asserted) during the Term, and on request shall furnish to the Company information as to the time, place and nature thereof, the names and addresses of the parties involved, any Persons injured, witnesses and owners of any property damaged, and such other information as may be known to it, and shall promptly upon request furnish the Company with copies of all material correspondence, papers, notices and documents whatsoever sent or received by Provider to or from third parties in connection therewith.	
6. Billing, Collecting and Enforcement of Customer Agreements :
 
 	•	 	Provider will, at its sole cost and expense, administer or cause to be administered all Customer Agreements. Provider’s obligations under this paragraph 6 shall include, without limitation, delivering periodic bills to all Host Customers, collecting from all Host Customers all monies due under the Customer Agreements, and managing all communications with or among Host Customers. Provider will assist the Company in the enforcement of all Customer Agreements. Provider will, at the Company’s direction and expense, diligently exercise any remedies that may become available under the Customer Agreements in respect of any defaults by Host Customers thereunder; provided that, in the event that the Company elects, in the exercise of any such remedies, to remove a PV System from the Host Customer’s real property, (a) the cost of such removal shall be borne by Provider, and (b) Provider will use commercially reasonable efforts to redeploy such PV System following any such removal (it being agreed that, in connection with any such redeployment, Provider shall not discriminate against such PV System as compared to similar equipment that is not subject to this Agreement and will not unreasonably favor new equipment over the redeployment of the PV Systems hereunder).	
 
A-4

7. Event of Loss with Respect to a Covered Project :
 
 	•	 	If any Covered Project is damaged or destroyed by fire, theft or other casualty, Provider will, to the extent insurance proceeds under insurance coverage obtained by the Company or the Provider are available therefor, repair, restore, replace or rebuild such Covered Project to substantially the same condition as existed immediately prior to the damage or destruction and substantially in accordance with the Customer Agreement related to such Covered Project.	
 
 	•	 	If a Covered Project is required to be replaced as described above, then Provider will cause the supplier of the replacement equipment to deliver to the Company a bill of sale for such equipment free and clear of all Liens, and such replacement equipment will become a PV System subject to this Agreement.	
8. Administration of Government Incentives and RECs :
 
 	•	 	With respect to Government Incentives, Provider shall use commercially reasonable efforts to timely: (a) complete and submit, on behalf of the Company and in the Company’s name, all applications and other filings required to be submitted in connection with the procurement of all Government Incentives that are available in respect of each Covered Project; (b) deliver to the Company for the Company’s signature such certifications, agreements and other documents required to be delivered or submitted under Applicable Laws in connection with such Government Incentives; (c) take such other action as may be reasonably necessary to effectuate the procurement and receipt by the Company of such Government Incentives in accordance with Applicable Laws; and (d) promptly deposit, direct or otherwise cause the proceeds of any such Government Incentives to be deposited into deposit accounts held by the Company (in no event later than five (5) Business Days after Provider’s receipt thereof).	
 
 	•	 	In the event RECs are available in respect of any Covered Project, Provider, on behalf and in the name of the Company, shall (collectively, the obligations set forth below, the “ REC Services ”):	
 
 	•	 	complete and submit all applications and other filings required to be submitted as may be reasonably necessary to effectuate the registration of each Covered Project and procurement, sale and transfer of the RECs;	
 
 	•	 	use commercially reasonable efforts to sell the RECs generated by the Covered Projects on behalf of the Company to third parties;	
 
 	•	 	transfer any proceeds realized from the sale of any RECs to the Company and deposit such proceeds into deposit accounts held by the Company within five (5) Business Days after receipt thereof by Provider;	
 
A-5

 	•	 	on a quarterly basis within thirty (30) calendar days after the end of each calendar quarter, provide Company with a report, in the form of Exhibit F , of all RECs generated and sold during such immediately preceding calendar quarter; and	
 
 	•	 	take such other action as may be reasonably necessary to effectuate the foregoing in accordance with Applicable Laws.	
9. Taxes :
 
 	•	 	With respect to all sales, use and similar Taxes in connection with the Covered Project, Provider shall: (a) invoice each Host Customer (or other applicable Person) for all such Taxes in accordance with Applicable Laws, timely remit to the applicable Governmental Authority all such Taxes in accordance with Applicable Laws, and promptly post to a servicing system maintained by Provider all such Tax amounts collected and remitted, (b) prepare and timely file all Tax Returns required to be prepared and filed in connection with such Taxes and promptly deliver copies of all such Tax Returns to the Company, and (c) provide ongoing compliance services in connection with such Taxes, including by fully cooperating in connection with all audits and other proceedings regarding such Taxes.	
 
 	•	 	With respect to all property and similar Taxes in connection with the Covered Project, Provider shall: (a) reasonably allocate all such Taxes to each applicable Host Customer (or other applicable Person), invoice each such Host Customer (or other applicable Person) for all such allocable Taxes, remit to the applicable Governmental Authority all such Taxes in accordance with Applicable Laws, and promptly post to a servicing system maintained by Provider all such Tax amounts collected and remitted, (b) prepare and timely file all Tax Returns required to be prepared and filed in connection with such Taxes and promptly deliver copies of all such Tax Returns to the Company, (c) review all valuations in connection with such Taxes, promptly provide such valuations to the Company, and timely and properly protest any such valuations deemed unreasonable by the Company, and (d) provide ongoing compliance services in connection with such Taxes, including by fully cooperating in connection with all audits and other proceedings regarding such Taxes.	
 
 	•	 	Provider shall promptly (and in any event within five (5) days after the relevant event) notify the Company in writing of any event that could reasonably be expected to, or does, result in any recapture or disallowance of, or inability to claim, any Tax Credits in respect of any Covered Project.	
 
A-6

EXHIBIT B
INSURANCE
Provider shall maintain the following insurance coverage and be responsible for its Subcontractors maintaining sufficient limits of appropriate insurance coverage. Provider, at its sole cost, before commencement of the Accounting Services, Administrative Services and System Services to be performed under this Agreement, shall procure and maintain, throughout the Term, the following coverages with insurers rated by A.M. Best as A-IX or higher:
 
 	1.1	WORKERS’ COMPENSATION AND EMPLOYERS’ LIABILITY	
 
 	1.1.1	Workers’ compensation and basic employers’ liability insurance for all employees in accordance with Applicable Law.	
 
 	1.1.2	Employers’ liability insurance shall not be less than $1,000,000 for injury or death occurring as a result of each accident.	
 
 	1.2	COMMERCIAL GENERAL LIABILITY	
 
 	1.2.1	Provider shall obtain comprehensive or commercial general liability insurance written on an occurrence basis with a combined single limit of at least $1,000,000 per occurrence and $2,000,000 in the aggregate, including premises and operations liability, owners’ and contractors’ protective, products and completed operations liability, blanket contractual liability, personal injury liability, bodily injury and “broad form” property damage coverage, blanket contractual liability, completed operations, explosion and collapse hazard coverage. If coverage includes an aggregate limit, that limit shall be at least $2,000,000.	
 
 	1.3	BUSINESS AUTO	
 
 	1.3.1	Provider shall obtain comprehensive automobile liability insurance with bodily injury, death and property damage combined single limits of at least $1,000,000 per occurrence covering vehicles owned, hired or non-owned.	
 
B-1

 	1.4	COMMERCIAL LIABILITY OR EXCESS LIABILITY	
 
 	1.4.1	Provider shall obtain commercial liability or excess liability insurance in excess of the underlying Commercial General Liability and Business Automobile Liability insurance as described above, which is at least as broad as each of the underlying policies. The minimum limits shall be at least $2,000,000 per occurrence and $2,000,000 aggregate.	
 
 	1.5	PROPERTY INSURANCE	
 
 	1.5.1	Provider shall obtain property insurance insuring the Covered Projects on an all-risk, replacement cost basis in an amount equal to one hundred percent (100%) of the full replacement value basis, with a combined limit of $10,000,000 in the aggregate. Such coverage shall include equipment breakdown.	
 
 	1.4	ADDITIONAL INSURANCE PROVISIONS	
 
 	1.4.1	Before commencing performance of the Accounting Services, the Administrative Services and the System Services, Provider shall furnish the Company with certificates of insurance and endorsements of all required insurance for Provider.	
 
 	1.4.2	Provider’s Commercial General Liability, Business Automobile Liability and Commercial Liability or Excess Liability insurance policies shall name Company, its members, its Affiliates, and their respective officers, agents, representatives and employees as additional insureds for work performed under or incidental to this Agreement.	
 
 	1.4.3	The limits of insurance or applicable deductibles shall not limit the liability of Provider or relieve Provider of any liability or financial responsibility.	
 
 	1.4.4	Any deductible or self-insured retention shall be the responsibility of Provider.	
 
 	1.4.5	Such insurance as is afforded by any policies contemplated by this Agreement for the benefit of the Company shall be primary and non-contributory as respects any claims, losses or liability arising directly or indirectly from Provider’s operations.	
 
B-2

 	1.4.6	The terms of any policies contemplated by this Agreement shall state that coverage shall not be cancelled except after thirty (30) calendar days’ prior written notice, or ten (10) days’ prior written notice in the event of cancellation for nonpayment of premium, has been given to the Company.	
 
 	1.4.7.	In the event and for so long as any property insurance (including the limits or deductibles thereof) hereby required by this Exhibit B to be maintained, other than insurance required by law to be maintained, shall not be available on commercially reasonable terms in the commercial insurance market, the Company shall not unreasonably withhold its agreement to waive such requirement to the extent such insurance is not so available or, to the extent applicable, may allow Provider to obtain the best available property insurance comparable to the requirements of this Exhibit B on commercially reasonable terms then available in the commercial insurance market.	
 
B-3

EXHIBIT C
COVERED PROJECTS

Job
#	  	Host
Customer	  	kW
size	  	System FMV
(price per
watt)	  	Panel
Manufacturer	  	Panel
Quantity	  	Inverter
Manufacturer	  	Inverter
Quantity	  	Performance
Test Date	  	Inspection
Date	  	PTO
Receipt
Date	  	Commercial
Operation Date	

C-1

EXHIBIT D
MONTHLY PERFORMANCE OF PORTFOLIO

Customer ID	  	Monthly Collection	  	A/R Aging	  	Remaining Months on
Term	
	  		  		  		
TRANCHE REPORT

Projected Receipts for Month	 		
		
Actual Receipts for Month	 		
		
Projected Receipts for Following Month	 		
		
Projects in Default and Status	 		
		
Pending Collection Actions and Status	 		
		
Major Developments	 		
		
Proposed Extraordinary Actions	 		
 
D-1

EXHIBIT E
MONTHLY PROJECT OPERATIONS REPORT
Date: MM/DD/YYYY
For the Month Ending on [              ], 20[      ]

1. ITC RECAPTURE	
1.1.  Has there been a change in ownership of any Covered Project?	  	Yes	  	    No	
If yes, explain:	  		
			
1.2.  Has any Covered Project been taken out of operation?	  	Yes	  	    No	
If yes, explain:	  		
			
2. OPERATIONS	  		  		
2.1.  Has there been a material default under any Customer Agreement?	  	Yes	  	    No	
If yes, explain:	  		
			
2.2.  Have Covered Projects been generating sufficient power to support the Base Case Models that were prepared for such Covered Projects at the applicable Purchase Date unless such shortfall would not adversely affect in a material manner the Covered Projects taken as a whole or the Company?	  	Yes	  	    No	
If no, explain:	  		
			
2.3.  Are there any major concerns, events or circumstances associated with the operations or maintenance of Covered Projects that would adversely affect in a material manner the Covered Projects taken as a whole or the Company?	  	Yes	  	    No	
If yes, explain:	  		
			
2.4.  Has there been a distribution of Distributable Cash?	  	Yes	  	    No	
If yes, please include report.	  		
			
2.5.  Are there (a) to your actual knowledge any alleged or threatened violations of law with respect to the Covered Projects that would adversely affect in a material manner the Covered Projects taken as a whole or the Company or (b) any current or pending lawsuits or legal proceedings?	  	Yes	  	    No	
If yes, please explain and include copies of the related documentation received.	  	 	
 
E-1

					
2.6.  The date the last Covered Project was placed in service (PIS) is	  	MM/DD/YYYY	
Leave blank if not PIS.	  		  		
			
3. EQUIPMENT WARRANTY STATUS	  		  		
3.1.  Have any material warranty claims been made with respect to manufacturer warranties or the installation warranty for Covered Projects that were not disclosed in any previous monthly project operations report?	  	Yes	  	No	
If yes, explain:	  		  		
 
E-2

EXHIBIT F
QUARTERLY REC GENERATION AND SALES REPORTS
Report Date:
Period:

Transaction
Date	  	Job ID	  	Certifying
Authority	  	State	  	Vintage	  	Quantity	  	Price
per
REC	  	Counterparty	  	REC
Income
Recognized*	  	Cash
Collected	
	  		  		  		  		  		  		  		  		  		
*	REC income is recognized upon delivery.	
 
F-1

Exhibit 10.33
*** Text Omitted and Filed Separately with the Securities Exchange Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406
EXECUTION VERSION

 
LIMITED LIABILITY COMPANY AGREEMENT
OF
Vivint Solar Aaliyah Project Company, LLC
dated as of November 5, 2013

 
THE SECURITIES (MEMBERSHIP INTERESTS) REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR REGISTERED OR QUALIFIED UNDER ANY SECURITIES OR BLUE SKY LAWS OF ANY STATE OR JURISDICTION. THEREFORE , THE SECURITIES MAY NOT BE SOLD , PLEDGED , HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR THE APPLICABLE STATE SECURITIES OR BLUE SKY LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD TO THE PROPOSED TRANSFER OR , IN THE OPINION OF LEGAL COUNSEL ACCEPTABLE TO THE COMPANY , REGISTRATION OR QUALIFICATION UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES OR BLUE SKY LAWS IS NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER.

TABLE OF CONTENTS

 	  	 	  	Page	 	
		
ARTICLE I DEFINITIONS	  	 	1	  	
			
Section 1.1.	  	Definitions	  	 	1	  	
Section 1.2.	  	Other Definitional Provisions	  	 	22	  	
		
ARTICLE II CONTINUATION; OFFICES; TERM	  	 	23	  	
			
Section 2.1.	  	Formation of the Company	  	 	23	  	
Section 2.2.	  	Name, Office and Registered Agent	  	 	23	  	
Section 2.3.	  	Purpose; No Partnership Intended	  	 	24	  	
Section 2.4.	  	Term	  	 	24	  	
Section 2.5.	  	Organizational and Fictitious Name Filings; Preservation of Limited Liability	  	 	24	  	
		
ARTICLE III RIGHTS AND OBLIGATIONS OF THE MEMBERS	  	 	25	  	
			
Section 3.1.	  	Members; Membership Interests	  	 	25	  	
Section 3.2.	  	Actions by the Members	  	 	25	  	
Section 3.3.	  	Management Rights	  	 	27	  	
Section 3.4.	  	Other Activities	  	 	27	  	
Section 3.5.	  	No Right to Withdraw	  	 	27	  	
Section 3.6.	  	Limitation of Liability of Members	  	 	27	  	
Section 3.7.	  	No Liability for Deficits	  	 	28	  	
Section 3.8.	  	Company Property	  	 	28	  	
Section 3.9.	  	Retirement, Resignation, Expulsion, Incompetency, Bankruptcy or Dissolution of a Member	  	 	28	  	
Section 3.10.	  	Withdrawal of Capital	  	 	28	  	
Section 3.11.	  	Representations and Warranties	  	 	29	  	
Section 3.12.	  	Other Covenants	  	 	34	  	
Section 3.13.	  	Removal of Managing Member	  	 	35	  	
		
ARTICLE IV CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; MEMBER LOANS	  	 	35	  	
			
Section 4.1.	  	Capital Contributions	  	 	35	  	
Section 4.2.	  	Capital Accounts	  	 	36	  	
Section 4.3.	  	Member Loans	  	 	37	  	
		
ARTICLE V ALLOCATIONS	  	 	38	  	
			
Section 5.1.	  	Allocations	  	 	38	  	
Section 5.2.	  	Adjustments	  	 	39	  	
 
Limited Liability Company Agreement of
Vivint Solar Aaliyah Project Company, LLC
 
i

							
Section 5.3.	  	Tax Allocations	  	 	40	  	
Section 5.4.	  	Transfer or Change in Membership Interest	  	 	41	  	
		
ARTICLE VI DISTRIBUTIONS	  	 	41	  	
			
Section 6.1.	  	Distributions	  	 	41	  	
Section 6.2.	  	Withholding Taxes	  	 	42	  	
Section 6.3.	  	Limitations upon Distributions	  	 	43	  	
Section 6.4.	  	No Return of Distributions	  	 	43	  	
Section 6.5.	  	Calculation of Internal Rate of Return	  	 	43	  	
		
ARTICLE VII ACCOUNTING AND RECORDS	  	 	45	  	
			
Section 7.1.	  	Reports	  	 	45	  	
Section 7.2.	  	Books and Records and Inspection	  	 	46	  	
Section 7.3.	  	Bank Accounts, Notes and Drafts	  	 	47	  	
Section 7.4.	  	Financial Statements	  	 	48	  	
Section 7.5.	  	Partnership Status and Tax Elections	  	 	48	  	
Section 7.6.	  	Company Tax Returns	  	 	49	  	
Section 7.7.	  	Tax Audits	  	 	50	  	
Section 7.8.	  	Cooperation	  	 	51	  	
Section 7.9.	  	Fiscal Year	  	 	51	  	
		
ARTICLE VIII MANAGEMENT	  	 	52	  	
			
Section 8.1.	  	Management	  	 	52	  	
Section 8.2.	  	Managing Member	  	 	52	  	
Section 8.3.	  	Major Decisions	  	 	54	  	
Section 8.4.	  	Officers	  	 	55	  	
Section 8.5.	  	Costs & Expenses	  	 	55	  	
Section 8.6.	  	Separateness	  	 	56	  	
		
ARTICLE IX TRANSFERS AND INDEMNIFICATION	  	 	57	  	
			
Section 9.1.	  	Transfers	  	 	57	  	
Section 9.2.	  	Conditions Applicable to All Transfers	  	 	58	  	
Section 9.3.	  	Certain Permitted Transfers	  	 	59	  	
Section 9.4.	  	Purchase Option	  	 	59	  	
Section 9.5.	  	Regulatory and Other Authorizations and Consents	  	 	61	  	
Section 9.6.	  	Admission	  	 	62	  	
Section 9.7.	  	Security Interest Consent	  	 	62	  	
Section 9.8.	  	Indemnity	  	 	62	  	
Section 9.9.	  	No Duplication	  	 	65	  	
Section 9.10.	  	Survival	  	 	65	  	
 
Limited Liability Company Agreement of
Vivint Solar Aaliyah Project Company, LLC
 
ii

							
Section 9.11.	  	Final Date for Assertion of Indemnity Claims	  	 	65	  	
Section 9.12.	  	Reasonable Steps to Mitigate	  	 	66	  	
Section 9.13.	  	Net of Insurance Benefits	  	 	66	  	
Section 9.14.	  	No Consequential Damages	  	 	66	  	
Section 9.15.	  	Payment of Indemnification Claims	  	 	66	  	
		
ARTICLE X DISSOLUTION AND WINDING-UP	  	 	67	  	
			
Section 10.1.	  	Events of Dissolution	  	 	67	  	
Section 10.2.	  	Distribution of Assets	  	 	67	  	
Section 10.3.	  	Certificate of Cancellation	  	 	68	  	
Section 10.4.	  	In-Kind Distributions	  	 	68	  	
		
ARTICLE XI MISCELLANEOUS	  	 	69	  	
			
Section 11.1.	  	Notices	  	 	69	  	
Section 11.2.	  	Amendment	  	 	69	  	
Section 11.3.	  	Partition	  	 	69	  	
Section 11.4.	  	Waivers and Modifications	  	 	69	  	
Section 11.5.	  	Severability	  	 	70	  	
Section 11.6.	  	Successors; No Third-Party Beneficiaries	  	 	70	  	
Section 11.7.	  	Entire Agreement	  	 	70	  	
Section 11.8.	  	Governing Law	  	 	70	  	
Section 11.9.	  	Further Assurances	  	 	70	  	
Section 11.10.	  	Counterparts	  	 	71	  	
Section 11.11.	  	Dispute Resolution	  	 	71	  	
Section 11.12.	  	Confidentiality and Publicity	  	 	72	  	
Section 11.13.	  	Joint Efforts	  	 	73	  	
Section 11.14.	  	Specific Performance	  	 	73	  	
Section 11.15.	  	Survival	  	 	74	  	
Section 11.16.	  	Recourse Only to Member	  	 	74	  	
Section 11.17.	  	Costs, Expenses, Fees	  	 	74	  	
 
Limited Liability Company Agreement of
Vivint Solar Aaliyah Project Company, LLC
 
iii

			
ANNEX I	  	Members and Membership Interests	
		
SCHEDULES	  		
Schedule 4.2(d)	  	Initial Capital Accounts	
Schedule 9	  	Transfer Representations and Warranties	
		
EXHIBITS	  		
Exhibit A	  	Form of Membership Interest Certificate	
Exhibit B	  	Base Case Model	
Exhibit C	  	Insurance Requirements	
Exhibit D	  	Form of Note	
 
Limited Liability Company Agreement of
Vivint Solar Aaliyah Project Company, LLC
 
iv

LIMITED LIABILITY COMPANY AGREEMENT
OF
VIVINT SOLAR AALIYAH PROJECT COMPANY, LLC
Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC, a Delaware limited liability company (the “ Company ”), dated as of November 5, 2013 (the “ Effective Date ”), by and between Vivint Solar Aaliyah Manager, LLC, a Delaware limited liability company (“ Sponsor Sub ”), and Stoneco IV Corporation, a Delaware corporation (“ Investor ”).
RECITALS
1. The Company was formed by virtue of its Certificate of Formation filed with the Secretary of State of the State of Delaware on October 25, 2013 (the “ Certificate of Formation ”).
2. The Company has been formed to own and operate photovoltaic systems.
3. Sponsor Sub and Investor desire to describe their respective rights and obligations as members of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions .
Capitalized terms used but not defined in this Agreement have the meanings assigned to them in the Master EPC Agreement. As used in this Agreement, the following terms have the respective meanings set forth below:
“ Act ” means the Delaware Limited Liability Company Act, Delaware Code Ann. 6, Sections 18-101, et seq. and any successor statute, as the same may be amended from time to time.
“ Adjusted Capital Account ” means, with respect to any Member, the Capital Account of such Member (a) increased by the amount of potential deficit that the Member is deemed obligated to restore, calculated as described in the next to last sentence of Treasury Regulations Section 1.704-2(g)(1) and the next to last sentence of Treasury Regulations Section 1.704-2(i)(5) and (b) decreased by such Member’s share of the items described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
 
Limited Liability Company Agreement of
Vivint Solar Aaliyah Project Company, LLC

“ Affiliate ” of a specified Person means any Person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such specified Person. As used in this definition of Affiliate, the term “ control ” of a specified Person, including, with correlative meanings, the terms, “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of such Person’s management or policies, whether through the ownership of voting securities, by contract or otherwise; provided , however , that notwithstanding the foregoing, for purposes of this Agreement, the Company will not be treated as an Affiliate of any Member, and Investor will not be treated as an Affiliate of Sponsor or Sponsor Sub.
“ Agreement ” means this Limited Liability Company Agreement, together with all schedules and exhibits hereto, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Applicable Laws ” means all applicable laws of any Governmental Authority, including, without limitation, laws relating to consumer leasing and protection and any ordinances, judgments, decrees, injunctions, writs and orders or like actions of any Governmental Authority and rules and regulations of any federal, regional, state, county, municipal or other Governmental Authority.
“ Appraisal Method ” means one appraiser shall be appointed by the Class A Member and one appraiser shall be appointed by the Class B Member, in each case, within fifteen (15) calendar days of a Member invoking the procedure described in this definition and delivering notice thereof to the other Members, which appraisers shall attempt to agree upon the fair market value of the Class A Membership Interests. If either the Class A Member or the Class B Member does not appoint its appraiser within the fifteen (15) calendar day period referenced in the immediately preceding sentence, the Member that has appointed an appraiser may deliver written notice to the other Member regarding its failure to appoint an appraiser within the required time period, and if such other Member does not appoint an appraiser within five (5) Business Days after receiving such notice, the determination of the appraiser that has been appointed shall be conclusive and binding on the Members. If the appraisers appointed by the Class A Member and the Class B Member are unable to agree upon the fair market value of the Class A Membership Interests within thirty (30) calendar days after the appointment of the second of such appraisers, the two appraisers shall appoint a third appraiser. In such case, the average of the determinations of the three appraisers shall be conclusive and binding on the Members, unless the determination of one independent appraiser is disparate from the middle determination by more than twice the amount by which the third determination is disparate from the middle determination, in which case the determination of the most disparate appraiser shall be excluded, and the average of the remaining two determinations shall be conclusive and binding on the Members. Any appraiser shall be qualified, and have at least three years of experience, in appraising PV Systems. The Class A Member and the Class B Member, respectively, shall bear their own costs in appointing their respective appraiser and shall evenly split the costs of any third appraiser.
“ Bankruptcy ” of a Person means the occurrence of any of the following events: (a) the filing by such Person of a voluntary case or the seeking of relief under any chapter of Title 11 of the United States Bankruptcy Code, as now constituted or hereafter amended (the
 
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“ Bankruptcy Code ”), (b) the making by such Person of a general assignment for the benefit of its creditors, (c) the admission in writing by such Person of its inability to pay its debts as they mature, (d) the filing by such Person of an application for, or consent to, the appointment of any receiver or a permanent or interim trustee of such Person or of all or any portion of its property, including the appointment or authorization of a trustee, receiver or agent under Applicable Law or under a contract to take charge of its property for the purposes of enforcing a lien against such property or for the purpose of general administration of such property for the benefit of its creditors, (e) the filing by such Person of a petition seeking a reorganization of its financial affairs or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law or statute, (f) an involuntary case is commenced against such Person by the filing of a petition under any chapter of Title 11 of the Bankruptcy Code and within sixty (60) days after the filing thereof either the petition is not dismissed or the order for relief is not stayed or dismissed, (g) an order, judgment or decree is entered appointing a receiver or a permanent or interim trustee of such Person or of all or any portion of its property, including the entry of an order, judgment or decree appointing or authorizing a trustee, receiver or agent to take charge of the property of such Person for the purpose of enforcing a lien against such property or for the purpose of general administration of such property for the benefit of the creditors of such Person, and such order, judgment or decree shall continue unstayed and in effect for a period of sixty (60) days, or (h) an order, judgment or decree is entered, without the approval or consent of such Person, approving or authorizing the reorganization, insolvency, readjustment of debt, dissolution or liquidation of such Person under any such law or statute, and such order, judgment or decree shall continue unstayed and in effect for a period of sixty (60) days. The foregoing definition of “Bankruptcy” is intended to replace and shall supersede the definition of “Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the Act.
“ Bankruptcy Code ” is defined in the definition of the term “Bankruptcy”.
“ Base Case Model ” means a computer model agreed to by Sponsor and Investor showing the estimated economic results that the parties expect from ownership of Projects and the assumptions to be used in projecting when Investor shall reach the Target Internal Rate of Return. The Base Case Model as of the date hereof is attached as Exhibit B and may be replaced from time to time with an updated computer model with each Member’s prior written consent (executed by a duly-authorized officer of such Member), including to reflect adjustments made to the Base Case Model in accordance with the Master EPC Agreement (including the True-Up Base Case Model).
“ Business Day ” means any day other than Saturday, Sunday and any other day on which banks in New York are authorized to be closed.
“ Calculation Date ” means March 31, June 30, September 30 and December 31 of each year (or if such day is not a Business Day, the next Business Day).
“ Capital Account ” is defined in Section 4.2(a) .
 
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“ Capital Contribution ” means, with respect to any Member, the amount of money and the initial Gross Asset Value of any property contributed to the Company with respect to the Membership Interests in the Company held or purchased by such Member.
“ Cash Difference ” is defined in Section 6.5(d) .
“ Cashflow Shortfall ” is defined in Section 4.3(a) .
“ Certificate of Formation ” is defined in the recitals of this Agreement.
“ Change of Member Control ” means with respect to any Class B Member, an event in which a Person or Persons who prior to a transaction or series of transactions, individually or collectively possessed directly or indirectly, legally or beneficially:
(a) Fifty percent (50%) or more of the equity, capital or profits interests of such Class B Member; or
(b) control of such Class B Member through the ownership of voting securities with the power to direct the management or policies of such Class B Member or otherwise;
and as a result of a consummation of any transaction or series of transactions (including any merger or consolidation), such Person or Persons individually or collectively fail to maintain, whether directly or indirectly, legally or beneficially, either of the elements of control listed in clause (a)  or clause (b)  above. Notwithstanding the foregoing, neither the direct nor indirect sale, transfer or other disposition of equity, capital or profits interests of, or of the ownership of voting securities with the power to direct the management or policies of, Sponsor shall constitute a Change of Member Control.
“ Class A Member ” means a Member holding one or more Class A Membership Interests. As of the Effective Date and for so long as Investor owns any Class A Membership Interests, Investor is a Class A Member.
“ Class A Membership Interests ” is defined in Section 3.1(b) .
“ Class B Member ” means a Member holding one or more Class B Membership Interests. As of the Effective Date and for so long as Sponsor Sub owns any Class B Membership Interests, Sponsor Sub is a Class B Member.
“ Class B Membership Interests ” is defined in Section 3.1(b) .
“ Code ” means the Internal Revenue Code of 1986, as amended, or any successor federal tax statute.
“ Company ” is defined in the preamble to this Agreement.
 
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“ Company Minimum Gain ” means the amount of minimum gain there is in connection with nonrecourse liabilities of the Company, calculated in the manner described in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
“ Confidential Information ” is defined in Section 11.12(a) .
“ Consultation ” or “ Consult ” means to confer with and reasonably consider and take into account the reasonable suggestions, comments or opinions of another Person.
“ Corporate Tax Rate ” means 35%.
“ Curative Flip Allocation ” is defined in Section 6.5(e) .
“ Customer Agreement ” is defined in the Master EPC Agreement.
“ Depreciation ” means for each Fiscal Year or part thereof, an amount equal to the depreciation, amortization or other cost recovery deduction allowable for federal income tax purposes with respect to an asset for such Fiscal Year or part thereof, except that if the Gross Asset Value of an asset differs from its adjusted basis at the beginning of such Fiscal Year, then the depreciation, amortization or other cost recovery deduction for such Fiscal Year or part thereof shall be (a) the amount described in Treasury Regulations Section 1.704-3(d)(2) if the remedial method referred to in Treasury Regulations Section 1.704-3(d) is used, and (b) otherwise an amount that bears the same ratio to such Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for the period bears to the adjusted tax basis. If the asset has a zero adjusted tax basis, then the depreciation, amortization or other cost recovery deduction under clause (b) above shall be determined under a method reasonably selected by the Managing Member and agreed to by Members representing a Required Majority Vote.
“ Designated Transfers ” is defined in Section 9.5(a) .
“ Developer ” means Vivint Solar Developer, LLC, a Delaware limited liability company.
“ Development ” means the acquisition, ownership, financing, leasing, occupation, design, development, construction, equipping, testing, repair, operation, maintenance, use and interconnection of a Project, and the sale of electricity and/or any attributes therefrom.
“ Dispute ” is defined in Section 11.11(a) .
“ Disputing Member ” is defined in Section 11.11(a) .
“ Distributable Cash ” means, as of any Distribution Date, all cash, cash equivalents and liquid investments held by the Company as of such date less all operating and maintenance expenses and reserves that, in the reasonable judgment of the Managing Member, are necessary or appropriate for the operation of the Company or the Projects consistently with Prudent Industry Standards.
 
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“ Distribution Date ” means March 31, June 30, September 30 and December 31 of each year (or if such day is not a Business Day, the next Business Day).
“ Effective Date ” is defined in the preamble to this Agreement.
“ Exercise Notice ” is defined in Section 9.4(a) .
“ Federal Power Act ” means Chapter 12 of Title 16 of the United States Code, as amended.
“ Fiscal Year ” is defined in Section 7.9 .
“ Fixed Tax Assumptions ” means the following assumptions: (a) the Company is a partnership for federal income tax purposes; (b) the Class A Member is a partner in the Company for federal income tax purposes, (c) the Company is the owner of each Project for federal income tax purposes; (d) the allocations of each item of income, gain, loss, deduction and credit set forth in this Agreement to the Members will be respected by the IRS either because they have “substantial economic effect” or are otherwise consistent with the Members’ interests in the Company within the meaning of Section 704(b) of the Code; (e) the transactions described in the Transaction Documents have “economic substance” within the meaning of Section 7701(o) of the Code; (f) each Class A Member is and will continue to be subject to federal income tax at the Corporate Tax Rate, (g) state, local, foreign or other non-United States federal income taxes are inapplicable and (h) each Class A Member will be able to fully utilize all regular federal income tax benefits allocated to it from the Company.
“ Flip Date ” means the later of (a) the date that is five (5) full years after the last date a Project owned by the Company is Placed in Service and (b) the last day of the calendar month in which the Class A Member achieves an Internal Rate of Return equal to or greater than the Target Internal Rate of Return.
“ GAAP ” means (a) generally accepted accounting principles in the United States of America as in effect from time to time, consistently applied; or (b) upon mutual agreement of the parties hereto, internationally recognized generally accepted accounting principles, consistently applied.
“ Governmental Approval ” means any authorization, consent, approval, ruling, tariff, rate, certification, waiver, exemption, filing, variance or order of, or any notice to or registration by or with, any Governmental Authority.
“ Governmental Authority ” means any foreign, federal, state, local or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrating body or other governmental authority having jurisdiction or effective control over the Company or any Project, or if the context requires, the Sponsor Sub or Investor.
 
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“ Gross Asset Value ” means, with respect to any asset, the asset’s adjusted tax basis for federal income tax purposes, except as follows:
(a) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the Gross Fair Market Value of such asset as of the date of contribution; provided that the initial Gross Asset Values of the assets contributed to the Company pursuant to Section 4.2(d) shall be as shown in Schedule 4.2(d) ;
(b) the Gross Asset Values of all Company assets shall be adjusted to equal their respective Gross Fair Market Values at the times described in Section 4.2(c) ;
(c) the Gross Asset Value of any item of Company assets distributed to any Member shall be adjusted to equal the Gross Fair Market Value of such asset on the date of distribution;
(d) the Gross Asset Values of all Company assets shall be adjusted to reflect any adjustments to the adjusted basis of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that such adjustments are required to be taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m); provided , however , that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that the Managing Member determines that an adjustment pursuant to subsection (b) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d) ; and
(e) if the Gross Asset Value of an asset has been determined or adjusted pursuant to subsection (a) , (b)  or (d)  above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset.
“ Gross Fair Market Value ” means, with respect to any asset, the fair market value of the asset as reasonably determined by the Managing Member and agreed to by Members representing a Required Majority Vote.
“ Guarantee ” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (a) to secure, purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to provide collateral security, to take-or-pay, or to maintain financial statement conditions or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.
“ Guaranty Agreement ” means the Guaranty dated as of the date hereof, made by Sponsor in favor of the Investor and the Company.
“ Host Customer ” is defined in the Master EPC Agreement.
 
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“ HSR Act ” means the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended and the regulations adopted thereunder.
“ Indebtedness ” means, with respect to any Person at any date of determination (without duplication), (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person as an account party in respect of letters of credit or other similar instruments (including contingent reimbursement obligations with respect thereto), (d) all of the obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six (6) months after the date of purchasing such property or service or taking delivery and title thereto or the completion of such services, and payment deferrals arranged primarily as a method of raising funds to acquire such property or service, (e) all monetary obligations of such Person and its Subsidiaries under any leasing or similar arrangement which have been (or, in accordance with GAAP, should be) classified as capitalized leases, (f) all monetary obligations of such Person with respect to any interest rate hedge, cap, floor, swap, option or other interest rate hedge agreement entered into after the date hereof, (g) all Indebtedness (as defined in clauses (a) through (f)  of this definition) of other Persons secured by a lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, and (h) all Indebtedness (as defined in clauses (a) through (f)  of this definition) of other Persons guaranteed by such Person.
“ Indemnified Costs ” means Investor Indemnified Costs or Sponsor Indemnified Costs, as the context requires.
“ Indemnified Party ” means an Investor Indemnified Party or Sponsor Indemnified Party, as the context requires.
“ Indemnifying Party ” means Sponsor Sub or Investor, as the context requires.
“ Independent Accounting Firm ” means Ernst & Young LLP or a nationally recognized third-party accounting firm that (a) is not an Affiliate of either Member, and (b) is mutually agreed upon by the Members.
“ Interested Member ” means a Member (or Affiliate of a Member) having a pecuniary interest in a transaction or claim other than a pecuniary interest resulting from such Member’s interest in the Company.
“ Internal Rate of Return ” means the discount rate that causes “A” to equal “B” in present-value terms where “A” is the sum of the present values as of the first Purchase Date for the first Tranche purchased under the Master EPC Agreement, calculated on a quarterly basis, of (a) the Tax Credits allocated to the Class A Member, and (b) the tax savings from deductions and losses that the Class A Member is allocated, and (c) cash that is distributed to the Class A Member, and (d) any indemnity payments by the Class B Member to the Class A Member that substitute for amounts in clauses (a) , (b) , and (c) , and where “B” is the sum of the present values as of the first Purchase Date for the first Tranche purchased under the Master EPC Agreement, calculated on a quarterly basis, of (e) the Capital Contributions that the Class A Member makes to the Company, and (f) the tax detriment from any taxable income or gain allocated to the Class
 
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A Member, and (g) any payment made by the Class A Member to any tax authority after and solely as a result of an audit with respect to any Project or the Company (other than in connection with the incorrectness of a Fixed Tax Assumption, unless such Fixed Tax Assumption is incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents). The tax savings and tax detriment will be calculated assuming the accuracy of the Fixed Tax Assumptions.
“ Investor ” is defined in the preamble to this Agreement.
“ Investor Contribution Cap ” means for all Projects purchased, $***.
“ Investor Indemnified Costs ” means, with respect to any Investor Indemnified Party, subject to ARTICLE IX , any and all damages, losses, claims, liabilities, demands, charges, suits, penalties, costs and reasonable expenses (including (i) court costs and reasonable attorneys’ fees and expenses of one law firm for all Investor Indemnified Parties plus one law firm of local counsel where any relevant Project is located and (ii) any recapture or disallowance of, or inability to claim, the Tax Credits assumed in the Base Case Model) incurred by such Investor Indemnified Parties resulting from or relating to (a) any breach or default by the Class B Member of any representation, warranty, covenant, indemnity or agreement under this Agreement or any other Transaction Document or (b) any claim for fraud, gross negligence or willful misconduct on the part of the Class B Member relating to this Agreement or any other Transaction Document.
“ Investor Indemnified Parties ” means Investor and any Person to whom Investor Transfers any portion of its Class A Membership Interests in accordance with ARTICLE IX , and each of their respective Affiliates and each of their respective shareholders, partners, members, officers, directors, employees, agents and other representatives, and their respective successors and assigns.
“ IRR Report ” is defined in Section 7.1(b) .
“ IRS ” means the Internal Revenue Service or any successor agency.
“ Knowledge of Investor ” means the actual knowledge, after due inquiry, as of the Effective Date, of one or more of the following persons holding the following titles at Investor: Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, and General Counsel.
“ Knowledge of Sponsor Sub ” means the actual knowledge, after due inquiry, as of the Effective Date, of one or more of the following persons holding the following titles at Sponsor: Greg Butterfield (Chief Executive Officer and President), Brendon Merkley (Chief Operating Officer), Paul Dickson (Vice President of Finance), and Dan Black (General Counsel); provided , however , that for matters relating to a Host Customer, “Knowledge” will be limited to the representations and warranties made by such Host Customer in the applicable Customer Agreement without Sponsor Sub undertaking further inquiry or due diligence, unless any one of the persons described above has actual knowledge that a representation or warranty is untrue.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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“ Lien ” means any lien, security interest, mortgage, hypothecation, encumbrance or other restriction on title or property interest.
“ Maintenance Services Agreement ” means that certain Maintenance Services Agreement by and between the Company and MSA Provider, dated as of the date hereof and as amended from time to time.
“ Major Decisions ” means any of the following actions:
(a) Acquisition of any Project (including any Substituted Project) under the Master EPC Agreement, such approval not to be withheld if the conditions of Sections 2.3 and 2.5 of the Master EPC Agreement with respect to that Project have been met in the reasonable determination of the Investor and such approval treated as automatically rejected unless Class A Member informs Managing Member that it approves the acquisition of such PV Systems prior to the expiration of the applicable Review Period or Substituted Project Review Period, as the case may be;
(b) Sale, lease or disposition of any Company assets with a value in excess of $25,000, individually or in the aggregate in any calendar year, other than (i) following the Flip Date, (A) sales of electric power, other than through a Customer Agreement, and (B) the transfer of any related RECs or other environmental credits, (ii) the transfer of an asset that is worn out, obsolete, or no longer necessary or useful for the operation of the applicable Project, (iii) transfer of a Customer Agreement by a Host Customer in accordance with the provisions therein and the Maintenance Services Agreement, (iv) the sale of a PV System to a Host Customer pursuant to such Host Customer’s Customer Agreement or (v) as otherwise set forth in this Agreement;
(c) Any joint venture, merger, consolidation or other business combination of or involving the Company;
(d) Any issuance by the Company of a Guarantee;
(e) Any issuance or redemption by the Company of any Membership Interests or other equity interest of any kind in the Company, or any warrants, rights or options to acquire the same, or any security convertible into any of the foregoing;
(f) Pursuing, initiating or settling any claim, litigation or arbitration with an amount in controversy that equals or exceeds $25,000, individually or in the aggregate in any calendar year, or which includes consent to or award of an injunction, specific performance or other equitable relief;
(g) Incurrence or voluntary prepayment of any Indebtedness on behalf of the Company in excess of $25,000 at any time outstanding in the aggregate; provided , that this limitation shall not apply to any Member Loans incurred in accordance with Section 4.3 ;
 
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(h) Any amendment or cancellation of the Certificate of Formation of the Company or any Transaction Document (other than the Maintenance Services Agreement, which is covered in clause (s) below), if the amendment or termination, in the reasonable estimation of the Managing Member, without due inquiry, would have a Material Adverse Change, individually or collectively, on the Class A Members;
(i) The admission of any additional member in the Company, other than pursuant to the terms of this Agreement;
(j) Making or committing to make any capital expenditures, other than (i) as contemplated by the Customer Agreements or the Maintenance Services Agreement, (ii) expenditures required by law or necessary to prevent or mitigate an emergency situation or to preserve the value of the Project’s property or assets, or (iii) capital expenditures not in excess of $25,000 individually or in the aggregate in any calendar year;
(k) Entering into any new contract on behalf of the Company with any Affiliate of a Member (not including any renewals of existing contracts on the same terms as the expiring agreement) or any extension or replacement of a Transaction Document with the same or another Affiliate of any such Member;
(l) Execution and delivery of instruments requested by MSA Provider under the Maintenance Services Agreement except for ministerial or administrative changes made in the Ordinary Course of Business;
(m) Encumbering or granting any Liens on the assets or rights of the Company other than (in each case) Permitted Liens;
(n) Hiring any employees, entering into or adopting any bonus, profit sharing, thrift, compensation, option, pension, retirement, savings, welfare, deferred compensation, employment, termination, severance or other employee benefit plan, agreement, trust, fund, policy or arrangement for the benefit or welfare of any directors, officers or employees of the Company;
(o) Causing the Company to elect under Treasury Regulations Section 301.7701-3 or any comparable provision of state or local income tax law, to be classified as an association;
(p) Making any tax election other than as provided herein or that is inconsistent with the assumptions contained in the Base Case Model;
(q) Applying for or claiming any grant or Tax credit (including any Tax credit under Section 45 of the Code) that would reduce the amount of the Tax Credits available under Section 48 of the Code;
(r) Entering into any contract or taking any action that in the reasonable estimation of the Class A Member would threaten the availability of Tax Credits or tax depreciation with respect to any PV System assumed in the Base Case Model;
 
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(s) (i) Subject to the proviso in Section 8.2(a)(ii) , (A) materially amending, (B) canceling, suspending, renewing (unless in the case of the Maintenance Services Agreement such renewal is on substantially similar terms and conditions as the Maintenance Services Agreement that is being renewed), terminating or entering into replacement contracts (unless in the case of the Maintenance Services Agreement such replacement is on substantially similar terms and conditions as the Maintenance Services Agreement that is being replaced) for, in each case of subclauses (A) and (B), the Maintenance Services Agreement or the Master EPC Agreement, (ii) assigning, releasing or relinquishing the material rights or obligations of any party to the Maintenance Services Agreement or the Master EPC Agreement, or (iii) resolving any material dispute relating to the Maintenance Services Agreement or the Master EPC Agreement, provided that the materiality qualifier in clause (i) , (ii)  or (iii)  is solely with regard to the Company or all of the Projects taken as a whole;
(t) Lending any funds of the Company to any Person;
(u) Changing, amending or substituting the insurance required to be maintained by the Company pursuant to this Agreement in a manner that would cause such insurance to be materially different from the insurance requirements attached hereto as Exhibit C ;
(v) Changing the Company’s methods of accounting or accounting policies and procedures as in effect on the date hereof, except as required by GAAP, or changing the Independent Accounting Firm;
(w) Hiring counsel to assist in a Tax audit or to represent the Company in a Tax controversy or consenting to any Tax audit adjustment;
(x) Subject to clause (b) , causing the Company to permit (A) possession or control of property of the Company by any Member or (B) the assignment, transfer, sale, lease, pledge or other disposition of rights of the Company in specific property of the Company, for other than a Company purpose or other than for the benefit of the Company;
(y) Changing the assumptions set forth in the Base Case Model or the Tracking Model other than in accordance with the terms of this Agreement;
(z) Making, or causing the Company to make, any advance payments of compensation or other consideration to the Managing Member or any of its Affiliates;
(aa) Commingling the assets of the Company with the funds or other assets of any other Person;
(bb) Taking or filing any action or instituting any proceedings in Bankruptcy on behalf of the Company;
(cc) Dissolving or winding up of the Company;
 
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(dd) Causing the Company to engage in any business or activity that is not within the purpose of the Company, as set forth in its organizational documents, or to change such purpose;
(ee) Adding any new manufacturer to the approved vendors listed on Schedule 13 of the Master EPC Agreement;
(ff) Causing the Company to take any action that could reasonably be expected by Managing Member to result in an event of default, or that would result in the acceleration of any material obligation or termination of any material right, under any Transaction Document;
(gg) Entering into, amending, canceling, suspending, renewing (unless such renewal is on substantially similar terms and conditions as the existing contract) or terminating contracts for goods and services requiring the Company to make expenditures in excess of $25,000 individually or in the aggregate in any calendar year; provided , that this limitation shall not apply to the Company’s engagement agreement with the Independent Accounting Firm for services to be provided by the Independent Accounting Firm as contemplated by this Agreement; and
(hh) Requesting Non-Included System Services under the Maintenance Services Agreement with a value of greater than $25,000 in any calendar year.
“ Manager ” is defined in Section  3.13(b) .
“ Managing Member ” is defined in Section 8.2 .
“ Master EPC Agreement ” means that certain Development, EPC and Purchase Agreement, dated as of the date hereof (as may be amended, restated, supplemented or otherwise modified from time to time), by and among the Company, Developer and Sponsor, and each Transfer Notice and Bill of Sale (as each term is defined in the Master EPC Agreement) thereunder.
“ Material Adverse Change ” means, with respect to any Person, a fact, event or circumstance that, alone or when taken with other events or conditions occurring or existing concurrently with such event or condition, (a) has or is reasonably expected to have a material adverse effect on the business, operations, condition (financial or otherwise), assets, liabilities or properties of such Person, (b) has or is reasonably expected to have any material adverse effect on the validity or enforceability of the Transaction Documents, (c) materially impairs or is reasonably expected to materially impair the ability of such Person to meet or perform its obligations under the Transaction Documents, or (d) has or is reasonably expected to have any material adverse effect on such Person’s rights under the Transaction Documents.
“ Maximum Liability ” means, with respect to a party, $***. For the avoidance of doubt, (a) any indemnification of Sponsor Sub by the Company or any indemnification of the Company by Sponsor Sub shall not be included in calculating whether the Maximum Liability
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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applicable to Sponsor Sub has been or will be exceeded, and (b) any indemnification of the Investor by the Company or any indemnification of the Company by Investor shall not be included in calculating whether the Maximum Liability applicable to Investor has been or will be exceeded.
“ Member ” means any Person executing this Agreement as of the date of this Agreement as a member of the Company or any Person admitted to the Company as a member as provided in this Agreement (each in the capacity of a member of the Company), but does not include any Person who has ceased to be a member of the Company.
“ Member Loan ” means any loan or advance made by a Class A Member or Class B Member, pursuant to Section 4.3 .
“ Member Nonrecourse Debt ” means “partner nonrecourse debt” as defined in Treasury Regulations Section 1.704-2(b)(4).
“ Member Nonrecourse Deduction ” means “partner nonrecourse deduction” as defined in Treasury Regulations Section 1.704-2(i)(2).
“ Membership Interest ” means the entire interest of a Member in the Company, including rights to distributions (liquidating or otherwise), allocations of profits and losses, and to vote, consent or approve or receive information, if any.
“ Minimum Gain Attributable to Member Nonrecourse Debt ” means the amount of minimum gain there is in connection with a Member Nonrecourse Debt, calculated in the manner described in Treasury Regulations Section 1.704-2(i)(3).
“ MSA Provider ” means Vivint Solar Provider, LLC, a Delaware limited liability company, as provider under the Maintenance Services Agreement or any successor thereto.
“ Net Income ” and “ Net Loss ” mean, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such Fiscal Year or other period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss) with the following adjustments:
(a) any income of the Company that is exempt from federal income tax, to the extent not otherwise taken into account in computing Net Income or Net Loss pursuant to this paragraph, shall be added to such taxable income or loss;
(b) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as expenditures under Section 705(a)(2)(B) pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), to the extent not otherwise taken into account in computing Net Income or Net Loss pursuant to this paragraph, shall be subtracted from such taxable income or loss;
(c) in the event the Gross Asset Value of any Company asset is adjusted pursuant to subsections (b) , (c)  or (d)  of the definition of “Gross Asset Value” herein, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss;
 
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(d) gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;
(e) any items that are specially allocated pursuant to the provisions of Section 5.2 and Section 5.3 shall not be taken into account in computing Net Income or Net Loss; and
(f) in lieu of depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation.
“ Nonrecourse Deduction ” means a deduction for spending that is funded out of nonrecourse borrowing by the Company or that is otherwise attributable to a “nonrecourse liability” of the Company within the meaning of Treasury Regulations Section 1.704-2.
“ Notice ” is defined in Section 11.1 .
“ Operations Report ” is defined in Section 7.1(a) .
“ Option Purchase Price ” is defined in Section 9.4(b) .
“ Ordinary Course of Business ” means the ordinary conduct of business consistent with custom and practice for residential solar energy electric generation businesses in the United States (including with respect to quantity and frequency).
“ Percentage Interest ” means the percentage interest shown for a Member in Schedule 4.2(d) as updated from time to time.
“ Permits ” means any license, consent, permit, authorization, requirement, environmental plan, notice, filing, certification, exemption, waiver, tariff, franchise, variance, order, decision, registration, ruling and other approval or permission required under any Applicable Law for the Development of the Project, including as to zoning, road crossing, environmental protection, pollution, sanitation, energy regulation, safety, siting or building, obtained or required to be obtained by or on behalf of the Company from any Governmental Authority.
“ Permitted Encumbrances ” means Liens provided for under the Transaction Documents, liens for Taxes not yet due and payable, to the extent adequate reserves have been made consistent with GAAP, and restrictions on transfer of the Membership Interests under any applicable federal, state or foreign securities law.
 
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“ Permitted Investments ” means any of the following having a maturity of not greater than one year from the date of issuance thereof: (a) readily marketable direct obligations of the government of the United States of America or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the government of the United States of America, (b) insured certificates of deposit of or time deposits with any commercial bank that is a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c) below, is organized under the laws of the United States or any State thereof and has combined capital and surplus of at least $1,000,000,000.00 or (c) commercial paper issued by any corporation organized under the laws of any State of the United States and rated at least “Prime-1” (or the then-equivalent grade) by Moody’s Investors Service, Inc. or “A-1” (or the then-equivalent grade) by Standard & Poor’s Corporation.
“ Permitted Liens ” means (a) liens for taxes not yet due or that are being contested in good faith by appropriate proceedings, to the extent adequate reserves have been made consistent with GAAP, (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, employees’, contractors’, operators’, vendors’ or other similar liens or charges securing the payment of expenses not yet due and payable that are incurred in the Ordinary Course of Business, (c) liens securing obligations or duties (other than Indebtedness) to any Governmental Authority arising in the Ordinary Course of Business (including under licenses and permits held by the Investor and under all Applicable Laws and orders of any Governmental Authority), (d) easements, rights-of-way, restrictions (including zoning restrictions), covenants, licenses, encroachments, protrusions and other similar charges or encumbrances on or with respect to real property that do not secure Indebtedness or materially interfere with the ordinary conduct of the Company’s business, (e) liens incurred or deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment or other social security or to secure performance of statutory obligations, surety bonds, performance bonds and other similar obligations and (f) any other liens agreed to in writing by Sponsor Sub and Investor.
“ Permitted Transfers ” is defined in Section 9.3 .
“ Person ” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, or governmental entity or any department or agency thereof.
“ Placed in Service ” means that all of the following events have occurred with respect to a PV System: (a) the PV System has been installed, tested and shown capable of operating in a reliable and continuous manner for its intended purpose; (b) legal title to and control over the PV System and all components thereof have been conveyed to the Company; and (c) all licenses and permits needed to operate the PV System (including authority from the local utility to commence parallel operation) and to put the PV System to its intended use of using it to generate electricity for sale to a Host Customer have been obtained.
“ Post-Flip Date ” means the later of (a) the Flip Date and (b) the last day of the calendar month in which the Class A Member achieves a Post-Flip Internal Rate of Return equal to or greater than the Post-Flip Target Internal Rate of Return.
 
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“ Post-Flip Internal Rate of Return ” means the discount rate that causes “A” to equal “B” in present-value terms where “A” is the sum of the present values as of the first Purchase Date for the first Tranche purchased under the Master EPC Agreement, calculated on a quarterly basis, of (a) the Tax Credits allocated to the Class A Member, and (b) the tax savings from deductions and losses that the Class A Member is allocated, and (c) cash that is distributed to the Class A Member, and (d) cash received by the Class A Member in connection with the Class B Member’s exercise of the Purchase Option, and (e) any indemnity payments by the Class B Member to the Class A Member that substitute for amounts in clauses (a) , (b) , (c) , and (d) , and where “B” is the sum of the present values as of the first Purchase Date for the first Tranche purchased under the Master EPC Agreement, calculated on a quarterly basis, of (f) the Capital Contributions that the Class A Member makes to the Company, and (g) the tax detriment from (i) any taxable income or gain allocated to the Class A Member, and (ii) the receipt by the Class A Member of cash in connection with the exercise of the Purchase Option, and (h) any payment made by the Class A Member to any tax authority after and solely as a result of an audit with respect to any Project or the Company (other than in connection with the incorrectness of a Fixed Tax Assumption, unless such Fixed Tax Assumption is incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents). The tax savings and tax detriment will be calculated assuming the accuracy of the Fixed Tax Assumptions.
***
“ Post-Flip Target Internal Rate of Return ” means an after-tax Post-Flip Internal Rate of Return of ***%.
***
“ Pre-Flip Period ” means the period commencing on the Effective Date and ending on (and including) the Flip Date.
***
“ Prohibited Transferee ” means any Person which is, or whose Affiliate is, (i) adverse in any pending or threatened action involving any Member (or Affiliate thereof) or the Company (unless the Members, excluding the transferor, have consented to such transferee), (ii) a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or (iii) during the Recapture Period, a Tax Exempt Entity.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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“ Project ” is defined in the Master EPC Agreement.
“ Projected Flip Date ” means April 30, 2020.
“ Prudent Industry Standards ” means the practices, methods, equipment, specifications and standards of safety, as the same may change from time to time, as are used or approved by a significant portion of the residential rooftop distributed solar electric generation industry operating in the applicable Project States in residential rooftop distributed solar electric generating systems or facilities of a type and size similar to the Projects as good, safe and prudent engineering practices in connection with the design, construction, operation, maintenance, repair and use of electrical and other equipment, facilities and improvements of such residential rooftop distributed solar electric generating system or facility, with commensurate standards of safety, performance, dependability, efficiency and economy in each case in light of the facts known and circumstances existing at the time any decision is made or action is taken, that would be expected to accomplish the desired result in a manner materially consistent with Applicable Law, permits, codes, and equipment manufacturer’s recommendations.
“ Purchase Date ” means the date that a Tranche is purchased under the Master EPC Agreement.
“ Purchase Option ” is defined in Section 9.4(a) .
“ Purchased Systems ” is defined in the Master EPC Agreement.
“ PV System ” is defined in the Master EPC Agreement.
“ Quarter ” means a fiscal quarter.
“ REC ” means a renewable energy credit or certificate representing any and all environmental credits, benefits, emissions reductions, offsets and allowances, howsoever entitled, that are created or otherwise arise from a PV System’s generation of electricity, including but not limited to solar renewable energy certificates that may be used in connection with a state’s renewable portfolio standard and in each case resulting from the avoidance of the emission of any gas, chemical or other substance attributable to the generation of solar energy by the PV System, but excluding any and all federal, state and local tax attributes (including Tax Credits).
“ Recapture Period ” means the period commencing on the Effective Date and ending on the fifth anniversary of the last date that a Project owned by the Company is Placed in Service.
“ Reference Rate ” means the rate of interest published in The Wall Street Journal as the prime lending rate or “prime rate”, with adjustments in that varying rate to be made on the same date as any change in that rate is so published.
 
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“ Removal Event ” means the occurrence of any of the following events:
(a) any representation or warranty made by the Class B Member or the Managing Member in this Agreement or any Transaction Document shall have been false or misleading, and such breach or default has or could reasonably be expected to have a Material Adverse Change on the Company or the Class A Member as reasonably determined by the Class A Member;
(b) any breach or default by the Class B Member, the Managing Member or the Company under any covenant or obligation under a Transaction Document to which it is a party, and such breach or default has or could reasonably be expected to have a Material Adverse Change on the Company or the Class A Member as reasonably determined by the Class A Member (unless the action or inaction that has led directly to such breach or default has been directed, accepted or approved by the Class A Member or Investor in writing);
(c) the occurrence and continuance of any event of default as to the Class B Member, the Managing Member or the Company, after any applicable notice and cure period has expired, under any Transaction Document to which such Person is a party, and such event of default has or could reasonably be expected to have a Material Adverse Change on the Company or the Class A Member as reasonably determined by the Class A Member (unless the action or inaction that has led directly to such event of default has been directed, accepted or approved by the Class A Member in writing);
(d) the Class B Member, the Managing Member, the Company or the Project violates any material Applicable Law (unless the action or inaction that has led directly to such violation has been directed, accepted or approved by Class A Member or Investor in writing), and such violation has or could reasonably be expected to have a Material Adverse Change on the Company;
(e) the Managing Member, Class B Member or the Company engages in fraud, willful misconduct or gross negligence, or breaches a fiduciary duty;
(f) any Bankruptcy or insolvency of the Class B Member, the Managing Member or the Company, whether voluntary or involuntary, and in the case of an involuntary Bankruptcy proceeding, not stayed or dismissed within sixty (60) days, or the foreclosure or involuntary transfer of Membership Interests held by the Managing Member;
(g) the Managing Member ceases to be an Affiliate of the Class B Member; or
(h) a failure by the Managing Member to enforce the rights of the Company under any Transaction Document.
“ Representatives ” means, with respect to any Person, the managing member(s) and the officers, directors, employees, representatives or agents (including investment bankers, financial advisors, attorneys, accountants, brokers and other advisors) of such Person, to the extent that such officer, director, employee, representative or agent of such Person is acting in his or her capacity as an officer, director, employee, representative or agent of such Person.
 
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“ Required Majority Vote ” is defined in Section 8.3(b) .
“ Restricted Investor Transferee ” means a Person who is (a) a direct competitor of Sponsor or its Affiliates in the residential or commercial PV System design, installation, finance or operation and maintenance industry, or any other then-business segment of Sponsor or its Affiliates (including but not limited to Sponsor’s home automation, security and wireless internet business segments) or (b) an Affiliate of any such direct competitor.
***
“ Restricted Transferee ” means, ***, and, with respect to a Transfer by Investor, a Restricted Investor Transferee.
“ Review Period ” is defined in the Master EPC Agreement.
“ Securities Act ” means the Securities Act of 1933, as amended.
“ Sharing Percentage ” is defined in Section 5.1 .
“ Shortfall Funding Date ” is defined in Section 4.3(a) .
“ Shortfall Notice ” is defined in Section 4.3(a) .
“ Sponsor ” means Vivint Solar, Inc.
“ Sponsor Indemnified Costs ” means, with respect to any Sponsor Indemnified Party, subject to ARTICLE IX , any and all damages, claims, liabilities, demands, charges, suits, penalties, costs, and reasonable expenses (including court costs and reasonable attorneys’ fees and expenses of one law firm for all Sponsor Indemnified Parties plus one law firm of local counsel for each Project State in which relevant Projects are located) incurred by such Sponsor Indemnified Parties resulting from or relating to any Third Party Claim to the extent resulting from or relating to (a) any breach or default by Investor or Class A Member of any representation, warranty, covenant, indemnity or agreement under this Agreement or any other Transaction Document or (b) any claim for fraud, gross negligence or willful misconduct on the part of Investor or Class A Member relating to this Agreement or any other Transaction Document.
“ Sponsor Indemnified Parties ” means Sponsor Sub and any Person to whom Sponsor Sub Transfers its Membership Interests in accordance with ARTICLE IX , and each of their respective Affiliates and each of their respective shareholders, partners, members, officers, directors, employees, agents and other representatives, and their respective successors and assigns.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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“ Sponsor Sub ” is defined in the preamble to this Agreement.
“ Subsidiary ” means, with respect to any Person, any corporation, partnership, limited liability company, joint venture or other entity of which such Person (either alone or through or together with any other Person pursuant to any agreement, arrangement, contract or other commitment) owns, directly or indirectly, 50% or more of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.
“ System Purchase Price ” is defined in the Master EPC Agreement.
“ Target Internal Rate of Return ” means an after-tax Internal Rate of Return of ***%.
“ Tax ” or “ Taxes ” (and with correlative meaning, “ Taxable ” and “ Taxing ”) means:
(a) any taxes, customs, duties, charges, fees, levies, penalties or other assessments imposed by any federal, state, local or foreign taxing authority, including, but not limited to, income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, net worth, employment, occupation, payroll, withholding, social security, alternative or add-on minimum, ad valorem, transfer, stamp, or environmental tax, or any other tax, custom, duty, fee, levy or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax, or additional amount attributable thereto; and
(b) any liability for the payment of amounts with respect to payment of a type described in clause (a) , including as a result of being a member of an affiliated, consolidated, combined or unitary group, as a result of succeeding to such liability as a result of merger, conversion or asset transfer or as a result of any obligation under any tax sharing arrangement or tax indemnity agreement.
“ Tax Credits ” means energy credits under Section 48 of the Code or any successor to such section.
“ Tax Exempt Entity ” means (a) a “tax-exempt entity” or “tax-exempt controlled entity” as those terms are defined in Section 168(h) of the Code, (b) a Person described in Section 50(b)(3) or (4) of the Code, (c) a Person whose ownership of a Membership Interest would result in a disallowance or reduction of Tax Credits pursuant to Section 50(d) of the Code or (d) any other Person whose ownership of a Membership Interest would result in a recapture or disallowance of, or inability to claim, the Tax Credits or accelerated Depreciation deductions assumed in the Base Case Model.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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“ Tax Loss Contest ” is defined in Section 7.7(c) .
“ Tax Matters Partner ” is defined in Section 7.7(a) .
“ Tax Return ” means any return, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including any IRS Form K-1 issued to Members by the Company, information return, claim for refund, amended return or declaration of estimated Tax.
“ Third Party Claim ” means any claim, action or proceeding made or brought by any Person who is not a Member or an Affiliate of a Member.
“ Third Party Penalty Claim ” is defined in Section 9.8(c) .
“ Tracking Model ” means a computer model in the form of the Base Case Model that reflects actual results of the Company using the calculation conventions in Section 6.5 , but with each of the Fixed Tax Assumptions remaining unchanged (except to the extent a Fixed Tax Assumption is incorrect due to a breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents).
“ Tranche ” is defined in the Master EPC Agreement.
“ Transactions ” means the transactions described in the Transaction Documents.
“ Transaction Documents ” means this Agreement, the Guaranty Agreement, the Master EPC Agreement and the Maintenance Services Agreement.
“ Transfer ” is defined in Section 9.1 .
“ Treasury Regulations ” means the federal income tax regulations (including temporary regulations) promulgated under the Code by the United States Department of Treasury, as such regulations may be amended from time to time. All references herein to specific sections of the Treasury Regulations shall be deemed also to refer to any corresponding provisions of succeeding regulations.
“ True-Up Base Case Model ” is defined in the Master EPC Agreement.
“ True-Up Report ” is defined in the Master EPC Agreement.
“ UCC ” means the Uniform Commercial Code of any applicable jurisdiction.
Section 1.2. Other Definitional Provisions .
(a) As used in this Agreement and in any certificate or other documents made or delivered pursuant hereto or thereto, financial and accounting terms not defined in this Agreement or in any such certificate or other document, and financial and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under GAAP. To the extent that the
 
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definitions of financial and accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Agreement or in any such certificate or other document shall control.
(b) The words “hereof”, “herein”, “hereunder”, and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Section references contained in this Agreement are references to Sections in this Agreement unless otherwise specified. The term “including” shall mean “including without limitation”.
(c) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.
(d) Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, restated, supplemented or otherwise modified and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein.
(e) Any references to a Person are also to its permitted successors and assigns.
ARTICLE II
CONTINUATION; OFFICES; TERM
Section 2.1. Formation of the Company .
The Members hereby acknowledge the formation of the Company as a limited liability company pursuant to the Act, the Certificate of Formation and this Agreement.
Section 2.2. Name, Office and Registered Agent .
(a) The name of the Company shall be “Vivint Solar Aaliyah Project Company, LLC” or such other name or names as may be agreed to by the Members from time to time. The principal office of the Company shall be c/o Vivint Solar, Inc., 4931 N 300 W, Provo, UT 84604. The Members may at any time change the location of such office to another location; provided that the Managing Member gives prompt written notice of any such change to the registered agent of the Company.
(b) The registered office of the Company in the State of Delaware is located at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle. The registered agent of the Company for service of process at such address is The Corporation Trust Company. The registered office and registered agent may be changed by the Managing Member at any time in accordance with the Act; provided that the Managing Member gives prompt written notice of any such change to all Members. The registered agent’s primary duty as such is to forward to the Company at its principal office and place of business any notice that is served on it as registered agent.
 
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Section 2.3. Purpose; No Partnership Intended .
(a) The nature of the business or purpose to be conducted or promoted by the Company is: (i) to engage in the transactions contemplated by the Transaction Documents and Customer Agreements; (ii) to engage in the acquisition, construction, installation, lease, ownership and sale, and the operation, management, maintenance and financing of the Projects and all other rights and assets necessary for the ownership and operation of such Projects and (iii) to engage in any lawful act or activity, enter into any agreement and to exercise any powers permitted to limited liability companies formed under the Act that are incidental to or necessary, suitable or convenient for the accomplishment of the purposes specified above.
(b) The Company shall exist for the purposes and business specified in Section 2.3(a) and, other than for purposes of determining the status of the Company under the Code and the applicable Treasury Regulations and under any applicable state, municipal or other income tax law or regulation, this Agreement shall not be deemed to create a partnership under the Delaware Revised Uniform Partnership Act, company, joint venture or other arrangement among the Members with respect to any actions whatsoever other than the purposes and business specified in Section 2.3(a) and the activities related thereto.
Section 2.4. Term .
The term of the Company commenced on the Effective Date and shall continue indefinitely.
Section 2.5. Organizational and Fictitious Name Filings; Preservation of Limited Liability .
Prior to the Company’s conducting business in any jurisdiction other than Delaware, the Managing Member shall, on behalf of the Company, register the Company as a foreign limited liability company and file such fictitious or trade names, statements or certificates in such jurisdictions and offices as necessary or appropriate for the conduct of the Company’s business. The Managing Member shall take any and all other actions as may be reasonably necessary or appropriate to perfect and maintain the status of the Company as a limited liability company under the laws of Delaware and any other state or jurisdiction other than Delaware in which the Company engages in business and continue the Company as a limited liability company and to protect the limited liability of the Members as contemplated by the Act.
 
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ARTICLE III
RIGHTS AND OBLIGATIONS OF THE MEMBERS
Section 3.1. Members; Membership Interests .
(a) The names of the Members, their addresses, contact information and Membership Interests held are listed on Annex I . Annex I shall be amended from time to time by the Managing Member without requiring the consent of any Member to reflect the change in a Member’s name, address or contact information, the withdrawal of any Member, the admission of any additional Member, Transfers of Membership Interests or the issuance of additional Membership Interests, in each case pursuant to and in accordance with the terms and conditions of this Agreement. The Managing Member shall, upon each amendment to Annex I , provide each Member, on a confidential basis for informational purposes, with a copy of such amended Annex I .
(b) The Membership Interests comprise one hundred (100) Class A Membership Interests (the “ Class A Membership Interests ”) and one hundred (100) Class B Membership Interests (the “ Class B Membership Interests ”).
(c) The Class A Membership Interests and the Class B Membership Interests shall (i) have the rights and obligations ascribed to such Membership Interests in this Agreement and the Act; (ii) be recorded in a register of Membership Interests, which register the Managing Member shall maintain; (iii) be transferable only on recordation of such Transfer in the register of Membership Interests, which recordation the Managing Member shall make, upon compliance with the provisions of ARTICLE IX ; and (iv) be personal property. The Members hereby specify, acknowledge and agree that all Membership Interests are securities governed by Article 8 and all other provisions of the UCC, and pursuant to the terms of Section 8-103(c) of the UCC such interests shall be “securities” for all purposes under such Article 8 and under all other provisions of the UCC. All Membership Interests shall be represented by certificates substantially in the form attached hereto as Exhibit A , shall be recorded in a register thereof maintained by the Company, and shall be subject to such rules for the issuance thereof in compliance with this Agreement, as the Managing Member may from time to time determine. The Managing Member is expressly authorized to execute the certificates on behalf of the Company.
(d) The Company shall be entitled to treat the registered holder of a Membership Interest, as shown in the register of Membership Interests referred to in Section 3.1 of this Agreement, as a Member for all purposes of this Agreement, except that the Managing Member may record in the register of Membership Interests any security interest of a secured party pursuant to any security interest permitted by this Agreement.
(e) If a Member Transfers all of its Membership Interest to another Person pursuant to and in accordance with the terms set forth in ARTICLE IX , the transferor shall automatically cease to be a Member.
Section 3.2. Actions by the Members .
(a) Except as otherwise permitted by this Agreement (including Section 3.2(e) below), all actions of the Members shall be taken at meetings of the Members which may be called by any Member for any reason and shall be called by the Managing Member within ten (10) calendar days following the written request of a Member. The Members may conduct any Company business at any such meeting that is permitted under the Act or this Agreement.
 
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Meetings shall be at a reasonable time and place. Accurate minutes of any meeting shall be taken and filed with the minute books of the Company. Following each meeting, the minutes of the meeting shall be sent promptly to each Member.
(b) Members may participate in any meeting of the Members by means of conference telephone or other communications equipment so that all persons participating in the meeting can hear each other or by any other means permitted by law. Such participation shall constitute presence in person at such meeting.
(c) The presence in person or by proxy of Members owning more than 50% of the aggregate Class A Membership Interests and more than 50% of the aggregate Class B Membership Interests shall constitute a quorum for purposes of transacting business at any meeting of the Members.
(d) Written notice stating the place, day and hour of the meeting of the Members, and the purpose or purposes for which the meeting is called, shall be delivered by or at the direction of the Managing Member, to each Member of record entitled to vote at such meeting not less than five (5) Business Days nor more than thirty (30) calendar days prior to the meeting. Notwithstanding the foregoing, meetings of the Members may be held without notice so long as all the Members are present in person or by proxy.
(e) Any action may be taken by the Members without a meeting if such action is authorized or approved by the written consent of Members representing sufficient Membership Interests to authorize or approve such action pursuant to this Agreement at a meeting of all of the Members. The Members may conduct any Company business or take any action required of Members under this Agreement through written consent. Where action is authorized by written consent no prior notice is required, and no meeting of Members needs to be called or noticed. A copy of any action taken by written consent must be sent promptly to all Members, and all actions by written consent shall be filed with the minute books of the Company.
(f) The Managing Member is hereby authorized by the Members to take any and all actions on behalf of the Company subject, in the case of Major Decisions and any transaction with an Interested Member, to the approval requirements in Section 8.3 .
(g) The voting power of each Membership Interest for purposes of any vote, consent or approval of Members required under this Agreement or the Act shall be as follows:
(i) each Class A Membership Interest shall entitle its holder to one vote;
(ii) each Class B Membership Interest shall entitle its holder to one vote; and
(iii) each Member shall cast all of its votes of a particular class as one block of votes.
 
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Section 3.3. Management Rights
Except as otherwise provided under Section 8.3(d) , no Member, in its capacity as such, other than the Managing Member, shall have any right, power or authority to take part in the management or control of the business of, or transact any business for, the Company, to sign for or on behalf of the Company or to bind the Company in any manner whatsoever. Except as otherwise provided herein, the Managing Member shall not hold out or represent to any third party that any other Member has any such power or right or that any Member is anything other than a member in the Company. A Member shall not be deemed to be participating in the control of the business of the Company by virtue of its possessing or exercising any rights set forth in this Agreement or the Act or any other agreement relating to the Company. No Member or its Affiliates shall have any duty, fiduciary or otherwise, to refrain from engaging in the same or similar activities or lines of business as the Company, the Members or any Affiliates thereof, and no Member or any Affiliate thereof shall be liable to the Company, any Member or any Affiliate thereof by reason of any such activities.
Section 3.4. Other Activities .
Notwithstanding any duty otherwise existing at law or in equity, any Member may engage in or possess an interest in other business ventures of every nature and description, independently or with others, even if such activities compete directly with the business of the Company, and neither the Company nor any of the Members will have any rights by virtue of this Agreement in and to such independent ventures or any income, profits or property derived from them.
Section 3.5. No Right to Withdraw .
Subject to Section 9.3 and Section 9.4 , no Member will have any right to voluntarily resign or otherwise withdraw from the Company without the prior written consent of all remaining Members of the Company which consent may be given or withheld in their sole and absolute discretion.
Section 3.6. Limitation of Liability of Members .
(a) Notwithstanding anything to the contrary set forth in this Agreement or under Applicable Law, neither the Managing Member nor any other Member will be liable to the Company, any Member (including the Managing Member), or any other equity holder in or creditor of the Company for any action taken by or on behalf of the Company, except (i) for such actions as constitute gross negligence, fraud or willful misconduct of such Member, and (ii) as otherwise provided in ARTICLE IX . Without limiting or reducing the foregoing, each Member’s liability will be limited as set forth in the Act. Except as otherwise required by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, will be the debts, obligations and liabilities solely of the Company, and the Members of the Company will not be obligated personally for any of such debts, obligations or liabilities solely by reason of being a Member of the Company.
(b) Each of the Members will be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any other Person who is a Member, or any officer or employee of the
 
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Company, or by any other individual as to matters the Members reasonably believe are within such other individual’s professional or expert competence, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits or losses of the Company or any other facts pertinent to the existence and amount of assets from which distribution to the Members might properly be paid.
(c) To the extent that, at law or in equity, a Member, in its capacity as a member or manager of the Company or otherwise, has duties (including fiduciary duties) or liabilities relating thereto to the Company or to any Member or other Person bound by this Agreement more expansive than those set forth in Section 3.6(a) , such duties and liabilities are hereby limited to the extent permitted under the Act to those set forth in Section 3.6(a) ; provided that this Section 3.6(c) or Section 3.6(a) will not be construed to limit obligations or liabilities expressly provided for in this Agreement (including the obligations with respect to Capital Contributions) or any other Transaction Document; provided , further , that these limitations shall not apply to Removal Events or a breach by any Member of its respective representations or covenants set forth herein. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Member, in its capacity as a member or manager of the Company or otherwise, otherwise existing at law or in equity, are agreed by the Members to replace such other duties and liabilities of such Member.
Section 3.7. No Liability for Deficits .
Except to the extent otherwise provided by law with respect to third-party creditors of the Company, none of the Members will be liable to the Company for any deficit in its Capital Account, nor will such deficits be deemed assets of the Company.
Section 3.8. Company Property .
All property owned by the Company, whether real or personal, tangible or intangible and wherever located, will be deemed to be owned by the Company, and no Member, individually, will have any ownership of such property.
Section 3.9. Retirement, Resignation, Expulsion, Incompetency, Bankruptcy or Dissolution of a Member .
The retirement, resignation, expulsion, Bankruptcy or dissolution of a Member will not, in and of itself, dissolve the Company. The successors in interest to the bankrupt Member shall, for the purpose of settling the estate, have all of the rights of such Member, including the same rights and subject to the same limitations that such Member would have had under the provisions of this Agreement to Transfer its Membership Interest. A successor in interest to a Member will not become a substituted Member except as provided in this Agreement.
Section 3.10. Withdrawal of Capital .
No Member will have the right to withdraw capital from the Company or to receive or demand distributions (except as contemplated under Section 4.1(b) and except as to
 
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distributions to which it is entitled under ARTICLE VI ) or return of its Capital Contributions until the Company is dissolved in accordance with this Agreement and applicable provisions of the Act. No Member will be entitled to demand or receive any interest on its Capital Contributions.
Section 3.11. Representations and Warranties .
(a) The Sponsor Sub, in its capacity as Class B Member and Managing Member, represents and warrants to the Company and each other Member, that all of the statements in this Section 3.11 shall be true and correct as of the Effective Date:
(i) Organization, Good Standing , Etc . Sponsor Sub is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation. Sponsor Sub has the limited liability company power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Sponsor Sub is duly qualified to do business and is in good standing under the laws of each jurisdiction that its business requires it to be so qualified, except where the failure to be so qualified would not adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Sponsor Sub or the Company.
(ii) Authority . Sponsor Sub has the limited liability company power and authority to enter into the Transaction Documents to which it is a party, to perform its obligations under such Transaction Documents and to consummate the transactions contemplated thereby. The execution and delivery by Sponsor Sub of the Transaction Documents to which it is a party and the consummation by Sponsor Sub of the transactions contemplated thereby have been duly and validly authorized by all necessary action required on the part of Sponsor Sub, and such Transaction Documents have been duly and validly executed and delivered by Sponsor Sub. Each of the Transaction Documents to which Sponsor Sub is a party constitutes the legal, valid and binding obligation of Sponsor Sub, enforceable against it in accordance with the terms, subject to the effects of Bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors’ rights and remedies generally and to general principles of equity.
(iii) No Conflicts . The execution and delivery by Sponsor Sub of the Transaction Documents to which it is a party and the performance by Sponsor Sub of its obligations under such Transaction Documents will not (A) violate any constitution, statute, law, ordinance, judgment, settlement, writ, regulation, rule, injunction, order, decree, ruling, charge or other restriction of any Governmental Authority having jurisdiction, (B) conflict with or cause a breach of any provision in the organizational documents of Sponsor Sub, or (C) cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, note, bond, mortgage, indenture, agreement, license, intellectual property license or right, instrument, decree, judgment or other arrangement to which Sponsor Sub is a party or under which any of them is bound or to which any of their assets is subject (or result in the imposition of a security interest or encumbrance upon any such assets), except (in the case of clauses (A)  and  (C) ) for any that would not adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Sponsor Sub or the Company.
 
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(iv) No Consent . All consents, approvals and filings then required to be obtained or made by Sponsor Sub to execute, deliver and perform the Transaction Documents to which it is a party shall have been obtained or made and shall be in full force and effect.
(v) Absence of Litigation . There are no pending or, to the Knowledge of Sponsor Sub, threatened claims, disputes, governmental investigations, suits, actions (including, without limitation, non-judicial real or personal property foreclosure actions), arbitrations, legal, administrative or other proceedings of any nature, domestic or foreign, criminal or civil, at law or in equity, of, in, or before any Governmental Authority or before any arbitrator, and Sponsor Sub is not subject to any outstanding injunction, judgment, order, decree, ruling or charge, other than in each case any such instance that would not reasonably be expected to adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Sponsor Sub or the Company.
(vi) Acknowledgment . Sponsor Sub acknowledges that, except with respect to the representations and warranties expressly made by Investor and the Company in the Transaction Documents, neither Investor nor the Company has made any representation or warranty, either express or implied, under the Transaction Documents. Without limiting the foregoing, Sponsor Sub acknowledges that neither Investor nor the Company has made any representation or warranty with respect to Sponsor Sub’s, or the Company’s, eligibility to claim investment tax credits or the availability of other tax benefits or savings except as expressly set forth herein.
(vii) Accredited Investor . Sponsor Sub is an “Accredited Investor” as such term is defined in Regulation D under the Securities Act. It has had a reasonable opportunity to ask questions of and receive answers from Investor concerning (A) Investor, (B) the Company, and (C) the Class B Membership Interests, and all such questions have been answered to the full satisfaction of Sponsor Sub. Sponsor Sub understands that the Class B Membership Interests have not been registered under the Securities Act in reliance on an exemption therefrom, and that the Class B Membership Interests must be held indefinitely unless the sale thereof is registered under the Securities Act, or an exemption from registration is available thereunder, and that Investor is under no obligation to register the Membership Interests. Sponsor Sub is acquiring the Class B Membership Interests for its own account and not for the account of any other person and not with a view to distribution or resale to others.
(viii) Taxes .
(A) Sponsor Sub is an entity disregarded as separate from its owner for U.S. federal tax purposes, and such owner (I) is a “United States person” within the meaning of Section 7701(a)(30) of the Code, and (II) is not subject to withholding under Section 1445 or Section 1446 of the Code.
 
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(B) No Taxes shall be imposed on the Company as a result of any obligation under any tax sharing arrangement, tax indemnity agreement or other similar contract entered into by the Sponsor Sub, the Company or any of their Affiliates prior to the Effective Date.
(C) The Company is a newly-formed entity that has not yet filed and has not yet been required to file any Tax Returns.
(D) No Person has extended or waived the application of any statute of limitations of any jurisdiction regarding the assessment or collection of any Tax of or with respect to the Company and no power of attorney has been granted by or with respect to the Company with regard to any matters relating to Taxes.
(E) No Taxes of or with respect to the Company are being contested, and there are no audits, claims, assessments, levies, administrative or judicial proceedings pending, threatened, proposed (tentatively or definitely) or contemplated against, or regarding Taxes of or with respect to, the Company.
(F) Immediately prior to the Effective Date the Company was a “disregarded entity” for federal income tax purposes and had been such an entity since it was formed. No election has been filed to treat the Company as a corporation for federal, state or local income tax purposes.
(G) The Company has no subsidiaries.
(H) The participation of Sponsor Sub as a Member will not cause any part of the assets of the Company to be characterized as “tax exempt use property” within the meaning of Section 168(h) of the Code and will not cause the Company to be an entity to which the provisions of Section 46(f) of the Code, as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990, applies.
(b) The Managing Member makes the following additional representations and warranties as to the Company to each other Member as of the Effective Date:
(i) Assets and Liabilities . The Company is not a party to any contracts or agreements other than as contemplated herein. Prior to the Company’s execution and delivery of the Transaction Documents to which the Company is a party, it had no liabilities. It has no debts or other liabilities other than as contemplated in the Transaction Documents or the Customer Agreements.
(ii) Employee Matters . The Company has no employees and has not maintained, sponsored, administered or participated in any employee benefit plan or arrangement.
 
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(c) Investor makes the following representations and warranties to the Company and each other Member as of the Effective Date:
(i) Organization, Good Standing, Etc . Investor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Investor has the corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Investor is duly qualified to do business and is in good standing under the laws of each jurisdiction that its business requires it to be so qualified, except where the failure to be so qualified would not adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Investor or the Company.
(ii) Authority . Investor has the corporate power and authority to enter into the Transaction Documents to which it is a party, to perform its obligations under such Transaction Documents and to consummate the transactions contemplated thereby. The execution and delivery by Investor of the Transaction Documents to which it is a party and the consummation by Investor of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action required on the part of Investor, and such Transaction Documents have been duly and validly executed and delivered by Investor. Each of the Transaction Documents to which Investor is a party constitutes the legal, valid and binding obligation of Investor, enforceable against it in accordance with the terms, subject to the effects of Bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors’ rights and remedies generally and to general principles of equity.
(iii) No Conflicts . The execution and delivery by Investor of the Transaction Documents to which it is a party and the performance by Investor of its obligations under such Transaction Documents will not (A) violate any constitution, statute, law, ordinance, judgment, settlement, writ, regulation, rule, injunction, order, decree, ruling, charge or other restriction of any Governmental Authority having jurisdiction, (B) conflict with or cause a breach of any provision in the organizational documents of Investor, or (C) cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, note, bond, mortgage, indenture, agreement, license, intellectual property license or right, instrument, decree, judgment or other arrangement to which Investor is a party or under which it is bound or to which any of its assets is subject (or result in the imposition of a security interest or encumbrance upon any such assets), except (in the case of clauses (A)  and  (C) ) for any that would not reasonably be expected to adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Investor or the Company.
 
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(iv) No Consent . All consents, approvals and filings then required to be obtained or made by Investor to execute, deliver and perform the Transaction Documents to which it is a party shall have been obtained or made and shall be in full force and effect.
(v) Absence of Litigation . There are no pending or, to the Knowledge of Investor, threatened claims, disputes, governmental investigations, suits, actions (including, without limitation, non-judicial real or personal property foreclosure actions), arbitrations, legal, administrative or other proceedings of any nature, domestic or foreign, criminal or civil, at law or in equity, of, in, or before any Governmental Authority or before any arbitrator, and Investor is not subject to any outstanding injunction, judgment, order, decree, ruling or charge, other than in each case any such instance that would not reasonably be expected to adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Investor or the Company.
(vi) Accredited Investor . Investor is an “Accredited Investor” as such term is defined in Regulation D under the Securities Act. It has had a reasonable opportunity to ask questions of and receive answers from Sponsor Sub concerning (A) the Company, and (B) the Class A Membership Interests, and all such questions have been answered to the full satisfaction of Investor. Investor understands that the Class A Membership Interests have not been registered under the Securities Act in reliance on an exemption therefrom, and that the Class A Membership Interests must be held indefinitely unless the sale thereof is registered under the Securities Act, or an exemption from registration is available thereunder, and that Investor is under no obligation to register the Membership Interests. Investor is acquiring the Class A Membership Interests for its own account and not for the account of any other person and not with a view to distribution or resale to others.
(vii) Information and Investment Intent . Investor recognizes that investment in the Membership Interests involves substantial risks. It acknowledges that any financial projections that may have been provided to it are based on assumptions of future operating results developed by Sponsor Sub and Sponsor Sub’s advisers and, therefore, represent their best good faith estimate of future results based on assumptions about certain events (some of which are beyond the control of Sponsor Sub and the Company). It understands that no assurances or representations can be given that the actual results of the operations of the Company will conform to the projected results for any period. It has relied solely on its own legal, tax and financial advisers for its evaluation of an investment in the Membership Interests and not on the advice of Sponsor Sub or Company or any of their respective legal, tax or financial advisers (with the exception of Sponsor Sub’s representations, on which Investor has relied and will rely).
(viii) Acknowledgment . Investor acknowledges that, except with respect to the representations and warranties expressly made by Sponsor Sub and the Company in the Transaction Documents, neither Sponsor Sub nor the Company has made any representation or warranty, either express or implied, under the Transaction Documents. Without limiting the foregoing, Investor acknowledges that neither Sponsor Sub nor the Company has made any representation or warranty with respect to Investor’s or the Company’s eligibility to claim investment tax credits or the availability of other tax benefits or savings, except as specifically provided herein.
 
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(ix) Government Regulation . Investor is not subject to regulation under the Federal Power Act and is not subject to regulation as an “electric utility,” under applicable state law. No governmental approvals are required for Investor to acquire the Class A Membership Interests.
(x) Domestic Status . Investor (A) is a corporation for U.S. federal tax purposes, (B) is a “United States person” within the meaning of Section 7701(a)(30) of the Code and (C) is not subject to withholding under Section 1445 or Section 1446 of the Code.
(xi) Tax Character . The participation of Investor as a Member will not cause any part of the assets of the Company to be characterized as “tax-exempt use property” within the meaning of Section 168(h) of the Code and will not cause the Company to be an entity to which the provisions of Section 46(f) of the Code, as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990, applies.
Section 3.12. Other Covenants .
(a) United States Person . Each Member covenants to the Company and each other Member that it (or, if it is an entity disregarded as separate from its owner for U.S. federal tax purposes, its owner for such purposes) will remain a “United States person” within the meaning of Section 7701(a)(30) of the Code and will not be subject to withholding under Section 1446 of the Code.
(b) Tax Character . Each Member covenants to the Company and each other Member that it is and will remain for federal income tax purposes a corporation (and not an “S-corporation”) that is not a Tax Exempt Entity, a partnership or a disregarded entity; provided , however , if, for federal income tax purposes, a Class B Member is a partnership or a disregarded entity, then each beneficial owner of such Class B Member (or if such beneficial owner is a partnership or disregarded entity, then each beneficial owner of such partnership or disregarded entity) is and will remain an individual or corporation (and not a “S-corporation”, partnership or disregarded entity) that is not a Tax Exempt Entity. The participation of such Member as a Member will not cause any part of the assets of the Company to be characterized as “tax-exempt use property” within the meaning of Section 168(h) of the Code and will not cause the Company to be an entity to which the provisions of Section 46(f) of the Code, as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990, applies.
(c) Sources of Funding for Purchase of Projects . The sole sources of funding for the purchase of the Projects by the Company shall be the Capital Contributions of the Members.
 
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Section 3.13. Removal of Managing Member .
(a) Within ten (10) Business Days after the occurrence of a Removal Event, the Managing Member shall give the Class A Member written notice thereof. If a Removal Event occurs, the Class A Member is entitled to remove the Managing Member by giving sixty (60) days’ written notice to the Managing Member of such removal, which shall take effect upon the expiration of such sixty (60)-day period unless the Managing Member cures such Removal Event within such sixty (60)-day period (and as a result of such cure such Removal Event shall be deemed not to have occurred and the Managing Member will not be subject to removal as Managing Member as a result of such Removal Event).
(b) If the Managing Member is so removed pursuant to Section 3.13(a) , the Class A Member shall elect a Person to succeed to all the rights, and to perform all of the obligations set forth for the Managing Member hereunder (the “ Manager ”), subject to the Company and/or the Manager obtaining any necessary prior governmental approvals. The Person selected as the Manager shall (A) be either (i) an entity that, within the preceding six (6) years has owned or operated for a continuous period of at least three (3) years solar photovoltaic systems with an aggregate electricity output of at least 20 megawatts, or (ii) such other entity which is approved by the Class A Member (such approval not to be unreasonably withheld or delayed) and (B) not be a direct competitor of the Managing Member (or any of its Affiliates). The entity chosen as Manager shall execute a counterpart to this Agreement.
ARTICLE IV
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; MEMBER LOANS
Section 4.1. Capital Contributions .
(a) The Members shall make Capital Contributions to the Company on the Effective Date in the amounts shown in Schedule 4.2(d) . In the case of Capital Contributions to fund payments required to be made on a Purchase Date under the Master EPC Agreement for a particular Tranche, the Class A Member shall contribute, subject to Section 4.1(c) , that amount, as determined pursuant to the Base Case Model for such Tranche, that will allow the Class A Member to reach the applicable Target Internal Rate of Return by the Projected Flip Date. Notwithstanding the foregoing, in no event shall the Class A Members contribute more than ***% of a payment required to be made under the Master EPC Agreement for a particular Tranche. The Class B Member shall make a Capital Contribution for the remainder of such payments required to pay the Net Purchase Price payable on that Purchase Date.
(b) If the True-Up Report delivered under the Master EPC Agreement indicates that the System Purchase Price for all Purchased Systems has left a balance owed to Developer, then, subject to Section 4.1(c) , the Class A Member shall contribute the amount the True-Up Base Case Model projects will allow the Class A Member to reach its Target Internal Rate of Return by the Projected Flip Date (but in no event more than ***% of the amount owed to Developer), and the Class B Member shall make a Capital Contribution for the remainder. If the True-Up Report indicates that the System Purchase Price for all Purchased Systems has left a credit owed to the Company, then upon receipt of the refund from Developer, the Company shall
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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distribute the refund, as a return of capital, to the Class A Member up to the amount the True-Up Base Case Model projects will allow the Class A Member to reach its Target Internal Rate of Return by the Projected Flip Date, and the Company shall distribute the remainder of the refund to the Class B Member as a return of capital. For the avoidance of doubt, distributions made to Members under this Section 4.1(b) shall not reduce or have any effect on the Members’ Capital Contributions.
(c) Notwithstanding anything to the contrary in this Agreement, the total amount of capital contributed by the Class A Member under Section 4.1(a) , Section 4.1(b) and any other provision in this Agreement will not exceed the Investor Contribution Cap.
(d) The Members will have no obligation to make any Capital Contributions other than as described in this Section 4.1 . All Capital Contributions required to be made under Section 4.1(a) and Section 4.1(b) will be made no later than when the Company is required to make payments under the Master EPC Agreement.
(e) Notwithstanding the above, the obligation of the Class A Members to make Capital Contributions to fund any payments required under the Master EPC Agreement for a particular Tranche shall be subject to the Class B Member’s making its Capital Contribution for its portion of the respective payment and Developer’s satisfaction of the conditions precedent in Section 2.3 of the Master EPC Agreement.
Section 4.2. Capital Accounts .
(a) A capital account (a “ Capital Account ”) shall be established and maintained for each Member in the manner required by the Treasury Regulations under Section 704(b) of the Code.
(b) A Member’s Capital Account shall be increased by (i) the amount of money the Member contributes to the Company, (ii) the net value of any other property the Member contributes to the Company ( i.e. , the fair market value of the property net of liabilities secured by the property that the Company is considered to assume or take subject to under Section 752 of the Code), (iii) the Net Income and items thereof allocated to the Member under Section 5.1 , and (iv) any items of income and gain allocated to the Member, including any income or gain that is exempted from tax. A Member’s Capital Account shall be decreased by (A) the amount of money distributed to the Member by the Company, (B) the net value of any other property distributed to the Member by the Company (i.e. the fair market value of the property net of liabilities secured by the property that the Member is considered to assume or take subject to under Section 752 of the Code), (C) the Net Loss and items thereof allocated to the Member under Section 5.1 , and (D) any items of loss or deduction allocated to the Member. The Members’ Capital Accounts shall be maintained and adjusted as required by the provisions of Treasury Regulations Sections 1.704-1(b)(2)(iv) and 1.704-1(b)(4), including adjustments to reflect the allocations to the Members of depreciation, depletion, amortization and gain or loss as computed for book purposes rather than the allocation of the corresponding items as computed for tax purposes, as required by Treasury Regulations Section 1.704-1(b)(2)(iv)(g).
 
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(c) The Company’s property shall be revalued, and the Capital Accounts of the Members shall be reset to reflect a revaluation as directed by Treasury Regulations Section 1.704-1(b)(2)(iv)(f), immediately prior to the following events: (i) if any new or existing Member makes a more than de minimis Capital Contribution in exchange for new or additional Membership Interests, (ii) if more than a de minimis amount of money or other property is distributed by the Company to a Member to redeem all or any portion of its Membership Interest, or (iii) if the Company is liquidated within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g).
(d) For federal income tax purposes, each of the initial Members will be treated as acquiring an interest in a new partnership in exchange for its initial Capital Contribution on the Effective Date and as each Member makes additional Capital Contributions its Capital Account will increase. The Company will be a disregarded subsidiary of Sponsor for federal income tax purposes prior to receiving the initial Capital Contributions. The initial Capital Account balances and Percentage Interest of each Member on the Effective Date are shown in Schedule 4.2(d) .
(e) The Capital Account balances and Percentage Interest of each Member are shown in Schedule 4.2(d) . The Managing Member shall update Schedule 4.2(d) from time to time as necessary to keep the information current. Any such updating will be consistent with the manner in which this ARTICLE IV requires that the Capital Accounts be maintained. Any reference in this Agreement to Schedule 4.2(d) will be treated as a reference to Schedule 4.2(d) as amended and in effect from time to time.
(f) If all or a portion of a Membership Interest in the Company is transferred in accordance with the terms of this Agreement, then the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the Membership Interest so transferred.
(g) The provisions of this Agreement relating to maintenance of Capital Accounts are intended to comply with Treasury Regulations Sections 1.704-1 and 1-704-2, and will be interpreted and applied in a manner consistent with such Treasury Regulations or any successor provision.
Section 4.3. Member Loans .
(a) If the Company does not have sufficient cash to pay its obligations (a “ Cashflow Shortfall ”) and the Managing Member determines in its reasonable discretion to request a Member Loan under this Section 4.3 , the Managing Member shall give each Member notice (a “ Shortfall Notice ”) of such Cashflow Shortfall not later than thirty (30) days prior to the date such funds are needed (the “ Shortfall Funding Date ”). Each Member shall have twenty (20) days after receipt of a Shortfall Notice to notify the Manager that it wishes to participate in loans to the Company in connection with any Cashflow Shortfall, and each such notice from a Member shall include the amount such Member wishes to provide. In the event that more than one Member elects to participate in loans to the Company under this Section 4.3 , such Members shall be allowed to participate ratably in proportion to the Sharing Percentage of all such participating Members. Member Loans by Members described in this Section 4.3 shall be repaid on each Distribution Date solely out of Distributable Cash that would otherwise be distributed to
 
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Members after any distributions required to be made pursuant to Section 4.1(b) or Section 6.1(a)(i)(A) are made, on a pro rata basis in accordance with the amount each such Member participates in such Member Loans. Each Member Loan shall be pari passu with all other Member Loans pursuant to this Section 4.3 , and no Member shall have the right to accelerate the repayment of such loan.
(b) Any Member Loan made by any Member pursuant to this Section 4.3 shall bear interest at a rate equal to the lesser of (i) the Target Internal Rate of Return or (ii) the Reference Rate plus two percent (2%), unless a lower rate of interest is otherwise agreed to by any such Member in its sole discretion. Interest on each Member Loan pursuant to this Section 4.3 shall accrue and, if not paid in accordance with this Section 4.3 , be compounded to the principal amount thereof on each Distribution Date.
(c) A Member Loan made by any Member pursuant to this Section 4.3 shall be evidenced by a note substantially in the form of Exhibit D . The Company shall, and the Managing Member shall cause the Company to, apply in accordance with the provisions of this Section 4.3 all amounts of Distributable Cash to the payment of principal of all outstanding Member Loans (together with accrued interest thereon and all other amounts due in respect thereof) made pursuant to this Section 4.3 and, unless and until the outstanding principal amount of all such Member Loans together with all interest thereon and all other amounts due in respect thereof is repaid in full, there shall be no distributions to the Members under this Agreement pursuant to ARTICLE VI or otherwise, except in each case distributions required to be made pursuant to Section 4.1(b) or Section 6.1(a)(i)(A) .
(f) Each Member Loan by any Member pursuant to this Section 4.3 constitutes a loan from such Member to the Company and is not a Capital Contribution.
ARTICLE V
ALLOCATIONS
Section 5.1. Allocations .
Except as provided in Section 5.2 or Section 10.2 , Net Income and Net Loss, and each item of income, gain, loss, deduction and credit of the Company for each Fiscal Year or any other period, shall be allocated among the Members as follows:
(a) During the Pre-Flip Period, ***% to the Class A Members and ***% to the Class B Members; and
(b) for the period beginning after the Flip Date,
(i) first, to the Class A Members, Net Income or items of income or gain in an amount equal to the amount distributed, or to be distributed, to such Members pursuant to Section 6.1(a)(ii)(A) for such Fiscal Year or other period; and
(ii) second, of the remaining Net Income, Net Loss, and items of income, gain, loss, deduction and credit, ***% to the Class A Members and ***% to the Class B Members.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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If there is more than one Class A Member or Class B Member, allocations to the Class A Members or the Class B Members, as applicable, pursuant to this Section 5.1 shall be shared among the Class A Members or the Class B Members, as the case may be, in proportion to their respective Percentage Interests. Each Member’s Percentage Interest multiplied by its percentage allocation applicable to such Member under subparagraphs (a)  and (b)(ii) of this Section 5.1 as in effect at any time and from time to time shall be referred to as that Member’s “ Sharing Percentage .”
Section 5.2. Adjustments .
The following adjustments shall be made in the allocations in Section 5.1 to comply with Treasury Regulations Section 1.704-1(b) and Section 1.704-2:
(a) In any Fiscal Year in which there is a net decrease in Company Minimum Gain, income and gain in the amount of the net decrease shall be allocated to Members in the ratio required by Treasury Regulations Section 1.704-2 or any successor provision. This clause is intended to constitute a “minimum gain chargeback” as provided by Treasury Regulations Section 1.704-2(f) and this clause will be construed accordingly.
(b) In any Fiscal Year in which there is a net decrease in Minimum Gain Attributable to Member Nonrecourse Debt, then income or gain in the amount of the net decrease shall be allocated to each Member who was considered to have had a share of such Minimum Gain Attributable to Member Nonrecourse Debt at the beginning of the Fiscal Year in the ratio required by Treasury Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii) or any successor provisions. This clause is intended to constitute a “chargeback of partner nonrecourse debt minimum gain” as provided by Treasury Regulations Section 1.704-2(i)(4) and this clause will be construed accordingly.
(c) Each Member’s Adjusted Capital Account balance for purposes of making other allocations under this ARTICLE V will be the balance after taking into account the allocations under Sections 5.2(a) and (b) .
(d) No losses or deductions may be allocated to a Member to the extent the allocation would lead or add to a deficit in the Member’s Adjusted Capital Account. Losses or deductions that cannot be allocated to a Member by reason of this Section 5.2(d) shall be allocated to the other Members in proportion to their Sharing Percentages, subject to the limitation in the preceding sentence.
(e) In the event any Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
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(5) or (6), items of gross income and gain shall be specially allocated to the Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, any deficit in the Member’s Adjusted Capital Account as quickly as possible. However, an allocation shall be made under this Section 5.2(e) only if and to the extent that the Member would have a deficit in its Adjusted Capital Account after all other allocations provided for in Section 5.1 and Section 5.2 have been tentatively made as if this Section 5.2(e) were not in this Agreement. This clause is intended to constitute a “qualified income offset” as provided by Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and this clause will be construed accordingly.
(f) In the event that any Member has a deficit in its Adjusted Capital Account at the end of any Fiscal Year or other period after all the other allocations in Section 5.1 and Section 5.2 (other than Section 5.2(e) ) have been taken into account, then the Member shall be specially allocated items of Company income and gain as quickly as possible to eliminate the deficit to the extent permitted under Section 471 of the Code.
(g) Member Nonrecourse Deductions will be allocated in the manner specified in Treasury Regulations Section 1.704-2(i)(1). Nonrecourse Deductions for any Fiscal Year shall be allocated to the Members in the same ratio as other partnership items under Section 5.1 or Section 10.2(c) and Section 10.2(d) , as applicable.
(h) If the Company distributes property to a Member in liquidation of the Membership Interest of the Member and there is an adjustment in the adjusted tax basis of Company property under Section 734(b) of the Code, there shall be a corresponding adjustment to the Capital Account of the Member receiving the distribution. If the Company distributes cash to a Member in excess of its outside basis in its Membership Interest, leading to an adjustment in the inside basis of the Company property under Section 743(b) of the Code, solely for purposes of adjusting Capital Accounts of the Members, the adjustment in the inside basis shall be treated as gain or loss and be allocated among the Members in the same ratio as other gain or loss for the Fiscal Year in which the adjustment occurs. This provision is intended to comply with Treasury Regulations Sections 1.704-1(b)(2)(iv)(m)(2) and (4) and shall be interpreted consistently therewith.
(i) The allocations in this Section 5.2 are intended to comply with the Treasury Regulations. To the extent the Company can do so consistently with the Treasury Regulations, such allocations (including those likely to occur in the future) shall be taken into account in allocating other items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocation of other items and the allocations pursuant to this Section 5.2 shall be equal to the net amount of the allocations under this ARTICLE V and Section 10.2 to each Member that would have been made if this Agreement did not have clauses (a) through (i) of this Section 5.2 .
Section 5.3. Tax Allocations .
(a) All tax items of Company income, gain, deduction, loss and credit for each Fiscal Year or other period shall be allocated in the same proportions as Net Income and Net Loss for such Fiscal Year were allocated under Section 5.1 and Section 5.2 .
 
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(b) Notwithstanding Section 5.3(a) , if, as a result of contributions of property by a Member to the Company or an adjustment to the Gross Asset Value of Company assets pursuant to this Agreement, there is a difference between the adjusted basis of an item of Company property for federal income tax purposes and as determined under the definition of Gross Asset Value, allocations of income, gain, loss and deduction shall be made among the Members so as to take into account the difference using the traditional method described in Treasury Regulations Section 1.704-3(b).
(c) Allocations pursuant to this Section 5.3 are solely for purposes of federal, state and local income taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account.
(d) To the extent that an adjustment to the adjusted tax basis of any Company asset is made pursuant to Section 743(b) of the Code as the result of a purchase of a Membership Interest in the Company, any adjustment to the depreciation, amortization, gain or loss resulting from such adjustment shall affect the transferee only and shall not affect the Capital Account of the transferor or transferee. In such case, the transferee shall be required to provide to the Company (i) information about the allocation of any step-up or step-down in basis to the Company’s assets and (ii) the depreciation or amortization method for any step-up in basis to the Company’s assets.
(e) The Members are aware of the tax consequences of the allocations made by this Section 5.3 and agree to be bound by the provisions of this Section 5.3 in reporting their shares of items of Company income, gain, loss, deduction and credit.
Section 5.4. Transfer or Change in Membership Interest .
If the respective Membership Interests or allocation ratios described in this ARTICLE V of the existing Members in the Company change or if a Membership Interest is Transferred in compliance with this Agreement to any other Person, then, for the Fiscal Year or other period in which the change or Transfer occurs, Net Income and Net Loss shall be allocated, as between the Members for the Fiscal Year in which the change occurs or between the transferor and transferee, by taking into account their varying interests using any method permitted by Section 706 of the Code and the Treasury Regulations (such as an interim-closing-of-the-books or a proration method) as agreed to by the Members.
ARTICLE VI
DISTRIBUTIONS
Section 6.1. Distributions .
(a) Except as otherwise provided in Section 4.1(b) , this ARTICLE VI or Section 10.2 , Distributable Cash shall be distributed to the Members as follows:
(i) for each Distribution Date during the Pre-Flip Period,
(A) First, *** immediately preceding such Distribution Date, plus any *** for any prior Distribution Date; and
(B) Second, ***% of the remainder to the Class A Members, and ***% of the remainder to the Class B Members; and
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(ii) for each Distribution Date thereafter,
(A) First, *** immediately preceding such Distribution Date, plus any *** for any prior Distribution Date; and
(B) Second, ***% of the remainder to Class A Members, and ***% of the remainder to Class B Members.
(b) Distributions pursuant to this Section 6.1 shall be made by the Managing Member on each Distribution Date, unless otherwise indicated.
(c) Notwithstanding anything to the contrary set forth in Section 6.1(a) , any indemnity or similar payments for a Tax Loss paid to the Company pursuant to the Master EPC Agreement or otherwise received by the Company that compensate the Company for (or otherwise substitute for) Tax Credits, deductions or losses that would have been allocated pursuant to Section 5.1(a) shall be distributed ***% to the Class A Members and ***% to the Class B Members within five (5) Business Days after the receipt of such payments by the Company.
Section 6.2. Withholding Taxes .
(a) If the Company is required to withhold Taxes with respect to any allocation or distribution to any Member pursuant to any applicable federal, state or local Tax laws, the Company may, after first notifying the Member and permitting the Member, if legally permitted, to contest the applicability of such Taxes, withhold such amounts and make such payments to Taxing authorities as are necessary to ensure compliance with such Tax laws. Any funds withheld by reason of this Section 6.2 will nonetheless be deemed distributed to the Member in question for all purposes under this Agreement. If the Company did not withhold from actual distributions any amounts it was required to withhold, the Company may, at its option, (i) require the Member to which the withholding was credited to reimburse the Company for such withholding, or (ii) reduce any subsequent distributions to that Member by the amount of such withholding. This obligation of a Member to reimburse the Company for Taxes that were required to be withheld shall continue after such Member Transfers its Membership Interests in the Company. Each Member agrees to furnish the Company with any representations and forms as will reasonably be requested by the Company to assist it in determining the extent of, and in fulfilling, any withholding obligations it may have.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Section 6.3. Limitations upon Distributions .
No distribution shall be made if such distribution would violate any contract or agreement to which the Company is then a party or any Applicable Law then applicable to the Company.
Section 6.4. No Return of Distributions .
Any distribution of cash or property pursuant to this Agreement shall be treated as a compromise within the meaning of Section 18-502(b) of the Act (subject to the adjustments provided in Section 6.5(d) and Section 6.5(e) ) and, to the full extent permitted by law, any Member receiving the payment of any such money or distribution of any such property will not be required to return any such money or property to any Person, the Company or any creditor of the Company. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Member is obligated to return such money or property, then such obligation will be the obligation of such Member and not of the other Members. Without limiting the generality of the foregoing, a deficit Capital Account of a Member will not be deemed to be a liability of such Member nor an asset or property of the Company.
Section 6.5. Calculation of Internal Rate of Return .
(a) Tracking Progress . The Managing Member shall track the progress of the Class A Member in reaching the Target Internal Rate of Return and make reports to the Members as contemplated in ARTICLE VII .
(b) Notice of Date . The Managing Member shall notify the Members in writing on or before the earlier of (i) fifteen (15) calendar days before the Calculation Date upon which the Managing Member expects the Class A Member to achieve the Target Internal Rate of Return and (ii) thirty (30) calendar days before making any liquidating distributions in connection with a liquidation of the Company under Section 10.1 . The notice shall include the Tracking Model showing the Managing Member’s calculations and, in the case of a notice delivered in connection with a liquidation, the allocations and distributions that the Managing Member proposes to make to the Class A Member under Section 10.2 in light of the calculations.
(c) Calculation Conventions . The Managing Member shall use the following assumptions and conventions to calculate the Internal Rate of Return:
(i) It will assume that each of the Fixed Tax Assumptions is correct, except to the extent a Fixed Tax Assumption is incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents. In all other respects, Tax Credits and taxable income and loss of the Company for any taxable period will be calculated based on the amounts actually allocated in accordance with the federal income tax accounting methods and tax elections actually used with respect to such period by the Company in the
 
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preparation of its federal income tax reports and returns, or as adjusted on any amended return or as a result of a federal income tax audit of the Company or the Class A Member; provided however , any adverse tax results (including any recapture, loss or disallowance of all or a portion of a Tax Credit) will be ignored for purposes of such calculation if caused by (A) the breach of a representation or covenant by the Class A Member in this Agreement, (B) the Class A Member taking a position on any Tax Return that is inconsistent with the Company Tax Returns unless in the opinion of nationally recognized tax counsel selected by the Class A Member and reasonably acceptable to the Class B Member the position taken by the Class A Member is more likely than not correct, or (C) a Transfer by the Class A Member of all or a portion of its Membership Interest. Notwithstanding anything in this Agreement to the contrary, the calculation of Tax Credits and taxable income and loss will not take into account Section 199 of the Code.
(ii) Each Class A Member will be assumed to have owned its Membership Interest since the Effective Date.
(iii) The taxable income and loss of the Company will be treated as earned ratably during the Fiscal Year or other period with the result that the Taxes on such income, gain or benefit from the losses allocated to the Class A Members will be treated as having been paid or received in four equal installments on the respective estimated tax payment dates for a December 31 corporate taxpayer during the Fiscal Year or other period, except that Tax Credits for placing in service any Projects during a Fiscal Year or other period will be treated as earned on the last day of the Quarter in which Tax Credit is actually earned and except that, in the Fiscal Year or other period in which the Flip Date occurs, the taxable income or loss allocated to the Class A Member for the Pre-Flip Period will be allocated ratably to each of the four estimated tax payment dates during the Fiscal Year or other period, and the post-Flip Date amounts will be treated similarly.
(d) End-of-Year True Up . If the federal income Tax Return that the Company files for the Fiscal Year in which the Target Internal Rate of Return is treated as having been achieved suggests that the Target Internal Rate of Return was not achieved in the month the Company assumed for reasons other than inaccuracy of the Fixed Tax Assumptions (unless they are incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents) or the calculation assumptions and conventions in Section 6.5(c) , then the Managing Member will recalculate when the Target Internal Rate of Return was achieved and send a new notice to the Members that will be subject to the same dispute resolution procedures in Section 11.11(b) as the original notice; provided that a disagreeing Member must notify the Managing Member of its disagreement with the revised calculation within sixty (60) calendar days after receipt. The Managing Member shall also calculate the shortfall in or excess Distributable Cash, in present-value terms using the Target Internal Rate of Return as the discount rate, that the Class A Member received as a consequence of the earlier miscalculation. The shortfall or excess will be grossed up (without duplication for any tax detriment taken into account in calculating when the Target Internal Rate of Return was reached) for income taxes payable thereon assuming an income tax rate equal to the Corporate Tax Rate, calculated by dividing such shortfall or excess
 
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by 100% minus such income tax rate (such shortfall or excess increased by the tax gross up, the “ Cash Difference ”). Once the revised calculation becomes final, the percentages in Section 6.1 will be adjusted to the maximum extent necessary to correct, on a present-value basis calculated at the Target Internal Rate of Return, the Cash Difference. The revised percentages will remain in effect until the Cash Difference has been eliminated.
(e) Curative Flip Allocations . If, after filing the federal income Tax Return for the year in which the Company treated the Target Internal Rate of Return as having been achieved, there is a change in the taxable income or loss or Tax Credits the Company reported for the period through the end of the month in which the Target Internal Rate of Return was assumed to have been achieved for reasons other than inaccuracy of the Fixed Tax Assumptions (unless they are incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents) or the calculation assumptions and conventions in Section 6.5(c) and the Company has not yet made liquidating distributions under Section 10.2 , then there will be a “ Curative Flip Allocation .” The Managing Member will determine the difference between the Target Internal Rate of Return and the Internal Rate of Return the Class A Members actually achieved through the last Distribution Date the Company distributed cash under Section 6.1(a)(i) . The sharing percentages in Section 6.1 will be adjusted for subsequent distributions to the maximum extent necessary to increase or decrease (as appropriate) the Class A Members’ Internal Rate of Return to the Target Internal Rate of Return as of such date. Such change in sharing percentages will remain in effect until, and to the extent necessary so that, the difference between the Target Internal Rate of Return and the actual Internal Rate of Return is eliminated. The Internal Rate of Return the Class A Members actually achieved will be calculated using the Fixed Tax Assumptions (unless they are incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents) and the calculation assumptions and conventions in Section 6.5(c) . If an event occurs that would have triggered a Curative Flip Allocation but for the fact that the Class B Members have already purchased the Membership Interests of the Class A Members under Section 9.4 of this Agreement or but for the fact that the Company has liquidated, then, as appropriate, the Class B Members will pay in cash, within thirty (30) calendar days after such event, the economic equivalent of the Curative Flip Allocation as additional purchase price for the Class A Membership Interests, or the Class A Members will pay in cash, within thirty (30) calendar days after such event, the economic equivalent of the Curative Flip Allocation as a reduction in purchase price for the Class A Membership Interests.
ARTICLE VII
ACCOUNTING AND RECORDS
Section 7.1. Reports .
(a) The Managing Member will prepare and deliver to each Member (i) after the end of each month written reports regarding the performance of the Host Customers under the Customer Agreements (an “ Operations Report ”) and the status of PV System milestones, it being understood that delivery to the Company of reports in the form of Exhibit E and Exhibit G, respectively, to the Maintenance Services Agreement shall satisfy this obligation; (ii) at least two
 
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calendar days prior to each distribution made under ARTICLE VI , a written report calculating the distributions for the relevant Distribution Date; and (iii) after the end of each Quarter a written report regarding (A) electricity generated by and (B) RECs and Government Incentives arising from the Projects owned by the Company, it being understood that delivery to the Company of a report in the form of Exhibit F to the Maintenance Services Agreement shall satisfy this obligation. Simultaneously with the delivery of each such report, the Managing Member shall electronically transmit to the Members all of the data set forth in such reports in Excel format.
(b) At least once every Fiscal Year during the Recapture Period and thereafter at least once every Quarter, the Managing Member will (i) run the Tracking Model and calculate whether the Class A Member has reached the Target Internal Rate of Return, and (ii) not later than sixty (60) days after the end of each Fiscal Year during the Recapture Period and thereafter after the end of each Quarter, send the Class A Member a report showing where it believes the Class A Member is in relation to the Target Internal Rate of Return (the “ IRR Report ”). Simultaneously with the delivery of the IRR Report, the Managing Member shall electronically transmit to the Members all of the data set forth in such reports in Excel format.
(c) The Managing Member will, at least once every Quarter from the Effective Date through the end of the first complete Quarter following the end of the Recapture Period, notify each Member in writing of each event during any prior Quarter that resulted in any recapture or disallowance of, or inability to claim, any Tax Credits.
(d) The Managing Member will submit to each Member (i) any notice of a breach, default or event of default received by the Managing Member under any Customer Agreement or Transaction Document within five (5) Business Days after the Managing Member’s receipt thereof and (ii) notice of any default by a counterparty under any Customer Agreement or Transaction Document within five (5) Business Days after Managing Member’s knowledge thereof, which (in the case of clause (ii) ) in the Managing Member’s determination, would reasonably be expected to adversely affect in a material manner all of the Projects owned by the Company taken as a whole, the Company or any Member.
Section 7.2. Books and Records and Inspection .
(a) The Managing Member will, on behalf of the Company, maintain full and accurate books of account, financial records and supporting documents, which will in all material respects reflect, completely, accurately and in reasonable detail, each transaction of the Company, and such other matters as are customarily entered into the records or maintained by Persons engaged in a business of like character or as are required by law. The books of account, financial records, and supporting documents and the other documents and writings of the Company will be kept and maintained by the Managing Member at the principal office of the Company. The financial records and reports of the Company will be kept in accordance with GAAP and kept on an accrual basis.
(b) In addition to and without limiting the generality of Section 7.2(a) , the Managing Member will, on behalf of the Company, maintain at the Company’s principal office:
(i) true and full information regarding the status of the financial condition of the Company, including any financial statements for the three (3) most recent years;
 
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(ii) promptly after becoming available, a copy of the Company’s federal, state and local income Tax Returns for each year;
(iii) minutes of the proceedings of the Members and the Managing Member;
(iv) a current list of the name and last known business, residence or mailing address of each Member;
(v) a copy of this Agreement, the Company’s Certificate of Formation, and all amendments thereto, together with executed copies of any written powers of attorney pursuant to which such agreements and Certificates of Formation and all amendments thereto have been executed and copies of written consents of Members;
(vi) true and full information regarding the amount of cash and a description and statement of the agreed value of any other property and services contributed by each Member, and the date upon which each became a Member; and
(vii) copies of records that would enable a Member to determine the Member’s relative shares of the Company’s distributions and the Member’s relative voting rights.
(c) Upon at least five (5) Business Days’ prior notice to the Managing Member, all books and records of the Company will be open to inspection and copying by any of the Members or their Representatives during business hours and at such Member’s expense, for any purpose reasonably related to such Member’s interest in the Company; provided that any such inspection or copying is conducted in a manner which does not unreasonably interfere with the Company’s business.
Section 7.3. Bank Accounts, Notes and Drafts .
(a) All funds not reasonably required for the near-term working capital needs of the Company or to fund distributions on the next Distribution Date will be placed in Permitted Investments, which investments will have a maturity appropriate for the anticipated cash flow needs of the Company. All Company funds will be deposited and held in accounts that are separate from all other accounts maintained by the Members, and the Company’s funds will not be commingled with any other funds of any other Person, including the Managing Member, any Member or any Affiliate (other than the Company itself as applicable) of the Managing Member or a Member.
(b) The Members acknowledge that the Managing Member may maintain Company funds in accounts, money market funds, certificates of deposit, other liquid assets in excess of the insurance provided by the Federal Deposit Insurance Corporation, or other
 
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depository insurance institutions and that the Managing Member shall not be accountable or liable for any loss of such funds resulting from failure or insolvency of the depository institution, so long as any such maintenance of funds is in compliance with Section 7.3(a) .
(c) Checks, notes, drafts and other orders for the payment of money shall be signed by such Persons as the Managing Member from time to time may authorize. When the Managing Member so authorizes, the signature of any such Person may be a facsimile.
Section 7.4. Financial Statements .
(a) Within sixty (60) calendar days after the end of each Quarter (excluding the Quarter ending on the last day of each Fiscal Year), the Managing Member shall furnish to each Member unaudited financial statements prepared in accordance with GAAP with respect to such Quarter for the Company consisting of (A) a balance sheet showing the Company’s financial position as of the end of such Quarter, (B) profit and loss statements for the Company for such Quarter, and (C) a statement of cash flows for the Company for such Quarter.
(b) As soon as practical after the end of each Fiscal Year, but in any event within one hundred twenty (120) calendar days after the end of the Fiscal Year, the Managing Member shall furnish to each Member financial statements with respect to such Fiscal Year for the Company, prepared in accordance with GAAP, that are audited and certified by the Independent Accounting Firm, consisting of (A) a balance sheet showing the Company’s financial position as of the end of such Fiscal Year, (B) profit and loss statements for the Company for such Fiscal Year, (C) a statement of cash flows for the Company for such Fiscal Year and (D) related footnotes.
Section 7.5. Partnership Status and Tax Elections .
(a) The Members intend that the Company will be taxed as a partnership for United States federal, state and local income tax purposes. The Members agree not to elect to be excluded from the application of Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state statute with respect to their Membership Interests and agree not to elect for the Company to be treated as a corporation, or an association taxable as a corporation, under the Code or any similar state statute.
(b) The Company shall make the following elections on the appropriate Tax Returns:
(i) to the extent permitted under Section 706 of the Code, to adopt as the Company’s taxable year a year that ends on December 31 as long as such taxable year remains the Company’s “majority interest taxable year,” as defined in Treasury Regulations Section 1.706-1(b)(2);
(ii) to adopt the accrual method of accounting;
(iii) if a distribution of the Company’s property as described in Section 734 of the Code occurs or a transfer of Membership Interest as described in Section 743 of the Code occurs, on request in writing from any Member, to elect, pursuant to Section 754 of the Code to adjust the basis of the Company’s properties;
 
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(iv) to elect to amortize the organizational expenses of the Company ratably over a period of one hundred eighty (180) months as permitted by Section 709(b) of the Code;
(v) to elect out of any “bonus depreciation” otherwise available under Section 168(k) of the Code; and
(vi) if approved in writing by Members representing a Required Majority Vote, any other election the Managing Member may deem appropriate.
(c) The Company shall file an election under Section 6231(a)(1)(B)(ii) of the Code and the Treasury Regulations thereunder to treat the Company as a partnership to which the provisions of Sections 6221 through 6234 of the Code, inclusive, apply.
(d) At the request of the Class A Member, the Managing Member shall engage the Independent Accounting Firm to perform a cost segregation report in respect of any PV Systems identified by the Class A Member.
Section 7.6. Company Tax Returns .
The Managing Member shall prepare all Tax Returns of the Company, in Consultation with the Members. The Managing Member, in Consultation with the other Members, may extend the time for filing any such Tax Returns as provided for under applicable statutes. The Managing Member shall, on behalf of the Company, retain the Independent Accounting Firm to prepare or review Tax Returns and information returns for the Company. Each Member shall provide such information, if any, as may be reasonably needed by the Company for purposes of preparing such Tax Returns; provided that such information is readily available from regularly maintained accounting records. At least thirty (30) calendar days prior to filing Tax Returns and information returns, the Managing Member shall deliver to the other Members for their review a copy of the Tax Returns and information returns in the form proposed to be filed, and shall incorporate all reasonable changes or comments to such proposed Tax Returns and information returns requested by the other Members at least ten (10) calendar days prior to the filing date for such returns. After taking into account any such requested changes, the Managing Member shall, on behalf of the Company, file such Tax Returns in a timely manner, taking into account any applicable extensions. Within one hundred twenty (120) calendar days after the end of each calendar year, the Managing Member shall, on behalf of the Company, deliver to each Member a copy of the Tax Returns and information returns as filed, together with any additional tax-related information in the possession of the Managing Member or the Company that such Member may reasonably and timely request in order to prepare its own income Tax Returns. The Company shall bear the costs of the preparation and filing of the Tax Returns, including the fees of the Independent Accounting Firm.
 
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Section 7.7. Tax Audits .
(a) The Managing Member is hereby designated as the “tax matters partner,” as that term is defined in Section 6231(a)(7) of the Code (the “ Tax Matters Partner ”), of the Company, with all of the rights, duties and powers provided for in Sections 6221 through 6234 of the Code, inclusive, provided however that in the case of a removal of the Managing Member after the occurrence of any Removal Event, the Investor shall have the right to assume the rights and duties of the Tax Matters Partner and to be designated as such. The Managing Member is hereby directed and authorized to take whatever steps it, in its reasonable discretion, deems necessary or desirable to perfect such designation, including filing any forms or documents with the IRS and taking such other action as may from time to time be required under the Treasury Regulations. The Managing Member shall remain as the Tax Matters Partner so long as it retains any ownership interests in the Company unless the Investor assumes the rights and duties of the Tax Matters Partner under the proviso to the first sentence of this paragraph.
(b) The Tax Matters Partner, in Consultation with the other Members, shall use reasonable commercial efforts to direct the defense of any claims made by any tax authority to the extent that such claims relate to the adjustment of Company items at the Company level and, in connection therewith, shall cause the Company to retain and to pay the fees and expenses of counsel and other advisors chosen by the Tax Matters Partner in Consultation with the other Members. The Tax Matters Partner shall promptly deliver to each Member a copy of all notices, communications, reports and writings received from the IRS by the Company or the Tax Matters Partner relating to or potentially resulting in an adjustment of Company items, shall promptly advise each Member of the substance of any conversations with the tax authorities in connection therewith and shall keep the Members advised of all developments with respect to any proposed adjustments that come to its attention. In addition, the Tax Matters Partner shall (i) provide each Member with a draft copy of any correspondence or filing to be submitted by the Company in connection with any administrative or judicial proceedings relating to the determination of Company items at the Company level reasonably in advance of such submission, (ii) consider in good faith incorporating all changes or comments to such correspondence or filing requested by any Member and (iii) provide each Member with a final copy of such correspondence or filing. The Tax Matters Partner will provide each Member with notice reasonably in advance of any meetings or conferences with respect to any administrative or judicial proceedings relating to the determination of Company items at the Company level (including any meetings or conferences with counsel or advisors to the Company with respect to such proceedings) and each Member shall have the right to participate, at its sole cost and expense, in any such meetings or conferences.
(c) The Tax Matters Partner shall not, without a Required Majority Vote, (i) except in the case of any claim by the IRS that could give rise to an indemnity claim under this Agreement or any other Transaction Document in respect of federal income taxes or the loss of federal income tax benefits (a “ Tax Loss Contest ”), commence a judicial action (including filing a petition as contemplated in Section 6226(a) or Section 6228 of the Code) with respect to a federal income tax matter or appeal any adverse determination of a judicial tribunal; (ii) enter into a settlement agreement with the IRS which purports to bind the Members; (iii) intervene in any action as contemplated by Section 6226(b) of the Code; (iv) file any request contemplated in Section 6227(c) of the Code; or (v) except in the case of a Tax Loss Contest, enter into an agreement extending the period of limitations as contemplated in Section 6229(b)(1)(B) of the Code. Any cost or expense incurred by the Tax Matters Partner in connection with its duties as Tax Matters Partner shall be paid by the Company.
 
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(d) If for any reason the IRS disregards the election made by the Company pursuant to Section 7.5(c) and commences any audit or proceeding in which it makes a claim, or proposes to make a claim, against any Member that could reasonably be expected to result in the disallowance or adjustment of any items of income, gain, loss, deduction or credit (including Tax Credits) allocated to such Member by the Company, then such Member shall promptly advise the other Members of the same, and such Member, in Consultation with the other Members, shall at the expense of the Company use best efforts to convert the portion of such audit or proceeding that relates to such items into a proceeding at the level of the Company consistent with the election of the Company pursuant to Section 7.5(c) . In the case of any such audit or proceeding involving the Investor for a tax period prior to or including the Flip Date, if the Investor is not successful in converting the portion of such audit or proceeding that relates to such items into a proceeding at the level of the Company, the Company shall reimburse the Investor for all reasonable costs and expenses, including reasonable attorneys’ fees, in contesting such claim.
(e) If any Member intends to file, pursuant to Section 6227 of the Code, a request for an administrative adjustment of any such partnership item of the Company, or to file a petition under Sections 6226, 6228 or other Sections of the Code with respect to any such partnership item or any other tax matter involving the Company, such Member shall, at least thirty (30) calendar days prior to any such filing, notify the other Members of such intent, which notification must include a reasonable description of the contemplated action and the reasons for such action; provided , however , that this Section 7.7(e) shall not relieve such Member’s obligation to use all commercially reasonable efforts to convert a Member level proceeding into a Company level proceeding as provided in Section 7.7(d) .
Section 7.8. Cooperation .
Subject to the provisions of this ARTICLE VII , each Member shall provide the other Members with such assistance as may reasonably be requested by such other Members in connection with the preparation of any Tax Return, any audit or other examination by any taxing authority, or any judicial or administrative proceedings relating to the liability for any Taxes with respect to the operations of the Company or the allowance or disallowance or recapture of any Tax Credits relating to the PV Systems.
Section 7.9. Fiscal Year .
The fiscal year of the Company (the “ Fiscal Year ”) shall be a year that ends on December 31.
 
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ARTICLE VIII
MANAGEMENT
Section 8.1. Management .
Each of the Members acknowledges and agrees that the Managing Member shall have the authority, powers and responsibilities set forth herein. Except (a) for Major Decisions, (b) matters subject to approval pursuant to Section 8.4 , and (c) as otherwise required by Applicable Laws, the powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under the direction of, the Managing Member, who shall take all actions for and on behalf of the Company not otherwise provided for in this Agreement. In addition, the Members may, with the consent of the Managing Member, vest in the Managing Member the authority to take actions for and on behalf of the Company not otherwise provided for in this Agreement. Any such action shall require a Required Majority Vote.
Section 8.2. Managing Member .
(a) The Managing Member shall be the Member designated to act as such hereunder from time to time in accordance with the provisions of this Section 8.2 or, if such Member is removed as Managing Member pursuant to Section 3.13 , the Manager (except for any references in this Agreement to the Managing Member in its capacity as a Member and not as a manager of the Company if such Manager is not a Member) (the “ Managing Member ”). The initial Managing Member shall be Sponsor Sub. Subject to the requirements for Major Decisions and the limits of the Managing Member’s authority under this Agreement, the obligations of the Managing Member, in addition to those set forth in this Agreement, shall include:
(i) Enforcing the Maintenance Services Agreement and the Master EPC Agreement on behalf of the Company;
(ii) Subject to the requirements for Major Decisions, upon the termination of the Maintenance Services Agreement, causing the Company to replace such Maintenance Services Agreement in accordance with Section 8.3 and Section 3.2(f) and, to the extent such replacement Maintenance Services Agreement is not with an Affiliate of Sponsor Sub, the operator (or an Affiliate thereof, if the operator’s obligations thereunder are being guaranteed by such Affiliate) under such replacement Maintenance Services Agreement shall have at least three years of experience operating and maintaining photovoltaic panels;
(iii) Delivering to each other Member all reports and notices delivered by MSA Provider under the Maintenance Services Agreement and by Developer under the Master EPC Agreement;
(iv) Causing the Company or the MSA Provider on the Company’s behalf to prepare and submit all filings of any nature which are required to be made by the Company under any Applicable Laws;
(v) Causing the Company or the MSA Provider on the Company’s behalf (as contemplated by the Maintenance Services Agreement) to procure and maintain, or cause to be procured and maintained by the Company, all material Governmental Approvals and Permits (if any) required for the Company and the Projects, to the extent applicable;
 
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(vi) Causing the Company or the MSA Provider on the Company’s behalf (as contemplated by the Maintenance Services Agreement) to comply with the terms and conditions of the Customer Agreements, the Transaction Documents, and all material Governmental Approvals, Permits and Applicable Laws;
(vii) Causing the Company, whether at the request of the Class A Member or otherwise, to enforce compliance by their counterparties with the terms and conditions of all contracts under which the Company has any rights, including, without limitation, the Transaction Documents and the Customer Agreements, as contemplated by the Maintenance Services Agreement;
(viii) Managing the Company’s cash balances according to investment guidelines set forth in Section 7.3 and making distributions out of Distributable Cash as provided under the relevant provisions of this Agreement;
(ix) Causing the Company or the MSA Provider on the Company’s behalf to manage local public relations and government relations, Host Customer contacts and other similar activities with respect to each Project; provided , however , that the Managing Member may not undertake any public relations activity on behalf of or in the name of any Member absent that Member’s express prior written consent, which such Member may freely withhold;
(x) Entering into an agreement with Sponsor, as agent on behalf of the Company, whereby Sponsor agrees to (i) complete and submit all applications and other filings required to be submitted in connection with the registration and procurement of RECs, (ii) with respect to each REC, use commercially reasonable efforts to sell such REC generated by the Projects on behalf of the Company to third parties, and (iii) take such other action as may be reasonably necessary to effectuate the foregoing in accordance with Applicable Laws; and
(xi) To the extent commercially reasonable, causing the Company to complete and submit applications and other filings required for the Company to receive the Government Incentives related to the Projects.
(b) In addition to the actions permitted pursuant to Section 8.2(a) , and in no event in limitation thereof, the Manager shall provide the following services to the Company:
(i) Insurance . The Managing Member shall cause the Company or the MSA Provider on the Company’s behalf to procure insurance coverage for, and in the name of, the Company at the Company’s expense, as required under this Agreement and any of the Transaction Documents and Customer Agreements and enforce the Company’s rights to insurance coverage, defense and indemnification; provided , however , that in the event (but only for so long as) the required property insurance is not available to the Company on commercially reasonable terms as determined in accordance with Exhibit C , Managing Member’s sole obligation under this clause (i)  shall be to cause the Company or the MSA Provider on the Company’s behalf to procure such property insurance coverage as is then available to the Company on commercially reasonable terms.
 
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(ii) Insurance Claims . The Managing Member shall cause the Company or the MSA Provider on the Company’s behalf to adjust insurance claims with insurance carriers to ensure equitable recovery for property damage and business interruption claims. Adjustment of such a claim shall include: (A) filing proof of loss with all applicable supporting documentation, (B) site inspection, (C) negotiations with insurance carriers, and (D) ensuring that insurance proceeds be deposited and distributed in accordance with the terms and conditions of this Agreement, the Transaction Documents and the Customer Agreements. In the event of a liability claim, the Managing Member shall oversee the defense of the claim.
(iii) ***
(c) In the event of a failure by the Managing Member to make timely payments of amounts due under the Maintenance Services Agreement at any time when the Company has adequate and available funds for such payment, any such late fee or interest charge in connection therewith shall be paid directly out of funds otherwise intended to be distributed to the Class B Member pursuant to Section 6.1 , which shall be deemed to have been distributed to the Class B Member upon such payment.
Section 8.3. Major Decisions .
(a) In addition to any other approval required by Applicable Laws or this Agreement, Major Decisions are reserved to the Members, and none of the Company, the Managing Member, or any officer thereof shall do or take or make or approve any Major Decisions without the vote required pursuant to Section 8.3(b) below.
(b) Other than the Major Decisions referred to in clause (bb)  of the definition of the term “ Major Decisions ” which shall require the approval of all Members, (i) in the Pre-Flip Period the affirmative vote, consent or approval of a majority of the holders of the Class A Membership Interests and a majority of the holders of the Class B Membership Interests shall be required to authorize or approve a Major Decision, (ii) after the Flip Date and until the Post-Flip Date, consent or approval of holders of a majority of the voting rights related to all outstanding Membership Interests shall be required to authorize or approve such Major Decision and (iii) after the Post-Flip Date, consent or approval of holders of a majority of the voting rights related to all outstanding Membership Interests based on Sharing Percentages shall be required to authorize or approve such Major Decision (the percentage applicable at the time a Major Decision will be made is referred to herein as a “ Required Majority Vote ”). Except as otherwise expressly provided in this Agreement, no separate vote, consent or approval of either Class A Member, acting as a class, or Class B Members, acting as a class, shall be required to authorize or approve any matter for which a vote, consent or approval of Members is required under this Agreement.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(c) The decision of each Member as to whether or not to consent to any Major Decision shall be in the sole discretion of such Member. A request for consent shall be sent by the Managing Member to each Member as provided in Section 11.1 .
(d) Notwithstanding anything to the contrary in this Agreement, if and to the extent the Managing Member fails to enforce the rights of the Company under any agreement between the Company, on the one hand, and MSA Provider, Developer, Sponsor, Managing Member, or any of their Affiliates (the “ Sponsor Related Parties ”), on the other hand, each Class A Member shall have the right to enforce such rights (but only such rights) on behalf and in the name of the Company, if the Managing Member has not commenced and thereafter continued proper enforcement actions within fifteen (15) Business Days (or earlier to the extent required to preserve the rights and remedies of the Company under any such agreement) after written notice from a Class A Member specifying such failure.
Section 8.4. Officers .
(a) The Managing Member may, from time to time, designate one or more officers with such titles as may be designated by the Managing Member to act in the name of the Company with such authority as may be delegated to such officer(s) by the Managing Member. Without limiting the foregoing, any such officer shall act pursuant to such delegated authority until such officer is removed by the Managing Member. The Managing Member shall be liable for actions of the officer(s) granted authority hereunder, arising under the Transaction Documents. Any action taken by an officer designated by the Managing Member shall constitute the act of and serve to bind the Company. In dealing with the officers acting on behalf of the Company, no person or entity shall be required to inquire into the authority of the officers to bind the Company. Persons and entities dealing with the Company are entitled to rely conclusively on the power and authority of any officer set forth in this Agreement and any instrument designating such officer and the authority delegated to him or her.
(b) Initially, the officers of the Company shall be as follows:

Name	  	Title	
		
Greg Butterfield	  	President and CEO	
Brendon Merkley	  	Chief Operating Officer	
Paul Dickson	  	Vice President of Financing	
Dan Black	  	Secretary and General Counsel	
Matt Woolsey	  	Treasurer and Controller	
(c) Each officer may sub-delegate the authority granted by the Managing Member to any other officer or employee of the Company.
Section 8.5. Costs & Expenses .
All reasonable costs and expenses incurred on behalf of the Company by the Managing Member to the extent approved by the Members shall be borne by the Company and shall be reimbursed to the Managing Member by the Company; provided , however , that
 
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Managing Member shall not be permitted to pass through any out-of-pocket expense that (a) Managing Member has expressly agreed in this Agreement to pay or (b) that are customary items of overhead (including, without limitation, office supplies, office expenses, office space, employee salaries, utilities, internet access, cellular phone service, computers, software and tools of the trade used by Managing Member to perform its management duties).
Section 8.6. Separateness . Each of the Members and the Managing Member acknowledges that the Company is to be formed and operated as a special purpose entity, distinct and separate from any Member or its Affiliates. Accordingly, the Managing Member shall cause the Company to maintain its existence separate and distinct from any other Person, including taking the following actions:
(a) maintaining in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware and obtaining and preserving its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and each other instrument or agreement necessary or appropriate to properly administer this Agreement and permit and effectuate the transactions contemplated hereby and thereby;
(b) maintaining its own deposit accounts, separate from those of each Member and any of their respective officers and Affiliates;
(c) conducting all material transactions between the Company and any of its Affiliates on an arm’s length basis and on commercially reasonable terms;
(d) allocating fairly and reasonably the cost of any shared overhead expenses, including office space, with the Managing Member and the Class B Members and any of their respective officers and Affiliates;
(e) conducting its affairs separately from those of each Member and its officers and Affiliates, and maintaining accurate and separate books, records and accounts and financial statements;
(f) acting solely in its own limited liability company name and not that of any other Person;
(g) not holding itself out as having agreed to pay or Guarantee, or as otherwise being liable for, the obligations of any Member and any of such Member’s respective officers and Affiliates;
(h) not making any loans or extending any Indebtedness to, or acquiring any Indebtedness of, the Members or their respective Affiliates;
(i) not creating, granting or suffering to exist any Liens (other than Permitted Liens) on property of the Company (except as contemplated by the Customer Agreements and the Transaction Documents);
 
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(j) not acquiring any asset other than any asset conveyed to the Company pursuant to any of the Customer Agreements or Transaction Documents or purchased by the Company in accordance with the Customer Agreements or Transaction Documents;
(k) maintaining all of its assets in its own name and not commingling its assets with those of any other Person;
(l) paying its own operating expenses and other liabilities out of its own funds;
(m) observing all limited liability company formalities, including maintaining meeting minutes or record meeting and acting on behalf of itself only pursuant to due authorization, required hereby and by the Certificate of Formation;
(n) maintaining adequate capital for the normal obligations reasonably foreseeable in light of its contemplated business operations;
(o) not acquiring obligations or the securities of any Member or any of such Member’s officers and Affiliates, except as required under the Customer Agreements or Transaction Documents;
(p) holding itself out to the public as a legal entity separate and distinct from any other Person, including the Members;
(q) correcting any known misunderstanding regarding its separate identity;
(r) not forming, acquiring or holding any subsidiaries (except as contemplated by the Customer Agreements or Transaction Documents); and
(s) not identifying itself as a department or division of any Member or any of such Member’s respective officers and Affiliates.
The failure of the Company to comply with any of the foregoing provisions of this Section 8.6 shall not affect the status of the Company as a separate legal Person or the limited liability of the Members, or their respective Affiliates.
ARTICLE IX
TRANSFERS AND INDEMNIFICATION
Section 9.1. Transfers .
Each Member may only sell, transfer, assign, convey, pledge, mortgage, encumber, hypothecate or otherwise dispose of all or any part of its Membership Interests or any interest, rights or obligations with respect thereto, directly or indirectly (including through a Change of Member Control) (any such action, a “ Transfer ”) in compliance with this ARTICLE IX . Any attempted Transfer that does not comply with this ARTICLE IX shall be null and void and of no force or effect whatsoever.
 
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Section 9.2. Conditions Applicable to All Transfers .
Except as otherwise provided in this ARTICLE IX , all Transfers of Membership Interests must satisfy the following conditions:
(a) The transferring Member must give notice of the proposed Transfer to each of the Members not less than ten (10) calendar days prior to the effective date of the proposed Transfer;
(b) The transferring Member and the prospective transferee each execute, acknowledge and deliver to the Company such instruments of transfer and assignment with respect to such Transfer and such other instruments as are reasonably satisfactory in form and substance to the other Members to effect such Transfer and confirm the transferor’s intention that the transferee become a Member in its place with respect to the Membership Interests so transferred, and the prospective transferee makes representations and warranties substantially similar to the representations and warranties set forth in Section 3.11 (taking into account differences between the corporate forms of the transferor and transferee) and makes the covenants set forth in Section 3.12 as of the date of such Transfer that had been made or agreed to by the transferring Member;
(c) The transferee executes, adopts and acknowledges this Agreement, and executes such other agreements as the Managing Member may reasonably deem necessary or appropriate to confirm the undertaking of the transferee to be bound by the terms of this Agreement and to assume the obligations of the transferor under this Agreement (to the extent the transferor is to be released from such obligations);
(d) The Transfer will not violate any securities laws or any other applicable federal or state laws or the order of any court having jurisdiction over the Company or any of its assets, or any Project;
(e) In the case of a Transfer during the Recapture Period, the Transfer will not cause (i) the Company to terminate under Section 708(b)(1)(B) of the Code, unless the transferor has indemnified the other Members against any adverse tax effects in a manner acceptable to the other Members; (ii) the restrictions on use of Company losses in Section 470 of the Code to apply to the Company or the Members; (iii) the assets of the Company to turn wholly or partly into “tax-exempt use property” within the meaning of Section 168(h) of the Code; or (iv) the assets of the Company to become subject wholly or partly to the alternative depreciation system in Section 168(g) of the Code;
(f) The Transfer will not cause the Company to be classified as a corporation for federal income tax purposes;
(g) The Transfer shall not relieve the transferring Member of its obligation to make Capital Contributions pursuant to Section 4.1 , and the Transfer will not be made to a Restricted Transferee;
(h) The Transfer will not be made to a Prohibited Transferee; and
(i) The Transfer will not result in any recapture, loss or disallowance of all or a portion of a Tax Credit.
 
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Section 9.3. Certain Permitted Transfers .
Except as otherwise provided in this Section 9.3 , notwithstanding Section 9.2 , the following Transfers (the “ Permitted Transfers ”) may be made at any time and from time to time, without restriction and without notice to, approval of, filing with, consent by, or other action of or by, any Member or other Person, so long as, in the case of a Transfer by a Class B Member, such Transfer does not result, and is not reasonably expected to result, in any recapture, loss or disallowance of all or a portion of a Tax Credit:
(a) The grant of any security interest in any Membership Interest pursuant to any pledge or security agreement any Member may enter into with lenders; provided , however , that the requirements in Section 9.2(a) , Section 9.2(d) , Section 9.2(e) , Section 9.2(f) and Section 9.2(h) shall be satisfied in respect of any such grant of a security interest;
(b) Any Transfer in connection with any foreclosure or other exercise of remedies in respect of any Membership Interest subject to a security interest referred to in Section 9.3(a) ; provided , however , that the requirements in Sections 9.2(a) through 9.2(f) and Section 9.2(h) shall be satisfied in respect of any such Transfer;
(c) Any Transfer to a non-Member Affiliate in accordance with Section 9.4 ; provided , however , that the requirements in Section 9.2(b) , Section 9.2(c) , Section 9.2(d) , Section 9.2(e) , Section 9.2(f) and Section 9.2(h) shall be satisfied in respect of any such Transfer;
(d) A sale of Class A Membership Interests pursuant to Section 9.4 of this Agreement; and
(e) Any Transfer of a Class A Membership Interest by Investor after the Recapture Period; provided , that the requirements in Section 9.2(a) through Section 9.2(d) and in Section 9.2(f) through Section 9.2(h) shall be satisfied.
No Permitted Transfer shall release the transferring Member from any liabilities to the Company or the other Members arising prior to or in connection with such Permitted Transfer.
Section 9.4. Purchase Option .
(a) The Class B Member (or any Affiliate of a Class B Member designated by it) shall have the right, at any time within one hundred eighty (180) days after the Flip Date, to acquire all (but not less than all) of the Class A Membership Interests (the “ Purchase Option ”), upon giving the Class A Member thirty (30) calendar days’ prior written notice of an election to exercise the Purchase Option (the “ Exercise Notice ”). Any Exercise Notice, if given, may be revoked by the Class B Member by written notice to the Class A Member at any time; provided that if the Exercise Notice is so revoked, the Class B Member shall reimburse the Class A Member for all of the Class A Member’s incurred costs and expenses (including the costs of any
 
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appraisal referred to in Section 9.4(b) and the reasonable legal counsel fees and disbursements) incurred by the Class A Member in connection with such Exercise Notice being given and the Class A Member’s activities related thereto.
(b) The consideration for the Transfer of the Class A Membership Interests to the Class B Member pursuant to the Purchase Option during the period referred to in Section 9.4(a) (such amount, the “ Option Purchase Price ”) will be the higher of: (i) the fair market value of the Class A Membership Interests as of the Flip Date as agreed by the Class A Member and the Class B Member or, if they are unable to agree, by appraisal conducted by an appraiser selected jointly by the Class A Member and the Class B Member (or, if they are unable to agree upon a single appraiser within fifteen (15) days, by appraisal in accordance with the Appraisal Method, which shall be final and binding on all Members), and (ii) $***.
(c) If the Purchase Option is exercised, the closing of such Transfer shall occur on the Business Day that is (i) sixty (60) calendar days after the applicable Exercise Notice is given or (ii) such later date as may be required to obtain any applicable consents or approvals or satisfy any reporting or waiting period under any Applicable Laws.
(d) If the Purchase Option is exercised, at the closing of the Transfer, (i) the Class B Member shall pay the consideration described in Section 9.4(b) (by wire transfer of immediately available United States dollars to such United States bank accounts as the Class A Member may designate in a written notice to the Class B Member no later than five (5) Business Days prior to the closing date for the Transfer pursuant to the Purchase Option), and (ii) the Class A Member shall take the following actions: (A) the Class A Member shall Transfer to the Class B Member, all right, title and interest in and to the Class A Membership Interests, free and clear of all Liens other than Permitted Encumbrances; (B) the Class A Member shall be deemed to have made the representations on Schedule 9 attached hereto to such Class B Member and the Company; and (C) the Class A Member shall take all such further actions and execute, acknowledge and deliver all such further documents that are necessary to effectuate the Transfer of the Class A Membership Interests contemplated by this Section 9.4 . Upon the closing of such Transfer, (1) all of such Class A Member’s obligations and liabilities associated with the Class A Membership Interests that are the subject of such Transfer will terminate except those obligations and liabilities accrued through the date of such closing, (2) the Class A Member shall have no further rights as a Member, and (3) all the rights, obligations and liabilities associated with the Class A Membership Interests that are the subject of such Transfer shall become the rights, obligations and liabilities of each Person acquiring such Class A Membership Interests. The Class B Member will pay all reasonable costs and expenses incurred by the Class A Member in connection with the Transfer, including reasonable attorneys’ fees and the amount of any sales, use, realty transfer or similar Taxes payable in connection with such Transfer; provided , however , that the obligation of the Class B Member to pay such expenses pursuant to this sentence shall not exceed $***.
(e) The Class B Member may transfer its rights set forth in this Section 9.4 to any of its Affiliates.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Section 9.5. Regulatory and Other Authorizations and Consents .
(a) In connection with any Transfer pursuant to Section 9.4 and any Transfer of Class A Membership Interests (the “ Designated Transfers ”), each Member involved shall use all commercially reasonable efforts to obtain all authorizations, consents, orders and approvals of, give all notices to and make all filings with, all Governmental Authorities and third parties that may be or become necessary for the Designated Transfers, and its execution and delivery of, and the performance of its obligations under, this Agreement or other Transaction Documents in connection with any such Designated Transfer, and will cooperate fully with the other Members in promptly seeking to obtain all such authorizations, consents, orders and approvals, giving such notices and making such filings, including the provision to such third parties and Governmental Authorities of such financial statements and other publicly available financial information with respect to such Member, as such third parties or Governmental Authorities may reasonably request; provided , however , that no Member involved shall have any obligation to pay any consideration to obtain any such consents. In addition, the Members involved shall keep each other reasonably apprised of their efforts to obtain necessary consents and waivers from third parties or Governmental Authorities and the responses of such third parties and Governmental Authorities to requests to provide such consents and waivers.
(b) Without limiting the generality of Section 9.5(a) , each Member shall make such filings as may be required under the HSR Act, the Federal Power Act and any state Applicable Laws relating to the ownership or control of the Projects.
(i) To the extent required by the HSR Act, each Member involved in a Designated Transfer shall (A) file or cause to be filed, as promptly as practicable but in no event later than the fifteenth Business Day after the delivery of any Exercise Notice, as applicable, with the Federal Trade Commission and the United States Department of Justice, all reports and other documents required to be filed by such Member under the HSR Act concerning the Designated Transfer and (B) promptly comply with or cause to be complied with any requests by the Federal Trade Commission or the United States Department of Justice for additional information concerning the Designated Transfer, in each case so that the initial 30-day waiting period applicable under the HSR Act shall expire as soon as practicable. Each Member involved in a Designated Transfer agrees to request, and to cooperate with the other Members involved in requesting, early termination of any applicable waiting period under the HSR Act. The Class B Member, if involved in a Designated Transfer, shall be responsible for the filing fees incurred by all Members involved in the Designated Transfer in connection with the initial filings required by the HSR Act in connection with the Designated Transfer. Except as expressly provided in the prior sentence with respect to filing fees, each Member involved in a Designated Transfer will be responsible for its own fees and expenses, including any fees and expenses of counsel, accountants or other professional advisors.
(ii) To the extent required by the Federal Power Act, each Member involved in a Designated Transfer shall as promptly as practicable but, in the event of a Transfer pursuant to Section 9.4 no later than the tenth Business Day after the delivery of any Exercise Notice, provide to the Company, the Managing Member and/or the acquiror as applicable, information needed for such entity to file an application for approval of the
 
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Designated Transfer under Section 203 of the Federal Power Act. To the extent required by the regulations of FERC, within thirty (30) days of a Designated Transfer, the transferee of the Membership Interests, or at the request and the sole cost and expense of such transferee the Company, shall file with FERC a Notice of Self-Recertification of any Projects larger than one (1) MW, aggregated within one (1) mile, including a completed FERC Form 556.
Section 9.6. Admission .
Any transferee of all or part of any Membership Interests pursuant to a Transfer made in accordance with this Agreement shall be admitted to the Company as a substitute Member upon its execution of a counterpart to this Agreement.
Section 9.7. Security Interest Consent .
If the Class B Member grants a security interest in any Class B Membership Interest in compliance with Section 9.3(a) , upon request by such Class B Member, each Class A Member will execute and deliver to any person holding such security interest (for itself and for the benefit of other lenders) such acknowledgments, consents or other instruments as such person may reasonably request to confirm that such grant and any foreclosure or other exercise of remedies in respect of such Class B Membership Interest constitutes a Permitted Transfer under this Agreement. If any Class A Member grants a security interest in any Class A Membership Interest in compliance with this Agreement, upon request by such Class A Member, the Class B Member will execute and deliver to any person holding such security interest (for itself and for the benefit of other lenders) such acknowledgments, consents or other instruments as such person may reasonably request to confirm that such grant and any foreclosure or other exercise of remedies in respect of such Class A Membership Interest constitutes a Permitted Transfer under this Agreement.
Section 9.8. Indemnity .
(a) The Class B Member agrees to indemnify, defend and hold harmless the Investor Indemnified Parties from and against any and all Investor Indemnified Costs, and the Class A Member agrees to indemnify, defend and hold harmless the Sponsor Indemnified Parties from and against any and all Sponsor Indemnified Costs; provided , however , that except with respect to Investor Indemnified Costs or Sponsor Indemnified Costs resulting from fraud, gross negligence or willful misconduct, or with respect to Taxes, in no event will any Class A Member’s or Class B Member’s aggregate obligation to indemnify the Indemnified Parties hereunder exceed the Maximum Liability.
(b) No claim for indemnification may be made with respect to any Indemnified Costs (other than with respect to Taxes, fraud, gross negligence, willful misconduct or failure to pay any amount due to Indemnified Parties under any Transaction Document) until the aggregate amount of such Indemnified Costs sought by (or previously sought by) the Sponsor Indemnified Parties or the Investor Indemnified Parties, as applicable, under this Agreement and
 
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all other Transaction Documents exceeds $***; provided that once such threshold amount of claims has been reached, then the relevant Indemnified Party and its Affiliates shall have the right to be indemnified with respect to all such claims, including amounts that were not previously paid because such threshold had not been reached; provided , further , that once such threshold has been reached, no individual claim or claims below $*** may be presented for indemnification, but individual claims that are less than such amount may be aggregated for the purpose of satisfying such threshold, and all claims outstanding at the end of each Fiscal Year may be presented for indemnification without regard to the amount thereof. Claims for indemnification under this Agreement and the other Transaction Documents shall not be duplicative of one another and shall not allow for duplicative recoveries.
(c) An Indemnified Party shall give written notice to the Indemnifying Party within ten (10) Business Days after it has actual knowledge of commencement or assertion of any Third Party Claim in respect of which the Indemnified Party may seek indemnification under this Section 9.8 . Such notice shall state the nature and basis of such Third Party Claim and the events and the amounts thereof to the extent known. Any failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that the Indemnifying Party may have to the Indemnified Party under this ARTICLE IX , except to the extent the failure to give such notice materially and adversely prejudices the Indemnifying Party. In case any such action, proceeding or claim is brought against an Indemnified Party, so long as the Indemnifying Party has acknowledged in writing to the Indemnified Party that it is liable for such Third Party Claim pursuant to this Section 9.8 , the Indemnifying Party shall be entitled to participate in and, unless in the reasonable judgment of the Indemnified Party a conflict of interests between it and the Indemnifying Party may exist in respect of such Third Party Claim or such Third Party Claim entails a material risk of criminal penalties or civil fines or non-monetary sanctions being imposed on the Indemnified Party (a “ Third Party Penalty Claim ”), to assume the defense thereof, with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnified Party, and after notice from the Indemnifying Party to the Indemnified Party of its election so to assume the defense thereof, except as otherwise provided herein, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation or defending such portion of such Third Party Penalty Claim; provided the parties agree that the handling of any Tax contests involving the Company will be governed by Section 7.7 .
(d) In the event that (i) the Indemnifying Party advises an Indemnified Party that the Indemnifying Party will not contest a claim for indemnification hereunder, (ii) the Indemnifying Party fails, within twenty (20) Business Days of receipt of any indemnification notice to notify, in writing, such Indemnified Party of its election to defend, settle or compromise, at its sole cost and expense, any such Third Party Claim (or discontinues its defense at any time after it commences such defense) or (iii) in the reasonable judgment of the Indemnified Party, a conflict of interests between it and the Indemnifying Party exists in respect of such Third Party Claim or the action or claim is a Third Party Penalty Claim, then the Indemnified Party may, at its option, defend, settle or otherwise compromise or pay such action or claim or Third Party Claim, in each case at the sole cost and expense of the Indemnifying
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Party. In any event, unless and until the Indemnifying Party elects in writing to assume and does so assume the defense of any such claim, proceeding or action, the Indemnifying Party shall be liable for the Indemnified Party’s reasonable costs and expenses arising out of the defense, settlement or compromise of any such action, claim or proceeding. The Indemnified Party shall cooperate to the extent commercially reasonable with the Indemnifying Party in connection with any negotiation or defense of any such action or claim by the Indemnifying Party. The Indemnifying Party shall keep the Indemnified Party fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.
(e) If the Indemnifying Party elects to defend any such action or claim, then the Indemnified Party shall be entitled to participate in such defense with counsel of its choice at its sole cost and expense unless otherwise specified herein; provided that any such participation of the Indemnified Party shall be at the Indemnifying Party’s sole cost and expense to the extent such participation relates to a Third Party Penalty Claim. If the Indemnifying Party does not assume such defense, the Indemnified Party shall keep the Indemnifying Party apprised at all times as to the status of the defense; provided , however , that the failure to keep the Indemnifying Party so informed shall not affect the obligations of the Indemnifying Party hereunder. Except as otherwise provided by Section 9.8(d) , the Indemnifying Party shall not be liable for any settlement of any action, claim or proceeding effected without its written consent; provided , however , that the Indemnifying Party shall not unreasonably withhold, delay or condition any such consent. Notwithstanding anything in this Section 9.8 to the contrary, the Indemnifying Party shall not, without the Indemnified Party’s prior written consent, (i) settle or compromise any claim or consent to entry of judgment in respect thereof which involves any condition other than payment of money by the Indemnified Party, (ii) settle or compromise any claim or consent to entry of judgment in respect thereof without first demonstrating to the Indemnified Party the ability to pay such claim or judgment, or (iii) settle or compromise any claim or consent to entry of judgment in respect thereof that does not include, as an unconditional term thereof, the giving by the claimant or the plaintiff to the Indemnified Party, a full and complete release from all liability in respect of such claim.
(f) If the amount of any Indemnified Costs, at any time after the making of an indemnity payment in respect thereof, is reduced by recovery, settlement or otherwise under any insurance coverage (excluding any proceeds from self insurance or flow through insurance policies) or under any claim, recovery, settlement or payment by or against any other entity, the amount of such reduction, less any costs, expenses or premiums incurred in connection therewith, must promptly be repaid by the Indemnified Party to the Indemnifying Party net of any Taxes imposed upon the Indemnified Party in respect of such amounts (but taking into account any Tax benefit the Indemnified Party receives as a result of such payment). Upon making any indemnity payment (other than any indemnity payment relating to Taxes), the Indemnifying Party will, to the extent of such indemnity payment, be subrogated to all rights of the Indemnified Party against any third party, except third parties that provide insurance coverage to the Indemnified Party or its Affiliates, in respect of the Indemnified Costs to which the indemnity payment relates. Without limiting the generality or effect of any other provision hereof, each such Indemnified Party and the Indemnifying Party shall duly execute upon request all instruments reasonably necessary to evidence and perfect the above described subrogation rights, and otherwise cooperate in the prosecution of such claims at the direction of the Indemnifying Party. Nothing in this Section 9.8 will be construed to require any Member to obtain or maintain any insurance coverage.
 
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(g) For Tax reporting purposes, to the maximum extent permitted by Applicable Law, each party will agree to treat all amounts paid under any of the provisions of this ARTICLE IX as an adjustment to the Capital Contribution made by Investor in exchange for its Class A Membership Interests or the Capital Contribution made by Sponsor Sub in exchange for its Class B Membership Interests (or otherwise as a non-taxable reimbursement, contribution or return of capital, as the case may be). To the extent any such indemnification payment is includable as income of the Indemnified Party or its Affiliates as determined by agreement of the parties or, if there is no agreement, by an opinion of a nationally-recognized Tax counsel reasonably selected by the Indemnified Party that such amount is *** includable as income of the recipient or its Affiliates, the amount of the payment shall be increased by the amount of any federal income Tax required to be paid by the Indemnified Party or its Affiliates on the receipt or accrual of the indemnification payment, including, for this purpose, the amount of any such Tax required to be paid by the Indemnified Party or its Affiliates on the receipt or accrual of the additional amount required to be added to such payment pursuant to this Section 9.8(g) , assuming full taxability at the Corporate Tax Rate. Any payment made under this ARTICLE IX shall be reduced by the present value (as determined on the basis of a discount rate equal to 15% per annum and the same assumptions about taxability and tax rates) of any federal income tax benefit to be realized by the Indemnified Party or its Affiliate by reason of the facts and circumstances giving rise to such indemnification.
Section 9.9. No Duplication .
Any liability for indemnification under this ARTICLE IX shall be determined without duplication of recovery. Without limiting the generality of the prior sentence, if a statement of facts, condition or event constitutes a breach of more than one representation, warranty, covenant or agreement which is subject to the indemnification obligation in Section 9.8 or under another Transaction Document, only one recovery of Indemnified Costs per Indemnified Party shall be allowed.
Section 9.10. Survival .
All representations, warranties, covenants and obligations made or undertaken by a party hereto in any Transaction Document shall survive until the final date for any assertion of claims as forth in Section 9.11 , if and as applicable, or as otherwise provided in the Transaction Documents.
Section 9.11. Final Date for Assertion of Indemnity Claims .
All claims by an Indemnified Party for indemnification pursuant to this ARTICLE IX resulting from breaches of representations or warranties in ARTICLE III shall be forever barred unless the other party is notified within twenty-four (24) months after the date such representation or warranty was made; provided that, notwithstanding the foregoing, the
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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representations and warranties in Section 3.11(a)(viii) , Section 3.11(b) , Section 3.11(c)(x) , or Section 3.11(c)(xi) shall survive until six (6) months following the expiration of the applicable statute of limitations (taking into account any waivers or extensions thereof); provided , further , that if written notice of a claim for indemnification has been given by an Indemnified Party on or prior to the last day of the respective foregoing period, then the obligation of the other party to indemnify such Indemnified Party pursuant to this ARTICLE IX shall survive with respect to such claim until such claim is finally resolved.
Section 9.12. Reasonable Steps to Mitigate .
Each Indemnified Party will take, at the Indemnifying Party’s own reasonable cost and expense, all reasonable commercial steps identified by Indemnifying Party to the Indemnified Parties to mitigate all Indemnified Costs (other than any such Indemnified Costs with respect to Taxes), which steps may include availing itself of any defenses, limitations, rights of contribution, claims against third Persons and other rights at law or equity. The Indemnified Parties will provide such evidence and documentation of the nature and extent of the Indemnified Costs as may be reasonably requested by the Indemnifying Party.
Section 9.13. Net of Insurance Benefits .
All Indemnified Costs shall be net of insurance recoveries from insurance policies of the Company to the extent that any proceeds of such policies, less any costs, expenses or premiums incurred by the Company in connection therewith, are distributed by Company to the Indemnified Party; provided , however , such amount shall account for any costs or expenses incurred by the Indemnified Party in connection with obtaining insurance proceeds with respect to any breach or nonperformance hereunder.
Section 9.14. No Consequential Damages .
Indemnified Costs shall not include, and an Indemnifying Party shall have no obligation to indemnify any Indemnified Party for or in respect of, any consequential, special, incidental, exemplary, statutory, or punitive damages of any nature including but not limited to damages for lost profits or revenues or the loss of use of such profits or revenues (other than in each case revenues from Customer Agreements, Government Incentives or sales of RECs), increased costs of purchasing or providing equipment, materials, labor, services, debt service fees or penalties, or damages for lost opportunities; provided , however , that a loss, disallowance or recapture of, or inability to claim Tax Credits or other adverse tax consequences shall not be treated as consequential, special, incidental, exemplary, statutory, or punitive damages for purposes of this Agreement.
Section 9.15. Payment of Indemnification Claims .
All claims for indemnification shall be paid by the Indemnifying Party in immediately available funds in U.S. dollars. Any undisputed portion of an indemnification claim shall be paid promptly by the Indemnifying Party to the Indemnified Parties involved. An Indemnifying Party may dispute any portion of an indemnification claim, provided , however , that such disputed indemnification claim shall be paid promptly by the Indemnifying Party to the Indemnified Party together with interest at a rate equal to 5% per annum upon the final determination of the payable amount of the claim (if any) by a court of competent jurisdiction.
 
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ARTICLE X
DISSOLUTION AND WINDING-UP
Section 10.1. Events of Dissolution .
The Company shall be dissolved upon the first to occur of the following:
(a) the written consent of each of the Members to dissolve the Company, but only on the effective date of dissolution specified by the Members in such writing at the time of such consent;
(b) entry of a decree of judicial dissolution under Section 18-802 of the Act;
(c) the issuance of a final, nonappealable court order which makes it unlawful for the business of the Company to be carried on; or
(d) the termination of the legal existence of the last remaining Member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining Member of the Company unless the Company is continued in a manner permitted by this Agreement or the Act.
Section 10.2. Distribution of Assets .
(a) The Members hereby appoint the Managing Member to act as the liquidator upon the occurrence of one of the events in Section 10.1 . Upon the occurrence of such an event, the liquidator will proceed diligently to wind up the affairs of the Company and make final distributions as provided herein and in the Act. The liquidator may sell, and will use commercially reasonable efforts to obtain the best possible price for, any or all Company property, including to Members. In no event, without the approval of Members by Required Majority Vote, will a sale to a Member be for an amount that is less than fair market value (determined by the Appraisal Method if the Members (by Required Majority Vote) are unable to agree on the fair market value).
(b) The liquidator will first pay, satisfy or discharge from Company funds all of the debts, liabilities and obligations of the Company (including all expenses incurred in liquidation), including Member Loans, or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash escrow fund for contingent, conditional or unmatured liabilities in such amount and for such term as the liquidator may reasonably determine) in the order of priority as provided by law.
(c) All assets of the Company will be treated as if sold, and the gain or loss treated as realized on those assets will be allocated first to Members with deficits in their Capital Accounts (in the ratio of the deficits if more than one Member’s Capital Account is in deficit) to eliminate the deficits.
 
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(d) Remaining gain or loss will be allocated next among the Class A Members in an effort to set the Capital Account of each Class A Member at a level that will allow it to reach an Internal Rate of Return equal to ***% out of the liquidating distributions if such Internal Rate of Return has not already been achieved and, thereafter, in the ratio as provided in Section 5.1(b) . Notwithstanding subsections (c) and (d) , the Class B Member will be allocated at least ***%, and the Class A Member will be allocated at least ***%, of any gain or loss at liquidation.
(e) After the allocations in subsections (c) and (d)  have been made, cash and property will be distributed to Members pro rata in the amount of the positive balances in their Capital Accounts by the end of the Fiscal Year in which the liquidation occurs (or, if later, within ninety (90) calendar days after such liquidation).
(f) The distribution of cash and property to a Member in accordance with the provisions of this Section 10.2 constitutes a complete return to the Member of its Capital Contributions and a complete distribution to the Member on its Membership Interests in the Company of all the Company’s property and constitutes a compromise to which all Members have consented within the meaning of Section 18-502(b) of the Act. If the assets of the Company remaining after the payment or discharge of the debts and liabilities of the Company are insufficient to return Capital Contributions of each Member, such Member shall have no recourse against the Company or any other Member.
Section 10.3. Certificate of Cancellation .
(a) When all debts, liabilities and obligations have been paid and discharged or adequate provisions have been made therefor and all of the remaining property and assets have been distributed to the Members, a certificate of cancellation shall be executed and filed by the liquidator with the Secretary of State of the State of Delaware, which certificate shall set forth the information required by Section 18-203 of the Act.
(b) Upon the filing of the certificate of cancellation, the existence of the Company shall cease.
(c) All costs and expenses in fulfilling the obligations under this Section 10.3 shall be borne by the Company.
Section 10.4. In-Kind Distributions . There shall be no distribution of assets of the Company in-kind without a prior Required Majority Vote approving such distribution.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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ARTICLE XI
MISCELLANEOUS
Section 11.1. Notices .
Unless otherwise provided herein, any offer, acceptance, election, approval, consent, certification, request, waiver, notice or other communication required or permitted to be given hereunder (each referred to as a “ Notice ”), shall be in writing and delivered (a) in person, (b) by registered or certified mail with postage prepaid and return receipt requested, (c) by recognized overnight courier service with charges prepaid or (d) by facsimile or electronic mail transmission, directed to the intended recipient at the address of such Member set forth on Schedule 4.2(d) attached hereto (as applicable) or at such other address as any Member hereafter may designate to the others in accordance with a Notice under this Section 11.1 . A Notice or other communication will be deemed delivered on the earliest to occur of (i) its actual receipt when delivered in person, (ii) the fifth Business Day following its deposit in registered or certified mail, with postage prepaid, and return receipt requested, (iii) the second Business Day following its deposit with a recognized overnight courier service or (iv) the date of receipt of a facsimile or electronic mail or, if such date of receipt is not a Business Day, the next Business Day following such date of receipt, provided the sender can and does provide evidence of successful transmission. Any Notice or other communication received on a day that is not a Business Day or later than 5:00 p.m., New York, New York time, on a Business Day shall be deemed to be received on the next Business Day.
Section 11.2. Amendment .
Except for an amendment of Schedule 4.2(d) hereto in accordance with the terms of this Agreement, an amendment of Annex I in accordance with Section 3.1(a) , and a Transfer of Membership Interests and the admission of a new Member in accordance with the terms of this Agreement, this Agreement may be changed, modified or amended only by an instrument in writing duly executed by Members representing a Required Majority Vote; provided , that any amendment of this Agreement after the Flip Date shall not materially impair the rights of the Class A Member unless the Class A Member has consented to such amendment.
Section 11.3. Partition .
Each of the Members hereby irrevocably waives, to the extent it may lawfully do so, any right that such Member may have to maintain any action for partition with respect to the Company property.
Section 11.4. Waivers and Modifications .
Any consent or waiver, express, implied or deemed, to or of any breach or default by any Person in the performance by that Person of its obligations with respect to the Company or any action inconsistent with this Agreement is not a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person with respect to the Company or any other such action. Failure on the part of a Person to insist in any one or more instances upon strict performance of any provisions of this Agreement, to take advantage of any of its rights hereunder, or to declare any Person in default with respect to the Company, irrespective of how long that failure continues, does not constitute a waiver by that Person of its rights with respect to that Person or its rights with respect to that default until the applicable statute of limitations period has lapsed. All waivers and consents hereunder shall be in writing duly executed by Members representing a Required Majority Vote of the Members affected by such waiver or consent and shall be delivered to the other Members in the manner set forth in Section 11.1 .
 
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Section 11.5. Severability .
Except as otherwise provided in the succeeding sentence, every term and provision of this Agreement is intended to be severable, and if any term or provision of this Agreement is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the legality or validity of the remainder of this Agreement. The preceding sentence shall be of no force or effect if the consequence of enforcing the remainder of this Agreement without such illegal or invalid terms or provision would be to cause any party to this Agreement to lose the benefit of its economic bargain.
Section 11.6. Successors; No Third-Party Beneficiaries .
This Agreement is binding on and inures to the benefit of the Members and their respective heirs, legal representatives, successors and permitted assigns. Nothing in this Agreement shall provide any benefit to any third party (other than the Company) or entitle any third party (other than the Company) to any claim, cause of action, remedy or right of any kind, it being the intent of the Members that this Agreement shall not be construed as a third-party beneficiary contract. To the full extent permitted by law, no creditor or other third party having dealings with the Company shall have the right to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and permitted assigns. None of the rights of the Members herein set forth to make Capital Contributions or loans to the Company shall be deemed an asset of the Company for any purpose by any creditor or other third party.
Section 11.7. Entire Agreement .
This Agreement, including the schedules attached hereto or incorporated herein by reference, constitutes the entire agreement of the Members with respect to the matters covered herein. This Agreement supersedes all prior agreements and oral understandings among the parties hereto with respect to such matters.
Section 11.8. Governing Law .
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, excluding any conflict of laws rule or principle that might refer the governance or construction of this Agreement to the law of another jurisdiction.
Section 11.9. Further Assurances .
In connection with this Agreement and the transactions contemplated hereby, each Member shall execute and deliver any additional documents and instruments and perform any additional acts that may be reasonably required or useful to carry out the intent and purpose of this Agreement and as are not inconsistent with the terms hereof.
 
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Section 11.10. Counterparts .
This Agreement may be executed in any number of counterparts, each of which may be delivered by facsimile transmission or electronically in .PDF format and each of which shall be an original but all of which together will constitute one instrument, binding upon all parties hereto, notwithstanding that all of such parties may not have executed the same counterpart.
Section 11.11. Dispute Resolution .
(a) This Section 11.11 shall apply to any dispute arising under or related to this Agreement (whether arising in contract, tort or otherwise, and whether arising at law or in equity), including (i) any dispute regarding the construction, interpretation, performance, validity or enforceability of any provision of this Agreement or whether any Person is in compliance with, or breach of, any provisions of this Agreement, and (ii) the applicability of this Section 11.11 to a particular dispute. Notwithstanding the foregoing, this Section 11.11 shall not apply to any matters that, pursuant to the provisions of this Agreement, are to be resolved by a vote of the Members (including through the Managing Member). Any dispute to which this Section 11.11 applies is referred to herein as a “ Dispute .” With respect to a particular Dispute, each Member that is a party to such Dispute is referred to herein as a “ Disputing Member .”
(b) If a Dispute arises, the Disputing Members shall attempt to resolve such Dispute through the following procedure: (i) first, the representatives of each of the Disputing Members shall promptly meet (whether by phone or in person) in a good faith attempt to resolve the Dispute; (ii) second, if the Dispute is still unresolved after twenty (20) calendar days following the commencement of the negotiations described Section 11.11(b)(i) , then the designated executive officer of each Disputing Member shall meet (whether by phone or in person) in a good faith attempt to resolve the Dispute; and (iii) third, if the Dispute is still unresolved after ten (10) calendar days following the commencement of the negotiations described in clause (ii) , then any Disputing Member may take such Dispute to litigation.
(c) If any Member raises a Dispute with respect to the Managing Member’s Internal Rate of Return calculation, such Disputing Member shall notify the Managing Member and the other Members not more than thirty (30) days after such Disputing Member has received the applicable Internal Rate of Return calculation notice. In such event, the Members and the Managing Member shall consider the issues raised or in Dispute and discuss such issues with each other and attempt to reach a mutually satisfactory agreement. If notice of Dispute is not given by any Member within such period, each calculation in the Internal Rate of Return will be final and binding on the Member. If the Dispute as to the Managing Member’s calculations is not promptly resolved within ten (10) Business Days of such notification of the Dispute, the Members and the Managing Member shall each promptly present their interpretations to an Independent Accounting Firm, and shall instruct the Independent Accounting Firm to determine the correct amount of the calculations in dispute (if applicable, in accordance with the methodology set forth in Section 6.5 or Section 7.1 ) and to resolve the dispute promptly, but in no event more than twenty (20) Business Days after having the dispute submitted to it. The Independent Accounting Firm will make a determination as to each of the items in dispute, which must be (i) in writing, (ii) furnished to each Member and the Managing Member and
 
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(iii) made in accordance with this Agreement, and which determination, absent manifest error, will be conclusive and binding on all Members. Each Member shall use reasonable efforts to cause the Independent Accounting Firm to render its decision as soon as reasonably practicable, including by promptly complying with all reasonable requests by the Independent Accounting Firm for information, books, records and similar items. In the event the Independent Accounting Firm determines that any of the calculations in dispute were incorrect such that distributions to the Class A Members were reduced by more than ***% over a period of one Fiscal Year or longer, the fees and expenses of the Independent Accounting Firm shall be borne by the Class B Members (pro rata in proportion to their Percentage Interests). In all other cases the fees and expenses of the Independent Accounting Firm shall be borne by the Disputing Member disputing any of the calculations (if more than one, pro rata in proportion to their Percentage Interests).
(d) Notwithstanding the foregoing, any Disputes under this Section 11.11 shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law. The Members hereby irrevocably submit to the non-exclusive jurisdiction of any state or federal court in the State of New York with respect to any action or proceeding arising out of or relating to any such Dispute. Each Member hereto irrevocably and unconditionally waives trial by jury in any action, suit or proceeding relating to a Dispute and for any counterclaim with respect thereto.
Section 11.12. Confidentiality and Publicity .
(a) Confidential Information . The Members shall, and shall cause their Affiliates and their respective stockholders, members, Subsidiaries and Representatives to, hold confidential all information they may have or obtain concerning Sponsor Sub, Sponsor, Investor, the Company, and their respective assets, business, operations or prospects or this Agreement (the “ Confidential Information ”); provided , however , that Confidential Information shall not include information that (i) becomes generally available to the public other than as a result of a disclosure by a Member or any of its Representatives, or (ii) becomes available to a Member or any of its Representatives on a nonconfidential basis prior to its disclosure by the Company or its Representatives. In addition, each Member hereby acknowledges its obligations under the United States federal securities laws.
(b) Legally Compelled Disclosure . Confidential Information may be disclosed (i) as required or requested to be disclosed by a Member or any of its Affiliates or their respective stockholders, members, Subsidiaries or Representatives as a result of any Applicable Laws or rule or regulation of any stock exchange, the National Association of Insurance Commissioners or other regulatory authority having jurisdiction over such Member, or (ii) as required or requested by the IRS in connection with the PV System or Tax Credits relating thereto, including in connection with a request for any private letter ruling, any determination letter or any audit. If a party becomes compelled by legal or administrative process to disclose any Confidential Information, such party shall, to the extent permitted by Applicable Laws, provide the other Members with prompt Notice so that the other Members may seek a protective order or other appropriate remedy or waive compliance with the non-disclosure provisions of this Section 11.12 with respect to the information required to be disclosed. If such protective order
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Limited Liability Company Agreement of
Vivint Solar Aaliyah Project Company, LLC
 
72

or other remedy is not obtained, or such other Members waive compliance with the non-disclosure provisions of this Section 11.12 with respect to the information required to be disclosed, the first party shall furnish only that portion of such information that it is advised, by opinion of counsel, is legally required to be furnished and shall exercise reasonable efforts, at the other Members’ expense, to obtain reliable assurance that confidential treatment will be accorded such information, including, in the case of disclosures to the IRS described in clause (ii) above, to obtain reliable assurance that, to the maximum extent permitted by Applicable Laws, such information will not be made available for public inspection pursuant to Section 6110 of the Code.
(c) Disclosure to Representatives . Notwithstanding the foregoing, a Member may disclose Confidential Information received by it to its employees, consultants, legal counsel, lenders, potential lenders, investors, potential investors (subject to Section 11.12(d) ), agents or other Representatives who have a need to know such information; provided that such Member informs each such Person who has access to the Confidential Information of the confidential nature of such Confidential Information, the terms of this Agreement, and that such terms apply to them. The Members shall ensure that each such Person complies with the terms of this Agreement and that any Confidential Information received by such Member is kept confidential.
(d) Other Permitted Disclosures . Nothing herein shall be construed as prohibiting a party hereunder from using such Confidential Information in connection with (i) any claim against another Member hereunder, (ii) any exercise by a party hereunder of any of its rights hereunder, or (iii) a disposition by a Member of all or a portion of its Membership Interest or a disposition of an equity interest in such Member or its Affiliates, provided that such potential purchaser shall have entered into a confidentiality agreement with respect to Confidential Information on customary terms used in confidentiality agreements in connection with corporate acquisitions before any such information may be disclosed.
(e) Publicity . Prior to any Member (other than Investor or its Affiliates) making a public announcement respecting the Company or any Project that references Investor or any of its Affiliates (for the avoidance of doubt, for purposes of this Agreement, Sponsor shall not be treated as an Affiliate of Investor), such Member shall have obtained the prior written consent of Investor.
Section 11.13. Joint Efforts .
To the full extent permitted by law, neither this Agreement nor any ambiguity or uncertainty herein will be construed against any of the parties hereto, whether under any rule of construction or otherwise. On the contrary, this Agreement has been prepared by the joint efforts of the respective attorneys for, and has been reviewed by, each of the parties hereto.
Section 11.14. Specific Performance .
The Members agree that irreparable damage will result if this Agreement is not performed in accordance with its terms, and the Members agree that any damages available at law for a breach of this Agreement would not be an adequate remedy. Therefore, to the full extent permitted by law, the provisions hereof and the obligations of the Members hereunder
 
Limited Liability Company Agreement of
Vivint Solar Aaliyah Project Company, LLC
 
73

shall be enforceable in a court of equity, or other tribunal with jurisdiction, by a decree of specific performance, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies and all other remedies provided for in this Agreement shall, however, be cumulative and not exclusive and shall be in addition to any other remedies that a Member may have under this Agreement, at law or in equity.
Section 11.15. Survival .
Subject to Section 9.11 , all indemnities and reimbursement obligations made pursuant to this Agreement shall survive dissolution and liquidation of the Company until expiration of the longest applicable statute of limitations (including extensions and waivers) with respect to the matter for which a Person would be entitled to be indemnified or reimbursed, as the case may be.
Section 11.16. Recourse Only to Member .
The sole recourse of the Company for performance of the obligations of any Member hereunder shall be against such Member and its assets and not against any assets or property of any present or future stockholder, partner, member, officer, employee, servant, executive, director, agent, authorized representative or Affiliate of such Member.
Section 11.17. Costs, Expenses, Fees .
Except as otherwise provided in Section 9.4 and Section 9.5 , each Member shall be responsible for its own costs and expenses in connection with the Transaction Documents; provided that Class B Member shall reimburse Investor for up to $*** of any out-of-pocket transaction costs and expenses (including legal fees) actually incurred by Investor in connection with the transactions contemplated under the Transaction Documents (in addition to Class B Member’s obligations under Section 9.4 and Section 9.5 ).
[Remainder of this page intentionally left blank.]
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Limited Liability Company Agreement of
Vivint Solar Aaliyah Project Company, LLC
 
74

IN WITNESS WHEREOF, the parties, each a Member, have caused this Limited Liability Company Agreement to be signed by their respective duly authorized officers as of the date first above written.

VIVINT SOLAR AALIYAH MANAGER, LLC	
		
By:	 	/s/ Paul Dickson	
	 	Name:	 	Paul Dickson	
	 	Title:	 	Vice President of Financing	
	
STONECO IV CORPORATION	
		
By:	 	/s/ John A. Magliano	
	 	Name:	 	John A. Magliano	
	 	Title:	 	Assistant Secretary	
Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC

Annex I
Members and Membership Interests

Class A Member	  	Number of Class A
Membership Interests Owned	 	  	Percentage of Class A
Membership Interests Owned	 	
Stoneco IV Corporation	  	 	100	  	  	 	100	% 	
c/o The Blackstone Group L.P.	  				  				
345 Park Avenue	  				  				
New York, New York 10154	  				  				
Attn: John Finley	  				  				
Fax: 212-583-5749	  				  				
John.Finley@Blackstone.com	  				  				
			
Chaim Miller	  				  				
Chaim.Miller@Blackstone.com	  				  				
			
Joe Rocco	  				  				
Joe.Rocco@Blackstone.com	  				  				
			
Treasury-Operations@Blackstone.com	  				  				

Class B Member	  	Number of Class B
Membership Interests Owned	 	  	Percentage of Class B
Membership Interests Owned	 	
Vivint Solar Aaliyah Manager, LLC,	  	 	100	  	  	 	100	% 	
c/o Vivint Solar, Inc.	  				  				
4931 N 300 W	  				  				
Provo, UT 84604	  				  				
Attn: Paul Dickson, VP of Financing	  				  				
E-Mail: pdickson@vivintsolar.com	  				  				
Fax: (801) 765-5705	  				  				

Schedule 4.2(d)
Initial Capital Accounts

Member Name and Address	  	Capital Account Balance	 	 	Percentage Interest	 	
Stoneco IV Corporation	  	$	 	*** 	 	 	 	***% 	
c/o The Blackstone Group L.P.	  				 				
345 Park Avenue	  				 				
New York, New York 10154	  				 				
Attn: John Finley	  				 				
Fax: 212-583-5749	  				 				
John.Finley@Blackstone.com	  				 				
			
Chaim Miller	  				 				
Chaim.Miller@Blackstone.com	  				 				
			
Joe Rocco	  				 				
Joe.Rocco@Blackstone.com	  				 				
			
Treasury-Operations@Blackstone.com	  				 				
			
Vivint Solar Aaliyah Manager, LLC,	  	$	 	*** 	 	 	 	***% 	
c/o Vivint Solar, Inc.	  				 				
4931 N 300 W	  				 				
Provo, UT 84604	  				 				
Attn: Paul Dickson, VP of Financing	  				 				
E-Mail: pdickson@vivintsolar.com	  				 				
Fax: (801) 765-5705	  				 				
*** Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.

Schedule 9
Transfer Representations and Warranties
(a) [The Class A Member] is a [ — ] duly organized, validly existing and in good standing under the laws of [ — ] and has all requisite [ — ] power and authority to reconvey the Class A Membership Interests as contemplated by the Agreement.
(b) [The Class A Member] owns directly [100%] of the Company’s outstanding Class A Membership Interests to the extent that is what it was sold under the [Agreement] [other transfer documentation].
(c) [The Class A Member] has absolute record and beneficial ownership and title to all of the Membership Interests held by [the Class A Member] to the extent that is what it was sold under the [Agreement] [other transfer documentation], free and clear of any Liens except Permitted Encumbrances.
(d) The assignment effecting the Transfer of the Class A Membership Interests from [the Class A Member] to [the Class B Member] has been duly and validly executed and delivered by [the Class A Member] and constitutes [the Class A Member’s] legal, valid and binding obligation, enforceable against it in accordance with its terms (subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws from time to time in effect relating to the rights and remedies of creditors as well as to general principles of equity whether considered at law or in equity).
(e) Neither the execution, delivery and performance by [the Class A Member] of the assignment effecting the Transfer of the Class A Membership Interests from [the Class A Member] to [the Class B Member] nor the consummation of the transactions contemplated thereby will (i) conflict with or result in any breach of any provision of the organizational documents of [the Class A Member]; (ii) violate or conflict with (or give rise to any right of termination, cancellation or acceleration under) any of the terms, conditions or provisions of any contract or other instrument or obligation that [the Class A Member] is a party to or by which [the Class A Member] is bound; or (iii) violate any Applicable Laws or any material license, franchise, permit or other authorization applicable to or affecting [the Class A Member] or any of its respective assets.
(f) No declaration, filing or registration with, or notice to, or authorization, consent or approval of any Governmental Authority or any other Person that has not been made or obtained on or before the date hereof is necessary for the execution, delivery and performance by [the Class A Member] of the assignment effecting the Transfer of the Class A Membership Interests from [the Class A Member] to [the Class B Member] or the consummation by any such Person of the transactions contemplated thereby.

Exhibit A
Certificate of Membership Interest
See attached

CERTIFICATE OF CLASS [A/B] MEMBERSHIP INTEREST

Certificate
No. [A/B]-[ — ]	  	[Company]
a Delaware limited liability company	  	Class [A/B]
Membership Interests	
The Class [A/B] Membership Interests represented by this Certificate of Class [A/B] Membership Interest (this “Certificate”) and the Class [A/B] Membership Interests evidenced hereby shall constitute a “security” within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware, and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.
THIS CERTIFIES THAT [ — ], a [ — ] [ — ], is the registered holder of [ — ] Class [A/B] Membership Interests of Vivint Solar Aaliyah Project Company, LLC, a Delaware limited liability company (the “Company”), representing 100% of the Class [A/B] Membership Interests in the Company.
IN WITNESS WHEREOF, the duly authorized officers of the Company have executed this Certificate as of this      day of             , 2013.

By:	 	 	 		 	By:	 	 	
	 	Name:	 		 		 	Name:	
					
	 	Title:	 		 		 	Title:	

THE CLASS [A/B] MEMBERSHIP INTERESTS REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER ANY SECURITIES LAW AND THE TRANSFERABILITY OF SUCH CLASS [A/B] MEMBERSHIP INTERESTS IS RESTRICTED. SUCH CLASS [A/B] MEMBERSHIP INTERESTS MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED OR TRANSFERRED, NOR WILL ANY ASSIGNEE, VENDEE, TRANSFEREE OR ENDORSEE THEREOF BE RECOGNIZED AS HAVING ACQUIRED ANY SUCH CLASS [A/B] MEMBERSHIP INTERESTS BY THE ISSUER FOR ANY PURPOSES, UNLESS (I) A REGISTRATION UNDER THE SECURITIES ACT OF 1933 (AS AMENDED) WITH RESPECT TO SUCH CLASS [A/B] MEMBERSHIP INTERESTS SHALL THEN BE IN EFFECT AND SUCH TRANSFER HAS BEEN QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS, OR (II) SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS.
ADDITIONALLY, NO CLASS [A/B] MEMBERSHIP INTERESTS REPRESENTED BY THIS INSTRUMENT MAY BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT AS PROVIDED IN THE LIMITED LIABILITY COMPANY AGREEMENT OF THE COMPANY, COPIES OF WHICH ARE ON FILE IN THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON REQUEST AND WITHOUT CHARGE TO ANY HOLDER.

For Value Received ,                      hereby sell(s), assign(s) and transfer(s) unto                                                       Class [A/B] Membership Interests represented by the within Certificate, and do(es) hereby irrevocably constitute and appoint                                                                                   Attorney to transfer the said Class [A/B] Membership Interests on the books of the within named Company with full power of substitution in the premises.

Dated:	 	 	
		
By:	 	 	

Exhibit B
Base Case Model
See attached

Exhibit C
Insurance
Coverage :
The Company shall procure and maintain in full force and effect the following minimum insurance coverages, at its sole expense, as set forth below. All such insurance carried shall be placed with such insurers having a minimum A.M. Best rating of A-IX, and be in such form, with such other terms, conditions, limits and deductibles (subject to the minimum insurance coverages below):
(A) All Risk Property Insurance . The Company shall maintain all risk property insurance covering against physical loss or damage to the Projects, including fire and extended coverage. Such insurance coverage shall cover each and every component of the Project, per policy terms and conditions. Such insurance coverage shall be written on a full replacement cost basis, shall include an agreed amount endorsement waiving any coinsurance penalty, and shall include expediting expense coverage in an amount not less than $50,000. Such insurance coverage may be subject to deductibles not to exceed $250,000 for each and every occurrence.
(B) Commercial General Liability . The Company shall maintain third party liability insurance coverage written on an occurrence basis with a limit of liability of not less than $1,000,000. Such insurance shall include coverage for premises/operations, pollution arising out of hostile fire, contractual liability, independent contractors, products/completed operations, property damage and personal injury liability.
(C) Workers’ Compensation/Employer’s Liability . If the Company has any employees, the Company shall maintain Workers’ Compensation insurance in accordance with statutory provisions covering accidental injury, illness or death of any such employee while at work or in the scope of his or her employment with the Company, and Employer’s Liability insurance in an amount not less than $1,000,000. Exclusions for occupational disease shall be limited to employers’ liability only.
(D) Business Auto . If applicable, the Company shall maintain Business Auto insurance covering owned, non-owned, leased, hired or borrowed vehicles of the Company, if any, against bodily injury or property damage. Such insurance coverage shall have a combined single limit of liability of not less than $1,000,000.
(E) Excess/Umbrella Liability . The Company shall maintain Excess/Umbrella Liability insurance written on an occurrence basis and providing coverage limits in excess of the primary limits applying under policies described in subsections (B), (C) (employers’ liability only), and (D) above. Such insurance coverage shall have a limit of liability of not less than $10,000,000. Such insurance coverage shall include a drop down provision in the event of exhaustion of underlying limits or aggregates and apply on a following form basis to the primary coverage.

Endorsements :
The Company shall cause its insurance coverages to be endorsed as follows (all such endorsements with respect to the Class A Member to be as of the Effective Date):
(A) Each Class A Member shall be an additional insured and Loss Payee with respect to the Property All Risk and any other applicable First Party insurance. Each Class A Member shall be additional insured with respect to the General Liability, Automobile and Umbrella Liability policies.
(B) Such other endorsements, or independent instruments, furnished to each Class A Member, will provide that (i) the insurance companies will give each Class A Member at least ten (10) calendar days prior written notice, in the case of nonpayment of premiums, or thirty (30) calendar days prior written notice, in all other cases, before any such policy or policies of insurance shall be canceled, (ii) in as much as the liability policies are written to cover more than one insured, all terms, conditions, insuring agreements and endorsements of the liability policies, with the exception of the limits of liability and products completed operations, shall operate in the same manner as if there were a separate policy covering each insured, (iii) such insurance is primary without right of contribution of any other insurance carried by or on behalf of each Class A Member with respect to its interests as such in the Project and (iv) coverage shall not be cancelled except after thirty (30) calendar days’ prior written notice, or ten (10) days’ prior written notice in the event of cancellation for nonpayment of premium, has been given to the each Class A Member.
General :
In the event any property insurance (including the limits or deductibles thereof) hereby required to be maintained, other than insurance required by law to be maintained, shall not be available and commercially feasible in the commercial insurance market, no Class A Member shall unreasonably withhold their agreement to waive such requirement to the extent the maintenance thereof is not so available; provided , however , that: (i) the Company shall first request any such waiver in writing ten (10) Business Days prior to the policy renewal, which request shall be accompanied by written reports prepared by the Company’s insurance broker certifying that such property insurance is not reasonably available and commercially feasible in the commercial insurance market for projects of similar type and capacity (and, in any case where the required amount is not so available, certifying as to the maximum amount which is so available) and explaining in detail the basis for such conclusions, such insurance advisers and the form and substance of such reports to be reasonably acceptable to the Class A Member; (ii) at any time after the granting of any such waiver, the Class A Member may request, and the Company shall furnish to the Class A Member within fifteen (15) calendar days after such request, supplemental reports reasonably acceptable to the Class A Member from such insurance advisers updating their prior reports and reaffirming such conclusion; (iii) any such waiver shall be effective only so long as such property insurance shall not be available and commercially feasible in the commercial insurance market, it being understood that the failure of the Company to timely furnish any such supplemental report shall be conclusive evidence that such waiver is no longer effective because such condition no longer exists, but that such failure is not the only way to establish such nonexistence; and (iv) the Company shall procure such property insurance coverage as is then available to the Company on commercially reasonable terms.

Exhibit D
Form of Note

$[        ]	  	[            ], 20[    ]
New York, New York	
FOR VALUE RECEIVED, Vivint Solar Aaliyah Project Company LLC, a Delaware limited liability company (the “ Company ”), hereby promises to pay to [                    ] (the “ Member ”), into [INSERT ACCOUNT INFORMATION], the principal sum of $[AMOUNT EQUAL TO THE MEMBER LOAN] as a Member Loan made by the Member to the Company pursuant to the Limited Liability Company Agreement of the Company dated as of November 5, 2013, by and between Stoneco IV Corporation and Vivint Solar Aaliyah Manager, LLC (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ LLC Agreement ”), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the LLC Agreement and on the schedule attached hereto, and to pay interest on the unpaid principal amount of each such Member Loan, into such account, in like money and funds, for the period commencing on the date of such Member Loan until such Member Loan shall be paid in full, at the rate per annum and on the dates provided in the LLC Agreement and on the schedule attached hereto (unless such interest is compounded to the principal amount of the Member Loan in accordance with Section 4.3(b) of the LLC Agreement).
The date, amount, and interest rate of each Member Loan made by the Member to the Company, and each payment made on account of the principal thereof, shall be recorded by the Member on its books and, prior to any transfer of this Note, endorsed by the Member on the schedule attached hereto or any continuation thereof, provided that the failure of the Member to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under the LLC Agreement or hereunder in respect of the Member Loans made by the Member.
This Note evidences Member Loans made by the Member under the LLC Agreement. Terms used but not defined in this Note have the respective meanings assigned to them in the LLC Agreement.
This Note shall be governed by, and construed in accordance with, the law of the State of New York.
[SIGNATURE PAGE FOLLOWS]

			
VIVINT SOLAR AALIYAH PROJECT COMPANY, LLC	
		
By:	 	 	
	 	Name:	
	 	Title:	

Schedule of Member Loans
This Note evidences Member Loans made under the within-described LLC Agreement to the Company, on the dates, in the principal amounts, bearing interest at the rates set forth below and subject to the payments, prepayments and compounding set forth below:

Date	  	Principal
Amount of
Loan	  	Interest Rate	  	Amount Paid,
Prepaid, or
Compounded	  	Notation
Made by	

	  		  		  		  		

Exhibit 10.33A
*** Text Omitted and Filed Separately with the Securities Exchance Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406
Execution Version
FIRST AMENDMENT TO
LIMITED LIABILITY COMPANY AGREEMENT OF
VIVINT SOLAR AALIYAH PROJECT COMPANY, LLC
This FIRST AMENDMENT TO LIMITED LIABILITY COMPANY AGREEMENT OF VIVINT SOLAR AALIYAH PROJECT COMPANY, LLC (this “ First Amendment ”) is dated as of January 13, 2014 by and between Vivint Solar Aaliyah Manager, LLC, a Delaware limited liability company (“ Sponsor Sub ”), and Stoneco IV Corporation, a Delaware corporation (“ Investor ”).
RECITALS
WHEREAS, Sponsor Sub and Investor are each a party to that certain Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC dated as of November 5, 2013 (the “ Agreement ”). Initially capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Agreement.
WHEREAS, the Members desire to amend the Agreement as set forth herein to modify certain provisions within the Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, of mutual promises of the parties hereto and of other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereby agree as follows:
 
1.	The following defined terms in Section 1.1 of the Agreement are hereby deleted in their entirety and the following new definitions are inserted in their stead, to read as follows:	
“ Investor Contribution Cap ” means for all Projects purchased, $***.
“ Maximum Liability ” means, with respect to a party, $***. For the avoidance of doubt, (a) any indemnification of Sponsor Sub by the Company or any indemnification of the Company by Sponsor Sub shall not be included in calculating whether the Maximum Liability applicable to Sponsor Sub has been or will be exceeded, and (b) any indemnification of the Investor by the Company or any indemnification of the Company by Investor shall not be included in calculating whether the Maximum Liability applicable to Investor has been or will be exceeded.
 
2.	Section 4.1(a) of the Agreement is hereby amended by deleting “***%” and replacing it with “***%.”	
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
1

Execution Version

3.	Section 9.4(b)(ii) of the Agreement is hereby deleted in its entirety and the following inserted in its stead, to read as follows:	
(ii) $***.
 
4.	Exhibit B (Base Case Model) of the Agreement is hereby deleted in its entirety and the exhibit attached hereto as Schedule A is inserted in its stead.	
 
5.	Miscellaneous .	
 
 	a.	Ratification of Agreement . All other terms and conditions of the Agreement remain in full force and effect unless amended by the foregoing changes or any additional amendments made in a writing executed by all of the parties hereto. In the event of a conflict or ambiguity between this First Amendment and the Agreement, this First Amendment will control.	
 
 	b.	Burden and Benefit . The covenants and agreements contained herein shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and permitted assigns of the respective parties hereto.	
 
 	c.	Governing Law . This First Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, excluding any conflict of laws rule or principle that might refer the governance or construction of this First Amendment to the law of another jurisdiction.	
 
 	d.	Counterparts . This First Amendment may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties shall not have signed the same counterpart.	
 
 	e.	Separability of Provisions . Each provision of this First Amendment shall be considered separable and if for any reason any provision which is not essential to the effectuation of the basic purposes of this First Amendment is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this First Amendment which are valid. The preceding sentence shall be of no force or effect if the consequence of enforcing the remainder of this First Amendment without such invalid or illegal provision would be to cause any party to this First Amendment to lose the benefit of its economic bargain.	
 
 	f.	Entire Agreement . This First Amendment, the Agreement and the documents referred to herein and therein (including the schedules and exhibits attached hereto and thereto) set forth all (and are intended by all parties to be an integration of all) of the representations, promises, agreements and understandings among the parties hereto with respect to the subject matter herein and therein, and there are no representations, promises, agreements or understandings, oral or written, express or implied, among them other than as set forth or incorporated herein or therein.	
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
2

Execution Version

 	g.	Costs, Expenses, Fees . Each of the Members shall be responsible for its own costs and expenses in connection with this First Amendment; provided , that Sponsor Sub shall reimburse Investor for any reasonable out-of-pocket transaction costs and expenses (including legal fees) actually incurred by Investor in connection with this First Amendment and related amendments to and reaffirmations of the Transaction Documents.	
[signature page follows]
 
3

IN WITNESS WHEREOF, the Members have set their signatures to this First Amendment to Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC as of the date first written above.

INVESTOR :	
	
STONECO IV CORPORATION,
a Delaware corporation	
		
By:	 	/s/ John A. Magliano	
Name:	 	John A. Magliano	
Title:	 	Assistant Secretary	
	
SPONSOR SUB :	
	
VIVINT SOLAR AALIYAH MANAGER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
Signature Page to First Amendment to Limited Liability Company Agreement of
Vivint Solar Aaliyah Project Company, LLC

Schedule A
To First Amendment to Limited Liability Company Agreement of
Vivint Solar Aaliyah Project Company, LLC
(Exhibit B to the Agreement – Base Case Model)

Exhibit 10.34
*** Text Omitted and Filed Separately with the Securities Exchange Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406
EXECUTION VERSION
DEVELOPMENT, EPC AND PURCHASE AGREEMENT
by and among
VIVINT SOLAR DEVELOPER, LLC
a Delaware limited liability company
and
VIVINT SOLAR, INC.
a Delaware corporation
and
VIVINT SOLAR AALIYAH PROJECT COMPANY, LLC
a Delaware limited liability company
Dated as of November 5, 2013
 
Development, EPC and Purchase Agreement

TABLE OF CONTENTS

 	  	 	  	Page	 	
		
ARTICLE 1 DEFINED TERMS	  	 	1	  	
			
1.1	  	Defined Terms.	  	 	1	  	
1.2	  	Capitalized Terms.	  	 	10	  	
1.3	  	Construction.	  	 	10	  	
		
ARTICLE 2 PURCHASE OF PROJECTS	  	 	10	  	
			
2.1	  	Presentation and Review of Tranches; Purchase.	  	 	10	  	
2.2	  	Completion of Purchased Systems.	  	 	13	  	
2.3	  	Conditions Precedent to the Obligations of Purchaser.	  	 	16	  	
2.4	  	Conditions Precedent to the Obligations of a Seller.	  	 	18	  	
2.5	  	Conditions Precedent to the Obligations of Both Parties.	  	 	19	  	
		
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS	  	 	19	  	
			
3.1	  	Representations, Warranties and Covenants of Sellers.	  	 	19	  	
3.2	  	Representations and Warranties of Purchaser.	  	 	25	  	
3.3	  	No Other Seller Representations.	  	 	26	  	
3.4	  	Defects Warranty.	  	 	26	  	
3.5	  	Insurance	  	 	26	  	
		
ARTICLE 4 TERMINATION	  	 	27	  	
			
4.1	  	Termination.	  	 	27	  	
4.2	  	Procedure and Effect of Termination.	  	 	28	  	
4.3	  	Indemnification by Seller.	  	 	28	  	
4.4	  	Indemnification by Purchaser.	  	 	29	  	
4.5	  	LIMITATION OF LIABILITY.	  	 	30	  	
4.6	  	Indemnification Procedures.	  	 	30	  	
		
ARTICLE 5 DISPUTE RESOLUTION	  	 	31	  	
			
5.1	  	Good Faith Negotiations.	  	 	31	  	
5.2	  	SUBMISSION TO JURISDICTION.	  	 	31	  	
		
ARTICLE 6 GENERAL PROVISIONS	  	 	31	  	
			
6.1	  	Exhibits and Schedules.	  	 	31	  	
6.2	  	Amendment, Modification and Waiver.	  	 	32	  	
6.3	  	Severability.	  	 	32	  	
6.4	  	Expenses.	  	 	32	  	
 
Development, EPC and Purchase Agreement
 
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TABLE OF CONTENTS
(continued)

 	  	 	  	Page	 	
			
6.5	  	Parties in Interest.	  	 	32	  	
6.6	  	Notices.	  	 	33	  	
6.7	  	Counterparts.	  	 	34	  	
6.8	  	Entire Agreement.	  	 	35	  	
6.9	  	Governing Law.	  	 	35	  	
6.10	  	Public Announcements.	  	 	35	  	
6.11	  	Assignment.	  	 	35	  	
6.12	  	Relationship of Parties.	  	 	36	  	
6.13	  	Successors and Assigns.	  	 	36	  	
6.14	  	Access.	  	 	36	  	
6.15	  	Purchaser Member Authorization.	  	 	36	  	
 
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Schedules :	  		
		
Schedule 1	  	List of Purchased Systems and Associated Customer Agreements	
Schedule 2	  	Form of Tranche Presentation Certificate	
Schedule 3	  	Forms of Customer Agreements	
	  	California – Version 2.6	
	  	Hawaii – Version 2.6	
	  	Maryland – Version 2.6	
	  	Massachusetts – Version 2.6	
	  	New Jersey – Version 2.6	
	  	New York – Version 2.6	
	  	Washington, D.C. – Version 2.6	
Schedule 4	  	Form of Bill of Sale and Assignment	
Schedule 5	  	Form of Closing Request	
Schedule 6	  	Form of Transfer Notice	
Schedule 7	  	Form of Deficient Project and Cancelled Project Report	
Schedule 8	  	Form of Change Order Report	
Schedule 9	  	Form of Substitution Report	
Schedule 10	  	Form of True-Up Report	
Schedule 11	  	Form of Completion Certificate	
Schedule 12	  	Performance Tests	
Schedule 13	  	Approved Suppliers	
Schedule 14	  	Insurance Requirements	
 
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DEVELOPMENT, EPC AND PURCHASE AGREEMENT
This DEVELOPMENT, EPC AND PURCHASE AGREEMENT is made and entered into as of November 5, 2013 (the “ Effective Date ”), by and among Vivint Solar Developer, LLC, a Delaware limited liability company (“ VSD ”), Vivint Solar, Inc., a Delaware corporation (“ VSI ”, together with VSD, the “ Sellers ” and each a “ Seller ”), and Vivint Solar Aaliyah Project Company, LLC, a Delaware limited liability company (“ Purchaser ”). The use of “ Party ” herein means each Seller or Purchaser, and “ Parties ” means the Sellers and Purchaser.
RECITALS
1. Each Seller is in the business of providing photovoltaic systems for use on residential properties.
2. Each Seller is experienced in the design, engineering, equipment procurement, installation, commissioning, construction and testing of such photovoltaic systems.
3. Purchaser desires to purchase, and each Seller desires to sell, such photovoltaic systems for installation and use on residential properties on the terms and subject to the conditions described herein.
4. Purchaser desires that each Seller design, engineer, procure, install, commission, construct and performance test the photovoltaic systems on a turnkey, fixed-price basis, and each Seller desires to perform such services.
5. In order to facilitate such purchases and the design, engineering, equipment procurement, installation, commissioning, construction and testing of such photovoltaic systems, the Parties wish to enter into this Agreement covering the period commencing on the date of this Agreement and ending at the expiration of the Term (defined below).
NOW THEREFORE, in consideration of the respective representations, warranties, covenants, agreements and conditions hereinafter set forth, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows:
AGREEMENT
ARTICLE 1
DEFINED TERMS
1.1 Defined Terms .
As used herein, the following terms have the following meanings:
“ Accepted Project ” is defined in Section 2.1(d) .
“ Affiliate ” means, with respect to any Person, a Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with the Person specified; provided , however , that Purchaser and Investor shall not be considered Affiliates of a Seller or Sponsor for purposes of this Agreement.
 
Development, EPC and Purchase Agreement

“ Agreement ” means this Development, EPC and Purchase Agreement, together with all schedules and exhibits hereto, as amended, restated, supplemented or otherwise modified from time to time.
“ Applicable Laws ” means all applicable laws of any Governmental Authority, including, without limitation, laws relating to consumer leasing and protection and any ordinances, judgments, decrees, injunctions, writs and orders or like actions of any Governmental Authority and rules and regulations of any federal, regional, state, county, municipal or other Governmental Authority.
“ Appraisal ” is defined in Section 2.3(h) .
“ Appraisal Deficiency Notice ” means an official promulgation or written notification from the Internal Revenue Service that would have the effect of lowering the fair market value of, or Purchaser’s tax basis in, any Project.
“ Assets ” means, with respect to any Person, all right, title and interest of such Person in land, properties, buildings, improvements, fixtures, foundations, assets and rights of any kind, whether tangible or intangible, real, personal or mixed, including contracts, equipment, systems, books and records, proprietary rights, intellectual property, Permits, rights under or pursuant to all warranties, representations and guarantees, cash, accounts receivable, deposits and prepaid expenses.
“ Base Case Model ” is defined in the LLC Agreement.
“ Bill of Sale ” is defined in Section 2.1(g) .
“ Business Day ” means any day other than Saturday, Sunday and any other day on which banks in New York are authorized to be closed.
“ Cancelled Project ” means a PV System (a) that a Seller has removed from the Tranche due to a delay in the completion schedule or other reasons or (b) for which the related Customer Agreement is cancelled or terminated, in each case, before such PV System is Placed in Service, but after such PV System has been Purchased by Purchaser.
“ Capital Contribution ” is defined in the LLC Agreement.
“ Change Order ” is defined in Section 2.2(e) .
“ Change Order Credit ” is defined in Section 2.2(e) .
“ Change Order Debit ” is defined in Section 2.2(e) .
“ Change Order Report ” is defined in Section 2.2(e) .
“ Closing Request ” is defined in Section 2.1(f) .
 
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“ Code ” means the Internal Revenue Code of 1986, as amended, or any successor federal tax statute.
“ Completion Certificate ” means a certificate signed by an authorized officer of Seller in substantially the form of Schedule 11 .
“ Completion Deadline ” means March 31, 2014.
“ Control ” means, with respect to a Person, the possession, directly or indirectly, of the power to direct or cause the direction of such Person’s management or policies, whether through the ownership of voting securities, by contract or otherwise.
“ Customer Agreement ” means, in respect of each PV System, a power purchase agreement with a Host Customer in one of the forms attached to Schedule 3 applicable to the Project State where such Host Customer is located, together with all other agreements, instruments and documents incorporated therein by the terms thereof (or such other form as is approved in writing by Investor), except for any immaterial deviations from such form that do not affect the rights and obligations of the parties thereto.
“ Deduction Loss ” is defined in Section 4.3(c) .
“ Deficient Project ” means an Accepted Project which is not a Cancelled Project but for which the PV System for such Project is not Placed in Service by the Completion Deadline.
“ Deficient Project and Cancelled Project Report ” is defined in Section 2.2(d) .
“ Dispute ” is defined in Section 5.1 .
“ Effective Date ” is defined in the preamble.
“ Environmental Law ” means all Applicable Laws pertaining to the environment, human health or safety, or natural resources, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the Superfund Amendments and Reauthorization Act of 1986, the Emergency Planning and Community Right to Know Act (42 U.S.C. §§ 11001 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), the Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Federal Water Pollution Control Act (also known as the Clean Water Act) (33 U.S.C. §§ 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.), the Endangered Species Act (16 U.S.C. §§ 1531 et seq.), the Migratory Bird Treaty Act (16 U.S.C. §§ 703 et seq.), the Bald Eagle Protection Act (16 U.S.C. §§ 668 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. §§ 2701 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et seq.), and the Occupational Safety and Health Act of 1970, to the extent that it relates to the handling of and exposure to hazardous or toxic materials or similar substances, and any similar or analogous state and local statutes or regulations promulgated thereunder, and decisional law of any Governmental Authority, as each of the foregoing may be amended or supplemented from time to time in the future, in each case to the extent applicable with respect to the property or operation to which application of the term “Environmental Law” relates.

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“ FERC ” means the Federal Energy Regulatory Commission or any successor agency.
“ FICO® Score ” means a score based on the credit risk rating system established and maintained by the Fair Isaac Corporation.
“ Final Determination ” means the earliest to occur of: (a) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other order has become final after all allowable appeals (other than appeals to the United States Supreme Court) by either party to the action have been exhausted or the time for filing such appeals has expired, (b) a closing agreement entered into (i) under Section 7121 of the Code or any other settlement agreement entered into in connection with an administrative or judicial proceeding and (ii) with the written consent of a Seller (such consent not to be unreasonably withheld, conditioned or delayed), (c) the expiration of the time for instituting suit with respect to the claimed deficiency, or (d) the expiration of the time for instituting a claim for refund, or if such a claim was filed, the expiration of the time for instituting suit with respect thereto.
“ GAAP ” means (a) generally accepted accounting principles in the United States of America as in effect from time to time, consistently applied; or (b) upon mutual agreement of the Parties, internationally recognized generally accepted accounting principles, consistently applied.
“ Governmental Authority ” means any foreign, federal, state, local or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrating body or other governmental authority having jurisdiction or effective control over a Seller, Purchaser, their respective Affiliates or any Project.
“ Government Incentive ” means a payment, including, without limitation, a payment in respect of any performance-based incentive or rebates, by a utility, electric distribution company or federal, state or local Governmental Authority or quasi-governmental agency, and any extension of the program (including by converting the program into a refundable tax credit or tax refund program), in each case as an inducement to a utility customer, solar company or installer to install or use solar equipment, except that neither (a) Tax Credits and depreciation deductions for U.S. federal income tax purposes nor (b) any credits or payments available under any Host Customer’s utility’s “net metering” program for energy generated by the applicable Project that are reserved to such Host Customer under the applicable Customer Agreement shall be considered Government Incentives.
“ Host Customer ” means a residential customer under a Customer Agreement whose property where the PV System is installed is located in a Project State.
“ Indemnifying Party ” is defined in Section 4.6 .
“ Indemnitee ” is defined in Section 4.6 .
 
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“ Initial Completion Deadline ” means December 31, 2013.
“ In-Service Date ” has the meaning assigned to that term in the applicable Customer Agreement.
“ Installation ” is defined in Section 2.2(a) .
“ Investor ” is defined in the LLC Agreement.
“ Investor Contribution Cap ” is defined in the LLC Agreement.
“ Knowledge of Investor ” means the actual knowledge, after due inquiry, as of the Effective Date and each Purchase Date, of one or more of the following persons (together with any successor person holding the same title or the functional equivalent without supplanting or replacing any of the following persons, whose actual knowledge after due inquiry shall remain “Knowledge”) holding the following titles at Investor: Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer and General Counsel.
“ Knowledge of a Seller ” or “ Knowledge of such Seller ” means with respect to a Seller, the actual knowledge, after due inquiry, as of the Effective Date and each Purchase Date, of one or more of the following persons holding the following titles at such Seller: Greg Butterfield (Chief Executive Officer and President), Brendon Merkley (Chief Operating Officer), Paul Dickson (Vice President of Finance), and Dan Black (General Counsel); provided , however , that for matters relating to a Host Customer, “Knowledge” shall be limited to the representations and warranties made by such Host Customer in Customer Agreements without such Seller undertaking further inquiry or due diligence, unless any one of the persons described above has actual knowledge that a representation or warranty is untrue.
“ kW ” means kilowatt.
“ Lien ” means any lien, security interest, mortgage, hypothecation, encumbrance or other restriction on title or property interest.
“ LLC Agreement ” means that certain Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC, a Delaware limited liability company, made and entered into as of the date hereof, as amended, restated, supplemented or otherwise modified from time to time.
“ Loss ” means any claim, demand, suit, loss, liability, damage, obligation, payment, cost, fee, Tax, penalty or expense (including, without limitation, the cost and expense of any action, suit, proceeding, assessment, judgment, settlement or compromise relating thereto and reasonable attorneys’ fees and reasonable disbursements in connection therewith).
“ Maintenance Services Agreement ” means that certain Maintenance Services Agreement, dated as of the date hereof, between MSA Provider and Purchaser.
“ Managing Member ” is defined in the LLC Agreement.
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“ Material Adverse Change ” means, with respect to any Person, a fact, event or circumstance that, alone or when taken with other events or conditions occurring or existing concurrently with such event or condition, (a) has or is reasonably expected to have a material adverse effect on the business, operations, condition (financial or otherwise), assets, liabilities or properties of such Person, (b) has or is reasonably expected to have any material adverse effect on the validity or enforceability of the Transaction Documents, (c) materially impairs or is reasonably expected to materially impair the ability of such Person to meet or perform its obligations under the Transaction Documents, or (d) has or is reasonably expected to have any material adverse effect on such Person’s rights under the Transaction Documents.
“ Minimum Credit Criteria ” means (a) a FICO® Score for an individual Host Customer of *** or greater from Equifax, TransUnion, Experian or other nationally-recognized consumer rating agency, and (b) after giving effect to all Purchases under this Agreement (i) ***% of the Customer Agreements are with Host Customers that have a FICO® Score *** from Equifax, TransUnion, Experian or other nationally-recognized consumer rating agency and (ii) *** Host Customers whose FICO® Scores from Equifax, TransUnion, Experian or other nationally-recognized consumer rating agency are *** or greater.
“ MW ” means megawatt.
“ MSA Provider ” is defined in the LLC Agreement.
“ Net Purchase Price ” is defined in Section 2.1(f) .
“ Non-Accepted Project ” is defined in Section 2.1(d) .
“ Ordinary Course of Business ” means the ordinary conduct of business consistent with custom and practice for residential rooftop distributed solar electricity generation businesses in the United States (including with respect to quantity and frequency).
“ Party ” or “ Parties ” is defined in the preamble.
“ Performance Test ” means each and every test required under the Customer Agreement as a requirement for achieving the In-Service Date, as more particularly described in Schedule 12 .
“ Permit ” means any permit, franchise, lease, order, license, notice, certification, approval, exemption, qualification, right or authorization from or registration, notice or filing with any Governmental Authority.
“ Permitted Liens ” means (a) liens for taxes not yet due or that are being contested in good faith by appropriate proceedings, to the extent adequate reserves have been made consistent with GAAP, (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, employees’, contractors’, operators’, vendors’ or other similar liens or charges securing the payment of expenses not yet due and payable that are incurred in the Ordinary Course of Business, (c) liens securing obligations or duties (other than Indebtedness) to any Governmental
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Authority arising in the Ordinary Course of Business (including under licenses and permits held by the Purchaser and under all Applicable Laws and orders of any Governmental Authority), (d) easements, rights-of-way, restrictions (including zoning restrictions), covenants, licenses, encroachments, protrusions and other similar charges or encumbrances on or with respect to real property that do not secure Indebtedness of Purchaser or its Affiliates or materially interfere with the ownership, installation or operation of the Projects in the Ordinary Course of Business, (e) liens incurred or deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment or other social security or to secure performance of statutory obligations, surety bonds, performance bonds and other similar obligations and (f) any other liens agreed to in writing by Managing Member and Investor.
“ Person ” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, or governmental entity or any department or agency thereof.
“ Placed in Service ” is defined in the LLC Agreement.
“ Placed in Service Date ” in respect of a PV System means the date such PV System is Placed in Service.
“ Project ” means a PV System installed or to be installed, and used or to be used to generate electricity for sale to a Host Customer under a Customer Agreement as contemplated under this Agreement, associated rights under the applicable Customer Agreement, and all other related rights to the extent applicable thereto, including, without limitation, all parts and manufacturer’s warranties and rights to access Host Customer data, and all Permits and Real Property Rights necessary for the operation of the PV System and the sale of electricity pursuant to the related Customer Agreement, and all rights pursuant to any related Government Incentives and RECs.
“ Project States ” means California, Hawaii, Maryland, Massachusetts, New Jersey, New York, and Washington, D.C.
“ Prudent Industry Standards ” means the practices, methods, equipment, specifications and standards of safety, as the same may change from time to time, as are used or approved by a significant portion of the residential rooftop distributed solar electric generation industry operating in the applicable Project States in residential rooftop distributed solar electric generating systems or facilities of a type and size similar to the Projects as good, safe and prudent engineering practices in connection with the design, construction, operation, maintenance, repair and use of electrical and other equipment, facilities and improvements of such residential rooftop distributed solar electric generating system or facility, with commensurate standards of safety, performance, dependability, efficiency and economy, in each case in light of the facts known and circumstances existing at the time any decision is made or action is taken, that would be expected to accomplish the desired result in a manner materially consistent with Applicable Law, Permits, codes, and equipment manufacturer’s recommendations.
“ Purchase ” means each purchase of a PV System pursuant to Section 2.1(b) .
 
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“ Purchase Date ” means the date on which the System Purchase Price is due for a particular PV System.
“ Purchased Systems ” means all PV Systems purchased by Purchaser from a Seller pursuant to Section 2.1 .
“ Purchaser ” is defined in the preamble.
“ Purchaser Indemnified Parties ” is defined in Section 4.3(a) .
“ PV System ” means a residentially hosted roof-top solar electric generating system, including photovoltaic panels, racks, wiring and other electrical devices, conduits, weatherproof housings, hardware, one or more inverters, remote monitoring systems, connectors, meters, disconnects and over current devices.
“ Qualified Appraiser ” means Novogradac & Company LLP or a nationally recognized third-party appraiser that (a) is qualified to appraise independent electric generating businesses, (b) has been engaged in the appraisal or business valuation and consulting business for no fewer than five (5) years, (c) is not an Affiliate of either Purchaser or any Seller, and (d) is mutually agreed upon by both the applicable Seller and Purchaser.
“ Real Property Rights ” is defined in Section 3.1(o) .
“ RECs ” is defined in the LLC Agreement.
“ Refund Credit ” means any of the (a) Change Order Credit and (b) Removed Project Credit.
“ Removed Project Credit ” is defined in Section 2.2(d) .
“ Replacement Appraisal ” is defined in Section 2.3(h) .
“ Review Period ” is defined in Section 2.1(d) .
“ Seller ” or “ Sellers ” is defined in the preamble.
“ Seller Indemnified Parties ” is defined in Section 4.4 .
“ Sponsor ” is defined in the LLC Agreement.
“ Sponsor Guaranty ” means that certain Guaranty, dated as of the date hereof, by Vivint Solar, Inc. in favor of Purchaser and Investor.
“ STC DC ” means standard test conditions direct current.
“ Substituted Project ” is defined in Section 2.2(d) .
“ Substituted Project Review Period ” is defined in Section 2.2(f) .
 
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“ Substitution Report ” means a report substantially in the form of Schedule 9 , for each affected Tranche, that (a) indicates which Deficient Projects and Cancelled Projects are proposed to be replaced with Substituted Projects, (b) describes any increase or decrease in system size pursuant to each change or substitution, (c) describes any increase or decrease in the tax bases or fair market values of Projects pursuant to each such change and (d) lists all Substituted Projects.
“ System Purchase Price ” is defined in Section 2.1(e) .
“ Tax ” or “ Taxes ” (and with correlative meaning, “ Taxable ” and “ Taxing ”) is defined in the LLC Agreement.
“ Tax Credit Loss ” is defined in Section 4.3(c) .
“ Tax Credits ” is defined in the LLC Agreement.
“ Tax Loss ” is defined in Section 4.3(c) .
“ Tax Savings ” is defined in Section 4.3(d) .
“ Term ” means the period commencing on the Effective Date and ending upon termination pursuant to ARTICLE 4 .
“ Tranche ” is defined in Section 2.1(c) .
“ Tranche Presentation Certificate ” means a list of PV Systems, substantially in the form of Schedule 2 , that are being presented as part of a Tranche, including, for each Project: (a) the Host Customer, (b) the address of the PV System, (c) the kW size of each PV System to be installed, (d) the System Purchase Price for a Project and (e) the FICO® Score for the Host Customer from any nationally recognized consumer rating agency.
“ Transaction Documents ” means this Agreement, the LLC Agreement, the Maintenance Services Agreement, the Sponsor Guaranty, any Transfer Notice executed and delivered pursuant to this Agreement, any subcontract entered into by a Seller under Section 2.2(a) of this Agreement and any Bill of Sale executed and delivered pursuant to this Agreement.
“ Transfer Notice ” is defined in Section 2.1(g) .
“ True-Up Base Case Model ” is defined in Section 2.2(h) .
“ True-Up Report ” is defined in Section 2.2(h) .
“ VSD ” is defined in the preamble.
“ VSH Entities ” means V Solar Holdings, Inc., a Delaware corporation, and its direct and indirect subsidiaries.
“ VSI ” is defined in the preamble.
“ Warranty ” is defined in Section 3.4 .
 
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1.2 Capitalized Terms .
Capitalized terms used but not defined in this Agreement have the same meaning as in the LLC Agreement.
1.3 Construction .
Unless the context otherwise requires, the singular shall include the plural, the masculine shall include the feminine and neuter, and vice versa. The term “includes” or “including” shall mean “including without limitation”. The terms “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the schedules and exhibits hereto and certificates delivered hereunder) and not to any particular provision of this Agreement. References to a section, article, exhibit or schedule shall mean a section, article, exhibit or schedule to this Agreement, and reference to a given agreement or instrument shall be a reference to that agreement or instrument as amended, restated, supplemented or otherwise modified through the date as of which such reference is made.
ARTICLE 2
PURCHASE OF PROJECTS
2.1 Presentation and Review of Tranches; Purchase .
(a) General . Each Seller shall present proposed Tranches of Projects to Purchaser in the manner described in Section 2.1(c) . As set out in Section 2.1(d) , Purchaser shall have the Review Period to review the Projects after which each Seller shall present a Closing Request to add the Accepted Projects to the applicable part of Schedule 1 . Concurrently with the presentation of each Closing Request, each Seller shall provide Purchaser with copies of the closing documents listed in Section 2.1(g) for the Projects identified in the Closing Request.
(b) Purchase . During the Term and subject to the terms and conditions hereof, Purchaser shall purchase from each Seller, subject to the provisions of Section 2.2 and Section 2.3 , all right, title and interest of such Seller in each Project described in the applicable part of Schedule 1 (which Schedule 1 shall be updated by such Seller after each Purchase Date, including to remove any Deficient Projects and Cancelled Projects, reflect any Change Orders and add any Substituted Projects). The consummation of the purchase of each Project in a Tranche and the payment of the System Purchase Price of each such Project shall take place pursuant to this Agreement on expiration of the applicable Review Period, subject to all of the conditions in Section 2.3 and Section 2.4 for such Project having been satisfied.
(c) Presentation of Tranches . Not more frequently than once each calendar month between the Effective Date and the Initial Completion Deadline, a Seller shall present a Tranche Presentation Certificate to Purchaser listing Projects that are reasonably expected to satisfy the conditions in Section 2.3 on the Purchase Date for such tranche (such collection of Projects, a “ Tranche ”).
(d) Purchaser’s Review of Tranches . Upon Purchaser’s receipt of a Tranche Presentation Certificate, Purchaser shall respond within ten (10) Business Days (the
 
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“ Review Period ”) regarding its review of the Projects proposed to be included in the Tranche and whether it agrees that such Projects are reasonably expected to satisfy the conditions in Section 2.3 . Purchaser shall purchase each Project that Purchaser approves in writing (an “ Accepted Project ”) within five (5) Business Days following the end of the Review Period. A Project shall automatically be deemed an Accepted Project unless Purchaser informs the applicable Seller in writing prior to the expiration of the Review Period that the Project is being rejected (each such rejected Project, a “ Non-Accepted Project ”); provided , however , that Purchaser shall have no discretion to reject any Project that satisfies all of the conditions in Section 2.3 . Upon receipt by a Seller of any such notice of a Non-Accepted Project, such Seller shall have until the day that is three (3) Business Days prior to the Purchase Date for the Tranche to notify Purchaser in writing that such Seller has cured all deficiencies in the relevant Non-Accepted Project or to demonstrate that such Project satisfies all of the conditions in Section 2.3 , in each case to the written satisfaction of Purchaser, upon which such Non-Accepted Project shall become an Accepted Project to be included in such Tranche; provided that, following the cure of any deficiency, such Seller instead may present any such Non-Accepted Project again in a future Tranche.
(e) Determination of System Purchase Price . The price for each Project (the “ System Purchase Price ”) purchased under this Agreement shall be indicated in each Seller’s Tranche Presentation Certificate. The System Purchase Price shall equal the price calculated by multiplying (i) the dollar-per-watt direct current as established in the most recent Appraisal applicable to the Project State where the Project is located, subject to Section 2.3(h) , and (ii) the STC DC nameplate rating of the PV System for such Project. The purchase price for the Tranche shall be the aggregate of the System Purchase Prices for all Accepted Projects in the Tranche; provided , however , that in no event shall Purchaser be obligated to make a purchase hereunder that causes the total Capital Contributions of the Investor to exceed the Investor Contribution Cap. The System Purchase Price for each Project shall be paid in cash by Purchaser on each Purchase Date as described in Section 2.1(g) .
(f) Closing Request . A Seller, or the Sellers, as applicable, shall send a notice in the form of Schedule 5 (a “ Closing Request ”) that shall list the Projects that will be purchased on the Purchase Date, the System Purchase Price for each Project, the aggregate of the System Purchase Prices for all the Projects in the Tranche payable on the Purchase Date, and the aggregate amount of Change Orders in respect of all Purchased Systems to date (including a notation identifying the Change Orders that were not previously incorporated into the calculation of the Net Purchase Price for prior Purchase Dates) and shall also specifically indicate the net amount, after taking into account any outstanding Refund Credit, payable on the Purchase Date (the “ Net Purchase Price ”).
(g) Closing . Subject to satisfaction of the conditions set forth in Section 2.3 , on each Purchase Date, the Net Purchase Price for the Projects in the Tranche purchased on such Purchase Date shall be payable by Purchaser to the applicable Seller. On the Purchase Date, the applicable Seller shall deliver or cause to be delivered to Purchaser the following documents for each Tranche:
(1) a notice substantially in the form of Schedule 6 (the “ Transfer Notice ”) associated with the Projects in each such Tranche;
 
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(2) the Bill of Sale and Assignment substantially in the form of Schedule 4 (the “ Bill of Sale ”);
(3) a revised Schedule 1 adding any new Accepted Projects purchased on the Purchase Date and the associated Customer Agreements and, if applicable, removing any Cancelled Projects or Deficient Projects, reflecting any Change Orders and adding any Substituted Projects;
(4) a copy of the duly executed Customer Agreement for each Project in such Tranche;
(5) any Permits required for the construction of each Project in such Tranche; and
(6) a certificate of non-foreign status from such Seller meeting the requirements of Treasury Regulation Section 1.1445-2(b)(2) and dated as of the Purchase Date.
(h) Title . Subject to Section 2.2 , on each Purchase Date, a Seller sells, conveys, assigns, transfers and delivers unto Purchaser all of such Seller’s right, title and interest in, to and under the Projects being purchased on such date (whether or not complete and including the Customer Agreements that are part thereof), and Purchaser purchases and assumes all of such Seller’s right, title, interest in and obligations with respect to such Projects (including the Customer Agreements that are part thereof). Notwithstanding the foregoing, a Seller shall remain liable for all of Purchaser’s obligations under each Customer Agreement until the In-Service Date thereunder.
(i) Risk of Loss . From and after the Purchase Date for an Accepted Project, all risk of loss or damage to such Project shall be borne by Purchaser; provided , that the passing of the risk of loss shall not, in any respect, excuse a Seller from completing installation of any Project or performing any of its obligations under the Transaction Documents to which such Seller is a party or relieve such Seller of its obligations to reimburse Purchaser for losses resulting from the actions of such Seller, its Affiliates or its subcontractors. If any Accepted Project becomes a Deficient Project or Cancelled Project, all risk of loss or damage to such Project shall pass back to such Seller and, if the Customer Agreements related thereto have not been terminated, such Customer Agreements shall be reassigned to such Seller by Purchaser.
(j) Sales . Provided that Purchaser is not in default under any Transaction Document, and subject to the terms and conditions hereof, the Sellers shall sell Projects that meet the criteria in Section 2.3 to Purchaser under this Agreement; provided , however , that this provision shall in no way obligate the Sellers to sell to Purchaser, or otherwise restrict the Sellers from pursuing alternative transactions in respect of, any specific solar energy generation system, including any PV Systems that do not meet the criteria in Section 2.3 or as to which the conditions in Section 2.4 have not been satisfied.
 
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(k) Information to Purchaser . After the Purchase of a Project (including without limitation any Project purchased from VSI), VSD hereby agrees, at no cost to Purchaser, to:
(1) provide Purchaser with access via VSD’s web portal to the information regarding such Project in the possession of VSD or any VSH Entity, which will include, as such information becomes available, among other things, descriptions of installation services performed by VSD or any VSH Entity, follow-up activities, if any, materials, serial numbers and other information relevant to Provider’s maintenance activities; and
(2) provide such information regarding such Project as is reasonably requested by Purchaser and available to VSD or the VSH Entities or that VSD or the VSH Entities are able to obtain through the use of commercially reasonable efforts (it being understood that such information will not include information regarding the maintenance or operation of Projects after their applicable In-Service Dates, to which VSD shall provide access pursuant to clause (k)(1) ).
(l) Transfer of RECs and Government Incentives . Commencing on each Purchase Date, all RECs and Government Incentives associated with the installation, ownership, use or operation of each PV System being purchased by Purchaser on such Purchase Date shall be, as between the applicable Seller and Purchaser and to the extent transferable pursuant to Applicable Laws, part of such Seller’s rights related to the Project that are transferred to Purchaser.
2.2 Completion of Purchased Systems .
A Seller shall complete the installation of each applicable Purchased System that was purchased by Purchaser from such Seller as follows:
(a) PV System Installation . Such Seller shall procure the materials and take such other steps as are required to install, test and complete such PV System and shall cause such PV System to be Placed in Service (the foregoing steps collectively being referred to herein as “ Installation ”) without further compensation or reimbursement from Purchaser. Installation of each PV System by such Seller shall be consistent with the applicable Customer Agreement, all manufacturer and design specifications and warranties relating to the relevant PV System, Prudent Industry Standards and all Applicable Laws and material Permits. Such Seller shall be authorized to enter into subcontracts for the performance of its obligations herein, provided that any such subcontract shall be on commercially reasonable terms and shall expressly provide for (i) the assignment of the warranty rights thereunder to Purchaser and (ii) the assignment of the entire contract to Purchaser upon a default of such Seller hereunder or thereunder. Such Seller shall remain liable for the compliance in full of its obligations hereunder regardless of whether they may have been subcontracted or not. Such Seller shall pay all amounts owed to its subcontractors and vendors in connection with the Installation of each PV System on a timely basis and shall hold Purchaser harmless against any claims asserted by such parties whether before or after the transfer of title to the Purchaser. Within five (5) Business Days after a breach or default by a Seller or any of its Affiliates, or after acquiring Knowledge of such Seller of a breach or default of any other Person, under any subcontract relating to one or more Purchased Systems, such Seller shall provide Purchaser written notice of such breach or default.
 
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(b) Completion Certificate . On or before the tenth Business Day of each calendar month, the Sellers, as applicable, shall deliver to Purchaser a Completion Certificate listing all such PV Systems that were Placed in Service in the prior month. If a Purchased System is not Placed in Service by the Completion Deadline, then such PV System shall become a Deficient Project subject to Section 2.2(d) . Concurrently with the delivery of the Completion Certificate, the Sellers, as applicable, shall also deliver to Purchaser a copy of the form of warranty issued by each manufacturer or supplier of panels, inverters or racking (to the extent not previously provided to Purchaser) that satisfies the requirements of Section 3.4 .
(c) Performance Tests . Each Seller shall perform the Performance Tests for each Purchased System that was purchased by Purchaser from such Seller under this Agreement. Such Seller’s technical personnel (or, when applicable, the installer or manufacturer’s personnel, with such Seller’s supervision) shall operate the PV Systems during the Performance Tests. If a PV System fails to pass the Performance Tests, then such Seller shall take corrective actions and repeat the Performance Tests until such PV System successfully completes the Performance Tests or the Completion Deadline, whichever occurs first.
(d) Deficient Projects and Cancelled Projects . A Seller shall remove any Accepted Projects Purchased by Purchaser from it and included in a Tranche that are Deficient Projects or Cancelled Projects. A Seller shall revise and update the applicable portion of Schedule 1 to remove such Deficient Projects and Cancelled Projects. A Seller shall either (i) provide a credit to Purchaser toward the purchase of additional PV Systems in a subsequent Tranche in the amount of the aggregate of the System Purchase Prices for such Deficient Projects and Cancelled Projects (the “ Removed Project Credit ”) to be applied in connection with payment of the aggregate of the System Purchase Prices of a Tranche in the Closing Request for that Tranche, which Removed Project Credit shall be calculated in a report, substantially in the form of Schedule 7 , describing the Deficient Projects and Cancelled Projects not previously reported (the “ Deficient Project and Cancelled Project Report ”) or (ii) substitute another PV System that meets all of the conditions in Section 2.3 (a “ Substituted Project ”) for any Deficient Project or Cancelled Project that was previously Purchased by Purchaser (and not otherwise previously reported in a prior Substitution Report or a Deficient Project and Cancelled Project Report) by delivering a Substitution Report in accordance with Section 2.2(f) ; provided that any such substitution shall occur no later than the Completion Deadline. For the avoidance of doubt, all right, title and interest in and to any Cancelled Project or Deficient Project removed from the Tranche shall pass back to such Seller. Notwithstanding anything to the contrary contained herein, in connection with any substitution of any Substituted Project for any Cancelled Project or Deficient Project, the applicable Seller and Purchaser shall cooperate in good faith to execute any documents and to take such other actions as may be necessary or advisable to carry out the intent of this Section 2.2 .
(e) Change Orders Under Customer Agreements . Following the relevant Purchase Date and prior to the Placed in Service Date of any PV System, a Seller may agree to change orders under or amendments to the Customer Agreement relating to the size, layout or design of such PV System (a “ Change Order ”). A Seller may agree to Change Orders in its sole discretion. A Seller shall deliver to Purchaser a report, substantially in the form of Schedule 8 (a “ Change Order Report ”), describing the economic impact of all Change Orders through the date of such Change Order Report and previously not reported in a Closing Request.
 
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The Change Order Report will (A) identify all Change Orders agreed to through the date of the Change Order Report and not previously reported in a Closing Request, (B) describe any increase or decrease in system size pursuant to each such Change Order, and (C) describe any increase or decrease in System Purchase Price as a consequence of each such Change Order. If the Change Order Report indicates that the aggregate System Purchase Prices for all Projects that were subject to Change Orders have resulted in a net credit balance (the “ Change Order Credit ”) or debit balance to Purchaser (the “ Change Order Debit ”), such Seller may (i) pay such credit or debit by including the Change Order Credit or the Change Order Debit in the subsequent Closing Request or (ii) in the case of a Change Order Credit, substitute one or more Substituted Projects in accordance with Section 2.2(f) (each of which Substituted Projects shall meet the conditions for PV Systems under Section 2.3 ); provided that any such substitution shall occur no later than the Completion Deadline. Such Seller shall revise Schedule 1 to reflect the information relating to the Change Order; provided further , that in no event will Purchaser be obligated to make a payment hereunder that causes the total Capital Contributions of the Investor in connection with Purchased Systems to exceed the Investor Contribution Cap.
(f) Substitution Report . A Seller shall provide written notice of any proposed Substituted Project to Purchaser in the Substitution Report, and Purchaser shall have a period of ten (10) days (the “ Substituted Project Review Period ”) from receipt of the Substitution Report to confirm that the conditions in Section 2.3 have been met with respect to each such proposed Substituted Project. Each such proposed Substituted Project shall be deemed accepted unless Purchaser informs such Seller in writing within the applicable Substituted Project Review Period that any such proposed Substituted Project is rejected; provided , however , that Purchaser shall have no discretion to reject any Project that satisfies all of the conditions in Section 2.3 . The Purchase Date for the Substituted Projects purchased under this Section 2.2(f) shall be the expiration of the applicable Substituted Project Review Period or, if such date is not a Business Day, then the first Business Day following the expiration of the applicable Substituted Project Review Period. On the Purchase Date for the Substituted Projects, all right, title and interest in and to any Substituted Project shall pass to Purchaser and such Seller shall revise and update Schedule 1 to reflect the relevant Substituted Project information (as shown in the Substitution Report).
(g) Initial Completion Deadline . Sellers shall use commercially reasonable efforts to cause all Projects sold to the Purchaser hereunder to be Placed in Service by the Initial Completion Deadline. Without limiting the foregoing, Sellers shall cause Projects sold to the Purchaser hereunder that have aggregate System Purchase Prices equal to at least ***% of $*** to be Placed in Service by the Initial Completion Deadline; provided , that to the extent the Projects sold to the Purchaser hereunder that are not Placed in Service by the Initial Completion Deadline have aggregate System Purchase Prices equal to more than ***% of $***, then upon Investor’s direction at its option, Sellers shall designate some of such Projects as Cancelled Projects until the aggregate System Purchase Prices of the remaining Projects that have not been Placed in Service equal no more than ***% of $*** and shall provide Purchaser a Removed Project Credit for such Cancelled Projects in accordance with Section 2.2(d)(i) .
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(h) True-Up Report . No later than twenty (20) Business Days following the Completion Deadline, VSD shall deliver to Purchaser a true-up report that contains the information specified in Schedule 10 (the “ True-Up Report ”) and a revised Base Case Model that reflects the information in the True-Up Report (the “ True-Up Base Case Model ”). If the True-Up Report indicates that the aggregate of the System Purchase Prices for all Purchased Systems has left a net credit balance or debit balance, such balance, plus 5% interest thereon accruing from the date the Party owed the credit effectively advanced the amounts now being credited, shall be paid in cash to the applicable Sellers by Purchaser or to Purchaser by VSD (on behalf of both Sellers), whichever is appropriate, within ten (10) calendar days after issuance of the True-Up Report; provided , however , that (i) no True-Up Report will include information on, or require a payment in connection with, any Deficient Projects, Cancelled Projects or Change Orders to the extent a Refund Credit has already been utilized or a Substituted Project has been substituted therefor, and (ii) in no event will Purchaser be obligated to make a payment hereunder that causes the total Capital Contributions of the Investor in connection with Purchased Systems to exceed the Investor Contribution Cap.
2.3 Conditions Precedent to the Obligations of Purchaser .
The obligations of Purchaser to consummate the Purchase of the Projects comprising a Tranche shall be subject to the satisfaction by a Seller (or Sellers, as applicable), of each of the following conditions precedent with respect to such Projects:
(a) Each of the representations and warranties of such Seller in Section 3.1 *** that is qualified as to materiality or by Material Adverse Change shall be true and correct, and such representations that are not so qualified shall be true and correct in all material respects, in each case as of the relevant Purchase Date;
(b) Each of such Seller *** has performed or complied with all obligations and covenants required by this Agreement *** to be performed or complied with by it at or prior to the relevant Purchase Date, except where such failure to perform or comply would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole, Seller ***;
(c) Such Seller has delivered to Purchaser a Closing Request and a Transfer Notice with respect to the Purchase of the applicable Tranche;
(d) Such Seller has executed and delivered the Bill of Sale;
(e) Such Seller shall have delivered an updated Base Case Model for the applicable Tranche;
(f) The Tax Credit is in effect and is reasonably expected to be available as of the anticipated Placed in Service Dates for each Project comprising the Tranche in an amount equal to 30% of the applicable System Purchase Price;
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(g) Prior to the initial Purchase Date, Purchaser has received an opinion from counsel to such Seller as to the enforceability of each of the Transaction Documents to which such Seller is a party and as to such other corporate matters as are customarily included in similar opinions, each such opinion in form and substance reasonably satisfactory to Purchaser;
(h) Purchaser has received appraisals from the Qualified Appraiser, in form and substance reasonably satisfactory to Purchaser (each such appraisal, an “ Appraisal ”), and which are dated no earlier than six (6) months prior to the applicable Purchase Date, showing the fair market value of new photovoltaic systems of the kind as, and in the State of the United States of America of, the PV Systems being purchased on the relevant Purchase Date under this Agreement expressed in terms of dollars per watt of installed capacity; provided , that notwithstanding anything to the contrary in this clause (h) , (i) in the event that Purchaser, such Seller or one of their Affiliates receives an Appraisal Deficiency Notice, (A) the System Purchase Price for each Project comprising the applicable Tranche shall be determined in a manner consistent with such Appraisal Deficiency Notice until such time as Purchaser has received a new Appraisal from the Qualified Appraiser in form and substance satisfactory to Purchaser (a “ Replacement Appraisal ”), and (B) upon acceptance of such Replacement Appraisal, the System Purchase Price for any such Project purchased after such acceptance shall thereafter be determined in accordance with Section 2.1(e) using such Replacement Appraisal, and (ii) in the event that Purchaser notifies such Seller that it requires an additional Appraisal, (A) such additional Appraisal will be at the Purchaser’s expense, (B) the Purchaser shall be entitled to exercise the right to request such additional Appraisals no more often than every six (6) months, (C) such Appraisal will be done by the Qualified Appraiser and (D) as a condition to Purchaser’s obligation to purchase Projects under this Agreement following such request, Purchaser shall have received such Appraisal from the Qualified Appraiser, in form and substance reasonably satisfactory to the Purchaser, which shall be used to determine the System Purchase Price in accordance with Section 2.1(e) unless and until such additional Appraisal is replaced by a Replacement Appraisal;
(i) All manufacturer’s warranties in respect of the PV System for each Project comprising the Tranche are transferable, and will be transferred, to Purchaser upon Purchase of such Project;
(j) The PV System for each Project has not been “placed in service” as that term is used in Sections 48 and 168 of the Code;
(k) Such Seller shall certify to Purchaser in the Transfer Notice that such Seller reasonably expects the PV System for such Project to be Placed in Service by the Initial Completion Deadline;
(l) Such Seller shall certify to Purchaser in the Transfer Notice that such Seller has complied with all other applicable provisions of this Agreement and that such Seller and its Affiliates have complied with each applicable Customer Agreement, except as would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole;
 
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(m) A Customer Agreement for the PV System for such Project is in effect in the applicable form attached to Schedule 3 ;
(n) The Host Customers meet the Minimum Credit Criteria, and each Host Customer’s FICO® Score has been delivered to the Investor;
(o) Each Host Customer for such Project is located in a Project State, and the address of each such Host Customer has been delivered to Investor;
(p) No material default or event of default of such Seller *** has occurred and is continuing under any Transaction Document;
(q) No Host Customer is described in Code Section 50(b)(3) or (4);
(r) Assuming that all of the Projects in the same Tranche as such Project are sold to the Purchaser and Placed in Service, the aggregate amount of all Capital Contributions of Investor to Purchaser, including all Capital Contributions to be made by Investor to Purchaser on the Purchase Date with respect to such Tranche and made by Investor to Purchaser prior to the Purchase Date for such Project, will not exceed the Investor Contribution Cap;
(s) Such Seller shall have made available to Purchaser, via such Seller’s web portal, on which site the following shall be delivered:
(1) a copy of the site plan and CAD designs used for the Projects; and
(2) a copy of the executed Customer Agreement for such Project; and
(t) The insurance that is required to be procured and maintained pursuant to Section 8.2(b)(i) of the LLC Agreement shall have been procured and shall be in full force and effect.
2.4 Conditions Precedent to the Obligations of a Seller .
The obligations of a Seller to consummate the Purchase of each Project comprising a Tranche shall be subject to the satisfaction by Purchaser of each of the following conditions precedent for such Project:
(a) Each of the representations and warranties of Purchaser in Section 3.2 that is qualified as to materiality or by Material Adverse Change shall be true and correct, and such representations that are not so qualified shall be true and correct in all material respects, in each case as of the relevant Purchase Date;
(b) All consents, approvals and filings then required to be obtained or made by Purchaser to execute, deliver and perform the Transaction Documents to which it is a party shall have been obtained or made and shall be in full force and effect as of the relevant Purchase Date;
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(c) Purchaser has executed and delivered the Bill of Sale; and
(d) The Tax Credits are in effect and are reasonably expected to remain in effect as of the anticipated Placed in Service Date for the PV System for such Project.
2.5 Conditions Precedent to the Obligations of Both Parties .
The obligations of Purchaser and a Seller, or the Sellers, as applicable, to consummate the Purchase of a Tranche of Projects shall be subject to the satisfaction of each of the following conditions precedent for such Tranche:
(a) Orders . No temporary restraining order, preliminary or permanent injunction or other legally binding award, judgment, decree, ruling, verdict or other decision issued by any Governmental Authority applicable directly to a Party, its business or properties, or the transactions contemplated hereby shall be in effect that (i) impairs, restrains, prohibits, adversely alters or invalidates the Installation or operation of such Tranche of Projects, any of the Transaction Documents or material Permits, or the applicable Customer Agreement, in each case which would be reasonably expected to adversely affect in a material manner such Tranche of Projects taken as a whole or (ii) enjoins, prohibits or otherwise prevents the consummation of the transactions contemplated hereby.
(b) Proceedings . No claims, disputes, governmental investigations, suits, actions (including, without limitation, non-judicial real or personal property foreclosure actions), arbitrations, legal, administrative or other proceedings of any nature, domestic or foreign, criminal or civil, at law or in equity, shall have been instituted or threatened in writing and remain pending, in each case that has a reasonable likelihood of success, that (i) seek (A) to impair, restrain, prohibit, adversely alter or invalidate the Installation or operation of the Projects, any of the Transaction Documents or material Permits, or the applicable Customer Agreement or (B) to prohibit the operation of the Projects in accordance with the applicable Customer Agreement, in each case which would adversely affect in a material manner such Tranche of Projects taken as a whole or (ii) does or would enjoin, prohibit or otherwise prevent, or seek to enjoin, prohibit or otherwise prevent the consummation of the transactions contemplated hereby.
(c) Laws . No Applicable Law shall have been enacted or shall be deemed applicable to the transactions contemplated by this Agreement that makes the consummation of such transactions illegal.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Representations, Warranties and Covenants of Sellers .
Each Seller represents, warrants and covenants to Purchaser as follows as of the Effective Date and each Purchase Date with respect to the Projects to be purchased from such Seller on such Purchase Date (for the avoidance of doubt on a Purchase Date Seller makes such representations, warranties and covenants only if Purchaser purchases any Project from such Seller on such Purchase Date) that:
(a) Organization and Good Standing . Such Seller is a limited liability company or a corporation, as applicable, duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, lease and operate its business as currently conducted. Such Seller is duly qualified to do business and is in good standing under the laws of each jurisdiction that its business, as currently being conducted, shall require it to be so qualified, except where the failure to be so qualified would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or such Seller.
 
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(b) Authorization, Execution and Enforceability . Such Seller has full power and authority to execute and deliver the Transaction Documents and the Customer Agreements to which it is a party and to consummate the transactions contemplated thereby. The execution and delivery by such Seller of the Transaction Documents and Customer Agreements to which it is a party and the consummation by such Seller of the transactions contemplated thereby have been duly and validly authorized by all necessary company or corporate action required on the part of such Seller, and such Transaction Documents and Customer Agreements have been duly and validly executed and delivered by such Seller. Each of the Transaction Documents and the Customer Agreements to which such Seller is a party constitutes the legal, valid and binding agreement of such Seller, enforceable against such Seller in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at law).
(c) No Violation . The execution and delivery by such Seller and its Affiliates of the Transaction Documents and the Customer Agreements do not, and the performance by such Seller and its Affiliates of their obligations hereunder and thereunder, as applicable, shall not (i) violate any laws, statutes, rules, regulations, ordinances, judgments, settlements, orders, decrees, injunctions and writs of any Governmental Authority having jurisdiction, (ii) conflict with or cause a breach of any provision in the charter, bylaws or other organizational document of such Seller or such Affiliates, as applicable, or (iii) cause a breach of, constitute a default under, cause the acceleration of, create in any counterparty the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, note, bond, mortgage, indenture, agreement, license, intellectual property licenses or rights, instrument, decree, judgment or other arrangement to which such Seller or such Affiliates are parties or under which such Seller or such Affiliates are bound or to which any of their Assets is subject (or result in the imposition of a Lien upon any such Assets), except in the case of clause (i)  or clause (iii)  as would not, individually or in the aggregate, would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or such Seller.
(d) No Consent . All consents, approvals and filings then required to be obtained or made by such Seller and its Affiliates to execute, deliver and perform the Transaction Documents and Customer Agreements to which they are parties have been obtained or made and are in full force and effect, except where the failure to obtain or make such consents, approvals or filings would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or Seller.
 
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(e) Legal Proceedings . There are no pending or, to the Knowledge of such Seller, threatened claims, disputes, governmental investigations, suits, actions (including, without limitation, non-judicial real or personal property foreclosure actions), arbitrations, legal, administrative or other proceedings of any nature, domestic or foreign, criminal or civil, at law or in equity, by or against or otherwise affecting such Seller or any Purchased System that would reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or such Seller, provided that the foregoing representation, as it relates to legal proceedings involving a Host Customer, is made only to the Knowledge of such Seller.
(f) Transaction Documents and Customer Agreements .
(1) None of such Seller, *** or, to the Knowledge of such Seller, any other party to a Transaction Document has breached any provision of, or defaulted under the terms of, any Transaction Document that remains uncured and no event or circumstance has occurred that would, with the passage of time, result in such a breach or default, except where any such breach or default would not adversely affect in a material manner all of the Projects taken as a whole or such Seller. The consummation of the transactions contemplated by this Agreement would not give any party to any Transaction Document the right to terminate or alter the terms of such contract or a right to claim damages thereunder.
(2) The Customer Agreement for each of the Projects included in the applicable Tranche is in full force and effect, and neither such Seller nor, to the Knowledge of such Seller, the relevant Host Customer has breached any provision of, or defaulted under the terms of, the underlying Customer Agreement that remains uncured and no event or circumstance has occurred that would, with the passage of time, result in such a breach or default, except where any such breach or default would not adversely affect in a material manner all of the Projects taken as a whole or such Seller. None of Sellers or any of the VSH Entities is a party to any contract, instrument, commitment, agreement or other legally binding arrangement with any Host Customer in relation to PV Systems other than the Customer Agreements to which such Host Customer is a party.
(g) Taxes .
(1) All the components of each Purchased System constitute “energy property” within the meaning of Section 48(a)(3)(A)(i) of the Code.
(2) None of such Projects has been “placed in service” within the meaning of Sections 48 and 168 of the Code. No Person has claimed with respect to such Projects or any property that is part of such Projects, on any Tax return, any depreciation or amortization deductions. The total fair market value of any previously used property included in each Purchased System will not be more than twenty percent (20%) of the total value of such Purchased System.
(3) No Person has applied for any grant under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009, as amended, with respect to any asset of such Projects.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(4) The fair market value of each Purchased System is equal to at least the installed capacity of such Purchased System in watts multiplied by the amount per watt set forth in the Appraisal for the Project State where such Purchased System is located with respect to the Tranche that includes such Purchased System.
(5) Such Seller shall, and shall cause its Affiliates to, report in all documents, filings and accounting statements that the amount realized on the sale of a Project to Purchaser is the System Purchase Price for such Project.
(6) Neither such Seller nor any of its Affiliates has received an Appraisal Deficiency Notice on or prior to the Effective Date.
(7) No Host Customer is described in Sections 50(b)(3) or (4) of the Code.
(8) No Person has requested or received, with respect to any Purchased System, any permission to operate or similar form, Permit or other document.
(9) No Purchased System is “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code.
(10) Each Purchased System is in a Project State.
(h) Compliance with Applicable Laws . Such Seller and each of its subcontractors engaged pursuant to Section 2.2(a) of this Agreement is in compliance with all Applicable Laws with respect to developing, constructing, leasing, installing, operating and maintaining such Projects and the entering into, and performance of obligations under, any Customer Agreement associated with a Project included in the applicable Tranche, except where the failure to be in compliance would not adversely affect in a material manner all of the Projects taken as a whole, such Seller or Purchaser’s (or any of its direct or indirect equity owner’s) ability to claim Tax Credits equal to 30% of the System Purchase Price and depreciation or amortization deductions on such Project.
(i) New Goods and Services . All equipment, parts and materials furnished in connection with each PV System for such Projects shall be new, unused and undamaged.
(j) Information . The written information (i) furnished by such Seller *** to Purchaser and Investor, their respective consultants, advisors and attorneys, and the Qualified Appraiser in the Transaction Documents or any other certificates or reports delivered pursuant to the terms of this Agreement, or (ii) posted on https://bxftp.watchdox.com or https://investor.vivintsolar.com, in each case in connection with such Projects (including, without limitation, information provided in each Completion Certificate) or the transactions contemplated by the Transaction Documents, is true, complete and correct in all material respects and does not omit any material information necessary to make such information not adversely misleading when taken as a whole in light of the circumstances under which it is provided.
 
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(k) Permits . All material Permits required under the Customer Agreement or otherwise to install, test and use the PV System for such Project to generate electricity for sale to the Host Customer have been obtained apart from a letter from the local utility authorizing parallel operation and such other Permits that are of a ministerial nature and are not required to be obtained prior to the Purchase Date under Applicable Law. Neither such Seller nor any of its Affiliates has received written notice from any Governmental Authority regarding any revocation, withdrawal, suspension, cancellation or termination of any Permit, except where such revocation, withdrawal, suspension, cancellation or termination would not adversely affect in a material manner all of the Projects taken as a whole, such Seller or Purchaser’s (or any of its direct or indirect equity owner’s) ability to claim Tax Credits equal to 30% of the System Purchase Price for such Project and depreciation or amortization on such Project.
(l) Warranties . As of the date each PV System for such Projects is Placed in Service, all warranties relating to such PV System from any manufacturer of any part thereof shall be in full force and effect in all material respects and shall have been assigned to Purchaser. The Bill of Sale effectively assigns all of the rights of such Seller and its Affiliates in, to and under all warranties relating to such PV System to Purchaser.
(m) Title; Personal Property . Such Seller has good title to, and is the owner of, each such Project, and each such Project is free and clear of all Liens of any third Person, other than Permitted Liens. Legal title and ownership of each such Project shall, on the applicable Purchase Date, upon consummation of the Purchase thereof pursuant to this Agreement, pass to and remain with Purchaser, free and clear of all Liens (other than Permitted Liens). All Permitted Liens have been released on or before the applicable Placed in Service Date.
(n) Intellectual Property . Such Seller owns or has a valid license to all intellectual property that is reasonably necessary to install, operate and maintain such Projects, which licenses, pursuant to this Agreement, shall be transferred to Purchaser upon Purchase of the relevant Projects. The Bill of Sale effectively assigns all of the rights of such Seller in such licenses to Purchaser. To the Knowledge of such Seller, there are no pending or threatened claims, actions, judicial or other adversary proceedings, disputes or disagreements concerning any item of such intellectual property that would adversely affect in a material manner such Projects taken as a whole or such Seller.
(o) Real Property Rights . All of such Seller’s real property rights and other rights with respect to Host Customers’ real property contained in the Customer Agreements for such Projects (the “ Real Property Rights ”) are sufficient for the full performance and enforcement of all of such Seller’s rights, remedies and obligations with respect to such Projects (including under the Customer Agreements for such Projects), and such Seller has not been informed in writing by any owner or lessor of the real property associated with such Real Property Rights that such Seller is in breach of its obligations relating to such Real Property Rights or that such Real Property Rights have been challenged or terminated.
(p) Environmental Matters . Except for matters that have not adversely affected in a material manner all of the Projects taken as a whole or Seller, (i) such Seller is, at
 
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all times has been, and reasonably expects to continue to be, in compliance with all Environmental Laws, (ii) to the Knowledge of such Seller, no such Project is in violation of Environmental Laws and (iii) such Seller has not received written notice from any Governmental Authority of an actual or potential violation of or liability under any Environmental Laws with respect to any Project. Such Seller shall indemnify and hold Purchaser harmless from any expenses, damages or amounts payable, including to the Host Customer, as a result of a breach of any Environmental Law by such Seller related to the Purchased Systems or the Installation thereof.
(q) No Condemnation . No condemnation is pending or threatened with respect to any such Project, or any portion thereof material to the ownership or operation of any such Project, and no unrepaired casualty exists with respect to any such Project or any portion thereof material to the ownership or operation of any such Project or the sale of electricity therefrom.
(r) Energy Regulatory Matters .
(1) The sale of each such Project to Purchaser will not (A) cause Purchaser, the Investor or any of their direct or indirect owners to become subject to, or not exempt from, regulation under the Federal Power Act or the Public Utility Holding Company Act of 2005, (B) require the approval of any Governmental Authority pursuant to state or local law, or (C) cause Purchaser, the Investor or any of their direct or indirect owners to become subject to, or not exempt from, regulation as a “public utility”, “electric utility” or similar designation under state or local law.
(2) The PV System for each such Project is a qualifying facility pursuant to 18 C.F.R. § 292.101(b)(1) and a qualifying small power production facility pursuant to 18 C.F.R. § 292.203(a) of FERC’s regulations and has or will have, together with all other PV Systems of all such Projects located within a mile of each such Project, a power production capacity of no more than twenty (20) MW (AC) and, to the extent required under FERC regulations to preserve such status, such Seller shall have filed or will file with FERC a notice of self-certification, or have obtained or will obtain from FERC an order granting certification, with respect to such status.
(s) DISCLAIMERS . EXCEPT AS OTHERWISE AGREED BY A SELLER (INCLUDING IN SECTION 3.4 ) AND EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 3 , ANY TRANSFER NOTICE DELIVERED PURSUANT TO THIS AGREEMENT, AND THE OTHER TRANSACTION DOCUMENTS, THE PV SYSTEMS ARE BEING DELIVERED BY SUCH SELLER TO PURCHASER “AS IS, WHERE IS” AND SUCH SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO LIABILITIES, OPERATIONS OF THE PV SYSTEMS OR PROJECTS, VALUE OR QUALITY OF THE PV SYSTEMS OR PROJECTS OR THE PROSPECTS (FINANCIAL AND OTHERWISE), RISKS AND OTHER INCIDENTS OF THE PV SYSTEMS OR PROJECTS. EXCEPT AS OTHERWISE AGREED BY SUCH SELLER AND EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 3 , ANY TRANSFER NOTICE DELIVERED PURSUANT TO THIS AGREEMENT
 
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AND THE OTHER TRANSACTION DOCUMENTS, SUCH SELLER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO SUCH SELLER OR THE PV SYSTEMS OR PROJECTS, OR ANY PART THEREOF.
3.2 Representations and Warranties of Purchaser .
Purchaser represents and warrants, with respect to itself, to each Seller as follows as of the Effective Date:
(a) Organization, Good Standing, Etc . Purchaser is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, and has the requisite limited liability company power and authority to own, lease and operate its properties and to carry on its business as being conducted on the date hereof.
(b) Authority . Purchaser has the requisite power and authority to enter into this Agreement and the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby or thereby. This Agreement (assuming due authorization, execution and delivery by Sellers) constitutes, and upon execution and delivery by Purchaser of the other Transaction Documents to which it is a party the Transaction Documents shall constitute, the valid and binding obligations of Purchaser, enforceable against it in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors’ rights and remedies generally and to general principles of equity.
(c) No Violation . The execution and delivery by Purchaser of this Agreement and the other Transaction Documents to which Purchaser is a party do not, and the performance by Purchaser of Purchaser’s obligations hereunder and thereunder shall not, (i) violate any laws, statutes, rules, regulations, ordinances, judgments, settlements, orders, decrees, injunctions and writs of any Governmental Authority having jurisdiction over Purchaser, (ii) conflict with or cause a breach of any provision in the charter, bylaws or other organizational document of Purchaser, or (iii) cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, license, instrument, decree, judgment or other arrangement to which Purchaser is a party or under which it is bound or to which any of its Assets are subject (or result in the imposition of a Lien upon any such Assets) except (in the case of this clause (iii) ) for any that would not materially impair or be reasonably expected to materially impair the ability of Purchaser to meet or perform its obligations under the Transaction Documents.
(d) Legal Proceedings . There is no pending or, to Knowledge of Investor, threatened litigation, claim, action, suit, proceeding or governmental investigation against Purchaser or which seeks the issuance of an order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement, other than any such instance that would not materially impair or be reasonably expected to materially impair the ability of Purchaser to meet or perform its obligations under the Transaction Documents.
 
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3.3 No Other Seller Representations .
Without limiting the foregoing, except with respect to the representations and warranties of each Seller set forth in ARTICLE 3 or expressly set forth as representations and warranties in the other Transaction Documents, no Seller makes any representation or warranty in this Agreement with respect to Purchaser’s eligibility to claim Tax Credits. Purchaser specifically acknowledges that no representation or warranty has been made by any Seller about the accuracy of any projections, estimates or budgets, future revenues, future results from operations, future cash flows, the future condition of the Projects or any assets of such Seller or Purchaser, or the future financial condition of such Seller or Purchaser.
3.4 Defects Warranty.
Each Seller warrants, with respect to each Project purchased by Purchaser under this Agreement from such Seller, that such Seller’s installation of the PV System for such Project shall be free from material defects in design of workmanship as of the date of installation for a period of *** from the date of installation (the “ Warranty ”); provided , however , that this Warranty shall not include any warranty statements beyond the scope of this Warranty. Upon a breach of the Warranty, the applicable Seller will, upon notice from Purchaser or Host Customer of a valid Warranty claim, at such Seller’s sole option, either repair or replace any defective parts or construction. Such Seller shall have reasonable access to the applicable Project site to the extent permitted by the Customer Agreements, as necessary to perform its Warranty obligations under this Agreement. All costs for the removal, replacement and reinstallation of all equipment and materials necessary to gain access to defective PV Systems and any other costs relating to corrective or remedial action shall be borne by the applicable Seller. This Warranty applies solely to the PV Systems and does not include (x) roof repair or maintenance or (y) site work, including but not limited to, grading and landscape maintenance, if applicable; provided , however , the applicable Seller shall, at its expense, repair any damage to the roof or Project site caused by such Seller, its Affiliates or its subcontractors. Panels, inverters and racking for each Project shall be procured from the approved vendors listed on Schedule 13 unless otherwise reasonably consented in writing by Investor ( provided that no such approval or consent of Investor shall be required with respect to vendors from whom any equipment other than panels, inverters or racking is procured) and either (a) the warranties therefor shall by their terms run to the benefit of the Person that owns such equipment or the solar system into which such equipment is incorporated or (b) VSD or VSI, as applicable, shall transfer or cause to be transferred the warranties therefor by such manufacturers to Purchaser (which for panels shall be at least twenty (20) years from the date of installation and for inverters and racking shall be at least ten (10) years from the date of installation). Except as expressly set forth in this Section 3.4 , neither Seller is providing any warranty with respect to any panels, inverters, racking or any other component of any Project.
3.5 Insurance . Each Seller will procure and maintain or cause to be procured and maintained, at its sole cost and expense, insurance substantially in the types and amounts listed in Schedule 14 attached hereto covering the activities of its employees and representatives in connection with this Agreement.
 
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ARTICLE 4
TERMINATION
4.1 Termination .
(a) The obligations to purchase and sell PV Systems under this Agreement shall automatically terminate on the earlier of (i) the Completion Deadline and (ii) the date on which any change in Applicable Laws takes effect that amends the Code so as to eliminate or reduce the value of the Tax Credit, but only to the extent such change in Applicable Laws would affect Projects to be sold pursuant to this Agreement after such date. For the avoidance of doubt, no such termination shall diminish, terminate or suspend the Parties’ other rights and obligations under this Agreement.
(b) Without limiting a Seller’s or Purchaser’s ability to exercise any right or remedy to which it is entitled hereunder or under any of the Transaction Documents, this Agreement may be terminated prior to the first Purchase Date:
(1) if a Seller or Purchaser voluntarily commences bankruptcy, insolvency, reorganization, stay, moratorium or similar debtor-relief proceedings, or makes an assignment for the benefit of creditors, by Purchaser or a Seller, as applicable;
(2) if insolvency, receivership, reorganization, bankruptcy, or similar proceedings shall have been commenced against a Seller or Purchaser and such proceedings remain undismissed or unstayed for a period of sixty (60) calendar days, by Purchaser or a Seller, as applicable;
(3) by a Seller or Purchaser, upon twenty (20) Business Days’ prior written notice to Purchaser or a Seller or the Sellers, as applicable, in the event a Seller or the Sellers, as applicable (with respect to a termination by Purchaser) or Purchaser (with respect to a termination by the Sellers) is in material breach of a representation, warranty, covenant or agreement contained in this Agreement, and such breach has not been cured during such twenty (20) Business Day period and such breach would reasonably be expected to result in a Material Adverse Change on the non-defaulting Party; provided , however , that the Party (or the Parties, as applicable) seeking termination pursuant to this subsection (b)(3) is (or are, as applicable) not in breach in any material respects of its (or their, as applicable) representations, warranties, covenants or agreements contained in this Agreement;
(4) automatically and without further action by any Party on the date on which the LLC Agreement is terminated; and
(5) by the mutual written consent of the Sellers and Purchaser.
 
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4.2 Procedure and Effect of Termination .
(a) The Party desiring to terminate this Agreement pursuant to Section 4.1 shall give written notice of such termination to the other Parties in accordance with Section 6.6 , specifying the provision pursuant to which such termination is effected.
(b) If this Agreement is terminated pursuant to Section 4.1(b) by a Seller, Purchaser, or all Parties then this Agreement shall be terminated in its entirety as of the date of such termination with no liability on the part of any Party hereto; provided , however , that (i) the agreements contained in this Section 4.2 , ARTICLE 5 and ARTICLE 6 shall survive the termination and (ii) no such termination shall relieve any Party of any liability or damages resulting from any breach by that Party of this Agreement or affect the rights of the other Parties to indemnification for such breach nor shall any such termination relieve any Party of any obligations that arose pursuant to this Agreement prior to such termination.
4.3 Indemnification by Seller .
(a) VSD shall defend, indemnify and hold harmless Purchaser, its respective members, the Affiliates of each, and its and their respective officers, directors, employees and agents (“ Purchaser Indemnified Parties ”) from and against (i) any Losses (other than Tax Losses), to the extent arising out of or in connection with (A) the negligence, fraud or willful misconduct of Sellers, their Affiliates or their subcontractors or (B) any breach by Sellers of any of their representations, warranties or covenants in this Agreement or the other Transaction Documents and (ii) any Losses (other than Tax Losses) from third party claims or demands arising under or relating to any Seller’s performance or nonperformance under this Agreement; provided , however , in no event will any Seller be responsible for any such Losses to the extent caused by Purchaser’s gross negligence or willful misconduct.
(b) From and after the applicable Purchase Date, VSD will indemnify, defend and hold harmless Purchaser Indemnified Parties from any claims or liens (other than Permitted Liens) brought or filed in connection with the Projects that were purchased from the Sellers. VSD will discharge any such claim or lien within thirty (30) days after becoming aware of such claim or lien. Failure to so discharge shall entitle the Purchaser to pay such claim or lien and seek reimbursement from VSD for such discharged claim or lien, or to set off the amounts owed to VSD hereunder or ***.
(c) If as a result of the breach or inaccuracy of any representation or warranty set forth herein or the breach of any covenant herein any Purchaser Indemnified Party for U.S. federal income tax purposes shall lose the benefit of, shall not have the right to claim, shall suffer a disallowance or deferral of, shall suffer a delay in claiming, shall be required to recapture or shall not claim (as the result of a Final Determination or a written opinion of independent counsel selected by Purchaser and reasonably acceptable to a Seller that there is not at least a “more likely than not” position for such claim) all or any portion of the Tax Credits (a “ Tax Credit Loss ”) or cost recovery (depreciation) deductions (a “ Deduction Loss ” and, together with a Tax Credit Loss, a “ Tax Loss ”) assumed in the Base Case Model, then VSD shall pay to Purchaser the amount determined pursuant to Section 4.3(d) hereof.
(d) (1) If a Tax Loss as defined in Section 4.3(c) hereof shall occur, then VSD shall pay to Purchaser (i) in the case of a Tax Credit Loss, the amount, if any, of the
 
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Tax Credit lost, disallowed or recaptured reduced by any Tax Savings arising as a result of the Tax Credit Loss, (ii) in the case of a Deduction Loss, the amount, if any, by which the sum of the present values as of the date of the indemnity payment of the additional U.S. federal income taxes payable by each Purchaser Indemnified Party as a result of such Deduction Loss (computed using a discount rate of 15%) exceeds any Tax Savings arising as a result of the Deduction Loss, (iii) the amount of any U.S. federal interest, penalties, fines or additions to tax payable by each Purchaser Indemnified Party, and (iv) the net amount of any additional U.S. federal income Taxes payable by each Purchaser Indemnified Party, if any, as the result of (A) the inclusion of any payment made pursuant to this Section 4.3(d) in taxable income or (B) the increase in any Tax Loss as a result of any payment made pursuant to this Section 4.3 . As used herein, “ Tax Savings ” shall mean the sum of the present values as of the date of the indemnity payment of the reductions in the U.S. federal income taxes payable by each Purchaser Indemnified Party as a result of the Tax Credit Loss or Deduction Loss, as the case may be (computed using a discount rate of 15%).
(2) For Tax reporting purposes, to the maximum extent permitted by the Code, each Party will agree to treat all amounts paid pursuant to this Section 4.3 as a non-taxable reimbursement of System Purchase Price. To the extent any such payment is includable as income of a Purchaser Indemnified Party as determined as a result of a Final Determination, by agreement of the Parties or, if there is no Final Determination or agreement, by an opinion of a nationally-recognized Tax counsel selected by the Purchaser Indemnified Party and reasonably acceptable to VSD that such amount is *** includable as income of the Purchaser Indemnified Party, the amount of the payment shall be increased by the amount of any U.S. federal income tax required to be paid by the Purchaser Indemnified Party upon the receipt or accrual of the payment. For purposes of calculating the amount of the U.S. federal income taxes required to be paid by each Purchaser Indemnified Party as a result of an amount paid pursuant to this Section 4.3 , including for purposes of determining the U.S. federal income tax required to be paid if a payment pursuant to this Section 4.3 is includable as income of a Purchaser Indemnified Party (and, in each case, any resulting Tax Savings), (A) each Purchaser Indemnified Party shall be deemed to have paid or to be required to pay U.S. federal income taxes for the relevant periods at the maximum marginal rates generally applicable to corporations in the taxable years in question and (B) it will be assumed that each Purchaser Indemnified Party will have sufficient taxable income to fully utilize on a current basis any tax benefits resulting from a Tax Loss or the events giving rise thereto.
(3) Any payment due to Purchaser from VSD pursuant to this Section 4.3 shall be paid within twenty (20) days after receipt by a Seller of a written demand therefor accompanied by a written statement describing in reasonable detail such Tax Loss and the computation of the amount so payable.
4.4 Indemnification by Purchaser .
Purchaser shall defend, indemnify and hold harmless each Seller, its Affiliates and its and their respective members, officers, directors, employees and agents (“ Seller Indemnified Parties ”) from and against (i) any Losses to the extent arising out of or in connection with (A) the negligence, fraud or willful misconduct of Purchaser or (B) any breach by Purchaser of any of its
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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representations, warranties or covenants in this Agreement or the other Transaction Documents and (ii) any Losses from third-party claims or demands arising under or relating to Purchaser’s performance or nonperformance of Purchaser’s obligations under this Agreement; provided , however , in no event will Purchaser be responsible for any such Losses of a Seller to the extent caused by such Seller’s gross negligence or willful misconduct.
4.5 LIMITATION OF LIABILITY .
EXCEPT AS MAY BE EXPRESSLY PROVIDED HEREIN AND EXCEPT FOR INDEMNIFIED THIRD PARTY CLAIMS PURSUANT TO SECTION 4.3 OR SECTION 4.4 , AS APPLICABLE, IN NO EVENT WILL PURCHASER OR ANY SELLER BE LIABLE TO THE SELLERS OR PURCHASER, AS APPLICABLE, UNDER THIS AGREEMENT OR OTHERWISE FOR CONSEQUENTIAL, SPECIAL, INCIDENTAL, EXEMPLARY, STATUTORY, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT; PROVIDED THAT A LOSS OR INABILITY TO CLAIM TAX CREDITS OR OTHER ADVERSE TAX CONSEQUENCES SHALL NOT BE TREATED AS CONSEQUENTIAL, SPECIAL, INCIDENTAL, EXEMPLARY, STATUTORY, OR PUNITIVE DAMAGES. IN ADDITION, WHETHER ANY ACTION OR CLAIM IS BASED ON WARRANTY, CONTRACT, TORT OR OTHERWISE, UNDER NO CIRCUMSTANCES SHALL THE TOTAL LIABILITY OF PURCHASER OR THE TOTAL AGGREGATE LIABILITY OF BOTH SELLERS ARISING OUT OF OR RELATED TO THIS AGREEMENT EXCEED *** ; PROVIDED THAT SUCH LIMITATION SHALL NOT APPLY TO REDUCE ANY PARTY’S OBLIGATION TO INDEMNIFY ANOTHER PARTY (A) TO THE EXTENT OF THE PROCEEDS OF INSURANCE OTHERWISE PAYABLE TO THE INDEMNIFYING PARTY, OR (B) FOR LOSSES CAUSED BY THE GROSS NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT OF THE INDEMNIFYING PARTY.
4.6 Indemnification Procedures .
Except with respect to Taxes, each of a Seller’s obligations in Section 4.3 and Purchaser’s obligations in Section 4.4 above (each of a Seller and Purchaser, as applicable, the “ Indemnifying Party ”) with respect to any third party claim are contingent upon the Seller Indemnified Parties or the Purchaser Indemnified Parties (each, as applicable, the “ Indemnitee ”), promptly notifying the Indemnifying Party in writing of such claim and promptly tendering the control of the defense and settlement of any such claim to the Indemnifying Party at the Indemnifying Party’s expense and with the Indemnifying Party’s choice of counsel. In connection with the foregoing, the indemnification obligation of Indemnifying Party to the Indemnitee shall be reduced if and to the extent the failure of an Indemnitee to provide such notice and tender of control actually prejudices the outcome of any such claim; provided that the foregoing shall not apply so long as the Managing Member of Purchaser is an Affiliate of a Seller. The Indemnitee shall also cooperate with the Indemnifying Party, at the Indemnifying Party’s expense, in defending or settling such claim and the Indemnitee may join in defense with counsel of its choice at its own expense. An Indemnifying Party may not, without the prior written consent (such consent not to be unreasonably withheld) of an Indemnitee, settle, compromise or consent to the entry of any judgment regarding a third party claim, the defense of
 
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which has been assumed by the Indemnifying Party unless such settlement, compromise or consent (a) does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the Indemnitee; and (b) does not contain any equitable order, judgment or term that in any manner affects, restrains or interferes with the business of the Indemnitee or any of the Indemnitee’s Affiliates. An Indemnitee may not settle, compromise or consent to the entry of any judgment regarding any third party claim for which indemnification is sought and the defense of which has not been assumed by the Indemnifying Party, without the prior written consent of the Indemnifying Party, such consent not to be unreasonably withheld or delayed.
ARTICLE 5
DISPUTE RESOLUTION
5.1 Good Faith Negotiations .
In the event that any question, dispute, difference or claim arises out of or in connection with this Agreement, including any question regarding its existence, validity, performance or termination (a “ Dispute ”), of which a Seller (or the Sellers, as applicable) or Purchaser has provided notice to Purchaser or a Seller or the Sellers, as applicable, senior management personnel from such Seller (or Sellers, as applicable) and Purchaser shall meet and diligently attempt in good faith to resolve the Dispute within a period of thirty (30) calendar days following one Party’s written request to the other Party for such a meeting. If, however, a Seller (or the Sellers, as applicable) or Purchaser refuses or fails to so meet, or the Dispute is not resolved by negotiation, then Purchaser or a Seller (or the Sellers as applicable), may pursue such remedies available to it (or them as applicable) at law or in equity, subject to the provisions of this Agreement, including Section 5.2 .
5.2 SUBMISSION TO JURISDICTION .
THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING RELATING TO A DISPUTE AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO. EACH PARTY HEREBY AUTHORIZES AND ACCEPTS SERVICE OF PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST IT AS CONTEMPLATED BY THIS SECTION 5.2 BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO ITS ADDRESS FOR THE GIVING OF NOTICES AS SET FORTH IN SECTION 6.6 . NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
ARTICLE 6
GENERAL PROVISIONS
6.1 Exhibits and Schedules .
All Exhibits and Schedules attached hereto are incorporated herein by reference.
 
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6.2 Amendment, Modification and Waiver .
This Agreement may not be amended or modified except by an instrument in writing signed by the Party against which enforcement of such amendment or modification is sought. Any failure of Seller or Purchaser to comply with any obligation, covenant, agreement or condition contained herein may be waived only if set forth in an instrument in writing signed by the Party to be bound thereby, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure.
Each Party’s rights and remedies under this Agreement are intended to be distinct, separate and cumulative and no such right or remedy therein or herein mentioned, whether exercised by such Party or not, is intended to be an exclusion or a waiver of any of the others.
6.3 Severability .
If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Applicable Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner materially adverse to any Party.
6.4 Expenses .
Each Party shall be responsible for all of its own legal costs, fees and expenses in connection with the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party; provided , that VSD shall reimburse Investor for up to $*** of any out-of-pocket transaction costs and expenses (including legal fees) actually incurred by Investor in connection with the transactions contemplated hereunder, regardless of whether such transaction occurs, and VSD shall make such reimbursement payment by the earlier of (a) ten (10) Business Days after Investor provides VSD with written evidence of Investor’s incurrence of any such costs and expenses and (b) the first Purchase Date.
6.5 Parties in Interest .
This Agreement shall be binding upon and, except as provided below, inure solely to the benefit of each Party and their successors and assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement; provided that, notwithstanding the foregoing, the Investor shall be a third-party beneficiary of Section 2.2(g) of this Agreement.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement
 
32

6.6 Notices .
All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, by a nationally recognized overnight courier, by facsimile, or by electronic mail transmission or mailed by registered or certified mail (return receipt requested) to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):
 
 	(a)	If to VSD, to:	
Vivint Solar Developer, LLC
4931 N 300 W
Provo, UT 84604
Attn: Paul Dickson, VP of Financing
Facsimile: (801) 765-5705
Email: pdickson@vivintsolar.com
With copies to:
Vivint Solar Developer, LLC
4931 N 300 W
Provo, UT 84604
Attn: C. Dan Black, General Counsel
Facsimile: (801) 765-5746
Email: dblack@vivintsolar.com
 
 	(b)	If to VSI, to:	
Vivint Solar, Inc.
4931 N 300 W
Provo, UT 84604
Attn: Paul Dickson, VP of Financing
Facsimile: (801) 765-5705
Email: pdickson@vivintsolar.com
With copies to
Vivint Solar, Inc.
4931 N 300 W
Provo, UT 84604
Attn: C. Dan Black, General Counsel
Facsimile: (801) 765-5746
Email: dblack@vivintsolar.com
 
 	(c)	If to Purchaser, to:	
Vivint Solar Aaliyah Project Company, LLC
4931 N 300 W
Provo, UT 84604
Attn: Paul Dickson, VP of Financing
Facsimile: (801) 765-5705
Email: pdickson@vivintsolar.com
 
Development, EPC and Purchase Agreement
 
33

With copies to:
Vivint Solar, Inc.
4931 N 300 W
Provo, UT 84604
Attn: C. Dan Black, General Counsel
Facsimile: (801) 765-5746
Email: dblack@vivintsolar.com
Stoneco IV Corporation
c/o The Blackstone Group L.P.
345 Park Avenue
New York, New York 10154
Attn: John Finley
Facsimile: (212) 583-5749
Email: John.Finley@Blackstone.com
and
Attn: Chaim Miller
Email: Chaim.Miller@Blackstone.com
and
Attn: Joe Rocco
Email: Joe.Rocco@Blackstone.com
and
Email: Treasury-Operations@Blackstone.com
All notices and other communications given in accordance herewith shall be deemed given (i) on the date of delivery, if hand delivered, (ii) on the date of receipt, if faxed or sent by electronic mail, or if such date is not a Business Day, the next Business Day following the date of receipt, provided sender can and does provide evidence of successful transmission, (iii) on the fifth Business Day after the date of mailing, if mailed by registered or certified mail, return receipt requested, or (iv) on the second Business Day after the date of sending, if sent by a nationally recognized overnight courier; provided that a notice given in accordance with this Section 6.6 but received on any day other than a Business Day or after 5:00 pm New York, New York time, on a Business Day in the place of receipt shall be deemed given on the next Business Day in that place.
6.7 Counterparts .
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
 
Development, EPC and Purchase Agreement
 
34

6.8 Entire Agreement .
This Agreement constitutes the entire agreement among the Parties and supersedes all prior agreements, letters of intent and understandings, both written and oral, among the Parties with respect to the subject matter hereof.
6.9 Governing Law .
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING RELATING TO A DISPUTE HEREUNDER AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.
6.10 Public Announcements .
Except for statements made or press releases issued pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934 or as otherwise required by law, neither the Sellers nor Purchaser shall issue, or permit any of their respective Affiliates to issue, any press release or otherwise make any public statements with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other Party; provided that the Sellers shall not make any public announcement regarding this Agreement which has not been approved in writing by the Investor.
6.11 Assignment .
This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No Party shall assign this Agreement without the prior written consent of the other Parties, in its sole discretion; provided that a Seller and Purchaser may each assign this Agreement and any rights or obligations hereunder to any of its respective lenders as collateral security (and each of the Sellers and Purchaser hereby agrees to execute a third-party consent and direct agreement with such lender in connection therewith); provided , further that, notwithstanding anything to the contrary in this Agreement, at any time, without the prior written consent of Purchaser or Investor, VSI may assign any or all of its rights and obligations under this Agreement to VSD so long as VSD has all of the Permits required to perform the Installation, warranty and other services in Hawaii required by this Agreement, and immediately upon such assignment, VSI shall be automatically released of all of its obligations and liabilities under this Agreement to the extent of such assignment (except that, for the avoidance of doubt, no such assignment by VSI shall satisfy, modify or reduce its obligations under the Sponsor Guaranty). Any attempted assignment of this Agreement other than in strict accordance with this Section 6.11 shall be null and void and of no force or effect.
 
Development, EPC and Purchase Agreement
 
35

6.12 Relationship of Parties .
This Agreement does not constitute a joint venture, association or partnership between the Parties. No express or implied term, provision or condition of this Agreement shall create, or shall be deemed to create, an agency, joint venture, partnership or any fiduciary relationship between the Parties.
6.13 Successors and Assigns .
This Agreement shall inure to the benefit of each Party and each Party’s successors and permitted assigns, and shall be binding upon and enforceable against each Party and each Party’s successors and permitted assigns.
6.14 Access .
Purchaser hereby grants each Seller and its authorized agents, employees and subcontractors the right to access any Purchased Project for the purpose of such Seller performing its obligations under this Agreement. Each Seller hereby accepts such access rights and access rights granted pursuant to the applicable Customer Agreement and further accepts the conditions at the site of each Purchased Project as they exist and acknowledges that Purchaser has no obligation to grant such Seller additional access rights or to change the conditions at such Project site. Such access rights granted pursuant to this Agreement will automatically expire immediately upon the termination or expiration of this Agreement.
6.15 Purchaser Member Authorization .
Notwithstanding anything in this Agreement to the contrary, Purchaser and each Seller hereby agree and acknowledge that, with respect to any direction, consent or approval described in this Agreement that Purchaser may provide that is governed by Section 8.3 of the LLC Agreement, a Seller shall not take any such direction of Purchaser or act under this Agreement unless Purchaser represents to such Seller in writing that the required member consents under such Section 8.3 of the LLC Agreement have been obtained.
[Remainder of page intentionally left blank]
 
Development, EPC and Purchase Agreement
 
36

IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be signed on its behalf as of the date first written above.

SELLERS :	
	
VIVINT SOLAR DEVELOPER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Financing	
	
VIVINT SOLAR, INC.,
a Delaware corporation	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Financing	
	
PURCHASER :	
	
VIVINT SOLAR AALIYAH PROJECT COMPANY, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Financing	
 
Development, EPC and Purchase Agreement

Schedule 1
List of Purchased Systems and Associated Customer Agreements
Part I. VSD Purchased Systems and Associated Customer Agreements

No.	 	Job ID	 	Host
Customer	 	Host Address	 	Description of PV
System
(Size  and Cost)	 	Purchase Date	 	Installation Date
(or expected
Installation
Date)	
1.	 		 		 		 		 		 		
2.	 		 		 		 		 		 		
3.	 		 		 		 		 		 		
4.	 		 		 		 		 		 		
5.	 		 		 		 		 		 		
6.	 		 		 		 		 		 		
7.	 		 		 		 		 		 		
8.	 		 		 		 		 		 		
9.	 		 		 		 		 		 		
10.	 		 		 		 		 		 		
11.	 		 		 		 		 		 		
12.	 		 		 		 		 		 		
13.	 		 		 		 		 		 		
14.	 		 		 		 		 		 		
15.	 		 		 		 		 		 		
 
Development, EPC and Purchase Agreement

Part II. VSI Purchased Systems and Associated Customer Agreements

No.	 	Job ID	 	Host
Customer	 	Host Address	 	Description of PV
System
(Size  and Cost)	 	Purchase Date	 	Installation Date
(or expected
Installation
Date)	
1.	 		 		 		 		 		 		
2.	 		 		 		 		 		 		
3.	 		 		 		 		 		 		
4.	 		 		 		 		 		 		
5.	 		 		 		 		 		 		
6.	 		 		 		 		 		 		
7.	 		 		 		 		 		 		
8.	 		 		 		 		 		 		
9.	 		 		 		 		 		 		
10.	 		 		 		 		 		 		
11.	 		 		 		 		 		 		
12.	 		 		 		 		 		 		
13.	 		 		 		 		 		 		
14.	 		 		 		 		 		 		
15.	 		 		 		 		 		 		
 
Development, EPC and Purchase Agreement

Schedule 2
Form of Tranche Presentation Certificate
TRANCHE PRESENTATION CERTIFICATE
This Tranche Presentation Certificate, dated                     , is issued pursuant to Section 2.1(c) of the Development, EPC and Purchase Agreement, dated as of November 5, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Aaliyah Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meaning as in the Agreement.
[Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”) hereby requests acceptance of this Tranche in the amount described in item (iv) below and certifies that, with respect to all Projects constituting this Tranche (the “ Tranche Projects ”):
 
 	(i)	each Tranche Project meets all applicable conditions set forth in Section 2.1 of the Agreement, and Seller reasonably expects each Tranche Project to meet all conditions set forth in Section 2.3 of the Agreement on the Purchase Date for such Tranche Project;	
 
 	(ii)	(A) all representations and warranties of Seller set forth in Section 3.1 of the Agreement and of Seller and *** in the *** are true and correct as of the date hereof, (B) Seller reasonably expects that such representations and warranties shall be true and correct as of the Purchase Date for such Tranche Projects, (C) Seller and *** have complied with all of the covenants and other obligations in the Agreement and *** with which they are required to comply at or prior to the date hereof and (D) Seller reasonably expects that they will have complied with all of the covenants and other obligations in the Agreement and *** with which Seller and *** are required to comply at or prior to the Purchase Date for such Tranche Projects;	
 
 	(iii)	the name and address of each potential Host Customer, the size of each Tranche Project to be installed at such Host Customer’s property, and the System Purchase Price for each Tranche Project is set forth on Schedule 1 hereto;	
 
 	(iv)	the aggregate System Purchase Price for all of the Tranche Projects is          Dollars ($        );	
 
 	(v)	the FICO® Score for each Host Customer of the Tranche Projects is set forth on Schedule 1 hereto;	
 
 	(vi)	the status of construction with respect to each Tranche Project is set forth on Schedule 1 hereto;	
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement

 	(vii)	Attached hereto as Annex 1 is a copy of the Base Case Model updated to reflect the Tranche Projects;	
 
 	(viii)	fully executed copies of each Customer Agreement included with each Tranche Project will be made available by Seller to Purchaser via electronic transmission;	
 
 	(ix)	copies of the manufacturer’s warranties to the equipment used or to be used in the each of the Tranche Projects have been delivered to Purchaser by Seller; and	
 
 	(x)	Seller will deliver all information and documents requested by Purchaser pursuant to this Tranche Presentation Certificate.	

Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title: ]	 		
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

Schedule 1 to Tranche Presentation Certificate 1

Job ID	  	Host
Customer
Name	  	Address	  	System
Purchase
Price	  	Projected
ITC	  	Appraisal	  	PV
System
Size
(KW)	  	FICO ®
Score	  	Gross
Capital
Contribution	  	Removed
Project
Credit	  	Change
Order
Debit	  	Projected
Capital
Contribution
for
Tranche	  	Projected
Capital
Contribution
from
Investor	  	Projected
Capital
Contribution
from
Managing
Member	  	Structural
Engineer	  	CAD
Drawing	  	PPA	  	Performance
Test	  	Construction
Status
(Installation
Date)	

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		

1  	Sellers shall transmit each version of Schedule 1 electronically to Investor and with such transmission shall include the data set forth on Schedule 1 in Excel format.	
 
Development, EPC and Purchase Agreement

Annex 1
Updated Base Case Model
[See attached]
 
Development, EPC and Purchase Agreement

Schedule 3
Forms of Customer Agreements
[See attached]
 
Development, EPC and Purchase Agreement

Schedule 4
Form of Bill of Sale and Assignment
BILL OF SALE AND ASSIGNMENT
This BILL OF SALE AND ASSIGNMENT is made and entered into as of [                    ], by and between Vivint Solar Aaliyah Project Company, LLC, a Delaware limited liability company (“ Purchaser ”), and [Vivint Solar Developer, LLC, a Delaware limited liability company][Vivint Solar, Inc., a Delaware corporation] (“ Seller ”). Purchaser and Seller are referred to collectively herein as the “Parties”. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Development, EPC and Purchase Agreement dated as of November 5, 2013, by and among, Purchaser, [Vivint Solar Developer, LLC][Vivint Solar, Inc.] and Seller (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”).
RECITALS
WHEREAS, pursuant to the Agreement, Seller agreed to sell, and Purchaser agreed to purchase, Projects for an amount of consideration equal to the System Purchase Price of each Project.
WHEREAS, it is the Parties’ intention to reflect the transfer of the Projects that may be purchased by Purchaser from Seller pursuant to Section 2.1 of the Agreement, including without limitation the transfer of the PV Systems comprising such Projects, warranties related thereto, associated Customer Agreements and related rights thereto, and related Permits, Government Incentives and RECs, by the execution and delivery of this Bill of Sale and Assignment.
WHEREAS, the Parties now desire to carry out the intent and purpose of the Agreement by Seller’s execution and delivery to Purchaser of this Bill of Sale and Assignment as evidence of the sale, conveyance, assignment, transfer and delivery to Purchaser of any and all Purchased Systems and the assignment of the associated Customer Agreements and related rights.
NOW, THEREFORE, in consideration of the covenants, promises and representations set forth herein and in the Agreement and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Seller does hereby, effective from and after the date hereof, sell, convey, assign, transfer and deliver unto Purchaser all of Seller’s right, title and interest in, to and under the Projects identified on the Closing Request attached hereto as Annex 1 (the “ Purchased Projects ”), to Purchaser and its successors and assigns for their exclusive use and benefit forever, and free and clear of all Liens other than Permitted Liens. Purchaser hereby purchases and assumes all of Seller’s right, title and interest in and obligations with respect to each of such Projects, including without limitation any warranties arising in connection with the PV Systems for such Projects, on the date hereof, and Purchaser hereby assumes all of Seller’s rights and obligations under each Customer Agreement and Permit included as part of such Projects, all as consistent with the Agreement. For the avoidance of doubt, the transfers of rights under this paragraph 1 do not include a license to use any proprietary monitoring intellectual property of Vivint Solar, Inc.
 
Development, EPC and Purchase Agreement

2. Each Party shall reasonably cooperate with the other Party, execute and deliver, or cause to be executed and delivered, all such other instruments and take all such other actions as a Party may reasonably be requested to take at any time after the date hereof in order to effectuate the provisions and purposes of this Bill of Sale and Assignment and the Agreement and the transactions contemplated hereby and thereby, to vest title in the Purchased Projects more effectively in Purchaser, and to put Purchaser in exclusive possession and absolute and total control of the Purchased Projects.
3. Seller hereby constitutes and appoints Purchaser and its successors and assigns, the true and lawful attorney of Seller, with full power of substitution for Seller and in its name and stead or otherwise, for the benefit of Purchaser and its successors and assigns, to take the following actions in relation to the Purchased Projects:
(a) to demand and receive from time to time any and all Purchased Projects hereby sold, conveyed, assigned, transferred and delivered and give receipts and releases for and in respect of the same and any part thereof;
(b) to institute and prosecute in the name of and at the expense of Seller or otherwise, but for the benefit of Purchaser, any and all proceedings at law, in equity or otherwise, which Purchaser may deem proper in order to collect, assert or enforce any claim, right or title of any kind in and to the Purchased Projects hereby given, transferred, sold, conveyed, assigned and delivered, and to defend or compromise any and all actions, suits or proceedings in respect of any of the Purchased Projects; and
(c) to do all such acts and things in relation to the Purchased Projects as Purchaser shall deem advisable.
4. Seller hereby declares that the appointment made and the powers hereby granted are coupled with an interest and are and shall be irrevocable by Seller in any manner and for any reason.
5. Each of the Parties shall use its commercially reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable laws, and execute and deliver such documents and other papers, as may be required to carry out the provisions of this Bill of Sale and Assignment and consummate and make effective the transactions contemplated by this Bill of Sale and Assignment.
6. Each of the Parties acknowledges and agrees that neither the representations and warranties nor the rights and remedies of the Parties under the Agreement shall be deemed to be enlarged, modified or altered in any way by this Bill of Sale and Assignment (but each of such representations and warranties shall apply to this Bill of Sale and Assignment), and, to the extent there shall arise a conflict between this Bill of Sale and Assignment and the Agreement, the Agreement shall control.
 
Development, EPC and Purchase Agreement

7. This Bill of Sale and Assignment shall bind and shall inure to the benefit of the respective Parties and their assigns, transferees and successors.
8. This Bill of Sale and Assignment shall be construed and enforced in accordance with the laws of the State of New York.
9. This Bill of Sale and Assignment may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
[Remainder of page intentionally left blank]
 
Development, EPC and Purchase Agreement

IN WITNESS WHEREOF, this Bill of Sale and Assignment has been duly executed and delivered by a duly authorized representative of each of the Parties as of the date first above written.

SELLER :	
	
[VIVINT SOLAR DEVELOPER, LLC,
a Delaware limited liability company	
		
By:	 	 	
Name:	 		
Title:]	 		
	
[VIVINT SOLAR, INC.,
a Delaware corporation	
		
By:	 	 	
Name:	 		
Title:]	 		
	
PURCHASER :	
	
VIVINT SOLAR AALIYAH PROJECT COMPANY, LLC,
a Delaware limited liability company	
		
By:	 	 	
Name:	 		
Title:	 		
 
Development, EPC and Purchase Agreement

ANNEX 1
Closing Request
[To be attached]
 
Development, EPC and Purchase Agreement

Schedule 5
Form of Closing Request
CLOSING REQUEST
This Closing Request, dated                     , is issued pursuant to Section 2.1 of the Development, EPC and Purchase Agreement, dated as of November 5, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Aaliyah Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defied herein shall have the same meaning as in the Agreement.
1. [Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”) hereby notifies Purchaser that the Purchase Date for the Tranche described in the Tranche Presentation Certificate, dated as of [DATE of Tranche Presentation Certificate], is [DATE]. Such Purchase Date is at least two (2) Business Days after the date of this Closing Request and no earlier than five (5) Business Days after the end of the Review Period for such Tranche.
2. Attached hereto as Schedule 1 is a list of all Accepted Projects that will be included in such Tranche, which includes the System Purchase Price for each such Project. Simultaneously with Seller’s delivery of this Closing Request to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedule 1 in Excel format.
3. The aggregate of the System Purchase Prices for all of the Accepted Projects in the Tranche is $[ — ].
4. Credits and Refunds:
a. [The Removed Project Credit specified in the Deficient Project and Cancelled Project Report dated [DATE], which has not been applied to System Purchase Prices for any other Tranche and is being applied to the aggregate of the System Purchase Prices for the Tranche hereof, is $[ — ]].
b. [The Change Order Credit specified in the Change Order Report dated [DATE], which has not been applied to System Purchase Prices for any other Tranche and is being applied to the aggregate of the System Purchase Prices for the Tranche hereof, is $[ — ]].
c. [The Change Order Debit specified in the Change Order Report dated [DATE], which has not been applied to System Purchase Prices for any other Tranche and is being applied to the aggregate of the System Purchase Prices for the Tranche hereof, is $[ — ]].
d. [The total Refund Credit being applied is $[Insert sum of Removed Project Credit and Change Order Credit less Change Order Debit].]
 
Development, EPC and Purchase Agreement

5. Change Orders:
 
 	a.	The aggregate change in kW size due to Change Orders between the Effective Date and the date hereof is [ — ] kW, and the aggregate change in kW size due to Change Orders for which a Change Order Credit is being applied to the aggregate of the System Purchase Prices for the Tranche hereof is [ — ] kW.	
 
 	b.	The aggregate amount of kW for which a System Purchase Price (including with respect to any Projects set forth in this Closing Request) has been paid in accordance with Section 2.1 of the Agreement as of the date hereof (adjusted for Deficient Projects, Cancelled Projects and Substituted Projects in accordance with Section 2.2(d) and Section 2.2(f)) is [ — ] kW.	
 
 	6.	On the Purchase Date, the Net Purchase Price of $[Insert the amount in Section 3 minus the amount in Section 4(d)] shall be wired by Purchaser to the following account:	
[INSERT BANK ACCOUNT INFORMATION]

Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title: ]	 		
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

Schedule 1 to Closing Request
LIST OF ACCEPTED PROJECTS TO BE INCLUDED IN TRANCHE

Job ID	 	Host Customer	 	Address	  	Title of
Agreement	  	System Size	  	System Purchase
Price	  	Net Purchase
Price	

	 		 		  		  		  		  		
 
Development, EPC and Purchase Agreement

Schedule 6
Form of Transfer Notice
TRANSFER NOTICE
This Transfer Notice, dated                      (the “ Transfer Notice Date ”), is issued pursuant to the Development, EPC and Purchase Agreement, dated as of November 5, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Aaliyah Project Company, LLC (“ Purchaser ”). Capitalized terms have the same meaning as in the Agreement.
The undersigned, a duly elected executive officer of [Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”), hereby certifies to Purchaser as follows:
 
 	1.	The undersigned is a duly elected executive officer of Seller currently holding the title below his or her signature and printed name.	
 
 	2.	Seller reasonably believes each of the Projects described on the attached Schedule 1 will be Placed in Service within the following quarter and in no event later than the Initial Completion Deadline (or, for Projects that are Substituted Projects that are transferred after December 31, 2013, the Completion Deadline).	
 
 	3.	The undersigned has reviewed each of the conditions precedent to consummate a Purchase of each of the Projects described on the attached Schedule 1 , and each such condition precedent has been satisfied.	
 
 	4.	Seller has complied with the applicable provisions of the Agreement and each applicable Customer Agreement, except as would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or Seller.	
 
 	5.	The information in Schedule 1 is complete and accurate. Simultaneously with Seller’s delivery of this Transfer Notice to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedule 1 in Excel format.	

SELLER :	
	
[VIVINT SOLAR DEVELOPER, LLC,
a Delaware limited liability company	
		
By:	 	 	
Name:	 		
Title:]	 		
 
Development, EPC and Purchase Agreement

			
[VIVINT SOLAR, INC.,	
a Delaware corporation	
		
By:	 	 	
Name:	 		
Title:]	 		
 
Development, EPC and Purchase Agreement

Schedule 1 to Transfer Notice

Job ID	 	Host
Customer
Name	 	Address	 	System
Purchase
Price	 	Projected
ITC	 	Appraisal	 	PV
System
Size
(KW)	 	FICO ®
Score	 	Gross
Capital
Contribution	 	Removed
Project
Credit	 	Change
Order
Debit	 	Projected
Capital
Contribution
for
Tranche	 	Projected
Capital
Contribution
from
Investor	 	Projected
Capital
Contribution
from
Managing
Member	 	Structural
Engineer	 	CAD
Drawing	 	Site
Photo	 	Performance
Test	 	Construction
Status
(Installation
Date)	

	 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		

	 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		

	 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		
 
Development, EPC and Purchase Agreement

Schedule 7
Form of Deficient Project and Cancelled Project Report
DEFICIENT PROJECT AND CANCELLED PROJECT REPORT
This Deficient Project and Cancelled Project Report, dated                     , is issued pursuant to Section 2.2(d) of the Development, EPC and Purchase Agreement, dated as of November 5, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Aaliyah Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meanings as in the Agreement.
[Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”) hereby notifies Purchaser that (i) each of the PV Systems described on the attached Schedule A are Deficient Projects or Cancelled Projects (the “ Removed Projects ”), and (ii) the aggregate System Purchase Price for the Removed Projects identified on Schedule A results in a credit balance to Purchaser in the amount of $[ — ] (the “ Removed Project Credit ”) and Purchaser shall receive a credit in the amount of the Removed Project Credit [in the Closing Request dated [DATE]][in the True-Up Report].
Each of the Removed Projects shall be removed from Schedule 1 to the Agreement, and all right, title and interest in and to, and all risk of loss or damage to, the Removed Projects shall pass back to Seller. A revised Schedule 1 to the Agreement is attached hereto as Schedule B .
Simultaneously with Seller’s delivery of this Deficient Project and Cancelled Project Report to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedule A and Schedule B in Excel format.

Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title: ]	 		
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

Schedule A to Deficient Project and Cancelled Project Report
List of Removed Projects

Job ID	 	Host Customer	 	Address	  	Title of
Agreement	  	System Size	  	System Purchase
Price	  	Net Purchase
Price	

	 		 		  		  		  		  		
 
Development, EPC and Purchase Agreement

Schedule 8
Form of Change Order Report
CHANGE ORDER REPORT
This Change Order Report, dated                     , is issued pursuant to Section 2.2(e) of the Development, EPC and Purchase Agreement, dated as of November 5, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Aaliyah Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meanings as in the Agreement.
Schedule A hereto (i) identifies all Change Orders through the date of this Change Order Report that have not previously been reported in a Closing Request, (ii) describes any increases or decreases in the system size pursuant to each such Change Order and (iii) describes any increases or decreases in the System Purchase Price pursuant to each such Change Order identified.
[Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”) hereby notifies Purchaser that the increases and decreases in the System Purchase Price for each Project affected by the Change Orders identified on Schedule A results in a [net credit balance to Purchaser in the amount of $[ — ] (the “ Change Order Credit ”)][net debit balance to Purchaser in the amount of $[ — ] (the “ Change Order Debit ”)], and Purchaser shall receive a [credit][debit] in the amount of the [Change Order Credit][Change Order Debit] in the [Closing Request dated [ — ]][True-Up Report].
The revised system sizes and System Purchase Price for each Project affected by such Change Orders shall be deemed to be the system size and system cost for such Project listed on Schedule 1 to the Agreement, and Seller shall revise Schedule 1 to reflect such information. A revised Schedule 1 to the Agreement is attached hereto as Schedule B .
Simultaneously with Seller’s delivery of this Change Order Report to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedule A and Schedule B in Excel format.

Seller :	 		
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

			
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

Schedule 9
Form of Substitution Report
SUBSTITUTION REPORT
This Substitution Report, dated                     , is issued pursuant to Section 2.2(f) of the Development, EPC and Purchase Agreement, dated as of November 5, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Aaliyah Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meanings as in the Agreement. [Vivint Solar Developer, LLC][Vivint Solar, Inc.] is hereinafter referred to as “ Seller ”.
1. Schedule 1 hereto is the Change Order Report describing the economic impact of all Change Orders agreed to through the date of the Change Order Report and not previously reported in a prior Substitution Report or Closing Request.
2. Schedule 2 hereto identifies all Accepted Projects in the Tranche that were determined to be Deficient Projects or Cancelled Projects through the date of this Substitution Report (including the System Purchase Prices therefor under the original Closing Request) and not previously reported in a prior Substitution Report or Closing Request.
3. Schedule 3 lists all Projects that are substituted for the above-referenced Deficient Projects and Cancelled Projects and in connection with any Change Orders that decrease the system sizes of any Projects (“ Substituted Projects ”) and the System Purchase Prices thereof. Purchaser shall have a Substituted Project Review Period of ten (10) days to confirm the conditions under Section 2.3 of the Agreement have been met with respect to the Substituted Projects. Each Substituted Project shall be a Non-Accepted Project unless Purchaser informs Seller in writing by the end of the Substituted Project Review Period that a proposed Substituted Project is an Accepted Project. The Purchase Date for the Substituted Projects that become Accepted Projects shall be the expiration of the applicable Substituted Project Review Period or, if such expiration does not occur on a Business Day, the first Business Day following such expiration.
4. A revised Schedule 1 to the Agreement is attached hereto as Schedule 4 .
5. A revised Schedule 1 to the applicable Transfer Notice is attached hereto as Schedule 5 .
6. A Closing Request for the Substituted Projects is being delivered by Seller to Purchaser concurrently with this Substitution Report. A Bill of Sale and Assignment and a Transfer Notice each dated the date of the Purchase Date of the Substituted Projects included in this Substitution Report shall be delivered by Seller to the Purchaser with respect to such Substituted Projects.
7. Simultaneously with Seller’s delivery of this Substitution Report to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedules 1 through 5 in Excel format.
 
Development, EPC and Purchase Agreement

			
Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title: ]	 		
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

Schedule 10
Form of True-Up Report
TRUE-UP REPORT
This True-Up Report, dated                     , is issued pursuant to Section 2.2(h) of the Development, EPC and Purchase Agreement, dated as of November 5, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC (“ VSD ”), Vivint Solar, Inc. (“ VSI ”, together with VSD, the “ Sellers ”) and Vivint Solar Aaliyah Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meanings as in the Agreement.
Part A of Schedule 1 hereto (i) identifies all Change Orders, (ii) describes any increases or decreases in the system size pursuant to each such Change Order and (iii) describes any increases or decreases in the System Purchase Price of the PV Systems pursuant to each such Change Order identified.
Part B of Schedule 1 hereto identifies all Deficient Projects and Cancelled Projects (including the System Purchase Price thereof under the original Closing Request).
Part C of Schedule 1 hereto lists all Projects that were substituted for the above-referenced Deficient Projects and Cancelled Projects which decrease the system sizes of any Projects (“ Substituted Projects ”) and the System Purchase Price thereof.
Part D of Schedule 1 hereto lists the total amounts that were netted out of or added to a System Purchase Price on a Purchase Date as set forth in a Closing Request to take into account the prior payment from Purchaser to a Seller associated with the related Deficient Project, Cancelled Project or Change Order being credited, debited or refunded on such related Purchase Date.
Part E of Schedule 1 hereto is a copy of the True-Up Base Case Model.
The Sellers hereby notify Purchaser that the increases and decreases in the System Purchase Price for each Project affected by the Changes Orders, Deficient Projects, Cancelled Projects and/or Substituted Projects, as applicable, identified on Schedule 1 hereto results in a net credit balance in favor of [Purchaser][the Sellers] in the amount of $[ — ][,including a net credit balance in favor of Purchaser from VSD in the amount of $[ — ] and a net credit balance in favor of Purchaser from VSI in the amount of $[ — ][, including a net credit balance in favor of VSD in the amount of $[ — ] and a net credit balance in favor of VSI in the amount of $[ — ]]. [VSD shall on its own behalf and on VSI’s behalf pay Purchaser][Each Seller hereby requests that Purchaser distributes to such Seller] in cash such amount within ten (10) days after the date of this True-Up Report.
A revised Schedule 1 to the Agreement reflecting the revised system sizes and System Purchase Price for each Project affected by such Change Orders, Deficient Projects, Cancelled Projects and/or Substituted Projects, as applicable, is attached hereto, and the revised system size and system cost for each such Project shall be deemed to be the system size and system cost listed on Schedule 1 to the Closing Request for each such Project.
 
Development, EPC and Purchase Agreement

Each Seller certifies that the applicable information in Schedule 1 is complete and accurate. Simultaneously with Seller’s delivery of this True-Up Report to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedules 1 through 5 in Excel format.

Sellers :	
	
VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title:	 		
	
VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title:	 		
 
Development, EPC and Purchase Agreement

Schedule 11
Form of Completion Certificate
COMPLETION CERTIFICATE
This Completion Certificate, dated                     , is issued pursuant to Section 2.2(b) of the Development, EPC and Purchase Agreement, dated as of November 5, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Aaliyah Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meaning as in the Agreement.
The undersigned, being the                      of [Vivint Solar Developer, LLC][Vivint Solar, Inc.] (the “ Seller ”), does hereby certify that he/she is duly authorized to certify and does hereby certify on behalf of the Seller as follows:
1. Each of the representations and warranties of Seller in Section 3.1 of the Agreement and [of Seller or *** in any *** ] that is qualified as to materiality or by Material Adverse Change is true and correct, and such representations that are not so qualified is true and correct in all material respects, in each case as of the date hereof;
2. The information provided in Schedule 1 attached hereto is complete and accurate as of the date hereof. Simultaneously with Seller’s delivery of this Completion Certificate to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedule 1 in Excel format.
3. Seller certifies that (i) installation of the Projects described on the attached Schedule 1 (the “ Completed Systems ”) was completed on the dates set forth therein, (ii) each Completed System passed the Performance Tests and was Placed in Service on the respective dates stated in Schedule 1 (each date a “ Completion Date ”), (iii) each Completed System passed inspection by the appropriate government building inspector on the respective dates stated in Schedule 1 (each date an “ Inspection Date ”) and the local electric utility where each Completed System is located sent a written communication with respect to each Completed System dated as of the respective dates stated in Schedule 1 authorizing parallel operation (each date a “ Utility Approval Date ”), (iv) all permits, governmental authorizations and other local utility approvals required for the installation and operation of each Completed System have been received, (v) prior to being Placed in Service, title to, and control over, each Completed System has been conveyed to Purchaser, (vi) each Completed System has been supplying electricity on a regular and continuous basis to the Host Customer under the applicable Customer Agreement since the respective dates stated on Schedule 1 (each date a “ Commercial Operation Date ”), which are no earlier than the dates on which the respective Completed Systems were Placed in Service, (vii) all warranties relating to the Completed System from any manufacturer of any part thereof are in full force and effect, (viii) each Completed System is in working order, and (ix) the system cost for each Completed System is as stated on Schedule 1 .
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement

			
Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title: ]	 		
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title: ]	 		
 
Development, EPC and Purchase Agreement

Schedule 1 to Completion Certificate

Job ID	 	Host
Customer Name	 	Address	 	PV System
Size	 	Completion Date	 	Inspection
Date	 	Utility
Approval
Date	 	Commercial
Operation
Date	 	System
Purchase
Price	

	 		 		 		 		 		 		 		 		

	 		 		 		 		 		 		 		 		

	 		 		 		 		 		 		 		 		
 
Development, EPC and Purchase Agreement

Schedule 12
Performance Tests
Upon completion of installation, the applicable Seller will run the system for 5 minutes and measure power output (peak kW energy production) at the inverter during such time. Each Performance Test will be successfully completed if the power output reading at the inverter matches the seasonally-adjusted and weather-adjusted expected output of the PV System.
 
Development, EPC and Purchase Agreement

Schedule 13
Approved Suppliers
Racking
 
•	 	Zep Solar, Inc.	
Inverters
 
•	 	Enphase Energy, Inc.	
Panels
 
•	 	Canadian Solar, Inc.	
 
•	 	Yingli Green Energy Americas, Inc.	
 
•	 	Trina Solar (U.S.), Inc.	
 
Development, EPC and Purchase Agreement

Schedule 14
Insurance Requirements
Each Seller, at its sole cost, and before commencement of the work or service to be performed under the Agreement, shall procure and maintain the following coverages with insurers rated by A.M. Best as A-IX or higher:
 
 	1.1	WORKERS’ COMPENSATION AND EMPLOYERS’ LIABILITY	
 
 	1.1.1	Workers’ compensation and basic employers’ liability insurance for all employees in accordance with Applicable Law, with a minimum limit of $1,000,000.	
 
 	1.2	COMMERCIAL GENERAL LIABILITY	
 
 	1.2.1	Comprehensive or commercial general liability insurance written on an occurrence basis with a combined single limit of at least $1,000,000 per occurrence and $2,000,000 in the aggregate, including premises and operations liability, owners’ and contractors’ protective, products and completed operations liability, blanket contractual liability, personal injury liability, bodily injury and “broad form” property damage coverage, blanket contractual liability, completed operations, explosion and collapse hazard coverage. The insurance shall cover all of such Seller’s operations.	
 
 	1.3	BUSINESS AUTO	
 
 	1.3.1	Comprehensive automobile liability insurance with bodily injury, death and property damage with combined single limits of at least $1,000,000 per occurrence covering vehicles owned, hired or non-owned.	
 
 	1.4	PROPERTY INSURANCE	
 
 	1.4.1	Property insurance covering such Seller’s tools and equipment.	
 
 	1.5	BUILDER’S RISK INSURANCE	
 
 	1.5.1	Builder’s Risk Insurance – Installation Floater with a coverage limit of $25,000 per job site, $250,000 per occurrence and $5,000,000 in the aggregate shall be written on an all-risk, replacement cost basis.	
 
 	1.6	ADDITIONAL INSURANCE PROVISIONS	
 
 	1.6.1	Such Seller shall provide Purchaser with a certificate of insurance, properly completed and signed by an authorized insurance company representative, before the commencement of work or service.	
 
Development, EPC and Purchase Agreement

 	1.6.2	Such Seller’s Commercial General Liability and Business Automobile Liability policies shall name Purchaser, its members and Affiliates, and their respective officers, agents, representatives and employees as additional insureds for work performed under or incidental to this Agreement.	
 
 	1.6.3	Commercial General Liability, including products and completed operations, shall be maintained for a minimum of three (3) years following the completion of work or service contemplated in this Agreement.	
 
 	1.6.4	The limits of insurance or applicable deductibles shall not limit the liability of such Seller or relieve such Seller of any liability or financial responsibility.	
 
 	1.6.5	Any deductible or self-insured retention shall be the responsibility of such Seller.	
 
 	1.6.6	Such insurance as is afforded by any policies contemplated by this Agreement for the benefit of Purchaser shall be primary and non-contributory as respects any claims, losses or liability arising directly or indirectly from such Seller’s operations.	
 
 	1.6.7	In the event and for so long as any property insurance (including the limits or deductibles thereof) hereby required by this Schedule 14 to be maintained, other than insurance required by law to be maintained, shall not be available on commercially reasonable terms in the commercial insurance market, Purchaser shall not unreasonably withhold its agreement to waive such requirement to the extent the maintenance thereof is not so available or, to the extent applicable, may allow such Seller to obtain the best available property insurance comparable to the requirements of this Schedule 14 on commercially reasonable terms then available in the commercial insurance market.	
 
Development, EPC and Purchase Agreement

Exhibit 10.34A
Execution Version
FIRST AMENDMENT TO
DEVELOPMENT, EPC AND PURCHASE AGREEMENT
(PROJECT AALIYAH)
This FIRST AMENDMENT TO DEVELOPMENT, EPC AND PURCHASE AGREEMENT (this “ First Amendment ”) is dated as of January 13, 2014 by and among Vivint Solar Developer, LLC, a Delaware limited liability company (“ VSD ”), Vivint Solar, Inc., a Delaware corporation (“ VSI ”, together with VSD, the “ Sellers ” and each a “ Seller ”), and Vivint Solar Aaliyah Project Company, LLC, a Delaware limited liability company (“ Purchaser ”).
RECITALS
WHEREAS, Sellers and Purchaser are each a party to that certain Development, EPC and Purchase Agreement dated as of November 5, 2013 (the “ Agreement ”). Initially capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Agreement.
WHEREAS, the Parties desire to amend the Agreement as set forth herein to modify certain provisions within the Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, of mutual promises of the parties hereto and of other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Parties hereby agree as follows:
 
1.	The following defined term in Section 1.1 of the Agreement is hereby deleted in its entirety and the following new definition is inserted in its stead, to read as follows:	
“ Completion Deadline ” means December 31, 2014.
 
2.	The defined term “Initial Completion Deadline” in Section 1.1 of the Agreement is hereby deleted in its entirety.	
 
3.	Sections 2.1(c) and 2.3(k) of the Agreement are hereby amended by deleting the term “Initial Completion Deadline” and replacing it with the term “Completion Deadline.”	
 
4.	Section 2.2(g) of the Agreement is hereby deleted in its entirety and replaced with the word “Reserved.”	
 
5.	Section 2 of Schedule 6 to the Agreement is hereby deleted in its entirety and the following inserted in its stead, to read as follows:	
Seller reasonably believes each of the Projects described on the attached Schedule 1 will be Placed in Service no later than the Completion Deadline.
 
1

Execution Version

6.	Waiver . Purchaser hereby releases and discharges Sellers from any obligation that arose prior to the date hereof under Section 2.2(g) of the Agreement to designate any Project as a Cancelled Project or to provide Purchaser a Removed Project Credit for any such Cancelled Project.	
 
7.	Miscellaneous .	
 
 	a.	Ratification of Agreement . All other terms and conditions of the Agreement remain in full force and effect unless amended by the foregoing changes or any additional amendments made in a writing executed by all of the parties hereto. In the event of a conflict or ambiguity between this First Amendment and the Agreement, this First Amendment will control.	
 
 	b.	Burden and Benefit . The covenants and agreements contained herein shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and permitted assigns of the respective parties hereto.	
 
 	c.	Governing Law . This First Amendment shall be construed and enforced in accordance with the laws of the State of New York.	
 
 	d.	Counterparts . This First Amendment may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties shall not have signed the same counterpart.	
 
 	e.	Separability of Provisions . Each provision of this First Amendment shall be considered separable and if for any reason any provision which is not essential to the effectuation of the basic purposes of this First Amendment is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this First Amendment which are valid so long as the economic and legal substance of this First Amendment is not affected in any manner materially adverse to any Party.	
 
 	f.	Entire Agreement . This First Amendment, the Agreement and the documents referred to herein and therein (including the schedules and exhibits attached hereto and thereto) set forth all (and are intended by all parties to be an integration of all) of the representations, promises, agreements and understandings among the parties hereto with respect to the subject matter herein and therein, and there are no representations, promises, agreements or understandings, oral or written, express or implied, among them other than as set forth or incorporated herein or therein.	
[signature page follows]
 
2

IN WITNESS WHEREOF, the parties have set their signatures to this First Amendment to Development, EPC and Purchase Agreement as of the date first written above.

SELLERS :	
	
VIVINT SOLAR DEVELOPER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
	
VIVINT SOLAR, INC.,
a Delaware corporation	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
	
PURCHASER :	
	
VIVINT SOLAR AALIYAH PROJECT
COMPANY, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
Acknowledged, Agreed and Consented to by the Members of Purchaser :

STONECO IV CORPORATION,	
a Delaware corporation	
		
By:	 	/s/ John A. Magliano	
Name:	 	John A. Magliano	
Title:	 	Assistant Secretary	
	
VIVINT SOLAR AALIYAH MANAGER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
Signature Page to First Amendment to Development, EPC and Purchase Agreement
(Project Aaliyah)

Exhibit 10.34B
*** Text Omitted and Filed Separately with the Securities Exchance Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406
SECOND AMENDMENT TO
DEVELOPMENT, EPC AND PURCHASE AGREEMENT
(PROJECT AALIYAH)
This SECOND AMENDMENT TO DEVELOPMENT, EPC AND PURCHASE AGREEMENT (this “ Second Amendment ”) is dated as of February 13, 2014 by and among Vivint Solar Developer, LLC, a Delaware limited liability company (“ VSD ”), Vivint Solar, Inc., a Delaware corporation (“ VSI ”, together with VSD, the “ Sellers ” and each a “ Seller ”), and Vivint Solar Aaliyah Project Company, LLC, a Delaware limited liability company (“ Purchaser ”).
RECITALS
WHEREAS, Sellers and Purchaser are each a party to that certain Development, EPC and Purchase Agreement dated as of November 5, 2013, as amended by that certain First Amendment to Development, EPC and Purchase Agreement, dated as of January 13, 2014 (the “ Agreement ”). Initially capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Agreement.
WHEREAS, the Parties desire to amend the Agreement as set forth herein to modify certain provisions within the Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, of mutual promises of the parties hereto and of other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Parties hereby agree as follows:
 
1.	The definition of “ Minimum Credit Criteria ” in Section 1.1 of the Agreement is hereby amended to replace “***%” with “***%.”	
 
2.	The following racking suppliers are hereby added to Schedule 13 of the Agreement immediately below Zep Solar, Inc.:	
 
 	•	 	Mounting Solutions	
 
 	•	 	Ecofasten	
 
 	•	 	Ecolibrium	
 
3.	Waiver . Purchaser hereby releases and discharges Sellers from any obligations that arose prior to the date hereof to satisfy the condition set forth in Section 2.3(n) of the Agreement that the Host Customers meet the Minimum Credit Criteria, provided that such waiver shall apply only to the extent that such Host Customers on the applicable Purchase Date satisfied the Minimum Credit Criteria as amended by this Second Amendment.	
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
1

4.	Miscellaneous	
 
 	a.	Ratification of Agreement . All other terms and conditions of the Agreement remain in full force and effect unless amended by the foregoing changes or any additional amendments made in a writing executed by all of the parties hereto. In the event of a conflict or ambiguity between this Second Amendment and the Agreement, this Second Amendment will control.	
 
 	b.	Burden and Benefit . The covenants and agreements contained herein shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and permitted assigns of the respective parties hereto.	
 
 	c.	Governing Law . This Second Amendment shall be construed and enforced in accordance with the laws of the State of New York.	
 
 	d.	Counterparts . This Second Amendment may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties shall not have signed the same counterpart.	
 
 	e.	Separability of Provisions . Each provision of this Second Amendment shall be considered separable and if for any reason any provision which is not essential to the effectuation of the basic purposes of this Second Amendment is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this Second Amendment which are valid so long as the economic and legal substance of this Second Amendment is not affected in any manner materially adverse to any Party.	
 
 	f.	Entire Agreement . This Second Amendment, the Agreement and the documents referred to herein and therein (including the schedules and exhibits attached hereto and thereto) set forth all (and are intended by all parties to be an integration of all) of the representations, promises, agreements and understandings among the parties hereto with respect to the subject matter herein and therein, and there are no representations, promises, agreements or understandings, oral or written, express or implied, among them other than as set forth or incorporated herein or therein.	
[signature page follows]
 
2

IN WITNESS WHEREOF, the parties have set their signatures to this Second Amendment to Development, EPC and Purchase Agreement as of the date first written above.

SELLERS :	
	
VIVINT SOLAR DEVELOPER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
	
VIVINT SOLAR, INC.,
a Delaware corporation	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
	
PURCHASER :	
	
VIVINT SOLAR AALIYAH PROJECT
COMPANY, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
Acknowledged, Agreed and Consented to by the Members of Purchaser :

STONECO IV CORPORATION,	
a Delaware corporation	
		
By:	 	/s/ John A. Magliano	
Name:	 	John A. Magliano	
Title:	 	Assistant Secretary	
	
VIVINT SOLAR AALIYAH MANAGER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
Signature Page to Second Amendment to Development, EPC and Purchase Agreement
(Project Aaliyah)

Exhibit 10.35
EXECUTION VERSION
MAINTENANCE SERVICES AGREEMENT
This MAINTENANCE SERVICES AGREEMENT, dated as of November 5, 2013 (the “ Effective Date ”), is entered into by and between Vivint Solar Provider, LLC, a Delaware limited liability company (“ Provider ”), and Vivint Solar Aaliyah Project Company, LLC, a Delaware limited liability company (the “ Company ,” and together with Provider, the “ Parties ,” and each, a “ Party ”).
RECITALS
WHEREAS, the Company desires to engage Provider to provide certain maintenance services on the terms and subject to the conditions as more fully described in this Agreement, and Provider is willing to provide such services on those terms and conditions;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . The following capitalized terms used in this Agreement have the following meanings:
“ Accounting Fee ” is defined in Section 2.1(d) .
“ Accounting Services ” means the services listed in Part 1 of Exhibit A .
“ Administrative Services ” means the services listed in Part 2 of Exhibit A .
“ Affiliate ” means, with respect to any Person, a Person that directly, or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common Control with, the Person specified; provided , however , that Provider and Developer, on the one hand, and the Company, on the other hand, shall not be considered Affiliates for purposes of this Agreement.
“ Agreement ” means this Maintenance Services Agreement, together with all schedules and exhibits hereto, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Applicable Laws ” means all applicable laws of any Governmental Authority, including, without limitation, laws relating to consumer leasing and protection and any ordinances, judgments, decrees, injunctions, writs and orders or like actions of any Governmental Authority and rules and regulations of any federal, regional, state, county, municipal or other Governmental Authority.

“ Business Day ” means any day other than Saturday, Sunday and any other day on which banks in New York are authorized to be closed.
“ Company ” is defined in the preamble of this Agreement.
“ Company Indemnitee ” is defined in Section 4.2 .
“ Company Permits ” is defined in Section 2.7(c) .
“ Control ” means, with respect to a Person, the possession, directly or indirectly, of the power to direct or cause the direction of such Person’s management or policies, whether through the ownership of voting securities, by contract or otherwise.
“ Covered Projects ” is defined in Section 2.1(a) .
“ Customer Agreement ” means, in respect of each Covered Project, the “Customer Agreement” as defined in the EPC Agreement with respect to such Covered Project.
“ Default Rate ” means, for any day, the sum of (a) ten percent (10%) per annum plus (b) the prime rate published in The Wall Street Journal for such day or, if The Wall Street Journal ceases to publish for any reason such rate of interest, the prime lending rate as set forth on the Bloomberg page PRIMBB Index (or successor page) for such day.
“ Effective Date ” is defined in the preamble of this Agreement.
“ Emergency Services ” is defined in Section 2.2 .
“ EPC Agreement ” means that certain Development, EPC and Purchase Agreement, by and among Vivint Solar Developer, LLC, Sponsor and the Company, dated as of the date hereof, as may be amended, restated, supplemented or otherwise modified from time to time.
“ Force Majeure Event ” means any act or event that prevents the Party claiming to be affected by the Force Majeure Event from performing its obligations in accordance with this Agreement, if such act or event is beyond the reasonable control, and not the result of the fault or negligence, of the Party claiming to be affected by the Force Majeure Event, and such Party had been unable to overcome such act or event with the exercise of due diligence (including the expenditure of reasonable sums). “Force Majeure Event” shall include action by a Governmental Authority ( provided , that such action has been resisted in good faith by all reasonable legal means); the failure to act on the part of any Governmental
 
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Authority ( provided , that such action has been timely requested and diligently pursued); national or regional third party labor disputes, civil strike, work stoppage, slow-down or lock-out; flood, earthquake, fire, lightning or wind; epidemic, war, terrorism, riot, economic sanction or embargo; civil disturbance; act of god; unavailability of electricity from the utility grid, equipment, supplies or products; failure of equipment not utilized by or under the control of the Party claiming to be affected by the Force Majeure Event; or any “Force Majeure Event” under and as defined in any Customer Agreement.
“ Government Incentive ” means a payment, including, without limitation, a payment in respect of any performance-based incentive or rebates, by a utility, electric distribution company or federal, state or local Governmental Authority or quasi-governmental agency, and any extension of the program (including by converting the program into a refundable tax credit or tax refund program), in each case as an inducement to a utility customer, solar company or installer to install or use solar equipment, except that neither (a) Tax Credits and depreciation deductions for U.S. federal income tax purposes nor (b) any credits or payments available under any Host Customer’s utility’s “net metering” program for energy generated by the applicable Project that are reserved to such Host Customer under the applicable Customer Agreement shall be considered Government Incentives.
“ Governmental Authority ” means any foreign, federal, state, local or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrating body or other governmental authority having jurisdiction or effective control over Provider, the Company, their respective Affiliates or any Project.
“ Host Customer ” means a residential customer under a Customer Agreement for a Covered Project.
“ Indemnifiable Loss ” means any claim, demand, suit, loss, liability, damage, obligation, payment, cost, Tax, penalty or expense (including, without limitation, the cost and expense of any action, suit, proceeding, assessment, judgment, settlement or compromise relating thereto and reasonable attorneys’ fees and reasonable disbursements in connection therewith) for personal injury or property damage.
“ Indemnifying Party ” is defined in Section 4.3 .
“ Indemnitee ” is defined in Section 4.3 .
“ Initial Term ” is defined in Section 3.1 .
“ Insolvent ” means (a) a Party has filed a voluntary petition in bankruptcy or has been adjudicated as bankrupt or insolvent, or has filed any petition or answer or consent seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future applicable federal, state
 
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or other statute or law relative to bankruptcy, insolvency or other relief for debtors, or has sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator or liquidator of such Party or of all or any substantial part of its properties (the term “acquiesce,” as used in this definition, includes the failure to file a petition or motion to vacate or discharge any order, judgment or decree within fifteen (15) calendar days after entry of such order, judgment or decree); (b) a court of competent jurisdiction has entered an order, judgment or decree approving a petition filed against a Party seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy act, or any other present or future applicable federal, state or other statute or law relating to bankruptcy, insolvency or other relief for debtors, and such Party has acquiesced and such decree has remained unvacated and unstayed for a total of sixty (60) calendar days (whether or not consecutive) from the date of entry thereof, or a trustee, receiver, conservator or liquidator of such Party has been appointed with the consent or acquiescence of such Party and such appointment has remained unvacated and unstayed for a total of sixty (60) calendar days, whether or not consecutive; (c) a Party has admitted in writing its inability to pay its debts as they mature; (d) a Party has given notice to any governmental body of insolvency or pending insolvency, or suspension or pending suspension of operations; (e) a Party has made an assignment for the benefit of creditors or taken any other similar action for the protection or benefit of creditors; or (f) an involuntary case is commenced against a Party by the filing of a petition under any chapter of Title 11 of the United States Bankruptcy Code, as now constituted or hereafter amended, and within sixty (60) days after the filing thereof either the petition is not dismissed or the order for relief is not stayed or dismissed.
“ Investor ” is defined in the LLC Agreement.
“ Lien ” means any lien, security interest, mortgage, hypothecation, encumbrance or other restriction on title or property interest.
“ LLC Agreement ” means that certain Limited Liability Company Agreement of the Company, dated as of the date hereof, by and between Vivint Solar Aaliyah Manager, LLC, a Delaware limited liability company, and Stoneco IV Corporation, a Delaware corporation, as may be amended, restated, supplemented or otherwise modified from time to time.
“ Maintenance Log ” is defined in Section 2.5 .
“ Maintenance Services Fee ” is defined in Section 2.1(b) .
“ Management and Administrative Fee ” is defined in Section 2.1(c) .
“ Managing Member ” is defined in the LLC Agreement.
“ Master EPC Agreement ” is defined in the LLC Agreement.
 
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“ Maximum Liability ” means, with respect to a Party, an amount equal to the total amount paid or to be paid by one Party to the other Party under the terms of this Agreement in any given year.
“ Non-Included System Services ” means services other than System Services and services ancillary thereto.
“ Parties ” or “ Party ” is defined in the preamble of this Agreement.
“ Parts ” means components of a PV System.
“ Permit ” means any permit, franchise, lease, order, license, notice, certification, approval, exemption, qualification, right or authorization from or registration, notice or filing with any Governmental Authority.
“ Permitted Liens ” is defined in the LLC Agreement.
“ Person ” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization or governmental entity or any department or agency thereof.
“ Project ” is defined in the EPC Agreement.
“ Project States ” is defined in the EPC Agreement.
“ Provider ” is defined in the preamble of this Agreement.
“ Provider Indemnitee ” is defined in Section 4.1 .
“ Provider Permits ” is defined in Section 2.7(a) .
“ Prudent Industry Standards ” means the practices, methods, equipment, specifications and standards of safety, as the same may change from time to time, as are used or approved by a significant portion of the residential rooftop distributed solar electric generation industry operating in the applicable Project States in residential rooftop distributed solar electric generating systems or facilities of a type and size similar to the Projects as good, safe and prudent engineering practices in connection with the design, construction, operation, maintenance, repair and use of electrical and other equipment, facilities and improvements of such residential rooftop distributed solar electric generating system or facility, with commensurate standards of safety, performance, dependability, efficiency and economy, in each case in light of the facts known and circumstances existing at the time any decision is made or action is taken, that would be expected to accomplish the desired result in a manner materially consistent with applicable law, regulation, permits, codes, standards and equipment manufacturer’s recommendations.
 
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“ PV System ” is defined in the EPC Agreement.
“ REC ” is defined in the LLC Agreement.
“ REC Services ” has the meaning set forth in paragraph 8 of Part 3 of Exhibit A .
“ Renewal Term ” is defined in Section 3.1 .
“ Sponsor ” is defined in the LLC Agreement.
“ Subcontractor ” means any person to whom Provider subcontracts any of its obligations under this Agreement, including the vendors and any person to whom such obligations are further subcontracted of any tier.
“ System Services ” means, collectively, the services listed in Part 3 of Exhibit A and all other obligations of Provider under ARTICLE II , other than the Accounting Services and the Administrative Services.
“ Tax ” or “ Taxes ” means:
(a) any taxes, customs, duties, charges, fees, levies, penalties or other assessments imposed by any federal, state, local or foreign taxing authority, including, but not limited to, income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, net worth, employment, occupation, payroll, withholding, social security, alternative or add-on minimum, ad valorem, transfer, stamp, or environmental tax, or any other tax, custom, duty, fee, levy or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax, or additional amount attributable thereto; and
(b) any liability for the payment of amounts with respect to payment of a type described in clause (a) , including as a result of being a member of an affiliated, consolidated, combined or unitary group, as a result of succeeding to such liability as a result of merger, conversion or asset transfer or as a result of any obligation under any tax sharing arrangement or tax indemnity agreement.
“ Tax Credits ” means energy credits under Section 48 of the Internal Revenue Code of 1986, as amended, or any successor to such section.
“ Tax Return ” means any return, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including any information return, claim for refund, amended return or declaration of estimated Tax.
“ Term ” is defined in Section 3.1 .
“ Termination Notice ” is defined in Section 3.2(c) .
 
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“ Third Party Claim ” means any claim, action or proceeding made or brought by any Person who is not a Party or an Affiliate of a Party.
Section 1.2 Construction . Unless the context otherwise requires, the singular shall include the plural, the masculine shall include the feminine and neuter, and vice versa. The term “includes” or “including” shall mean “including without limitation”. The terms “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the schedules and exhibits hereto and certificates delivered hereunder) and not to any particular provision of this Agreement. References to a section, article, exhibit or schedule shall mean a section, article, exhibit or schedule to this Agreement, and reference to a given agreement or instrument shall be a reference to that agreement or instrument as modified, amended, supplemented or restated through the date as of which such reference is made.
ARTICLE II
MAINTENANCE SERVICES; STANDARDS
Section 2.1 In General .
(a) Provider will provide the System Services for the Projects listed on Exhibit C hereto (the “ Covered Projects ”) to the Company throughout the Term. System Services will commence for each individual Covered Project when such Covered Project is “Placed in Service” under and as defined in the EPC Agreement. It is the intention of the Parties that Exhibit C shall include all Projects purchased by the Company under the EPC Agreement, which are not later deemed Cancelled Projects or Deficient Projects (as such terms are defined in the EPC Agreement), and shall not include Projects no longer owned by the Company (including due to termination of the underlying Customer Agreement); and the Parties shall execute updates to Exhibit C as necessary to reflect the addition or removal of Covered Projects.
(b) The Company will compensate Provider for the System Services, other than the Non-Included System Services, by paying Provider a fee of $1,893 per quarter per DC megawatt of installed nameplate capacity of the Covered Projects that have successfully passed the applicable Performance Test under and as defined in the EPC Agreement, prorated for any capacity not available for a full quarter, and escalating annually beginning on the first anniversary hereof in an amount equal to 2% of the fee per DC megawatt paid for the preceding year (the “ Maintenance Services Fee ”). Provider will invoice the Company for System Services on a quarterly basis within thirty (30) calendar days following the end of each calendar quarter (with the invoice being pro rated for any period in which System Services were not provided for a particular Project for the entire quarter). Payment will be due to Provider at the address or to the account indicated in the invoice within ten (10) calendar days after the Company receives such invoice. If such payment is not received by Provider within such ten (10) calendar day period, the payment will be considered late and will bear interest at the Default Rate (or the highest rate permissible under Applicable Law, if less) until paid.
 
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(c) The Company will compensate Provider for Administrative Services by paying Provider a monthly fee in an amount equal to 15% of the total gross revenues received in the prior month by the Company from Host Customers in respect of electricity sales from Covered Projects under the Customer Agreements (the “ Management and Administrative Fee ”). Within thirty (30) days following the end of each month, Provider will notify the Company of the total gross revenues received in the prior month by the Company from Host Customers in respect of electricity sales from PV Systems under the Customer Agreements, and will invoice the Company for the Management and Administrative Fee based on such revenues. Payment will be due to Provider at the address or to the account indicated in the invoice within ten (10) calendar days after the Company receives such invoice, subject to the Company’s contest rights under Section 9.12 . If such payment is not received by Provider within such ten (10) day period, the payment will be considered late and will bear interest at the Default Rate (or the highest rate permissible under Applicable Law, if less) until paid.
(d) The Company will compensate Provider for Accounting Services by paying Provider an annual accounting fee of $25,000, escalating annually beginning on the first anniversary hereof in an amount equal to 2% of the fee paid for the preceding year (the “ Accounting Fee ”). Provider will invoice the Company for Accounting Services on an annual basis within thirty (30) calendar days following the end of each calendar year (with the invoice being pro rated for any period in which Accounting Services were not provided for the entire calendar year). Payment will be due to Provider at the address or to the account indicated in the invoice within ten (10) calendar days after the Company receives such invoice, subject to the Company’s contest rights under Section 9.12 . If such payment is not received by Provider within such ten (10) calendar day period, the payment will be considered late and will bear interest at the Default Rate (or the highest rate permissible under Applicable Law, if less) until paid.
Section 2.2 Non-Included System Services . If the Company desires Provider to perform any Non-Included System Services, then the Company will submit a written request for such services to Provider. If Provider agrees to provide the Non-Included System Services, it will do so in accordance with the provisions of this Agreement. Provider will not perform Non-Included System Services until the Parties have reached agreement in writing setting forth what the Non-Included System Services will cost. Notwithstanding the foregoing, if Provider determines, in accordance with Prudent Industry Standards, that it must furnish any Non-Included System Services on an emergency basis in order to prevent an imminent danger of injury, loss or damage (“ Emergency Services ”), if the situation allows, Provider shall attempt to notify the Company via telephone and email (using the telephone number and email address provided for the Company in Section 9.2 below) prior to the performance of any Emergency Services. Should Provider be unable to notify or contact the Company prior
 
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to providing any Emergency Services, Provider shall be authorized to perform such Emergency Services without prior approval from the Company and shall notify the Company immediately thereafter in writing specifying the nature of the emergency and the Emergency Services performed; provided that Provider (a) will not have any duty to perform such Emergency Services nor will it incur any liability or obligation by reason of not performing any such Emergency Services and (b) shall cease to perform Emergency Services and not incur any costs and/or expenses in connection therewith immediately after such imminent danger of injury, loss or damage to a Project has passed without the prior consent of the Company (it being agreed and understood that no reimbursement shall be owing by the Company to Provider for Emergency Services performed in violation of this proviso (b) ). Provider shall perform any such Emergency Services in accordance with the provisions of this Agreement. The Company shall reimburse Provider for all reasonable expenses associated with Provider’s performance of any such Emergency Services, except to the extent such Emergency Services are required due to (i) the negligence of or failure of Vivint Solar Developer, LLC to install the applicable Covered Project in accordance with the terms of the EPC Agreement and the costs therefor are covered under the warranty provided in Section 3.4 of the EPC Agreement, solely if Provider is then an Affiliate of Vivint Solar Developer, LLC or (ii) Provider’s negligence or its failure to perform its material obligations under this Agreement.
Section 2.3 Standard of Performance . Provider shall perform its services under this Agreement in accordance with Applicable Law, Prudent Industry Standards, all material Company Permits with respect to each applicable Covered Project, and in compliance with the terms and conditions of the Customer Agreements, except to the extent the Company instructs Provider not to do so in the event the Company is contesting in good faith the validity or application of any such Applicable Law or such term and condition of the Customer Agreement, in any reasonable manner.
Section 2.4 Access . The Company hereby grants Provider and its authorized agents, employees and Subcontractors a license to access the Projects for the purpose of Provider performing its obligations under this Agreement; provided , that such license shall be subject to the restrictions in the Customer Agreements on the Company’s rights to access the Projects. Such license will automatically expire immediately upon the termination or expiration of this Agreement.
Section 2.5 Maintenance Log . Provider will keep and maintain, in accordance with Prudent Industry Standards, a separate maintenance log for each Covered Project in a paper or electronic format (“ Maintenance Log ”). The Maintenance Log will contain, among other things, descriptions of maintenance services performed by Provider, follow-up activities, if any, that are required, material and equipment costs, and other information relevant to Provider’s maintenance activities. Provider shall furnish to the Company the Maintenance Log upon the Company’s request and immediately prior to the expiration or earlier termination of this Agreement, provided that Provider shall not be obligated to furnish to the Company the Maintenance Log more than once per calendar year unless such request is in connection with the expiration or earlier termination of this Agreement.
 
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Section 2.6 Remote Monitoring . For purposes of determining when repair services are necessary, Provider will monitor and evaluate, in accordance with Prudent Industry Standards, the information gathered through remote monitoring of each Covered Project as well as the maintenance and inspection reports; provided that no such monitoring or evaluating (or lack thereof) will relieve Provider of any of its obligations under this Agreement.
Section 2.7 Permits .
(a) Provider will be responsible, at Provider’s sole cost and expense, for procuring, obtaining, maintaining and complying with all material Permits required to perform the System Services under this Agreement other than Company Permits (“ Provider Permits ”).
(b) The Company agrees to cooperate with and assist Provider in obtaining all Provider Permits required to perform the System Services, and Provider will reimburse the Company for its reasonable costs in providing such assistance.
(c) The Company shall obtain and maintain all Permits (i) that are required for the general ownership, operation and maintenance of the Projects or (ii) that Provider may, from time to time, notify the Company are required by Applicable Laws to be obtained by the Company in its name in order to allow Provider to perform the System Services but excluding the Provider Permits (collectively, the “ Company Permits ”). Upon the Company’s request, Provider shall reasonably cooperate with the Company with respect to obtaining all Company Permits.
Section 2.8 Reporting .
(a) Within thirty (30) days after the end of each month, Provider will deliver to the Company (i) a report on Host Customer collections (by “Tranche” as defined in the EPC Agreement), developments and proposed actions in the form of Exhibit D , (ii) a report of project operations, in the form of Exhibit E and (iii) a report on milestones in the form of Exhibit G . Simultaneously with Provider’s delivery of such reports to the Company, Provider shall transmit electronically all of the data set forth on such reports in Excel format to Investor.
(b) Provider will deliver the notices, information and reports described in paragraphs 1 , 4 , 5 and 8 of Part 3 of Exhibit A as and when contemplated thereunder.
 
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Section 2.9 Access to Data and Meters .
Throughout the Term, and thereafter to the extent relevant to calculations necessary for periods prior to the end of the Term and subject to any confidentiality obligation owed to any third party and to any restrictions on disclosure of information that may be subject to intellectual property rights restricting disclosure, the Company will allow Provider:
(a) access to all data relating to the electricity production of any Covered Project and the weather conditions at each site where a Covered Project is located; and
(b) access to all data from all meters.
Provider will be entitled to use the foregoing data for its internal purposes and make such data available to third parties for analysis.
Section 2.10 Manufacturer Warranty . To the extent that manufacturer warranties cover replacement and repair of covered equipment during the Term, Provider, on behalf of the Company, shall use commercially reasonable efforts to submit, process and pursue, at the Company’s sole cost and expense, warranty coverage; provided , that the Company shall have no obligation to pay costs of Provider in connection with pursuit of warranty coverage, the costs of which are covered under the warranty provided in Section 3.4 of the EPC Agreement or are required to be indemnified by Vivint Solar Developer, LLC under the EPC Agreement, solely if Provider is then an Affiliate of Vivint Solar Developer, LLC. The Company will provide such full and complete cooperation as Provider may reasonably require in connection with the submission, processing and pursuit of warranty coverage.
Section 2.11 Sales, Use and Other Similar Taxes .
(a) The consideration payable pursuant to Sections 2.1(b) , 2.1(c) , 2.1(d) and 2.2 shall, except as otherwise provided in this Section 2.11 , exclude any and all Taxes imposed on the sale of the services described in Sections 2.1(b) , 2.1(c) , 2.1(d) and 2.2 , and any and all Taxes otherwise imposed on, sustained or incurred with respect to, or applicable to, such services; provided , that the Company shall bear any and all sales, use and other similar taxes imposed on the sale of such services. Provider shall properly and timely collect from the Company and remit any such sales, use and other similar taxes if required to do so by Applicable Laws.
(b) Provider shall cooperate with the Company and take any reasonably requested action in order to minimize any sales, use or other similar taxes imposed on the sale of the services described in Sections 2.1(b) , 2.1(c) , 2.1(d) and 2.2 , including providing sales and use tax exemption certificates or other documentation necessary to support Tax exemptions. Provider agrees to provide the Company such information and data as reasonably requested from time to time, and to fully cooperate with the Company, in connection with (i) the reporting of any sales, use or other similar taxes payable pursuant to this Agreement, (ii) any audit relating to any such sales, use or other similar taxes, or (iii) any assessment, refund, claim or proceeding relating to any such sales, use or other similar taxes.
 
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Section 2.12 Assignment of Renewable Energy Credits .
(a) Assignment of Renewable Energy Credits. The Company hereby grants, conveys, transfers, assigns, and delivers unto Provider (or its designee), without recourse to the Company, all of the Company’s rights, title and interest in and to all RECs solely so that the Provider may perform the REC Services on behalf of the Company in accordance with Prudent Industry Standards. Until any sale of RECs to a third party, Provider shall keep all RECs free and clear of all Liens (except for Permitted Liens). After any such sale and until its delivery to the Company of the purchase price for such REC Provider shall keep its right to receive such purchase price and such amounts received free of all Liens. Subject to the provisions of Section 2.12(d) of this Agreement, the Company hereby delegates, without recourse by Provider to the Company, any and all duties, obligations, responsibilities, claims, demands and other commitments in connection with the RECs, as applicable, unto Provider.
(b) Acceptance of Assignment of Renewable Energy Credits . Provider hereby accepts and assumes the RECs and accepts the delegation under Section 2.12(a) of this Agreement from the date hereof.
(c) Transfer of Renewable Energy Credit Proceeds. Provider hereby covenants that it will transfer any and all proceeds generated by the sale of any RECs to the Company in accordance with the stated REC Services.
(d) Reversion of Renewable Energy Credits upon Termination. Upon the expiration of this Agreement in accordance with Section 3.1 or a termination of this Agreement in accordance with Sections 3.2 or any other provision herein, any RECs that remain with the Provider that have not been sold shall automatically be transferred back to the Company and all right, title and interest in such RECs shall automatically revert back to the Company without any further action of the Parties required, and all rights to receive payment for any RECs that have been sold but for which Provider has not received payment shall be immediately assigned to the Company, without any further action required by the Company. Prior to any such expiration or promptly upon any such termination, Provider shall, on behalf of Company and at Provider’s sole cost, make such applications to the pertinent Governmental Authorities or other third parties as may be required to establish and shall establish one or more accounts within the attribute tracking systems or generation information systems that are recognized by Governmental Authorities for the purpose of tracking and trading RECs. Provider shall deliver to the Company all account information, application materials, statements of qualification and other documentation as may be required for the Company to create, receive, track and transfer RECs after such an expiration or termination. The Provider’s obligations under this Section 2.12(d) shall survive the expiration or termination of this Agreement.
 
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(e) Cooperation and Assistance. The Company agrees to cooperate with and assist Provider in obtaining and completing any documentation required to perform the REC Services.
ARTICLE III
TERM AND TERMINATION
Section 3.1 Term . The initial term of this Agreement, including, without limitation, the period during which System Services are to be provided for the Covered Project, shall commence on the Effective Date and shall thereafter continue for a period of twenty-five (25) years (the “ Initial Term ”), unless and until earlier terminated pursuant to the provisions of this Agreement. After the Initial Term, this Agreement shall automatically renew for successive one-year terms (each, a “ Renewal Term ”), unless a written notice of non-renewal is given by either Party to the other Party at least one hundred eighty (180) calendar days prior to the expiration of the Initial Term or then applicable Renewal Term. In the event that either Party delivers a notice of non-renewal pursuant to the immediately preceding sentence, or in the event that this Agreement is otherwise terminated in accordance with its terms, Provider will, for a period of one hundred eighty (180) calendar days following the delivery or receipt of such notice, as applicable, use commercially reasonable efforts to assist a replacement provider selected by the Company in assuming the duties, responsibilities and obligations of Provider hereunder. The Initial Term and all subsequent Renewal Terms, if any, are referred to collectively as the “ Term .”
Section 3.2 Termination .
(a) Termination by the Company . The Company may terminate this Agreement immediately upon the occurrence of any of the following:
(i) Provider becomes Insolvent;
(ii) any failure of Provider to pay any amount owed to the Company under this Agreement (and not contested under Section 9.12 ) within ten (10) Business Days after the due date for such payment; provided that the Company has first provided at least ten (10) calendar days’ prior written notice to Provider of its intention to terminate for such failure pursuant to Section 3.2 below and Provider does not pay such due amount within such ten (10) calendar day period;
(iii) any failure by Provider to perform any of its material obligations under this Agreement, which failure is not remedied within thirty (30) calendar days after written notice of such failure from the Company to Provider; provided that if (x) such failure can be remedied, (y) such failure cannot
 
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reasonably be remedied within such thirty (30) calendar day period, and (z) Provider commences cure of such failure within such thirty (30) calendar day period and thereafter diligently seeks to remedy the failure, then the Company will not be entitled to terminate this Agreement until such time as Provider ceases reasonable efforts to cure such failure unless such failure continues for a period of a ninety (90) calendar days from the original written notice from the Company; or
(iv) a Force Majeure Event occurs that prevents Provider from providing a material part of the System Services for a continuous period of at least ninety (90) calendar days; and the Company reasonably concludes such prevention is not reasonably likely to be remedied within a further period of ninety (90) calendar days.
(b) Termination by Provider . Provider may terminate this Agreement in the event of any of the following:
(i) the Company becomes Insolvent;
(ii) any failure of the Company to pay any amount owed to Provider under this Agreement (and not contested under Section 9.12 ) within ten (10) Business Days after the due date for such payment; provided that Provider has first provided at least ten (10) calendar days’ prior written notice to the Company and Investor of its intention to terminate for such failure pursuant to Section 3.2(c) below and the Company does not pay such due amount within such ten (10) calendar day period; or
(iii) any failure by the Company to perform any of its material obligations under this Agreement, which failure, if not a payment breach, is not remedied within thirty (30) calendar days of written notice of such failure from Provider to the Company; provided that if (A) such failure can be remedied, (B) such failure cannot reasonably be remedied within such thirty (30) calendar day period, and (C) the Company commences cure of such failure within such thirty (30) calendar day period and thereafter diligently seeks to remedy such failure, then Provider will not be entitled to terminate this Agreement until such time as the Company ceases reasonable efforts to cure such failure unless such failure continues for a period of ninety (90) calendar days from the original written notice from Provider.
(c) Notice . A notice of termination given pursuant to the foregoing provisions of this Section 3.2 (the “ Termination Notice ”) must specify in reasonable detail the circumstances giving rise to the Termination Notice. Except to the extent otherwise provided herein, this Agreement will terminate on the date specified in the Termination Notice, which date will be no earlier than the date upon which the applicable Party is entitled to effect such termination as provided above.
 
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(d) Preservation of Rights . Termination of this Agreement will not affect any rights or obligations as between the Parties that may have accrued prior to such termination or that expressly or by implication are intended to survive termination, whether resulting from the event giving rise to termination or otherwise.
ARTICLE IV
INDEMNIFICATION
Section 4.1 Indemnification of Provider by the Company . The Company will indemnify, defend and hold harmless Provider, its officers, directors, employees, members, partners, Affiliates and agents (each, a “ Provider Indemnitee ”) from and against any and all Indemnifiable Losses asserted against or suffered by any Provider Indemnitee in any way relating to, resulting from or arising out of or in connection with any Third Party Claims against a Provider Indemnitee, in each case, to the extent arising out of or in connection with (i) the gross negligence, fraud or willful misconduct of the Company, its Affiliates or its Subcontractors (other than Provider), (ii) any breach by the Company of any of the representations, warranties or covenants of the Company under this Agreement or (iii) a default under the Customer Agreement as a result of a breach by the Company of its obligations hereunder; provided that in each case, the Company will have no obligation to indemnify Provider with respect to any Indemnifiable Losses resulting from (a) the gross negligence, fraud or willful misconduct of Provider, its Affiliates or its Subcontractors (other than the Company), (b) the breach by Provider of any of its covenants or warranties under this Agreement, or (c) so long as the Managing Member is an Affiliate of Provider, the breach by the Managing Member of any of its covenants or warranties under the LLC Agreement.
Section 4.2 Indemnification of the Company by Provider . Provider will indemnify, defend and hold harmless the Company, its officers, employees, members, partners, Affiliates and agents (each, a “ Company Indemnitee ”) from and against any and all Indemnifiable Losses asserted against or suffered by any Company Indemnitee in any way relating to, resulting from or arising out of or in connection with any Third Party Claims against a Company Indemnitee, in each case, to the extent arising out of or in connection with (i) the gross negligence, fraud or willful misconduct of Provider, its Affiliates or its Subcontractors, (ii) any breach by Provider of any of the representations, warranties or covenants of Provider under this Agreement or (iii) a default under the Customer Agreement as a result of a breach by Provider of its obligations hereunder; provided that in each case, Provider will have no obligation to indemnify the Company either with respect to any Indemnifiable Losses resulting from the gross negligence, fraud or willful misconduct of the Company, its Affiliates or Subcontractors (other than Provider) or the breach by the Company of any of its covenants or warranties under this Agreement.
 
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Section 4.3 Indemnification Procedures . Each of the Company’s obligations in Section 4.1 and Provider’s obligations in Section 4.2 above (each of Company and Provider, as applicable, the “ Indemnifying Party ”) are contingent upon the Provider Indemnitee or the Company Indemnitee, as applicable (each, the “ Indemnitee ”), promptly notifying the Indemnifying Party in writing of the Third Party Claim and, except with respect to Taxes, promptly tendering the control of the defense and settlement of any such Third Party Claim to the Indemnifying Party at the Indemnifying Party’s expense and with the Indemnifying Party’s choice of counsel. In connection with the foregoing, the indemnification obligation of Indemnifying Party to the Indemnitee shall be reduced if and to the extent the failure of an Indemnitee to provide such notice and tender of control actually prejudices the outcome of any such claim; provided , however , that the foregoing notice requirement shall not apply if Provider or one of its Affiliates is the Managing Member at such time. The Indemnitee shall also cooperate with the Indemnifying Party, at the Indemnifying Party’s expense, in defending or settling such Third Party Claim and the Indemnitee may join in defense with counsel of its choice at its own expense. An Indemnifying Party may not, without the prior written consent (such consent not to be unreasonably withheld) of an Indemnitee, settle, compromise or consent to the entry of any judgment regarding a Third Party Claim the defense of which has been assumed by the Indemnifying Party unless such settlement, compromise or consent (i) does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the Indemnitee; and (ii) does not contain any equitable order, judgment or term that in any manner affects, restrains or interferes with the business of the Indemnitee or any of the Indemnitee’s Affiliates. An Indemnitee may not settle, compromise or consent to the entry of any judgment regarding any Third Party Claim for which indemnification is sought and the defense of which has not been assumed by the Indemnifying Party, without the prior written consent of the Indemnifying Party, such consent not to be unreasonably withheld or delayed. Each Indemnifying Party’s obligations under Section 4.1 or Section 4.2 , as applicable, shall survive the expiration or termination of this Agreement.
ARTICLE V
FORCE MAJEURE
Section 5.1 If either Party (subject to Section 3.2(a)(iii) in the case of Provider) is rendered wholly or in part unable to perform its obligations under this Agreement because of a Force Majeure Event, then such Party will be excused from whatever performance is affected by the Force Majeure Event; provided that:
(a) such Party will, as soon as is reasonably possible but in any event no later than ten (10) Business Days (i) upon the occurrence of the Force Majeure Event, give the other Party written notice describing the particulars of the occurrence, and (ii) after termination of the Force Majeure Event, give the other Party written notice summarizing the effects of the Force Majeure Event and the actions taken in connection therewith;
 
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(b) the suspension of performance will be of no greater scope and of no longer duration than is required by the Force Majeure Event;
(c) no obligation of such Party that arose before the occurrence causing the suspension of performance and that could and should have been fully performed before such occurrence through the exercise of commercially reasonable efforts or pursuant to the terms of this Agreement will be excused as a result of such occurrence; and
(d) no Force Majeure Event shall excuse any Party from its payment obligations under this Agreement.
ARTICLE VI
LIMITATIONS ON LIABILITY
Section 6.1 Aggregate Limit of Liability .
(a) In no event will any Party be liable under this Agreement to another Party for any lost profits (other than revenues from Customer Agreements, Government Incentives or sales of RECs) of, or any consequential, special, incidental, exemplary, statutory or punitive damages incurred by, the other Party to this Agreement; provided that this provision will in no way limit any such liability of a Party to another Party under any other agreement between the Parties; provided , further , that a loss, disallowance or recapture of, or inability to claim, Tax Credits or accelerated depreciation or cost recovery deductions shall not be treated as consequential, special, incidental, exemplary, statutory or punitive damages for purposes of this Agreement.
(b) In no event will one Party be liable under this Agreement to the other Party for an aggregate amount in any given year in excess of the Maximum Liability for such year unless and to the extent such liability is (i) the result of (A) fraud, gross negligence or willful misconduct of a Party, (B) the failure of a Party to pay any amount due under this Agreement or (C) a claim for indemnity asserted by a Party on account of a Third Party Claim against such Party, or (ii) with respect to Taxes.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties of the Company .
(a) The Company is a limited liability company duly organized and existing in good standing under the laws of the State of Delaware.
(b) The Company possesses all requisite power and authority to enter into and perform this Agreement and to carry out the transactions contemplated herein.
 
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(c) The Company’s execution, delivery and performance of this Agreement have been duly authorized and this Agreement has been duly executed and delivered and constitutes the Company’s legal, valid and binding obligation, enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency and other legal principles pertaining to creditors’ rights.
(d) Except as otherwise contemplated herein, no material consent or approvals are required in connection with the execution, delivery and performance by the Company of this Agreement.
(e) The execution, delivery and performance by the Company of this Agreement will not (i) violate any Applicable Law applicable to the Company, (ii) result in any breach of, or constitute any default under, any material contractual obligation of the Company or (iii) result in, or require, the imposition of any Lien on any of the properties or revenues of the Company.
Section 7.2 Representations and Warranties of Provider .
(a) Provider is a limited liability company duly organized and existing in good standing under the laws of the State of Delaware.
(b) Provider possesses all requisite power and authority to enter into and perform this Agreement and to carry out the transactions contemplated herein.
(c) Provider’s execution, delivery and performance of this Agreement have been duly authorized and this Agreement has been duly executed and delivered and constitutes Provider’s legal, valid and binding obligation, enforceable against Provider in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency and other legal principles pertaining to creditors’ rights.
(d) Except as otherwise contemplated herein, no material consent or approvals are required in connection with the execution, delivery and performance by Provider of this Agreement.
(e) The execution, delivery and performance by Provider of this Agreement will not (i) violate any Applicable Law applicable to Provider, (ii) result in any breach of, or constitute any default under, any material contractual obligation of Provider or (iii) result in, or require, the imposition of any Lien on any of the properties or revenues of Provider.
 
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ARTICLE VIII
INSURANCE
Section 8.1 Provider will procure and maintain or cause to be procured and maintained during the Term, at its sole cost and expense, insurance substantially in the types and amounts listed in Exhibit B covering the activities of its employees and representatives in connection with this Agreement; provided that, if the same is not available at commercially reasonable rates and commercially reasonable terms and Provider obtains the prior written consent of Investor, not to be unreasonably withheld, conditioned or delayed, Provider may procure alternate types and amounts of insurance.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Independent Contractors . The Parties acknowledge that Provider will perform its obligations under this Agreement and act at all times as an independent contractor, and nothing in this Agreement will be interpreted or applied so as to make the relationship of any of the Parties that of partners, joint venturers or anything other than independent contractors, and the Parties expressly disclaim any intention to create a partnership, joint venture, association or other such relationship. Neither Party is granted any right on behalf of the other Party to assume or create any obligation or responsibility binding such other Party. None of Provider’s employees, Subcontractors or any such Subcontractor’s employees will be or will be considered to be employees of the Company. Provider will be fully responsible for the payment of all wages, salaries, benefits and other compensation to its employees and all amounts due and owing to Subcontractors.
Section 9.2 Notices . Any notice required or authorized to be given hereunder or any other communication provided for under the terms of this Agreement will be in writing and will be delivered personally, by reputable next Business Day express courier services or by electronic mail or facsimile transmission addressed to the relevant Party at the address stated below or at any other address notified by that Party as its address for service. Any notice so given personally shall be deemed to have been served on delivery, any notice so given by express courier service shall be deemed to have been served the next Business Day after the same shall have been delivered to the relevant courier, and any notice so given by electronic mail or facsimile transmission shall be deemed to have been served on transmission and receipt of confirmation of successful transmission during normal business hours (or if successful transmission occurs after normal business hours, then on the next succeeding Business Day). The Parties’ addresses for notice and service are:

            To Provider:	 	Vivint Solar Provider, LLC	
	 	c/o Vivint Solar, Inc.	
	 	4931 N. 300 West	
 
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	 	Provo, UT 84604	
	 	Attn: Paul Dickson	
	 	Facsimile: (801) 765-5705	
	 	Email: pdickson@vivintsolar.com	
		
            With a copy to:	 	Vivint Solar, Inc.	
	 	4931 N. 300 West	
	 	Provo, UT 84604	
	 	Attn: Dan Black	
	 	Facsimile: (801) 765-5746	
	 	Email: dblack@vivintsolar.com	
		
            To the Company:	 	Vivint Solar Aaliyah Project Company, LLC	
	 	c/o Vivint Solar, Inc.	
	 	4931 N. 300 West	
	 	Provo, UT 84604	
	 	Attn: Paul Dickson	
	 	Facsimile: (801) 765-5705	
	 	Email: pdickson@vivintsolar.com	
		
            With copies to:	 	Vivint Solar, Inc.	
	 	4931 N. 300 West	
	 	Provo, UT 84604	
	 	Attn: Dan Black	
	 	Facsimile: (801) 765-5746	
	 	Email: dblack@vivintsolar.com	
		
	 	Stoneco IV Corporation	
	 	c/o The Blackstone Group L.P.	
	 	345 Park Avenue	
	 	New York, NY 10154	
	 	Attn: John Finley	
	 	Fax: 212-583-5749	
	 	John.Finley@Blackstone.com	
		
	 	Chaim Miller	
	 	Chaim.Miller@Blackstone.com	
		
	 	Joe Rocco	
	 	Joe.Rocco@Blackstone.com	
		
	 	Treasury-Operations@Blackstone.com	
 
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Section 9.3 Governing Law . This Agreement will be governed by and construed in accordance with the law of the State of New York applicable to contracts made and to be performed in the State of New York. THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING RELATING TO A DISPUTE AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.
Section 9.4 Amendment, Modification and Waiver . This Agreement may not be amended or modified except by an instrument in writing signed by the Party against which enforcement of such amendment or modification is sought. Any failure of a Party to comply with any obligation, covenant, agreement or condition contained herein may be waived only if set forth in an instrument in writing signed by the other Party, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure.
Section 9.5 Rights and Remedies . Each Party’s rights and remedies under this Agreement are intended to be distinct, separate and cumulative and no such right or remedy therein or herein mentioned, whether exercised by such Party or not, is intended to be an exclusion or a waiver of any of the others.
Section 9.6 Entire Agreement . This Agreement reflects the Parties’ entire agreement with respect to the matters covered by the Agreement and supersedes any prior agreements, commitments, drafts, communication, discussions and understandings, oral or written, with respect thereto.
Section 9.7 Further Assurances . The Parties agree to do such further acts and things and execute and deliver such additional agreements and instruments as the other may reasonably require to consummate, evidence or confirm the agreements contained herein in the matters contemplated hereby.
Section 9.8 Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under all Applicable Laws and regulations. If, however, any provision of this Agreement is prohibited by or invalid under any such law or regulation in any jurisdiction, it will as to such jurisdiction be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it will be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provisions of this Agreement, or the validity or effectiveness of such provision in any other jurisdiction.
 
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Section 9.9 Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 9.10 Assignment . Neither Party may assign its rights or obligations hereunder without the prior written consent of the other Party, which consent will not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, without the need for consent from the other Party, (a) either Party may upon written notice transfer or assign this Agreement to any person or entity succeeding to all or substantially all of the assets of such Party or to a successor entity in a merger or acquisition transaction, and (b) either Party may collaterally assign this Agreement to any of its lenders as security; provided , however , that any such assignee shall agree to be bound by the terms and conditions hereof. No assignment of such rights or obligations may be made by either Party with respect to less than all of the Covered Projects.
Section 9.11 Company Member Authorization . Notwithstanding anything in this Agreement to the contrary, Provider and the Company hereby agree and acknowledge that, with respect to any direction, consent or approval described in this Agreement that the Company may provide that is governed by Section 8.3 of the LLC Agreement, Provider shall not take any such direction of the Company or act under this Agreement unless the Company represents to Provider in writing that the required member consents under such Section 8.3 of the LLC Agreement have been obtained. For such purpose, Provider acknowledges and agrees that “Class A Members” (as defined in the LLC Agreement) are intended third-party beneficiaries of this Agreement. For any consents required from, or notices to, Investor under this Agreement, Provider acknowledges and agrees that Investor is an intended third-party beneficiary of this Agreement.
Section 9.12 Payment Dispute . In the event that any Party disputes any amount payable hereunder, such amount shall be placed into a segregated escrow account as security for amounts in dispute until such time as the dispute is fully and finally resolved. Interest on such escrowed amount shall be paid to the prevailing Party in the dispute. Each Party agrees to cooperate in good faith in establishing an escrow account with an independent escrow agent for the purposes of this provision.
Section 9.13 Performance During Dispute . Provider shall continue to perform its obligations under this Agreement during the pendency of any dispute.
[Signature Pages Follow]
 
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IN WITNESS WHEREOF, Provider and the Company have each duly executed this Agreement as of the Effective Date.

COMPANY :	
	
VIVINT SOLAR AALIYAH PROJECT COMPANY, LLC,	
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
	 	Name:   Paul Dickson	
	 	Title:     Vice President of Financing	

PROVIDER :	
	
VIVINT SOLAR PROVIDER, LLC,	
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
	 	Name:   Paul Dickson	
	 	Title:     Vice President of Financing	

EXHIBIT A
Part 1: SCOPE OF ACCOUNTING SERVICES
1. Books and Records
 
 	•	 	Provider shall maintain complete and accurate financial books of accounts, financial records and supporting documents in accordance with Section 7.2(a) of the LLC Agreement and make such books and records available for inspection in accordance with Section 7.2(c) of the LLC Agreement.	
 
 	•	 	Provider shall prepare, or cause to be prepared by an “Independent Accounting Firm” (as defined in the LLC Agreement), the Company’s financial statements required to be delivered pursuant to Section 7.4 of the LLC Agreement.	
2. Tax Accounting
 
 	•	 	Except for Tax Returns described in paragraph 9 of Part 3 of this Exhibit A , Provider shall prepare, or cause to be prepared, all Tax Returns of the Company in accordance with Sections 7.5 and 7.6 of the LLC Agreement.	
Part 2: SCOPE OF ADMINISTRATIVE SERVICES
1. Company Bank Accounts
 
 	•	 	Provider shall maintain, in the name and for the exclusive benefit of the Company, accounts at one or more banks or other financial institutions in accordance with Section 7.3 of the LLC Agreement.	
 
 	•	 	Provider shall, in the name and for the exclusive benefit of the Company, make any investments with funds not required for the near-term working capital needs of the Company in accordance with Section 7.3 of the LLC Agreement.	
2. Other Services
 
 	•	 	Provider shall represent the Company in business matters with third parties in consultation with the Managing Member and present to the Company for execution such additional documents reasonably deemed necessary or desirable by Provider to effectuate the transactions and agreements authorized by the Company.	
 
A-1

 	•	 	Provider shall provide such readily available information to the Company as it may reasonably request from time to time.	
 
 	•	 	Provider shall perform on behalf of the Company all reporting and other routine administrative responsibilities reasonably believed by the Company to be required to appropriately maintain the limited liability company documents of the Company.	
Part 3: SCOPE OF SYSTEM SERVICES
Provider shall provide all services required for the operation, maintenance and performance of the obligations of the Company as required by the Customer Agreements or as otherwise determined by Provider in its discretion, including but not limited to:
1. Operation and Maintenance:
 
 	•	 	Provider will (i) keep all Covered Projects in good repair, good operating condition, appearance and working order in compliance with the manufacturer’s recommendations, the Customer Agreements, all manufacturer’s warranties and the Company’s standard practices (but in no event less than Prudent Industry Standards), (ii) properly service all components of all Covered Projects following the manufacturer’s written operating and servicing procedures and in accordance with the Customer Agreements, and (iii) replace any Part of a Covered Project as provided in Part 3, paragraph 2 of this Exhibit A and make modifications and alterations to a Covered Project as provided in Part 3 , paragraph 3 of this Exhibit A .	
 
 	•	 	Upon request by the Company, Provider shall promptly furnish or cause to be furnished to the Company such information as may be required to enable the Company to file any reports required to be filed by the Company with any Governmental Authority because of the Company’s ownership of any Covered Project.	
2. Replacement of Parts:
 
 	•	 	In accordance with the Customer Agreements, Provider will promptly replace or cause to be replaced all Parts that may from time to time be incorporated or installed in or attached to a Covered Project and that may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged	
 
A-2

 	beyond repair or permanently rendered unfit for use under the Customer Agreements for any reason whatsoever, except as otherwise provided in Part 3, paragraph 3 of this Exhibit A ; provided that the Company shall bear sole responsibility for the cost and expense of all replacement panels, inverters and racking not covered by a manufacturer’s warranty, so long as the unavailability of a manufacturer’s warranty is not due to the failure of the Provider to comply with any such manufacturer’s warranty.	
 
 	•	 	Provider may, in accordance with the Customer Agreements, remove in the ordinary course of maintenance, service, repair, overhaul or testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use; provided that Provider, except as otherwise provided in Part 3 , paragraph 3 of this Exhibit A , will replace such Parts as promptly as practicable. All replacement Parts will be free and clear of all Liens (except in the case of replacement property temporarily installed on an emergency basis and solely for such time as necessary to permanently install the definitive property) and will be in as good operating condition as, and will have a value and utility at least equal to, the Parts replaced assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof; provided that the Company shall bear sole responsibility for the cost and expense of all replacement panels, inverters and racking not covered by a manufacturer’s warranty, so long as the unavailability of a manufacturer’s warranty is not due to the failure of the Provider to comply with any such manufacturer’s warranty.	
3. Alterations, Modifications and Additions:
 
 	•	 	Provider will make such alterations and modifications in and additions to Covered Projects as may be required from time to time to comply with Applicable Law, Prudent Industry Standards and the terms of the applicable Customer Agreements; provided , however , that Provider may, in good faith, contest the validity or application of any such Applicable Law in any reasonable manner, but diligently and in good faith, and only if there is no material risk of the loss or forfeiture of a Covered Project or any interest therein or breach of the related Customer Agreement; and provided further , that Provider’s failure to make (or cause to be made) any such alterations, modifications or additions will not constitute noncompliance with the requirements of this paragraph 3 or a breach of Provider’s undertaking hereunder for so long a period as may be necessary to remedy such failure, if such failure can be remedied, so long as during such period Provider is using due diligence and best efforts to remedy such failure.	
 
A-3

4. Customary Information : Provider will furnish or cause to be furnished to the Company:
 
 	•	 	promptly upon its receipt of notice thereof, or an officer of Provider becoming aware of the existence thereof, a notice stating that a breach of, or a default under, any contractual obligation of the Company or another party that could reasonably be expected to adversely affect in a material manner the Company or all of the Covered Projects taken as a whole and specifying the nature and period of existence thereof and what action Provider has taken or is taking or proposes to take with respect thereto; and	
 
 	•	 	from time to time such other information regarding the Covered Projects as the Company may reasonably request.	
5. Reports of Liability:
 
 	•	 	Provider shall give prompt written notice to the Company upon its receipt of notice of, or an officer of Provider becoming aware of, the occurrence of any accident that could reasonably be expected to adversely affect in a material manner the Company or all of the Projects taken as a whole (whenever asserted) during the Term, and on request shall furnish to the Company information as to the time, place and nature thereof, the names and addresses of the parties involved, any Persons injured, witnesses and owners of any property damaged, and such other information as may be known to it, and shall promptly upon request furnish the Company with copies of all material correspondence, papers, notices and documents whatsoever sent or received by Provider to or from third parties in connection therewith.	
6. Billing, Collecting and Enforcement of Customer Agreements:
 
 	•	 	Provider will, at its sole cost and expense, administer or cause to be administered all Customer Agreements. Provider’s obligations under this paragraph 6 shall include, without limitation, delivering periodic bills to all Host Customers, collecting from all Host Customers all monies due under the Customer Agreements, and managing all communications with or among Host Customers. Provider will assist the Company in the enforcement of all Customer Agreements. Provider will, at the Company’s direction and expense, diligently exercise any remedies that may become available under the Customer Agreements in respect of any defaults by Host Customers thereunder; provided that, in the event that the Company elects, in the exercise of any such remedies, to remove a PV System from the Host Customer’s real property, (a) the cost of such removal shall be borne by Provider, and (b) Provider will use commercially reasonable efforts to redeploy such PV System following any such removal (it being agreed that, in connection with any such redeployment, Provider shall not discriminate against such PV System as compared to similar equipment that is not subject to this Agreement and will not unreasonably favor new equipment over the redeployment of the PV Systems hereunder).	
 
A-4

7. Event of Loss with Respect to a Covered Project:
 
 	•	 	If any Covered Project is damaged or destroyed by fire, theft or other casualty, Provider will, to the extent insurance proceeds under insurance coverage obtained by the Company or the Provider are available therefor, repair, restore, replace or rebuild such Covered Project to substantially the same condition as existed immediately prior to the damage or destruction and substantially in accordance with the Customer Agreement related to such Covered Project.	
 
 	•	 	If a Covered Project is required to be replaced as described above, then Provider will cause the supplier of the replacement equipment to deliver to the Company a bill of sale for such equipment free and clear of all Liens, and such replacement equipment will become a PV System subject to this Agreement.	
8. Administration of Government Incentives and RECs:
 
 	•	 	With respect to Government Incentives, Provider shall use commercially reasonable efforts to timely: (a) complete and submit, on behalf of the Company and in the Company’s name, all applications and other filings required to be submitted in connection with the procurement of all Government Incentives that are available in respect of each Covered Project; (b) deliver to the Company for the Company’s signature such certifications, agreements and other documents required to be delivered or submitted under Applicable Laws in connection with such Government Incentives; (c) take such other action as may be reasonably necessary to effectuate the procurement and receipt by the Company of such Government Incentives in accordance with Applicable Laws; and (d) promptly deposit, direct or otherwise cause the proceeds of any such Government Incentives to be deposited into deposit accounts held by the Company (in no event later than five (5) Business Days after Provider’s receipt thereof).	
 
 	•	 	In the event RECs are available in respect of any Covered Project, Provider, on behalf and in the name of the Company, shall (collectively, the obligations set forth below, the “ REC Services ”):	
 
 	•	 	complete and submit all applications and other filings required to be submitted as may be reasonably necessary to effectuate the registration of each Covered Project and procurement, sale and transfer of the RECs;	
 
 	•	 	use commercially reasonable efforts to sell the RECs generated by the Covered Projects on behalf of the Company to third parties;	
 
 	•	 	transfer any proceeds realized from the sale of any RECs to the Company and deposit such proceeds into deposit accounts held by the Company within five (5) Business Days after receipt thereof by Provider;	
 
A-5

 	•	 	on a quarterly basis within thirty (30) calendar days after the end of each calendar quarter, provide Company with a report, in the form of Exhibit F , of all RECs generated and sold during such immediately preceding calendar quarter (and simultaneously transmit to Investor electronically all of the data set forth on such reports in Excel format); and	
 
 	•	 	take such other action as may be reasonably necessary to effectuate the foregoing in accordance with Applicable Laws.	
9. Taxes:
 
 	•	 	With respect to all sales, use and similar Taxes in connection with the Covered Project, Provider shall: (a) invoice each Host Customer (or other applicable Person) for all such Taxes in accordance with Applicable Laws, timely remit to the applicable Governmental Authority all such Taxes in accordance with Applicable Laws, and promptly post to a servicing system maintained by Provider all such Tax amounts collected and remitted, (b) prepare and timely file all Tax Returns required to be prepared and filed in connection with such Taxes and promptly deliver copies of all such Tax Returns to the Company, and (c) provide ongoing compliance services in connection with such Taxes, including by fully cooperating in connection with all audits and other proceedings regarding such Taxes.	
 
 	•	 	With respect to all property and similar Taxes in connection with the Covered Project, Provider shall: (a) reasonably allocate all such Taxes to each applicable Host Customer (or other applicable Person), invoice each such Host Customer (or other applicable Person) for all such allocable Taxes, remit to the applicable Governmental Authority all such Taxes in accordance with Applicable Laws, and promptly post to a servicing system maintained by Provider all such Tax amounts collected and remitted, (b) prepare and timely file all Tax Returns required to be prepared and filed in connection with such Taxes and promptly deliver copies of all such Tax Returns to the Company, (c) review all valuations in connection with such Taxes, promptly provide such valuations to the Company, and timely and properly protest any such valuations deemed unreasonable by the Company, and (d) provide ongoing compliance services in connection with such Taxes, including by fully cooperating in connection with all audits and other proceedings regarding such Taxes.	
 
 	•	 	Provider shall promptly (and in any event within five (5) days after the relevant event) notify the Company in writing of any event that could reasonably be expected to, or does, result in any recapture or disallowance of, or inability to claim, any Tax Credits in respect of any Covered Project.	
 
A-6

EXHIBIT B
INSURANCE
Provider shall maintain the following insurance coverage and be responsible for its Subcontractors maintaining sufficient limits of appropriate insurance coverage. Provider, at its sole cost, before commencement of the Accounting Services, Administrative Services and System Services to be performed under this Agreement, shall procure and maintain, throughout the Term, the following coverages with insurers rated by A.M. Best as A-IX or higher:
 
 	1.1	WORKERS’ COMPENSATION AND EMPLOYERS’ LIABILITY	
 
 	1.1.1	Workers’ compensation and basic employers’ liability insurance for all employees in accordance with Applicable Law.	
 
 	1.1.2	Employers’ liability insurance shall not be less than $1,000,000 for injury or death occurring as a result of each accident.	
 
 	1.2	COMMERCIAL GENERAL LIABILITY	
 
 	1.2.1	Provider shall obtain comprehensive or commercial general liability insurance written on an occurrence basis with a combined single limit of at least $1,000,000 per occurrence and $2,000,000 in the aggregate, including premises and operations liability, owners’ and contractors’ protective, products and completed operations liability, blanket contractual liability, personal injury liability, bodily injury and “broad form” property damage coverage, blanket contractual liability, completed operations, explosion and collapse hazard coverage. If coverage includes an aggregate limit, that limit shall be at least $2,000,000.	
 
 	1.3	BUSINESS AUTO	
 
 	1.3.1	Provider shall obtain comprehensive automobile liability insurance with bodily injury, death and property damage combined single limits of at least $1,000,000 per occurrence covering vehicles owned, hired or non-owned.	
 
B-1

 	1.4	COMMERCIAL LIABILITY OR EXCESS LIABILITY	
 
 	1.4.1	Provider shall obtain commercial liability or excess liability insurance in excess of the underlying Commercial General Liability and Business Automobile Liability insurance as described above, which is at least as broad as each of the underlying policies. The minimum limits shall be at least $2,000,000 per occurrence and $2,000,000 in the aggregate.	
 
 	1.5	PROPERTY INSURANCE	
 
 	1.5.1	Provider shall obtain property insurance insuring the Covered Projects on an all-risk, replacement cost basis in an amount equal to one hundred percent (100%) of the full replacement value basis, with a combined limit of $10,000,000 in the aggregate. Such coverage shall include equipment breakdown.	
 
 	1.4	ADDITIONAL INSURANCE PROVISIONS	
 
 	1.4.1	Before commencing performance of the Accounting Services, the Administrative Services and the System Services, Provider shall furnish the Company with certificates of insurance and endorsements of all required insurance for Provider.	
 
 	1.4.2	Provider’s Commercial General Liability, Business Automobile Liability and Commercial Liability or Excess Liability insurance policies shall name Company, its members, its Affiliates, and their respective officers, agents, representatives and employees as additional insureds for work performed under or incidental to this Agreement.	
 
 	1.4.3	The limits of insurance or applicable deductibles shall not limit the liability of Provider or relieve Provider of any liability or financial responsibility.	
 
 	1.4.4	Any deductible or self-insured retention shall be the responsibility of Provider.	
 
 	1.4.5	Such insurance as is afforded by any policies contemplated by this Agreement for the benefit of the Company shall be primary and non-contributory as respects any claims, losses or liability arising directly or indirectly from Provider’s operations.	
 
B-2

 	1.4.6	The terms of any policies contemplated by this Agreement shall state that coverage shall not be cancelled except after thirty (30) calendar days’ prior written notice, or ten (10) days’ prior written notice in the event of cancellation for nonpayment of premium, has been given to the Company.	
 
 	1.4.7.	In the event and for so long as any property insurance (including the limits or deductibles thereof) hereby required by this Exhibit B to be maintained, other than insurance required by law to be maintained, shall not be available on commercially reasonable terms in the commercial insurance market, the Company shall not unreasonably withhold its agreement to waive such requirement to the extent such insurance is not so available or, to the extent applicable, may allow Provider to obtain the best available property insurance comparable to the requirements of this Exhibit B on commercially reasonable terms then available in the commercial insurance market.	
 
B-3

EXHIBIT C
COVERED PROJECTS

Job
#	  	Host
Customer	  	kW
size	  	System FMV
(price per
watt)	  	Panel
Manufacturer	  	Panel
Quantity	  	Inverter
Manufacturer	  	Inverter
Quantity	  	Performance
Test Date	  	Inspection
Date	  	PTO
Receipt
Date	  	Commercial
Operation Date	

C-1

EXHIBIT D
MONTHLY PERFORMANCE OF PORTFOLIO

Customer ID	  	Monthly Collection	  	A/R Aging	  	Remaining Months on
Term	
	  		  		  		
TRANCHE REPORT

Projected Receipts for Month	  		
		
Actual Receipts for Month	  		
		
Projected Receipts for Following Month	  		
		
Projects in Default and Status	  		
		
Pending Collection Actions and Status	  		
		
Major Developments	  		
		
Proposed Extraordinary Actions	  		
 
D-1

EXHIBIT E
MONTHLY PROJECT OPERATIONS REPORT
Date: MM/DD/YYYY
For the Month Ending on [              ], 20[      ]

1. ITC RECAPTURE	  		  		
1.1. Has there been a change in ownership of any Covered Project?	  	Yes	  	    No	
If yes, explain:	  		  		
			
1.2.  Has any Covered Project been taken out of operation?	  	Yes	  	    No	
If yes, explain:	  		  		
			
2. OPERATIONS	  		  		
2.1.  Has there been a material default under any Customer Agreement?	  	Yes	  	    No	
If yes, explain:	  		  		
			
2.2.  Have Covered Projects been generating sufficient power to support the Base Case Models (as defined in the LLC Agreement) that were prepared for such Covered Projects at the applicable Purchase Date (as defined in the Master EPC Agreement) unless such shortfall would not adversely affect in a material manner the Covered Projects taken as a whole or the Company?	  	Yes	  	    No	
If no, explain:	  		  		
			
2.3.  Are there any major concerns, events or circumstances associated with the operations or maintenance of Covered Projects that would adversely affect in a material manner the Covered Projects taken as a whole or the Company?	  	Yes	  	    No	
If yes, explain:	  		  		
			
2.4.  Has there been a distribution of Distributable Cash (as defined in the LLC Agreement)?	  	Yes	  	    No	
If yes, please include report.	  		  		
			
2.5.  Are there (a) to your actual knowledge any alleged or threatened violations of law with respect to the Covered Projects that would adversely affect in a material manner the Covered Projects taken as a whole or the Company or (b) any current or pending lawsuits or legal proceedings?	  	Yes	  	    No	
If yes, please explain and include copies of the related documentation received.	  	                    	
 
E-1

					
2.6.  The date the last Covered Project was placed in service (PIS) is	  	MM/DD/YYYY	
Leave blank if not PIS.	  		  		
			
3. EQUIPMENT WARRANTY STATUS	  		  		
3.1.  Have any material warranty claims been made with respect to manufacturer warranties or the installation warranty for Covered Projects that were not disclosed in any previous monthly project operations report?	  	Yes	  	    No	
If yes, explain:	  		  		
 
E-2

EXHIBIT F
QUARTERLY REC GENERATION AND SALES REPORTS
Report Date:
Period:

Transaction
Date	  	Job ID	  	Certifying
Authority	  	State	  	Vintage	  	Quantity	  	Price
per
REC	  	Counterparty	  	REC
Income
Recognized*	  	Cash
Collected	

*	REC income is recognized upon delivery.	
 
F-1

Exhibit G
Monthly Milestone Report
Report Date:
Period:

AR	  	Customer
Name	  	Address	  	Cancel
Date	  	Install
Date	  	Electrician
Complete	  	City
Inspection
Approved	  	Utility
Interconnection
Complete	  	System
Cost	  	Projected
ITC	
	  		  	Address	  	City	  	State	  	Zip	  		  		  		  		  		  		  		

G-1

Exhibit 10.37
*** Text Omitted and Filed Separately with the Securities Exchange Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406
Execution

 
LIMITED LIABILITY COMPANY AGREEMENT
OF
Vivint Solar Rebecca Project Company, LLC
dated as of February 13, 2014

 
THE SECURITIES (MEMBERSHIP INTERESTS) REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR REGISTERED OR QUALIFIED UNDER ANY SECURITIES OR BLUE SKY LAWS OF ANY STATE OR JURISDICTION. THEREFORE , THE SECURITIES MAY NOT BE SOLD , PLEDGED , HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR THE APPLICABLE STATE SECURITIES OR BLUE SKY LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD TO THE PROPOSED TRANSFER OR , IN THE OPINION OF LEGAL COUNSEL ACCEPTABLE TO THE COMPANY , REGISTRATION OR QUALIFICATION UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES OR BLUE SKY LAWS IS NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER.

TABLE OF CONTENTS

 	  	 	  	Page	 	
		
ARTICLE I DEFINITIONS	  	 	1	 	
			
Section 1.1.	  	Definitions	  	 	1	 	
Section 1.2.	  	Other Definitional Provisions	  	 	22	 	
		
ARTICLE II CONTINUATION; OFFICES; TERM	  	 	23	 	
			
Section 2.1.	  	Formation of the Company	  	 	23	 	
Section 2.2.	  	Name, Office and Registered Agent	  	 	23	 	
Section 2.3.	  	Purpose; No Partnership Intended	  	 	23	 	
Section 2.4.	  	Term	  	 	24	 	
Section 2.5.	  	Organizational and Fictitious Name Filings; Preservation of Limited Liability	  	 	24	 	
		
ARTICLE III RIGHTS AND OBLIGATIONS OF THE MEMBERS	  	 	24	 	
			
Section 3.1.	  	Members; Membership Interests	  	 	24	 	
Section 3.2.	  	Actions by the Members	  	 	25	 	
Section 3.3.	  	Management Rights	  	 	26	 	
Section 3.4.	  	Other Activities	  	 	27	 	
Section 3.5.	  	No Right to Withdraw	  	 	27	 	
Section 3.6.	  	Limitation of Liability of Members	  	 	27	 	
Section 3.7.	  	No Liability for Deficits	  	 	28	 	
Section 3.8.	  	Company Property	  	 	28	 	
Section 3.9.	  	Retirement, Resignation, Expulsion, Incompetency, Bankruptcy or Dissolution of a Member	  	 	28	 	
Section 3.10.	  	Withdrawal of Capital	  	 	28	 	
Section 3.11.	  	Representations and Warranties	  	 	28	 	
Section 3.12.	  	Other Covenants	  	 	34	 	
Section 3.13.	  	Removal of Managing Member	  	 	34	 	
		
ARTICLE IV CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; MEMBER LOANS	  	 	35	 	
			
Section 4.1.	  	Capital Contributions	  	 	35	 	
Section 4.2.	  	Capital Accounts	  	 	36	 	
Section 4.3.	  	Member Loans	  	 	37	 	
		
ARTICLE V ALLOCATIONS	  	 	38	 	
			
Section 5.1.	  	Allocations	  	 	38	 	
Section 5.2.	  	Adjustments	  	 	38	 	
Section 5.3.	  	Tax Allocations	  	 	40	 	
Section 5.4.	  	Transfer or Change in Membership Interest	  	 	41	 	
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
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ARTICLE VI DISTRIBUTIONS	  	 	41	 	
			
Section 6.1.	  	Distributions	  	 	41	 	
Section 6.2.	  	Withholding Taxes	  	 	42	 	
Section 6.3.	  	Limitations upon Distributions	  	 	42	 	
Section 6.4.	  	No Return of Distributions	  	 	42	 	
Section 6.5.	  	Calculation of Internal Rate of Return	  	 	43	 	
		
ARTICLE VII ACCOUNTING AND RECORDS	  	 	45	 	
			
Section 7.1.	  	Reports	  	 	45	 	
Section 7.2.	  	Books and Records and Inspection	  	 	46	 	
Section 7.3.	  	Bank Accounts, Notes and Drafts	  	 	47	 	
Section 7.4.	  	Financial Statements	  	 	47	 	
Section 7.5.	  	Partnership Status and Tax Elections	  	 	48	 	
Section 7.6.	  	Company Tax Returns	  	 	49	 	
Section 7.7.	  	Tax Audits	  	 	49	 	
Section 7.8.	  	Cooperation	  	 	51	 	
Section 7.9.	  	Fiscal Year	  	 	51	 	
		
ARTICLE VIII MANAGEMENT	  	 	51	 	
			
Section 8.1.	  	Management	  	 	51	 	
Section 8.2.	  	Managing Member	  	 	51	 	
Section 8.3.	  	Major Decisions	  	 	54	 	
Section 8.4.	  	Officers	  	 	54	 	
Section 8.5.	  	Costs & Expenses	  	 	55	 	
Section 8.6.	  	Separateness	  	 	55	 	
		
ARTICLE IX TRANSFERS AND INDEMNIFICATION	  	 	57	 	
			
Section 9.1.	  	Transfers	  	 	57	 	
Section 9.2.	  	Conditions Applicable to All Transfers	  	 	57	 	
Section 9.3.	  	Certain Permitted Transfers	  	 	58	 	
Section 9.4.	  	Purchase Option	  	 	59	 	
Section 9.5.	  	Regulatory and Other Authorizations and Consents	  	 	60	 	
Section 9.6.	  	Admission	  	 	61	 	
Section 9.7.	  	Security Interest Consent	  	 	61	 	
Section 9.8.	  	Indemnity	  	 	62	 	
Section 9.9.	  	No Duplication	  	 	65	 	
Section 9.10.	  	Survival	  	 	65	 	
Section 9.11.	  	Final Date for Assertion of Indemnity Claims	  	 	65	 	
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
ii

							
Section 9.12.	  	Reasonable Steps to Mitigate	  	 	65	 	
Section 9.13.	  	Net of Insurance Benefits	  	 	65	 	
Section 9.14.	  	No Consequential Damages	  	 	66	 	
Section 9.15.	  	Payment of Indemnification Claims	  	 	66	 	
		
ARTICLE X DISSOLUTION AND WINDING-UP	  	 	66	 	
			
Section 10.1.	  	Events of Dissolution	  	 	66	 	
Section 10.2.	  	Distribution of Assets	  	 	67	 	
Section 10.3.	  	Certificate of Cancellation	  	 	68	 	
Section 10.4.	  	In-Kind Distributions	  	 	68	 	
		
ARTICLE XI MISCELLANEOUS	  	 	68	 	
			
Section 11.1.	  	Notices	  	 	68	 	
Section 11.2.	  	Amendment	  	 	68	 	
Section 11.3.	  	Partition	  	 	69	 	
Section 11.4.	  	Waivers and Modifications	  	 	69	 	
Section 11.5.	  	Severability	  	 	69	 	
Section 11.6.	  	Successors; No Third-Party Beneficiaries	  	 	69	 	
Section 11.7.	  	Entire Agreement	  	 	70	 	
Section 11.8.	  	Governing Law	  	 	70	 	
Section 11.9.	  	Further Assurances	  	 	70	 	
Section 11.10.	  	Counterparts	  	 	70	 	
Section 11.11.	  	Dispute Resolution	  	 	70	 	
Section 11.12.	  	Confidentiality and Publicity	  	 	71	 	
Section 11.13.	  	Joint Efforts	  	 	73	 	
Section 11.14.	  	Specific Performance	  	 	73	 	
Section 11.15.	  	Survival	  	 	73	 	
Section 11.16.	  	Recourse Only to Member	  	 	73	 	
Section 11.17.	  	Costs, Expenses, Fees	  	 	74	 	
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
iii

			
ANNEX I	  	Members and Membership Interests	
		
SCHEDULES	  		
Schedule 4.2(d)	  	Initial Capital Accounts	
Schedule 9	  	Transfer Representations and Warranties	
		
EXHIBITS	  		
Exhibit A	  	Form of Membership Interest Certificate	
Exhibit B	  	Base Case Model	
Exhibit C	  	Insurance Requirements	
Exhibit D	  	Form of Note	
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
iv

LIMITED LIABILITY COMPANY AGREEMENT
OF
VIVINT SOLAR REBECCA PROJECT COMPANY, LLC
Limited Liability Company Agreement of Vivint Solar Rebecca Project Company, LLC, a Delaware limited liability company (the “ Company ”), dated as of February 13, 2014 (the “ Effective Date ”), by and between Vivint Solar Rebecca Manager, LLC, a Delaware limited liability company (“ Sponsor Sub ”), and Blackstone Holdings I L.P., a Delaware limited partnership (“ Investor ”).
RECITALS
1. The Company was formed by virtue of its Certificate of Formation filed with the Secretary of State of the State of Delaware on February 3, 2014 (the “ Certificate of Formation ”).
2. The Company has been formed to own and operate photovoltaic systems.
3. Sponsor Sub and Investor desire to describe their respective rights and obligations as members of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions .
Capitalized terms used but not defined in this Agreement have the meanings assigned to them in the Master EPC Agreement. As used in this Agreement, the following terms have the respective meanings set forth below:
“ Act ” means the Delaware Limited Liability Company Act, Delaware Code Ann. 6, Sections 18-101, et seq . and any successor statute, as the same may be amended from time to time.
“ Adjusted Capital Account ” means, with respect to any Member, the Capital Account of such Member (a) increased by the amount of potential deficit that the Member is deemed obligated to restore, calculated as described in the next to last sentence of Treasury Regulations Section 1.704-2(g)(1) and the next to last sentence of Treasury Regulations Section 1.704-2(i)(5) and (b) decreased by such Member’s share of the items described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC

“ Affiliate ” of a specified Person means any Person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such specified Person. As used in this definition of Affiliate, the term “ control ” of a specified Person, including, with correlative meanings, the terms, “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of such Person’s management or policies, whether through the ownership of voting securities, by contract or otherwise; provided , however , that notwithstanding the foregoing, for purposes of this Agreement, the Company will not be treated as an Affiliate of any Member, and Investor will not be treated as an Affiliate of Sponsor or Sponsor Sub.
“ Agreement ” means this Limited Liability Company Agreement, together with all schedules and exhibits hereto, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Applicable Laws ” means all applicable laws of any Governmental Authority, including, without limitation, laws relating to consumer leasing and protection and any ordinances, judgments, decrees, injunctions, writs and orders or like actions of any Governmental Authority and rules and regulations of any federal, regional, state, county, municipal or other Governmental Authority.
“ Appraisal Method ” means one appraiser shall be appointed by the Class A Member and one appraiser shall be appointed by the Class B Member, in each case, within fifteen (15) calendar days of a Member invoking the procedure described in this definition and delivering notice thereof to the other Members, which appraisers shall attempt to agree upon the fair market value of the Class A Membership Interests. If either the Class A Member or the Class B Member does not appoint its appraiser within the fifteen (15) calendar day period referenced in the immediately preceding sentence, the Member that has appointed an appraiser may deliver written notice to the other Member regarding its failure to appoint an appraiser within the required time period, and if such other Member does not appoint an appraiser within five (5) Business Days after receiving such notice, the determination of the appraiser that has been appointed shall be conclusive and binding on the Members. If the appraisers appointed by the Class A Member and the Class B Member are unable to agree upon the fair market value of the Class A Membership Interests within thirty (30) calendar days after the appointment of the second of such appraisers, the two appraisers shall appoint a third appraiser. In such case, the average of the determinations of the three appraisers shall be conclusive and binding on the Members, unless the determination of one independent appraiser is disparate from the middle determination by more than twice the amount by which the third determination is disparate from the middle determination, in which case the determination of the most disparate appraiser shall be excluded, and the average of the remaining two determinations shall be conclusive and binding on the Members. Any appraiser shall be qualified, and have at least three years of experience, in appraising PV Systems. The Class A Member and the Class B Member, respectively, shall bear their own costs in appointing their respective appraiser and shall evenly split the costs of any third appraiser.
“ Bankruptcy ” of a Person means the occurrence of any of the following events: (a) the filing by such Person of a voluntary case or the seeking of relief under any chapter of Title 11 of the United States Bankruptcy Code, as now constituted or hereafter amended (the
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
2

“ Bankruptcy Code ”), (b) the making by such Person of a general assignment for the benefit of its creditors, (c) the admission in writing by such Person of its inability to pay its debts as they mature, (d) the filing by such Person of an application for, or consent to, the appointment of any receiver or a permanent or interim trustee of such Person or of all or any portion of its property, including the appointment or authorization of a trustee, receiver or agent under Applicable Law or under a contract to take charge of its property for the purposes of enforcing a lien against such property or for the purpose of general administration of such property for the benefit of its creditors, (e) the filing by such Person of a petition seeking a reorganization of its financial affairs or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law or statute, (f) an involuntary case is commenced against such Person by the filing of a petition under any chapter of Title 11 of the Bankruptcy Code and within sixty (60) days after the filing thereof either the petition is not dismissed or the order for relief is not stayed or dismissed, (g) an order, judgment or decree is entered appointing a receiver or a permanent or interim trustee of such Person or of all or any portion of its property, including the entry of an order, judgment or decree appointing or authorizing a trustee, receiver or agent to take charge of the property of such Person for the purpose of enforcing a lien against such property or for the purpose of general administration of such property for the benefit of the creditors of such Person, and such order, judgment or decree shall continue unstayed and in effect for a period of sixty (60) days, or (h) an order, judgment or decree is entered, without the approval or consent of such Person, approving or authorizing the reorganization, insolvency, readjustment of debt, dissolution or liquidation of such Person under any such law or statute, and such order, judgment or decree shall continue unstayed and in effect for a period of sixty (60) days. The foregoing definition of “Bankruptcy” is intended to replace and shall supersede the definition of “Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the Act.
“ Bankruptcy Code ” is defined in the definition of the term “Bankruptcy”.
“ Base Case Model ” means a computer model agreed to by Sponsor and Investor showing the estimated economic results that the parties expect from ownership of Projects and the assumptions to be used in projecting when Investor shall reach the Target Internal Rate of Return. The Base Case Model as of the date hereof is attached as Exhibit B and may be replaced from time to time with an updated computer model with each Member’s prior written consent (executed by a duly-authorized officer of such Member), including to reflect adjustments made to the Base Case Model in accordance with the Master EPC Agreement (including the True-Up Base Case Model).
“ Business Day ” means any day other than Saturday, Sunday and any other day on which banks in New York are authorized to be closed.
“ Calculation Date ” means March 31, June 30, September 30 and December 31 of each year (or if such day is not a Business Day, the next Business Day).
“ Capital Account ” is defined in Section 4.2(a) .
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
3

“ Capital Contribution ” means, with respect to any Member, the amount of money and the initial Gross Asset Value of any property contributed to the Company with respect to the Membership Interests in the Company held or purchased by such Member.
“ Cash Difference ” is defined in Section 6.5(d) .
“ Cashflow Shortfall ” is defined in Section 4.3(a) .
“ Certificate of Formation ” is defined in the recitals of this Agreement.
“ Change of Member Control ” means with respect to any Class B Member, an event in which a Person or Persons who prior to a transaction or series of transactions, individually or collectively possessed directly or indirectly, legally or beneficially:
(a) Fifty percent (50%) or more of the equity, capital or profits interests of such Class B Member; or
(b) control of such Class B Member through the ownership of voting securities with the power to direct the management or policies of such Class B Member or otherwise;
and as a result of a consummation of any transaction or series of transactions (including any merger or consolidation), such Person or Persons individually or collectively fail to maintain, whether directly or indirectly, legally or beneficially, either of the elements of control listed in clause (a)  or clause (b)  above. Notwithstanding the foregoing, neither the direct nor indirect sale, transfer or other disposition of equity, capital or profits interests of, or of the ownership of voting securities with the power to direct the management or policies of, Sponsor shall constitute a Change of Member Control.
“ Class A Member ” means a Member holding one or more Class A Membership Interests. As of the Effective Date and for so long as Investor owns any Class A Membership Interests, Investor is a Class A Member.
“ Class A Membership Interests ” is defined in Section 3.1(b) .
“ Class B Member ” means a Member holding one or more Class B Membership Interests. As of the Effective Date and for so long as Sponsor Sub owns any Class B Membership Interests, Sponsor Sub is a Class B Member.
“ Class B Membership Interests ” is defined in Section 3.1(b) .
“ Code ” means the Internal Revenue Code of 1986, as amended, or any successor federal tax statute.
“ Company ” is defined in the preamble to this Agreement.
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
4

“ Company Minimum Gain ” means the amount of minimum gain there is in connection with nonrecourse liabilities of the Company, calculated in the manner described in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
“ Confidential Information ” is defined in Section 11.12(a) .
“ Consultation ” or “ Consult ” means to confer with and reasonably consider and take into account the reasonable suggestions, comments or opinions of another Person.
“ Corporate Tax Rate ” means 35%.
“ Curative Flip Allocation ” is defined in Section 6.5(e) .
“ Customer Agreement ” is defined in the Master EPC Agreement.
“ Depreciation ” means for each Fiscal Year or part thereof, an amount equal to the depreciation, amortization or other cost recovery deduction allowable for federal income tax purposes with respect to an asset for such Fiscal Year or part thereof, except that if the Gross Asset Value of an asset differs from its adjusted basis at the beginning of such Fiscal Year, then the depreciation, amortization or other cost recovery deduction for such Fiscal Year or part thereof shall be (a) the amount described in Treasury Regulations Section 1.704-3(d)(2) if the remedial method referred to in Treasury Regulations Section 1.704-3(d) is used, and (b) otherwise an amount that bears the same ratio to such Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for the period bears to the adjusted tax basis. If the asset has a zero adjusted tax basis, then the depreciation, amortization or other cost recovery deduction under clause (b) above shall be determined under a method reasonably selected by the Managing Member and agreed to by Members representing a Required Majority Vote.
“ Designated Transfers ” is defined in Section 9.5(a) .
“ Developer ” means Vivint Solar Developer, LLC, a Delaware limited liability company.
“ Development ” means the acquisition, ownership, financing, leasing, occupation, design, development, construction, equipping, testing, repair, operation, maintenance, use and interconnection of a Project, and the sale of electricity and/or any attributes therefrom.
“ Dispute ” is defined in Section 11.11(a) .
“ Disputing Member ” is defined in Section 11.11(a) .
“ Distributable Cash ” means, as of any Distribution Date, all cash, cash equivalents and liquid investments held by the Company as of such date less all operating and maintenance expenses and reserves that, in the reasonable judgment of the Managing Member, are necessary or appropriate for the operation of the Company or the Projects consistently with Prudent Industry Standards.
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
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“ Distribution Date ” means March 31, June 30, September 30 and December 31 of each year (or if such day is not a Business Day, the next Business Day).
“ Effective Date ” is defined in the preamble to this Agreement.
“ Exercise Notice ” is defined in Section 9.4(a) .
“ Federal Power Act ” means Chapter 12 of Title 16 of the United States Code, as amended.
“ Fiscal Year ” is defined in Section 7.9 .
“ Fixed Tax Assumptions ” means the following assumptions: (a) the Company is a partnership for federal income tax purposes; (b) the Class A Member is a partner in the Company for federal income tax purposes, (c) the Company is the owner of each Project for federal income tax purposes; (d) the allocations of each item of income, gain, loss, deduction and credit set forth in this Agreement to the Members will be respected by the IRS either because they have “substantial economic effect” or are otherwise consistent with the Members’ interests in the Company within the meaning of Section 704(b) of the Code; (e) the transactions described in the Transaction Documents have “economic substance” within the meaning of Section 7701(o) of the Code; (f) each Class A Member is and will continue to be subject to federal income tax at the Corporate Tax Rate, (g) state, local, foreign or other non-United States federal income taxes are inapplicable and (h) each Class A Member will be able to fully utilize all regular federal income tax benefits allocated to it from the Company.
“ Flip Date ” means the later of (a) the date that is five (5) full years after the last date a Project owned by the Company is Placed in Service and (b) the last day of the calendar month in which the Class A Member achieves an Internal Rate of Return equal to or greater than the Target Internal Rate of Return.
“ GAAP ” means (a) generally accepted accounting principles in the United States of America as in effect from time to time, consistently applied; or (b) upon mutual agreement of the parties hereto, internationally recognized generally accepted accounting principles, consistently applied.
“ Governmental Approval ” means any authorization, consent, approval, ruling, tariff, rate, certification, waiver, exemption, filing, variance or order of, or any notice to or registration by or with, any Governmental Authority.
“ Governmental Authority ” means any foreign, federal, state, local or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrating body or other governmental authority having jurisdiction or effective control over the Company or any Project, or if the context requires, the Sponsor Sub or Investor.
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
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“ Gross Asset Value ” means, with respect to any asset, the asset’s adjusted tax basis for federal income tax purposes, except as follows:
(a) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the Gross Fair Market Value of such asset as of the date of contribution; provided that the initial Gross Asset Values of the assets contributed to the Company pursuant to Section 4.2(d) shall be as shown in Schedule 4.2(d) ;
(b) the Gross Asset Values of all Company assets shall be adjusted to equal their respective Gross Fair Market Values at the times described in Section 4.2(c) ;
(c) the Gross Asset Value of any item of Company assets distributed to any Member shall be adjusted to equal the Gross Fair Market Value of such asset on the date of distribution;
(d) the Gross Asset Values of all Company assets shall be adjusted to reflect any adjustments to the adjusted basis of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that such adjustments are required to be taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m); provided , however , that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that the Managing Member determines that an adjustment pursuant to subsection (b) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d) ; and
(e) if the Gross Asset Value of an asset has been determined or adjusted pursuant to subsection (a) , (b)  or (d)  above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset.
“ Gross Fair Market Value ” means, with respect to any asset, the fair market value of the asset as reasonably determined by the Managing Member and agreed to by Members representing a Required Majority Vote.
“ Guarantee ” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (a) to secure, purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to provide collateral security, to take-or-pay, or to maintain financial statement conditions or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.
“ Guaranty Agreement ” means the Guaranty dated as of the date hereof, made by Sponsor in favor of the Investor and the Company.
“ Host Customer ” is defined in the Master EPC Agreement.
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
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“ HSR Act ” means the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended and the regulations adopted thereunder.
“ Indebtedness ” means, with respect to any Person at any date of determination (without duplication), (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person as an account party in respect of letters of credit or other similar instruments (including contingent reimbursement obligations with respect thereto), (d) all of the obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six (6) months after the date of purchasing such property or service or taking delivery and title thereto or the completion of such services, and payment deferrals arranged primarily as a method of raising funds to acquire such property or service, (e) all monetary obligations of such Person and its Subsidiaries under any leasing or similar arrangement which have been (or, in accordance with GAAP, should be) classified as capitalized leases, (f) all monetary obligations of such Person with respect to any interest rate hedge, cap, floor, swap, option or other interest rate hedge agreement entered into after the date hereof, (g) all Indebtedness (as defined in clauses (a) through (f)  of this definition) of other Persons secured by a lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, and (h) all Indebtedness (as defined in clauses (a) through (f)  of this definition) of other Persons guaranteed by such Person.
“ Indemnified Costs ” means Investor Indemnified Costs or Sponsor Indemnified Costs, as the context requires.
“ Indemnified Party ” means an Investor Indemnified Party or Sponsor Indemnified Party, as the context requires.
“ Indemnifying Party ” means Sponsor Sub or Investor, as the context requires.
“ Independent Accounting Firm ” means Ernst & Young LLP or a nationally recognized third-party accounting firm that (a) is not an Affiliate of either Member, and (b) is mutually agreed upon by the Members.
“ Interested Member ” means a Member (or Affiliate of a Member) having a pecuniary interest in a transaction or claim other than a pecuniary interest resulting from such Member’s interest in the Company.
“ Internal Rate of Return ” means the discount rate that causes “A” to equal “B” in present-value terms where “A” is the sum of the present values as of the first Purchase Date for the first Tranche purchased under the Master EPC Agreement, calculated on a quarterly basis, of (a) the Tax Credits allocated to the Class A Member, and (b) the tax savings from deductions and losses that the Class A Member is allocated, and (c) cash that is distributed to the Class A Member, and (d) any indemnity payments by the Class B Member to the Class A Member that substitute for amounts in clauses (a) , (b) , and (c) , and where “B” is the sum of the present values as of the first Purchase Date for the first Tranche purchased under the Master EPC Agreement, calculated on a quarterly basis, of (e) the Capital Contributions that the Class A Member makes to the Company, and (f) the tax detriment from any taxable income or gain allocated to the Class
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
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A Member, and (g) any payment made by the Class A Member to any tax authority after and solely as a result of an audit with respect to any Project or the Company (other than in connection with the incorrectness of a Fixed Tax Assumption, unless such Fixed Tax Assumption is incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents). The tax savings and tax detriment will be calculated assuming the accuracy of the Fixed Tax Assumptions.
“ Investor ” is defined in the preamble to this Agreement.
“ Investor Contribution Cap ” means for all Projects purchased, $***.
“ Investor Indemnified Costs ” means, with respect to any Investor Indemnified Party, subject to ARTICLE IX , any and all damages, losses, claims, liabilities, demands, charges, suits, penalties, costs and reasonable expenses (including (i) court costs and reasonable attorneys’ fees and expenses of one law firm for all Investor Indemnified Parties plus one law firm of local counsel where any relevant Project is located and (ii) any recapture or disallowance of, or inability to claim, the Tax Credits assumed in the Base Case Model) incurred by such Investor Indemnified Parties resulting from or relating to (a) any breach or default by the Class B Member of any representation, warranty, covenant, indemnity or agreement under this Agreement or any other Transaction Document or (b) any claim for fraud, gross negligence or willful misconduct on the part of the Class B Member relating to this Agreement or any other Transaction Document.
“ Investor Indemnified Parties ” means Investor and any Person to whom Investor Transfers any portion of its Class A Membership Interests in accordance with ARTICLE IX , and each of their respective Affiliates and each of their respective shareholders, partners, members, officers, directors, employees, agents and other representatives, and their respective successors and assigns.
“ IRR Report ” is defined in Section 7.1(b) .
“ IRS ” means the Internal Revenue Service or any successor agency.
“ Knowledge of Investor ” means the actual knowledge, after due inquiry, as of the Effective Date, of one or more of the following persons holding the following titles at Investor: Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, and General Counsel.
“ Knowledge of Sponsor Sub ” means the actual knowledge, after due inquiry, as of the Effective Date, of one or more of the following persons holding the following titles at Sponsor: Greg Butterfield (Chief Executive Officer and President), Brendon Merkley (Chief Operating Officer), Paul Dickson (Vice President of Finance), and Dan Black (General Counsel); provided , however , that for matters relating to a Host Customer, “Knowledge” will be limited to the representations and warranties made by such Host Customer in the applicable Customer Agreement without Sponsor Sub undertaking further inquiry or due diligence, unless any one of the persons described above has actual knowledge that a representation or warranty is untrue.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Limited Liability Company Agreement of
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“ Lien ” means any lien, security interest, mortgage, hypothecation, encumbrance or other restriction on title or property interest.
“ Maintenance Services Agreement ” means that certain Maintenance Services Agreement by and between the Company and MSA Provider, dated as of the date hereof and as amended from time to time.
“ Major Decisions ” means any of the following actions:
(a) Acquisition of any Project (including any Substituted Project) under the Master EPC Agreement, such approval not to be withheld if the conditions of Sections 2.3 and 2.5 of the Master EPC Agreement with respect to that Project have been met in the reasonable determination of the Investor and such approval treated as automatically rejected unless Class A Member informs Managing Member that it approves the acquisition of such PV Systems prior to the expiration of the applicable Review Period or Substituted Project Review Period, as the case may be;
(b) Sale, lease or disposition of any Company assets with a value in excess of $25,000, individually or in the aggregate in any calendar year, other than (i) following the Flip Date, (A) sales of electric power, other than through a Customer Agreement, and (B) the transfer of any related RECs or other environmental credits, (ii) the transfer of an asset that is worn out, obsolete, or no longer necessary or useful for the operation of the applicable Project, (iii) transfer of a Customer Agreement by a Host Customer in accordance with the provisions therein and the Maintenance Services Agreement, (iv) the sale of a PV System to a Host Customer pursuant to such Host Customer’s Customer Agreement or (v) as otherwise set forth in this Agreement;
(c) Any joint venture, merger, consolidation or other business combination of or involving the Company;
(d) Any issuance by the Company of a Guarantee;
(e) Any issuance or redemption by the Company of any Membership Interests or other equity interest of any kind in the Company, or any warrants, rights or options to acquire the same, or any security convertible into any of the foregoing;
(f) Pursuing, initiating or settling any claim, litigation or arbitration with an amount in controversy that equals or exceeds $25,000, individually or in the aggregate in any calendar year, or which includes consent to or award of an injunction, specific performance or other equitable relief;
(g) Incurrence or voluntary prepayment of any Indebtedness on behalf of the Company in excess of $25,000 at any time outstanding in the aggregate; provided , that this limitation shall not apply to any Member Loans incurred in accordance with Section 4.3 ;
(h) Any amendment or cancellation of the Certificate of Formation of the Company or any Transaction Document (other than the Maintenance Services Agreement, which is covered in clause (s) below), if the amendment or termination, in the reasonable estimation of the Managing Member, without due inquiry, would have a Material Adverse Change, individually or collectively, on the Class A Members;
 
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(i) The admission of any additional member in the Company, other than pursuant to the terms of this Agreement;
(j) Making or committing to make any capital expenditures, other than (i) as contemplated by the Customer Agreements or the Maintenance Services Agreement, (ii) expenditures required by law or necessary to prevent or mitigate an emergency situation or to preserve the value of the Project’s property or assets, or (iii) capital expenditures not in excess of $25,000 individually or in the aggregate in any calendar year;
(k) Entering into any new contract on behalf of the Company with any Affiliate of a Member (not including any renewals of existing contracts on the same terms as the expiring agreement) or any extension or replacement of a Transaction Document with the same or another Affiliate of any such Member;
(l) Execution and delivery of instruments requested by MSA Provider under the Maintenance Services Agreement except for ministerial or administrative changes made in the Ordinary Course of Business;
(m) Encumbering or granting any Liens on the assets or rights of the Company other than (in each case) Permitted Liens;
(n) Hiring any employees, entering into or adopting any bonus, profit sharing, thrift, compensation, option, pension, retirement, savings, welfare, deferred compensation, employment, termination, severance or other employee benefit plan, agreement, trust, fund, policy or arrangement for the benefit or welfare of any directors, officers or employees of the Company;
(o) Causing the Company to elect under Treasury Regulations Section 301.7701-3 or any comparable provision of state or local income tax law, to be classified as an association;
(p) Making any tax election other than as provided herein or that is inconsistent with the assumptions contained in the Base Case Model;
(q) Applying for or claiming any grant or Tax credit (including any Tax credit under Section 45 of the Code) that would reduce the amount of the Tax Credits available under Section 48 of the Code;
(r) Entering into any contract or taking any action that in the reasonable estimation of the Class A Member would threaten the availability of Tax Credits or tax depreciation with respect to any PV System assumed in the Base Case Model;
(s) (i) Subject to the proviso in Section 8.2(a)(ii) , (A) materially amending, (B) canceling, suspending, renewing (unless in the case of the Maintenance Services Agreement such renewal is on substantially similar terms and conditions as the Maintenance
 
Limited Liability Company Agreement of
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Services Agreement that is being renewed), terminating or entering into replacement contracts (unless in the case of the Maintenance Services Agreement such replacement is on substantially similar terms and conditions as the Maintenance Services Agreement that is being replaced) for, in each case of subclauses (A) and (B), the Maintenance Services Agreement or the Master EPC Agreement, (ii) assigning, releasing or relinquishing the material rights or obligations of any party to the Maintenance Services Agreement or the Master EPC Agreement, or (iii) resolving any material dispute relating to the Maintenance Services Agreement or the Master EPC Agreement, provided that the materiality qualifier in clause (i) , (ii)  or (iii)  is solely with regard to the Company or all of the Projects taken as a whole;
(t) Lending any funds of the Company to any Person;
(u) Changing, amending or substituting the insurance required to be maintained by the Company pursuant to this Agreement in a manner that would cause such insurance to be materially different from the insurance requirements attached hereto as Exhibit C ;
(v) Changing the Company’s methods of accounting or accounting policies and procedures as in effect on the date hereof, except as required by GAAP, or changing the Independent Accounting Firm;
(w) Hiring counsel to assist in a Tax audit or to represent the Company in a Tax controversy or consenting to any Tax audit adjustment;
(x) Subject to clause (b) , causing the Company to permit (A) possession or control of property of the Company by any Member or (B) the assignment, transfer, sale, lease, pledge or other disposition of rights of the Company in specific property of the Company, for other than a Company purpose or other than for the benefit of the Company;
(y) Changing the assumptions set forth in the Base Case Model or the Tracking Model other than in accordance with the terms of this Agreement;
(z) Making, or causing the Company to make, any advance payments of compensation or other consideration to the Managing Member or any of its Affiliates;
(aa) Commingling the assets of the Company with the funds or other assets of any other Person;
(bb) Taking or filing any action or instituting any proceedings in Bankruptcy on behalf of the Company;
(cc) Dissolving or winding up of the Company;
(dd) Causing the Company to engage in any business or activity that is not within the purpose of the Company, as set forth in its organizational documents, or to change such purpose;
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
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(ee) Adding any new manufacturer to the approved vendors listed on Schedule 13 of the Master EPC Agreement;
(ff) Causing the Company to take any action that could reasonably be expected by Managing Member to result in an event of default, or that would result in the acceleration of any material obligation or termination of any material right, under any Transaction Document;
(gg) Entering into, amending, canceling, suspending, renewing (unless such renewal is on substantially similar terms and conditions as the existing contract) or terminating contracts for goods and services requiring the Company to make expenditures in excess of $25,000 individually or in the aggregate in any calendar year; provided , that this limitation shall not apply to the Company’s engagement agreement with the Independent Accounting Firm for services to be provided by the Independent Accounting Firm as contemplated by this Agreement; and
(hh) Requesting Non-Included System Services under the Maintenance Services Agreement with a value of greater than $25,000 in any calendar year.
“ Manager ” is defined in Section  3.13(b) .
“ Managing Member ” is defined in Section 8.2 .
“ Master EPC Agreement ” means that certain Development, EPC and Purchase Agreement, dated as of the date hereof (as may be amended, restated, supplemented or otherwise modified from time to time), by and among the Company, Developer and Sponsor, and each Transfer Notice and Bill of Sale (as each term is defined in the Master EPC Agreement) thereunder.
“ Material Adverse Change ” means, with respect to any Person, a fact, event or circumstance that, alone or when taken with other events or conditions occurring or existing concurrently with such event or condition, (a) has or is reasonably expected to have a material adverse effect on the business, operations, condition (financial or otherwise), assets, liabilities or properties of such Person, (b) has or is reasonably expected to have any material adverse effect on the validity or enforceability of the Transaction Documents, (c) materially impairs or is reasonably expected to materially impair the ability of such Person to meet or perform its obligations under the Transaction Documents, or (d) has or is reasonably expected to have any material adverse effect on such Person’s rights under the Transaction Documents.
“ Maximum Liability ” means, with respect to a party, $***. For the avoidance of doubt, (a) any indemnification of Sponsor Sub by the Company or any indemnification of the Company by Sponsor Sub shall not be included in calculating whether the Maximum Liability applicable to Sponsor Sub has been or will be exceeded, and (b) any indemnification of the Investor by the Company or any indemnification of the Company by Investor shall not be included in calculating whether the Maximum Liability applicable to Investor has been or will be exceeded.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
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“ Member ” means any Person executing this Agreement as of the date of this Agreement as a member of the Company or any Person admitted to the Company as a member as provided in this Agreement (each in the capacity of a member of the Company), but does not include any Person who has ceased to be a member of the Company.
“ Member Loan ” means any loan or advance made by a Class A Member or Class B Member, pursuant to Section 4.3 .
“ Member Nonrecourse Debt ” means “partner nonrecourse debt” as defined in Treasury Regulations Section 1.704-2(b)(4).
“ Member Nonrecourse Deduction ” means “partner nonrecourse deduction” as defined in Treasury Regulations Section 1.704-2(i)(2).
“ Membership Interest ” means the entire interest of a Member in the Company, including rights to distributions (liquidating or otherwise), allocations of profits and losses, and to vote, consent or approve or receive information, if any.
“ Minimum Gain Attributable to Member Nonrecourse Debt ” means the amount of minimum gain there is in connection with a Member Nonrecourse Debt, calculated in the manner described in Treasury Regulations Section 1.704-2(i)(3).
“ MSA Provider ” means Vivint Solar Provider, LLC, a Delaware limited liability company, as provider under the Maintenance Services Agreement or any successor thereto.
“ Net Income ” and “ Net Loss ” mean, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such Fiscal Year or other period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss) with the following adjustments:
(a) any income of the Company that is exempt from federal income tax, to the extent not otherwise taken into account in computing Net Income or Net Loss pursuant to this paragraph, shall be added to such taxable income or loss;
(b) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as expenditures under Section 705(a)(2)(B) pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), to the extent not otherwise taken into account in computing Net Income or Net Loss pursuant to this paragraph, shall be subtracted from such taxable income or loss;
(c) in the event the Gross Asset Value of any Company asset is adjusted pursuant to subsections (b) , (c)  or (d)  of the definition of “Gross Asset Value” herein, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss;
(d) gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes shall be
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
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computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;
(e) any items that are specially allocated pursuant to the provisions of Section 5.2 and Section 5.3 shall not be taken into account in computing Net Income or Net Loss; and
(f) in lieu of depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation.
“ Nonrecourse Deduction ” means a deduction for spending that is funded out of nonrecourse borrowing by the Company or that is otherwise attributable to a “nonrecourse liability” of the Company within the meaning of Treasury Regulations Section 1.704-2.
“ Notice ” is defined in Section 11.1 .
“ Operations Report ” is defined in Section 7.1(a) .
“ Option Purchase Price ” is defined in Section 9.4(b) .
“ Ordinary Course of Business ” means the ordinary conduct of business consistent with custom and practice for residential solar energy electric generation businesses in the United States (including with respect to quantity and frequency).
“ Percentage Interest ” means the percentage interest shown for a Member in Schedule 4.2(d) as updated from time to time.
“ Permits ” means any license, consent, permit, authorization, requirement, environmental plan, notice, filing, certification, exemption, waiver, tariff, franchise, variance, order, decision, registration, ruling and other approval or permission required under any Applicable Law for the Development of the Project, including as to zoning, road crossing, environmental protection, pollution, sanitation, energy regulation, safety, siting or building, obtained or required to be obtained by or on behalf of the Company from any Governmental Authority.
“ Permitted Encumbrances ” means Liens provided for under the Transaction Documents, liens for Taxes not yet due and payable, to the extent adequate reserves have been made consistent with GAAP, and restrictions on transfer of the Membership Interests under any applicable federal, state or foreign securities law.
“ Permitted Investments ” means any of the following having a maturity of not greater than one year from the date of issuance thereof: (a) readily marketable direct obligations of the government of the United States of America or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the government of the United States of America, (b) insured certificates of deposit of or time deposits with any commercial bank that is a member of the Federal Reserve System, issues (or the parent of which
 
Limited Liability Company Agreement of
Vivint Solar Rebecca Project Company, LLC
 
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issues) commercial paper rated as described in clause (c) below, is organized under the laws of the United States or any State thereof and has combined capital and surplus of at least $1,000,000,000.00 or (c) commercial paper issued by any corporation organized under the laws of any State of the United States and rated at least “Prime-1” (or the then-equivalent grade) by Moody’s Investors Service, Inc. or “A-1” (or the then-equivalent grade) by Standard & Poor’s Corporation.
“ Permitted Liens ” means (a) liens for taxes not yet due or that are being contested in good faith by appropriate proceedings, to the extent adequate reserves have been made consistent with GAAP, (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, employees’, contractors’, operators’, vendors’ or other similar liens or charges securing the payment of expenses not yet due and payable that are incurred in the Ordinary Course of Business, (c) liens securing obligations or duties (other than Indebtedness) to any Governmental Authority arising in the Ordinary Course of Business (including under licenses and permits held by the Investor and under all Applicable Laws and orders of any Governmental Authority), (d) easements, rights-of-way, restrictions (including zoning restrictions), covenants, licenses, encroachments, protrusions and other similar charges or encumbrances on or with respect to real property that do not secure Indebtedness or materially interfere with the ordinary conduct of the Company’s business, (e) liens incurred or deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment or other social security or to secure performance of statutory obligations, surety bonds, performance bonds and other similar obligations and (f) any other liens agreed to in writing by Sponsor Sub and Investor.
“ Permitted Transfers ” is defined in Section 9.3 .
“ Person ” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, or governmental entity or any department or agency thereof.
“ Placed in Service ” means that all of the following events have occurred with respect to a PV System: (a) the PV System has been installed, tested and shown capable of operating in a reliable and continuous manner for its intended purpose; (b) legal title to and control over the PV System and all components thereof have been conveyed to the Company; and (c) all licenses and permits needed to operate the PV System (including authority from the local utility to commence parallel operation) and to put the PV System to its intended use of using it to generate electricity for sale to a Host Customer have been obtained.
“ Post-Flip Date ” means the later of (a) the Flip Date and (b) the last day of the calendar month in which the Class A Member achieves a Post-Flip Internal Rate of Return equal to or greater than the Post-Flip Target Internal Rate of Return.
“ Post-Flip Internal Rate of Return ” means the discount rate that causes “A” to equal “B” in present-value terms where “A” is the sum of the present values as of the first Purchase Date for the first Tranche purchased under the Master EPC Agreement, calculated on a quarterly basis, of (a) the Tax Credits allocated to the Class A Member, and (b) the tax savings from deductions and losses that the Class A Member is allocated, and (c) cash that is distributed to the Class A Member, and (d) cash received by the Class A Member in connection with the
 
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Class B Member’s exercise of the Purchase Option, and (e) any indemnity payments by the Class B Member to the Class A Member that substitute for amounts in clauses (a) , (b) , (c) , and (d) , and where “B” is the sum of the present values as of the first Purchase Date for the first Tranche purchased under the Master EPC Agreement, calculated on a quarterly basis, of (f) the Capital Contributions that the Class A Member makes to the Company, and (g) the tax detriment from (i) any taxable income or gain allocated to the Class A Member, and (ii) the receipt by the Class A Member of cash in connection with the exercise of the Purchase Option, and (h) any payment made by the Class A Member to any tax authority after and solely as a result of an audit with respect to any Project or the Company (other than in connection with the incorrectness of a Fixed Tax Assumption, unless such Fixed Tax Assumption is incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents). The tax savings and tax detriment will be calculated assuming the accuracy of the Fixed Tax Assumptions.
***
“ Post-Flip Target Internal Rate of Return ” means an after-tax Post-Flip Internal Rate of Return of ***%.
***
“ Pre-Flip Period ” means the period commencing on the Effective Date and ending on (and including) the Flip Date.
***
“ Prohibited Transferee ” means any Person which is, or whose Affiliate is, (i) adverse in any pending or threatened action involving any Member (or Affiliate thereof) or the Company (unless the Members, excluding the transferor, have consented to such transferee), (ii) a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or (iii) during the Recapture Period, a Tax Exempt Entity.
“ Project ” is defined in the Master EPC Agreement.
“ Projected Flip Date ” means October 31, 2020.
“ Prudent Industry Standards ” means the practices, methods, equipment, specifications and standards of safety, as the same may change from time to time, as are used or
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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approved by a significant portion of the residential rooftop distributed solar electric generation industry operating in the applicable Project States in residential rooftop distributed solar electric generating systems or facilities of a type and size similar to the Projects as good, safe and prudent engineering practices in connection with the design, construction, operation, maintenance, repair and use of electrical and other equipment, facilities and improvements of such residential rooftop distributed solar electric generating system or facility, with commensurate standards of safety, performance, dependability, efficiency and economy in each case in light of the facts known and circumstances existing at the time any decision is made or action is taken, that would be expected to accomplish the desired result in a manner materially consistent with Applicable Law, permits, codes, and equipment manufacturer’s recommendations.
“ Purchase Date ” means the date that a Tranche is purchased under the Master EPC Agreement.
“ Purchase Option ” is defined in Section 9.4(a) .
“ Purchased Systems ” is defined in the Master EPC Agreement.
“ PV System ” is defined in the Master EPC Agreement.
“ Quarter ” means a fiscal quarter.
“ REC ” means a renewable energy credit or certificate representing any and all environmental credits, benefits, emissions reductions, offsets and allowances, howsoever entitled, that are created or otherwise arise from a PV System’s generation of electricity, including but not limited to solar renewable energy certificates that may be used in connection with a state’s renewable portfolio standard and in each case resulting from the avoidance of the emission of any gas, chemical or other substance attributable to the generation of solar energy by the PV System, but excluding any and all federal, state and local tax attributes (including Tax Credits).
“ Recapture Period ” means the period commencing on the Effective Date and ending on the fifth anniversary of the last date that a Project owned by the Company is Placed in Service.
“ Reference Rate ” means the rate of interest published in The Wall Street Journal as the prime lending rate or “prime rate”, with adjustments in that varying rate to be made on the same date as any change in that rate is so published.
“ Removal Event ” means the occurrence of any of the following events:
(a) any representation or warranty made by the Class B Member or the Managing Member in this Agreement or any Transaction Document shall have been false or misleading, and such breach or default has or could reasonably be expected to have a Material Adverse Change on the Company or the Class A Member as reasonably determined by the Class A Member;
 
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(b) any breach or default by the Class B Member, the Managing Member or the Company under any covenant or obligation under a Transaction Document to which it is a party, and such breach or default has or could reasonably be expected to have a Material Adverse Change on the Company or the Class A Member as reasonably determined by the Class A Member (unless the action or inaction that has led directly to such breach or default has been directed, accepted or approved by the Class A Member or Investor in writing);
(c) the occurrence and continuance of any event of default as to the Class B Member, the Managing Member or the Company, after any applicable notice and cure period has expired, under any Transaction Document to which such Person is a party, and such event of default has or could reasonably be expected to have a Material Adverse Change on the Company or the Class A Member as reasonably determined by the Class A Member (unless the action or inaction that has led directly to such event of default has been directed, accepted or approved by the Class A Member in writing);
(d) the Class B Member, the Managing Member, the Company or the Project violates any material Applicable Law (unless the action or inaction that has led directly to such violation has been directed, accepted or approved by Class A Member or Investor in writing), and such violation has or could reasonably be expected to have a Material Adverse Change on the Company;
(e) the Managing Member, Class B Member or the Company engages in fraud, willful misconduct or gross negligence, or breaches a fiduciary duty;
(f) any Bankruptcy or insolvency of the Class B Member, the Managing Member or the Company, whether voluntary or involuntary, and in the case of an involuntary Bankruptcy proceeding, not stayed or dismissed within sixty (60) days, or the foreclosure or involuntary transfer of Membership Interests held by the Managing Member;
(g) the Managing Member ceases to be an Affiliate of the Class B Member; or
(h) a failure by the Managing Member to enforce the rights of the Company under any Transaction Document.
“ Representatives ” means, with respect to any Person, the managing member(s) and the officers, directors, employees, representatives or agents (including investment bankers, financial advisors, attorneys, accountants, brokers and other advisors) of such Person, to the extent that such officer, director, employee, representative or agent of such Person is acting in his or her capacity as an officer, director, employee, representative or agent of such Person.
“ Required Majority Vote ” is defined in Section 8.3(b) .
“ Restricted Investor Transferee ” means a Person who is (a) a direct competitor of Sponsor or its Affiliates in the residential or commercial PV System design, installation, finance or operation and maintenance industry, or any other then-business segment of Sponsor or its Affiliates (including but not limited to Sponsor’s home automation, security and wireless internet business segments) or (b) an Affiliate of any such direct competitor.
 
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***
“ Restricted Transferee ” means,                      ***                     , and, with respect to a Transfer by Investor, a Restricted Investor Transferee.
“ Review Period ” is defined in the Master EPC Agreement.
“ Securities Act ” means the Securities Act of 1933, as amended.
“ Sharing Percentage ” is defined in Section 5.1 .
“ Shortfall Funding Date ” is defined in Section 4.3(a) .
“ Shortfall Notice ” is defined in Section 4.3(a) .
“ Sponsor ” means Vivint Solar, Inc.
“ Sponsor Indemnified Costs ” means, with respect to any Sponsor Indemnified Party, subject to ARTICLE IX , any and all damages, claims, liabilities, demands, charges, suits, penalties, costs, and reasonable expenses (including court costs and reasonable attorneys’ fees and expenses of one law firm for all Sponsor Indemnified Parties plus one law firm of local counsel for each Project State in which relevant Projects are located) incurred by such Sponsor Indemnified Parties resulting from or relating to any Third Party Claim to the extent resulting from or relating to (a) any breach or default by Investor or Class A Member of any representation, warranty, covenant, indemnity or agreement under this Agreement or any other Transaction Document or (b) any claim for fraud, gross negligence or willful misconduct on the part of Investor or Class A Member relating to this Agreement or any other Transaction Document.
“ Sponsor Indemnified Parties ” means Sponsor Sub and any Person to whom Sponsor Sub Transfers its Membership Interests in accordance with ARTICLE IX , and each of their respective Affiliates and each of their respective shareholders, partners, members, officers, directors, employees, agents and other representatives, and their respective successors and assigns.
“ Sponsor Sub ” is defined in the preamble to this Agreement.
“ Subsidiary ” means, with respect to any Person, any corporation, partnership, limited liability company, joint venture or other entity of which such Person (either alone or through or together with any other Person pursuant to any agreement, arrangement, contract or other commitment) owns, directly or indirectly, 50% or more of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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“ System Purchase Price ” is defined in the Master EPC Agreement.
“ Target Internal Rate of Return ” means an after-tax Internal Rate of Return of ***%.
“ Tax ” or “ Taxes ” (and with correlative meaning, “ Taxable ” and “ Taxing ”) means:
(a) any taxes, customs, duties, charges, fees, levies, penalties or other assessments imposed by any federal, state, local or foreign taxing authority, including, but not limited to, income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, net worth, employment, occupation, payroll, withholding, social security, alternative or add-on minimum, ad valorem, transfer, stamp, or environmental tax, or any other tax, custom, duty, fee, levy or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax, or additional amount attributable thereto; and
(b) any liability for the payment of amounts with respect to payment of a type described in clause (a) , including as a result of being a member of an affiliated, consolidated, combined or unitary group, as a result of succeeding to such liability as a result of merger, conversion or asset transfer or as a result of any obligation under any tax sharing arrangement or tax indemnity agreement.
“ Tax Credits ” means energy credits under Section 48 of the Code or any successor to such section.
“ Tax Exempt Entity ” means (a) a “tax-exempt entity” or “tax-exempt controlled entity” as those terms are defined in Section 168(h) of the Code, (b) a Person described in Section 50(b)(3) or (4) of the Code, (c) a Person whose ownership of a Membership Interest would result in a disallowance or reduction of Tax Credits pursuant to Section 50(d) of the Code or (d) any other Person whose ownership of a Membership Interest would result in a recapture or disallowance of, or inability to claim, the Tax Credits or accelerated Depreciation deductions assumed in the Base Case Model.
“ Tax Loss Contest ” is defined in Section 7.7(c) .
“ Tax Matters Partner ” is defined in Section 7.7(a) .
“ Tax Return ” means any return, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including any IRS Form K-1 issued to Members by the Company, information return, claim for refund, amended return or declaration of estimated Tax.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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“ Third Party Claim ” means any claim, action or proceeding made or brought by any Person who is not a Member or an Affiliate of a Member.
“ Third Party Penalty Claim ” is defined in Section 9.8(c) .
“ Tracking Model ” means a computer model in the form of the Base Case Model that reflects actual results of the Company using the calculation conventions in Section 6.5 , but with each of the Fixed Tax Assumptions remaining unchanged (except to the extent a Fixed Tax Assumption is incorrect due to a breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents).
“ Tranche ” is defined in the Master EPC Agreement.
“ Transactions ” means the transactions described in the Transaction Documents.
“ Transaction Documents ” means this Agreement, the Guaranty Agreement, the Master EPC Agreement and the Maintenance Services Agreement.
“ Transfer ” is defined in Section   9.1 .
“ Treasury Regulations ” means the federal income tax regulations (including temporary regulations) promulgated under the Code by the United States Department of Treasury, as such regulations may be amended from time to time. All references herein to specific sections of the Treasury Regulations shall be deemed also to refer to any corresponding provisions of succeeding regulations.
“ True-Up Base Case Model ” is defined in the Master EPC Agreement.
“ True-Up Report ” is defined in the Master EPC Agreement.
“ UCC ” means the Uniform Commercial Code of any applicable jurisdiction.
Section 1.2. Other Definitional Provisions .
(a) As used in this Agreement and in any certificate or other documents made or delivered pursuant hereto or thereto, financial and accounting terms not defined in this Agreement or in any such certificate or other document, and financial and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under GAAP. To the extent that the definitions of financial and accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Agreement or in any such certificate or other document shall control.
(b) The words “hereof”, “herein”, “hereunder”, and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Section references contained in this Agreement are references to Sections in this Agreement unless otherwise specified. The term “including” shall mean “including without limitation”.
 
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(c) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.
(d) Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, restated, supplemented or otherwise modified and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein.
(e) Any references to a Person are also to its permitted successors and assigns.
ARTICLE II
CONTINUATION; OFFICES; TERM
Section 2.1. Formation of the Company .
The Members hereby acknowledge the formation of the Company as a limited liability company pursuant to the Act, the Certificate of Formation and this Agreement.
Section 2.2. Name, Office and Registered Agent .
(a) The name of the Company shall be “Vivint Solar Rebecca Project Company, LLC” or such other name or names as may be agreed to by the Members from time to time. The principal office of the Company shall be c/o Vivint Solar, Inc., 4931 N 300 W, Provo, UT 84604. The Members may at any time change the location of such office to another location; provided that the Managing Member gives prompt written notice of any such change to the registered agent of the Company.
(b) The registered office of the Company in the State of Delaware is located at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle. The registered agent of the Company for service of process at such address is The Corporation Trust Company. The registered office and registered agent may be changed by the Managing Member at any time in accordance with the Act; provided that the Managing Member gives prompt written notice of any such change to all Members. The registered agent’s primary duty as such is to forward to the Company at its principal office and place of business any notice that is served on it as registered agent.
Section 2.3. Purpose; No Partnership Intended .
(a) The nature of the business or purpose to be conducted or promoted by the Company is: (i) to engage in the transactions contemplated by the Transaction Documents and Customer Agreements; (ii) to engage in the acquisition, construction, installation, lease, ownership and sale, and the operation, management, maintenance and financing of the Projects and all other rights and assets necessary for the ownership and operation of such Projects and (iii) to engage in any lawful act or activity, enter into any agreement and to exercise any powers permitted to limited liability companies formed under the Act that are incidental to or necessary, suitable or convenient for the accomplishment of the purposes specified above.
 
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(b) The Company shall exist for the purposes and business specified in Section 2.3(a) and, other than for purposes of determining the status of the Company under the Code and the applicable Treasury Regulations and under any applicable state, municipal or other income tax law or regulation, this Agreement shall not be deemed to create a partnership under the Delaware Revised Uniform Partnership Act, company, joint venture or other arrangement among the Members with respect to any actions whatsoever other than the purposes and business specified in Section 2.3(a) and the activities related thereto.
Section 2.4. Term .
The term of the Company commenced on the Effective Date and shall continue indefinitely.
Section 2.5. Organizational and Fictitious Name Filings; Preservation of Limited Liability .
Prior to the Company’s conducting business in any jurisdiction other than Delaware, the Managing Member shall, on behalf of the Company, register the Company as a foreign limited liability company and file such fictitious or trade names, statements or certificates in such jurisdictions and offices as necessary or appropriate for the conduct of the Company’s business. The Managing Member shall take any and all other actions as may be reasonably necessary or appropriate to perfect and maintain the status of the Company as a limited liability company under the laws of Delaware and any other state or jurisdiction other than Delaware in which the Company engages in business and continue the Company as a limited liability company and to protect the limited liability of the Members as contemplated by the Act.
ARTICLE III
RIGHTS AND OBLIGATIONS OF THE MEMBERS
Section 3.1. Members; Membership Interests .
(a) The names of the Members, their addresses, contact information and Membership Interests held are listed on Annex I . Annex I shall be amended from time to time by the Managing Member without requiring the consent of any Member to reflect the change in a Member’s name, address or contact information, the withdrawal of any Member, the admission of any additional Member, Transfers of Membership Interests or the issuance of additional Membership Interests, in each case pursuant to and in accordance with the terms and conditions of this Agreement. The Managing Member shall, upon each amendment to Annex I , provide each Member, on a confidential basis for informational purposes, with a copy of such amended Annex I .
(b) The Membership Interests comprise one hundred (100) Class A Membership Interests (the “ Class A Membership Interests ”) and one hundred (100) Class B Membership Interests (the “ Class B Membership Interests ”).
 
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(c) The Class A Membership Interests and the Class B Membership Interests shall (i) have the rights and obligations ascribed to such Membership Interests in this Agreement and the Act; (ii) be recorded in a register of Membership Interests, which register the Managing Member shall maintain; (iii) be transferable only on recordation of such Transfer in the register of Membership Interests, which recordation the Managing Member shall make, upon compliance with the provisions of ARTICLE IX ; and (iv) be personal property. The Members hereby specify, acknowledge and agree that all Membership Interests are securities governed by Article 8 and all other provisions of the UCC, and pursuant to the terms of Section 8-103(c) of the UCC such interests shall be “securities” for all purposes under such Article 8 and under all other provisions of the UCC. All Membership Interests shall be represented by certificates substantially in the form attached hereto as Exhibit A , shall be recorded in a register thereof maintained by the Company, and shall be subject to such rules for the issuance thereof in compliance with this Agreement, as the Managing Member may from time to time determine. The Managing Member is expressly authorized to execute the certificates on behalf of the Company.
(d) The Company shall be entitled to treat the registered holder of a Membership Interest, as shown in the register of Membership Interests referred to in Section 3.1 of this Agreement, as a Member for all purposes of this Agreement, except that the Managing Member may record in the register of Membership Interests any security interest of a secured party pursuant to any security interest permitted by this Agreement.
(e) If a Member Transfers all of its Membership Interest to another Person pursuant to and in accordance with the terms set forth in ARTICLE IX , the transferor shall automatically cease to be a Member.
Section 3.2. Actions by the Members .
(a) Except as otherwise permitted by this Agreement (including Section 3.2(e) below), all actions of the Members shall be taken at meetings of the Members which may be called by any Member for any reason and shall be called by the Managing Member within ten (10) calendar days following the written request of a Member. The Members may conduct any Company business at any such meeting that is permitted under the Act or this Agreement. Meetings shall be at a reasonable time and place. Accurate minutes of any meeting shall be taken and filed with the minute books of the Company. Following each meeting, the minutes of the meeting shall be sent promptly to each Member.
(b) Members may participate in any meeting of the Members by means of conference telephone or other communications equipment so that all persons participating in the meeting can hear each other or by any other means permitted by law. Such participation shall constitute presence in person at such meeting.
(c) The presence in person or by proxy of Members owning more than 50% of the aggregate Class A Membership Interests and more than 50% of the aggregate Class B Membership Interests shall constitute a quorum for purposes of transacting business at any meeting of the Members.
 
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(d) Written notice stating the place, day and hour of the meeting of the Members, and the purpose or purposes for which the meeting is called, shall be delivered by or at the direction of the Managing Member, to each Member of record entitled to vote at such meeting not less than five (5) Business Days nor more than thirty (30) calendar days prior to the meeting. Notwithstanding the foregoing, meetings of the Members may be held without notice so long as all the Members are present in person or by proxy.
(e) Any action may be taken by the Members without a meeting if such action is authorized or approved by the written consent of Members representing sufficient Membership Interests to authorize or approve such action pursuant to this Agreement at a meeting of all of the Members. The Members may conduct any Company business or take any action required of Members under this Agreement through written consent. Where action is authorized by written consent no prior notice is required, and no meeting of Members needs to be called or noticed. A copy of any action taken by written consent must be sent promptly to all Members, and all actions by written consent shall be filed with the minute books of the Company.
(f) The Managing Member is hereby authorized by the Members to take any and all actions on behalf of the Company subject, in the case of Major Decisions and any transaction with an Interested Member, to the approval requirements in Section 8.3 .
(g) The voting power of each Membership Interest for purposes of any vote, consent or approval of Members required under this Agreement or the Act shall be as follows:
(i) each Class A Membership Interest shall entitle its holder to one vote;
(ii) each Class B Membership Interest shall entitle its holder to one vote; and
(iii) each Member shall cast all of its votes of a particular class as one block of votes.
Section 3.3. Management Rights
Except as otherwise provided under Section 8.3(d) , no Member, in its capacity as such, other than the Managing Member, shall have any right, power or authority to take part in the management or control of the business of, or transact any business for, the Company, to sign for or on behalf of the Company or to bind the Company in any manner whatsoever. Except as otherwise provided herein, the Managing Member shall not hold out or represent to any third party that any other Member has any such power or right or that any Member is anything other than a member in the Company. A Member shall not be deemed to be participating in the control of the business of the Company by virtue of its possessing or exercising any rights set forth in this Agreement or the Act or any other agreement relating to the Company. No Member or its Affiliates shall have any duty, fiduciary or otherwise, to refrain from engaging in the same or similar activities or lines of business as the Company, the Members or any Affiliates thereof, and no Member or any Affiliate thereof shall be liable to the Company, any Member or any Affiliate thereof by reason of any such activities.
 
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Section 3.4. Other Activities .
Notwithstanding any duty otherwise existing at law or in equity, any Member may engage in or possess an interest in other business ventures of every nature and description, independently or with others, even if such activities compete directly with the business of the Company, and neither the Company nor any of the Members will have any rights by virtue of this Agreement in and to such independent ventures or any income, profits or property derived from them.
Section 3.5. No Right to Withdraw .
Subject to Section 9.3 and Section 9.4 , no Member will have any right to voluntarily resign or otherwise withdraw from the Company without the prior written consent of all remaining Members of the Company which consent may be given or withheld in their sole and absolute discretion.
Section 3.6. Limitation of Liability of Members .
(a) Notwithstanding anything to the contrary set forth in this Agreement or under Applicable Law, neither the Managing Member nor any other Member will be liable to the Company, any Member (including the Managing Member), or any other equity holder in or creditor of the Company for any action taken by or on behalf of the Company, except (i) for such actions as constitute gross negligence, fraud or willful misconduct of such Member, and (ii) as otherwise provided in ARTICLE IX . Without limiting or reducing the foregoing, each Member’s liability will be limited as set forth in the Act. Except as otherwise required by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, will be the debts, obligations and liabilities solely of the Company, and the Members of the Company will not be obligated personally for any of such debts, obligations or liabilities solely by reason of being a Member of the Company.
(b) Each of the Members will be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any other Person who is a Member, or any officer or employee of the Company, or by any other individual as to matters the Members reasonably believe are within such other individual’s professional or expert competence, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits or losses of the Company or any other facts pertinent to the existence and amount of assets from which distribution to the Members might properly be paid.
(c) To the extent that, at law or in equity, a Member, in its capacity as a member or manager of the Company or otherwise, has duties (including fiduciary duties) or liabilities relating thereto to the Company or to any Member or other Person bound by this Agreement more expansive than those set forth in Section 3.6(a) , such duties and liabilities are hereby limited to the extent permitted under the Act to those set forth in Section 3.6(a) ; provided that this Section 3.6(c) or Section 3.6(a) will not be construed to limit obligations or liabilities expressly provided for in this Agreement (including the obligations with respect to Capital Contributions) or any other Transaction Document; provided , further , that these limitations shall
 
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not apply to Removal Events or a breach by any Member of its respective representations or covenants set forth herein. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Member, in its capacity as a member or manager of the Company or otherwise, otherwise existing at law or in equity, are agreed by the Members to replace such other duties and liabilities of such Member.
Section 3.7. No Liability for Deficits .
Except to the extent otherwise provided by law with respect to third-party creditors of the Company, none of the Members will be liable to the Company for any deficit in its Capital Account, nor will such deficits be deemed assets of the Company.
Section 3.8. Company Property .
All property owned by the Company, whether real or personal, tangible or intangible and wherever located, will be deemed to be owned by the Company, and no Member, individually, will have any ownership of such property.
Section 3.9. Retirement, Resignation, Expulsion, Incompetency, Bankruptcy or Dissolution of a Member .
The retirement, resignation, expulsion, Bankruptcy or dissolution of a Member will not, in and of itself, dissolve the Company. The successors in interest to the bankrupt Member shall, for the purpose of settling the estate, have all of the rights of such Member, including the same rights and subject to the same limitations that such Member would have had under the provisions of this Agreement to Transfer its Membership Interest. A successor in interest to a Member will not become a substituted Member except as provided in this Agreement.
Section 3.10. Withdrawal of Capital .
No Member will have the right to withdraw capital from the Company or to receive or demand distributions (except as contemplated under Section 4.1(b) and except as to distributions to which it is entitled under ARTICLE VI ) or return of its Capital Contributions until the Company is dissolved in accordance with this Agreement and applicable provisions of the Act. No Member will be entitled to demand or receive any interest on its Capital Contributions.
Section 3.11. Representations and Warranties .
(a) The Sponsor Sub, in its capacity as Class B Member and Managing Member, represents and warrants to the Company and each other Member, that all of the statements in this Section 3.11 shall be true and correct as of the Effective Date:
(i) Organization, Good Standing , Etc . Sponsor Sub is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation. Sponsor Sub has the limited liability company power and authority to own, lease and operate its properties and to carry on its business as now
 
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being conducted. Sponsor Sub is duly qualified to do business and is in good standing under the laws of each jurisdiction that its business requires it to be so qualified, except where the failure to be so qualified would not adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Sponsor Sub or the Company.
(ii) Authority . Sponsor Sub has the limited liability company power and authority to enter into the Transaction Documents to which it is a party, to perform its obligations under such Transaction Documents and to consummate the transactions contemplated thereby. The execution and delivery by Sponsor Sub of the Transaction Documents to which it is a party and the consummation by Sponsor Sub of the transactions contemplated thereby have been duly and validly authorized by all necessary action required on the part of Sponsor Sub, and such Transaction Documents have been duly and validly executed and delivered by Sponsor Sub. Each of the Transaction Documents to which Sponsor Sub is a party constitutes the legal, valid and binding obligation of Sponsor Sub, enforceable against it in accordance with the terms, subject to the effects of Bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors’ rights and remedies generally and to general principles of equity.
(iii) No Conflicts . The execution and delivery by Sponsor Sub of the Transaction Documents to which it is a party and the performance by Sponsor Sub of its obligations under such Transaction Documents will not (A) violate any constitution, statute, law, ordinance, judgment, settlement, writ, regulation, rule, injunction, order, decree, ruling, charge or other restriction of any Governmental Authority having jurisdiction, (B) conflict with or cause a breach of any provision in the organizational documents of Sponsor Sub, or (C) cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, note, bond, mortgage, indenture, agreement, license, intellectual property license or right, instrument, decree, judgment or other arrangement to which Sponsor Sub is a party or under which any of them is bound or to which any of their assets is subject (or result in the imposition of a security interest or encumbrance upon any such assets), except (in the case of clauses (A)  and  (C) ) for any that would not adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Sponsor Sub or the Company.
(iv) No Consent . All consents, approvals and filings then required to be obtained or made by Sponsor Sub to execute, deliver and perform the Transaction Documents to which it is a party shall have been obtained or made and shall be in full force and effect.
(v) Absence of Litigation . There are no pending or, to the Knowledge of Sponsor Sub, threatened claims, disputes, governmental investigations, suits, actions (including, without limitation, non-judicial real or personal property foreclosure actions), arbitrations, legal, administrative or other proceedings of any nature, domestic or foreign, criminal or civil, at law or in equity, of, in, or before any Governmental Authority or before any arbitrator, and Sponsor Sub is not subject to any outstanding injunction, judgment, order, decree, ruling or charge, other than in each case any such instance that would not reasonably be expected to adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Sponsor Sub or the Company.
 
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(vi) Acknowledgment . Sponsor Sub acknowledges that, except with respect to the representations and warranties expressly made by Investor and the Company in the Transaction Documents, neither Investor nor the Company has made any representation or warranty, either express or implied, under the Transaction Documents. Without limiting the foregoing, Sponsor Sub acknowledges that neither Investor nor the Company has made any representation or warranty with respect to Sponsor Sub’s, or the Company’s, eligibility to claim investment tax credits or the availability of other tax benefits or savings except as expressly set forth herein.
(vii) Accredited Investor . Sponsor Sub is an “Accredited Investor” as such term is defined in Regulation D under the Securities Act. It has had a reasonable opportunity to ask questions of and receive answers from Investor concerning (A) Investor, (B) the Company, and (C) the Class B Membership Interests, and all such questions have been answered to the full satisfaction of Sponsor Sub. Sponsor Sub understands that the Class B Membership Interests have not been registered under the Securities Act in reliance on an exemption therefrom, and that the Class B Membership Interests must be held indefinitely unless the sale thereof is registered under the Securities Act, or an exemption from registration is available thereunder, and that Investor is under no obligation to register the Membership Interests. Sponsor Sub is acquiring the Class B Membership Interests for its own account and not for the account of any other person and not with a view to distribution or resale to others.
(viii) Taxes .
(A) Sponsor Sub is an entity disregarded as separate from its owner for U.S. federal tax purposes, and such owner (I) is a “United States person” within the meaning of Section 7701(a)(30) of the Code, and (II) is not subject to withholding under Section 1445 or Section 1446 of the Code.
(B) No Taxes shall be imposed on the Company as a result of any obligation under any tax sharing arrangement, tax indemnity agreement or other similar contract entered into by the Sponsor Sub, the Company or any of their Affiliates prior to the Effective Date.
(C) The Company is a newly-formed entity that has not yet filed and has not yet been required to file any Tax Returns.
(D) No Person has extended or waived the application of any statute of limitations of any jurisdiction regarding the assessment or collection of any Tax of or with respect to the Company and no power of attorney has been granted by or with respect to the Company with regard to any matters relating to Taxes.
 
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(E) No Taxes of or with respect to the Company are being contested, and there are no audits, claims, assessments, levies, administrative or judicial proceedings pending, threatened, proposed (tentatively or definitely) or contemplated against, or regarding Taxes of or with respect to, the Company.
(F) Immediately prior to the Effective Date the Company was a “disregarded entity” for federal income tax purposes and had been such an entity since it was formed. No election has been filed to treat the Company as a corporation for federal, state or local income tax purposes.
(G) The Company has no subsidiaries.
(H) The participation of Sponsor Sub as a Member will not cause any part of the assets of the Company to be characterized as “tax exempt use property” within the meaning of Section 168(h) of the Code and will not cause the Company to be an entity to which the provisions of Section 46(f) of the Code, as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990, applies.
(b) The Managing Member makes the following additional representations and warranties as to the Company to each other Member as of the Effective Date:
(i) Assets and Liabilities . The Company is not a party to any contracts or agreements other than as contemplated herein. Prior to the Company’s execution and delivery of the Transaction Documents to which the Company is a party, it had no liabilities. It has no debts or other liabilities other than as contemplated in the Transaction Documents or the Customer Agreements.
(ii) Employee Matters . The Company has no employees and has not maintained, sponsored, administered or participated in any employee benefit plan or arrangement.
(c) Investor makes the following representations and warranties to the Company and each other Member as of the Effective Date:
(i) Organization, Good Standing, Etc . Investor is a limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation. Investor has the partnership power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Investor is duly qualified to do business and is in good standing under the laws of each jurisdiction that its business requires it to be so qualified, except where the failure to be so qualified would not adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Investor or the Company.
 
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(ii) Authority . Investor has the partnership power and authority to enter into the Transaction Documents to which it is a party, to perform its obligations under such Transaction Documents and to consummate the transactions contemplated thereby. The execution and delivery by Investor of the Transaction Documents to which it is a party and the consummation by Investor of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action required on the part of Investor, and such Transaction Documents have been duly and validly executed and delivered by Investor. Each of the Transaction Documents to which Investor is a party constitutes the legal, valid and binding obligation of Investor, enforceable against it in accordance with the terms, subject to the effects of Bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors’ rights and remedies generally and to general principles of equity.
(iii) No Conflicts . The execution and delivery by Investor of the Transaction Documents to which it is a party and the performance by Investor of its obligations under such Transaction Documents will not (A) violate any constitution, statute, law, ordinance, judgment, settlement, writ, regulation, rule, injunction, order, decree, ruling, charge or other restriction of any Governmental Authority having jurisdiction, (B) conflict with or cause a breach of any provision in the organizational documents of Investor, or (C) cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, note, bond, mortgage, indenture, agreement, license, intellectual property license or right, instrument, decree, judgment or other arrangement to which Investor is a party or under which it is bound or to which any of its assets is subject (or result in the imposition of a security interest or encumbrance upon any such assets), except (in the case of clauses (A)  and  (C) ) for any that would not reasonably be expected to adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Investor or the Company.
(iv) No Consent . All consents, approvals and filings then required to be obtained or made by Investor to execute, deliver and perform the Transaction Documents to which it is a party shall have been obtained or made and shall be in full force and effect.
(v) Absence of Litigation . There are no pending or, to the Knowledge of Investor, threatened claims, disputes, governmental investigations, suits, actions (including, without limitation, non-judicial real or personal property foreclosure actions), arbitrations, legal, administrative or other proceedings of any nature, domestic or foreign, criminal or civil, at law or in equity, of, in, or before any Governmental Authority or before any arbitrator, and Investor is not subject to any outstanding injunction, judgment, order, decree, ruling or charge, other than in each case any such instance that would not reasonably be expected to adversely affect in a material manner all of the Projects owned by the Company taken as a whole, Investor or the Company.
 
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(vi) Accredited Investor . Investor is an “Accredited Investor” as such term is defined in Regulation D under the Securities Act. It has had a reasonable opportunity to ask questions of and receive answers from Sponsor Sub concerning (A) the Company, and (B) the Class A Membership Interests, and all such questions have been answered to the full satisfaction of Investor. Investor understands that the Class A Membership Interests have not been registered under the Securities Act in reliance on an exemption therefrom, and that the Class A Membership Interests must be held indefinitely unless the sale thereof is registered under the Securities Act, or an exemption from registration is available thereunder, and that Investor is under no obligation to register the Membership Interests. Investor is acquiring the Class A Membership Interests for its own account and not for the account of any other person and not with a view to distribution or resale to others.
(vii) Information and Investment Intent . Investor recognizes that investment in the Membership Interests involves substantial risks. It acknowledges that any financial projections that may have been provided to it are based on assumptions of future operating results developed by Sponsor Sub and Sponsor Sub’s advisers and, therefore, represent their best good faith estimate of future results based on assumptions about certain events (some of which are beyond the control of Sponsor Sub and the Company). It understands that no assurances or representations can be given that the actual results of the operations of the Company will conform to the projected results for any period. It has relied solely on its own legal, tax and financial advisers for its evaluation of an investment in the Membership Interests and not on the advice of Sponsor Sub or Company or any of their respective legal, tax or financial advisers (with the exception of Sponsor Sub’s representations, on which Investor has relied and will rely).
(viii) Acknowledgment . Investor acknowledges that, except with respect to the representations and warranties expressly made by Sponsor Sub and the Company in the Transaction Documents, neither Sponsor Sub nor the Company has made any representation or warranty, either express or implied, under the Transaction Documents. Without limiting the foregoing, Investor acknowledges that neither Sponsor Sub nor the Company has made any representation or warranty with respect to Investor’s or the Company’s eligibility to claim investment tax credits or the availability of other tax benefits or savings, except as specifically provided herein.
(ix) Government Regulation . Investor is not subject to regulation under the Federal Power Act and is not subject to regulation as an “electric utility,” under applicable state law. No governmental approvals are required for Investor to acquire the Class A Membership Interests.
(x) Domestic Status . Investor (A) is a partnership for U.S. federal tax purposes, (B) is a “United States person” within the meaning of Section 7701(a)(30) of the Code and (C) is not subject to withholding under Section 1445 or Section 1446 of the Code.
(xi) Tax Character . The participation of Investor as a Member will not cause any part of the assets of the Company to be characterized as “tax-exempt use
 
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property” within the meaning of Section 168(h) of the Code and will not cause the Company to be an entity to which the provisions of Section 46(f) of the Code, as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990, applies.
Section 3.12. Other Covenants .
(a) United States Person . Each Member covenants to the Company and each other Member that it (or, if it is an entity disregarded as separate from its owner for U.S. federal tax purposes, its owner for such purposes) will remain a “United States person” within the meaning of Section 7701(a)(30) of the Code and will not be subject to withholding under Section 1446 of the Code.
(b) Tax Character . Each Member covenants to the Company and each other Member that it is and will remain for federal income tax purposes a corporation (and not an “S-corporation”) that is not a Tax Exempt Entity, a partnership or a disregarded entity; provided , however , if, for federal income tax purposes, a Class B Member is a partnership or a disregarded entity, then each beneficial owner of such Class B Member (or if such beneficial owner is a partnership or disregarded entity, then each beneficial owner of such partnership or disregarded entity) is and will remain an individual or corporation (and not a “S-corporation”, partnership or disregarded entity) that is not a Tax Exempt Entity. The participation of such Member as a Member will not cause any part of the assets of the Company to be characterized as “tax-exempt use property” within the meaning of Section 168(h) of the Code and will not cause the Company to be an entity to which the provisions of Section 46(f) of the Code, as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990, applies.
(c) Sources of Funding for Purchase of Projects . The sole sources of funding for the purchase of the Projects by the Company shall be the Capital Contributions of the Members.
Section 3.13. Removal of Managing Member .
(a) Within ten (10) Business Days after the occurrence of a Removal Event, the Managing Member shall give the Class A Member written notice thereof. If a Removal Event occurs, the Class A Member is entitled to remove the Managing Member by giving sixty (60) days’ written notice to the Managing Member of such removal, which shall take effect upon the expiration of such sixty (60)-day period unless the Managing Member cures such Removal Event within such sixty (60)-day period (and as a result of such cure such Removal Event shall be deemed not to have occurred and the Managing Member will not be subject to removal as Managing Member as a result of such Removal Event).
(b) If the Managing Member is so removed pursuant to Section 3.13(a) , the Class A Member shall elect a Person to succeed to all the rights, and to perform all of the obligations set forth for the Managing Member hereunder (the “ Manager ”), subject to the Company and/or the Manager obtaining any necessary prior governmental approvals. The Person selected as the Manager shall (A) be either (i) an entity that, within the preceding six (6) years has owned or operated for a continuous period of at least three (3) years solar photovoltaic
 
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systems with an aggregate electricity output of at least 20 megawatts, or (ii) such other entity which is approved by the Class A Member (such approval not to be unreasonably withheld or delayed) and (B) not be a direct competitor of the Managing Member (or any of its Affiliates). The entity chosen as Manager shall execute a counterpart to this Agreement.
ARTICLE IV
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; MEMBER LOANS
Section 4.1. Capital Contributions .
(a) The Members shall make Capital Contributions to the Company on the Effective Date in the amounts shown in Schedule 4.2(d) . In the case of Capital Contributions to fund payments required to be made on a Purchase Date under the Master EPC Agreement for a particular Tranche, the Class A Member shall contribute, subject to Section 4.1(c) , that amount, as determined pursuant to the Base Case Model for such Tranche, that will allow the Class A Member to reach the applicable Target Internal Rate of Return by the Projected Flip Date. Notwithstanding the foregoing, in no event shall the Class A Members contribute more than ***% of a payment required to be made under the Master EPC Agreement for a particular Tranche. The Class B Member shall make a Capital Contribution for the remainder of such payments required to pay the Net Purchase Price payable on that Purchase Date.
(b) If the True-Up Report delivered under the Master EPC Agreement indicates that the System Purchase Price for all Purchased Systems has left a balance owed to Developer, then, subject to Section 4.1(c) , the Class A Member shall contribute the amount the True-Up Base Case Model projects will allow the Class A Member to reach its Target Internal Rate of Return by the Projected Flip Date (but in no event more than ***% of the amount owed to Developer), and the Class B Member shall make a Capital Contribution for the remainder. If the True-Up Report indicates that the System Purchase Price for all Purchased Systems has left a credit owed to the Company, then upon receipt of the refund from Developer, the Company shall distribute the refund, as a return of capital, to the Class A Member up to the amount the True-Up Base Case Model projects will allow the Class A Member to reach its Target Internal Rate of Return by the Projected Flip Date, and the Company shall distribute the remainder of the refund to the Class B Member as a return of capital. For the avoidance of doubt, distributions made to Members under this Section 4.1(b) shall not reduce or have any effect on the Members’ Capital Contributions.
(c) Notwithstanding anything to the contrary in this Agreement, the total amount of capital contributed by the Class A Member under Section 4.1(a) , Section 4.1(b) and any other provision in this Agreement will not exceed the Investor Contribution Cap.
(d) The Members will have no obligation to make any Capital Contributions other than as described in this Section 4.1 . All Capital Contributions required to be made under Section 4.1(a) and Section 4.1(b) will be made no later than when the Company is required to make payments under the Master EPC Agreement.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(e) Notwithstanding the above, the obligation of the Class A Members to make Capital Contributions to fund any payments required under the Master EPC Agreement for a particular Tranche shall be subject to the Class B Member’s making its Capital Contribution for its portion of the respective payment and Developer’s satisfaction of the conditions precedent in Section 2.3 of the Master EPC Agreement.
Section 4.2. Capital Accounts.
(a) A capital account (a “ Capital Account ”) shall be established and maintained for each Member in the manner required by the Treasury Regulations under Section 704(b) of the Code.
(b) A Member’s Capital Account shall be increased by (i) the amount of money the Member contributes to the Company, (ii) the net value of any other property the Member contributes to the Company ( i.e. , the fair market value of the property net of liabilities secured by the property that the Company is considered to assume or take subject to under Section 752 of the Code), (iii) the Net Income and items thereof allocated to the Member under Section 5.1 , and (iv) any items of income and gain allocated to the Member, including any income or gain that is exempted from tax. A Member’s Capital Account shall be decreased by (A) the amount of money distributed to the Member by the Company, (B) the net value of any other property distributed to the Member by the Company (i.e. the fair market value of the property net of liabilities secured by the property that the Member is considered to assume or take subject to under Section 752 of the Code), (C) the Net Loss and items thereof allocated to the Member under Section 5.1 , and (D) any items of loss or deduction allocated to the Member. The Members’ Capital Accounts shall be maintained and adjusted as required by the provisions of Treasury Regulations Sections 1.704-1(b)(2)(iv) and 1.704-1(b)(4), including adjustments to reflect the allocations to the Members of depreciation, depletion, amortization and gain or loss as computed for book purposes rather than the allocation of the corresponding items as computed for tax purposes, as required by Treasury Regulations Section 1.704-1(b)(2)(iv)(g).
(c) The Company’s property shall be revalued, and the Capital Accounts of the Members shall be reset to reflect a revaluation as directed by Treasury Regulations Section 1.704-1(b)(2)(iv)(f), immediately prior to the following events: (i) if any new or existing Member makes a more than de minimis Capital Contribution in exchange for new or additional Membership Interests, (ii) if more than a de minimis amount of money or other property is distributed by the Company to a Member to redeem all or any portion of its Membership Interest, or (iii) if the Company is liquidated within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g).
(d) For federal income tax purposes, each of the initial Members will be treated as acquiring an interest in a new partnership in exchange for its initial Capital Contribution on the Effective Date and as each Member makes additional Capital Contributions its Capital Account will increase. The Company will be a disregarded subsidiary of Sponsor for federal income tax purposes prior to receiving the initial Capital Contributions. The initial Capital Account balances and Percentage Interest of each Member on the Effective Date are shown in Schedule 4.2(d) .
 
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(e) The Capital Account balances and Percentage Interest of each Member are shown in Schedule 4.2(d) . The Managing Member shall update Schedule 4.2(d) from time to time as necessary to keep the information current. Any such updating will be consistent with the manner in which this ARTICLE IV requires that the Capital Accounts be maintained. Any reference in this Agreement to Schedule 4.2(d) will be treated as a reference to Schedule 4.2(d) as amended and in effect from time to time.
(f) If all or a portion of a Membership Interest in the Company is transferred in accordance with the terms of this Agreement, then the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the Membership Interest so transferred.
(g) The provisions of this Agreement relating to maintenance of Capital Accounts are intended to comply with Treasury Regulations Sections 1.704-1 and 1-704-2, and will be interpreted and applied in a manner consistent with such Treasury Regulations or any successor provision.
Section 4.3. Member Loans .
(a) If the Company does not have sufficient cash to pay its obligations (a “ Cashflow Shortfall ”) and the Managing Member determines in its reasonable discretion to request a Member Loan under this Section 4.3 , the Managing Member shall give each Member notice (a “ Shortfall Notice ”) of such Cashflow Shortfall not later than thirty (30) days prior to the date such funds are needed (the “ Shortfall Funding Date ”). Each Member shall have twenty (20) days after receipt of a Shortfall Notice to notify the Manager that it wishes to participate in loans to the Company in connection with any Cashflow Shortfall, and each such notice from a Member shall include the amount such Member wishes to provide. In the event that more than one Member elects to participate in loans to the Company under this Section 4.3 , such Members shall be allowed to participate ratably in proportion to the Sharing Percentage of all such participating Members. Member Loans by Members described in this Section 4.3 shall be repaid on each Distribution Date solely out of Distributable Cash that would otherwise be distributed to Members after any distributions required to be made pursuant to Section 4.1(b) or Section 6.1(a)(i)(A) are made, on a pro rata basis in accordance with the amount each such Member participates in such Member Loans. Each Member Loan shall be pari passu with all other Member Loans pursuant to this Section 4.3 , and no Member shall have the right to accelerate the repayment of such loan.
(b) Any Member Loan made by any Member pursuant to this Section 4.3 shall bear interest at a rate equal to the lesser of (i) the Target Internal Rate of Return or (ii) the Reference Rate plus two percent (2%), unless a lower rate of interest is otherwise agreed to by any such Member in its sole discretion. Interest on each Member Loan pursuant to this Section 4.3 shall accrue and, if not paid in accordance with this Section 4.3 , be compounded to the principal amount thereof on each Distribution Date.
(c) A Member Loan made by any Member pursuant to this Section 4.3 shall be evidenced by a note substantially in the form of Exhibit D . The Company shall, and the Managing Member shall cause the Company to, apply in accordance with the provisions of this Section 4.3 all amounts of Distributable Cash to the payment of principal of all outstanding
 
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Member Loans (together with accrued interest thereon and all other amounts due in respect thereof) made pursuant to this Section 4.3 and, unless and until the outstanding principal amount of all such Member Loans together with all interest thereon and all other amounts due in respect thereof is repaid in full, there shall be no distributions to the Members under this Agreement pursuant to ARTICLE VI or otherwise, except in each case distributions required to be made pursuant to Section 4.1(b) or Section 6.1(a)(i)(A) .
(f) Each Member Loan by any Member pursuant to this Section 4.3 constitutes a loan from such Member to the Company and is not a Capital Contribution.
ARTICLE V
ALLOCATIONS
Section 5.1. Allocations .
Except as provided in Section 5.2 or Section 10.2 , Net Income and Net Loss, and each item of income, gain, loss, deduction and credit of the Company for each Fiscal Year or any other period, shall be allocated among the Members as follows:
(a) During the Pre-Flip Period, ***% to the Class A Members and ***% to the Class B Members; and
(b) for the period beginning after the Flip Date,
(i) first, to the Class A Members, Net Income or items of income or gain in an amount equal to the amount distributed, or to be distributed, to such Members pursuant to Section 6.1(a)(ii)(A) for such Fiscal Year or other period; and
(ii) second, of the remaining Net Income, Net Loss, and items of income, gain, loss, deduction and credit, ***% to the Class A Members and ***% to the Class B Members.
If there is more than one Class A Member or Class B Member, allocations to the Class A Members or the Class B Members, as applicable, pursuant to this Section 5.1 shall be shared among the Class A Members or the Class B Members, as the case may be, in proportion to their respective Percentage Interests. Each Member’s Percentage Interest multiplied by its percentage allocation applicable to such Member under subparagraphs (a)  and (b)(ii) of this Section 5.1 as in effect at any time and from time to time shall be referred to as that Member’s “ Sharing Percentage .”
Section 5.2. Adjustments .
The following adjustments shall be made in the allocations in Section 5.1 to comply with Treasury Regulations Section 1.704-1(b) and Section 1.704-2:
(a) In any Fiscal Year in which there is a net decrease in Company Minimum Gain, income and gain in the amount of the net decrease shall be allocated to Members in the ratio required by Treasury Regulations Section 1.704-2 or any successor provision. This clause is intended to constitute a “minimum gain chargeback” as provided by Treasury Regulations Section 1.704-2(f) and this clause will be construed accordingly.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(b) In any Fiscal Year in which there is a net decrease in Minimum Gain Attributable to Member Nonrecourse Debt, then income or gain in the amount of the net decrease shall be allocated to each Member who was considered to have had a share of such Minimum Gain Attributable to Member Nonrecourse Debt at the beginning of the Fiscal Year in the ratio required by Treasury Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii) or any successor provisions. This clause is intended to constitute a “chargeback of partner nonrecourse debt minimum gain” as provided by Treasury Regulations Section 1.704-2(i)(4) and this clause will be construed accordingly.
(c) Each Member’s Adjusted Capital Account balance for purposes of making other allocations under this ARTICLE V will be the balance after taking into account the allocations under Sections 5.2(a) and (b) .
(d) No losses or deductions may be allocated to a Member to the extent the allocation would lead or add to a deficit in the Member’s Adjusted Capital Account. Losses or deductions that cannot be allocated to a Member by reason of this Section 5.2(d) shall be allocated to the other Members in proportion to their Sharing Percentages, subject to the limitation in the preceding sentence.
(e) In the event any Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of gross income and gain shall be specially allocated to the Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, any deficit in the Member’s Adjusted Capital Account as quickly as possible. However, an allocation shall be made under this Section 5.2(e) only if and to the extent that the Member would have a deficit in its Adjusted Capital Account after all other allocations provided for in Section 5.1 and Section 5.2 have been tentatively made as if this Section 5.2(e) were not in this Agreement. This clause is intended to constitute a “qualified income offset” as provided by Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and this clause will be construed accordingly.
(f) In the event that any Member has a deficit in its Adjusted Capital Account at the end of any Fiscal Year or other period after all the other allocations in Section 5.1 and Section 5.2 (other than Section 5.2(e) ) have been taken into account, then the Member shall be specially allocated items of Company income and gain as quickly as possible to eliminate the deficit to the extent permitted under Section 471 of the Code.
(g) Member Nonrecourse Deductions will be allocated in the manner specified in Treasury Regulations Section 1.704-2(i)(1). Nonrecourse Deductions for any Fiscal Year shall be allocated to the Members in the same ratio as other partnership items under Section 5.1 or Section 10.2(c) and Section 10.2(d) , as applicable.
 
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(h) If the Company distributes property to a Member in liquidation of the Membership Interest of the Member and there is an adjustment in the adjusted tax basis of Company property under Section 734(b) of the Code, there shall be a corresponding adjustment to the Capital Account of the Member receiving the distribution. If the Company distributes cash to a Member in excess of its outside basis in its Membership Interest, leading to an adjustment in the inside basis of the Company property under Section 743(b) of the Code, solely for purposes of adjusting Capital Accounts of the Members, the adjustment in the inside basis shall be treated as gain or loss and be allocated among the Members in the same ratio as other gain or loss for the Fiscal Year in which the adjustment occurs. This provision is intended to comply with Treasury Regulations Sections 1.704-1(b)(2)(iv)(m)(2) and (4) and shall be interpreted consistently therewith.
(i) The allocations in this Section 5.2 are intended to comply with the Treasury Regulations. To the extent the Company can do so consistently with the Treasury Regulations, such allocations (including those likely to occur in the future) shall be taken into account in allocating other items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocation of other items and the allocations pursuant to this Section 5.2 shall be equal to the net amount of the allocations under this ARTICLE V and Section 10.2 to each Member that would have been made if this Agreement did not have clauses (a) through (i) of this Section 5.2 .
Section 5.3. Tax Allocations .
(a) All tax items of Company income, gain, deduction, loss and credit for each Fiscal Year or other period shall be allocated in the same proportions as Net Income and Net Loss for such Fiscal Year were allocated under Section 5.1 and Section 5.2 .
(b) Notwithstanding Section 5.3(a) , if, as a result of contributions of property by a Member to the Company or an adjustment to the Gross Asset Value of Company assets pursuant to this Agreement, there is a difference between the adjusted basis of an item of Company property for federal income tax purposes and as determined under the definition of Gross Asset Value, allocations of income, gain, loss and deduction shall be made among the Members so as to take into account the difference using the traditional method described in Treasury Regulations Section 1.704-3(b).
(c) Allocations pursuant to this Section 5.3 are solely for purposes of federal, state and local income taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account.
(d) To the extent that an adjustment to the adjusted tax basis of any Company asset is made pursuant to Section 743(b) of the Code as the result of a purchase of a Membership Interest in the Company, any adjustment to the depreciation, amortization, gain or loss resulting from such adjustment shall affect the transferee only and shall not affect the Capital Account of the transferor or transferee. In such case, the transferee shall be required to provide to the Company (i) information about the allocation of any step-up or step-down in basis to the Company’s assets and (ii) the depreciation or amortization method for any step-up in basis to the Company’s assets.
(e) The Members are aware of the tax consequences of the allocations made by this Section 5.3 and agree to be bound by the provisions of this Section 5.3 in reporting their shares of items of Company income, gain, loss, deduction and credit.
 
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Section 5.4. Transfer or Change in Membership Interest .
If the respective Membership Interests or allocation ratios described in this ARTICLE V of the existing Members in the Company change or if a Membership Interest is Transferred in compliance with this Agreement to any other Person, then, for the Fiscal Year or other period in which the change or Transfer occurs, Net Income and Net Loss shall be allocated, as between the Members for the Fiscal Year in which the change occurs or between the transferor and transferee, by taking into account their varying interests using any method permitted by Section 706 of the Code and the Treasury Regulations (such as an interim-closing-of-the-books or a proration method) as agreed to by the Members.
ARTICLE VI
DISTRIBUTIONS
Section 6.1. Distributions .
(a) Except as otherwise provided in Section 4.1(b) , this ARTICLE VI or Section 10.2 , Distributable Cash shall be distributed to the Members as follows:
(i) for each Distribution Date during the Pre-Flip Period,
(A) First, *** immediately preceding such Distribution Date, plus any *** for any prior Distribution Date; and
(B) Second, ***% of the remainder to the Class A Members, and ***% of the remainder to the Class B Members; and
(ii) for each Distribution Date thereafter,
(A) First, *** immediately preceding such Distribution Date, plus any *** for any prior Distribution Date; and
(B) Second, ***% of the remainder to Class A Members, and ***% of the remainder to Class B Members.
(b) Distributions pursuant to this Section 6.1 shall be made by the Managing Member on each Distribution Date, unless otherwise indicated.
(c) Notwithstanding anything to the contrary set forth in Section 6.1(a) , any indemnity or similar payments for a Tax Loss paid to the Company pursuant to the Master EPC
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Agreement or otherwise received by the Company that compensate the Company for (or otherwise substitute for) Tax Credits, deductions or losses that would have been allocated pursuant to Section 5.1(a) shall be distributed ***% to the Class A Members and ***% to the Class B Members within five (5) Business Days after the receipt of such payments by the Company.
Section 6.2. Withholding Taxes .
(a) If the Company is required to withhold Taxes with respect to any allocation or distribution to any Member pursuant to any applicable federal, state or local Tax laws, the Company may, after first notifying the Member and permitting the Member, if legally permitted, to contest the applicability of such Taxes, withhold such amounts and make such payments to Taxing authorities as are necessary to ensure compliance with such Tax laws. Any funds withheld by reason of this Section 6.2 will nonetheless be deemed distributed to the Member in question for all purposes under this Agreement. If the Company did not withhold from actual distributions any amounts it was required to withhold, the Company may, at its option, (i) require the Member to which the withholding was credited to reimburse the Company for such withholding, or (ii) reduce any subsequent distributions to that Member by the amount of such withholding. This obligation of a Member to reimburse the Company for Taxes that were required to be withheld shall continue after such Member Transfers its Membership Interests in the Company. Each Member agrees to furnish the Company with any representations and forms as will reasonably be requested by the Company to assist it in determining the extent of, and in fulfilling, any withholding obligations it may have.
Section 6.3. Limitations upon Distributions .
No distribution shall be made if such distribution would violate any contract or agreement to which the Company is then a party or any Applicable Law then applicable to the Company.
Section 6.4. No Return of Distributions .
Any distribution of cash or property pursuant to this Agreement shall be treated as a compromise within the meaning of Section 18-502(b) of the Act (subject to the adjustments provided in Section 6.5(d) and Section 6.5(e) ) and, to the full extent permitted by law, any Member receiving the payment of any such money or distribution of any such property will not be required to return any such money or property to any Person, the Company or any creditor of the Company. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Member is obligated to return such money or property, then such obligation will be the obligation of such Member and not of the other Members. Without limiting the generality of the foregoing, a deficit Capital Account of a Member will not be deemed to be a liability of such Member nor an asset or property of the Company.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Section 6.5. Calculation of Internal Rate of Return .
(a) Tracking Progress . The Managing Member shall track the progress of the Class A Member in reaching the Target Internal Rate of Return and make reports to the Members as contemplated in ARTICLE VII .
(b) Notice of Date . The Managing Member shall notify the Members in writing on or before the earlier of (i) fifteen (15) calendar days before the Calculation Date upon which the Managing Member expects the Class A Member to achieve the Target Internal Rate of Return and (ii) thirty (30) calendar days before making any liquidating distributions in connection with a liquidation of the Company under Section 10.1 . The notice shall include the Tracking Model showing the Managing Member’s calculations and, in the case of a notice delivered in connection with a liquidation, the allocations and distributions that the Managing Member proposes to make to the Class A Member under Section 10.2 in light of the calculations.
(c) Calculation Conventions . The Managing Member shall use the following assumptions and conventions to calculate the Internal Rate of Return:
(i) It will assume that each of the Fixed Tax Assumptions is correct, except to the extent a Fixed Tax Assumption is incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents. In all other respects, Tax Credits and taxable income and loss of the Company for any taxable period will be calculated based on the amounts actually allocated in accordance with the federal income tax accounting methods and tax elections actually used with respect to such period by the Company in the preparation of its federal income tax reports and returns, or as adjusted on any amended return or as a result of a federal income tax audit of the Company or the Class A Member; provided however, any adverse tax results (including any recapture, loss or disallowance of all or a portion of a Tax Credit) will be ignored for purposes of such calculation if caused by (A) the breach of a representation or covenant by the Class A Member in this Agreement, (B) the Class A Member taking a position on any Tax Return that is inconsistent with the Company Tax Returns unless in the opinion of nationally recognized tax counsel selected by the Class A Member and reasonably acceptable to the Class B Member the position taken by the Class A Member is more likely than not correct, or (C) a Transfer by the Class A Member of all or a portion of its Membership Interest. Notwithstanding anything in this Agreement to the contrary, the calculation of Tax Credits and taxable income and loss will not take into account Section 199 of the Code.
(ii) Each Class A Member will be assumed to have owned its Membership Interest since the Effective Date.
(iii) The taxable income and loss of the Company will be treated as earned ratably during the Fiscal Year or other period with the result that the Taxes on such income, gain or benefit from the losses allocated to the Class A Members will be treated as having been paid or received in four equal installments on the respective estimated tax payment dates for a December 31 corporate taxpayer during the Fiscal Year or other period, except that Tax Credits for placing in service any Projects during a Fiscal Year or other period will be treated as earned on the last day of the Quarter in which Tax
 
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Credit is actually earned and except that, in the Fiscal Year or other period in which the Flip Date occurs, the taxable income or loss allocated to the Class A Member for the Pre-Flip Period will be allocated ratably to each of the four estimated tax payment dates during the Fiscal Year or other period, and the post-Flip Date amounts will be treated similarly.
(d) End-of-Year True Up . If the federal income Tax Return that the Company files for the Fiscal Year in which the Target Internal Rate of Return is treated as having been achieved suggests that the Target Internal Rate of Return was not achieved in the month the Company assumed for reasons other than inaccuracy of the Fixed Tax Assumptions (unless they are incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents) or the calculation assumptions and conventions in Section 6.5(c) , then the Managing Member will recalculate when the Target Internal Rate of Return was achieved and send a new notice to the Members that will be subject to the same dispute resolution procedures in Section 11.11(b) as the original notice; provided that a disagreeing Member must notify the Managing Member of its disagreement with the revised calculation within sixty (60) calendar days after receipt. The Managing Member shall also calculate the shortfall in or excess Distributable Cash, in present-value terms using the Target Internal Rate of Return as the discount rate, that the Class A Member received as a consequence of the earlier miscalculation. The shortfall or excess will be grossed up (without duplication for any tax detriment taken into account in calculating when the Target Internal Rate of Return was reached) for income taxes payable thereon assuming an income tax rate equal to the Corporate Tax Rate, calculated by dividing such shortfall or excess by 100% minus such income tax rate (such shortfall or excess increased by the tax gross up, the “ Cash Difference ”). Once the revised calculation becomes final, the percentages in Section 6.1 will be adjusted to the maximum extent necessary to correct, on a present-value basis calculated at the Target Internal Rate of Return, the Cash Difference. The revised percentages will remain in effect until the Cash Difference has been eliminated.
(e) Curative Flip Allocations . If, after filing the federal income Tax Return for the year in which the Company treated the Target Internal Rate of Return as having been achieved, there is a change in the taxable income or loss or Tax Credits the Company reported for the period through the end of the month in which the Target Internal Rate of Return was assumed to have been achieved for reasons other than inaccuracy of the Fixed Tax Assumptions (unless they are incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents) or the calculation assumptions and conventions in Section 6.5(c) and the Company has not yet made liquidating distributions under Section 10.2 , then there will be a “ Curative Flip Allocation .” The Managing Member will determine the difference between the Target Internal Rate of Return and the Internal Rate of Return the Class A Members actually achieved through the last Distribution Date the Company distributed cash under Section 6.1(a)(i) . The sharing percentages in Section 6.1 will be adjusted for subsequent distributions to the maximum extent necessary to increase or decrease (as appropriate) the Class A Members’ Internal Rate of Return to the Target Internal Rate of Return as of such date. Such change in sharing percentages will remain in effect until, and to the extent necessary so that, the difference between the Target Internal Rate of Return and the actual Internal Rate of Return is eliminated. The Internal Rate of Return the Class A Members actually achieved will be calculated using the Fixed Tax Assumptions (unless
 
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they are incorrect due to breach of a representation or covenant by Sponsor, any Class B Member, Managing Member or any of their Affiliates in the Transaction Documents) and the calculation assumptions and conventions in Section 6.5(c) . If an event occurs that would have triggered a Curative Flip Allocation but for the fact that the Class B Members have already purchased the Membership Interests of the Class A Members under Section 9.4 of this Agreement or but for the fact that the Company has liquidated, then, as appropriate, the Class B Members will pay in cash, within thirty (30) calendar days after such event, the economic equivalent of the Curative Flip Allocation as additional purchase price for the Class A Membership Interests, or the Class A Members will pay in cash, within thirty (30) calendar days after such event, the economic equivalent of the Curative Flip Allocation as a reduction in purchase price for the Class A Membership Interests.
ARTICLE VII
ACCOUNTING AND RECORDS
Section 7.1. Reports .
(a) The Managing Member will prepare and deliver to each Member (i) after the end of each month written reports regarding the performance of the Host Customers under the Customer Agreements (an “ Operations Report ”) and the status of PV System milestones, it being understood that delivery to the Company of reports in the form of Exhibit E and Exhibit G, respectively, to the Maintenance Services Agreement shall satisfy this obligation; (ii) at least two calendar days prior to each distribution made under ARTICLE VI , a written report calculating the distributions for the relevant Distribution Date; and (iii) after the end of each Quarter a written report regarding (A) electricity generated by and (B) RECs and Government Incentives arising from the Projects owned by the Company, it being understood that delivery to the Company of a report in the form of Exhibit F to the Maintenance Services Agreement shall satisfy this obligation. Simultaneously with the delivery of each such report, the Managing Member shall electronically transmit to the Members all of the data set forth in such reports in Excel format.
(b) At least once every Fiscal Year during the Recapture Period and thereafter at least once every Quarter, the Managing Member will (i) run the Tracking Model and calculate whether the Class A Member has reached the Target Internal Rate of Return, and (ii) not later than sixty (60) days after the end of each Fiscal Year during the Recapture Period and thereafter after the end of each Quarter, send the Class A Member a report showing where it believes the Class A Member is in relation to the Target Internal Rate of Return (the “ IRR Report ”). Simultaneously with the delivery of the IRR Report, the Managing Member shall electronically transmit to the Members all of the data set forth in such reports in Excel format.
(c) The Managing Member will, at least once every Quarter from the Effective Date through the end of the first complete Quarter following the end of the Recapture Period, notify each Member in writing of each event during any prior Quarter that resulted in any recapture or disallowance of, or inability to claim, any Tax Credits.
 
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(d) The Managing Member will submit to each Member (i) any notice of a breach, default or event of default received by the Managing Member under any Customer Agreement or Transaction Document within five (5) Business Days after the Managing Member’s receipt thereof and (ii) notice of any default by a counterparty under any Customer Agreement or Transaction Document within five (5) Business Days after Managing Member’s knowledge thereof, which (in the case of clause (ii) ) in the Managing Member’s determination, would reasonably be expected to adversely affect in a material manner all of the Projects owned by the Company taken as a whole, the Company or any Member.
Section 7.2. Books and Records and Inspection .
(a) The Managing Member will, on behalf of the Company, maintain full and accurate books of account, financial records and supporting documents, which will in all material respects reflect, completely, accurately and in reasonable detail, each transaction of the Company, and such other matters as are customarily entered into the records or maintained by Persons engaged in a business of like character or as are required by law. The books of account, financial records, and supporting documents and the other documents and writings of the Company will be kept and maintained by the Managing Member at the principal office of the Company. The financial records and reports of the Company will be kept in accordance with GAAP and kept on an accrual basis.
(b) In addition to and without limiting the generality of Section 7.2(a) , the Managing Member will, on behalf of the Company, maintain at the Company’s principal office:
(i) true and full information regarding the status of the financial condition of the Company, including any financial statements for the three (3) most recent years;
(ii) promptly after becoming available, a copy of the Company’s federal, state and local income Tax Returns for each year;
(iii) minutes of the proceedings of the Members and the Managing Member;
(iv) a current list of the name and last known business, residence or mailing address of each Member;
(v) a copy of this Agreement, the Company’s Certificate of Formation, and all amendments thereto, together with executed copies of any written powers of attorney pursuant to which such agreements and Certificates of Formation and all amendments thereto have been executed and copies of written consents of Members;
(vi) true and full information regarding the amount of cash and a description and statement of the agreed value of any other property and services contributed by each Member, and the date upon which each became a Member; and
(vii) copies of records that would enable a Member to determine the Member’s relative shares of the Company’s distributions and the Member’s relative voting rights.
 
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(c) Upon at least five (5) Business Days’ prior notice to the Managing Member, all books and records of the Company will be open to inspection and copying by any of the Members or their Representatives during business hours and at such Member’s expense, for any purpose reasonably related to such Member’s interest in the Company; provided that any such inspection or copying is conducted in a manner which does not unreasonably interfere with the Company’s business.
Section 7.3. Bank Accounts, Notes and Drafts .
(a) All funds not reasonably required for the near-term working capital needs of the Company or to fund distributions on the next Distribution Date will be placed in Permitted Investments, which investments will have a maturity appropriate for the anticipated cash flow needs of the Company. All Company funds will be deposited and held in accounts that are separate from all other accounts maintained by the Members, and the Company’s funds will not be commingled with any other funds of any other Person, including the Managing Member, any Member or any Affiliate (other than the Company itself as applicable) of the Managing Member or a Member.
(b) The Members acknowledge that the Managing Member may maintain Company funds in accounts, money market funds, certificates of deposit, other liquid assets in excess of the insurance provided by the Federal Deposit Insurance Corporation, or other depository insurance institutions and that the Managing Member shall not be accountable or liable for any loss of such funds resulting from failure or insolvency of the depository institution, so long as any such maintenance of funds is in compliance with Section 7.3(a) .
(c) Checks, notes, drafts and other orders for the payment of money shall be signed by such Persons as the Managing Member from time to time may authorize. When the Managing Member so authorizes, the signature of any such Person may be a facsimile.
Section 7.4. Financial Statements .
(a) Within sixty (60) calendar days after the end of each Quarter (excluding the Quarter ending on the last day of each Fiscal Year), the Managing Member shall furnish to each Member unaudited financial statements prepared in accordance with GAAP with respect to such Quarter for the Company consisting of (A) a balance sheet showing the Company’s financial position as of the end of such Quarter, (B) profit and loss statements for the Company for such Quarter, and (C) a statement of cash flows for the Company for such Quarter.
(b) As soon as practical after the end of each Fiscal Year, but in any event within one hundred twenty (120) calendar days after the end of the Fiscal Year, the Managing Member shall furnish to each Member financial statements with respect to such Fiscal Year for the Company, prepared in accordance with GAAP, that are audited and certified by the Independent Accounting Firm, consisting of (A) a balance sheet showing the Company’s financial position as of the end of such Fiscal Year, (B) profit and loss statements for the Company for such Fiscal Year, (C) a statement of cash flows for the Company for such Fiscal Year and (D) related footnotes.
 
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Section 7.5. Partnership Status and Tax Elections .
(a) The Members intend that the Company will be taxed as a partnership for United States federal, state and local income tax purposes. The Members agree not to elect to be excluded from the application of Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state statute with respect to their Membership Interests and agree not to elect for the Company to be treated as a corporation, or an association taxable as a corporation, under the Code or any similar state statute.
(b) The Company shall make the following elections on the appropriate Tax Returns:
(i) to the extent permitted under Section 706 of the Code, to adopt as the Company’s taxable year a year that ends on December 31 as long as such taxable year remains the Company’s “majority interest taxable year,” as defined in Treasury Regulations Section 1.706-1(b)(2);
(ii) to adopt the accrual method of accounting;
(iii) if a distribution of the Company’s property as described in Section 734 of the Code occurs or a transfer of Membership Interest as described in Section 743 of the Code occurs, on request in writing from any Member, to elect, pursuant to Section 754 of the Code to adjust the basis of the Company’s properties;
(iv) to elect to amortize the organizational expenses of the Company ratably over a period of one hundred eighty (180) months as permitted by Section 709(b) of the Code;
(v) to elect out of any “bonus depreciation” otherwise available under Section 168(k) of the Code; and
(vi) if approved in writing by Members representing a Required Majority Vote, any other election the Managing Member may deem appropriate.
(c) The Company shall file an election under Section 6231(a)(1)(B)(ii) of the Code and the Treasury Regulations thereunder to treat the Company as a partnership to which the provisions of Sections 6221 through 6234 of the Code, inclusive, apply.
(d) At the request of the Class A Member, the Managing Member shall engage the Independent Accounting Firm to perform a cost segregation report in respect of any PV Systems identified by the Class A Member.
 
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Section 7.6. Company Tax Returns .
The Managing Member shall prepare all Tax Returns of the Company, in Consultation with the Members. The Managing Member, in Consultation with the other Members, may extend the time for filing any such Tax Returns as provided for under applicable statutes. The Managing Member shall, on behalf of the Company, retain the Independent Accounting Firm to prepare or review Tax Returns and information returns for the Company. Each Member shall provide such information, if any, as may be reasonably needed by the Company for purposes of preparing such Tax Returns; provided that such information is readily available from regularly maintained accounting records. At least thirty (30) calendar days prior to filing Tax Returns and information returns, the Managing Member shall deliver to the other Members for their review a copy of the Tax Returns and information returns in the form proposed to be filed, and shall incorporate all reasonable changes or comments to such proposed Tax Returns and information returns requested by the other Members at least ten (10) calendar days prior to the filing date for such returns. After taking into account any such requested changes, the Managing Member shall, on behalf of the Company, file such Tax Returns in a timely manner, taking into account any applicable extensions. Within one hundred twenty (120) calendar days after the end of each calendar year, the Managing Member shall, on behalf of the Company, deliver to each Member a copy of the Tax Returns and information returns as filed, together with any additional tax-related information in the possession of the Managing Member or the Company that such Member may reasonably and timely request in order to prepare its own income Tax Returns. The Company shall bear the costs of the preparation and filing of the Tax Returns, including the fees of the Independent Accounting Firm.
Section 7.7. Tax Audits .
(a) The Managing Member is hereby designated as the “tax matters partner,” as that term is defined in Section 6231(a)(7) of the Code (the “ Tax Matters Partner ”), of the Company, with all of the rights, duties and powers provided for in Sections 6221 through 6234 of the Code, inclusive, provided however that in the case of a removal of the Managing Member after the occurrence of any Removal Event, the Investor shall have the right to assume the rights and duties of the Tax Matters Partner and to be designated as such. The Managing Member is hereby directed and authorized to take whatever steps it, in its reasonable discretion, deems necessary or desirable to perfect such designation, including filing any forms or documents with the IRS and taking such other action as may from time to time be required under the Treasury Regulations. The Managing Member shall remain as the Tax Matters Partner so long as it retains any ownership interests in the Company unless the Investor assumes the rights and duties of the Tax Matters Partner under the proviso to the first sentence of this paragraph.
(b) The Tax Matters Partner, in Consultation with the other Members, shall use reasonable commercial efforts to direct the defense of any claims made by any tax authority to the extent that such claims relate to the adjustment of Company items at the Company level and, in connection therewith, shall cause the Company to retain and to pay the fees and expenses of counsel and other advisors chosen by the Tax Matters Partner in Consultation with the other Members. The Tax Matters Partner shall promptly deliver to each Member a copy of all notices, communications, reports and writings received from the IRS by the Company or the Tax Matters Partner relating to or potentially resulting in an adjustment of Company items, shall promptly advise each Member of the substance of any conversations with the tax authorities in connection therewith and shall keep the Members advised of all developments with respect to any proposed
 
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adjustments that come to its attention. In addition, the Tax Matters Partner shall (i) provide each Member with a draft copy of any correspondence or filing to be submitted by the Company in connection with any administrative or judicial proceedings relating to the determination of Company items at the Company level reasonably in advance of such submission, (ii) consider in good faith incorporating all changes or comments to such correspondence or filing requested by any Member and (iii) provide each Member with a final copy of such correspondence or filing. The Tax Matters Partner will provide each Member with notice reasonably in advance of any meetings or conferences with respect to any administrative or judicial proceedings relating to the determination of Company items at the Company level (including any meetings or conferences with counsel or advisors to the Company with respect to such proceedings) and each Member shall have the right to participate, at its sole cost and expense, in any such meetings or conferences.
(c) The Tax Matters Partner shall not, without a Required Majority Vote, (i) except in the case of any claim by the IRS that could give rise to an indemnity claim under this Agreement or any other Transaction Document in respect of federal income taxes or the loss of federal income tax benefits (a “ Tax Loss Contest ”), commence a judicial action (including filing a petition as contemplated in Section 6226(a) or Section 6228 of the Code) with respect to a federal income tax matter or appeal any adverse determination of a judicial tribunal; (ii) enter into a settlement agreement with the IRS which purports to bind the Members; (iii) intervene in any action as contemplated by Section 6226(b) of the Code; (iv) file any request contemplated in Section 6227(c) of the Code; or (v) except in the case of a Tax Loss Contest, enter into an agreement extending the period of limitations as contemplated in Section 6229(b)(1)(B) of the Code. Any cost or expense incurred by the Tax Matters Partner in connection with its duties as Tax Matters Partner shall be paid by the Company.
(d) If for any reason the IRS disregards the election made by the Company pursuant to Section 7.5(c) and commences any audit or proceeding in which it makes a claim, or proposes to make a claim, against any Member that could reasonably be expected to result in the disallowance or adjustment of any items of income, gain, loss, deduction or credit (including Tax Credits) allocated to such Member by the Company, then such Member shall promptly advise the other Members of the same, and such Member, in Consultation with the other Members, shall at the expense of the Company use best efforts to convert the portion of such audit or proceeding that relates to such items into a proceeding at the level of the Company consistent with the election of the Company pursuant to Section 7.5(c) . In the case of any such audit or proceeding involving the Investor for a tax period prior to or including the Flip Date, if the Investor is not successful in converting the portion of such audit or proceeding that relates to such items into a proceeding at the level of the Company, the Company shall reimburse the Investor for all reasonable costs and expenses, including reasonable attorneys’ fees, in contesting such claim.
(e) If any Member intends to file, pursuant to Section 6227 of the Code, a request for an administrative adjustment of any such partnership item of the Company, or to file a petition under Sections 6226, 6228 or other Sections of the Code with respect to any such partnership item or any other tax matter involving the Company, such Member shall, at least thirty (30) calendar days prior to any such filing, notify the other Members of such intent, which notification must include a reasonable description of the contemplated action and the reasons for such action; provided , however , that this Section 7.7(e) shall not relieve such Member’s obligation to use all commercially reasonable efforts to convert a Member level proceeding into a Company level proceeding as provided in Section 7.7(d) .
 
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Section 7.8. Cooperation .
Subject to the provisions of this ARTICLE VII , each Member shall provide the other Members with such assistance as may reasonably be requested by such other Members in connection with the preparation of any Tax Return, any audit or other examination by any taxing authority, or any judicial or administrative proceedings relating to the liability for any Taxes with respect to the operations of the Company or the allowance or disallowance or recapture of any Tax Credits relating to the PV Systems.
Section 7.9. Fiscal Year .
The fiscal year of the Company (the “ Fiscal Year ”) shall be a year that ends on December 31.
ARTICLE VIII
MANAGEMENT
Section 8.1. Management .
Each of the Members acknowledges and agrees that the Managing Member shall have the authority, powers and responsibilities set forth herein. Except (a) for Major Decisions, (b) matters subject to approval pursuant to Section 8.4 , and (c) as otherwise required by Applicable Laws, the powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under the direction of, the Managing Member, who shall take all actions for and on behalf of the Company not otherwise provided for in this Agreement. In addition, the Members may, with the consent of the Managing Member, vest in the Managing Member the authority to take actions for and on behalf of the Company not otherwise provided for in this Agreement. Any such action shall require a Required Majority Vote.
Section 8.2. Managing Member .
(a) The Managing Member shall be the Member designated to act as such hereunder from time to time in accordance with the provisions of this Section 8.2 or, if such Member is removed as Managing Member pursuant to Section 3.13 , the Manager (except for any references in this Agreement to the Managing Member in its capacity as a Member and not as a manager of the Company if such Manager is not a Member) (the “ Managing Member ”). The initial Managing Member shall be Sponsor Sub. Subject to the requirements for Major Decisions and the limits of the Managing Member’s authority under this Agreement, the obligations of the Managing Member, in addition to those set forth in this Agreement, shall include:
(i) Enforcing the Maintenance Services Agreement and the Master EPC Agreement on behalf of the Company;
 
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(ii) Subject to the requirements for Major Decisions, upon the termination of the Maintenance Services Agreement, causing the Company to replace such Maintenance Services Agreement in accordance with Section 8.3 and Section 3.2(f) and, to the extent such replacement Maintenance Services Agreement is not with an Affiliate of Sponsor Sub, the operator (or an Affiliate thereof, if the operator’s obligations thereunder are being guaranteed by such Affiliate) under such replacement Maintenance Services Agreement shall have at least three years of experience operating and maintaining photovoltaic panels;
(iii) Delivering to each other Member all reports and notices delivered by MSA Provider under the Maintenance Services Agreement and by Developer under the Master EPC Agreement;
(iv) Causing the Company or the MSA Provider on the Company’s behalf to prepare and submit all filings of any nature which are required to be made by the Company under any Applicable Laws;
(v) Causing the Company or the MSA Provider on the Company’s behalf (as contemplated by the Maintenance Services Agreement) to procure and maintain, or cause to be procured and maintained by the Company, all material Governmental Approvals and Permits (if any) required for the Company and the Projects, to the extent applicable;
(vi) Causing the Company or the MSA Provider on the Company’s behalf (as contemplated by the Maintenance Services Agreement) to comply with the terms and conditions of the Customer Agreements, the Transaction Documents, and all material Governmental Approvals, Permits and Applicable Laws;
(vii) Causing the Company, whether at the request of the Class A Member or otherwise, to enforce compliance by their counterparties with the terms and conditions of all contracts under which the Company has any rights, including, without limitation, the Transaction Documents and the Customer Agreements, as contemplated by the Maintenance Services Agreement;
(viii) Managing the Company’s cash balances according to investment guidelines set forth in Section 7.3 and making distributions out of Distributable Cash as provided under the relevant provisions of this Agreement;
(ix) Causing the Company or the MSA Provider on the Company’s behalf to manage local public relations and government relations, Host Customer contacts and other similar activities with respect to each Project; provided , however , that the Managing Member may not undertake any public relations activity on behalf of or in the name of any Member absent that Member’s express prior written consent, which such Member may freely withhold;
(x) Entering into an agreement with Sponsor, as agent on behalf of the Company, whereby Sponsor agrees to (i) complete and submit all applications and other filings required to be submitted in connection with the registration and procurement of
 
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RECs, (ii) with respect to each REC, use commercially reasonable efforts to sell such REC generated by the Projects on behalf of the Company to third parties, and (iii) take such other action as may be reasonably necessary to effectuate the foregoing in accordance with Applicable Laws; and
(xi) To the extent commercially reasonable, causing the Company to complete and submit applications and other filings required for the Company to receive the Government Incentives related to the Projects.
(b) In addition to the actions permitted pursuant to Section 8.2(a) , and in no event in limitation thereof, the Manager shall provide the following services to the Company:
(i) Insurance . The Managing Member shall cause the Company or the MSA Provider on the Company’s behalf to procure insurance coverage for, and in the name of, the Company at the Company’s expense, as required under this Agreement and any of the Transaction Documents and Customer Agreements and enforce the Company’s rights to insurance coverage, defense and indemnification; provided , however , that in the event (but only for so long as) the required property insurance is not available to the Company on commercially reasonable terms as determined in accordance with Exhibit C , Managing Member’s sole obligation under this clause (i)  shall be to cause the Company or the MSA Provider on the Company’s behalf to procure such property insurance coverage as is then available to the Company on commercially reasonable terms.
(ii) Insurance Claims . The Managing Member shall cause the Company or the MSA Provider on the Company’s behalf to adjust insurance claims with insurance carriers to ensure equitable recovery for property damage and business interruption claims. Adjustment of such a claim shall include: (A) filing proof of loss with all applicable supporting documentation, (B) site inspection, (C) negotiations with insurance carriers, and (D) ensuring that insurance proceeds be deposited and distributed in accordance with the terms and conditions of this Agreement, the Transaction Documents and the Customer Agreements. In the event of a liability claim, the Managing Member shall oversee the defense of the claim.
(iii) ***
(c) In the event of a failure by the Managing Member to make timely payments of amounts due under the Maintenance Services Agreement at any time when the Company has adequate and available funds for such payment, any such late fee or interest charge in connection therewith shall be paid directly out of funds otherwise intended to be distributed to the Class B Member pursuant to Section 6.1 , which shall be deemed to have been distributed to the Class B Member upon such payment.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Section 8.3. Major Decisions .
(a) In addition to any other approval required by Applicable Laws or this Agreement, Major Decisions are reserved to the Members, and none of the Company, the Managing Member, or any officer thereof shall do or take or make or approve any Major Decisions without the vote required pursuant to Section 8.3(b) below.
(b) Other than the Major Decisions referred to in clause (bb)  of the definition of the term “ Major Decisions ” which shall require the approval of all Members, (i) in the Pre-Flip Period the affirmative vote, consent or approval of a majority of the holders of the Class A Membership Interests and a majority of the holders of the Class B Membership Interests shall be required to authorize or approve a Major Decision, (ii) after the Flip Date and until the Post-Flip Date, consent or approval of holders of a majority of the voting rights related to all outstanding Membership Interests shall be required to authorize or approve such Major Decision and (iii) after the Post-Flip Date, consent or approval of holders of a majority of the voting rights related to all outstanding Membership Interests based on Sharing Percentages shall be required to authorize or approve such Major Decision (the percentage applicable at the time a Major Decision will be made is referred to herein as a “ Required Majority Vote ”). Except as otherwise expressly provided in this Agreement, no separate vote, consent or approval of either Class A Member, acting as a class, or Class B Members, acting as a class, shall be required to authorize or approve any matter for which a vote, consent or approval of Members is required under this Agreement.
(c) The decision of each Member as to whether or not to consent to any Major Decision shall be in the sole discretion of such Member. A request for consent shall be sent by the Managing Member to each Member as provided in Section 11.1 .
(d) Notwithstanding anything to the contrary in this Agreement, if and to the extent the Managing Member fails to enforce the rights of the Company under any agreement between the Company, on the one hand, and MSA Provider, Developer, Sponsor, Managing Member, or any of their Affiliates (the “ Sponsor Related Parties ”), on the other hand, each Class A Member shall have the right to enforce such rights (but only such rights) on behalf and in the name of the Company, if the Managing Member has not commenced and thereafter continued proper enforcement actions within fifteen (15) Business Days (or earlier to the extent required to preserve the rights and remedies of the Company under any such agreement) after written notice from a Class A Member specifying such failure.
Section 8.4. Officers .
(a) The Managing Member may, from time to time, designate one or more officers with such titles as may be designated by the Managing Member to act in the name of the Company with such authority as may be delegated to such officer(s) by the Managing Member. Without limiting the foregoing, any such officer shall act pursuant to such delegated authority until such officer is removed by the Managing Member. The Managing Member shall be liable for actions of the officer(s) granted authority hereunder, arising under the Transaction Documents. Any action taken by an officer designated by the Managing Member shall constitute the act of and serve to bind the Company. In dealing with the officers acting on behalf of the Company, no person or entity shall be required to inquire into the authority of the officers to bind the Company. Persons and entities dealing with the Company are entitled to rely conclusively on the power and authority of any officer set forth in this Agreement and any instrument designating such officer and the authority delegated to him or her.
 
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(b) Initially, the officers of the Company shall be as follows:

Name	  	Title	
		
Greg Butterfield	  	Chief Executive Officer; President	
		
Dana Russell	  	Chief Financial Officer	
		
Greg Steinkopf	  	Controller	
		
Thomas Plagemann	  	Executive Vice President of Capital Markets	
		
Paul Dickson	  	Vice President of Operations	
		
Dan Black	  	General Counsel; Secretary	
(c) Each officer may sub-delegate the authority granted by the Managing Member to any other officer or employee of the Company.
Section 8.5. Costs & Expenses .
All reasonable costs and expenses incurred on behalf of the Company by the Managing Member to the extent approved by the Members shall be borne by the Company and shall be reimbursed to the Managing Member by the Company; provided , however , that Managing Member shall not be permitted to pass through any out-of-pocket expense that (a) Managing Member has expressly agreed in this Agreement to pay or (b) that are customary items of overhead (including, without limitation, office supplies, office expenses, office space, employee salaries, utilities, internet access, cellular phone service, computers, software and tools of the trade used by Managing Member to perform its management duties).
Section 8.6. Separateness . Each of the Members and the Managing Member acknowledges that the Company is to be formed and operated as a special purpose entity, distinct and separate from any Member or its Affiliates. Accordingly, the Managing Member shall cause the Company to maintain its existence separate and distinct from any other Person, including taking the following actions:
(a) maintaining in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware and obtaining and preserving its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and each other instrument or agreement necessary or appropriate to properly administer this Agreement and permit and effectuate the transactions contemplated hereby and thereby;
 
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(b) maintaining its own deposit accounts, separate from those of each Member and any of their respective officers and Affiliates;
(c) conducting all material transactions between the Company and any of its Affiliates on an arm’s length basis and on commercially reasonable terms;
(d) allocating fairly and reasonably the cost of any shared overhead expenses, including office space, with the Managing Member and the Class B Members and any of their respective officers and Affiliates;
(e) conducting its affairs separately from those of each Member and its officers and Affiliates, and maintaining accurate and separate books, records and accounts and financial statements;
(f) acting solely in its own limited liability company name and not that of any other Person;
(g) not holding itself out as having agreed to pay or Guarantee, or as otherwise being liable for, the obligations of any Member and any of such Member’s respective officers and Affiliates;
(h) not making any loans or extending any Indebtedness to, or acquiring any Indebtedness of, the Members or their respective Affiliates;
(i) not creating, granting or suffering to exist any Liens (other than Permitted Liens) on property of the Company (except as contemplated by the Customer Agreements and the Transaction Documents);
(j) not acquiring any asset other than any asset conveyed to the Company pursuant to any of the Customer Agreements or Transaction Documents or purchased by the Company in accordance with the Customer Agreements or Transaction Documents;
(k) maintaining all of its assets in its own name and not commingling its assets with those of any other Person;
(l) paying its own operating expenses and other liabilities out of its own funds;
(m) observing all limited liability company formalities, including maintaining meeting minutes or record meeting and acting on behalf of itself only pursuant to due authorization, required hereby and by the Certificate of Formation;
(n) maintaining adequate capital for the normal obligations reasonably foreseeable in light of its contemplated business operations;
(o) not acquiring obligations or the securities of any Member or any of such Member’s officers and Affiliates, except as required under the Customer Agreements or Transaction Documents;
 
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(p) holding itself out to the public as a legal entity separate and distinct from any other Person, including the Members;
(q) correcting any known misunderstanding regarding its separate identity;
(r) not forming, acquiring or holding any subsidiaries (except as contemplated by the Customer Agreements or Transaction Documents); and
(s) not identifying itself as a department or division of any Member or any of such Member’s respective officers and Affiliates.
The failure of the Company to comply with any of the foregoing provisions of this Section 8.6 shall not affect the status of the Company as a separate legal Person or the limited liability of the Members, or their respective Affiliates.
ARTICLE IX
TRANSFERS AND INDEMNIFICATION
Section 9.1. Transfers .
Each Member may only sell, transfer, assign, convey, pledge, mortgage, encumber, hypothecate or otherwise dispose of all or any part of its Membership Interests or any interest, rights or obligations with respect thereto, directly or indirectly (including through a Change of Member Control) (any such action, a “ Transfer ”) in compliance with this ARTICLE IX . Any attempted Transfer that does not comply with this ARTICLE IX shall be null and void and of no force or effect whatsoever.
Section 9.2. Conditions Applicable to All Transfers .
Except as otherwise provided in this ARTICLE IX , all Transfers of Membership Interests must satisfy the following conditions:
(a) The transferring Member must give notice of the proposed Transfer to each of the Members not less than ten (10) calendar days prior to the effective date of the proposed Transfer;
(b) The transferring Member and the prospective transferee each execute, acknowledge and deliver to the Company such instruments of transfer and assignment with respect to such Transfer and such other instruments as are reasonably satisfactory in form and substance to the other Members to effect such Transfer and confirm the transferor’s intention that the transferee become a Member in its place with respect to the Membership Interests so transferred, and the prospective transferee makes representations and warranties substantially similar to the representations and warranties set forth in Section 3.11 (taking into account differences between the corporate forms of the transferor and transferee) and makes the covenants set forth in Section 3.12 as of the date of such Transfer that had been made or agreed to by the transferring Member;
 
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(c) The transferee executes, adopts and acknowledges this Agreement, and executes such other agreements as the Managing Member may reasonably deem necessary or appropriate to confirm the undertaking of the transferee to be bound by the terms of this Agreement and to assume the obligations of the transferor under this Agreement (to the extent the transferor is to be released from such obligations);
(d) The Transfer will not violate any securities laws or any other applicable federal or state laws or the order of any court having jurisdiction over the Company or any of its assets, or any Project;
(e) In the case of a Transfer during the Recapture Period, the Transfer will not cause (i) the Company to terminate under Section 708(b)(1)(B) of the Code, unless the transferor has indemnified the other Members against any adverse tax effects in a manner acceptable to the other Members; (ii) the restrictions on use of Company losses in Section 470 of the Code to apply to the Company or the Members; (iii) the assets of the Company to turn wholly or partly into “tax-exempt use property” within the meaning of Section 168(h) of the Code; or (iv) the assets of the Company to become subject wholly or partly to the alternative depreciation system in Section 168(g) of the Code;
(f) The Transfer will not cause the Company to be classified as a corporation for federal income tax purposes;
(g) The Transfer shall not relieve the transferring Member of its obligation to make Capital Contributions pursuant to Section 4.1 , and the Transfer will not be made to a Restricted Transferee;
(h) The Transfer will not be made to a Prohibited Transferee; and
(i) The Transfer will not result in any recapture, loss or disallowance of all or a portion of a Tax Credit.
Section 9.3. Certain Permitted Transfers .
Except as otherwise provided in this Section 9.3 , notwithstanding Section 9.2 , the following Transfers (the “ Permitted Transfers ”) may be made at any time and from time to time, without restriction and without notice to, approval of, filing with, consent by, or other action of or by, any Member or other Person, so long as, in the case of a Transfer by a Class B Member, such Transfer does not result, and is not reasonably expected to result, in any recapture, loss or disallowance of all or a portion of a Tax Credit:
(a) The grant of any security interest in any Membership Interest pursuant to any pledge or security agreement any Member may enter into with lenders; provided , however , that the requirements in Section 9.2(a) , Section 9.2(d) , Section 9.2(e) , Section 9.2(f) and Section 9.2(h) shall be satisfied in respect of any such grant of a security interest;
(b) Any Transfer in connection with any foreclosure or other exercise of remedies in respect of any Membership Interest subject to a security interest referred to in Section 9.3(a) ; provided , however , that the requirements in Sections 9.2(a) through 9.2(f) and Section 9.2(h) shall be satisfied in respect of any such Transfer;
 
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(c) Any Transfer to a non-Member Affiliate in accordance with Section 9.4 ; provided , however , that the requirements in Section 9.2(b) , Section 9.2(c) , Section 9.2(d) , Section 9.2(e) , Section 9.2(f) and Section 9.2(h) shall be satisfied in respect of any such Transfer;
(d) A sale of Class A Membership Interests pursuant to Section 9.4 of this Agreement; and
(e) Any Transfer of a Class A Membership Interest by Investor after the Recapture Period; provided , that the requirements in Section 9.2(a) through Section 9.2(d) and in Section 9.2(f) through Section 9.2(h) shall be satisfied.
No Permitted Transfer shall release the transferring Member from any liabilities to the Company or the other Members arising prior to or in connection with such Permitted Transfer.
Section 9.4. Purchase Option .
(a) The Class B Member (or any Affiliate of a Class B Member designated by it) shall have the right, at any time within one hundred eighty (180) days after the Flip Date, to acquire all (but not less than all) of the Class A Membership Interests (the “ Purchase Option ”), upon giving the Class A Member thirty (30) calendar days’ prior written notice of an election to exercise the Purchase Option (the “ Exercise Notice ”). Any Exercise Notice, if given, may be revoked by the Class B Member by written notice to the Class A Member at any time; provided that if the Exercise Notice is so revoked, the Class B Member shall reimburse the Class A Member for all of the Class A Member’s incurred costs and expenses (including the costs of any appraisal referred to in Section 9.4(b) and the reasonable legal counsel fees and disbursements) incurred by the Class A Member in connection with such Exercise Notice being given and the Class A Member’s activities related thereto.
(b) The consideration for the Transfer of the Class A Membership Interests to the Class B Member pursuant to the Purchase Option during the period referred to in Section 9.4(a) (such amount, the “ Option Purchase Price ”) will be the higher of: (i) the fair market value of the Class A Membership Interests as of the Flip Date as agreed by the Class A Member and the Class B Member or, if they are unable to agree, by appraisal conducted by an appraiser selected jointly by the Class A Member and the Class B Member (or, if they are unable to agree upon a single appraiser within fifteen (15) days, by appraisal in accordance with the Appraisal Method, which shall be final and binding on all Members), and (ii) $***.
(c) If the Purchase Option is exercised, the closing of such Transfer shall occur on the Business Day that is (i) sixty (60) calendar days after the applicable Exercise Notice is given or (ii) such later date as may be required to obtain any applicable consents or approvals or satisfy any reporting or waiting period under any Applicable Laws.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(d) If the Purchase Option is exercised, at the closing of the Transfer, (i) the Class B Member shall pay the consideration described in Section 9.4(b) (by wire transfer of immediately available United States dollars to such United States bank accounts as the Class A Member may designate in a written notice to the Class B Member no later than five (5) Business Days prior to the closing date for the Transfer pursuant to the Purchase Option), and (ii) the Class A Member shall take the following actions: (A) the Class A Member shall Transfer to the Class B Member, all right, title and interest in and to the Class A Membership Interests, free and clear of all Liens other than Permitted Encumbrances; (B) the Class A Member shall be deemed to have made the representations on Schedule 9 attached hereto to such Class B Member and the Company; and (C) the Class A Member shall take all such further actions and execute, acknowledge and deliver all such further documents that are necessary to effectuate the Transfer of the Class A Membership Interests contemplated by this Section 9.4 . Upon the closing of such Transfer, (1) all of such Class A Member’s obligations and liabilities associated with the Class A Membership Interests that are the subject of such Transfer will terminate except those obligations and liabilities accrued through the date of such closing, (2) the Class A Member shall have no further rights as a Member, and (3) all the rights, obligations and liabilities associated with the Class A Membership Interests that are the subject of such Transfer shall become the rights, obligations and liabilities of each Person acquiring such Class A Membership Interests. The Class B Member will pay all reasonable costs and expenses incurred by the Class A Member in connection with the Transfer, including reasonable attorneys’ fees and the amount of any sales, use, realty transfer or similar Taxes payable in connection with such Transfer; provided , however , that the obligation of the Class B Member to pay such expenses pursuant to this sentence shall not exceed $***.
(e) The Class B Member may transfer its rights set forth in this Section 9.4 to any of its Affiliates.
Section 9.5. Regulatory and Other Authorizations and Consents .
(a) In connection with any Transfer pursuant to Section 9.4 and any Transfer of Class A Membership Interests (the “ Designated Transfers ”), each Member involved shall use all commercially reasonable efforts to obtain all authorizations, consents, orders and approvals of, give all notices to and make all filings with, all Governmental Authorities and third parties that may be or become necessary for the Designated Transfers, and its execution and delivery of, and the performance of its obligations under, this Agreement or other Transaction Documents in connection with any such Designated Transfer, and will cooperate fully with the other Members in promptly seeking to obtain all such authorizations, consents, orders and approvals, giving such notices and making such filings, including the provision to such third parties and Governmental Authorities of such financial statements and other publicly available financial information with respect to such Member, as such third parties or Governmental Authorities may reasonably request; provided , however , that no Member involved shall have any obligation to pay any consideration to obtain any such consents. In addition, the Members involved shall keep each other reasonably apprised of their efforts to obtain necessary consents and waivers from third parties or Governmental Authorities and the responses of such third parties and Governmental Authorities to requests to provide such consents and waivers.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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(b) Without limiting the generality of Section 9.5(a) , each Member shall make such filings as may be required under the HSR Act, the Federal Power Act and any state Applicable Laws relating to the ownership or control of the Projects.
(i) To the extent required by the HSR Act, each Member involved in a Designated Transfer shall (A) file or cause to be filed, as promptly as practicable but in no event later than the fifteenth Business Day after the delivery of any Exercise Notice, as applicable, with the Federal Trade Commission and the United States Department of Justice, all reports and other documents required to be filed by such Member under the HSR Act concerning the Designated Transfer and (B) promptly comply with or cause to be complied with any requests by the Federal Trade Commission or the United States Department of Justice for additional information concerning the Designated Transfer, in each case so that the initial 30-day waiting period applicable under the HSR Act shall expire as soon as practicable. Each Member involved in a Designated Transfer agrees to request, and to cooperate with the other Members involved in requesting, early termination of any applicable waiting period under the HSR Act. The Class B Member, if involved in a Designated Transfer, shall be responsible for the filing fees incurred by all Members involved in the Designated Transfer in connection with the initial filings required by the HSR Act in connection with the Designated Transfer. Except as expressly provided in the prior sentence with respect to filing fees, each Member involved in a Designated Transfer will be responsible for its own fees and expenses, including any fees and expenses of counsel, accountants or other professional advisors.
(ii) To the extent required by the Federal Power Act, each Member involved in a Designated Transfer shall as promptly as practicable but, in the event of a Transfer pursuant to Section 9.4 no later than the tenth Business Day after the delivery of any Exercise Notice, provide to the Company, the Managing Member and/or the acquiror as applicable, information needed for such entity to file an application for approval of the Designated Transfer under Section 203 of the Federal Power Act. To the extent required by the regulations of FERC, within thirty (30) days of a Designated Transfer, the transferee of the Membership Interests, or at the request and the sole cost and expense of such transferee the Company, shall file with FERC a Notice of Self-Recertification of any Projects larger than one (1) MW, aggregated within one (1) mile, including a completed FERC Form 556.
Section 9.6. Admission .
Any transferee of all or part of any Membership Interests pursuant to a Transfer made in accordance with this Agreement shall be admitted to the Company as a substitute Member upon its execution of a counterpart to this Agreement.
Section 9.7. Security Interest Consent .
If the Class B Member grants a security interest in any Class B Membership Interest in compliance with Section 9.3(a) , upon request by such Class B Member, each Class A Member will execute and deliver to any person holding such security interest (for itself and for the benefit of other lenders) such acknowledgments, consents or other instruments as such person
 
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may reasonably request to confirm that such grant and any foreclosure or other exercise of remedies in respect of such Class B Membership Interest constitutes a Permitted Transfer under this Agreement. If any Class A Member grants a security interest in any Class A Membership Interest in compliance with this Agreement, upon request by such Class A Member, the Class B Member will execute and deliver to any person holding such security interest (for itself and for the benefit of other lenders) such acknowledgments, consents or other instruments as such person may reasonably request to confirm that such grant and any foreclosure or other exercise of remedies in respect of such Class A Membership Interest constitutes a Permitted Transfer under this Agreement.
Section 9.8. Indemnity .
(a) The Class B Member agrees to indemnify, defend and hold harmless the Investor Indemnified Parties from and against any and all Investor Indemnified Costs, and the Class A Member agrees to indemnify, defend and hold harmless the Sponsor Indemnified Parties from and against any and all Sponsor Indemnified Costs; provided , however , that except with respect to Investor Indemnified Costs or Sponsor Indemnified Costs resulting from fraud, gross negligence or willful misconduct, or with respect to Taxes, in no event will any Class A Member’s or Class B Member’s aggregate obligation to indemnify the Indemnified Parties hereunder exceed the Maximum Liability.
(b) No claim for indemnification may be made with respect to any Indemnified Costs (other than with respect to Taxes, fraud, gross negligence, willful misconduct or failure to pay any amount due to Indemnified Parties under any Transaction Document) until the aggregate amount of such Indemnified Costs sought by (or previously sought by) the Sponsor Indemnified Parties or the Investor Indemnified Parties, as applicable, under this Agreement and all other Transaction Documents exceeds $***; provided that once such threshold amount of claims has been reached, then the relevant Indemnified Party and its Affiliates shall have the right to be indemnified with respect to all such claims, including amounts that were not previously paid because such threshold had not been reached; provided , further , that once such threshold has been reached, no individual claim or claims below $*** may be presented for indemnification, but individual claims that are less than such amount may be aggregated for the purpose of satisfying such threshold, and all claims outstanding at the end of each Fiscal Year may be presented for indemnification without regard to the amount thereof. Claims for indemnification under this Agreement and the other Transaction Documents shall not be duplicative of one another and shall not allow for duplicative recoveries.
(c) An Indemnified Party shall give written notice to the Indemnifying Party within ten (10) Business Days after it has actual knowledge of commencement or assertion of any Third Party Claim in respect of which the Indemnified Party may seek indemnification under this Section 9.8 . Such notice shall state the nature and basis of such Third Party Claim and the events and the amounts thereof to the extent known. Any failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that the Indemnifying Party may have to the Indemnified Party under this ARTICLE IX , except to the extent the failure to give such notice materially and adversely prejudices the Indemnifying Party. In case any such action, proceeding or claim is brought against an Indemnified Party, so long as the Indemnifying Party
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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has acknowledged in writing to the Indemnified Party that it is liable for such Third Party Claim pursuant to this Section 9.8 , the Indemnifying Party shall be entitled to participate in and, unless in the reasonable judgment of the Indemnified Party a conflict of interests between it and the Indemnifying Party may exist in respect of such Third Party Claim or such Third Party Claim entails a material risk of criminal penalties or civil fines or non-monetary sanctions being imposed on the Indemnified Party (a “ Third Party Penalty Claim ”), to assume the defense thereof, with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnified Party, and after notice from the Indemnifying Party to the Indemnified Party of its election so to assume the defense thereof, except as otherwise provided herein, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation or defending such portion of such Third Party Penalty Claim; provided the parties agree that the handling of any Tax contests involving the Company will be governed by Section 7.7 .
(d) In the event that (i) the Indemnifying Party advises an Indemnified Party that the Indemnifying Party will not contest a claim for indemnification hereunder, (ii) the Indemnifying Party fails, within twenty (20) Business Days of receipt of any indemnification notice to notify, in writing, such Indemnified Party of its election to defend, settle or compromise, at its sole cost and expense, any such Third Party Claim (or discontinues its defense at any time after it commences such defense) or (iii) in the reasonable judgment of the Indemnified Party, a conflict of interests between it and the Indemnifying Party exists in respect of such Third Party Claim or the action or claim is a Third Party Penalty Claim, then the Indemnified Party may, at its option, defend, settle or otherwise compromise or pay such action or claim or Third Party Claim, in each case at the sole cost and expense of the Indemnifying Party. In any event, unless and until the Indemnifying Party elects in writing to assume and does so assume the defense of any such claim, proceeding or action, the Indemnifying Party shall be liable for the Indemnified Party’s reasonable costs and expenses arising out of the defense, settlement or compromise of any such action, claim or proceeding. The Indemnified Party shall cooperate to the extent commercially reasonable with the Indemnifying Party in connection with any negotiation or defense of any such action or claim by the Indemnifying Party. The Indemnifying Party shall keep the Indemnified Party fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.
(e) If the Indemnifying Party elects to defend any such action or claim, then the Indemnified Party shall be entitled to participate in such defense with counsel of its choice at its sole cost and expense unless otherwise specified herein; provided that any such participation of the Indemnified Party shall be at the Indemnifying Party’s sole cost and expense to the extent such participation relates to a Third Party Penalty Claim. If the Indemnifying Party does not assume such defense, the Indemnified Party shall keep the Indemnifying Party apprised at all times as to the status of the defense; provided , however , that the failure to keep the Indemnifying Party so informed shall not affect the obligations of the Indemnifying Party hereunder. Except as otherwise provided by Section 9.8(d) , the Indemnifying Party shall not be liable for any settlement of any action, claim or proceeding effected without its written consent; provided , however , that the Indemnifying Party shall not unreasonably withhold, delay or condition any such consent. Notwithstanding anything in this Section 9.8 to the contrary, the Indemnifying Party shall not, without the Indemnified Party’s prior written consent, (i) settle or compromise
 
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any claim or consent to entry of judgment in respect thereof which involves any condition other than payment of money by the Indemnified Party, (ii) settle or compromise any claim or consent to entry of judgment in respect thereof without first demonstrating to the Indemnified Party the ability to pay such claim or judgment, or (iii) settle or compromise any claim or consent to entry of judgment in respect thereof that does not include, as an unconditional term thereof, the giving by the claimant or the plaintiff to the Indemnified Party, a full and complete release from all liability in respect of such claim.
(f) If the amount of any Indemnified Costs, at any time after the making of an indemnity payment in respect thereof, is reduced by recovery, settlement or otherwise under any insurance coverage (excluding any proceeds from self insurance or flow through insurance policies) or under any claim, recovery, settlement or payment by or against any other entity, the amount of such reduction, less any costs, expenses or premiums incurred in connection therewith, must promptly be repaid by the Indemnified Party to the Indemnifying Party net of any Taxes imposed upon the Indemnified Party in respect of such amounts (but taking into account any Tax benefit the Indemnified Party receives as a result of such payment). Upon making any indemnity payment (other than any indemnity payment relating to Taxes), the Indemnifying Party will, to the extent of such indemnity payment, be subrogated to all rights of the Indemnified Party against any third party, except third parties that provide insurance coverage to the Indemnified Party or its Affiliates, in respect of the Indemnified Costs to which the indemnity payment relates. Without limiting the generality or effect of any other provision hereof, each such Indemnified Party and the Indemnifying Party shall duly execute upon request all instruments reasonably necessary to evidence and perfect the above described subrogation rights, and otherwise cooperate in the prosecution of such claims at the direction of the Indemnifying Party. Nothing in this Section 9.8 will be construed to require any Member to obtain or maintain any insurance coverage.
(g) For Tax reporting purposes, to the maximum extent permitted by Applicable Law, each party will agree to treat all amounts paid under any of the provisions of this ARTICLE IX as an adjustment to the Capital Contribution made by Investor in exchange for its Class A Membership Interests or the Capital Contribution made by Sponsor Sub in exchange for its Class B Membership Interests (or otherwise as a non-taxable reimbursement, contribution or return of capital, as the case may be). To the extent any such indemnification payment is includable as income of the Indemnified Party or its Affiliates as determined by agreement of the parties or, if there is no agreement, by an opinion of a nationally-recognized Tax counsel reasonably selected by the Indemnified Party that such amount is *** includable as income of the recipient or its Affiliates, the amount of the payment shall be increased by the amount of any federal income Tax required to be paid by the Indemnified Party or its Affiliates on the receipt or accrual of the indemnification payment, including, for this purpose, the amount of any such Tax required to be paid by the Indemnified Party or its Affiliates on the receipt or accrual of the additional amount required to be added to such payment pursuant to this Section 9.8(g) , assuming full taxability at the Corporate Tax Rate. Any payment made under this ARTICLE IX shall be reduced by the present value (as determined on the basis of a discount rate equal to 15% per annum and the same assumptions about taxability and tax rates) of any federal income tax benefit to be realized by the Indemnified Party or its Affiliate by reason of the facts and circumstances giving rise to such indemnification.
 
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Section 9.9. No Duplication .
Any liability for indemnification under this ARTICLE IX shall be determined without duplication of recovery. Without limiting the generality of the prior sentence, if a statement of facts, condition or event constitutes a breach of more than one representation, warranty, covenant or agreement which is subject to the indemnification obligation in Section 9.8 or under another Transaction Document, only one recovery of Indemnified Costs per Indemnified Party shall be allowed.
Section 9.10. Survival .
All representations, warranties, covenants and obligations made or undertaken by a party hereto in any Transaction Document shall survive until the final date for any assertion of claims as forth in Section 9.11 , if and as applicable, or as otherwise provided in the Transaction Documents.
Section 9.11. Final Date for Assertion of Indemnity Claims .
All claims by an Indemnified Party for indemnification pursuant to this ARTICLE IX resulting from breaches of representations or warranties in ARTICLE III shall be forever barred unless the other party is notified within twenty-four (24) months after the date such representation or warranty was made; provided that, notwithstanding the foregoing, the representations and warranties in Section 3.11(a)(viii) , Section 3.11(b) , Section 3.11(c)(x) , or Section 3.11(c)(xi) shall survive until six (6) months following the expiration of the applicable statute of limitations (taking into account any waivers or extensions thereof); provided , further , that if written notice of a claim for indemnification has been given by an Indemnified Party on or prior to the last day of the respective foregoing period, then the obligation of the other party to indemnify such Indemnified Party pursuant to this ARTICLE IX shall survive with respect to such claim until such claim is finally resolved.
Section 9.12. Reasonable Steps to Mitigate .
Each Indemnified Party will take, at the Indemnifying Party’s own reasonable cost and expense, all reasonable commercial steps identified by Indemnifying Party to the Indemnified Parties to mitigate all Indemnified Costs (other than any such Indemnified Costs with respect to Taxes), which steps may include availing itself of any defenses, limitations, rights of contribution, claims against third Persons and other rights at law or equity. The Indemnified Parties will provide such evidence and documentation of the nature and extent of the Indemnified Costs as may be reasonably requested by the Indemnifying Party.
Section 9.13. Net of Insurance Benefits .
All Indemnified Costs shall be net of insurance recoveries from insurance policies of the Company to the extent that any proceeds of such policies, less any costs, expenses or premiums incurred by the Company in connection therewith, are distributed by Company to the
 
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Indemnified Party; provided , however , such amount shall account for any costs or expenses incurred by the Indemnified Party in connection with obtaining insurance proceeds with respect to any breach or nonperformance hereunder.
Section 9.14. No Consequential Damages .
Indemnified Costs shall not include, and an Indemnifying Party shall have no obligation to indemnify any Indemnified Party for or in respect of, any consequential, special, incidental, exemplary, statutory, or punitive damages of any nature including but not limited to damages for lost profits or revenues or the loss of use of such profits or revenues (other than in each case revenues from Customer Agreements, Government Incentives or sales of RECs), increased costs of purchasing or providing equipment, materials, labor, services, debt service fees or penalties, or damages for lost opportunities; provided , however , that a loss, disallowance or recapture of, or inability to claim Tax Credits or other adverse tax consequences shall not be treated as consequential, special, incidental, exemplary, statutory, or punitive damages for purposes of this Agreement.
Section 9.15. Payment of Indemnification Claims .
All claims for indemnification shall be paid by the Indemnifying Party in immediately available funds in U.S. dollars. Any undisputed portion of an indemnification claim shall be paid promptly by the Indemnifying Party to the Indemnified Parties involved. An Indemnifying Party may dispute any portion of an indemnification claim, provided , however , that such disputed indemnification claim shall be paid promptly by the Indemnifying Party to the Indemnified Party together with interest at a rate equal to 5% per annum upon the final determination of the payable amount of the claim (if any) by a court of competent jurisdiction.
ARTICLE X
DISSOLUTION AND WINDING-UP
Section 10.1. Events of Dissolution .
The Company shall be dissolved upon the first to occur of the following:
(a) the written consent of each of the Members to dissolve the Company, but only on the effective date of dissolution specified by the Members in such writing at the time of such consent;
(b) entry of a decree of judicial dissolution under Section 18-802 of the Act;
(c) the issuance of a final, nonappealable court order which makes it unlawful for the business of the Company to be carried on; or
(d) the termination of the legal existence of the last remaining Member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining Member of the Company unless the Company is continued in a manner permitted by this Agreement or the Act.
 
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Section 10.2. Distribution of Assets .
(a) The Members hereby appoint the Managing Member to act as the liquidator upon the occurrence of one of the events in Section 10.1 . Upon the occurrence of such an event, the liquidator will proceed diligently to wind up the affairs of the Company and make final distributions as provided herein and in the Act. The liquidator may sell, and will use commercially reasonable efforts to obtain the best possible price for, any or all Company property, including to Members. In no event, without the approval of Members by Required Majority Vote, will a sale to a Member be for an amount that is less than fair market value (determined by the Appraisal Method if the Members (by Required Majority Vote) are unable to agree on the fair market value).
(b) The liquidator will first pay, satisfy or discharge from Company funds all of the debts, liabilities and obligations of the Company (including all expenses incurred in liquidation), including Member Loans, or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash escrow fund for contingent, conditional or unmatured liabilities in such amount and for such term as the liquidator may reasonably determine) in the order of priority as provided by law.
(c) All assets of the Company will be treated as if sold, and the gain or loss treated as realized on those assets will be allocated first to Members with deficits in their Capital Accounts (in the ratio of the deficits if more than one Member’s Capital Account is in deficit) to eliminate the deficits.
(d) Remaining gain or loss will be allocated next among the Class A Members in an effort to set the Capital Account of each Class A Member at a level that will allow it to reach an Internal Rate of Return equal to ***% out of the liquidating distributions if such Internal Rate of Return has not already been achieved and, thereafter, in the ratio as provided in Section 5.1(b) . Notwithstanding subsections (c) and (d) , the Class B Member will be allocated at least ***%, and the Class A Member will be allocated at least ***%, of any gain or loss at liquidation.
(e) After the allocations in subsections (c) and (d)  have been made, cash and property will be distributed to Members pro rata in the amount of the positive balances in their Capital Accounts by the end of the Fiscal Year in which the liquidation occurs (or, if later, within ninety (90) calendar days after such liquidation).
(f) The distribution of cash and property to a Member in accordance with the provisions of this Section 10.2 constitutes a complete return to the Member of its Capital Contributions and a complete distribution to the Member on its Membership Interests in the Company of all the Company’s property and constitutes a compromise to which all Members have consented within the meaning of Section 18-502(b) of the Act. If the assets of the Company remaining after the payment or discharge of the debts and liabilities of the Company are insufficient to return Capital Contributions of each Member, such Member shall have no recourse against the Company or any other Member.
 
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Section 10.3. Certificate of Cancellation .
(a) When all debts, liabilities and obligations have been paid and discharged or adequate provisions have been made therefor and all of the remaining property and assets have been distributed to the Members, a certificate of cancellation shall be executed and filed by the liquidator with the Secretary of State of the State of Delaware, which certificate shall set forth the information required by Section 18-203 of the Act.
(b) Upon the filing of the certificate of cancellation, the existence of the Company shall cease.
(c) All costs and expenses in fulfilling the obligations under this Section 10.3 shall be borne by the Company.
Section 10.4. In-Kind Distributions . There shall be no distribution of assets of the Company in-kind without a prior Required Majority Vote approving such distribution.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Notices .
Unless otherwise provided herein, any offer, acceptance, election, approval, consent, certification, request, waiver, notice or other communication required or permitted to be given hereunder (each referred to as a “ Notice ”), shall be in writing and delivered (a) in person, (b) by registered or certified mail with postage prepaid and return receipt requested, (c) by recognized overnight courier service with charges prepaid or (d) by facsimile or electronic mail transmission, directed to the intended recipient at the address of such Member set forth on Schedule 4.2(d) attached hereto (as applicable) or at such other address as any Member hereafter may designate to the others in accordance with a Notice under this Section 11.1 . A Notice or other communication will be deemed delivered on the earliest to occur of (i) its actual receipt when delivered in person, (ii) the fifth Business Day following its deposit in registered or certified mail, with postage prepaid, and return receipt requested, (iii) the second Business Day following its deposit with a recognized overnight courier service or (iv) the date of receipt of a facsimile or electronic mail or, if such date of receipt is not a Business Day, the next Business Day following such date of receipt, provided the sender can and does provide evidence of successful transmission. Any Notice or other communication received on a day that is not a Business Day or later than 5:00 p.m., New York, New York time, on a Business Day shall be deemed to be received on the next Business Day.
Section 11.2. Amendment .
Except for an amendment of Schedule 4.2(d) hereto in accordance with the terms of this Agreement, an amendment of Annex I in accordance with Section 3.1(a) , and a Transfer of Membership Interests and the admission of a new Member in accordance with the terms of this Agreement, this Agreement may be changed, modified or amended only by an instrument in writing duly executed by Members representing a Required Majority Vote; provided , that any amendment of this Agreement after the Flip Date shall not materially impair the rights of the Class A Member unless the Class A Member has consented to such amendment.
 
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Section 11.3. Partition .
Each of the Members hereby irrevocably waives, to the extent it may lawfully do so, any right that such Member may have to maintain any action for partition with respect to the Company property.
Section 11.4. Waivers and Modifications .
Any consent or waiver, express, implied or deemed, to or of any breach or default by any Person in the performance by that Person of its obligations with respect to the Company or any action inconsistent with this Agreement is not a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person with respect to the Company or any other such action. Failure on the part of a Person to insist in any one or more instances upon strict performance of any provisions of this Agreement, to take advantage of any of its rights hereunder, or to declare any Person in default with respect to the Company, irrespective of how long that failure continues, does not constitute a waiver by that Person of its rights with respect to that Person or its rights with respect to that default until the applicable statute of limitations period has lapsed. All waivers and consents hereunder shall be in writing duly executed by Members representing a Required Majority Vote of the Members affected by such waiver or consent and shall be delivered to the other Members in the manner set forth in Section 11.1 .
Section 11.5. Severability .
Except as otherwise provided in the succeeding sentence, every term and provision of this Agreement is intended to be severable, and if any term or provision of this Agreement is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the legality or validity of the remainder of this Agreement. The preceding sentence shall be of no force or effect if the consequence of enforcing the remainder of this Agreement without such illegal or invalid terms or provision would be to cause any party to this Agreement to lose the benefit of its economic bargain.
Section 11.6. Successors; No Third-Party Beneficiaries .
This Agreement is binding on and inures to the benefit of the Members and their respective heirs, legal representatives, successors and permitted assigns. Nothing in this Agreement shall provide any benefit to any third party (other than the Company) or entitle any third party (other than the Company) to any claim, cause of action, remedy or right of any kind, it being the intent of the Members that this Agreement shall not be construed as a third-party beneficiary contract. To the full extent permitted by law, no creditor or other third party having dealings with the Company shall have the right to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and permitted assigns. None of the rights of the Members herein set forth to make Capital Contributions or loans to the Company shall be deemed an asset of the Company for any purpose by any creditor or other third party.
 
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Section 11.7. Entire Agreement .
This Agreement, including the schedules attached hereto or incorporated herein by reference, constitutes the entire agreement of the Members with respect to the matters covered herein. This Agreement supersedes all prior agreements and oral understandings among the parties hereto with respect to such matters.
Section 11.8. Governing Law .
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, excluding any conflict of laws rule or principle that might refer the governance or construction of this Agreement to the law of another jurisdiction.
Section 11.9. Further Assurances .
In connection with this Agreement and the transactions contemplated hereby, each Member shall execute and deliver any additional documents and instruments and perform any additional acts that may be reasonably required or useful to carry out the intent and purpose of this Agreement and as are not inconsistent with the terms hereof.
Section 11.10. Counterparts .
This Agreement may be executed in any number of counterparts, each of which may be delivered by facsimile transmission or electronically in .PDF format and each of which shall be an original but all of which together will constitute one instrument, binding upon all parties hereto, notwithstanding that all of such parties may not have executed the same counterpart.
Section 11.11. Dispute Resolution .
(a) This Section 11.11 shall apply to any dispute arising under or related to this Agreement (whether arising in contract, tort or otherwise, and whether arising at law or in equity), including (i) any dispute regarding the construction, interpretation, performance, validity or enforceability of any provision of this Agreement or whether any Person is in compliance with, or breach of, any provisions of this Agreement, and (ii) the applicability of this Section 11.11 to a particular dispute. Notwithstanding the foregoing, this Section 11.11 shall not apply to any matters that, pursuant to the provisions of this Agreement, are to be resolved by a vote of the Members (including through the Managing Member). Any dispute to which this Section 11.11 applies is referred to herein as a “ Dispute .” With respect to a particular Dispute, each Member that is a party to such Dispute is referred to herein as a “ Disputing Member .”
(b) If a Dispute arises, the Disputing Members shall attempt to resolve such Dispute through the following procedure: (i) first, the representatives of each of the Disputing Members shall promptly meet (whether by phone or in person) in a good faith attempt to resolve the Dispute; (ii) second, if the Dispute is still unresolved after twenty (20) calendar days
 
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following the commencement of the negotiations described Section 11.11(b)(i) , then the designated executive officer of each Disputing Member shall meet (whether by phone or in person) in a good faith attempt to resolve the Dispute; and (iii) third, if the Dispute is still unresolved after ten (10) calendar days following the commencement of the negotiations described in clause (ii) , then any Disputing Member may take such Dispute to litigation.
(c) If any Member raises a Dispute with respect to the Managing Member’s Internal Rate of Return calculation, such Disputing Member shall notify the Managing Member and the other Members not more than thirty (30) days after such Disputing Member has received the applicable Internal Rate of Return calculation notice. In such event, the Members and the Managing Member shall consider the issues raised or in Dispute and discuss such issues with each other and attempt to reach a mutually satisfactory agreement. If notice of Dispute is not given by any Member within such period, each calculation in the Internal Rate of Return will be final and binding on the Member. If the Dispute as to the Managing Member’s calculations is not promptly resolved within ten (10) Business Days of such notification of the Dispute, the Members and the Managing Member shall each promptly present their interpretations to an Independent Accounting Firm, and shall instruct the Independent Accounting Firm to determine the correct amount of the calculations in dispute (if applicable, in accordance with the methodology set forth in Section 6.5 or Section 7.1 ) and to resolve the dispute promptly, but in no event more than twenty (20) Business Days after having the dispute submitted to it. The Independent Accounting Firm will make a determination as to each of the items in dispute, which must be (i) in writing, (ii) furnished to each Member and the Managing Member and (iii) made in accordance with this Agreement, and which determination, absent manifest error, will be conclusive and binding on all Members. Each Member shall use reasonable efforts to cause the Independent Accounting Firm to render its decision as soon as reasonably practicable, including by promptly complying with all reasonable requests by the Independent Accounting Firm for information, books, records and similar items. In the event the Independent Accounting Firm determines that any of the calculations in dispute were incorrect such that distributions to the Class A Members were reduced by more than ***% over a period of one Fiscal Year or longer, the fees and expenses of the Independent Accounting Firm shall be borne by the Class B Members (pro rata in proportion to their Percentage Interests). In all other cases the fees and expenses of the Independent Accounting Firm shall be borne by the Disputing Member disputing any of the calculations (if more than one, pro rata in proportion to their Percentage Interests).
(d) Notwithstanding the foregoing, any Disputes under this Section 11.11 shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law. The Members hereby irrevocably submit to the non-exclusive jurisdiction of any state or federal court in the State of New York with respect to any action or proceeding arising out of or relating to any such Dispute. Each Member hereto irrevocably and unconditionally waives trial by jury in any action, suit or proceeding relating to a Dispute and for any counterclaim with respect thereto.
Section 11.12. Confidentiality and Publicity .
(a) Confidential Information . The Members shall, and shall cause their Affiliates and their respective stockholders, members, Subsidiaries and Representatives to, hold
 
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confidential all information they may have or obtain concerning Sponsor Sub, Sponsor, Investor, the Company, and their respective assets, business, operations or prospects or this Agreement (the “ Confidential Information ”); provided , however , that Confidential Information shall not include information that (i) becomes generally available to the public other than as a result of a disclosure by a Member or any of its Representatives, or (ii) becomes available to a Member or any of its Representatives on a nonconfidential basis prior to its disclosure by the Company or its Representatives. In addition, each Member hereby acknowledges its obligations under the United States federal securities laws.
(b) Legally Compelled Disclosure . Confidential Information may be disclosed (i) as required or requested to be disclosed by a Member or any of its Affiliates or their respective stockholders, members, Subsidiaries or Representatives as a result of any Applicable Laws or rule or regulation of any stock exchange, the National Association of Insurance Commissioners or other regulatory authority having jurisdiction over such Member, or (ii) as required or requested by the IRS in connection with the PV System or Tax Credits relating thereto, including in connection with a request for any private letter ruling, any determination letter or any audit. If a party becomes compelled by legal or administrative process to disclose any Confidential Information, such party shall, to the extent permitted by Applicable Laws, provide the other Members with prompt Notice so that the other Members may seek a protective order or other appropriate remedy or waive compliance with the non-disclosure provisions of this Section 11.12 with respect to the information required to be disclosed. If such protective order or other remedy is not obtained, or such other Members waive compliance with the non-disclosure provisions of this Section 11.12 with respect to the information required to be disclosed, the first party shall furnish only that portion of such information that it is advised, by opinion of counsel, is legally required to be furnished and shall exercise reasonable efforts, at the other Members’ expense, to obtain reliable assurance that confidential treatment will be accorded such information, including, in the case of disclosures to the IRS described in clause (ii) above, to obtain reliable assurance that, to the maximum extent permitted by Applicable Laws, such information will not be made available for public inspection pursuant to Section 6110 of the Code.
(c) Disclosure to Representatives . Notwithstanding the foregoing, a Member may disclose Confidential Information received by it to its employees, consultants, legal counsel, lenders, potential lenders, investors, potential investors (subject to Section 11.12(d) ), agents or other Representatives who have a need to know such information; provided that such Member informs each such Person who has access to the Confidential Information of the confidential nature of such Confidential Information, the terms of this Agreement, and that such terms apply to them. The Members shall ensure that each such Person complies with the terms of this Agreement and that any Confidential Information received by such Member is kept confidential.
(d) Other Permitted Disclosures . Nothing herein shall be construed as prohibiting a party hereunder from using such Confidential Information in connection with (i) any claim against another Member hereunder, (ii) any exercise by a party hereunder of any of its rights hereunder, or (iii) a disposition by a Member of all or a portion of its Membership Interest or a disposition of an equity interest in such Member or its Affiliates, provided that such potential purchaser shall have entered into a confidentiality agreement with respect to Confidential Information on customary terms used in confidentiality agreements in connection with corporate acquisitions before any such information may be disclosed.
 
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(e) Publicity . Prior to any Member (other than Investor or its Affiliates) making a public announcement respecting the Company or any Project that references Investor or any of its Affiliates (for the avoidance of doubt, for purposes of this Agreement, Sponsor shall not be treated as an Affiliate of Investor), such Member shall have obtained the prior written consent of Investor.
Section 11.13. Joint Efforts .
To the full extent permitted by law, neither this Agreement nor any ambiguity or uncertainty herein will be construed against any of the parties hereto, whether under any rule of construction or otherwise. On the contrary, this Agreement has been prepared by the joint efforts of the respective attorneys for, and has been reviewed by, each of the parties hereto.
Section 11.14. Specific Performance .
The Members agree that irreparable damage will result if this Agreement is not performed in accordance with its terms, and the Members agree that any damages available at law for a breach of this Agreement would not be an adequate remedy. Therefore, to the full extent permitted by law, the provisions hereof and the obligations of the Members hereunder shall be enforceable in a court of equity, or other tribunal with jurisdiction, by a decree of specific performance, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies and all other remedies provided for in this Agreement shall, however, be cumulative and not exclusive and shall be in addition to any other remedies that a Member may have under this Agreement, at law or in equity.
Section 11.15. Survival .
Subject to Section 9.11 , all indemnities and reimbursement obligations made pursuant to this Agreement shall survive dissolution and liquidation of the Company until expiration of the longest applicable statute of limitations (including extensions and waivers) with respect to the matter for which a Person would be entitled to be indemnified or reimbursed, as the case may be.
Section 11.16. Recourse Only to Member .
The sole recourse of the Company for performance of the obligations of any Member hereunder shall be against such Member and its assets and not against any assets or property of any present or future stockholder, partner, member, officer, employee, servant, executive, director, agent, authorized representative or Affiliate of such Member.
 
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Section 11.17. Costs, Expenses, Fees .
Except as otherwise provided in Section 9.4 and Section 9.5 , each Member shall be responsible for its own costs and expenses in connection with the Transaction Documents; provided that Class B Member shall reimburse Investor for up to $*** of any out-of-pocket transaction costs and expenses (including legal fees) actually incurred by Investor in connection with the transactions contemplated under the Transaction Documents (in addition to Class B Member’s obligations under Section 9.4 and Section 9.5 ).
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IN WITNESS WHEREOF, the parties, each a Member, have caused this Limited Liability Company Agreement to be signed by their respective duly authorized officers as of the date first above written.

VIVINT SOLAR REBECCA MANAGER, LLC	
		
By:	 	/s/ Paul Dickson	
	 	Name:	 	Paul Dickson	
	 	Title:	 	Vice President of Operations	
	
BLACKSTONE HOLDINGS I L.P.	
By:	 	Blackstone Holdings I/II GP Inc.,	
	 	its General Partner	
		
By:	 	/s/ Laurance A. Tosi	
	 	Name:	 	Laurance A. Tosi	
	 	Title:	 	CFO	
Limited Liability Company Agreement of Vivint Solar Rebecca Project Company, LLC

Annex I
Members and Membership Interests

Class A Member	  	Number of Class A
Membership Interests Owned	 	  	Percentage of Class A
Membership Interests Owned	 	
Blackstone Holdings I L.P.
c/o The Blackstone Group L.P.
345 Park Avenue
New York, New York 10154
Attn: John Finley
Fax: 212-583-5749
John.Finley@Blackstone.com
 
Chaim Miller
Chaim.Miller@Blackstone.com
 
Joe Rocco
Joe.Rocco@Blackstone.com
 
Treasury-Operations@Blackstone.com	  	 	100	  	  	 	100	% 	

Class B Member	  	Number of Class B
Membership Interests Owned	 	  	Percentage of Class B
Membership Interests Owned	 	
Vivint Solar Rebecca Manager, LLC,
c/o Vivint Solar, Inc.
4931 N 300 W
Provo, UT 84604
Attn: Thomas Plagemann, Exec. VP of Capital Markets
E-Mail: thomas.plagemann@vivintsolar.com
Fax: (801) 229-7727	  	 	100	  	  	 	100	% 	

Schedule 4.2(d)
Initial Capital Accounts

Member Name and Address	  	Capital Account Balance	 	  	Percentage Interest	 	
Blackstone Holdings I L.P.
c/o The Blackstone Group L.P.
345 Park Avenue
New York, New York 10154
Attn: John Finley
Fax: 212-583-5749
John.Finley@Blackstone.com
 
Chaim Miller
Chaim.Miller@Blackstone.com
 
Joe Rocco
Joe.Rocco@Blackstone.com
 
Treasury-Operations@Blackstone.com	  	$	***	  	  	 	***	% 	
			
Vivint Solar Rebecca Manager, LLC,
c/o Vivint Solar, Inc.
4931 N 300 W
Provo, UT 84604
Attn: Thomas Plagemann, Exec. VP of Capital Markets
E-Mail: thomas.plagemann@vivintsolar.com
Fax: (801) 229-7727	  	$	***	  	  	 	***	% 	
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	

Schedule 9
Transfer Representations and Warranties
(a) [The Class A Member] is a [ — ] duly organized, validly existing and in good standing under the laws of [ — ] and has all requisite [ — ] power and authority to reconvey the Class A Membership Interests as contemplated by the Agreement.
(b) [The Class A Member] owns directly [100%] of the Company’s outstanding Class A Membership Interests to the extent that is what it was sold under the [Agreement] [other transfer documentation].
(c) [The Class A Member] has absolute record and beneficial ownership and title to all of the Membership Interests held by [the Class A Member] to the extent that is what it was sold under the [Agreement] [other transfer documentation], free and clear of any Liens except Permitted Encumbrances.
(d) The assignment effecting the Transfer of the Class A Membership Interests from [the Class A Member] to [the Class B Member] has been duly and validly executed and delivered by [the Class A Member] and constitutes [the Class A Member’s] legal, valid and binding obligation, enforceable against it in accordance with its terms (subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws from time to time in effect relating to the rights and remedies of creditors as well as to general principles of equity whether considered at law or in equity).
(e) Neither the execution, delivery and performance by [the Class A Member] of the assignment effecting the Transfer of the Class A Membership Interests from [the Class A Member] to [the Class B Member] nor the consummation of the transactions contemplated thereby will (i) conflict with or result in any breach of any provision of the organizational documents of [the Class A Member]; (ii) violate or conflict with (or give rise to any right of termination, cancellation or acceleration under) any of the terms, conditions or provisions of any contract or other instrument or obligation that [the Class A Member] is a party to or by which [the Class A Member] is bound; or (iii) violate any Applicable Laws or any material license, franchise, permit or other authorization applicable to or affecting [the Class A Member] or any of its respective assets.
(f) No declaration, filing or registration with, or notice to, or authorization, consent or approval of any Governmental Authority or any other Person that has not been made or obtained on or before the date hereof is necessary for the execution, delivery and performance by [the Class A Member] of the assignment effecting the Transfer of the Class A Membership Interests from [the Class A Member] to [the Class B Member] or the consummation by any such Person of the transactions contemplated thereby.

Exhibit A
Certificate of Membership Interest
See attached

CERTIFICATE OF CLASS [A/B] MEMBERSHIP INTEREST

Certificate
No. [A/B]-[  —  ]	  	Vivint Solar Rebecca Project Company, LLC,
a Delaware limited liability company	  	Class [A/B]
Membership Interests	
The Class [A/B] Membership Interests represented by this Certificate of Class [A/B] Membership Interest (this “Certificate”) and the Class [A/B] Membership Interests evidenced hereby shall constitute a “security” within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware, and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.
THIS CERTIFIES THAT [ — ], a [ — ] [ — ], is the registered holder of [ — ] Class [A/B] Membership Interests of Vivint Solar Rebecca Project Company, LLC, a Delaware limited liability company (the “Company”), representing 100% of the Class [A/B] Membership Interests in the Company.
IN WITNESS WHEREOF, the duly authorized officers of the Company have executed this Certificate as of this      day of             , 2014.

By:	 	 	 		 	By:	 	 	
	 	Name:	 		 		 	Name:	
					
	 	Title:	 		 		 	Title:	

THE CLASS [A/B] MEMBERSHIP INTERESTS REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER ANY SECURITIES LAW AND THE TRANSFERABILITY OF SUCH CLASS [A/B] MEMBERSHIP INTERESTS IS RESTRICTED. SUCH CLASS [A/B] MEMBERSHIP INTERESTS MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED OR TRANSFERRED, NOR WILL ANY ASSIGNEE, VENDEE, TRANSFEREE OR ENDORSEE THEREOF BE RECOGNIZED AS HAVING ACQUIRED ANY SUCH CLASS [A/B] MEMBERSHIP INTERESTS BY THE ISSUER FOR ANY PURPOSES, UNLESS (I) A REGISTRATION UNDER THE SECURITIES ACT OF 1933 (AS AMENDED) WITH RESPECT TO SUCH CLASS [A/B] MEMBERSHIP INTERESTS SHALL THEN BE IN EFFECT AND SUCH TRANSFER HAS BEEN QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS, OR (II) SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS.
ADDITIONALLY, NO CLASS [A/B] MEMBERSHIP INTERESTS REPRESENTED BY THIS INSTRUMENT MAY BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT AS PROVIDED IN THE LIMITED LIABILITY COMPANY AGREEMENT OF THE COMPANY, COPIES OF WHICH ARE ON FILE IN THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON REQUEST AND WITHOUT CHARGE TO ANY HOLDER.

For Value Received ,                     hereby sell(s), assign(s) and transfer(s) unto                                                       Class [A/B] Membership Interests represented by the within Certificate, and do(es) hereby irrevocably constitute and appoint                                                                                   Attorney to transfer the said Class [A/B] Membership Interests on the books of the within named Company with full power of substitution in the premises.

	 	Dated: 	 	 	
			
	 	By:	 	 	

Exhibit B
Base Case Model
See attached

Exhibit C
Insurance
Coverage :
The Company shall procure and maintain in full force and effect the following minimum insurance coverages, at its sole expense, as set forth below. All such insurance carried shall be placed with such insurers having a minimum A.M. Best rating of A-IX, and be in such form, with such other terms, conditions, limits and deductibles (subject to the minimum insurance coverages below):
(A) All Risk Property Insurance . The Company shall maintain all risk property insurance covering against physical loss or damage to the Projects, including fire and extended coverage. Such insurance coverage shall cover each and every component of the Project, per policy terms and conditions. Such insurance coverage shall be written on a full replacement cost basis, shall include an agreed amount endorsement waiving any coinsurance penalty, and shall include expediting expense coverage in an amount not less than $50,000. Such insurance coverage may be subject to deductibles not to exceed $250,000 for each and every occurrence.
(B) Commercial General Liability . The Company shall maintain third party liability insurance coverage written on an occurrence basis with a limit of liability of not less than $1,000,000. Such insurance shall include coverage for premises/operations, pollution arising out of hostile fire, contractual liability, independent contractors, products/completed operations, property damage and personal injury liability.
(C) Workers’ Compensation/Employer’s Liability . If the Company has any employees, the Company shall maintain Workers’ Compensation insurance in accordance with statutory provisions covering accidental injury, illness or death of any such employee while at work or in the scope of his or her employment with the Company, and Employer’s Liability insurance in an amount not less than $1,000,000. Exclusions for occupational disease shall be limited to employers’ liability only.
(D) Business Auto . If applicable, the Company shall maintain Business Auto insurance covering owned, non-owned, leased, hired or borrowed vehicles of the Company, if any, against bodily injury or property damage. Such insurance coverage shall have a combined single limit of liability of not less than $1,000,000.
(E) Excess/Umbrella Liability . The Company shall maintain Excess/Umbrella Liability insurance written on an occurrence basis and providing coverage limits in excess of the primary limits applying under policies described in subsections (B), (C) (employers’ liability only), and (D) above. Such insurance coverage shall have a limit of liability of not less than $10,000,000. Such insurance coverage shall include a drop down provision in the event of exhaustion of underlying limits or aggregates and apply on a following form basis to the primary coverage.

Endorsements :
The Company shall cause its insurance coverages to be endorsed as follows (all such endorsements with respect to the Class A Member to be as of the Effective Date):
(A) Each Class A Member shall be an additional insured and Loss Payee with respect to the Property All Risk and any other applicable First Party insurance. Each Class A Member shall be additional insured with respect to the General Liability, Automobile and Umbrella Liability policies.
(B) Such other endorsements, or independent instruments, furnished to each Class A Member, will provide that (i) the insurance companies will give each Class A Member at least ten (10) calendar days prior written notice, in the case of nonpayment of premiums, or thirty (30) calendar days prior written notice, in all other cases, before any such policy or policies of insurance shall be canceled, (ii) in as much as the liability policies are written to cover more than one insured, all terms, conditions, insuring agreements and endorsements of the liability policies, with the exception of the limits of liability and products completed operations, shall operate in the same manner as if there were a separate policy covering each insured, (iii) such insurance is primary without right of contribution of any other insurance carried by or on behalf of each Class A Member with respect to its interests as such in the Project and (iv) coverage shall not be cancelled except after thirty (30) calendar days’ prior written notice, or ten (10) days’ prior written notice in the event of cancellation for nonpayment of premium, has been given to the each Class A Member.
General :
In the event any property insurance (including the limits or deductibles thereof) hereby required to be maintained, other than insurance required by law to be maintained, shall not be available and commercially feasible in the commercial insurance market, no Class A Member shall unreasonably withhold their agreement to waive such requirement to the extent the maintenance thereof is not so available; provided , however , that: (i) the Company shall first request any such waiver in writing ten (10) Business Days prior to the policy renewal, which request shall be accompanied by written reports prepared by the Company’s insurance broker certifying that such property insurance is not reasonably available and commercially feasible in the commercial insurance market for projects of similar type and capacity (and, in any case where the required amount is not so available, certifying as to the maximum amount which is so available) and explaining in detail the basis for such conclusions, such insurance advisers and the form and substance of such reports to be reasonably acceptable to the Class A Member; (ii) at any time after the granting of any such waiver, the Class A Member may request, and the Company shall furnish to the Class A Member within fifteen (15) calendar days after such request, supplemental reports reasonably acceptable to the Class A Member from such insurance advisers updating their prior reports and reaffirming such conclusion; (iii) any such waiver shall be effective only so long as such property insurance shall not be available and commercially feasible in the commercial insurance market, it being understood that the failure of the Company to timely furnish any such supplemental report shall be conclusive evidence that such waiver is no longer effective because such condition no longer exists, but that such failure is not the only way to establish such nonexistence; and (iv) the Company shall procure such property insurance coverage as is then available to the Company on commercially reasonable terms.

Exhibit D
Form of Note

$[        ]	  	[            ], 20[    ]	
	  	New York, New York	
FOR VALUE RECEIVED, Vivint Solar Rebecca Project Company, LLC, a Delaware limited liability company (the “ Company ”), hereby promises to pay to [        ] (the “ Member ”), into [INSERT ACCOUNT INFORMATION], the principal sum of $[AMOUNT EQUAL TO THE MEMBER LOAN] as a Member Loan made by the Member to the Company pursuant to the Limited Liability Company Agreement of the Company dated as of February [    ], 2014, by and between Blackstone Holdings I L.P. and Vivint Solar Rebecca Manager, LLC (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ LLC Agreement ”), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the LLC Agreement and on the schedule attached hereto, and to pay interest on the unpaid principal amount of each such Member Loan, into such account, in like money and funds, for the period commencing on the date of such Member Loan until such Member Loan shall be paid in full, at the rate per annum and on the dates provided in the LLC Agreement and on the schedule attached hereto (unless such interest is compounded to the principal amount of the Member Loan in accordance with Section 4.3(b) of the LLC Agreement).
The date, amount, and interest rate of each Member Loan made by the Member to the Company, and each payment made on account of the principal thereof, shall be recorded by the Member on its books and, prior to any transfer of this Note, endorsed by the Member on the schedule attached hereto or any continuation thereof, provided that the failure of the Member to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under the LLC Agreement or hereunder in respect of the Member Loans made by the Member.
This Note evidences Member Loans made by the Member under the LLC Agreement. Terms used but not defined in this Note have the respective meanings assigned to them in the LLC Agreement.
This Note shall be governed by, and construed in accordance with, the law of the State of New York.
[SIGNATURE PAGE FOLLOWS]

			
VIVINT SOLAR REBECCA PROJECT COMPANY, LLC	
		
By:	 	 	
	 	Name:	
	 	Title:	

Schedule of Member Loans
This Note evidences Member Loans made under the within-described LLC Agreement to the Company, on the dates, in the principal amounts, bearing interest at the rates set forth below and subject to the payments, prepayments and compounding set forth below:

Date	  	Principal
Amount of
Loan	  	Interest Rate	  	Amount Paid,
Prepaid, or
Compounded	  	Notation
Made by	

	  		  		  		  		

Exhibit 10.38
*** Text Omitted and Filed Separately with the Securities Exchange Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406
Execution
DEVELOPMENT, EPC AND PURCHASE AGREEMENT
by and among
VIVINT SOLAR DEVELOPER, LLC
a Delaware limited liability company
and
VIVINT SOLAR, INC.
a Delaware corporation
and
VIVINT SOLAR REBECCA PROJECT COMPANY, LLC
a Delaware limited liability company
Dated as of February 13, 2014
 
Development, EPC and Purchase Agreement

TABLE OF CONTENTS

 	  	 	  	Page 	 	
		
ARTICLE 1 DEFINED TERMS	  	 	1	 	
1.1	  	Defined Terms.	  	 	1	 	
1.2	  	Capitalized Terms.	  	 	10	  	
1.3	  	Construction.	  	 	10	 	
		
ARTICLE 2 PURCHASE OF PROJECTS	  	 	10	 	
			
2.1	  	Presentation and Review of Tranches; Purchase.	  	 	10	 	
2.2	  	Completion of Purchased Systems.	  	 	13	 	
2.3	  	Conditions Precedent to the Obligations of Purchaser.	  	 	16	 	
2.4	  	Conditions Precedent to the Obligations of a Seller.	  	 	18	 	
2.5	  	Conditions Precedent to the Obligations of Both Parties.	  	 	18	 	
		
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS	  	 	19	 	
			
3.1	  	Representations, Warranties and Covenants of Sellers.	  	 	19	 	
3.2	  	Representations and Warranties of Purchaser.	  	 	25	  	
3.3	  	No Other Seller Representations.	  	 	25	 	
3.4	  	Defects Warranty.	  	 	26	 	
3.5	  	Insurance.	  	 	26	 	
		
ARTICLE 4 TERMINATION	  	 	26	 	
			
4.1	  	Termination.	  	 	26	 	
4.2	  	Procedure and Effect of Termination.	  	 	27	 	
4.3	  	Indemnification by Seller.	  	 	28	  	
4.4	  	Indemnification by Purchaser.	  	 	29	 	
4.5	  	LIMITATION OF LIABILITY.	  	 	29	 	
4.6	  	Indemnification Procedures.	  	 	30	 	
		
ARTICLE 5 DISPUTE RESOLUTION	  	 	31	  	
			
5.1	  	Good Faith Negotiations.	  	 	31	  	
5.2	  	SUBMISSION TO JURISDICTION	  	 	31	 	
		
ARTICLE 6 GENERAL PROVISIONS	  	 	31	 	
			
6.1	  	Exhibits and Schedules.	  	 	31	 	
6.2	  	Amendment, Modification and Waiver.	  	 	31	 	
6.3	  	Severability.	  	 	32	  	
6.4	  	Expenses.	  	 	32	 	
 
Development, EPC and Purchase Agreement
 
-i-

TABLE OF CONTENTS
(continued)

 	  	 	  	Page	 	
			
6.5	  	Parties in Interest.	  	 	32	 	
6.6	  	Notices.	  	 	32	 	
6.7	  	Counterparts.	  	 	34	 	
6.8	  	Entire Agreement.	  	 	34	 	
6.9	  	Governing Law.	  	 	34	 	
6.10	  	Public Announcements.	  	 	35	 	
6.11	  	Assignment.	  	 	35	 	
6.12	  	Relationship of Parties.	  	 	35	 	
6.13	  	Successors and Assigns.	  	 	35	 	
6.14	  	Access.	  	 	35	 	
6.15	  	Purchaser Member Authorization.	  	 	36	 	
 
Development, EPC and Purchase Agreement
 
-ii-

			
Schedules :	  		
		
Schedule 1	  	List of Purchased Systems and Associated Customer Agreements	
Schedule 2	  	Form of Tranche Presentation Certificate	
Schedule 3	  	Forms of Customer Agreements	
	  	California – Versions 2.6 and 2.8	
	  	Hawaii – Versions 2.6 and 2.8	
	  	Maryland – Versions 2.6 and 2.8	
	  	Massachusetts – Versions 2.6 and 2.8	
	  	New Jersey – Versions 2.6 and 2.8	
	  	New York – Versions 2.6 and 2.8	
	  	Washington, D.C. – Versions 2.6 and 2.8	
Schedule 4	  	Form of Bill of Sale and Assignment	
Schedule 5	  	Form of Closing Request	
Schedule 6	  	Form of Transfer Notice	
Schedule 7	  	Form of Deficient Project and Cancelled Project Report	
Schedule 8	  	Form of Change Order Report	
Schedule 9	  	Form of Substitution Report	
Schedule 10	  	Form of True-Up Report	
Schedule 11	  	Form of Completion Certificate	
Schedule 12	  	Performance Tests	
Schedule 13	  	Approved Suppliers	
Schedule 14	  	Insurance Requirements	
 
Development, EPC and Purchase Agreement
 
-iii-

DEVELOPMENT, EPC AND PURCHASE AGREEMENT
This DEVELOPMENT, EPC AND PURCHASE AGREEMENT is made and entered into as of February 13, 2014 (the “ Effective Date ”), by and among Vivint Solar Developer, LLC, a Delaware limited liability company (“ VSD ”), Vivint Solar, Inc., a Delaware corporation (“ VSI ”, together with VSD, the “ Sellers ” and each a “ Seller ”), and Vivint Solar Rebecca Project Company, LLC, a Delaware limited liability company (“ Purchaser ”). The use of “ Party ” herein means each Seller or Purchaser, and “ Parties ” means the Sellers and Purchaser.
RECITALS
1. Each Seller is in the business of providing photovoltaic systems for use on residential properties.
2. Each Seller is experienced in the design, engineering, equipment procurement, installation, commissioning, construction and testing of such photovoltaic systems.
3. Purchaser desires to purchase, and each Seller desires to sell, such photovoltaic systems for installation and use on residential properties on the terms and subject to the conditions described herein.
4. Purchaser desires that each Seller design, engineer, procure, install, commission, construct and performance test the photovoltaic systems on a turnkey, fixed-price basis, and each Seller desires to perform such services.
5. In order to facilitate such purchases and the design, engineering, equipment procurement, installation, commissioning, construction and testing of such photovoltaic systems, the Parties wish to enter into this Agreement covering the period commencing on the date of this Agreement and ending at the expiration of the Term (defined below).
NOW THEREFORE, in consideration of the respective representations, warranties, covenants, agreements and conditions hereinafter set forth, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows:
AGREEMENT
ARTICLE 1
DEFINED TERMS
1.1 Defined Terms . 
As used herein, the following terms have the following meanings:
“ Accepted Project ” is defined in Section 2.1(d) .
“ Affiliate ” means, with respect to any Person, a Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with the Person specified; provided , however , that Purchaser and Investor shall not be considered Affiliates of a Seller or Sponsor for purposes of this Agreement.
 
Development, EPC and Purchase Agreement

“ Agreement ” means this Development, EPC and Purchase Agreement, together with all schedules and exhibits hereto, as amended, restated, supplemented or otherwise modified from time to time.
“ Applicable Laws ” means all applicable laws of any Governmental Authority, including, without limitation, laws relating to consumer leasing and protection and any ordinances, judgments, decrees, injunctions, writs and orders or like actions of any Governmental Authority and rules and regulations of any federal, regional, state, county, municipal or other Governmental Authority.
“ Appraisal ” is defined in Section 2.3(h) .
“ Appraisal Deficiency Notice ” means an official promulgation or written notification from the Internal Revenue Service that would have the effect of lowering the fair market value of, or Purchaser’s tax basis in, any Project.
“ Assets ” means, with respect to any Person, all right, title and interest of such Person in land, properties, buildings, improvements, fixtures, foundations, assets and rights of any kind, whether tangible or intangible, real, personal or mixed, including contracts, equipment, systems, books and records, proprietary rights, intellectual property, Permits, rights under or pursuant to all warranties, representations and guarantees, cash, accounts receivable, deposits and prepaid expenses.
“ Base Case Model ” is defined in the LLC Agreement.
“ Bill of Sale ” is defined in Section 2.1(g) .
“ Business Day ” means any day other than Saturday, Sunday and any other day on which banks in New York are authorized to be closed.
“ Cancelled Project ” means a PV System (a) that a Seller has removed from the Tranche due to a delay in the completion schedule or other reasons or (b) for which the related Customer Agreement is cancelled or terminated, in each case, before such PV System is Placed in Service, but after such PV System has been Purchased by Purchaser.
“ Capital Contribution ” is defined in the LLC Agreement.
“ Change Order ” is defined in Section 2.2(e) .
“ Change Order Credit ” is defined in Section 2.2(e) .
“ Change Order Debit ” is defined in Section 2.2(e) .
“ Change Order Report ” is defined in Section 2.2(e) .
“ Closing Request ” is defined in Section 2.1(f) .
 
Development, EPC and Purchase Agreement
 
2

“ Code ” means the Internal Revenue Code of 1986, as amended, or any successor federal tax statute.
“ Completion Certificate ” means a certificate signed by an authorized officer of Seller in substantially the form of Schedule 11 .
“ Completion Deadline ” means December 31, 2014.
“ Control ” means, with respect to a Person, the possession, directly or indirectly, of the power to direct or cause the direction of such Person’s management or policies, whether through the ownership of voting securities, by contract or otherwise.
“ Customer Agreement ” means, in respect of each PV System, a power purchase agreement with a Host Customer in one of the forms attached to Schedule 3 applicable to the Project State where such Host Customer is located, together with all other agreements, instruments and documents incorporated therein by the terms thereof (or such other form as is approved in writing by Investor), except for any immaterial deviations from such form that do not affect the rights and obligations of the parties thereto.
“ Deduction Loss ” is defined in Section 4.3(c) .
“ Deficient Project ” means an Accepted Project which is not a Cancelled Project but for which the PV System for such Project is not Placed in Service by the Completion Deadline.
“ Deficient Project and Cancelled Project Report ” is defined in Section 2.2(d) .
“ Dispute ” is defined in Section 5.1 .
“ Effective Date ” is defined in the preamble.
“ Environmental Law ” means all Applicable Laws pertaining to the environment, human health or safety, or natural resources, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the Superfund Amendments and Reauthorization Act of 1986, the Emergency Planning and Community Right to Know Act (42 U.S.C. §§ 11001 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), the Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Federal Water Pollution Control Act (also known as the Clean Water Act) (33 U.S.C. §§ 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.), the Endangered Species Act (16 U.S.C. §§ 1531 et seq.), the Migratory Bird Treaty Act (16 U.S.C. §§ 703 et seq.), the Bald Eagle Protection Act (16 U.S.C. §§ 668 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. §§ 2701 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et seq.), and the Occupational Safety and Health Act of 1970, to the extent that it relates to the handling of and exposure to hazardous or toxic materials or similar substances, and any similar or analogous state and local statutes or regulations promulgated thereunder, and decisional law of any Governmental Authority, as each of the foregoing may be amended or supplemented from time to time in the future, in each case to the extent applicable with respect to the property or operation to which application of the term “Environmental Law” relates.
 
Development, EPC and Purchase Agreement
 
3

“ FERC ” means the Federal Energy Regulatory Commission or any successor agency.
“ FICO® Score ” means a score based on the credit risk rating system established and maintained by the Fair Isaac Corporation.
“ Final Determination ” means the earliest to occur of: (a) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other order has become final after all allowable appeals (other than appeals to the United States Supreme Court) by either party to the action have been exhausted or the time for filing such appeals has expired, (b) a closing agreement entered into (i) under Section 7121 of the Code or any other settlement agreement entered into in connection with an administrative or judicial proceeding and (ii) with the written consent of a Seller (such consent not to be unreasonably withheld, conditioned or delayed), (c) the expiration of the time for instituting suit with respect to the claimed deficiency, or (d) the expiration of the time for instituting a claim for refund, or if such a claim was filed, the expiration of the time for instituting suit with respect thereto.
“ GAAP ” means (a) generally accepted accounting principles in the United States of America as in effect from time to time, consistently applied; or (b) upon mutual agreement of the Parties, internationally recognized generally accepted accounting principles, consistently applied.
“ Governmental Authority ” means any foreign, federal, state, local or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrating body or other governmental authority having jurisdiction or effective control over a Seller, Purchaser, their respective Affiliates or any Project.
“ Government Incentive ” means a payment, including, without limitation, a payment in respect of any performance-based incentive or rebates, by a utility, electric distribution company or federal, state or local Governmental Authority or quasi-governmental agency, and any extension of the program (including by converting the program into a refundable tax credit or tax refund program), in each case as an inducement to a utility customer, solar company or installer to install or use solar equipment, except that neither (a) Tax Credits and depreciation deductions for U.S. federal income tax purposes nor (b) any credits or payments available under any Host Customer’s utility’s “net metering” program for energy generated by the applicable Project that are reserved to such Host Customer under the applicable Customer Agreement shall be considered Government Incentives.
“ Host Customer ” means a residential customer under a Customer Agreement whose property where the PV System is installed is located in a Project State.
“ Indemnifying Party ” is defined in Section 4.6 .
“ Indemnitee ” is defined in Section 4.6 .
“ In-Service Date ” has the meaning assigned to that term in the applicable Customer Agreement.
 
Development, EPC and Purchase Agreement
 
4

“ Installation ” is defined in Section 2.2(a) .
“ Investor ” is defined in the LLC Agreement.
“ Investor Contribution Cap ” is defined in the LLC Agreement.
“ Knowledge of Investor ” means the actual knowledge, after due inquiry, as of the Effective Date and each Purchase Date, of one or more of the following persons (together with any successor person holding the same title or the functional equivalent without supplanting or replacing any of the following persons, whose actual knowledge after due inquiry shall remain “Knowledge”) holding the following titles at Investor: Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer and General Counsel.
“ Knowledge of a Seller ” or “ Knowledge of such Seller ” means with respect to a Seller, the actual knowledge, after due inquiry, as of the Effective Date and each Purchase Date, of one or more of the following persons holding the following titles at such Seller: Greg Butterfield (Chief Executive Officer and President), Brendon Merkley (Chief Operating Officer), Paul Dickson (Vice President of Finance), and Dan Black (General Counsel); provided , however , that for matters relating to a Host Customer, “Knowledge” shall be limited to the representations and warranties made by such Host Customer in Customer Agreements without such Seller undertaking further inquiry or due diligence, unless any one of the persons described above has actual knowledge that a representation or warranty is untrue.
“ kW ” means kilowatt.
“ Lien ” means any lien, security interest, mortgage, hypothecation, encumbrance or other restriction on title or property interest.
“ LLC Agreement ” means that certain Limited Liability Company Agreement of Vivint Solar Rebecca Project Company, LLC, a Delaware limited liability company, made and entered into as of the date hereof, as amended, restated, supplemented or otherwise modified from time to time.
“ Loss ” means any claim, demand, suit, loss, liability, damage, obligation, payment, cost, fee, Tax, penalty or expense (including, without limitation, the cost and expense of any action, suit, proceeding, assessment, judgment, settlement or compromise relating thereto and reasonable attorneys’ fees and reasonable disbursements in connection therewith).
“ Maintenance Services Agreement ” means that certain Maintenance Services Agreement, dated as of the date hereof, between MSA Provider and Purchaser.
“ Managing Member ” is defined in the LLC Agreement.
“ Material Adverse Change ” means, with respect to any Person, a fact, event or circumstance that, alone or when taken with other events or conditions occurring or existing concurrently with such event or condition, (a) has or is reasonably expected to have a material
 
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adverse effect on the business, operations, condition (financial or otherwise), assets, liabilities or properties of such Person, (b) has or is reasonably expected to have any material adverse effect on the validity or enforceability of the Transaction Documents, (c) materially impairs or is reasonably expected to materially impair the ability of such Person to meet or perform its obligations under the Transaction Documents, or (d) has or is reasonably expected to have any material adverse effect on such Person’s rights under the Transaction Documents.
“ Minimum Credit Criteria ” means (a) a FICO® Score for an individual Host Customer of *** or greater from Equifax, TransUnion, Experian or other nationally-recognized consumer rating agency, and (b) after giving effect to all Purchases under this Agreement (i) ***% of the Customer Agreements are with Host Customers, including Host Customers of all Projects proposed to be included in the applicable Tranche, that have a FICO® Score *** from Equifax, TransUnion, Experian or other nationally-recognized consumer rating agency and (ii) *** all Host Customers, including Host Customers of all Projects proposed to be included in the applicable Tranche, ***.
“ MW ” means megawatt.
“ MSA Provider ” is defined in the LLC Agreement.
“ Net Purchase Price ” is defined in Section 2.1(f) .
“ Non-Accepted Project ” is defined in Section 2.1(d) .
“ Ordinary Course of Business ” means the ordinary conduct of business consistent with custom and practice for residential rooftop distributed solar electricity generation businesses in the United States (including with respect to quantity and frequency).
“ Party ” or “ Parties ” is defined in the preamble.
“ Performance Test ” means each and every test required under the Customer Agreement as a requirement for achieving the In-Service Date, as more particularly described in Schedule 12 .
“ Permit ” means any permit, franchise, lease, order, license, notice, certification, approval, exemption, qualification, right or authorization from or registration, notice or filing with any Governmental Authority.
“ Permitted Liens ” means (a) liens for taxes not yet due or that are being contested in good faith by appropriate proceedings, to the extent adequate reserves have been made consistent with GAAP, (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, employees’, contractors’, operators’, vendors’ or other similar liens or charges securing the payment of expenses not yet due and payable that are incurred in the Ordinary Course of Business, (c) liens securing obligations or duties (other than Indebtedness) to any Governmental Authority arising in the Ordinary Course of Business (including under licenses and permits held by the Purchaser and under all Applicable Laws and orders of any Governmental Authority), (d) easements, rights-of-way, restrictions (including zoning restrictions), covenants, licenses,
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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encroachments, protrusions and other similar charges or encumbrances on or with respect to real property that do not secure Indebtedness of Purchaser or its Affiliates or materially interfere with the ownership, installation or operation of the Projects in the Ordinary Course of Business, (e) liens incurred or deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment or other social security or to secure performance of statutory obligations, surety bonds, performance bonds and other similar obligations and (f) any other liens agreed to in writing by Managing Member and Investor.
“ Person ” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, or governmental entity or any department or agency thereof.
“ Placed in Service ” is defined in the LLC Agreement.
“ Placed in Service Date ” in respect of a PV System means the date such PV System is Placed in Service.
“ Project ” means a PV System installed or to be installed, and used or to be used to generate electricity for sale to a Host Customer under a Customer Agreement as contemplated under this Agreement, associated rights under the applicable Customer Agreement, and all other related rights to the extent applicable thereto, including, without limitation, all parts and manufacturer’s warranties and rights to access Host Customer data, and all Permits and Real Property Rights necessary for the operation of the PV System and the sale of electricity pursuant to the related Customer Agreement, and all rights pursuant to any related Government Incentives and RECs.
“ Project States ” means California, Hawaii, Maryland, Massachusetts, New Jersey, New York, and Washington, D.C.
“ Prudent Industry Standards ” means the practices, methods, equipment, specifications and standards of safety, as the same may change from time to time, as are used or approved by a significant portion of the residential rooftop distributed solar electric generation industry operating in the applicable Project States in residential rooftop distributed solar electric generating systems or facilities of a type and size similar to the Projects as good, safe and prudent engineering practices in connection with the design, construction, operation, maintenance, repair and use of electrical and other equipment, facilities and improvements of such residential rooftop distributed solar electric generating system or facility, with commensurate standards of safety, performance, dependability, efficiency and economy, in each case in light of the facts known and circumstances existing at the time any decision is made or action is taken, that would be expected to accomplish the desired result in a manner materially consistent with Applicable Law, Permits, codes, and equipment manufacturer’s recommendations.
“ Purchase ” means each purchase of a PV System pursuant to Section 2.1(b) .
“ Purchase Date ” means the date on which the System Purchase Price is due for a particular PV System.
 
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“ Purchased Systems ” means all PV Systems purchased by Purchaser from a Seller pursuant to Section 2.1 .
“ Purchaser ” is defined in the preamble.
“ Purchaser Indemnified Parties ” is defined in Section 4.3(a) .
“ PV System ” means a residentially hosted roof-top solar electric generating system, including photovoltaic panels, racks, wiring and other electrical devices, conduits, weatherproof housings, hardware, one or more inverters, remote monitoring systems, connectors, meters, disconnects and over current devices.
“ Qualified Appraiser ” means Marshall & Stevens Inc. or a nationally recognized third-party appraiser that (a) is qualified to appraise independent electric generating businesses, (b) has been engaged in the appraisal or business valuation and consulting business for no fewer than five (5) years, (c) is not an Affiliate of either Purchaser or any Seller, and (d) is mutually agreed upon by both the applicable Seller and Purchaser.
“ Real Property Rights ” is defined in Section 3.1(o) .
“ RECs ” is defined in the LLC Agreement.
“ Refund Credit ” means any of the (a) Change Order Credit and (b) Removed Project Credit.
“ Removed Project Credit ” is defined in Section 2.2(d) .
“ Replacement Appraisal ” is defined in Section 2.3(h) .
“ Review Period ” is defined in Section 2.1(d) .
“ Seller ” or “ Sellers ” is defined in the preamble.
“ Seller Indemnified Parties ” is defined in Section 4.4 .
“ Sponsor ” is defined in the LLC Agreement.
“ Sponsor Guaranty ” means that certain Guaranty, dated as of the date hereof, by Vivint Solar, Inc. in favor of Purchaser and Investor.
“ STC DC ” means standard test conditions direct current.
“ Substituted Project ” is defined in Section 2.2(d) .
“ Substituted Project Review Period ” is defined in Section 2.2(f) .
“ Substitution Report ” means a report substantially in the form of Schedule 9 , for each affected Tranche, that (a) indicates which Deficient Projects and Cancelled Projects are proposed to be replaced with Substituted Projects, (b) describes any increase or decrease in system size pursuant to each change or substitution, (c) describes any increase or decrease in the tax bases or fair market values of Projects pursuant to each such change and (d) lists all Substituted Projects.
 
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“ System Purchase Price ” is defined in Section 2.1(e) .
“ Tax ” or “ Taxes ” (and with correlative meaning, “ Taxable ” and “ Taxing ”) is defined in the LLC Agreement.
“ Tax Credit Loss ” is defined in Section 4.3(c) .
“ Tax Credits ” is defined in the LLC Agreement.
“ Tax Loss ” is defined in Section 4.3(c) .
“ Tax Savings ” is defined in Section 4.3(d) .
“ Term ” means the period commencing on the Effective Date and ending upon termination pursuant to ARTICLE 4 .
“ Tranche ” is defined in Section 2.1(c) .
“ Tranche Presentation Certificate ” means a list of PV Systems, substantially in the form of Schedule 2 , that are being presented as part of a Tranche, including, for each Project: (a) the Host Customer, (b) the address of the PV System, (c) the kW size of each PV System to be installed, (d) the System Purchase Price for a Project and (e) the FICO® Score for the Host Customer from any nationally recognized consumer rating agency.
“ Transaction Documents ” means this Agreement, the LLC Agreement, the Maintenance Services Agreement, the Sponsor Guaranty, any Transfer Notice executed and delivered pursuant to this Agreement, any subcontract entered into by a Seller under Section 2.2(a) of this Agreement and any Bill of Sale executed and delivered pursuant to this Agreement.
“ Transfer Notice ” is defined in Section 2.1(g) .
“ True-Up Base Case Model ” is defined in Section 2.2(h) .
“ True-Up Report ” is defined in Section 2.2(h) .
“ VSD ” is defined in the preamble.
“ VSH Entities ” means V Solar Holdings, Inc., a Delaware corporation, and its direct and indirect subsidiaries.
“ VSI ” is defined in the preamble.
“ Warranty ” is defined in Section 3.4 .
 
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1.2 Capitalized Terms .
Capitalized terms used but not defined in this Agreement have the same meaning as in the LLC Agreement.
1.3 Construction .
Unless the context otherwise requires, the singular shall include the plural, the masculine shall include the feminine and neuter, and vice versa. The term “includes” or “including” shall mean “including without limitation”. The terms “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the schedules and exhibits hereto and certificates delivered hereunder) and not to any particular provision of this Agreement. References to a section, article, exhibit or schedule shall mean a section, article, exhibit or schedule to this Agreement, and reference to a given agreement or instrument shall be a reference to that agreement or instrument as amended, restated, supplemented or otherwise modified through the date as of which such reference is made.
ARTICLE 2
PURCHASE OF PROJECTS
2.1 Presentation and Review of Tranches; Purchase .
(a) General . Each Seller shall present proposed Tranches of Projects to Purchaser in the manner described in Section 2.1(c) . As set out in Section 2.1(d) , Purchaser shall have the Review Period to review the Projects after which each Seller shall present a Closing Request to add the Accepted Projects to the applicable part of Schedule 1 . Concurrently with the presentation of each Closing Request, each Seller shall provide Purchaser with copies of the closing documents listed in Section 2.1(g) for the Projects identified in the Closing Request.
(b) Purchase . During the Term and subject to the terms and conditions hereof, Purchaser shall purchase from each Seller, subject to the provisions of Section 2.2 and Section 2.3 , all right, title and interest of such Seller in each Project described in the applicable part of Schedule 1 (which Schedule 1 shall be updated by such Seller after each Purchase Date, including to remove any Deficient Projects and Cancelled Projects, reflect any Change Orders and add any Substituted Projects). The consummation of the purchase of each Project in a Tranche and the payment of the System Purchase Price of each such Project shall take place pursuant to this Agreement on expiration of the applicable Review Period, subject to all of the conditions in Section 2.3 and Section 2.4 for such Project having been satisfied.
(c) Presentation of Tranches . Not more frequently than once each calendar month between the Effective Date and May 15, 2014, a Seller shall present a Tranche Presentation Certificate to Purchaser listing Projects that are reasonably expected to satisfy the conditions in Section 2.3 on the Purchase Date for such tranche (such collection of Projects, a “ Tranche ”).
(d) Purchaser’s Review of Tranches . Upon Purchaser’s receipt of a Tranche Presentation Certificate, Purchaser shall respond within ten (10) Business Days (the “ Review Period ”) regarding its review of the Projects proposed to be included in the Tranche and whether it agrees that such Projects are reasonably expected to satisfy the conditions in Section 2.3 .
 
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Purchaser shall purchase each Project that Purchaser approves in writing (an “ Accepted Project ”) within five (5) Business Days following the end of the Review Period. A Project shall automatically be deemed an Accepted Project unless Purchaser informs the applicable Seller in writing prior to the expiration of the Review Period that the Project is being rejected (each such rejected Project, a “ Non-Accepted Project ”); provided , however , that Purchaser shall have no discretion to reject any Project that satisfies all of the conditions in Section 2.3 . Upon receipt by a Seller of any such notice of a Non-Accepted Project, such Seller shall have until the day that is three (3) Business Days prior to the Purchase Date for the Tranche to notify Purchaser in writing that such Seller has cured all deficiencies in the relevant Non-Accepted Project or to demonstrate that such Project satisfies all of the conditions in Section 2.3 , in each case to the written satisfaction of Purchaser, upon which such Non-Accepted Project shall become an Accepted Project to be included in such Tranche; provided that, following the cure of any deficiency, such Seller instead may present any such Non-Accepted Project again in a future Tranche.
(e) Determination of System Purchase Price . The price for each Project (the “ System Purchase Price ”) purchased under this Agreement shall be indicated in each Seller’s Tranche Presentation Certificate. The System Purchase Price shall equal the price calculated by multiplying (i) the dollar-per-watt direct current as established in the most recent Appraisal applicable to the Project State where the Project is located, subject to Section 2.3(h) , and (ii) the STC DC nameplate rating of the PV System for such Project. The purchase price for the Tranche shall be the aggregate of the System Purchase Prices for all Accepted Projects in the Tranche; provided , however , that in no event shall Purchaser be obligated to make a purchase hereunder that causes the total Capital Contributions of the Investor to exceed the Investor Contribution Cap. The System Purchase Price for each Project shall be paid in cash by Purchaser on each Purchase Date as described in Section 2.1(g) .
(f) Closing Request . A Seller, or the Sellers, as applicable, shall send a notice in the form of Schedule 5 (a “ Closing Request ”) that shall list the Projects that will be purchased on the Purchase Date, the System Purchase Price for each Project, the aggregate of the System Purchase Prices for all the Projects in the Tranche payable on the Purchase Date, and the aggregate amount of Change Orders in respect of all Purchased Systems to date (including a notation identifying the Change Orders that were not previously incorporated into the calculation of the Net Purchase Price for prior Purchase Dates) and shall also specifically indicate the net amount, after taking into account any outstanding Refund Credit, payable on the Purchase Date (the “ Net Purchase Price ”).
(g) Closing . Subject to satisfaction of the conditions set forth in Section 2.3 , on each Purchase Date, the Net Purchase Price for the Projects in the Tranche purchased on such Purchase Date shall be payable by Purchaser to the applicable Seller. On the Purchase Date, the applicable Seller shall deliver or cause to be delivered to Purchaser the following documents for each Tranche:
(1) a notice substantially in the form of Schedule 6 (the “ Transfer Notice ”) associated with the Projects in each such Tranche;
(2) the Bill of Sale and Assignment substantially in the form of Schedule 4 (the “ Bill of Sale ”);
 
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(3) a revised Schedule 1 adding any new Accepted Projects purchased on the Purchase Date and the associated Customer Agreements and, if applicable, removing any Cancelled Projects or Deficient Projects, reflecting any Change Orders and adding any Substituted Projects;
(4) a copy of the duly executed Customer Agreement for each Project in such Tranche;
(5) any Permits required for the construction of each Project in such Tranche; and
(6) a certificate of non-foreign status from such Seller meeting the requirements of Treasury Regulation Section 1.1445-2(b)(2) and dated as of the Purchase Date.
(h) Title . Subject to Section 2.2 , on each Purchase Date, a Seller sells, conveys, assigns, transfers and delivers unto Purchaser all of such Seller’s right, title and interest in, to and under the Projects being purchased on such date (whether or not complete and including the Customer Agreements that are part thereof), and Purchaser purchases and assumes all of such Seller’s right, title, interest in and obligations with respect to such Projects (including the Customer Agreements that are part thereof). Notwithstanding the foregoing, a Seller shall remain liable for all of Purchaser’s obligations under each Customer Agreement until the In-Service Date thereunder.
(i) Risk of Loss . From and after the Purchase Date for an Accepted Project, all risk of loss or damage to such Project shall be borne by Purchaser; provided , that the passing of the risk of loss shall not, in any respect, excuse a Seller from completing installation of any Project or performing any of its obligations under the Transaction Documents to which such Seller is a party or relieve such Seller of its obligations to reimburse Purchaser for losses resulting from the actions of such Seller, its Affiliates or its subcontractors. If any Accepted Project becomes a Deficient Project or Cancelled Project, all risk of loss or damage to such Project shall pass back to such Seller and, if the Customer Agreements related thereto have not been terminated, such Customer Agreements shall be reassigned to such Seller by Purchaser.
(j) Sales . Provided that Purchaser is not in default under any Transaction Document, and subject to the terms and conditions hereof, the Sellers shall sell Projects that meet the criteria in Section 2.3 to Purchaser under this Agreement; provided , however , that this provision shall in no way obligate the Sellers to sell to Purchaser, or otherwise restrict the Sellers from pursuing alternative transactions in respect of, any specific solar energy generation system, including any PV Systems that do not meet the criteria in Section 2.3 or as to which the conditions in Section 2.4 have not been satisfied.
(k) Information to Purchaser . After the Purchase of a Project (including without limitation any Project purchased from VSI), VSD hereby agrees, at no cost to Purchaser, to:
(1) provide Purchaser with access via VSD’s web portal to the information regarding such Project in the possession of VSD or any VSH Entity, which will
 
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include, as such information becomes available, among other things, descriptions of installation services performed by VSD or any VSH Entity, follow-up activities, if any, materials, serial numbers and other information relevant to Provider’s maintenance activities; and
(2) provide such information regarding such Project as is reasonably requested by Purchaser and available to VSD or the VSH Entities or that VSD or the VSH Entities are able to obtain through the use of commercially reasonable efforts (it being understood that such information will not include information regarding the maintenance or operation of Projects after their applicable In-Service Dates, to which VSD shall provide access pursuant to clause (k)(1) ).
(l) Transfer of RECs and Government Incentives . Commencing on each Purchase Date, all RECs and Government Incentives associated with the installation, ownership, use or operation of each PV System being purchased by Purchaser on such Purchase Date shall be, as between the applicable Seller and Purchaser and to the extent transferable pursuant to Applicable Laws, part of such Seller’s rights related to the Project that are transferred to Purchaser.
2.2 Completion of Purchased Systems .
A Seller shall complete the installation of each applicable Purchased System that was purchased by Purchaser from such Seller as follows:
(a) PV System Installation . Such Seller shall procure the materials and take such other steps as are required to install, test and complete such PV System and shall cause such PV System to be Placed in Service (the foregoing steps collectively being referred to herein as “ Installation ”) without further compensation or reimbursement from Purchaser. Installation of each PV System by such Seller shall be consistent with the applicable Customer Agreement, all manufacturer and design specifications and warranties relating to the relevant PV System, Prudent Industry Standards and all Applicable Laws and material Permits. Such Seller shall be authorized to enter into subcontracts for the performance of its obligations herein, provided that any such subcontract shall be on commercially reasonable terms and shall expressly provide for (i) the assignment of the warranty rights thereunder to Purchaser and (ii) the assignment of the entire contract to Purchaser upon a default of such Seller hereunder or thereunder. Such Seller shall remain liable for the compliance in full of its obligations hereunder regardless of whether they may have been subcontracted or not. Such Seller shall pay all amounts owed to its subcontractors and vendors in connection with the Installation of each PV System on a timely basis and shall hold Purchaser harmless against any claims asserted by such parties whether before or after the transfer of title to the Purchaser. Within five (5) Business Days after a breach or default by a Seller or any of its Affiliates, or after acquiring Knowledge of such Seller of a breach or default of any other Person, under any subcontract relating to one or more Purchased Systems, such Seller shall provide Purchaser written notice of such breach or default.
(b) Completion Certificate . On or before the tenth Business Day of each calendar month, the Sellers, as applicable, shall deliver to Purchaser a Completion Certificate listing all such PV Systems that were Placed in Service in the prior month. If a
 
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Purchased System is not Placed in Service by the Completion Deadline, then such PV System shall become a Deficient Project subject to Section 2.2(d) . Concurrently with the delivery of the Completion Certificate, the Sellers, as applicable, shall also deliver to Purchaser a copy of the form of warranty issued by each manufacturer or supplier of panels, inverters or racking (to the extent not previously provided to Purchaser) that satisfies the requirements of Section 3.4 .
(c) Performance Tests . Each Seller shall perform the Performance Tests for each Purchased System that was purchased by Purchaser from such Seller under this Agreement. Such Seller’s technical personnel (or, when applicable, the installer or manufacturer’s personnel, with such Seller’s supervision) shall operate the PV Systems during the Performance Tests. If a PV System fails to pass the Performance Tests, then such Seller shall take corrective actions and repeat the Performance Tests until such PV System successfully completes the Performance Tests or the Completion Deadline, whichever occurs first.
(d) Deficient Projects and Cancelled Projects . A Seller shall remove any Accepted Projects Purchased by Purchaser from it and included in a Tranche that are Deficient Projects or Cancelled Projects. A Seller shall revise and update the applicable portion of Schedule 1 to remove such Deficient Projects and Cancelled Projects. A Seller shall either (i) provide a credit to Purchaser toward the purchase of additional PV Systems in a subsequent Tranche in the amount of the aggregate of the System Purchase Prices for such Deficient Projects and Cancelled Projects (the “ Removed Project Credit ”) to be applied in connection with payment of the aggregate of the System Purchase Prices of a Tranche in the Closing Request for that Tranche, which Removed Project Credit shall be calculated in a report, substantially in the form of Schedule 7 , describing the Deficient Projects and Cancelled Projects not previously reported (the “ Deficient Project and Cancelled Project Report ”) or (ii) substitute another PV System that meets all of the conditions in Section 2.3 (a “ Substituted Project ”) for any Deficient Project or Cancelled Project that was previously Purchased by Purchaser (and not otherwise previously reported in a prior Substitution Report or a Deficient Project and Cancelled Project Report) by delivering a Substitution Report in accordance with Section 2.2(f) ; provided that any such substitution shall occur no later than the Completion Deadline. For the avoidance of doubt, all right, title and interest in and to any Cancelled Project or Deficient Project removed from the Tranche shall pass back to such Seller. Notwithstanding anything to the contrary contained herein, in connection with any substitution of any Substituted Project for any Cancelled Project or Deficient Project, the applicable Seller and Purchaser shall cooperate in good faith to execute any documents and to take such other actions as may be necessary or advisable to carry out the intent of this Section 2.2 .
(e) Change Orders Under Customer Agreements . Following the relevant Purchase Date and prior to the Placed in Service Date of any PV System, a Seller may agree to change orders under or amendments to the Customer Agreement relating to the size, layout or design of such PV System (a “ Change Order ”). A Seller may agree to Change Orders in its sole discretion. A Seller shall deliver to Purchaser a report, substantially in the form of Schedule 8 (a “ Change Order Report ”), describing the economic impact of all Change Orders through the date of such Change Order Report and previously not reported in a Closing Request. The Change Order Report will (A) identify all Change Orders agreed to through the date of the Change Order Report and not previously reported in a Closing Request, (B) describe any increase or decrease in system size pursuant to each such Change Order, and (C) describe any
 
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increase or decrease in System Purchase Price as a consequence of each such Change Order. If the Change Order Report indicates that the aggregate System Purchase Prices for all Projects that were subject to Change Orders have resulted in a net credit balance (the “ Change Order Credit ”) or debit balance to Purchaser (the “ Change Order Debit ”), such Seller may (i) pay such credit or debit by including the Change Order Credit or the Change Order Debit in the subsequent Closing Request or (ii) in the case of a Change Order Credit, substitute one or more Substituted Projects in accordance with Section 2.2(f) (each of which Substituted Projects shall meet the conditions for PV Systems under Section 2.3 ); provided that any such substitution shall occur no later than the Completion Deadline. Such Seller shall revise Schedule 1 to reflect the information relating to the Change Order; provided further , that in no event will Purchaser be obligated to make a payment hereunder that causes the total Capital Contributions of the Investor in connection with Purchased Systems to exceed the Investor Contribution Cap.
(f) Substitution Report . A Seller shall provide written notice of any proposed Substituted Project to Purchaser in the Substitution Report, and Purchaser shall have a period of ten (10) days (the “ Substituted Project Review Period ”) from receipt of the Substitution Report to confirm that the conditions in Section 2.3 have been met with respect to each such proposed Substituted Project. Each such proposed Substituted Project shall be deemed accepted unless Purchaser informs such Seller in writing within the applicable Substituted Project Review Period that any such proposed Substituted Project is rejected; provided , however , that Purchaser shall have no discretion to reject any Project that satisfies all of the conditions in Section 2.3 . The Purchase Date for the Substituted Projects purchased under this Section 2.2(f) shall be the expiration of the applicable Substituted Project Review Period or, if such date is not a Business Day, then the first Business Day following the expiration of the applicable Substituted Project Review Period. On the Purchase Date for the Substituted Projects, all right, title and interest in and to any Substituted Project shall pass to Purchaser and such Seller shall revise and update Schedule 1 to reflect the relevant Substituted Project information (as shown in the Substitution Report).
(g) [Reserved]
(h) True-Up Report . No later than twenty (20) Business Days following the Completion Deadline, VSD shall deliver to Purchaser a true-up report that contains the information specified in Schedule 10 (the “ True-Up Report ”) and a revised Base Case Model that reflects the information in the True-Up Report (the “ True-Up Base Case Model ”). If the True-Up Report indicates that the aggregate of the System Purchase Prices for all Purchased Systems has left a net credit balance or debit balance, such balance, plus 5% interest thereon accruing from the date the Party owed the credit effectively advanced the amounts now being credited, shall be paid in cash to the applicable Sellers by Purchaser or to Purchaser by VSD (on behalf of both Sellers), whichever is appropriate, within ten (10) calendar days after issuance of the True-Up Report; provided , however , that (i) no True-Up Report will include information on, or require a payment in connection with, any Deficient Projects, Cancelled Projects or Change Orders to the extent a Refund Credit has already been utilized or a Substituted Project has been substituted therefor, and (ii) in no event will Purchaser be obligated to make a payment hereunder that causes the total Capital Contributions of the Investor in connection with Purchased Systems to exceed the Investor Contribution Cap.
 
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2.3 Conditions Precedent to the Obligations of Purchaser .
The obligations of Purchaser to consummate the Purchase of the Projects comprising a Tranche shall be subject to the satisfaction by a Seller (or Sellers, as applicable), of each of the following conditions precedent with respect to such Projects:
(a) Each of the representations and warranties of such Seller in Section 3.1 and *** that is qualified as to materiality or by Material Adverse Change shall be true and correct, and such representations that are not so qualified shall be true and correct in all material respects, in each case as of the relevant Purchase Date;
(b) Each of such Seller *** has performed or complied with all obligations and covenants required by this Agreement *** to be performed or complied with by it at or prior to the relevant Purchase Date, except where such failure to perform or comply would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole, Seller ***;
(c) Such Seller has delivered to Purchaser a Closing Request and a Transfer Notice with respect to the Purchase of the applicable Tranche;
(d) Such Seller has executed and delivered the Bill of Sale;
(e) Such Seller shall have delivered an updated Base Case Model for the applicable Tranche;
(f) The Tax Credit is in effect and is reasonably expected to be available as of the anticipated Placed in Service Dates for each Project comprising the Tranche in an amount equal to 30% of the applicable System Purchase Price;
(g) Prior to the initial Purchase Date, Purchaser has received an opinion from counsel to such Seller as to the enforceability of each of the Transaction Documents to which such Seller is a party and as to such other corporate matters as are customarily included in similar opinions, each such opinion in form and substance reasonably satisfactory to Purchaser;
(h) Purchaser has received appraisals from the Qualified Appraiser, in form and substance reasonably satisfactory to Purchaser (each such appraisal, an “ Appraisal ”), and which are dated no earlier than six (6) months prior to the applicable Purchase Date, showing the fair market value of new photovoltaic systems of the kind as, and in the State of the United States of America of, the PV Systems being purchased on the relevant Purchase Date under this Agreement expressed in terms of dollars per watt of installed capacity; provided , that notwithstanding anything to the contrary in this clause (h) , (i) in the event that Purchaser, such Seller or one of their Affiliates receives an Appraisal Deficiency Notice, (A) the System Purchase Price for each Project comprising the applicable Tranche shall be determined in a manner consistent with such Appraisal Deficiency Notice until such time as Purchaser has received a new Appraisal from the Qualified Appraiser in form and substance satisfactory to
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Purchaser (a “ Replacement Appraisal ”), and (B) upon acceptance of such Replacement Appraisal, the System Purchase Price for any such Project purchased after such acceptance shall thereafter be determined in accordance with Section 2.1(e) using such Replacement Appraisal, and (ii) in the event that Purchaser notifies such Seller that it requires an additional Appraisal, (A) such additional Appraisal will be at the Purchaser’s expense, (B) the Purchaser shall be entitled to exercise the right to request such additional Appraisals no more often than every six (6) months, (C) such Appraisal will be done by the Qualified Appraiser and (D) as a condition to Purchaser’s obligation to purchase Projects under this Agreement following such request, Purchaser shall have received such Appraisal from the Qualified Appraiser, in form and substance reasonably satisfactory to the Purchaser, which shall be used to determine the System Purchase Price in accordance with Section 2.1(e) unless and until such additional Appraisal is replaced by a Replacement Appraisal;
(i) All manufacturer’s warranties in respect of the PV System for each Project comprising the Tranche are transferable, and will be transferred, to Purchaser upon Purchase of such Project;
(j) The PV System for each Project has not been “placed in service” as that term is used in Sections 48 and 168 of the Code;
(k) Such Seller shall certify to Purchaser in the Transfer Notice that such Seller reasonably expects the PV System for such Project to be Placed in Service by the Completion Deadline;
(l) Such Seller shall certify to Purchaser in the Transfer Notice that such Seller has complied with all other applicable provisions of this Agreement and that such Seller and its Affiliates have complied with each applicable Customer Agreement, except as would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole;
(m) A Customer Agreement for the PV System for such Project is in effect in the applicable form attached to Schedule 3 ;
(n) The Host Customers meet the Minimum Credit Criteria, and each Host Customer’s FICO® Score has been delivered to the Investor;
(o) Each Host Customer for such Project is located in a Project State, and the address of each such Host Customer has been delivered to Investor;
(p) No material default or event of default of such Seller *** has occurred and is continuing under any Transaction Document;
(q) No Host Customer is described in Code Section 50(b)(3) or (4);
(r) Assuming that all of the Projects in the same Tranche as such Project are sold to the Purchaser and Placed in Service, the aggregate amount of all Capital Contributions of Investor to Purchaser, including all Capital Contributions to be made by
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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Investor to Purchaser on the Purchase Date with respect to such Tranche and made by Investor to Purchaser prior to the Purchase Date for such Project, will not exceed the Investor Contribution Cap;
(s) Such Seller shall have made available to Purchaser, via such Seller’s web portal, on which site the following shall be delivered:
(1) a copy of the site plan and CAD designs used for the Projects; and
(2) a copy of the executed Customer Agreement for such Project; and
(t) The insurance that is required to be procured and maintained pursuant to Section 8.2(b)(i) of the LLC Agreement shall have been procured and shall be in full force and effect.
2.4 Conditions Precedent to the Obligations of a Seller .
The obligations of a Seller to consummate the Purchase of each Project comprising a Tranche shall be subject to the satisfaction by Purchaser of each of the following conditions precedent for such Project:
(a) Each of the representations and warranties of Purchaser in Section 3.2 that is qualified as to materiality or by Material Adverse Change shall be true and correct, and such representations that are not so qualified shall be true and correct in all material respects, in each case as of the relevant Purchase Date;
(b) All consents, approvals and filings then required to be obtained or made by Purchaser to execute, deliver and perform the Transaction Documents to which it is a party shall have been obtained or made and shall be in full force and effect as of the relevant Purchase Date;
(c) Purchaser has executed and delivered the Bill of Sale; and
(d) The Tax Credits are in effect and are reasonably expected to remain in effect as of the anticipated Placed in Service Date for the PV System for such Project.
2.5 Conditions Precedent to the Obligations of Both Parties .
The obligations of Purchaser and a Seller, or the Sellers, as applicable, to consummate the Purchase of a Tranche of Projects shall be subject to the satisfaction of each of the following conditions precedent for such Tranche:
(a) Orders . No temporary restraining order, preliminary or permanent injunction or other legally binding award, judgment, decree, ruling, verdict or other decision issued by any Governmental Authority applicable directly to a Party, its business or properties, or the transactions contemplated hereby shall be in effect that (i) impairs, restrains, prohibits, adversely alters or invalidates the Installation or operation of such Tranche of Projects, any of the Transaction Documents or material Permits, or the applicable Customer Agreement, in each case
 
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which would be reasonably expected to adversely affect in a material manner such Tranche of Projects taken as a whole or (ii) enjoins, prohibits or otherwise prevents the consummation of the transactions contemplated hereby.
(b) Proceedings . No claims, disputes, governmental investigations, suits, actions (including, without limitation, non-judicial real or personal property foreclosure actions), arbitrations, legal, administrative or other proceedings of any nature, domestic or foreign, criminal or civil, at law or in equity, shall have been instituted or threatened in writing and remain pending, in each case that has a reasonable likelihood of success, that (i) seek (A) to impair, restrain, prohibit, adversely alter or invalidate the Installation or operation of the Projects, any of the Transaction Documents or material Permits, or the applicable Customer Agreement or (B) to prohibit the operation of the Projects in accordance with the applicable Customer Agreement, in each case which would adversely affect in a material manner such Tranche of Projects taken as a whole or (ii) does or would enjoin, prohibit or otherwise prevent, or seek to enjoin, prohibit or otherwise prevent the consummation of the transactions contemplated hereby.
(c) Laws . No Applicable Law shall have been enacted or shall be deemed applicable to the transactions contemplated by this Agreement that makes the consummation of such transactions illegal.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Representations, Warranties and Covenants of Sellers .
Each Seller represents, warrants and covenants to Purchaser as follows as of the Effective Date and each Purchase Date with respect to the Projects to be purchased from such Seller on such Purchase Date (for the avoidance of doubt on a Purchase Date Seller makes such representations, warranties and covenants only if Purchaser purchases any Project from such Seller on such Purchase Date) that:
(a) Organization and Good Standing . Such Seller is a limited liability company or a corporation, as applicable, duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, lease and operate its business as currently conducted. Such Seller is duly qualified to do business and is in good standing under the laws of each jurisdiction that its business, as currently being conducted, shall require it to be so qualified, except where the failure to be so qualified would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or such Seller.
(b) Authorization, Execution and Enforceability . Such Seller has full power and authority to execute and deliver the Transaction Documents and the Customer Agreements to which it is a party and to consummate the transactions contemplated thereby. The execution and delivery by such Seller of the Transaction Documents and Customer Agreements to which it is a party and the consummation by such Seller of the transactions contemplated thereby have been duly and validly authorized by all necessary company or corporate action
 
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required on the part of such Seller, and such Transaction Documents and Customer Agreements have been duly and validly executed and delivered by such Seller. Each of the Transaction Documents and the Customer Agreements to which such Seller is a party constitutes the legal, valid and binding agreement of such Seller, enforceable against such Seller in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at law).
(c) No Violation . The execution and delivery by such Seller and its Affiliates of the Transaction Documents and the Customer Agreements do not, and the performance by such Seller and its Affiliates of their obligations hereunder and thereunder, as applicable, shall not (i) violate any laws, statutes, rules, regulations, ordinances, judgments, settlements, orders, decrees, injunctions and writs of any Governmental Authority having jurisdiction, (ii) conflict with or cause a breach of any provision in the charter, bylaws or other organizational document of such Seller or such Affiliates, as applicable, or (iii) cause a breach of, constitute a default under, cause the acceleration of, create in any counterparty the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, note, bond, mortgage, indenture, agreement, license, intellectual property licenses or rights, instrument, decree, judgment or other arrangement to which such Seller or such Affiliates are parties or under which such Seller or such Affiliates are bound or to which any of their Assets is subject (or result in the imposition of a Lien upon any such Assets), except in the case of clause (i)  or clause (iii)  as would not, individually or in the aggregate, would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or such Seller.
(d) No Consent . All consents, approvals and filings then required to be obtained or made by such Seller and its Affiliates to execute, deliver and perform the Transaction Documents and Customer Agreements to which they are parties have been obtained or made and are in full force and effect, except where the failure to obtain or make such consents, approvals or filings would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or Seller.
(e) Legal Proceedings . There are no pending or, to the Knowledge of such Seller, threatened claims, disputes, governmental investigations, suits, actions (including, without limitation, non-judicial real or personal property foreclosure actions), arbitrations, legal, administrative or other proceedings of any nature, domestic or foreign, criminal or civil, at law or in equity, by or against or otherwise affecting such Seller or any Purchased System that would reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or such Seller, provided that the foregoing representation, as it relates to legal proceedings involving a Host Customer, is made only to the Knowledge of such Seller.
(f) Transaction Documents and Customer Agreements .
(1) None of such Seller, *** or, to the Knowledge of such Seller, any other party to a Transaction Document has breached any provision of, or defaulted under the terms of, any Transaction Document that remains uncured and no event or circumstance has
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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occurred that would, with the passage of time, result in such a breach or default, except where any such breach or default would not adversely affect in a material manner all of the Projects taken as a whole or such Seller. The consummation of the transactions contemplated by this Agreement would not give any party to any Transaction Document the right to terminate or alter the terms of such contract or a right to claim damages thereunder.
(2) The Customer Agreement for each of the Projects included in the applicable Tranche is in full force and effect, and neither such Seller nor, to the Knowledge of such Seller, the relevant Host Customer has breached any provision of, or defaulted under the terms of, the underlying Customer Agreement that remains uncured and no event or circumstance has occurred that would, with the passage of time, result in such a breach or default, except where any such breach or default would not adversely affect in a material manner all of the Projects taken as a whole or such Seller. None of Sellers or any of the VSH Entities is a party to any contract, instrument, commitment, agreement or other legally binding arrangement with any Host Customer in relation to PV Systems other than the Customer Agreements to which such Host Customer is a party.
(g) Taxes .
(1) All the components of each Purchased System constitute “energy property” within the meaning of Section 48(a)(3)(A)(i) of the Code.
(2) None of such Projects has been “placed in service” within the meaning of Sections 48 and 168 of the Code. No Person has claimed with respect to such Projects or any property that is part of such Projects, on any Tax return, any depreciation or amortization deductions. The total fair market value of any previously used property included in each Purchased System will not be more than twenty percent (20%) of the total value of such Purchased System.
(3) No Person has applied for any grant under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009, as amended, with respect to any asset of such Projects.
(4) The fair market value of each Purchased System is equal to at least the installed capacity of such Purchased System in watts multiplied by the amount per watt set forth in the Appraisal for the Project State where such Purchased System is located with respect to the Tranche that includes such Purchased System.
(5) Such Seller shall, and shall cause its Affiliates to, report in all documents, filings and accounting statements that the amount realized on the sale of a Project to Purchaser is the System Purchase Price for such Project.
(6) Neither such Seller nor any of its Affiliates has received an Appraisal Deficiency Notice on or prior to the Effective Date.
(7) No Host Customer is described in Sections 50(b)(3) or (4) of the Code.
 
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(8) No Person has requested or received, with respect to any Purchased System, any permission to operate or similar form, Permit or other document.
(9) No Purchased System is “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code.
(10) Each Purchased System is in a Project State.
(h) Compliance with Applicable Laws . Such Seller and each of its subcontractors engaged pursuant to Section 2.2(a) of this Agreement is in compliance with all Applicable Laws with respect to developing, constructing, leasing, installing, operating and maintaining such Projects and the entering into, and performance of obligations under, any Customer Agreement associated with a Project included in the applicable Tranche, except where the failure to be in compliance would not adversely affect in a material manner all of the Projects taken as a whole, such Seller or Purchaser’s (or any of its direct or indirect equity owner’s) ability to claim Tax Credits equal to 30% of the System Purchase Price and depreciation or amortization deductions on such Project.
(i) New Goods and Services . All equipment, parts and materials furnished in connection with each PV System for such Projects shall be new, unused and undamaged.
(j) Information . The written information (i) furnished by such Seller *** to Purchaser and Investor, their respective consultants, advisors and attorneys, and the Qualified Appraiser in the Transaction Documents or any other certificates or reports delivered pursuant to the terms of this Agreement, or (ii) posted on https://bxftp.watchdox.com or https://investor.vivintsolar.com, in each case in connection with such Projects (including, without limitation, information provided in each Completion Certificate) or the transactions contemplated by the Transaction Documents, is true, complete and correct in all material respects and does not omit any material information necessary to make such information not adversely misleading when taken as a whole in light of the circumstances under which it is provided.
(k) Permits . All material Permits required under the Customer Agreement or otherwise to install, test and use the PV System for such Project to generate electricity for sale to the Host Customer have been obtained apart from a letter from the local utility authorizing parallel operation and such other Permits that are of a ministerial nature and are not required to be obtained prior to the Purchase Date under Applicable Law. Neither such Seller nor any of its Affiliates has received written notice from any Governmental Authority regarding any revocation, withdrawal, suspension, cancellation or termination of any Permit, except where such revocation, withdrawal, suspension, cancellation or termination would not adversely affect in a material manner all of the Projects taken as a whole, such Seller or Purchaser’s (or any of its direct or indirect equity owner’s) ability to claim Tax Credits equal to 30% of the System Purchase Price for such Project and depreciation or amortization on such Project.
 
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(l) Warranties . As of the date each PV System for such Projects is Placed in Service, all warranties relating to such PV System from any manufacturer of any part thereof shall be in full force and effect in all material respects and shall have been assigned to Purchaser. The Bill of Sale effectively assigns all of the rights of such Seller and its Affiliates in, to and under all warranties relating to such PV System to Purchaser.
(m) Title; Personal Property . Such Seller has good title to, and is the owner of, each such Project, and each such Project is free and clear of all Liens of any third Person, other than Permitted Liens. Legal title and ownership of each such Project shall, on the applicable Purchase Date, upon consummation of the Purchase thereof pursuant to this Agreement, pass to and remain with Purchaser, free and clear of all Liens (other than Permitted Liens). All Permitted Liens have been released on or before the applicable Placed in Service Date.
(n) Intellectual Property . Such Seller owns or has a valid license to all intellectual property that is reasonably necessary to install, operate and maintain such Projects, which licenses, pursuant to this Agreement, shall be transferred to Purchaser upon Purchase of the relevant Projects. The Bill of Sale effectively assigns all of the rights of such Seller in such licenses to Purchaser. To the Knowledge of such Seller, there are no pending or threatened claims, actions, judicial or other adversary proceedings, disputes or disagreements concerning any item of such intellectual property that would adversely affect in a material manner such Projects taken as a whole or such Seller.
(o) Real Property Rights . All of such Seller’s real property rights and other rights with respect to Host Customers’ real property contained in the Customer Agreements for such Projects (the “ Real Property Rights ”) are sufficient for the full performance and enforcement of all of such Seller’s rights, remedies and obligations with respect to such Projects (including under the Customer Agreements for such Projects), and such Seller has not been informed in writing by any owner or lessor of the real property associated with such Real Property Rights that such Seller is in breach of its obligations relating to such Real Property Rights or that such Real Property Rights have been challenged or terminated.
(p) Environmental Matters . Except for matters that have not adversely affected in a material manner all of the Projects taken as a whole or Seller, (i) such Seller is, at all times has been, and reasonably expects to continue to be, in compliance with all Environmental Laws, (ii) to the Knowledge of such Seller, no such Project is in violation of Environmental Laws and (iii) such Seller has not received written notice from any Governmental Authority of an actual or potential violation of or liability under any Environmental Laws with respect to any Project. Such Seller shall indemnify and hold Purchaser harmless from any expenses, damages or amounts payable, including to the Host Customer, as a result of a breach of any Environmental Law by such Seller related to the Purchased Systems or the Installation thereof.
(q) No Condemnation . No condemnation is pending or threatened with respect to any such Project, or any portion thereof material to the ownership or operation of any such Project, and no unrepaired casualty exists with respect to any such Project or any portion thereof material to the ownership or operation of any such Project or the sale of electricity therefrom.
 
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(r) Energy Regulatory Matters .
(1) The sale of each such Project to Purchaser will not (A) cause Purchaser, the Investor or any of their direct or indirect owners to become subject to, or not exempt from, regulation under the Federal Power Act or the Public Utility Holding Company Act of 2005, (B) require the approval of any Governmental Authority pursuant to state or local law, or (C) cause Purchaser, the Investor or any of their direct or indirect owners to become subject to, or not exempt from, regulation as a “public utility”, “electric utility” or similar designation under state or local law.
(2) The PV System for each such Project is a qualifying facility pursuant to 18 C.F.R. § 292.101(b)(1) and a qualifying small power production facility pursuant to 18 C.F.R. § 292.203(a) of FERC’s regulations and has or will have, together with all other PV Systems of all such Projects located within a mile of each such Project, a power production capacity of no more than twenty (20) MW (AC) and, to the extent required under FERC regulations to preserve such status, such Seller shall have filed or will file with FERC a notice of self-certification, or have obtained or will obtain from FERC an order granting certification, with respect to such status.
(s) DISCLAIMERS . EXCEPT AS OTHERWISE AGREED BY A SELLER (INCLUDING IN SECTION 3.4 ) AND EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 3 , ANY TRANSFER NOTICE DELIVERED PURSUANT TO THIS AGREEMENT, AND THE OTHER TRANSACTION DOCUMENTS, THE PV SYSTEMS ARE BEING DELIVERED BY SUCH SELLER TO PURCHASER “AS IS, WHERE IS” AND SUCH SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO LIABILITIES, OPERATIONS OF THE PV SYSTEMS OR PROJECTS, VALUE OR QUALITY OF THE PV SYSTEMS OR PROJECTS OR THE PROSPECTS (FINANCIAL AND OTHERWISE), RISKS AND OTHER INCIDENTS OF THE PV SYSTEMS OR PROJECTS. EXCEPT AS OTHERWISE AGREED BY SUCH SELLER AND EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 3 , ANY TRANSFER NOTICE DELIVERED PURSUANT TO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, SUCH SELLER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO SUCH SELLER OR THE PV SYSTEMS OR PROJECTS, OR ANY PART THEREOF.
 
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3.2 Representations and Warranties of Purchaser .
Purchaser represents and warrants, with respect to itself, to each Seller as follows as of the Effective Date:
(a) Organization, Good Standing, Etc . Purchaser is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, and has the requisite limited liability company power and authority to own, lease and operate its properties and to carry on its business as being conducted on the date hereof.
(b) Authority . Purchaser has the requisite power and authority to enter into this Agreement and the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby or thereby. This Agreement (assuming due authorization, execution and delivery by Sellers) constitutes, and upon execution and delivery by Purchaser of the other Transaction Documents to which it is a party the Transaction Documents shall constitute, the valid and binding obligations of Purchaser, enforceable against it in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors’ rights and remedies generally and to general principles of equity.
(c) No Violation . The execution and delivery by Purchaser of this Agreement and the other Transaction Documents to which Purchaser is a party do not, and the performance by Purchaser of Purchaser’s obligations hereunder and thereunder shall not, (i) violate any laws, statutes, rules, regulations, ordinances, judgments, settlements, orders, decrees, injunctions and writs of any Governmental Authority having jurisdiction over Purchaser, (ii) conflict with or cause a breach of any provision in the charter, bylaws or other organizational document of Purchaser, or (iii) cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, license, instrument, decree, judgment or other arrangement to which Purchaser is a party or under which it is bound or to which any of its Assets are subject (or result in the imposition of a Lien upon any such Assets) except (in the case of this clause (iii) ) for any that would not materially impair or be reasonably expected to materially impair the ability of Purchaser to meet or perform its obligations under the Transaction Documents.
(d) Legal Proceedings . There is no pending or, to Knowledge of Investor, threatened litigation, claim, action, suit, proceeding or governmental investigation against Purchaser or which seeks the issuance of an order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement, other than any such instance that would not materially impair or be reasonably expected to materially impair the ability of Purchaser to meet or perform its obligations under the Transaction Documents.
3.3 No Other Seller Representations .
Without limiting the foregoing, except with respect to the representations and warranties of each Seller set forth in ARTICLE 3 or expressly set forth as representations and warranties in the other Transaction Documents, no Seller makes any representation or warranty in this Agreement with respect to Purchaser’s eligibility to claim Tax Credits. Purchaser specifically acknowledges that no representation or warranty has been made by any Seller about the accuracy of any projections, estimates or budgets, future revenues, future results from operations, future cash flows, the future condition of the Projects or any assets of such Seller or Purchaser, or the future financial condition of such Seller or Purchaser.
 
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3.4 Defects Warranty .
Each Seller warrants, with respect to each Project purchased by Purchaser under this Agreement from such Seller, that such Seller’s installation of the PV System for such Project shall be free from material defects in design of workmanship as of the date of installation for a period of *** from the date of installation (the “ Warranty ”); provided , however , that this Warranty shall not include any warranty statements beyond the scope of this Warranty. Upon a breach of the Warranty, the applicable Seller will, upon notice from Purchaser or Host Customer of a valid Warranty claim, at such Seller’s sole option, either repair or replace any defective parts or construction. Such Seller shall have reasonable access to the applicable Project site to the extent permitted by the Customer Agreements, as necessary to perform its Warranty obligations under this Agreement. All costs for the removal, replacement and reinstallation of all equipment and materials necessary to gain access to defective PV Systems and any other costs relating to corrective or remedial action shall be borne by the applicable Seller. This Warranty applies solely to the PV Systems and does not include (x) roof repair or maintenance or (y) site work, including but not limited to, grading and landscape maintenance, if applicable; provided , however , the applicable Seller shall, at its expense, repair any damage to the roof or Project site caused by such Seller, its Affiliates or its subcontractors. Panels, inverters and racking for each Project shall be procured from the approved vendors listed on Schedule 13 unless otherwise reasonably consented in writing by Investor ( provided that no such approval or consent of Investor shall be required with respect to vendors from whom any equipment other than panels, inverters and racking is procured). Either (a) the warranties for panels, inverters and racking shall by their terms run to the benefit of the Person that owns such equipment or the solar system into which such equipment is incorporated or (b) VSD or VSI, as applicable, shall transfer or cause to be transferred the warranties for panels, inverters and racking by such manufacturers to Purchaser (which for panels shall be at least twenty (20) years from the date of installation and for inverters and racking shall be at least ten (10) years from the date of installation). Except as expressly set forth in this Section 3.4 , neither Seller is providing any warranty with respect to any panels, inverters, racking or any other component of any Project.
3.5 Insurance . Each Seller will procure and maintain or cause to be procured and maintained, at its sole cost and expense, insurance substantially in the types and amounts listed in Schedule 14 attached hereto covering the activities of its employees and representatives in connection with this Agreement.
ARTICLE 4
TERMINATION
4.1 Termination .
(a) The obligations to purchase and sell PV Systems under this Agreement shall automatically terminate on the earlier of (i) the Completion Deadline and (ii) the date on which any change in Applicable Laws takes effect that amends the Code so as to eliminate or reduce the value of the Tax Credit, but only to the extent such change in Applicable Laws would affect Projects to be sold pursuant to this Agreement after such date. For the avoidance of doubt, no such termination shall diminish, terminate or suspend the Parties’ other rights and obligations under this Agreement.
 
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(b) Without limiting a Seller’s or Purchaser’s ability to exercise any right or remedy to which it is entitled hereunder or under any of the Transaction Documents, this Agreement may be terminated prior to the first Purchase Date:
(1) if a Seller or Purchaser voluntarily commences bankruptcy, insolvency, reorganization, stay, moratorium or similar debtor-relief proceedings, or makes an assignment for the benefit of creditors, by Purchaser or a Seller, as applicable;
(2) if insolvency, receivership, reorganization, bankruptcy, or similar proceedings shall have been commenced against a Seller or Purchaser and such proceedings remain undismissed or unstayed for a period of sixty (60) calendar days, by Purchaser or a Seller, as applicable;
(3) by a Seller or Purchaser, upon twenty (20) Business Days’ prior written notice to Purchaser or a Seller or the Sellers, as applicable, in the event a Seller or the Sellers, as applicable (with respect to a termination by Purchaser) or Purchaser (with respect to a termination by the Sellers) is in material breach of a representation, warranty, covenant or agreement contained in this Agreement, and such breach has not been cured during such twenty (20) Business Day period and such breach would reasonably be expected to result in a Material Adverse Change on the non-defaulting Party; provided , however , that the Party (or the Parties, as applicable) seeking termination pursuant to this subsection (b)(3) is (or are, as applicable) not in breach in any material respects of its (or their, as applicable) representations, warranties, covenants or agreements contained in this Agreement;
(4) automatically and without further action by any Party on the date on which the LLC Agreement is terminated; and
(5) by the mutual written consent of the Sellers and Purchaser.
4.2 Procedure and Effect of Termination .
(a) The Party desiring to terminate this Agreement pursuant to Section 4.1 shall give written notice of such termination to the other Parties in accordance with Section 6.6 , specifying the provision pursuant to which such termination is effected.
(b) If this Agreement is terminated pursuant to Section 4.1(b) by a Seller, Purchaser, or all Parties then this Agreement shall be terminated in its entirety as of the date of such termination with no liability on the part of any Party hereto; provided , however , that (i) the agreements contained in this Section 4.2 , ARTICLE 5 and ARTICLE 6 shall survive the termination and (ii) no such termination shall relieve any Party of any liability or damages resulting from any breach by that Party of this Agreement or affect the rights of the other Parties to indemnification for such breach nor shall any such termination relieve any Party of any obligations that arose pursuant to this Agreement prior to such termination.
 
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4.3 Indemnification by Seller .
(a) VSD shall defend, indemnify and hold harmless Purchaser, its respective members, the Affiliates of each, and its and their respective officers, directors, employees and agents (“ Purchaser Indemnified Parties ”) from and against (i) any Losses (other than Tax Losses), to the extent arising out of or in connection with (A) the negligence, fraud or willful misconduct of Sellers, their Affiliates or their subcontractors or (B) any breach by Sellers of any of their representations, warranties or covenants in this Agreement or the other Transaction Documents and (ii) any Losses (other than Tax Losses) from third party claims or demands arising under or relating to any Seller’s performance or nonperformance under this Agreement; provided , however , in no event will any Seller be responsible for any such Losses to the extent caused by Purchaser’s gross negligence or willful misconduct.
(b) From and after the applicable Purchase Date, VSD will indemnify, defend and hold harmless Purchaser Indemnified Parties from any claims or liens (other than Permitted Liens) brought or filed in connection with the Projects that were purchased from the Sellers. VSD will discharge any such claim or lien within thirty (30) days after becoming aware of such claim or lien. Failure to so discharge shall entitle the Purchaser to pay such claim or lien and seek reimbursement from VSD for such discharged claim or lien, or to set off the amounts owed to VSD hereunder or ***.
(c) If as a result of the breach or inaccuracy of any representation or warranty set forth herein or the breach of any covenant herein any Purchaser Indemnified Party for U.S. federal income tax purposes shall lose the benefit of, shall not have the right to claim, shall suffer a disallowance or deferral of, shall suffer a delay in claiming, shall be required to recapture or shall not claim (as the result of a Final Determination or a written opinion of independent counsel selected by Purchaser and reasonably acceptable to a Seller that there is not at least a “more likely than not” position for such claim) all or any portion of the Tax Credits (a “ Tax Credit Loss ”) or cost recovery (depreciation) deductions (a “ Deduction Loss ” and, together with a Tax Credit Loss, a “ Tax Loss ”) assumed in the Base Case Model, then VSD shall pay to Purchaser the amount determined pursuant to Section 4.3(d) hereof.
(d) (1) If a Tax Loss as defined in Section 4.3(c) hereof shall occur, then VSD shall pay to Purchaser (i) in the case of a Tax Credit Loss, the amount, if any, of the Tax Credit lost, disallowed or recaptured reduced by any Tax Savings arising as a result of the Tax Credit Loss, (ii) in the case of a Deduction Loss, the amount, if any, by which the sum of the present values as of the date of the indemnity payment of the additional U.S. federal income taxes payable by each Purchaser Indemnified Party as a result of such Deduction Loss (computed using a discount rate of 15%) exceeds any Tax Savings arising as a result of the Deduction Loss, (iii) the amount of any U.S. federal interest, penalties, fines or additions to tax payable by each Purchaser Indemnified Party, and (iv) the net amount of any additional U.S. federal income Taxes payable by each Purchaser Indemnified Party, if any, as the result of (A) the inclusion of any payment made pursuant to this Section 4.3(d) in taxable income or (B) the increase in any Tax Loss as a result of any payment made pursuant to this Section 4.3 . As used herein, “ Tax Savings ” shall mean the sum of the present values as of the date of the indemnity payment of the reductions in the U.S. federal income taxes payable by each Purchaser Indemnified Party as a result of the Tax Credit Loss or Deduction Loss, as the case may be (computed using a discount rate of 15%).
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement
 
28

(2) For Tax reporting purposes, to the maximum extent permitted by the Code, each Party will agree to treat all amounts paid pursuant to this Section 4.3 as a non-taxable reimbursement of System Purchase Price. To the extent any such payment is includable as income of a Purchaser Indemnified Party as determined as a result of a Final Determination, by agreement of the Parties or, if there is no Final Determination or agreement, by an opinion of a nationally-recognized Tax counsel selected by the Purchaser Indemnified Party and reasonably acceptable to VSD that such amount is *** includable as income of the Purchaser Indemnified Party, the amount of the payment shall be increased by the amount of any U.S. federal income tax required to be paid by the Purchaser Indemnified Party upon the receipt or accrual of the payment. For purposes of calculating the amount of the U.S. federal income taxes required to be paid by each Purchaser Indemnified Party as a result of an amount paid pursuant to this Section 4.3 , including for purposes of determining the U.S. federal income tax required to be paid if a payment pursuant to this Section 4.3 is includable as income of a Purchaser Indemnified Party (and, in each case, any resulting Tax Savings), (A) each Purchaser Indemnified Party shall be deemed to have paid or to be required to pay U.S. federal income taxes for the relevant periods at the maximum marginal rates generally applicable to corporations in the taxable years in question and (B) it will be assumed that each Purchaser Indemnified Party will have sufficient taxable income to fully utilize on a current basis any tax benefits resulting from a Tax Loss or the events giving rise thereto.
(3) Any payment due to Purchaser from VSD pursuant to this Section 4.3 shall be paid within twenty (20) days after receipt by a Seller of a written demand therefor accompanied by a written statement describing in reasonable detail such Tax Loss and the computation of the amount so payable.
4.4 Indemnification by Purchaser .
Purchaser shall defend, indemnify and hold harmless each Seller, its Affiliates and its and their respective members, officers, directors, employees and agents (“ Seller Indemnified Parties ”) from and against (i) any Losses to the extent arising out of or in connection with (A) the negligence, fraud or willful misconduct of Purchaser or (B) any breach by Purchaser of any of its representations, warranties or covenants in this Agreement or the other Transaction Documents and (ii) any Losses from third-party claims or demands arising under or relating to Purchaser’s performance or nonperformance of Purchaser’s obligations under this Agreement; provided , however , in no event will Purchaser be responsible for any such Losses of a Seller to the extent caused by such Seller’s gross negligence or willful misconduct.
4.5 LIMITATION OF LIABILITY .
EXCEPT AS MAY BE EXPRESSLY PROVIDED HEREIN AND EXCEPT FOR INDEMNIFIED THIRD PARTY CLAIMS PURSUANT TO SECTION 4.3 OR SECTION 4.4 , AS APPLICABLE, IN NO EVENT WILL PURCHASER OR ANY SELLER BE LIABLE TO THE SELLERS OR PURCHASER, AS APPLICABLE, UNDER THIS AGREEMENT OR OTHERWISE FOR CONSEQUENTIAL, SPECIAL, INCIDENTAL, EXEMPLARY, STATUTORY, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT; PROVIDED THAT A LOSS OR INABILITY TO CLAIM TAX CREDITS OR
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement
 
29

OTHER ADVERSE TAX CONSEQUENCES SHALL NOT BE TREATED AS CONSEQUENTIAL, SPECIAL, INCIDENTAL, EXEMPLARY, STATUTORY, OR PUNITIVE DAMAGES. IN ADDITION, WHETHER ANY ACTION OR CLAIM IS BASED ON WARRANTY, CONTRACT, TORT OR OTHERWISE, UNDER NO CIRCUMSTANCES SHALL THE TOTAL LIABILITY OF PURCHASER OR THE TOTAL AGGREGATE LIABILITY OF BOTH SELLERS ARISING OUT OF OR RELATED TO THIS AGREEMENT EXCEED *** ; PROVIDED THAT SUCH LIMITATION SHALL NOT APPLY TO REDUCE ANY PARTY’S OBLIGATION TO INDEMNIFY ANOTHER PARTY (A) TO THE EXTENT OF THE PROCEEDS OF INSURANCE OTHERWISE PAYABLE TO THE INDEMNIFYING PARTY, OR (B) FOR LOSSES CAUSED BY THE GROSS NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT OF THE INDEMNIFYING PARTY.
4.6 Indemnification Procedures .
Except with respect to Taxes, each of a Seller’s obligations in Section 4.3 and Purchaser’s obligations in Section 4.4 above (each of a Seller and Purchaser, as applicable, the “ Indemnifying Party ”) with respect to any third party claim are contingent upon the Seller Indemnified Parties or the Purchaser Indemnified Parties (each, as applicable, the “ Indemnitee ”), promptly notifying the Indemnifying Party in writing of such claim and promptly tendering the control of the defense and settlement of any such claim to the Indemnifying Party at the Indemnifying Party’s expense and with the Indemnifying Party’s choice of counsel. In connection with the foregoing, the indemnification obligation of Indemnifying Party to the Indemnitee shall be reduced if and to the extent the failure of an Indemnitee to provide such notice and tender of control actually prejudices the outcome of any such claim; provided that the foregoing shall not apply so long as the Managing Member of Purchaser is an Affiliate of a Seller. The Indemnitee shall also cooperate with the Indemnifying Party, at the Indemnifying Party’s expense, in defending or settling such claim and the Indemnitee may join in defense with counsel of its choice at its own expense. An Indemnifying Party may not, without the prior written consent (such consent not to be unreasonably withheld) of an Indemnitee, settle, compromise or consent to the entry of any judgment regarding a third party claim, the defense of which has been assumed by the Indemnifying Party unless such settlement, compromise or consent (a) does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the Indemnitee; and (b) does not contain any equitable order, judgment or term that in any manner affects, restrains or interferes with the business of the Indemnitee or any of the Indemnitee’s Affiliates. An Indemnitee may not settle, compromise or consent to the entry of any judgment regarding any third party claim for which indemnification is sought and the defense of which has not been assumed by the Indemnifying Party, without the prior written consent of the Indemnifying Party, such consent not to be unreasonably withheld or delayed.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement
 
30

ARTICLE 5
DISPUTE RESOLUTION
5.1 Good Faith Negotiations .
In the event that any question, dispute, difference or claim arises out of or in connection with this Agreement, including any question regarding its existence, validity, performance or termination (a “ Dispute ”), of which a Seller (or the Sellers, as applicable) or Purchaser has provided notice to Purchaser or a Seller or the Sellers, as applicable, senior management personnel from such Seller (or Sellers, as applicable) and Purchaser shall meet and diligently attempt in good faith to resolve the Dispute within a period of thirty (30) calendar days following one Party’s written request to the other Party for such a meeting. If, however, a Seller (or the Sellers, as applicable) or Purchaser refuses or fails to so meet, or the Dispute is not resolved by negotiation, then Purchaser or a Seller (or the Sellers as applicable), may pursue such remedies available to it (or them as applicable) at law or in equity, subject to the provisions of this Agreement, including Section 5.2 .
5.2 SUBMISSION TO JURISDICTION .
THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING RELATING TO A DISPUTE AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO. EACH PARTY HEREBY AUTHORIZES AND ACCEPTS SERVICE OF PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST IT AS CONTEMPLATED BY THIS SECTION 5.2 BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO ITS ADDRESS FOR THE GIVING OF NOTICES AS SET FORTH IN SECTION 6.6 . NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
ARTICLE 6
GENERAL PROVISIONS
6.1 Exhibits and Schedules .
All Exhibits and Schedules attached hereto are incorporated herein by reference.
6.2 Amendment, Modification and Waiver .
This Agreement may not be amended or modified except by an instrument in writing signed by the Party against which enforcement of such amendment or modification is sought. Any failure of Seller or Purchaser to comply with any obligation, covenant, agreement or condition contained herein may be waived only if set forth in an instrument in writing signed by the Party to be bound thereby, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure.
Each Party’s rights and remedies under this Agreement are intended to be distinct, separate and cumulative and no such right or remedy therein or herein mentioned, whether exercised by such Party or not, is intended to be an exclusion or a waiver of any of the others.
 
Development, EPC and Purchase Agreement
 
31

6.3 Severability .
If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Applicable Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner materially adverse to any Party.
6.4 Expenses .
Each Party shall be responsible for all of its own legal costs, fees and expenses in connection with the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party; provided , that VSD shall reimburse Investor for up to $*** of any out-of-pocket transaction costs and expenses (including legal fees) actually incurred by Investor in connection with the transactions contemplated hereunder, regardless of whether such transaction occurs, and VSD shall make such reimbursement payment by the earlier of (a) ten (10) Business Days after Investor provides VSD with written evidence of Investor’s incurrence of any such costs and expenses and (b) the first Purchase Date.
6.5 Parties in Interest .
This Agreement shall be binding upon and, except as provided below, inure solely to the benefit of each Party and their successors and assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement.
6.6 Notices .
All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, by a nationally recognized overnight courier, by facsimile, or by electronic mail transmission or mailed by registered or certified mail (return receipt requested) to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):
 
 	(a)	If to VSD, to:	
Vivint Solar Developer, LLC
4931 N 300 W
Provo, UT 84604
Attn: Thomas Plagemann, Exec. VP of Capital Markets
Facsimile: (801) 229-7727
Email: thomas.plagemann@vivintsolar.com
With copies to:
Vivint Solar Developer, LLC
4931 N 300 W
Provo, UT 84604
Attn: C. Dan Black, General Counsel
Facsimile: (801) 765-5746
Email: dblack@vivintsolar.com
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement
 
32

 	(b)	If to VSI, to:	
Vivint Solar, Inc.
4931 N 300 W
Provo, UT 84604
Attn: Thomas Plagemann, Exec. VP of Capital Markets
Facsimile: (801) 229-7727
Email: thomas.plagemann@vivintsolar.com
With copies to
Vivint Solar, Inc.
4931 N 300 W
Provo, UT 84604
Attn: C. Dan Black, General Counsel
Facsimile: (801) 765-5746
Email: dblack@vivintsolar.com
 
 	(c)	If to Purchaser, to:	
Vivint Solar Rebecca Project Company, LLC
4931 N 300 W
Provo, UT 84604
Attn: Thomas Plagemann, Exec. VP of Capital Markets
Facsimile: (801) 229-7727
Email: thomas.plagemann@vivintsolar.com
With copies to:
Vivint Solar, Inc.
4931 N 300 W
Provo, UT 84604
Attn: C. Dan Black, General Counsel
Facsimile: (801) 765-5746
Email: dblack@vivintsolar.com
Blackstone Holdings I L.P.
c/o The Blackstone Group L.P.
345 Park Avenue
New York, New York 10154
Attn: John Finley
Facsimile: (212) 583-5749
Email: John.Finley@Blackstone.com
 
Development, EPC and Purchase Agreement
 
33

and
Attn: Chaim Miller
Email: Chaim.Miller@Blackstone.com
and
Attn: Joe Rocco
Email: Joe.Rocco@Blackstone.com
and
Email: Treasury-Operations@Blackstone.com
All notices and other communications given in accordance herewith shall be deemed given (i) on the date of delivery, if hand delivered, (ii) on the date of receipt, if faxed or sent by electronic mail, or if such date is not a Business Day, the next Business Day following the date of receipt, provided sender can and does provide evidence of successful transmission, (iii) on the fifth Business Day after the date of mailing, if mailed by registered or certified mail, return receipt requested, or (iv) on the second Business Day after the date of sending, if sent by a nationally recognized overnight courier; provided that a notice given in accordance with this Section 6.6 but received on any day other than a Business Day or after 5:00 pm New York, New York time, on a Business Day in the place of receipt shall be deemed given on the next Business Day in that place.
6.7 Counterparts .
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
6.8 Entire Agreement .
This Agreement constitutes the entire agreement among the Parties and supersedes all prior agreements, letters of intent and understandings, both written and oral, among the Parties with respect to the subject matter hereof.
6.9 Governing Law .
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING RELATING TO A DISPUTE HEREUNDER AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.
 
Development, EPC and Purchase Agreement
 
34

6.10 Public Announcements .
Except for statements made or press releases issued pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934 or as otherwise required by law, neither the Sellers nor Purchaser shall issue, or permit any of their respective Affiliates to issue, any press release or otherwise make any public statements with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other Party; provided that the Sellers shall not make any public announcement regarding this Agreement which has not been approved in writing by the Investor.
6.11 Assignment .
This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No Party shall assign this Agreement without the prior written consent of the other Parties, in its sole discretion; provided that a Seller and Purchaser may each assign this Agreement and any rights or obligations hereunder to any of its respective lenders as collateral security (and each of the Sellers and Purchaser hereby agrees to execute a third-party consent and direct agreement with such lender in connection therewith); provided , further that, notwithstanding anything to the contrary in this Agreement, at any time, without the prior written consent of Purchaser or Investor, VSI may assign any or all of its rights and obligations under this Agreement to VSD so long as VSD has all of the Permits required to perform the Installation, warranty and other services in Hawaii required by this Agreement, and immediately upon such assignment, VSI shall be automatically released of all of its obligations and liabilities under this Agreement to the extent of such assignment (except that, for the avoidance of doubt, no such assignment by VSI shall satisfy, modify or reduce its obligations under the Sponsor Guaranty). Any attempted assignment of this Agreement other than in strict accordance with this Section 6.11 shall be null and void and of no force or effect.
6.12 Relationship of Parties .
This Agreement does not constitute a joint venture, association or partnership between the Parties. No express or implied term, provision or condition of this Agreement shall create, or shall be deemed to create, an agency, joint venture, partnership or any fiduciary relationship between the Parties.
6.13 Successors and Assigns .
This Agreement shall inure to the benefit of each Party and each Party’s successors and permitted assigns, and shall be binding upon and enforceable against each Party and each Party’s successors and permitted assigns.
6.14 Access .
Purchaser hereby grants each Seller and its authorized agents, employees and subcontractors the right to access any Purchased Project for the purpose of such Seller performing its obligations under this Agreement. Each Seller hereby accepts such access rights and access rights granted pursuant to the applicable Customer Agreement and further accepts the
 
Development, EPC and Purchase Agreement
 
35

conditions at the site of each Purchased Project as they exist and acknowledges that Purchaser has no obligation to grant such Seller additional access rights or to change the conditions at such Project site. Such access rights granted pursuant to this Agreement will automatically expire immediately upon the termination or expiration of this Agreement.
6.15 Purchaser Member Authorization .
Notwithstanding anything in this Agreement to the contrary, Purchaser and each Seller hereby agree and acknowledge that, with respect to any direction, consent or approval described in this Agreement that Purchaser may provide that is governed by Section 8.3 of the LLC Agreement, a Seller shall not take any such direction of Purchaser or act under this Agreement unless Purchaser represents to such Seller in writing that the required member consents under such Section 8.3 of the LLC Agreement have been obtained.
[Remainder of page intentionally left blank]
 
Development, EPC and Purchase Agreement
 
36

IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be signed on its behalf as of the date first written above.

SELLERS :	
	
VIVINT SOLAR DEVELOPER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
	
VIVINT SOLAR, INC.,
a Delaware corporation	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
	
PURCHASER :	
	
VIVINT SOLAR REBECCA PROJECT COMPANY, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
Name:	 	Paul Dickson	
Title:	 	Vice President of Operations	
 
Development, EPC and Purchase Agreement

Schedule 1
List of Purchased Systems and Associated Customer Agreements
Part I. VSD Purchased Systems and Associated Customer Agreements

No.	  	Job ID	  	Host
Customer	  	Host Address	  	Description of PV
System
(Size and Cost)	  	Purchase Date	  	Installation Date
(or expected
Installation
Date)	
1.	  		  		  		  		  		  		
2.	  		  		  		  		  		  		
3.	  		  		  		  		  		  		
4.	  		  		  		  		  		  		
5.	  		  		  		  		  		  		
6.	  		  		  		  		  		  		
7.	  		  		  		  		  		  		
8.	  		  		  		  		  		  		
9.	  		  		  		  		  		  		
10.	  		  		  		  		  		  		
11.	  		  		  		  		  		  		
12.	  		  		  		  		  		  		
13.	  		  		  		  		  		  		
14.	  		  		  		  		  		  		
15.	  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Part II. VSI Purchased Systems and Associated Customer Agreements

No.	  	Job ID	  	Host
Customer	  	Host Address	  	Description of PV
System
(Size and Cost)	  	Purchase Date	  	Installation Date
(or expected
Installation
Date)	
1.	  		  		  		  		  		  		
2.	  		  		  		  		  		  		
3.	  		  		  		  		  		  		
4.	  		  		  		  		  		  		
5.	  		  		  		  		  		  		
6.	  		  		  		  		  		  		
7.	  		  		  		  		  		  		
8.	  		  		  		  		  		  		
9.	  		  		  		  		  		  		
10.	  		  		  		  		  		  		
11.	  		  		  		  		  		  		
12.	  		  		  		  		  		  		
13.	  		  		  		  		  		  		
14.	  		  		  		  		  		  		
15.	  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Schedule 2
Form of Tranche Presentation Certificate
TRANCHE PRESENTATION CERTIFICATE
This Tranche Presentation Certificate, dated                     , is issued pursuant to Section 2.1(c) of the Development, EPC and Purchase Agreement, dated as of February 13, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Rebecca Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meaning as in the Agreement.
[Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”) hereby requests acceptance of this Tranche in the amount described in item (iv) below and certifies that, with respect to all Projects constituting this Tranche (the “ Tranche Projects ”):
 
 	(i)	each Tranche Project meets all applicable conditions set forth in Section 2.1 of the Agreement, and Seller reasonably expects each Tranche Project to meet all conditions set forth in Section 2.3 of the Agreement on the Purchase Date for such Tranche Project;	
 
 	(ii)	(A) all representations and warranties of Seller set forth in Section 3.1 of the Agreement and of Seller and *** in the *** are true and correct as of the date hereof, (B) Seller reasonably expects that such representations and warranties shall be true and correct as of the Purchase Date for such Tranche Projects, (C) Seller and *** have complied with all of the covenants and other obligations in the Agreement and *** with which they are required to comply at or prior to the date hereof and (D) Seller reasonably expects that they will have complied with all of the covenants and other obligations in the Agreement and *** with which Seller and *** are required to comply at or prior to the Purchase Date for such Tranche Projects;	
 
 	(iii)	the name and address of each potential Host Customer, the size of each Tranche Project to be installed at such Host Customer’s property, and the System Purchase Price for each Tranche Project is set forth on Schedule 1 hereto;	
 
 	(iv)	the aggregate System Purchase Price for all of the Tranche Projects is         Dollars ($        );	
 
 	(v)	the FICO® Score for each Host Customer of the Tranche Projects is set forth on Schedule 1 hereto;	
 
 	(vi)	the status of construction with respect to each Tranche Project is set forth on Schedule 1 hereto;	
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement

 	(vii)	Attached hereto as Annex 1 is a copy of the Base Case Model updated to reflect the Tranche Projects;	
 
 	(viii)	fully executed copies of each Customer Agreement included with each Tranche Project will be made available by Seller to Purchaser via electronic transmission;	
 
 	(ix)	copies of the manufacturer’s warranties to the equipment used or to be used in the each of the Tranche Projects have been delivered to Purchaser by Seller; and	
 
 	(x)	Seller will deliver all information and documents requested by Purchaser pursuant to this Tranche Presentation Certificate.	

Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title:	 	]	
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title:	 	]	
 
Development, EPC and Purchase Agreement

Schedule 1 to Tranche Presentation Certificate 1

Job
ID	  	Host
Customer
Name	  	Address	  	System
Purchase
Price	  	Projected
ITC	  	Appraisal	  	PV
System
Size
(KW)	  	FICO ®
Score	  	Gross
Capital
Contribution	  	Removed
Project
Credit	  	Change
Order
Debit	  	Projected
Capital
Contribution
for Tranche	  	Projected
Capital
Contribution
from
Investor	  	Projected
Capital
Contribution
from
Managing
Member	  	Structural
Engineer	  	CAD
Drawing	  	PPA	  	Performance
Test	  	Construction
Status
(Installation
Date)	

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		

1  	Sellers shall transmit each version of Schedule 1 electronically to Investor and with such transmission shall include the data set forth on Schedule 1 in Excel format.	
 
Development, EPC and Purchase Agreement

Annex 1
Updated Base Case Model
[See attached]
 
Development, EPC and Purchase Agreement

Schedule 3
Forms of Customer Agreements
[See attached]
 
Development, EPC and Purchase Agreement

Schedule 4
Form of Bill of Sale and Assignment
BILL OF SALE AND ASSIGNMENT
This BILL OF SALE AND ASSIGNMENT is made and entered into as of [                    ], by and between Vivint Solar Rebecca Project Company, LLC, a Delaware limited liability company (“ Purchaser ”), and [Vivint Solar Developer, LLC, a Delaware limited liability company][Vivint Solar, Inc., a Delaware corporation] (“ Seller ”). Purchaser and Seller are referred to collectively herein as the “Parties”. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Development, EPC and Purchase Agreement dated as of February 13, 2014, by and among, Purchaser, [Vivint Solar Developer, LLC][Vivint Solar, Inc.] and Seller (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”).
RECITALS
WHEREAS, pursuant to the Agreement, Seller agreed to sell, and Purchaser agreed to purchase, Projects for an amount of consideration equal to the System Purchase Price of each Project.
WHEREAS, it is the Parties’ intention to reflect the transfer of the Projects that may be purchased by Purchaser from Seller pursuant to Section 2.1 of the Agreement, including without limitation the transfer of the PV Systems comprising such Projects, warranties related thereto, associated Customer Agreements and related rights thereto, and related Permits, Government Incentives and RECs, by the execution and delivery of this Bill of Sale and Assignment.
WHEREAS, the Parties now desire to carry out the intent and purpose of the Agreement by Seller’s execution and delivery to Purchaser of this Bill of Sale and Assignment as evidence of the sale, conveyance, assignment, transfer and delivery to Purchaser of any and all Purchased Systems and the assignment of the associated Customer Agreements and related rights.
NOW, THEREFORE, in consideration of the covenants, promises and representations set forth herein and in the Agreement and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Seller does hereby, effective from and after the date hereof, sell, convey, assign, transfer and deliver unto Purchaser all of Seller’s right, title and interest in, to and under the Projects identified on the Closing Request attached hereto as Annex 1 (the “ Purchased Projects ”), to Purchaser and its successors and assigns for their exclusive use and benefit forever, and free and clear of all Liens other than Permitted Liens. Purchaser hereby purchases and assumes all of Seller’s right, title and interest in and obligations with respect to each of such Projects, including without limitation any warranties arising in connection with the PV Systems for such Projects, on the date hereof, and Purchaser hereby assumes all of Seller’s rights and obligations under each Customer Agreement and Permit included as part of such Projects, all as consistent with the Agreement. For the avoidance of doubt, the transfers of rights under this paragraph 1 do not include a license to use any proprietary monitoring intellectual property of Vivint Solar, Inc.
 
Development, EPC and Purchase Agreement

2. Each Party shall reasonably cooperate with the other Party, execute and deliver, or cause to be executed and delivered, all such other instruments and take all such other actions as a Party may reasonably be requested to take at any time after the date hereof in order to effectuate the provisions and purposes of this Bill of Sale and Assignment and the Agreement and the transactions contemplated hereby and thereby, to vest title in the Purchased Projects more effectively in Purchaser, and to put Purchaser in exclusive possession and absolute and total control of the Purchased Projects.
3. Seller hereby constitutes and appoints Purchaser and its successors and assigns, the true and lawful attorney of Seller, with full power of substitution for Seller and in its name and stead or otherwise, for the benefit of Purchaser and its successors and assigns, to take the following actions in relation to the Purchased Projects:
(a) to demand and receive from time to time any and all Purchased Projects hereby sold, conveyed, assigned, transferred and delivered and give receipts and releases for and in respect of the same and any part thereof;
(b) to institute and prosecute in the name of and at the expense of Seller or otherwise, but for the benefit of Purchaser, any and all proceedings at law, in equity or otherwise, which Purchaser may deem proper in order to collect, assert or enforce any claim, right or title of any kind in and to the Purchased Projects hereby given, transferred, sold, conveyed, assigned and delivered, and to defend or compromise any and all actions, suits or proceedings in respect of any of the Purchased Projects; and
(c) to do all such acts and things in relation to the Purchased Projects as Purchaser shall deem advisable.
4. Seller hereby declares that the appointment made and the powers hereby granted are coupled with an interest and are and shall be irrevocable by Seller in any manner and for any reason.
5. Each of the Parties shall use its commercially reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable laws, and execute and deliver such documents and other papers, as may be required to carry out the provisions of this Bill of Sale and Assignment and consummate and make effective the transactions contemplated by this Bill of Sale and Assignment.
6. Each of the Parties acknowledges and agrees that neither the representations and warranties nor the rights and remedies of the Parties under the Agreement shall be deemed to be enlarged, modified or altered in any way by this Bill of Sale and Assignment (but each of such representations and warranties shall apply to this Bill of Sale and Assignment), and, to the extent there shall arise a conflict between this Bill of Sale and Assignment and the Agreement, the Agreement shall control.
 
Development, EPC and Purchase Agreement

7. This Bill of Sale and Assignment shall bind and shall inure to the benefit of the respective Parties and their assigns, transferees and successors.
8. This Bill of Sale and Assignment shall be construed and enforced in accordance with the laws of the State of New York.
9. This Bill of Sale and Assignment may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
[Remainder of page intentionally left blank]
 
Development, EPC and Purchase Agreement

IN WITNESS WHEREOF, this Bill of Sale and Assignment has been duly executed and delivered by a duly authorized representative of each of the Parties as of the date first above written.

SELLER :	
	
[VIVINT SOLAR DEVELOPER, LLC,a Delaware limited liability company	
		
By:	 	 	
Name:	 		
Title:	 	]	
	
[VIVINT SOLAR, INC.,
a Delaware corporation	
		
By:	 	 	
Name:	 		
Title:	 	]	
	
PURCHASER :	
	
VIVINT SOLAR REBECCA PROJECT COMPANY, LLC,
a Delaware limited liability company	
		
By:	 	 	
Name:	 		
Title:	 		
 
Development, EPC and Purchase Agreement

ANNEX 1
Closing Request
[To be attached]
 
Development, EPC and Purchase Agreement

Schedule 5
Form of Closing Request
CLOSING REQUEST
This Closing Request, dated                     , is issued pursuant to Section 2.1 of the Development, EPC and Purchase Agreement, dated as of February 13, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Rebecca Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defied herein shall have the same meaning as in the Agreement.
1. [Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”) hereby notifies Purchaser that the Purchase Date for the Tranche described in the Tranche Presentation Certificate, dated as of [DATE of Tranche Presentation Certificate], is [DATE]. Such Purchase Date is at least two (2) Business Days after the date of this Closing Request and no earlier than five (5) Business Days after the end of the Review Period for such Tranche.
2. Attached hereto as Schedule 1 is a list of all Accepted Projects that will be included in such Tranche, which includes the System Purchase Price for each such Project. Simultaneously with Seller’s delivery of this Closing Request to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedule 1 in Excel format.
3. The aggregate of the System Purchase Prices for all of the Accepted Projects in the Tranche is $[ — ].
4. Credits and Refunds:
a. [The Removed Project Credit specified in the Deficient Project and Cancelled Project Report dated [DATE], which has not been applied to System Purchase Prices for any other Tranche and is being applied to the aggregate of the System Purchase Prices for the Tranche hereof, is $[ — ]].
b. [The Change Order Credit specified in the Change Order Report dated [DATE], which has not been applied to System Purchase Prices for any other Tranche and is being applied to the aggregate of the System Purchase Prices for the Tranche hereof, is $[ — ]].
c. [The Change Order Debit specified in the Change Order Report dated [DATE], which has not been applied to System Purchase Prices for any other Tranche and is being applied to the aggregate of the System Purchase Prices for the Tranche hereof, is $[ — ]].
d. [The total Refund Credit being applied is $[Insert sum of Removed Project Credit and Change Order Credit less Change Order Debit].]
 
Development, EPC and Purchase Agreement

5. Change Orders:
 
 	a.	The aggregate change in kW size due to Change Orders between the Effective Date and the date hereof is [ — ] kW, and the aggregate change in kW size due to Change Orders for which a Change Order Credit is being applied to the aggregate of the System Purchase Prices for the Tranche hereof is [ — ] kW.	
 
 	b.	The aggregate amount of kW for which a System Purchase Price (including with respect to any Projects set forth in this Closing Request) has been paid in accordance with Section 2.1 of the Agreement as of the date hereof (adjusted for Deficient Projects, Cancelled Projects and Substituted Projects in accordance with Section 2.2(d) and Section 2.2(f)) is [ — ] kW.	
 
 	6.	On the Purchase Date, the Net Purchase Price of $[Insert the amount in Section 3 minus the amount in Section 4(d)] shall be wired by Purchaser to the following account:	
[INSERT BANK ACCOUNT INFORMATION]

Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title:	 	]	
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title:	 	]	
 
Development, EPC and Purchase Agreement

Schedule 1 to Closing Request
LIST OF ACCEPTED PROJECTS TO BE INCLUDED IN TRANCHE

Job ID	  	Host Customer	  	Address	  	Title of
Agreement	  	System
Size	  	System Purchase
Price	  	Net Purchase
Price	

	  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Schedule 6
Form of Transfer Notice
TRANSFER NOTICE
This Transfer Notice, dated                     (the “ Transfer Notice Date ”), is issued pursuant to the Development, EPC and Purchase Agreement, dated as of February 13, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Rebecca Project Company, LLC (“ Purchaser ”). Capitalized terms have the same meaning as in the Agreement.
The undersigned, a duly elected executive officer of [Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”), hereby certifies to Purchaser as follows:
 
 	1.	The undersigned is a duly elected executive officer of Seller currently holding the title below his or her signature and printed name.	
 
 	2.	Seller reasonably believes each of the Projects described on the attached Schedule 1 will be Placed in Service no later than the Completion Deadline.	
 
 	3.	The undersigned has reviewed each of the conditions precedent to consummate a Purchase of each of the Projects described on the attached Schedule 1 , and each such condition precedent has been satisfied.	
 
 	4.	Seller has complied with the applicable provisions of the Agreement and each applicable Customer Agreement, except as would not reasonably be expected to adversely affect in a material manner all of the Projects taken as a whole or Seller.	
 
 	5.	The information in Schedule 1 is complete and accurate. Simultaneously with Seller’s delivery of this Transfer Notice to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedule 1 in Excel format.	

SELLER :	
	
[VIVINT SOLAR DEVELOPER, LLC,
a Delaware limited liability company	
		
By:	 	 	
Name:	 		
Title:	 	]	
 
Development, EPC and Purchase Agreement

			
[VIVINT SOLAR, INC.,	
a Delaware corporation	
		
By:	 	 	
Name:	 		
Title:	 	]	
 
Development, EPC and Purchase Agreement

Schedule 1 to Transfer Notice

Job
ID	  	Host
Customer
Name	  	Address	  	System
Purchase
Price	  	Projected
ITC	  	Appraisal	  	PV
System
Size
(KW)	  	FICO ®
Score	  	Gross
Capital
Contribution	  	Removed
Project
Credit	  	Change
Order
Debit	  	Projected
Capital
Contribution
for Tranche	  	Projected
Capital
Contribution
from
Investor	  	Projected
Capital
Contribution
from
Managing
Member	  	Structural
Engineer	  	CAD
Drawing	  	Site
Photo	  	Performance
Test	  	Construction
Status
(Installation
Date)	

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Schedule 7
Form of Deficient Project and Cancelled Project Report
DEFICIENT PROJECT AND CANCELLED PROJECT REPORT
This Deficient Project and Cancelled Project Report, dated                     , is issued pursuant to Section 2.2(d) of the Development, EPC and Purchase Agreement, dated as of February 13, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Rebecca Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meanings as in the Agreement.
[Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”) hereby notifies Purchaser that (i) each of the PV Systems described on the attached Schedule A are Deficient Projects or Cancelled Projects (the “ Removed Projects ”), and (ii) the aggregate System Purchase Price for the Removed Projects identified on Schedule A results in a credit balance to Purchaser in the amount of $[ — ] (the “ Removed Project Credit ”) and Purchaser shall receive a credit in the amount of the Removed Project Credit [in the Closing Request dated [DATE]][in the True-Up Report].
Each of the Removed Projects shall be removed from Schedule 1 to the Agreement, and all right, title and interest in and to, and all risk of loss or damage to, the Removed Projects shall pass back to Seller. A revised Schedule 1 to the Agreement is attached hereto as Schedule B .
Simultaneously with Seller’s delivery of this Deficient Project and Cancelled Project Report to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedule A and Schedule B in Excel format.

Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title:	 	]	
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title:	 	]	
 
Development, EPC and Purchase Agreement

Schedule A to Deficient Project and Cancelled Project Report
List of Removed Projects

Job ID	  	Host Customer	  	Address	  	Title of
Agreement	  	System
Size	  	System Purchase
Price	  	Net Purchase
Price	

	  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Schedule 8
Form of Change Order Report
CHANGE ORDER REPORT
This Change Order Report, dated                     , is issued pursuant to Section 2.2(e) of the Development, EPC and Purchase Agreement, dated as of February 13, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Rebecca Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meanings as in the Agreement.
Schedule A hereto (i) identifies all Change Orders through the date of this Change Order Report that have not previously been reported in a Closing Request, (ii) describes any increases or decreases in the system size pursuant to each such Change Order and (iii) describes any increases or decreases in the System Purchase Price pursuant to each such Change Order identified.
[Vivint Solar Developer, LLC][Vivint Solar, Inc.] (“ Seller ”) hereby notifies Purchaser that the increases and decreases in the System Purchase Price for each Project affected by the Change Orders identified on Schedule A results in a [net credit balance to Purchaser in the amount of $[ — ] (the “ Change Order Credit ”)][net debit balance to Purchaser in the amount of $[ — ] (the “ Change Order Debit ”)], and Purchaser shall receive a [credit][debit] in the amount of the [Change Order Credit][Change Order Debit] in the [Closing Request dated [ — ]][True-Up Report].
The revised system sizes and System Purchase Price for each Project affected by such Change Orders shall be deemed to be the system size and system cost for such Project listed on Schedule 1 to the Agreement, and Seller shall revise Schedule 1 to reflect such information. A revised Schedule 1 to the Agreement is attached hereto as Schedule B .
Simultaneously with Seller’s delivery of this Change Order Report to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedule A and Schedule B in Excel format.

Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title:	 	]	
 
Development, EPC and Purchase Agreement

			
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title:	 	]	
 
Development, EPC and Purchase Agreement

Schedule 9
Form of Substitution Report
SUBSTITUTION REPORT
This Substitution Report, dated                     , is issued pursuant to Section 2.2(f) of the Development, EPC and Purchase Agreement, dated as of February 13, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Rebecca Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meanings as in the Agreement. [Vivint Solar Developer, LLC][Vivint Solar, Inc.] is hereinafter referred to as “ Seller ”.
1. Schedule 1 hereto is the Change Order Report describing the economic impact of all Change Orders agreed to through the date of the Change Order Report and not previously reported in a prior Substitution Report or Closing Request.
2. Schedule 2 hereto identifies all Accepted Projects in the Tranche that were determined to be Deficient Projects or Cancelled Projects through the date of this Substitution Report (including the System Purchase Prices therefor under the original Closing Request) and not previously reported in a prior Substitution Report or Closing Request.
3. Schedule 3 lists all Projects that are substituted for the above-referenced Deficient Projects and Cancelled Projects and in connection with any Change Orders that decrease the system sizes of any Projects (“ Substituted Projects ”) and the System Purchase Prices thereof. Purchaser shall have a Substituted Project Review Period of ten (10) days to confirm the conditions under Section 2.3 of the Agreement have been met with respect to the Substituted Projects. Each Substituted Project shall be a Non-Accepted Project unless Purchaser informs Seller in writing by the end of the Substituted Project Review Period that a proposed Substituted Project is an Accepted Project. The Purchase Date for the Substituted Projects that become Accepted Projects shall be the expiration of the applicable Substituted Project Review Period or, if such expiration does not occur on a Business Day, the first Business Day following such expiration.
4. A revised Schedule 1 to the Agreement is attached hereto as Schedule 4 .
5. A revised Schedule 1 to the applicable Transfer Notice is attached hereto as Schedule 5 .
6. A Closing Request for the Substituted Projects is being delivered by Seller to Purchaser concurrently with this Substitution Report. A Bill of Sale and Assignment and a Transfer Notice each dated the date of the Purchase Date of the Substituted Projects included in this Substitution Report shall be delivered by Seller to the Purchaser with respect to such Substituted Projects.
7. Simultaneously with Seller’s delivery of this Substitution Report to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedules 1 through 5 in Excel format.
 
Development, EPC and Purchase Agreement

			
Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title:	 	]	
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title:	 	]	
 
Development, EPC and Purchase Agreement

Schedule 10
Form of True-Up Report
TRUE-UP REPORT
This True-Up Report, dated                     , is issued pursuant to Section 2.2(h) of the Development, EPC and Purchase Agreement, dated as of February 13, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC (“ VSD ”), Vivint Solar, Inc. (“ VSI ”, together with VSD, the “ Sellers ”) and Vivint Solar Rebecca Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meanings as in the Agreement.
Part A of Schedule 1 hereto (i) identifies all Change Orders, (ii) describes any increases or decreases in the system size pursuant to each such Change Order and (iii) describes any increases or decreases in the System Purchase Price of the PV Systems pursuant to each such Change Order identified.
Part B of Schedule 1 hereto identifies all Deficient Projects and Cancelled Projects (including the System Purchase Price thereof under the original Closing Request).
Part C of Schedule 1 hereto lists all Projects that were substituted for the above-referenced Deficient Projects and Cancelled Projects which decrease the system sizes of any Projects (“ Substituted Projects ”) and the System Purchase Price thereof.
Part D of Schedule 1 hereto lists the total amounts that were netted out of or added to a System Purchase Price on a Purchase Date as set forth in a Closing Request to take into account the prior payment from Purchaser to a Seller associated with the related Deficient Project, Cancelled Project or Change Order being credited, debited or refunded on such related Purchase Date.
Part E of Schedule 1 hereto is a copy of the True-Up Base Case Model.
The Sellers hereby notify Purchaser that the increases and decreases in the System Purchase Price for each Project affected by the Changes Orders, Deficient Projects, Cancelled Projects and/or Substituted Projects, as applicable, identified on Schedule 1 hereto results in a net credit balance in favor of [Purchaser][the Sellers] in the amount of $[ — ][,including a net credit balance in favor of Purchaser from VSD in the amount of $[ — ] and a net credit balance in favor of Purchaser from VSI in the amount of $[ — ][, including a net credit balance in favor of VSD in the amount of $[ — ] and a net credit balance in favor of VSI in the amount of $[ — ]]. [VSD shall on its own behalf and on VSI’s behalf pay Purchaser][Each Seller hereby requests that Purchaser distributes to such Seller] in cash such amount within ten (10) days after the date of this True-Up Report.
A revised Schedule 1 to the Agreement reflecting the revised system sizes and System Purchase Price for each Project affected by such Change Orders, Deficient Projects, Cancelled Projects and/or Substituted Projects, as applicable, is attached hereto, and the revised system size and system cost for each such Project shall be deemed to be the system size and system cost listed on Schedule 1 to the Closing Request for each such Project.
 
Development, EPC and Purchase Agreement

Each Seller certifies that the applicable information in Schedule 1 is complete and accurate. Simultaneously with Seller’s delivery of this True-Up Report to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedules 1 through 5 in Excel format.

Sellers :	
	
VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title:	 		
	
VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title:	 		
 
Development, EPC and Purchase Agreement

Schedule 11
Form of Completion Certificate
COMPLETION CERTIFICATE
This Completion Certificate, dated                     , is issued pursuant to Section 2.2(b) of the Development, EPC and Purchase Agreement, dated as of February 13, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Rebecca Project Company, LLC (“ Purchaser ”). Capitalized terms used but not defined herein have the same meaning as in the Agreement.
The undersigned, being the                     of [Vivint Solar Developer, LLC][Vivint Solar, Inc.] (the “ Seller ”), does hereby certify that he/she is duly authorized to certify and does hereby certify on behalf of the Seller as follows:
1. Each of the representations and warranties of Seller in Section 3.1 of the Agreement and [of Seller or *** in any ***] that is qualified as to materiality or by Material Adverse Change is true and correct, and such representations that are not so qualified is true and correct in all material respects, in each case as of the date hereof;
2. The information provided in Schedule 1 attached hereto is complete and accurate as of the date hereof. Simultaneously with Seller’s delivery of this Completion Certificate to Purchaser, Seller has electronically transmitted to Investor the data set forth on Schedule 1 in Excel format.
3. Seller certifies that (i) installation of the Projects described on the attached Schedule 1 (the “ Completed Systems ”) was completed on the dates set forth therein, (ii) each Completed System passed the Performance Tests and was Placed in Service on the respective dates stated in Schedule 1 (each date a “ Completion Date ”), (iii) each Completed System passed inspection by the appropriate government building inspector on the respective dates stated in Schedule 1 (each date an “ Inspection Date ”) and the local electric utility where each Completed System is located sent a written communication with respect to each Completed System dated as of the respective dates stated in Schedule 1 authorizing parallel operation (each date a “ Utility Approval Date ”), (iv) all permits, governmental authorizations and other local utility approvals required for the installation and operation of each Completed System have been received, (v) prior to being Placed in Service, title to, and control over, each Completed System has been conveyed to Purchaser, (vi) each Completed System has been supplying electricity on a regular and continuous basis to the Host Customer under the applicable Customer Agreement since the respective dates stated on Schedule 1 (each date a “ Commercial Operation Date ”), which are no earlier than the dates on which the respective Completed Systems were Placed in Service, (vii) all warranties relating to the Completed System from any manufacturer of any part thereof are in full force and effect, (viii) each Completed System is in working order, and (ix) the system cost for each Completed System is as stated on Schedule 1 .
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
Development, EPC and Purchase Agreement

			
Seller :	
	
[VIVINT SOLAR DEVELOPER, LLC	
		
By:	 	 	
Name:	 		
Title:	 	]	
	
[VIVINT SOLAR, INC.	
		
By:	 	 	
Name:	 		
Title:	 	]	
 
Development, EPC and Purchase Agreement

Schedule 1 to Completion Certificate

Job ID	  	Host
Customer Name	  	Address	  	PV System
Size	  	Completion Date	  	Inspection
Date	  	Utility
Approval
Date	  	Commercial
Operation
Date	  	System
Purchase
Price	

	  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		
 
Development, EPC and Purchase Agreement

Schedule 12
Performance Tests
Upon completion of installation, the applicable Seller will run the system for 5 minutes and measure power output (peak kW energy production) at the inverter during such time. Each Performance Test will be successfully completed if the power output reading at the inverter matches the seasonally-adjusted and weather-adjusted expected output of the PV System.
 
Development, EPC and Purchase Agreement

Schedule 13
Approved Suppliers
Racking
 
•	 	Zep Solar, Inc.	
 
•	 	Mounting Solutions	
 
•	 	Ecofasten	
 
•	 	Ecolibrium	
Inverters
 
•	 	Enphase Energy, Inc.	
 
•	 	SMA	
 
•	 	SolarEdge	
Panels
 
•	 	Trina Solar	
 
•	 	Yingli Green Energy Americas, Inc.	
 
•	 	Canadian Solar, Inc.	
 
•	 	SolarWorld	
 
•	 	ReneSola Ltd.	
 
Development, EPC and Purchase Agreement

Schedule 14
Insurance Requirements
Each Seller, at its sole cost, and before commencement of the work or service to be performed under the Agreement, shall procure and maintain the following coverages with insurers rated by A.M. Best as A-IX or higher:
 
 	1.1	WORKERS’ COMPENSATION AND EMPLOYERS’ LIABILITY	
 
 	1.1.1	Workers’ compensation and basic employers’ liability insurance for all employees in accordance with Applicable Law, with a minimum limit of $1,000,000.	
 
 	1.2	COMMERCIAL GENERAL LIABILITY	
 
 	1.2.1	Comprehensive or commercial general liability insurance written on an occurrence basis with a combined single limit of at least $1,000,000 per occurrence and $2,000,000 in the aggregate, including premises and operations liability, owners’ and contractors’ protective, products and completed operations liability, blanket contractual liability, personal injury liability, bodily injury and “broad form” property damage coverage, blanket contractual liability, completed operations, explosion and collapse hazard coverage. The insurance shall cover all of such Seller’s operations.	
 
 	1.3	BUSINESS AUTO	
 
 	1.3.1	Comprehensive automobile liability insurance with bodily injury, death and property damage with combined single limits of at least $1,000,000 per occurrence covering vehicles owned, hired or non-owned.	
 
 	1.4	PROPERTY INSURANCE	
 
 	1.4.1	Property insurance covering such Seller’s tools and equipment.	
 
 	1.5	BUILDER’S RISK INSURANCE	
 
 	1.5.1	Builder’s Risk Insurance – Installation Floater with a coverage limit of $25,000 per job site, $250,000 per occurrence and $5,000,000 in the aggregate shall be written on an all-risk, replacement cost basis.	
 
 	1.6	ADDITIONAL INSURANCE PROVISIONS	
 
 	1.6.1	Such Seller shall provide Purchaser with a certificate of insurance, properly completed and signed by an authorized insurance company representative, before the commencement of work or service.	
 
Development, EPC and Purchase Agreement

 	1.6.2	Such Seller’s Commercial General Liability and Business Automobile Liability policies shall name Purchaser, its members and Affiliates, and their respective officers, agents, representatives and employees as additional insureds for work performed under or incidental to this Agreement.	
 
 	1.6.3	Commercial General Liability, including products and completed operations, shall be maintained for a minimum of three (3) years following the completion of work or service contemplated in this Agreement.	
 
 	1.6.4	The limits of insurance or applicable deductibles shall not limit the liability of such Seller or relieve such Seller of any liability or financial responsibility.	
 
 	1.6.5	Any deductible or self-insured retention shall be the responsibility of such Seller.	
 
 	1.6.6	Such insurance as is afforded by any policies contemplated by this Agreement for the benefit of Purchaser shall be primary and non-contributory as respects any claims, losses or liability arising directly or indirectly from such Seller’s operations.	
 
 	1.6.7	In the event and for so long as any property insurance (including the limits or deductibles thereof) hereby required by this Schedule 14 to be maintained, other than insurance required by law to be maintained, shall not be available on commercially reasonable terms in the commercial insurance market, Purchaser shall not unreasonably withhold its agreement to waive such requirement to the extent the maintenance thereof is not so available or, to the extent applicable, may allow such Seller to obtain the best available property insurance comparable to the requirements of this Schedule 14 on commercially reasonable terms then available in the commercial insurance market.	
 
Development, EPC and Purchase Agreement

Exhibit 10.39
EXECUTION VERSION
MAINTENANCE SERVICES AGREEMENT
This MAINTENANCE SERVICES AGREEMENT, dated as of February 13, 2014 (the “ Effective Date ”), is entered into by and between Vivint Solar Provider, LLC, a Delaware limited liability company (“ Provider ”), and Vivint Solar Rebecca Project Company, LLC, a Delaware limited liability company (the “ Company ,” and together with Provider, the “ Parties ,” and each, a “ Party ”).
RECITALS
WHEREAS, the Company desires to engage Provider to provide certain maintenance services on the terms and subject to the conditions as more fully described in this Agreement, and Provider is willing to provide such services on those terms and conditions;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . The following capitalized terms used in this Agreement have the following meanings:
“ Accounting Fee ” is defined in Section 2.1(d) .
“ Accounting Services ” means the services listed in Part 1 of Exhibit A .
“ Administrative Services ” means the services listed in Part 2 of Exhibit A .
“ Affiliate ” means, with respect to any Person, a Person that directly, or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common Control with, the Person specified; provided , however , that Provider and Developer, on the one hand, and the Company, on the other hand, shall not be considered Affiliates for purposes of this Agreement.
“ Agreement ” means this Maintenance Services Agreement, together with all schedules and exhibits hereto, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Applicable Laws ” means all applicable laws of any Governmental Authority, including, without limitation, laws relating to consumer leasing and protection and any ordinances, judgments, decrees, injunctions, writs and orders or like actions of any Governmental Authority and rules and regulations of any federal, regional, state, county, municipal or other Governmental Authority.

“ Business Day ” means any day other than Saturday, Sunday and any other day on which banks in New York are authorized to be closed.
“ Company ” is defined in the preamble of this Agreement.
“ Company Indemnitee ” is defined in Section 4.2 .
“ Company Permits ” is defined in Section 2.7(c) .
“ Control ” means, with respect to a Person, the possession, directly or indirectly, of the power to direct or cause the direction of such Person’s management or policies, whether through the ownership of voting securities, by contract or otherwise.
“ Covered Projects ” is defined in Section 2.1(a) .
“ Customer Agreement ” means, in respect of each Covered Project, the “Customer Agreement” as defined in the EPC Agreement with respect to such Covered Project.
“ Default Rate ” means, for any day, the sum of (a) ten percent (10%) per annum plus (b) the prime rate published in The Wall Street Journal for such day or, if The Wall Street Journal ceases to publish for any reason such rate of interest, the prime lending rate as set forth on the Bloomberg page PRIMBB Index (or successor page) for such day.
“ Effective Date ” is defined in the preamble of this Agreement.
“ Emergency Services ” is defined in Section 2.2 .
“ EPC Agreement ” means that certain Development, EPC and Purchase Agreement, by and among Vivint Solar Developer, LLC, Sponsor and the Company, dated as of the date hereof, as may be amended, restated, supplemented or otherwise modified from time to time.
“ Force Majeure Event ” means any act or event that prevents the Party claiming to be affected by the Force Majeure Event from performing its obligations in accordance with this Agreement, if such act or event is beyond the reasonable control, and not the result of the fault or negligence, of the Party claiming to be affected by the Force Majeure Event, and such Party had been unable to overcome such act or event with the exercise of due diligence (including the expenditure of reasonable sums). “Force Majeure Event” shall include action by a Governmental Authority ( provided , that such action has been resisted in good faith by all reasonable legal means); the failure to act on the part of any Governmental
 
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Authority ( provided , that such action has been timely requested and diligently pursued); national or regional third party labor disputes, civil strike, work stoppage, slow-down or lock-out; flood, earthquake, fire, lightning or wind; epidemic, war, terrorism, riot, economic sanction or embargo; civil disturbance; act of god; unavailability of electricity from the utility grid, equipment, supplies or products; failure of equipment not utilized by or under the control of the Party claiming to be affected by the Force Majeure Event; or any “Force Majeure Event” under and as defined in any Customer Agreement.
“ Government Incentive ” means a payment, including, without limitation, a payment in respect of any performance-based incentive or rebates, by a utility, electric distribution company or federal, state or local Governmental Authority or quasi-governmental agency, and any extension of the program (including by converting the program into a refundable tax credit or tax refund program), in each case as an inducement to a utility customer, solar company or installer to install or use solar equipment, except that neither (a) Tax Credits and depreciation deductions for U.S. federal income tax purposes nor (b) any credits or payments available under any Host Customer’s utility’s “net metering” program for energy generated by the applicable Project that are reserved to such Host Customer under the applicable Customer Agreement shall be considered Government Incentives.
“ Governmental Authority ” means any foreign, federal, state, local or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrating body or other governmental authority having jurisdiction or effective control over Provider, the Company, their respective Affiliates or any Project.
“ Host Customer ” means a residential customer under a Customer Agreement for a Covered Project.
“ Indemnifiable Loss ” means any claim, demand, suit, loss, liability, damage, obligation, payment, cost, Tax, penalty or expense (including, without limitation, the cost and expense of any action, suit, proceeding, assessment, judgment, settlement or compromise relating thereto and reasonable attorneys’ fees and reasonable disbursements in connection therewith) for personal injury or property damage.
“ Indemnifying Party ” is defined in Section 4.3 .
“ Indemnitee ” is defined in Section 4.3 .
“ Initial Term ” is defined in Section 3.1 .
“ Insolvent ” means (a) a Party has filed a voluntary petition in bankruptcy or has been adjudicated as bankrupt or insolvent, or has filed any petition or answer or consent seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future applicable federal, state
 
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or other statute or law relative to bankruptcy, insolvency or other relief for debtors, or has sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator or liquidator of such Party or of all or any substantial part of its properties (the term “acquiesce,” as used in this definition, includes the failure to file a petition or motion to vacate or discharge any order, judgment or decree within fifteen (15) calendar days after entry of such order, judgment or decree); (b) a court of competent jurisdiction has entered an order, judgment or decree approving a petition filed against a Party seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy act, or any other present or future applicable federal, state or other statute or law relating to bankruptcy, insolvency or other relief for debtors, and such Party has acquiesced and such decree has remained unvacated and unstayed for a total of sixty (60) calendar days (whether or not consecutive) from the date of entry thereof, or a trustee, receiver, conservator or liquidator of such Party has been appointed with the consent or acquiescence of such Party and such appointment has remained unvacated and unstayed for a total of sixty (60) calendar days, whether or not consecutive; (c) a Party has admitted in writing its inability to pay its debts as they mature; (d) a Party has given notice to any governmental body of insolvency or pending insolvency, or suspension or pending suspension of operations; (e) a Party has made an assignment for the benefit of creditors or taken any other similar action for the protection or benefit of creditors; or (f) an involuntary case is commenced against a Party by the filing of a petition under any chapter of Title 11 of the United States Bankruptcy Code, as now constituted or hereafter amended, and within sixty (60) days after the filing thereof either the petition is not dismissed or the order for relief is not stayed or dismissed.
“ Investor ” is defined in the LLC Agreement.
“ Lien ” means any lien, security interest, mortgage, hypothecation, encumbrance or other restriction on title or property interest.
“ LLC Agreement ” means that certain Limited Liability Company Agreement of the Company, dated as of the date hereof, by and between Vivint Solar Rebecca Manager, LLC, a Delaware limited liability company, and Blackstone Holdings I L.P., a Delaware limited partnership, as may be amended, restated, supplemented or otherwise modified from time to time.
“ Maintenance Log ” is defined in Section 2.5 .
“ Maintenance Services Fee ” is defined in Section 2.1(b) .
“ Management and Administrative Fee ” is defined in Section 2.1(c) .
“ Managing Member ” is defined in the LLC Agreement.
“ Master EPC Agreement ” is defined in the LLC Agreement.
 
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“ Maximum Liability ” means, with respect to a Party, an amount equal to the total amount paid or to be paid by one Party to the other Party under the terms of this Agreement in any given year.
“ Non-Included System Services ” means services other than System Services and services ancillary thereto.
“ Parties ” or “ Party ” is defined in the preamble of this Agreement.
“ Parts ” means components of a PV System.
“ Permit ” means any permit, franchise, lease, order, license, notice, certification, approval, exemption, qualification, right or authorization from or registration, notice or filing with any Governmental Authority.
“ Permitted Liens ” is defined in the LLC Agreement.
“ Person ” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization or governmental entity or any department or agency thereof.
“ Project ” is defined in the EPC Agreement.
“ Project States ” is defined in the EPC Agreement.
“ Provider ” is defined in the preamble of this Agreement.
“ Provider Indemnitee ” is defined in Section 4.1 .
“ Provider Permits ” is defined in Section 2.7(a) .
“ Prudent Industry Standards ” means the practices, methods, equipment, specifications and standards of safety, as the same may change from time to time, as are used or approved by a significant portion of the residential rooftop distributed solar electric generation industry operating in the applicable Project States in residential rooftop distributed solar electric generating systems or facilities of a type and size similar to the Projects as good, safe and prudent engineering practices in connection with the design, construction, operation, maintenance, repair and use of electrical and other equipment, facilities and improvements of such residential rooftop distributed solar electric generating system or facility, with commensurate standards of safety, performance, dependability, efficiency and economy, in each case in light of the facts known and circumstances existing at the time any decision is made or action is taken, that would be expected to accomplish the desired result in a manner materially consistent with applicable law, regulation, permits, codes, standards and equipment manufacturer’s recommendations.
 
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“ PV System ” is defined in the EPC Agreement.
“ REC ” is defined in the LLC Agreement.
“ REC Services ” has the meaning set forth in paragraph 8 of Part 3 of Exhibit A .
“ Renewal Term ” is defined in Section 3.1 .
“ Sponsor ” is defined in the LLC Agreement.
“ Subcontractor ” means any person to whom Provider subcontracts any of its obligations under this Agreement, including the vendors and any person to whom such obligations are further subcontracted of any tier.
“ System Services ” means, collectively, the services listed in Part 3 of Exhibit A and all other obligations of Provider under ARTICLE II , other than the Accounting Services and the Administrative Services.
“ Tax ” or “ Taxes ” means:
(a) any taxes, customs, duties, charges, fees, levies, penalties or other assessments imposed by any federal, state, local or foreign taxing authority, including, but not limited to, income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, net worth, employment, occupation, payroll, withholding, social security, alternative or add-on minimum, ad valorem, transfer, stamp, or environmental tax, or any other tax, custom, duty, fee, levy or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax, or additional amount attributable thereto; and
(b) any liability for the payment of amounts with respect to payment of a type described in clause (a) , including as a result of being a member of an affiliated, consolidated, combined or unitary group, as a result of succeeding to such liability as a result of merger, conversion or asset transfer or as a result of any obligation under any tax sharing arrangement or tax indemnity agreement.
“ Tax Credits ” means energy credits under Section 48 of the Internal Revenue Code of 1986, as amended, or any successor to such section.
“ Tax Return ” means any return, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including any information return, claim for refund, amended return or declaration of estimated Tax.
“ Term ” is defined in Section 3.1 .
“ Termination Notice ” is defined in Section 3.2(c) .
 
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“ Third Party Claim ” means any claim, action or proceeding made or brought by any Person who is not a Party or an Affiliate of a Party.
Section 1.2 Construction . Unless the context otherwise requires, the singular shall include the plural, the masculine shall include the feminine and neuter, and vice versa. The term “includes” or “including” shall mean “including without limitation”. The terms “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the schedules and exhibits hereto and certificates delivered hereunder) and not to any particular provision of this Agreement. References to a section, article, exhibit or schedule shall mean a section, article, exhibit or schedule to this Agreement, and reference to a given agreement or instrument shall be a reference to that agreement or instrument as modified, amended, supplemented or restated through the date as of which such reference is made.
ARTICLE II
MAINTENANCE SERVICES; STANDARDS
Section 2.1 In General .
(a) Provider will provide the System Services for the Projects listed on Exhibit C hereto (the “ Covered Projects ”) to the Company throughout the Term. System Services will commence for each individual Covered Project when such Covered Project is “Placed in Service” under and as defined in the EPC Agreement. It is the intention of the Parties that Exhibit C shall include all Projects purchased by the Company under the EPC Agreement, which are not later deemed Cancelled Projects or Deficient Projects (as such terms are defined in the EPC Agreement), and shall not include Projects no longer owned by the Company (including due to termination of the underlying Customer Agreement); and the Parties shall execute updates to Exhibit C as necessary to reflect the addition or removal of Covered Projects.
(b) The Company will compensate Provider for the System Services, other than the Non-Included System Services, by paying Provider a fee of $1,893 per quarter per DC megawatt of installed nameplate capacity of the Covered Projects that have successfully passed the applicable Performance Test under and as defined in the EPC Agreement, prorated for any capacity not available for a full quarter, and escalating annually beginning on the first anniversary hereof in an amount equal to 2% of the fee per DC megawatt paid for the preceding year (the “ Maintenance Services Fee ”). Provider will invoice the Company for System Services on a quarterly basis within thirty (30) calendar days following the end of each calendar quarter (with the invoice being pro rated for any period in which System Services were not provided for a particular Project for the entire quarter). Payment will be due to Provider at the address or to the account indicated in the invoice within ten (10) calendar days after the Company receives such invoice. If such payment is not received by Provider within such ten (10) calendar day period, the payment will be considered late and will bear interest at the Default Rate (or the highest rate permissible under Applicable Law, if less) until paid.
 
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(c) The Company will compensate Provider for Administrative Services by paying Provider a monthly fee in an amount equal to 15% of the total gross revenues received in the prior month by the Company from Host Customers in respect of electricity sales from Covered Projects under the Customer Agreements (the “ Management and Administrative Fee ”). Within thirty (30) days following the end of each month, Provider will notify the Company of the total gross revenues received in the prior month by the Company from Host Customers in respect of electricity sales from PV Systems under the Customer Agreements, and will invoice the Company for the Management and Administrative Fee based on such revenues. Payment will be due to Provider at the address or to the account indicated in the invoice within ten (10) calendar days after the Company receives such invoice, subject to the Company’s contest rights under Section 9.12 . If such payment is not received by Provider within such ten (10) day period, the payment will be considered late and will bear interest at the Default Rate (or the highest rate permissible under Applicable Law, if less) until paid.
(d) The Company will compensate Provider for Accounting Services by paying Provider an annual accounting fee of $25,000, escalating annually beginning on the first anniversary hereof in an amount equal to 2% of the fee paid for the preceding year (the “ Accounting Fee ”). Provider will invoice the Company for Accounting Services on an annual basis within thirty (30) calendar days following the end of each calendar year (with the invoice being pro rated for any period in which Accounting Services were not provided for the entire calendar year). Payment will be due to Provider at the address or to the account indicated in the invoice within ten (10) calendar days after the Company receives such invoice, subject to the Company’s contest rights under Section 9.12 . If such payment is not received by Provider within such ten (10) calendar day period, the payment will be considered late and will bear interest at the Default Rate (or the highest rate permissible under Applicable Law, if less) until paid.
Section 2.2 Non-Included System Services . If the Company desires Provider to perform any Non-Included System Services, then the Company will submit a written request for such services to Provider. If Provider agrees to provide the Non-Included System Services, it will do so in accordance with the provisions of this Agreement. Provider will not perform Non-Included System Services until the Parties have reached agreement in writing setting forth what the Non-Included System Services will cost. Notwithstanding the foregoing, if Provider determines, in accordance with Prudent Industry Standards, that it must furnish any Non-Included System Services on an emergency basis in order to prevent an imminent danger of injury, loss or damage (“ Emergency Services ”), if the situation allows, Provider shall attempt to notify the Company via telephone and email (using the telephone number and email address provided for the Company in Section 9.2 below) prior to the performance of any Emergency Services. Should Provider be unable to notify or contact the Company prior
 
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to providing any Emergency Services, Provider shall be authorized to perform such Emergency Services without prior approval from the Company and shall notify the Company immediately thereafter in writing specifying the nature of the emergency and the Emergency Services performed; provided that Provider (a) will not have any duty to perform such Emergency Services nor will it incur any liability or obligation by reason of not performing any such Emergency Services and (b) shall cease to perform Emergency Services and not incur any costs and/or expenses in connection therewith immediately after such imminent danger of injury, loss or damage to a Project has passed without the prior consent of the Company (it being agreed and understood that no reimbursement shall be owing by the Company to Provider for Emergency Services performed in violation of this proviso (b) ). Provider shall perform any such Emergency Services in accordance with the provisions of this Agreement. The Company shall reimburse Provider for all reasonable expenses associated with Provider’s performance of any such Emergency Services, except to the extent such Emergency Services are required due to (i) the negligence of or failure of Vivint Solar Developer, LLC to install the applicable Covered Project in accordance with the terms of the EPC Agreement and the costs therefor are covered under the warranty provided in Section 3.4 of the EPC Agreement, solely if Provider is then an Affiliate of Vivint Solar Developer, LLC or (ii) Provider’s negligence or its failure to perform its material obligations under this Agreement.
Section 2.3 Standard of Performance . Provider shall perform its services under this Agreement in accordance with Applicable Law, Prudent Industry Standards, all material Company Permits with respect to each applicable Covered Project, and in compliance with the terms and conditions of the Customer Agreements, except to the extent the Company instructs Provider not to do so in the event the Company is contesting in good faith the validity or application of any such Applicable Law or such term and condition of the Customer Agreement, in any reasonable manner.
Section 2.4 Access . The Company hereby grants Provider and its authorized agents, employees and Subcontractors a license to access the Projects for the purpose of Provider performing its obligations under this Agreement; provided , that such license shall be subject to the restrictions in the Customer Agreements on the Company’s rights to access the Projects. Such license will automatically expire immediately upon the termination or expiration of this Agreement.
Section 2.5 Maintenance Log . Provider will keep and maintain, in accordance with Prudent Industry Standards, a separate maintenance log for each Covered Project in a paper or electronic format (“ Maintenance Log ”). The Maintenance Log will contain, among other things, descriptions of maintenance services performed by Provider, follow-up activities, if any, that are required, material and equipment costs, and other information relevant to Provider’s maintenance activities. Provider shall furnish to the Company the Maintenance Log upon the Company’s request and immediately prior to the expiration or earlier termination of this Agreement, provided that Provider shall not be obligated to furnish to the Company the Maintenance Log more than once per calendar year unless such request is in connection with the expiration or earlier termination of this Agreement.
 
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Section 2.6 Remote Monitoring . For purposes of determining when repair services are necessary, Provider will monitor and evaluate, in accordance with Prudent Industry Standards, the information gathered through remote monitoring of each Covered Project as well as the maintenance and inspection reports; provided that no such monitoring or evaluating (or lack thereof) will relieve Provider of any of its obligations under this Agreement.
Section 2.7 Permits .
(a) Provider will be responsible, at Provider’s sole cost and expense, for procuring, obtaining, maintaining and complying with all material Permits required to perform the System Services under this Agreement other than Company Permits (“ Provider Permits ”).
(b) The Company agrees to cooperate with and assist Provider in obtaining all Provider Permits required to perform the System Services, and Provider will reimburse the Company for its reasonable costs in providing such assistance.
(c) The Company shall obtain and maintain all Permits (i) that are required for the general ownership, operation and maintenance of the Projects or (ii) that Provider may, from time to time, notify the Company are required by Applicable Laws to be obtained by the Company in its name in order to allow Provider to perform the System Services but excluding the Provider Permits (collectively, the “ Company Permits ”). Upon the Company’s request, Provider shall reasonably cooperate with the Company with respect to obtaining all Company Permits.
Section 2.8 Reporting .
(a) Within thirty (30) days after the end of each month, Provider will deliver to the Company (i) a report on Host Customer collections (by “Tranche” as defined in the EPC Agreement), developments and proposed actions in the form of Exhibit D , (ii) a report of project operations, in the form of Exhibit E and (iii) a report on milestones in the form of Exhibit G . Simultaneously with Provider’s delivery of such reports to the Company, Provider shall transmit electronically all of the data set forth on such reports in Excel format to Investor.
(b) Provider will deliver the notices, information and reports described in paragraphs 1 , 4 , 5 and 8 of Part 3 of Exhibit A as and when contemplated thereunder.
Section 2.9 Access to Data and Meters .
 
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Throughout the Term, and thereafter to the extent relevant to calculations necessary for periods prior to the end of the Term and subject to any confidentiality obligation owed to any third party and to any restrictions on disclosure of information that may be subject to intellectual property rights restricting disclosure, the Company will allow Provider:
(a) access to all data relating to the electricity production of any Covered Project and the weather conditions at each site where a Covered Project is located; and
(b) access to all data from all meters.
Provider will be entitled to use the foregoing data for its internal purposes and make such data available to third parties for analysis.
Section 2.10 Manufacturer Warranty . To the extent that manufacturer warranties cover replacement and repair of covered equipment during the Term, Provider, on behalf of the Company, shall use commercially reasonable efforts to submit, process and pursue, at the Company’s sole cost and expense, warranty coverage; provided , that the Company shall have no obligation to pay costs of Provider in connection with pursuit of warranty coverage, the costs of which are covered under the warranty provided in Section 3.4 of the EPC Agreement or are required to be indemnified by Vivint Solar Developer, LLC under the EPC Agreement, solely if Provider is then an Affiliate of Vivint Solar Developer, LLC. The Company will provide such full and complete cooperation as Provider may reasonably require in connection with the submission, processing and pursuit of warranty coverage.
Section 2.11 Sales, Use and Other Similar Taxes .
(a) The consideration payable pursuant to Sections 2.1(b) , 2.1(c) , 2.1(d) and 2.2 shall, except as otherwise provided in this Section 2.11 , exclude any and all Taxes imposed on the sale of the services described in Sections 2.1(b) , 2.1(c) , 2.1(d) and 2.2 , and any and all Taxes otherwise imposed on, sustained or incurred with respect to, or applicable to, such services; provided , that the Company shall bear any and all sales, use and other similar taxes imposed on the sale of such services. Provider shall properly and timely collect from the Company and remit any such sales, use and other similar taxes if required to do so by Applicable Laws.
(b) Provider shall cooperate with the Company and take any reasonably requested action in order to minimize any sales, use or other similar taxes imposed on the sale of the services described in Sections 2.1(b) , 2.1(c) , 2.1(d) and 2.2 , including providing sales and use tax exemption certificates or other documentation necessary to support Tax exemptions. Provider agrees to provide the Company such information and data as reasonably requested from time to time, and to fully cooperate with the Company, in connection with (i) the reporting of any sales, use or other similar taxes payable pursuant to this Agreement, (ii) any audit relating to any such sales, use or other similar taxes, or (iii) any assessment, refund, claim or proceeding relating to any such sales, use or other similar taxes.
 
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Section 2.12 Assignment of Renewable Energy Credits .
(a) Assignment of Renewable Energy Credits . The Company hereby grants, conveys, transfers, assigns, and delivers unto Provider (or its designee), without recourse to the Company, all of the Company’s rights, title and interest in and to all RECs solely so that the Provider may perform the REC Services on behalf of the Company in accordance with Prudent Industry Standards. Until any sale of RECs to a third party, Provider shall keep all RECs free and clear of all Liens (except for Permitted Liens). After any such sale and until its delivery to the Company of the purchase price for such REC Provider shall keep its right to receive such purchase price and such amounts received free of all Liens. Subject to the provisions of Section 2.12(d) of this Agreement, the Company hereby delegates, without recourse by Provider to the Company, any and all duties, obligations, responsibilities, claims, demands and other commitments in connection with the RECs, as applicable, unto Provider.
(b) Acceptance of Assignment of Renewable Energy Credits . Provider hereby accepts and assumes the RECs and accepts the delegation under Section 2.12(a) of this Agreement from the date hereof.
(c) Transfer of Renewable Energy Credit Proceeds . Provider hereby covenants that it will transfer any and all proceeds generated by the sale of any RECs to the Company in accordance with the stated REC Services.
(d) Reversion of Renewable Energy Credits upon Termination . Upon the expiration of this Agreement in accordance with Section 3.1 or a termination of this Agreement in accordance with Sections 3.2 or any other provision herein, any RECs that remain with the Provider that have not been sold shall automatically be transferred back to the Company and all right, title and interest in such RECs shall automatically revert back to the Company without any further action of the Parties required, and all rights to receive payment for any RECs that have been sold but for which Provider has not received payment shall be immediately assigned to the Company, without any further action required by the Company. Prior to any such expiration or promptly upon any such termination, Provider shall, on behalf of Company and at Provider’s sole cost, make such applications to the pertinent Governmental Authorities or other third parties as may be required to establish and shall establish one or more accounts within the attribute tracking systems or generation information systems that are recognized by Governmental Authorities for the purpose of tracking and trading RECs. Provider shall deliver to the Company all account information, application materials, statements of qualification and other documentation as may be required for the Company to create, receive, track and transfer RECs after such an expiration or termination. The Provider’s obligations under this Section 2.12(d) shall survive the expiration or termination of this Agreement.
 
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(e) Cooperation and Assistance . The Company agrees to cooperate with and assist Provider in obtaining and completing any documentation required to perform the REC Services.
ARTICLE III
TERM AND TERMINATION
Section 3.1 Term . The initial term of this Agreement, including, without limitation, the period during which System Services are to be provided for the Covered Project, shall commence on the Effective Date and shall thereafter continue for a period of twenty-five (25) years (the “ Initial Term ”), unless and until earlier terminated pursuant to the provisions of this Agreement. After the Initial Term, this Agreement shall automatically renew for successive one-year terms (each, a “ Renewal Term ”), unless a written notice of non-renewal is given by either Party to the other Party at least one hundred eighty (180) calendar days prior to the expiration of the Initial Term or then applicable Renewal Term. In the event that either Party delivers a notice of non-renewal pursuant to the immediately preceding sentence, or in the event that this Agreement is otherwise terminated in accordance with its terms, Provider will, for a period of one hundred eighty (180) calendar days following the delivery or receipt of such notice, as applicable, use commercially reasonable efforts to assist a replacement provider selected by the Company in assuming the duties, responsibilities and obligations of Provider hereunder. The Initial Term and all subsequent Renewal Terms, if any, are referred to collectively as the “ Term .”
Section 3.2 Termination .
(a) Termination by the Company . The Company may terminate this Agreement immediately upon the occurrence of any of the following:
(i) Provider becomes Insolvent;
(ii) any failure of Provider to pay any amount owed to the Company under this Agreement (and not contested under Section 9.12 ) within ten (10) Business Days after the due date for such payment; provided that the Company has first provided at least ten (10) calendar days’ prior written notice to Provider of its intention to terminate for such failure pursuant to Section 3.2 below and Provider does not pay such due amount within such ten (10) calendar day period;
(iii) any failure by Provider to perform any of its material obligations under this Agreement, which failure is not remedied within thirty (30) calendar days after written notice of such failure from the Company to Provider; provided that if (x) such failure can be remedied, (y) such failure cannot
 
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reasonably be remedied within such thirty (30) calendar day period, and (z) Provider commences cure of such failure within such thirty (30) calendar day period and thereafter diligently seeks to remedy the failure, then the Company will not be entitled to terminate this Agreement until such time as Provider ceases reasonable efforts to cure such failure unless such failure continues for a period of a ninety (90) calendar days from the original written notice from the Company; or
(iv) a Force Majeure Event occurs that prevents Provider from providing a material part of the System Services for a continuous period of at least ninety (90) calendar days; and the Company reasonably concludes such prevention is not reasonably likely to be remedied within a further period of ninety (90) calendar days.
(b) Termination by Provider . Provider may terminate this Agreement in the event of any of the following:
(i) the Company becomes Insolvent;
(ii) any failure of the Company to pay any amount owed to Provider under this Agreement (and not contested under Section 9.12 ) within ten (10) Business Days after the due date for such payment; provided that Provider has first provided at least ten (10) calendar days’ prior written notice to the Company and Investor of its intention to terminate for such failure pursuant to Section 3.2(c) below and the Company does not pay such due amount within such ten (10) calendar day period; or
(iii) any failure by the Company to perform any of its material obligations under this Agreement, which failure, if not a payment breach, is not remedied within thirty (30) calendar days of written notice of such failure from Provider to the Company; provided that if (A) such failure can be remedied, (B) such failure cannot reasonably be remedied within such thirty (30) calendar day period, and (C) the Company commences cure of such failure within such thirty (30) calendar day period and thereafter diligently seeks to remedy such failure, then Provider will not be entitled to terminate this Agreement until such time as the Company ceases reasonable efforts to cure such failure unless such failure continues for a period of ninety (90) calendar days from the original written notice from Provider.
(c) Notice . A notice of termination given pursuant to the foregoing provisions of this Section 3.2 (the “ Termination Notice ”) must specify in reasonable detail the circumstances giving rise to the Termination Notice. Except to the extent otherwise provided herein, this Agreement will terminate on the date specified in the Termination Notice, which date will be no earlier than the date upon which the applicable Party is entitled to effect such termination as provided above.
 
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(d) Preservation of Rights . Termination of this Agreement will not affect any rights or obligations as between the Parties that may have accrued prior to such termination or that expressly or by implication are intended to survive termination, whether resulting from the event giving rise to termination or otherwise.
ARTICLE IV
INDEMNIFICATION
Section 4.1 Indemnification of Provider by the Company . The Company will indemnify, defend and hold harmless Provider, its officers, directors, employees, members, partners, Affiliates and agents (each, a “ Provider Indemnitee ”) from and against any and all Indemnifiable Losses asserted against or suffered by any Provider Indemnitee in any way relating to, resulting from or arising out of or in connection with any Third Party Claims against a Provider Indemnitee, in each case, to the extent arising out of or in connection with (i) the gross negligence, fraud or willful misconduct of the Company, its Affiliates or its Subcontractors (other than Provider), (ii) any breach by the Company of any of the representations, warranties or covenants of the Company under this Agreement or (iii) a default under the Customer Agreement as a result of a breach by the Company of its obligations hereunder; provided that in each case, the Company will have no obligation to indemnify Provider with respect to any Indemnifiable Losses resulting from (a) the gross negligence, fraud or willful misconduct of Provider, its Affiliates or its Subcontractors (other than the Company), (b) the breach by Provider of any of its covenants or warranties under this Agreement, or (c) so long as the Managing Member is an Affiliate of Provider, the breach by the Managing Member of any of its covenants or warranties under the LLC Agreement.
Section 4.2 Indemnification of the Company by Provider . Provider will indemnify, defend and hold harmless the Company, its officers, employees, members, partners, Affiliates and agents (each, a “ Company Indemnitee ”) from and against any and all Indemnifiable Losses asserted against or suffered by any Company Indemnitee in any way relating to, resulting from or arising out of or in connection with any Third Party Claims against a Company Indemnitee, in each case, to the extent arising out of or in connection with (i) the gross negligence, fraud or willful misconduct of Provider, its Affiliates or its Subcontractors, (ii) any breach by Provider of any of the representations, warranties or covenants of Provider under this Agreement or (iii) a default under the Customer Agreement as a result of a breach by Provider of its obligations hereunder; provided that in each case, Provider will have no obligation to indemnify the Company either with respect to any Indemnifiable Losses resulting from the gross negligence, fraud or willful misconduct of the Company, its Affiliates or Subcontractors (other than Provider) or the breach by the Company of any of its covenants or warranties under this Agreement.
Section 4.3 Indemnification Procedures . Each of the Company’s obligations in Section 4.1 and Provider’s obligations in Section 4.2 above (each of Company and
 
15

Provider, as applicable, the “ Indemnifying Party ”) are contingent upon the Provider Indemnitee or the Company Indemnitee, as applicable (each, the “ Indemnitee ”), promptly notifying the Indemnifying Party in writing of the Third Party Claim and, except with respect to Taxes, promptly tendering the control of the defense and settlement of any such Third Party Claim to the Indemnifying Party at the Indemnifying Party’s expense and with the Indemnifying Party’s choice of counsel. In connection with the foregoing, the indemnification obligation of Indemnifying Party to the Indemnitee shall be reduced if and to the extent the failure of an Indemnitee to provide such notice and tender of control actually prejudices the outcome of any such claim; provided , however , that the foregoing notice requirement shall not apply if Provider or one of its Affiliates is the Managing Member at such time. The Indemnitee shall also cooperate with the Indemnifying Party, at the Indemnifying Party’s expense, in defending or settling such Third Party Claim and the Indemnitee may join in defense with counsel of its choice at its own expense. An Indemnifying Party may not, without the prior written consent (such consent not to be unreasonably withheld) of an Indemnitee, settle, compromise or consent to the entry of any judgment regarding a Third Party Claim the defense of which has been assumed by the Indemnifying Party unless such settlement, compromise or consent (i) does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the Indemnitee; and (ii) does not contain any equitable order, judgment or term that in any manner affects, restrains or interferes with the business of the Indemnitee or any of the Indemnitee’s Affiliates. An Indemnitee may not settle, compromise or consent to the entry of any judgment regarding any Third Party Claim for which indemnification is sought and the defense of which has not been assumed by the Indemnifying Party, without the prior written consent of the Indemnifying Party, such consent not to be unreasonably withheld or delayed. Each Indemnifying Party’s obligations under Section 4.1 or Section 4.2 , as applicable, shall survive the expiration or termination of this Agreement.
ARTICLE V
FORCE MAJEURE
Section 5.1 If either Party (subject to Section 3.2(a)(iii) in the case of Provider) is rendered wholly or in part unable to perform its obligations under this Agreement because of a Force Majeure Event, then such Party will be excused from whatever performance is affected by the Force Majeure Event; provided that:
(a) such Party will, as soon as is reasonably possible but in any event no later than ten (10) Business Days (i) upon the occurrence of the Force Majeure Event, give the other Party written notice describing the particulars of the occurrence, and (ii) after termination of the Force Majeure Event, give the other Party written notice summarizing the effects of the Force Majeure Event and the actions taken in connection therewith;
 
16

(b) the suspension of performance will be of no greater scope and of no longer duration than is required by the Force Majeure Event;
(c) no obligation of such Party that arose before the occurrence causing the suspension of performance and that could and should have been fully performed before such occurrence through the exercise of commercially reasonable efforts or pursuant to the terms of this Agreement will be excused as a result of such occurrence; and
(d) no Force Majeure Event shall excuse any Party from its payment obligations under this Agreement.
ARTICLE VI
LIMITATIONS ON LIABILITY
Section 6.1 Aggregate Limit of Liability .
(a) In no event will any Party be liable under this Agreement to another Party for any lost profits (other than revenues from Customer Agreements, Government Incentives or sales of RECs) of, or any consequential, special, incidental, exemplary, statutory or punitive damages incurred by, the other Party to this Agreement; provided that this provision will in no way limit any such liability of a Party to another Party under any other agreement between the Parties; provided , further , that a loss, disallowance or recapture of, or inability to claim, Tax Credits or accelerated depreciation or cost recovery deductions shall not be treated as consequential, special, incidental, exemplary, statutory or punitive damages for purposes of this Agreement.
(b) In no event will one Party be liable under this Agreement to the other Party for an aggregate amount in any given year in excess of the Maximum Liability for such year unless and to the extent such liability is (i) the result of (A) fraud, gross negligence or willful misconduct of a Party, (B) the failure of a Party to pay any amount due under this Agreement or (C) a claim for indemnity asserted by a Party on account of a Third Party Claim against such Party, or (ii) with respect to Taxes.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties of the Company .
(a) The Company is a limited liability company duly organized and existing in good standing under the laws of the State of Delaware.
(b) The Company possesses all requisite power and authority to enter into and perform this Agreement and to carry out the transactions contemplated herein.
 
17

(c) The Company’s execution, delivery and performance of this Agreement have been duly authorized and this Agreement has been duly executed and delivered and constitutes the Company’s legal, valid and binding obligation, enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency and other legal principles pertaining to creditors’ rights.
(d) Except as otherwise contemplated herein, no material consent or approvals are required in connection with the execution, delivery and performance by the Company of this Agreement.
(e) The execution, delivery and performance by the Company of this Agreement will not (i) violate any Applicable Law applicable to the Company, (ii) result in any breach of, or constitute any default under, any material contractual obligation of the Company or (iii) result in, or require, the imposition of any Lien on any of the properties or revenues of the Company.
Section 7.2 Representations and Warranties of Provider .
(a) Provider is a limited liability company duly organized and existing in good standing under the laws of the State of Delaware.
(b) Provider possesses all requisite power and authority to enter into and perform this Agreement and to carry out the transactions contemplated herein.
(c) Provider’s execution, delivery and performance of this Agreement have been duly authorized and this Agreement has been duly executed and delivered and constitutes Provider’s legal, valid and binding obligation, enforceable against Provider in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency and other legal principles pertaining to creditors’ rights.
(d) Except as otherwise contemplated herein, no material consent or approvals are required in connection with the execution, delivery and performance by Provider of this Agreement.
(e) The execution, delivery and performance by Provider of this Agreement will not (i) violate any Applicable Law applicable to Provider, (ii) result in any breach of, or constitute any default under, any material contractual obligation of Provider or (iii) result in, or require, the imposition of any Lien on any of the properties or revenues of Provider.
 
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ARTICLE VIII
INSURANCE
Section 8.1 Provider will procure and maintain or cause to be procured and maintained during the Term, at its sole cost and expense, insurance substantially in the types and amounts listed in Exhibit B covering the activities of its employees and representatives in connection with this Agreement; provided that, if the same is not available at commercially reasonable rates and commercially reasonable terms and Provider obtains the prior written consent of Investor, not to be unreasonably withheld, conditioned or delayed, Provider may procure alternate types and amounts of insurance.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Independent Contractors . The Parties acknowledge that Provider will perform its obligations under this Agreement and act at all times as an independent contractor, and nothing in this Agreement will be interpreted or applied so as to make the relationship of any of the Parties that of partners, joint venturers or anything other than independent contractors, and the Parties expressly disclaim any intention to create a partnership, joint venture, association or other such relationship. Neither Party is granted any right on behalf of the other Party to assume or create any obligation or responsibility binding such other Party. None of Provider’s employees, Subcontractors or any such Subcontractor’s employees will be or will be considered to be employees of the Company. Provider will be fully responsible for the payment of all wages, salaries, benefits and other compensation to its employees and all amounts due and owing to Subcontractors.
Section 9.2 Notices . Any notice required or authorized to be given hereunder or any other communication provided for under the terms of this Agreement will be in writing and will be delivered personally, by reputable next Business Day express courier services or by electronic mail or facsimile transmission addressed to the relevant Party at the address stated below or at any other address notified by that Party as its address for service. Any notice so given personally shall be deemed to have been served on delivery, any notice so given by express courier service shall be deemed to have been served the next Business Day after the same shall have been delivered to the relevant courier, and any notice so given by electronic mail or facsimile transmission shall be deemed to have been served on transmission and receipt of confirmation of successful transmission during normal business hours (or if successful transmission occurs after normal business hours, then on the next succeeding Business Day). The Parties’ addresses for notice and service are:

To Provider:	  	Vivint Solar Provider, LLC	
	  	c/o Vivint Solar, Inc.	
	  	4931 N. 300 West	
 
19

			
	  	Provo, UT 84604	
	  	Attn: Thomas Plagemann	
	  	Facsimile: (801) 229-7727	
	  	Email: thomas.plagemann@vivintsolar.com	
		
With a copy to:	  	Vivint Solar, Inc.	
	  	4931 N. 300 West	
	  	Provo, UT 84604	
	  	Attn: Dan Black	
	  	Facsimile: (801) 765-5746	
	  	Email: dblack@vivintsolar.com	
		
To the Company:	  	Vivint Solar Rebecca Project Company, LLC	
	  	c/o Vivint Solar, Inc.	
	  	4931 N. 300 West	
	  	Provo, UT 84604	
	  	Attn: Thomas Plagemann	
	  	Facsimile: (801) 229-7727	
	  	Email: thomas.plagemann@vivintsolar.com	
		
With copies to:	  	Vivint Solar, Inc.	
	  	4931 N. 300 West	
	  	Provo, UT 84604	
	  	Attn: Dan Black	
	  	Facsimile: (801) 765-5746	
	  	Email: dblack@vivintsolar.com	
		
	  	Blackstone Holdings I L.P.	
	  	c/o The Blackstone Group L.P.	
	  	345 Park Avenue	
	  	New York, NY 10154	
	  	Attn: John Finley	
	  	Fax: 212-583-5749	
	  	John.Finley@Blackstone.com	
		
	  	Chaim Miller	
	  	Chaim.Miller@Blackstone.com	
		
	  	Joe Rocco	
	  	Joe.Rocco@Blackstone.com	
		
	  	Treasury-Operations@Blackstone.com	
 
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Section 9.3 Governing Law . This Agreement will be governed by and construed in accordance with the law of the State of New York applicable to contracts made and to be performed in the State of New York. THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING RELATING TO A DISPUTE AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.
Section 9.4 Amendment, Modification and Waiver . This Agreement may not be amended or modified except by an instrument in writing signed by the Party against which enforcement of such amendment or modification is sought. Any failure of a Party to comply with any obligation, covenant, agreement or condition contained herein may be waived only if set forth in an instrument in writing signed by the other Party, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure.
Section 9.5 Rights and Remedies . Each Party’s rights and remedies under this Agreement are intended to be distinct, separate and cumulative and no such right or remedy therein or herein mentioned, whether exercised by such Party or not, is intended to be an exclusion or a waiver of any of the others.
Section 9.6 Entire Agreement . This Agreement reflects the Parties’ entire agreement with respect to the matters covered by the Agreement and supersedes any prior agreements, commitments, drafts, communication, discussions and understandings, oral or written, with respect thereto.
Section 9.7 Further Assurances . The Parties agree to do such further acts and things and execute and deliver such additional agreements and instruments as the other may reasonably require to consummate, evidence or confirm the agreements contained herein in the matters contemplated hereby.
Section 9.8 Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under all Applicable Laws and regulations. If, however, any provision of this Agreement is prohibited by or invalid under any such law or regulation in any jurisdiction, it will as to such jurisdiction be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it will be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provisions of this Agreement, or the validity or effectiveness of such provision in any other jurisdiction.
 
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Section 9.9 Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 9.10 Assignment . Neither Party may assign its rights or obligations hereunder without the prior written consent of the other Party, which consent will not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, without the need for consent from the other Party, (a) either Party may upon written notice transfer or assign this Agreement to any person or entity succeeding to all or substantially all of the assets of such Party or to a successor entity in a merger or acquisition transaction, and (b) either Party may collaterally assign this Agreement to any of its lenders as security; provided , however , that any such assignee shall agree to be bound by the terms and conditions hereof. No assignment of such rights or obligations may be made by either Party with respect to less than all of the Covered Projects.
Section 9.11 Company Member Authorization . Notwithstanding anything in this Agreement to the contrary, Provider and the Company hereby agree and acknowledge that, with respect to any direction, consent or approval described in this Agreement that the Company may provide that is governed by Section 8.3 of the LLC Agreement, Provider shall not take any such direction of the Company or act under this Agreement unless the Company represents to Provider in writing that the required member consents under such Section 8.3 of the LLC Agreement have been obtained. For such purpose, Provider acknowledges and agrees that “Class A Members” (as defined in the LLC Agreement) are intended third-party beneficiaries of this Agreement. For any consents required from, or notices to, Investor under this Agreement, Provider acknowledges and agrees that Investor is an intended third-party beneficiary of this Agreement.
Section 9.12 Payment Dispute . In the event that any Party disputes any amount payable hereunder, such amount shall be placed into a segregated escrow account as security for amounts in dispute until such time as the dispute is fully and finally resolved. Interest on such escrowed amount shall be paid to the prevailing Party in the dispute. Each Party agrees to cooperate in good faith in establishing an escrow account with an independent escrow agent for the purposes of this provision.
Section 9.13 Performance During Dispute . Provider shall continue to perform its obligations under this Agreement during the pendency of any dispute.
[Signature Pages Follow]
 
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IN WITNESS WHEREOF, Provider and the Company have each duly executed this Agreement as of the Effective Date.

COMPANY :	
	
VIVINT SOLAR REBECCA PROJECT COMPANY, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
	 	Name:  Paul Dickson	
	 	Title:    Vice President of Financing	
	
PROVIDER :	
	
VIVINT SOLAR PROVIDER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Paul Dickson	
	 	Name:  Paul Dickson	
	 	Title:    Vice President of Financing	

EXHIBIT A
Part 1: SCOPE OF ACCOUNTING SERVICES
 
1.	Books and Records	
 
 	•	 	Provider shall maintain complete and accurate financial books of accounts, financial records and supporting documents in accordance with Section 7.2(a) of the LLC Agreement and make such books and records available for inspection in accordance with Section 7.2(c) of the LLC Agreement.	
 
 	•	 	Provider shall prepare, or cause to be prepared by an “Independent Accounting Firm” (as defined in the LLC Agreement), the Company’s financial statements required to be delivered pursuant to Section 7.4 of the LLC Agreement.	
 
2.	Tax Accounting	
 
 	•	 	Except for Tax Returns described in paragraph 9 of Part 3 of this Exhibit A , Provider shall prepare, or cause to be prepared, all Tax Returns of the Company in accordance with Sections 7.5 and 7.6 of the LLC Agreement.	
Part 2: SCOPE OF ADMINISTRATIVE SERVICES
 
1.	Company Bank Accounts	
 
 	•	 	Provider shall maintain, in the name and for the exclusive benefit of the Company, accounts at one or more banks or other financial institutions in accordance with Section 7.3 of the LLC Agreement.	
 
 	•	 	Provider shall, in the name and for the exclusive benefit of the Company, make any investments with funds not required for the near-term working capital needs of the Company in accordance with Section 7.3 of the LLC Agreement.	
 
2.	Other Services	
 
 	•	 	Provider shall represent the Company in business matters with third parties in consultation with the Managing Member and present to the Company for execution such additional documents reasonably deemed necessary or desirable by Provider to effectuate the transactions and agreements authorized by the Company.	
 
A-1

 	•	 	Provider shall provide such readily available information to the Company as it may reasonably request from time to time.	
 
 	•	 	Provider shall perform on behalf of the Company all reporting and other routine administrative responsibilities reasonably believed by the Company to be required to appropriately maintain the limited liability company documents of the Company.	
Part 3: SCOPE OF SYSTEM SERVICES
Provider shall provide all services required for the operation, maintenance and performance of the obligations of the Company as required by the Customer Agreements or as otherwise determined by Provider in its discretion, including but not limited to:
 
1.	Operation and Maintenance :	
 
 	•	 	Provider will (i) keep all Covered Projects in good repair, good operating condition, appearance and working order in compliance with the manufacturer’s recommendations, the Customer Agreements, all manufacturer’s warranties and the Company’s standard practices (but in no event less than Prudent Industry Standards), (ii) properly service all components of all Covered Projects following the manufacturer’s written operating and servicing procedures and in accordance with the Customer Agreements, and (iii) replace any Part of a Covered Project as provided in Part 3, paragraph 2 of this Exhibit A and make modifications and alterations to a Covered Project as provided in Part 3 , paragraph 3 of this Exhibit A .	
 
 	•	 	Upon request by the Company, Provider shall promptly furnish or cause to be furnished to the Company such information as may be required to enable the Company to file any reports required to be filed by the Company with any Governmental Authority because of the Company’s ownership of any Covered Project.	
 
2.	Replacement of Parts :	
 
 	•	 	In accordance with the Customer Agreements, Provider will promptly replace or cause to be replaced all Parts that may from time to time be incorporated or installed in or attached to a Covered Project and that may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged	
 
A-2

 	beyond repair or permanently rendered unfit for use under the Customer Agreements for any reason whatsoever, except as otherwise provided in Part 3, paragraph 3 of this Exhibit A ; provided that the Company shall bear sole responsibility for the cost and expense of all replacement panels, inverters and racking not covered by a manufacturer’s warranty, so long as the unavailability of a manufacturer’s warranty is not due to the failure of the Provider to comply with any such manufacturer’s warranty.	
 
 	•	 	Provider may, in accordance with the Customer Agreements, remove in the ordinary course of maintenance, service, repair, overhaul or testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use; provided that Provider, except as otherwise provided in Part 3 , paragraph 3 of this Exhibit A , will replace such Parts as promptly as practicable. All replacement Parts will be free and clear of all Liens (except in the case of replacement property temporarily installed on an emergency basis and solely for such time as necessary to permanently install the definitive property) and will be in as good operating condition as, and will have a value and utility at least equal to, the Parts replaced assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof; provided that the Company shall bear sole responsibility for the cost and expense of all replacement panels, inverters and racking not covered by a manufacturer’s warranty, so long as the unavailability of a manufacturer’s warranty is not due to the failure of the Provider to comply with any such manufacturer’s warranty.	
 
3.	Alterations, Modifications and Additions :	
 
 	•	 	Provider will make such alterations and modifications in and additions to Covered Projects as may be required from time to time to comply with Applicable Law, Prudent Industry Standards and the terms of the applicable Customer Agreements; provided , however , that Provider may, in good faith, contest the validity or application of any such Applicable Law in any reasonable manner, but diligently and in good faith, and only if there is no material risk of the loss or forfeiture of a Covered Project or any interest therein or breach of the related Customer Agreement; and provided further , that Provider’s failure to make (or cause to be made) any such alterations, modifications or additions will not constitute noncompliance with the requirements of this paragraph 3 or a breach of Provider’s undertaking hereunder for so long a period as may be necessary to remedy such failure, if such failure can be remedied, so long as during such period Provider is using due diligence and best efforts to remedy such failure.	
 
4.	Customary Information : Provider will furnish or cause to be furnished to the Company:	
 
A-3

 	•	 	promptly upon its receipt of notice thereof, or an officer of Provider becoming aware of the existence thereof, a notice stating that a breach of, or a default under, any contractual obligation of the Company or another party that could reasonably be expected to adversely affect in a material manner the Company or all of the Covered Projects taken as a whole and specifying the nature and period of existence thereof and what action Provider has taken or is taking or proposes to take with respect thereto; and	
 
 	•	 	from time to time such other information regarding the Covered Projects as the Company may reasonably request.	
 
5.	Reports of Liability :	
 
 	•	 	Provider shall give prompt written notice to the Company upon its receipt of notice of, or an officer of Provider becoming aware of, the occurrence of any accident that could reasonably be expected to adversely affect in a material manner the Company or all of the Projects taken as a whole (whenever asserted) during the Term, and on request shall furnish to the Company information as to the time, place and nature thereof, the names and addresses of the parties involved, any Persons injured, witnesses and owners of any property damaged, and such other information as may be known to it, and shall promptly upon request furnish the Company with copies of all material correspondence, papers, notices and documents whatsoever sent or received by Provider to or from third parties in connection therewith.	
 
6.	Billing, Collecting and Enforcement of Customer Agreements :	
 
 	•	 	Provider will, at its sole cost and expense, administer or cause to be administered all Customer Agreements. Provider’s obligations under this paragraph 6 shall include, without limitation, delivering periodic bills to all Host Customers, collecting from all Host Customers all monies due under the Customer Agreements, and managing all communications with or among Host Customers. Provider will assist the Company in the enforcement of all Customer Agreements. Provider will, at the Company’s direction and expense, diligently exercise any remedies that may become available under the Customer Agreements in respect of any defaults by Host Customers thereunder; provided that, in the event that the Company elects, in the exercise of any such remedies, to remove a PV System from the Host Customer’s real property, (a) the cost of such removal shall be borne by Provider, and (b) Provider will use commercially reasonable efforts to redeploy such PV System following any such removal (it being agreed that, in connection with any such redeployment, Provider shall not discriminate against such PV System as compared to similar equipment that is not subject to this Agreement and will not unreasonably favor new equipment over the redeployment of the PV Systems hereunder).	
 
A-4

7.	Event of Loss with Respect to a Covered Project :	
 
 	•	 	If any Covered Project is damaged or destroyed by fire, theft or other casualty, Provider will, to the extent insurance proceeds under insurance coverage obtained by the Company or the Provider are available therefor, repair, restore, replace or rebuild such Covered Project to substantially the same condition as existed immediately prior to the damage or destruction and substantially in accordance with the Customer Agreement related to such Covered Project.	
 
 	•	 	If a Covered Project is required to be replaced as described above, then Provider will cause the supplier of the replacement equipment to deliver to the Company a bill of sale for such equipment free and clear of all Liens, and such replacement equipment will become a PV System subject to this Agreement.	
 
8.	Administration of Government Incentives and RECs :	
 
 	•	 	With respect to Government Incentives, Provider shall use commercially reasonable efforts to timely: (a) complete and submit, on behalf of the Company and in the Company’s name, all applications and other filings required to be submitted in connection with the procurement of all Government Incentives that are available in respect of each Covered Project; (b) deliver to the Company for the Company’s signature such certifications, agreements and other documents required to be delivered or submitted under Applicable Laws in connection with such Government Incentives; (c) take such other action as may be reasonably necessary to effectuate the procurement and receipt by the Company of such Government Incentives in accordance with Applicable Laws; and (d) promptly deposit, direct or otherwise cause the proceeds of any such Government Incentives to be deposited into deposit accounts held by the Company (in no event later than five (5) Business Days after Provider’s receipt thereof).	
 
 	•	 	In the event RECs are available in respect of any Covered Project, Provider, on behalf and in the name of the Company, shall (collectively, the obligations set forth below, the “ REC Services ”):	
 
 	•	 	complete and submit all applications and other filings required to be submitted as may be reasonably necessary to effectuate the registration of each Covered Project and procurement, sale and transfer of the RECs;	
 
 	•	 	use commercially reasonable efforts to sell the RECs generated by the Covered Projects on behalf of the Company to third parties;	
 
 	•	 	transfer any proceeds realized from the sale of any RECs to the Company and deposit such proceeds into deposit accounts held by the Company within five (5) Business Days after receipt thereof by Provider;	
 
A-5

 	•	 	on a quarterly basis within thirty (30) calendar days after the end of each calendar quarter, provide Company with a report, in the form of Exhibit F , of all RECs generated and sold during such immediately preceding calendar quarter (and simultaneously transmit to Investor electronically all of the data set forth on such reports in Excel format); and	
 
 	•	 	take such other action as may be reasonably necessary to effectuate the foregoing in accordance with Applicable Laws.	
 
9.	Taxes :	
 
 	•	 	With respect to all sales, use and similar Taxes in connection with the Covered Project, Provider shall: (a) invoice each Host Customer (or other applicable Person) for all such Taxes in accordance with Applicable Laws, timely remit to the applicable Governmental Authority all such Taxes in accordance with Applicable Laws, and promptly post to a servicing system maintained by Provider all such Tax amounts collected and remitted, (b) prepare and timely file all Tax Returns required to be prepared and filed in connection with such Taxes and promptly deliver copies of all such Tax Returns to the Company, and (c) provide ongoing compliance services in connection with such Taxes, including by fully cooperating in connection with all audits and other proceedings regarding such Taxes.	
 
 	•	 	With respect to all property and similar Taxes in connection with the Covered Project, Provider shall: (a) reasonably allocate all such Taxes to each applicable Host Customer (or other applicable Person), invoice each such Host Customer (or other applicable Person) for all such allocable Taxes, remit to the applicable Governmental Authority all such Taxes in accordance with Applicable Laws, and promptly post to a servicing system maintained by Provider all such Tax amounts collected and remitted, (b) prepare and timely file all Tax Returns required to be prepared and filed in connection with such Taxes and promptly deliver copies of all such Tax Returns to the Company, (c) review all valuations in connection with such Taxes, promptly provide such valuations to the Company, and timely and properly protest any such valuations deemed unreasonable by the Company, and (d) provide ongoing compliance services in connection with such Taxes, including by fully cooperating in connection with all audits and other proceedings regarding such Taxes.	
 
 	•	 	Provider shall promptly (and in any event within five (5) days after the relevant event) notify the Company in writing of any event that could reasonably be expected to, or does, result in any recapture or disallowance of, or inability to claim, any Tax Credits in respect of any Covered Project.	
 
A-6

EXHIBIT B
INSURANCE
Provider shall maintain the following insurance coverage and be responsible for its Subcontractors maintaining sufficient limits of appropriate insurance coverage. Provider, at its sole cost, before commencement of the Accounting Services, Administrative Services and System Services to be performed under this Agreement, shall procure and maintain, throughout the Term, the following coverages with insurers rated by A.M. Best as A-IX or higher:
 
 	1.1	WORKERS’ COMPENSATION AND EMPLOYERS’ LIABILITY	
 
 	1.1.1	Workers’ compensation and basic employers’ liability insurance for all employees in accordance with Applicable Law.	
 
 	1.1.2	Employers’ liability insurance shall not be less than $1,000,000 for injury or death occurring as a result of each accident.	
 
 	1.2	COMMERCIAL GENERAL LIABILITY	
 
 	1.2.1	Provider shall obtain comprehensive or commercial general liability insurance written on an occurrence basis with a combined single limit of at least $1,000,000 per occurrence and $2,000,000 in the aggregate, including premises and operations liability, owners’ and contractors’ protective, products and completed operations liability, blanket contractual liability, personal injury liability, bodily injury and “broad form” property damage coverage, blanket contractual liability, completed operations, explosion and collapse hazard coverage. If coverage includes an aggregate limit, that limit shall be at least $2,000,000.	
 
 	1.3	BUSINESS AUTO	
 
 	1.3.1	Provider shall obtain comprehensive automobile liability insurance with bodily injury, death and property damage combined single limits of at least $1,000,000 per occurrence covering vehicles owned, hired or non-owned.	
 
B-1

 	1.4	COMMERCIAL LIABILITY OR EXCESS LIABILITY	
 
 	1.4.1	Provider shall obtain commercial liability or excess liability insurance in excess of the underlying Commercial General Liability and Business Automobile Liability insurance as described above, which is at least as broad as each of the underlying policies. The minimum limits shall be at least $2,000,000 per occurrence and $2,000,000 in the aggregate.	
 
 	1.5	PROPERTY INSURANCE	
 
 	1.5.1	Provider shall obtain property insurance insuring the Covered Projects on an all-risk, replacement cost basis in an amount equal to one hundred percent (100%) of the full replacement value basis, with a combined limit of $10,000,000 in the aggregate. Such coverage shall include equipment breakdown.	
 
 	1.4	ADDITIONAL INSURANCE PROVISIONS	
 
 	1.4.1	Before commencing performance of the Accounting Services, the Administrative Services and the System Services, Provider shall furnish the Company with certificates of insurance and endorsements of all required insurance for Provider.	
 
 	1.4.2	Provider’s Commercial General Liability, Business Automobile Liability and Commercial Liability or Excess Liability insurance policies shall name Company, its members, its Affiliates, and their respective officers, agents, representatives and employees as additional insureds for work performed under or incidental to this Agreement.	
 
 	1.4.3	The limits of insurance or applicable deductibles shall not limit the liability of Provider or relieve Provider of any liability or financial responsibility.	
 
 	1.4.4	Any deductible or self-insured retention shall be the responsibility of Provider.	
 
 	1.4.5	Such insurance as is afforded by any policies contemplated by this Agreement for the benefit of the Company shall be primary and non-contributory as respects any claims, losses or liability arising directly or indirectly from Provider’s operations.	
 
B-2

 	1.4.6	The terms of any policies contemplated by this Agreement shall state that coverage shall not be cancelled except after thirty (30) calendar days’ prior written notice, or ten (10) days’ prior written notice in the event of cancellation for nonpayment of premium, has been given to the Company.	
 
 	1.4.7.	In the event and for so long as any property insurance (including the limits or deductibles thereof) hereby required by this Exhibit B to be maintained, other than insurance required by law to be maintained, shall not be available on commercially reasonable terms in the commercial insurance market, the Company shall not unreasonably withhold its agreement to waive such requirement to the extent such insurance is not so available or, to the extent applicable, may allow Provider to obtain the best available property insurance comparable to the requirements of this Exhibit B on commercially reasonable terms then available in the commercial insurance market.	
 
B-3

EXHIBIT C
COVERED PROJECTS

Job
#	  	Host
Customer	  	kW
size	  	System FMV
(price per
watt)	  	Panel
Manufacturer	  	Panel
Quantity	  	Inverter
Manufacturer	  	Inverter
Quantity	  	Performance
Test Date	  	Inspection
Date	  	PTO
Receipt
Date	  	Commercial
Operation Date	

	  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		
 
C-1

EXHIBIT D
MONTHLY PERFORMANCE OF PORTFOLIO

Customer ID	  	Monthly Collection	  	A/R Aging	  	Remaining Months on
Term	
	  		  		  		
TRANCHE REPORT

Projected Receipts for Month	  		
Actual Receipts for Month	  		
Projected Receipts for Following Month	  		
Projects in Default and Status	  		
Pending Collection Actions and Status	  		
Major Developments	  		
Proposed Extraordinary Actions	  		
 
D-1

EXHIBIT E
MONTHLY PROJECT OPERATIONS REPORT
Date: MM/DD/YYYY
For the Month Ending on [            ], 20[    ]

			
1. ITC RECAPTURE	  		  		
1.1.     Has there been a change in ownership of any Covered Project?	  	Yes	  	No	
If yes, explain:	  		  		
			
1.2.     Has any Covered Project been taken out of operation?	  	Yes	  	No	
If yes, explain:	  		  		
			
2. OPERATIONS	  		  		
2.1.     Has there been a material default under any Customer Agreement?	  	Yes	  	No	
If yes, explain:	  		  		
			
2.2.     Have Covered Projects been generating sufficient power to support the Base Case Models (as defined in the LLC Agreement) that were prepared for such Covered Projects at the applicable Purchase Date (as defined in the Master EPC Agreement) unless such shortfall would not adversely affect in a material manner the Covered Projects taken as a whole or the Company?	  	Yes	  	No	
If no, explain:	  		  		
			
2.3.     Are there any major concerns, events or circumstances associated with the operations or maintenance of Covered Projects that would adversely affect in a material manner the Covered Projects taken as a whole or the Company?	  	Yes	  	No	
If yes, explain:	  		  		
			
2.4.     Has there been a distribution of Distributable Cash (as defined in the LLC Agreement)?	  	Yes	  	No	
If yes, please include report.	  		  		
			
2.5.     Are there (a) to your actual knowledge any alleged or threatened violations of law with respect to the Covered Projects that would adversely affect in a material manner the Covered Projects taken as a whole or the Company or (b) any current or pending lawsuits or legal proceedings?	  	Yes	  	No	
If yes, please explain and include copies of the related documentation received.	  	                     	
 
E-1

					
		
2.6.     The date the last Covered Project was placed in service (PIS) is	  	MM/DD/YYYY	
Leave blank if not PIS.	  		  		
			
3. EQUIPMENT WARRANTY STATUS	  		  		
			
3.1.     Have any material warranty claims been made with respect to manufacturer warranties or the installation warranty for Covered Projects that were not disclosed in any previous monthly project operations report?	  	Yes	  	No	
If yes, explain:	  		  		
 
E-2

EXHIBIT F
QUARTERLY REC GENERATION AND SALES REPORTS
Report Date:
Period:

Transaction
Date	 	Job ID	 	Certifying
Authority	  	State	  	Vintage	  	Quantity	  	Price
per
REC	  	Counterparty	  	REC
Income
Recognized*	  	Cash
Collected	

	 		 		  		  		  		  		  		  		  		

 
*	REC income is recognized upon delivery.	
 
F-1

Exhibit G
Monthly Milestone Report
Report Date:
Period:

AR	  	Customer
Name	  	Address	  	Cancel
Date	  	Install
Date	  	Electrician
Complete	  	City
Inspection
Approved	  	Utility
Interconnection
Complete	  	System
Cost	  	Projected
ITC	
	  		  	Address	  	City	  	State	  	Zip	  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		  		

	  		  		  		  		  		  		  		  		  		  		  		  		

G-1

Exhibit 10.42
*** Text Omitted and Filed Separately with the Securities Exchance Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406

LONG TERM PRODUCT SUPPLY AGREEMENT
between
VIVINT SOLAR DEVELOPER, LLC
and
ENPHASE ENERGY, INC.
Dated as of August 11, 2014

							
ARTICLE 1 DEFINITIONS AND GENERAL PROVISIONS	  	 	2	  	
			
1.1	 	Definitions and Rules of Interpretation	  	 	2	  	
1.2	 	Term	  	 	2	  	
1.3	 	Effect of this Agreement on the Original Agreement	  	 	2	  	
1.4	 	No Obligations Until Delivery of a Purchase Order	  	 	2	  	
		
ARTICLE 2 PRODUCT SUPPLY	  	 	2	  	
			
2.1	 	Purchase Orders and Scope of Product Supply	  	 	2	  	
2.2	 	Rolling Forecasts	  	 	5	  	
2.3	 	Annual Volumes	  	 	7	  	
2.4	 	Modification of Product Specifications; New Products	  	 	7	  	
2.5	 	No Stand-Alone Product Sales	  	 	8	  	
2.6	 	Branding	  	 	8	  	
		
ARTICLE 3 UNIT PRICE AND PAYMENT TERMS	  	 	8	  	
			
3.1	 	Unit Price; Favored Customer Pricing	  	 	8	  	
3.2	 	Inclusions and Exclusions from Unit Prices	  	 	9	  	
3.3	 	Invoices	  	 	9	  	
3.4	 	Payment	  	 	9	  	
3.5	 	Notice of Payment Disputes	  	 	10	  	
3.6	 	Late Payments	  	 	10	  	
3.7	 	Reconciliation	  	 	10	  	
3.8	 	Payments Not Acceptance of Products	  	 	10	  	
3.9	 	Taxes	  	 	10	  	
		
ARTICLE 4 DELIVERY SCHEDULING	  	 	11	  	
			
4.1	 	Delivery Scheduling and Coordination	  	 	11	  	
4.2	 	Preferential Deliveries to Buyer	  	 	13	  	
		
ARTICLE 5 DELIVERY, ACCEPTANCE AND REJECTION, TITLE AND RISK OF LOSS	  	 	13	  	
			
5.1	 	Delivery of Products, Shipment Protocol and Packaging	  	 	13	  	
5.2	 	Rejection of Products; Deemed Acceptance	  	 	15	  	
5.3	 	Transfer and Warranty of Title	  	 	16	  	
5.4	 	No Liens	  	 	16	  	
5.5	 	Risk of Loss	  	 	17	  	
5.6	 	Serial Defects, Recalls	  	 	17	  	
		
ARTICLE 6 INSPECTIONS AND TECHNICAL ASSISTANCE	  	 	18	  	
			
6.1	 	Buyer Inspections and Testing	  	 	18	  	
6.2	 	Seller Technical Assistance	  	 	19	  	
		
ARTICLE 7 WARRANTIES	  	 	19	  	
			
7.1	 	Warranty	  	 	19	  	
7.2	 	Warranty Transferable	  	 	20	  	
7.3	 	Warranty Upgrades	  	 	20	  	

							
		
ARTICLE 8 INDEMNIFICATION AND INSURANCE	  	 	20	  	
			
8.1	 	Seller’s General Indemnity	  	 	20	  	
8.2	 	Seller’s Hazardous Materials Indemnity	  	 	20	  	
8.3	 	Seller’s Intellectual Property Rights Indemnity	  	 	21	  	
8.4	 	Seller’s Lien Indemnity	  	 	21	  	
8.5	 	Seller’s Laws, Standards and Codes Indemnity	  	 	21	  	
8.6	 	Buyer’s General Indemnity	  	 	21	  	
8.7	 	Notice of Claim	  	 	22	  	
8.8	 	Term of Indemnities	  	 	22	  	
8.9	 	Insurance	  	 	22	  	
8.10	 	Setoff	  	 	22	  	
		
ARTICLE 9 COMPLIANCE WITH LAWS AND STANDARDS AND CODES	  	 	23	  	
			
9.1	 	Generally	  	 	23	  	
9.2	 	Changes in Law	  	 	23	  	
		
ARTICLE 10 DEFAULT, TERMINATION AND SUSPENSION	  	 	24	  	
			
10.1	 	Events of Default	  	 	24	  	
10.2	 	Remedies for Event of Default	  	 	26	  	
10.3	 	Termination for Force Majeure	  	 	26	  	
10.4	 	Limited Continuation at Buyer’s Election	  	 	26	  	
		
ARTICLE 11 LIMITATIONS AND EXCLUSIONS ON LIABILITY	  	 	26	  	
			
11.1	 	Limitation on Consequential Damages	  	 	26	  	
11.2	 	Limitation on Aggregate Liability	  	 	27	  	
11.3	 	Exclusions from Limitations	  	 	27	  	
11.4	 	No Limitation on Remedies	  	 	27	  	
11.5	 	Supremacy	  	 	27	  	
		
ARTICLE 12 REPRESENTATIONS AND WARRANTIES	  	 	27	  	
			
12.1	 	Representations and Warranties by Seller	  	 	27	  	
12.2	 	Representations and Warranties by Buyer	  	 	29	  	
		
ARTICLE 13 DISPUTE RESOLUTION	  	 	30	  	
			
13.1	 	Dispute Resolution, Consent to Jurisdiction and Equitable Remedies	  	 	30	  	
13.2	 	Continued Performance During Dispute Resolution	  	 	30	  	
		
ARTICLE 14 FORCE MAJEURE	  	 	31	  	
			
14.1	 	Force Majeure Events	  	 	31	  	
14.2	 	Notice of Force Majeure Events	  	 	31	  	
14.3	 	Mitigation	  	 	31	  	
		
ARTICLE 15 CONFIDENTIALITY	  	 	32	  	
			
15.1	 	Ratification of NDA	  	 	32	  	
15.2	 	Additional Provisions	  	 	32	  	
 
2

							
		
ARTICLE 16 INTELLECTUAL PROPERTY MATTERS	  	 	34	  	
			
16.1	 	Seller’s Representations and Warranties Regarding Intellectual Property Rights	  	 	34	  	
16.2	 	Product Use License	  	 	34	  	
16.3	 	Seller’s Intellectual Property Rights and Source Code Escrow	  	 	34	  	
16.4	 	Buyer’s Data	  	 	35	  	
16.5	 	Retention of Data	  	 	36	  	
		
ARTICLE 17 OTHER OBLIGATIONS	  	 	36	  	
			
17.1	 	Enlighten	  	 	36	  	
17.2	 	Mutual Support	  	 	37	  	
		
ARTICLE 18 MISCELLANEOUS	  	 	37	  	
			
18.1	 	Audit	  	 	37	  	
18.2	 	Currency	  	 	37	  	
18.3	 	Applicable Law	  	 	38	  	
18.4	 	Assignment	  	 	38	  	
18.5	 	Financing Assistance	  	 	38	  	
18.6	 	Representatives	  	 	38	  	
18.7	 	Severability	  	 	38	  	
18.8	 	Amendments	  	 	39	  	
18.9	 	Joint Effort	  	 	39	  	
18.10	 	Non-Waiver	  	 	39	  	
18.11	 	Independent Contractor	  	 	39	  	
18.12	 	Counterparts and Execution	  	 	39	  	
18.13	 	Notices	  	 	39	  	
18.14	 	Further Assurances	  	 	40	  	
18.15	 	Buyer’s Review of Seller’s Information or Documents	  	 	40	  	
18.16	 	No Recourse	  	 	40	  	
18.17	 	Survival	  	 	40	  	
18.18	 	Third Parties	  	 	40	  	
18.19	 	Conflicting Provisions	  	 	40	  	
 
3

Schedules and Exhibits

Schedule 1	  	Definitions and Rules of Interpretation	
Exhibit A	  	Products and Pricing	
Exhibit B	  	Form of Purchase Order	
Exhibit C	  	[Reserved]	
Exhibit D	  	Seller Wire Information	
Exhibit E	  	Non-Disclosure and Non-Use Agreement	
Exhibit F	  	[Reserved]	
Exhibit G	  	Warranties	
Exhibit H	  	Insurance	
Exhibit I	  	Representatives	
 
4

LONG TERM PRODUCT
SUPPLY AGREEMENT
This LONG TERM PRODUCT SUPPLY AGREEMENT (this “ Agreement ”) is entered into as of August 11, 2014 (“ Effective Date ”), by and between VIVINT SOLAR DEVELOPER, LLC, a Delaware limited liability company (“ Buyer ”) and ENPHASE ENERGY, INC., a Delaware corporation (“ Seller ”). Buyer and Seller are referred to herein individually as a “ Party ”, and collectively as the “ Parties ”.
RECITALS
A. WHEREAS, Buyer and its affiliates develop photovoltaic solar electric energy generation projects (each, a “ Project ”);
B. WHEREAS, in connection with the Projects, Buyer desires to purchase from Seller and Seller desires to sell to Buyer certain Products as defined in Exhibit A and which generally include solar power system devices, components and services, all as more particularly described in this Agreement;
C. WHEREAS, Seller and Buyer’s Affiliate and predecessor in interest, Vivint Solar Holdings, Inc. (f/k/a Vivint Solar Inc.), a Delaware corporation, previously entered into that certain Agreement for Sale and Purchase (“ Supply Agreement ”) dated May 10, 2011, as amended by (a) Amendment No. 1 to Agreement for Sale and Purchase dated November 7, 2011 (“ Amendment 1 ”), (b) Amendment No. 2 to Agreement for Sale and Purchase dated January 1, 2013 (“ Amendment 2 ”), and (c) Amendment No. 3 to Agreement for Sale and Purchase dated April 16, 2014 (“ Amendment 3 ,” and collectively with the Supply Agreement, Amendment 1 and Amendment 2, the “ Original Agreement ”), whereby Vivint Solar Holdings, Inc. purchased Products from Seller;
D. WHEREAS, Buyer is a wholly-owned subsidiary of Vivint Solar Holdings, Inc.;
E. WHEREAS, the Parties and Vivint Solar Holdings, Inc., entered into that certain Assignment and Assumption Agreement dated August 11, 2014, whereby (i) Vivint Solar Holdings, Inc., assigned its right, title and interest in and to the Original Agreement and all purchase orders entered under the Original Agreement to Buyer, (ii) Buyer assumed Vivint Solar Holdings, Inc.’s liabilities and obligations thereunder, and (iii) Seller consented to such assignment and transfer; and
F. WHEREAS, the Parties now desire to supersede the Original Agreement with this Agreement, as further described in Section 1.3 .
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereby agree as follows:

ARTICLE 1
DEFINITIONS AND GENERAL PROVISIONS
1.1 Definitions and Rules of Interpretation . Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings set forth in Schedule 1 , and the Rules of Interpretation set forth in Schedule 1 shall apply to this Agreement, unless in any such case the context requires otherwise.
1.2 Term . Unless earlier terminated pursuant to its terms, the initial term of this Agreement shall commence on the Effective Date and shall continue until the third (3 rd ) anniversary of the Effective Date (“ Initial Term ”). The Initial Term shall automatically renew for successive one (1) year periods (each, a “ Renewal Term ” and together with the Initial Term, the “ Term ”) unless either this Agreement is terminated pursuant to its terms, or a Party receives written notice from the other Party no less than nine (9) months prior to the end of the Initial Term or a Renewal Term, as applicable, specifying that the sending Party is declining to renew this Agreement.
1.3 Effect of this Agreement on the Original Agreement . Seller and Buyer agree that this Agreement (including all Schedules and Exhibits attached hereto), the NDA and all Purchase Orders entered into by the Parties pursuant to this Agreement, constitutes the complete and entire agreement between the Parties and supersedes the Original Agreement and all prior oral and written understandings and all contemporaneous oral negotiations, commitments and understandings between the Parties relating to the subject matter hereof. In entering into this Agreement and consummating the transactions contemplated hereby, except for a Party’s statements, representations and warranties expressly set forth in this Agreement (or additional representations and warranties expressly set forth in a Purchase Order and that do not otherwise conflict with or diminish the representations and warranties set forth in this Agreement), the other Party is not relying on any statement, representation or warranty, oral or written, express or implied, made by the other Party or such Party’s employees, agents, representatives or legal counsel. The Parties agree that no trade usage, prior course of dealing or course of performance under this Agreement or the Original Agreement shall be a part of this Agreement or shall be used in the interpretation or construction of this Agreement. For clarity, this Agreement shall not affect any orders of Products by Buyer under the Original Agreement that were acknowledged by Seller prior to the Effective Date, and the terms and conditions of the Original Agreement shall continue to apply to such Products.
1.4 No Obligations Until Delivery of a Purchase Order . Prior to Buyer’s issuance of a Purchase Order with respect to Products under this Agreement, and except with respect to Original Agreement Products: (a) no Products shall be delivered to Buyer; and (b) Buyer shall have no payment obligations of any nature under this Agreement.
ARTICLE 2
PRODUCT SUPPLY
2.1 Purchase Orders and Scope of Product Supply .
 
2

2.1.1 Generally . Subject to this Section 2.1 and the delivery by Buyer to Seller of a Purchase Order, Seller shall: (a) provide all of the Products specified in a Purchase Order in accordance with the provisions of this Agreement and such Purchase Order; (b) provide the Warranties with respect to the Products delivered hereunder; and (c) perform its other obligations set forth in this Agreement and such Purchase Order.
2.1.2 Submission of Purchase Orders . During the Term of this Agreement, and pursuant to the terms and subject to the conditions of this Agreement, Buyer may submit Purchase Orders to Seller for Products by electronic mail sent to Seller’s Representative. Seller may change the electronic mail address to which Purchase Orders are sent at any time during the Term upon ten (10) Business Days’ prior written notice to Buyer. Each Purchase Order delivered by Buyer to Seller hereunder shall comply with the Required Lead Time (subject to Section 4.1.1(b) ) and shall:
(a) specify the model name of each Product, including Seller’s Product number for such Product as set forth in Exhibit A , to be purchased by Buyer under such Purchase Order;
(b) set forth the applicable quantity of each type of Product (“ PO Product Quantity ”) in compliance with Section 2.2 ;
(c) set forth the applicable Unit Price for such Products determined in accordance with Section 3.1 and Exhibit A , and the pricing for any other items or services (e.g., Enlighten pricing) on Exhibit A if and as applicable;
(d) include a Delivery Schedule for Products being ordered under such Purchase Order in accordance with Section 2.1.5 ; and
(e) note the Delivery Month to which the Purchase Order relates and whether the Purchase Order is for deliveries at the Destination Point occurring either (A) between the first (1st) through the fifth (5th) day of the Delivery Month, or (B) between the fifteenth (15th) through the twentieth (20th) day of the Delivery Month, in each case pursuant to Section 2.1.5 .
In the normal course when Products are being ordered for delivery at Destination Points in a given Delivery Month, the Parties acknowledge that Buyer intends to provide two (2) Purchase Orders for each Delivery Month. One Purchase Order will cover Products to be delivered to the applicable Destination Points between the first (1st) through the fifth (5th) day of the Delivery Month and the other Purchase Order will cover Products to be delivered to the applicable Destination Points between the fifteenth (15th) and the twentieth (20th) day of the Delivery Month, in each case pursuant to Section 2.1.5 .
2.1.3 Acceptance of Purchase Orders; Obligation to Purchase and Sell . Seller shall use best efforts to accept and acknowledge the Purchase Order using an Order Acknowledgement within two (2) Business Days of receipt of the Purchase Order, but in no event more than five (5) Business Days from such receipt; however , Seller may reject a Purchase Order if its terms do not conform to this Agreement. The Order Acknowledgement shall include the Scheduled Ship Dates for the Products based on the Delivery Schedule submitted with a
 
3

Purchase Order so that, taking into account customary and reasonable transit times for delivery to the Destination Point and subject to the occurrence of Force Majeure Events, such Products ordered under the Purchase Order will arrive at the applicable Destination Points by the Delivery Dates set forth in the Delivery Schedule. Subject to the prior sentence and any other information required of an Order Acknowledgment (as defined), any terms that appear in an Order Acknowledgement and that are either in addition to or conflict with the terms set forth in the Purchase Order or this Agreement shall be considered null and void, not a rejection and counteroffer, and the Order Acknowledgement absent such terms shall constitute acceptance of the Purchase Order. This Agreement may not be amended in a Purchase Order. Should Seller reject a Purchase Order pursuant to this Section 2.1.3 , Buyer may submit another Purchase Order addressing any rejected Purchase Order and if submitted within ten (10) days of receipt of Seller’s rejection, the date of the accepted Purchase Order shall be the date of the originally rejected Purchase Order for purposes of calculating the Required Lead Time. Upon acceptance of a Purchase Order submitted by Buyer, Buyer agrees to purchase such Products from Seller, and Seller agrees to sell and deliver to Buyer such Products at the Delivery Point and perform its other obligations in this Agreement relating to such Products, all in accordance with the applicable Purchase Order and the terms and conditions of this Agreement.
2.1.4 Cancellation of a Purchase Order; Rescheduling . Buyer may cancel a Purchase Order prior to the receipt of an Order Acknowledgement.
2.1.5 Delivery Schedules . Delivery Schedules submitted by Buyer in connection with each Purchase Order it submits pursuant to Section 2.1.2 , and the PO Product Quantities contained in the Purchase Orders covering a Delivery Month, shall generally reflect the allocation requirements of this Section 2.1.5 . For each Delivery Month, approximately fifty percent (50%) of the aggregate quantity of Products that Buyer orders for delivery at the Destination Points in such Delivery Month under its Purchase Orders relating to such Delivery Month will be delivered to the applicable Destination Points on Delivery Dates that fall between the first (1 st ) and the fifth (5 th ) day of the Delivery Month (excluding Sundays and Federally-observed holidays). The other fifty percent (50%) will be delivered to the applicable Destination Points on Delivery Dates that fall between the fifteenth (15 th ) and twentieth (20 th ) day of the Delivery Month (excluding Sundays and Federally-observed holidays). If a Sunday or Federally-observed holiday falls within the applicable five (5) day period, such Sunday or holiday shall not serve to extend such period. Buyer may change Destination Points in a Delivery Schedule no later than fourteen (14) days before the Scheduled Ship Dates for such Products as set forth in Seller’s Order Acknowledgement for such Purchase Order; provided , however , that the total quantities set forth in the Delivery Schedule for such Scheduled Ship Date may not be changed without Seller’s written consent. Buyer may change the specific Delivery Dates within the five (5) day windows provided in this Section 2.1.5 only with the prior written consent of Seller (not to be unreasonably withheld, conditioned or delayed).
 
4

2.2 Rolling Forecasts.
2.2.1 Issuance of Rolling Forecasts; Limitations on PO Product Quantities . As of or promptly following the Effective Date, Buyer has delivered to Seller an initial Rolling Forecast. Buyer shall deliver to Seller an update of the Rolling Forecast on a monthly basis no later than the fifth (5 th ) Business Day of each following calendar month during the Term. Except as set forth in this Section 2.2 , the Rolling Forecasts shall be non-binding and are intended by the Parties solely to assist them in coordinating the manufacture and supply of Products under this Agreement and Purchase Orders. Notwithstanding the foregoing sentence, Buyer’s Purchase Orders covering delivery of Products to Destination Points in a Delivery Month shall contain PO Product Quantities that, in the aggregate for such Delivery Month: (a) are at least *** percent (***%) of the quantity that was set forth in the Rolling Forecast for such calendar month when such Delivery Month was the first calendar month in the Rolling Forecast Period; and (b) do not exceed *** percent (***%) of the quantity that was set forth in the Rolling Forecast for such calendar month when such Delivery Month was the first calendar month in the Rolling Forecast Period.
2.2.2 Limitations on Quantity Adjustments in Rolling Forecasts . In addition to the limitations on the percentage decrease and increase of aggregate monthly PO Product Quantities set forth in Section 2.2.1 , Buyer shall not submit Rolling Forecasts that are (a) less than *** percent (***%) of the quantity that was set forth in the Rolling Forecast for such calendar month when a Delivery Month was the second and third calendar month in the Rolling Forecast Period; or (b) more than *** percent (***%) of the quantity that was set forth in the Rolling Forecast for such calendar month when such Delivery Month was the second and third calendar month in the Rolling Forecast Period. For purposes of clarifying the above language, the following table is provided:

July 1st	 	Jul	 	Aug	 	Sep	 	Oct	 	Nov	 	Dec	 	 	
Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	 	
PO	 	PO	 	PO	 	New PO	 	 	 	 	 	 	 	Total
Q4’14	
Ex-Fcst	 	***	 	***	 	***	 	***	 	***	 	***	 	***	
Ex-PO	 	***	 	***	 	***	 		 		 		 		
Low Case	
Aug 1st (low)	 	Aug	 	Sep	 	Oct	 	Nov	 	Dec	 	Jan	 	 	
Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	 	
PO	 	PO	 	PO	 	New PO	 	 	 	 	 	 	 	Total
Q4’14	
Fcst	 	***	 	***	 	***	 	***	 	***	 		 	***	
PO	 	***	 	***	 	***	 		 		 		 		
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
5

															
Sep 1st (low)	 	Sep	 	Oct	 	Nov	 	Dec	 	Jan	 	Feb	 	 	
Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	 	
PO	 	PO	 	PO	 	New PO	 	 	 	 	 	 	 	Total
Q4’14	
Fcst	 	***	 	***	 	***	 	***	 		 		 	***	
PO	 	***	 	***	 	***	 		 		 		 		
								
Oct 1st (low)	 	Oct	 	Nov	 	Dec	 	Jan	 	Feb	 	Feb	 	 	
Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	 	
PO	 	PO	 	PO	 	New PO	 	 	 	 	 	 	 	Total
Q4’14	
Fcst	 	***	 	***	 	***	 		 		 		 	***	
PO	 	***	 	***	 	***	 		 		 		 	***	

High Case	
Aug 1st (high)	 	Aug	 	Sep	 	Oct	 	Nov	 	Dec	 	Jan	 	 	
Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	 	
PO	 	PO	 	PO	 	New PO	 	 	 	 	 	 	 	Total
Q4’14	
Fcst	 	***	 	***	 	***	 	***	 	***	 		 	***	
PO	 	***	 	***	 	***	 		 		 		 		
								
Sep 1st (high)	 	Sep	 	Oct	 	Nov	 	Dec	 	Jan	 	Feb	 	 	
Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	 	
PO	 	PO	 	PO	 	New PO	 	 	 	 	 	 	 	Total
Q4’14	
Fcst	 	***	 	***	 	***	 	***	 		 		 	***	
PO	 	***	 	***	 	***	 		 		 		 		
								
Oct 1st (high)	 	Oct	 	Nov	 	Dec	 	Jan	 	Feb	 	Feb	 	 	
Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	Fcst	 	 	
PO	 	PO	 	PO	 	New PO	 	 	 	 	 	 	 	Total
Q4’14	
Fcst	 	***	 	***	 	***	 		 		 		 	***	
PO	 	***	 	***	 	***	 		 		 		 	***	
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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2.3 Annual Volumes . Buyer shall use commercially reasonable efforts, consistent with past practice, to submit Purchase Orders which shall be binding for the purchase of an aggregate of *** (***) MW DC per year of Products consisting of Microinverters in anticipated quarterly volumes of approximately *** units. Seller agrees that Purchase Orders submitted under the Original Agreement between January 1, 2014, and the Effective Date shall apply when determining if Buyer has satisfied its obligation under this Section 2.3 .
2.4 Modification of Product Specifications; New Products . Buyer acknowledges that Seller is continually striving to increase its competitiveness in the marketplace by improving the Products and that doing so may require modifications to the Specifications for the Products, the development of new models of existing Products, or the development of entirely new products.
2.4.1 Reports . Seller shall periodically provide Buyer with reports containing information relating to anticipated material modifications in any current Specifications, the development of new product offerings that would be materially different than the Products, and/or any other material information that Seller reasonably believes would be relevant or useful to Buyer’s evaluation with respect to continued purchase of Products; provided however, that in no event shall Seller provide a report to Buyer if in doing so it would be in violation of any applicable Law.
2.4.2 Changes to Existing Product Specifications. Seller shall at all times use best efforts during the Term, maintain the ability to manufacture Products meeting the Specifications set forth in Exhibit A (or the relevant Specifications as otherwise approved by Buyer pursuant to this Section 2.4 ). During the Term, Seller shall not, without Buyer’s prior written consent, which will not be unreasonably withheld, substitute different products for the Products ordered by Buyer under any accepted Purchase Order; provided , however , Seller may substitute one or more Products ordered under a Purchase Order with different Products without Buyer’s prior written consent if: (a) the Unit Price for the different Products is the same or less than as the Unit Price for the Products ordered by Buyer, the different Products are backwards compatible in all respects, and the different Products have comparable or better Specifications (improved functionality) than the Products ordered by Buyer; or (b) Buyer has not ordered the Products for which Seller is substituting the different Products in the six (6) months prior to the date of the applicable Purchase Order. Without limiting the foregoing, Seller shall use commercially reasonable efforts not to (i) discontinue the production of any Products (unless Seller has a new product that is substantially similar to the Product), or (ii) make any modifications to the Specifications of Products to be sold to Buyer under this Agreement (unless such modifications improve the functionality of the Product). Seller shall give Buyer reasonable written notice of any discontinuation or modification as described in clauses (i) and (ii) above. Buyer shall have the right, pursuant to Section 5.2 , to reject any Product that fails to conform to the Specifications or other requirements of this Agreement unless the new Specifications are agreed upon by the Parties or substitution was otherwise permitted by this Section 2.4.2 . Once such material modification or revision has received Buyer’s written approval, Seller shall cause the Products delivered and sold under Purchase Orders to comply with the modified Specification.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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2.4.3 New Products. Should Seller manufacture and/or offer to sell new products that are similar to, or provide functionality or features similar to, the Products, Buyer shall have the right to purchase such products in addition to or in lieu of the Products. Prior to purchasing or selling such new product under a Purchase Order, the Parties shall, pursuant to Section 18.8 , amend Exhibit A to include the Product and pricing for such new product. Once Exhibit A is amended, such product shall become a “Product” for all purposes of this Agreement.
2.5 No Stand-Alone Product Sales . Buyer is purchasing the Products for inclusion with Systems that it or its Affiliates intend to sell to its customers, and Buyer is not in the business of reselling or distributing the Products on a stand-alone basis. Except for assignments pursuant to Section 18.4 , or sales of the Products by Buyer to an Affiliate or to a consumer host customer in each instance for purposes of inclusion in a System to be installed by such Affiliate, host customer, or their contractors at a Project, Buyer covenants that it will not re-sell or distribute Products on a stand-alone basis to any other Person.
2.6 Branding . If Buyer uses the Enphase Trademarks in connection with its advertising, promotion and marketing of Systems which include the Products and the Enlighten Service in the Territory and in related brochures and other materials, Buyer shall comply with Seller’s then current trademark usage policies and guidelines available at http://enphase.com/legal, subject to the terms and conditions of this Agreement. Buyer shall not alter or remove from the Products or Seller’s Documentation any Enphase Trademark or Seller’s trade name, patent, copyright or other proprietary notices, or other notices or markings, or add any other notices or markings to the Products or on Seller’s Documentation.
ARTICLE 3
UNIT PRICE AND PAYMENT TERMS
3.1 Unit Price; Favored Customer Pricing .
3.1.1 Unit Price and Contract Amount . The unit price for each Product shall be as set forth in Exhibit A (the “ Unit Price ”). All Unit Prices are F.C.A. Seller’s Facility (INCOTERMS 2010) and are subject to the inclusions and exclusions specified in Section 3.2 . The Contract Amount is the complete compensation for the sale and delivery by Seller of all Products to the Delivery Point under this Agreement.
3.1.2 Annual Unit Price Modification . No later than November 1 of each year during the Term, Buyer and Seller shall agree upon the Unit Price for each Product to be ordered under Purchase Orders for delivery to the Delivery Points in each calendar quarter of the next calendar year; provided , however , subject to Section 9.2.3 , under no circumstances shall any increase result in a Unit Price that exceeds those Unit Prices set forth in Exhibit A as of the Effective Date. The Parties agreement on revised Unit Prices shall be reflected in an amendment to Exhibit A pursuant to Section 18.8 .
3.1.3 Favored Customer Pricing . Based on the relationship between Buyer and Seller, Seller agrees to provide favored pricing to Buyer on the terms set forth in this Section 3.1.3 . Without limiting Section 3.1.2 , throughout the Term, Seller shall provide Buyer with ***.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
8

The foregoing covenant shall not apply to Seller’s sales of products to ***. By execution of each Purchase Order, Seller represents and warrants that the Unit Price for each Product being sold thereunder complies with the foregoing covenant. If Seller accepts a *** from any other such customer (other than ***), then (a) Seller shall promptly notify Buyer of the ***, (b) the *** that are functionally equivalent to the products offered or sold to such other customer shall be *** for *** so that the *** by such other customer (the ***), and (c) for Products that Seller has already purchased since the date on which the *** Buyer may *** that become due and owing under Invoices *** by such other customer and the applicable ***. The *** shall apply to all Products then subject to Purchase Orders and to all Products ***. Buyer and Seller shall make an adjustment on the Purchase Order, Order Acknowledgement or pricing information (whichever method is most easily managed by each parties order processing teams) to document such change in Unit Price. Buyer shall have the right to audit Seller’s books and records pursuant to Section 18.1 to confirm Seller’s compliance with this Section 3.1.3 .
3.2 Inclusions and Exclusions from Unit Prices . Except as otherwise set forth in this Section 3.2 or in Exhibit A , the Unit Price includes all Taxes (other than U.S., State and local Taxes imposed on the sale or use of the Products), Product packaging, the Warranty, licensing fees, royalties or other similar charges of any and all kinds imposed with respect to the provision of any Products or otherwise with respect to the transactions contemplated hereby, including any increases in any of the same during the term of this Agreement. The Unit Prices and Contract Amount do not include all: (i) U.S. state and local Taxes imposed on the sale or use of the Products; and (ii) freight, transportation, shipping, transit insurance and similar costs and charges to ship the Products from the Delivery Point to the Destination Point. Responsibility for payment of Taxes is described further in Section 3.9 .
3.3 Invoices . Buyer agrees to pay the Contract Amount to Seller in accordance with this Agreement. Upon the delivery of Products to the applicable Delivery Point set forth in the corresponding Purchase Order, Seller shall deliver an invoice to Buyer for that portion of the Purchase Order allocable to such delivered Products, which invoice shall (a) specify the related Purchase Order number pursuant to which the delivery of Products was made, (b) list the model number as set forth on Exhibit A for the Products delivered to the Delivery Point to which such invoice relates, and (c) set forth the applicable Unit Price, the Buyer’s Taxes and loading and shipping costs, under the related Purchase Order (each, an “ Invoice ”). Buyer shall review the Invoice and if it determines that any of the information listed above is not set forth in the Invoice, then Buyer shall so notify Seller within five (5) Business Days. Seller’s failure to list any amounts due by Buyer pursuant to this Agreement on an Invoice shall not be deemed a waiver of Seller’s right to collect such amounts from Buyer. Upon Buyer’s written request outlining the reasons for the request, Seller shall deliver to Buyer a waiver and release of liens conditioned only on payment in such form as shall be appropriate and customary under applicable Law, signed by a duly authorized officer or representative of Seller.
3.4 Payment . Payment is due on each Invoice, and shall be paid by Buyer, within *** (***) days following the date that Seller has (a) delivered Products to the Delivery Point, and (b) delivered the corresponding correct Invoice to Buyer in accordance with Section 3.3 (the “ Payment Date ”). All payments by Buyer to Seller hereunder shall be made by wire transfer of immediately available funds in accordance with Seller’s wire instructions set forth in Exhibit D .
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
9

Seller may update such wire information by prior written notice to Buyer and without amendment to this Agreement.
3.5 Notice of Payment Disputes . On or before the Payment Date, Buyer may, in good faith, dispute such Invoice, including as to whether the delivery of Products has been achieved or the Products meet the requirements of this Agreement and the related Purchase Order, by providing Seller with written notice identifying the basis for such dispute. Thereafter, the payment of such disputed portions of the Invoice shall be deferred until such dispute has been resolved in accordance with the dispute resolution provisions in Article 13 . Notwithstanding this Section 3.5 , Buyer may not dispute such Invoice on grounds that it is missing information required by Section 3.3 if Buyer did not notify Seller thereof within the five (5) Business Day period set forth in Section 3.3 .
3.6 Late Payments . Any undisputed amount not paid by Buyer to Seller when due shall accrue interest at the Late Payment Rate beginning on the date that is five (5) Business Days after Buyer has received Seller’s written notice that such undisputed amount has not been paid. If there is a dispute about any amount Invoiced by Seller, the amount not in dispute shall be promptly paid as described in this Article 3 . Should any disputed amount be determined to have been properly payable, such amounts shall accrue interest at the Late Payment Rate from the date on which such payment was properly payable until the date such payment is actually made. Late payments of any amounts payable by Seller hereunder shall be paid with interest at the Late Payment Rate from the date due until the date paid.
3.7 Reconciliation . From time-to-time, as reasonably requested by Buyer, Seller shall submit to Buyer (a) a statement summarizing and reconciling all previous invoices, payments relating to any Purchase Order, and (b) any additional information regarding the Products or Seller’s performance hereunder with respect to such Purchase Order.
3.8 Payments Not Acceptance of Products . No payment made hereunder shall be considered or deemed to represent that Buyer has inspected the Products or checked the quality or quantity thereof and shall not be deemed or construed as approval or acceptance of any Products, or as a waiver of any claim or right that Buyer may then or thereafter have, including any rejection or warranty right.
3.9 Taxes .
3.9.1 Minimization of Taxes . The Parties shall cooperate with each other to minimize the Taxes owed by each Party to the extent legally permissible, including, without limitation, separately stating taxable charges on Invoices, supplying resale and exemption certificates, if applicable, and providing other information as reasonably requested.
3.9.2 Seller Taxes . Other than the Buyer Taxes, Seller shall be responsible for and pay all other Taxes, as required by applicable Law, incurred or payable in connection with Seller’s performance of its obligations under this Agreement or the Products, including, without limitation, payment of all: (a) Taxes based on or related to the income, receipts, capital or net worth of Seller; (b) sales and use taxes assessed against Seller-owned, leased or rented
 
10

equipment; and (c) all sales and use Tax or related items purchased by Seller in manufacturing the Products (collectively, the “ Seller Taxes ”).
3.9.3 Buyer Taxes . Buyer shall, as required by applicable Law: (a) be responsible for and pay all Taxes based on or related to the income, receipts, capital or net worth of Buyer; and (b) be responsible for paying to Seller under Invoices and pursuant to Section 3.9.4 , all sales and use Taxes related to Buyer’s purchase of the Products (collectively, the “ Buyer Taxes ”).
3.9.4 Seller’s Payment of Sales and Use Taxes . Buyer shall remain liable at all times for all sales and use Taxes imposed upon the sale of the Products to Buyer (the “ Sales and Use Taxes ”). Provided that Seller has been able to collect the Sales and Use Taxes from Buyer, then Seller shall pay such Sales and Use Taxes to the appropriate Governmental Authority on Buyer’s behalf. If Seller has actually collected Sales and Use Taxes in excess of the amounts required to be paid to a Governmental Authority and has not yet paid such Governmental Authority, then Seller shall, within thirty (30) days of the discovery of such overpayment, refund to Buyer the difference between the amounts collected and the amounts due. If Seller has actually collected Sales and Use Taxes in excess of the amounts required to be paid to a Governmental Authority and has paid such Governmental Authority, then Seller shall, within thirty (30) days of the receipt of a refund from such overpayment from the Governmental Authority, refund to Buyer the difference between the amounts collected and the amounts due. If Seller has not actually collected Sales and Use Taxes in the amounts required to be paid to a Governmental Authority, then Buyer shall, within thirty (30) days of notice from Seller, pay to Seller the difference between the amounts due and the amounts collected and Buyer shall remain liable for all interest and penalties assessed by the applicable Governmental Authority due to such failure or delinquency.
ARTICLE 4
DELIVERY SCHEDULING
4.1 Delivery Scheduling and Coordination .
4.1.1 Delivery and Scheduling .
(a) Delivery. Seller shall deliver the Products under a Purchase Order to Buyer at the Delivery Point in accordance with Section 5.1 , the Scheduled Ship Dates set forth in the applicable Order Acknowledgement, and the scheduling provisions of this Section 4.1.1 . Seller acknowledges and agrees that time is of the essence with respect to each delivery of Products to the Delivery Point by the applicable Scheduled Ship Dates and that the Scheduled Ship Dates are established by Seller in each Order Acknowledgement so that, taking into account customary and reasonable transit times for delivery to the applicable Destination Points and subject to the occurrence of Force Majeure Events, are scheduled such that the Delivery Dates for the Products will fall within the applicable five (5) day period of the applicable Delivery Month pursuant to Section 2.1.5 .
(b) Required Lead Time; Rush Orders . Unless consented to in writing by Seller, which shall include, without limitation, an Order Acknowledgement, the Delivery
 
11

Dates in a Delivery Schedule will be no less than sixty (60) days after the date that the applicable Purchase Order is sent by Buyer to Seller pursuant to Section 2.1.2 (“ Required Lead Time ”). If Buyer submits a Purchase Order with a Delivery Schedule that does not allow for the Required Lead Time (each, a “ Rush Order ”) and Seller accepts and issues an Order Acknowledgement, Seller shall use commercially reasonable efforts to fill any such Rush Order. Notwithstanding anything to the contrary in this Agreement, Seller shall be under no obligation to accept a Rush Order and shall not be in breach of this Agreement should it accept such Rush Order and fail to deliver the Products at the Delivery Point by the Scheduled Ship Date(s).
(c) Deliveries Coordination . Seller and Buyer will each use their commercially reasonable efforts to coordinate logistics related to delivery of the Products at the Delivery Point and shipment of the Products to the Destination Point, including through compliance with the procedures set forth in this Article 4 and Article 5 .
4.1.2 Early Delivery . Notwithstanding Section 4.1.1(a) , (i) Seller may deliver agreed quantities of Products on dates prior to the Scheduled Ship Dates if agreed to in advance in writing by the Parties, and (ii) the Parties may otherwise agree in writing on a delivery schedule for any Purchase Order different from the Delivery Schedule. Seller shall communicate any impact of such early delivery of the Products at the Delivery Point on the applicable Delivery Dates of such Products at their Destination Point(s). Any change to the Scheduled Ship Dates that would cause the Delivery Date(s) to be outside of the five (5) day periods set forth in Section 2.1.5 shall require Buyer’s prior written consent.
 
12

4.2 Preferential Deliveries to Buyer . Consistent with the Most Favored Customer status that Seller grants to Buyer pursuant to Section 3.1.3 , and without limiting any obligation of Seller or right of Buyer herein, if Seller cannot concurrently satisfy all then-effective Purchase Orders and then-effective binding orders from other customers, Seller shall *** of such Products under then-effective Purchase Orders with Buyer ***. After fulfilling its obligations in the foregoing sentence to Buyer, Seller may *** of its *** and to its *** on a ***; provided, however, Seller shall use its best efforts to ***.
ARTICLE 5
DELIVERY, ACCEPTANCE AND REJECTION, TITLE AND RISK OF LOSS
5.1 Delivery of Products, Shipment Protocol and Packaging .
5.1.1 Delivery Point . All Products purchased by Buyer and sold by Seller under Purchase Orders entered pursuant to this Agreement shall be delivered by Seller to Buyer or its Carrier F.C.A. Seller’s Facility (INCOTERMS ® 2010) (“ Delivery Point ”). The Delivery Point may not be changed in a Purchase Order unless each Party indicates its agreement to such change by initialing such change in the Purchase Order, and Seller is not obligated to acknowledge a Purchase Order with a delivery point that is not the Delivery Point.
5.1.2 Transportation Arrangements . Seller, at Buyer’s cost and expense, shall be responsible for making all transportation arrangements with Carriers in order to ship such Product from the Delivery Point to the Destination Point, all in accordance with the applicable Delivery Schedule, the Shipment Protocol, and the other provisions of this Section 5.1 . If Buyer requires Seller to cancel its transportation arrangements with a Carrier in order to use a different Carrier, then Buyer shall be responsible for cancellation charges incurred by Seller. Seller shall employ the same level of care, diligence, inquiry and effort to minimize transportation costs that it would use if Seller were paying the costs thereof and bore the risk of loss during shipment (but in no event less than reasonable care). All Carriers shall carry liability insurance reasonably acceptable to Buyer, on an occurrence basis, with limits of no less than two million dollars ($2,000,000) per occurrence and aggregate, covering the loss of the Products while in transit or otherwise in the Carrier’s possession.
(a) Carrier’s Inspection. Seller shall cause the Carrier to inspect the packaging of the Products prior to its loading of the Products, and the Carrier shall have the authority to reject Products on behalf of Buyer if the packaging is damaged or fails to conform to Section 5.1.4 .
(b) Documents of Title. Seller shall provide the Carrier with a bill of lading, bill of sale or other document of title when the Products are delivered to the Carrier at the Delivery Point. To the extent not included in the foregoing, Seller shall provide an itemized list of all Products delivered to a Carrier for each shipment (which may include multiple trucks) in order to validate the quantity and type of Products delivered.
(c) Buyer’s Assumption of Transportation Arrangements. At any time during the Term, upon written notice, Buyer may assume responsibility for transportation
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
13

arrangements. In such case, the Parties will work together to ensure a seamless transition of responsibilities.
(d) Cooperation with Claims . Seller shall provide reasonable cooperation and assistance in connection with any claims by Buyer against any Carriers.
5.1.3 Notices . Seller shall provide written notice to Buyer and Carrier at least seven (7) days prior to each delivery of Products to the Delivery Point, which notice shall include an itemized list of Products being delivered. Seller shall notify Buyer, or cause the Carrier to notify Buyer, promptly following the delivery of each shipment of Products to a Carrier for shipment to Buyer. Such notice shall include the anticipated Delivery Dates. Buyer shall, and shall cause its Carrier to, keep Buyer reasonably informed regarding any changes to such anticipated Delivery Dates.
5.1.4 Packaging . Seller shall package, mark and handle all of the Products in accordance with prudent commercial practices in the United States solar industry and Seller’s standard practices. All packaging (inner and outer cartons) shall identify the contents by manufacturing model number and serial number for each Product contained in such packaging, and all labeling shall be bar-coded.
5.1.5 Importer of Record . For all purposes hereunder and under applicable Law, Seller shall be the “importer of record” with respect to all Products delivered in the Territory.
5.1.6 Shipment Protocols . All deliveries of Products shall be made by Seller within the five (5) day time periods set forth in Section 2.1.5 and in accordance with the shipment protocols set forth in this Section 5.1.6 (the “ Shipment Protocol ”) or as otherwise agreed by the Parties in writing.
(a) Flow of Delivery Trucks at the Delivery Point . Seller shall coordinate its Carriers so that they comply with the following requirements, unless such requirements are waived by Buyer’s Representative in writing and in advance:
(i) Deliveries of Products to the Destination Point shall only occur on Business Days between the hours of 8:00 a.m. to 4:00 p.m., provided that deliveries at the Destination Point may occur later than 4:00 p.m. with reasonable prior notice to Buyer; and
(ii) No containers owned by Seller or the Carrier shall be left at the Destination Point.
(b) Type of Delivery Truck . A Seller’s Representative and a Buyer’s Representative will, in advance of delivery of the Products to the Delivery Point and in connection with Seller arranging transportation pursuant to Section 5.1.2 , coordinate regarding the type of delivery truck to be used and any logistical limitations thereon based on the Destination Point.
 
14

(c) Deliveries to Storage Facilities . Without limiting anything else herein or in this Agreement, if the Destination Point is a storage facility, such deliveries shall comply with the requirements of the relevant storage facility.
5.2 Rejection of Products; Deemed Acceptance .
5.2.1 Rejection of Products .
(a) Inspection. Buyer shall use commercially reasonable efforts to inspect the Products within a reasonable period of time following arrival of the Products at the Destination Point.
(b) Rejection. Notwithstanding Section 5.2.1(a) or anything to the contrary in this Agreement or pursuant to applicable Laws (including, without limitation, New York Uniform Commercial Code § 2-602(1) or any state law equivalent to Section 2-602(1) of the Uniform Commercial Code), Buyer or its representatives may, by notice to Seller pursuant to Section 5.2.1(c) , reject any non-conforming Product or shipments of Products up to the earlier of: (a) fifteen (15) days following the discovery of any Product that does not conform with the applicable Specification, the applicable Purchase Order, the applicable Warranty, or any other requirement set forth in this Agreement; (b) commencement of installation of the Product; or (c) sixty (60) days following the Delivery Date. Without limiting the generality of the foregoing, Buyer (or the Carrier on Buyer’s behalf) may reject any Product if, after visual inspection of the Product or its packaging at the time that such Product is received by the Carrier, it appears that any portion thereof or the containers in which such items were shipped have been damaged. If Buyer rejects any Product, Buyer shall have the right to take the following actions, at Buyer’s option: (i) retain the non-conforming Products in whole or in part with an appropriate adjustment in the price as mutually agreed upon by the Parties, in which case, Buyer shall, by its retention of the defective Products, waive all claims or liabilities related to, or resulting from, the failure of the Products to conform to the applicable Warranty, or (ii) require Seller to replace the rejected Product at Seller’s sole cost and expense (including shipping and transportation costs to the nominated Destination Point) and promptly deliver the replacement Product to Buyer within thirty (30) days after receiving Buyer’s written notice of rejection.
(c) Notice of Rejection. Buyer’s notice of rejection shall include (i) a detailed description of the reason(s) for the rejection, (ii) if applicable, of the damage or defect to the Product, (iii) the location of the rejected Product, and (iv) the option selected by Buyer under clauses (i) or (ii) of Section 5.2.1(b) .
(d) Responsibilities Following Rejection; Impact of Rejection. Upon any notice of rejection of any Product, Buyer shall have no further responsibility for the rejected Product other than those obligations set forth in the following sections of the New York Uniform Commercial Code §§ 2-602(2), 2-603, and 2-604, or any other state law equivalent to Sections 2-602(2), 2-603, and 2-604 of the Uniform Commercial Code, Unless Buyer elected to retain the non-conforming Products pursuant to Section 5.2.1(b)(i), Seller shall promptly arrange for the removal of such rejected Product at Seller’s sole cost and expense. Title to the Product shall pass from Buyer to Seller at the time that Seller or Seller’s agent picks-up the rejected Product from the Destination Point, and the fact that title is held by Buyer between notice of rejection and its
 
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passage Seller at such time shall not be deemed a violation by Buyer of New York Uniform Commercial Code § 2-602(2)(a) or any other state law equivalent to Section 2-602(2)(a) of the Uniform Commercial Code.
(e) Disputes Regarding Buyer’s Right to Reject. If Seller believes that Buyer’s rejection of a Product was wrongful, then Seller shall notify Buyer within fourteen (14) days of the date that the rejected Product was recovered by Seller or its agent from Buyer. Any dispute shall be resolved pursuant to Article 13 . Should Buyer wrongfully reject a Product, Seller’s rights with respect to such Product (but not the entire Agreement or other shipments of Products), shall be those set forth in New York Uniform Commercial Code § 2-703(d) or (e) or the equivalent state law incorporating 2-703(d) and (e) of the Uniform Commercial Code.
5.2.2 Acceptance . Any Products not rejected in accordance with Section 5.2.1 shall be deemed accepted by Buyer; provided , that such deemed acceptance shall not affect any right or remedy available pursuant to the Warranty applicable to the Product regardless of whether such right or remedy is exercised by Buyer or by any assignee or transferee permitted thereunder. Once accepted, any defects discovered in a Product shall be resolved pursuant to the terms and conditions of the applicable Warranty, and Buyer shall follow Seller’s standard “ RMA Procedures ” for returning any non-conforming Products using Seller’s. Delivery of a Product to the Carrier at the Delivery Point, or receipt by Buyer of a Product at the Destination Point, shall in no event be construed as Buyer’s acceptance of the Product.
5.3 Transfer and Warranty of Title . Title to each Product shall pass from Seller to Buyer at the Delivery Point when such Products have been loaded on the Carrier’s means of transport. Seller warrants good title to all Products furnished hereunder, and Seller warrants that title and ownership thereto shall pass to and vest in Buyer as described in this Section 5.3 free and clear of any and all Liens. For the avoidance of doubt, transfer of title to Products hereunder shall not affect Buyer’s rights or Seller’s obligations as set forth in other provisions of this Agreement (including Article 4 , Article 7 and Article 8 ).
5.4 No Liens .
5.4.1 No Seller Liens; Removal . Seller shall not permit or suffer to exist any Lien, including a Lien of any Person claiming by, through or under Seller, its subcontractors, vendors or any Affiliate thereof, upon the Products, any Project incorporating such Products, or other property of Buyer or any Person to whom Buyer has assigned or otherwise transferred Products (each, a “ Seller Lien ”). If any such Lien is imposed or asserted, Seller shall promptly (but in any event within such period as to avoid a default by Buyer under any applicable financing agreement or contracts entered into by Buyer, in each case as notified by Buyer to Seller) pay or discharge and discharge of record (including by recording a bond in the amount of at least 120% of the amount of such Seller Lien not paid or discharged to the extent permitted by and in accordance with applicable Law) any such Seller Lien or other charges which, if unpaid, might be or become a Seller Lien.
5.4.2 Buyer Right to Remove . Upon the failure of Seller to timely discharge or cause to be released any Seller Lien as required under Section 5.4.1 , Buyer may, but shall not
 
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be obligated to, pay, discharge or obtain a surety bond for such Seller Lien and, upon such payment, discharge or posting of surety bond, shall be entitled to reimbursement from Seller of the amount equal to one-hundred fifty percent (150%) thereof together with all out-of-pocket expenses reasonably incurred by Buyer in connection with such payment, discharge or posting upon the submission of an invoice thereof to Seller setting forth all such amounts. Seller shall pay any such invoice from Buyer within thirty (30) Business Days from the date of the invoice.
5.4.3 Security Interests Created by Operation of Law . Seller shall be entitled to a Lien against the Products by operation of Law to secure payment for the Products, to the greatest extent permitted by applicable Law; provided however, that any such Lien with respect to one Product shall not apply to any other Product, and payment in full for one Product shall serve to release such Lien therein. There shall be no cross-collateralization of the Products.
5.5 Risk of Loss . Subject to Section 5.2.1 , care, custody and control of the Products, and risk of loss to the Products, shall transfer from Seller to Buyer at the Delivery Point when such Products have been loaded on the Carrier’s means of transport.
5.6 Serial Defects, Recalls . If at any time during the Term, Seller (a) receives *** regarding Products from Buyer arising out *** relating to *** of the Products that are under Seller’s warranty sold to Buyer ***, or (b) recalls any Products sold to Buyer, then Buyer shall notify Seller. Upon such notification, the Parties shall meet to discuss the underlying issues related to problem that resulted in either (a) or (b). If Buyer believes that Seller is not addressing the issue in a manner that is reasonable to Buyer’s position, Buyer may, upon written notice and without being in breach or default of its obligations under this Agreement or any Purchase Order: (i) suspend issuances of Purchase Orders for such Product; (ii) direct Seller to suspend deliveries of such Products to Carriers at the Delivery Point; (iii) reject shipments of such Products at the Destination Points and cause the Carriers to return the Products to Seller at Buyer’s expense but without further liability to Seller under this Agreement; or (iv) notwithstanding Section 5.2 , reject any such Products then in storage at Buyer’s facility or any contracted storage facility and return such Products to Seller at Buyer’s expense but without further liability to Seller under this Agreement. The foregoing remedies are not exclusive, and Buyer may elect to apply one remedy with respect to certain Products and a different remedy with respect to other Products. Seller shall perform or caused to be performed a root cause analysis with respect to the extensive component failures and provide Buyer with a written report explaining the likely causes of the serial defect and how Seller intends to address the matter. Buyer shall not be obligated to resume performance under this Agreement until Seller has supplied evidence reasonably satisfactory to Buyer to demonstrate the defect has been addressed with respect to manufacturing additional Products. Seller shall, at its sole cost and expense and without the need for Buyer to make a further claim under the Warranty, address the serial defect in each Product sold to Buyer under this Agreement. Seller may address the serial defect through repair, replacement, retrofit, refund or another remedy that Seller reasonably deems appropriate and technically feasible under its Warranty, provided that such solution addresses the defect. Buyer and Seller shall cooperate in good faith to effectuate the remedy elected by Seller. Buyer shall resume performance under this Agreement so long as Seller’s efforts to correct the serial defect in Products that have been delivered under this Agreement are ongoing.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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ARTICLE 6
INSPECTIONS AND TECHNICAL ASSISTANCE
6.1 Buyer Inspections and Testing .
6.1.1 Manufacturing Facility Inspections . In the event that Buyer experiences an unreasonable amount of failures of the Products, then Buyer (or its representatives) may (i) inspect Seller’s Manufacturing Facility, including inspection of the production of the Products at Seller’s Manufacturing Facility, in accordance with this Section 6.1 or (ii) perform an inspection of the Products and Seller’s manufacturing and packaging procedures of those Products at Seller’s Manufacturing Facility or Seller’s Facility, either (i) or (ii) to be at a time that is mutually agreed to by the Parties. Seller shall make available to Buyer a representative of Seller to answer questions and demonstrate the quality control procedures at Seller’s Manufacturing Facility or Seller’s Facility, as applicable. Any representative of Buyer shall be obligated to sign a non-disclosure agreement in favor of Seller.
6.1.2 Costs and Expenses . Any inspection and quality control tests undertaken by Buyer or its representative shall (a) be undertaken at Buyer’s cost and expense, and (b) be carried out in accordance with all applicable Laws and in such a manner as will not unreasonably interfere with the operation of Seller’s Manufacturing Facility or Seller’s Facility, as applicable.
6.1.3 Discovery of Defects; Corrective Actions . In the event that any inspection or testing by Buyer indicates that any of the Products designated for a shipment are defective and/or do not comply with the Specifications, the applicable Purchase Order, the applicable Warranty, or any other requirement set forth herein, Buyer shall notify Seller of such defect or non-compliance, and Seller shall implement all necessary actions to ensure that the Products to be shipped to Buyer in accordance with this Agreement and the Purchase Orders comply with the Specifications, the applicable Purchase Order, the applicable Warranty, or such other applicable requirement set forth herein.
6.1.4 Inspections Not Waiver . Nothing in this Section 6.1 relating to any inspections or quality control tests undertaken with respect to Products, including any required replacement of Products that do not pass such inspection or testing, shall operate to relieve Seller’s obligations to deliver the Products on a timely basis in accordance with Article 4 or to limit Buyer’s termination rights pursuant to Article 10 .
 
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6.2 Seller Technical Assistance .
6.2.1 From time-to-time during the Term, Buyer may, in its discretion, send to Seller (a) requests for clarifications regarding the requirements of the Product Installation Manual and (b) technical drawings and other information relating to Buyer’s proposed design or procedures for the installation of the Products into a Project, with the request that Seller confirm that installation in accordance with such technical drawings or other information is consistent with the Product Installation Manual and therefore would not, on its own, constitute the basis for an exclusion under the applicable Warranty. Seller shall promptly respond in writing to any such request. The failure of Buyer to make any requests for clarifications or to send technical drawings or other information to Seller pursuant to this Section 6.2.1 shall not operate to limit Seller’s obligations under this Agreement or any Purchase Order, including with respect to the applicable Warranty.
6.2.2 To the extent not otherwise required of Seller under the terms of the applicable Warranty hereunder, Seller will use commercially reasonable efforts to provide Buyer with technical assistance and support with respect to the Products for the Warranty Period of the Products, including notifying Buyer of any (a) newly discovered material design defects or manufacturing defects affecting large quantities of products similar or identical to the Products and any proposed corrective approach; and (b) any software upgrades or other improvements; provided , however , except as specified in Section 5.6 , the foregoing shall not obligate Seller to preemptively correct any potential defect before it arises under the Warranty or make such improvements or software upgrades available to Buyer without compensation.
ARTICLE 7
WARRANTIES
7.1 Warranty . Seller shall provide the Warranties with respect to the Products supplied pursuant to this Agreement delivered hereunder; provided , that nothing in the Warranties (including, without limitation, the disclaimer) shall be read or deemed to limit Seller’s obligations or Buyer’s rights as expressly set forth in this Agreement. The “ Warranty Period for Microinverters purchased under a Purchase Order and Seller’s standard limited warranty period is twenty (20) years from the Delivery Date of the applicable Microinverter. Should Buyer desire to extend the Warranty Period for one or more Microinverters from twenty (20) years to twenty-five (25) years from the Delivery Date thereof, Buyer may do so by submitting to Seller a report on a quarterly basis containing the serial numbers of Microinverters to be covered by a twenty-five (25) year Warranty Period; provided however, that Buyer may only make such an election during the first twelve (12) months from the Delivery Date. After receiving the report, Seller shall invoice Buyer for the amount of the additional five (5) years as set forth in Exhibit A (as amended from time to time). Payment terms on such invoices are net *** (***) days. The standard Warranty Period for Envoys purchased under the Agreement is two (2) years from the date of that the Envoy is installed at the first end user location. Seller may make changes to the Warranties at any time during the Term, provided such changes do not have a material or adverse effect on the warranty rights of Buyer or any transferee of such Warranties.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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7.2 Warranty Transferable . The Warranties shall be freely transferable by Buyer, without notice to or consent of Seller, to any subsequent owner of the Products at the original site of installation. Notwithstanding any such transfer, Buyer shall be a joint beneficiary of the Warranties supplied hereunder and shall have the same rights as any transferee, on behalf of such transferee, to make claims and obtain service, recoveries and other remedies under the Warranties with respect to the applicable Products; provided , that under no circumstance shall both Buyer and the applicable transferee be entitled to make claims and obtain service, recoveries and other remedies with respect to the same claim, defect or similar issue with respect to such Products.
7.3 Warranty Upgrades . If Seller materially changes the terms and conditions of its standard warranty that is applicable to products that are the same as the Products in a manner that is more favorable to its customers, upon Buyer’s request, the Parties shall amend this Agreement to substitute such warranty (but such changes shall apply only for Products purchased after such material changes are made) for that set forth in Exhibit G , as applicable; provided , however , the foregoing obligation of Seller to enter into an amendment shall not apply to extension of the warranty periods, but Seller agrees to negotiate in good faith with Buyer with respect to any such extensions.
ARTICLE 8
INDEMNIFICATION AND INSURANCE
8.1 Seller’s General Indemnity . Seller shall defend, indemnify and hold harmless Buyer and its Affiliates, along with each of their respective officers, directors, partners, members, shareholders, agents, employees, successors, and assigns (collectively, the “ Buyer Indemnitees ”), from and against all third-party claims (including, without limitation, product liability claims), losses, damages, expenses and liability (including court costs and reasonable attorneys’ fees) (collectively, the “ Losses ”) brought against or incurred by any Buyer Indemnitee arising out of or relating to this Agreement or any Purchase Order to the extent such Losses are caused by or are the result of (a) any breach of this Agreement by Seller or its successors and assigns (collectively, the “ Seller-Related Persons ”), (b) breach of the Warranties, including manufacturing defects and design defects, (c) the negligence or willful misconduct of the Seller-Related Persons, (d) any product liability claims or other claims relating to the Products, including, without limitation, Seller’s labeling on the Products or Seller’s failure to withdraw or recall Products in a timely fashion, and (e) Seller’s failure to pay Taxes for which it is responsible under this Agreement.
8.2 Seller’s Hazardous Materials Indemnity . Seller shall defend, indemnify and hold harmless each Buyer Indemnitee from and against all claims, losses, fines, costs, penalties or expenses imposed upon any of them (including court costs and reasonable attorneys’ fees), regardless of whether or not such claims, losses, fines, costs, penalties or expenses arise from or are incurred by third parties, that they may incur or suffer by reason of: (a) the existence in or any release from a Product of any Hazardous Material; (b) any enforcement or compliance proceeding commenced by or in the name of any Governmental Authority arising from or related to the existence in or any release from a Product of any Hazardous Material; and (c) any action reasonably necessary to abate, remediate or prevent a violation or threatened violation of any
 
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Applicable Law by any Buyer Indemnity with respect to the existence in or any release from a Product of any Hazardous Material.
8.3 Seller’s Intellectual Property Rights Indemnity . Seller shall defend, indemnify and hold harmless the Buyer Indemnitees from (a) any breach of Seller’s representations, warranties, covenants and obligations set forth in Section 16.1 and (b) any claim of any third party that any Product as furnished by Seller to Buyer under this Agreement infringes any Intellectual Property Rights of such third party. Without limiting the generality of the foregoing, Seller shall, at Seller’s option and Seller’s sole cost and expense, either (i) procure for Buyer the right to continue using the infringing Product or (ii) modify or replace the infringing Product so that it becomes non-infringing, in either case in a manner and time period that does not unreasonably interfere with Buyer’s activities or operations. If in connection with any such claim the continued use of any Product is forbidden by any court of competent jurisdiction, and neither of the foregoing remedies under clauses (i) or (ii) are available, and provided that in no event may Seller take any action which adversely affects Buyer’s continued use and enjoyment of the Products without the prior written consent of Buyer, Seller shall refund to Buyer the amounts paid by Buyer to Seller for the infringing Products, without reduction or offset, and shall provide any commercially reasonable assistance requested by Buyer in procuring a suitable replacement for the infringing Product.
8.4 Seller’s Lien Indemnity . Seller shall defend, indemnify and hold harmless the Buyer Indemnitees from and against all claims, losses, fines, costs, penalties or expenses imposed upon any of them (including court costs and reasonable attorneys’ fees) resulting from or related to any Seller Liens, regardless of whether or not such claims, losses, fines, costs, penalties or expenses arise from or are incurred by third parties.
8.5 Seller’s Laws, Standards and Codes Indemnity . Seller shall defend, indemnify and hold harmless each of the Buyer Indemnitees from and against all claims, losses, fines, costs, penalties or expenses imposed upon any of them (including court costs and reasonable attorneys’ fees) resulting from or related to any violation by the Seller-Related Persons of any applicable Law, Standard or Code, regardless of whether or not such claims, losses, fines, costs, penalties or expenses arise from or are incurred by third parties.
8.6 Buyer’s General Indemnity . Buyer shall defend, indemnify and hold harmless Seller and its Affiliates, along with each of their respective officers, directors, partners, members, shareholders, agents, employees, successors, and assigns (collectively, the “ Seller Indemnitees ”), from and against all third-party Losses brought against or incurred by any Seller Indemnitee arising out of or relating to this Agreement or any Purchase Order to the extent such Losses are caused by (a) any breach of this Agreement by Buyer or its successors and assigns (collectively, the “ Buyer-Related Persons ”) and (b) the negligence or willful misconduct of the Buyer-Related Persons.
 
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8.7 Notice of Claim . A Buyer Indemnitee or Seller Indemnitee (each, an “ Indemnified Party ”) shall, promptly after the receipt of notice of the commencement of any legal action or of any claims against such Indemnified Party in respect of which indemnification may be sought pursuant to the provisions of this Article 8 , notify Seller or Buyer, as the case may be (each, an “ Indemnifying Party ”) in writing thereof, provided that the failure of an Indemnified Party promptly to provide any such notice shall only reduce the liability of the Indemnifying Party by the amount of any damages attributable to the failure of the Indemnified Party to give such notice in such manner. In case any such claim or legal action shall be made or brought against an Indemnified Party and such Indemnified Party shall notify the Indemnifying Party thereof, the Indemnifying Party may, or if so requested by the Indemnified Party shall, assume the defense thereof and after notice from the Indemnifying Party to the Indemnified Party of its election to assume the defense thereof with legal counsel reasonably satisfactory to the Indemnified Party, the Indemnifying Party will not be liable to the Indemnified Party under this Article 8 for any legal fees and expenses subsequently incurred by such Indemnified Party in connection with the defense thereof. If the Indemnifying Party does not assume the defense of any such claim or legal action, then the Indemnifying Party shall remain liable to such Indemnified Party for any legal fees and expenses incurred by such Indemnified Party in connection with the defense thereof. No Indemnified Party shall settle any indemnified claim over which the Indemnifying Party has not been afforded the opportunity to assume the defense. The Indemnifying Party shall control the settlement of all claims over which it has assumed the defense; provided , that the Indemnifying Party shall not conclude any settlement which requires any action or forbearance from action by an Indemnified Party, or any payment by an Indemnified Party, without the prior approval of the Indemnified Party. The Indemnified Party shall provide reasonable assistance to the Indemnifying Party as reasonably requested by the Indemnifying Party, at the Indemnifying Party’s sole cost and expense, in connection with such legal action or claim. For claims over which the Indemnifying Party has assumed the defense, the Indemnified Party shall have the right to participate in and be represented by counsel of its own choice and at its own expense.
8.8 Term of Indemnities . Notwithstanding any other provision in this Agreement to the contrary, the indemnification obligations and rights set forth in this Article 8 shall survive the expiration or other termination of this Agreement, and Buyer’s acceptance of any Products shall not be construed to relieve Seller of any obligation under this Article 8 .
8.9 Insurance . Seller shall maintain in effect insurance in accordance with the provisions of Exhibit H throughout the Term. Seller shall comply with the terms of any policy required to be maintained by Seller in connection with this Agreement. Seller shall provide to Buyer an insurance certificate meeting the requirements of Exhibit H by the earlier of (i) ten (10) days after the Effective Date and (ii) within five (5) days of the date of the first Purchase Order delivered by Buyer hereunder.
8.10 Setoff . In the event that Seller owes to Buyer any amounts and only in the event of Seller’s breach of Sections 10.1.2(a) or 10.1.2(b) , then Buyer may set off such amounts (including any awarded attorney’s fees and costs) against any amounts then due and owing (or that become due and owing) to Seller; provided , however , that Buyer has given Seller at least five (5) Business Days’ notice of its intent to set off pursuant to the terms of this Section 8.10 .
 
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ARTICLE 9
COMPLIANCE WITH LAWS AND STANDARDS AND CODES
9.1 Generally . Seller shall at all times comply, and shall ensure that the Products when delivered comply, with all Laws and Standards and Codes applicable to the design, manufacture and intended use of the Products, the delivery thereof, and the performance by Seller of its other obligations hereunder.
9.2 Changes in Law .
9.2.1 Notices of Changes in Laws or Standards and Codes . In the event that any change in any applicable Law or Standards and Codes applicable to the Products or their manufacturing are enacted or otherwise approved after the Effective Date and such change requires or makes advisable any modifications in the design, manufacturing, delivery, installation, operation or other use of the Products, Buyer or Seller, as the case may be, shall reasonably promptly notify the other thereof in writing upon its discovery of such change in Laws or Standards and Codes.
9.2.2 Modification of Scheduled Ship Dates; Buyer’s Rights . If any such modification is required by any such Law or Standards and Codes and Seller has received notice thereof, then the Parties agree to resolve how Seller shall make any such modification, if practicable, at its sole cost and expense, subject to Section 9.2.3 . If Seller fails to modify the Products to comply with applicable Laws or Standards and Codes in effect as of the applicable Scheduled Ship Date, or fails to give written assurances that such Products (when delivered at the Delivery Point) will comply with the then-effective Laws or Standards and Codes, then Buyer shall have the right to cancel the applicable Purchase Order. Should Seller tender Products at the Delivery Point that fail to comply with the then-effective Laws or Standards and Codes, Buyer shall have the right to reject such non-conforming Products pursuant to Section 5.2 .
9.2.3 Modification of Unit Prices . In the event that a change in any Law or Standards and Codes requires substantial modifications to a Product’s design, materials or its manufacturing process (operational expenditures, but not capital expenditures) then the Parties shall promptly meet and work to resolve the cost of any such modifications and how it might impact the overall price for the Product. Any adjustment in the Unit Price pursuant to this Section 9.2.3 shall in all cases be reflected in an amendment to Exhibit A pursuant to Section 18.8 (which, subject to Buyer’s right to terminate below, the Parties shall promptly execute following resolution of any disagreements) and the revised Unit Prices shall only apply to Purchase Orders issued by Buyer after the date of such amendment. Should the Parties fail to agree on an amendment, or if Buyer determines it no longer desires to purchase the Product given the changes in the Product Specifications or manufacturing process, Buyer may, at Buyer’s discretion, either (a) terminate this Agreement by notice to Seller, or (b) elect by written notice to Seller to continue with this Agreement, and in such case, (i) Buyer shall be relieved of its obligation to use commercially reasonable efforts to purchase certain quantities of Products as set forth in Section 2.3 , and to purchase minimum quantities as set forth in the then-applicable Rolling Forecasts pursuant to Sections 2.2.1 and 2.2.2 , (ii) thereafter, Buyer may (but is not required to) submit Purchase Orders to purchase Products at the adjusted Unit Prices established
 
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by Seller, and Seller may accept or reject such Purchase Orders on a case-by- case basis depending on Product availability at the time Buyer issues its Purchase Order, and (iii) the provisions of Section 2.2 and 2.3 will no longer apply. If Buyer elects to terminate this Agreement pursuant to clause (a), such termination shall be deemed a “no fault” termination, and neither Party shall have liability to the other Party except to the extent arising prior to the termination date or if a Party fails to comply with its obligations that survive termination of this Agreement. Nothing in this Section 9.2 shall limit Seller’s obligations under Section 9.1 .
ARTICLE 10
DEFAULT, TERMINATION AND SUSPENSION
10.1 Events of Default . The following conditions, events and occurrences shall each be an “ Event of Default ” for all purposes hereunder:
10.1.1 Buyer Events of Default. With respect to Buyer:
(a) Buyer fails to make payment of any amount payable to Seller when due under this Agreement or any Purchase Order, which failure continues for ten (10) Business Days after receipt of written notice of such non-payment from Seller;
(b) Buyer fails to cure a material breach or default in the performance of its obligations under this Agreement or any Purchase Order not otherwise specifically addressed in this Section 10.1.1 within thirty (30) days after receipt of written notice of such material breach or default from Seller; provided , that if such breach or default cannot be remedied with reasonable diligence within such thirty (30) day period, so long as Buyer timely commences curing such material breach or default and proceeds with reasonable diligence thereafter to prosecute such cure, than the period for such cure shall be extended for a reasonable period of time not to exceed ninety (90) days;
(c) Buyer files a petition in bankruptcy, files a petition seeking reorganization, arrangement, composition or similar relief, or makes a general assignment for the benefit of creditors, or if any involuntary petition or proceeding under bankruptcy or insolvency laws is instituted against Buyer and not stayed, enjoined or discharged within ninety (90) days;
(d) If any representation or warranty made by Buyer herein was materially false or misleading when made, and Buyer fails to remedy such materially false or misleading representation or warranty within thirty (30) days after receipt of written notice of the particulars of such materially false or misleading representation or warranty from Seller;
(e) Buyer’s breach of or default under Section 15.2.2 or 15.2.3 ; or
(f) Buyer’s assignment of this Agreement other than in strict compliance with the requirements of Section 18.4 .
10.1.2 Seller Events of Default. With respect to Seller:
 
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(a) Seller fails to make payment of any amount payable to Buyer when due under this Agreement, which failure continues for ten (10) Business Days after receipt of written notice of such nonpayment from Buyer;
(b) Seller fails to cure a material breach or default in the performance of its obligations under this Agreement or any Purchase Order not otherwise specifically addressed in this Section 10.1.2 within thirty (30) days after receipt of written notice of such material breach or default from Buyer; provided , that if such breach or default cannot be remedied with reasonable diligence within such thirty (30) day period, so long as Seller timely commences curing such material breach or default and proceeds with reasonable diligence thereafter to prosecute such cure, than the period for such cure shall be extended for a reasonable period of time not to exceed ninety (90) days;
(c) For at least *** percent (***%) of deliveries made in the course of one (1) calendar quarter, Seller fails to deliver Products to the Delivery Point on the applicable Scheduled Ship Dates, and, as a result, such Products are not delivered to the applicable Destination Point within *** (***) Business Days of the date set forth in the Delivery Schedule (subject to delays caused by a Force Majeure Event or the Carrier’s failure that is unrelated to Seller’s late delivery);
(d) Seller files a petition in bankruptcy, files a petition seeking reorganization, arrangement, composition or similar relief, or makes a general assignment for the benefit of creditors, or if any involuntary petition or proceeding under bankruptcy or insolvency laws is instituted against Seller and not stayed, enjoined or discharged within ninety (90) days;
(e) If any representation or warranty made by Seller herein was materially false or misleading when made, and Seller fails to remedy such materially false or misleading representation or warranty within thirty (30) days after receipt of written notice of the particulars of such materially false or misleading representation or warranty from Buyer;
(f) Seller’s breach of or default under Sections 15.2.2 , 15.2.3 , or 16.3 (no cure period);
(g) Seller’s assignment of this Agreement other than in strict compliance with the requirements of Section 18.4 (no cure period);
(h) If Seller (i) offers a *** to a customer (and another customer accepts such ***), (ii) fails to notify Buyer in breach of its obligation to do so set forth in Section 3.1.3 such that Buyer discovers the breach either by audit, from a third party or in any other manner, (iii) the foregoing occurs on *** during the Term (no cure period); and
(i) Seller fails to issue an Order Acknowledgement as required pursuant to Section 2.1.3 after (i) Buyer resubmits the Purchase Order after five (5) Business Days elapse following the initial Purchase Order, (ii) five (5) additional Business Days elapse since such resubmission without Buyer’s receipt of the Order Acknowledgement or a proper rejection from Seller, (iii) thereafter, Buyer delivers a notice citing Seller’s breach of Section 2.1.3 , and (iv) and such failure to issue an Order Acknowledgement continues for a period of ten (10) additional Business Days after receipt of such notice from Buyer.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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10.2 Remedies for Event of Default .
10.2.1 Upon the occurrence of an Event of Default, the non-defaulting Party may (a) terminate this Agreement, or, at its election, one or more Purchase Orders affected by such Event of Default, (b) seek specific performance of the defaulting Party’s obligations hereunder, (c) suspend performance under the Agreement or any Purchase Order until the defaulting Party cures such default, provided that Seller shall not suspend its obligations to perform Warranty service or to provide the Services set forth in Section 17.1 (unless, with respect to Section 17.1 , Buyer’s Event of Default is its failure to pay for the Enlighten service and such suspension occurs consistent with Section 17.1 ); or (d) seek any other legal or equitable remedy available to such non-defaulting Party under applicable Laws. In addition, in the event of a Seller’s Event of Default, Buyer may exercise its rights pursuant to Section 16.3 . For clarity, for a Seller Event of Default set forth in Section 10.1.2(h) , in addition to termination of this Agreement and any other right or remedy available to Buyer under applicable Law or equity, the Parties agree that the amounts payable under Section 3.1.3 shall promptly be paid by Seller to Buyer.
10.2.2 Any termination for an Event of Default shall be without prejudice to any other right or remedy the non-defaulting Party may have under this Agreement or at Law or in equity (including the remedy of contract damages), and no such remedy shall be exclusive of any other remedy except as otherwise expressly set forth herein.
10.3 Termination for Force Majeure . If a Force Majeure Event affects the performance of the claiming Party for ninety (90) consecutive days, the non-claiming Party may terminate this Agreement or an affected Purchase Order upon not less than thirty (30) days prior written notice to such Party.
10.4 Limited Continuation at Buyer’s Election . If this Agreement is terminated by Buyer due a default of Seller pursuant to Sections 10.1.2(a) , (c)  or (d) , then Buyer shall have the option, in its sole discretion, to continue to submit Purchase Orders for Products (and Seller shall have the obligation to continue to accept such Purchase Orders) pursuant to Section 2.1 wherein the Delivery Schedule for all such Purchase Orders provides for delivery to the Delivery Point on or before the first anniversary of the effective date of any such termination. If Buyer so-elects to continue to purchase Products then, notwithstanding such termination, this Agreement, except for Sections 3.1.3 , 7.3 , 9.2 , 17.2 , 18.1 , shall continue in full force and effect solely with respect to purchases of Products during such period, and any other provision applicable to other Products or periods shall survive such termination or expiration only to the extent expressly set forth herein. During such period, the Unit Price shall remain the same as on the date immediately prior to the day of termination by Buyer.
ARTICLE 11
LIMITATIONS AND EXCLUSIONS ON LIABILITY
11.1 Limitation on Consequential Damages . IN NO EVENT SHALL EITHER PARTY BE RESPONSIBLE UNDER ANY PROVISION OF THIS AGREEMENT OR OTHERWISE WITH RESPECT TO THE PRODUCTS, FOR ANY CONSEQUENTIAL,
 
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INCIDENTAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES, ANTICIPATED OR LOST PROFITS, LOSS OF TIME, OR OTHER SIMILAR LOSSES OF ANY KIND INCURRED BY THE OTHER PARTY IN CONNECTION WITH SUCH PARTY’S PERFORMANCE OR NON-PERFORMANCE UNDER THIS AGREEMENT.
11.2 Limitation on Aggregate Liability . EACH PARTY’S ENTIRE AND AGGREGATE LIABILITY FOR ALL CLAIMS MADE BY ONE PARTY AGAINST THE OTHER PARTY ARISING FROM THIS AGREEMENT SHALL NOT EXCEED THE GREATER OF: (a) *** DOLLARS ($***); OR (b) *** (***%) OF THE ANNUAL CONTRACT AMOUNT.
11.3 Exclusions from Limitations . NOTHING IN THIS ARTICLE 11 SHALL BE DEEMED OR CONSTRUED TO LIMIT (a) RECOVERY OF AMOUNTS OWED TO A THIRD PARTY THAT MAY BE RECOVERABLE FROM THE OTHER PARTY PURSUANT TO ANY INDEMNITY UNDER ARTICLE 8 , (b) LIABILITY ARISING FROM A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, INTENTIONAL BREACH, FRAUD, OR ILLEGAL OR UNLAWFUL ACTS, (c) AMOUNTS DUE TO SELLER FOR UNPAID INVOICES, OR (d) SELLER’S WARRANTY OBLIGATIONS SET FORTH IN Article 7 AND EXHIBIT G . THE LIMITS OF LIABILITY SET FORTH IN THIS AGREEMENT SHALL NOT BE REDUCED BY THE AMOUNT OF INSURANCE PROCEEDS AVAILABLE TO THE INDEMNIFIED PARTY.
11.4 No Limitation on Remedies . Except where this Agreement states that the applicable remedy set forth herein is the sole or exclusive remedy (or words of similar import) for such event, the rights and remedies of the Parties with respect to this Agreement in relation to such event are in addition to, and shall not be read or deemed a limitation on, those rights and remedies that may be available to a Party at law or in equity.
11.5 Supremacy . The provisions of this Article 11 shall prevail over any conflicting or inconsistent provisions contained elsewhere in this Agreement or in any Purchase Order.
ARTICLE 12
REPRESENTATIONS AND WARRANTIES
12.1 Representations and Warranties by Seller . Seller hereby represents and warrants to Buyer, as of the Effective Date, and as of the date of each Order Acknowledgement, as follows; provided , however , that if, as of the date of each Order Acknowledgement, Seller is in breach of this Section 12.1 but such breach would not have a material adverse effect on (a) the business, assets, properties, liabilities (actual or contingent), operations, or condition (financial or otherwise) of Seller and its Affiliates taken as a whole, or (b) the ability of Seller to perform its obligations under this Agreement, then such breach shall not be an Event of Default:
12.1.1 Due Organization; Good Standing . Seller is a corporation duly organized, validly existing and in good standing under the laws of Delaware and is qualified to
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
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do business in California and in each other jurisdiction where failure to so qualify would have a material adverse effect on its ability to perform its obligations under this Agreement.
12.1.2 Due Authorization . The execution, delivery and performance of this Agreement by Seller have been duly authorized by all necessary corporate action on the part of Seller and do not and will not require the consent of any other Person except for any consents that have been obtained.
12.1.3 Execution and Delivery . This Agreement has been duly executed and delivered by Seller. This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and by general equitable principles.
12.1.4 Governmental Approvals . No Governmental Approval is required on the part of Seller in connection with the execution, delivery and performance of this Agreement, except those which have already been obtained or which Seller anticipates will be timely obtained in the ordinary course of performance of this Agreement and before being required by applicable Law.
12.1.5 No Conflict; No Liens . The execution, delivery and performance by Seller of this Agreement will not (a) conflict with or cause any default under (i) its organizational documents, (ii) any indebtedness or other obligation of Seller or any contract to which Seller is a party or by which it or its properties may be bound or (iii) any applicable Law governing Seller or Seller’s performance hereunder or (b) subject Buyer or any Project or any component thereof (including the Products) to any Lien.
12.1.6 No Litigation . There are no actions, suits, proceedings, patent or license infringements, or investigations pending or, to Seller’s knowledge, threatened against it or its Affiliates at law or in equity before any Governmental Authority that individually or in the aggregate could result in a materially adverse effect on the business, properties or assets or the condition, financial or otherwise, of Seller or in any impairment of Seller’s ability to perform its obligations under this Agreement. Seller has no knowledge of any violation or default with respect to any order, writ, injunction or decree of any court or any other Governmental Authority that may result in any such materially adverse effect or such impairment.
12.1.7 Solvency . Without limiting the generality of Section 12.1.6 :
(a) No petition or notice has been presented, no order has been presented, no order has been made and no resolution has been passed for the bankruptcy, liquidation, winding-up or dissolution of Seller.
(b) No receiver, trustee, custodian or similar fiduciary has been appointed over the whole or any part of the Products, including any Intellectual Property Rights embodied or used therein, or the income or assets of Seller.
(c) Seller has no plan or intention of, nor has received any notice that any other Person has any plan or intention of, filing, making or obtaining any such petition,
 
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notice, order or resolution or of seeking the appointment of a receiver, trustee, custodian or similar fiduciary.
(d) Seller is solvent, is able to pay its debts as they become due, has capital sufficient to carry on its current business and all businesses in which Seller is about to engage, and now owns property having a value both at fair valuation and at present fair salable value greater than the amount required to pay Seller’s debts.
12.1.8 Hazardous Materials . Without limiting the generality of Section 12.1.6 , Seller has not received notice of any claims related to Hazardous Materials in the Products, nor, to Seller’s knowledge, is there any event, circumstance or fact that could reasonably form the basis for such a claim.
12.2 Representations and Warranties by Buyer . Buyer hereby represents and warrants to Seller as follows:
12.2.1 Due Organization; Good Standing . Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in California and where failure to so qualify would have a material adverse effect on its ability to perform its obligations under this Agreement.
12.2.2 Due Authorization . The execution, delivery and performance of this Agreement by Buyer have been duly authorized by all necessary company action on the part of Buyer and do not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Buyer or any other party to any other contract with Buyer, except for any such consents that have been obtained.
12.2.3 Execution and Delivery . This Agreement has been duly executed and delivered by Buyer. This Agreement constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and by general equitable principles.
12.2.4 Governmental Approvals . No Governmental Approval is required on the part of Buyer in connection with the execution, delivery and performance of this Agreement except those which have already been obtained or which Buyer anticipates will be timely obtained in the ordinary course of performance of this Agreement and before being required by applicable Law.
12.2.5 No Conflict . The execution, delivery and performance by Buyer of this Agreement will not conflict with or cause any default under (i) its organizational documents, (ii) any indebtedness or other obligation of Buyer or any contract to which Buyer is a party or by which it or its properties may be bound or (iii) as of the date hereof, any applicable Law governing Buyer or the performance of its obligations hereunder.
12.2.6 No Litigation . There are no actions, suits, proceedings, patent or license infringements, or investigations pending or, to Buyer’s knowledge, threatened against it or its Affiliates at law or in equity before any Governmental Authority that individually or in the
 
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aggregate could result in any materially adverse effect on the business, properties or assets or the condition, financial or otherwise, of Buyer or in any impairment of Buyer’s ability to perform its obligations under this Agreement. Buyer has no knowledge of any violation or default with respect to any order, writ, injunction or decree of any court or any other Governmental Authority that may result in any such materially adverse effect or such impairment.
ARTICLE 13
DISPUTE RESOLUTION
13.1 Dispute Resolution, Consent to Jurisdiction and Equitable Remedies .
13.1.1 If a dispute arises between Seller and Buyer in any way arising out of or relating to this Agreement, the disputing Party shall promptly provide written notice to the other Party of the dispute (a “ Notice of Dispute ”). Within five (5) Business Days of the receipt of such Notice of Dispute, the Parties shall meet to negotiate in good faith to resolve the dispute quickly and with minimal costs to the Parties. If the Parties shall have failed to resolve any such dispute within thirty (30) days after receipt of the Notice of Dispute, either Party may bring suit in the United States District Court for the District of New York, or if such court does not have jurisdiction over such dispute, in the District Court of the State of New York, in each case located in New York City, which courts shall have exclusive jurisdiction with respect to all disputes arising out of or relating to this Agreement or any Purchase Order. By execution and delivery of this Agreement, each of the Parties hereby accepts the exclusive jurisdiction of the United States District Court for the District of New York, or if such court does not have jurisdiction over such dispute, in the District Court of the State of New York, in each case located in New York City.
13.1.2 Each Party irrevocably agrees to be bound by any final judgment (subject to any appeal available pursuant to applicable Law) of the applicable court determined in accordance with Section 13.1.1 . Each Party irrevocably waives, to the fullest extent permitted by Law, any claim that any such suit brought in any such court has been brought in an inconvenient forum. Each of the Parties hereto knowingly, voluntarily, intentionally and irrevocably waives any right it may now or hereafter have to a trial by jury in any litigation based herein, or arising out of, under, or in respect of this Agreement, or any course of conduct, course of dealing, statements (whether oral or written) or actions of the Parties hereto.
13.1.3 Notwithstanding any provision in this Agreement, the Parties understand and agree that any breach or threatened breach of this Agreement by Seller may result in irreparable injury to Buyer, that any remedy available to Buyer at Law in relation to such breach or threatened breach would be an inadequate remedy for such breach or threatened breach and that, in addition to any other remedies Buyer has under this Agreement or any Purchase Order or under Law for such breach or threatened breach, Buyer shall be entitled at any time to seek to enforce the specific performance of this Agreement and the applicable Purchase Orders by Seller through injunctive relief, without the necessity of proving actual damages or posting a bond and without limitation of the right to recover such damages.
13.2 Continued Performance During Dispute Resolution . During the pendency of any dispute, the Parties shall continue to timely and diligently perform any obligation under this
 
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Agreement that is not the subject of a dispute; provided , however , if Buyer fails to timely make payment on an invoice without disputing such invoice pursuant to Section 3.5 , Seller may reject any Purchase Orders issued by Buyer until Buyer pays such overdue amounts (including amounts owed for Enlighten pursuant to Section 17.1.1 ) and any interest thereon in full. Without limiting the foregoing, Seller shall continue performing its warranty obligations and its obligations under Article 17 .
ARTICLE 14
FORCE MAJEURE
14.1 Force Majeure Events . Performance under this Agreement shall be excused due to, and a Party shall not be liable for or deemed in breach of this Agreement because of, any failure or omission to carry out or observe its obligations under this Agreement, to the extent that such performance is rendered impossible or delayed by fire, flood, act of God or the public enemy, act of a Governmental Authority (other than in respect of the failure of a Party to comply with applicable Law), national or regional labor difficulties, riot, perils of the sea, or any other extraordinary event where the failure to perform or the delay is beyond the reasonable control of, and could not have been reasonably foreseen by, the nonperforming Party; provided that such event is not caused by or attributable to the negligence or fault of, or breach of its obligations hereunder by, such Party, and could not have been avoided by prudent commercial practices (any such event, a “ Force Majeure Event ”). Force Majeure Events shall not include: (a) mechanical or equipment failures (except to the extent any such failure is itself caused by a Force Majeure Event); (b) delays in customs clearance (except to the extent any such delay is itself caused by a Force Majeure Event); (c) any delays or other problems associated with the issuance, suspension, renewal, administration or withdrawal of, or any other problem directly or indirectly relating to, any Governmental Approval or the applications therefor where such delays or problems are within the affected Party’s reasonable control; (d) labor strikes or other labor difficulties that are not of a general and widespread nature or are specific to the affected Party’s personnel or facilities; (e) any weather condition unless of a catastrophic nature or listed above; (f) lack of financial resources, cost increases in commodities or labor, or other economic conditions; and (g) failure of raw or finished material supply, unless such failure was itself the result of a Force Majeure Event.
14.2 Notice of Force Majeure Events . As a condition to claiming a Force Majeure Event, the claiming Party shall promptly give the other Party a written notice describing the particulars of the Force Majeure Event of the occurrence of any such Force Majeure Event, including an estimate of the expected duration and the probable impact of the Force Majeure Event on the performance of such Party’s obligations hereunder. The Parties agree to use reasonable efforts to notify each other of potential Force Majeure Events and update each other on developments regarding potential Force Majeure Events. The Party claiming the Force Majeure Event shall have a continuing obligation to deliver to the other Party regular updated reports supporting its claim regarding a Force Majeure Event promptly after such information is available to such Party and until such time as the Force Majeure Event is no longer in effect.
14.3 Mitigation . The impact of the Force Majeure Event on a Party’s performance shall be of no greater scope and no longer duration than is reasonably required by such event. The Party claiming a Force Majeure Event shall have a duty to alleviate and mitigate the cause
 
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and effect, including duration, costs and Delivery Schedule impacts, in each case arising from such Force Majeure Event, and to resume performance of its affected obligations under this Agreement and the affected Purchase Orders promptly after being able to do so. The burden of proof with respect to a Force Majeure Event shall be on the Party claiming the same.
ARTICLE 15
CONFIDENTIALITY
15.1 Ratification of NDA . The Parties acknowledge and agree that the provisions of the NDA shall apply this Agreement, including with respect to all Confidential Information, and the term of such NDA shall extend for a period of two (2) years beyond the last day of the Term (including any extension pursuant to Section 10.4 ).
15.2 Additional Provisions . The provisions of this Section 15.2 shall supplement the provisions in the NDA, and in the event of a conflict, the provisions of this Section 15.2 shall prevail.
15.2.1 Ownership of Confidential Information .
(a) Each Party shall retain all right and title to, and interest in, its own Confidential Information as of the Effective Date.
(b) All Confidential Information obtained, developed or created by or specifically for Buyer in connection with and relating solely to its performance of this Agreement, a Purchase Order or a Project hereunder, including copies thereof, is the exclusive property of Buyer. No right or license is granted to Seller or any third party respecting the use of such Confidential Information, or any of Buyer’s Confidential Information, except as expressly set forth in this Agreement or any Purchase Order and otherwise solely to the extent necessary for Seller’s performance of its obligations hereunder. Seller shall deliver the Buyer’s Confidential Information, including all copies thereof, to Buyer upon its request.
(c) Without limiting the generality of Section 15.2.1(a) : (i) as between Buyer and Seller, Buyer shall have exclusive ownership of all information, data, and documents relating to the Projects in which any of the Products are installed; and (ii) in no event shall Buyer be deprived of its rights to the energy production data, customer data, or any other information (“ Data ”) that may be stored in or accessible by any Products with respect to Systems owned or operated by Buyer; provided , however , that Seller shall have the right to use Data pursuant to the terms of Section 16.4 , but only if and to the extent that (A) the Data is aggregated and (B) the Data does not identify Buyer or any customer of Buyer. Seller hereby disclaims any and all other right, title or interest in and to all such Data.
15.2.2 Confidentiality of Agreement . Each Party shall keep the terms of this Agreement and all Purchase Orders confidential, unless (a) the other Party consents in writing to such disclosure in advance, (b) disclosure is required by lawful subpoena of a Governmental Authority or pursuant to rules or regulations of a Governmental Authority, including, without limitation, the Securities and Exchange Commission or similar state securities authority, or (c) otherwise provided in this Section 15.2.2 . If a Party is compelled by Law to disclose the terms of this Agreement or a Purchase Order, except in the case of disclosure required by the Securities
 
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and Exchange Commission or state securities authority, the Parties shall cooperate in seeking a protective order or other order limiting disclosure. If a protective order or a similar order limiting disclosure is not obtained, the compelled Party shall furnish only that portion of the terms of this Agreement that, upon the advice of its legal counsel, it is legally required to disclose. Without the prior consent of the other Party, (i) each Party may disclose the terms of this Agreement to its employees, partners, auditors, consultants, accountants, financial institutions or advisors, investment partners, Financing Parties, attorneys, and other third party advisors, provided such disclosure is on a “need-to-know” basis and such Persons are legally bound by a contractual or professional obligation to keep this Agreement confidential and to not further disclose the terms of this Agreement, and (ii) the Parties may file this Agreement with the Securities and Exchange Commission, provided that such Party filing this Agreement shall work with the other Party to determine what information (such as pricing and other proprietary business information) will be the subject of “CTR.”
15.2.3 Publications and Announcements . No Party shall make a public announcement or issue a press release about this Agreement, the transactions set forth herein, the terms and conditions of this Agreement, or the Party’s relationship without the prior written consent of the other Party. Each Party shall coordinate with the other Party with respect to, and provide advance copies to such other Party for review of, the text of any proposed announcement or publication that may include any non-public information concerning this Agreement or the activities or obligations of any Party hereunder prior to the dissemination thereof to the public or to any Person other than such announcing Party’s employees, contractors, subcontractors, representatives, agents or Affiliates, in each case, who agree in writing to keep such information confidential. The non-announcing Party shall deliver written notice to the announcing Party of any objections to the proposed announcement or publication within a reasonable period of time after receiving the advance copy of the proposed announcement; provided, however, the non-announcing Party’s failure to notify the announcing Party of any objections shall not be construed as a waiver of the covenant set forth in the first sentence of this Section 15.2.3 . The Parties shall work in good faith to resolve any objections. Subject to the foregoing, the Parties shall issue a mutually agreeable, joint press release promptly after execution of this Agreement announcing the Parties entry into a long term supply agreement. This Section 15.2.3 shall be subject to Section 2.6 , and Buyer shall be permitted to use, and Seller hereby consents to Buyer’s use of, Seller’s name and the Enphase Trademarks consistent with the Seller’s then current trademark usage policies or to generally announce to potential customers the use of Seller’s Products when marketing a System.
 
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ARTICLE 16
INTELLECTUAL PROPERTY MATTERS
16.1 Seller’s Representations and Warranties Regarding Intellectual Property Rights . Seller represents and warrants to Buyer that:
16.1.1 To Seller’s knowledge, the Products do not infringe or misappropriate any Intellectual Property Rights of any third party;
16.1.2 Seller has all necessary right, title, and interest in and to the Intellectual Property Rights necessary for Seller to (a) perform its obligations hereunder, including, without limitation, the manufacturing, delivery, and sale of Products by Seller to Buyer hereunder and (b) grant to Buyer the Product Use License and any other licenses granted to Buyer in this Agreement;
16.1.3 To Seller’s knowledge, as of the Effective Date, there are no disputes, claims or controversies pending or, to Seller’s knowledge, threatened, with respect to Intellectual Property Rights that could reasonably be expected to limit Seller’s ability to (a) perform its obligations hereunder, including, without limitation, the manufacturing, delivery, and sale of Products by Seller to Buyer hereunder and (b) grant to Buyer the Product Use License and any other licenses granted to Buyer in this Agreement; and
16.1.4 Neither Seller’s performance of its obligations hereunder, including, without limitation, the manufacturing, delivery, and sale of Products by Seller to Buyer, nor Buyer’s use of the Products as intended, will infringe upon any Intellectual Property Rights of any third party.
16.2 Product Use License . Subject to the terms and conditions of the Agreement, Seller hereby grants to Buyer and its permitted successors and permitted assigns an irrevocable, non-cancellable, non-exclusive, non-sublicensable, non-transferable (except as permitted under Section 18.4 ), fully paid-up, royalty-free, United States only right and license, under all of Seller’s Intellectual Property Rights, for so long as any of Buyer and its permitted successors and permitted assigns has any rights of ownership in or to any Product, solely to distribute, purchase, install, use, have used, operate, maintain, repair, offer for sale and sell such Product; provided, however that Buyer has made all payments for such Product to Seller as required under this Agreement (the “ Product Use License ”).
16.3 Seller’s Intellectual Property Rights and Source Code Escrow .
16.3.1 Escrow . Within sixty (60) days after the Effective Date, the Parties shall enter into a backup escrow arrangement (“ Backup Escrow Agreement ”) with a mutually agreeable third party escrow agent (“ Escrow Agent ”). Buyer shall be responsible for timely paying all reasonable fees, expenses, costs or other amounts associated with establishing and maintaining the escrow (“ Escrow Fees ”) pursuant to the terms and conditions of the Backup Escrow Agreement.
 
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16.3.2 Escrow Materials . Promptly following execution of the Backup Escrow Agreement, and pursuant to the terms and conditions thereof, Seller shall deposit and maintain under escrow: (a) a complete copy of the binary files, source code and object code for the Enlighten software and the software components of Seller’s backend system used in providing the Enlighten service that are proprietary to Seller, including all relevant documentation associated with such software (the “ Enlighten Software ”); and (b) and instructions on how Buyer shall be able to retrieve the Data that is hosted on the various servers, locations, or other storage apparatuses that it may be located on (the Data and the Enlighten Software shall collectively be referred to as the “ Escrow Materials ”). Promptly following any material update to the Enlighten Software, but no less than annually, and immediately prior to termination of the Hosting Period, Seller shall update the Escrow Materials to conform to the then-current version of the Enlighten Software used to provide the Enlighten service to Buyer under this Agreement.
16.3.3 Release Conditions . Upon satisfaction of the Release Conditions, Buyer may request that the Escrow Agent release the Escrow Materials to Buyer by written notice to the Escrow Agent (“ Escrow Materials Release Notice ”). The Escrow Materials Release Notice shall: (a) specify that the Release Conditions have been satisfied; (b) include a copy of any other notice confirming the occurrence of a Seller Event of Default; and (c) include a certification by an officer of Buyer that Buyer has not received notice from Seller of the occurrence of any breach by Buyer set forth in Section 10.1.1 as of the date of the Escrow Materials Release Notice. The Backup Escrow Agreement shall provide that, upon the Escrow Agent’s receipt of the Escrow Materials Release Notice, the Escrow Agent shall contact the Seller to determine if the Seller has any dispute or disagreement with the terms set forth in Sections 16.3.3(a) – (c)  above. If there is any such dispute or disagreement, then the Escrow Agent shall release the Escrow Materials to Buyer only after such dispute or disagreement has been finally settled pursuant to the provisions of Article 13 .
16.3.4 Escrow Materials License . Subject to satisfaction of the Release Conditions and the actual release of the Escrow Materials, Seller hereby grants to Buyer a non-exclusive, non-sublicenseable, non-transferable, United States only, *** relating to and necessary to utilize the Escrow Materials, solely until Seller has cured the breach that lead to the trigger of the Release Conditions (including reimbursement of Buyer of its costs and expenses relating to implementing the escrowed materials) and has resumed full performance under this Agreement, to reproduce and use the Escrow Materials for Buyer’s internal purposes and to provide the Enlighten service to owners of any System at which Envoys purchased under this Agreement have been installed (the “ Escrow Materials License ”).
16.3.5 Confidentiality of Enlighten Software . Notwithstanding anything to the contrary in this Agreement or the NDA, Buyer acknowledges that the Enlighten Software is Seller’s Confidential Information. Buyer agrees (a) not to remove, obscure, or alter any copyright or other proprietary rights notices appearing in or on any Enlighten Software, (b) to reproduce all such copyright or other proprietary rights notices on all copies made of the Enlighten Software made by Buyer, and (c) to not use the Enlighten Software for any purpose other than expressly permitted under this Agreement.
16.4 Buyer’s Data . Buyer shall retain exclusive ownership of all Data and all Data shall be deemed the Confidential Information of Buyer and shall not be disclosed by Seller to
 
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any Person without Buyer’s prior written consent. Notwithstanding the foregoing sentence, for so long as Seller is hosting and operating the Enlighten monitoring service pursuant to Section 17.1 , Seller shall have, and Buyer does hereby grant to Seller, a right of limited access and use of the Data generated in connection with the Enlighten monitoring services for Seller’s internal purposes and analysis, including ongoing research and development, and such development may lead to the development of other products which may be offered for sale by Seller. Seller may, without the prior written consent of Buyer, disclose Data to Persons other than Buyer so long as (a) the customer data is anonymous, meaning that the data shall not contain any personal identifying information or other sensitive information, including, without limitation: site location, site photos, address, site owner, system owner, installer, equipment types, and other system-specific information; (b) customer data is aggregated with other customer data; and (c) customer data comprising such aggregate data set comprises a representative sample of the entire data set.
16.5 Retention of Data . Seller shall maintain all Data and any other information collected by Seller in connection with its performance of this Agreement for a period of one (1) year following the termination or expiration of this Agreement. Seller shall be permitted to retain the Data for an indefinite period of time and if Buyer so requests, Seller shall disassociate Buyer’s specific information from the Data.
ARTICLE 17
OTHER OBLIGATIONS
17.1 Enlighten .
17.1.1 Hosting . For the life of every Envoy purchased under this Agreement (the “ Hosting Period ”), for no additional cost to Buyer beyond that paid by Buyer for each Envoy and *** following such purchase of each Envoy pursuant to Exhibit A , Seller shall (a) host and operate the Enlighten monitoring software service for all monitored Systems, and (b) provide access to such Enlighten monitoring software service to end users via a web-based online interface and to Buyer via Seller’s application programming interface (“ API ”). At no additional cost to Buyer, Buyer shall be able to make the number of requests as is reasonably necessary to conduct its business consistent with past practices;  provided ,  however , that if Buyer needs to make substantially more requests to Seller’s system that is not consistent with past practices, then they shall negotiate in good faith the technical solution to enable Seller’s system to accommodate the increase in requests, as well as the costs involved with any modifications or upgrades. The obligations of Seller and rights granted to Buyer in this Section 17.1.1 are perpetual and irrevocable during the Hosting Period, shall survive any termination, cancellation or expiration of this Agreement, and shall continue notwithstanding any failure by Buyer to pay the *** or any other amount under this Agreement. Should Buyer fail to ***, Seller may, as Seller’s sole remedy, seek recovery of damages, interest at the Late Payment Rate, and attorney’s fees from Buyer but shall not suspend performance of its obligations, or Buyer’s rights, under this Section 17.1.1 unless: (i) Buyer has refused to *** with respect to a System; and (ii) Seller provides Buyer with written notice of such failure to *** and Buyer’s failure continues for a period of thirty (30) days. Seller shall only have the right to suspend its obligations and services provided under this Section 17.1.1 with respect to the Systems for which Buyer *** (with any *** to the earliest *** still subject to ***).
17.1.2 Seller Technical Development and Support . At no additional cost to Buyer, Seller shall continue to collaborate with Buyer and to provide reasonable technical development support with respect to new Buyer products and solutions including: (a) communications hardware; (b) systems integration; (c) Enlighten modifications to assist with fleet management and other Buyer requests; and (d) integration with new Buyer products and services.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
36

17.2 Mutual Support . Seller shall use commercially reasonable efforts to provide support as reasonably requested by Buyer for technical training, installer training, and other support to assist in the deployment and installation of Products; provided, however, such support shall not involve the presence of Seller’s personnel on any Project site. At no additional cost to Buyer, Seller shall use commercially reasonable efforts to provide representation and be present as needed by Buyer for Buyer’s discussions with local building permit offices, licensing boards, and other Governmental Authorities to explain microinverter technology and the Products, provided that Buyer requests Seller’s presence no later than two (2) weeks prior to the scheduled meeting.
ARTICLE 18
MISCELLANEOUS
18.1 Audit Of Seller’s Records . Seller shall keep accurate books and records related to its performance under this Agreement and all Purchase Orders as are necessary to verify Seller’s compliance therewith, including, without limitation, Seller’s compliance with Section 3.1.3 . At any time during the Term, and for a *** (***) year period after the end of the Term, Buyer may designate an independent third party auditor that is reasonably satisfactory to Seller (the “ Auditor ”), to audit Seller’s books and records, with no less than *** (***) Business Days prior notice to Seller, in order to determine Seller’s compliance with Section 3.1.3 . The Auditor, as a representative of Buyer, shall be bound by the terms of the NDA. Seller shall not delay its approval of the Auditor and shall cooperate with the Auditor in connection with this audit. If the audit shows that Seller was not in compliance with the terms this Agreement (including, without limitation, Section 3.1.3 ), then Seller shall promptly cure its failure to comply with such section. If the audit reveals that a credit is due to Buyer, Buyer may take this credit against the next payment or payments due Seller until the credit is exhausted. Buyer shall incur the audit at its own expense, however, if the audit reveals that any adjustments are necessary in amounts of more than *** Dollars ($***), the cost of the audit shall be borne by Seller. This Section 18.1 shall survive the termination of this Agreement for a period of ***.
18.2 Currency . All monetary amounts referenced herein are in U.S. Dollars, and monies due by one Party to the other Party hereunder shall be invoiced and payable in U.S. Dollars.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
 
37

18.3 Applicable Law . This Agreement, and the rights and obligations of the Parties and any dispute arising under or relating thereto (whether in contract, tort or otherwise) shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the conflict of law rules thereof or any other statute or doctrine that might call for the application of the laws of any other jurisdiction.
18.4 Assignment . Neither Party may assign, sell, transfer or otherwise dispose of its rights or obligations under this Agreement, nor may it delegate its duties under this Agreement, in each case without obtaining the prior written consent of the other Party. Notwithstanding the foregoing sentence, Buyer may transfer this Agreement and any then-effective Purchase Orders (whether by assignment, novation, operation of law, or otherwise), in whole or in part: (a) to an Affiliate; (b) to a Financing Party for collateral security purposes only; or (c) in connection with a merger, acquisition, or sale of substantially all of its assets; in each case of clauses (a) through (c), without prior notice to Seller or Seller’s prior written consent; however, Buyer shall notify Seller of such transfer within a reasonable period of time after such transfer is effective. Any unauthorized assignment, novation or transfer of this Agreement or the rights or obligations under this Agreement, shall be void and unenforceable. Subject to this Section 18.4 , this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their permitted successors and permitted assigns.
18.5 Financing Assistance . Seller shall cooperate with all reasonable requests of Buyer in connection with any financing transaction undertaken by Buyer, including, without limitation, by (1) executing any estoppels, amendments and modifications hereto reasonably requested by the Financing Parties and which are customary for such transactions, (2) promptly furnishing all documents as may be reasonably requested by the Financing Parties, and (3) promptly executing consents (the “ Consents ”) and other related documents, in a form reasonably requested by such Financing Party(ies) and containing provisions customary to such financing transactions. Seller shall respond promptly to reasonable requests for information from Financing Parties or Buyer on their behalf.
18.6 Representatives . Each Party shall nominate a Representative or Representatives to oversee and coordinate the performance of its obligations under this Agreement and each Purchase Order delivered hereunder and to act as its liaison with the other Party’s Representative for the duration of this Agreement, and the contact information for each Party’s Representative is set forth in Exhibit I . Each Party shall promptly notify the other Party of its Representative and make available the Representative (or a suitable replacement) at all reasonable times to carry out this role. Notwithstanding any other provision of this Agreement, Seller acknowledges that (a) no action by Buyer’s Representative can waive, alter or modify any right of Buyer or obligation of Seller hereunder, and (b) Buyer’s Representative is not authorized to execute any certificate hereunder, and that such certificate will be executed by a duly appointed officer or other designated Person of Buyer.
18.7 Severability . The invalidity of one or more phrases, sentences, clauses, sections or articles contained in this Agreement or in any Purchase Order shall not affect the validity of the remaining portions of this Agreement and such Purchase Order (or any other Purchase Orders delivered hereunder). Any such invalid phrases, sentences, clauses, sections or articles shall be
 
38

deemed severed from this Agreement and shall be of no force or effect, and the remaining phrases, sentences, clauses, sections and articles shall continue to apply to the maximum extent that the material purposes of this Agreement and any affected Purchase Order can be determined and effectuated.
18.8 Amendments . No change, amendment or modification of this Agreement shall be valid or binding upon the Parties hereto unless such change, amendment or modification shall be in writing and duly executed by both Parties hereto.
18.9 Joint Effort . The negotiation and drafting of this Agreement has been a joint effort of the Parties and the resulting document shall not be construed more severely against one of the Parties than against the other.
18.10 Non-Waiver . Any failure of any Party to enforce any of the provisions of this Agreement or any Purchase Order or any decision or failure to require compliance with any of its terms at any time during the Term shall in no way affect the validity of this Agreement, or any part hereof and shall not be deemed a waiver of the right of such Party thereafter to enforce any and each such provision. Any such waiver of any of the provisions of this Agreement or any Purchase Order shall be in writing and executed by the party to whom performance or other compliance with the terms hereof is owed.
18.11 Independent Contractor . Seller is an independent contractor, and all persons employed by Seller in connection herewith shall be employees of Seller and not employees of Buyer or any of Buyer’s Affiliates in any respect. Nothing contained in this Agreement shall be construed as constituting a joint venture or partnership between Seller and Buyer.
18.12 Counterparts and Execution . This Agreement may be signed in any number of counterparts and each counterpart shall represent a fully executed original as if signed by both Parties. Delivery of this Agreement may be accomplished by means of an exchange of facsimile or emailed signatures, which shall be deemed originals for all purposes.
18.13 Notices .
18.13.1 Notices and other communications by either Party under this Agreement shall be deemed given when sent either by (a) personal delivery, (b) postage prepaid registered or certified mail, return receipt requested, (c) nationally recognized overnight courier service, or (iv) confirmed facsimile or electronic transmission, in each case addressed to the applicable Party as set forth in Exhibit I , or to such other address as either of the Parties shall have provided to the other in writing pursuant to Section 18.13.3 .
18.13.2 Without limiting any other means by which a Party may be able to prove that a notice has been received by another Party, a notice shall be deemed to be duly received (a) if delivered by hand or courier service, the date when delivered to the address of the recipient; (b) if sent by registered or certified mail, return receipt requested, the date the receiving party executes the return receipt; or (c) if sent by facsimile or electronic transmission, upon receipt by the sender of an acknowledgment of receipt, including, without limitation, an automatically-generated emailed read receipt, an automatically-generated transmission report generated by facsimile machine indicating that the facsimile was sent in its entirety to the
 
39

recipient’s facsimile machine number, or a manually-generated acknowledgement of such emailed or faxed notice.
18.13.3 Either Party shall have the right to change the address or name of the person to whom such notices are to be delivered by notice to the other Party.
18.14 Further Assurances . Seller and Buyer each agree to provide such information, execute and deliver any instruments, applications, oaths, assignments, and documents and to take such other actions as may be necessary or reasonably requested by the other Party which are not inconsistent with the provisions of this Agreement and which do not involve the assumptions of obligations other than those provided for in this Agreement, in order to give full effect to this Agreement and to carry out the intent of this Agreement.
18.15 Buyer’s Review of Seller’s Information or Documents . No inspection or review by Buyer or Affiliates shall constitute an approval, endorsement or confirmation of any drawing, plan, specification or Product or an acknowledgment by Buyer that any drawing, plan, specification or Product satisfies the requirements of this Agreement; nor shall any such inspection or review relieve Seller of any of its obligations to provide the Products in conformance with all requirements of this Agreement.
18.16 No Recourse . The obligations of Buyer under this Agreement shall be without recourse to any of the officers, board members, directors, shareholders, members, employees, agents, partners, Affiliates, or Financing Parties of Buyer, or to the Affiliates of any of the foregoing.
18.17 Survival . The provisions of Article 1 , Article 3 , Article 7 , Article 8 , Article 9 , Article 10 , Article 11 , Article 13 , Article 15 , Article 16 , Article 18 , and of Sections 4.2 , 5.3 , 5.4 , 5.5 , 5.6 , and 17.1 of this Agreement shall survive the expiration or other termination of this Agreement, as well as any other provision that expressly or by its nature survives.
18.18 Third Parties . Except as otherwise expressly provided in this Agreement, nothing in this Agreement shall be construed to create any duty to, standard of care with respect to, or any liability to any person who is not a party to this Agreement.
18.19 Conflicting Provisions . In the event of any inconsistencies within this Agreement and the following related documents, the following order of precedence in the interpretation hereof or resolution of such conflict hereunder shall prevail:
 
 	(a)	Amendments to this Agreement executed by both Parties;	
 
 	(b)	This Agreement (excluding Purchase Orders and Exhibits);	
 
 	(c)	Purchase Orders delivered in accordance with Article 2 ; and	
 
 	(d)	The Exhibits hereto.	
[ signatures appear on next page ]
 
40

NOW, THEREFORE , the Parties hereto have entered into this Agreement as of the Effective Date.

SELLER:	
ENPHASE ENERGY, INC.	
	
By: /s/ Jeff Loebbaka	
Name: Jeff Loebbaka	
Title: SVP, Global Sales, Marketing and Support	
[SIGNATURE PAGES CONTINUE ON FOLLOWING PAGE]
[SIGNATURE PAGE]

	
BUYER:	
	
VIVINT SOLAR DEVELOPER, LLC	
	
By: /s/ Jan Newman	
Name: Jan Newman	
Title: Vice President, Business Development	
[SIGNATURE PAGE]

SCHEDULE 1
Definitions and Rules of Interpretation
1. Definitions .
“ Affiliate ” means, with respect to any entity, another entity or a person which controls, is controlled by, or is under common control with the first entity. For purposes of this definition “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity, means the possession, directly or indirectly through one or more intermediaries, of any of the following with respect to another entity: (a) the legal or beneficial ownership of more than fifty percent (50%) of the economic interest in such entity, (b) the power to elect more than fifty percent (50%) of the directors, managers, or other voting members of the governing body of such entity, (c) more than fifty percent (50%) of the voting securities (or equivalent voting interests) in such entity, or (d) the power to direct or cause the direction of the management and policies of such entity (by contract or otherwise).
“ Agreement ” means this Agreement as defined in the preamble, including all Exhibits hereto, as supplemented by any Purchase Order issued hereunder and as amended in accordance with this Agreement from time to time.
“ Amendment 1 ” has the meaning set forth in the Recitals.
“ Amendment 2 ” has the meaning set forth in the Recitals.
“ Amendment 3 ” has the meaning set forth in the Recitals.
***
“ API ” has the meaning set forth in Section 17.1.1 .
“ Backup Escrow Agreement ” has the meaning set forth in Section 16.3.1 .
“ Business Day ” or “ Business Days ” means any day other than a Saturday, Sunday or other day on which banks are authorized to be closed in Provo, Utah or New York, New York.
“ Buyer ” has the meaning set forth in the preamble to this Agreement.
“ Buyer Indemnitees ” has the meaning set forth in Section 8.1 .
“ Buyer-Related Persons ” has the meaning set forth in Section 8.6 .
“ Buyer Taxes ” has the meaning set forth in Section 3.9.3 .
“ Carrier ” means a carrier selected by Seller (and approved by Buyer in advance) when arranging transportation of Products from the Delivery Point to the Destination Point.
“ Confidential Information ” has the meaning set forth in Section 15.1 .
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
Schedule 1-1

“ Consent ” or “ Consents ” has the meaning set forth in Section 18.5 .
“ Contract Amount ” means the total aggregate amounts under all Purchase Orders that has been received by Seller from Buyer under this Agreement with respect to Products, as it may from time to time be changed or adjusted pursuant to the terms hereof.
“ Data ” means (a) all enablement and solar production data and customer data or other information generated by Seller’s Microinverters and Buyer’s meters at monitored installations that is transmitted by the Envoys to Seller’s network services.
“ Delivery Date ” means the date that the Product arrives at the Destination Point.
“ Delivery Month ” means the calendar month specified in a Purchase Order in which Products that Buyer orders under such Purchase Order are to arrive at their respective Destination Points, as set forth in the applicable Delivery Schedule.
“ Delivery Point ” has the meaning set forth in Section 5.1.1 .
“ Delivery Schedule ” means the written schedule issued by Buyer pursuant to Section 2.1.2 , and as may be modified pursuant to Section 2.1.5 , detailing (a) the Delivery Dates, (b) the Product names/models and quantities thereof to be delivered on the Delivery Dates, and (c) the Destination Point for each Product.
“ Destination Point ” means the location at Buyer’s facility (or Buyer’s contracted storage facility) to which the Carrier is to deliver Products ordered under a Purchase Order, as designated in the Delivery Schedule relating to such Purchase Order.
“ Effective Date ” has the meaning set forth in the preamble to this Agreement.
“ Enlighten ” means Seller’s proprietary software platform with web-based tools and interfaces enabling remote monitoring of Systems, individual solar modules composing such Systems, and their performance, and which interfaces with Envoy and integrates with Buyer’s billing system.
“ Enlighten Software ” has the meaning set forth in Section 16.3.2 .
“ Enphase Trademarks ” means the trade name “Enphase Energy, Inc.,” “Enphase Energy” and the trademarks of Seller used on the Products, within the Enlighten service, and on Seller’s Documentation, the ingredient trademark “Enphase Energized” and such other trademarks as Seller may, from time to time, notify Buyer of in writing.
“ Envoy ” means Seller’s proprietary power line communications hardware device connecting each photovoltaic module and microinverter in a System and providing a network communications gateway for Enlighten to access System performance data, the model of which is set forth on Exhibit A .
“ Escrow Agent ” has the meaning set forth in Section 16.3.1 .
 
Schedule 1-1

“ Escrow Fees ” has the meaning set forth in Section 16.3.1 .
“ Escrow Materials ” has the meaning set forth in Section 16.3.2 .
“ Escrow Materials License ” has the meaning set forth in Section 16.3.4 .
“ Escrow Materials Release Notice ” has the meaning set forth in Section 16.3.3 .
“ Event of Default ” has the meaning set forth in Section 10.1 .
“ Financing Parties ” means (a) any and all lenders providing senior or subordinated construction, interim or long-term debt or other financing or refinancing to Buyer, a Permitted Assignee or their respective Affiliates, (b) any and all equity investors in Buyer, a Permitted Assignee or their respective Affiliates providing tax equity investment or leveraged lease-financing or refinancing (or any other equity investor that makes a capital contribution to Buyer, a Permitted Assignee or their respective Affiliates in cash or in kind) or (c) any person providing credit support to Buyer, a Permitted Assignee or their respective Affiliates, in each case in connection with the Project or a portfolio of projects of which the Project is a part (for the duration of the period of such inclusion only) and, in each case, any trustee or agent acting on behalf of the Buyer, a Permitted Assignee or their respective Affiliates.
“ Force Majeure Event ” has the meaning set forth in Section 14.1 .
“ Governmental Approval ” means any authorization, approval, order, license, permit, franchise or consent, registration, declaration or filing with any Governmental Authority.
“ Governmental Authority ” means any national, autonomic, regional, province, town, city, tribal, or municipal government, whether domestic or foreign, or other administrative, regulatory or judicial body of any of the foregoing.
“ Hazardous Materials ” means hazardous or toxic substance, waste or material, or any other substance, pollutant or condition that is commonly understood to pose a severe risk to human health or the environment.
“ Hosting Period ” has the meaning set forth in Section 17.1.1 .
“ Indemnified Party ” has the meaning set forth in Section 8.6 .
“ Indemnifying Party ” has the meaning set forth in Section 8.6 .
“ Initial Term ” has the meaning set forth in Section 1.2 .
“ Intellectual Property Rights ” means, with respect to any Person, all (a) patents, patent applications, patent disclosures, inventions and improvements (whether patentable or not), (b) copyrights and copyrightable works (including computer programs) and registrations and applications therefor, including any software, firmware, or source code, (c) trade secrets, know-how and other confidential information, (d) database rights, (e) have made drawings and (f) all other forms of intellectual property, including waivable or assignable rights of publicity or moral
 
Schedule 1-2

rights, and any right to bring suit or collect damages for the infringement, misappropriation or violation of the foregoing, anywhere in the world, that are held by that Person.
“ Invoice ” has the meaning set forth in Section 3.3 .
“ Late Payment Rate ” means a rate of interest equal to one percent (1%) per month of the amount due.
“ Laws ” means all laws, statutes, treaties, ordinances, codes, judgments, decrees, directives, guidelines, policies, injunctions, writs, orders, rules, regulations, interpretations, licenses, permits and other approvals with, from or of any governmental authority having jurisdiction over the Products, the site at which Products are installed, and this Agreement and each other document, instrument and agreement delivered hereunder or in connection herewith, including those relating to health, safety or the environment in the Territory.
“ Lien ” means any lien (statutory or other), pledge, mortgage, charge, security interest, deed of trust, assignment, hypothecation, title retention, fiduciary transfer, deposit arrangement, easement, encumbrance, bond right, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including the right to claim the foregoing) in respect of an asset, whether or not filed, recorded or otherwise perfected or effective under applicable Law.
“ Losses ” has the meaning set forth in Section 8.1 .
“ Manufacturing Facility ” means Flextronics Global Services Shenzhen, 3# Tian Fu Road, Tong Fu Yu Industrial Park, Fu Yong Town, Bao An District, Shenzhen City, China.
“ Microinverter ” has the meaning set forth in Exhibit G and includes the microinverters in the M215 series as set forth on Exhibit A .
“ NDA ” means that certain Confidentiality and Non-Disclosure Agreement by and between Buyer and Seller, dated as of April 3, 2014, attached hereto as Exhibit E .
“ Notice of Dispute ” has the meaning set forth in Section 13.1 .
“ Order Acknowledgement ” has the meaning set forth in Section 2.1.3 and is a written acknowledgement issued by Seller in response to, and in acceptance of, a Purchase Order, containing the following information: (a) the billing address; (b) the Destination Point(s); (c) Scheduled Ship Dates for Products based on the Delivery Schedule submitted with the Purchase Order being acknowledged and accepted; (d) name of the Seller’s Representative for Purchase Orders; (d) the number of the Purchase Order being acknowledged and accepted; (e) the date of the Purchase Order being acknowledged and accepted; and (f) Seller’s order number. Any term in either the Order Acknowledgement or the Purchase Order that is inconsistent with the terms of this Agreement shall not be enforceable by the relevant Party.
“ Original Agreement ” has the meaning set forth in the Recitals.
“ Party ” and “ Parties ” have the meanings set forth in the preamble to this Agreement.
 
Schedule 1-3

“ Person ” means any individual, corporation, company, voluntary association, partnership, incorporated organization, trust, limited liability company or any other entity or organization, including any Governmental Authority. A Person shall include any officer, director, member, manager, employee or agent of such Person.
“ PO Product Quantity ” has the meaning set forth in Section 2.1.2(b) .
“ Product ” has the meaning set forth in Exhibit A .
“ Product Use License ” has the meaning set forth in Section 16.2 .
“ Project ” has the meaning set forth in the recitals.
“ Purchase Order ” means a purchase order for Products in the Territory substantially in the form attached hereto as Exhibit B , such other form as either mutually acceptable to the Parties or used by Buyer and complying with the terms of the Agreement so long as Buyer sends the revised form to Seller in advance of its use.
“ Release Conditions ” means the following conditions: (i) there not being an Event of Default by Buyer under Section 10.1.1 that remains uncured; and (ii) the occurrence and continuation of a Trigger Event.
“ Representative(s) ” means the person or persons designated from time to time by each Party to act as their representative under Section 18.6 and as are initially listed in Exhibit I .
“ Renewal Term ” has the meaning set forth in Section 1.2 .
“ Required Lead Time ” has the meaning set forth in Section 4.1.1(b) .
“ Rolling Forecast ” means a report that includes: (a) the Rolling Forecast Period; (b) a summary of the types of Products that Buyer anticipates ordering and that will arrive at the Destination Points in each calendar month in the Rolling Forecast Period (by Product number), and the quantity of each such type of Products; and (c) the anticipated date on which Buyer intends to issue a Purchase Order for the first calendar month of the Rolling Forecast Period, provided that the foregoing does not obligate Buyer to submit a Purchase Order on such date.
“ Rolling Forecast Period ” means the three (3) month period covered by a Rolling Forecast beginning on the first day of the calendar month that is three (3) months following the calendar month in which the Rolling Forecast is issued by Buyer pursuant to Section 2.2 . For purposes of example only, the Rolling Forecast Period for the Rolling Forecast issued by Buyer in January covers Products Buyer anticipates ordering for arrival at Destination Points in April, May and June.
“ Rush Order ” has the meaning set forth in Section 4.1.1(b) .
“ Scheduled Ship Date ” means the date on which Seller shall cause delivery of the Products to the Delivery Point and tender the same to the Carrier, as set forth in an Order Acknowledgement provided by Seller pursuant to Section 2.1.3 .
 
Schedule 1-4

“ Seller ” means has the meaning set forth in the preamble to this Agreement.
“ Seller Indemnitees ” has the meaning set forth in Section 8.6 .
“ Seller Lien ” has the meaning set forth in Section 5.4 .
***
“ Seller-Related Persons ” has the meaning set forth in Section 8.1 .
“ Seller Taxes ” has the meaning set forth in Section 3.9.2 .
“ Seller’s Documentation ” means user documentation (including user documentation with respect to the Enlighten service for certain Products) furnished to Buyer by Seller for distribution along with the Products.
“ Seller’s Facility ” means Seller’s warehouse, manufacturing or assembly facility located at Flextronics Global Services Milpitas, 890 Yosemite Dr., Dock S4/S5, Milpitas California, 95035, U.S.A..
“ Shipment Protocol ” has the meaning set forth in Section 5.1.6 .
“ Specifications ” mean Seller’s specifications for each Product as set forth in Seller’s specifications sheet for such Product.
“ Standards and Codes ” means the following, as applicable to each Product: UL 1741; UL 60950-1; EN 60950-1; CSA22.2 No. 60950-1; IEC 60950-1; IEEE1547, FCC Part 15 Class B; ANSI C12.1, C12.10, C12.20, C37.90.1; and any other similar standards and codes compliance with which is either mandatory under applicable Law or standard for such type of equipment based on industry standards as such were in place at the time the Product was delivered to Buyer at the Delivery Point in the Territory.
“ Supply Agreement ” has the meaning set forth in the Recitals.
“ System ” means a solar photovoltaic system.
“ Taxes ” means all federal, state, or local income, property, license, privilege, sales, use, VAT, excise, gross receipts, or other taxes, duties, tariffs, and levies now or hereafter applicable to, measured by, or imposed upon or with respect to the manufacturing, purchase, sale or use of the Products sold under Purchase Orders or any other transactions contemplated by this Agreement, and which are levied or assessed under any applicable Law by any Governmental Authority.
“ Term ” has the meaning set forth in Section 1.2 .
“ Territory ” means the United States of America.
“ Trigger Event ” means: (a) ***; or (b) ***; or (c) ***.
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
Schedule 1-1

“ Unit Price ” has the meaning set forth in Section 3.1.1 .
“ Warranty ” means that certain Limited Microinverter Warranty or that certain Limited Envoy Warranty made by Seller relating to the Microinverters and Envoy, respectively, and attached hereto as Exhibit G .
“ Warranty Period ” has the meaning set forth in Section 7.1 .
2. Rules of Interpretation . In this Agreement:
(a) The terms “herein,” “herewith” and “hereof” are references to this Agreement, taken as a whole.
(b) The term “includes” or “including” shall mean “including, without limitation”.
(c) References to a “Section,” “subsection,” “clause,” “Article” or “Exhibit” shall mean a Section, subsection, clause, Article or Exhibit of this Agreement, as the case may be, unless in any such case the context requires otherwise.
(d) All references to a given agreement, instrument or other document, or to any Law, Standard or Code, shall be a reference to such agreement, instrument or other document, or to such Law, Standard or Code, as modified, amended, supplemented and/or restated from time to time.
(e) Reference to a person or party includes its successors and permitted assigns.
(f) The singular shall include the plural and the masculine shall include the feminine and neuter, and vice versa.
(g) Where the words “required,” “approved,” “satisfactory,” “determined,” “acceptable,” “decision,” or words of like import are used in this Agreement, action by Buyer is indicated unless the context clearly indicates otherwise.
 
Schedule 1-1

EXHIBIT A
PRODUCTS AND UNIT PRICE

Model Number	  	Description	  	Y2014
Q2
Unit
Price	 	 	Y2014
Q3
Unit
Price	 	 	Y2014
Q4
Unit
Price	 	 	Y2015
Q1
Unit
Price	 	 	MOQ	
Microinverters M215 – 20 Year Warranty	
M215-60-2LL-S22*	  	Microinverter, 240 & 208Vac, for 60-cell modules, MC-style PV connector	  	$	*	** 	 	$	*	** 	 	$	*	** 	 	$	*	** 	 	1 Box x 12 Units	
M215-60-2LL-S22-ZC*	  	Microinverter, 240 & 208Vac, for 60-cell modules, MC-style PV connector, ZEP Compatible	  	$	*	** 	 	$	*	** 	 	$	*	** 	 	$	*	** 	 	1 Box x 8 Units	
	  	5 Year Warranty Upgrade	  	$	*	** 	 	$	*	** 	 	$	*	** 	 	$	*	** 	 		
Communications Gateway	  		  				 				 				 				 		
ENV-120-01 VM	  	Envoy Communications Gateway,120VAC, with Ethernet Bridge pair**	  	$	*	** 	 	$	*	** 	 	$	*	** 	 	$	*	** 	 	1 Box x 6 Units	
RGM-MTR-01	  	Enphase-compatible GE i210+ Revenue Grade Meter (RGM) with integrated ZigBee wireless	  	$	*	** 	 	$	*	** 	 	$	*	** 	 	$	*	** 	 	1 Box x 4 Units	
RGM-ZGB-01	  	ZigBee USB stick for Enphase Envoy communication with RGM	  	$	*	** 	 	$	*	** 	 	$	*	** 	 	$	*	** 	 	1 Box x 4 Units	
***	  		  				 				 				 				 		
	  	***	  	$	*	** 	 	$	*	** 	 	$	*	** 	 	$	*	** 	 		
Cables—M215	  		  				 				 				 				 		
ET10-240-BULK	  	240VAC Trunk Cable, 240 Connectors, Portrait	  	$	*	** 	 	$	*	** 	 	$	*	** 	 	$	*	** 	 	1 Box (240 Connectors)	
ET17-240-BULK	  	240VAC Trunk Cable, 240 Connectors, Landscape	  	$	*	** 	 	$	*	** 	 	$	*	** 	 	$	*	** 	 	1 Box (240 Connectors)	
 
*	M215 will be transitioned to an M215 with an integrated ground.	
**	Enlighten is a non-cancellable, non-refundable service received with each purchase of an Envoy Communications Gateway. The Enlighten service will commence upon delivery of the Envoy and continue for the life of the Envoy. Buyer will have access to Enlighten and Enlighten API for the life of the Envoy, provided that the Envoy is connected to the Internet.	
***	For example, in ***, Seller will invoice Buyer ***. The amount *** will be *** based on the *** when the purchase occurred to ensure that Buyer receives a ***. Invoices for *** would then be invoiced ***. The final invoice *** would be for the ***.	
 
***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
Exhibit A-1

																					
Model Number	  	Description	  	Y2014
Q2
Unit
Price	 	  	Y2014
Q3
Unit
Price	 	  	Y2014
Q4
Unit
Price	 	  	Y2015
Q1
Unit
Price	 	  	MOQ	
Accessories—M215	
ET-TERM-10	  	Branch Terminator—(QTY 10 Units/Bag)	  	$	***	  	  	$	***	  	  	$	***	  	  	$	***	  	  	1 Box x 10 Bags	
ET-DISC-05	  	Table Disconnect Tool—(QTY 5 Units/Bag)	  	$	***	  	  	$	***	  	  	$	***	  	  	$	***	  	  	1 Box x 20 Bags	
ET-SEAL-10	  	Sealing Cap—(QTY 10 Units/Bag)	  	$	***	  	  	$	***	  	  	$	***	  	  	$	***	  	  	1 Box x 10 Bags	
ET-SPLK-05	  	Engage Coupled—(QTY 5 Units/Bag)	  	$	***	  	  	$	***	  	  	$	***	  	  	$	***	  	  	1 Box x 5 Bags	

***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
Exhibit A-2

EXHIBIT B
FORM OF PURCHASE ORDER

 
4931 North 300 West
Provo UT 84604	  	 
Purchase Order No.:
 
Date Issued:
 
Delivery Month:	

Vendor:	 	Buyer:	
		
Enphase Energy
1420 N. McDowell Blvd.
Petaluma, CA 94954
Attn:	 	VIVINT SOLAR Developer, LLC
4931 North 300 West
Provo, UT 84604
Attn: VIVINT SOLAR SUPPLY CHAIN	
Contract: Long Term Supply Agreement dated August     , 2014
All invoices must reference our Purchase Order Number in order to be paid.

Delivery Point	  	Payment Terms	  	Confirm With	  	Page	
F.C.A. Seller’s Facility (INCOTERMS 2010)	  	Net ***	  		  		  		  	1	
L/N	  	Seller’s Product Number	  	Description (Model Name)	  	U/M	  	Quantity	  	Unit Price	  	Ext. Price	
 
Delivery Schedule for Products ordered under this Purchase Order is attached.
Seller’s Order Acknowledgement to list Scheduled Ship Dates to ensure arrival of Products at Destination Points in accordance with attached Delivery Schedule.
Destination Points may be modified pursuant to the Long Term Product Supply Agreement.

Product Subtotal	 		
Trade Discount	 		
Freight/Shipping Costs	 	At Seller’s cost as invoiced by Carriers	
[Miscellaneous]	 		
[Tax (Estimated)]	 		
Total (excluding Shipping)	 		

	

Authorized Signature	

***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
Exhibit B

EXHIBIT C
[RESERVED]

Exhibit C

EXHIBIT D
SELLER’S WIRE INFORMATION
All payments by Buyer to Seller hereunder shall be made by wire transfer to the following account of Seller or such other account as Seller shall designate by written notice to Buyer from time-to-time:
***
ABA or Routing Number: ***
Account Number: ***
Credit To: Enphase Energy, Inc.

***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
Exhibit D

EXHIBIT E
NON-DISCLOSURE AND NON-USE AGREEMENT
( NDA follows on next six (6) pages )
 
Exhibit E

EXHIBIT F
[RESERVED]
 
Exhibit F

EXHIBIT G
20-YEAR LIMITED MICROINVERTER WARRANTY

ENPHASE ENERGY M215 MICROINVERTER
20-YEAR LIMITED WARRANTY FOR
INSTALLATIONS IN NORTH AMERICA
Enphase Energy, Inc. (“ Enphase ”) has developed a highly reliable microinverter, designated as the M215 Series (“ Microinverter ”), that is designed to withstand normal operating conditions when used for its originally intended purpose in compliance with the Enphase User Manual made available with the originally shipped system. The Enphase limited warranty (“ Limited Warranty ”) covers defects in workmanship and materials of the Microinverter (“ Defective Product ”) for a period of twenty (20) years from the date of original purchase of such Microinverter at point of sale to the system owner (the “ Warranty Holder ”) at the originally-installed end user location (the “ Warranty Period ”). All Microinverters shall, at the time of delivery by Enphase to the original purchaser, will be new and unused and comply with all applicable laws, standards and codes in effect at such time.
During the Warranty Period, the Limited Warranty is transferable to a different owner (“ Transferee ”) as long as the Microinverter remains installed at the originally-installed end user location (“ Original Location ”).
During the Warranty Period, if Enphase establishes, through inspection, the existence of a defect that is covered by the Limited Warranty, Enphase will at its option, either (1) repair or replace the Defective Product free of charge, or (2) issue a credit or refund to the Warranty Holder of the system in an amount up to its actual value at the time the Warranty Holder notifies Enphase of the defect, as determined by Enphase.
If Enphase elects to repair or replace the Defective Product, Enphase will, at its option, use new and/or reconditioned parts in repairing or replacing the Defective Product. Enphase reserves the right to use parts or products of original or improved design in the repair or replacement of Defective Product. If Enphase repairs or replaces a Defective Product, the Limited Warranty continues on the repaired or replacement Microinverter for the remainder of the original Warranty Period or ninety (90) days from the date of Enphase’s return shipment of the repaired or replacement product, whichever is later. The Limited Warranty covers a replacement unit to replace the Defective Product, but does not include labor costs related to (1) un-installing the Defective Product or (ii) if applicable, re-installing a repaired or replacement product. To the extent applicable, the Limited Warranty also covers the costs of returning the Defective Product via Enphase’s RMA policy and procedure described further below, as well as shipping a repaired or replacement product from Enphase, via a non-expedited freight carrier selected by Enphase, to locations specified by the Warranty Holder of the Defective Product. The Limited Warranty does not cover, and Enphase will not be responsible for, shipping damage or damage caused by mishandling by the freight carrier and any such damage is the responsibility of the freight carrier.
Enphase Microinverters are designed to withstand normal operating conditions and typical wear and tear when used for their original intent and in compliance with the installation and operating instructions supplied with the Microinverter. The Limited Warranty does not apply to, and Enphase will not be responsible for, any defect in or damage to any Microinverter: (1) that has been misused, neglected, tampered with, altered, or otherwise
 
Exhibit G-1

damaged, either internally or externally; (2) that has been improperly installed, operated, handled or used, including use under conditions for which the Microinverter was not designed, use in an unsuitable environment, or use in a manner contrary to the Enphase User Manual (as supplied to the Warranty Holder) or applicable laws or regulations; (3) that has been subjected to fire, water, generalized corrosion, biological infestations, acts of nature, or input voltage that creates operating conditions beyond the maximum or minimum limits listed in the Microinverter specifications, including high input voltage from generators or lightning strikes; (4) that has been subjected to incidental or consequential damage caused by defects of other components of the solar system; or (5) if the original identification markings (including trademark or serial number) of such Microinverter have been defaced, altered, or removed. The Limited Warranty does not cover costs related to the removal, installation or troubleshooting of the Warranty Holder’s electrical systems. The Limited Warranty does not extend beyond the original cost of the Enphase Microinverter.
To obtain repair or replacement service, credit or refund (as applicable) under this Limited Warranty, the Warranty Holder must comply with the Return Merchandise Authorization Number (RMA) policy and procedure http://www.enphase.com/rma .
Enphase expressly reserves the right to novate or assign its rights and obligations under this Limited Warranty to a third party with the demonstrated expertise and requisite resources needed to effectively discharge the obligations hereunder.
THE LIMITED WARRANTY IS THE SOLE AND EXCLUSIVE WARRANTY GIVEN BY ENPHASE AND, WHERE PERMITTED BY LAW, IS MADE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF TITLE, QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OR WARRANTIES AS TO THE ACCURACY, SUFFICIENCY OR SUITABILITY OF ANY TECHNICAL OR OTHER INFORMATION PROVIDED IN MANUALS OR OTHER DOCUMENTATION. IN NO EVENT WILL ENPHASE BE LIABLE FOR ANY SPECIAL, DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES, COSTS OR EXPENSES HOWEVER ARISING, WHETHER IN CONTRACT OR TORT, INCLUDING WITHOUT LIMITATION ANY ECONOMIC LOSSES OF ANY KIND, ANY LOSS OR DAMAGE TO PROPERTY, OR ANY PERSONAL INJURY.
To the extent any implied warranties are required under applicable law to apply to the Microinverter, such implied warranties shall be limited in duration to the Warranty Period, to the extent permitted by applicable law. Some regions do not allow limitations or exclusions on implied warranties or on the duration of an implied warranty or on the limitation or exclusion of incidental or consequential damages, so the above limitation(s) or exclusion(s) may not apply. This Limited Warranty gives the Warranty Holder specific legal rights, and the Warranty Holder may have other rights that may vary from region to region.
 
Exhibit G-2

25-YEAR LIMITED MICROINVERTER WARRANTY

ENPHASE ENERGY M215 MICROINVERTER
25-YEAR LIMITED WARRANTY FOR
INSTALLATIONS IN NORTH AMERICA
Enphase Energy, Inc. (“ Enphase ”) has developed a highly reliable microinverter, designated as the M215 Series (“ Microinverter ”), that is designed to withstand normal operating conditions when used for its originally intended purpose in compliance with the Enphase User Manual made available with the originally shipped system. The Enphase limited warranty (“ Limited Warranty ”) covers defects in workmanship and materials of the Microinverter (“ Defective Product ”) for a period of twenty five (25) years from the date of original purchase of such Microinverter at point of sale to the system owner (the “ Warranty Holder ”) at the originally-installed end user location (the “ Warranty Period ”). All Microinverters shall, at the time of delivery by Enphase to the original purchaser, will be new and unused and comply with all applicable laws, standards and codes in effect at such time.
During the Warranty Period, the Limited Warranty is transferable to a different owner (“ Transferee ”) as long as the Microinverter remains installed at the originally-installed end user location (“ Original Location ”).
During the Warranty Period, if Enphase establishes, through inspection, the existence of a defect that is covered by the Limited Microinverter Warranty, Enphase will at its option, either (1) repair or replace the Defective Product free of charge, or (2) issue a credit or refund to the Warranty Holder in an amount up to its actual value at the time the Warranty Holder notifies Enphase of the defect, as determined by Enphase.
If Enphase elects to repair or replace the Defective Product, Enphase will, at its option, use new and/or reconditioned parts in repairing or replacing the Defective Product. Enphase reserves the right to use parts or products of original or improved design in the repair or replacement of Defective Product. If Enphase repairs or replaces a Defective Product, the Limited Warranty continues on the repaired or replacement Microinverter for the remainder of the original Warranty Period or ninety (90) days from the date of Enphase’s return shipment of the repaired or replacement product, whichever is later. The Limited Warranty covers a replacement unit to replace the Defective Product, but does not include labor costs related to (1) un-installing the Defective Product or (ii) if applicable, re-installing a repaired or replacement product. To the extent applicable, the Limited Warranty also covers the costs of returning the Defective Product via Enphase’s RMA policy and procedure described further below, as well as shipping a repaired or replacement product from Enphase, via a non-expedited freight carrier selected by Enphase, to locations specified by the Warranty Holder of the Defective Product. The Limited Warranty does not cover, and Enphase will not be responsible for, shipping damage or damage caused by mishandling by the freight carrier and any such damage is the responsibility of the freight carrier.
The Microinverters are designed to withstand normal operating conditions and typical wear and tear when used for their original intent and in compliance with the installation and operating instructions supplied with the Microinverter. The Limited Warranty does not apply to, and Enphase will not be responsible for, any defect in or damage to any Microinverter: (1) that has been misused, neglected, tampered with, altered, or otherwise damaged, either internally or externally; (2) that has been improperly installed, operated, handled or used, including use under conditions for which the Microinverter was not designed, use in an unsuitable environment,
 
Exhibit G-3

or use in a manner contrary to the Enphase User Manual (as supplied to the Warranty Holder) or applicable laws or regulations; (3) that has been subjected to fire, water, generalized corrosion, biological infestations, acts of nature, or input voltage that creates operating conditions beyond the maximum or minimum limits listed in the Microinverter specifications, including high input voltage from generators or lightning strikes; (4) that has been subjected to incidental or consequential damage caused by defects of other components of the solar system; or (5) if the original identification markings (including trademark or serial number) of such Microinverter have been defaced, altered, or removed. The Limited Warranty does not cover costs related to the removal, installation or troubleshooting of the Warranty Holder’s electrical systems. The Limited Warranty does not extend beyond the original cost of the Microinverter.
To obtain repair or replacement service, credit or refund (as applicable) under this Limited Warranty, the Warranty Holder must comply with the Return Merchandise Authorization Number (RMA) policy and procedure http://www.enphase.com/rma .
Enphase expressly reserves the right to novate or assign its rights and obligations under this Limited Warranty to a third party with the demonstrated expertise and requisite resources needed to effectively discharge the obligations hereunder.
THE LIMITED WARRANTY IS THE SOLE AND EXCLUSIVE WARRANTY GIVEN BY ENPHASE AND, WHERE PERMITTED BY LAW, IS MADE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF TITLE, QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OR WARRANTIES AS TO THE ACCURACY, SUFFICIENCY OR SUITABILITY OF ANY TECHNICAL OR OTHER INFORMATION PROVIDED IN MANUALS OR OTHER DOCUMENTATION. IN NO EVENT WILL ENPHASE BE LIABLE FOR ANY SPECIAL, DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES, COSTS OR EXPENSES HOWEVER ARISING, WHETHER IN CONTRACT OR TORT, INCLUDING WITHOUT LIMITATION ANY ECONOMIC LOSSES OF ANY KIND, ANY LOSS OR DAMAGE TO PROPERTY, OR ANY PERSONAL INJURY.
To the extent any implied warranties are required under applicable law to apply to the Microinverter, such implied warranties shall be limited in duration to the Warranty Period, to the extent permitted by applicable law. Some regions do not allow limitations or exclusions on implied warranties or on the duration of an implied warranty or on the limitation or exclusion of incidental or consequential damages, so the above limitation(s) or exclusion(s) may not apply. This Limited Warranty gives the Warranty Holder specific legal rights, and the Warranty Holder may have other rights that may vary from region to region.
 
Exhibit G-4

LIMITED ENVOY WARRANTY

ENPHASE ENERGY ENVOY TM COMMUNICATIONS GATEWAY 2-YEAR LIMITED
WARRANTY – FOR INSTALLATIONS IN NORTH AMERICA
Enphase Energy, Inc. (“ Enphase ”) has developed a highly reliable Envoy Communications Gateway (“ Envoy ”) that is designed to withstand normal operating conditions when used for its originally intended purpose in compliance with the Enphase User Manual made available with the originally shipped system. Enphase hereby represents and warrants that all Envoys shall be free of defects in workmanship, materials and design, shall meet the applicable Specification, shall comply with all applicable Laws, and shall be fit for its intended purpose (“ Limited Envoy Warranty ”). The Limited Envoy Warranty covers any failure of an Envoy that is defective or otherwise does not conform to the Limited Envoy Warranty (“ Defective Product ”) for a period of two (2) years from the date of original purchase of such Envoy at point of sale to system owner (the “ Warranty Holder ”) at the originally-installed end user location (the “ Warranty Period ”) in locations where we have approved our Envoy for installation as listed on our website at http:// www.enphase.com/warranty.
During the Warranty Period, the Limited Envoy Warranty is transferable to a different owner (“ Transferee ”) as long as the Envoy remains installed at the originally-installed end user location (“ Original Location ”).
During the Warranty Period, if Enphase establishes, through inspection, the existence of a defect that is covered by the Limited Envoy Warranty, Enphase will, at its option, either (1) repair or replace the Defective Product free of charge, or (2) issue a credit or refund for the Defective Product to the Warranty Holder of the system in an amount up to its actual value at the time the Warranty Holder notifies Enphase of the defect, as determined by Enphase.
If Enphase elects to repair or replace the Defective Product, Enphase will, at its option, use new and/or reconditioned parts in repairing or replacing the Defective Product. Enphase reserves the right to use parts or products of original or improved design in the repair or replacement of Defective Product. If Enphase repairs or replaces a Defective Product, the Limited Envoy Warranty continues on the repaired or replacement product for the remainder of the original Warranty Period or ninety (90) days from the date of Enphase’s return shipment of the repaired or replacement product, whichever is later. The Limited Envoy Warranty covers a replacement unit to replace the Defective Product, but does not include labor costs related to (1) un-installing the Defective Product or (2) if applicable, re-installing a repaired or replacement product. To the extent applicable, the Limited Envoy Warranty also covers the costs of returning the Defective Product via Enphase’s RMA policy and procedure described further below, as well as shipping a repaired or replacement product from Enphase, via a non-expedited freight carrier selected by Enphase, to locations specified by the Warranty Holder of the Defective Product. The Limited Envoy Warranty does not cover, and Enphase will not be responsible for, shipping damage or damage caused by mishandling by the freight carrier and any such damage is the responsibility of the freight carrier.
Envoys are designed to withstand normal operating conditions and typical wear and tear when used for their original intent and in compliance with the installation and operating instructions supplied with the original equipment. The Limited Envoy Warranty does not apply to, and Enphase will not be responsible for, any defect in or damage to any Envoy: (1) that has been misused, neglected, tampered with, altered, or otherwise damaged, either internally or externally; (2) that has been improperly installed, operated, handled or used, including use
 
Exhibit G-5

under conditions for which the product was not designed, use in an unsuitable environment, or use in a manner contrary to the Enphase User Manual (as supplied to the Warranty Holder) or applicable laws or regulations; (3) that has been subjected to fire, water, generalized corrosion, biological infestations, acts of nature, or input voltage that creates operating conditions beyond the maximum or minimum limits listed in the Enphase Envoy specifications, including high input voltage from generators or lightning strikes; (4) that has been subjected to incidental or consequential damage caused by defects of other components of the solar system; or (5) if the original identification markings (including trademark or serial number) of such Envoy have been defaced, altered, or removed. This Limited Envoy Warranty does not cover cosmetic, technical or design defects, or shortcomings which do not materially influence or affect the energy production or degrade form, fit, or function of the Envoy. The Limited Envoy Warranty does not cover costs related to the removal, installation or troubleshooting of the Warranty Holder’s electrical systems. The Limited Envoy Warranty does not extend beyond the original cost of the Enphase Envoy.
To obtain repair or replacement service, credit or refund (as applicable) under this Limited Envoy Warranty, the Warranty Holder must comply with the Return Merchandise Authorization Number (RMA) policy and procedure http://www.enphase.com/rma .
THE LIMITED ENVOY WARRANTY IS THE SOLE AND EXCLUSIVE WARRANTY GIVEN BY ENPHASE AND, WHERE PERMITTED BY LAW, IS MADE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF TITLE, QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OR WARRANTIES AS TO THE ACCURACY, SUFFICIENCY OR SUITABILITY OF ANY TECHNICAL OR OTHER INFORMATION PROVIDED IN MANUALS OR OTHER DOCUMENTATION. IN NO EVENT WILL ENPHASE BE LIABLE FOR ANY SPECIAL, DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES, COSTS OR EXPENSES HOWEVER ARISING, WHETHER IN CONTRACT OR TORT, INCLUDING WITHOUT LIMITATION ANY ECONOMIC LOSSES OF ANY KIND, ANY LOSS OR DAMAGE TO PROPERTY, OR ANY PERSONAL INJURY.
To the extent any implied warranties are required under applicable law to apply to the Envoy, such implied warranties shall be limited in duration to the Warranty Period, to the extent permitted by applicable law. Some regions do not allow limitations or exclusions on implied warranties or on the duration of an implied warranty or on the limitation or exclusion of incidental or consequential damages, so the above limitation(s) or exclusion(s) may not apply. This Limited Envoy Warranty gives the Warranty Holder specific legal rights, and the Warranty Holder may have other rights that may vary from region to region.
 
Exhibit G-6

EXHIBIT H
INSURANCE
Seller will carry the following liability and property insurance and comply with the other insurance related requirements set out in this Exhibit H . Such insurance shall be with insurance companies having an A.M. Best Insurance financial strength and financial size rating category of A-VIII or better.
A. Workers’ Compensation and Employers’ Liability.
(i) Workers’ Compensation insurance or self-insurance, on a guaranteed cost basis as required by applicable Law, indicating compliance with any applicable labor codes, acts, laws or statutes, state or federal, where Seller performs work.
(ii) Employers’ Liability insurance shall not be less than $*** for injury or death each accident or for each illness or disease.
B. Commercial General Liability.
(i) Coverage shall be at least as broad as the Insurance Services Office (ISO) Commercial General Liability Coverage “occurrence” form.
(ii) The limit shall not be less than $*** each occurrence and not less than $*** annual General Aggregate with Products and Completed Operations coverage Aggregate of not less than $***.
C. Auto Liability.
(i) Coverage shall be at least as broad as the Insurance Services Office (ISO) Business Auto Coverage form covering Automobile Liability, codes 7 and 8, for all owned, hired and non-owned autos.
(ii) The limit shall not be less than $*** each accident.
D. Excess Liability Insurance.
(i) A policy of Excess or Umbrella Liability insurance for not less than $*** per occurrence and aggregate limit in excess of the Commercial General Liability, Auto Liability and Employers’ Liability insurance policies.
E. Professional Liability Insurance.
(i) Errors and Omissions Liability insurance appropriate to Seller’s profession. Coverage shall be for a professional error, act, or omission arising out of the scope of services shown in the Agreement and the Purchase Orders(s).

***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
Exhibit H-1

(ii) The limit shall not be less than $*** for each claim and not less than $*** aggregate.
F. Additional Insurance Provisions.
(i) Certificates of each renewal of insurance required hereunder shall also be delivered to Buyer promptly after each renewal.
(ii) All deductibles and self-insured retentions are the responsibility of Seller and Supply shall pay all premiums payable in respect to the insurance of Seller required hereunder.
(iii) Seller shall promptly notify Buyer of any claim relating to the Products under the product liability coverage pursuant to the Commercial General Liability insurance policies for an amount in excess of US$***.
(iv) All policies of liability insurance to be maintained by Seller shall also be written or endorsed to include the following:
(A) With respect to the Commercial General Liability, Auto Liability and Excess Liability insurance, Seller shall provide that the insurer waive any and all rights of subrogation or recovery which the insurer may have or acquire against Buyer, its Affiliates;
(B) With respect to the Commercial General Liability insurance, to provide for a severability of interest and cross liability clause;
(C) That the insurance shall be primary and not excess to or contributing with any insurance or self-insurance maintained by Seller;
(D) With the exception of the Worker’s Compensation, Professional Liability and Employer’s Liability insurance, to identify Buyer as additional insureds for their legal liability arising out of the operations of Seller; and
(E) Buyer shall have no liability for the payment of any premiums under the insurance required to be maintained by Seller hereunder.

***	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.	
Exhibit H-2

EXHIBIT I
NOTICES; REPRESENTATIVES
I. Parties’ official contacts for all Notices:
Buyer’s Contact Information
For Purchase Orders:
Brian Hollingsworth
Director of Supply Chain
4931 North 300 West
Provo, UT 84604
Brian.hollingsworth@vivintsolar.com
For Invoices :
Vivint Solar Accounts Payable
APSolar@vivintsolar.com
For all other notices :
Name: Brian Hollingsworth
Title: Director of Supply Chain
Address: 4931 North 300 West
Provo, UT 84604
Phone: (801) 229-6476
Email: Brian.hollingsworth@vivintsolar.com
With a copy to :
Vivint Solar Legal Department
Address: 4931 North 300 West
Provo, UT 84604
Fax: (801) 765-5746
Email: solarlegal@vivintsolar.com
Seller’s Contact Information
For Purchase Orders and Invoices:
Name: Adam Mahaffey
Title: Sales Operations Support Manager, Americas
Address: 1420 North McDowell Blvd., Petaluma, CA 94954
 
Exhibit I-1

Phone: (707) 763-4784
Fax: (707) 763-0784
Email: Adam.Mahaffey@enphaseenergy.com
For all other notices :
Name: Kris Sennesael
Title: Chief Financial Officer
Address: 1420 North McDowell Blvd., Petaluma, CA 94954
Phone: (707) 763-4784
Fax: (707) 763-0784
Email: ksennesael@enphaseenergy.com
With a copy to :
Enphase Energy, Inc. Legal Department
J. Taylor Browning
Address: 1420 N. McDowell Blvd.
Petaluma, CA 94954
Fax: (707) 795-5835
Email: tbrowning@enphaseenergy.com
II. Buyer and Seller Representatives (for day-to-day operations and other, non-official matters):
Buyer’s Representative
Name: Brian Hollingsworth
Title: Director of Supply Chain
Address: 4931 North 300 West
Provo, UT 84604
Phone: (801) 229-6476
Email: Brian.hollingsworth@vivintsolar.com
Seller’s Representative
Name: Adam Mahaffey
Title: Sales Operations Support Manager, Americas
Address: 1420 North McDowell Blvd., Petaluma, CA 94954
Phone: (707) 763-4784
Fax: (707) 763-0784
Email: Adam.Mahaffey@enphaseenergy.com
 
Exhibit I-2

Exhibit 10.43
VIVINT SOLAR, INC.
SUBSCRIPTION AGREEMENT
September 3, 2014
THIS SUBSCRIPTION AGREEMENT (this “ Agreement ”) by and among VIVINT SOLAR, INC., a Delaware corporation (“ Solar ”), and each of the investors who have signed a counterpart signature page to this Agreement (individually a “ Purchaser ” and collectively, the “ Purchasers ”) is made as of the date set forth above.
WHEREAS, Solar desires an infusion of an aggregate of approximately $75 million of additional common equity capital into Solar based on a total pre-money equity valuation of $828.5 million; and
WHEREAS, Purchasers are willing to invest such amount in Solar common equity capital; and
WHEREAS, on the terms and subject to the conditions hereof, each of the Purchasers desires to subscribe for and acquire from Solar, and Solar desires to issue and sell to each of the Purchasers, shares of Solar common stock, par value $0.01 per share of Solar (“ Solar Common Stock” ) based on such valuation;
NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:
1. Sale and Purchase of Subscription Securities . At the Closing (as defined below), upon the terms and subject to the conditions of this Agreement, each Purchaser agrees, severally and not jointly, to purchase, and Solar agrees to sell and issue to each Purchaser, the number of shares of Solar Common Stock set forth in the space designated “Number of Shares” on such Purchaser’s counterpart signature page to this Agreement, at a cash purchase price of $10.666667 per share (the “ Subscription Amount” ). Solar’s agreement with each Purchaser is a separate agreement, and the sale and issuance of the Solar Common Stock to each Purchaser is a separate sale and issuance to such Purchaser. The shares of Solar Common Stock purchased by the Purchasers hereunder (including any additional shares subsequently issued pursuant to the adjustment mechanism described in Section 1(c) below) are referred to as the “ Subscription Securities ”.
(b) Subject to the satisfaction (or waiver by the parties entitled to the benefit thereof) of the conditions set forth in Section 2 of this Agreement, the closing of the transactions contemplated hereby (the “ Closing ”) will take place at such time, date and location as the parties may mutually agree. At the Closing, Solar will duly record in its stockholder registry in the name of each of the Purchasers the applicable number of Subscription Securities, against the transfer, contribution and payment to Solar of the aggregate Subscription Amount related thereto, which shall represent payment in full for the Subscription Securities.
(c) From the date hereof until the earlier of (i) the initial public offering of Solar and (ii) the first anniversary of the Closing Date, in the event that Solar issues or sells any
 
1

Solar Common Stock or any other securities of Solar or its subsidiaries that would entitle the holder thereof to acquire at any time Solar Common Stock (“ Solar Common Stock Equivalent ”) in one or more transactions to an unrelated third party, if such Solar Common Stock or Solar Common Stock Equivalent is sold at or otherwise reflects a Solar Common Stock valuation per share of less than $10.666667, then, as an adjustment in the purchase price per share for the Subscription Securities purchased by the Purchasers, Solar shall issue to each of the Purchasers or their respective transferees, as applicable, such number of additional shares of Solar Common Stock as would reflect, as of the Closing Date, the valuation per share of Solar Common Stock implied by such subsequent issuance. Such adjustment and issuance to the Purchasers of additional shares will occur serially in the event additional such issuances to a third party subsequently occur at an even lower valuation. The parties expect that the negotiations with respect to any such subsequent issuance would take into account the adjustment mechanism of this Section 1(c) . In no event shall any of the Subscription Securities issued pursuant hereto and the related right to receive additional shares of Solar Common Stock as contemplated by this Section 1(c) be separable.
2. Conditions to Sale and Purchase of Subscription Securities .
(a) Notwithstanding anything in this Agreement to the contrary, none of the Purchasers will be under any obligation to purchase or subscribe for any Subscription Securities unless (i) the representations and warranties of Solar contained in Section 3 hereof are true and correct in all material respects as of the Closing and (ii) Solar is not in breach of any agreement, obligation or covenant herein required to be performed or observed by Solar on or prior to the Closing.
(b) Notwithstanding anything in this Agreement to the contrary, Solar shall be under no obligation to issue, sell or grant to any Purchaser any Subscription Securities unless (i) the representations and warranties of such Purchaser contained in Section 4 hereof are true and correct in all material respects as of the Closing and (ii) such Purchaser is not in breach of any agreement, obligation or covenant herein required to be performed or observed by such Purchaser on or prior to the Closing.
3. Representations and Warranties of Solar . Solar represents and warrants to each of the Purchasers as follows:
(a) Solar is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware and has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder; the execution and delivery by Solar of this Agreement, the performance by Solar of its obligations hereunder, and the consummation by Solar of the transactions contemplated hereby have been duly authorized by all requisite action on the part of Solar; this Agreement has been duly executed and delivered by Solar and, assuming the due authorization, execution and delivery hereof by the Purchasers, constitutes a legal, valid and binding obligation of Solar, enforceable against Solar in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law);

(b) the Subscription Securities, when issued and delivered in accordance with the terms hereof, will be duly authorized, validly issued, fully paid and nonassessable, and free and clear of any liens or encumbrances of any kind other than under applicable securities laws or as set forth in the by-laws of Solar;
(c) the execution, delivery and performance by Solar of this Agreement and the consummation by Solar of the transactions contemplated hereby do not and will not, with or without the giving of notice or the passage of time or both, (i) violate the provisions of any law, rule or regulation applicable to Solar or its properties or assets; (ii) violate the provisions of the certificate of incorporation or by-laws of Solar, as amended to date; or (iii) violate any judgment, decree, order or award of any court, governmental or quasi-governmental agency or arbitrator applicable to Solar or its properties or assets;
(d) no consent, approval, exemption or authorization is required to be obtained from, no notice is required to be given to and no filing is required to be obtained from any third party (including, without limitation, governmental and quasi-governmental agencies, authorities and instrumentalities of competent jurisdiction) by Solar, in order (i) for this Agreement to constitute a legal, valid and binding obligation of Solar or (ii) to authorize or permit the consummation by Solar of the issuance of the Subscription Securities;
(e) As of the date hereof, without taking into effect the issuance of the Subscription Securities, the authorized capital stock of Solar consists of 100,000,000 shares of Solar Common Stock, of which 77,671,875 shares of Solar Common Stock were issued and outstanding; and
(f) Solar has not employed any broker or finder in connection with the transactions contemplated by this Agreement to whom any Purchaser might have any obligation.
4. Representations and Warranties of the Purchasers .
(a) Each Purchaser that is other than a natural person hereby represents and warrants to Solar that:
(i) Such Purchaser is a corporation, limited liability company, partnership, limited partnership or other entity or trust duly organized and validly existing and in good standing under the laws of the state of its organization or formation and has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and
(ii) the execution and delivery by such Purchaser of this Agreement, the performance by such Purchaser of its obligations hereunder and the consummation by such Purchaser of the transactions contemplated hereby (A) have been duly authorized by all requisite action on the part of such Purchaser and (B) do not and will not, with or without the giving of notice or the passage of time or both, violate the provisions of the articles or certificate of incorporation, by-laws, certificate or articles of formation or organization, operating agreement or limited liability company agreement, partnership agreement or comparable documents, agreements or instruments of such Purchaser, in each case as amended to date.

(b) Each Purchaser hereby, severally as to itself or himself, and not jointly or as to any other Purchaser, represents and warrants to Solar that:
(i) this Agreement has been duly executed and delivered by such Purchaser and, assuming the due authorization, execution and delivery thereof by Solar, constitutes a legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law);
(ii) the execution, delivery and performance by such Purchaser of this Agreement and the consummation by such Purchaser of the transactions contemplated hereby do not and will not, with or without the giving of notice or the passage of time or both, (i) violate the provisions of any law, rule or regulation applicable to such Purchaser or its properties or assets; or (ii) violate any judgment, decree, order or award of any court, governmental or quasi-governmental agency or arbitrator applicable to such Purchaser or its properties or assets;
(iii) no consent, approval, exemption or authorization is required to be obtained from, no notice is required to be given to, and no filing is required to be obtained from, any third party (including, without limitation, governmental and quasi-governmental agencies, authorities and instrumentalities of competent jurisdiction) by such Purchaser, in order (i) for this Agreement to constitute a legal, valid and binding obligation of such Purchaser or (ii) to authorize or permit the consummation by such Purchaser of its purchase of the Subscription Securities;
(iv) such Purchaser (i) is an “accredited investor” within the definition of Regulation D promulgated under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “ Securities Act ”), (ii) is experienced in evaluating and investing in private placement transactions of securities of similar companies and acknowledges that it is able to fend for itself, can bear the economic risk of such Purchaser’s investment in Solar, and has such knowledge and experience in financial and business matters that such Purchaser is capable of evaluating the merits and risks of the investment in the Subscription Securities and can afford a complete loss of its investment, (iii) has not been organized for the purpose of acquiring the Subscription Securities, (iv) understands that no public market now exists for the Subscription Securities and that it is likely that no public market will ever exist for the Subscription Securities, (v) understands that the Subscription Securities may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that, in the absence of an effective registration statement covering the Subscription Securities or an available exemption from registration under the Securities Act, the Subscription Securities must be held indefinitely, (vi) understands that the exemption from registration afforded by Rule 144 (the provisions of which are known to it) promulgated under the Securities Act depends on the satisfaction of various conditions, and that, if applicable, Rule 144 may afford the basis for sales only in limited amounts; (vii) understands that the Subscription Securities will be subject to the provisions of the by-laws of Solar, which provides for certain restrictions on the transferability of the Subscription Securities, (viii) understands that a notation may be made in the appropriate records of Solar indicating that the Subscription

Securities are subject to restrictions on transfer and, if Solar should at some time in the future engage the services of a securities transfer agent, appropriate stop-transfer instructions will be issued to such transfer agent with respect to the Subscription Securities, and (ix) understands that its investment in the Subscription Securities involves a significant degree of risk including a risk of total loss of its investment, and it is fully aware of and understands all the risk factors related to its purchase of the Subscription Securities;
(v) such Purchaser has been advised by Solar that a restrictive legend in the form set forth below shall be placed on the certificates representing the Solar Common Stock, if any:
“NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER.”
(vi) such Purchaser is acquiring the Subscription Securities for its own account, solely for the purpose of investment and not with a view to, or for sale in connection with, any distribution thereof in violation of federal law or any applicable securities law. Such Purchaser understands that the Subscription Securities have not been registered under the Securities Act on the basis that the sale provided for in this Agreement is exempt from the registration provisions thereof;
(vii) to the full satisfaction of such Purchaser, such Purchaser has been furnished any materials it has requested relating to Solar and the Subscription Securities, and such Purchaser has been afforded the opportunity to ask questions of representatives of Solar concerning Solar and the Subscription Securities and to obtain any additional information necessary to verify the accuracy of any information provided to it;
(viii) such Purchaser is not relying upon any information, representation or warranty by Solar or any affiliate or agent of Solar in determining to invest in Solar, and expressly acknowledges that neither Solar or any affiliate or agent of Solar has made any representations or warranties to it in connection therewith other than the representations and warranties made by Solar in this Agreement. Such Purchaser has, independently and without reliance upon Solar or any affiliate or agent of Solar, and based on such documents and information as such Purchaser has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of Solar and made its own investment decision with respect to the investment represented by the Subscription Securities. Such Purchaser has consulted to the extent deemed appropriate by such Purchaser with such Purchaser’s own advisers as to the financial, tax, legal and related matters concerning an investment in the Subscription Securities and on that basis understands the financial, legal, tax and related consequences of an investment in the Subscription Securities, and believes that an investment in the Subscription Securities is suitable and appropriate for such Purchaser;

(ix) such Purchaser has not employed any broker or finder in connection with the transactions contemplated by this Agreement; and
(x) such Purchaser has received a copy of the form of registration rights agreement attached to the Registration Statement on Form S-1 filed by Solar with the U.S. Securities Exchange Commission on August 26, 2014 as Exhibit 4.2 and agrees to be bound by the terms and provisions thereof, as if the same has been duly executed by the undersigned, subject to such modifications thereto as may be agreed to by the authorized persons of Solar and Purchasers.
5. Miscellaneous .
(a) Termination . This Agreement shall be terminated by mutual written consent of Solar and Purchasers, provided that this Agreement may be terminated in the case of any Purchaser solely as to such Purchaser and not as to any other Purchaser by a written consent of Solar and such Purchaser, and further provided that any such termination by or affecting any specific Purchaser shall have no effect on the validity and enforceability of this Agreement as between Solar and any other Purchaser.
(b) Amendment; Waiver . This Agreement may be amended only by a written instrument signed by the parties hereto against whom such amendment or waiver is sought to be enforced. No waiver by any party hereto of any of the provisions hereof shall be effective unless set forth in a writing executed by the party so waiving.
(c) Governing Law; Jurisdiction . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed therein. Each party hereto hereby (i) agrees than any action, directly or indirectly, arising out of, under or relating to this Agreement or the transactions contemplated hereby shall exclusively be brought in the Delaware Court of Chancery sitting in Wilmington, Delaware (the “ Court of Chancery ”) and shall exclusively be heard and determined by the Court of Chancery, unless the Court of Chancery determines that it does not then have subject matter jurisdiction over such action, in which case any such action shall then exclusively be brought in and shall exclusively be heard and determined by either the Supreme Court of the State of New York sitting in Manhattan or the United States District Court for the Southern District of New York, and (ii) solely in connection with the action(s) contemplated by subsection (i) hereof, (A) irrevocably and unconditionally consents and submits to the exclusive jurisdiction of the courts identified in subsection (i) hereof, (B) irrevocably and unconditionally waives any objection to the laying of venue in any of the courts identified in clause (i) of this Section 5(c) , (C) irrevocably and unconditionally waives and agrees not to plead or claim that any of the courts identified in such clause (i) is an inconvenient forum or does not have personal jurisdiction over any party hereto, and (D) agrees that mailing of process or other papers in connection with any such action in the manner provided herein or in such other manner as may be permitted by applicable law shall be valid and sufficient service thereof. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any claim or action directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby.

(d) Notices . All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three postal delivery days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
If to Solar:
If on or prior to September 15, 2014 –             
4931 North 300 West
Provo, UT 84604
Facsimile: (801) 765-5746
Attention: Chief Legal Officer
If after September 15, 2014 –             
3301 N. Thanksgiving Way, Suite 500
Lehi, UT 84003
Facsimile: (801) 765-5746
Attention: Chief Legal Officer
with a copy to (which shall not constitute notice):
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Facsimile: (650) 493-6811
Attention: Robert Day and Michael Nordtvedt
If to 313:
c/o The Blackstone Group
345 Park Avenue
New York, NY 10154
Facsimile: (212) 583-5710
Attention: Peter Wallace
with a copy to (which shall not constitute notice):
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017-3954
Facsimile: (212) 455-2502
Attn: Pete Martelli

If to any other Purchaser:
c/o Vivint, Inc.
4931 North 300 West
Provo, UT 84604
Facsimile: (801) 765-5730
with a copy to (which shall not constitute notice):
Durham Jones & Pinegar
111 East Broadway, Suite 900
Salt Lake City, UT 84111
Attention: N. Todd Leishman
Facsimile: (801) 415-3500
(e) Integration . This Agreement and the documents referred to herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to the subject matter hereof and thereof. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein and therein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.
(f) Counterparts . This Agreement may be executed in any number of counterparts (including counterparts transmitted by facsimile or electronically in portable document format (pdf)), all of which will be an original and together shall constitute a single instrument.
(g) Injunctive Relief . Each of the parties acknowledges and agrees that a violation of any of the terms of this Agreement will cause the other party irreparable injury for which adequate remedy at law is not available. Accordingly, each party agrees that the other party shall be entitled to an injunction, restraining order or other equitable relief to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction in the United States or any state thereof, in addition to any other remedy to which it may be entitled at law or equity.
(h) Rights Cumulative; Waiver . The rights and remedies of the Purchasers and Solar under this Agreement shall be cumulative and not exclusive of any rights or remedies which either would otherwise have hereunder or at law or in equity or by statute, and no failure or delay by either party in exercising any right or remedy shall impair any such right or remedy or operate as a waiver of such right or remedy, nor shall any single or partial exercise of any power or right preclude such party’s other or further exercise or the exercise of any other power or right. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by either party to exercise any right or privilege hereunder shall be deemed a waiver of such party’s rights or privileges hereunder or shall be deemed a waiver of such party’s rights to exercise the same at any subsequent time or times hereunder.

(i) Further Assurances . Each of the parties shall execute such documents and perform such further acts as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement.
(j) Amendment of Prior Subscription Agreement . Reference is made to the Subscription Agreement, dated as of August 14, 2014, by and between Solar and 313 (the “ Prior Subscription Agreement ”). Solar and 313 agree that the intention of the parties to the Prior Subscription Agreement was that any transferee of Subscription Securities (as defined in the Prior Subscription Agreement) would receive the right to receive additional shares as contemplated by Section 1(c) thereof in the same manner as contemplated by Section 1(c) hereof.
[Signature pages follow]

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first above written.

VIVINT SOLAR, INC.	
		
By:	 	/s/ Greg Butterfield	
Name:	 	Greg Butterfield	
Title:	 	Chief Executive Officer	
[ Signature Page to Subscription Agreement ]

The undersigned Purchaser has executed this Subscription Agreement.

313 ACQUISITION, LLC	
		
By:	 	/s/ Dale R. Gerard	
Its:	 	VP, Finance and Treasurer	
			
Printed Name:	 	Dale R. Gerard	
	
State/Country of Domicile or Formation:
Delaware	
	
Aggregate Subscription Amount:
US$ 49,999,990.90	
	
Number of Shares Subscribed:
4,687,499	
	
Address:	

     	
     	
[ Counterpart Signature Page of Purchaser to Subscription Agreement ]

The undersigned Purchaser has executed this Subscription Agreement.

THE PEDERSEN FAMILY TRUST	
		
By:	 	/s/ Michael Cahill	
Name:	 	Michael Cahill	
Title:	 	Trustee	
	
Aggregate Subscription Amount:
US$ 19,999,989.96	
	
Number of Shares Subscribed:
1,874,999	
	
Address:	
	
7371 Prairie Falcon Road, Suite 120
Las Vegas, Nevada 89128	
	
With a copy to:	
	
c/o Vivint, Inc.
4931 North 300 West
Provo, UT 84604
Facsimile: (801) 765-5730	
[ Counterpart Signature Page of Purchaser to Subscription Agreement ]

The undersigned Purchaser has executed this Subscription Agreement.

	
/s/ Alex Dunn	
Printed Name: Alex Dunn	
	
Aggregate Subscription Amount:
US$ 4,999,989.49	
	
Number of Shares Subscribed:
468,749	
	
Address:	
	
c/o Vivint, Inc.
4931 North 300 West
Provo, UT 84604
Facsimile: (801) 765-5730	
[ Counterpart Signature Page of Purchaser to Subscription Agreement ]

Exhibit 10.44
*** Text Omitted and Filed Separately with the Securities Exchange Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406
PROJECT SPOTLIGHT
LOAN AGREEMENT
Dated as of September 12, 2014
among
VIVINT SOLAR FINANCING I, LLC,
a Delaware limited liability company
(Borrower);
VIVINT SOLAR HOLDINGS, INC.,
a Delaware corporation
(Borrower Member and a Guarantor);
THE OTHER GUARANTORS PARTIES HERETO FROM TIME TO TIME ;
THE LENDERS PARTIES HERETO FROM TIME TO TIME ;
BANK OF AMERICA, N.A.
(Sole Book Runner, Sole Structuring Agent, Collateral Agent and Administrative Agent);
Deutsche Bank AG, New York Branch
(Joint Lead Arranger and Documentation Bank);
CIT Finance LLC
(Joint Lead Arranger); and
ING Capital LLC
(Joint Lead Arranger)
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
- i -

TABLE OF CONTENTS

 	 	 	  	Page	 	
ARTICLE 1	 	DEFINITIONS	  	 	1	  	
			
1.1    	 	Definitions	  	 	1	  	
			
1.2    	 	Rules of Interpretation	  	 	31	  	
			
ARTICLE 2	 	THE CREDIT FACILITY	  	 	33	  	
			
2.1    	 	Loan Facility	  	 	33	  	
			
2.2    	 	Commitments	  	 	38	  	
			
2.3    	 	Fees	  	 	38	  	
			
2.4    	 	Other Payment Terms	  	 	39	  	
			
2.5    	 	Pro Rata Treatment	  	 	47	  	
			
2.6    	 	Change of Circumstances	  	 	48	  	
			
2.7    	 	Funding Losses	  	 	49	  	
			
2.8    	 	Alternate Office; Minimization of Costs	  	 	50	  	
			
2.9    	 	Increase in Loan Facility	  	 	51	  	
			
2.10  	 	Eligible Structures; Addition of Subject Funds; Release of Subject Funds	  	 	55	  	
			
2.11  	 	Defaulting Lenders	  	 	58	  	
			
2.12  	 	Refinancing Loans	  	 	59	  	
			
2.13  	 	Extended Loans	  	 	61	  	
			
ARTICLE 3	 	CONDITIONS PRECEDENT	  	 	63	  	
			
3.1    	 	Conditions Precedent to the Closing Date	  	 	63	  	
			
3.2    	 	Conditions Precedent to Each Borrowing	  	 	66	  	
			
3.3    	 	Conditions Precedent to Addition of New Systems to Existing Subject Fund	  	 	67	  	
			
3.4    	 	Conditions Precedent to Inclusion of New Subject Fund	  	 	68	  	
			
ARTICLE 4	 	REPRESENTATIONS AND WARRANTIES	  	 	70	  	
			
4.1    	 	Representations and Warranties	  	 	70	  	
			
ARTICLE 5	 	AFFIRMATIVE COVENANTS OF BORROWER AND MANAGING MEMBERS	  	 	76	  	
			
5.1    	 	Use of Proceeds	  	 	76	  	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
- ii -

					
5.2    	 	Notices	  	77	
			
5.3    	 	Portfolio Reports; Financial Statements	  	77	
			
5.4    	 	Reports; Other Information	  	79	
			
5.5    	 	Maintenance of Existence	  	80	
			
5.6    	 	Books, Records, Access	  	80	
			
5.7    	 	Preservation of Rights; Further Assurance	  	81	
			
5.8    	 	Taxes and Other Government Changes	  	82	
			
5.9    	 	Compliance With Laws; Instruments, Etc	  	82	
			
5.10  	 	Indemnification	  	82	
			
5.11  	 	Revenue Account	  	84	
			
5.12  	 	[Reserved]	  	84	
			
5.13  	 	Separateness Provisions; Required Provisions in LLC Agreements	  	84	
			
5.14  	 	Distributions by Certain Subsidiaries	  	84	
			
5.15  	 	Borrowing Base Certificate	  	85	
			
5.16  	 	Amendments; Other Agreements	  	85	
			
5.17  	 	Insurance	  	85	
			
5.18  	 	New Subject Funds	  	87	
			
ARTICLE 6	 	NEGATIVE COVENANTS OF BORROWER AND MANAGING MEMBERS	  	89	
			
6.1    	 	Cash Flow Coverage Ratio	  	89	
			
6.2    	 	Limitations on Liens	  	89	
			
6.3    	 	Indebtedness	  	89	
			
6.4    	 	Sale or Lease of Assets	  	89	
			
6.5    	 	Changes	  	90	
			
6.6    	 	Distributions	  	90	
			
6.7    	 	Investments	  	90	
			
6.8    	 	Federal Reserve Regulations	  	91	
			
6.9    	 	Fundamental Changes	  	91	
			
6.10  	 	Amendments; Other Agreements	  	91	
			
6.11  	 	Name and Location; Fiscal Year	  	92	
			
6.12  	 	Assignment	  	92	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
- iii -

							
6.13  	 	Transfer of Equity Interest	  	 	92	  	
			
6.14  	 	Accounts	  	 	92	  	
			
6.15  	 	Transaction with Affiliates	  	 	92	  	
			
6.16  	 	Limitation on Dividends and Other Payment Restrictions Affecting Certain Subsidiaries	  	 	93	  	
			
6.17  	 	Hedging Agreement	  	 	93	  	
			
6.18  	 	Operations and Maintenance in Partnership	  	 	93	  	
			
ARTICLE 7	 	ACCOUNTS; APPLICATION OF FUNDS	  	 	93	  	
			
7.1    	 	Accounts; Application of Funds in Accounts	  	 	93	  	
			
ARTICLE 8	 	EVENTS OF DEFAULT; REMEDIES	  	 	94	  	
			
8.1    	 	Events of Default	  	 	94	  	
			
8.2    	 	Remedies	  	 	96	  	
			
8.3    	 	Remedies Under Consents	  	 	97	  	
			
8.4    	 	Borrower’s Right to Cure	  	 	97	  	
			
ARTICLE 9	 	THE AGENTS; AMENDMENTS; ASSIGNMENTS	  	 	98	  	
			
9.1    	 	Appointment and Authority	  	 	98	  	
			
9.2    	 	Rights as a Lender	  	 	99	  	
			
9.3    	 	Exculpatory Provisions	  	 	99	  	
			
9.4    	 	Reliance by Administrative Agent	  	 	100	  	
			
9.5    	 	Delegation of Duties	  	 	100	  	
			
9.6    	 	Resignation of Administrative Agent	  	 	101	  	
			
9.7    	 	Non-Reliance on Administrative Agent and Other Lenders	  	 	102	  	
			
9.8    	 	Administrative Agent May File Proofs of Claim	  	 	102	  	
			
9.9    	 	Collateral Matters	  	 	102	  	
			
9.10  	 	Indemnification	  	 	103	  	
			
9.11  	 	No Advisory or Fiduciary Responsibility	  	 	103	  	
			
9.12  	 	Amendments	  	 	104	  	
			
9.13  	 	Withholding Tax	  	 	107	  	
			
9.14  	 	Participations	  	 	107	  	
			
9.15  	 	Assignments	  	 	108	  	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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9.16  	 	Assignability to Federal Reserve Bank or Central Bank	  	111	
			
9.17  	 	[Intentionally omitted.]	  	111	
			
9.18  	 	No Other Duties, Etc.	  	111	
			
ARTICLE 10	 	MISCELLANEOUS	  	111	
			
10.1    	 	Addresses; Notices	  	111	
			
10.2    	 	Right to Set-Off	  	115	
			
10.3    	 	Delay and Waiver	  	115	
			
10.4    	 	Costs, Expenses and Attorney’s Fees	  	116	
			
10.5    	 	Entire Agreement	  	116	
			
10.6    	 	Governing Law	  	117	
			
10.7    	 	Severability	  	117	
			
10.8    	 	Headings	  	117	
			
10.9    	 	Accounting Terms	  	117	
			
10.10  	 	No Partnership, Etc	  	117	
			
10.11  	 	Waiver of Jury Trial	  	117	
			
10.12  	 	Consent to Jurisdiction; Service of Process	  	118	
			
10.13  	 	Interest Rate Limitation	  	118	
			
10.14  	 	Successors and Assigns	  	119	
			
10.15  	 	Patriot Act Compliance	  	119	
			
10.16  	 	Binding Effect; Counterparts	  	119	
			
10.17  	 	Confidentiality	  	120	
			
10.18  	 	Survival of Agreements	  	121	
			
10.19  	 	Electronic Execution of Assignments and Certain Other Documents	  	121	
			
ARTICLE 11	 	GUARANTY	  	122	
			
11.1    	 	The Guarantee	  	122	
			
11.2    	 	Obligations Unconditional	  	122	
			
11.3    	 	Reinstatement	  	124	
			
11.4    	 	Subrogation; Subordination	  	124	
			
11.5    	 	Remedies	  	124	
			
11.6    	 	Instrument for the Payment of Money	  	124	
			
11.7    	 	Continuing Guarantee	  	125	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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                11.8	  	General Limitation on Guarantee Obligations	  	125	
			
                11.9	  	Release of Guarantors	  	125	
			
                11.10	  	Right of Contribution	  	125	
			
                11.11	  	Keepwell	  	125	
			
                11.12	  	Limited Recourse	  	126	
			
                11.13	  	Amendments with respect to a Permitted Swap Agreement	  	126	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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INDEX OF EXHIBITS

Exhibit A	  	Form of Note	
		
Exhibit B-1	  	Form of Borrowing Notice	
		
Exhibit B-2	  	Form of Continuation Notice	
		
Exhibit C	  	Form of Assignment and Acceptance	
		
Exhibit D	  	Form of Incremental Loan Commitment Increase Notice	
		
Exhibit E	  	Form of Increasing Incremental Lender Confirmation	
		
Exhibit F	  	Form of New Lender Accession Agreement	
		
Exhibit G	  	Form of Borrowing Base Certificate	
		
Exhibit H	  	Form of Advance Model	
		
Exhibit I	  	Form of US Tax Compliance Certificate	
		
Exhibit J	  	Required Tax Equity Consent Provisions	
		
Exhibit K	  	Potential New Fund Notice	
		
Exhibit L	  	New Systems Notice	
		
Exhibit M	  	New Subject Fund Accession Agreement	
		
Exhibit N	  	Borrowing Date Certificate	
	
INDEX OF SCHEDULES	
		
Schedule 1.1(b)	  	Knowledge Individuals	
		
Schedule 3.1(m)	  	Consents	
		
Schedule 4.1(f)	  	Outstanding Debt	
		
Schedule 4.1(x)	  	Subsidiaries; Equity Interests	
		
Schedule 6.7	  	Investments	
		
Schedule 6.15	  	Transactions with Affiliates	
	
INDEX OF ANNEXES	
		
Annex 1	  	Account Information	
		
Annex 2	  	Lenders/Lending Office	
		
Annex 3	  	Lender Commitments	
	
INDEX OF APPENDICES	
		
Appendix 1	  	Advance Rate Calculations	
		
Appendix 2	  	Borrowing Base Certificate Calculations	
		
Appendix 3	  	Eligibility Representations	
		
Appendix 4	  	List of Managing Members, Subject Funds, Cash-Sweep Designations and Investors	
		
Appendix 5	  	Project Documents	
		
Appendix 6	  	System Information	
		
Appendix 7	  	Tax Equity Representations and Other Structure Representations	
		
Appendix 8	  	Separateness Provisions	
		
Appendix 9	  	Approved Manufacturers	
		
Appendix 10	  	Approved Form Agreements (Customer Agreements)	
		
Appendix 11	  	Tax Equity Structure Characteristics	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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LOAN AGREEMENT
This LOAN AGREEMENT, dated as of September 12, 2014 (this “ Agreement ”), is made by and among VIVINT SOLAR FINANCING I, LLC, a Delaware limited liability company (the “ Borrower ”), VIVINT SOLAR HOLDINGS, INC., a Delaware corporation (the “ Borrower Member ”), each of the other guarantors that is a party to this Agreement identified as a “Guarantor” on the signature pages to this Agreement and listed as a “Managing Member” on Appendix 4 (as updated pursuant to Section 2.10 ) or that shall become a Guarantor pursuant to the terms of this Agreement and a New Subject Fund Accession Agreement (each individually, a “ Guarantor ” and, collectively, the “ Subsidiary Guarantors ,” and together with the Borrower Member, collectively, the “ Guarantors ”) each of the lenders that is a signatory to this Agreement identified as a “ Lender ” on the signature pages to this Agreement and listed on Annex 2 or that shall become a “ Lender ” under this Agreement pursuant to the terms of this Agreement (each individually, a “ Lender ” and, collectively, the “ Lenders ”), and BANK OF AMERICA, N.A, as the collateral agent for the Secured Parties (in such capacity, together with its successors in such capacity, the “ Collateral Agent ”) and as the administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “ Administrative Agent ”, and, together with the Collateral Agent, the “ Agents ”).
WHEREAS, the Borrower has requested that the Lenders make loans to the Borrower to monetize certain of the future distributions to be received by the Borrower from the Managing Members in connection with Subject Funds; and
WHEREAS, the Lenders are willing to make such loans upon the terms and subject to the conditions of this Agreement.
NOW THEREFORE, in consideration of the agreements herein and in the other Financing Documents and in reliance upon the representations and warranties set forth herein and therein, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions . Except as otherwise expressly provided, capitalized terms used in this Agreement and its exhibits and schedules shall have the meanings set forth below:
“ Accounts ” has the meaning set forth in the CADA.
“ Actual Net Cash Flow ” means the actual amount of all Revenues paid to and received in the Revenue Account for the benefit of the Borrower, net of expenses permitted under the CADA.
“ Administrative Agent ” has the meaning set forth in the introductory paragraph of this Agreement.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

“ Administrative Questionnaire ” means an administrative questionnaire in the form supplied by the Administrative Agent.
“ Advance Model ” has the meaning set forth in Appendix 2 .
“ Advance Rate ” has the meaning set forth in Appendix 2 .
“ Affiliate ” of a specified Person means any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person specified. As used herein, the term “control” means possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of partnership interests or voting securities, by contract or otherwise.
“ Agents ” has the meaning set forth in the introductory paragraph of this Agreement.
“ Agreement ” has the meaning set forth in the introductory paragraph of this Agreement.
“ All-In Yield ” means, as to any Debt, the yield thereof, whether in the form of interest rate, margin, OID, upfront fees or LIBO Rate or Base Rate floor, in each case, incurred or payable by the Borrower generally to all Lenders of such Debt; provided that (a) OID and upfront fees shall be equated to interest rate assuming a 4-year life to maturity on a straight line basis (or, if less, the stated life to maturity at the time of incurrence of the applicable Debt); and (b) “All-In Yield” shall not include amendment fees, arrangement fees, structuring fees, commitment fees, underwriting fees and similar fees payable to any lead arranger (or its affiliate) in connection with the commitment or syndication of such Debt, consent fees paid to consenting Lenders and any other fees not paid or payable generally to all Lenders in the primary syndication of such Debt.
“ Applicable Interest Rate ” means (i) with respect to the Loans other than Incremental Loans, (a) for any LIBO Loan, during each Interest Period applicable thereto, the per annum rate equal to the sum of the LIBO Rate for such Interest Period plus the Applicable Margin (or, with respect to the initial Interest Period applicable to a LIBO Loan that was not initially made on the 15 th day of a calendar month, the Daily LIBO Rate plus the Applicable Margin) or (b) for any Base Rate Loan, on any day, the per annum rate equal to the sum of the Base Rate for such day plus the Applicable Margin and (ii) with respect to each Incremental Loan, the per annum rate specified in the terms of the Incremental Loan Commitment related to such Incremental Loan.
“ Applicable Margin ” means (i) during the Availability Period, 3.25% and (ii) after the Availability Period, 3.50%.
“ Applicable Threshold Test ” means, with respect to any date of determination on which the Outstanding Principal is greater than the Available Borrowing Base (for purposes of this definition, the “ Test Date ”):
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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(i) if reductions to the Available Borrowing Base since the last Borrowing Date (if any) result solely from interest rate fluctuations, the Outstanding Principal on the Test Date is less than the product of (x) the Available Borrowing Base (calculated on the Test Date using interest rates in effect as of the Test Date), multiplied by (y) 110%;
(ii) if reductions to the Available Borrowing Base since the last Borrowing Date (if any) result solely from any fact or circumstance that would cause a Subject Fund to become a Watched Fund, the Outstanding Principal on the Test Date is less than the product of (x) the Available Borrowing Base (calculated on the Test Date using interest rates in effect as of the Test Date), multiplied by (y) 105%; and
(iii) if reductions to the Available Borrowing Base since the last Borrowing Date (if any) result from a combination of interest rate fluctuations and any fact or circumstance that would cause a Subject Fund to become a Watched Fund, both:
(A) the Outstanding Principal on the Test Date is less than the product of (x) the Available Borrowing Base (calculated on the Test Date using the interest rates in effect on the later of (i) the date which is 60 days prior to such Test Date and (ii) the most recent date, prior to and not including the Test Date, if any, on which the Borrower notified the Administrative Agent of the existence of a Watched Fund), multiplied by (y) 105% and
(B) the Outstanding Principal on the Test Date is less than the product of (x) the Available Borrowing Base (calculated on the Test Date using interest rates in effect as of the Test Date), multiplied by (y) 110%.
For the avoidance of doubt, on any date on which the Outstanding Principal is less than or equal to the Available Borrowing Base, the Applicable Threshold Test shall be deemed to be satisfied.
“ Approved Form Agreement ” means each of the form Customer Agreements attached hereto as Appendix 10 as such forms may be modified from time to time pursuant to Section 6.10(b) .
“ Approved Manufacturer ” means (i) any of the manufacturers set forth in Appendix 9 or (ii) any other manufacturer approved in writing by the Administrative Agent in its reasonable discretion upon Borrower’s request.
“ Assignment and Acceptance ” means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, in the form of Exhibit C or such other form as shall be approved by the Administrative Agent.
“ Assumptions ” has the meaning set forth in Appendix 2 .
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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“ Attributable Indebtedness ” means, on any date, in respect of any Capital Lease Obligations of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP.
“ Availability Period ” means a period commencing on the Closing Date and ending on the earlier of (a) the date when the Commitments have been fully utilized for Borrowings and (b) March 12, 2017.
“ Available Borrowing Base ” has the meaning set forth in Appendix 2 .
“ Bank of America ” means Bank of America, N.A., a national banking association.
“ Bankruptcy Event ” shall be deemed to occur with respect to any Person if (a) such Person shall institute a voluntary case seeking liquidation or reorganization under the Bankruptcy Law or shall consent to the institution of an involuntary case thereunder against it; (b) such Person shall file a petition, answer or consent or shall otherwise institute any similar proceeding under any other applicable federal, State or other applicable law, or shall consent thereto; (c) such Person shall apply for, or by consent there shall be an appointment of, a receiver, liquidator, sequestrator, trustee or other officer with similar powers for itself or any substantial part of its assets; (d) such Person shall make an assignment for the benefit of creditors; (e) such Person shall admit in writing its inability to pay its debts generally as they become due; (f) if an involuntary case shall be commenced seeking the liquidation or reorganization of such Person under the Bankruptcy Law or any similar proceeding shall be commenced against such Person under any other applicable federal, State or other applicable law and (i) the petition commencing the involuntary case is not timely controverted; (ii) the petition commencing the involuntary case is not dismissed within sixty (60) days of its filing; (iii) an interim trustee is appointed to take possession of all or a portion of the property, and/or to operate all or any part of the business of such Person and such appointment is not vacated within sixty (60) days; or (iv) an order for relief shall have been issued or entered therein; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee or other officer having similar powers of such Person or of all or a part of its property, shall have been entered; or (h) any other similar relief shall be granted against such Person under any federal, State or other applicable law.
“ Bankruptcy Law ” means Title 11, United States Code, and any other State or federal insolvency, reorganization, moratorium or similar law for the relief of debtors.
“ Base Rate ” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus  1 ⁄ 2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate”, and (c) the LIBO Rate plus 1.0%. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such “prime rate” announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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“ Base Rate Loan ” means any Loan that bears interest at rates based upon the Base Rate.
“ Benefited Lender ” has the meaning set forth in Section 2.5(b) .
“ Borrower ” has the meaning set forth in the introductory paragraph of this Agreement.
“ Borrower Materials ” has the meaning set forth in Section 10.1(d) .
“ Borrower Member ” has the meaning set forth in the introductory paragraph of this Agreement.
“ Borrowing ” means Loans of the same Type made, converted or continued on the same date and, in the case of LIBO Loans, as to which a single Interest Period is in effect.
“ Borrowing Base Certificate ” means the certificate in the form of Exhibit G , setting forth the matters specified on Appendix 2 in the manner set forth therein.
“ Borrowing Base Certificate Date ” means each date upon which a Borrowing Base Certificate is submitted in accordance with the terms of Section 2.1(a)(iv) or Section 5.15 .
“ Borrowing Base Requirement ” means, as of the date of a Borrowing Base Certificate, (i) the Available Borrowing Base exceeds the Outstanding Principal and (ii) the aggregate Subject Fund Borrowing Bases of all Cash-Sweep Funds do not exceed *** percent (***%) of the Available Borrowing Base.
“ Borrowing Date ” means that date on which a Borrowing occurs pursuant to the terms herein.
“ Borrowing Date Certificate ” has the meaning set forth in Section 3.2(a) .
“ Borrowing Notice ” has the meaning set forth in Section 2.1(a)(iii) .
“ Breakage Event ” has the meaning set forth in Section 2.7 .
“ Bridge Loan Credit Facility ” means that certain Credit Agreement, dated May 1, 2014, between Borrower Member, Lender and the other parties thereto.
“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and if such day relates to any Eurocurrency Rate Loan, means any such day on which dealings in deposits are conducted by and between banks in the London interbank Eurocurrency market.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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“ CADA ” means the Collateral Agency and Depositary Agreement, dated as of the date hereof, among the Borrower; the Collateral Agent, the Depositary, each Managing Member and, the Lenders, solely for the purposes of Section 2.1 and Article 7 thereof.
“ Capital Adequacy Requirement ” has the meaning set forth in Section 2.6(b) .
“ Capital Lease Obligations ” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
“ Cash Flow Coverage Ratio ” means, as of any Quarterly Date, for any trailing 6-month period ending on such Quarterly Date (or with respect to the first two quarters following the Closing Date, such period from the Closing Date to the Quarterly Date), the quotient of (i) the sum of (A) Actual Net Cash Flow received by Borrower for such period less Borrower’s expenses (excluding interest on the Loans) due and payable during such period, (B) any amounts on deposit in the Equity Cure Account that are applicable to such period pursuant to Section 8.4(c) and (C) any amount previously applied as a Cure Amount and subsequently applied as a prepayment of the Loans pursuant to Section 8.4(c) during the trailing 6-month period ending on such Quarterly Date, divided by (ii) the actual interest due pursuant to the Loans and payable during such period; provided that in the event the Cure Amount is applied as a prepayment of the Loans in accordance with Section 8.4(c) , for purposes of calculating this clause (ii) the aggregate principal of outstanding Loans shall be deemed to not be so adjusted for the fiscal quarter in which such Cure Amount was made (but shall be in each following quarter).
“ Cash-Sweep Event ” has the meaning set forth in Appendix 7 .
“ Cash-Sweep Fund ” means, with respect to any Subject Fund, a Subject Fund designated as such on Appendix 4 whose Project Documents reduce, limit, suspend or otherwise restrict distributions to the Managing Member following the occurrence of certain events enumerated in such Project Documents, including (a) the occurrence of a flip date when an internal rate of return has not been achieved, (b) certain indemnity claims, and (c) non-payment of such indemnity claims by the applicable Subject Fund guarantor, as reasonably determined by the Administrative Agent in consultation with the Borrower and the Lenders.
A “ Change of Control ” shall be deemed to have occurred if:
(a) Vivint Solar Parent shall cease to directly or indirectly own, beneficially and of record, 100% of the issued and outstanding equity interests in Borrower Member;
(b) Borrower Member shall cease to directly own, beneficially and of record, 100% of the issued and outstanding equity interests in the Borrower;
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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(c) the Borrower shall cease to directly own, beneficially and of record, 100% of the issued and outstanding equity interests in each Managing Member; or
(d) a Managing Member fails to own 100% of the class of Equity Interests owned as of the date the related Partnership or Lessor, as applicable, becomes a Subject Fund under this Agreement and as set forth in Appendix 4 hereto (as such schedule may be updated prior to the funding of any new Subject Fund after the Closing Date to reflect the interests of a Managing Member in such new Subject Fund);
provided , that any disposition that would otherwise be a Change of Control that complies with terms of Section 2.10(b) or Section 6.4(d) shall be deemed not to be a Change of Control for all purposes hereunder.
“ Change of Law ” means the occurrence, after the Closing Date, of any of the following: (i) the adoption or taking effect of any Governmental Rule, any change in any Governmental Rule or in the administration, interpretation, implementation or the application or requirements thereof (whether such change occurs in accordance with the terms of such Governmental Rule as enacted, as a result of amendment, or otherwise), any change in the interpretation or administration of any Governmental Rule by any Governmental Authority, or (ii) the making or issuance of any request or directive (whether or not having the force of law) of any Governmental Authority, that, in each such case, makes it unlawful or impossible for any Lender to make or maintain any Loan; for the avoidance of doubt, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change of Law”, regardless of the date enacted, adopted, promulgated or issued, but only to the extent such rules, regulations, or published interpretations or directives are applied to the Borrower and its Subsidiaries by the Administrative Agent or any Lender in substantially the same manner as applied to other similarly situated borrowers under comparable credit facilities after consideration of factors as the Administrative Agent or Lender then reasonably determines to be relevant.
“ Charges ” has the meaning set forth in Section 10.13 .
“ Closing Date ” means the date when each of the conditions precedent listed in Section 3.1 has been satisfied (or waived in writing by the Agents and the applicable Lenders).
“ Closing Date Commitment ” means any Commitment that exists on the Closing Date.
“ Code ” means the Internal Revenue Code of 1986.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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“ Collateral ” means all property of, and equity interests in the Loan Parties, now owned or hereafter acquired upon which a Lien is or is purported to be created by any Collateral Document.
“ Collateral Agent ” has the meaning set forth in the introductory paragraph of this Agreement.
“ Collateral Documents ” means the CADA, the Member Pledge, the Security Agreement, each consent, each control agreement and any other security documents, financing statements and other documentation filed or recorded in connection with the foregoing.
“ Commitment ” means, at any time with respect to each Lender, the commitment of such Lender to make Loans hereunder, expressed as a maximum aggregate principal amount of the Loans to be made by such Lender hereunder as such amount may be (a) reduced from time to time pursuant to Section 2.2(e) , increased or modified from time to time pursuant to assignments by or to such Lender pursuant to Section 9.15 or (b) increased or supplemented pursuant to Section 2.9 (it being understood that Incremental Loan Commitments made by such Lender pursuant to Section 2.9 may have different maturity, interest, and fee terms than such Lender’s existing Commitments). The initial amount of each Lender’s Commitment is set forth in Annex 3 hereto, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable.
“ Commitment Fee ” has the meaning set forth in the Fee Letters.
“ Communications ” has the meaning set forth in Section 10.1 .
“ Continuation Notice ” has the meaning set forth in Section 2.1(a)(iii) .
“ Controlled Group ” means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.
“ Coverage Ratio EOD ” has the meaning set forth in Section 8.4 .
“ Cure Amount ” has the meaning set forth in Section 8.4 .
“ Cure Expiration Date ” has the meaning set forth in Section 8.4 .
“ Customer Agreement ” means, with respect to any System, the power purchase agreement, lease agreement or other offtake agreement for the purchase and sale of energy or lease of a solar energy system relating to such System signed by a residential customer and a Subject Fund (either directly or as assignee of Developer).
“ Customer Payments ” means, with respect to each System, all payments made by the Host Customer in accordance with its Customer Agreement.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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“ Daily LIBO Rate ” means, on each day during the applicable period, the fluctuating rate of interest equal to LIBOR, as published on the applicable Reuters screen page (or such other commercially available source providing quotations of LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London local time, on each day (or, if such day is not a Business Day, on the immediately preceding Business Day) any such Loan is outstanding, for dollars deposited with a term equivalent to an overnight interest period. If such rate is not available at such time for any reason, then the Daily LIBO Rate shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in dollars for delivery in same day funds in the approximate amount of the initial Loan with a term equivalent to a one-month interest period would be offered by Bank of America’s London branch to major banks in the London interbank Eurodollar market at their request at approximately 11:00 a.m. (London local time), on each day (or, if such day is not a Business Day, on the immediately preceding Business Day) such Loan is outstanding.
“ Debt ” of any Person at any date means, without duplication,
(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments,
(b) the maximum amount (after giving effect to any prior drawings or reductions which may have been reimbursed) of all outstanding letters of credit (including standby and commercial), bankers’ acceptances, bank guarantees, surety bonds, performance bonds and similar instruments issued or created by or for the account of such Person,
(c) net obligations of such Person under any Swap Contract,
(d) all obligations of such Person to pay the deferred purchase price of property or services (other than (i) trade accounts payable in the ordinary course of business, (ii) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and (iii) liabilities accrued in the ordinary course),
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements and mortgage, industrial revenue bond, industrial development bond and similar financings), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse,
(f) all Attributable Indebtedness; and,
(g) all obligations of such Person in respect of Disqualified Equity Interests;
(h) to the extent not otherwise included above, all Guarantees of such Person in respect of any of the foregoing.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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“ Default ” means any occurrence, circumstance or event, or any combination thereof, which, with the lapse of time, the giving of notice or both, would constitute an Event of Default under this Agreement.
“ Default Rate ” means, with respect to the Loans, the interest rate per annum equal to the Applicable Interest Rate plus 2.0% per annum.
“ Defaulted System ” has the meaning set forth in Appendix 2 .
“ Defaulting Lender ” means, subject to Section 2.11(c) any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more of the conditions precedent set forth in Sections 3.1 and 3.2 with respect to the relevant Borrowing (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) have not been satisfied, or (ii) pay to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, (b) has notified the Borrower or the Administrative Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c)  upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, at any time following the date of this Agreement, (i) become the subject of a public proceeding under Bankruptcy Law, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect, or (ii) had publicly appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the FDIC or any other state, federal or national regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a)  through (d)  above, and of the effective
 
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date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.11(b) ) as of the date established therefor by the Administrative Agent in a written notice of such determination which shall be delivered by the Administrative Agent to the Borrower and each other Lender promptly following such determination.
“ Depositary ” means Bank of America.
“ Designated Jurisdiction ” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.
“ Developer ” means Vivint Solar Developer, LLC.
“ Discharge Date ” means the date when the outstanding Obligations (other than unasserted contingent payment obligations that by their nature expressly survive the termination of the Financing Documents) have been paid in full in cash and all Commitments have been terminated.
“ Discount Rate ” has the meaning set forth in Appendix 2 .
“ Disqualified Equity Interests ” means any Equity Interest that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (except as a result of a customarily defined change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full in cash of all outstanding Loans and all other outstanding Obligations that are accrued and payable and the termination of the Commitments), (b) is redeemable at the option of the holder thereof, in whole or in part, (c) provides for the scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Debt or any other Equity Interests that are described in the foregoing clauses (a), (b) or (c), in whole or in part, in each case, prior to the date that is ninety-one (91) days after the Latest Maturity Date.
“ Dollars ” and “ $ ” means United States dollars or such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts in the United States of America.
“ Eligibility Representations ” means the representations set forth in Appendix 3 .
“ Eligible Assignee ” means (a) a Lender, (b) an Affiliate of a Lender, and (c) any other Person (other than the Borrower, Sponsor, a Subject Fund or any of their respective Affiliates or a natural person).
“ Eligible Structure ” means:
 
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(i) a Partnership Flip Structure that is acceptable to the Administrative Agent in its reasonable discretion following due diligence and with respect to which the Borrower has made the Tax Equity Representations;
(ii) an Inverted Lease Structure that is acceptable to the Administrative Agent in its reasonable discretion following due diligence and with respect to which the Borrower has made the Tax Equity Representations;
(iii) a Repeat Tax Equity Structure with respect to which the Borrower has made both (x) the Tax Equity Representations in respect of such Repeat Tax Equity Structure and (y) the Tax Equity Representations set forth in clauses (k), (l) and (n)(B) in Part 1 of Appendix 7 in respect of the previously approved Tax Equity Structure to which such Repeat Tax Equity Structure is substantially similar;
(iv) an Other Financed Structure that is acceptable to the Administrative Agent and Majority Lenders in their reasonable discretion following due diligence and with respect to which the Borrower has made the Other Structure Representations; or
(v) an Other Non-Financed Structure with respect to which the Borrower has made the Other Structure Representations.
“ Engagement Letter ” means the Engagement Letter, dated April 30, 2014, entered into between Borrower Member and Bank of America, as amended.
“ Environmental Claim ” means any and all obligations, liabilities, losses, administrative, regulatory or judicial actions, suits, demands, decrees, claims, liens, judgments, warning notices, notices of noncompliance or violation, investigations, proceedings, removal or remedial actions or orders, or damages, penalties, fees, out-of-pocket costs, expenses, disbursements, attorneys’ or consultants’ fees, relating in any way to any Environmental Law or any Permit issued under any such Environmental Law (hereafter, “Hazard Claims”), including (a) any and all Hazard Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Hazard Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the Release of Hazardous Materials or arising from injury to health, safety or the environment.
“ Environmental Law ” means any and all federal, State, regional and local statutes, laws (including common law), regulations, ordinances, judgments, orders, codes or injunctions pertaining to the environment, human health or safety (as affected by exposure to Hazardous Materials), or natural resources, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.) (“ CERCLA ”), and the Superfund Amendments and Reauthorization Act of 1986, the Emergency Planning and Community Right to Know Act (42 U.S.C. §§ 11001 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), and the Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Federal Water
 
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Pollution Control Act (also known as the Clean Water Act) (33 U.S.C. §§ 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.), the Endangered Species Act (16 U.S.C. §§ 1531 et seq.), the Migratory Bird Treaty Act (16 U.S.C. §§ 703 et seq.), the Bald Eagle Protection Act (16 U.S.C. §§ 668 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. §§ 2701 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et seq.), and any similar or analogous state and local statutes or regulations promulgated thereunder, and legally binding decisional law of any Governmental Authority, as each of the foregoing may be amended or supplemented from time to time in the future, in each case to the extent applicable with respect to the property or operation to which application of the term “Environmental Laws” relates.
“Equity Contribution ” has the meaning given to such term in the CADA.
“ Equity Cure Account ” has the meaning set forth in the CADA.
“ Equity Interests ” means shares of capital stock, partnership interests, limited liability company interests or membership interests in a limited liability company, beneficial interests in a trust or other equity interests in any Person, and any option, warrant, commitment, preemptive rights or agreements of any kind (including any members’ or voting agreements) entitling the holder thereof to purchase or otherwise acquire any such equity interest.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ ERISA Event ” means (a) a Reportable Event; (b) a withdrawal by the Borrower or any member of its Controlled Group from an ERISA Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any member of its Controlled Group from a Multiemployer Plan or notification that a Multiemployer Plan is in “reorganization” (within the meaning of Section 4241 of ERISA); (d) the filing of a notice of intent to terminate, the treatment of an ERISA Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate an ERISA Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any ERISA Plan or Multiemployer Plan; (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any member of its Controlled Group; (g) the failure by the Borrower or an ERISA Affiliate to meet the minimum funding requirements of Section 412 and 430 of the Code or Sections 302 and 303 of ERISA with respect to any ERISA Plan, whether or not waived; (h) the filing pursuant to Section 412(c) of the Code or Section 303(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any ERISA Plan; or (i) any other event in connection with an ERISA Plan or Multiemployer Plan which, directly or indirectly, could reasonably be expected to subject the Borrower to any material liability under any statute, regulation or
 
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governmental order or which could obligate the Borrower or any member of their Controlled Group to indemnify any Person against such liability incurred under any such statute, regulation or order.
“ ERISA Plan ” means any employee pension benefit plan (as defined in Section 3(2) of ERISA) other than a Multiemployer Plan that is both (a) maintained by the Borrower or any member of the Controlled Group, or to which any of them contributes or is obligated to contribute, for its employees or has made, or was so maintained and in respect of which the Borrower or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated and (b) covered by Title IV of ERISA or to which Section 412 of the Code applies.
“ Event of Default ” and “ Events of Default ” have the meanings given in Section 8.1 .
“ Excluded Revenues ” has the meaning set forth in Appendix 2 .
“ Excluded Taxes ” means any of the following Taxes imposed on or with respect to any recipient or required to be withheld or deducted from a payment to a recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment under Section 2.8(b) or (c) ) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 2.4(d)(i)(B) or (iii) , amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such recipient’s failure to comply with Section 2.4(g) and (d) any Taxes imposed pursuant to FATCA.
“ Existing Loans ” has the meaning set forth in Section 2.13 .
“ Extended Loans ” has the meaning set forth in Section 2.13 .
“Extending Lender ” has the meaning set forth in Section 2.13 .
“ Extension Election ” has the meaning set forth in Section 2.13 .
“ Extension Request ” has the meaning set forth in Section 2.13 .
 
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“ FATCA ” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471 (b)(1) of the Code, and any intergovernmental agreements and related laws, rules or regulations to implement any of the foregoing.
“ FDIC ” means the Federal Deposit Insurance Corporation and its successors.
“ Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.
“ Federal Reserve Board ” means the Board of Governors of the Federal Reserve System of the United States of America.
“ Fee Letters ” means (i) the Engagement Letter, (ii) each of the fee letters entered into between Borrower or any of its Affiliates and Bank of America, dated on or about the date hereof, and (iii) each other fee letter entered into by the Borrower or any of its Affiliates, on the one hand, and one or more Agents or Lenders in connection with this Agreement (including in connection with an increase in Commitments in accordance with Section 2.9 ).
“ Fees ” refers to all fees, costs and expenses payable in accordance with the Financing Documents.
“ Financing Documents ” means this Agreement, the Notes, the Collateral Documents, the Fee Letters, each New Lender Accession Agreement, each New Subject Fund Accession Agreement, and the Tax Equity Required Consents.
“ Foreign Lender ” means a Lender that is not a U.S. Person.
“ GAAP ” means (a) generally accepted accounting principles in the United States of America consistently applied or (b) upon mutual agreement of the parties, internationally recognized generally accepted accounting principles, consistently applied.
“ Governmental Authority ” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
 
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“ Governmental Rule ” means any statute, law, regulation, ordinance, rule, judgment, order, decree, permit, concession, grant, franchise, license, agreement, directive, guideline, policy requirement or other governmental restriction or any similar form of decision of or determination by, or any interpretation or administration of any of the foregoing having the force of law by, any Governmental Authority, whether now or hereafter in effect.
“ Guarantee ” of or by any Person shall mean any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Debt or other obligation of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Debt or other obligation, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Debt or other obligation of the payment of such Debt or other obligation or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation.
“ Guarantor ” and “ Guarantors ” each have the respective meaning set forth in the introductory paragraph of this Agreement. For the avoidance of doubt, the Borrower Member shall be a Guarantor without recourse, except to the pledge of its Equity Interest in the Borrower pursuant to the Member Pledge.
“ Hazardous Materials ” means all materials, pollutants, contaminants, chemicals, compounds, constituents, substances or wastes, in any form, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, mold, electromagnetic radio frequency or microwave emissions, that are regulated pursuant to, or which could give rise to liability under, applicable Environmental Law.
“ Hedging Agreement ” means (a) any and all interest rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc. or any International Foreign Exchange Master Agreement.
 
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“ Host Customer ” means a Person contractually obligated to make payments to a Subject Fund under a Customer Agreement.
“ Impacted Loans ” has the meaning set forth in Section 2.1(b)(vi) .
“ Increasing Incremental Lender Confirmation ” has the meaning set forth in Section 2.9(b) .
“ Incremental Loan ” means a Loan resulting from a Borrowing against an Incremental Loan Commitment.
“ Incremental Loan Amount ” has the meaning set forth in Section 2.9(a) .
“ Incremental Loan Commitment ” has the meaning set forth in Section 2.9(a) .
“ Incremental Loan Commitment Increase Notice ” has the meaning set forth in Section 2.9(a) .
“ Incremental Loan Increase Date ” has the meaning set forth in Section 2.9(a) .
“ Indemnified Taxes ” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Financing Document and (b) to the extent not otherwise described in (a), Other Taxes.
“ Indemnitee ” has the meaning set forth in Section 5.10 .
“ Independent Engineer ” means (i) Leidos or (ii) any other reputable, qualified engineering firm with substantial experience in the residential solar industry that is not an Affiliate of the Borrower or the Sponsor.
“ Independent Member ” means an individual who has not been at any time during the five years preceding such initial designation: (a) a direct or indirect owner of any equity interest in, or member (with the exception of serving as the Independent Member), officer, employee, director, manager or contractor, bankruptcy trustee, attorney or counsel of, any Investor or the Borrower or any of its respective Affiliates; (b) a creditor, customer, supplier (other than a supplier of registered agent or registered office services), or other Person who derives any of its purchases or revenues from its business activities with any Investor or the Borrower or any of its respective Affiliates (other than any fee paid for its services as Independent Member); (c) an Affiliate of the Borrower excluded from serving as Independent Member under clause (a)  or (b)  of this definition; (d) a member of the immediate family by blood or marriage of any Person excluded from being an Independent Member under clause (a)  or (b)  of this definition; or (e) a Person who received, or a member or employee of a firm or business that received, fees or other income from any Investor or the Borrower or any of its Affiliates in the aggregate in excess of five percent (5%) of the gross income, for any applicable year, of such Person; provided, however, that notwithstanding the foregoing, for the purposes of clause (a) , an equity interest
 
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shall be deemed to exclude de minimis or otherwise immaterial holdings of equity interests of an Affiliate of the Borrower which are traded on public stock exchanges. The initial Independent Member is Michelle Dreyer.
“ Information ” has the meaning set forth in Section 10.17 .
“ Initial Loans ” means the term loans made by the Lenders to the Borrower pursuant to the Closing Date Commitments, excluding any Incremental Loans, Refinancing Loans or Extended Loans.
“ Interest Period ” means, with respect to any LIBO Loan, (a)(i) if such LIBO Loan was made on any day other than the 15 th day of a calendar month, initially, the period commencing on the date such Loan is initially made and ending on the next day that is the 15 th day of a calendar month, and (ii) thereafter, the period commencing on the last day of the immediately prior Interest Period and ending one (1), two (2), or three (3) months thereafter (as elected by the Borrower in the Borrowing Notice or Continuation Notice related to such Loan) and (b) if such LIBO Loan was made on the 15 th day of a calendar month, the period commencing (i) initially, on the date such Loan is initially made and (ii) thereafter, on the last day of the immediately prior Interest Period and ending, in each case, one (1), two (2), or three (3) months thereafter (as elected by the Borrower in the Borrowing Notice or Continuation Notice related to such Loan), provided that (A) any Interest Period ending on a day that is not a Business Day shall be deemed to end of the immediately following Business Day unless such immediately following Business Day falls in a subsequent calendar month, in which case such Interest Period shall be deemed to end on the immediately preceding Business Day and (B) any Interest Period that would otherwise end after the Loan Maturity Date of such Loan shall be deemed to end on such Loan Maturity Date.
“ Interest Reserve Account ” has the meaning set forth in the CADA.
“ Inverted Lease Agreement ” has the meaning set forth in Appendix 11 .
“ Inverted Lease Structure ” means a tax equity structure that conforms to the characteristics set forth in Part II of Appendix 11 , as the same may be updated from time to time in accordance with this Agreement.
“ Investor ” means (i) each investor in a Tax Equity Structure and (ii) each investor in any Other Financed Structure, in each case, other than the Managing Member.
“ Investor Guarantor ” has the meaning set forth in Appendix 2 .
“ Knowledge ” means, with respect to a Loan Party the actual knowledge, after due inquiry, of (a) any Responsible Officer of such Loan Party or, (b) any Person responsible for the management and administration of such Subject Fund and its assets and operations, including any Person set forth in Schedule 1.1(b) (but only with respect to matters relating to the Subject Fund(s) and the assets of the Subject Fund(s) corresponding to such Person), or any Person who assumes the responsibility of such Person with respect to a corresponding Subject Fund.
 
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“ Laws ” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority.
“ Latest Maturity Date ” means, at any date of determination, the latest Maturity Date applicable to any Loan or Commitment hereunder at such time, including the latest maturity date of any Refinancing Loan, any Incremental Loan or any Extended Loan, in each case as extended in accordance with this Agreement from time to time.
“ Lead Arrangers ” has the meaning set forth on the cover page of this Agreement.
“ Legal Requirements ” means, as to any Person, the articles of incorporation, bylaws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation including any Governmental Rule, any requirement or obligation under a Permit, and any determination of any Governmental Authority in each case applicable to or binding upon such Person or any of its properties or to which such Person or any of its property is subject.
“ Lender ” has the meaning set forth in the introductory paragraph to this Agreement.
“ Lending Office ” means the office in the United States of America designated as such beneath the name of such Lender on Annex 2 or such other office of such Lender as such Lender may specify in writing from time to time to the Administrative Agent and the Borrower in accordance with this Agreement.
“ Lessor ” means a special purpose vehicle and wholly-owned subsidiary of the Borrower, that leases a specific, segregated pool of Systems to an Investor (or a partnership in which the Investor or a subsidiary of the Investor is a member), as lessee.
“ LIBO Loan ” means any Loan that bears interest at rates based upon the Daily LIBO Rate or the LIBO Rate.
“ LIBO Rate ” means:
(a) for any Interest Period, other than an Interest Period when the Daily LIBO Rate is being charged, with respect to a LIBO Loan, the greater of (i) the rate per annum equal to the London Interbank Offered Rate set by the ICE Benchmark Administration or any successor thereto (“ LIBOR ”) or a comparable successor rate, which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to
 
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time) at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, for dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period and (ii) 0%; and
(b) for purposes of any determination of the Base Rate on any date (other than the initial Interest Period), the rate per annum equal to the greater of (i) LIBOR, at or about 11:00 a.m. London local time, determined two (2) Business Days prior to such date for U.S. Dollar deposits with a term of three months commencing on such date and (ii) 0%;
provided that to the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.
“ LIBOR ” has the meaning set forth in clause (a) of the definition of LIBO Rate.
“ Lien ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any Capital Lease Obligation having substantially the same economic effect as any of the foregoing).
“ LLC Agreements ” means, collectively, (i) the Limited Liability Company Agreement of the Borrower, dated as of September 12, 2014 and (ii) the limited liability company agreements of each Managing Member.
“ Loan ” and “ Loans ” means the loans made by the Lenders under this Agreement, including any Initial Loan, Incremental Loan, Refinancing Loan or Extended Loan, as the context may require.
“ Loan Extension Amendment ” has the meaning set forth in Section 2.13 .
“ Loan Maturity Date ” means, the earlier of (A) (i) with respect to each Initial Loan, March 12, 2018, (ii) with respect to any Extended Loans, the final maturity date applicable thereto as specified in the applicable Extension Request accepted by the respective Lender or Lenders, (iii) with respect to any Refinancing Loans, the final maturity date applicable thereto as specified in the applicable Refinancing Loan Amendment, and (iv) with respect to any Incremental Loans, the final maturity date applicable thereto as specified in the applicable Incremental Loan Commitment, and (B) the date of acceleration of the Loans pursuant to Section 8.2 .
“ Loan Parties ” means the Borrower Member, the Borrower and the Managing Members.
 
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“ Majority Lenders ” means, at any time, the holders of more than 50% of the sum of (a) the aggregate unused amount of the Commitments then in effect and (b) the aggregate unpaid principal amount of the Loans then outstanding. The Loans and unused Commitments of any Defaulting Lender shall be disregarded in determining the Majority Lenders at any time.
“ Managing Member ” means a special purpose vehicle and wholly-owned subsidiary of the Borrower that (a) with respect to each Tax Equity Structure and Other Financed Structure, has a direct Equity Interest in the entity that is party to each Customer Agreement related to such Tax Equity Structure or Other Financed Structure and the entity that is entitled to receive the payments to be made by such Host Customer under each such Customer Agreement and (b) with respect to each Other Non-Financed Structure, is Vivint Solar Owner I, LLC or another special purpose vehicle wholly-owned by Borrower related to an Other Non-Financed Structure. The Managing Members are listed on Appendix 4 as the same is adjusted from time to time in accordance with the terms of this Agreement.
“ Margin Stock ” has the meaning set forth in Regulation U.
“ Material Adverse Effect ” means a (a) material adverse effect on the business, operations, assets, liabilities (actual or contingent) or financial condition of the Borrower and its Subsidiaries, taken as a whole; (b) material adverse effect on the ability of the Loan Parties (taken as a whole) to fully and timely perform any of their payment obligations under any Financing Document to which the Borrower or any of the Loan Parties is a party; or (c) material adverse effect on the rights and remedies available to the Lenders or the Collateral Agent under any Financing Document.
“ Material Project Documents ” means, with respect to a Subject Fund, the Project Documents of such Subject Fund set forth in Appendix 5 hereto, and successor, substitute or replacement documents therefor, including any Master EPC Agreement (if applicable, as may be defined in any applicable Subject Fund’s LLC Agreement), Inverted Lease Agreement (if applicable), Equity Capital Contribution Agreement (if applicable, as may be defined in any applicable Subject Fund’s LLC Agreement), any Subject Fund LLC Agreement, maintenance services agreement, administrative services agreement and any Guarantee by Vivint Solar Parent or Borrower Member of the obligations of a Managing Member issued in connection with any applicable Subject Fund.
“ Maximum Rate ” has the meaning set forth in Section 10.13 .
“ Member Pledge ” means the Pledge and Security Agreement, dated as of the date hereof, among the Borrower Member, the Borrower and the Collateral Agent.
“ Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto.
“ Moody’s RiskCalc ” means the RiskCalc™ product offered by Moody’s Analytics, Inc.
 
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“ Multiemployer Plan ” means any ERISA Plan that is a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to which the Borrower or any member of the Controlled Group is making, or has an obligation to make, contributions, or has made, or has been obligated to make, contributions within any of the preceding five (5) plan years immediately preceding the Closing Date.
“ Net Cash Flow ” has the meaning set forth in Appendix 2 .
“ New Lender ” has the meaning set forth in Section 2.9(c) .
“ New Lender Accession Agreement ” means an accession agreement substantially in the form of Exhibit F hereto, among a New Lender, the Borrower and the Administrative Agent and delivered pursuant to Section 2.9(c) .
“ New Subject Fund Accession Agreement ” has the meaning set forth in Section 5.18 .
“ New Systems Notice ” has the meaning set forth in Section 2.10(c)(i) .
“ Non-Cash-Sweep Fund ” means any Eligible Structure that is not a Cash-Sweep Fund.
“ Non-Consenting Lender ” has the meaning set forth in Section 9.12(h) .
“ Nonrecourse Parties ” means, collectively, the Sponsor, its Affiliates (other than the Loan Parties), and their respective shareholders, partners, members, officers, directors or employees.
“ Note ” and “ Notes ” has the meanings given in Section 2.9(e) .
“ Notice of Intent to Cure ” has the meaning set forth in Section 8.4 .
“ Obligations ” means and includes all loans, advances, debts, obligations, and liabilities howsoever arising (and whether arising or incurred before or after any Bankruptcy Event with respect to the Borrower or any other Person), owed by such Loan Party to the Agents or the Secured Parties of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, pursuant to the terms of this Agreement or any of the other Financing Documents, including all principal, interest, indemnity or reimbursement obligations, fees, charges, expenses, attorneys’ fees and accountants fees chargeable to such Person in connection with its dealings with such Person and payable by such Person under this Agreement or any of the other Financing Documents.
“ OFAC ” means the United States Department of the Treasury’s Office of Foreign Assets Control.
“ OID ” means original issue discount.
 
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“ Operative Documents ” means the Financing Documents, the LLC Agreements and the Project Documents.
“ Organizational Documents ” means (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
“ Other Connection Taxes ” means, with respect to any recipient, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Financing Document, or sold or assigned an interest in any Loan or Financing Document).
“ Other Documents ” means, with respect to each Subject Fund, the Customer Agreements, interconnection agreements and all other material contracts relating to Systems in a Subject Fund.
“ Other Financed Structure ” means a financing structure for investments in Systems other than a Tax Equity Structure or Other Non-Financed Structure (which may include financing structures that include investments in commercial systems).
“ Other Non-Financed Structure ” means a non-financed structure composed entirely of Systems that are wholly and directly owned by Vivint Solar Owner I, LLC or another special purpose vehicle wholly-owned by Borrower related to an Other Non-Financed Structure.
“ Other Structure ” means any Other Financed Structure or Other Non-Financed Structure.
“ Other Structure Representations ” means, with respect to each Other Structure, the representations set forth in Part II of Appendix 7 .
“ Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Financing Document, except that any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.8(b) or (c) ).
 
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“ Outstanding Principal ” means, as of any date of determination, the aggregate amount of principal outstanding under all Loans on such date.
“ Participant Register ” has the meaning set forth in Section 9.13(a) .
“ Partnership ” means a limited liability company owned by an Investor and a Managing Member that owns a specific pool of Systems.
“ Partnership Flip Structure ” means a tax equity structure that conforms to the characteristics set forth in Part I of Appendix 11 , as the same may be updated from time to time in accordance with this Agreement.
“ Patriot Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56 ( a/k/a the USA PATRIOT Act).
“ PBGC ” means the Pension Benefit Guaranty Corporation.
“ Permit ” means any action, approval, consent, waiver, exemption, variance, franchise, order, permit, authorization, right or license of or from a Governmental Authority.
“ Permitted Liens ” means (a) Liens imposed by any Governmental Authority for Taxes not yet due or being contested in good faith and by appropriate proceedings and in respect of which (i) appropriate reserves acceptable to the Administrative Agent have been established in accordance with GAAP, (ii) enforcement of the contested Tax is effectively stayed for the entire duration of such contest and (iii) any Tax determined to be due, together with any interest or penalties thereon, is promptly paid after resolution of such conflict; (b) Liens arising out of judgments or awards that do not otherwise constitute an Event of Default so long as an appeal or proceeding for review is being prosecuted in good faith and for the payment of which appropriate reserves have been established in accordance with GAAP, bonds or other security have been provided or are fully covered by insurance, in each case, as acceptable to the Administrative Agent; (c) Liens created under the Financing Documents; (d) Liens arising as a matter of Law and (e) Liens permitted (without requiring any amendment, consent, waiver, or vote by any member of a Subject Fund, including any Investor, under the terms and conditions of such Material Project Documents and Other Documents unless such amendment, consent or waiver is approved in in accordance with the terms hereof) under the Material Project Documents and the Other Documents.
“ Permitted Swap Agreements ” means any interest rate Hedging Agreement (a) in form, structure, and substance acceptable to the Administrative Agent in its sole discretion, (b) that together with all rights thereunder, has been pledged on a first Lien priority basis as Collateral to the Collateral Agent, for the benefit of the Secured Parties, pursuant to documentation in form and substance reasonably satisfactory to Administrative Agent, (c) that if secured, is secured by either (i) assets other than Collateral, other than assets of any Loan Party, or other than assets of any Subject Fund or (ii) solely if the counterparty is a Lender hereunder at the time such
 
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Hedging Agreement is entered into, Collateral on a pari-passu basis with the security interests of the other Secured Parties in such Collateral (or on a subordinated basis with respect to the security interests of the other Secured Parties), (d) pursuant to which such counterparty agrees that if it ceases to be a Lender hereunder during the term of such hedging transaction for any reason, such counterparty shall make commercially reasonable efforts to assign such Hedging Agreement and all of its rights and obligations thereunder to a Lender hereunder for fair market consideration, (e) that shall solely hedge the interest rate exposure of the Borrower under this Agreement, and (f) that provides that all payments to be made under such Hedge Agreement to or for the benefit of any Loan Party will be paid directly to the Revenue Account pursuant to documentation in form and substance reasonably satisfactory to Administrative Agent.
“ Person ” means any natural person, corporation, limited liability company, partnership, firm, association, Governmental Authority or any other entity whether acting in an individual, fiduciary or other capacity.
“ Placed-In-Service ” means for a System, the definition of “Placed In Service,” or “Placed-In-Service,” or “Placement in Service” or any substantially similar defined term, as applicable, given in the applicable Project Documents of the applicable Subject Fund.
“ Platform ” has the meaning set forth in Section 10.1(d) .
“ Portfolio Report ” means the “Quarterly Performance of Portfolio” report or “Monthly Operations Report,” as applicable, delivered under a maintenance services or administrative services agreement in a Subject Fund.
“ Potential New Fund ” has the meaning set forth in Section 2.10(a)(i) .
“ Potential New Fund Notice ” has the meaning set forth in Section 2.10(a)(ii) .
“ Prime Rate ” means the rate of interest per annum determined from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City and notified to the Borrower. The prime rate is a rate set by the Administrative Agent based upon various factors including the Administrative Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such rate.
“ Project Documents ” means, with respect to a Subject Fund, the Material Project Documents and the Other Documents of such Subject Fund.
“ Proportionate Share ” means, at any time with respect to each Lender, the percentage obtained by dividing the outstanding principal amount of the Loans and Commitments of such Lender at such time by the aggregate outstanding principal amount of all Loans and Commitments of all Lenders at such time.
“ Public Lender ” has the meaning set forth in Section 10.1(d) .
 
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“ Qualified ECP Guarantor ” means, in respect of any Permitted Swap Agreement, each Guarantor that, at the time the relevant Guarantee of such Guarantor (or grant of the relevant security interest, as applicable) becomes or would become effective with respect to such Permitted Swap Agreement, has total assets exceeding $10,000,000 or otherwise constitutes an “eligible contract participant” under the Commodity Exchange Act and which may cause another person to qualify as an “eligible contract participant” with respect to such Permitted Swap Agreement at such time by entering into a keepwell pursuant to § 1a(18)(A)(v)(II) of the Commodity Exchange Act.
“ Qualified Insurers ” means financially sound and reputable insurance companies rated “A-, X” or better by A.M. Best Company or “A” or better by S&P.
“ Quarterly Date ” means a date occurring on the last day of each calendar quarter, commencing with the quarter in which the initial Borrowing Date occurs.
“ Refinanced Debt ” has the meaning set forth in Section 2.12 .
“ Refinancing Effective Date ” has the meaning set forth in Section 2.12 .
“ Refinancing Lender ” has the meaning set forth in Section 2.12 .
“ Refinancing Loan ” has the meaning set forth in Section 2.12 .
“ Refinancing Loan Amendment ” has the meaning set forth in Section 2.12 .
“ Register ” has the meaning set forth in Section 9.15(c) .
“ Regulation T ” means Regulation T of the Federal Reserve Board as from time to time in effect, and all official rulings and interpretations thereunder or thereof.
“ Regulation U ” means Regulation U of the Federal Reserve Board as from time to time in effect, and all official rulings and interpretations thereunder or thereof.
“ Regulation X ” means Regulation X of the Federal Reserve Board as from time to time in effect, and all official rulings and interpretations thereunder or thereof.
“ Related Parties ” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such Person and such Person’s Affiliates.
“ Release ” means any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing or migrating of Hazardous Materials in, into, onto or through the Environment or from or through any facility, property or equipment.
 
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“ Relevant Member Action ” means, with respect to any matter relating to a Subject Fund with respect to which the Organizational Documents of such Subject Fund (or any other contract or agreement, or instrument) grant voting, approval or consent rights to the Managing Member, or otherwise provide the Managing Member with the option to cause any Subject Fund to take, or restrict any Subject Fund from taking, any action, the exercise by the Managing Member of such voting, approval, consent or other rights in conformity with the applicable Organizational Documents and the Managing Member’s fiduciary duties, if any, as such exercise may be limited by Law.
“ Removal Effective Date ” has the meaning set forth in Section 9.6(b) .
“ Repayment Event ” means the occurrence and continuation of the following:
(a) the Outstanding Principal is greater than the Available Borrowing Base as of any date; or
(b) the Cash Flow Coverage Ratio is less than 1.40:1.00 as of any Quarterly Date.
“ Repeat Tax Equity Structure ” means a Partnership Flip Structure or Inverted Lease Structure that (a) is substantially similar to a Partnership Flip Structure or Inverted Lease Structure, as the case may be, that was previously approved by the Administrative Agent as a Subject Fund and (b) has the same Investor as the previously approved Partnership Flip Structure or Inverted Lease Structure or an Affiliate of such Investor.
“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived.
“ Representatives ” has the meaning set forth in Section 10.17 .
“ Required LLC Provisions ” has the meaning set forth in Section 5.13(c) .
“ Resignation Effective Date ” has the meaning set forth in Section 9.6(a) .
“ Responsible Officer ” means (i) the chief executive officer, president, chief legal officer, chief financial officer or executive vice president of any Loan Party, as the case may be, (ii) as to any document delivered on the Closing Date, any secretary or assistant secretary of such any Loan Party, as applicable, and (iii) any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of any Loan Party, as the case may be, shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party, as applicable, and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party, as applicable.
 
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“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) on or with respect to any Equity Interests in any Loan Party (other than Borrower Member), or any other payment (whether in cash, securities or other property on account of any Equity Interest in any Loan Party (other than Borrower Member)), including any sinking fund or similar deposit or any payment, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in such Loan Party or any payments in respect of any management or development fees.
“ Revenue Account ” has the meaning set forth in the CADA.
“ Revenues ” means, for any period, with respect to any Person, all income, revenues or other amounts paid (or, with respect to financial forecasts, payable) to such Person.
“ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.
“ Sanction(s) ” means any international economic sanction administered or enforced by the United States Government (including without limitation, OFAC), the United Nations Security Council, the European Union or any member state of the European Union.
“ Scheduled Payment Date ” means each January 15th, April 15th, July 15th, and October 15th.
“ Secured Parties ” means (i) the Agents, (ii) the Lenders, (iii) the Depositary and (iv) any counterparty to a Permitted Swap Agreement that is a Lender at the time such Permitted Swap Agreement was entered into.
“ Security Agreement ” means that certain Pledge and Security Agreement, dated as of the date hereof, between the Borrower, Managing Members and the Collateral Agent.
“ Solvent ” and “ Solvency ” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person generally is able to pay its debts and liabilities, contingent obligations and other commitments as they mature. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
 
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“ Specified Guarantor ” means any Guarantor that is not an “eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to Section 11.11 ).
“ Sponsor ” means The Blackstone Group L.P. and its Affiliates.
“ SREC ” means the definition “SRECs”, “RECs” or “Renewable Energy Credits”, as applicable, given in the applicable Project Documents of the applicable Subject Fund, but in any event, includes credits, credit certificates, green tags or similar environmental or green energy attributes (such as those for greenhouse gas reduction or the generation of green power or renewable energy) created by a Governmental Authority of any state or local jurisdiction and/or independent certification board or group generally recognized in the electric power generation industry, and generated by or associated with any System or electricity produced therefrom.
“ Subject Fund ” means, with respect to each Eligible Structure financed pursuant to this Agreement, (i) for each Partnership Flip Structure, the Partnership into which an Investor and Managing Member invests with respect to such Partnership Flip Structure, (ii) for each Inverted Lease Structure, (x) the limited liability company into which an Investor and Managing Member (for purposes of this definition, “ Master Tenant/Lessee ”) invests and (y) the limited liability company into which the Managing Member and such Master Tenant/Lessee invests, and (iii) for each Other Structure, the legal entity that directly owns the Systems subject to the Other Structure, as agreed by the Administrative Agent and Borrower at the time such Eligible Structure is financed pursuant to this Agreement. The Subject Funds are listed on Appendix 4 hereto, as the same may be updated from time to time in accordance with this Agreement.
“ Subject Fund Borrowing Base ” has the meaning set forth in Appendix 2 .
“ Subject Fund Value ” has the meaning set forth in Appendix 2 .
“ Subsidiary ” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.
“ Subsidiary Guarantors ” has the meaning set forth in the introductory paragraph of this Agreement.
“ Supermajority Lenders ” means, at any time, both (a) Majority Lenders and (b) Lenders constituting 66.67% of total number of Lenders party to this Agreement at such time.
 
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“ Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any such master agreement.
“ System ” means (i) a residential photovoltaic system including photovoltaic panels, racks, wiring and other electrical devices, conduit, weatherproof housings, hardware, one or more inverters, remote monitoring equipment, connectors, meters, disconnects, over current devices and battery storage, (ii) the applicable Customer Agreement related to such System and (iii) all other related rights applicable thereto.
“ System Information ” means the information listed on Appendix 6 , which shall be in form, substance and content substantially the same as the tranche data file provided by the Loan Parties to the Administrative Agent during due diligence and on the Closing Date.
“ Tax Equity Model ” has the meaning set forth on Appendix 2 .
“ Tax Equity Representations ” means, with respect to each Tax Equity Structure, representations set forth in Part I of Appendix 7 .
“ Tax Equity Required Consent ” means, with respect to a Subject Fund, a consent executed by the Investor in such Subject Fund and each other party thereto containing, among others, each of the provisions set forth in Exhibit J and otherwise in form and substance acceptable to the Agents.
“ Tax Equity Structure ” means a Partnership Flip Structure, an Inverted Lease Structure or a Repeat Tax Equity Structure.
“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“ Non-Operable System ” has the meaning set forth in Appendix 2 .
 
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“ Total Loan Commitment ” means the aggregate amount of all Commitments of the Lenders hereunder as such amount may be (a) reduced from time to time pursuant to Section 2.2(c) or (b) increased pursuant to Section 2.9 . The Total Loan Commitment on the Closing Date is Three Hundred Fifty Million Dollars ($350,000,000).
“ True-Up Report ” means, with respect to any Subject Fund, that report concerning the as-built state of each System after all such Systems are Placed-In-Service and the Investor’s commitment under such Subject Fund has been fully deployed or is otherwise no longer eligible to be deployed, as delivered by Vivint Solar Parent, Borrower Member, Borrower or the applicable Managing Member pursuant to the terms of the applicable Project Document of the applicable Subject Fund.
“ Type ” when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, the term “Rate” shall mean the LIBO Rate and the Base Rate.
“ UCC ” means the Uniform Commercial Code of the jurisdiction the law of which governs the document in which such term is used or which governs the creation or perfection of the Liens granted thereunder.
“ Undrawn Fees ” has the meaning set forth in Section 2.3(a) .
“ U.S. Tax Compliance Certificate ” has the meaning set forth in Section 2.4(g)(ii)(B)(3) .
“ Vivint Solar Parent ” means Vivint Solar, Inc., a Delaware corporation (f/k/a V Solar Holdings, Inc.).
“ Watched Funds ” has the meaning set forth in Appendix 2 .
1.2 Rules of Interpretation . Except as otherwise expressly provided, the rules of interpretation set forth below shall apply to this Agreement and the other Financing Documents:
(a) The singular includes the plural and the plural includes the singular. The definitions of terms apply equally to the singular and plural forms of the terms defined.
(b) A reference to a Governmental Rule includes any amendment or modification to such Governmental Rule, and all regulations, rulings and other Governmental Rules promulgated under such Governmental Rule.
(c) A reference to a Person includes its permitted successors and assigns.
(d) The words “include,” “includes” and “including” are not limiting.
(e) A reference in a document to an Article, Section, Exhibit, Schedule, Annex or Appendix is to the Article, Section, Exhibit, Schedule, Annex or Appendix of such document unless otherwise indicated. Exhibits, Schedules, Annexes or Appendices to any document shall
 
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be deemed incorporated by reference in such document. In the event of any conflict between the provisions of this Agreement (exclusive of the Exhibits, Schedules, Annexes and Appendices thereto) and any Exhibit, Schedule, Annex or Appendix thereto, the provisions of this Agreement shall control.
(f) References to any document, instrument or agreement (a) shall include all exhibits, schedules and other attachments thereto, (b) shall include all documents, instruments or agreements issued or executed in replacement thereof, and (c) shall mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time, provided such amendment, modification or supplement was made in compliance with this Agreement.
(g) The words “hereof,” “herein” and “hereunder” and words of similar import when used in any document shall refer to such document as a whole and not to any particular provision of such document.
(h) References to “days” shall mean calendar days, unless the term “Business Days” shall be used. References to a time of day shall mean such time in New York, New York, unless otherwise specified.
(i) The Financing Documents are the result of negotiations between, and have been reviewed by the Borrower, the Agents, each Lender and their respective counsel. Accordingly, the Financing Documents shall be deemed to be the product of all parties thereto, and no ambiguity shall be construed in favor of or against the Borrower, the Agents or any Lender.
(j) Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “will” and “shall” shall be construed to have the same meaning and effect.
(k) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.”
(l) Accounting terms have the meanings assigned to them by GAAP, as applied by the accounting entity to which they refer.
(m) Unless otherwise specified in this Agreement, whenever a payment or performance of an action is required to be made pursuant to this Agreement on a day that is not a Business Day, such payment or performance shall be made on the next succeeding Business Day.
(n) If, at any time after the Closing Date, Moody’s or S&P or Moody’s RiskCalc shall change its respective system of classifications, then any Moody’s or S&P or Moody’s RiskCalc “rating” referred to herein shall be considered to be at or above a specified level if it is at or above the new rating which most closely corresponds to the specified level under the old rating system.
 
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ARTICLE 2
THE CREDIT FACILITY
2.1 Loan Facility .
(a) Loan Facility .
(i) Availability .
 
 	(A)	Subject to the terms and conditions set forth herein, each Lender agrees, severally and not jointly, to make one or more Loans to the Borrower, from time to time during the Availability Period, in an aggregate principal amount that will not result in such Lender’s Loans exceeding its Commitment.	
 
 	(B)	Notwithstanding the foregoing, (x) there shall be no more than one (1) Borrowing per calendar month and (y) the total principal amount of all Loans made hereunder shall not exceed the Total Loan Commitment.	
 
 	(C)	Each Loan made by a Lender under this Agreement shall irrevocably reduce such Lenders proportionate share of the Total Loan Commitment available hereunder.	
 
 	(D)	Amounts borrowed hereunder and repaid may not be reborrowed.	
(ii) Loan Sizing; Minimum Draw Amount . Notwithstanding anything to the contrary in Section 2.1(a)(i) , the aggregate amount of each Borrowing (A) shall not cause the Outstanding Principal (including the amounts of the requested Borrowing) to exceed the Available Borrowing Base and (B) shall exceed $2,500,000 or such lesser amount as is remaining under the Total Loan Commitment.
(iii) Borrowing Notice . The Borrower shall request Loans by delivering to the Administrative Agent an irrevocable written notice in the form of Exhibit B-1 (or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent)), appropriately completed and signed by a Responsible Officer of the Borrower (a “ Borrowing Notice ”) by no later than 2:00 p.m., New York time, at least five (5) Business Days before the requested date of each Borrowing. Notwithstanding anything to the contrary in this Agreement, the Borrower may submit a Borrowing Notice prior to the Closing Date requesting (i) a Base Rate Loan in the aggregate principal amount of $87,000,000 to be funded on the Closing Date and (ii) that such Base Rate Loan will be converted on September 15, 2014 to a LIBO Rate Loan with an Interest Period of three (3) months, and the Administrative Agent shall be deemed to have approved such Borrowing Notice.
 
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(iv) Borrowing Base Certificate; the Advance Model . In connection with any Borrowing Notice, the Borrower shall also deliver to the Administrative Agent simultaneously with such Borrowing Notice, the applicable final, complete and executed Borrowing Base Certificate and the Advance Model.
(v) Calculations and Computations . If the Administrative Agent delivers a written notice to the Borrower contesting the Borrower’s calculations in such Borrowing Base Certificate, it shall inform the Borrower and provide an amended Borrowing Base Certificate. Thereafter, Borrower may (A) agree to such amended Borrowing Base Certificate and deliver an amended Borrowing Notice to the Administrative Agent, or (B) by written notice to the Administrative Agent, rescind the Borrowing Notice. The delivery of an amendment to a Borrowing Notice or a rescission of a Borrowing Notice pursuant to this clause (v)  shall not be subject to Section 2.7 , provided that the Borrower delivers such amendment or rescission no later than 12:00 p.m. New York time three (3) Business Days before the requested Borrowing Date.
(b) Interest Provisions Relating to Loans .
(i) Interest Rate . Subject to Section 2.4(c) , the Borrower shall pay interest (including interest accruing after the commencement of an insolvency proceeding under applicable Bankruptcy Law) on the unpaid principal amount of each Loan from the date of the funding of such Loan until the Loan Maturity Date at the Applicable Interest Rate.
(ii) Interest Payment Dates . Interest on the unpaid principal amount of each Loan shall be payable in arrears on (a) with respect to each LIBO Loan, the last day of any Interest Period with respect to such Loan, (b) with respect to each Base Rate Loan, each Scheduled Payment Date with respect to such Loan and (c) upon prepayment of any Loans as and to the extent provided in Section 2.1(f) and at maturity (whether by acceleration or otherwise); provided that interest payable pursuant to Section 2.4(c) shall be payable on demand.
(iii) Interest Computations . All computations of interest on any LIBO Loan hereunder shall include the first day but exclude the last day of the Interest Period in effect for such Borrowing and shall be based upon a year of 360 days. All computations of interest on any Base Rate Loan hereunder shall be based upon a year of 365/366 days. The Applicable Interest Rate for each Interest Period or day within an Interest Period, as the case may be, shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
(iv) Interest Account and Interest Computations . The Administrative Agent shall record in an account or accounts maintained by the Administrative Agent on its books (A) the Applicable Interest Rate for the Loans; (B) the date and amount of each
 
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principal and interest payment on each Loan; and (C) such other information as the Administrative Agent may determine is necessary for the computation of interest payable by the Borrower hereunder consistent with the basis hereof. The Borrower agrees that all computations by the Administrative Agent of interest shall be deemed prima facie to be correct in the absence of manifest error.
(v) Continuation of Loans . Each Borrowing hereunder shall be automatically continued, at the end of each Interest Period that ends prior to the Loan Maturity Date for the Loans comprising such Borrowing, for an additional Interest Period of the same duration as such ending Interest Period, unless the Borrower delivers a written notice in the form of Exhibit B-2 , appropriately completed (a “ Continuation Notice ”) electing a different Interest Period by no later than 2:00 p.m., New York Time, at least three (3) Business Days prior to the end of such Interest Period. Each such continuation shall be made pro rata among the Lenders in accordance with the respective principal amounts of the Loans comprising the continued Borrowing.
(vi) Alternate Rate of Interest . If prior to the commencement of any Interest Period for a Borrowing, (A) the Administrative Agent determines that (i) Dollar deposits are not being offered to banks in the London interbank market for the applicable amount and Interest Period of such LIBO Rate Loan, or (ii) adequate and reasonable means do not exist for determining the LIBO Rate or Daily LIBO Rate for any requested Interest Period with respect to a proposed LIBO Rate Loan or in connection with an existing or proposed Base Rate Loan (in each case with respect to clause (A) (i) and (ii) above, “ Impacted Loans ”), or (B) the Administrative Agent determines that for any reason the LIBO Rate or Daily LIBO Rate for any requested Interest Period with respect to a proposed LIBO Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such LIBO Rate Loan, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain LIBO Rate Loans shall be suspended (to the extent of the affected LIBO Rate Loans or Interest Periods) and (y) in the event of a determination described in the preceding sentence with respect to the LIBO Rate component of the Base Rate, the utilization of the LIBO Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent upon the instruction of the Majority Lenders revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of LIBO Rate Loans (to the extent of the affected LIBO Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a borrowing of Base Rate Loans in the amount specified therein.
Notwithstanding the foregoing, if the Administrative Agent has made the determination described in clause (A) (i) of this section, the Administrative Agent, in consultation with the Borrower and the affected Lenders, may establish an alternative interest rate for the Impacted Loans, in which case, such alternative rate of interest shall apply with respect to the Impacted Loans until (1) the Administrative Agent revokes the notice delivered
 
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with respect to the Impacted Loans under clause (A) of the first sentence of this section, (2) the Administrative Agent notifies the Borrower that such alternative interest rate does not adequately and fairly reflect the cost to such Lenders of funding the Impacted Loans, or (3) any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to such alternative rate of interest or to determine or charge interest rates based upon such rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing and provides the Administrative Agent and the Borrower written notice thereof.
(vii) After giving effect to the Loans, all conversions of the Loans from one Type to the other, and all continuations of the Loans as the same Type, there shall not be more than five (5) Interest Periods in effect at any one time with respect to the Loans.
(c) Principal Payments of Loans . All outstanding principal of, and all unpaid interest, fees and costs payable hereunder with respect to each of the Loans shall be due and payable in full on such Loan’s Loan Maturity Date.
(d) Promissory Notes . If requested by any Lender, the Borrower shall execute and deliver to such Lender a promissory note in the form of Exhibit A (individually, a “ Note ” and, collectively, the “ Notes ”), payable to the order of such Lender and in the principal amount of such Lender’s Proportionate Share of the Loans.
(e) Loan Funding .
(i) Notice . The Borrowing Notice, as well as the applicable Borrowing Base Certificate and the Advance Model, shall be delivered to the Administrative Agent in accordance with Section 2.1(a) . The Administrative Agent shall promptly notify each Lender of the date of each requested Borrowing and such Lender’s Proportionate Share of the requested Borrowing.
(ii) Pro Rata Loans . All Loans shall be made on a pro rata basis by the Lenders in accordance with their respective Proportionate Share, with the Borrowing of Loans to be comprised of a Loan by each Lender equal to such Lender’s Proportionate Share of the Borrowing.
(iii) Administrative Agent Account . No later than 12:00 p.m., New York time on the date of the requested Borrowing, if the applicable conditions precedent listed in Sections 3.1 and 3.2 have been satisfied or waived, each Lender shall make available the Loans requested in the Borrowing Notice in Dollars and in immediately available funds to the Administrative Agent at its account in the United States identified in Annex 1 .
 
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(f) Prepayments .
(i) Voluntary Prepayment of Loans . The Borrower may, at its option, prepay, all outstanding Loans in whole or in part. Any partial prepayment hereunder shall be in a minimum aggregate amount of One Million Dollars ($1,000,000) and in an integral multiple of One Million Dollars ($1,000,000), provided, however, that any prepayment pursuant to this Section 2.1(f)(i) shall not result in any release of Collateral without further action of the Collateral Agent; provided, further, that the foregoing minimum amount requirement shall not apply to a prepayment of the Loans made pursuant to Section 8.4(c) .
(ii) Mandatory Prepayments . In accordance with Section 2.1(f)(iii) , (A) during a Repayment Event, on each Scheduled Payment Date, the Borrower shall prepay the Loans as required pursuant to Section 3.3(d)(3) of the CADA; (B) if any Loan Party or any of such Loan Party’s Subsidiaries (x) incurs or issues any Debt after the Closing Date that is not otherwise permitted to be incurred pursuant to Section 6.3 or (y) issues any capital stock, then, in each case, the Borrower shall prepay the Loans, in an aggregate principal amount equal to 100% of all net proceeds received therefrom, on or prior to the date which is two (2) Business Days after the receipt by the Borrower or such Subsidiary of such net proceeds; (C) upon receipt of any funds for the prepayment of principal pursuant to Section 2.10(b) , the Borrower shall cause such funds to be applied as a prepayment of the outstanding principal of the Loans; and (D) upon receipt of any Equity Contributions for the purpose of curing a Default under Section 8.1(l) , the Borrower shall cause the proceeds of such Equity Contribution to be applied as a prepayment of outstanding principal of the Loans in an amount not less than the amount required to satisfy the Applicable Threshold Test; provided that the Borrower may cure any Default under Section 8.1(l) by, within ten (10) Business Days from the date of the Borrowing Base Certificate referred to in Section 8.1(l), making a request to the Administrative Agent to add additional Systems or Subject Funds to the Available Borrowing Base in accordance with the terms set forth in this Agreement in order to cause the Outstanding Principal to be less than the Available Borrowing Base. In the event that adding such additional Systems or Subject Funds to the Available Base would cause the Available Borrowing Base to exceed the Outstanding Principal, as evidenced by a new Borrowing Base Certificate approved by the Administrative Agent, and such new Systems or Subject Funds are subsequently added to the Available Borrowing Base in accordance with the terms of this Agreement within such ten (10) Business Day period, then any Default under Section 8.1(l) shall be deemed to be cured. For the avoidance of doubt, no such Default shall be deemed cured if the inclusion of new Systems or Subject Funds does not otherwise reduce the Outstanding Principal to an amount less than the Available Borrowing Base.
(iii) Terms of Prepayments .
 
 	(A)	Any Loans prepaid or repaid pursuant to this Section 2.1(f) may not be reborrowed.	
 
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 	(B)	All voluntary and mandatory prepayments of Loans under this Section 2.1(f) shall be subject to Section 2.7 but shall otherwise be without premium or penalty and shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment.	
 
 	(C)	The Borrower shall give the Administrative Agent at least three (3) Business Days’ notice of any voluntary prepayment under Section 2.1(f)(i) . Each notice of voluntary prepayment shall (x) specify the voluntary prepayment date, and (y) be accompanied by a certificate signed by a Responsible Officer of the Borrower setting forth in reasonable detail the calculation of the amount of such voluntary prepayment.	
2.2 Commitments .
(a) Generally . Subject to the terms and conditions set forth herein, each Lender agrees, severally and jointly, to make one or more Loans to the Borrower, from time to time during the Availability Period, in an aggregate principal amount that will not result in such Lender’s Loans exceeding its Commitment.
(b) Scheduled Commitment Termination Date . Unless previously terminated, the Commitments shall automatically terminate on the last day of the Availability Period.
(c) Voluntary Termination or Reduction of Commitments . The Borrower may, at any time, terminate, or from time to time reduce, the Commitments provided that each partial reduction of the Commitments shall be in an amount that is One Million Dollars ($1,000,000) or a larger multiple of Five Hundred Thousand Dollars ($500,000); provided that no such reduction shall reduce the Commitments such that the amount of Outstanding Principal exceeds the Total Loan Commitment.
(d) Notice of Voluntary Termination or Reduction . The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under this Section 2.2 at least three (3) Business Days prior to the effective date of such termination and reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.2 shall be irrevocable.
(e) Effect of Termination or Reduction . Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments. Notwithstanding any termination or reduction of the Commitments pursuant to this Section 2.2(e) , the Commitment Fee shall not be reduced in any event unless otherwise set forth in the Fee Letters.
 
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2.3 Fees .
(a) Undrawn Fee . On each Scheduled Payment Date and on and until the earlier of (i) the last day of the Availability Period and (ii) the date on which the Total Loan Commitments are canceled or terminated, the Borrower shall pay to the Administrative Agent, for the account of each applicable Lender, a commitment fee for each such Lender (the “ Undrawn Fees ”) accruing from the date of execution of this Agreement or the preceding Scheduled Payment Date, as applicable, until the date of such payment equal to ***% per annum (based upon a year of 365/366 days) on the average daily unutilized portion of the Commitment of such Lender during such period.
(b) Fee Letters . On the Closing Date and thereafter, the Borrower shall pay to the Lead Arrangers, the Administrative Agent, the Lenders, the Depositary and any other parties thereto (for their respective accounts) such fees in the amount and at the times set forth in the Fee Letters.
2.4 Other Payment Terms .
(a) Place and Manner . All payments to be made by the Borrower shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m., New York time, on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Proportionate Share (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m., New York time, shall be deemed received on the next succeeding Business Day (it being understood that the Administrative Agent, in its sole discretion, may deem payments received after such time on any day to be received on the date due) and any applicable interest or fee shall continue to accrue.
(b) Date . Unless otherwise specified in this Agreement, whenever any payment due hereunder shall fall due on a day other than a Business Day, such payment shall instead be due on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be.
(c) Default Interest . If any amounts required to be paid by the Borrower under this Agreement or any other Financing Document (including principal or interest payable on any Loan, and any fees or other amounts payable to the Agents or any Lender) remain unpaid after such amounts are due, whether by acceleration or otherwise, the Borrower shall pay interest on the aggregate, outstanding balance of such overdue amount from the date due until the amounts are paid in full at a per annum rate equal to the Default Rate. Such Default Rate shall apply automatically without the need for any notice from the Administrative Agent or any Lender; provided that the foregoing shall not be intended to modify any other notice obligation hereunder including the notice provisions applicable to Events of Default.
 
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(d) Net of Taxes, Etc.
 
 	(i)         (A)	Taxes . Any and all payments by or on account of any obligation of any Loan Party under any Financing Document shall be made without deduction or withholding for any Taxes, except as required by applicable Laws. If any applicable Laws (as determined in the good faith discretion of the applicable withholding agent) require the deduction or withholding of any Tax from any such payment by the Administrative Agent or a Loan Party, then the Administrative Agent or such Loan Party shall be entitled to make such deduction or withholding, upon the basis or the information and documentation to be delivered pursuant to subsection (g)  below.	
 
 	(B)	If any Loan Party or the Administrative Agent shall be required by the Code to withhold or deduct any Taxes, including both United States Federal backup withholding and withholding taxes, from any payment, then (A) the Administrative Agent shall withhold or make such deductions as are determined by the Administrative Agent to be required based upon the information and documentation it has received pursuant to subsection (g)  below, (B) the Administrative Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 2.4(d) ) the applicable recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.	
 
 	(C)	If any Loan Party or the Administrative Agent shall be required by any applicable Laws other than the Code to withhold or deduct any Taxes from any payment, then (A) such Loan Party or the Administrative Agent, as required by such Laws, shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (g)  below, (B) such Loan Party or the Administrative Agent, to the extent required by such Laws, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be	
 
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 	increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 2.4(d) ) the applicable recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.	
(ii) Payment of Other Taxes by the Borrower . Without limiting the provisions of subsection (i)  above, the Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable Laws, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(iii) Indemnity .
 
 	(A)	The Borrower shall indemnify each Agent and each Lender for the full amount of Indemnified Taxes (including any Indemnified Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.4(d)) arising from the execution, delivery or performance of its obligations or from receiving a payment hereunder, or enforcing this Agreement or any Financing Document, paid by, or required to be withheld or deducted from a payment to, such Agent or Lender, or any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally asserted; provided that the Borrower shall not be obligated to indemnify any Agent or Lender for any penalties, additional interest or expense relating to Indemnified Taxes arising from such Agent’s or Lender’s gross negligence or willful misconduct. A certificate as to the amount of such payment or liability delivered to the Borrower by an Agent or Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. Payments by the Borrower pursuant to this indemnification shall be made within ten (10) days from the date such Agent or Lender makes written demand therefor. The Borrower shall, and does hereby indemnify the Administrative Agent, and shall make in respect thereof within ten (10) days after demand therefor, for any amount which a Lender for any reason fails to pay indefeasibly to the Administrative Agent as required pursuant to Section 2.4(d)(iii)(B) below.	
 
 	(B)	Each Lender shall, and does hereby, severally indemnify, and shall make payment in respect thereof within ten (10) days after demand therefor, (x) the Administrative Agent against any Indemnified Taxes attributable to such Lender (but only to the extent that the	
 
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 	Borrower has not already has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (y) the Administrative Agent and the Borrower, as applicable, against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.13(b) relating to the maintenance of a Participant Register and (z) the Administrative Agent or the Borrower, as applicable, against any Excluded Taxes attributable to such Lender that are payable or paid by the Administrative Agent or the Borrower in connection with any Financing Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender, as the case may be, under this Agreement or any other Financing Document against any amount due to the Administrative Agent under this clause (B) .	
(iv) Evidence of Payments . Upon request by the Borrower or the Administrative Agent, as the case may be, after any payment of Taxes by any Loan Party or by the Administrative Agent to a Government Authority as provided in this Section 2.4(d) , the Borrower shall deliver to the Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the case may be, the original or certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.
(v) Treatment of Certain Refunds . If any Agent or Lender determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by the Borrower pursuant to this Section 2.4(d) (including by the payment of additional amounts pursuant to this Section 2.4(d)) , it shall pay to the Borrower an amount equal to such refund (but only to the extent of the indemnity payments made under this Section 2.4(d) with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses related thereto (including taxes) of such Agent or Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). The Borrower, upon the request of such Lender or Agent, shall repay to such Lender or Agent the amount paid over pursuant to this paragraph (v)  (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such Lender or Agent is required to repay such refund to such Governmental Authority; provided that the Borrower shall not be obligated to reimburse an Agent or any Lender for any penalties, additional interest or
 
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other charges arising from such Agent’s or Lender’s gross negligence or willful misconduct. Notwithstanding anything to the contrary in this paragraph (v) , in no event will Lender or Agent be required to pay any amount to the Borrower pursuant to this paragraph (v)  the payment of which could place such Lender or Agent in a less favorable net after-tax position than such Lender or Agent would have been in if the tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such tax had never been paid. This paragraph shall not be construed to require any Agent or Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.
(vi) Survival of Obligations . The obligations included in this Section 2.4(d) shall survive the termination of this Agreement and the repayment and discharge of the Obligations of the Loan Parties.
(e) Application of Payments .
(i) Except as otherwise provided herein (including in Section 7.1 ), payments made under this Agreement and the other Financing Documents shall be applied first , to any fees, costs, charges or expenses payable to the Administrative Agent and the Collateral Agent hereunder; second , to any fees, costs, charges or expenses payable to the Lenders hereunder or under the other Financing Documents; third , to any accrued but unpaid interest on the Loans; and fourth , to the outstanding principal of the Loans.
(ii) The Administrative Agent shall promptly distribute to each Lender its Proportionate Share of each payment of principal, payments, fees and any other amounts received by the Administrative Agent for the account of the Lenders under the Financing Documents. The payments made for the account of each Lender shall be made, and distributed to it, for the account of such Lender’s Lending Office.
(f) Failure to Pay Administrative Agent .
(i) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Loan of LIBO Rate Loans (or, in the case of any Base Rate Loans, prior to 12:00 noon on the date of such proposed Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.1(e)(iii) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender,
 
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the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Proportionate Share included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
(ii) Unless the Administrative Agent shall have received notice from the Borrower at least two (2) Business Days prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall not have so made such payment in full to the Administrative Agent, such Lender shall repay to the Administrative Agent forthwith upon demand such amount distributed to such Lender, together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at a rate equal to the Applicable Interest Rate for each day during such period. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing by such Lender under this Section 2.4(f) shall be conclusive in the absence of manifest error.
(g) Withholding Exemption Certificates .
(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Financing Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section
 
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2.4(g)(ii)(A) , 2.4(g)(ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing,
 
 	(A)	any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;	
 
 	(B)	any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:	
(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Financing Document, executed originals of IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Financing Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(2) executed originals of IRS Form W-8ECI;
(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit I to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed originals of IRS Form W-8BEN; or
 
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(4) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit I , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit I on behalf of each such direct and indirect partner;
 
 	(C)	any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and	
 
 	(D)	if a payment made to a Lender under any Financing Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.	
 
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(iii) Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 2.4(g) expires or becomes obsolete or inaccurate in any respect, it shall promptly (but in any event on or before the next Scheduled Payment Date; provided that such Scheduled Payment Date is at least ten (10) Business Days after such certificate expires or becomes obsolete) update such form or certification or notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
2.5 Pro Rata Treatment . Subject to Sections 2.12 and 2.13 :
(a) Borrowing, Etc. Except as otherwise provided herein each Borrowing, each payment of principal of any Borrowing, each payment of interest on the Loans, each payment of Commitment Fees, each payment of Undrawn Fees and each reduction of the Commitments shall be made or shared among the Lenders pro rata according to their respective applicable Commitments (or, if such Commitments shall have expired or terminated, other than with respect to payment of Undrawn Fees, in accordance with the respective principal amounts of their outstanding Loans). Each Lender agrees that in computing each Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of such Borrowing to the next higher or lower whole Dollar amount.
(b) Sharing of Payments, Etc. If any Lender (a “ Benefited Lender ”) shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of Loans (or interest thereon) owed to it, in excess of its ratable share of payments on account of such Loans obtained by all Lenders entitled to such payments (for the avoidance of doubt, only Lenders holding Refinanced Debt shall be entitled to payment from the proceeds of Refinancing Loans until such Lenders are fully repaid), such Lender shall forthwith purchase from the other Lenders such participations in the Loans, as the case may be, as shall be necessary to cause such Benefited Lender to share the excess payment ratably with each of them; provided , however , that if all or any portion of such excess payment is thereafter recovered from such Benefited Lender, such purchase from such Lender shall be rescinded and each other Lender shall repay to the Benefited Lender the purchase price to the extent of such recovery together with an amount equal to such other Lender’s ratable share (according to the proportion of (i) the amount of such other Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the Benefited Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.5(b) may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation; provided , that the provisions of this Section 2.5(b) shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or any payment obtained by a Lender as consideration for the assignment of sale of a participation in any of its Loans to any assignee or participant, other than to a Loan Party or any of their Affiliates (as to which provisions of this Section 2.5(b) apply).
 
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2.6 Change of Circumstances .
(a) Increased Costs . If, after the date of this Agreement, any Change of Law:
(i) shall impose, modify or hold applicable any reserve, special deposit or similar requirement (except any reserve requirement reflected in the LIBO Rate) against assets held by, deposits or other liabilities in or for the account of, advances or loans by any Lender;
(ii) shall impose on any Lender any other condition not otherwise contemplated hereunder affecting this Agreement or Loans made by such Lender; or
(iii) shall subject the Lender to any taxes other than Taxes covered by Section 2.4(d) or Excluded Taxes,
and the effect of any of the foregoing is to increase the cost to such Lender of making or maintaining any such Loan or Commitment or to reduce any amount received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower shall promptly, but in no event later than ten (10) Business Days’ after receipt of written demand therefor by such Lender (accompanied by a certificate from such Lender setting forth the amount of the incurred costs as determined by such Lender in good faith and which shall be conclusive absent manifest error), pay to such Lender such additional amounts sufficient to reimburse such Lender for such increased costs or to compensate such Lender for such reduced amounts, to the extent actually incurred by or suffered by such Lender.
(b) Capital Requirements . If any Lender reasonably determines that (i) any Change of Law that affects or would affect the amount of capital or liquidity required or expected to be maintained by such Lender or on the Lender’s holding company (a “ Capital Adequacy Requirement ”) and (ii) the amount of capital or liquidity maintained by such Lender or such Lender’s holding company which is attributable to or based upon the Loans, the Commitments or this Agreement must be increased as a result of such Capital Adequacy Requirement (taking into account such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), the Borrower shall promptly, but in no event later than ten (10) Business Days’ after receipt of written demand therefor by such Lender (accompanied by a certificate from such Lender setting forth the amount of the incurred costs as determined by such Lender in good faith and which shall be conclusive absent manifest error), pay such amounts as such Lender shall determine are necessary to compensate such Lender for the increased costs to such Lender of such increased capital or liquidity.
(c) Notice . Each Lender will notify the Borrower of any event occurring after the date of this Agreement that will entitle such Lender to compensation pursuant to this Section 2.6 , as promptly as is practicable. Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.6 shall not constitute a waiver of such Lender’s right to demand such compensation; provided , that the Borrower shall not be required to compensate a Lender pursuant to this Section 2.6 for any increased costs or reductions incurred more than one
 
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hundred and eighty (180) days prior to the date that such Lender notifies the Borrower of the Change of Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change of Law giving rise to such increased costs or reductions is retroactive, then the one hundred eighty (180) day period referred to above shall be extended to include the period of retroactive effect thereof. The protection of this Section 2.6 shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of the Change of Law that shall have occurred or been imposed.
(d) Change in Legality . Notwithstanding any other provision of this Agreement, if any Change of Law shall make it unlawful for any Lender to make or maintain a LIBO Loan or to give effect to its obligations as contemplated hereby with respect to any LIBO Loan, then, by written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that LIBO Loans will not thereafter (for the duration of such unlawfulness) be made by such Lender hereunder (or be continued), whereupon any request for a Borrowing (or any continuation of a Borrowing for an additional Interest Period) shall, as to such Lender only, be deemed a request for a Base Rate Loan (or a continuation of a LIBO Loan as a Base Rate Loan), unless such declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding LIBO Loans made by it be converted to Base Rate Loans, in which event all such LIBO Loans shall be automatically converted to Base Rate Loans as of the effective date of such notice as provided below.
In the event any Lender shall exercise its rights under clauses (i ) or (ii)  above, all payments and prepayments of principal that would otherwise have been applied to repay the LIBO Loans that would have been made by such Lender or the converted LIBO Loans of such Lender shall instead be applied to repay the Base Rate Loans made by such Lender in lieu of, or resulting from the conversion of, such LIBO Loans. For purposes of this clause (d) , a notice to the Borrower by any Lender shall be effective as to each LIBO Loan made by such Lender, if lawful, on the last day of the Interest Period then applicable to such LIBO Loan (which shall be a Scheduled Payment Date); in all other cases such notice shall be effective on the date of receipt by the Borrower.
2.7 Funding Losses . The Borrower shall indemnify each Lender against any loss or expense that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount for the prepayment of principal of any Loan (other than a Base Rate Loan) prior to the end of the Interest Period in effect therefor or (ii) any Loan (other than a Base Rate Loan) to be made by such Lender not being made after notice, (b) any default in the making, or failure to make on the date and in the amount notified of any payment or prepayment required to or permitted to be made by or on behalf of the Borrower hereunder on any Loan (other than a Base Rate Loan) (any of the events referred to in this clauses (a)  and (b)  being called a “ Breakage Event ”). In the case of any Breakage Event, such
 
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loss shall include an amount equal to the excess, as reasonably determined by such Lender, of (A) its costs of obtaining funds for the Loan that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Interest Period in effect (or that would have been in effect) for such Loan over (B) the amount of interest likely to be realized by such Lender in redeploying the funds released or not utilized by reason of such Breakage Event for such period. A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 2.7 shall be delivered to the Borrower and shall be conclusive absent manifest error.
2.8 Alternate Office; Minimization of Costs .
(a) Any Lender may designate a Lending Office other than that set forth in Annex 2 and may assign all of its interests under the Financing Documents, and its Notes (if any), to such Lending Office, provided that such designation and assignment do not at the time of such designation and assignment increase the reasonably foreseeable liability of the Borrower under Section 2.4(d) , Section 2.6(a) or Section 2.6(b) .
(b) If the Borrower is required to pay additional amounts under Section 2.4(d) or any Lender requests compensation under Section 2.6(a) or Section 2.6(b) , then such Lender shall, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (i) file any certificate or document reasonably requested in writing by the Borrower or (y) to assign its rights and delegate and transfer its obligations hereunder to another of its offices, branches or affiliates, if such filing or assignment would avoid or minimize any additional costs, taxes, expense or obligation which would otherwise be imposed on the Borrower pursuant to Section 2.4(d) , Section 2.6(a) or Section 2.6(b) ; provided , however , that no Lender shall be required to take any such action that, as determined by such Lender in its sole discretion, would adversely affect the making, issuing, funding or maintaining of such Loans or the interests of such Lender; provided , further , however , that such efforts shall not cause the imposition on any Lender of any additional costs or expenses, unless the Borrower agrees to pay such additional costs and expenses.
(c) If (i) the Borrower incurs any liability to a Lender under Section 2.4(d) , Section 2.6(a) or Section 2.6(b) or (ii) any Lender is a Defaulting Lender, then the Borrower, at its sole expense (including with respect to the processing and recordation fee referred to in Section 10.4) may, upon notice to such Lender and the Administrative Agent require the Lender subject to this Section 2.8(c) to assign and delegate, without recourse, all its interests, rights and obligations under this Agreement and under the Loans and Commitments of the Lender being replaced hereunder to an Eligible Assignee that shall assume all those rights and obligations; provided , however , that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other governmental authority having valid jurisdiction, (y) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not be unreasonably withheld or delayed, and (z) the Borrower or such assignee shall have paid to the replaced Lender in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans of such Lender plus
 
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all fees and other amounts accrued for the account of such Lender hereunder with respect thereto (including any amounts under Sections 2.6 and 2.7 ). A Lender subject to this Section 2.8(c) shall not be required to make any such assignment and delegation if (A) prior to any such assignment and delegation the circumstances entitling the Borrower to require such assignment and delegation have ceased to apply (including as a result of any action taken by such Lender pursuant to clause (b)  above), (B) if such Lender shall waive its right to claim compensation or payment under Section 2.4(d) , Section 2.6(a) or Section 2.6(b) or (C) if any Default or Event of Default then exists. Each Lender hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender, as assignor, any Assignment and Acceptance necessary to effectuate any assignment of such Lender’s interests hereunder in the circumstances contemplated by this Section 2.8(c) . Nothing in this Section 2.8 shall be deemed to prejudice any rights that the Borrower may have against any Lender that is a Defaulting Lender. The Administrative Agent and each Lender hereby agree to cooperate with the Borrower to effectuate the assignment of any Defaulting Lender’s interest hereunder.
2.9 Increase in Loan Facility .
(a) Request for Increase . If the Available Borrowing Base exceeds $175 million at any time following the Closing Date and the Borrower is in compliance with the Borrowing Base Requirement, the Borrower may request an increase in Commitments upon written notice to the Administrative Agent in the form of Exhibit D (each such notice, a “ Incremental Loan Commitment Increase Notice ”), pursuant to which the Borrower will request the Lenders to provide on a pro rata basis, or, in the event one or more of the Lenders declines to provide its pro rata share of the requested amount of the increase in commitments pursuant to Section 2.9(b) , permit other existing Lenders (on a non-pro rata basis) or New Lenders (defined below) to provide, new Commitments to increase the Total Commitment Amount (each such new Commitment, an “ Incremental Loan Commitment ”); provided , that:
(i) the Incremental Loan Commitment Increase Notice shall set forth (A) the aggregate amount of the Incremental Loan Commitments requested, (B) the date on which such Incremental Loan Commitments are requested to be effective (“ Incremental Loan Increase Date ”), which shall not be less than sixty (60) days after the date of such notice, (C) the requested maturity date and interest rate of Incremental Loans related to such Incremental Loan Commitments, and (D) the upfront fees the Borrower proposes to pay to participating Lenders in such Incremental Loan Commitment,
(ii) all Incremental Loan Commitments hereunder shall not exceed $200,000,000 (the “ Incremental Loan Amount ”) in the aggregate,
(iii) any request for an Incremental Loan Commitment shall be in a minimum amount of (x) $50,000,000 or (y) such lesser amount equal to the Incremental Loan Amount minus the Incremental Loan Commitments granted on or prior to the date of such request,
 
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(iv) the terms of each requested Incremental Loan Commitment are identical to those applicable to the original Commitment, other than with respect to (x) maturity ( provided that the Loan Maturity Date of any Incremental Loan shall not be earlier than the Loan Maturity Date of the Initial Loans), (y) interest rates, and (z) upfront fees,
(v) if the All-In Yield applicable to such Incremental Loan Commitment shall be greater than the applicable All-In Yield payable with respect to any Loans (other than Incremental Loans made pursuant to such Incremental Loan Commitment) by more than 50 basis points per annum (the amount of such excess, the “ Yield Differential ”) then the interest rate (together with, as provided in the proviso below, the LIBO Rate or Base Rate floor) with respect to such Loans shall be increased by the applicable Yield Differential; provided , that, if any Incremental Loan Commitments include a LIBO Rate or Base Rate floor that is greater than the LIBO Rate or Base Rate floor applicable to any existing Loans, such differential between interest rate floors shall be included in the calculation of All-In Yield for purposes of this clause (v) but only to the extent an increase in the LIBO Rate or Base Rate Floor applicable to the existing Loans would cause an increase in the interest rate then in effect thereunder, and in such case the LIBO Rate and Base Rate floors (but not the Applicable Margin) applicable to the existing Loans shall be increased to the extent of such differential between interest rate floors; provided further that any undrawn or commitment fees applicable to such Incremental Loan Commitments shall be included in the foregoing calculation solely to the extent such fees exceed those applicable to the Loans by more than 50 basis points per annum;
(vi) no request for an Incremental Loan Commitment may be made after the end of the Availability Period,
(vii) the Borrower shall provide to the Administrative Agent such information that is reasonably requested by the Administrative Agent on behalf of the Lenders to evaluate the request for an Incremental Loan Commitment,
(viii) on the date of the request by the Borrower for an Incremental Loan Commitments, the conditions set forth in Section 2.9(e)(i) shall have been satisfied, and
(ix) no Lender shall be obligated to provide any new or additional Commitment.
(b) Lender Elections to Increase . Upon receipt of an Incremental Loan Commitment Increase Notice pursuant to Section 2.9(a) , the Lenders shall have thirty (30) days to accept an offer to participate in the requested Incremental Loan Commitments by delivering to the Administrative Agent confirmation substantially in the form attached as Exhibit E (each, an “ Increasing Incremental Lender Confirmation ”). Any Lender may accept or decline such offer in any amount up to its pro rata share of the aggregate amount of the Incremental Loan Commitments requested in such Lender’s sole and absolute discretion. In the event that any one or more Lenders declines to increase its Commitment by its full pro rata share of the Incremental
 
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Loan Commitments requested, the Administrative Agent shall offer the other Lenders the opportunity to further increase their Commitments in an aggregate amount equal to the remaining requested increase.
(c) Notification by Administrative Agent; Additional Lenders . The Administrative Agent shall notify the Borrower and each Lender of the Lenders’ responses to each request made hereunder. If the Lenders determine not to increase their Commitments in the amount of the requested increase, then in order to achieve the full amount of a requested increase, subject to (other than in the case of Eligible Assignees which are federally regulated banking institutions) the approval of the Administrative Agent (which approval shall not be unreasonably withheld), the Borrower may then invite additional Eligible Assignees to become Lenders on the same terms that were offered to the existing Lenders by executing a New Lender Accession Agreement (each such Eligible Assignee entering into a New Lender Accession Agreement, a “ New Lender ”). For the avoidance of doubt, the Borrower may not invite any additional Eligible Assignee to become a New Lender until all Lenders existing at such time have declined to increase their Commitments in an aggregate amount equal to the requested increase.
(d) Effective Date and Allocations . On each Incremental Loan Increase Date, upon the fulfillment of the conditions set forth in Section 2.9(e) , the Administrative Agent shall notify the Lenders (including any New Lenders) and the Borrower, on or before 11:00 a.m., New York time, of the occurrence of the requested Incremental Loan Commitments to be effected on such Incremental Loan Increase Date and shall record in the Register with the relevant information with respect to each Lender that executes an Incremental Lender Confirmation and each New Lender on such date.
(e) Conditions to Effectiveness of Increase . Any Incremental Loan Commitments are subject to the occurrence of the Closing Date and the satisfaction of each of the following conditions on such Incremental Loan Increase Date:
(i) no Default or Event of Default shall have occurred and be continuing;
(ii) immediately before and after giving effect to such Incremental Loan Commitments, the Borrower is in pro forma compliance with the Borrowing Base Requirement;
(iii) no Repayment Event has occurred and remains ongoing;
(iv) the Available Borrowing Base exceeds $175 million;
(v) no New Lenders are Investors or Sponsor;
(vi) since the delivery of the most recent financial statements of the Borrower delivered pursuant to Section 5.3 , no Material Adverse Effect has occurred or is continuing;
 
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(vii) the representations and warranties set forth in Section 4.1 and in each other Financing Document shall be true and correct in all material respects as of the Incremental Loan Increase Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material respects as of such earlier date);
(viii) the Administrative Agent shall have received a duly executed Incremental Loan Commitment Increase Notice and any fee letters entered into in connection with such Incremental Loan Commitments;
(ix) the Administrative Agent shall have received for its own account, and for the account of each Incremental Loan Lender or New Lender entitled thereto, all fees due and payable as of the Incremental Loan Increase Date pursuant to Section 2.3 , and all costs and expenses, including costs, fees and expenses of legal counsel, for which invoices have been presented; provided that costs, fees and expenses of legal counsel may be subject to caps as agreed to between the Borrower and the relevant party;
(x) if requested by an Incremental Loan Lender providing any portion of such Incremental Loan Commitments on such Incremental Loan Increase Date, such Incremental Loans shall be evidence by a Note; and
(xi) the Borrower shall deliver to the Administrative Agent a certificate of the Borrower dated as of the Incremental Loan Increase Date signed by a Responsible Officer of the Borrower (x) certifying and attaching the resolutions adopted by the Borrower approving or consenting to such increase, and (y) certifying that each of the conditions set forth in this Section 2.9(e) have been met as of the Incremental Loan Increase Date.
(f) Upon any Incremental Loan Increase Date on which Incremental Loan Commitments are effected pursuant to this Section 2.9, (a) each of the Lenders as of such Incremental Loan Increase Date shall assign to each of the lenders providing such Incremental Loan Commitments and each of the lenders providing such Incremental Loan Commitments shall purchase from each of the Lenders, at the principal amount thereof plus accrued and unpaid interest as of the date of such assignment, such interests in the Commitments and Loans outstanding on such Incremental Loan Increase Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Commitments and Loans will be held by existing Lenders and lenders providing such Incremental Loan Commitments ratably in accordance with their Commitments after giving effect to the addition of such Incremental Loan Commitments to the Commitments, (b) each Incremental Loan Commitment shall be deemed for all purposes a Commitment and each Loan made thereunder shall be deemed, for all purposes, a Loan and (c) each lender providing such Incremental Loan Commitments shall become a Lender with respect to the Commitments and all matters relating thereto. Notwithstanding anything to the contrary herein, no consent of the Borrower shall be required for any of the foregoing assignments and purchases. For the avoidance of doubt, the Administrative Agent and the
 
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Lenders hereby agree that the minimum borrowing and prepayment requirements in Section 2.1(a)(ii) and 2.1(f) of this Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence.
(g) For the avoidance of doubt, no Incremental Loan Commitments (if any) shall result in any adverse change to the Loan Maturity Date, interest rates and/or upfront fees applicable to the Closing Date Commitments of existing Lenders.
(h) Notwithstanding any Incremental Loan Commitments, the Administrative Agent shall retain all of its rights hereunder, including with respect to determining the Available Borrowing Base and approving new Subject Funds.
(i) In the event of any conflict between this Section 2.9 and Section 9.9 of this Agreement, this Section 2.9 shall control and govern.
2.10 Eligible Structures; Addition of Subject Funds; Release of Subject Funds .
(a) To the extent that the Available Borrowing Base is less than the Total Loan Commitment prior to the expiration of the Availability Period, and no Default (other than a Default that the Borrower has certified to the Administrative Agent it intends to cure by the inclusion of such Potential New Fund as a Subject Fund) or Event of Default has occurred and is continuing:
(i) the Borrower may request the inclusion of additional potential Eligible Structures (each, a “ Potential New Fund ”); provided that:
 
 	(A)	the Borrower shall make such request no fewer than (x) with respect to any Eligible Structure other than a Repeat Tax Equity Structure, forty-five (45) days prior to the expiration of the Availability Period and (y) with respect to any Repeat Tax Equity Structure, fifteen (15) Business Days prior to the expiration of the Availability Period, in each case, by delivery of written notice of its request for the inclusion of such Potential New Fund in the form attached hereto as Exhibit K (a “ Potential New Fund Notice ”);	
 
 	(B)	the Borrower shall not request, and Administrative Agent shall be under no obligation to review, more than one Potential New Fund (excluding Repeat Tax Equity Structures) at any one time;	
 
 	(C)	with respect to any Tax Equity Structure other than a Repeat Tax Equity Structure (which Tax Equity Structure, for the avoidance of doubt, shall conform to the applicable characteristics set forth in Appendix 11 ), the Administrative Agent shall have forty-five (45) days following the Borrower’s satisfaction of the conditions precedent set forth in Sections 3.4(a) and (b) to conduct due	
 
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 	diligence and determine, in its reasonable discretion, (i) whether such Potential New Fund is acceptable and (ii) if so, in consultation with the Borrower and the Lenders whether to designate such Potential New Fund as a Cash-Sweep Fund or a Non-Cash-Sweep Fund in Appendix 4 and for all purposes under this Agreement; and	
 
 	(D)	with respect to Repeat Tax Equity Structures, the Administrative Agent shall have fifteen (15) Business Days following the Borrower’s satisfaction of the conditions precedent set forth in Sections 3.4(a) and (b) to conduct, or cause to be conducted, legal reviews and reviews of underlying Systems and Host Customers related to such Repeat Tax Equity Structure to the extent it deems such reviews appropriate; the Administrative Agent may, but so long as the Borrower makes the Tax Equity Representations shall be under no obligation to, conduct any due diligence with respect to such Potential New Fund and such Potential New Fund shall be included as a Subject Fund for all purposes hereunder following satisfaction of the applicable conditions precedent set forth in Section 3.4 ; and	
 
 	(E)	with respect to any Other Financed Structure, the Administrative Agent shall conduct due diligence for as long as it deems necessary and together with the Majority Lenders shall determine, in their reasonable discretion, whether such Other Financed Structure is acceptable.	
(ii) If following review of any such Potential New Fund in consultation with the Borrower, the Administrative Agent notifies the Borrower in writing that such Potential New Fund is acceptable for inclusion in the Available Borrowing Base, such Potential New Fund shall become a Subject Fund subject to the terms of the Financing Documents upon the satisfaction by Borrower of each of the conditions precedent set forth in Section 3.4 .
(iii) Simultaneously with the satisfaction of the conditions precedent set forth in Section 3.4 , the Administrative Agent shall update (A)  Appendix 4 to include such new Subject Fund, its related Managing Member, and whether it is a Cash-Sweep Fund or a Non-Cash-Sweep Fund, (B)  Appendix 5 to include such new Subject Fund’s Project Documents, (C)  Schedule 1.1(b) to include the Responsible Officers of such Subject Fund, (D)  Schedule 4.1(f) to include any existing Debt of the Managing Member of such Subject Fund, (E)  Schedule 4.1(x) to reflect the Equity Interests related to such Subject Fund, (F)  Schedule A of Appendix 7 to include any existing Debt of such Subject Fund, and (G)  Schedule 6.7 to include the investments of all the Loan Parties related to such Subject Fund.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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(iv) For the avoidance of doubt, each Repeat Tax Equity Structure shall be designated as a Cash-Sweep Fund or a Non-Cash-Sweep Fund in accordance with the designation of the current Subject Fund to which it is substantially similar unless the Administrative Agent determines in its reasonable discretion in consultation with the Borrower and the Lenders that the provision(s) of such current Subject Fund that caused it to be designated a Cash-Sweep Fund or Non-Cash-Sweep Fund have been modified or eliminated so as to change the appropriate designation of such Repeat Tax Equity Structure.
(v) The Borrower will reimburse the Agents pursuant to Section 10.4 for their reasonable due diligence and legal expenses in connection with their review of any Potential New Fund (other than Repeat Tax Equity Structures).
(b) Subject to the final sentence of this Section 2.10(b) , the Borrower may refinance the Actual Net Cash Flow arising from one or more Subject Funds in whole but not partially. Upon the prepayment of principal or addition of Subject Funds or Systems by the Borrower in an amount such that Borrower will be in compliance with the Borrowing Base Requirement following the removal of the Net Cash Flow of a Subject Fund from the calculation of the Available Borrowing Base, as evidenced by a Borrowing Base Certificate delivered by Borrower to Administrative Agent giving pro forma effect to such prepayments or additions, such Subject Fund shall no longer be subject to the Financing Documents, and the Borrower shall be entitled to the release of the Collateral with respect to such Subject Fund. Within five (5) Business Days of the release of such Collateral, Borrower shall cause the Managing Member related to such Subject Fund to no longer be a Subsidiary of Borrower by selling, winding up or otherwise disposing of (including, without limitation, transferring Borrower’s Equity Interests in such Managing Member to a third party) such Managing Member. Notwithstanding the foregoing, if after giving pro forma effect to any such refinancing, the aggregate Subject Fund Borrowing Bases of all Cash-Sweep Funds exceed *** percent (***%) of the Available Borrowing Base, such refinancing shall require the prior written consent of the Supermajority Lenders.
(c)
(i) To the extent that, the Available Borrowing Base is less than the Total Loan Commitment, and no Default (other than a Default that the Borrower has certified to the Administrative Agent it intends to cure by the addition of such Systems) or Event of Default has occurred and is continuing, the Borrower may request the inclusion of additional potential System(s) to existing Subject Funds by delivery of written notice of its request for the inclusion of such Systems in the form attached hereto as Exhibit L (a “ New Systems Notice ”) at least fifteen (15) Business Days prior to the requested date of inclusion set forth in such notice; provided that at least ten (10) Business Days shall have passed since delivery of the last New Systems Notice.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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(ii) The Administrative Agent shall have fifteen (15) Business Days following the Borrower’s satisfaction of the conditions precedent set forth in Sections 3.3(a) and (b)  to conduct due diligence with respect to such new System(s).
(iii) The Borrower will reimburse the Administrative Agent pursuant to Section 10.4 for its reasonable due diligence and legal expenses in connection with such review of any new Systems.
(iv) If the conditions precedent set forth in Section 3.3 are satisfied with respect to such Systems, then such new Systems will be included in the appropriate Subject Fund.
2.11 Defaulting Lenders .
(a) Adjustments . Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender, to the extent permitted by applicable Law:
(i) fees shall cease to accrue on the unused portion of the Commitment of such Defaulting Lender pursuant to Section 2.3(a) ; and
(ii) the Loans and unused Commitments of such Defaulting Lender shall not be included in determining whether the Majority Lenders have taken or may take any action hereunder (including any right to approve or disapprove to any amendment, waiver or consent pursuant to Section 9.12 ).
(b) Defaulting Lender Waterfall . Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 8 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.2 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second , as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third , if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; fourth , to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; fifth , so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and sixth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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that if (x) such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made at a time when the conditions set forth in Section 3.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans are held by the Lenders pro rata in accordance with the Commitments hereunder. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 2.11(b) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(c) Defaulting Lender Cure . If the Borrower and the Administrative Agent agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
2.12 Refinancing Loans .
(a) The Borrower may by written notice to Administrative Agent request the establishment of one or more additional tranches of loans under this Agreement (“ Refinancing Loans ”) to refinance outstanding Loans (such existing Loans being refinanced, the “ Refinanced Debt ”). Each such notice shall (1) specify (x) the date (each, a “ Refinancing Effective Date ”) on which the Borrower proposes that the Refinancing Loans shall be made, which shall be a date not less than sixty (60) days after the date on which such notice is delivered to the Administrative Agent, (y) the type and amount of outstanding Loans the Borrower is requesting to refinance, and (z) the other proposed terms of the Refinancing Loans and (2) certify that the Borrower in compliance with the Borrowing Base Requirement; provided that:
(i) before and after giving effect to the borrowing of such Refinancing Loans on the Refinancing Effective Date each of the conditions set forth in Section 3.1 and Section 3.2 shall be satisfied;
(ii) any request for Refinancing Loans shall be in an aggregate amount not less than $25,000,000;
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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(iii) the terms and conditions applicable to such Refinancing Loans shall be identical in all respects to the terms and conditions set forth in Appendix 1 , Appendix 2 and Appendix 3 of this Agreement (and any related provision or definition under this Agreement or any other Financing Document) with respect to the subject matter thereof;
(iv) such Refinancing Loans have a maturity no earlier than the Refinanced Debt;
(v) such Refinancing Loans shall not have a greater principal amount than the principal amount of the Refinanced Debt;
(vi) except as described in clauses (iii), (iv) and (v) above, all other terms applicable to such Refinancing Loans as set forth in the Refinancing Amendment (other than provisions relating to original issue discount, upfront fees and interest rates which shall be as agreed between the Borrower and the lenders providing such Refinancing Loans) shall be substantially identical to, or less favorable to the lenders providing such Refinancing Loans than, those applicable to the then outstanding Loans except to the extent such covenants and other terms apply solely to any period after the Latest Maturity Date of the Loans in effect on the Refinancing Effective Date immediately prior to the borrowing of such Refinancing Loans;
(vii) the Loan Parties and the Collateral Agent shall enter into such amendments to the Collateral Documents as may be requested by the Collateral Agent (which shall not require any consent from any Lender) in order to ensure that the Refinancing Loans are provided with the benefit of the applicable Collateral Documents and shall deliver such other documents, certificates and opinions of counsel in connection therewith as may be requested by the Collateral Agent; and
(viii) On the Refinancing Effective Date, the net proceeds of the Refinancing Loans shall be applied to the repayment of the then outstanding Loans.
(b) In connection with each Refinancing Request, the Lenders shall have thirty (30) days to accept an offer to provide the requested Refinancing Loans in an amount up to its pro rata share of the outstanding Loans under this Agreement by delivering written confirmation to the Administrative Agent, and in the event that any one or more Lenders declines to provide Refinancing Loans in an amount equal to its full pro rata share of the Refinancing Loans requested, the Administrative Agent shall offer the other Lenders the opportunity to provide further Refinancing Loans in an aggregate amount equal to the remaining requested amount; during the foregoing period, the Borrower shall not approach any other Person in connection with its Refinancing Request. Thereafter, the Borrower may approach any Lender or any other Person that would be a permitted Assignee pursuant to Section 9.15 (without consideration of any Borrower approval required by Section 9.15 ) to provide all or a portion of the requested Refinancing Loans (each, together with any Lender who delivers a confirmation pursuant to the first sentence of this clause (b), a “ Refinancing Lender ”); provided that any Lender offered or approached to provide all or a portion of the Refinancing Loans may elect or decline, in its sole
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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discretion, to provide a Refinancing Loan. Each Refinancing Loan incurred on a Refinancing Effective Date shall have identical terms and conditions to each other Refinancing Loan incurred on such Refinancing Effective Date. Any Refinancing Loan made on any Refinancing Effective Date shall be designated Refinancing Loans for all purposes of this Agreement.
(c) The Refinancing Term Loans shall be established pursuant to an amendment to this Agreement among the Borrower, the Administrative Agent and the Refinancing Lenders providing such Refinancing Loans (a “ Refinancing Loan Amendment ”), which shall be consistent in all respects with the provisions set forth in paragraph (a) above. Each of the parties hereto hereby agrees that this Agreement and the other Financing Documents may be amended pursuant to a Refinancing Amendment, without the consent of any other Lenders, to the extent (but only to the extent) necessary to (i) reflect the existence and terms of the Refinancing Loans incurred pursuant thereto and (ii) effect such other amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.12, and the Required Lenders hereby expressly authorize the Administrative Agent to enter into any such Refinancing Amendment. Each Refinancing Loan Amendment shall be binding on the Lenders, the Loan Parties and the other parties hereto.
(d) Notwithstanding anything to the contrary herein, the Borrower shall not prepay any Refinancing Loans until all Initial Loans have been indefeasibly paid in full in cash.
2.13 Extended Loans .
(a) The Borrower may by written notice to Administrative Agent request that all or a portion of the Loans (an “ Existing Loans ”) be amended to extend the scheduled maturity date(s) of any payment of principal with respect to all or a portion of any principal amount of such Loans (any such Loans which have been so amended, “ Extended Loans ”). In order to establish any Extended Loans, the Borrower shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each of the Lenders) (an “ Extension Request ”) setting forth the proposed terms of the Extended Loans to be established which shall be identical to the Existing Loans except that:
(i) the terms and conditions applicable to such Extended Loans shall be identical in all respects to the terms and conditions set forth in Appendix 1 , Appendix 2 and Appendix 3 of this Agreement (and any related provision or definition under this Agreement or any other Financing Document) with respect to the subject matter thereof;
(ii) the interest margins with respect to the Extended Loans may be different than the interest margins for the Existing Loans being converted and upfront fees may be paid to the Extending Lenders, in each case, to the extent provided in the applicable Loan Extension Amendment;
(iii) the Loan Extension Amendment may provide for other covenants and terms that apply solely to any period after the Latest Maturity Date of all Loans in effect on the effective date of the Loan Extension Amendment immediately prior to the establishment of such Extended Loans; and
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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(iv) no Extended Loans may be optionally prepaid prior to the date on which the Loans from which they were converted are repaid in full unless such optional prepayment is accompanied by a pro rata optional prepayment of the Loans that were not converted.
Any Extended Loans converted pursuant to any Extension Request shall be designated Extended Loans for all purposes of this Agreement; provided that any Extended Loans converted may, to the extent provided in the applicable Loan Extension Amendment, be designated as an increase in any previously established Extended Loans.
(b) The Borrower shall provide the applicable Extension Request to all Lenders of the Loans that are subject to the Extension Request at least thirty (30) days prior to the date on which Lenders with such Loans being converted are requested to respond. No Lender shall have any obligation to agree to have any of its Loans of such class converted into Extended Loans pursuant to any Extension Request. Any Lender (an “ Extending Lender ”) wishing to have all or a portion of its Loans converted into Extended Loans shall notify the Administrative Agent (an “ Extension Election ”) on or prior to the date specified in such Extension Request of the amount of its Loans which it has elected to request be converted into Extended Loans (subject to any minimum denomination requirements reasonably imposed by the Administrative Agent). In the event that the aggregate amount of Loans being converted exceeds the amount of Extended Loans requested pursuant to the Extension Request, Loans subject to Extension Elections shall be converted to Extended Loans on a pro rata basis based on the amount of Loans included in each such Extension Election.
(c) Extended Loans shall be established pursuant to an amendment (a “ Loan Extension Amendment ”) to this Agreement among the Borrower, the Administrative Agent and each Extending Lender providing an Extended Loan thereunder which shall be consistent with the provisions set forth in paragraph (a) above (but which shall not require the consent of any other Lender). Each Loan Extension Amendment shall be binding on the Lenders, the Loan Parties and the other parties hereto. In connection with any Loan Extension Amendment, the Loan Parties and the Collateral Agent shall enter into such amendments to the Collateral Documents as may be reasonably requested by the Collateral Agent (which shall not require any consent from any Lender) in order to ensure that the Extended Loans are provided with the benefit of the applicable Collateral Documents and shall deliver such other documents, certificates and opinions of counsel in connection therewith as may be requested by the Collateral Agent.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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ARTICLE 3
CONDITIONS PRECEDENT
3.1 Conditions Precedent to the Closing Date . The obligation of each Lender to make Loans and the effectiveness of this Agreement are subject to the prior satisfaction of each of the following conditions, in each case to the satisfaction of the Administrative Agent and each of the Lenders (unless waived pursuant to Section 9.12(a) ) on or prior to the Closing Date:
(a) Delivery to the Agents of each of the following Financing Documents, each duly executed and delivered by the parties thereto:
(i) this Agreement;
(ii) the CADA;
(iii) the Member Pledge;
(iv) the Security Agreement;
(v) the Fee Letters;
(vi) the Tax Equity Required Consents (if any);
(vii) the LLC Agreements (amended and restated to comply with the provisions of this Agreement, as necessary); and
(viii) the Notes (if requested by a Lender).
(b) Each representation and warranty set forth in Section 4.1 is true and correct in all material respects as of the Closing Date, other than those representations and warranties which are modified by materiality by their own terms, which shall be true and correct in all respects as of the Closing Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material respects as of such earlier date).
(c) As of the Closing Date, no event shall have occurred and be continuing or would result from the consummation of the transactions contemplated by this Agreement on the Closing Date that would constitute a Default or an Event of Default under this Agreement.
(d) Delivery to the Administrative Agent and each Lender of the following:
(i) an omnibus secretary’s certificate, satisfactory in form and substance to the Administrative Agent, from Borrower Member, signed by an authorized Responsible Officer and dated as of the Closing Date, attaching and certifying as to the Organizational Documents of each Loan Party (which, to the extent filed with a Governmental Authority, shall be certified as of a recent date by such Governmental Authority), and attaching and certifying as to the resolutions of the governing body of each Loan Party, the good standing, existence or its equivalent of each Loan Party and of the incumbency of one or more Responsible Officers of each Loan Party;
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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(ii) an certificate executed by a Responsible Officer of the Borrower certifying to (A) the representations and warranties made by each Loan Party in each Financing Document to which it is a party being true and correct in all material respects as of the Closing Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material respects as of such earlier date), (B) the absence of a Default or an Event of Default, (C) the absence of any (x) material breach by any Loan Party of any Material Project Documents to which it is a party or (y) breach of any Other Documents that could have a Material Adverse Effect, (D) the absence of any Bankruptcy Event with respect to any Loan Party and any Subject Fund in which such Loan Party owns an interest, and (E) the satisfaction (or waiver by the Administrative Agent and each Lender) of all conditions precedent to the Closing Date in accordance with the terms and conditions hereof;
(iii) a certificate executed by a Responsible Officer of the Borrower certifying to (A) the absence of a Default or an Event of Default with respect to Borrower Member or Vivint Solar Parent, (B) the absence of any Bankruptcy Event with respect to Borrower Member or Vivint Solar Parent;
(iv) an opinion, dated as of the Closing Date, of Simpson Thacher & Bartlett LLP, counsel to the Loan Parties, in form and substance reasonably acceptable to the Agents and each Lender; and
(v) an opinion, dated as of the Closing Date, of Simpson Thacher & Bartlett LLP, special bankruptcy counsel to the Loan Parties, in form and substance reasonably acceptable to the Agents and each Lender.
(e) The Collateral Documents shall have been duly executed and delivered by each Loan Party that is to be a party thereto, together with (x) certificates representing the Equity Interests of the Borrower, the Equity Interests of each Managing Member and each Equity Interest owned by any Managing Member in another Person accompanied, in each case, by undated stock powers executed in blank and (y) documents and instruments to be recorded or filed that the Administrative Agent may deem reasonably necessary to perfect, record and file in the appropriate jurisdictions.
(f) The Administrative Agent and the Collateral Agent shall have received (A) searches of UCC filings in the jurisdiction of incorporation or formation, as applicable, of each Loan Party and each jurisdiction where a filing would need to be made in order to perfect the security interest of the Collateral Agent (for the benefit of the Secured Parties) in the Collateral, (B) copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than Permitted Liens and (C) copies of tax lien, judgment and bankruptcy searches in such jurisdictions.
(g) The UCC financing statements relating to the Collateral being secured as of the Closing Date shall have been duly filed in each office and in each jurisdiction where required in order to create and perfect the first Lien and security interest set forth in the Collateral
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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Documents. The Borrower shall have properly delivered or caused to be delivered to the Collateral Agent all Collateral that requires perfection of the Lien and security interest described above by possession or control, including delivery of original certificates representing all issued and outstanding Equity Interests in the Borrower, each Managing Member and each Equity Interest owned by any Managing Member in another Person along with blank transfer powers and proxies.
(h) All amounts required to be paid to or deposited with the Administrative Agent, the Collateral Agent, the Depositary or any Lender under this Agreement, the Fee Letters, or any other Financing Document, or under any separate agreement with such parties, and all taxes, fees and other costs payable in connection with the execution, delivery and filing of the documents and instruments required to be filed pursuant to this Section 3.1 , shall have been paid in full (or in connection with such taxes, fees (other than fees payable to the Lenders or the Agents) and costs, the Borrower shall have made other arrangements acceptable to the Agents, the Depositary or such Lender(s), as the case may be, in their sole discretion).
(i) The Agents and Lenders shall have received all such documentation and information requested by the Agents and the Lenders that is necessary (including the names and addresses of the Borrower, taxpayer identification forms, name of officers/board members, documents and copies of government-issued identification of the Borrower and each other Loan Party (or owners thereof) for the Agents and the Lenders to identify the Borrower and each other Loan Party (or owners thereof) in accordance with the requirements of the Patriot Act (including the “know your customer” and similar regulations thereunder).
(j) All Accounts required to be open as of the Closing Date under the CADA (including the Interest Reserve Account) shall have been opened in the name of the Borrower and each Managing Member.
(k) The expenses incurred and invoiced as of or prior to the Closing Date shall have been paid by the Borrower or its Affiliates in accordance with Section 10.4 .
(l) The Borrower shall have delivered an unaudited financial statement in form and substance satisfactory to the Administrative Agent.
(m) The Borrower shall have obtained all approvals (to the extent required to have been obtained by such time) and all consents, including any applicable Tax Equity Required Consents, modifications to Project Documents or Organizational Documents of any Subject Fund, in each case that are necessary for its entry into the Financing Documents to which it is a party and implementation of the transactions contemplated in the Financing Documents, each of which is listed on Schedule 3.1(m) .
(n) All outstanding obligations under the Bridge Loan Credit Facility have been indefeasibly paid in full in cash on the Closing Date.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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(o) The Administrative Agent shall have received the Tax Equity Model for each Subject Fund.
3.2 Conditions Precedent to Each Borrowing . The obligation of each Lender to make any Loans is subject to the prior satisfaction of the following conditions (unless waived pursuant to Section 9.12(a) ); provided , however , that there shall be no duplication with respect to the satisfaction of conditions precedent under Sections 3.1 and 3.2 if the Closing Date and the initial Borrowing Date occur on the same Business Day:
(a) Delivery of an Officer’s Certificate executed by a Responsible Officer of the Borrower in the form of Exhibit N , dated as of the Borrowing Date (a “ Borrowing Date Certificate ”):
(i) certifying that all representations and warranties made by each Loan Party under the Financing Documents are true and correct in all material respects as of such Borrowing Date, other than those representations and warranties which are modified by materiality by their own terms, which shall be true and correct in all respects as of such Borrowing Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material respects as of such earlier date); provided , however , that with respect to each System, the Borrower shall only be required to make the Eligibility Representations for such System as of the first Borrowing Date on or after the date such System becomes subject to the Financing Documents;
(ii) certifying that no Default or Event of Default has occurred and is continuing or will result from the Borrowing of such Loan;
(iii) certifying that the Borrower is in compliance with Section 6.1 as of the most recent Quarterly Date;
(iv) either (x) certifying that no Watched Funds exist or (y) setting forth a true, complete and correct list identifying each Subject Fund that is a Watched Fund and the condition or conditions that resulted in such Subject Fund being a Watched Fund;
(v) either (x) certifying that the Borrower is in compliance with the Borrowing Base Requirement or (y) setting forth details of the Borrower’s non-compliance with the Borrowing Base Requirement;
(vi) certifying that no Material Adverse Effect has occurred and is continuing since the Closing Date, and, to the Borrower’s Knowledge, no event or circumstance exists that could reasonably be expected to result in a Material Adverse Effect has occurred; and
(vii) certifying to the absence of any Bankruptcy Event with respect to Borrower Member or Vivint Solar Parent;
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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(b) Delivery to the Administrative Agent of a Borrowing Notice in accordance with Section 2.1(a)(iii) and a Borrowing Base Certificate and the Advance Model in accordance with Section 2.1(a)(iv) that are subsequently reviewed, accepted and approved by the Administrative Agent.
(c) The conditions precedent set forth in Sections 3.3 and 3.4 , respectively, with respect to any new Systems or any new Subject Funds added to the Available Borrowing Base for the purpose of making such Borrowing have been satisfied in all respects as of the Borrowing Date (as determined by the Administrative Agent in its reasonable discretion);
(d) All Liens contemplated to be created and perfected in favor of the Collateral Agent pursuant to the Collateral Documents shall have been so created, perfected and filed in the applicable jurisdictions, including in respect of any Subject Fund that becomes subject to this Agreement on or prior to the making of such Loan.
(e) All amounts required to be paid to or deposited with any Secured Party hereunder or under any other Financing Document, and all taxes, fees and other costs payable in connection with the execution, delivery, recordation and filing of the documents and instruments required to be filed as a condition precedent to Section 3.1 and this Section 3.2 , shall have been paid in full (or shall be paid concurrently with the occurrence of such Borrowing) or arrangements for the payment thereof from the Loans shall have been made, which arrangements shall be acceptable to the Agents and the Lenders.
(f) After giving effect to such proposed Borrowing and any Watched Fund identified in the Borrowing Base Certificate, the Borrower shall be in compliance with the Borrowing Base Requirement.
(g) After giving effect to such proposed Borrowing, the Interest Reserve Account shall be funded in an amount greater than or equal to the Interest Reserve Required Amount (as defined in the CADA).
(h) The Administrative Agent shall have received a duly executed funds flow memorandum in form and substance acceptable to the Administrative Agent.
3.3 Conditions Precedent to Addition of New Systems to Existing Subject Fund .
The inclusion of either (i) any new System in an existing Subject Fund or (ii) any System as part of a new Subject Fund is subject to the satisfaction of the following conditions precedent:
(a) The Borrower has delivered to the Administrative Agent a New Systems Notice in accordance with Section 2.10(c)(i) , together with the revised Advance Model with respect to the applicable Subject Fund;
(b) The Borrower has delivered to the Administrative Agent (or provided the Administrative Agent access to an online data room that contains true, complete and correct
 
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copies of the following) (i) a complete set of Customer Agreements for each such System,(ii) System Information for each such System and (iii) any other data, documentation, analysis or report reasonably requested by the Administrative Agent with respect to such Systems or the associated Host Customers and commercially available to the Borrower.
(c) Solely with respect to any new System in an existing Subject Fund, the Borrower has delivered to the Administrative Agent a certificate executed by a Responsible Officer of the Borrower (i) making the Eligibility Representations with respect to such Systems and (ii) making the Tax Equity Representations or Other Structure Representations, as applicable, with respect to the Subject Fund to which such Systems will be subject after giving effect to the inclusion of such Systems;
(d) Each such System (i) is subject to and owned by an existing Subject Fund pursuant to the applicable Project Documents, (ii) has received permission to operate from the local utility as evidenced by Borrower’s delivery or other notification to the Administrative Agent of such utility’s permission to operate either in writing or in such other form as is customarily given by such local utility and (iii) has commenced operation;
(e) Such System would not be a Defaulted System if included in the Available Borrowing Base;
(f) After giving effect to the inclusion of any such System, the Average FICO Score for all Host Customers in all Subject Funds subject to this Agreement is at least 720; and
(g) The Administrative Agent has updated Appendix 4 and/or Appendix 5 , as appropriate to reflect the inclusion of the new Systems.
3.4 Conditions Precedent to Inclusion of New Subject Fund .
The inclusion of any Potential New Fund as a Subject Fund is subject to the satisfaction of the following conditions precedent:
(a) The Borrower has delivered a Potential New Fund Notice to the Administrative Agent in accordance with Section 2.10(b) , together with the Tax Equity Model for the Potential New Fund and the revised Advance Model with respect to the Potential New Fund;
(b) The Borrower has delivered to the Administrative Agent (or provided the Administrative Agent (1) access to an online data room that contains true, complete and correct copies of the following) (i) a complete set of transaction documents for the Potential New Fund at least thirty (30) days prior to the requested date of inclusion set forth in the Potential New Fund Notice, (ii) if such Potential New Fund is a Repeat Tax Equity Structure, redline comparisons of the transactions documents for the potential new fund marked against the transaction documents of the current Subject Fund to which it is substantially similar, (iii) the information set forth in Section 3.3(b) with respect to each System included in such Potential New Fund and Host Customers and (iv) any other data, documentation, analysis or report
 
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reasonably requested by the Administrative Agent with respect to such Potential New Fund and (2) either (A) written confirmation that the transaction documents of such Potential New Fund do not contain any “cash sweep” provision (including, for example, any provision that would have the effect of (i) reducing the Managing Member’s cash distribution percentage, (ii) increasing the Investor’s cash distribution percentage or (iii) limiting, suspending or otherwise diverting cash distributions (whether temporarily, pursuant to an escrow or similar arrangement, or permanently) that would otherwise be payable to the Managing Member) or (B) written notice of the existence of such “cash sweep” provision and a written explanation of the events or circumstances that would give rise to a cash sweep;
(c) If the Potential New Fund is not a Repeat Tax Equity Structure, or if the Potential New Fund is a Repeat Tax Equity Structure with respect to which the Administrative Agent has decided to conduct due diligence, in each case, the Administrative Agent has conducted due diligence with respect to such Potential New Fund in consultation with the Borrower and the Administrative Agent has given the Borrower written notice that the Administrative Agent has accepted such Potential New Fund and designated such Potential New Fund as a Cash-Sweep Fund, a Non-Cash-Sweep Fund or an Other Structure;
(d) The Administrative Agent has updated Appendix 4 , Appendix 5 , Schedule A to Appendix 7 , Schedule 1.1(b) , Schedule 3.1(m) , Schedule 4.1(f) , Schedule 4.1(x) , and Schedule 6.7 pursuant to Section 2.10(a)(iii) .
(e) The Borrower has delivered an Officer’s Certificate duly executed by a Responsible Officer of the Borrower making the Eligibility Representations with respect to each System in such Potential New Fund;
(f) Each System then subject to such Potential New Fund is included in such Potential New Fund pursuant to the Material Project Documents;
(g) The Borrower has made the Tax Equity Representations or Other Structure Representations, as the case may be, required to be made pursuant to Section 2.10(a) ;
(h) Such Potential New Fund would not be a Watched Fund if it were included in the Available Borrowing Base and no System subject to such Subject Fund would be a Defaulted System if included in the Available Borrowing Base;;
(i) Borrower shall have delivered or caused to be delivered (A) with respect to any Tax Equity Structure, a Tax Equity Required Consent for such Subject Fund if required by the Agents and (B) with respect to any Other Structure, all consents required by the Agents;
(j) No Default or Event of Default has occurred and is continuing or will result from the inclusion of the Potential New Fund as a Subject Fund;
(k) The Managing Member of the Subject Fund is a wholly-owned direct subsidiary of Borrower;
 
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(l) Each of the conditions set forth in Section 5.18 have been satisfied; and
(m) (1) Each of the conditions set forth in Sections 3.1(d) , (e) , (f) , (g) , (h) , (i) , (m)  and (o) , including matters related to corporate authority, perfection of the Secured Parties’ security interests in the Collateral, etc., shall have been satisfied with respect to such Subject Fund and (2) each of the conditions set forth in Sections 3.3(d) , (e) , (f)  and (g)  shall have been satisfied with respect to each System subject to such Subject Fund.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties . Each of the Loan Parties represents, solely as to itself (except that (A) Borrower shall make the representations as to Developer set forth in clause (q)  of this Section 4.1 , and (B) the Managing Member related to a Subject Fund shall, individually and not collectively, make the representations as to each Subject Fund set forth in clauses (a)(v) , (w) , (x)  and (y)  of this Section 4.1 ) as to each Subject Fund to each Agent and the Lenders as of the date such representations are given, including each Borrowing Date:
(a) Organization .
(i) Such Loan Party (other than the Borrower Member) (A) is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware; (B) is duly qualified, authorized to do business and in good standing in each other jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary; (C) has all requisite limited liability company power and authority to own or lease the property it purports to own or lease and to carry on its business as now being conducted and as proposed to be conducted under the Operative Documents to which it is a party; and (D) has all requisite limited liability company power and authority to execute and perform its obligations under each of the Financing Documents and each other agreement or instrument contemplated thereby to which it is a party and to borrow hereunder.
(ii) The Borrower Member (A) is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware; (B) is duly qualified, authorized to do business and in good standing in each other jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary; (C) has all requisite corporate power and authority to own or hold its interest in the Borrower and to carry on its business as now being conducted and as proposed to be conducted by it under the Operative Documents in respect of the Systems; and (D) has all requisite corporate power and authority to execute and perform its obligations under each of the Financing Documents and each other agreement or instrument contemplated thereby to which it is a party.
 
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(iii) The only holder of Equity Interests in the Borrower is the Borrower Member and (A) there are no outstanding Equity Interests with respect to the Borrower and (B) there are no outstanding obligations of the Borrower to repurchase, redeem, or otherwise acquire any membership or other equity interests in the Borrower or to make payments to any Person, such as “phantom stock” payments, where the amount thereof is calculated with reference to the fair market value or equity value of the Borrower. The Borrower is authorized to issue and has issued only one class of membership interests.
(iv) The only holder of Equity Interests in each Managing Member is the Borrower and (A) there are no outstanding Equity Interests with respect to each Managing Member and (B) there are no outstanding obligations of any Managing Member to repurchase, redeem, or otherwise acquire any membership or other equity interests in such Managing Member or to make payments to any Person, such as “phantom stock” payments, where the amount thereof is calculated with reference to the fair market value or equity value of such Managing Member. Each Managing Member is authorized to issue and has issued only one class of membership interests.
(v) The only holders of Equity Interests in each Subject Fund are (1) the applicable Managing Member and (2) either an Investor or another Subject Fund and, except as expressly set forth in each Subject Fund’s operating agreement, (A) there are no outstanding Equity Interests with respect to such Subject Fund and (B) there are no outstanding obligations of any Subject Fund to repurchase, redeem, or otherwise acquire any membership or other equity interests in such Subject Fund or to make payments to any Person, such as “phantom stock” payments, where the amount thereof is calculated with reference to the fair market value or equity value of such Subject Fund. The class or classes of membership interests that each Subject Fund is authorized to issue and has issued are expressly set forth in its operating agreement (except as otherwise agreed with the Administrative Agent and noted on Appendix 4 ).
(b) Authorization; No Conflict . Each Loan Party has duly authorized, executed and delivered each Financing Document to which it is a party, and neither such entity’s execution and delivery thereof nor the performance thereof (i) will be in conflict with or result in a breach of such entity’s Organizational Documents; (ii) will violate any other material Legal Requirement applicable to or binding on such Loan Party or any of its respective properties; (iii) will result in any breach of or constitute any default under, or result in or require the creation of any Lien (other than Permitted Liens) upon any of the Collateral under any agreement or instrument to which it is a party or by which it or any of the Collateral may be bound or affected; or (iv) will require the consent or approval of any Person, which has not already been obtained.
(c) Enforceability . Each Financing Document to which a Loan Party is a party is a legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and subject to general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law).
 
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(d) ERISA . Neither the Borrower nor any member of the Controlled Group sponsors, maintains, administers, contributes to, participates in, or has any obligation to contribute to or any liability under, any ERISA Plan. Neither the Borrower nor any Managing Member has any employees. Without limiting the generality of the foregoing, there has been no and there is not reasonably expected to be any ERISA Event.
(e) Taxes . Except as would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each of the Loan Parties has filed, and the Borrower and applicable Managing Member have caused each Subject Fund to file, all tax returns required to be filed, and have paid all Taxes levied or imposed upon them or their properties, that are due and payable (including in their capacity as a withholding agent) and taking into account applicable extensions, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP and enforcement of the contested tax is effectively stayed for the entire duration of such contest. There is no action, suit, proceeding, investigation, audit or claim now pending by a taxing authority regarding any taxes relating to the Loan Parties or Subject Funds that could, if made, individually or in the aggregate, have a Material Adverse Effect.
(f) Business . The Borrower and Managing Members have not conducted and have not permitted any Subject Fund to conduct any business other than acquisition, construction, installation, lease, ownership of, and sale of energy from, and the operation, management, maintenance and financing of, the Systems and activities related or incident thereto (including those contemplated by the Operative Documents). The Borrower and each of the Managing Members do not have any outstanding Debt or other material liabilities other than as permitted pursuant to Section 6.3 and as scheduled on Schedule 4.1(f) . Each of Borrower and the Managing Members is not a party to or bound by any material contract other than, with respect to the Managing Members, the Operative Documents to which it is a party and, with respect to the Borrower, this Agreement, the LLC Agreements and the other Financing Documents.
(g) Collateral . Each Collateral Document will, upon execution and delivery thereof, be effective to create in favor of the Collateral Agent for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, the Collateral described therein to the extent intended to be created thereby and (i) when financing statements in appropriate form are filed in the appropriate offices and (ii) upon the taking of possession or control by the Collateral Agent of such Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required hereunder), the Liens created by the Collateral Documents shall constitute fully perfected Liens on, and security interests in (to the extent intended to be created thereby), all right, title and interest of the grantors in such Collateral to the extent perfection can be obtained by filing financing statements or taking control, in each case subject to no Liens other than Permitted Liens.
 
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(h) Investment Company, Holding Company Act . No Loan Party is an “investment company” within the meaning of, or is regulated as an “investment company” under, the Investment Company Act of 1940.
(i) Federal Reserve Regulations . No Loan Party is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no part of the proceeds of the Loans will be used by any Loan Party to purchase Margin Stock, or to extend credit to others for the purpose of purchasing or carrying Margin Stock or otherwise in violation of Regulations T, U or X.
(j) Financial Statements . The Borrower represents that (x) the most recent financial statements (including the notes thereto) delivered in respect of the Borrower pursuant to Section 5.3 fairly present in all material respects the financial condition of the Borrower as of the date thereof and have been prepared in accordance with GAAP applied on a consistent basis, subject to the audit and normal year-end adjustments and the absence of footnotes and associated disclosures, (y) such financial statements and notes thereto disclose all direct or contingent material liabilities of the Borrower as of the dates thereof and (z) except as disclosed to the Administrative Agent in writing, there has occurred no Material Adverse Effect since the date of the most recent financial statements delivered pursuant to Section 5.3 .
(k) Project Documents . Each Managing Member represents that (w) each of the Project Documents related to a Subject Fund to which such Managing Member is a party is listed on Appendix 5 , as the same may be updated from time to time, (x) true, complete and correct copies of all Project Documents as currently in effect have been delivered via electronic data room to the Administrative Agent by the Borrower, (y) each Project Document to which a Managing Member or Subject Fund is a party is a legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and subject to general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law) and (z) none of the Project Documents to which a Managing Member or Subject Fund is a party has been materially amended or modified since the effective date of such Project Document other than as set forth in Appendix 5 or permitted by Section 6.10 and copies of all such amendments and modifications have been delivered to the Administrative Agent.
(l) Litigation . There are no instituted, pending or, to the Loan Parties’ Knowledge, threatened actions, suits or proceedings of any kind, including actions, suits or proceedings by or before any Governmental Authority, against a Loan Party or Subject Fund or any business, property or rights of a Loan Party or Subject Fund as to which, if adversely determined against such Loan Party or Subject Fund, could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
 
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(m) Disclosure . To the Borrower’s Knowledge, all written information that has been made available by any of the Loan Parties to any Secured Party in connection with the transactions contemplated by this Agreement and the other Operative Documents (such information to be taken as a whole, including, without limitation, updated or supplemented information), or that has been furnished by any of the Loan Parties to any third party in connection with the preparation and delivery by such third party of a report or certificate to any Secured Party, is complete and correct in all material respects, and does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading under the circumstances in which they are made; provided , however , that in each case no representation or warranty is made with respect to projections, assumptions or other forward-looking statements provided by or on behalf of the Loan Parties with respect to the Advance Model other than as provided in clause (s) of this Section 4.1.
(n) Tax Status . For United States federal and state income tax purposes the Borrower and each Managing Member (other than (i) Vivint Solar Hannah Manager, LLC, which is a limited liability company that elects to be treated as a corporation for federal income tax purposes and a part of the Borrower’s consolidated tax group and (ii) as otherwise agreed with the Administrative Agent and noted in Appendix 4 ) will be treated as a disregarded entity of Borrower Member. Neither the execution and delivery of the Financing Documents nor the consummation of any of the transactions contemplated by such Financing Documents will affect such status.
(o) No Other Subsidiaries . The Borrower has no subsidiaries other than the Managing Members existing on the Closing Date as set forth in Appendix 4 and other subsidiaries that become a party to this Agreement pursuant to Section 2.10 .
(p) Capital Structure . The Equity Interests of Borrower, each Managing Member and each Subject Fund has been duly authorized and validly issued and, except as otherwise provided for in such Loan Party’s or Subject Fund’s operating agreements, as the case may be, are fully paid and non-assessable. Except as expressly set forth in any Subject Fund’s operating agreements, in each case, there is no existing option, warrant, call, right, commitment or other agreement to which Borrower, any Managing Member, or any Subject Fund is a party requiring, and there is no membership interest, partnership interest, or other Equity Interests of Borrower, any Managing Member, or any Subject Fund outstanding which upon conversion or exchange would require, the issuance by such Borrower, Managing Member of any additional membership interests, partnership interests or other Equity Interests of such Borrower, Managing Member or other securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase, a membership interest, a partnership interest or other Equity Interest of such Borrower, Managing Member, or Subject Fund.
(q) Compliance with Law . Each Loan Party, and, solely with respect to Systems included in any Subject Fund, each of Borrower Member and Developer, has complied in all material respects with all applicable Legal Requirements, including consumer protection laws, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.
 
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(r) No Other Bank Accounts . The Borrower and Managing Members do not have any deposit or securities accounts other than the Accounts.
(s) Projections . The Borrower has disclosed to the Administrative Agent the assumptions that the Advance Model is based on (other than the Assumptions) and the forecasts and other projections in the Advance Model submitted to the Administrative Agent (i) are based on good faith estimates and commercially reasonable assumptions as to all factual matters material thereto and (ii) are generally consistent with the Project Documents, the Tax Equity Model, and other adjustments as approved by the Administrative Agent; provided, however, that (A) none of the Advance Model, nor the assumptions set forth therein are to be viewed as facts and that actual results during the term of the Loans may differ from the Advance Model, and that the differences may be material, and (B) the Borrower believed in good faith that the Advance Model as of the relevant date of delivery was reasonable and attainable.
(t) Solvency . Immediately after the consummation of the transactions to occur on the Closing Date and immediately following the making of each Loan and after giving effect to the application of the proceeds thereof, the Borrower and its Subsidiaries, on a consolidated basis, are Solvent.
(u) Sanctioned Persons . No Loan Party, (i) is currently the target of any Sanctions, (ii) is located, organized or residing in any Designated Jurisdiction, or (iii) is or has been (within the previous five (5) years) engaged in any transaction with any Person who is now or was then the target of Sanctions or who is located, organized or residing in any Designated Jurisdiction. No Loan, nor any part of the proceeds from any Loan, has been used or will be used, directly or indirectly, to lend, contribute, provide or otherwise make funds available (i) in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, or (ii) to fund any activity or business in any Designated Jurisdiction or to fund any activity or business of any Person located, organized or residing in any Designated Jurisdiction or who is the subject of any Sanctions, or in any other manner that will result in any violation by any Person (including any Lender, the Lead Arranger, or any Agent) of Sanctions.
(v) Environmental Compliance . To the Borrower’s and Managing Members’ Knowledge (solely with respect to each Managing Member’s applicable Subject Fund) there is no: (i) past or existing material violation of any applicable Environmental Law by the Borrower or any Managing Member, or any Affiliate thereof relating in any way to any System subject to the Financing Documents; (ii) Environmental Claim pending or, to any such party’s Knowledge, threatened against any Subject Fund or Potential New Fund, Borrower or any Managing Member; and (iii) to the Borrower’s and Managing Member’s Knowledge, events, conditions or circumstances that could reasonably be expected to form a basis for an Environmental Claim against any Subject Fund, Potential New Fund, Borrower or Managing Member with respect thereto.
 
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(w) Knowledge Individuals . Each of the individuals listed on Schedule 1.1(b) with respect to a Subject Fund is a Responsible Officer of such Subject Fund, who is responsible for the management and administration of such Subject Fund and its assets and operations.
(x) Subsidiaries; Equity Interests . As of the Closing Date, no Loan Party has any Subsidiaries or other Equity Interests other than those specifically disclosed in Schedule 4.1(x) , and all of the outstanding Equity Interests owned by the Loan Parties (or a Subsidiary of any Loan Party) in such Subsidiaries or other Equity Interests have been validly issued and are fully paid and all Equity Interests owned by a Loan Party (or a Subsidiary of any Loan Party) in such Subsidiaries or other Equity Interests are owned free and clear of all Liens except those created under the Operative Documents. As of the Closing Date, Schedule 4.1(x) sets forth (a) the name and jurisdiction of each direct and indirect Subsidiary of Borrower, (b) the ownership interest of Borrower Member, the Borrower and any other Subsidiary of a Loan Party in each such Subsidiary, including the percentage of such ownership, (c) the ownership interest of each Managing Member in each Subject Fund, including the percentage of such ownership, (d) the ownership interest of each Investor in each Subject Fund, including the percentage of such ownership, and (e) the ownership interest of each Subject Fund in any other Subject Fund, including the percentage of such ownership.
(y) Tax Equity and Other Structure Representations . As of the Closing Date, (i) with respect to each Subject Fund that is a Tax Equity Structure, each of the Tax Equity Representations is true, complete and correct and (ii) with respect to each Subject Fund that is an Other Structure (if any), each of the Other Structure Representations is true, complete and correct. Each Tax Equity Structure substantially conforms with the applicable characteristics set forth in Appendix 11 .
ARTICLE 5
AFFIRMATIVE COVENANTS OF BORROWER AND MANAGING MEMBERS
The Borrower and each Managing Member covenants and agrees that until the Discharge Date, it shall and each Managing Member covenants and agrees that it shall take all applicable Relevant Member Action to cause the Subject Funds to:
5.1 Use of Proceeds . Use the proceeds of the Loans solely (a) to make Restricted Payments to the Borrower’s direct or indirect owners for any purposes, (b) to pay fees (including the Commitment Fees), costs and expenses as required under this Agreement, and (c) to pay all outstanding obligations under the Bridge Loan Credit Facility as required pursuant to Section 3.1(n) .
 
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5.2 Notices . Promptly, upon acquiring notice or giving notice, as the case may be, or obtaining Knowledge thereof, give written notice to the Administrative Agent and each Lender of:
(a) the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit, litigation, Environmental Claim, investigation or proceeding, whether at law or in equity by or before any Governmental Authority or any other material written notice from a Governmental Authority with respect to any Loan Party, any Financing Document, any Project Document or any Guarantee, except to the extent that such action, suit, litigation, investigation, proceeding or notice could not reasonably be expected to have a Material Adverse Effect;
(b) any dispute or disputes between the Borrower, Managing Member or a Subject Fund, on the one hand, and any Person, on the other hand, which could reasonably be expected to have a Material Adverse Effect and that involve (i) claims against the Borrower, Managing Member or a Subject Fund, (ii) injunctive or declaratory relief, or (iii) revocation, material modification, or suspension of any applicable Permit or imposition of additional material conditions with respect thereto;
(c) the occurrence of a Default or Event of Default (and any notice thereof shall be entitled, respectively, “ Notice of Default ” or “ Notice of Event of Default ”);
(d) any matter which has, or could reasonably be expected to have, a Material Adverse Effect;
(e) (i) the occurrence of, or notice given or received by a Loan Party or a Subject Fund in respect of, any breach, default or claim under a Material Project Document, (ii) notice of any event of default or termination given to or received by a Managing Member, Borrower or Subject Fund under any Material Project Document, together with a copy of any such notice, and (iii) the occurrence of, or notice given or received by a Loan Party or a Subject fund in respect of any breach, default or claim under any Other Document that could have a Material Adverse Effect;
(f) The adoption of or participation in any ERISA Plan, or intention to adopt or participate in any ERISA Plan, by the Borrower or a Managing Member or a Subject Fund, or the occurrence of any ERISA Event; and
(g) any material change to the Developer’s, the Subject Funds or their respective Affiliates’ underwriting, appraisal or System development policies or processes, solely to the extent that such change renders invalid the assumptions used in the preparation of the previous report of the Independent Engineer provided to the Administrative Agent.
5.3 Portfolio Reports; Financial Statements . Deliver to the Administrative Agent (or cause to be delivered to the Administrative Agent) for further distribution to each Lender:
(a) No later than ten (10) days following the date of delivery of such reports, for each Subject Fund, any performance, financial or status reports, including any Portfolio Report, delivered or required to be delivered to each Investor under a Subject Fund’s Project Documents.
 
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(b) Within thirty (30) days of the end of each fiscal quarter, to the extent not included in the reports delivered pursuant to Section 5.3(a) , for each Subject Fund, each of the following:
(i) detailed accounts receivable aging taken directly from the source system including that maintained by any third party servicer;
(ii) financing deployment status by Subject Fund;
(iii) aggregated portfolio profile by credit composition, market composition and customer location;
(iv) the cumulative amount of billed Customer Payments delinquent for 120 days or more with respect to each Subject Fund;
(v) a summary and commentary with respect to the status of Customer Agreements that are greater than 120 days past due, to the extent not provided elsewhere within any other item delivered pursuant to Section 5.3(a) ; and
(vi) a list of Defaulted Systems.
(c) No later than ten (10) Business Days following the date of delivery to any Investor, duplicate copies of any annual reporting package required to be delivered to any Investor with respect to a Subject Fund pursuant to the Subject Fund’s Project Documents.
(d) As soon as available but no later than sixty (60) days after the close of each quarterly fiscal period, quarterly (and year-to-date) unaudited consolidated financial statements of the (A) the Borrower and (B) Vivint Solar Parent (if such financial statements are not otherwise publicly available) and (C) each Subject Fund, in each case prepared by the issuing entity in accordance with GAAP and certified by the chief financial officer of the issuing entity as of the end of such period, including a balance sheet and the related statement of income, stockholders’ or member’s equity and cash flows, in each case setting forth comparative figures for the corresponding periods from the prior year, to the extent available; provided, no quarterly financial statements shall be due with respect to the fourth quarter of the fiscal year; provided, further, that no quarterly financial statements of the Borrower shall be due with respect the third quarter of 2014.
(e) As soon as available but no later than one hundred fifty (150) days after the close of each applicable fiscal year, the audited financial statements, including a balance sheet and the related statement of income, stockholders’ or member’s equity and cash flows, and any footnotes thereto, in each case setting forth comparative figures for the prior year, to the extent available, of (A) the Borrower, as certified by Ernst & Young LLP or another nationally-recognized independent certified public accountant selected by Borrower and reasonably acceptable to the Administrative Agent, (B) Vivint Solar Parent (if such financial statements are not otherwise publicly available as of such date), and as certified by a nationally-recognized independent certified public accountant, as certified by Ernst & Young LLP or another nationally-recognized
 
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independent certified public accountant selected by Borrower and reasonably acceptable to the Administrative Agent and (C) each Subject Fund, as certified by Ernst & Young LLP or another nationally-recognized independent certified public accountant selected by the applicable Subject Fund pursuant to its operating agreement; provided, the accountant certifications accompanying such audited financial statements shall not be qualified, or limited because of restricted or limited examination by such accountant of any material portion of the records of any entity. Such audited financial statements shall be certified by the chief financial officer of the issuing entity as of the end of such period.
(f) Concurrently with any delivery of a Draft Withdrawal/Transfer Certificate (as defined in the CADA) which specifies a distribution to be made to Borrower Member in accordance with Section 3.3(d) of the CADA or otherwise on each Scheduled Payment Date, a certificate signed by an authorized Responsible Officer of the Borrower (i) certifying that such Responsible Officer has made or caused to be made a review of the transactions and financial condition of the Borrower during the relevant fiscal period and that, to the knowledge of such Responsible Officer, no Default or Event of Default exists or if any such event or condition existed or exists, the nature thereof and the corrective actions that the Borrower has taken or proposes to take with respect thereto and (ii) setting forth whether or not Borrower was in compliance with the requirements of Section 6.1 as of the end of the applicable quarter, including computations in reasonable detail satisfactory to the Administrative Agent demonstrating such compliance.
(g) Documents required to be delivered pursuant to Section 5.3(d) or (e)  (to the extent any such documents are included in materials otherwise filed with the U.S. Securities and Exchange Commission) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Vivint Solar Parent posts such documents, or provides a link thereto on Vivint Solar Parent’s website on the Internet at the following website address: www.vivintsolar.com; or (ii) on which such documents are posted on Vivint Solar Parent’s behalf on an Internet or intranet website, if any, to which each Lender and Administrative Agent have access (whether a commercial, third-party website or whether sponsored by Administrative Agent); provided that: (i) Borrower shall deliver paper copies of such documents to Administrative Agent on behalf of any Lender that reasonably requests delivery of such paper copies until a written request to cease delivering paper copies is given by Administrative Agent or such Lender and (ii) Borrower shall notify Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents. Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by Borrower with any request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining copies of such documents.
5.4 Reports; Other Information .
(a) Deliver to the Administrative Agent copies of any material documents and reports related to the Subject Funds furnished to the Borrower or a Managing Member by a
 
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Governmental Authority or by any counterparty to a Material Project Document (other than reports already delivered pursuant to Section 5.3(a)) , or furnished by the Borrower to such Governmental Authority or such counterparty.
(b) Deliver to the Administrative Agent promptly after receipt thereof a copy of any “management letter” received by the Borrower, any Managing Member or any Subject Fund from its independent accounts and management’s response thereto.
(c) Deliver to the Administrative Agent no later than three (3) Business Days of delivery to the applicable Investor, any True-Up Reports and models in connection therewith delivered to an Investor in a Subject Fund.
(d) Promptly, from time to time, deliver such other information regarding the operations, business affairs and financial condition of the Borrower or any other Loan Party, or compliance with the terms of any Operative Document, as the Administrative Agent or any Lender may reasonably request through the Administrative Agent.
(e) Within sixty (60) days after any notice is delivered pursuant to Section 5.2(g), upon the request of the Administrative Agent, the Borrower shall deliver an Independent Engineer’s report in the same form, and regarding the same substance, as the Independent Engineer’s report provided to the Administrative Agent in connection with the structuring of this Agreement and covering any other matters that the Administrative Agent may reasonably request.
5.5 Maintenance of Existence . Except as otherwise expressly permitted under this Agreement: (i) do or cause to be done all things required to maintain and preserve and keep in full force its existence as a Delaware limited liability company; (ii) take all reasonable action required to maintain all material rights, privileges (including its good standing where applicable in the relevant jurisdiction), permits, licenses and franchises necessary or desirable in the normal conduct of its business, (iii) perform all of its material obligations under the Material Project Documents; (iv) perform all of its obligations under the Other Documents and (v) to engage only in the activities permitted by the Operative Documents, and activities related or incident thereto, except, in the cases of clauses (ii) and (iv) above, where the failure to take such actions could not reasonably be expected to have a Material Adverse Effect.
5.6 Books, Records, Access .
(a) The Borrower shall maintain, in respect of itself, each Managing Member and each Subject Fund, books, accounts and records in accordance with GAAP and in material compliance with applicable law and the regulations of any Governmental Authority having jurisdiction thereof.
(b) At any time during normal business hours and upon reasonable written notice to the Borrower, but so long as no Event of Default has occurred and is continuing, no more frequently than twice per calendar year, subject to Section 10.17 , and to the extent permitted by
 
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applicable Laws, permit any representatives and independent contractors of the Administrative Agent and (and, during the continuance of an Event of Default, any Lender) to visit the premises of the Borrower, Borrower Member or Vivint Solar Parent, inspect all of the Borrower’s and each Managing Member’s, and (to the extent permitted by the Subject Fund Project Documents) each Subject Fund’s books, accounts, records and properties and make copies thereof and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants (subject to such accountants’ customary policies and procedures). Notwithstanding anything to the contrary in this Section 5.6(b) , none of the Borrower, Borrower Member, Vivint Solar Parent or Managing Members shall be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (x) constitutes non-financial trade secrets or non-financial proprietary information, (y) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by Law or (z) is subject to attorney client or similar privilege or constitutes attorney work-product.
(c) The Borrower shall reimburse the Administrative Agent and Lenders for reasonable out-of-pocket expenses incurred in connection with Section 5.6(b) by the Administrative Agent and Lenders and their respective Representatives limited to, so long as no Event of Default has occurred, one inspection per year; provided , that such expenses shall be agreed to by the Borrower and the Administrative Agent in advance on commercially reasonably terms, and provided , further , that notwithstanding anything to contrary herein, any expenses incurred pursuant to Section 5.6(b) by the Administrative Agent or any Lender during the continuance of an Event of Default shall be for the account of the Borrower and not subject to any limitations set forth herein or elsewhere.
5.7 Preservation of Rights; Further Assurance .
(a) (i) Maintain in full force and effect, preserve, protect and defend the material rights of each Loan Party and Subject Fund and (ii) take all actions necessary to prevent termination or cancellation (except as required by the Operative Documents) by, and enforce against, other parties the material terms of each Project Document of the applicable Subject Fund, including enforcement of any claims with respect thereto, except in each case to the extent the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) Preserve and maintain the security interests granted under the Collateral Documents and undertake all actions that are necessary or appropriate to (a) maintain the Collateral Agent’s security interest in the Collateral in full force and effect at all times (including the priority thereof), (b) preserve and protect the Collateral and (c) protect and enforce the Borrower’s rights and title and the rights of the Collateral Agent and the other Secured Parties to the Collateral, including the making or delivery of all filings and recordations, the payment of all fees and other charges and the issuance of supplemental documentation.
 
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(c) From time to time as reasonably requested by the Administrative Agent, execute, acknowledge, record, register, deliver and/or file all such notices, statements, instruments and other documents (including any financing statement, continuation statement, certificate of title or estoppel certificate) as are necessary or appropriate to carry out the interest and purposes of the Financing Documents or necessary to maintain the Collateral Agent’s perfected security interest in the Collateral to the extent and in the priority required pursuant to the Collateral Documents.
5.8 Taxes and Other Government Changes .
(a) Pay, or cause to be paid, as and when due and prior to delinquency, all taxes, assessments and governmental charges of any kind that may at any time be lawfully assessed or levied against or with respect to the Borrower, each Managing Member and each Subject Fund, except, in each case, to the extent any such amount is being contested in good faith and by appropriate proceedings, the enforcement of such contested taxes, assessments and governmental charges is effectively stayed for the entire duration of such proceedings, and appropriate reserves for such contested taxes, assessments and governmental charges have been established in accordance with GAAP.
(b) The Borrower and each Managing Member (other than (i) Vivint Solar Hannah Manager, LLC, which is a limited liability company that elects to be treated as a corporation for federal income tax purposes and is a member of the Borrower’s consolidated tax group and (ii) as otherwise agreed with the Administrative Agent and noted in Appendix 4 ) shall at all times be classified as disregarded entities for U.S. federal income tax purposes.
5.9 Compliance With Laws; Instruments, Etc. Comply, or cause compliance by each Managing Member and Subject Fund, in all respects, with all Laws, including consumer protection laws, and all orders, writs, injunctions and decrees applicable to it or to its business or property, except (i) if the failure to comply therewith could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and (ii) that the Borrower, Managing Member or Subject Fund may contest by appropriate proceedings conducted in good faith the validity or application of any such Laws.
5.10 Indemnification .
(a) Without duplication of the Borrower’s obligations under Section 2.4(d) or Section 2.6 , the Borrower agrees to indemnify each Secured Party (other than the Depositary, who is indemnified under Section 6.2 of the CADA) and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements of one counsel to the Agents (and one local counsel in each applicable jurisdiction and, in the event of any actual conflict of interest, one additional counsel of each type to the affected parties), incurred by or asserted against any Indemnitee arising out of, connected with, or as a result of (i) the execution or delivery of this Agreement or any other Financing Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the
 
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consummation of the transactions contemplated hereby and thereby, (ii) the use of the proceeds of the Loans, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto (and regardless of whether such matter is initiated by a third party or by the Borrower, any other Loan Party or any of their respective Affiliates), or (iv) any actual or alleged presence or Release of Hazardous Materials on any property currently or formerly owned, leased or occupied by the Borrower, any Managing Member or any Subject Fund or, or any Environmental Claim related in any way to the Borrower, any Managing Member or any Subject Fund, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from such Indemnitee’s gross negligence, bad faith or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Financing Document, if the Borrower or such Loan Party has obtained a final or nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. Notwithstanding the foregoing, any indemnification relating to Taxes, other than Taxes resulting from any non-Tax claim, shall be covered by Sections 2.4(d) and 2.6 and shall not be covered by this Section 5.10.
(b) To the extent that the Borrower fails to pay any amount required to be paid by them to the Administrative Agent or the Collateral Agent under Section 5.10(a) or Section 10.4(a) , each Lender severally agrees to pay to the Administrative Agent and the Collateral Agent, as the case may be, such Lender’s Proportionate Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent or the Collateral Agent in its capacity as such.
(c) To the extent permitted by applicable law, the Borrowers and Lenders shall not assert and hereby waive any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, any transaction contemplate hereby or by the other Financing Documents, any Loan or the use of the proceeds thereof.
(d) The provisions of this Section 5.10 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the resignation of any Agent, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Financing Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Lender. Any amounts due and payable by the Borrower under this Section 5.10 shall be payable on demand by the applicable Indemnitee, but in no event later than ten (10) Business Days after receipt of an invoice for such amounts
 
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from such Indemnitee; provided, however, that such Indemnitee shall promptly refund such amount to the extent that there is a final judicial or arbitral determination that such Indemnitee was not entitled to indemnification rights with respect to such payment pursuant to the express terms of this Section 5.10 .
5.11 Revenue Account . Each Managing Member shall, and the Borrower shall cause each Managing Member to, deposit all income, fees, revenue and other funds payable or distributable to such Managing Member into such Managing Member’s related Account. In the event that, notwithstanding the foregoing, the Borrower receives any such amounts, the Borrower will hold such amounts in trust and promptly (and in any event within five (5) Business Days) after receipt thereof deposit such amounts in the Revenue Account.
5.12 [Intentionally omitted.]
5.13 Separateness Provisions; Required Provisions in LLC Agreements .
(a) The LLC Agreement of the Borrower shall include, and the Borrower shall comply with, (i) the provisions set forth in Appendix 8 and (ii) Independent Member provisions in conformity with the requirements of Section 5.13(c) below.
(b) The LLC Agreement of each Managing Member shall provide that the Managing Member’s only purposes are to (i) hold its Equity Interests in the applicable Subject Fund, (ii) enter into and perform the Project Documents applicable to its Subject Fund and documents ancillary thereto and (iii) enter into and perform the Financing Documents and any documents ancillary thereto.
(c) The LLC Agreement of each Managing Member shall include each of the following terms (collectively, the “ Required LLC Provisions ”): requires unanimous written approval of all members, partners or managers of such Managing Member, as the case may be, (which approval, pursuant to the terms of the Borrower’s LLC Agreement requires the consent of the Independent Member of the Borrower), in order to authorize the filing of any insolvency or reorganization case or proceeding, instituting proceedings to have such Managing Member adjudicated bankrupt or insolvent, instituting proceedings under any applicable insolvency law, seeking any relief under any law relating to relief from debts or the protection of debtors, consenting to the filing or institution of bankruptcy or insolvency proceedings against such Managing Member, filing a petition seeking or consenting to reorganization, liquidation or relief with respect to such Managing Member under any applicable federal or state law relating to bankruptcy, reorganization or insolvency, seeking or consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official for such Managing Member or a substantial part of its respective property, making any assignment for the benefit of creditors, admitting in writing the inability of such Managing Member to pay its debts as they become due, or taking action in furtherance of any of the foregoing.
5.14 Distributions by Certain Subsidiaries . The Borrower shall cause each Managing Member to promptly distribute cash flows as per the requirements, and in accordance with and subject to any limitations in, the distribution allocation of the Subject Fund and to pay all such cash flows paid or distributed to such Managing Member into its related Account.
 
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5.15 Borrowing Base Certificate . The Borrower shall deliver a fully executed and complete Borrowing Base Certificate to the Administrative Agent, (a) once per month for every month during the term hereof on the fifteenth (15 th ) day of such month, (b) on each Borrowing Date, (c) on each date interest is payable pursuant to Section 2.1(b)(ii) , (d) on any other date on which the Borrower first obtains Knowledge that a Subject Fund has become a Watched Fund and (e) as otherwise expressly required herein; provided, that if a date specified in the foregoing clauses (b) or (c) occurs on the fifteenth (15 th ) day of a month, only one Borrowing Base Certificate will be required to be delivered on such day. Each Borrowing Base Certificate will include all the items specified in Appendix 2 .
5.16 Amendments; Other Agreements . Promptly after the execution and delivery thereof, the Borrower shall furnish the Administrative Agent with copies of (i) all material waivers, amendments, supplements or modifications of any Material Project Document or Approved Form Agreement and (ii) all waivers, amendments, supplements or modifications of any Other Documents and any additional material contracts or agreements to which the Borrower becomes a party after the Closing Date, in the case of this clause (ii), to the extent such waivers, amendments, supplements or modifications could reasonably be expected to have a Material Adverse Effect.
5.17 Insurance .
(a) Maintain with Qualified Insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business as the Borrower and Managing Members, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons, which types and amounts shall be adjusted annually pursuant to Section 5.17(b) . In addition, Borrower and the Managing Members shall take all Relevant Member Action to cause each of the Subject Funds to maintain any insurance that such Subject Fund is required to maintain pursuant to the terms and conditions of the Project Documents. The following terms and conditions apply with respect to property and liability insurance maintained by or on behalf of the Borrower or Subject Funds:
 
 	(i)	All-Risk Property Insurance (Including Excess Policies) :	
 
 	(A)	Borrower, Borrower Member and each Managing Member shall be included as an additional “named insured”;	
 
 	(B)	Borrower, Borrower Member and each Managing Member hereby waives any rights of subrogation against the Secured Parties and shall cause any such property insurance policies to include or be endorsed to include a waiver of subrogation in their favor;	
 
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 	(ii)	General Liability / Excess Liability Insurance :	
 
 	(A)	Borrower, Borrower Member and each Managing Member shall be included as an additional “named insured”;	
 
 	(B)	Secured Parties shall be included as additional insureds on a primary and non-contributory basis;	
 
 	(C)	Borrower, Borrower Member and each Managing Member hereby waives any rights of subrogation against the Secured Parties and shall cause any such liability insurance policies to include or be endorsed to include a waiver of subrogation in their favor	
 
 	(D)	To the extent commercially available, the policies shall be endorsed to provide the Administrative Agent with thirty (30) days’ written notice of cancellation, except ten (10) days for non-payment of premium at the following address:	
Bank of America, N.A.,
as Administrative Agent
Gateway Village
900 W Trade Street
Charlotte NC 28255
Attention: Darleen R Parmelee
Telephone: 980.388.5001
Telecopier: 704.409.0645
Electronic Mail: darleen.r.parmelee@baml.com
 
 	(iii)	General Terms and Conditions	
 
 	(A)	Borrower and/or Borrower Member shall be obligated to provide written notice of material change to the Administrative Agent unless such notice is otherwise provided by endorsement of the required policies. For the purposes of this Section 5.17(a)(iii) , “materially changed” means any reduction of more than twenty-five percent (25%) of any policy aggregate limit for earthquake (or earth movement as the case may be), flood, windstorm (if applicable) or excess liability or a change that would cause the Subject Fund to be in non-compliance with the insurance requirements of the Project Documents;	
 
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 	(B)	Prior to Closing Date and annually thereafter, the Borrower and/or Borrower Member shall provide detailed evidence of insurance (in a form acceptable to the Administrative Agent) including certificates of insurance and copies of applicable insurance binders and policies (if requested), as well as a statement from the Borrower and/or its authorized insurance representative confirming that such insurance is in compliance with the terms and conditions of this Section 5.17 , is in full force and effect and all premiums then due have been paid or are not in arrears; and	
 
 	(C)	No provision of this Agreement shall impose on the Administrative Agent or any Secured Party any duty or obligation to verify the existence or adequacy of the insurance coverage maintained by or on behalf of the Borrower, Borrower Member, Managing Member or Subject Fund, nor shall the Administrative Agent or any Secured Party be responsible for any representations or warranties made by or on behalf of the Borrower, Borrower Member, Managing Member or Subject Fund, or any other party to any insurance agent or broker, insurance company or underwriter.	
(b) On an annual basis, not later than sixty (60) days before the end of the Borrower’s fiscal year, the Borrower shall cause a nationally recognized insurance or other applicable expert to perform and deliver, with a copy to the Administrative Agent, a probable maximum loss analysis with respect to the properties of the Borrower and the Managing Members. The Administrative Agent, the Borrower and each Managing Member shall review such probable maximum loss analysis and, the Borrower and Managing Members shall make appropriate adjustments (in consultation with, and with the prior written approval of, the Administrative Agent) to the types and amounts of insurance it maintains pursuant to Section 5.17(a) to reflect the results of such probable maximum loss analysis.
5.18 New Subject Funds . In connection with the inclusion of any Potential New Fund as a Subject Fund, the Loan Parties shall simultaneously with such Potential New Fund becoming a Subject Fund:
(a) deliver to the Administrative Agent such modifications to the terms of the Financing Documents (or, to the extent applicable as determined by the Administrative Agent, such other documents), in each case in form and substance reasonably satisfactory to the Administrative Agent and as the Administrative Agent deems necessary or advisable in order to ensure the following:
 
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(i) the Managing Member of such Potential New Fund (but, for the avoidance of doubt, not any Subject Fund itself) shall guaranty, as primary obligor and not as surety, the payment of the Obligations; and
(ii) the Managing Member of such Potential New Fund shall effectively grant to the Administrative Agent, for the benefit of the Secured Parties, a valid and enforceable security interest in all of its property, including all of the Equity Interests it owns, as security for the Obligations;
(b) deliver to the Administrative Agent all documents representing all Equity Interests pledged pursuant to the documents delivered pursuant to clause (a) above, together with undated powers or endorsements duly executed in blank;
(c) the Loan Parties shall take any actions reasonably required by the Administrative Agent to ensure and/or demonstrate that the Liens and security interests granted by the applicable Financing Documents continue to be perfected under applicable law after giving effect to the Potential New Fund becoming a Subject Fund hereunder and thereunder;
(d) to take all other actions necessary or advisable to ensure the validity or continuing validity of any guaranty for any Obligation or any Lien securing any Obligation, to perfect, maintain, evidence or enforce any Lien securing any Obligation or to ensure such Liens have the same priority as that of the Liens on similar Collateral set forth in the Financing Documents executed on the Closing Date (or, for Collateral located outside the United States, a similar priority acceptable to the Administrative Agent), including the filing of UCC financing statements in such jurisdictions as may be required by the Financing Documents or applicable law or as the Administrative Agent or Collateral Agent may otherwise reasonably request;
(e) without duplication of documents delivered pursuant to Section 3.4(b) , deliver all Project Documents for such Subject Fund to the Administrative Agent;
(f) in connection with any Other Structure, execute agreements and other documents indicating their consent to the incorporation of supplemental or modified terms and conditions to the Financing Documents regarding such Other Structure reasonably requested by the Agents and Majority Lenders, including supplemental representations, warranties, covenants and defaults and amendments to the existing terms of this Agreement and the other Financing Documents;
(g) in accordance with Section 5.17 , provide evidence of insurance with respect to such new Subject Fund in form and substance acceptable to the Administrative Agent, including copies of policies of such insurance upon the Administrative Agent’s request; and
(h) the Managing Member for such Subject Fund has duly executed and delivered an agreement in the form of Exhibit M (a “ New Subject Fund Accession Agreement ”).
 
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5.19 Backup Servicer . Within 90 days following the Closing Date, the Borrower shall appoint a backup servicer with respect to the management, administration and servicing of all the Systems in the Available Borrowing Base on terms and conditions reasonably acceptable to the Administrative Agent.
ARTICLE 6
NEGATIVE COVENANTS OF BORROWER AND MANAGING MEMBERS
Borrower and, other than with respect to Section 6.1 , each of the Managing Members covenants and agrees that until the Discharge Date it shall not, and each Managing Member covenants and agrees that it shall take all applicable Relevant Member Action to cause the Subject Funds not to:
6.1 Cash Flow Coverage Ratio . Permit the Cash Flow Coverage Ratio as of a Quarterly Date to be less than 1.40:1.00.
6.2 Limitations on Liens . (a) Create or assume any Lien on any of its property assets or revenue, whether now owned or hereafter acquired, except for Permitted Liens or (b) suffer to exist any Lien on any of its property assets or revenues , whether now owned or hereafter acquired, except for Permitted Liens.
6.3 Indebtedness . Incur, create, assume or permit to exist any Debt except for (i) Debt created under the Financing Documents, (ii) Debt in respect of Permitted Swap Agreements, and (iii) Debt permitted (without requiring any amendment, consent, waiver, or vote by any member of a Subject Fund, including any Investor, under the terms and conditions of such Material Project Documents and Other Documents unless such amendment, consent or waiver is approved in accordance with the terms hereof) to be incurred by a Subject Fund under any Material Project Document or Other Document;
6.4 Sale or Lease of Assets . Directly or indirectly sell, lease, assign, transfer or otherwise dispose of any of its Property (including any portion of any Equity Interest owned by the Borrower or a Managing Member), whether now owned or hereafter acquired except:
(a) the granting of Liens to the Collateral Agent;
(b) with respect to the property of a Subject Fund, to the extent permitted (without requiring any amendment, consent, waiver, or vote by any member of a Subject Fund, including any Investor, under the terms and conditions of such Material Project Documents and Other Documents unless such amendment, consent or waiver is approved in accordance with the terms hereof) pursuant to any Material Project Document or Other Document;
(c) any Restricted Payment by a Subject Fund to a Managing Member or from the Managing Member to the Borrower; and
 
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(d) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the sale by Borrower of a Subject Fund (including, without limitation, the sale of the Equity Interests in a Managing Member or Equity Interests in such Subject Fund or the applicable Managing Member) in an arm’s length transaction; provided that (i) the consideration for such sale is paid entirely in cash, (ii) as evidenced by a Borrowing Base Certificate delivered by Borrower to Administrative Agent giving pro forma effect to such sale, the Available Borrowing Base exceeds the Outstanding Principal, and (iii) such sale will be non-recourse to the Borrower, any Loan Party not fully disposed as part of such sale, or any other Subject Fund and Borrower and the remaining Loan Parties will cease to have any obligation, liability or responsibility in respect of any disposed Subject Fund and any disposed Loan Party.
6.5 Changes . Conduct any business other than the acquisition and ownership of subsidiaries which engage in the acquisition, ownership, leasing and financing of the Systems and activities related or incident thereto (including those contemplated by the Operative Documents but excluding the engineering, development, construction or creation of Systems), hire or become an employer of an employee or assume or incur any obligation under or in connection with any ERISA Plan.
6.6 Distributions . Directly or indirectly, make or declare any Restricted Payment or incur any obligation (contingent or otherwise) to do so, except for Restricted Payments:
(a) from proceeds of the Loans in accordance with Section 5.1 ;
(b) from a Subject Fund to its Managing Member;
(c) from a Managing Member to Borrower;
(d) to the extent required under the Project Documents of a Subject Fund to each direct owner of Equity Interests in such Subject Fund (other than to the Managing Member, which payments are permitted pursuant to clause (b)  of this Section 6.6 ); and
(e) on any Scheduled Payment Date, so long as (i) no Default or Event of Default has occurred and is continuing or would be caused thereby, (ii) no Repayment Event has occurred and is continuing, (iii) the Borrower, after giving effect to any prepayments made pursuant to Section 2.1(f)(ii) , is in compliance with the Borrowing Base Requirement, and (iv) the Interest Reserve Accounts has been fully funded in an amount at least equal to the required reserve amount under the CADA, from Borrower to Borrower Member from any monies remaining in the Revenue Account after giving effect to the withdrawals and transfers specified in clauses (1) through (4) of Section 3.3(d) of the CADA.
6.7 Investments . Make or permit to remain outstanding any advances or loans or extensions of credit to, or purchase, redeem or own any Equity Interests in, or any assets constituting an ongoing business from, or make or permit any other investment in, any Person, except for:
 
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(a) investments by each Managing Member in a Subject Fund in which it holds an Equity Interest and investments by Borrower in each Managing Member (including, for the avoidance of doubt, investments made using equity contributions to Borrower or any Managing Member by Holdings or Vivint Solar Parent), in each case, with respect to Equity Interests existing as of the Closing Date (and in the case of Subject Funds and Managing Members added after the Closing Date, existing as of the date of such addition) and as set forth in Schedule 6.7 . For the avoidance of doubt, each Managing Member may exercise, subject to compliance with the other terms and conditions of the Financing Documents, any call option, purchase option or other similar right to purchase the Equity Interests of an Investor in its Subject Fund, without the consent of any Agent or Lender; and
(b) investments in the form of loans and advances by each Managing Member to the Subject Fund or any Potential New Fund in which it holds an Equity Interest and capital contributions by the Borrower and each Managing Member to or in the Subject Fund or any Potential New Fund in which it holds an Equity Interest made on or after the Closing Date to the extent permitted (without requiring any amendment, consent, waiver, or vote by any member of a Subject Fund, including any Investor, under the terms and conditions of such Material Project Documents and Other Documents unless such amendment, consent or waiver is approved in accordance with the terms hereof) by the terms of the applicable Project Documents of the Subject Funds or Potential New Fund (in each case, as reflected in an updated Schedule 6.7 with the prior written approval of the Administrative Agent);
provided, however, that if a Potential New Fund is not approved to become a Subject Fund, then upon the written request of the Majority Lenders, the Borrower shall within five (5) Business Days cause the Managing Member related to such Potential New Fund to no longer be a Subsidiary of Borrower by selling, winding up or otherwise disposing of (including, without limitation, transferring Borrower’s Equity Interests in such Managing Member to a third party) such Managing Member.
6.8 Federal Reserve Regulations . Apply any part of the proceeds of any Loan to the purchasing or carrying of any Margin Stock.
6.9 Fundamental Changes . Liquidate or dissolve, or sell or lease or otherwise transfer or dispose of, all or any substantial part of its property, assets or business, or combine, merge or consolidate with or into any other entity (in each case, whether in one transaction or a series of transactions) other than the sale of assets as permitted by Section 6.4 .
6.10 Amendments; Other Agreements .
(a) Without the prior written consent of the Majority Lenders, (i) terminate or cancel, exercise any right or remedy under or pursuant to any breach or default of, (ii) materially amend, modify, supplement or consent to any change in any provision of or (iii) materially waive any material default under, material breach of, material condition, closing deliverable or other required item under, or the performance of a material obligation by any Person, in each case, under any (x) Other Documents, except to the extent that such actions could not reasonably be
 
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expected to have a Material Adverse Effect or (y) Material Project Documents unless such amendment, consent or waiver is either approved in writing by the Administrative Agent or immaterial; provided , however , that no prior written consent by the Majority Lenders shall be required in the case of any amendment, modification or supplement to or waiver under Other Documents or Material Project Documents to (A) correct a manifest error therein that is not material or (B) to increase the aggregate amount of an Investor’s commitment.
(b) Amend, modify, supplement or consent to any change in any provision of the LLC Agreements, except to the extent that such actions could not reasonably be expected to materially and adversely affect the Administrative Agent or the Lenders.
(c) Amend, modify, supplement or consent to any change in any Approved Form Agreement unless (i) such amendments, modifications, supplements or changes do not (w) reallocate risk from the Host Customer to the Subject Fund, Managing Member or any of its Affiliates, or (x) reduce any payment obligations of the Host Customer, (y) reduces the creditworthiness standards with which the Host Customer must comply, or (z) otherwise materially increase the risk profile of the Lenders and (ii) the Borrower has promptly (and in any event within five (5) Business Days) provided copies of such amendments, modifications, supplements or changes to the Administrative Agent.
(d) Notwithstanding the foregoing, Borrower may permit any Subject Fund to enter into an agreement for the sale of SRECs, including any such agreement that, notwithstanding anything to the contrary herein, contains any provisions for liquidated damages, contingent liabilities or other damages, or the posting of collateral or other security, so long as such agreements are entered into in the ordinary course of business at prices and on terms and conditions not less favorable than could be obtained on an arm’s-length basis from unrelated third parties; provided , further , that all Revenues from such sale of SRECs shall be paid directly to the Borrower by deposit by the purchaser of such SRECs directly into the Revenue Account.
6.11 Name and Location; Fiscal Year . Change its name, its state of business, accounting policies (except as permitted by GAAP) or its fiscal year without the Administrative Agent’s prior written consent.
6.12 Assignment . Assign its rights hereunder or under any other Operative Document.
6.13 Transfer of Equity Interest . Except to the extent permitted pursuant to Section 2.10(b) or Section 6.4 , cause, make, suffer, permit or consent to any creation, sale, assignment or transfer of any Equity Interest in the Managing Members or Subject Funds except for the Liens in favor of the Collateral Agent under the Collateral Documents.
6.14 Accounts . Establish or maintain any deposit, securities or other account in its own name other than the Accounts.
6.15 Transaction with Affiliates . Engage in any transactions with any of its Affiliates except (i) transactions among the Loan Parties (other than the Borrower Member) and the
 
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Subject Funds or any entity that becomes a Loan Party or a Subject Fund as a result of such transaction, including, without limitation, transactions among such Persons pursuant to the Project Documents, in each case, subject to compliance with the other terms and conditions of the Financing Documents, (ii) transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Loan Party or the applicable Subject Fund than could be obtained on arm’s-length basis from unrelated third parties and (iii) transactions pursuant to agreements in existence on the Closing Date and set forth on Schedule 6.15 or any amendment thereto to the extent such an amendment is not adverse to the Lenders in any material respect.
6.16 Limitation on Dividends and Other Payment Restrictions Affecting Certain Subsidiaries . Enter into, or allow a Borrower, any Managing Member or any Subject Fund to enter into, any agreement, instrument or other undertaking that (i) restricts or limits the ability of any Managing Member or any Subject Fund to make any dividend or other distribution of Revenues with respect to its Equity Interests or (ii) restricts or limits the ability of any Loan Party to create, incur, assume or suffer to exist Liens on the property of such Person for the benefit of the Agents and Lender with respect to the Obligations of the Loan Parties or the Financing Documents, except, in each case, the Operative Documents in existence on the Closing Date as well as any other Operative Documents entered into by a Potential New Fund after the Closing Date, to the extent reviewed and approved by the Administrative Agent.
6.17 Hedging Agreement . Enter into any Hedging Agreement other than a Permitted Swap Agreement.
6.18 Operations and Maintenance in Partnership . Vote to terminate or to appoint a new operations and maintenance provider, or consent to the appointment of a new operations and maintenance provider; provided , that if any vote or appointment is required within a certain time period under the applicable Project Document, if Administrative Agent does not consent (unless such consent was reasonably withheld) within such time period, then the Borrower may, or cause any Managing Member of a Subject Fund to, vote or appoint or consent to a new operations and maintenance provider or administrative services provider in order to comply with the terms of the applicable Project Documents; provided , further , that the consent of the Administrative Agent may not be unreasonably withheld if the new operations and maintenance provider or administrative services provider meets the standards set forth in the applicable Project Documents.
ARTICLE 7
ACCOUNTS; APPLICATION OF FUNDS
7.1 Accounts; Application of Funds in Accounts .
(a) On or prior to the Closing Date, the Borrower shall cause the Accounts to be established at Depositary. Each Loan Party shall, or shall take Relevant Member Action to cause, all Revenues, income and other amounts paid, payable or distributable to any Managing Member or the Borrower, when actually paid, to be deposited in such Managing Member’s related Account.
 
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(b) Funds on deposit in the Accounts shall be applied in the manner, at the times and in the order of priority as set forth in the CADA.
ARTICLE 8
EVENTS OF DEFAULT; REMEDIES
8.1 Events of Default . The occurrence of any of the following events shall constitute an event of default (individually, an “ Event of Default ,” and collectively, “ Events of Default ”) hereunder:
(a) Failure to Make Payments . Any Loan Party shall fail to pay, in accordance with the terms of this Agreement, (i) any principal with respect to any Loan on the date that such principal is due or (ii) any interest on any Loan or other amount payable hereunder or with respect to any other Loan within five (5) Business Days after the date that such payment is due.
(b) Judgments . There is entered against any Loan Party any one or more final judgments or orders for the payment of money and the aggregate amount of all such judgments or orders for all such parties equals or exceeds $2,000,000 (to the extent not covered by a valid and binding policy of insurance issued by an independent third party as to which the insurer has been notified of such judgment or order and has not denied coverage) and such judgments or orders shall not have been satisfied, vacated, discharged or stayed or bonded to the reasonable satisfaction of the Administrative Agent pending an appeal for a period of sixty (60) consecutive days;
(c) Misstatements . Any representation, warranty, certification or statement of trust made or deemed made by a Loan Party in the Financing Documents, any amendment or modification thereof or waiver thereto, or in any certificate or financial statement furnished pursuant thereto to any Agent or Secured Party pursuant to this Agreement or any other Financing Document, shall prove to have been inaccurate or misleading in any material respect as of the date made or deemed made, as applicable.
(d) Bankruptcy . Vivint Solar Parent, Borrower Member, or Borrower shall become subject to a Bankruptcy Event.
(e) ERISA . (i) The Borrower shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any ERISA Plan (that is not excepted under Section 408 of ERISA and regulatory guidance thereunder) resulting in a Material Adverse Effect to the Borrower; (ii) an ERISA Event shall occur with respect to any ERISA Plan which results in an aggregate amount which could reasonably be expected to result in a Material Adverse Effect; or (iii) the Borrower or any member of its Controlled Group fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount which could reasonably be expected to result in a Material Adverse Effect.
 
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(f) Breach of Terms of Financing Agreements .
(i) Any Loan Party shall fail to perform or observe any covenant set forth in Section 5.2 , Section 5.5(i) , Article 6 , or Section 8.4 of this Agreement.
(ii) Any Loan Party shall fail to perform or observe any other covenant (not specified in Section 8.1(a) or clause (i)  of this Section 8.1(f) ) to be performed or observed by it hereunder or under any Financing Document and not otherwise specifically provided for elsewhere in this Section 8.1 , and such failure shall continue unremedied for a period of thirty (30) days after the Borrower becomes aware of such failure; provided , that if (x) such failure can be remedied, (y) such failure cannot reasonably be remedied within such 30 day period, and (z) the Borrower commences cure of such failure within such 30 day period and thereafter diligently seeks to remedy the failure, then an “Event of Default” shall not be deemed to have occurred until the earlier of (A) such time as Borrower ceases reasonable efforts to cure such failure and (B) 90 calendar days following such failure.
(g) Security . Any of the Collateral Documents, once executed and delivered, (i) shall fail to provide the Collateral Agent (on behalf of the Secured Parties) a first priority perfected security interest (subject only to Permitted Liens) in all of the Collateral (except to the extent that any such perfection or priority results from the failure of the Collateral Agent to maintain possession of certificates actually delivered to it representing securities pledged under the Collateral Documents or the failure of the Collateral Agent to uniform commercial code continuation statements), (ii) shall cease to be in full force and effect, or (iii) the validity or the applicability thereof to the Obligations to be secured or guaranteed thereby or any part thereof shall be disaffirmed by or on behalf of any Loan Party.
(h) Change of Control . A Change of Control shall have occurred.
(i) Invalidity of Financing Documents . Any material provision of any Financing Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or as a result of acts or omissions by the Administrative Agent or Collateral Agent or any Lender or the satisfaction in full in cash of all the Obligations, shall cease to be in full force and effect, or any Loan Party shall contest in writing the validity or enforceability of any provision of any Financing Document, or any Loan Party shall deny in writing that it has any or further liability or obligation under any Financing Document (other than as a result of repayment in full of the Obligations and termination of the Commitments), or any Loan Party shall purport in writing to revoke or rescind any Financing Document.
(j) Tax Equity Transaction Documents . Any Loan Party shall fail to observe or perform any of its obligations under or otherwise breaches (i) any representation, warranty, term or condition of the Material Project Documents applicable to it which is not immaterial or (ii) any representation, warranty, term or condition of the Other Documents applicable to it the effect of which could reasonably be expected to have a Material Adverse Effect.
 
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(k) Cross-Default . Any Loan Party (A) fails to make any payment beyond the applicable grace period with respect thereto, if any, (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Debt (other than the Loans) and such Debt, either individually or in the aggregate for all such Loan Parties, has an outstanding aggregate principal amount or notional amount, as applicable, equal to or greater than $2,000,000 or (B) fails to observe or perform any other agreement or condition relating to any such Debt, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Debt (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Debt to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Debt to be made, prior to its stated maturity; provided that this clause (k)(B) shall not apply to secured Debt that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Debt, if such sale or transfer is permitted hereunder and under the documents providing for such Debt.
(l) Borrowing Base . As of any date that a Borrowing Base Certificate is delivered, the Outstanding Principal does not satisfy the Applicable Threshold Test and such Default is not cured within ten (10) Business Days by the Borrower adding new Subject Funds to the Available Borrowing Base or by any Person making an Equity Contribution to Borrower in an amount sufficient to cure the Default, after giving effect to the prepayment of principal, in each case, as provided in Section 2.1(f) .
8.2 Remedies .
(a) If any Event of Default (other than any event described in Section 8.1(d) shall have occurred and be continuing, the Administrative Agent may, and upon the request of the Majority Lenders shall, by notice to the Borrower:
(i) immediately terminate the Commitments of each Lender and the obligation of each Lender to make Loans; and
(ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued fees and all other liabilities of the Borrower accrued hereunder and under any other Financing Document, shall become forthwith due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Financing Document to the contrary notwithstanding.
 
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(b) If any Event of Default described in Section 8.1(d) shall have occurred and be continuing:
(i) the Commitments of each Lender and the obligation of each Lender to make Loans shall automatically terminate (if not previously terminated or expired);
(ii) the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued fees and all other liabilities of the Borrower accrued hereunder and under any other Financing Document, shall automatically become due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Financing Document to the contrary notwithstanding.
(c) Upon the occurrence and during the continuance of any Event of Default, in addition to the exercise of remedies set forth in clauses (a)  and (b)  above, (i) the Agents may immediately exercise exclusive control of or over any or all of the Accounts, including taking any and all actions necessary or advisable in pursuance of the foregoing, such as issuing any notice of exclusive control contemplated by the applicable control agreements and (ii) each Secured Party shall be, subject to the terms of the Financing Documents, entitled to exercise the rights and remedies available to such Secured Party under and in accordance with the provisions of the other Financing Documents to which it is a party or any applicable law.
(d) Notwithstanding the foregoing, if an Event of Default with respect to Section 6.1 has occurred and the Borrower has delivered an irrevocable Notice of Intent to Cure, then, prior to the Cure Expiration Date, none of the actions in Section 8.2 may be taken on account of such Event of Default until the Cure Expiration Date (but it being understood that unless a Cure Amount in an amount sufficient to cure such Event of Default has been provided in accordance with Section 8.4 , such actions under this Section 8.2 may then be taken on and following the Cure Expiration Date and that, notwithstanding anything contained herein, no Lender shall be required to make any Loans while an Event of Default with respect to Section 6.1 is continuing even if a Notice of Intent to Cure has been delivered).
8.3 Remedies Under Consents . Each of the Agents or Lenders may exercise a cure right that vests in its favor under any of the Tax Equity Required Consents at the time of such vesting whether or not an Event of Default has occurred at such time, except to the extent that relevant Loan Party is diligently pursuing its cure rights under the Tax Equity Required Consents.
8.4 Borrower’s Right to Cure .
(a) When an Event of Default under Section 6.1 has occurred (a “ Coverage Ratio EOD ”), the Borrower may provide an irrevocable notice (the “ Notice of Intent to Cure ”) to the Administrative Agent committing to cure such Coverage Ratio EOD by depositing an amount in the Equity Cure Account sufficient to cause the Cash Flow Coverage Ratio to be greater than or equal to 1:40:1.00 (the “ Cure Amount ”). The Borrower shall specify the Cure Amount in its Notice of Intent to Cure.
 
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(b) Within ten (10) days of the Quarterly Date when the Coverage Ratio EOD occurred (the “ Cure Expiration Date ”), the Borrower shall in accordance with its Notice of Intent to Cure, deposit Equity Contributions in an amount equal to the Cure Amount in the Equity Cure Account.
(c) Solely for purposes of calculating the Cash Flow Coverage Ratio for any period that includes the fiscal quarter prior the Quarterly Date when the applicable Coverage Ratio EOD occurred, the Cure Amount shall be added to the Actual Net Cash Flow of the Borrower to the extent such Cure Amount remains on deposit in the Equity Cure Account (except to the extent applied to prepay the Loans in accordance with the following sentence). The Borrower may at any time apply amounts on deposit in the Equity Cure Account to prepay the Loans pursuant to Section 2.1(f).
(d) In furtherance of clause (b) above, (A) upon actual deposit of the full Cure Amount in the Equity Cure Account, the covenant under Section 6.1 shall be deemed satisfied and complied with as of Quarterly Date when the applicable Coverage Ratio EOD occurred with the same effect as though there had been no failure to comply with such covenant and the applicable Coverage Ratio EOD shall be deemed not to have occurred for purposes of the Financing Documents, and (B) upon receipt by the Administrative Agent of a Notice of Intent to Cure prior the Cure Expiration Date, neither the Administrative Agent nor any Lender may exercise any rights or remedies under Section 8.2 (or under any other Financing Document) on the basis of any actual or purported Event of Default under Section 6.1 until and unless the Cure Expiration Date has occurred without the Cure Amount having been deposited pursuant to Section 8.4(b) .
(e) There shall be no more than (i) two (2) consecutive fiscal quarters and (ii) four (4) total fiscal quarters in which the cure rights set forth in this Section 8.4 are exercised during the term of this Agreement.
ARTICLE 9
THE AGENTS; AMENDMENTS; ASSIGNMENTS
9.1 Appointment and Authority . Each of the Lenders and hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent and Collateral Agent hereunder and under the other Financing Documents and authorizes the Administrative Agent and Collateral Agent, respectively, to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent and Collateral Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, Collateral Agent, and the Lenders and the Borrower shall not have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Financing Documents (or any other similar term) with reference to the Administrative Agent or Collateral Agent is not intended to denote or connote any fiduciary or other implied (or express)
 
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obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
9.2 Rights as a Lender . The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
9.3 Exculpatory Provisions . The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Financing Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Financing Documents that the Administrative Agent is required to exercise as directed in writing by the Majority Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Financing Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Financing Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Bankruptcy Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Bankruptcy Law; and
(c) shall not, except as expressly set forth herein and in the other Financing Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.1 and 8.2 ) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Borrower or a Lender.
 
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The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Financing Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Financing Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article 3 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
9.4 Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
9.5 Delegation of Duties . The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Financing Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
 
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9.6 Resignation of Administrative Agent .
(a) The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Majority Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Majority Lenders or shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Majority Lenders) (the “ Resignation Effective Date ”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.
(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d)  of the definition thereof, the Majority Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Majority Lenders and shall have accepted such appointment within thirty (30) days (or such earlier day as shall be agreed by the Majority Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Financing Documents and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Majority Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 2.4(d)(vi) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Financing Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Financing Documents, the provisions of this Article and Sections 10.4 and 5.10 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.
 
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9.7 Non-Reliance on Administrative Agent and Other Lenders . Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Financing Document or any related agreement or any document furnished hereunder or thereunder.
9.8 Administrative Agent May File Proofs of Claim . In case of the pendency of any proceeding under any Bankruptcy Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations of the Loan Parties that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.3 and 10.4 ) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.3 and 10.4 .
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
9.9 Collateral Matters . Without limiting the provisions of Section 9.8 , the Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion,
 
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(a) to release any Lien on any property granted to or held by the Administrative Agent under any Financing Document (i) upon termination of the Commitments and payment in full of all Obligations (other than contingent indemnification obligations), (ii) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition permitted hereunder or under any other Financing Document, or (iii) subject to Section 9.12 , if approved, authorized or ratified in writing by the Majority Lenders; and
(b) to subordinate any Lien on any property granted to or held by the Administrative Agent under any Financing Document to the holder of any Lien on such property that is permitted by Section 6.2 .
9.10 Indemnification . Without limiting the obligations (including, but not limited to, the Obligations) of the Borrower hereunder, each Lender agrees to indemnify each of the Agents, ratably in accordance with its Proportionate Share for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of this Agreement or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or the enforcement of any of the terms hereof or thereof or of any such other documents; provided , however , that no Lender shall be liable for any of the foregoing to the extent they arise solely from the relevant Agent’s gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. The Agents shall be fully justified in refusing to take or to continue to take any action hereunder unless it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Without limitation of the foregoing, each Lender agrees to reimburse the relevant Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by such Agent in connection with the preparation, execution, administration or enforcement of, or legal advice in respect of rights or responsibilities under, the Operative Documents, to the extent that such Agent is not reimbursed promptly for such expenses by the Borrower.
9.11 No Advisory or Fiduciary Responsibility . In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Financing Document), the Borrower acknowledges and agrees , and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent and the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent and the Lenders, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Financing Documents; (ii) (A) the Administrative Agent and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not,
 
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and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) neither the Administrative Agent nor any Lender has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Financing Documents; and (iii) the Administrative Agent and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor any Lender has any obligation to disclose any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent or any Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
9.12 Amendments .
(a) Generally. Subject to Sections 2.12 and 2.13 , no amendment or waiver of any provision of this Agreement or any other Financing Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Majority Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall effect any of the changes described in clauses (b), (c), and/or (d) of this Section 9.12 without the additional consent(s) required therein.
(b) Consent of Affected Lenders . Subject to Sections 2.12 and 2.13 , no amendment, waiver or consent described in clause (a) of this Section 9.12 shall, without the written consent of each Lender affected thereby:
(i) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.2 );
(ii) postpone any date fixed by this Agreement or any other Financing Document for or reduce or forgive the amount of any payment or mandatory prepayment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Financing Document;
(iii) reduce or forgive the principal of, or the rate of interest specified herein on, any Loan, or any fees or other amounts payable hereunder or under any other Financing Document to the Lenders (it being understood that the waiver of (or amendment to the terms of) any mandatory prepayment of a Loan (other than pursuant to Section 2.1(f)(ii)(A) ) shall not constitute a postponement of any date scheduled for the payment of principal or interest) (or change the timing of payment of such fees or other amounts), or change the manner of computation of any financial ratio (including any change in any applicable defined term) used in determining the Applicable Interest Rate that would result in a reduction of any interest rate on any Loan or any fee payable hereunder; provided , however , that only the consent of the Majority Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate; or
 
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(iv) amend, waive or otherwise modify any term or provision (including the availability and conditions to funding under Section 2.9 with respect to Incremental Loans, under Section 2.12 with respect to Refinancing Loans, and under Section 2.13 with respect to Extended Loans and, in each case, the rate of interest applicable thereto) which directly affects Lenders of one or more Incremental Loans, Refinancing Loans or Extended Loans and does not directly affect Lenders of any other Loans, in each case, without the written consent of the directly affected Lenders under such Incremental Loans, Refinancing Loans or Extended Loans; provided , however , that the waivers described in this clause (iv) shall not require the consent of any Lenders other than the affected Lenders under such Incremental Loans, Refinancing Loans or Extended Loans, as the case may be.
(c) Borrowing Base Amendments . No amendment, waiver or consent described in clause (a) of this Section 9.12 shall, without the written consent of Lenders holding at least 90% of the sum of (i) the aggregate unused amount of the Commitments then in effect and (ii) the aggregate unpaid principal amount of the Loans then outstanding, affect the Available Borrowing Base, Appendix 1 , Appendix 2 , Appendix 3 , any provision relating to the Available Borrowing Base, Appendix 1 , Appendix 2 or Appendix 3 , or any related definition under this Agreement or any other Financing Document; provided, however, that the proviso to the definition of “Available Borrowing Base” in Appendix 2 may be amended with the written consent of the Supermajority Lenders.
(d) Consent of All Lenders. Subject to Sections 2.12 and 2.13 , no amendment, waiver or consent described in clause (a) of this Section 9.12 shall, without the written consent of each Lender:
(i) waive any condition set forth in Sections 3.1 or 3.2 ;
(ii) change any provision of this Section or the definition of “Majority Lenders,” “Supermajority Lenders,” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder;
(iii) change the definition of “Eligible Assignee”; or
(iv) release all or substantially all the Collateral, or release any Loan Party from such Person’s obligations under this Agreement or any Collateral Document, or permit the release of any funds from the Revenue Account, in each case, unless in accordance with the Financing Documents.
 
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(e) Consent of Administrative Agent. No amendment, waiver or consent described in clause (a) of this Section 9.12 shall, without the written consent of the Administrative Agent (in addition to the Lenders required above):
(i) affect the rights or duties of the Administrative Agent or Collateral Agent under this Agreement or any other Financing Document; or
(ii) affect the Available Borrowing Base, Appendix 1 , Appendix 2 , Appendix 3 , any provision relating to the Available Borrowing Base, Appendix 1 , Appendix 2 or Appendix 3 , or any related definition under this Agreement or any other Financing Document.
(f) Fee Letters. The Fee Letters may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.
(g) Defaulting Lenders. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender, (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender, and (z) the interest, principal and maturity of Loans made by such Defaulting Lender may not be modified without the Defaulting Lender’s consent.
(h) Errors and Omissions. The Administrative Agent and the Borrower may amend any Financing Document to correct administrative errors or omissions, or to effect administrative changes that are not adverse to any Lender. Notwithstanding anything to the contrary contained herein, such amendments shall become effective without any further consent of any other party to such Financing Document.
(i) Non-Consenting Lenders. In the event that (i) the Borrower or the Administrative Agent has requested that the Lenders consent to a departure or waiver of any provisions of the Financing Documents or agree to any amendment thereto, (ii) the consent, waiver or amendment in question requires the agreement of all affected Lenders in accordance with the terms of Section 9.12(b) or all Lenders in accordance with the terms of Section 9.12(d) and (iii) the Majority Lenders have agreed to such consent, waiver or amendment, then any Lender who does not agree to such consent, waiver or amendment shall be deemed to be a “ Non-Consenting Lender .” If any Lender becomes a Non-Consenting Lender, then the Borrower may, on ten (10) Business Days’ prior written notice to the Administrative Agent and such Lender, replace such Lender by causing such Lender to (and such Lender shall be obligated to) assign pursuant to Section 9.15 (with the assignment fee to be paid by the Borrower in such instance) its Commitment and its outstanding Loans, if any, to one or more Eligible Assignees approved by
 
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the Administrative Agent in its sole and absolute discretion; provided that (i) neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender or other such Person, (ii) on the date of such assignment, the replacement Lender shall pay to the Non-Consenting Lender an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of such Non-Consenting Lender and (B) an amount equal to all accrued, but theretofore unpaid fees, if any, owing to such Non-Consenting Lender pursuant to Section 2.3 and (iii) on the date of such assignment, the Borrower shall pay any amounts payable to such Non-Consenting Lender pursuant to Sections 2.6 or 2.7 .
9.13 Withholding Tax .
(a) If the forms or other documentation required by Section 2.4(g) are not delivered to the Administrative Agent, then the Administrative Agent may withhold from any interest payment to any Lender not providing such forms or other documentation, an amount equivalent to the applicable withholding tax.
(b) If the Internal Revenue Service or any authority of the United States of America or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Administrative Agent or any other Person of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify promptly the Administrative Agent fully for all amounts paid, directly or indirectly, by such Person as tax or otherwise, including penalties and interest, together with all expenses incurred, including legal expenses, allocated staff costs, and any out-of-pocket expenses.
9.14 Participations .
(a) Each Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other Persons in all or a portion of its rights and obligations under this Agreement and the other Financing Documents (including all or a portion of its Commitment and the Loans owing to it); provided , however , that (i) such Lender’s obligations under this Agreement and the other Financing Documents shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other Persons shall be entitled to the benefit of the cost protection provisions contained in Sections 2.4(d) , 2.6 , and 2.7 to the same extent as if they were Lenders and (iv) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to the Loans and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers with respect to matters requiring consent of all Lenders pursuant to Section 9.9) . To the extent permitted by law, each participating bank or other Person shall also be entitled to the benefits of
 
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Section 10.2 as though it were a Lender, provided such participating bank or other Person agrees to be subject to Section 2.5(b) as though it were a Lender. Other than as otherwise specified in this clause (a) , no participating bank or other Person shall have any other rights under this Agreement, including direct rights against any Loan Party nor any rights to any remedies and shall not be considered for any purpose to be a party to this Agreement. In no event shall a Loan Party be responsible for any costs or expenses of any counsel engaged by a participating bank or other Person that has acquired a participation from a Lender.
(b) Any Lender that sells a participation, acting solely for this purpose as an agent of the Borrower, shall maintain a register in which it enters the name and address of each participant, and the principal amount (and stated interest) of each participant’s interest in the Loans under the Financing Documents (the “ Participant Register ”); provided , that no Lender shall have an obligation to disclose the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans, letters of credit or its other obligations under any Financing Document) to any Person except to the extent that such disclosure is necessary to establish that the Loans or other obligations under this Agreement are in registered form for tax purposes under Section 5f.103-1(c) of the United States Treasury Regulation. The entries in the Participant Register shall be conclusive absent manifest error, and the Lender maintaining the Participant Register shall treat each person whose name is recorded in the register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent, in its capacity as such, shall have no responsibility for maintaining a Participant Register.
(c) Any Lender or participant may, in connection with any participation or proposed participation pursuant to this Section 9.14 , disclose to the participant or proposed participant any information relating to the Loan Parties or their respective Affiliates furnished to such Lender by or on behalf of the Loan Parties; provided , that, prior to any such disclosure of information designated by the Borrower as confidential, each such participant or proposed participant shall execute an agreement whereby such participant shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 10.17 .
9.15 Assignments .
(a) Each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent of the Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed) and, unless an Event of Default pursuant to Sections 8.1(a) or (d)  has occurred and is continuing, the Borrower (such consent not to be unreasonably withheld, conditioned or delayed); provided , however , that if such assignment is to a Lender or an Affiliate of a Lender whose credit- worthiness is reasonably comparable to that of the transferring Lender, no consent of the Borrower or the Administrative Agent shall be required; provided , further , that (i) the amount of
 
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the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be in an integral multiple of, and not less than One Million Dollars ($1,000,000) (or, if less, the entire remaining amount of such Lender’s Commitment or Loans), provided that (i) the parties to each assignment shall (A) execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent or (B) if previously agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an Assignment and Acceptance, and, in each case, shall pay to the Administrative Agent a processing and recordation fee of Three Thousand Five Hundred Dollars ($3,500) (which fee may be waived or reduced in the sole discretion of the Administrative Agent), and (ii) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire (in which the assignee shall designate one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Loan Parties and their Affiliates or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws) and all applicable tax forms. Upon acceptance and recording pursuant to clause (a)  of this Section 9.15 , from and after the effective date specified in each Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.4(d) , 2.6 , 2.7 , 5.9 , 5.10 and 10.4 , as well as to any Fees accrued for its account and not yet paid).
(b) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any Lien or adverse claim and that its Commitment, and the outstanding balances of its Loans, in each case without giving effect to assignments thereof which have not become effective, are as set forth in such Assignment and Acceptance, (ii) except as set forth in subclause (i)  above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the other Financing Documents, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Financing Document or any other instrument or document furnished pursuant hereto, or the financial condition of the Borrower or any other Loan Party or the performance or observance by the Borrower or any other Person of any of its obligations under this Agreement, any other Financing Document or any other instrument or document furnished pursuant hereto, or thereto, or in connection therewith; (iii) such assignee represents and warrants that it is an Eligible Assignee legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement and the other Financing Documents (other than the Fee Letters), together with copies of the most recent financial statements delivered pursuant to Section 5.3 and such other documents and information as it has deemed appropriate to make its own credit analysis and
 
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decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Secured Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender; provided , that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
(c) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in the City of New York a copy of each Assignment and Agreement referred delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment thereof, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error and the Borrower, each Lender and the Agents may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Collateral Agent and any Lender at any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of, and consent to, a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in clause (a)  above, if applicable, and the written consent of the Administrative Agent and, if required, the Borrower, to such assignment and any applicable tax forms, the Administrative Agent shall (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register. No assignment shall be effective unless it has been recorded in the Register as provided in this clause (d) .
(e) At the assigning Lender’s option, the Borrower shall execute and deliver to such new lender a new Note in the form attached hereto as Exhibit A , in a principal amount equal to the Loans being assigned, and the Borrower shall execute and exchange with the assigning Lender a replacement note for any Note in an amount equal to amount of the Loans retained by the Lender, if any.
(f) Any Lender may, in connection with any assignment or proposed assignment pursuant to this Section 9.15 , disclose to the assignee or proposed assignee any information relating to the Loan Parties or their respective Affiliates furnished to such Lender by or on behalf of the Loan Parties; provided , that, prior to any such disclosure of information designated by the
 
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Borrower as confidential, each such assignee or proposed assignee shall execute an agreement whereby such assignee shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 10.17 .
9.16 Assignability to Federal Reserve Bank or Central Bank .
(a) Any Lender may at any time assign all or any portion of its rights under this Agreement to secure extensions of credit to such Lender or in support of obligations owed by such Lender; provided that no such assignment shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto.
(b) Any Lender or its direct or indirect parent may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any such pledge or assignment to a Federal Reserve Bank or any other central bank in the jurisdiction of such Lender, and this Section 9.16 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto; and provided further that any payment in respect of such pledge or assignment made by the Borrower to or for the account of the pledging or assigning Lender in accordance with the terms of this Agreement shall satisfy the Borrower’s obligations hereunder in respect of such pledged or assigned Loans to the extent of such payment.
9.17 [Intentionally omitted.]
9.18 No Other Duties, Etc . Notwithstanding anything to the contrary herein, none of the Lead Arrangers listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, Collateral Agent, a Lender, or the Depositary hereunder.
ARTICLE 10
MISCELLANEOUS
10.1 Addresses; Notices .
(a) Any communications between the parties hereto or notices provided herein to be given may be given to the following addresses:
To the Borrower:
Vivint Solar Financing I, LLC
c/o Vivint Solar, Inc.
 
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4931 N 300 W
Provo, UT 84604
Attention: Thomas Plagemann, EVP, Capital Markets
E-Mail: thomas.plagemann@vivintsolar.com
Facsimile: (801) 229-7727
with a copy to:
Vivint Solar Inc.
4931 N 300 W
Provo, UT 84604
Attention: Vivint Solar Legal Department
E-Mail: solarlegal@vivintsolar.com
Facsimile: 801.765.5746
To the Administrative Agent or Collateral Agent:
Administrative Agent/Collateral Agent Office:
(For financial/loan activity – advances, pay down, interest/fee billing and
payments, rollovers, rate-settings):
Bank of America Plaza
901 Main Street
Mail Code: TX1-492-14-11
Dallas, TX 75202-3714
Attention: Diana Lopez
Phone: 972-338-3774
Fax: 214-290-8384
Electronic Mail: diana.r.lopez@baml.com
Other Notices as Administrative Agent/Collateral Agent:
( For financial statements, compliance certificates, maturity extension and
commitment change notices, amendments, consents, vote taking, etc.)
Gateway Village
900 W Trade Street
Mail Code: NC1-026-06-03
Charlotte NC 28255
Attention: Darleen R Parmelee
Telephone: 980.388.5001
Telecopier: 704.409.0645
Electronic Mail: darleen.r.parmelee@baml.com
To the Lenders: At such address and fax number as set forth in Annex 2 or as each Lender may provide in writing to the Borrower and the Administrative Agent.
 
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(b) All notices or other communications required or permitted to be given hereunder shall be in writing and shall be considered as properly given (i) if delivered in person; (ii) if sent by a nationally recognized overnight delivery service; (iii) in the event overnight delivery services are not readily available, if mailed by first class mail, postage prepaid, registered or certified with return receipt requested; or (iv) if sent by telecopy or electronic mail with a confirmation of receipt. Notice so given shall be effective upon receipt by the addressee, except that communication or notice so transmitted by telecopy or other direct written electronic means shall be deemed to have been validly and effectively given on the day (if a Business Day and, if not, on the next following Business Day) on which it is transmitted if transmitted before 4:00 p.m., recipient’s time, and if transmitted after that time, on the next following Business Day; provided , however , that if any notice is tendered to an addressee and the delivery thereof is refused by such addressee, such notice shall be effective upon such tender. Any party shall have the right to change its address for notice hereunder to any other location by giving of thirty (30) days’ written notice to the other parties in the manner set forth hereinabove.
(c) The Borrower hereby agrees, unless directed otherwise by the Administrative Agent or unless the electronic mail address referred to below has not been provided by the Administrative Agent to the Borrower, that notwithstanding anything to the contrary in clause (b)  above, it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Financing Documents or to the Lenders under Article 5 , including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) is or relates to a Borrowing Notice or a notice pursuant to Section 2.1(a)(iii) , (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides a Notice of Default or Notice of Event of Default under this Agreement or any other Financing Document or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any Borrowing or other extension of credit hereunder (all such non-excluded communications being referred to herein collectively as “ Communications ”), by transmitting the Communications in an electronic/soft medium that is properly identified in a format acceptable to the Administrative Agent to an electronic mail address as directed by the Administrative Agent. In addition, the Borrower agrees to continue to provide the Communications to the Administrative Agent or the Lenders, as the case may be, in the manner specified in the Financing Documents but only to the extent requested by the Administrative Agent.
(d) The Borrower hereby acknowledges that (i) the Administrative Agent will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, the “ Borrower Materials ”) by posting the Borrower Materials on Intralinks or another similar electronic system (the “ Platform ”) and (ii) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “ Public Lender ”). The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking
 
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Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States federal and state securities laws ; (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor;” and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not marked as “Public Investor.” The following Borrower Materials shall be marked “PUBLIC”, unless the Borrower notifies the Administrative Agent promptly that any such document contains material non-public information: (1) the Financing Documents and (2) notification of changes in the terms of the Financing Documents; provided, however, that the parties acknowledge and agree that the Fee Letters contain sensitive proprietary information and shall not be marked, treated as, or considered “PUBLIC” in any respect. Notwithstanding anything herein to the contrary, any and all Borrower Materials are subject to the confidentiality provisions of Section 10.17 .
(e) Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including United States Federal and state securities laws, to make reference to Communications that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.
(f) THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE ANY LIABILITY TO THE MEMBER, THE BORROWER, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE MEMBER’S, THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE PLATFORM, ANY OTHER ELECTRONIC PLATFORM OR ELECTRONIC MESSAGING SERVICE OR THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS
 
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FOUND IN A FINAL RULING BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(g) The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Financing Documents. Each Lender agrees that receipt of notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Financing Documents. Each Lender agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e-mail address.
(h) Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give notice or other communications pursuant to any Financing Document in any other manner specified in such Financing Document.
10.2 Right to Set-Off . If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, except to the extent prohibited by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of any Loan Party against any of and all the obligations of any Loan Party now or hereafter existing under this Agreement and other Financing Documents held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other Financing Document and although such obligations may be unmatured; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender under this Section 10.2 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.
10.3 Delay and Waiver . No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Financing Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under any other Financing Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Financing Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Financing Document, the authority to enforce rights and remedies hereunder and under the other Financing Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions
 
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and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.2 for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Financing Documents, (b) any Lender from exercising setoff rights in accordance with Section 10.2 (subject to the terms of Section 2.5 ), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Bankruptcy Law; and provided , further , that if at any time there is no Person acting as Administrative Agent hereunder and under the other Financing Documents, then (i) the Majority Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.2 and (ii) in addition to the matters set forth in clauses (b) , (c)  and (d)  of the preceding proviso and subject to Section 2.5 , any Lender may, with the consent of the Majority Lenders, enforce any rights and remedies available to it and as authorized by the Majority Lenders.
10.4 Costs, Expenses and Attorney’s Fees . The Borrower shall pay all reasonable costs and out-of-pocket expenses (a) incurred by the Agents and their Affiliates, Depositary and any Lender in connection with the preparation, negotiation, closing and costs of administering this Agreement and the other Financing Documents (whether or not the transactions contemplated hereby or thereby shall be consummated and regardless of whether any Borrowing Date occurs) or in connection with any amendments, modifications or waivers of the provisions hereof and thereof, including the reasonable fees, out-of-pocket expenses and disbursements of any single counsel for the Agents and one local counsel in each applicable jurisdiction (and, in the event of any conflict of interest, one additional counsel of each type to the affected parties) or (b) incurred by the Agents and their Affiliates, Depositary or any Lender in connection with the enforcement or protection of its rights under this Agreement and the other Financing Documents or in connection with the Loans or the performance of this Agreement (including, for the avoidance of doubt, any expenses related to an Incremental Loan Commitment, review of a Potential New Fund, or review of potential new Systems); provided , however , that the reimbursement provided by the Borrower for the benefit of the Administrative Agent pursuant to clause (a) of this Section 10.4 for legal expenses incurred prior to the Closing Date shall be subject to the limitation set forth in Section 4 of the Engagement Letter.
10.5 Entire Agreement . This Agreement, the Fee Letters and the other Financing Documents constitute the entire contract between the parties relative to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the Parties. There are no unwritten oral agreements among the parties. Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Financing Documents. Nothing in this Agreement or in the other Financing Documents, expressed or implied, is intended to confer upon any Person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder and, to the extent expressly contemplated hereby, the Related Parties of each of the Agents and the Lenders) any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Financing Documents.
 
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10.6 Governing Law . THIS AGREEMENT, THE OTHER FINANCING DOCUMENTS, AND ANY INSTRUMENT OR AGREEMENT REQUIRED HEREUNDER (TO THE EXTENT NOT EXPRESSLY PROVIDED FOR THEREIN) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10.7 Severability . In case any one or more of the provisions contained in this Agreement or any other Financing Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall enter into good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
10.8 Headings . Article, Section and paragraph headings and the table of contents used herein have been inserted in this Agreement as a matter of convenience for reference only and are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement.
10.9 Accounting Terms . All accounting terms not specifically defined herein shall be construed in accordance with GAAP and practices consistent with those applied in the preparation of the financial statements submitted by the Borrower to the Administrative Agent and Lenders pursuant to this Agreement, and (unless otherwise indicated) all financial data submitted pursuant to this Agreement shall be prepared in accordance with such principles and practices consistently applied.
10.10 No Partnership, Etc. The Agents, the Lenders and the Borrower intend that the relationship between them shall be solely that of creditor and debtor. Nothing contained in this Agreement, the Notes or in any of the other Financing Documents shall be deemed or construed to create a partnership, tenancy-in-common, joint tenancy, joint venture or co-ownership by or between or among the Agents, the Lenders and the Borrower or any other Person. Neither the Agents nor the Lenders shall be in any way responsible or liable for the debts, losses, obligations or duties of the Borrower or any other Person with respect to the Systems or otherwise. All obligations to pay real property or other taxes, assessments, insurance premiums, and all other fees and charges arising from the ownership, operation or occupancy of the Systems and to perform all obligations under other agreements and contracts relating to the Systems shall be the sole responsibility of the Borrower.
10.11 Waiver of Jury Trial . EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY BASED
 
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HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.11 .
10.12 Consent to Jurisdiction; Service of Process .
(a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the courts of the State of New York, sitting in the Borough of Manhattan, The City of New York, New York, United States of America, or of the United States of America for the Southern District of New York sitting in the Borough of Manhattan, The City of New York, New York, United States of America, any appellate court from any thereof, in any legal action or proceeding arising out of or relating to this Agreement or the other Financing Documents, or for the recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such courts of the State of New York or, to the extent permitted by law, such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent, or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Financing Documents against the Loan Parties or their respective properties in the courts of any jurisdiction.
(b) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Financing Documents in any courts of the State of New York or Federal court, each sitting in the Borough of Manhattan, The City of New York, New York, United States of America. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.1 . Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
10.13 Interest Rate Limitation . Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the
 
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“ Charges ”), shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section 10.13 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Rate to the date of repayment, shall have been received by such Lender.
10.14 Successors and Assigns .
(a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Loan Party, the Agents or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.
(b) No Loan Party shall assign or delegate any of its rights or duties under this Agreement or any Financing Document without the prior written consent of the Administrative Agent and each Lender, and any attempted assignment shall be null and void.
10.15 Patriot Act Compliance . The Administrative Agent hereby notifies the Borrower that, pursuant to the requirements of the Patriot Act, it and any other Agent and any Lender shall be required to obtain, verify and record information that identifies the Borrower and the Borrower Member, which information includes the names and addresses and other information that will allow it, any other Agent or any Lender to identify the Borrower and the Borrower Member in accordance with the requirements of the Patriot Act. The Borrower shall promptly deliver information described in the immediately preceding sentence when requested by the Administrative Agent, any other Agent or any Lender in writing pursuant to the requirements of the Patriot Act, and shall promptly deliver such other information when requested by the Administrative Agent, any other Agent or any Lender in writing pursuant to such Person’s ongoing obligations under “know your customer” and anti-money laundering rules and regulations.
10.16 Binding Effect; Counterparts .
(a) This Agreement shall become effective when it shall have been executed by the Borrower and each of the Agents and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto.
(b) This Agreement may be executed in one or more duplicate counterparts and by facsimile or other electronic transmission, each of which shall constitute an original but all of
 
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which shall become effective as provided in clause (a)  above. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterparty of this Agreement.
10.17 Confidentiality . Each of the Agents and the Lenders agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ officers, directors, employees, agents, advisors, counsel and representatives (collectively, its “ Representatives ”) who have the need to know the Information to evaluate or engage in transactions contemplated by the Financing Documents (it being understood that, prior to any such disclosure, the Representative has signed a non-use and non-disclosure agreement in content similar to the provisions of this Section 10.17 or have otherwise been instructed by the Agent or Lender, as applicable, not to disclose such Information and to treat such Information confidentially in accordance with the terms of this Section 10.17) , (b) to the extent requested or required by any governmental agency or other regulatory authority (including any self-regulatory organization having or claiming to have jurisdiction) or in connection with any legal proceedings to make any disclosure that is prohibited or otherwise constrained by this Section 10.17 , the Agent or Lender, as applicable, will (other than in connection with any regulatory inquiry or proceeding), to the extent reasonably practicable and permitted by law, judicial or regulatory authority, provide the Borrower and Borrower Member with prompt written notice of such requirement so that the Borrower or Borrower Member, as the case may be, may seek a protective order or other appropriate relief (at the Borrower’s sole expense), and subject to the foregoing, such Agent or Lender, as applicable, may furnish that portion (and only that portion) of the Information that the Agent or Lender, as applicable, is legally compelled or is otherwise required to disclose without liability hereunder, (c) subject to an agreement containing provisions substantially the same as those of this Section 10.17 , to (i) any actual or prospective assignee of or participant in any of its rights or obligations under this Agreement and the other Financing Documents or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower or any of its obligations, (d) with the consent of the Borrower or (e) to the extent such Information becomes publicly known or generally made available other than as a result of a breach of this Section 10.17 . For the purposes of this Section 10.17 , “ Information ” shall mean (A) any information disclosed by the Borrower, Borrower Member or its Affiliates, either directly or indirectly, in writing, orally or by inspection of tangible objects, including without limitation, algorithms, business plans, customer data, customer lists, customer names, designs documents, drawing, engineering information, financial analysis, forecasts, formulas, hardware configuration information, know-how, ideas, inventions, market information, marketing plans, processes, products, product plans, research, specifications, software, data tags and content, source code, trade secrets or any other information which is designated as “confidential,” “proprietary” or some similar designation or should be reasonably be understood by the receiving party as being confidential, (B) any information otherwise obtained, directly or indirectly, by a receiving party through inspection, review or analysis of the disclosed information and (C) this Agreement, the terms hereof and the transactions contemplated hereby. Information that is disclosed orally shall be “Information” for purposes of this Section 10.17 if it is (x) designated as confidential at the time of disclosure or within a reasonable time after disclosure; or (y) should be reasonably
 
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understood to be confidential. Information may also include information of a third party that is in the possession of the Borrower, Borrower Member or its Affiliate and is disclosed to the Agents and the Lenders in connection with this Agreement. Clause (a) and (b) of the definition of Information shall not, however, include any information that (1) was publicly known and made generally available in the public domain prior to the time of disclosure, (2) becomes publicly known and made generally available after disclosure other than as a result of a breach of this Section 10.17 , (3) is already in the possession of the Agent or Lender at the time of disclosure as shown by the Agent’s or Lender’s files and records immediately prior to the time of disclosure, (4) is obtained by the Agent or Lender from a third party lawfully in possession of such information and without a breach of such third party’s obligations of confidentiality, or (5) is independently developed by the Agent or Lender without use or reference to the Borrower’s, Borrower Member’s or their Affiliates’ Information, as shown by documents and other competent evidence in the Agent’s or Lender’s possession. Any Person required to maintain the confidentiality of Information as provided in this Section 10.17 shall be considered to have complied with its obligation to do so if such Person has taken at least those measures that it take to protect its own confidential information of a similar nature, but in no case less than reasonable care (including, without limitation, all precautions the Agent or Lender employs with respect to its confidential materials). For the avoidance of doubt, any and all Borrower Materials are subject to the confidentiality provisions of this Section 10.17 .
10.18 Survival of Agreements . All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Financing Document shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans, regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fees or any other amount payable under this Agreement or any other Financing Document is outstanding and unpaid and so long as the Commitments have not been terminated. The provisions of Sections 2.4(d) , 2.6 , 2.7 , 5.9 , 5.10 , 10.4 and 10.18 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Financing Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Lender.
10.19 Electronic Execution of Assignments and Certain Other Documents . The words “execute,” “execution,” “signed,” “signature,” and words of like import in any document to be signed in connection with this Agreement and the transactions contemplated hereby (including assignment agreements, amendments or other modifications, Borrowing Notices, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the
 
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Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary, solely with respect to the Administrative Agent’s “Cash Pro” electronic platform and the Platform, the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.
ARTICLE 11
GUARANTY
11.1 The Guarantee .
Each Guarantor hereby jointly and severally with the other Guarantors guarantees, as a primary obligor and not as a surety to each Secured Party and their respective successors and assigns, the prompt payment in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal of and interest (including any interest, fees, costs or charges that would accrue but for the provisions of (i) the Title 11 of the United States Code after any bankruptcy or insolvency petition under Title 11 of the United States Code and (ii) any other Bankruptcy Laws) on the Loans made by the Lenders to, and the Notes, if any, held by each Lender of, the Borrower (other than such Guarantor), in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the “ Guaranteed Obligations ”). The Guarantors hereby jointly and severally agree that if the Borrower or other Guarantor(s) shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantors will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.
11.2 Obligations Unconditional .
The obligations of the Guarantors under Section 11.1 shall constitute a guarantee of payment and to the fullest extent permitted by applicable Law, are absolute, irrevocable and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations of the Borrower under this Agreement, the Notes, if any, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or Guarantor (except for payment in full). Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantors hereunder which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above:
 
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 	(A)	at any time or from time to time, without notice to the Guarantors, to the extent permitted by Law, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;	
 
 	(B)	any of the acts mentioned in any of the provisions of this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein shall be done or omitted;	
 
 	(C)	the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be amended in any respect, or any right under the Financing Documents or any other agreement or instrument referred to herein or therein shall be amended or waived in any respect or any other guarantee of any of the Guaranteed Obligations or except as permitted pursuant to Section 11.9 , any security therefor shall be released or exchanged in whole or in part or otherwise dealt with;	
 
 	(D)	any Lien or security interest granted to, or in favor of any Lender or Agent as security for any of the Guaranteed Obligations shall fail to be perfected; or	
 
 	(E)	the release of any other Guarantor pursuant to Section 11.9 or otherwise.	
The Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and, to the extent permitted by Law, all notices whatsoever, and any requirement that any Secured Party exhaust any right, power or remedy or proceed against the Borrower under this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein, or against any other person under any other guarantee of, or security for, any of the Guaranteed Obligations. The Guarantors waive, to the extent permitted by Law, any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Secured Party upon this Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee, and all dealings between the Borrower and the Secured Parties shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. This Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment without regard to any right of offset with respect to the Guaranteed Obligations at any time or from time to time held by Secured Parties, and the obligations and liabilities of the Guarantors hereunder shall not be conditioned or contingent upon the pursuit by the Secured Parties or any other person at any time of any right or remedy against the Borrower or against any other person which may be or become liable in respect of all or any part of the Guaranteed Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantors and the successors and assigns thereof, and shall inure to the benefit of the Lenders, and their respective successors and assigns, notwithstanding that from time to time during the term of this Agreement there may be no Guaranteed Obligations outstanding.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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11.3 Reinstatement .
The obligations of the Guarantors under this Article 11 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower or other Loan Party in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.
11.4 Subrogation; Subordination .
Each Guarantor hereby agrees that until the payment and satisfaction in full in cash of all Guaranteed Obligations and the expiration and termination of the Commitments of the Lenders under this Agreement it shall waive any claim and shall not exercise any right or remedy, direct or indirect, arising by reason of any performance by it of its guarantee in Section 11.1 , whether by subrogation or otherwise, against the Borrower or any other Guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations. Any Indebtedness of any Loan Party permitted pursuant to this Agreement shall be subordinated to such Loan Party’s Obligations in the manner set forth in documentation acceptable in form and substance to the Administrative Agent.
11.5 Remedies .
The Guarantors jointly and severally agree that, as between the Guarantors and the Lenders, the obligations of the Borrower under this Agreement and the Notes, if any, may be declared to be forthwith due and payable as provided in Section 8.2 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 8.2 ) for purposes of Section 11.1 , notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable by the Guarantors for purposes of Section 11.1 .
11.6 Instrument for the Payment of Money .
Each Guarantor hereby acknowledges that the guarantee in this Article 11 constitutes an instrument for the payment of money, and consents and agrees that any Lender or Agent, at its sole option, in the event of a dispute by such Guarantor in the payment of any moneys due hereunder, shall have the right to bring a motion-action under New York CPLR Section 3213.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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11.7 Continuing Guarantee .
The guarantee in this Article 11 is a continuing guarantee of payment, and shall apply to all Guaranteed Obligations whenever arising.
11.8 General Limitation on Guarantee Obligations .
In any action or proceeding involving any state corporate limited partnership or limited liability company law, or any applicable state, federal or foreign bankruptcy, insolvency, reorganization or other Law affecting the rights of creditors generally, if the obligations of any Guarantor under Section 11.1 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 11.1 , then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by such Guarantor, any Loan Party or any other person, be automatically limited and reduced to the highest amount (after giving effect to the right of contribution established in Section 11.10 ) that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.
11.9 Release of Guarantors .
When all of the Loans and any other Obligations of the Loan Parties hereunder which are accrued and payable have been indefeasibly paid in full or satisfied in full, this Agreement and the Guarantees made herein shall terminate with respect to all Obligations, except with respect to Obligations that expressly survive such repayment pursuant to the terms of this Agreement.
11.10 Right of Contribution .
Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantor’s right of contribution shall be subject to the terms and conditions of Section 11.4 . The provisions of this Section 11.10 shall in no respect limit the obligations and liabilities of any Guarantor to the Administrative Agent and the Lenders, and each Guarantor shall remain liable to the Administrative Agent and the Lenders for the full amount guaranteed by such Guarantor hereunder.
11.11 Keepwell .
Each Qualified ECP Guarantor hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide such funds or other support to each Specified Guarantor as may be needed by such Specified Guarantor from time to time to honor all of its obligations under its Guarantee of the Guaranteed Obligations and the other Financing Documents in respect of any Swap Obligation (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section for up to the maximum amount of such liability that can be hereby incurred without rendering such Qualified ECP Guarantor’s obligations and undertakings under this Article 11 voidable under applicable law relating to fraudulent conveyance or fraudulent
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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transfer, and not for any greater amount). The obligations and undertakings of each Qualified ECP Guarantor under this Section shall remain in full force and effect until the date upon which all Commitments under this Agreement have been terminated and all Obligations have been indefeasibly paid and performed in full. Each Qualified ECP Guarantor intends that this Section constitute, and this Section shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each Specified Guarantor for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
11.12 Limited Recourse . Notwithstanding anything to the contrary in this Agreement, (i) the obligations of the Loan Parties under this Agreement and the other Financing Documents, and any certificate, notice, instrument or document delivered pursuant hereto or thereto are obligations of the Loan Parties and do not constitute a debt or obligation of (and no recourse shall be had with respect thereto to) the Nonrecourse Parties except to the extent of the obligations of any such Nonrecourse Parties expressly provided for in any of the Financing Documents and (ii) the Secured Parties’ shall not have recourse to the assets of Borrower Member other than the Equity Interests in the Borrower owned by Borrower Member (and any proceeds thereof and any contractual rights or claims with respect thereto) for payment and/or satisfaction of the Guarantee set forth in this Article 11 . Except as provided in the Financing Documents to which they are a party, no claim of deficiency with respect to the obligations of the Loan Parties under this Agreement and the other Financing Documents shall be brought against the Nonrecourse Parties by any Secured Party; provided , that nothing contained in this Section 11.12 shall be deemed to release any Nonrecourse Party from liability for its own breach, fraudulent actions or willful misconduct. For the avoidance of doubt, the Secured Parties shall have full recourse to each Guarantor other than Borrower Member in respect of the Guarantee set forth in this Article 11 .
11.13 Amendments with respect to a Permitted Swap Agreement . The parties hereby acknowledge and agree that amendments and modifications to this Agreement and the other Loan Documents will be required in connection with the execution and delivery of a Permitted Swap Agreement and that such amendments and modifications must be in form, structure and substance acceptable to the Administrative Agent and Majority Lenders.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their officers thereunto duly authorized as of the day and year first above written.

VIVINT SOLAR FINANCING I, LLC,	
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR HOLDINGS, INC.,
a Delaware corporation	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR LIBERTY MANAGER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR MARGAUX MANAGER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR FUND III MANAGER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
VIVINT SOLAR MIA MANAGER, LLC,	
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR AALIYAH MANAGER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR REBECCA MANAGER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR HANNAH MANAGER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR NICOLE MANAGER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
- 2 -

			
VIVINT SOLAR ELYSE MANAGER, LLC,	
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR OWNER I, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
- 3 -

			
BANK OF AMERICA, N.A., as	
Administrative Agent and as Collateral	
Agent	
		
By:	 	/s/ Darleen R. Parmelee	
Name:	 	Darleen R. Parmelee	
Title:	 	Vice President	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
BANK OF AMERICA, N.A., as a Lender	
		
By:	 	/s/ Sheikh Omer-Farooq	
Name:	 	Sheikh Omer-Farooq	
Title:	 	Director	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
CIT FINANCE LLC, as a Lender	
		
By:	 	/s/ Rhys Marsh	
Name:	 	Rhys Marsh	
Title:	 	Vice President	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
DEUTSCHE BANK AG, NEW YORK BRANCH, as a Lender	
		
By:	 	/s/ Vinod Mukani	
Name:	 	Vinod Mukani	
Title:	 	Director	
		
By:	 	/s/ Sven Semmelmann	
Name:	 	Sven Semmelmann	
Title:	 	Vice President	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
ING CAPITAL LLC, as a Lender	
		
By:	 	/s/ Erwin Thomet	
Name:	 	Erwin Thomet	
Title:	 	Managing Director	
	
ING CAPITAL LLC, as a Lender	
		
By:	 	/s/ Thomas Cantello	
Name:	 	Thomas Cantello	
Title:	 	Director	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
SILICON VALLEY BANK, as a Lender	
		
By:	 	/s/ Mona Maitra	
Name:	 	Mona Maitra	
Title:	 	Vice President	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
SOCIÉTÉ GÉNÉRALE, as a Lender	
		
By:	 	/s/ Roberto Simon	
Name:	 	Roberto Simon	
Title:	 	Managing Director	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT A
to Loan Agreement
FORM OF NOTE
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

FORM OF NOTE
FOR VALUE RECEIVED, the undersigned (the “ Borrower ”), hereby promises to pay to              or registered assigns (the “ Lender ”), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of each Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of September 12, 2014 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Agreement ;” the terms defined therein being used herein as therein defined), among the Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Lead Arranger, Administrative Agent and Collateral Agent.
The Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent’s office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.
This Note is one of the Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note may be declared to be, or may automatically become, immediately due and payable all as provided in the Agreement. Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.
The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

VIVINT SOLAR FINANCING I, LLC	
		
By:	 	 	
Name:	 	 	
Title:	 	 	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

LOANS AND PAYMENTS with respect thereto

Date	 	Type of
Loan Made	 	Amount of
Loan Made	 	End of
Interest
Period	 	Amount of
Principal or
Interest
Paid This
Date	 	Outstanding
Principal
Balance
This Date	 	Notation
Made By	

                        	 	                        	 	                        	 	                        	 	                        	 	                        	 	                        	

                        	 	                        	 	                        	 	                        	 	                        	 	                        	 	                        	

                        	 	                        	 	                        	 	                        	 	                        	 	                        	 	                        	

                        	 	                        	 	                        	 	                        	 	                        	 	                        	 	                        	

                        	 	                        	 	                        	 	                        	 	                        	 	                        	 	                        	

                        	 	                        	 	                        	 	                        	 	                        	 	                        	 	                        	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT B-1
to Loan Agreement
FORM OF BORROWING NOTICE
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

FORM OF BORROWING NOTICE
Date:                    
Requested Borrowing Date:                    
Bank of America, N.A.
			
Administrative	 	Agent	
901 Main Street
Dallas, TX 75202-3714
Telephone: (972) 338-3774
Telecopy: (214) 290-8384
diana.r.lopez@baml.com
Gateway Village
900 W Trade Street
Charlotte NC 28255
Attention: Darleen R Parmelee
Telephone: 980.388.5001
Telecopier: 704.409.0645
Electronic Mail: darleen.r.parmelee@baml.com
 
Re:	Project Spotlight Master Credit Facility	
This Borrowing Notice is delivered to you pursuant to Section 2.1(a)(iii) of the Loan Agreement dated as of September 12, 2014, (as amended, modified or supplemented and in effect from time to time, the “ Loan Agreement ”) by and among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”), Vivint Solar Holdings, Inc., a Delaware corporation (the “ Member ”) and each guarantor from time to time party thereto (collectively and together with the Member, the “ Guarantors ” and individually, a “ Guarantor ”), each lender from time to time party thereto (collectively, the “ Lenders ” and individually, a “ Lender ”), and Bank of America, N.A., as Collateral Agent, and as Administrative Agent (together with its successors and permitted assigns in such capacity, the “ Administrative Agent ”), pursuant to which the Lenders have agreed to make Loans to the Borrower. Each capitalized term used and not otherwise defined herein shall have the meaning assigned thereto in Section 1.1 of the Loan Agreement.
This Borrowing Notice constitutes a request for a Loan as set forth below:
1. The aggregate principal amount of the Loan requested is $         (the “Requested Amount”). 1
2. The Borrowing Date of the Loan requested is          (the “Requested Borrowing Date”), which is a Business Day.

1  	The Requested Amount must exceed $2,500,000 or such lesser amount as is remaining under the Total Loan Commitment. The total aggregate principal amount advanced to date under the Loan Agreement, when aggregated with the Requested Amount, must not exceed the Total Loan Commitment.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

3. The Interest Period of the Loan requested is [one (1) month]/[two (2) months]/[three (3) months].
4. Proceeds of the Loan requested should be directed to the following account[s]:
[            ]
The undersigned further confirms and certifies to Administrative Agent and each Lender that, as of the date hereof:
(a) The Requested Amount, when aggregated with the Outstanding Principal, is no greater than the Available Borrowing Base;
(b) Attached hereto as Schedule 1 is a Borrowing Base Certificate, dated as of the date hereof;
(c) Attached hereto as Schedule 2 is the proposed updated Advance Model for each Subject Fund; and
(d) Attached hereto as Schedule 3 is a Borrowing Date Certificate, delivered pursuant to Section 3.2(a) of the Loan Agreement.
[ Remainder of page intentionally left blank ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF, the undersigned has caused this Borrowing Notice to be executed as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,
a Delaware limited liability company, as Borrower	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Schedule 1
Borrowing Base Certificate
[ See Attached. ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Schedule 2
Advance Model
[ See Attached. ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Schedule 3
Borrowing Date Certificate
[ See Attached. ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT B-2
to Loan Agreement
FORM OF CONTINUATION NOTICE
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

FORM OF CONTINUATION NOTICE
Date:                    
Bank of America, N.A.
			
Administrative	  	Agent	
901 Main Street
Dallas, TX 75202-3714
Telephone: (972) 338-3774
Telecopy: (214) 290-8384
diana.r.lopez@baml.com
Gateway Village
900 W Trade Street
Charlotte NC 28255
Attention: Darleen R Parmelee
Telephone: 980.388.5001
Telecopier: 704.409.0645
Electronic Mail: darleen.r.parmelee@baml.com
 
Re:	Project Spotlight Master Credit Facility	
This Continuation Notice is delivered to you pursuant to Section 2.1(a)(iii) of the Loan Agreement dated as of September 12, 2014, (as amended, modified or supplemented and in effect from time to time, the “ Loan Agreement ”) by and among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”), Vivint Solar Holdings, Inc., a Delaware corporation (the “ Member ”) and each guarantor from time to time party thereto (collectively and together with the Member, the “ Guarantors ” and individually, a “ Guarantor ”), each lender from time to time party thereto (collectively, the “ Lenders ” and individually, a “ Lender ”), and Bank of America, N.A., as Collateral Agent, and as Administrative Agent (together with its successors and permitted assigns in such capacity, the “ Administrative Agent ”), pursuant to which the Lenders have agreed to make Loans to the Borrower. Each capitalized term used and not otherwise defined herein shall have the meaning assigned thereto in Section 1.1 of the Loan Agreement.
This Continuation Notice constitutes a request to continue a LIBO Rate Loan as set forth below:
1. The aggregate principal amount of the Loan was originally $         and is currently $        .
2. The Borrowing Date of the Loan was         .
3. The Interest Period of the Loan is currently [one (1) month]/[two (2) months]/[three (3) months] and is requested to be continued as [one (1) month]/[two (2) months]/[three (3) months].
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF, the undersigned has caused this Continuation Notice to be executed as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,	
a Delaware limited liability company, as Borrower	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT C
to Loan Agreement
FORM OF ASSIGNMENT AND ACCEPTANCE
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

FORM OF ASSIGNMENT AND ACCEPTANCE
This Assignment and Acceptance (this “ Assignment and Acceptance ”) is dated as of the Effective Date set forth below and is entered into by and between [the][each] 2 Assignor identified in item 1 below ([the][each, an] “ Assignor ”) and [the][each] 3 Assignee identified in item 2 below ([the][each, an] “ Assignee ”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees] 4 hereunder are several and not joint.] 5 Capitalized terms used but not defined herein shall have the meanings given to them in the Loan Agreement identified below (as amended, the “ Loan Agreement ”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto (the “ Standard Terms ”) are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Acceptance as if set forth herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and the Loan Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Loan Agreement and any other documents or instruments delivered pursuant thereto in the amount[s] and equal to the percentage interest[s] identified below of all the outstanding rights and obligations under the respective facilities identified below, and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Loan Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “ Assigned Interest ”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Acceptance, without representation or warranty by [the][any] Assignor.
 
 	1.	Assignor[s] :                                                              	

[Assignor [is] [is not] a Defaulting Lender]

2  	For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.	
3  	For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.	
4  	Select as appropriate.	
5  	Include bracketed language if there are either multiple Assignors or multiple Assignees.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

2.	Assignee[s] :                                                              	

[for each Assignee, indicate [Lender], [Affiliate] of [ identify Lender ], or [other Person (other than the Borrower, Sponsor, a Subject Fund or any of their respective Affiliates)]]
 
 	3.	Borrower(s) :                                                              	
 
4.	Administrative Agent : Bank of America, N.A., as the administrative agent under the Loan Agreement	
 
5.	Loan Agreement : Loan Agreement, dated as of September 12, 2014 among Vivint Solar Financing I, LLC, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and Collateral Agent	
 
6.	Assigned Interest[s] :	

Assignor[s] 6	  	Assignee[s] 7	  	Facility
Assigned 8	  	Aggregate
Amount of
Commitment/
Loans
for all Lenders 9	 	  	Amount
of
Commitment/Loans
Assigned	 	  	Percentage
Assigned of
Commitment/
Loans 10	 	 	CUSIP
Number	
	  		  		  	$	            	  	  	$	            	  	  	 	            	% 	 		
	  		  		  	$	            	  	  	$	            	  	  	 	            	% 	 		
	  		  		  	$	            	  	  	$	            	  	  	 	            	% 	 		
 
[7.	Trade Date :                                          ] 11	

6  	List each Assignor, as appropriate.	
7  	List each Assignee and, if available, its market entity identifier, as appropriate.	
8  	Fill in the appropriate terminology for the types of facilities under the Loan Agreement that are being assigned under this Assignment (e.g., “Term Loan Commitment”, etc.).	
9  	Amounts in this column and in the column immediately to the right to be adjusted to take into account any payments or prepayments made between the Trade Date and the Effective Date.	
10  	Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.	
11  	To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Effective Date:             , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
The terms set forth in this Assignment and Acceptance are hereby agreed to:

ASSIGNOR[S] 12	
[NAME OF ASSIGNOR]	
	
By:	

[NAME OF ASSIGNOR]	
	
By:	
 	
Title:	
	
ASSIGNEE[S] 13	
[NAME OF ASSIGNEE]	
	
By:	
 	
Title:	
	
[NAME OF ASSIGNEE]	
	
By:	
 	
Title:	

12  	Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).	
13	Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

	
Consented to and Accepted:	
	
BANK OF AMERICA, N.A., as
    Administrative Agent	
	
By:                                                                  	
Title:	
	
[VIVINT SOLAR FINANCING I LLC, as	
Borrower	
	
By:                                                                  	
Title:] 14	

14  	To be included to the extent Borrower consent is required.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

ANNEX 1 TO ASSIGNMENT AND ACCEPTANCE
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ACCEPTANCE
1. Representations and Warranties .
1.1. Assignor . [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Loan Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2. Assignee . [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become a Lender under the Loan Agreement, (ii) it is an Eligible Assignee pursuant to the Loan Agreement, (iii) from and after the Effective Date, it shall be bound by the provisions of the Loan Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Loan Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.3 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Loan Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

2. Payments . From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date. Notwithstanding the foregoing, the Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to [the][the relevant] Assignee.
3. General Provisions . This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Acceptance may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. This Assignment and Acceptance shall be governed by, and construed in accordance with, the law of the State of New York.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT D
to Loan Agreement
FORM OF INCREMENTAL LOAN COMMITMENT INCREASE NOTICE
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

INCREMENTAL LOAN COMMITMENT INCREASE NOTICE

Bank of America, N.A.	
901 Main Street	
Dallas, TX 75202-3714	
Attention:	  	Diana Lopez	
Telephone:	  	(972) 338-3774	
Telecopy:	  	(214) 290-8384	
Email:	  	diana.r.lopez@baml.com	
Gateway Village
900 W Trade Street
Charlotte NC 28255
Attention: Darleen R Parmelee
Telephone: 980.388.5001
Telecopier: 704.409.0645
Electronic Mail: darleen.r.parmelee@baml.com
[DATE]
 
Re:	Vivint Solar Financing I, LLC	
Incremental Loan Commitment Increase Notice
Ladies and Gentlemen:
The undersigned, Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”), refers to the Loan Agreement, dated as of September 12, 2014, as amended from time to time, restated, supplemented or otherwise modified (the “ Loan Agreement ”) by and among the Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for the Lenders and as collateral agent (in such capacity, including any successor thereto, the “ Collateral Agent ”) for the Secured Parties, and the other Persons party thereto. Capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.
The Borrower hereby requests an Incremental Loan Commitment Increase under Section 2.9 of the Loan Agreement (the “ Proposed Incremental Loan Commitment Increase ”) and in connection therewith certifies as follows:
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

(a) The requested effective date of the Proposed Incremental Loan Commitment Increase is             , 20    . 15
(b) The aggregate amount of the Proposed Incremental Loan Commitment Increase is             Dollars ($            ). 16
(c) The maturity date and interest rate of Incremental Loans related to such Proposed Incremental Loan Commitment Increase are             and             . 17
(d) The upfront fees the Borrower proposes to pay to participating Lenders in such Proposed Incremental Loan Commitment Increase are             .
(e) The Available Borrowing Base exceeds $175 million.
(f) Immediately before and after giving effect to the Proposed Incremental Loan Commitment Increase, the Borrower is in compliance, and will be in pro forma compliance, with the Borrowing Base Requirements.
(g) no Default, Event of Default or Repayment Event has occurred and is continuing.
[ The remainder of this page is intentionally blank. The next page is the signature page .]

15  	Such date must be no less than sixty (60) days after the date of such notice.	
16  	Request must comply with the applicable provisions of the Loan Agreement, including Section 2.9(a)(ii)-(viii).	
17  	The proposed maturity date must be no earlier than the Loan Maturity Date of the Initial Loans.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF, the undersigned has executed this Incremental Loan Increase Notice as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,	
a Delaware limited liability company, as Borrower	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT E
to Loan Agreement
FORM OF INCREASING INCREMENTAL LENDER CONFIRMATION
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

FORM OF INCREASING INCREMENTAL LENDER CONFIRMATION
Reference is made to the Loan Agreement, dated as of September 12, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”), the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent for the Lenders (in such capacity, including any successor thereto, the “ Administrative Agent ”) and as collateral agent for the Secured Parties (in such capacity, including any successor thereto, the “ Collateral Agent ”), and the other Persons party thereto. Capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.
The undersigned Lender hereby certifies that in accordance with Section 2.9(b) of the Loan Agreement and the Incremental Loan Increase Notice dated as of [ — ], 201[ — ], such Lender has agreed to increase its Incremental Loan Commitment under the Loan Agreement as of [ — ], 201[ — ] (the “ Incremental Loan Increase Date ”). Such Incremental Loan Commitment Increase is subject to the satisfaction (or waiver) of the conditions set forth in Section 2.9(e) of the Loan Agreement on or prior to the Incremental Loan Commitment Increase Date. After giving effect to such Incremental Loan Commitment Increase, the Commitments of such Lender shall be in the amounts set forth on Annex 1 hereto. The Incremental Loan Commitments of such Lender shall have the Loan Maturity Date and Applicable Interest Rate set forth on Annex I hereto.
[ The remainder of this page is intentionally blank. The next page is the signature page . ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF , the undersigned have caused this Increasing Incremental Lender Confirmation to be duly executed as of the date first above written.

[NAME OF INCREASING INCREMENTAL
LENDER]	
		
By:	 	 	
Name:	 		
Title:	 		
Date:	 		

For acceptance and recordation in the register:	
BANK OF AMERICA, N.A.,
as Administrative Agent	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Annex I
to Increasing Incremental Lender Confirmation

Lender’s Undisbursed
Commitment Pre-
Commitment Increase	  	Lender’s Outstanding
Loans Pre-
Commitment Increase	 	  	Lender’s Undisbursed
Commitment Post-
Commitment Increase	 	  	Lender’s Outstanding
Loans Post-Commitment
Increase	 	
$                	  	$	                	  	  	$	                	  	  	$	                	  	
Incremental Loan Commitment Terms:

Loan Maturity Date	  	 	            , 20    	  	
		
Applicable Interest Rate	  	 	            	% 	
		
Upfront Fees	  				
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT F
to Loan Agreement
FORM OF NEW LENDER ACCESSION AGREEMENT
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

FORM OF NEW LENDER ACCESSION AGREEMENT
This ACCESSION AGREEMENT (this “ Accession Agreement ”), dated as of                     , is entered into by and among                     (the “ New Lender ”) Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”) and Bank of America, N.A., administrative agent for the Lenders (the “ Administrative Agent ”).
RECITALS
WHEREAS, reference is made to the Loan Agreement, dated as of September 12, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”), the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as the Administrative Agent and as collateral agent for the Secured Parties (in such capacity, including any successor thereto, the “ Collateral Agent ”), and the other Persons party thereto; and
WHEREAS, the New Lender has accepted an offer to provide an Incremental Loan Commitment to the Borrower on the terms set forth on Annex I attached hereto subject to the terms and conditions of the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions . All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.
SECTION 2. Assumption . As of the effective date set forth on the signature page to this Accession Agreement (the “ Effective Date ”), subject to and in accordance with the Loan Agreement, the New Lender irrevocably agrees to provide the Incremental Loan Commitment on the terms set forth on Annex I subject to the terms and conditions of the Loan Agreement, including Section 2.9(f) of the Loan Agreement and the additional purchases of Commitments and Loans the New Lender is required to make thereunder. The New Lender shall have all of the rights and be subject to all of the obligations in its capacity as a Lender under the Loan Agreement, each other Financing Document, and any other documents or instruments delivered pursuant thereto or in connection therewith and shall have all rights to all claims, suits, causes of action and any other right of a Lender against any Person, that arise from transactions, events or occurrences on or after the Effective Date, whether known or unknown, arising under or in connection with the Loan Agreement, each other Financing Document, and any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, statutory claims and all other claims at law or in equity.
Upon acceptance and recording of the assumption made pursuant to this Accession Agreement by the Administrative Agent, from and after the Effective Date, the Administrative Agent shall make all payments in respect of the Incremental Loan Commitment and any Incremental Loans made by the New Lender (including all payments of principal, interest, fees and other amounts) to the New Lender for amounts that have accrued from and including the Effective Date.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

SECTION 3. Representations, Warranties and Undertakings . The New Lender: (i) represents and warrants that (A) it has full power and authority, and has taken all action necessary, to execute and deliver this Accession Agreement and to consummate the transactions contemplated hereby and to become a Lender under the Loan Agreement and the other Financing Documents and (B) it is not an Investor or the Sponsor, (ii) acknowledges and confirms that it has received a copy of the Loan Agreement, each other Financing Document and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Accession Agreement and to provide the Incremental Loan Commitment and any Incremental Loans made by the New Lender, on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Secured Party, (iii) agrees that it will, independently and without reliance upon the Administrative Agent, the Borrower, or any other Secured Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Agreement or any other Financing Document, (iv) appoints and authorizes each Agent and the Depositary to take such action as agent on its behalf and to exercise such powers under the Loan Agreement or the other Financing Documents as are delegated to such Agent or the Depositary, as applicable, by the terms thereof, together with such powers as are reasonably incidental thereto and (v) will perform in accordance with their terms all of the obligations that by the terms of the Financing Documents are required to be performed by it as a Lender. The New Lender further confirms and agrees that in becoming a Lender and in making Loans under the Loan Agreement, such actions have and will be made without recourse to, or representation or warranty, by any Secured Party.
The New Lender further agrees to furnish to the Administrative Agent and, to the extent required by the Loan Agreement, the Borrower, no later than the Effective Date, an Administrative Questionnaire and any tax forms required under the Loan Agreement.
SECTION 4. Effectiveness . The effectiveness of the making of the Commitment hereunder is subject to (i) the due execution and delivery of this Accession Agreement by the New Lender, (ii) consent, not to be unreasonably withheld, by the Administrative Agent and the Borrower to this Accession Agreement, (iii) the registration of such Incremental Loan Commitment by the Administrative Agent in the Register and (iv) the satisfaction (or waiver) of each of the conditions set forth in Section 2.9(e) of the Loan Agreement.
Simultaneously with the execution and delivery by the parties hereto of this Accession Agreement to the Administrative Agent for its recording in the Register, the New Lender may request that Notes be executed and delivered to the New Lender reflecting the amounts of the Commitment of the New Lender.
Except as otherwise provided in the Loan Agreement, effective as of the Effective Date, the New Lender shall be deemed automatically to have become a party to, and the New Lender agrees that it will be bound by the terms and conditions set forth in, the Loan Agreement, and shall have all
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

the rights and obligations of a “Lender” under the Loan Agreement and the other Financing Documents for the Loans and/or Commitments held by it as if it were an original signatory thereto or an original Lender thereunder.
SECTION 5. Governing Law. THIS ACCESSION AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. Counterparts . This Accession Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Accession Agreement by telecopy or portable document format (“ pdf ”) shall be effective as delivery of a manually executed counterpart of this Accession Agreement.
SECTION 7. Further Assurances . The New Lender hereby agrees to execute and deliver such other instruments, and take such other action, as either the Borrower or the Administrative Agent may reasonably request in connection with the transactions contemplated by this Accession Agreement including, without limitation, the delivery of any notices to the Borrower or the Agents that may be required in connection herewith.
SECTION 8. Binding Effect; Amendment . This Accession Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, subject, however, to the provisions of the Loan Agreement. No provision of this Accession Agreement may be amended, waived or otherwise modified except by an instrument in writing signed by the New Lender and the Administrative Agent.
SECTION 9. Administrative Agent Enforcement . The Administrative Agent shall be entitled to rely upon and enforce this Accession Agreement against the New Lender in all respects.
[ The remainder of this page is intentionally blank. The next page is the signature page. ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF , the undersigned have caused this Accession Agreement to be duly executed by a Responsible Officer as of the date first above written.
The effective date for this Accession Agreement is the date this Accession Agreement is acknowledged and accepted by the Administrative Agent and the Borrower             , 20    (the “ Effective Date ”).

[NEW LENDER]	
		
By:	 	 	
Name:	 		
Title:	 		
	
BANK OF AMERICA, N.A.
as Administrative Agent	
		
By:	 	 	
Name:	 		
Title:	 		
	
VIVINT SOLAR FINANCING I, LLC,
as Borrower	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Annex I
to New Lender Accession Agreement
Incremental Loan Commitment Terms:

New Lender’s Incremental Loan Commitment 18	  				
		
Loan Maturity Date	  	 	            ,20    	  	
		
Applicable Interest Rate	  	 	            	% 	
		
Upfront Fees	  				

18  	Does not include additional purchases of Commitments and Loans that New Lender is required to make pursuant to Section 2.9(f) of the Loan Agreement.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT G
to Loan Agreement
FORM OF BORROWING BASE CERTIFICATE
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

BORROWING BASE CERTIFICATE
This Borrowing Base Certificate (this “ Borrowing Base Certificate ”) dated as of             , 20    , in respect of the period ending on             , 20    (the “ Computation Date ”) is delivered to you pursuant to Section 5.15 of the Loan Agreement dated as of September 12, 2014, (as amended, modified or supplemented and in effect from time to time, the “ Loan Agreement ”) by and among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”), the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent for the Lenders (in such capacity, including any successor thereto, the “ Administrative Agent ”) and as collateral agent for the Secured Parties (in such capacity, including any successor thereto, the “ Collateral Agent ”), and the other Persons party thereto, pursuant to which the Lenders have agreed to make Loans to the Borrower. Each capitalized term used and not otherwise defined herein shall have the meaning assigned thereto in Section 1.1 of the Loan Agreement.
The undersigned Responsible Officer of Borrower hereby certifies, represents and warrants as of the date hereof that he/she is the             of Borrower, and that, as such, he/she is authorized to execute and deliver this Borrowing Base Certificate to the Administrative Agent on behalf of the Borrower, and that:
4. all information contained herein and attached hereto is true and complete, and calculations contained herein and attached hereto as Schedule 1 (the “ Borrowing Base Certificate Calculations ”) are true and complete.
5. to the extent not provided concurrently in connection with a Borrowing Notice dated of even date herewith, Schedule 2 hereto contains the Advance Models, Net Cash Flows and Revised Net Cash Flows for each Subject Fund used to calculate the Subject Fund Value for each such Subject Fund;
6. as of the date hereof, the Subject Fund Value, Subject Fund Borrowing Base and Advance Rate for each Subject Fund are as follows:

Subject Fund	 	Subject Fund Value	 	Advance Rate	  	Subject Fund
Borrowing Base	

	 		 		  		

	 		 		  		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

7. as of the date hereof, the Available Borrowing Base is $            , and Outstanding Principal is $            ;
8. as of the date hereof, no Subject Fund is a Watched Fund [other than the following:

Watched Fund	  	Conditions/Circumstances causing
Watched Fund	

	  		
];
9. as of the date hereof, no System is a Defaulted System or a Non-Operable System [other than the following: — ];
10. as of the date hereof, the Borrower [is] [is not] in compliance with the Borrowing Base Requirement;
11. the Borrower is in compliance with Section 6.1 of the Loan Agreement as of the Quarterly Date for the calendar quarter that ended immediately prior to the date hereof; and
12. no Default or Event of Default has occurred and is continuing pursuant to the Loan Agreement.
[ Remainder of page intentionally left blank ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF, the undersigned has caused this Borrowing Base Certificate to be executed and delivered, and the certifications and warranties contained herein to be made on behalf of the Borrower, by a Responsible Officer of the Borrower as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,	
a Delaware limited liability company	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Schedule 1
Borrowing Base Calculations
[ To be provided by the Borrower on each Borrowing Base Certificate Date ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Schedule 2
Advance Models and Net Cash Flows
[ see attached. ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT H
to Loan Agreement
FORM OF ADVANCE MODEL
[See attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT I
to Loan Agreement
FORM OF US TAX COMPLIANCE CERTIFICATE
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Loan Agreement dated as of September 12, 2014 (as amended, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), among Vivint Solar Financing I, LLC, Bank of America, N.A., as lead arranger, collateral agent and administrative agent, each guarantor and each lender from time to time party thereto.
Pursuant to the provisions of Section 2.4(g) of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower (or its regarded parent) within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower (or its regarded parent) as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

[NAME OF LENDER]	
		
By:	 	 	
Name:	 	 	
Title:	 	 	
Date:             , 20[    ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Loan Agreement dated as of September 12, 2014 (as amended, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), among Vivint Solar Financing I, LLC, Bank of America, N.A., as lead arranger, collateral agent and administrative agent, each guarantor and each lender from time to time party thereto.
Pursuant to the provisions of Section 2.4(g) of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower (or its regarded parent) within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Borrower (or its regarded parent) as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

[NAME OF PARTICIPANT]	
		
By:	 	 	
Name:	 	 	
Title:	 	 	
Date:             , 20[    ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Loan Agreement dated as of September 12, 2014 (as amended, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), among Vivint Solar Financing I, LLC, Bank of America, N.A., as collateral agent and administrative agent, each guarantor and each lender from time to time party thereto.
Pursuant to the provisions of Section 2.4(g) of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower (or its regarded parent) within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower (or its regarded parent) as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

[NAME OF PARTICIPANT]	
		
By:	 	 	
Name:	 	 	
Title:	 	 	
Date:             , 20[    ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

FORM OF
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Loan Agreement dated as of September 12, 2014 (as amended, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), among Vivint Solar Financing I, LLC, Bank of America, N.A., as lead arranger, collateral agent and administrative agent, each guarantor and each lender from time to time party thereto.
Pursuant to the provisions of Section 2.4(g) of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Loan Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower (or its regarded parent) within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower (or its regarded parent) as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

[NAME OF LENDER]	
		
By:	 	 	
Name:	 	 	
Title:	 	 	
Date:             , 20[    ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT J
REQUIRED PERMISSIVE TRANSFER PROVISIONS
Part I – Partnership Flip Structures 19
Pursuant to a Subject Fund LLC Agreement (“ LLCA ”) or a valid, enforceable and irrevocable consent of the Investor or another Subject Fund that owns a direct Equity Interest in such Subject Fund (such party, the “ Class A Member ”):
 
 	(a)	The Managing Member (the “ Class B Member ”) is permitted to freely encumber all of its Class B Units in favor of a lender (or an agent acting on behalf of such lender) of such Class B Member (or an affiliate of such Class B Member) (“ Lender ”) without the further consent of the Class A Member;	
 
 	(b)	each Lender (or its transferee or an agent acting on behalf of such lender) is permitted to foreclose (or transfer in lieu thereof) on the Class B Units under the Financing Documents without the consent of the Class A Member and such lender is entitled to enforce such foreclosure rights so long as (I) any exercise of remedies in respect of such foreclosure (or transfer in lieu thereof) does not cause either a (x) recapture event for the Class A Member or (y) termination of the LLC for income tax purposes unless the transferee or another Person reasonably acceptable to the Class A Member has agreed to indemnify the Class A Member for any losses associated with such termination and (II) the transferee is not a tax-exempt entity (collectively, clauses (I) and (II), “ Tax Transfer Preconditions ”);	
 
 	(c)	subject to the Tax Transfer Preconditions and any other conditions acceptable to the Administrative Agent and specifically set forth in a consent otherwise meeting the requirements of Part I of this Exhibit J , Lender (or an agent acting on behalf of such Lender) is permitted, without the consent of the Class A Member after foreclosure (or transfer in lieu thereof) on the Class B Units by Lender (or an agent acting on behalf of such Lender), to transfer all of the Class B Units to any Person; provided that the LLCA may require that such Person be a “Qualified Transferee” (or such other term as may be used in the applicable LLCA) meeting certain ownership, management and/or operating experience criteria, which Class A Member has expressly agreed may be met by appointment of a third party satisfying such criteria; (for the avoidance of doubt, each Lender shall not be subject to such Qualified Transferee criteria unless such Lender is the transferee of the Class B Units transferred as contemplated by this clause (c)); and	
 
 	(d)	each Lender (or its transferee or an agent acting on behalf of such Lender) after foreclosure (or transfer in lieu thereof) on the Class B Units shall not be responsible for any obligations and liabilities of the Class B Member incurred or arising prior to such	

19  	To be duplicated and revised for inverted lease transfer provisions when a standard inverted lease is added as an Eligible Structure as described in footnote 5 of Appendix 11.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

 	foreclosure (or transfer in lieu thereof) or any obligations and liabilities incurred or arising after the date of such foreclosure (or transfer in lieu thereof), in either case resulting from the Class B Member’s acts or omissions, misrepresentations or default under any LLCA.	
In addition to the foregoing:
 
 	(e)	The LLCA shall not grant or provide a right of first refusal or offer in favor of a Class A Member in respect of any transfer of the Class B Units;	
 
 	(f)	Either (i) pursuant to the express terms of the LLCA, (A) the parent of the Class B Member (the “ Borrower ”) is permitted to freely encumber all of the equity interests it holds in the Class B Member and (B) the parent of the Borrower is permitted to freely encumber all of the equity interests it holds in the Borrower, in each case, without the further consent of the Class A Member or (ii) there is no provision of the LLCA that prohibits the encumbrances or requires the consent described in the foregoing subclause (i) ; and	
 
 	(g)	Either (i) pursuant to the express terms of the LLCA, (A) each Lender (or its transferee or an agent acting on behalf of such Lender) is permitted to foreclose (or transfer in lieu thereof) on the equity interests described in clause (f)  above without the consent of the Class A Member or satisfaction of any further conditions under any LLCA and such Lender is entitled to enforce such foreclosure rights and (B) any such exercise by a Lender shall not constitute a change of control of the Class B Member or (ii) there is no provision of the LLCA that prohibits the actions or requires the consent described in the foregoing subclause (i) .	
Part II – Closing Date Inverted Lease Structures
Pursuant to the operating agreement of the Master Tenant and the operating agreement of the Owner (each individually, an “ LLCA ” and collectively, the “ LLCAs ”) or valid, enforceable and irrevocable consents of the Investor, Owner and the Master Tenant, as applicable:
 
 	(a)	The Managing Member under each LLCA is permitted to freely encumber all of the membership interests that it holds in the Master Tenant as well as all of the membership interest that it holds in the Owner (collectively, the “ Equity Interests ”) in favor of a lender (or an agent acting on behalf of such lender) of such Managing Member (or an affiliate of such Managing Member) (“ Lender ”) without the further consent of the Owner, Master Tenant or Investor;	
 
 	(b)	each Lender (or its transferee or an agent acting on behalf of such lender) is permitted to foreclose (or transfer in lieu thereof) on the Equity Interests under the Financing Documents without the consent of the Owner, Master Tenant or Investor and such lender is entitled to enforce such foreclosure rights so long as (I) any exercise of remedies in respect of such foreclosure (or transfer in lieu thereof) does	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

 	not cause either a (x) recapture event for Investor or (y) termination of an LLCA for income tax purposes and (II) the transferee is not a tax-exempt entity (collectively, clauses (I) and (II), “ Tax Transfer Preconditions ”);	
 
 	(c)	subject to the Tax Transfer Preconditions and any other conditions acceptable to the Administrative Agent and specifically set forth in a consent otherwise meeting the requirements of Part II of this Exhibit J , Lender (or an agent acting on behalf of such Lender) is permitted, without the consent of Investor, Master Tenant or Owner after foreclosure (or transfer in lieu thereof) on any Equity Interest by Lender (or an agent acting on behalf of such Lender), to transfer any or all of the Equity Interests to any Person, subject to any management or operational experience requirements specifically set forth in a consent otherwise meeting the requirements of Part II of this Exhibit J ;	
 
 	(d)	No Lender (or its transferee or an agent acting on behalf of such Lender) after foreclosure (or transfer in lieu thereof) on any or all of the Equity Interest shall be responsible for any obligations and liabilities of Managing Member incurred or arising prior to such foreclosure (or transfer in lieu thereof) or any obligations and liabilities incurred or arising after the date of such foreclosure (or transfer in lieu thereof), in either case resulting from the Managing Member’s acts or omissions, misrepresentations or default under any LLCA or its failure to make a Capital Contribution;	
In addition to the foregoing:
 
 	(e)	No LLCA shall grant or provide a right of first refusal or offer in favor of Investor, Master Tenant or Owner in respect of any transfer of any Equity Interests.	
 
 	(f)	Either (i) pursuant to the express terms of the LLCA or (ii) a consent otherwise meeting the requirements of Part II of this Exhibit J , (A) the parent of the Managing Member (the “Borrower”) is permitted to freely encumber all of the equity interests it holds in the Managing Member and (B) the parent of the Borrower is permitted to freely encumber all of the equity interests it holds in the Borrower, in each case, without the further consent of the Investor, Master Tenant or Owner; and	
 
 	(g)	Either (i) pursuant to the express terms of the LLCA or (ii) a consent otherwise meeting the requirements of Part II of this Exhibit J , (A) each Lender (or its transferee or an agent acting on behalf of such Lender) is permitted to foreclose (or transfer in lieu thereof) on the equity interests described in clause (f) without the consent of the Investor, Master Tenant or Owner, or satisfaction of any further conditions under any LLCA and any such Lender is entitled to enforce such foreclosure rights and (B) any such exercise by a Lender shall not constitute a change of control of the Owner or Master Tenant as the case may be.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT K
to Loan Agreement
FORM OF POTENTIAL NEW FUND NOTICE
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

POTENTIAL NEW FUND NOTICE

Bank of America, N.A.	
901 Main Street	
Dallas, TX 75202-3714	
Attention:	  	Diana Lopez	
Telephone:	  	(972)338-3774	
Telecopy:	  	(214)290-8384	
Email:	  	diana.r.lopez@baml.com	
Gateway Village
900 W Trade Street
Charlotte NC 28255
Attention: Darleen R Parmelee
Telephone: 980.388.5001
Telecopier: 704.409.0645
Electronic Mail: darleen.r.parmelee@baml.com
[DATE 20 ]
 
Re:	Vivint Solar Financing I, LLC	
Potential New Fund Notice
Ladies and Gentlemen:
The undersigned, Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”), refers to the Loan Agreement, dated as of September 12, 2014, as amended from time to time, restated, supplemented or otherwise modified (the “ Loan Agreement ”) by and among the Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for the Lenders and as collateral agent (in such capacity, including any successor thereto, the “ Collateral Agent ”) for the Secured Parties, and the other Persons party thereto. Capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.
The Borrower hereby requests the inclusion of the Potential New Fund identified below under Section 2.10(a) of the Loan Agreement and in connection therewith certifies as follows:
(A) The requested date of inclusion of the Potential New Fund is:             .

20  	Date of request must be no fewer than (x) with respect to any Eligible Structure other than a Repeat Tax Equity Structure, forty-five (45) days prior to the expiration of the Availability Period and (y) with respect to any Repeat Tax Equity Structure, fifteen (15) Business Days prior to the expiration of the Availability Period.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

(B) The details of the Potential New Fund are set forth in the following table:

Type of Eligible Structure ( check one ):	 	__ Repeat Tax Equity Structure
 
__ Tax Equity Structure (non-repeat)
 
__ Other Financed Structure
 
__ Other Non-Financed Structure	
		
Managing Member ( if applicable, insert entity name, type of legal entity and jurisdiction of organization ):	 		
		
Subject Fund(s) ( if applicable, insert entity name(s), type(s) of legal entity and jurisdiction(s) of organization ):	 		
		
Investor ( if applicable, insert entity name ):	 		
		
Recommended Designation ( check one, in accordance with certification in (F) below )	 	__ Non-Cash-Sweep Fund
 
__ Cash-Sweep Fund
 
__ (not applicable)	
(C) The Borrower has delivered to the Administrative Agent the Tax Equity Model for the Potential New Fund.
(D) The Borrower has delivered to the Administrative Agent (or provided the Administrative Agent access to an online data room that contains true, complete and correct copies of the following) (i) a complete set of transaction documents for the Potential New Fund, [(ii) redline comparisons of the transaction documents for the Potential New Fund marked against the transaction documents of the current Subject Fund to which it is substantially similar,] 21 and [(ii)][(iii)] the information set forth in Section 3.3(b) of the Loan Agreement with respect to each System included in the Potential New Fund or the associated Host Customers.
(E) The Borrower will deliver to the Administrative Agent (or provide the Administrative Agent access to an online data room that contains true, complete and correct copies of the following) any other data, documentation, analysis or report reasonably requested by the Administrative Agent with respect to the Potential New Fund.
(F) The Borrower [hereby confirms that the transaction documents of the Potential New Fund do not contain any “cash sweep” provision (including, for example, any provision that

21  	To be included if the Potential New Fund is a Repeat Tax Equity Structure.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

would have the effect of (i) reducing the Managing Member’s cash distribution percentage, (ii) increasing the Investor’s cash distribution percentage or (iii) limiting, suspending or otherwise diverting cash distributions (whether temporarily, pursuant to an escrow or similar arrangement, or permanently) that would otherwise be payable to the Managing Member)] [hereby gives notice of the existence of a “cash sweep” provision in the transaction documents of the Potential New Fund; the following events or circumstances would give rise to a cash sweep with respect to the Potential New Fund:             ]. 22
[ The remainder of this page is intentionally blank. The next page is the signature page .]

22  	Pick and complete the applicable certification. For Other Non-Financed Structures, delete this clause (F) entirely and check “not applicable” where indicated in the table above.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF, the undersigned has executed this Potential New Fund Notice as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,	
a Delaware limited liability company, as Borrower	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT L
to Loan Agreement
FORM OF NEW SYSTEMS NOTICE
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

NEW SYSTEMS NOTICE

Bank of America, N.A.	
901 Main Street	
Dallas, TX 75202-3714	
Attention:	  	Diana Lopez	
Telephone:	  	(972) 338-3774	
Telecopy:	  	(214) 290-8384	
Email:	  	diana.r.lopez@baml.com	
Gateway Village
900 W Trade Street
Charlotte NC 28255
Attention: Darleen R Parmelee
Telephone: 980.388.5001
Telecopier: 704.409.0645
Electronic Mail: darleen.r.parmelee@baml.com
[DATE 23 ]
 
Re:	Vivint Solar Financing I, LLC	
New Systems Notice
Ladies and Gentlemen:
The undersigned, Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”), refers to the Loan Agreement, dated as of September 12, 2014, as amended from time to time, restated, supplemented or otherwise modified (the “ Loan Agreement ”) by and among the Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) for the Lenders and as collateral agent (in such capacity, including any successor thereto, the “ Collateral Agent ”) for the Secured Parties, and the other Persons party thereto. Capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.
The Borrower hereby requests the inclusion of new Systems identified below under Section 2.10(c) of the Loan Agreement and in connection therewith certifies as follows:
(G) The requested date of inclusion of the new Systems is:                    .
(H) Each of new Systems that are the subject of this request are identified on Annex I attached hereto, along with the Subject Fund into which each such System is requested to be included.

23  	Date of request must be at least 15 Business Days prior to the requested date of inclusion [and at least 10 Business Days after the date of the most recent prior New Systems Notice (if any)].	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

(I) The Borrower has delivered a revised Advance Model to the Administrative Agent reflecting the pro forma inclusion of the new Systems.
(J) The Borrower has delivered to the Administrative Agent (or provided the Administrative Agent access to an online data room that contains true, complete and correct copies of the following) (i) a complete set of Customer Agreements for each such System and (ii) System Information for each such System.
(K) The Borrower will deliver to the Administrative Agent (or provide the Administrative Agent access to an online data room that contains true, complete and correct copies of the following) any other data, documentation, analysis or report reasonably requested by the Administrative Agent with respect to such Systems or the associated Host Customers and commercially available to the Borrower.
[ The remainder of this page is intentionally blank. The next page is the signature page .]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF, the undersigned has executed this New Systems Notice as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,	
a Delaware limited liability company, as Borrower	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Annex I
New Systems
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT M
to Loan Agreement
FORM OF NEW SUBJECT FUND ACCESSION AGREEMENT
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

FORM OF NEW SUBJECT FUND ACCESSION AGREEMENT
This ACCESSION AGREEMENT (this “ Accession Agreement ”), dated as of             , is entered into by and among             , a Delaware limited liability company (the “ New Managing Member ”), Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”) and Bank of America, N.A., as administrative agent for the Lenders (in such capacity, including any successor thereto, the “ Administrative Agent ”) and as collateral agent for the Secured Parties (in such capacity, including any successor thereto, the “ Collateral Agent ”).
RECITALS
WHEREAS, reference is made to the Loan Agreement, dated as of September 12, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), among the Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent and Collateral Agent, and the other Persons party thereto; and
WHEREAS, pursuant to Section 2.10(a) of the Loan Agreement, the Borrower has requested the inclusion of a Potential New Fund of which the New Managing Member is managing member (the “ New Subject Fund ”) and the Administrative Agent has notified the Borrower that such Potential New Fund is acceptable for inclusion in the Available Borrowing Base.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions . All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.
SECTION 2. Joinder .
(A) Pursuant to Sections 2.10(a) , 3.4 and 5.18 of the Credit Agreement, the New Managing Member hereby:
 
 	(a)	agrees that this Accession Agreement may be attached to the Loan Agreement and that by execution and delivery hereof, the New Managing Member hereby accepts the duties and responsibilities of a Managing Member under the Loan Agreement and the other Financing Documents, including without limitation the CADA and the Security Agreement;	
 
 	(b)	makes, solely as to itself (except that the New Mananging Member shall make the representations as to its related Subject Fund or Subject Funds, as the case may be, pursuant to Sections 4.1(a)(v), 4.1(w), 4.1(x) and 4.1(y) of the Loan Agreement), each of the representations and warranties made by the Managing Members under the Loan Agreement and each other Financing Document, as if each such representation or warranty was set forth herein, mutatis mutandis ;	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

 	(c)	agrees to and makes, solely with respect to itself, each of the covenants and agreements made by the Managing Members under the Loan Agreement and each other Financing Document, as if each such covenant was set forth herein, mutatis mutandis ;	
 
 	(d)	certifies that no event has occurred and is continuing as of the date hereof, or will result from the transactions contemplated hereby, that would constitute a Default or Event of Default;	
 
 	(e)	agrees to comply with all the terms and conditions of the Loan Agreement as if it were an original signatory thereto;	
 
 	(f)	agrees to provide the Administrative Agent, the Collateral Agent and each Lender all documents, instruments, agreements and certificates required by such Lender in connection with such New Managing Members’ execution of this Accession Agreement;	
 
 	(g)	agrees to complete a Perfection Certificate pursuant to the terms of the Security Agreement and deliver the same to the Collateral Agent on or before the date hereof;	
 
 	(h)	agrees to deliver to the Collateral Agent, simultaneously with its execution hereof, an original certificate evidencing the Pledged Equity (as defined in the Security Agreement) in the New Subject Fund, together with an undated limited liability company interest power, and such other instruments and documents as the Collateral Agent may reasonably request, in accordance with the terms and conditions of the Security Agreement; and	
 
 	(i)	authorizes the filing of all financing statements deemed reasonably necessary or advisable by the Collateral Agent in connection with the Collateral Agent’s perfection of the Liens created against the assets of the New Managing Member pursuant to the terms of the Financing Documents.	
2. Effective as of the date hereof, the Administrative Agent and the Collateral Agent, on behalf of each Lender, hereby consent to this Accession Agreement and the New Managing Member becoming a Managing Member under the Loan Agreement and the other Financing Documents.
SECTION 3. Representations, Warranties and Undertakings . The New Managing Member: (i) represents and warrants that it has full power and authority, and has taken all action necessary, to execute and deliver this Accession Agreement and to consummate the transactions contemplated hereby and to become a Managing Member under the Loan Agreement and the other Financing Documents and (ii) acknowledges and confirms that it has received a copy of the Loan Agreement, each other Financing Document and such other documents and information as it has deemed appropriate to make its own decision to enter into this Accession Agreement.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

SECTION 4. Effectiveness . The effectiveness of this Accession Agreement is subject to (i) the satisfaction (or waiver) of each of the conditions set forth in Sections 3.3 and 5.18 of the Loan Agreement, (ii) the due execution and delivery of this Accession Agreement by the New Managing Member, and (iii) consent, not to be unreasonably withheld, conditioned or delayed by the Administrative Agent, the Collateral Agent and the Borrower to this Accession Agreement; provided , that such consent of the Administrative Agent or the Collateral Agent shall not be withheld if the New Subject Fund is a Repeat Tax Equity Structure with respect to which the Administrative Agent has decided not to conduct due diligence.
Except as otherwise provided in the Loan Agreement, effective as of the Effective Date, the New Managing Member shall be deemed automatically to have become a party to, and the New Managing Member agrees that it will be bound by the terms and conditions set forth in, the Loan Agreement, the CADA and the Security Agreement, and shall have all the rights and obligations of a “Managing Member” under the Loan Agreement and the other Financing Documents as if it were an original signatory thereto.
SECTION 5. Governing Law. THIS ACCESSION AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. Counterparts . This Accession Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Accession Agreement by telecopy or portable document format (“ pdf ”) shall be effective as delivery of a manually executed counterpart of this Accession Agreement.
SECTION 7. Further Assurances . The New Managing Member hereby agrees to execute and deliver such other instruments, amendments, agreements and authorizations, and take such other action, as the Administrative Agent, the Collateral Agent or any Lender may reasonably request in connection with the transactions contemplated by this Accession Agreement.
SECTION 8. Binding Effect; Amendment . This Accession Agreement shall be binding upon and inure to the benefit of the parties hereto, the Secured Parties, and their respective successors and assigns, subject, however, to the provisions of the Loan Agreement. No provision of this Accession Agreement may be amended, waived or otherwise modified except by an instrument in writing signed by the New Managing Member, the Administrative Agent and the Collateral Agent.
SECTION 9. Borrower Undertaking . The Borrower agrees to deliver to the Collateral Agent, simultaneously with its execution hereof, an original certificate evidencing the Pledged Equity (as defined in the Security Agreement) in the New Managing Member, together with an undated limited liability company interest power, and such other instruments and documents as the Collateral Agent may reasonably request, in accordance with the terms and conditions of the Security Agreement.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

SECTION 10. Administrative Agent Enforcement . The Administrative Agent, the Collateral Agent and each Lender shall be entitled to rely upon and enforce this Accession Agreement against the New Managing Member and the Borrower in all respects.
[ The remainder of this page is intentionally blank. The next page is the signature page. ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF , the undersigned have caused this Accession Agreement to be duly executed by a Responsible Officer as of the date first above written.
The effective date for this Accession Agreement is the date this Accession Agreement is acknowledged and accepted by the Administrative Agent, the Collateral Agent and the Borrower             , 20     (the “ Effective Date ”).

[NEW MANAGING MEMBER]	
		
By:	 	 	
Name:	 		
Title:	 		
	
BANK OF AMERICA, N.A.
as Administrative Agent and Collateral Agent	
		
By:	 	 	
Name:	 		
Title:	 		
	
VIVINT SOLAR FINANCING I, LLC,
as Borrower	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT N
to Loan Agreement
FORM OF BORROWING DATE CERTIFICATE
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

BORROWING DATE CERTIFICATE
This Borrowing Date Certificate (this “ Borrowing Date Certificate ”) dated as of             , 20    , is delivered to you pursuant to Section 3.2(a) of the Loan Agreement dated as of September 12, 2014, (as amended, modified or supplemented and in effect from time to time, the “ Loan Agreement ”) by and among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”), the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent for the Lenders (in such capacity, including any successor thereto, the “ Administrative Agent ”) and as collateral agent for the Secured Parties (in such capacity, including any successor thereto, the “ Collateral Agent ”), and the other Persons party thereto, pursuant to which the Lenders have agreed to make Loans to the Borrower. Each capitalized term used and not otherwise defined herein shall have the meaning assigned thereto in Section 1.1 of the Loan Agreement.
The undersigned Responsible Officer of Borrower hereby certifies, represents and warrants as of the date hereof that he/she is the                      of Borrower, and that, as such, he/she is authorized to execute and deliver this Borrowing Date Certificate to the Administrative Agent on behalf of the Borrower, and that:
13. Each of the representations and warranties made by each Loan Party under the Financing Documents are true and correct in all material respects as of such Requested Borrowing Date (as defined in the Borrowing Notice to which this Borrowing Date Certificate is attached), other than those representations and warranties which are modified by materiality by their own terms, which are true and correct in all respects as of such Requested Borrowing Date (unless such representation or warranty relates solely to an earlier date, in which case it is true and correct in all material respects as of such earlier date);
14. The Eligibility Representations set forth in Appendix 3 of the Loan Agreement are true, complete, and correct with respect to each System for which the Requested Borrowing Date is the first Borrowing Date after such System became subject to the Financing Documents;
15. No Default of Event of Default has occurred and is continuing pursuant to the Loan Agreement or will result from the Borrowing of the requested Loan;
16. The Borrower is in compliance with Section 6.1 of the Loan Agreement as of the most recent Quarterly Date;
17. As of the date hereof, no Subject Fund is a Watched Fund [other than the following:

ARTICLE 12 Watched Fund	 	ARTICLE 13 Conditions/Circumstances
causing Watched Fund	
ARTICLE 14	 	ARTICLE 15	
ARTICLE 16	 	ARTICLE 17	
ARTICLE 18	 	ARTICLE 19	
ARTICLE 20];
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

18. the Borrower [is][is not] in compliance with the Borrowing Base Requirement [and the details of such non-compliance are as follows:             ];
19. No Material Adverse Effect has occurred or is continuing since the Closing Date, and, to Borrower’s knowledge, no event or circumstance exists that could reasonably be expected to result in a Material Adverse Effect has occurred; and
20. No Bankruptcy Event has occurred with respect to either Borrower Member or Vivint Solar Parent.
[ Remainder of page intentionally left blank ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF, the undersigned has caused this Borrowing Date Certificate to be executed and delivered, and the certifications and warranties contained herein to be made on behalf of the Borrower, by a Responsible Officer of the Borrower as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,	
a Delaware limited liability company	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT N
to Loan Agreement
FORM OF BORROWING DATE CERTIFICATE
[See Attached]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

BORROWING DATE CERTIFICATE
This Borrowing Date Certificate (this “ Borrowing Date Certificate ”) dated as of             , 20    , is delivered to you pursuant to Section 3.2(a) of the Loan Agreement dated as of September 12, 2014, (as amended, modified or supplemented and in effect from time to time, the “ Loan Agreement ”) by and among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”), the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Bank of America, N.A., as Lead Arranger, as administrative agent for the Lenders (in such capacity, including any successor thereto, the “ Administrative Agent ”) and as collateral agent for the Secured Parties (in such capacity, including any successor thereto, the “ Collateral Agent ”), and the other Persons party thereto, pursuant to which the Lenders have agreed to make Loans to the Borrower. Each capitalized term used and not otherwise defined herein shall have the meaning assigned thereto in Section 1.1 of the Loan Agreement.
The undersigned Responsible Officer of Borrower hereby certifies, represents and warrants as of the date hereof that he/she is the             of Borrower, and that, as such, he/she is authorized to execute and deliver this Borrowing Date Certificate to the Administrative Agent on behalf of the Borrower, and that:
21. Each of the representations and warranties made by each Loan Party under the Financing Documents are true and correct in all material respects as of such Requested Borrowing Date (as defined in the Borrowing Notice to which this Borrowing Date Certificate is attached), other than those representations and warranties which are modified by materiality by their own terms, which are true and correct in all respects as of such Requested Borrowing Date (unless such representation or warranty relates solely to an earlier date, in which case it is true and correct in all material respects as of such earlier date);
22. The Eligibility Representations set forth in Appendix 3 of the Loan Agreement are true, complete, and correct with respect to each System for which the Requested Borrowing Date is the first Borrowing Date after such System became subject to the Financing Documents;
23. No Default of Event of Default has occurred and is continuing pursuant to the Loan Agreement or will result from the Borrowing of the requested Loan;
24. The Borrower is in compliance with Section 6.1 of the Loan Agreement as of the most recent Quarterly Date;
25. As of the date hereof, no Subject Fund is a Watched Fund [other than the following:

ARTICLE 21 Watched Fund	 	ARTICLE 22 Conditions/Circumstances
causing Watched Fund	
ARTICLE 23	 	ARTICLE 24	
ARTICLE 25	 	ARTICLE 26	
ARTICLE 27	 	ARTICLE 28	
ARTICLE 29];
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

26. the Borrower [is][is not] in compliance with the Borrowing Base Requirement [and the details of such non-compliance are as follows:             ];
27. No Material Adverse Effect has occurred or is continuing since the Closing Date, and, to Borrower’s knowledge, no event or circumstance exists that could reasonably be expected to result in a Material Adverse Effect has occurred; and
28. No Bankruptcy Event has occurred with respect to either Borrower Member or Vivint Solar Parent.
[ Remainder of page intentionally left blank ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF, the undersigned has caused this Borrowing Date Certificate to be executed and delivered, and the certifications and warranties contained herein to be made on behalf of the Borrower, by a Responsible Officer of the Borrower as of the date first written above.

VIVINT SOLAR FINANCING I, LLC,	
a Delaware limited liability company	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

SCHEDULE 1.1(b)
Knowledge Individuals
For each Loan Party, unless otherwise indicated on this Schedule 1.1(b) :
 
 	1.	Greg Butterfield – Chief Executive Officer; President	
 
 	2.	Shawn Lindquist – Chief Legal Officer; Secretary	
 
 	3.	Dana Russell – Chief Financial Officer	
 
 	4.	Thomas Plagemann – Executive Vice President of Capital Markets	
 
 	5.	Dan Black – Associate General Counsel; Assistant Secretary	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

SCHEDULE 3.1(m)
Consents
 
1.	Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Liberty Manager, LLC, Bank of America, N.A., Vivint Solar Liberty Master Tenant, LLC and the Investor named therein, dated September 12, 2014	
 
2.	Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Liberty Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014	
 
3.	Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Margaux Manager, LLC, Bank of America, N.A., Vivint Solar Margaux Master Tenant, LLC and the Investor named therein, dated September 12, 2014	
 
4.	Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Margaux Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014	
 
5.	Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Fund III Manager, LLC, Bank of America, N.A., Vivint Solar Fund III Master Tenant, LLC and the Investor named therein, dated September 12, 2014	
 
6.	Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Fund III Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014	
 
7.	Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Nicole Manager, LLC, Bank of America, N.A., Vivint Solar Nicole Master Tenant, LLC and the Investor named therein, dated September 12, 2014	
 
8.	Consent Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Nicole Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014	
 
9.	Consent and Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Mia Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014	
 
10.	Consent and Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Aaliyah Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014	
 
11.	Consent and Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Rebecca Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

12.	Consent and Agreement by and among Vivint Solar Financing I, LLC, Vivint Solar Elyse Manager, LLC, Bank of America, N.A., and the Investor named therein, dated September 12, 2014	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

SCHEDULE 4.1(f)
Outstanding Debt
Vivint Solar Financing I, LLC
1. None
Vivint Solar Liberty Manager, LLC
1. None
Vivint Solar Margaux Manager, LLC
1. None
Vivint Solar Fund III Manager, LLC
1. None
Vivint Solar Nicole Manager, LLC
1. None
Vivint Solar Mia Manager, LLC
1. None
Vivint Solar Aaliyah Manager, LLC
1. None
Vivint Solar Rebecca Manager, LLC
1. None
Vivint Solar Hannah Manager, LLC
1. None
Vivint Solar Elyse Manager, LLC
1. None
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

SCHEDULE 4.1(x)
Subsidiaries; Equity Interests

Current Legal
Entities Owned	  	Loan Party
Record Owner	  	Jurisdiction	  	Interest	
Vivint Solar
Financing I, LLC
(BORROWER)	  	Vivint Solar
Holdings, Inc.	  	Delaware	  	100%	
				
Vivint Solar
Liberty Manager,
LLC
(GUARANTOR)	  	Vivint Solar
Financing I, LLC	  	Delaware	  	100%	
				
Vivint Solar
Margaux
Manager, LLC
(GUARANTOR)	  	Vivint Solar
Financing I, LLC	  	Delaware	  	100%	
				
Vivint Solar Fund III Manager, LLC
(GUARANTOR)	  	Vivint Solar
Financing I, LLC	  	Delaware	  	100%	
				
Vivint Solar Nicole Manager, LLC
(GUARANTOR)	  	Vivint Solar
Financing I, LLC	  	Delaware	  	100%	
				
Vivint Solar Mia
Manager, LLC
(GUARANTOR)	  	Vivint Solar
Financing I, LLC	  	Delaware	  	100%	
				
Vivint Solar
Aaliyah Manager,
LLC
(GUARANTOR)	  	Vivint Solar
Financing I, LLC	  	Delaware	  	100%	
				
Vivint Solar
Rebecca Manager,
LLC
(GUARANTOR)	  	Vivint Solar
Financing I, LLC	  	Delaware	  	100%	
				
Vivint Solar
Hannah Manager,
LLC
(GUARANTOR)	  	Vivint Solar
Financing I, LLC	  	Delaware	  	100%	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

							
Current Legal
Entities Owned	  	Loan Party
Record Owner	  	Jurisdiction	  	Interest	
Vivint Solar Elyse
Manager, LLC
(GUARANTOR)	  	Vivint Solar
Financing I, LLC	  	Delaware	  	100%	
				
Vivint Solar
Owner I, LLC
(GUARANTOR)	  	Vivint Solar Financing I, LLC	  	Delaware	  	100%	
				
Vivint Solar
Liberty Master
Tenant, LLC	  	Vivint Solar Liberty Manager, LLC	  	Delaware	  	***% (pre-flip),
***% (post-flip)	
				
Vivint Solar
Liberty Master
Tenant, LLC	  	[n/a; Investor]	  	Delaware	  	***% (pre-flip),
***% (post-flip)	
				
Vivint Solar
Liberty Owner,
LLC	  	Vivint Solar Liberty Manager, LLC	  	Delaware	  	***%	
				
Vivint Solar
Liberty Owner,
LLC	  	Vivint Solar Liberty Master Tenant, LLC	  	Delaware	  	***%	
				
Vivint Solar
Margaux Master
Tenant, LLC	  	Vivint Solar
Margaux Manager,
LLC	  	Delaware	  	***% (pre-flip),
***% (post-flip)	
				
Vivint Solar
Margaux Master
Tenant, LLC	  	[n/a; Investor]	  	Delaware	  	***% (pre-flip),
***% (post-flip)	
				
Vivint Solar
Margaux Owner,
LLC	  	Vivint Solar
Margaux Manager, LLC	  	Delaware	  	***%	
				
Vivint Solar
Margaux Owner,
LLC	  	Vivint Solar
Margaux Master
Tenant, LLC	  	Delaware	  	***%	
				
Vivint Solar Fund III
Master Tenant,
LLC	  	Vivint Solar Fund III Manager, LLC	  	Delaware	  	***% (pre-flip),
***% (post-flip)	
				
Vivint Solar Fund III
Master Tenant,
LLC	  	[n/a; Investor]	  	Delaware	  	***% (pre-flip),
***% (post-flip)	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

							
Current Legal
Entities Owned	  	Loan Party
Record Owner	  	Jurisdiction	 	Interest	
Vivint Solar Fund
III Owner,
LLC	  	Vivint Solar Fund III Manager, LLC	  	Delaware	 	***%	
				
Vivint Solar Fund
III Owner,
LLC	  	Vivint Solar Fund III Master Tenant, LLC	  	Delaware	 	***%	
				
Vivint Solar Nicole
Master Tenant,
LLC	  	Vivint Solar Nicole Manager, LLC	  	Delaware	 	***% (pre-flip),
***% (post-flip)	
				
Vivint Solar Nicole
Master Tenant, LLC	  	[n/a; Investor]	  	Delaware	 	***% (pre-flip),
***% (post-flip)	
				
Vivint Solar Nicole
Owner, LLC	  	Vivint Solar Nicole Manager, LLC	  	Delaware	 	***%	
				
Vivint Solar Nicole
Owner, LLC	  	Vivint Solar Nicole Master Tenant, LLC	  	Delaware	 	***%	
				
Vivint Solar Mia
Project Company,
LLC	  	Vivint Solar Mia Manager, LLC	  	Delaware	 	100% of Class B/
***% of Mia Project Co.	
				
Vivint Solar Mia
Project Company,
LLC	  	[n/a; Investor]	  	Delaware	 	100% of Class A/
***% of Mia Project Co.	
				
Vivint Solar
Aaliyah Project
Company, LLC	  	Vivint Solar Aaliyah Manager, LLC	  	Delaware	 	100% of Class B/
***% of Aaliyah Project Co.	
				
Vivint Solar
Aaliyah Project
Company, LLC	  	[n/a; Investor]	  	Delaware	 	100% of Class A/
***% of Aaliyah Project Co.	
				
Vivint Solar
Rebecca Project
Company, LLC	  	Vivint Solar Rebecca Manager, LLC	  	Delaware	 	100% of Class B/
***% of Rebecca Project Co.	
				
Vivint Solar
Rebecca Project
Company, LLC	  	[n/a; Investor]	  	Delaware	 	100% of Class A/
***% of Rebecca Project Co.	
				
Vivint Solar
Hannah Project
Company, LLC	  	Vivint Solar Hannah Manager, LLC	  	Delaware	 	100% of Class B/
***% of Hannah Project Co.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

							
Current Legal
Entities Owned	  	Loan Party
Record Owner	  	Jurisdiction	  	Interest	
Vivint Solar
Hannah Project
Company, LLC	  	[n/a; Investor]	  	Delaware	  	100% of Class A/
***% of Hannah
Project Co.	
Vivint Solar
Elyse Project
Company, LLC	  	Vivint Solar Elyse Manager, LLC	  	Delaware	  	100% of Class B/
***% of Elyse
Project Co.	
Vivint Solar
Elyse Project
Company, LLC	  	[n/a; Investor]	  	Delaware	  	100% of Class A/
***% of Elyse
Project Co.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

SCHEDULE 6.7
Investments
Vivint Solar Financing I, LLC
1. Investments made from time-to-time in Vivint Solar Liberty Manager, LLC
2. Investments made from time-to-time in Vivint Solar Margaux Manager, LLC
3. Investments made from time-to-time in Vivint Solar Fund III Manager, LLC
4. Investments made from time-to-time in Vivint Solar Nicole Manager, LLC
5. Investments made from time-to-time in Vivint Solar Mia Manager, LLC
6. Investments made from time-to-time in Vivint Solar Aaliyah Manager, LLC
7. Investments made from time-to-time in Vivint Solar Rebecca Manager, LLC
8. Investments made from time-to-time in Vivint Solar Hannah Manager, LLC
9. Investments made from time-to-time in Vivint Solar Elyse Manager, LLC
10. Investments made from time-to-time in Vivint Solar Owner I, LLC
Vivint Solar Liberty Manager, LLC
1. Investments made from time-to-time in Vivint Solar Liberty Owner, LLC
2. Investments made from time-to-time in Vivint Solar Liberty Master Tenant, LLC
Vivint Solar Margaux Manager, LLC
1. Investments made from time-to-time in Vivint Solar Margaux Owner, LLC
2. Investments made from time-to-time in Vivint Solar Margaux Master Tenant, LLC
Vivint Solar Fund III Manager, LLC
1. Investments made from time-to-time in Vivint Solar Fund III Owner, LLC
2. Investments made from time-to-time in Vivint Solar Fund III Master Tenant, LLC
Vivint Solar Nicole Manager, LLC
1. Investments made from time-to-time in Vivint Solar Nicole Owner, LLC
2. Investments made from time-to-time in Vivint Solar Nicole Master Tenant, LLC
Vivint Solar Mia Manager, LLC
1. Investments made from time-to-time in Vivint Solar Mia Project Company, LLC
Vivint Solar Aaliyah Manager, LLC
1. Investments made from time-to-time in Vivint Solar Aaliyah Project Company, LLC
Vivint Solar Rebecca Manager, LLC
1. Investments made from time-to-time in Vivint Solar Rebecca Project Company, LLC
Vivint Solar Hannah Manager, LLC
1. Investments made from time-to-time in Vivint Solar Hannah Project Company, LLC
Vivint Solar Elyse Manager, LLC
1. Investments made from time-to-time in Vivint Solar Elyse Project Company, LLC
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

SCHEDULE 6.15
Transactions With Affiliates
None
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

APPENDIX 1
ADVANCE RATE CALCULATIONS
Advance Rate
For each Cash-Sweep Fund, Non-Cash Sweep Fund and Other Structure, the Advance Rate will be *** based on (i) the Host Customer FICO Score and (ii) the “Type of Fund,” in accordance with the table below.

Type of Fund	  	Host Customer FICO Score	
	  	Greater than
***
(***)	  	*** – ***
(***)	  	Less than ***
(***)	
Cash-Sweep Fund
(baseline: *** (see below))***	  	***	  	***%	  	***%	
Non-Cash-Sweep Fund
(***% baseline)	  	***%	  	***%	  	***%	
Other Non-Financed Structure
(***% baseline)	  	***%	  	***%	  	***%	
***
“ ITC Downside Case ” means a scenario in which a ***.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

APPENDIX 2
BORROWING BASE CERTIFICATE COMPONENTS AND CALCULATIONS
I. Borrowing Base Certificate Components
Borrower will submit a certificate (the “ Borrowing Base Certificate ”) setting forth:
 
 	a.	the Subject Fund Value of all Systems presented for financing to date, including Systems being submitted in connection with the contemplated draw, if any, including details of:	
 
 	(i)	the Advance Models and Net Cash Flows used to calculate such Subject Fund Value,	
 
 	(ii)	Revised Net Cash Flows; and	
 
 	(iii)	a list identifying each Defaulted System and Non-Operable System.	
 
 	b.	the Subject Fund Borrowing Base for each Subject Fund;	
 
 	c.	the Available Borrowing Base;	
 
 	d.	a representation that the Borrower is in compliance with Section 6.1 as of the previous Quarterly Date;	
 
 	e.	the Advance Rate for each Subject Fund;	
 
 	f.	Either (x) certification that no Watched Funds exist or (y) a list identifying each Subject Fund that is a Watched Fund and the condition or conditions that resulted in such Subject Fund being a Watched Fund; and	
 
 	g.	Either (x) certification of compliance with the Borrowing Base Requirement or (y) notice of non-compliance with the Borrowing Base Requirement.	
II. Defined terms .
“ Advance Model ” means a model in respect of all Subject Funds in the form of Exhibit H (which Exhibit H may be updated from time to time with the addition of new Subject Funds or Systems pursuant to Section 2.10 , 3.3(a) , or in accordance with Section 9.12(a) ), forecasting the Net Cash Flows to each Managing Member under each Subject Fund (including in the case of a Flip Structure, before and after the expected “Flip Date,” and in the case of an Inverted Lease Structure, before and after the expiration of the master lease), in each case: (i) calculated in accordance with and adjusted for the Assumptions, (ii) adjusted to exclude Excluded Revenues, (iii) accounting for the applicable System Information and (iv) with respect to each Subject Fund financed pursuant to the Loan Agreement after the Closing Date, in form and substance reasonably satisfactory to the Administrative Agent as determined in consultation with the Lenders and the Borrower. In addition, each Advance Model will be updated as of the date such model is delivered to reflect any modifications required due to changes in System Information or Revised Net Cash Flow. Each Advance Model shall identify Systems that have become Defaulted Systems and Subject Funds that have become Watched Funds.
“ Advance Rate ” means, with respect to each Subject Fund, a percentage to be determined in accordance with percentages and adjustments (i) in the case of Tax Equity Structures and Other
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

Non-Financed Structures, set forth in Appendix 1 and (ii) in the case of Other Financed Structures, to be reasonably determined by the Majority Lenders, in consultation with the Borrower, at the time such Other Financed Structures or funds are included in the Available Borrowing Base (it being understood that the Majority Lenders may consent to the methodology of calculating the Advance Rate for Other Financed Structures, but the calculation and approval of specific Advance Rates based on actual Host Customer FICO Scores shall be conducted by the Administrative Agent, in consultation with the Borrower); provided, however, each Watched Fund shall have an Advance Rate of ***% for purposes of calculating the Available Borrowing Base. The Advance Rate for each Subject Fund shall be as set forth in the most recent Borrowing Base Certificate approved by the Administrative Agent.
“ Assumptions ” means the assumptions set forth in the following table:

Characteristic	  	Assumption	
***	  	***	  		
***
***	  		  	            ***
            ***	
***	  	***	  		
***	  	***                	  	***	
	  	***                	  	***	
	  	***                	  	***	
	  	***                	  	***	
***	  		  	            ***
 
            ***	
***	  		  	            ***
 
            ***	
“ Available Borrowing Base ” means the sum of the Subject Fund Borrowing Bases for all Subject Funds
***.
“ Cash-Sweep Event ” has the meaning set forth in Appendix 7 .
“ Defaulted System ” means any System (i) that has not been in service for 180 days or more (subject to force majeure exceptions), (ii) with respect to which the Host Customer has failed to make any payment
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

that is due and payable under a Customer Agreement for 120 days or more (including, without limitation, any recurring payments and shut-down payments), or (iii) with respect to which a Host Customer has failed to make a transfer payment or buy-out payment that is due and payable under a Customer Agreement.
“ Discount Rate ” means, with respect to any Net Cash Flows, the last rate quoted by Bloomberg L.P. as of 12:00 p.m. New York City time on the Borrowing Base Certificate Date using the following keystrokes: IRSB <go>, or any successor quotation, in each case, corresponding to the weighted average life of such Net Cash Flows plus 3.25%.
“ Excluded Revenues ” means ***.
“ Investor Guarantor ” means, with respect to any Subject Fund, the guarantor under any Guarantee issued by Vivint Parent and/or any of its Affiliates for the benefit of the Investor in connection with such Subject Fund.
“ Net Cash Flow ” means an amount equal to the aggregate forecasted distributions paid or payable to each Managing Member on account of its respective interest in a Subject Fund as set forth in the Advance Model (provided, the forecasted distributions shall only include contracted cash flows attributable to the initial term (excluding any renewal period) of the applicable Customer Agreement).
“ Non-Operable System ” means a System that is damaged or destroyed by fire, theft or other casualty (an “ Event of Loss ”) and such System has become inoperable because of such event and is not repaired, restored, replaced or rebuilt to substantially the same condition as it existed immediately prior to such Event of Loss within one hundred eighty (180) days of such Event of Loss.
“ Revised Net Cash Flow ” means, as of each date a Borrowing Base Certificate is delivered, a revised calculation of Net Cash Flows that includes the effect of:
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

 	1.	Any transfer payment or buy-out payment that has been received in accordance with the applicable Customer Agreement;	
 
 	2.	Host Customer transfers in accordance with the applicable Customer Agreement, with respect to which the transferee of a Host Customer’s interest in a System fails to meet the transfer requirements, including any credit requirements, as set forth in the Material Project Documents. For the avoidance of doubt, the FICO score associated with the System will be updated to reflect the transferee as part of such transfer;	
 
 	3.	Removal of cash flows associated with Non-Operable Systems and Defaulted Systems;	
 
 	4.	Updates (solely on a forward-looking basis) to *** based on the results of *** required to be delivered pursuant to ***; and	
 
 	5.	Changes to Managing Member cash distribution allocations or Flip Dates (as defined in each Subject Fund’s applicable Material Project Documents) as reflected in any True-Up Models (as defined in each Subject Fund’s applicable Material Project Documents) or updated Tax Equity Models, as applicable, delivered with respect to a Subject Fund.	
“ Subject Fund Borrowing Base ” means, for each Subject Fund, an amount equal to the Subject Fund Value of Systems in such Subject Fund multiplied by the applicable Advance Rate for such Subject Fund.
“ Subject Fund Value ” means for each Subject Fund, an amount equal to the net present value of Net Cash Flow calculated using a discount rate equal to the Discount Rate.
“ Tax Equity Model ” means for each Subject Fund, the financial model delivered to the Administrative Agent as of the Closing Date or the date such Subject Fund was included in the Available Borrowing Base pursuant to Section 3.4 , as agreed upon by the respective Investor and Managing Member with respect to a Subject Fund and as updated in accordance with the terms of the Project Documents and the terms hereof.
“ Watched Funds ” means (a) any Subject Funds where:
 
 	(i)	a Lessor, Partnership or Managing Member is subject to a Bankruptcy Event, dissolution event or liquidation event;	
 
 	(ii)	Investor Guarantor has failed to pay any tax or other indemnity amounts over $*** in the aggregate due and owing to the Investor (including amounts owed by any Managing Member, whether or not such amounts are guaranteed by Investor Guarantor), unless such amounts are being contested by Managing Member or the Lessor or Partnership in good faith; ***; and provided , further , that neither the Lessor or Partnership nor Managing Member shall make any such tax or other indemnity payments out of Managing Member cash flows;	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

 	(iii)	the number of Defaulted Systems equals or exceeds ***% of the total number of Systems included in such Subject Fund (including, for the avoidance of doubt, any removed Systems);	
 
 	(iv)	the Managing Member is removed or a notice of the removal of the Managing Member is given and not rescinded or withdrawn within thirty (30) days following the date such notice is given;	
 
 	(v)	the occurrence of any default under any Material Project Documents that has a Material Adverse Effect or a material adverse effect on the aggregate value of the Collateral; or	
 
 	(vi)	Eligibility Representations with respect to Systems constituting ***% or more of the Subject Fund Value of the Subject Fund (as reasonably determined by the Administrative Agent with prior written notice to the Borrower) were not true and correct as of any date such Eligibility Representations were made; and	
 
 	(b)	any Subject Fund meeting such other criteria as may be reasonably determined by the Administrative Agent in consultation with the Lenders and the Borrower in respect of any Potential New Funds that are added as Subject Funds.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

APPENDIX 3
ELIGIBILITY REPRESENTATIONS
As of the date that each System is added to a Subject Fund pursuant to Section 3.3, 3.4 or otherwise is added to the Available Borrowing Base, the Borrower will make the following Eligibility Representations:
 
 	1.	Accuracy of System Information: The System Information for the System is complete, accurate, true and correct in all material respects and does not omit any necessary information that makes such entry misleading.	
 
 	2.	Customer Agreement : The Customer Agreement signed by a residential obligor relating to such System (x) is substantially in the form of (A) with respect to the Subject Funds as of the Closing Date, one of the forms of Customer Agreements as delivered by or on behalf of Borrower to Administrative Agent prior to the Closing Date and (B) with respect to a Subject Fund added after the Closing Date, one of the Approved Form Agreements and (y) complies with and satisfies the following conditions:	
 
 	a.	Customer Agreement: The related Customer Agreement provides that an affiliate of Borrower agrees to design, procure and install and maintain and repair Systems (subject to force majeure exceptions) at the property specified in such Customer Agreement for no charge (other than any fees related to activation, removal and reinstallation of the system, or other fees as set forth in the form of Customer Agreements as delivered by or on behalf of Borrower to Administrative Agent or the Approved Form Agreements, as applicable) over the term of the contract other than for power purchases or lease payments, and the Host Customer agrees to purchase electric energy produced by such Systems or lease such Systems.	
 
 	b.	Host Customer Payments in U.S. Dollars: The related Host Customer is obligated per the terms of the related Customer Agreement to make payments in U.S. dollars to the counterparty of the related Customer Agreement.	
 
 	c.	Absolute and Unconditional Obligation: The related Customer Agreement is by its terms an absolute and unconditional obligation of the Host Customer to pay for electricity generated and delivered or will be generated and delivered by the related System to such Host Customer after the related System has received permission to operate from the local utility in writing or in such other form as is customarily given by such local utility (“ PTO ”), and such payment obligations under the related Customer Agreement do not provide for offset for any reason.	
 
 	d.	Non-cancelable; Prepayable: The related Customer Agreement is non-cancelable by its terms after the start of installation of the System and, other than with respect to Customer Agreements that have been fully prepaid or partially prepaid prior to the Borrowing Date, prepayable only in connection with (i) a Customer default or (ii) a Host Customer selling their home to a transferee that is not approved by the applicable Subject Fund, in either case in an amount determined by a stated formula (including, with respect to all of the Approved Form Agreements and certain other Customer Agreements, the discounting of a pre-determined $/Watt System value at a pre-determined discount rate as specified in such Customer Agreement).	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

 	e.	Governing Law of Customer Agreement: The related Customer Agreement is governed by the laws of a state of the United States and was not originated in, nor is it subject to the laws of, any jurisdiction, the laws of which would make unlawful the sale, transfer or assignment of the related Customer Agreement under the applicable Material Project Document.	
 
 	f.	Assignments: All related Customer Agreements have all been assigned to a special purpose entity (whether a Lessor, Partnership, Vivint Solar Owner I, LLC or another special purpose vehicle wholly-owned by Borrower related to an Other Non-Financed Structure) (i) that is the seller of electricity produced by, or lessor of, the related System under such Customer Agreement, (ii) that is entitled to receive the payments to be made by the applicable Host Customer under such Customer Agreement, and (iii) with respect to Partnerships and Lessors, in which the applicable Managing Member has a direct Equity Interest.	
 
 	3.	Legal Compliance: The Customer Agreement and the origination thereof and the installation of the related System, in each case, was in compliance in all material respects with applicable federal, state and local laws and regulations (including without limitation, all consumer protection laws) at the time such Customer Agreement was originated and executed and such System was installed.	
 
 	4.	Legal, Valid and Binding Agreement: To Borrower’s Knowledge, the related Customer Agreement is legal, valid and binding on the related Host Customer, enforceable against such related Host Customer in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors’ rights generally, and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity).	
 
 	5.	Full Force and Effect: With respect to the applicable Subject Fund counterparty, the related Customer Agreement is in full force and effect in accordance with its respective terms and such Subject Fund is not in material breach or default under such Customer Agreement, and, to the Borrower’s Knowledge, with respect to the Host Customer, the related Customer Agreement is in full force and effect in accordance with its respective terms, and no material breach or default by such Host Customer has occurred and is continuing thereunder, and such Customer Agreement has not been rescinded, cancelled or otherwise terminated by such Host Customer.	
 
 	6.	Ordinary Course of Business: The related Customer Agreement relates to the sale of power from or the leasing of a System originated in the ordinary course of business of an affiliate of Borrower.	
 
 	7.	System: The System has been installed and has received PTO. The solar photovoltaic panels and inverters used in the related System were obtained from, and are a product of, an Approved Manufacturer. After giving effect to the inclusion of the System, no more than *** percent (***%) of the Systems subject to the Financing Documents are products of ***.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

 	8.	Project States: The System is located in a state or locality that is approved in the applicable Subject Fund.	
 
 	9.	No Condemnation: To Borrower’s Knowledge, no condemnation is pending or threatened with respect to the System, or any portion thereof material to the ownership or operation of the System, and no unrepaired casualty exists with respect to the System or any portion thereof material to the ownership or operation of the System or the sale of electricity therefrom.	
 
 	10.	Warranties: All manufacturer warranties relating to the related Customer Agreement and the related System are in full force and effect and can be enforced by the owner or lessee of such System, as applicable (other than with respect to those manufacturer warranties that are no longer being honored by the relevant manufacturer with respect to all customers generally).	
 
 	11.	Covered Assets: An affiliate of Borrower, which is an experienced operator licensed, or using licensed personnel (including, without limitation, by subcontracting certain maintenance and administrative services), as applicable, as required by applicable law, is obligated to provide certain maintenance and administrative services associated with such Systems in accordance with the applicable servicing arrangement for such Subject Fund and the standards set forth in the Material Project Documents.	
 
 	12.	Ownership and Liens: Such System and the related Customer Agreement have been assigned (i) to and are owned by the Lessor or Partnership (or such other ownership arrangement acceptable to the Administrative Agent) within the Subject Fund, to which the Managing Member has an Equity Interest, or (ii) to Vivint Solar Owner I, LLC or another special purpose vehicle wholly-owned by Borrower related to an Other Non-Financed Structure, in each case of clause (i) and (ii) hereof, free and clear of all liens and encumbrances, except for Permitted Liens.	
 
 	13.	Notices of Ownership: An affiliate of Borrower has filed a precautionary fixture filing in respect of the related System or such other similar filing as may be required by applicable law including, without limitation, pursuant to Cal. Pub. Util. Code §§ 2868-2869; provided , however , that (i) certain of such filings may be released from time-to-time in order to assist the applicable Host Customer in a pending refinancing of such Host Customer’s mortgage loan or sale of home and (ii) such filings may not have been filed or maintained in a manner that would provide priority under applicable law over an encumbrance or owner of the real property subject to the filing.	
 
 	14.	Insurance: (i) If the applicable Subject Fund is a Flip Structure, the System is insured as specified under the Material Project Documents of such Subject Fund, or (ii) if the applicable Subject Fund is an Inverted Lease Structure, Lessor is not aware of a breach of Lessee’s covenant to insure the System pursuant to the terms of the applicable tax equity documents.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

APPENDIX 4
LIST OF MANAGING MEMBERS, SUBJECT FUNDS, CASH-SWEEP FUND DESIGNATIONS AND INVESTORS

Managing Member	  	Subject Fund(s)	 	Cash-Sweep Fund or
Non-Cash-Sweep Fund	 	Investor	
Vivint Solar Liberty Manager, LLC	  	Vivint Solar Liberty Master Tenant, LLC
Vivint Solar Liberty Owner, LLC	 	***	 	***	
Vivint Solar Margaux Manager, LLC	  	Vivint Solar Margaux Master Tenant, LLC
Vivint Solar Margaux Owner, LLC	 	***	 	***	
Vivint Solar Fund III Manager, LLC	  	Vivint Solar Fund III Master Tenant, LLC
Vivint Solar Fund III Owner, LLC	 	***	 	***	
Vivint Solar Nicole Manager, LLC	  	Vivint Solar Nicole Master Tenant, LLC
Vivint Solar Nicole Owner, LLC	 	***	 	***	
Vivint Solar Mia Manager, LLC	  	Vivint Solar Mia Project Company, LLC	 	***	 	***	
Vivint Solar Aaliyah Manager, LLC	  	Vivint Solar Aaliyah Project Company, LLC	 	***	 	***	
Vivint Solar Rebecca Manager, LLC	  	Vivint Solar Rebecca Project Company, LLC	 	***	 	***	
Vivint Solar Hannah Manager, LLC 24	  	Vivint Solar Hannah Project Company, LLC	 	***	 	***	
Vivint Solar Elyse Manager, LLC	  	Vivint Solar Elyse Project Company, LLC	 	***	 	***	

24  	Vivint Solar Hannah Manager, LLC is (x) a limited liability company that elects to be treated as a corporation for federal income tax purposes and (y) part of the consolidated tax group of Vivint Solar, Inc.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

APPENDIX 5
MATERIAL PROJECT DOCUMENTS
Liberty Fund
 
 	1.	Amended and Restated Operating Agreement of Vivint Solar Liberty Master Tenant, LLC, between the Investor named therein and Vivint Solar Liberty Manager, LLC, dated September 14, 2012	
 
 	2.	Operating Agreement of Vivint Solar Liberty Owner, LLC, between Vivint Solar Liberty Master Tenant, LLC and Vivint Solar Liberty Manager, LLC, dated October 5, 2011	
 
 	3.	Amended and Restated Equity Capital Contribution Agreement among Vivint Solar Developer, LLC, Vivint Solar Liberty Owner, LLC and Vivint Solar Liberty Manager, LLC, dated September 14, 2012	
 
 	4.	Master Lease between Vivint Solar Liberty Owner, LLC and Vivint Solar Liberty Master Tenant, LLC, dated October 5, 2011, as amended by Amendment No. 1 to Master Lease dated June 20, 2012	
 
 	5.	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Liberty Owner, LLC, dated October 5, 2011, as amended by the First Amendment to Maintenance Services Agreement dated October 2, 2013	
 
 	6.	Guaranty between the Investor named therein and Vivint Solar, Inc., dated October 5, 2011 and Extension of Deadline To Deliver Subordination Agreement Under Guaranty dated November 23, 2011	
Margaux Fund
 
 	1.	Operating Agreement of Vivint Solar Margaux Master Tenant, LLC, between the Investor named therein and Vivint Solar Margaux Manager, LLC, dated October 3, 2012	
 
 	2.	Operating Agreement of Vivint Solar Margaux Owner, LLC, between Vivint Solar Margaux Master Tenant, LLC and Vivint Solar Margaux Manager, LLC, dated October 3, 2012	
 
 	3.	Equity Capital Contribution Agreement among Vivint Solar Developer, LLC, Vivint Solar Margaux Owner, LLC and Vivint Solar Margaux Manager, LLC, dated October 3, 2012	
 
 	4.	Master Lease between Vivint Solar Margaux Owner, LLC and Vivint Solar Margaux Master Tenant, LLC, dated October 3, 2012	
 
 	5.	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Margaux Owner, LLC, dated October 3, 2012, as amended by the First Amendment to Maintenance Services Agreement dated October 2, 2013	
 
 	6.	Guaranty between the Investor named therein and Vivint Solar, Inc., dated October 3, 2012	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

Caitlin Fund
 
 	2.	Operating Agreement of Vivint Solar Fund III Master Tenant, LLC, between the Investor named therein and Vivint Solar Fund III Manager, LLC, dated June 28, 2013, as amended by the First Amendment to Vivint Solar Fund III Master Tenant, LLC Operating Agreement, dated October 2, 2013	
 
 	3.	Operating Agreement of Vivint Solar Fund III Owner, LLC, between Vivint Solar Fund III Master Tenant, LLC and Vivint Solar Fund III Manager, LLC, dated June 28, 2013, as amended by the First Amendment to Vivint Solar Fund III Owner, LLC Operating Agreement, dated October 2, 2013	
 
 	4.	Equity Capital Contribution Agreement among Vivint Solar Developer, LLC, Vivint Solar Fund III Owner, LLC and Vivint Solar Fund III Manager, LLC, dated June 28, 2013, as amended by the First Amendment to Equity Capital Contribution Agreement, dated October 2, 2013	
 
 	5.	Master Lease between Vivint Solar Fund III Owner, LLC and Vivint Solar Fund III Master Tenant, LLC, dated June 28, 2013, as amended by the First Amendment to Master Lease, dated October 2, 2013	
 
 	6.	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Fund III Owner, LLC, dated June 28, 2013	
 
 	7.	Guaranty among the Investor named therein, Vivint Solar Fund III Master Tenant, LLC, Vivint Solar Developer, LLC, and Vivint Solar, Inc., dated June 28, 2013 and the Reaffirmation Agreement by Vivint Solar, Inc. and Vivint Solar Developer, LLC to the Investor named therein and Vivint Solar Fund III Master Tenant, LLC, dated October 2, 2013	
Nicole Fund
 
 	1.	Operating Agreement of Vivint Solar Nicole Master Tenant, LLC, between the Investor named therein and Vivint Solar Nicole Manager, LLC, dated April 29, 2014	
 
 	2.	Operating Agreement of Vivint Solar Nicole Owner, LLC, between Vivint Solar Nicole Master Tenant, LLC and Vivint Solar Nicole Manager, LLC, dated April 29, 2014	
 
 	3.	Equity Capital Contribution Agreement among Vivint Solar Developer, LLC, Vivint Solar Nicole Owner, LLC and Vivint Solar Nicole Manager, LLC, dated April 29, 2014	
 
 	4.	Master Lease between Vivint Solar Nicole Owner, LLC and Vivint Solar Nicole Master Tenant, LLC, dated April 29, 2014	
 
 	5.	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Nicole Owner, LLC, dated April 29, 2014	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

 	6.	Guaranty among the Investor named therein, Vivint Solar Nicole Master Tenant, LLC, Vivint Solar Developer, LLC, and Vivint Solar Holdings, Inc., dated April 29, 2014	
Mia Fund
 
 	2.	Limited Liability Company Agreement of Vivint Solar Mia Project Company, LLC, between Vivint Solar Mia Manager, LLC and the original investor named therein, dated July 16, 2013, as assigned to the Investor named therein pursuant to the Assignment and Assumption Agreement among the original investor named therein as assignor, the Investor named therein as assignee, and Vivint Solar Mia Manager, LLC, dated September 30, 2013, and as amended by the First Amendment to Limited Liability Company Agreement dated September 12, 2013 and effective as of August 5, 2013 and the Second Amendment to Limited Liability Company Agreement dated August 31, 2013	
 
 	3.	Development, EPC and Purchase Agreement among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Mia Project Company, LLC, dated July 16, 2013, as amended by the First Amendment to Development, EPC and Purchase Agreement dated January 13, 2014 and the Second Amendment to Development, EPC and Purchase Agreement dated April 25, 2014	
 
 	4.	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Mia Project Company, LLC, dated July 16, 2013	
 
 	5.	Guaranty by Vivint Solar, Inc. in favor of the original investor named therein and Vivint Solar Mia Project Company, LLC, dated July 16, 2013, as assigned to the current Investor automatically by operation of Section 9 of the Guaranty	
Aaliyah Fund
 
 	1.	Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC, between Vivint Solar Aaliyah Manager, LLC and the Investor named therein, dated November 5, 2013, as amended by the First Amendment to Limited Liability Company Agreement of Vivint Solar Aaliyah Project Company, LLC dated January 13, 2014 and the Written Consent of the Members of Vivint Solar Aaliyah Project Company, LLC, dated February 13, 2014	
 
 	2.	Development, EPC and Purchase Agreement among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Aaliyah Project Company, LLC, dated November 5, 2013, as amended by the First Amendment to Development, EPC and Purchase Agreement dated January 13, 2014 and the Second Amendment to Development, EPC and Purchase Agreement dated February 13, 2014	
 
 	3.	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Aaliyah Project Company, LLC, dated November 5, 2013	
 
 	4.	Guaranty by Vivint Solar, Inc. in favor of the Investor named therein and Vivint Solar Aaliyah Project Company, LLC, dated November 5, 2013 and the Reaffirmation Agreement by Vivint Solar, Inc. in favor of the Investor named therein and Vivint Solar Aaliyah Project Company, LLC, dated January 15, 2014	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

Rebecca Fund
 
 	1.	Limited Liability Company Agreement of Vivint Solar Rebecca Project Company, LLC, between Vivint Solar Rebecca Manager, LLC and the Investor named therein, dated February 13, 2014	
 
 	2.	Development, EPC and Purchase Agreement among Vivint Solar Developer, LLC, Vivint Solar, Inc. and Vivint Solar Rebecca Project Company, LLC, dated February 13, 2014	
 
 	3.	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Rebecca Project Company, LLC, dated February 13, 2014	
 
 	4.	Guaranty by Vivint Solar, Inc. in favor of the Investor named therein and Vivint Solar Rebecca Project Company, LLC, dated February 13, 2014	
Hannah Fund
 
 	1.	Limited Liability Company Agreement of Vivint Solar Hannah Project Company, LLC, between Vivint Solar Hannah Manager, LLC and the Investor named therein, dated February 14, 2014, as amended by Amendment No. 1 to Limited Liability Company Agreement, dated March 28, 2014 and Amendment No. 2 to the Limited Liability Company Agreement dated June 30, 2014	
 
 	2.	Master EPC Agreement between Vivint Solar Developer, LLC and Vivint Solar Hannah Project Company, LLC, dated February 14, 2014	
 
 	3.	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Hannah Project Company, LLC, dated February 14, 2014	
 
 	4.	Guaranty by Vivint Solar, Inc. in favor of the Investor named therein, dated February 14, 2014	
Elyse Fund
 
 	1.	Limited Liability Company Agreement of Vivint Solar Elyse Project Company, LLC, between Vivint Solar Elyse Manager, LLC and the Investor named therein, dated July 3, 2014, as amended by Amendment No. 1 to Limited Liability Company Agreement, dated July 22, 2014	
 
 	2.	Master Engineering, Procurement and Construction Agreement between Vivint Solar Developer, LLC and Vivint Solar Elyse Project Company, LLC, dated July 3, 2014, as amended by Amendment No. 1 to Master Engineering, Procurement and Construction Agreement, dated July 22, 2014	
 
 	3.	Maintenance Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Elyse Project Company, LLC, dated July 3, 2014	
 
 	4.	Administrative Services Agreement between Vivint Solar Provider, LLC and Vivint Solar Elyse Project Company, LLC, dated July 3, 2014	
 
 	5.	Guaranty by Vivint Solar, Inc. in favor of the Investor named therein, dated July 3, 2014	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

APPENDIX 6
SYSTEM INFORMATION
The following information with respect to each applicable System is the “ System Information ”:
 
 	(a)	the applicable Subject Fund;	
 
 	(b)	Host Customer (i) account reference numbers, and (ii) city, state and ZIP code;	
 
 	(c)	type of agreement (i.e., power purchase agreement or lease agreement);	
 
 	(d)	Host Customer FICO score;	
 
 	(e)	PTO dates (as such dates become available);	
 
 	(f)	Substantial Completion dates (as such dates become available);	
 
 	(g)	Tranche presentation dates (as such dates become available);	
 
 	(h)	The projected annual insolation with respect to the System for the first full year of operation of such System;	
 
 	(i)	System size;	
 
 	(j)	the length of the remaining term of the applicable Customer Agreement;	
 
 	(k)	the model, make and manufacturer (as available after the Closing Date) of the solar panels and inverters used in the System;	
 
 	(l)	if requested by the Administrative Agent from time to time:	
 
 	•	 	the CAD design of such System;	
 
 	•	 	the Solmetric PV Designer report and any available associated data with respect to such System;	
 
 	•	 	the billing history of such System; and	
 
 	•	 	the operational history of such System.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

APPENDIX 7
TAX EQUITY REPRESENTATIONS AND OTHER REPRESENTATIONS
Part I – Tax Equity Representations
As of the date that a Subject Fund is added to the Available Borrowing Base or pursuant to Section 3.3 or 3.4, with respect to such Subject Fund, the Borrower will make the following Eligibility Representations:
(a) the Managing Member (i) has entered into only one tax equity transaction, namely the applicable Tax Equity Structure, and (ii) owns no assets other than (x) its Equity Interests in the Subject Fund or Subject Funds related to such Tax Equity Structure as set forth on Schedule 4.1(x) and (y) its contractual rights arising from the Project Documents related to such Tax Equity Structure. All of the Material Project Documents for the Subject Fund that are in effect on such date are set forth on Appendix 5 , and true, complete and correct copies of all such Material Project Documents have been delivered to the Administrative Agent.
(b) To the actual Knowledge of the Managing Member that is party to such agreement, the Subject Fund operating agreement(s) is (or are) in full force and effect and no material breach, default or event of default has occurred and is continuing under or in connection with (x) such Subject Fund operating agreement(s) or (y) the Subject Fund Guaranty (if any), except in either case to the extent that such breach, default or event of default could not reasonably be expected to have a Material Adverse Effect.
(c) Neither the Managing Member nor the Subject Fund has incurred any Debt or other obligations or liabilities, direct or contingent other than (i) with respect to the Managing Member, (x) the Debt and other obligations and liabilities arising under the Financing Documents and (y) contingent indemnification obligations and loans required to be made to the Subject Fund, in each case under clause (y), under the Subject Fund operating agreements, (ii) with respect to the Subject Fund, the Debt and other obligations and liabilities (including for Taxes) arising under or in relation to the Project Documents or (iii) Debt in accordance with Section 6.3 of the Loan Agreement and otherwise in connection with Permitted Liens. No claim with respect to the contingent indemnification obligations of the Managing Member under the Subject Fund operating agreement(s) has been asserted on or prior to the date hereof against the Managing Member and remains outstanding.
(d) No loan to the Subject Fund required or permitted to be made under the Subject Fund operating agreement(s) has been made and remains outstanding, except loans required to be made under a Subject Fund operating agreement that are set forth on Schedule A or that otherwise constitute Debt in accordance with Section 6.3 of the Loan Agreement. All preferred return payments required to be made on or prior to such date pursuant to the Subject Fund operating agreement(s) have been made.
(e) Except as otherwise listed on Appendix 4 , each of the Managing Members is a limited liability company that is disregarded for federal income tax purposes.
(f) Neither the Managing Member nor the Subject Fund is in breach or default under or with respect to any contractual obligation for or with respect to any outstanding amount or amounts payable under such contractual obligation that equals or exceeds $*** individually or $*** in the aggregate.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

(g) Neither the Managing Member nor the Subject Fund has conducted any business other than the business contemplated by the Project Documents applicable to such Managing Member and the Subject Fund.
(h) The Managing Member has not been removed as Managing Member under the Subject Fund operating agreement(s) nor has the Managing Member given or received notice of an action, claim or threat of removal.
(i) No event has occurred under the Subject Fund operating agreement(s) that would allow the Investor or another member to remove, or give notice of removal, of the Managing Member.
(j) No event or circumstance occurred and is continuing that has resulted or could reasonably be expected to result in or trigger any limitation, reduction, suspension or other restriction on distributions to the Managing Member, which limitation, reduction, suspension or other restriction is set forth in the applicable Subject Fund operating agreement(s) (any such event or circumstance, a “ Cash-Sweep Event ”). For the avoidance of doubt, “Cash-Sweep Event” shall not include any insolation-, customer default-, or serial defect-related events or circumstances, or other events or circumstances, that are not addressed in the applicable Subject Fund operating agreement(s) as modifying the cash flow distributions under such operating agreement(s).
(k) There are no actions, suits, proceedings, claims or disputes pending or, to the Knowledge of the Borrower, threatened in writing or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Subject Fund, the Managing Member or against either of their properties or revenues that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(l) No notice or action challenging the tax structure, tax basis validity, tax characterization or tax-related legal compliance of the Subject Fund or the tax benefits associated with the Subject Fund is ongoing or has been resolved in a manner materially adverse to the Subject Fund or Managing Member or, the Borrower’s Knowledge, any other member.
(m) The Subject Fund’s initial tax basis in its respective Systems was equal to the total purchase price paid by such Subject Fund for such Systems.
(n) Solely with respect to a Repeat Tax Equity Structure, (A) the Subject Fund uses a Tax Equity Structure that is on substantially similar terms as those previously approved by the Administrative Agent with respect to the same Investor (or an Affiliate of such Investor) and the Managing Member has provided the Administrative Agent with a written explanation of those terms that are not substantially similar to those of the previously approved transaction, (B) no change in law has occurred that would reasonably be expect to have a material adverse effect on the tax benefits associated with such Subject Fund and (C) any priority return payable to the Investor has not materially and adversely changed relative to that of the Subject Fund previously approved by the Administrative Agent.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

Part II – Other Non-Financed Structure Representations
(a) The Subject Fund owns no assets other than the Systems and the contractual rights related thereto and has engaged in no other business (other than owning and managing the Systems).
(b) The Subject Fund operating agreement is in full force and effect and no material breach, default or event of default has occurred and is continuing under the Subject Fund operating agreement.
(c) The Subject Fund has not incurred any Debt or other obligations or liabilities, direct or contingent other than the Debt and other obligations and liabilities arising under the Financing Documents.
(d) No Debt has been or will be created, incurred, assumed or permitted under the Subject Fund operating agreement, other than the Debt arising under the Financing Documents.
(e) The Subject Fund is a limited liability company that is disregarded for federal income tax purposes and wholly owned by the Borrower.
(f) The Subject Fund is not in breach or default under or with respect to any contractual obligation for or with respect to any outstanding amount or amounts payable under such contractual obligation that equals or exceeds $*** individually or $*** in the aggregate.
(g) All revenue received by the Subject Fund shall at all times be distributed to the Borrower.
(h) There are no actions, suits, proceedings, claims or disputes pending or, to the Knowledge of the Borrower, threatened in writing or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Subject Fund or its properties or revenues that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

Schedule A
Subject Fund Required Loans
 
 	1.	Vivint Solar Nicole Master Tenant, LLC: outstanding operating deficit loan in an amount equal to $***.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

APPENDIX 8
SEPARATENESS PROVISIONS
The Borrower shall maintain its existence separate and distinct from any other Person, including taking the following actions:
(i) maintaining in full effect its existence, rights and franchises as a limited liability company under the laws of the formation state and obtaining and preserving its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and each other instrument or agreement necessary or appropriate to properly administer this Agreement and permit and effectuate the transactions contemplated hereby and thereby;
(ii) maintaining its own deposit accounts, separate from those of any other Person, any of its officers and their respective Affiliates;
(iii) conducting all material transactions between the Borrower and any of its Affiliates on an arm’s length basis and on a commercially reasonable basis;
(iv) conducting its affairs separately from those of any other Person, any of its officers or any of their respective Affiliates and maintaining accurate and separate books, records and accounts and financial statements;
(v) acting solely in its own limited liability company name and not that of any other Person, any of its officers or any of their respective Affiliates, and at all times using its own stationery, invoices and checks separate from those of any other Person, any of its officers or any of their respective Affiliates;
(vi) not holding itself out as having agreed to pay, or as being liable for, the, obligations of the Member or any of its respective Affiliates;
(vii) other than in connection with the Financing Documents, not pledging its assets or securing its liabilities for the benefit of any other Person or guarantee or becoming obligated for the debts of any other Person;
(viii) not acquiring any securities of any Member;
(ix) other than in connection with the Financing Documents and as expressly permitted by the Loan Agreement, not incurring, creating or assuming any indebtedness, and not making or granting liens on, or security interests in, any assets of the Company;
(x) maintaining all of its assets in its own name and not commingling its assets with those of any other Person;
(xi) paying its own operating expenses and other liabilities out of its own funds;
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

(xii) observing all limited liability company formalities, including maintaining meeting minutes or records of meetings and acting on behalf of itself only pursuant to due authorization, required hereby and by the Certificate;
(xiii) maintaining adequate capital for the normal obligations reasonably foreseeable in light of its contemplated business operations;
(xiv) paying its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its own assets;
(xv) prior to the Independent Member Termination Date, at all times having an Independent Member;
(xvi) holding itself out to the public as a legal entity separate and distinct from any other Person; and
(xvii) correcting any known misunderstanding regarding its separate identity.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

APPENDIX 9
APPROVED MANUFACTURERS
Panels
 
 	•	 	First Solar	
 	•	 	Yingli	
 	•	 	Trina	
 	•	 	Canadian Solar	
 	•	 	ReneSola	
 	•	 	REC Solar	
 	•	 	Sharp	
 	•	 	Kyocera	
 	•	 	Solarworld	
 	•	 	SunPower	
 	•	 	LG Solar USA	
 	•	 	Suniva Inc.	
Inverters
 	•	 	Enphase	
 	•	 	SolarEdge	
 	•	 	SMA	
 	•	 	Fronius	
 	•	 	Kaco	
 	•	 	Schneider	
 	•	 	Xantrex	
 	•	 	PowerOne	
 	•	 	Advanced Energy	
 	•	 	Solectria	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

APPENDIX 10
APPROVED FORM AGREEMENTS
[ To come ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

APPENDIX 11
TAX EQUITY STRUCTURE CHARACTERISTICS
Part I – Partnership Flip Structure
2. Borrower or an affiliate shall have formed a limited liability company (the “ Subject Fund ”) that has been formed for the sole purpose of owning solar photovoltaic systems that have been leased to or are producing power for sale to host customers (the “ Systems ”).
3. The Subject Fund operating agreement provides that the Subject Fund will make no election to be treated other than as a partnership for federal tax purposes.
4. The Limited Liability Company Agreement of the Subject Fund (the “ LLCA ”) provides for two classes of limited liability company interests – for purposes of this Part I, “ Class A Units ” and “ Class B Units .”
5. The tax equity investor (the “ Investor ”) owns the Class A Units (as holder thereof, the “ Class A Member ”) and a wholly owned subsidiary of the Borrower owns the Class B Units (as holder thereof, the “ Class B Member ”). The Class A Member and the Class B Member are collectively referred to herein as the “ Members .”
6. Class B Member has been appointed as the initial managing member of the Subject Fund (in such capacity, the “ Manager ”).
7. Manager is solely responsible for the management of the Systems and the Subject Fund subject to certain customary approval rights of the Class A Member. The Subject Fund shall be prohibited from incurring any indebtedness above a limit specified in the Subject Fund operating agreement without the Class A Member’s consent and from incurring or granting or suffering to exist any liens on its assets other than such liens in the ordinary course of such business that are customarily permitted without the Class A Member’s consent.
8. The LLCA provides a standard of care that requires the Manager to manage the Subject Fund in accordance with prudent industry standards or to at all times act in good faith and in the best interests of the Subject Fund.
9. The Subject Fund has acquired each System pursuant to an agreement (the “ EPC Contract ”) with an affiliate of the Borrower (the “ Seller ”). Each System was acquired prior to receiving permission to operate from the applicable interconnecting utility.
10. Cash available for distribution to the Members will be distributed at least quarterly (or annually with respect to certain items) in accordance with an agreed upon priority, subject to customary exceptions (including, without limitation, end of year true-up and curative flip allocations).
11. After certain criteria have been satisfied, the Class B Member will have the option to purchase all of the Class A Units from the Class A Member for a stated amount or pursuant to an agreed methodology (which may include a purchase price equal to the greater of (x) the fair market value of the Class A Units or (y) an amount necessary to cause the Class A Member to reach its Target IRR).
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

12. Pursuant to the LLCA or a valid, enforceable and irrevocable consent of the Class A Member, each of the Required Permissive Transfer Provisions set forth in Exhibit J is satisfied.
13. The LLCA may not be amended without the written consent of each Member.
14. Class B Member’s obligation to indemnify the Class A Member, if any, will be limited to customary indemnities for breach of the LLCA or bad acts, standard tax indemnities (but not structure or tax ownership) and environmental indemnities. Any such obligation to indemnify the Class A Member is guaranteed by Borrower Member or Vivint Solar Parent.
15. No provision in the LLCA would require or cause the Class B Member to forfeit, transfer or otherwise divest itself of such Member’s economic interest in the Subject Fund.
16. The Project Documents require the Subject Fund to appoint and maintain an operations and maintenance provider for each System, and the Subject Fund is in compliance with such requirements of the Project Documents.
17. The LLCA identifies fixed tax assumptions regarding the treatment of the Subject Fund as a partnership, tax ownership of the Systems, depreciation, allocations of income and loss, and economic substance and requires that the investor’s return be calculated in accordance with the fixed tax assumptions and that tax returns be prepared in accordance with the fixed tax assumptions.
18. Solely for a Partnership Flip Structure submitted after the Closing Date, any priority return payable to the Investor has not materially and adversely changed relative to that of any Partnership Flip Structure previously approved by the Administrative Agent.
Part II – Closing Date Inverted Lease Structure
With respect to the Subject Funds associated with Vivint Solar Liberty Manager, LLC, Vivint Solar Margaux Manager, LLC, Vivint Solar Fund III Manager, LLC and Vivint Solar Nicole Manager, LLC, the following are characteristics of an “Inverted Lease Structure” for purposes of the Agreement:
1. Borrower or an affiliate has formed two limited liability companies, one for the sole purpose of owning solar photovoltaic systems that have been leased to or are producing power for sale to host customers (the “ Systems ”) (such entity, the “ Owner ”) and one for the sole purpose of leasing the Systems from the Owner and managing the Systems (the “ Master Tenant ”).
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

2. Each of the Master Tenant operating agreement and the Owner operating agreement provides that such entity will not elect to be treated other than as a partnership for federal tax purposes.
3. The Limited Liability Company Agreement of the Owner (the “ Owner LLCA ”) and the Limited Liability Company Agreement of the Master Tenant (the “ Master Tenant LLCA ”), as modified by a consent that has been accepted by the Administrative Agent, provides for two classes of limited liability company interests – for purposes of this Part II.A, the “ Class A Units ” and “ Class B Units .”
4. The tax equity investor (the “ Investor ”) owns the Class A Units of the Master Tenant (as holder thereof, the “ Master Tenant Class A Member ”) and a wholly owned subsidiary of the Borrower owns the Class B Units of the Master Tenant (as holder thereof, the “ Master Tenant Class B Member ”). The Master Tenant Class A Member and the Master Tenant Class B Member are collectively referred to herein as the “ Master Tenant Members .”
5. Master Tenant Class B Member has been appointed as the initial managing member of the Master Tenant (in such capacity, the “ Master Tenant Manager ”).
6. The Master Tenant owns the Class A Units of the Owner (as holder thereof, the “ Owner Class A Member ” and together with the Master Tenant Class A Member, collectively, the “ Class A Members ” and each a “ Class A Member ”) and the same entity that owns the Class B Units of the Master Tenant owns the Class B Units of the Owner (as holder thereof, the “ Owner Class B Member ” and together with the Master Tenant Class B Member, collectively, the “ Class B Members ” and each a “ Class B Member ”). The Owner Class A Member and the Owner Class B Member are collectively referred to herein as the “ Owner Members .”
7. Owner Class B Member has been appointed as the initial managing member of the Owner (in such capacity, the “ Owner Manager ”). The Master Tenant Manager and the Owner Manager are collectively referred to herein as the “ Managers ” and each, a “ Manager .”
8. Master Tenant Manager is solely responsible for the management of the Systems and the Master Tenant subject to certain customary approval rights of the Master Tenant Class A Member. Owner Manager is solely responsible for the management of the Owner subject to certain customary approval rights of the Owner Class A Member, which also requires the approval of the Master Tenant Class A Member. Both the Owner and the Master Tenant are prohibited from incurring any indebtedness above a limit specified in the Owner LLCA or the Master Tenant LLCA, as applicable, without the applicable Class A Member’s consent and from incurring or granting or suffering to exist any liens on its assets other than ordinary course liens that are customarily permitted.
9. Profits, losses and deductions are generally allocated between the Members in proportion to their respective percentages interests as set forth in the applicable LLCA.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

10. Both the Owner LLCA and the Master Tenant LLCA provide a standard of care that requires the applicable Manager to manage the Subject Fund in accordance with prudent industry standards or to at all times act in good faith and in the best interests of the Owner or Master Tenant, as applicable.
11. The Owner has acquired each System pursuant to an agreement (the “ ECCA ”) with an affiliate of the Borrower (the “ Seller ”). Each System was acquired prior to it receiving permission to operate. Master Tenant has leased each System from Owner pursuant to a lease agreement (the “ Master Lease ”). A portion of the rent or power payments paid to the Master Tenant by the host customers is used to pay rent to the Owner under the Master Lease.
12. Cash available for distribution to the Owner Members will be distributed at least quarterly (or annually with respect to certain items) in accordance with the agreed upon priority in the Owner LLCA. Owner has elected to pass through the ITC benefits to Master Tenant.
13. Cash distributions in the form of rent will be paid by the Master Tenant to the Owner as an operating expense. Cash available for distribution to the Master Tenant Members will be distributed at least quarterly in accordance with the agreed upon priority in the Master Tenant LLCA.
14. After the end of the recapture period, the Master Tenant Class B Member will have the option to purchase all of the Class A Units in the Master Tenant from the Master Tenant Class A Member for an amount equal to the sum of (x) a stated price equal to the projected fair market value of the Class A Units and (y) any accrued but unpaid priority return and prepaid priority return. Neither the Owner LLCA nor the Master Tenant LLCA provide for a right of first refusal or offer in favor of either Class A Member in respect of any potential transfer of the Class B Units in either the Owner or the Master Tenant.
15. Pursuant to each LLCA or a valid, enforceable and irrevocable consent of the Class A Member and/or Master Tenant, as applicable, each of the applicable Required Permissive Transfer Provisions set forth in Exhibit J is satisfied.
16. Neither the Owner LLCA nor the Master Tenant LLCA may be amended without the written consent of each Owner Member or Master Tenant Member, as applicable.
17. No Managing Member or Affiliate of a Managing Member has assumed any structural or tax ownership risk in respect of any Subject Fund under any Project Document other than as a result of such Managing Member’s or Affiliates breach or default.
18. Each Class B Member’s obligation to indemnify the applicable Class A Member will be limited to customary indemnities for breach of the LLCA or bad acts, standard tax indemnities (but not structure or tax ownership) and environmental indemnities. Any such obligation to indemnify the Class A Member is guaranteed by Borrower Member or Vivint Solar Parent.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

19. Solely for an Inverted Lease Structure submitted after the Closing Date, any priority return payable to the Investor has not materially and adversely changed relative to that of any Inverted Lease Structure previously approved by the Administrative Agent. 25

25  	The Borrower, Administrative Agent, and Majority Lenders intend to amend this Appendix 11 to incorporate an alternative Inverted Lease Structure at the time the first such structure is diligenced, approved and included in the Available Borrowing Base.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Loan Agreement — Appendices

Exhibit 10.45
*** Text Omitted and Filed Separately with the Securities Exchange Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406
COLLATERAL AGENCY AND DEPOSITARY AGREEMENT
dated as of September 12, 2014
among
VIVINT SOLAR FINANCING I, LLC,
as Borrower,
VIVINT SOLAR LIBERTY MANAGER, LLC,
VIVINT SOLAR MARGAUX MANAGER, LLC,
VIVINT SOLAR FUND III MANAGER, LLC,
VIVINT SOLAR MIA MANAGER, LLC,
VIVINT SOLAR AALIYAH MANAGER, LLC,
VIVINT SOLAR REBECCA MANAGER, LLC,
VIVINT SOLAR HANNAH MANAGER, LLC,
VIVINT SOLAR NICOLE MANAGER, LLC,
VIVINT SOLAR ELYSE MANAGER, LLC,
and
VIVINT SOLAR OWNER I, LLC, as Subsidiary Parties
BANK OF AMERICA, N.A.,
as Administrative Agent,
BANK OF AMERICA, N.A.
as Collateral Agent,
BANK OF AMERICA, N.A.,
as Depositary and Securities Intermediary,
and
EACH SECURED LENDER SIGNATORY HERETO
(solely for purposes of Section 2.1 , Section 6.2 and Article VII hereof)
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

TABLE OF CONTENTS

 	  	 	  	Page	 	
	
ARTICLE I	 	
	
DEFINITIONS	 	
			
Section 1.1	  	Capitalized Terms	  	 	1	 	
Section 1.2	  	Definitions; Construction	  	 	4	 	
Section 1.3	  	Uniform Commercial Code	  	 	4	 	
	
ARTICLE II	  	
	
APPOINTMENT OF DEPOSITARY;	  	
ESTABLISHMENT OF ACCOUNTS; GRANT OF SECURITY INTEREST	 	
			
Section 2.1	  	Appointment of Depositary, Powers and Immunities	  	 	4	 	
Section 2.2	  	Acceptance of Appointment of Depositary	  	 	5	 	
Section 2.3	  	Establishment of Accounts	  	 	6	 	
Section 2.4	  	Account Security Interests	  	 	7	 	
Section 2.5	  	Accounts Maintained as UCC “Securities Accounts”	  	 	8	 	
Section 2.6	  	Jurisdiction of Depositary	  	 	9	 	
Section 2.7	  	Degree of Care; Liens	  	 	9	 	
Section 2.8	  	Subordination of Lien; Waiver of Set-Off	  	 	9	 	
Section 2.9	  	No Other Agreements	  	 	9	 	
Section 2.10	  	Notice of Adverse Claims	  	 	9	 	
Section 2.11	  	Rights and Powers of the Collateral Agent	  	 	10	 	
Section 2.12	  	Powers of Collateral Agents and Depositary	  	 	10	 	
Section 2.13	  	Termination	  	 	10	 	
Section 2.14	  	Interpleader	  	 	10	 	
Section 2.15	  	Additional Duties of Agent	  	 	11	 	
	
ARTICLE III	  	
	
THE ACCOUNTS	 	
			
Section 3.1	  	Deposits into and Withdrawals from Accounts	  	 	11	 	
Section 3.2	  	Prepayment Account	  	 	12	 	
Section 3.3	  	Revenue Account	  	 	12	 	
Section 3.4	  	Interest Reserve Account	  	 	14	 	
Section 3.5	  	Equity Cure Account	  	 	15	 	
	
ARTICLE IV	  	
	
INVESTMENTS, EVENTS OF DEFAULT & PAYMENTS	 	
			
Section 4.1	  	Investment of Accounts	  	 	15	 	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
i

							
Section 4.2	  	Disposition of Accounts Upon Discharge Date	  	 	16	 	
Section 4.3	  	Notices of Suspension of Accounts	  	 	16	 	
Section 4.4	  	Payments	  	 	17	 	
			
	  	ARTICLE V	  				
			
	  	DEPOSITARY	  				
			
Section 5.1	  	Reliance by Depositary	  	 	17	 	
Section 5.2	  	Court Orders	  	 	18	 	
Section 5.3	  	Resignation or Removal	  	 	18	 	
			
	  	ARTICLE VI	  				
			
	  	EXPENSES; INDEMNIFICATION; FEES	  				
			
Section 6.1	  	Expenses	  	 	19	 	
Section 6.2	  	Indemnification	  	 	19	 	
			
	  	ARTICLE VII	  				
			
	  	COLLATERAL AGENT	  				
			
Section 7.1	  	Appointment of Collateral Agent	  	 	20	 	
Section 7.2	  	Undertaking of Collateral Agent	  	 	21	 	
Section 7.3	  	General Authority of the Collateral Agent over the Collateral	  	 	22	 	
Section 7.4	  	Enforcement of Liens	  	 	22	 	
Section 7.5	  	Rights, Duties, Etc .	  	 	23	 	
Section 7.6	  	Exculpatory Provisions	  	 	24	 	
Section 7.7	  	Expenses	  	 	24	 	
Section 7.8	  	Indemnification	  	 	25	 	
Section 7.9	  	Resignation or Removal	  	 	26	 	
			
	  	ARTICLE VIII	  				
			
	  	MISCELLANEOUS	  				
			
Section 8.1	  	Amendments; Etc .	  	 	26	 	
Section 8.2	  	Addresses for Notices	  	 	27	 	
Section 8.3	  	Governing Law	  	 	27	 	
Section 8.4	  	Headings	  	 	27	 	
Section 8.5	  	No Third Party Beneficiaries	  	 	28	 	
Section 8.6	  	No Waiver	  	 	28	 	
Section 8.7	  	Severability	  	 	28	 	
Section 8.8	  	Successors and Assigns	  	 	28	 	
Section 8.9	  	Execution in Counterparts	  	 	28	 	
Section 8.10	  	Directions to Depositary	  	 	28	 	
Section 8.11	  	Customer Identification Program Notice; Patriot Act Compliance	  	 	29	 	
Section 8.12	  	Provisions of the Loan Agreement	  	 	29	 	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
ii

							
Section 8.13	  	Waiver of Jury Trial	  	 	29	 	
Section 8.14	  	Joinder of Additional Subsidiary Parties; Release of Subsidiary Parties	  	 	29	 	
	
 SCHEDULES	  	
Schedule I:	  	PAYMENT INSTRUCTIONS	  				
		
EXHIBITS	  				
			
Exhibit A:	  	FORM OF WITHDRAWAL/TRANSFER CERTIFICATE	  				
Exhibit B:	  	FORM OF TERMINATION AGREEMENT	  				
Exhibit C:	  	FORM OF PENDING TRADE NOTICE	  				
Exhibit D:	  	GENERAL ACCOUNT DEPOSITARY SETTLEMENT INFORMATION	  				
Exhibit E:	  	DEPOSITARY ACCOUNT INVESTMENT SELECTION FORM	  				
Exhibit F:	  	CERTIFICATE OF AUTHORIZED REPRESENTATIVE	  				
Exhibit G:	  	FORM OF INTEREST RESERVE RELEASE CERTIFICATE	  				
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
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COLLATERAL AGENCY AND DEPOSITARY AGREEMENT
This COLLATERAL AGENCY AND DEPOSITARY AGREEMENT (this “ Agreement ”) dated as of September 12, 2014 (the “ Effective Date ”), is made by and among Vivint Solar Financing I, LLC, a Delaware limited liability company (“ Borrower ”), and Vivint Solar Liberty Manager, LLC, a Delaware limited liability company (“ Liberty Manager ”), Vivint Solar Margaux Manager, LLC, a Delaware limited liability company (“ Margaux Manager ”), Vivint Solar Fund III Manager, LLC, a Delaware limited liability company (“ Fund III Manager ”), Vivint Solar Mia Manager, LLC, a Delaware limited liability company (“ Mia Manager ”), Vivint Solar Aaliyah Manager, LLC, a Delaware limited liability company (“ Aaliyah Manager ”), Vivint Solar Rebecca Manager, LLC, a Delaware limited liability company (“ Rebecca Manager ”), Vivint Solar Hannah Manager, LLC, a Delaware limited liability company (“ Hannah Manager ”), Vivint Solar Nicole Manager, LLC, a Delaware limited liability company (“ Nicole Manager ”), Vivint Solar Elyse Manager, LLC, a Delaware limited liability company (“ Elyse Manager ”), and Vivint Solar Owner I, LLC (“ Owner I ,” and together with Liberty Manager, Margaux Manager, Fund III Manager, Mia Manager, Aaliyah Manager, Rebecca Manager, Hannah Manager, Nicole Manager, Elyse Manager and each other Person that subsequently becomes a party hereto in accordance with Section 8.14 of this Agreement, the “ Subsidiary Parties ”), Bank of America, N.A., as the administrative agent under the Loan Agreement (as defined below) for the Lenders (as defined below) (together with its successors and permitted assigns in such capacity, the “ Administrative Agent ”), Bank of America, N.A., in its capacity as collateral agent for the Beneficiaries (as defined below) (together with its successors and permitted assigns in such capacity, the “ Collateral Agent ”), Bank of America, N.A., in its capacity as depositary bank and as securities intermediary (together with its successors and permitted assigns in such capacity, the “ Depositary ”) and solely for purposes of Section 2.1 , Section 6.2 and Article VII , the Lenders (as defined below).
RECITALS
A. Borrower has entered into that certain Loan Agreement dated as of the date hereof (the “ Loan Agreement ”), by and among Borrower, the lenders from time to time party thereto (collectively, the “ Lenders ”) and the Administrative Agent (together with the Lenders and other Secured Parties (as defined in the Loan Agreement), collectively, the “ Secured Beneficiaries ”).
B. It is a condition precedent to the extensions of credit by the Lenders under the Loan Agreement that this Agreement shall have been executed and delivered by each of the parties hereto.
AGREEMENT
In consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms . Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement. In addition to the
 
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terms defined in the Loan Agreement, the following terms used herein (including the introductory paragraph and the recitals hereto) shall have the following respective meanings:
“ Account Collateral ” has the meaning set forth in Section 2.4(a) .
“ Accounts ” has the meaning set forth in Section 2.3(a) .
“ Administrative Agent ” has the meaning set forth in the preamble hereto.
“ Agreement ” has the meaning set forth in the preamble hereto.
“ Authorized Signatory ” has the meaning set forth in Section 8.10 .
“ Borrower ” has the meaning set forth in the preamble hereto.
“ Borrower Entity ” means Borrower or any Subsidiary Party.
“ Cash Sweep ” means, as of any Transfer Date, the amount of funds available at priority third of Section 3.3(d) of this Agreement as of such Transfer Date such that, after giving effect to the application of such amount to the prepayment of Loans in accordance with Section 2.1(f) of the Loan Agreement, no Repayment Event is continuing; provided , that, for the avoidance of doubt, if the amount of funds available at such priority is less than the amount required to eliminate any Repayment Event, the Cash Sweep shall be the full amount of funds available at such priority.
“ CIP ” has the meaning set forth in Section 8.11 .
“ Collateral Agent ” has the meaning set forth in the preamble hereto.
“ Depositary ” has the meaning set forth in the preamble hereto.
“ Discharge Date ” means the date when all Obligations have been paid in full in cash, all Commitments under the Loan Agreement have been terminated and each of the Financing Documents entered into by Borrower or its Affiliates in connection with the Loan Agreement have been terminated, or novated such that Borrower does not continue to have any obligations thereunder.
“ Draft Withdrawal/Transfer Certificate ” means a certificate of Borrower in the form of Exhibit A that has been submitted pursuant to Section 3.1(a) but not yet approved by the Collateral Agent.
“ Effective Date ” has the meaning set forth in the preamble hereto.
“ Equity Contribution ” any monies contributed to Borrower by any Person (a) for the purpose of prepaying principal and curing a default under Section 8.1(l) of the Loan Agreement or (b) pursuant to Section 8.4 of the Loan Agreement for the purpose of curing an Event of Default under Section 6.1 of the Loan Agreement.
 
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“ Equity Cure Account ” has the meaning set forth in Section 2.3(a)(iii).
“ Financial Assets ” has the meaning set forth in Section 2.5 .
“ Indemnified Collateral Agent Liabilities ” has the meaning set forth in Section 7.8(a) .
“ Indemnified Collateral Agent Parties ” has the meaning set forth in Section 7.8(a) .
“ Indemnified Depositary Liabilities ” has the meaning set forth in Section 6.2(a) .
“ Indemnified Depositary Parties ” has the meaning set forth in Section 6.2(a) .
“ Interest Reserve Account ” has the meaning set forth in Section 2.3(a)(iii).
“ Interest Reserve Release Certificate ” means a certificate in substantially the form of Exhibit G , duly executed by a Responsible Officer of the Borrower and countersigned by the Administrative Agent, directing the transfer or withdrawal of funds from the Interest Reserve Account.
“ Interest Reserve Required Amount ” means, as of any date, the amount equal to the aggregate amount of interest on all then-outstanding Loans scheduled to become due and payable for the succeeding six (6) months.
“ Lenders ” has the meaning set forth in the recitals hereto.
“ Loan Agreement ” has the meaning set forth in the recitals hereto.
“ New York UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York.
“ Notice of Suspension ” has the meaning set forth in Section 4.3(a) .
“ pdf ” has the meaning set forth in Section 8.2 .
“ Prepayment Account ” has the meaning set forth in Section 2.3(a)(ii) .
“ Revenue Account ” has the meaning set forth in Section 2.3(a)(i) .
“ Revenue Account Sub-Account ” has the meaning set forth in Section 2.3(b) .
“ Secured Beneficiaries ” has the meaning set forth in the recitals hereto.
“ Secured Obligations ” means the Obligations.
“ Securities ” has the meaning set forth in Section 4.1 .
“ Securities Intermediary ” has the meaning set forth in Section 2.2(a) .
 
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“ Subsidiary Party ” has the meaning set forth in the recitals hereto.
“ Transfer Date ” means the date the relevant withdrawal and/or transfer is to be made pursuant to a Withdrawal/Transfer Certificate.
“ Withdrawal/Transfer Certificate ” means a certificate of the Borrower in the form of Exhibit A and approved by the Administrative Agent in accordance with Section 3.1(b) .
Section 1.2 Definitions; Construction . For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) all terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular;
(b) all references in this Agreement to designated “Articles,” “Sections,” “Exhibits”, “Schedules” and other subdivisions are to the designated Articles, Sections, Exhibits, Schedules and other subdivisions of this Agreement;
(c) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision;
(d) unless otherwise expressly specified, any Financing Documents and any other agreement, contract or document defined or referred to herein shall mean such Loan Document, agreement, contract or document as in effect as of the date hereof, as the same may thereafter be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof and of the other Financing Documents and including any agreement, contract or document in substitution or replacement of any of the foregoing;
(e) unless the context clearly intends to the contrary, pronouns having a masculine or feminine gender shall be deemed to include the other; and
(f) any reference to any Person shall include its successors and assigns.
Section 1.3 Uniform Commercial Code . All terms defined in the New York UCC shall have the respective meanings given to those terms in the New York UCC, except where the context otherwise requires.
ARTICLE II
APPOINTMENT OF DEPOSITARY;
ESTABLISHMENT OF ACCOUNTS; GRANT OF SECURITY INTEREST
Section 2.1 Appointment of Depositary, Powers and Immunities . The Administrative Agent, the Collateral Agent, the Borrower, the Subsidiary Paries, and the Lenders, hereby appoint the Depositary to act as the agent of the Collateral Agent, for the benefit of the Secured Beneficiaries hereunder, with such powers as are expressly delegated to the Depositary by the terms of this Agreement, together with such other powers as are reasonably incidental thereto.
 
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The Depositary shall not have any duties or responsibilities except those expressly set forth in this Agreement and no implied duties or covenants shall be read against the Depositary. The Depositary shall not be a trustee or fiduciary to any Secured Beneficiary. Without limiting the generality of the foregoing, the Depositary shall take all actions as the applicable party shall direct it to perform in accordance with the express provisions of this Agreement. Notwithstanding anything to the contrary contained herein, the Depositary shall not be required to take any action which is contrary to this Agreement or applicable law. Neither the Depositary nor any of its Affiliates shall be responsible to the Secured Beneficiaries for any recitals, statements, representations or warranties made by Borrower or any Subsidiary Party contained in this Agreement or any other Financing Document or in any certificate or other document referred to or provided for in, or received by any Secured Beneficiary under any Financing Document for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Financing Document or any other document referred to or provided for herein or therein or for any failure by Borrower or any Subsidiary Party to perform its obligations hereunder or thereunder. The Depositary shall not be required to ascertain or inquire as to the performance by Borrower or any Subsidiary Party of any of their obligations under any Financing Document or any other document or agreement contemplated hereby or thereby. Except as otherwise provided under this Agreement, the Depositary shall take action under this Agreement only as it shall be directed in writing. Whenever in the administration of this Agreement the Depositary shall deem it necessary or desirable that a factual matter be proved or established in connection with the Depositary taking, suffering to exist or omitting to take any action hereunder, such matter (unless other evidence in respect thereof is herein specifically prescribed) may be deemed to be conclusively proved or established by a certificate of an Responsible Officer of Borrower or the Collateral Agent, if appropriate. The Depositary shall have the right at any time to seek instructions concerning the administration of this Agreement from the Administrative Agent, the Collateral Agent, Borrower or any court of competent jurisdiction. The Depositary shall have no obligation to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder. The Depositary may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees appointed with due care. Neither the Depositary nor any of its officers, directors, employees or agents shall be liable for any action taken or omitted under this Agreement or in connection therewith except to the extent caused by the Depositary’s or any of its officer’s, director’s, employee’s or agent’s bad faith, gross negligence or willful misconduct.
Section 2.2 Acceptance of Appointment of Depositary .
(a) The Depositary hereby accepts each of the foregoing appointments and agrees to act as the depositary for the Collateral Agent and as a securities intermediary (within the meaning of Section 8-102(a)(14) of the New York UCC, the “ Securities Intermediary ”) with respect to the Accounts and to accept all cash, payments, other amounts and investments to be delivered to or held by the Depositary pursuant to the terms of this Agreement and the other Financing Documents. The Depositary shall hold and maintain the Accounts during the term of this Agreement and shall treat the Accounts and the cash, instruments and investments in the Accounts as monies, instruments and securities or securities entitlements, as applicable, pledged by Borrower or a Subsidiary Party to be held in the custody of the Depositary, as agent solely for the benefit of the Secured Beneficiaries. In performing its functions and duties under this Agreement, the Depositary shall act solely as agent for the Collateral Agent for the benefit of the
 
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Secured Beneficiaries and, except in such capacity, does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for Borrower or the Subsidiary Parties.
(b) Neither Borrower nor any Subsidiary Party shall have any rights to withdraw or transfer funds from the Accounts or rights against or to monies held in the Accounts, as third party beneficiaries or otherwise, except the Borrower’s rights to withdraw or transfer funds in the Accounts that are expressly provided in Section 3.1 .
Section 2.3 Establishment of Accounts .
(a) The Depositary hereby agrees and confirms that it has established the following accounts (inclusive of any sub-accounts thereof (if any) as well as any additional accounts that may be established pursuant to clause (c) of this Section 2.3 , collectively, the “ Accounts ”) in the name of Borrower (as special, segregated accounts and sub-accounts thereof (if any)), which shall be maintained at all times until the termination of this Agreement:
(i) an Account (account no. ***) entitled “Revenue Account” (the “ Revenue Account ”);
(ii) an Account (account no. ***) entitled “Prepayment Account” (the “ Prepayment Account ”);
(iii) an Account (account no. ***), entitled “Interest Reserve Account” (the “ Interest Reserve Account ”); and
(iv) an Account (account no. ***), entitled “Equiry Cure Account” (the “ Equity Cure Account ”).
(b) For administrative purposes, sub-accounts within the Accounts may be established and created by the Depositary from time to time in accordance with this Agreement, each of which shall be, and be treated as, an Account. In furtherance of the foregoing, the Depositary hereby agrees and confirms that it has established the following accounts in the name of the respective Subsidiary Party (collectively, the “ Revenue Account Sub-Accounts ”), each of which shall be treated as a sub-account of the Revenue Account and shall be maintained at all times until the termination of this Agreement:
(i) an Account (account no. ***) entitled Zero Bal Collection Vivint Solar Liberty Mgr in the name of Vivint Solar Liberty Manager, LLC;
(ii) an Account (account no. ***) entitled Zero Bal Collection Vivint Solar Margaux Mgr in the name of Vivint Solar Margaux Manager, LLC;
(iii) an Account (account no. ***) entitled Zero Bal Collection Vivint Solar Fund III Mgr in the name of Vivint Solar Fund III Manager, LLC;
(iv) an Account (account no. ***) entitled Zero Bal Collection Vivint Solar Mia Mgr in the name of Vivint Solar Mia Manager, LLC;
 
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(v) an Account (account no. ***) entitled Zero Bal Collection Vivint Solar Aaliyah Mgr in the name of Vivint Solar Aaliyah Manager, LLC;
(vi) an Account (account no. ***) entitled Zero Bal Collection Vivint Solar Rebecca Mgr in the name of Vivint Solar Rebecca Manager, LLC;
(vii) an Account (account no. ***) entitled Zero Bal Collection Vivint Solar Hannah Mgr in the name of Vivint Solar Hannah Manager, LLC;
(viii) an Account (account no. ***) entitled Zero Bal Collection Vivint Solar Nicole Mgr in the name of Vivint Solar Nicole Manager, LLC;
(ix) an Account (account no. ***) entitled Zero Bal Collection Vivint Solar Elyse Mgr in the name of Vivint Solar Elyse Manager, LLC; and
(x) an Account (account no. ***) entitled Zero Bal Collection Vivint Solar Owner I, LLC in the name of Vivint Solar Owner I, LLC.
(c) Borrower may from time to time with the prior written consent of the Collateral Agent and the Administrative Agent, establish additional accounts that will be subject to the terms hereof, which shall constitute “Accounts” for all purposes hereunder. Borrower and the Subsidiary Parties shall not have any deposit accounts other than the Accounts.
Section 2.4 Account Security Interests .
(a) As collateral security for the prompt and complete payment and performance when due of all Obligations, Borrower and each Subsidiary Party hereby pledges, assigns, hypothecates and transfers to and grants to the Collateral Agent for the benefit of the Secured Beneficiaries a first priority Lien on and security interest in and to all of their right, title and interest in, to and under (the following described assets being the “ Account Collateral ”): whether now owned or hereafter acquired, (x) each Account held in its name and sub-account thereof (if any) and (y) all cash, instruments, investment property, securities, “ security entitlements ” (within the meaning of Section 8-102(a)(17) of the New York UCC) and Financial Assets, other than Excluded Revenues, at any time on deposit in or credited to any Account held in its name or sub-account thereof (if any), including all income, earnings and distributions thereon and all proceeds, products and accessions of and to any and all of the foregoing, including whatever is received or receivable upon any collection, exchange, sale or other disposition of any of the foregoing and any property into which any of the foregoing is converted, whether cash or non-cash proceeds, and any and all other amounts paid or payable under or in connection with any of the foregoing.
(b) The Depositary is the agent of the Collateral Agent, for the benefit of the Secured Beneficiaries for the purpose of receiving payments contemplated hereunder and for the purpose of perfecting the Lien of the Collateral Agent, for the benefit of the Secured Beneficiaries in and to the Accounts and the other Account Collateral; provided that the Depositary shall not be responsible to take any action to perfect such Liens except through the performance of its express obligations hereunder or upon the written direction of the Collateral Agent. Each of the Accounts and the sub-accounts (if any) shall at all times be held in the sole
 
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custody and “ control ” (within the meaning of Section 8-106(d) or Section 9-104(a), as applicable, of the New York UCC) of the Collateral Agent for the purposes and on the terms set forth in this Agreement and all such amounts shall constitute a part of the Collateral. This Agreement constitutes a “ security agreement ” (within the meaning of Section 9-102(a) of the New York UCC).
Section 2.5 Accounts Maintained as UCC “Securities Accounts” . The Depositary, Borrower and each Subsidiary Party agrees that (a) each Account is and will be maintained as a “ securities account ” (within the meaning of Section 8-501 of the New York UCC); (b) Borrower or the applicable Subsidiary Party is the “ entitlement holder ” (within the meaning of Section 8-102(a)(7) of the New York UCC) in respect of the “ financial assets ” (within the meaning of Section 8-102(a)(9) of the New York UCC, the “ Financial Assets ”) credited to such Accounts, as applicable; (c) each item of property (including a security, security entitlement, investment property, instrument or obligation, share, participation, interest or other property whatsoever) credited to any Account shall be treated as a Financial Asset; and (d) to the extent practicable, all Financial Assets in registered form or payable to or to the order of and credited to any Account shall be registered in the name of, payable to or to the order of, or specially endorsed to, the Depositary or in blank and in no case will any Financial Asset credited to any Account be registered in the name of, payable to or to the order of, or endorsed to, Borrower or a Subsidiary Party, as applicable, except to the extent the foregoing have been subsequently endorsed by Borrower or a Subsidiary Party, as applicable, to the Depositary or in blank. The Collateral Agent shall have “ control ” (within the meaning of Section 8-106(d) or Section 9-104(a) (as applicable) of the New York UCC) of the Accounts and the “ security entitlements ” (within the meaning of Section 8-102(a)(17) of the New York UCC) with respect to the Financial Assets credited to the Accounts. All property delivered to the Depositary pursuant to this Agreement will be promptly credited to the Accounts. Borrower and each Subsidiary Party hereby irrevocably directs, and the Depositary hereby agrees, that the Depositary will comply with all instructions and all “ entitlement orders ” (as defined in Section 8-102(a)(8) of the New York UCC) originated by the Collateral Agent in accordance with this Agreement regarding each Account and each sub-account (if any) and any Financial Asset therein without the further consent of Borrower, a Subsidiary Party or any other Person. Until the Depositary has been notified in writing by the Collateral Agent that the Discharge Date has occurred, in the case of a conflict between any instruction or order originated by the Collateral Agent and any instruction or order originated by Borrower, a Subsidiary Party or any other Person, the instruction or order originated by the Collateral Agent in accordance with this Agreement shall prevail. The Depositary shall not change the name or account number of any Account without the prior written consent of the Collateral Agent and shall not change the entitlement holder in respect of any Financial Asset credited thereto. To the extent that the Accounts are not considered “ securities accounts ” (within the meaning of Section 8-501(a) of the New York UCC), the Accounts shall be deemed to be “ deposit accounts ” (within the meaning of Section 9-102(a)(29) of the New York UCC), which Borrower and each Subsidiary Party shall maintain with Depositary acting not as a securities intermediary but as a “ bank ” (within the meaning of Section 9-102(a)(8) of the New York UCC). Depositary shall not have title to the funds on deposit in the Accounts, and shall credit the Accounts with all receipts of interest, dividends and other income received on the property held in the Accounts. Depositary shall administer and manage the Accounts in strict compliance with all the terms applicable to the Accounts pursuant to this Agreement, and shall be subject to and comply with all the obligations that Depositary owes to Collateral Agent with respect to the Accounts, including all subordination
 
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obligations, pursuant to the terms of this Agreement. Depositary hereby agrees to comply with any and all instructions originated by the Collateral Agent directing disposition of funds and all other property in the Accounts without any further consent of Borrower, a Subsidiary Party or any other Person.
Section 2.6 Jurisdiction of Depositary . The parties hereto agree that, for purposes of the New York UCC, notwithstanding anything to the contrary contained in any other agreement relating to the establishment and operation of the Accounts, the jurisdiction of the Depositary (in its capacity as the Securities Intermediary and as a bank) is the State of New York and the laws of the State of New York govern the establishment and operation of the Accounts.
Section 2.7 Degree of Care; Liens . The Depositary shall exercise the same degree of care in administering the funds held in the Accounts as the Depositary exercises in the ordinary course of its day-to-day business in administering other funds for its own account and as required by applicable law. Other than this Agreement, the Depositary is not party to and shall not execute and deliver, or otherwise become bound by, any agreement under which the Depositary agrees with any Person other than the Collateral Agent to comply with entitlement orders or instructions originated by such Person relating to any of the Accounts. The Depositary shall not grant any lien, pledge or security interest in any Financial Asset or any Account or funds therein that is the subject of any security entitlement that is the subject of this Agreement other than any Liens granted to the Collateral Agent hereunder.
Section 2.8 Subordination of Lien; Waiver of Set-Off . In the event that the Depositary has or subsequently obtains by agreement, operation of law or otherwise a Lien in any Account, any security entitlement carried therein or credited thereto or any Financial Asset or any Account or funds therein that is the subject of any such security entitlement, the Depositary agrees that such Lien shall (except to the extent provided in the last sentence of this Section 2.8 ) be subordinate to the Liens of the Collateral Agent. The Financial Assets standing to the credit of the Accounts or any Account or funds therein will not be subject to deduction, set-off, banker’s lien, or any other right in favor of any Person other than the Collateral Agent (except to the extent of returned items and chargebacks either for uncollected checks or other items of payment and transfers previously credited to one or more of the Accounts, and Borrower, each Subsidiary Party and the Collateral Agent hereby authorize the Depositary to debit the relevant Account(s) for such amounts).
Section 2.9 No Other Agreements . None of the Depositary, the Collateral Agent, Borrower or any Subsidiary Party has entered or will enter into any agreement with respect to any Account or any security entitlements, or any Financial Assets or funds carried in or credited to any Account, other than this Agreement and the Financing Documents.
Section 2.10 Notice of Adverse Claims . The Depositary hereby represents that, except for the claims and interests of the Collateral Agent, Borrower and each Subsidiary Party in each of the Accounts, as applicable, the Depositary (a) as of the Effective Date, has no knowledge of, and has received no notice of, and (b) as of the Effective Date and as of each date on which any Account is established pursuant to this Agreement, has received no notice of, any claim to, or interest in, any Account or in any security entitlement, or Financial Asset or funds carried therein or credited thereto. If any Person asserts any Lien (including any writ, garnishment, judgment,
 
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warrant of attachment, execution or similar process) against any Account or in any security entitlement, or Financial Asset or funds carried therein or credited thereto, the Depositary will promptly notify the Collateral Agent, Borrower and any applicable Subsidiary Party thereof.
Section 2.11 Rights and Powers of the Collateral Agent . The rights and powers granted to the Collateral Agent by the Secured Beneficiaries have been granted in order to perfect their Lien in the Account Collateral, security entitlements and financial assets carried therein or credited thereto and to otherwise act as their agent with respect to the matters contemplated hereby.
Section 2.12 Powers of Collateral Agents and Depositary . The Collateral Agent and, where appropriate, the Depositary shall have the right (but not the obligation) to (a) refuse any item for credit to any Account except as required by the terms of this Agreement and (b) refuse to honor any request for a disbursement of Account Collateral that is not consistent with the terms of this Agreement. The Collateral Agent shall not take any actions unless consented to by the Administrative Agent. If Borrower or any Subsidiary Party fails to perform any of its obligations contained herein, the Collateral Agent may (but shall not be obligated to) itself perform, or cause the performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by Borrower or a Subsidiary Party upon demand and shall be part of the Obligations. The powers conferred on the Collateral Agent and the Depositary in this Agreement are solely to protect the Liens and security interests granted to the Collateral Agent pursuant to Section 2.4(a) in the Account Collateral and shall not impose any duty on any of the Collateral Agent or the Depositary to exercise any of such powers. Except for the reasonable care of any Account in its possession or under its control and the accounting of funds received by it pursuant hereto, neither the Collateral Agent nor the Depositary shall have any duty with respect to the Account Collateral, or with respect to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to the Account Collateral.
Section 2.13 Termination . The rights and powers granted herein to the Collateral Agent have been granted in order to, among other things, perfect the Liens and security interests granted to the Collateral Agent pursuant to Section 2.4(a) in the Account Collateral, and such rights and powers are coupled with an interest, and will not be affected by any bankruptcy or insolvency of Borrower, a Subsidiary Party or any other Person or by any lapse of time. Except as otherwise provided herein, the obligations of the Depositary hereunder shall continue in effect until the Collateral Agent has notified the Depositary in writing of the occurrence of the Discharge Date. After the Collateral Agent has notified the Depositary in writing of the occurrence of the Discharge Date, all right, title and interest of the Collateral Agent and the Secured Beneficiaries in the Account Collateral shall revert to Borrower. At such time, the Collateral Agent shall direct the Depositary to, and upon such direction the Depositary shall, pay any Account Collateral then remaining in the Accounts to Borrower. No termination of any Secured Beneficiary’s interest hereunder shall affect the rights of any other Secured Beneficiary hereunder. The Collateral Agent will inform the Depositary of the occurrence of the Discharge Date promptly upon the occurrence thereof.
Section 2.14 Interpleader . In the event that the Depositary should at any time be confronted with inconsistent claims or demands by the parties hereto, the Depositary shall have the right, at its option, to interplead such parties in any court of competent jurisdiction and request that
 
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such court determine the respective rights of the parties with respect to this Agreement, and upon doing so, the Depositary automatically shall be released from any obligations or liability as a consequence of any such claims or demands. The Depositary is authorized, at its option, to deposit with the court in which such action is filed, all documents and assets held in the Accounts, except all costs, expenses, charges and reasonable attorney fees incurred by the Depositary due to the interpleader action which Borrower and Subsidiary Parties agree on a joint and several basis to pay.
Section 2.15 Additional Duties of Agent .
(a) The Depositary shall keep and maintain records of the Accounts in the normal course of business. Such records shall upon two (2) Business Days prior written request be available for inspection by authorized officers, employees, and agents of the Secured Beneficiaries and the Borrower during the normal business hours of the Depositary.
(b) Borrower and each Subsidiary Party will provide or caused to be provided to the Depositary appropriate W-9 forms for tax I.D., number certifications, or W-8 forms for non-resident alien certifications and any other item reasonably requested in writing by the Depositary to facilitate compliance with withholding regulations for all payees under the Accounts.
ARTICLE III
THE ACCOUNTS
Section 3.1 Deposits into and Withdrawals from Accounts .
(a) At least three (3) Business Days (but no more than five (5) Business Days) prior to each Transfer Date, Borrower shall deliver to the Administrative Agent, the Collateral Agent and the Depositary a Draft Withdrawal/Transfer Certificate signed by an Responsible Officer of Borrower specifying, as applicable:
(i) the relevant Account(s) or other account to which, and/or Person(s) to whom, each such transfer is to be made;
(ii) the amount requested to be transferred from such Account;
(iii) the proposed Transfer Date;
(iv) the purpose(s) to which the amount(s) so transferred are to be applied; and
(v) all of such other information required to be provided in such Draft Withdrawal/Transfer Certificate under the provisions thereof or of this Article III.
(b) A Draft Withdrawal/Transfer Certificate submitted by Borrower in accordance with Section 3.1(a) shall be deemed a “Withdrawal/Transfer Certificate” for purposes of this Agreement only if (A) submitted to the Administrative Agent, the Collateral Agent and the
 
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Depositary by Borrower no later than 12:00 p.m. (New York time) three (3) Business Days (but no more than five (5) Business Days) prior to the relevant Transfer Date (Depositary may conclusively presume that any Withdrawal/Transfer Certificate delivered to it was simultaneously delivered to the Administrative Agent and the Collateral Agent) and (B) the Collateral Agent and the Administrative Agent, if such Draft Withdrawal/Transfer Certificate complies with the Financing Documents, shall have acknowledged and approved such Draft Withdrawal/Transfer Certificate by delivery to Borrower and the Depositary of a countersigned version of such Draft Withdrawal/Transfer Certificate no later than two (2) Business Days prior to such Transfer Date ( provided , that any failure to deliver an acknowledgment by the Collateral Agent and the Administrative Agent shall not give rise to any claim, right or cause of action on the part of Borrower).
(c) Notwithstanding any other provision of this Agreement to the contrary, if at any time Borrower fails to submit a Draft Withdrawal/Transfer Certificate to the Administrative Agent, the Collateral Agent and the Depositary for the transfer of any amounts required to be paid to any Person from any Account in accordance with this Agreement and the other Financing Documents, the Collateral Agent shall be authorized (and Borrower authorizes the Collateral Agent) to effect such transfer by directing the Depositary without any further action of Borrower. The Collateral Agent will promptly notify Borrower if it instructs the Depositary to effect a transfer pursuant to this Section 3.1(c) ; provided that any failure or delay in doing so shall not diminish the rights of the Collateral Agent to take such actions or give rise to any claim, right or cause of action on the part of Borrower.
Section 3.2 Prepayment Account .
(a) The Borrower and each Subsidiary Party shall cause to be deposited into the Prepayment Account 100% of the net proceeds of (A) any Debt incurred or issued by any Loan Party or any of its Subsidiaries after the Closing Date that is not otherwise permitted to be incurred pursuant to Section 6.3 of the Loan Agreement, and (B) any capital stock issued by any Loan Party or any of its Subsidiaries.
(b) At any time, upon receipt by the Depositary of an instruction from the Collateral Agent (countersigned by the Administrative Agent), the Depositary shall transfer funds in the Prepayment Account to the Administrative Agent (for the benefit and account of the Lenders), for application as a prepayment of Loans in accordance with Section 2.1(f) of the Loan Agreement.
Section 3.3 Revenue Account .
(a) Borrower and each Subsidiary Party shall cause the following amounts to be paid into the Revenue Account (or sub-account thereof):
(1) all Revenues of Borrower and each Subsidiary Party, whether received by or on behalf of Borrower or Subsidiary Party;
(2) if applicable, such funds in the other Accounts as are required to be transferred to the Revenue Account pursuant to this Agreement; and
 
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(3) any other income or other amount that is received by or on behalf of the Borrower or any Subsidiary Party that is not required to be deposited in or credited to another Account, or applied directly to the Obligations, in accordance with the Loan Agreement and this Agreement.
(b) If any of the amounts described in Section 3.3(a) required to be deposited with the Depositary in accordance with the terms of this Agreement are received by Borrower or any Subsidiary Party, such Borrower Entity shall hold such payments in trust for the Collateral Agent and shall remit such amounts to the Depositary within one (1) Business Day upon receiving knowledge thereof for deposit in the Revenue Account, in the form received, with any necessary endorsements.
(c) In the event the Depositary receives monies without adequate instruction with respect to the proper Account into which such monies are to be deposited, the Depositary shall deposit such monies into the Revenue Account. Borrower shall, within five (5) Business Days after the receipt of notice from the Depositary of such receipt, deliver to the Collateral Agent a duly executed and completed Withdrawal/Transfer Certificate specifying the proper Account(s) into which such monies are to be deposited. Absent receipt by the Depositary from the Collateral Agent of a duly executed and completed Withdrawal/Transfer Certificate instructing the Depositary as to the appropriate transfer of funds among Accounts to give effect thereto, such monies shall remain in the Revenue Account and be otherwise subject to the provisions of this Section 3.3 . Any funds on deposit in any Revenue Account Sub-Account shall be withdrawn and transferred into the Revenue Account immediately prior to each Transfer Date. For the avoidance of doubt, funds on deposit in any Revenue Account Sub-Account shall not be withdrawn and transferred to any account other than the Revenue Account.
(d) Unless a Notice of Suspension is in effect, upon receipt of a duly completed and executed Withdrawal/Transfer Certificate, and in accordance with the directions set forth therein, Depositary shall cause funds held in the Revenue Account to be withdrawn or transferred in accordance with such Withdrawal/Transfer Certificate. The Borrower, the Administrative Agent and the Collateral Agent hereby agree, solely as between such parties, that (i) no Withdrawal/Transfer Certificate will be issued to the Depositary if an Event of Default would occur after giving effect to any application of funds contemplated by this Section 3.3(d) and (ii) that any such Withdrawal/Transfer Certificate will instruct disbursements to pay the following amounts on the dates and at the priorities indicated below:
(1) first , on any Transfer Date, to the Administrative Agent (for the benefit of each Secured Beneficiary, as applicable), the amount specified in the Withdrawal/Transfer Certificate as equal to all fees, costs, charges and any other amounts (except principal and interest) then due and payable to the Depositary and the Secured Beneficiaries pursuant to this Agreement, the Loan Agreement and the other Financing Documents;
(2) second , on any Transfer Date, to the Administrative Agent (for the benefit and account of the Lenders), the amount specified in the Withdrawal/Transfer Certificate as equal to the amount of all interest under or in respect of the Financing Documents then due and payable by Borrower;
 
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(3) third , on any Transfer Date, to the Administrative Agent (for the benefit and account of the Lenders), the amount specified in the Withdrawal/Transfer Certificate as equal to all principal under or in respect of the Financing Documents then due and payable by Borrower (including, to the extent that a Repayment Event has occurred and is continuing, the Cash Sweep as of such Transfer Date), for application as a repayment or prepayment of Loans, as applicable, in accordance with Section 2.1 of the Loan Agreement;
(4) fourth , on any Transfer Date, to the Interest Reserve Account, the amount specified in the Withdrawal/Transfer Certificate as equal to the difference between (i) the Interest Reserve Required Amount, and (ii) the funds on deposit in the Interest Reserve Account on such Transfer Date, after giving effect to any transfers made on such Transfer Date; and
(5) fifth , on each Scheduled Payment Date, subject to the satisfaction of all other conditions set forth in Section 6.6(e) of the Loan Agreement, to the Borrower Member (or a direct or indirect owner thereof), the amount specified in the Withdrawal/Transfer Certificate as the balance of any monies remaining in the Revenue Account after giving effect to the withdrawals and transfers specified in clauses (1)  and (4)  above on such date; provided , that in the event that any Borrowing has occurred since the immediately preceding Scheduled Payment Date, the foregoing transfer shall not occur until the later of (x) three (3) Business Days after the applicable Scheduled Payment Date or (y) the date on which the Administrative Agent confirms in writing that any interest paid under priority (2) constitutes the full amount of all interest under or in respect of the Financing Documents that was due as of Transfer Date, and, provided , further , in the event that the Administrative Agent determines that the transfer made pursuant to priority (2) above on such Scheduled Payment Date was for less than full amount of all interest under or in respect of the Financing Documents that was due as of Transfer Date, an amount equal to such deficit shall be paid to the Administrative Agent (for the benefit and account of the Lenders) prior to any transfers under this priority (5).
Section 3.4 Interest Reserve Account .
(a) Funds shall be deposited into the Interest Reserve Account pursuant to Section 3.3(d)(4) .
(b) On any date when the amounts available at priorities first, second and third set forth in Section 3.3(d) are insufficient to pay amounts then due and owing, the Depositary shall (upon written notification from the Borrower or the Administrative Agent, with a copy to the Administrative Agent or the Borrower, as applicable, setting forth the amount of such shortfall) withdraw funds from the Interest Reserve Account to pay to the Administrative Agent, for the account of the Lenders, the amount of such shortfall then due and payable, which funds shall be applied by the Administrative Agent in the order of priority set forth in priorities first, second, and third in Section 3.3(d) . The Depositary shall promptly notify the Administrative Agent and the Collateral Agent if, at any time, there are insufficient funds on deposit in the Interest Reserve Account to make the payments required under this Section 3.4(b) .
(c) If, on any Scheduled Payment Date, the funds on deposit in the Interest Reserve Account are in excess of the Interest Reserve Required Amount, unless a Notice of Suspension is in effect, the Borrower may direct, by delivery of an Interest Reserve Release
 
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Certificate to the Depositary, the transfer to the Revenue Account of an amount equal to the difference between (i) the aggregate total amount of all funds on deposit in the Interest Reserve Account and (ii) the Interest Reserve Required Amount, as certified by the Borrower and confirmed by the Administrative Agent in such Interest Reserve Release Certificate. Borrower, Administative Agent and Collateral Agent hereby agree, solely as between such parties, that Borrower will not issue such an Interest Reserve Release Certificate to the Depositary if an Event of Default would occur after giving effect to such transfer.
Section 3.5 Equity Cure Account .
(a) The Borrower and each Subsidiary Party shall cause all Equity Contributions to be deposited into the Equity Cure Account.
(b) At any time, upon receipt by the Depositary of an instruction from the Borrower (countersigned by the Collateral Agent and the Administrative Agent), the Depositary shall transfer funds in the Equity Cure Account to the Administrative Agent (for the benefit and account of the Lenders), for application as a prepayment of Loans in accordance with Section 2.1(f) of the Loan Agreement.
(c) On any date when the amounts available at priorities first, second and third set forth in Section 3.3(d) are insufficient to pay amounts then due and owing, after making the transfers from the Interest Reserve Account under Section 3.4(b) above, the Depositary shall (upon written notification from the Borrower or the Administrative Agent, with a copy to the Administrative Agent or the Borrower, as applicable, setting forth the amount of such shortfall) withdraw funds from the Equity Cure Account to pay to the Administrative Agent, for the account of the Lenders, the amount of such shortfall then due and payable, which funds shall be applied by the Administrative Agent in the order of priority set forth in priorities first, second, and third in Section 3.3(d) .
(d) At any time, upon receipt of a duly completed and executed Withdrawal/Transfer Certificate, so long as the Cash Flow Coverage Ratio is not less than 1.40:1.00 after giving pro forma effect to such transfer, the Depositary shall transfer funds in the Equity Cure Account to the Revenue Account for subsequent application in accordance with the priorities set forth in Section 3.3(d) .
ARTICLE IV
INVESTMENTS, EVENTS OF DEFAULT & PAYMENTS
Section 4.1 Investment of Accounts . Unless a Notice of Suspension is in effect, the Depositary shall invest all funds on deposit in all Accounts including earnings thereon, in either (a) as instructed in writing on Exhibit E by Borrower, in a specific money market fund or bank deposit investment vehicle or (b) as instructed in writing on Exhibit C by Borrower in marketable obligations. It is understood and agreed Exhibit E represents money market funds which are currently available for investment of funds held in Bank of America, N.A. depositary accounts, which availability is subject to change following the date of this Agreement. If Borrower chooses to invest in accordance with clause 4.1(a), the investment may be changed by
 
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delivery to the Depositary of a written request including a revised and re-executed Exhibit E . Upon receipt of such request the Depositary will reinvest the funds on deposit in all Accounts in the indicated investment within two (2) Business Days or such additional time as may be required due to circumstances beyond the Depositary’s control. If Borrower chooses to invest in accordance with clause 4.1(b), each of the parties hereto acknowledges that the Depositary does not have the ability to purchase or sell securities, certificates, debt or equity instruments, exchange traded funds or other investment vehicles (collectively, “ Securities ”) on behalf of any other person or party. Therefore, to the extent that Borrower elects to invest in Securities, Borrower will be responsible for initiating any purchase or sale of such Securities on the open market by whatever means necessary and available to it and the Depositary will settle such purchases or sales into and out of the applicable Account, as necessary. Specifically, (A) for any purchase of Securities directed by Borrower, Borrower shall place a buy order on the open market for the Securities it wishes to purchase and shall indicate that such purchase is to be settled by the Depositary into the applicable Account and (B) for any sale of Securities directed by Borrower, Borrower shall place a sell order on the open market for the Securities it wishes to sell and shall indicate that such sale is to be settled by the Depositary out of the holdings of such Securities in the applicable Account and that all funds received from the sale of such Securities shall be paid to the Depositary for deposit into the applicable Account. In order to ensure the proper settlement of purchases and sales of Securities, Borrower shall give the Depositary written notice prior to the applicable settlement date in accordance with Exhibit D to the Agreement. Settlement of any trades of Securities into the Accounts will be on an actual basis. Additionally, the Depositary shall not be required to comply with any settlement instructions requesting it to purchase any Securities for any Account unless the then-current balance of such Account is sufficient to purchase such Securities. In the event that a money market fund is designated herein as the initial investment, the party or parties designating the investment acknowledge receipt of the prospectus for such fund at the time of execution of this Agreement. The Depositary is hereby authorized to make early withdrawal or sale of securities if necessary to make a distribution from any of the Accounts in accordance with this Agreement. The Depositary shall not be liable or responsible for any loss or any penalties which are imposed on any investments in any Account, including because of the early withdrawal or sale of the securities in which any portion of the Accounts may be invested.
Section 4.2 Disposition of Accounts Upon Discharge Date . In the event that the Depositary shall have received a certificate from the Collateral Agent stating that the Discharge Date shall have occurred, all amounts remaining in the Accounts shall, upon receipt of a certificate from the Collateral Agent authorizing such payments from the Accounts, be remitted to or as otherwise directed by Borrower.
Section 4.3 Notices of Suspension of Accounts.
(a) The Collateral Agent may, but shall not be required to, suspend the right of the Depositary and the Borrower to withdraw or otherwise deal with any funds deposited in or credited to the Accounts at any time during the occurrence and continuance of either (i) an Event of Default or (ii) a Default under Section 8.1(a) of the Loan Agreement, by delivering a notice to the Depositary (with a copy to the Borrower and the Administrative Agent) (a “ Notice of Suspension ”).
 
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(b) Notwithstanding any other provision of the Loan Agreement or any other Financing Document, after the issuance by the Collateral Agent of a Notice of Suspension and until such time as the Collateral Agent advises the Depositary and the Borrower in writing that it has withdrawn such Notice of Suspension, no amount may be withdrawn by the Depositary from any Account, without the express prior written consent of the Collateral Agent, and the Depositary shall comply with any instruction given by the Collateral Agent as contemplated by Section 2.1 , without reference to any inconsistent request or instruction from the Borrower or otherwise. For the avoidance of doubt, the withdrawal of a Notice of Suspension by the Collateral Agent shall not affect any other Notice of Suspension that it may have issued.
(c) Notwithstanding anything to the contrary in this Agreement, the Loan Agreement or any other Financing Document, the Borrower acknowledges that if an Event of Default has occurred and is continuing, and following delivery of a Notice of Suspension that has not been withdrawn (provided, that any failure to deliver such notice shall not affect the validity of any actions taken under this Agreement), the Collateral Agent, on behalf of the Secured Parties, is entitled to apply amounts deposited in or credited to any Account against all or any part of the Obligations in accordance with the Financing Documents. The Borrower shall remain liable for any deficiency in accordance with the respective Financing Documents to which it is a party.
Section 4.4 Payments . Borrower hereby instructs the Collateral Agent and the Depositary to make all payments to be made in respect of the Secured Obligations hereunder, or with respect to any other payment, directly to the Administrative Agent, for the benefit of the Lenders and other Secured Beneficiaries, as applicable, in each case, in accordance with the instructions set forth in Schedule I , and the Collateral Agent and the Depositary hereby acknowledge receipt of such instruction.
ARTICLE V
DEPOSITARY
Section 5.1 Reliance by Depositary . The Depositary shall be entitled to conclusively rely upon and shall not be bound to make any investigation into the facts or matters stated in any certificate of an Responsible Officer of Borrower, any certificate of the Administrative Agent, the Collateral Agent or any other notice or other document (including any cable, telegram, telecopy, telex, or facsimile, and any document delivered or furnished by electronic communication including e-mail and Internet or intranet websites, including the Platform) believed by it to be genuine and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statement of legal counsel, independent accountants and other experts selected by the Depositary and shall have no liability for its actions taken thereupon, unless due to the Depositary’s bad faith, willful misconduct or gross negligence. The Depositary is entitled to rely on, with no liability for such reliance, and shall not be obligated to monitor or verify, the accuracy of any certificate or other written instruction provided to the Depositary by Borrower, any Subsidiary Party, the Administrative Agent or the Collateral Agent. The Depositary shall be fully justified in failing or refusing to take any action under this Agreement (i) if such action would, in the reasonable opinion of the Depositary, be contrary to applicable law or the terms of this Agreement, (ii) if such action is not specifically provided for in this Agreement, it
 
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shall not have received any such advice or concurrence of the Collateral Agent as it deems appropriate or (iii) if, in connection with the taking of any such action that would constitute an exercise of remedies under this Agreement (whether such action is or is intended to be an action of the Depositary or the Collateral Agent), it shall not first be indemnified to its satisfaction by the applicable Secured Beneficiaries (other than the Collateral Agent (in its individual capacity), or any other agent or trustee under any of the documents for the Secured Obligations (in each case, in their respective individual capacities)) against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Depositary shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Collateral Agent, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Secured Beneficiaries.
Section 5.2 Court Orders . The Depositary is hereby authorized, in its exclusive discretion, to obey and comply with all writs, orders, judgments or decrees issued by any court or administrative agency affecting any money, documents or things held by the Depositary. The Depositary shall not be liable to any of the parties hereto or any of the Beneficiaries or their successors, heirs or personal representatives by reason of the Depositary’s compliance with such writs, orders, judgments or decrees, notwithstanding such writ, order, judgment or decree is later reversed, modified, set aside or vacated.
Section 5.3 Resignation or Removal . Subject to the appointment and acceptance of a successor Depositary as provided below, the Depositary may resign at any time by giving thirty (30) days’ written notice thereof to each party hereof. The Depositary may be removed at any time with or without cause by the Administrative Agent with, so long as no Event of Default is then continuing, the consent of the Borrower. Notwithstanding anything to the contrary, no resignation or removal of the Depositary shall be effective until: (i) a successor Depositary is appointed in accordance with this Section 5.3 , (ii) the resigning or removed Depositary has transferred to its successor all of its rights and obligations in its capacity as the Depositary under this Agreement, and (iii) the successor Depositary has executed and delivered an agreement to be bound by the terms hereof and perform all duties required of the Depositary hereunder and a copy of such agreement has been delivered to the Administrative Agent, the Collateral Agent and Borrower. Within thirty (30) days of receipt of a written notice of any resignation or removal of the Depositary, the Administrative Agent and, if no Default or Event of Default is then continuing, Borrower shall appoint a successor Depositary. If no successor Depositary (x) shall have been appointed by the Administrative Agent and, if applicable, Borrower and (y) shall have accepted such appointment within thirty (30) days after the retiring Depositary’s giving of notice of resignation or the removal of the retiring Depositary, then the retiring Depositary may apply to a court of competent jurisdiction to appoint a successor Depositary, which shall be a federally insured U.S.-domiciled bank or trust company that has a combined capital surplus of at least $500,000,000. Upon the acceptance of any appointment as Depositary hereunder by the successor Depositary, (a) such successor Depositary shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Depositary, and the retiring Depositary shall be discharged from its duties and obligations hereunder and (b) the retiring Depositary shall promptly transfer all monies within its possession or control to the possession or control of the successor Depositary and shall execute and deliver such notices, instructions and assignments as may be necessary or desirable to transfer the rights of the Depositary with respect to the monies to the successor Depositary. After the retiring Depositary’s
 
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resignation or removal hereunder as Depositary, the provisions of this Article V and of Article VI shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Depositary. Any corporation into which the Depositary may be merged or converted or with which it may be consolidated or any corporation resulting from any merger, conversion or consolidation to which the Depositary shall be a party, or any corporation succeeding to the business of the Depositary or its corporate trust operations shall be the successor of the Depositary hereunder without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto except where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding.
ARTICLE VI
EXPENSES; INDEMNIFICATION; FEES
Section 6.1 Expenses . Borrower agrees to pay or reimburse all reasonable and documented out-of-pocket costs and expenses of the Depositary (including reasonable fees and expenses for legal services of a single law firm) in respect of, or incident to, the administration or enforcement of any of the provisions of this Agreement or in connection with any amendment, waiver or consent relating to this Agreement, except to the extent any costs or expenses of the Depositary result from the Depositary’s bad faith, gross negligence or willful misconduct.
Section 6.2 Indemnification .
(a) Borrower and each Subsidiary Party, jointly and severally, agrees to indemnify, protect, save and keep harmless the Depositary and its officers, partners, members, directors, trustees, advisors, employees, agents, sub-agents and Affiliates and any of their successors, or permitted assigns (collectively, the “ Indemnified Depositary Parties ”) from and against, any and all claims, liabilities, obligations, losses, damages, penalties, costs and reasonable expenses that may be imposed on, incurred by, or asserted against, at any time, the Depositary arising out of the execution, delivery and performance of this Agreement, the establishment of the Accounts, the acceptance of deposits or the proceeds thereof and any payment, transfer or other application of cash by the Depositary in accordance with the provisions of this Agreement, or as may arise by reason of any act, omission or error of the Depositary made in good faith in the conduct of its duties (collectively, the “ Indemnified Depositary Liabilities ”); except that Borrower shall not be required to indemnify, protect, save and keep harmless any Indemnified Depositary Parties against the Indemnified Depositary Party’s own bad faith, gross negligence or willful misconduct as determined by the final judgment of a court of competent jurisdiction, no longer subject to appeal or review. Without limiting the foregoing, Borrower and each Subsidiary Party, jointly and severally, agrees to pay, and to hold the Depositary harmless from, and to indemnify the Depositary against, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other similar taxes which may be payable or determined to be payable with respect to any of the Account Collateral or in connection with any of the transactions contemplated hereby unless such delay is caused by the Depositary’s own bad faith, gross negligence or willful misconduct. To the extent that the undertakings to indemnify, pay and hold harmless set forth in this Section 6.2 may be unenforceable in whole or in part because they are volatile of any law or public policy, Borrower and each of the Subsidiary Parties shall contribute
 
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the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all of the Indemnified Liabilities incurred by the Indemnified Depositary Parties or any of them. The Administrative Agent and the Collateral Agent each agrees to indemnify and hold harmless the Depositary against any and all claims, losses, damages, liabilities, judgments, costs and expenses (including reasonable attorneys’ fees) incurred or sustained by the Depositary as a result of or in connection with the Depositary’s reliance upon and compliance with instructions or directions given by the Administrative Agent or the Collateral Agent, as applicable, provided, however, that such losses have not arisen from the Depositary’s own bad faith, gross negligence or willful misconduct as determined by the final judgment of a court of competent jurisdiction, no longer subject to appeal or review.
(b) To the extent permitted by applicable law, Administrative Agent, Collateral Agent, Borrower, each Lender, and each of the Subsidiary Parties agrees not to assert, and Borrower and each of the Subsidiary Parties hereby waives, any claim against the Depositary and its Affiliates, directors, employees, attorneys, agents or subagents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any agreement or instrument contemplated hereby or referred to herein or therein, the transactions contemplated hereby or thereby or any act or omission or event occurring in connection therewith, and Administrative Agent, Collateral Agent, Borrower, each Lender, and each of the Subsidiary Parties hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor; provided that such claim is not for the bad faith, gross negligence or willful misconduct of any Indemnified Depositary Party.
(c) The agreements in this Section 6.2 shall survive repayment of the Secured Obligations and all other amounts payable under the Financing Documents and the removal or resignation of the Depositary.
ARTICLE VII
COLLATERAL AGENT
Section 7.1 Appointment of Collateral Agent . The Administrative Agent and the Lenders hereby irrevocably designate and appoint Bank of America, N.A. as collateral agent under this Agreement and the other Collateral Documents, and Bank of America, N.A. hereby accepts such appointment, and the Administrative Agent and Lenders, irrevocably authorizes the Collateral Agent to take such action on their behalf under the provisions of this Agreement and any other Collateral Documents, and to exercise such powers and perform such duties as are expressly delegated to the Collateral Agent by the terms of this Agreement and the other Collateral Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Collateral Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with the Administrative Agent or any other Person, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Collateral Agent. The
 
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Administrative Agent shall endeavor to provide to the Collateral Agent a copy of the Financing Documents (and any amendments thereto) and any notices received by the Administrative Agent from Borrower ( provided that the Administrative Agent shall have no liability in respect of such obligation and any failure to provide such documents to the Collateral Agent shall not give rise to any claim, right or cause of action on the part of the Collateral Agent, Borrower, any Subsidiary Party or any other Person).
Section 7.2 Undertaking of Collateral Agent .
(a) Subject to, and in accordance with, this Agreement and the other Collateral Documents, the Collateral Agent will, for the benefit solely and exclusively of the present and future Secured Beneficiaries:
(i) accept, enter into, hold, maintain, administer and enforce all Collateral Documents, including all Collateral subject thereto, and all Liens created thereunder, perform its obligations under the Collateral Documents and protect, exercise and enforce the interests, rights, powers and remedies granted or available to it under, pursuant to or in connection with this Agreement and the other Collateral Documents;
(ii) take all lawful and commercially reasonable actions permitted under the Collateral Documents that it may deem necessary or advisable to protect or preserve its interest in the Collateral subject thereto and such interests, rights, powers and remedies;
(iii) deliver and receive notices pursuant to the Collateral Documents;
(iv) sell, assign, collect, assemble, foreclose on, institute legal proceedings with respect to, or otherwise exercise or enforce the rights and remedies of a Secured Beneficiary (including a mortgagee, trust deed beneficiary and insurance beneficiary or loss payee) with respect to the Collateral under the Collateral Documents and its other interests, rights, powers and remedies in accordance with Section 7.4 ; and
(v) remit all cash proceeds, cash equivalents and other distributions of or in respect of Collateral received by it from the collection, foreclosure or enforcement of its interest in the Collateral under the Collateral Documents or any of its other interests, rights, powers or remedies.
(b) Each party to this Agreement acknowledges and consents to the undertakings of the Collateral Agent set forth in Section 7.2(a) and agrees thereto and to each of the other provisions of this Agreement applicable to the Collateral Agent.
(c) Notwithstanding anything to the contrary contained in this Agreement, the Collateral Agent will not commence any exercise of remedies or any foreclosure actions or otherwise take any action or proceeding against or in respect of any of the Collateral or take other actions hereunder, including the delivering of any notice required to be delivered or the giving of any instruction required to be given by the Collateral Agent hereunder, unless and until it shall have been directed by written notice of the Administrative Agent on behalf of the Secured Beneficiaries and then only in accordance with the provisions of such notice, this Agreement and the other Collateral Documents.
 
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(d) The Collateral Agent hereby acknowledges and agrees that any Liens and security interests granted to the Collateral Agent pursuant to this Agreement, the Collateral Documents and the other Financing Documents are granted to the Collateral Agent not for its own benefit, but solely for the benefit of the Administrative Agent and the Lenders.
Section 7.3 General Authority of the Collateral Agent over the Collateral . Borrower hereby irrevocably constitute and appoint the Collateral Agent and any officer or agent thereof, with full power of substitution as among such officers and agents, as their true and lawful attorney-in-fact with full power and authority, if a Notice of Suspension has been delivered to the Depositary and until such Notice of Suspension has been withdrawn, in the name of the Administrative Agent and the Lenders, or in its own name, from time to time to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to carry out or cause to be carried out the terms of this Agreement and/or the other Collateral Documents (but subject to the terms hereof and thereof) and to accomplish the purposes hereof and thereof; and, without limiting the generality of the foregoing, Borrower hereby gives the Collateral Agent, during any Event of Default, the power and right on behalf of Borrower, without notice to or further assent by Borrower, to: (i) ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due upon, or in connection with, the Collateral; (ii) receive, take, endorse, assign and deliver any and all checks, notes, drafts, acceptances, documents and other negotiable and non-negotiable instruments taken or received by the Collateral Agent as, or in connection with, the Collateral; (iii) commence, prosecute, defend, settle, compromise or adjust any claim, suit, action or proceeding with respect to, or in connection with, the Collateral; (iv) sell, transfer, assign or otherwise deal in or with the Collateral or any part thereof as fully and effectively as if the Collateral Agent were the absolute owner thereof; (v) exercise all remedies provided for by this Agreement or the other Collateral Documents; and (vi) do, at its option for the account of the Administrative Agent and the Lenders, at any time or from time to time, all acts and things which the Collateral Agent reasonably deems necessary to cause perfection of the liens and security interests of the Collateral Agent in the Collateral, to protect or preserve the Collateral and to realize upon the Collateral in each case in accordance with the Collateral Documents. To the maximum extent permitted by law, the Borrower hereby ratifies all that said attorneys-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall, so long as the Secured Obligations are outstanding, be irrevocable and thereafter be deemed revoked.
Section 7.4 Enforcement of Liens . Following receipt of any notice that an Event of Default has occurred, the Collateral Agent shall await direction by the Administrative Agent on behalf of the Secured Beneficiaries and will act, or decline to act, as directed by the Administrative Agent on behalf of the Secured Beneficiaries, in the exercise and enforcement of the Collateral Agent’s interests, rights, powers and remedies in respect of the Collateral or under the Collateral Documents or applicable law and, following the initiation of such exercise of remedies, the Collateral Agent will act, or decline to act, with respect to the manner of such exercise of remedies as directed by the Administrative Agent on behalf of the Secured Beneficiaries. Unless it has been directed to the contrary by the Administrative Agent on behalf of the Secured Beneficiaries, the Collateral Agent in any event may (but will not be obligated to) take all lawful and commercially reasonable actions permitted under the Collateral Documents that it may deem necessary or advisable to protect or preserve its interest in the Collateral as the Collateral Agent subject thereto, and the interests, rights, powers and remedies granted or available to it as the Collateral Agent for the Secured Beneficiaries under, pursuant to or in connection with the Collateral Documents.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
 
22

Section 7.5 Rights, Duties, Etc . The acceptance by the Collateral Agent of its respective duties hereunder and under the other Collateral Documents is subject to the following terms and conditions which the parties to this Agreement hereby agree shall govern and control with respect to the rights, duties, liabilities, privileges, protections and immunities of the Collateral Agent:
(a) it shall not be responsible or liable in any manner whatever for soliciting any funds or for the sufficiency, correctness, genuineness or validity of any funds or securities deposited with or held by it;
(b) it shall be protected in acting or refraining from acting upon any written notice, certificate, instruction, request, or other paper or document, as to the due execution thereof and the validity and effectiveness of the provisions thereof and as to the truth of any information therein contained, which it in good faith believes to be genuine;
(c) it shall not be liable for any error of judgment or for any act done or step taken or omitted, except in the case of its gross negligence, willful misconduct or bad faith as determined pursuant to a final, non-appealable judgment of a court of competent jurisdiction;
(d) it may consult with and obtain advice from counsel of its own choice in the event of any dispute or question as to the construction of any provision hereof or of a Loan Document or in connection with any other matters arising hereunder or under any Loan Document and the advice or any opinion of counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder or under any Loan Document in good faith and in accordance with such advice or opinion of counsel;
(e) it shall have no duties or obligations hereunder or under any other Collateral Document to which it is a party, except those which are expressly set forth herein or in such other Collateral Documents, and it undertakes to perform such duties and only such duties as are specifically set forth herein or in such other Collateral Document;
(f) it may execute or perform any duties hereunder or under the other Collateral Documents to which it is a party either directly or through agents, nominees, custodians or attorneys and shall not be responsible for any failure, breach or omission of (including if resulting from willful misconduct or gross negligence on the part of) any agent, attorney, custodian or nominee so appointed with reasonable care;
(g) it may engage or be interested in any financial or other transactions with any party hereto or to any Loan Document and may act on, or as depositary, collateral agent or agent for, any committee or body of holders of obligations of such Persons as freely as if it were not Collateral Agent hereunder; and
(h) it shall not be obligated to take any action which in its reasonable judgment would involve it in expense or liability unless it has been furnished with reasonable indemnity.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
 
23

Subject to Section 4.2 , the Collateral Agent shall have no obligation to invest and reinvest any cash held in the Accounts. In no event shall the Collateral Agent be liable for the selection of investments or for investment losses incurred thereon by reason of investment performance, liquidation prior to stated maturity or otherwise. The Collateral Agent shall have no liability in respect of losses incurred as a result of the liquidation of any investment prior to its stated maturity.
Section 7.6 Exculpatory Provisions . Neither the Collateral Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates (nor their officers, directors, employees, agents, attorneys-in-fact) shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Financing Document (except to the extent that any of the foregoing are found by a final and non-appealable judgment of a court of competent jurisdiction to have resulted from its or such Person’s own bad faith, gross negligence or willful misconduct) or (b) responsible in any manner to the Administrative Agent or any other Person for any recitals, statements, representations or warranties made by Borrower or any Subsidiary Party or any of their affiliates or any officer(s) thereof contained in this Agreement or any other Loan Document or in the certificate, report, statement or other document referred to or provided for in, or received by the Collateral Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or of any Lien granted to it under any Loan Document or for any failure of Borrower or any Subsidiary Party or any other party thereto to perform its obligations hereunder or thereunder. The Collateral Agent shall not be under any obligation to the Administrative Agent or to any other Person to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of Borrower, any Subsidiary Party or any other Person. None of the provisions of this Agreement or any Loan Document shall require the Collateral Agent to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder or under the Financing Documents, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it. The Collateral Agent shall have no responsibility to insure or to see to the insurance of any property with respect to which it shall have been granted a Lien under any Collateral Document. Nothing herein shall require the Collateral Agent to file any financing statement, continuation statement or amendment thereto in any public office at any time or times or to otherwise take any action to perfect or maintain the perfection of the Lien on any property granted to the Collateral Agent under any Collateral Document or to give notice of any such Lien to any third party. In no event shall the Collateral Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Collateral Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. The Collateral Agent is hereby authorized to enter into or to accept delivery to it of each of the Collateral Documents to which it is intended to be a party.
Section 7.7 Expenses . Borrower agrees to pay or reimburse all reasonable and documented out-of-pocket costs and expenses of the Collateral Agent (including reasonable fees and expenses for legal services of a single law firm) in respect of, or incident to, the administration or enforcement of any of the provisions of this Agreement or in connection with any amendment, waiver or consent relating to this Agreement, except to the extent any costs or expenses of the Collateral Agent result from the Collateral Agent’s bad faith, gross negligence or willful misconduct.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
 
24

Section 7.8 Indemnification .
(a) Borrower agrees to indemnify, protect, save and keep harmless the Collateral Agent and its officers, partners, members, directors, trustees, advisors, employees, agents, sub-agents and Affiliates and any of their successors, or permitted assigns (collectively, the “ Indemnified Collateral Agent Parties ”) from and against, any and all claims, liabilities, obligations, losses, damages, penalties, costs and reasonable expenses that may be imposed on, incurred by, or asserted against, at any time, the Collateral Agent arising out of the execution, delivery and performance of this Agreement or any other Loan Document, the establishment of the Accounts, or as may arise by reason of any act, omission or error of the Collateral Agent made in good faith in the conduct of its duties (collectively, the “ Indemnified Collateral Agent Liabilities ”); except that Borrower shall not be required to indemnify, protect, save and keep harmless any Indemnified Collateral Agent Parties against the Indemnified Collateral Agent Party’s own bad faith, gross negligence or willful misconduct as determined by the final judgment of a court of competent jurisdiction, no longer subject to appeal or review. Without limiting the foregoing, Borrower agrees to pay, and to hold the Collateral Agent harmless from, and to indemnify the Collateral Agent against, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other similar taxes which may be payable or determined to be payable with respect to any of the Account Collateral or in connection with any of the transactions contemplated hereby, unless such delay is caused by the Collateral Agent’s own bad faith, gross negligence or willful misconduct. To the extent that the undertakings to indemnify, pay and hold harmless set forth in this Section 7.8 may be unenforceable in whole or in part because they are volatile of any law or public policy, Borrower shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all of the Indemnified Collateral Agent Liabilities incurred by the Indemnified Collateral Agent Parties or any of them.
(b) To the extent permitted by applicable law, Borrower and each Subsidiary Party agrees not to assert, and Borrower and each Subsidiary Party hereby waives, any claim against the Collateral Agent and its Affiliates, directors, employees, attorneys, agents or subagents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any other Collateral Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby or any act or omission or event occurring in connection therewith, and Borrower and each Subsidiary Party hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor; provided that such claim is not for the bad faith, gross negligence or willful misconduct of any Indemnified Collateral Agent Party.
(c) The agreements in this Section 7.8 shall survive repayment of the Secured Obligations and all other amounts payable under the Financing Documents and the removal or resignation of the Collateral Agent.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
 
25

Section 7.9 Resignation or Removal . Subject to the appointment and acceptance of a successor Collateral Agent as provided below, the Collateral Agent may resign at any time by giving thirty (30) days’ written notice thereof to each party hereof. The Collateral Agent may be removed at any time with or without cause by the Administrative Agent. Notwithstanding anything to the contrary, no resignation or removal of the Collateral Agent shall be effective until: (i) a successor Collateral Agent is appointed in accordance with this Section 7.9 , (ii) the resigning or removed Collateral Agent has transferred to its successor all of its rights and obligations in its capacity as the Collateral Agent under this Agreement, and (iii) the successor Collateral Agent has executed and delivered an agreement to be bound by the terms hereof and perform all duties required of the Collateral Agent hereunder and a copy of such agreement has been delivered to the Administrative Agent, Collateral Agent and Borrower. Within thirty (30) days of receipt of a written notice of any resignation or removal of the Collateral Agent, the Administrative Agent and, if no Default or Event of Default is then continuing, Borrower shall appoint a successor Collateral Agent. If no successor Collateral Agent (x) shall have been appointed by the Administrative Agent and, if applicable, Borrower and (y) shall have accepted such appointment within thirty (30) days after the retiring Collateral Agent’s giving of notice of resignation or the removal of the retiring Collateral Agent, then the retiring Collateral Agent may apply to a court of competent jurisdiction to appoint a successor Collateral Agent, which shall be a federally insured U.S.- domiciled bank or trust company that has a combined capital surplus of at least $500,000,000. Upon the acceptance of any appointment as Collateral Agent hereunder by the successor Collateral Agent, (a) such successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be discharged from its duties and obligations hereunder and (b) the retiring Collateral Agent shall promptly transfer all monies and other property within its possession or control to the possession or control of the successor Collateral Agent and shall execute and deliver such notices, instructions and assignments as may be necessary or desirable to transfer the rights of the Collateral Agent with respect to the monies to the successor Collateral Agent. After the retiring Collateral Agent’s resignation or removal hereunder as Collateral Agent, the provisions of this Article VII shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Collateral Agent. Any corporation into which the Collateral Agent may be merged or converted or with which it may be consolidated or any corporation resulting from any merger, conversion or consolidation to which the Collateral Agent shall be a party, or any corporation succeeding to the business of the Collateral Agent or its corporate trust operations shall be the successor of the Collateral Agent hereunder without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto except where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendments; Etc . No amendment or waiver of any provision of this Agreement nor consent to any departure by Borrower or any Subsidiary Party shall in any event be effective unless the same shall be in writing and signed by each of the parties hereto. Any such amendment, waiver or consent shall be effective only in the specific instance and for the specified purpose for which given.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
 
26

Section 8.2 Addresses for Notices .
(a) All notices, requests and other communications provided for hereunder shall be in writing and, except as otherwise required by the provisions of this Agreement or by clause (b)  below, shall be sufficiently given and shall be deemed given when personally delivered or, if mailed by registered or certified mail, postage prepaid, or sent by overnight delivery or telecopy, upon receipt by the addressee, in each case addressed to the parties at their respective addresses pursuant to Section 10.1 of the Loan Agreement or, with respect to the Depositary or the Collateral Agent, as follows (or, in each case, such other address as shall be designated by such party in a written notice to each other party):
 
Depositary:	Bank of America, N.A.	
135 S La Salle Street
Mail Code: IL4-135-05-07
Chicago, IL 60603
Attention: Alice M. Wolan
Telephone: (312) 992-9782
Telecopy: (312) 904-9833
Email: alice.m.wolan@baml.com
 
Collateral Agent:	Bank of America Plaza	
101 S Tryon Street
Mail Code: NC1-002-15-36
Charlotte, NC 28255-0001
Attention: Mollie S. Canup
Telephone: (980) 387-5449
Telecopy: (704) 409-0011
Email: mollie.s.canup@baml.com
(b) Unless the Depositary otherwise prescribes, notices and other communications may be delivered or furnished by e-mail. Such notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (by the “read receipt” request function, as available, return e-mail or other written acknowledgment that such notice or other communication has been read by the intended recipient); provided that, if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient; provided further that, all such notices and other communications shall contain a portable document format (“ pdf ”) attachment with a signature from an Authorized Signatory as required pursuant to Section 8.10 .
Section 8.3 Governing Law . This Agreement shall be governed by the laws of the State of New York.
Section 8.4 Headings . Headings used in this Agreement are for convenience of reference only and do not constitute part of this Agreement for any purpose.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
 
27

Section 8.5 No Third Party Beneficiaries . The agreements of the parties hereto are solely for the benefit of Borrower, the Subsidiary Parties and the Secured Beneficiaries and their respective successors and permitted assigns, and no Person (other than the parties hereto and such Secured Beneficiaries) shall have any rights hereunder.
Section 8.6 No Waiver . No failure on the part of the Depositary, the Collateral Agent, or any of the Secured Beneficiaries or any of their nominees or representatives to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Depositary, the Collateral Agent or any of the Secured Beneficiaries or any of their nominees or representatives of any right, power or remedy hereunder preclude any other or future exercise thereof or the exercise of any other right, power or remedy, nor shall any waiver of any single Default or Event of Default or other breach or default be deemed a waiver of any other Default or Event of Default or other breach or default theretofore or thereafter occurring. All remedies either under this Agreement or by law or otherwise afforded to any Secured Beneficiary shall be cumulative and not alternative.
Section 8.7 Severability . If any provision of this Agreement or the application thereof shall be invalid or unenforceable to any extent, (a) the remainder of this Agreement and the application of such remaining provisions shall not be affected thereby and (b) each such remaining provision shall be enforced to the greatest extent permitted by law.
Section 8.8 Successors and Assigns . All covenants, agreements, representations and warranties in this Agreement by each party hereto shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and permitted assigns, whether so expressed or not; provided that neither Borrower nor any Subsidiary Party may assign its rights or obligations hereunder without the consent of the Administrative Agent and Depositary.
Section 8.9 Execution in Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 8.10 Directions to Depositary . All written directions and instructions by any Person to the Depositary pursuant to this Agreement shall be executed by an authorized signatory (each, an “ Authorized Signatory ”) of such Person designated on Exhibit F . All directions, orders and other instructions provided to the Depositary hereunder shall be in writing. In its capacity as the Depositary, the Depositary will accept all instructions and documents complying with the above requirements under the indemnities provided in this Agreement, and reserves the right to refuse to accept any instructions or documents which fail, or appear to fail, to comply with this Agreement. Further to this procedure, the Depositary reserves the right to telephone an Authorized Signatory (such person verifying the instruction shall be different than the person initiating the instruction) to confirm the details of such instructions or documents if they are not already on file with the Depositary as standing instructions. The Depositary may require
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
 
28

any party hereto which is entitled to direct the delivery of fund transfers to designate a phone number or numbers for purposes of confirming the requested transfer. The parties hereto aside from the Depositary agree that the Depositary may delay the initiation of any fund transfer until all security measures its deems to be necessary and appropriate have been completed and shall incur no liability for such delay.
Section 8.11 Customer Identification Program Notice; Patriot Act Compliance . Borrower hereby acknowledges that the Depositary is subject to federal laws, including the Customer Identification Program (“ CIP ”) requirements under the USA PATRIOT Act and its implementing regulations, pursuant to which the Depositary must obtain, verify and record information that allows the Depositary to identify Borrower. Accordingly, prior to opening an Account hereunder the Depositary will ask Borrower to provide certain information including, but not limited to, Borrower’s name, physical address, tax identification number and other information that will help the Depositary to identify and verify Borrower’s identity such as organizational documents, certificate of good standing, license to do business, or other pertinent identifying information. Borrower agrees that the Depositary cannot open an Account hereunder unless and until the Depositary verifies Borrower’s identity in accordance with its CIP.
Section 8.12 Provisions of the Loan Agreement . The parties hereto acknowledge and agree that all of the provisions of the Section 10.17 (Confidentiality) of the Loan Agreement constitute a part of the terms and conditions of the agreement between the parties with regard to the arrangements under this Agreement and should be read in conjunction with this Agreement (regardless of whether incorporated in this Agreement by reference thereto).
Section 8.13 Waiver of Jury Trial . TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO WAIVES THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING OR DISPUTE OF ANY KIND RELATING IN ANY WAY TO THIS AGREEMENT OR THE ACCOUNT COLLATERAL. Each party hereto acknowledges that the foregoing waivers are a material inducement to each other party’s entering into this Agreement and that it is relying upon the foregoing in its dealings with such party. Each party hereto has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its jury trial and other rights following consultation with legal counsel. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.
Section 8.14 Joinder of Additional Subsidiary Parties; Release of Subsidiary Parties .
(a) From time to time in connection with the addition of Subject Funds pursuant to Section 2.10(a) of the Loan Agreement, additional Subsidiary Parties shall automatically be joined to, and become bound by, the terms of this Agreement.
(b) Upon the conditions set forth in Section 2.10(b) of the Loan Agreement being met with respect to a Subject Fund, the related Subsidiary Party shall be released from the terms of this Agreement. In connection with such release, the Collateral Agent and Administrative Agent shall execute a Termination Agreement in the form attached hereto as Exhibit B .
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
 
29

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
 
30

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.

VIVINT SOLAR FINANCING I, LLC	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
VIVINT SOLAR LIBERTY MANAGER, LLC	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
VIVINT SOLAR MARGAUX MANAGER, LLC	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
VIVINT SOLAR FUND III MANAGER, LLC	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
VIVINT SOLAR AALIYAH MANAGER, LLC,	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
VIVINT SOLAR REBECCA MANAGER, LLC,	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
VIVINT SOLAR HANNAH MANAGER, LLC,	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
VIVINT SOLAR NICOLE MANAGER, LLC,	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
VIVINT SOLAR ELYSE MANAGER, LLC,	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
VIVINT SOLAR OWNER I, LLC,	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
BANK OF AMERICA, N.A.,	
as Administrative Agent	
		
By:	 	/s/ Darleen R. Parmelee	
Name:	 	Darleen R. Parmelee	
Title:	 	Vice President	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
BANK OF AMERICA, N.A.,	
as Collateral Agent	
		
By:	 	/s/ Darleen R. Parmelee	
Name:	 	Darleen R. Parmelee	
Title:	 	Vice President	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
solely for purposes of Section 2.1 , Section 6.2 and Article VII	
	
BANK OF AMERICA, N.A.,
as Secured Lender	
		
By:	 	/s/ Sheikh Omer-Farooq	
Name:	 	Sheikh Omer-Farooq	
Title:	 	Director	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
solely for purposes of Section 2.1 , Section 6.2 and Article VII	
	
CIT FINANCE LLC
as Secured Lender	
		
By:	 	/s/ Rhys Marsh	
Name:	 	Rhys Marsh	
Title:	 	Vice President	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
solely for purposes of Section 2.1 , Section 6.2 and Article VII	
	
DEUTSCHE BANK AG, NEW YORK BRANCH
as Secured Lender	
		
By:	 	/s/ Vinod Mukani	
Name:	 	Vinod Mukani	
Title:	 	Director	
		
By:	 	/s/ Sven Semmelmann	
Name:	 	Sven Semmelmann	
Title:	 	Vice President	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
solely for purposes of Section 2.1 , Section 6.2 and Article VII	
	
ING CAPITAL LLC
as Secured Lender	
		
By:	 	/s/ Erwin Thomet	
Name:	 	Erwin Thomet	
Title:	 	Managing Director	
	
ING CAPITAL LLC
as Secured Lender	
		
By:	 	/s/ Thomas Cantello	
Name:	 	Thomas Cantello	
Title:	 	Director	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
solely for purposes of Section 2.1 , Section 6.2 and Article VII	
	
SILICON VALLEY BANK
as Secured Lender	
		
By:	 	/s/ Mona Maitra	
Name:	 	Mona Maitra	
Title:	 	Vice President	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
solely for purposes of Section 2.1 , Section 6.2 and Article VII	
	
SOCIÉTÉ GÉNÉRALE
as Secured Lender	
		
By:	 	/s/ Roberto Simon	
Name:	 	Roberto Simon	
Title:	 	Managing Director	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

			
BANK OF AMERICA, N.A,	
as Depositary and Securities Intermediary	
		
By:	 	/s/ Wayne M. Evans	
Name:	 	Wayne M. Evans	
Title:	 	Vice President	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page of Collateral Agency and Depositary Agreement (Project Spotlight)]

Schedule I to
Collateral Agency and
Depositary Agreement
PAYMENT INSTRUCTIONS
All payments to be paid to or on behalf of the Administrative Agent shall be paid to:

NAME OF BANK:	 	Bank of America, N.A.	
		
CITY, STATE:	 	New York, NY	
		
ABA NUMBER:	 	026009593	
		
ACCOUNT NUMBER:	 	1292000883	
		
ATTENTION:	 	Corporate Credit Services	
		
REF:	 	Vivint Solar Financing I, LLC	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Exhibit A-1

Exhibit A
FORM OF WITHDRAWAL/TRANSFER CERTIFICATE
Date:                  ,         
[BANK OF AMERICA, N.A.],
   as Depositary and Securities Intermediary
[ Insert notice and address information ]
with a copy to:
[ Insert Collateral Agent’s and Administrative Agent’s notice and address information ]
Re: Withdrawal/Transfer Certificate
Ladies and Gentlemen:
This Withdrawal/Transfer Certificate is delivered pursuant to that certain Collateral Agency and Depositary Agreement, dated as of September 12, 2014 (as such agreement may be amended, restated or otherwise supplemented from time to time, the “ Agreement ”), among Vivint Solar Financing I, LLC, a Delaware limited liability company (“ Borrower ”), and Vivint Solar Liberty Manager, LLC, a Delaware limited liability company (“ Liberty Manager ”), Vivint Solar Margaux Manager, LLC, a Delaware limited liability company (“ Margaux Manager ”), Vivint Solar Fund III Manager, LLC, a Delaware limited liability company (“ Fund III Manager ”), Vivint Solar Mia Manager, LLC, a Delaware limited liability company (“ Mia Manager ”), Vivint Solar Aaliyah Manager, LLC, a Delaware limited liability company (“ Aaliyah Manager ”), Vivint Solar Rebecca Manager, LLC, a Delaware limited liability company (“ Rebecca Manager ”), Vivint Solar Hannah Manager, LLC, a Delaware limited liability company (“ Hannah Manager ”), Vivint Solar Nicole Manager, LLC, a Delaware limited liability company (“ Nicole Manager ”), and Vivint Solar Elyse Manager, LLC, a Delaware limited liability company (“ Elyse Manager ”), and Vivint Solar Owner I, LLC (“ Owner I ,” and together with Liberty Manager, Margaux Manager, Fund III Manager, Mia Manager, Aaliyah Manager, Rebecca Manager, Hannah Manager, Nicole Manager, Elyse Manager and each other Person that subsequently becomes a party hereto in accordance with Section 8.14 of this Agreement, the “ Subsidiary Parties ”), Bank of America, N.A., as the administrative agent under the Loan Agreement (as defined below) for the Lenders (as defined below) (together with its successors and permitted assigns in such capacity, the “ Administrative Agent ”), Bank of America, N.A., in its capacity as collateral agent for the Beneficiaries (as defined below) (together with its successors and permitted assigns in such capacity, the “ Collateral Agent ”), Bank of America, N.A., in its capacity as depositary bank and as securities intermediary (together with its successors and permitted assigns in such capacity, the “ Depositary ”) and solely
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Exhibit A-2

for purposes of Section 2.1 and Article VII , the Lenders (as defined below). Unless otherwise defined herein or unless the context otherwise requires, terms used in this Withdrawal/Transfer Certificate have the meanings provided in the Agreement.
The undersigned, in [his/her] capacity as an officer of Borrower (and not in an individual capacity) is a Responsible Officer of Borrower and is delivering this Withdrawal/Transfer Certificate pursuant to Section(s) [        ] of the Agreement.
1. Transfers from Revenue Account.
The Borrower hereby directs the Depositary to withdraw and transfer, from the account entitled Revenue Account, No. *** (the “ Revenue Account ”), on [            ] , 20 [      ] (the “ Transfer Date ”), the following amounts: 1
(i) in accordance with priority first of Section 3.3(d) of the Agreement, [        ] Dollars ($[        ]) to the Administrative Agent, for the benefit of the Secured Beneficiaries, for the payment of fees, costs, charges and other amounts (except principal and interest) due and payable under the Financing Documents as of the Transfer Date;
(ii) in accordance with priority second of Section 3.3(d) of the Agreement, [        ] Dollars ($[        ]) to the Administrative Agent, for the benefit and account of the Lenders, on a pro rata basis, for payment of all interest due and payable under the Financing Documents as of the Transfer Date;
(iii) in accordance with priority third of Section 3.3(d) of the Agreement, [        ] Dollars ($[        ]) to the Administrative Agent, for the benefit and account of the Lenders, on a pro rata basis, for payment of all principal due and payable under the Financing Documents as of the Transfer Date;
(iv) in accordance with priority fourth of Section 3.3(d) of the Agreement, [        ] Dollars ($[        ]) to the Interest Reserve Account, representing an amount equal to the difference between (x) the Interest Reserve Required Amount, and (y) the funds on deposit in the Interest Reserve Account as of the Transfer Date; and
(v) in accordance with priority fifth of Section 3.3(d) of the Agreement, [        ] Dollars ($[        ]) to the Persons and the amounts set forth on Annex I attached hereto.
2. Certifications.
In support of such direction(s), the undersigned, on behalf of the Borrower, hereby represents and certifies, as of the date hereof and as of the Revenue Account Withdrawal Date, as follows:
(a) All conditions set forth in the Loan Agreement and the Agreement for the withdrawals requested hereby have been satisfied.

1  	Each Revenue Account Withdrawal Certificate should only include those priorities relevant on the given Transfer Date.	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Exhibit A-3

(b) No Notice of Suspension is in effect, and no Event of Default has occurred and is continuing or would be caused by the withdrawal and transfer otherwise contemplated by this Certificate.
(c) All of the statements contained in this certificate are true and correct
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Exhibit A-4

¨	REVENUE ACCOUNT	
The Collateral Agent hereby directs the Depositary to withdraw from the Revenue Account the following amounts and apply such amounts as follows:

Date of Withdrawal
or Transfer:	 	Amount to be
withdrawn/transferred:	 	Account/Person to be
Transferred to:	 	Purpose:	

 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Exhibit A-5

¨	PREPAYMENT ACCOUNT	
The Collateral Agent hereby directs the Depositary to withdraw from the Prepayment Account and transfer such funds as follows:

Date of Withdrawal
or Transfer:	 	Amount to be
withdrawn/transferred:	 	Account/Person to be
Transferred to:	 	Purpose:	

 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Exhibit A-6

IN WITNESS WHEREOF, this Withdrawal/Transfer Certificate is duly executed and delivered by a duly authorized representative of Borrower as of the date first above written.

VIVINT SOLAR FINANCING I, LLC	
		
By:	 	 	
Name:	 		
Title:	 		

Acknowledged by:	
	
BANK OF AMERICA, N.A.,
as Collateral Agent	
		
By:	 	 	
Name:	 		
Title:	 		
	
BANK OF AMERICA, N.A.,
as Administrative Agent	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
Exhibit A-7

Exhibit B
FORM OF TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (the “ Termination Agreement ”), dated as of [                    ], is entered into by and between [                    ], a [                    ] (the “ Released Subsidiary Party ”), and [BANK OF AMERICA, N.A.], a [national banking association] (the “ Collateral Agent ”), as Administrative Agent, Collateral Agent and Depositary and Securities Intermediary under the Collateral Agency Agreement (as such term is defined below).
RECITALS
WHEREAS, the Released Subsidiary Party is a party to that certain Collateral Agency and Depositary Agreement, dated as of September 12, 2014 (as such agreement may be amended, restated or otherwise supplemented from time to time, the “ CADA ”), among Vivint Solar Financing I, LLC, a Delaware limited liability company (“ Borrower ”), and Vivint Solar Liberty Manager, LLC, a Delaware limited liability company (“ Liberty Manager ”), Vivint Solar Margaux Manager, LLC, a Delaware limited liability company (“ Margaux Manager ”), Vivint Solar Fund III Manager, LLC, a Delaware limited liability company (“ Fund III Manager ”), Vivint Solar Mia Manager, LLC, a Delaware limited liability company (“ Mia Manager ”), Vivint Solar Aaliyah Manager, LLC, a Delaware limited liability company (“ Aaliyah Manager ”), Vivint Solar Rebecca Manager, LLC, a Delaware limited liability company (“ Rebecca Manager ”), Vivint Solar Hannah Manager, LLC, a Delaware limited liability company (“ Hannah Manager ”), Vivint Solar Nicole Manager, LLC, a Delaware limited liability company (“ Nicole Manager ”), Vivint Solar Elyse Manager, LLC, a Delaware limited liability company (“ Elyse Manager ”), Vivint Solar Owner I, LLC (“ Owner I ,” and together with Liberty Manager, Margaux Manager, Fund III Manager, Mia Manager, Aaliyah Manager, Rebecca Manager, Hannah Manager, Nicole Manager, Elyse Manager and each other Person that subsequently becomes a party hereto in accordance with Section 8.14 of this Agreement, the “ Subsidiary Parties ”), Bank of America, N.A., as the administrative agent under the Loan Agreement (as defined in the CADA) for the Lenders (as defined below) (together with its successors and permitted assigns in such capacity, the “ Administrative Agent ”), Bank of America, N.A., in its capacity as collateral agent for the Beneficiaries (as defined below) (together with its successors and permitted assigns in such capacity, the “ Collateral Agent ”), Bank of America, N.A., in its capacity as depositary bank and as securities intermediary (together with its successors and permitted assigns in such capacity, the “ Depositary ”) and solely for purposes of Section 2.1 and Article VII , the Lenders (as defined in the CADA); and
WHEREAS, the Subject Fund related to the Released Subsidiary Party is no longer subject to the Loan Agreement pursuant to Section 2.10(b) of the Loan Agreement, and pursuant to Section 8.15 of the CADA, the parties wish to release the Released Subsidiary Party from the terms of the CADA and for the Released Subsidiary Party to no longer be a party to the CADA.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
(a) Termination of CADA . The CADA shall be terminated as to the Released Subsidiary Party, and the Released Subsidiary Party shall no longer be a party to the CADA, as of the date of this Termination Agreement.
(b) Certain Definitions . Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the CADA.
(c) Reliance . The parties to the CADA shall be entitled to rely on this Termination Agreement as evidence that the Released Subsidiary Party has been released as a party to the CADA.
(d) Counterparts . This Termination Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
(e) Governing Law . This Termination Agreement shall be governed by the laws of the State of New York.
[ Remainder of Page Intentionally Left Blank ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF, this Termination Agreement is duly executed and delivered by a duly authorized representative of Collateral Agent and the Administrative Agent as of the date first above written.

BANK OF AMERICA, N.A.,	
as Collateral Agent	
		
By:	 	 	
Name:	 		
Title:	 		

BANK OF AMERICA, N.A.,	
as Administrative Agent	
		
By:	 	 	
Name:	 		
Title:	 		

Acknowledged by:	
	
VIVINT SOLAR FINANCING I, LLC	
		
By:	 	 	
Name:	 		
Title:	 		
	
[RELEASED SUBSIDIARY PARTY]	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT C
FORM OF PENDING TRADE NOTICE

Date:	 		
To:	 		
From:	 		

Borrower	
Vivint Solar Financing I, LLC	

Signature:	 		
Name:	 		
Title:	 		
Trade Details:

Trade Type: (check one)	  	Form (check one)	  	 	
					
¨	  	Receive Free	 	¨	  	Book Entry	  		
					
¨	  	Deliver Free (See Note Below)	 	¨	  	Physical	  		
					
¨	  	DVP (Sell)	 		  		  		
					
¨	  	RVP (Buy)	 		  		  		
Security Description:                                                                                                                                                           

Cusip:	 	 	  	Special Instructions	
Class Name:	 		  		
Trade Date:	 		  		
Settlement Date:	 		  		
Original Face Value:	 		  		
Principal:	 		  		
Accrued Interest:	 		  		
Commission:	 		  		
Net Amount:	 		  		
Broker Number:	 		  		
Broker Name:	 		  		
Broker Contact & Phone Number:	 		  		
Note: Depositary will verify any free delivery instruction by a call to an authorized person other than the authorized person signing the instruction.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT D
GENERAL DEPOSITARY ACCOUNT SETTLEMENT INFORMATION
Domestic Delivery Instructions
All trade confirmations should be created using the Bank of America Security Trade Delivery Instructions for the Depository Trust Clearing Corporation (DTCC). All ID confirms must include your DTCC institution number, our DTCC Participant number, our Agent ID number, and the Client’s account number.
To facilitate timely settlement of all trades, please include the decimal in the account number (for example, 123456.1). Please fax the trade instructions, Exhibit C, to:
Bank of America, N.A.
Attention: [Insert Account Manager Name]
135 S. LaSalle Street
Mail Code: IL4-135-14-01
Chicago, IL 60603
Facsimile: 312-904-0990
For next day or T+2 trades, instructions must be received on trade date (T). For trades on a T+3 settlement, please remit instructions by 3:30 p.m. Central Time the day after trade date (T+1). Any trade received after these times will be processed on a best-effort basis.
Depository Trust Company (DTC)
The Depository Trust Clearing Corp. (DTCC)
Participant #2251
Agent ID #26320
Ref Trust A/C #: (Insert Your Account Number Here)
Fed Settlement Instructions
ABA #: 0530-0019-6
Account Name: TRUST/SVC
Account/Third Party Number: 2E21
Ref Trust A/C #: (Insert Your Account Number Here)
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT E
DEPOSITARY ACCOUNT INVESTMENT SELECTION FORM
Institutional Deposit Account (U.S and non U.S. Corporate and Institutional Investor Use Only):
The Institutional Deposit Account is a Money Market Deposit Account held at Bank of America, N.A. For more complete information about IDA, please refer to the terms and conditions and fact sheet. You should read and review this information carefully before investing. Past performance is no guarantee of future results. Funds deposited in IDA are insured to the maximum extent permitted by law and regulation by the Federal Deposit Insurance Corporation. IDA has a normal cutoff time of 4:00PM (central time) and any cash received after that time will not be invested until the next business day.
Repurchase Agreement Account (U.S Corporate and Institutional Investor Use Only):
The Repurchase Agreement Account (“RAA”) is a Repurchase Agreement with Bank of America, National Association (“Bank”) and is available with the establishment of an account with Global Custody and Agency Services, a division of Bank acting on your behalf (“GCAS”). For more complete information about RAA, please refer to the terms and conditions and fact sheet. You should read and review this information carefully before investing. Past performance is no guarantee of future results. Repurchase Agreements are not deposits within the meaning of the Federal Deposit Insurance Act (12 U.S.C. 1813(l)), are not insured or guaranteed by the U.S. Government, the FDIC or any other government agency, and involve investment risk, including possible loss of principal. If a receiver were appointed for Bank of America, the client would have an ownership interest in the securities sold to the client that are described in the applicable trade confirmation received by GCAS on behalf of all clients investing in RAA or, if the transaction were deemed to be a loan, the client would be a secured creditor and have a perfected interest in such securities. RAA has a normal cutoff time of 1:00PM (central time) and any cash received after that time will not be invested until the next business day.
Money Market Funds (U.S Corporate and Institutional Investor Use Only):
For more complete information about a money market fund listed in this form, including expenses, investment objectives, and past performance, please refer to the prospectus. You should read and review this information carefully before investing. Past performance is no guarantee of future results. Investments in money market mutual funds are neither insured nor guaranteed by Bank of America, N.A. and its affiliates, or by any Government Agency. There can be no assurance that the funds can maintain a stable net asset value of $1.00 per share. Bank of America, N. A. typically has a normal cut-off time of one hour prior to the money market mutual fund’s stated cut off time and any cash received after that time will not be invested until the next Business Day.
The parties to the agreement understand and agree that the Depositary may receive certain revenue associated with money market fund investments. These revenues take one of two forms:
Shareholder Servicing Payments : The Depositary may receive shareholder servicing payments commensurate with the shareholder services provided for the money market fund company. Shareholder services typically provided by Bank of America, N.A. include the maintenance of shareholder ownership records, distributing prospectuses and other shareholder information materials to investors and handling proxy-voting materials. Typically shareholder servicing payments are paid under a money market fund’s 12b-1 distribution plan and impact the investment performance of the fund by the amount of the fee. The shareholder servicing fee payable from any money market fund is detailed in the fund’s prospectus provided to you.
Revenue Sharing Payments : The Depositary may receive revenue sharing payments from a money market fund company. These payments represent a reallocation to the Depositary of a portion of the compensation payable to the fund company in connection with a money market fund investment. Revenue sharing payments constitute a form of fee sharing between the fund company and the Depositary and do not, as a general rule, result in any additional charge or expense in connection with a money market fund investment, are not paid under a 12b-1 plan, and do not impact the investment performance of the fund. The amount of any revenue share, if any, payable to the Depositary with respect to your account’s investments is available upon request.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

In the event that a money market fund has been designated as the investment, the parties hereto acknowledge delivery of the prospectus for such fund. The Parties hereto acknowledge that money market funds and other non-deposit investments are not deposits in or obligations of, or guaranteed by, Bank of America Corporation or any of its affiliates and are not insured by the FDIC or any government agency. Investments in money market funds involve investment risks, including possible loss of principal.
Acknowledged and agreed to this             day of                             , 20        :

	 	Bank of America, N.A.	 		
			
	 	By:	 		
	 	Name:	 		
        	 	Title:	 		

DEPOSITARY ACCOUNT INVESTMENT SELECTION FORM	
					
x	 		  	CUSIP	  	TICKER	  	INTERNAL	
	
Money Market Deposit Account (“MMDA”) held at Bank of America, N.A.	
					
	 	Bank of America Institutional Deposit Account (IDA) (a Money Market Deposit Account
at Bank of America, N.A.)	  	N/A	  	N/A	  	999100845	
	
Repurchase Agreement Account (“RAA”) is a Repurchase Agreement with Bank of America, N.A.	
					
	 	Repurchase Agreement Account (“RAA”) (a Repurchase Agreement with Bank of America, N.A.)	  	N/A	  	N/A	  	9998SF748	
	
Prime Money Market Funds	
					
	 	BofA Cash Reserves - Daily Share	  	19765K605	  	NSHXX	  	999301229	
	
US Government & Agency Money Market Funds	
					
	 	BofA Government Reserves - Daily Share	  	19765K761	  	NRDXX	  	999301195	
	
Treasury Money Market Funds	
					
	 	BofA Treasury Reserves - Daily Share	  	19765K282	  	NDLXX	  	999301138	
	
Tax-Exempt Money Market Funds	
					
	 	BofA Municipal Reserves Daily	  	097100416	  	NMDXX	  	999301161	
					
	 	BOFA Tax Exempt Reserves - Daily Share	  	097100192	  	NEDXX	  	999301153	

Please indicate a selection by placing an “X” to the left of the investment name.	
	
[                         ], LLC	

By:	
      Name:	
      Title:	
	
Date:	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

EXHIBIT F
Certificate of Authorized Representatives

					
Name:	 	 	  		  	Name:	  	 	
					
Title:	 	 	  		  	Title:	  	 	
					
Phone:	 	 	  		  	Phone:	  	 	
					
Facsimile:	 	 	  		  	Facsimile:	  	 	
					
E-mail:	 	 	  		  	E-mail:	  	 	
					
Signature:	 	 	  		  	Signature:	  	 	
	
Fund Transfer / Disbursement Authority Level:                                     Fund Transfer / Disbursement Authority Level:	
	
       ¨          Initiate                                                                                                               ¨   Initiate	
       ¨          Verify transactions initiated by others                                     ¨   Verify transactions initiated by others	

					
Name:	 	 	  		  	Name:	  	 	
					
Title:	 	 	  		  	Title:	  	 	
					
Phone:	 	 	  		  	Phone:	  	 	
					
Facsimile:	 	 	  		  	Facsimile:	  	 	
					
E-mail:	 	 	  		  	E-mail:	  	 	
					
Signature:	 	 	  		  	Signature:	  	 	

Fund Transfer / Disbursement Authority Level:                                     Fund Transfer / Disbursement Authority Level:	
	
       ¨          Initiate                                                                                                       ¨    Initiate	
       ¨          Verify transactions initiated by others                                 ¨   Verify transactions initiated by others	
                                                      
The Depositary Bank is authorized to comply with and rely upon any notices, instructions or other communications believed by it to have been sent or given by the person or persons identified above including without limitation, to initiate and verify funds transfers as indicated.

[                     ], LLC:	
	
By:	
        Name:	 		
        Title:	 		
	
Date:	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Exhibit G
FORM OF INTEREST RESERVE RELEASE CERTIFICATE
Date:                      ,         
[BANK OF AMERICA, N.A.],
   as Depositary and Securities Intermediary
[ Insert notice and address information ]
with a copy to:
[ Insert Collateral Agent’s and Administrative Agent’s notice and address information ]
Re: Interest Reserve Release Certificate
Ladies and Gentlemen:
This Interest Reserve Release Certificate is delivered pursuant to that certain Collateral Agency and Depositary Agreement, dated as of September 12, 2014 (as such agreement may be amended, restated or otherwise supplemented from time to time, the “ Agreement ”), among Vivint Solar Financing I, LLC, a Delaware limited liability company (“ Borrower ”), and Vivint Solar Liberty Manager, LLC, a Delaware limited liability company (“ Liberty Manager ”), Vivint Solar Margaux Manager, LLC, a Delaware limited liability company (“ Margaux Manager ”), Vivint Solar Fund III Manager, LLC, a Delaware limited liability company (“ Fund III Manager ”), Vivint Solar Mia Manager, LLC, a Delaware limited liability company (“ Mia Manager ”), Vivint Solar Aaliyah Manager, LLC, a Delaware limited liability company (“ Aaliyah Manager ”), Vivint Solar Rebecca Manager, LLC, a Delaware limited liability company (“ Rebecca Manager ”), Vivint Solar Hannah Manager, LLC, a Delaware limited liability company (“ Hannah Manager ”), Vivint Solar Nicole Manager, LLC, a Delaware limited liability company (“ Nicole Manager ”), Vivint Solar Elyse Manager, LLC, a Delaware limited liability company (“ Elyse Manager ”), and Vivint Solar Owner I, LLC (“ Owner I ,” and together with Liberty Manager, Margaux Manager, Fund III Manager, Mia Manager, Aaliyah Manager, Rebecca Manager, Hannah Manager, Nicole Manager, Elyse Manager and each other Person that subsequently becomes a party hereto in accordance with Section 8.14 of this Agreement, the “ Subsidiary Parties ”), Bank of America, N.A., as the administrative agent under the Loan Agreement (as defined below) for the Lenders (as defined below) (together with its successors and permitted assigns in such capacity, the “ Administrative Agent ”), Bank of America, N.A., in its capacity as collateral agent for the Beneficiaries (as defined below) (together with its successors and permitted assigns in such capacity, the
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

“ Collateral Agent ”), Bank of America, N.A., in its capacity as depositary bank and as securities intermediary (together with its successors and permitted assigns in such capacity, the “ Depositary ”) and solely for purposes of Section 2.1 and Article VII , the Lenders (as defined below). Unless otherwise defined herein or unless the context otherwise requires, terms used in this Interest Reserve Release Certificate have the meanings provided in the Agreement.
The undersigned, in [his/her] capacity as an officer of Borrower (and not in an individual capacity) is a Responsible Officer of Borrower and is delivering this Interest Reserve Release Certificate pursuant to Section 3.4(c) of the Agreement.
1. Transfers from Interest Reserve Account.
The Borrower hereby directs the Depositary to withdraw and transfer, from the account entitled Interest Reserve Account, No. *** (the “ Interest Reserve Account ”), on [            ] , 20 [          ] (the “ Transfer Date ”), [        ] Dollars ($[        ]) to the Revenue Account, representing an amount equal to the difference between (x) the funds on deposit in the Interest Reserve Account as of the Transfer Date (after giving effect to the transfers requested hereby) and (y) the Interest Reserve Required Amount.
2. Certifications.
In support of such direction(s), the undersigned, on behalf of the Borrower, hereby represents and certifies, as of the date hereof and as of the Transfer Date, as follows:
(a) All conditions set forth in the Loan Agreement and the Agreement for the withdrawals requested hereby have been satisfied.
(b) No Notice of Suspension is in effect, and no Event of Default has occurred and is continuing or would be caused by the withdrawal and transfer otherwise contemplated by this Certificate.
(c) All of the statements contained in this certificate are true and correct.
[Remainder of page blank. The next page is the signature page.]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF, this Interest Reserve Release Certificate is duly executed and delivered by a duly authorized representative of Borrower as of the date first above written.

VIVINT SOLAR FINANCING I, LLC	
		
By:	 	 	
Name:	 		
Title:	 		

Acknowledged by:	
	
BANK OF AMERICA, N.A.,
as Collateral Agent	
		
By:	 	 	
Name:	 		
Title:	 		
	
BANK OF AMERICA, N.A.,	
as Administrative Agent	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Exhibit 10.46
*** Text Omitted and Filed Separately with the Securities Exchange Commission
Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4) and 230.406

PLEDGE AND SECURITY AGREEMENT
dated as of
September 12, 2014
among
THE GRANTORS IDENTIFIED HEREIN
and
BANK OF AMERICA, N.A.,
as Collateral Agent

 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

TABLE OF CONTENTS

 	 	 	  	Page	 	
	
ARTICLE I	  	
		
DEFINITIONS	  	 	1	 	
			
Section 1.01	 	Loan Agreement	  	 	1	 	
Section 1.02	 	Other Defined Terms	  	 	1	 	
	
ARTICLE II	  	
		
PLEDGE OF SECURITIES	  	 	4	 	
			
Section 2.01	 	Pledge	  	 	4	 	
Section 2.02	 	Delivery of the Pledged Securities	  	 	6	 	
Section 2.03	 	Representations, Warranties and Covenants	  	 	7	 	
Section 2.04	 	Certification of Limited Liability Company and Limited Partnership Interests	  	 	8	 	
Section 2.05	 	Registration in Nominee Name; Denominations	  	 	9	 	
Section 2.06	 	Voting Rights; Dividends and Interest	  	 	9	 	
	
ARTICLE III	  	
		
SECURITY INTERESTS IN PERSONAL PROPERTY	  	 	11	 	
			
Section 3.01	 	Security Interest	  	 	11	 	
Section 3.02	 	Representations and Warranties	  	 	14	 	
Section 3.03	 	Covenants	  	 	15	 	
	
ARTICLE IV	  	
		
REMEDIES	  	 	18	 	
			
Section 4.01	 	Remedies Upon Default	  	 	18	 	
Section 4.02	 	Application of Proceeds	  	 	21	 	
Section 4.03	 	Grant of License to Use Intellectual Property	  	 	21	 	
	
ARTICLE V	  	
		
SUBORDINATION	  	 	22	 	
			
Section 5.01	 	Subordination	  	 	22	 	
 
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ARTICLE VI	  	
		
MISCELLANEOUS	  	 	23	 	
			
Section 6.01	 	Notices	  	 	23	 	
Section 6.02	 	Waivers; Amendment	  	 	23	 	
Section 6.03	 	Collateral Agent’s Fees and Expenses; Indemnification	  	 	23	 	
Section 6.04	 	Successors and Assigns	  	 	24	 	
Section 6.05	 	Survival of Agreement	  	 	24	 	
Section 6.06	 	Counterparts; Effectiveness; Several Agreement	  	 	24	 	
Section 6.07	 	Severability	  	 	24	 	
Section 6.08	 	Right of Set-Off	  	 	24	 	
Section 6.09	 	Governing Law; Jurisdiction; Venue; Waiver of Jury Trial; Consent to Service of Process	  	 	25	 	
Section 6.10	 	Headings	  	 	26	 	
Section 6.11	 	Security Interest Absolute	  	 	26	 	
Section 6.12	 	Termination or Release	  	 	26	 	
Section 6.13	 	Additional Grantors	  	 	27	 	
Section 6.14	 	Collateral Agent Appointed Attorney-in-Fact	  	 	27	 	
Section 6.15	 	General Authority of the Collateral Agent	  	 	28	 	
Section 6.16	 	Reasonable Care	  	 	29	 	
Section 6.17	 	Delegation; Limitation	  	 	29	 	
Section 6.18	 	Reinstatement	  	 	29	 	
Section 6.19	 	Miscellaneous	  	 	29	 	
		
Schedules	  				
			
Schedule I	 	Pledged Equity	  				
Schedule II	 	Commercial Tort Claims	  				
Schedule III	 	LLC Agreements	  				
		
Exhibits	  				
			
Exhibit I	 	Form of Security Agreement Supplement	  				
Exhibit II	 	Form of Perfection Certificate	  				
Exhibit III	 	Form of Patent Security Agreement	  				
Exhibit IV	 	Form of Trademark Security Agreement	  				
Exhibit V	 	Form of Copyright Security Agreement	  				
Exhibit VI	 	UCC Financing Statements	  				
 
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This PLEDGE AND SECURITY AGREEMENT dated as of September 12, 2014, is made by and among the Grantors (as defined below) and Bank of America, N.A., as Collateral Agent for the Secured Parties (in such capacity, the “ Collateral Agent ”).
Reference is made to the Loan Agreement dated as of September 12, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), among Vivint Solar Financing I, LLC, a Delaware limited liability company (the “ Borrower ”), Vivint Solar Holdings, Inc., a Delaware corporation, each of the other Subsidiary Guarantors from time to time party thereto, Bank of America, N.A., as Administrative Agent and Collateral Agent, and each lender from time to time party thereto (collectively, the “ Lenders ” and individually, a “ Lender ”). The Lenders have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Loan Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. The parties hereto are affiliates of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Loan Agreement, and are willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Loan Agreement .
(a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings specified in the Loan Agreement. All terms defined in the UCC (as defined herein) and not defined in this Agreement have the meanings specified therein; the term “instrument” shall have the meaning specified in Article 9 of the UCC.
(b) The rules of construction specified in Section 1.2 of the Loan Agreement also apply to this Agreement.
Section 1.02 Other Defined Terms . As used in this Agreement, the following terms have the meanings specified below:
“ Account Debtor ” means any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.
“ Accounts ” has the meaning specified in Article 9 of the UCC.
“ Agreement ” means this Pledge and Security Agreement.
“ Article 9 Collateral ” has the meaning assigned to such term in Section 3.01(a).
“ Assigned Agreement ” has the meaning set forth in Section 3.01(a)(xvii).
 
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“ Borrower ” has the meaning assigned to such term in the recitals of this Agreement.
“ Collateral ” means the Article 9 Collateral and the Pledged Collateral.
“ Collateral Agent ” has the meaning assigned to such term in the recitals of the Agreement.
“ Collateral Documents ” has the meaning assigned to such term in the Loan Agreement.
“ Commercial Tort Claims ” has the meaning specified in Article 9 of the UCC.
“ Copyright License ” means any written agreement, now or hereafter in effect, granting any right to any third party under any Copyright now owned or hereafter acquired by any Grantor or that such Grantor otherwise has the right to license, or granting any right to any Grantor under any Copyright now owned or hereafter acquired by any third party, and all rights of such Grantor under any such agreement.
“ Copyrights ” means all of the following now owned or hereafter acquired by any Person: (a) all copyright rights in any work subject to the copyright laws of the United States, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States, including registrations and pending applications for registration in the USCO.
“ Loan Agreement ” has the meaning assigned to such term in the recitals of this Agreement.
“ Discharge Date ” has the meaning assigned to such term in Section 6.12.
“ Equity Interests ” in or of a Person, means, with respect to any Person, any membership interests, shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of membership interests, shares of capital stock of (or other ownership or profit interests in) such Person, any securities convertible into or exchangeable for membership interests, shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such membership interests, shares (or such other interests), and any other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such membership interests, shares, warrants, options, rights or other interests are outstanding on any date of determination, in each such case including all voting rights and economic rights related thereto.
“ General Intangibles ” has the meaning specified in Article 9 of the UCC.
“ Grantor ” means the Borrower, each Subsidiary Guarantor, and each other Person that subsequently becomes a party hereto in accordance with Section 6.13.
 
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“ Intellectual Property ” means all intellectual property now owned or hereafter acquired by any Person, including inventions, designs, Patents, Copyrights, Trademarks, trade secrets, the intellectual property rights in software and databases and related documentation, and all additions and improvements to the foregoing.
“ Intellectual Property Security Agreements ” means the short-form Patent Security Agreement, short-form Trademark Security Agreement, and short-form Copyright Security Agreement, each substantially in the form attached hereto as Exhibits III, IV and V, respectively.
“ LLC Agreements ” means each of the Limited Liability Company Agreements of each Subsidiary Guarantor, as listed on Schedule III hereto.
“ License ” means any Patent License, Trademark License, Copyright License or other Intellectual Property license or sublicense agreement to which any Grantor is a party, together with any and all (i) renewals, extensions, supplements and continuations thereof, (ii) income, fees, royalties, damages, claims and payments now and hereafter due and/or payable thereunder or with respect thereto including damages and payments for past, present or future infringements or violations thereof, and (iii) rights to sue for past, present and future violations thereof.
“ Patent License ” means any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention on which a Patent, now owned or hereafter acquired by any Grantor or that any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a Patent, now owned or hereafter acquired by any third party, is in existence, and all rights of any Grantor under any such agreement.
“ Patents ” means all of the following now owned or hereafter acquired by any Person: (a) all letters Patent of the United States in or to which any Grantor now or hereafter has any right, title or interest therein, all registrations thereof, and all applications for letters Patent of the United States, including registrations and pending applications in the USPTO, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.
“ Perfection Certificate ” means a certificate substantially in the form of Exhibit II, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by a Responsible Officer of the Borrower and each Guarantor.
“ Pledged Collateral ” has the meaning assigned to such term in Section 2.01(b).
“ Pledged Equity ” has the meaning assigned to such term in Section 2.01(a).
“ Released Subsidiary Guarantor ” has the meaning assigned to such term in Section 6.12.
 
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“ Released Subsidiary Guarantor Collateral ” has the meaning assigned to such term in Section 6.12.
“ Secured Obligations ” means the “Obligations” (as defined in the Loan Agreement).
“ Security Agreement Supplement ” means an instrument substantially in the form of Exhibit I hereto.
“ Security Interest ” has the meaning assigned to such term in Section 3.01(a).
“ Trademark License ” means any written agreement, now or hereafter in effect, granting to any third party any right to use any trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any trademark now or hereafter owned by any third party, and all rights of any Grantor under any such agreement.
“ Trademarks ” means all of the following now owned or hereafter acquired by any Person: (a) all trademarks, service marks, trade names, corporate names, trade dress, logos, designs, fictitious business names other source or business identifiers, now owned or hereafter acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the USPTO or any similar offices in any State of the United States or any jurisdiction thereof, and all extensions or renewals thereof, and (b) all goodwill associated therewith.
“ UCC ” means the Uniform Commercial Code as from time to time in effect in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “ UCC ” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.
“ USCO ” means the United States Copyright Office.
“ USPTO ” means the United States Patent and Trademark Office.
ARTICLE II
PLEDGE OF EQUITY
Section 2.01 Pledge . To secure the timely payment and performance of the Secured Obligations when due, whether at stated maturity, by acceleration or otherwise, each Grantor hereby collaterally assigns and pledges to Collateral Agent, for the benefit of the Secured Parties, and grants to Collateral Agent, for the benefit of the Secured Parties, a continuing first priority lien on and security interest in all the estate, right, title and interest of such Grantor in, to and under any and all of the following properties, assets and rights of Grantor, wherever located, whether now owned or existing or hereafter acquired or arising:
 
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(a) any and all of the Grantors’ right(s), title(s) and interest(s), whether now owned or hereafter existing or acquired, in each Subsidiary Guarantor and the Subject Funds, as applicable, and all of the Equity Interests of each Subsidiary Guarantor and the Subject Funds related thereto, whether or not evidenced or represented by any certificated security or other instrument (the “ Pledged Equity ”), including, without, limitation:
(i) with respect to Borrower, all of the Equity Interests in each Subsidiary Guarantor, and with respect to each Subsidiary Guarantor, all of the Equity Interests in any Subject Fund owned by such Subsidiary Guarantor;
(ii) with respect to Borrower, all of Borrower’s rights under the LLC Agreements, and with respect to each Subsidiary Guarantor, all of such Subsidiary Guarantor’s rights under the Organizational Documents of any Subject Fund owned by such Subsidiary Guarantor;
(iii) all present and future rights of the Grantors to receive any payment of money or other distribution or payment arising out of or in connection with the Pledged Equity (including, with respect to Borrower, all of the Equity Interests in each Subsidiary Guarantor and its rights under each of the LLC Agreements, and with respect to each Subsidiary Guarantor, all of the Equity Interests in any Subject Fund owned by such Subsidiary Guarantor and its rights under the Organizational Documents of such Subject Fund);
(iv) all of the Grantors’ capital or ownership interest or other Equity Interest, including capital accounts, in the Subject Funds;
(v) all of the Grantors’ voting rights in or rights to control or direct the affairs of the Subject Funds;
(vi) all other rights, title and interest in or to the Subject Funds, as applicable, derived from the Pledged Equity;
(vii) any other claim which any Grantor now has or may in the future acquire in its capacity as a member or owner of each Subsidiary Guarantor or Subject Fund, as applicable, against the applicable Subsidiary Guarantor or Subject Fund and its property; and
(viii) all securities, certificates and other instruments representing or evidencing any of the foregoing rights and interests or the ownership thereof; and
(b) to the extent not otherwise included in clause (a), all Proceeds, products and accessions of any and all of the foregoing, including, without limitation, whatever is received upon any collection, exchange, sale or other disposition of any of the Collateral, and
 
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any property into which any of the Collateral is converted, whether cash or noncash proceeds, and any and all other amounts paid or payable under or in connection with any of the Collateral (the items referred to in clauses (a) through (b) above being collectively referred to as the “ Pledged Collateral ”);
TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, forever, subject, however, to the terms, covenants and conditions hereinafter set forth.
Section 2.02 Delivery of the Pledged Securities; Further Assurances .
(a) Each Grantor agrees that concurrently with the execution and delivery of this Agreement, each Grantor shall deliver to Collateral Agent in New York each original certificate evidencing the Pledged Equity (which certificates shall constitute “security certificates” (as defined in the UCC)) and, in the case of any limited liability company interest that is included in the Pledged Equity, together with an undated limited liability company interest power, covering each such certificate, and such other instruments and documents as the Collateral Agent may reasonably request.
(b) Each delivery of Pledged Equity shall be accompanied by a schedule describing the securities and listing the relevant Organizational Documents, which schedule shall be deemed to supplement Schedules I and III and made a part hereof; provided, that failure to supplement Schedule I or III shall not affect the validity of such pledge of such Pledged Equity. Each schedule so delivered shall supplement any prior schedules so delivered.
(c) Each Grantor agrees that from time to time, at the joint and several expense of the Grantors, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be reasonably necessary or desirable, or that Collateral Agent may reasonably request, in order to perfect and protect the assignment and security interest granted or intended to be granted hereby or to enable Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to the Pledged Collateral. Without limiting the generality of the foregoing, each Grantor shall authorize the Collateral Agent to execute and file such financing or continuation statements, or amendments thereto, and such other instruments, endorsements or notices, as may be reasonably necessary or desirable or as Collateral Agent may reasonably request, in order to perfect and preserve the assignments and security interests granted or purported to be granted hereby.
(d) Notwithstanding anything to the contrary contained herein, Borrower shall remain liable under the LLC Agreements, and each Subsidiary Guarantor shall remain liable under the Organizational Documents for each Subject Fund, to perform all of its obligations thereunder, and Collateral Agent shall have no obligation or liability under the LLC Agreements or such other Organizational Documents, as applicable, by reason of or arising out of this Agreement, nor shall Collateral Agent be required or obligated in any manner to perform or fulfill any obligations of any Grantor thereunder or to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.
 
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Section 2.03 Representations, Warranties and Covenants . Each Grantor represents, warrants and covenants to and with the Collateral Agent, for the benefit of the Secured Parties, that:
(a) As of the date hereof, Schedule I includes all Equity Interests required to be pledged by each Grantor, and each Grantor has delivered to the Collateral Agent all certificates or instruments representing or evidencing such Equity Interests;
(b) the Pledged Equity has been duly and validly authorized and issued by the issuers thereof and are fully paid and nonassessable;
(c) except for the security interests granted hereunder, such Grantor (i) is the direct owner, beneficially and of record, of the Pledged Equity indicated on Schedule I, (ii) holds the same free and clear of all Liens, other than Liens created by the Collateral Documents or otherwise permitted under Section 6.2 of the Loan Agreement, and (iii) if requested by the Collateral Agent, will defend its title or interest thereto or therein against any and all Liens (other than the Liens created by the Collateral Documents), however arising, of all Persons whomsoever;
(d) except for restrictions and limitations imposed or permitted by the Financing Documents or securities laws generally, the Pledged Collateral is and will continue to be freely transferable and assignable, and none of the Pledged Collateral is or will be subject to any option, right of first refusal, shareholders agreement, charter or by-law provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect in any manner material and adverse to the Secured Parties the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder;
(e) the execution and performance by the Grantors of this Agreement are within each Grantor’s corporate, limited liability or limited partnership powers and have been duly authorized by all necessary corporate, limited liability or limited partnership action or other organizational action;
(f) no consent or approval of any Governmental Authority, any securities exchange or any other Person was or is necessary to the validity of the pledge effected hereby, except for (i) filings and registrations necessary to perfect the Liens on the Collateral granted by the Loan Parties in favor of the Secured Parties and (ii) the approvals, consents, exemptions, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect (except to the extent not required to be obtained, taken, given, or made or to be in full force and effect pursuant to the Collateral and Guarantee Requirement);
(g) by virtue of the execution and delivery by each Grantor of this Agreement, and delivery of all certificates or instruments representing or evidencing the Pledged Equity
 
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(including duly executed undated blank stock powers) to and continued possession by the Collateral Agent in the State of New York, the Collateral Agent for the benefit of the Secured Parties has a legal, valid and perfected lien upon and security interest in such Pledged Equity as security for the payment and performance of the Secured Obligations to the extent such perfection is governed by the UCC, and no further filings or other actions are necessary to perfect such security interest;
(h) the pledge effected hereby is effective to vest in the Collateral Agent, for the benefit of the Secured Parties, the rights of the Collateral Agent in the Pledged Collateral to the extent intended hereby;
(i) all interests in any limited liability company or limited partnership controlled by such Grantor that constitute Pledged Equity (i) are “securities” within the meaning of Sections 8-102(a)(15) and 8-103 of the Code, (ii) are “financial assets” (within the meaning of Section 8-102(a)(9) of the Code), (iii) are not credited to a “securities account” (within the meaning of Section 8-501(a) of the Code), (iv) are not dealt in or traded on a securities exchange or in a securities market, and (v) are not “investment company securities” (within the meaning of Section 8-103 of the Code); and
(j) it has not and shall not issue any options, warrants, calls or commitments of any character whatsoever obligating it to issue any Equity Interests.
Subject to the terms of this Agreement and to the extent permitted by Applicable Law, each Grantor hereby agrees that upon the occurrence and during the continuance of an Event of Default, it will comply with instructions of the Collateral Agent with respect to any Equity Interests in such Grantor that constitute Pledged Equity hereunder that are not certificated, if any, without further consent by the applicable owner or holder of such Equity Interests.
Section 2.04 Certification of Limited Liability Company and Limited Partnership Interests . Each Grantor shall cause all interests in any limited liability company or limited partnership controlled by such Grantor that constitute Pledged Equity to at all times (i) continue to be “securities” within the meaning of Sections 8-102(a)(15) and 8-103 of the Code, (ii) continue to be “financial assets” (within the meaning of Section 8-102(a)(9) of the Code) and (iii) not credit such interests to a “securities account” (within the meaning of Section 8-501(a) of the Code), (iv) not be dealt in or traded on a securities exchange or in a securities market, and (v) not be “investment company securities” (within the meaning of Section 8-103 of the Code). The related limited liability company agreement or limited partnership agreement and the certificates evidencing the applicable interests each shall at all times state that such interests are “securities” as such term is defined in Article 8 of the Uniform Commercial Code, as from time to time amended and in effect, in the jurisdiction in which the issuer of such interests is organized. Subject in all respects to the foregoing provisions of this Section 2.04 and without limitation thereof, (x) to the extent an interest in any limited liability company or limited partnership controlled by any Grantor and pledged under Section 2.01 is certificated or becomes certificated, (1) each such certificate shall be delivered to the Collateral Agent, pursuant to Section 2.02(a) and (2) such Grantor shall fulfill all other requirements under
 
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Section 2.02 applicable in respect thereof and (y) each Grantor hereby agrees that if any of the Pledged Collateral are at any time not evidenced by certificates of ownership, then each applicable Grantor shall, to the extent permitted by applicable law, cause such pledge to be recorded on the equity holder register or the books of the issuer, execute any customary pledge forms or other documents necessary or appropriate to complete the pledge and give the Collateral Agent the right to transfer such Pledged Collateral under the terms hereof.
Section 2.05 Registration in Nominee Name; Denominations . If an Event of Default shall have occurred and be continuing, (a) the Collateral Agent, on behalf of the Secured Parties, shall have the right to hold the Pledged Equity in its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Collateral Agent and each Grantor will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Equity registered in the name of such Grantor and (b) the Collateral Agent shall have the right to exchange the certificates representing Pledged Equity for certificates of smaller or larger denominations for any purpose consistent with this Agreement, to the extent permitted by the documentation governing such Pledged Equity.
Section 2.06 Voting Rights; Dividends and Interest .
(a) Unless and until an Event of Default shall have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Equity or any part thereof, and each Grantor agrees that it shall exercise such rights for purposes consistent with the terms of this Agreement, the Loan Agreement and the other Financing Documents;
(ii) The Collateral Agent shall promptly (after reasonable advance notice) execute and deliver to each Grantor, or cause to be executed and delivered to such Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above; and
(iii) Each Grantor shall be entitled to receive and retain any and all dividends and other distributions paid on or distributed in respect of the Pledged Equity to the extent and only to the extent that such dividends and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Loan Agreement, the other Financing Documents and applicable Laws; provided that any noncash dividends or other distributions that would constitute Pledged Equity, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Equity or received in exchange for Pledged Equity or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Grantor, shall
 
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not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Collateral Agent and the Secured Parties and shall be promptly (and in any event within 10 Business Days) delivered to the Collateral Agent in the same form as so received (with any necessary endorsement reasonably requested by the Collateral Agent).
(b) Upon the occurrence and during the continuance of an Event of Default, all rights of any Grantor to dividends or other distributions that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section 2.06 shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends or other distributions. All dividends or other distributions received by any Grantor contrary to the provisions of this Section 2.06 shall be held in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of such Grantor and shall be promptly (and in any event within 10 days) delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsement reasonably requested by the Collateral Agent). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 4.02. After all Events of Default have been cured or waived, the Collateral Agent shall promptly repay to each Grantor (without interest) all dividends or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 2.06 to the extent such proceeds remain in such account.
(c) Upon the occurrence and during the continuance of an Event of Default, all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 2.06, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 2.06, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that, unless otherwise directed by the Required Lenders, the Collateral Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights. After all Events of Default have been cured or waived, each Grantor shall have the exclusive right to exercise the voting and/or consensual rights and powers that such Grantor would otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i) above, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 2.06 shall be reinstated.
(d) Any notice given by the Collateral Agent to the Borrower under Section 2.05 or Section 2.06 (i) shall be given in writing, (ii) may be given with respect to one or more Grantors at the same or different times and (iii) may suspend the rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) of this Section 2.06 in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.
 
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(e) Irrevocable Proxy . Each Grantor hereby irrevocably grants and appoints Collateral Agent, from the date of this Agreement until the termination of this Agreement in accordance with its terms, as such Grantor’s true and lawful proxy, for and in such Grantor’s name, place and stead to vote, during the continuance of an Event of Default, the Pledged Equity owned by such Grantor, whether directly or indirectly, beneficially or of record, now owned or hereafter acquired. The proxy granted and appointed in this Section 2.06(e) shall include the right, during the continuance of an Event of Default, to sign such Grantor’s name (as owner of the related Pledged Equity) to any consent, certificate or other document relating to the Pledged Equity owned by such Grantor that applicable law may permit or require, and to cause such Pledged Equity to be voted in accordance with the preceding sentence. Each Grantor hereby represents and warrants that there are no other proxies and powers of attorney with respect to the Pledged Equity that such Grantor may have granted or appointed. Until the Obligations have been paid and performed in full, each Grantor shall not give a subsequent proxy or power of attorney or enter into any other voting agreement with respect to the Pledged Equity owned by such Grantor and any attempt to do so will be void and of no effect. The proxies and powers granted by each Grantor pursuant to this Agreement are coupled with an interest and are given to secure the performance of such Grantor’s obligations.
ARTICLE III
SECURITY INTERESTS IN PERSONAL PROPERTY
Section 3.01 Security Interest .
(a) As security for the payment or performance, as the case may be, in full of the Secured Obligations, including the Guaranteed Obligations, each Grantor hereby collaterally assigns and pledges to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest (the “ Security Interest ”) in, all right, title or interest in or to any and all of the following assets and properties now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “ Article 9 Collateral ”):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Documents;
(iv) all Equipment;
(v) all General Intangibles;
(vi) all Goods;
(vii) all Instruments;
 
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(viii) all Inventory;
(ix) all Investment Property;
(x) all books and records pertaining to the Article 9 Collateral;
(xi) all Fixtures;
(xii) all Letters of Credit and Letter-of-Credit Rights;
(xiii) all Intellectual Property;
(xiv) all Commercial Tort Claims listed on Schedule II and on any supplement thereto received by the Collateral Agent pursuant to Section 3.03(g);
(xv) all cash and Cash Equivalents;
(xvi) all Deposit Accounts, Securities Accounts and Commodities Accounts;
(xvii) all agreements, including, without limitation, each and all of the Tax Equity Transaction Documents and all agreements or documents now existing or hereafter entered into by such Grantor relating to the acquisition, development, construction, supply, operation, maintenance or use and occupancy of any Project, including without limitation, all other instruments, agreements and documents executed and delivered with respect to such agreements, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof (the agreements described in this clause (xvii), collectively, the “ Assigned Agreements ”), including, without limitation, all rights of such Grantor (x) to receive moneys due and to become due under or pursuant to the Assigned Agreements, to compel performance and otherwise to exercise all remedies thereunder, including, without limitation, all rights to make determinations, to exercise any election or option contained in such agreements (including, but not limited to, termination thereof), to give or receive any notice or consent, to demand and receive any property which is the subject of any of the Assigned Agreements, to file any claims and generally to take any action which (in the opinion of the Collateral Agent) may be necessary or advisable in connection with any of the foregoing; (y) to receive the proceeds of any claim for damages arising out of or for breach of any Assigned Agreement and proceeds of any insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements; and (z) to all of such Grantor’s right, title and interest in, to and under the Assigned Agreements; and
(xviii) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all supporting obligations, collateral security and guarantees given by any Person with respect to any of the foregoing;
provided , however, that notwithstanding any of the other provisions set forth in this Section 3.01 , in no event shall the security interest granted under this Section 3.01 attach to any lease, license, contract, property rights or agreement to which any Grantor is a party or any
 
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of its rights or interests thereunder if and for so long as the grant of such security interest shall constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of any Grantor therein or (ii) in a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract property rights or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law or principles of equity), provided however that such security interest shall attach immediately at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and to the extent severable, shall attach immediately to any portion of such lease, license, contract, property rights or agreement that does not result in any of the consequences specified in (i) or (ii) above.
(b) Each Grantor hereby irrevocably authorizes the Collateral Agent for the benefit of the Secured Parties at any time and from time to time to file in any relevant jurisdiction any initial financing statements with respect to the Article 9 Collateral or any part thereof and amendments thereto that (i) indicate the Article 9 Collateral as “all assets” or “all personal property” of such Grantor or words of similar effect as being of an equal or lesser scope or with greater detail and (ii) contain the information required by Article 9 of the UCC or the analogous legislation of each applicable jurisdiction for the filing of any financing statement or amendment, including whether such Grantor is an organization, the type of organization and, if required, any organizational identification number issued to such Grantor. Each Grantor agrees to provide such information to the Collateral Agent promptly upon any reasonable request.
(c) The Security Interest is granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Article 9 Collateral.
(d) The Collateral Agent is authorized to file with the USPTO or the USCO (or any successor office) such documents executed by any Grantor as may be necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest in United States registered and applied for Intellectual Property of each Grantor in which a security interest has been granted by each Grantor and naming any Grantor or the Grantor as debtors and the Collateral Agent as secured party.
(e) Each Grantor shall (i) promptly from time to time enter into such control agreements, each in form and substance reasonably acceptable to the Collateral Agent, as may be required to perfect the security interest created hereby in any and all Deposit Accounts, Securities Accounts, Commodities Accounts, Investment Property, Electronic Chattel Paper and Letter-of-Credit Rights, and, in the case of any such Investment Property, Electronic Chattel Paper and Letter-of-Credit Rights, will promptly following receipt furnish to the Collateral Agent true copies thereof and (ii) take such other action as the Collateral Agent may reasonably deem necessary or appropriate to duly record or otherwise perfect the Security Interest in the Collateral referenced in clause (i).
 
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Section 3.02 Representations and Warranties . Each Grantor represents and warrants to the Collateral Agent and the Secured Parties that:
(a) Subject to Liens permitted by Section 6.2 of the Loan Agreement, each Grantor has good and valid rights in and title to the Article 9 Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Collateral Agent the Security Interest in such Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained.
(b) The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein is correct and complete in all material respects (except the information therein with respect to the exact legal name of each Grantor shall be correct and complete in all respects) as of the Closing Date. The UCC financing statements prepared by the Collateral Agent and attached hereto as Exhibit VI based upon the information provided to the Collateral Agent in the Perfection Certificate for filing in the applicable filing office (or specified by notice from the Borrower to the Collateral Agent after the Closing Date in the case of filings, recordings or registrations (other than filings required to be made in the USPTO and the USCO in order to perfect the Security Interest in Article 9 Collateral consisting of United States registered and applied for Patents, Trademarks and Copyrights), are all the filings, recordings and registrations that are necessary to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the benefit of the Secured Parties) in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code, and no further or subsequent filing, re-filing, recording, rerecording, registration or re-registration is necessary in any such jurisdiction, except as provided under applicable Law with respect to the filing of continuation statements.
(c) Each Grantor represents and warrants that short-form Intellectual Property Security Agreements substantially in the form attached hereto as Exhibits II, IV and V and containing a description of all Article 9 Collateral consisting of material United States registered and applied for Patents, United States registered Trademarks (and Trademarks for which United States registration applications are pending) and United States registered Copyrights, respectively, have been delivered to the Collateral Agent for recording by the USPTO and the USCO pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the regulations thereunder, as applicable, (for the benefit of the Secured Parties) in respect of all Article 9 Collateral consisting of registrations and applications for United States Patents, Trademarks and Copyrights. To the extent a security interest may be perfected by filing, recording or registration in USPTO or USCO under the Federal intellectual property laws, then no further or subsequent filing, re-filing, recording, rerecording, registration or re-registration is necessary (other than (i) such filings and actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of United States registered and applied for Patents, Trademarks and Copyrights acquired or developed by any Grantor after the date hereof and (ii) the UCC financing and continuation statements contemplated in Section 3.02(b)).
(d) The Security Interest constitutes (i) a legal and valid security interest in all the Article 9 Collateral securing the payment and performance of the Secured Obligations and (ii) subject to the filings described in Section 3.02(b), a perfected security interest in all Article 9
 
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Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code in the relevant jurisdiction. The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than (i) any statutory or similar Lien that has priority as a matter of Law and (ii) any Liens expressly permitted pursuant to Section 6.2 of the Loan Agreement.
(e) The Article 9 Collateral is owned by the Grantors free and clear of any Lien, except for Liens expressly permitted pursuant to Section 6.2 of the Loan Agreement. None of the Grantors has filed or consented to the filing of (i) any financing statement or analogous document under the Uniform Commercial Code or any other applicable Laws covering any Article 9 Collateral, (ii) any assignment in which any Grantor assigns any Article 9 Collateral owned by any Grantor or any security agreement or similar instrument covering any Article 9 Collateral owned by any Grantor with the USPTO or the USCO, or (iii) any assignment in which any Grantor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Liens expressly permitted pursuant to Section 6.2 of the Loan Agreement and assignments permitted by the Loan Agreement.
(f) As of the date hereof, no Grantor has any Commercial Tort Claim in excess of $1,000,000, other than the Commercial Tort Claims listed on Schedule II.
Section 3.03 Covenants .
(a) Without at least five (5) Business Days’ prior written notice to the Collateral Agent, no Grantor shall change (i) the legal name of any Grantor, (ii) the identity or type of organization or corporate structure of any Grantor or (iii) the jurisdiction of organization of any Grantor.
(b) Each Grantor shall, at its own expense, upon the reasonable request of the Collateral Agent, take any and all actions necessary to defend title to the Article 9 Collateral against all Persons and to defend the Security Interest of the Collateral Agent in the Article 9 Collateral and the priority thereof against any Lien not expressly permitted pursuant to Section 6.2 of the Loan Agreement; provided that, nothing in this Agreement shall prevent any Grantor (other than a Project Guarantor) from discontinuing the operation or maintenance of any of its assets or properties if such discontinuance is (x) determined by such Grantor to be desirable in the conduct of its business and (y) permitted by the Loan Agreement.
(c) Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements or other documents in connection herewith or therewith. If any amount payable under or in
 
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connection with any of the Article 9 Collateral that is in excess of $50,000 shall be or become evidenced by any promissory note, other instrument or debt security, such note, instrument or debt security shall be promptly (and in any event within 30 days of its acquisition) pledged and delivered to the Collateral Agent, for the benefit of the Secured Parties, duly endorsed in a manner reasonably satisfactory to the Collateral Agent.
(d) At its option, the Collateral Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and not permitted pursuant to Section 6.2 of the Loan Agreement, and may pay for the maintenance and preservation of the Article 9 Collateral to the extent any Grantor fails to do so as required by the Loan Agreement or any other Financing Document and within a reasonable period of time after the Collateral Agent has requested that it do so, and each Grantor jointly and severally agrees to reimburse the Collateral Agent within 10 Business Days after demand for any payment made or any reasonable expense incurred by the Collateral Agent pursuant to the foregoing authorization; provided , however , the Grantors shall not be obligated to reimburse the Collateral Agent with respect to any Intellectual Property that any Grantor has failed to maintain or pursue, or otherwise allowed to lapse, terminate or be put into the public domain in accordance with Section 3.03(f)(iv). Nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Financing Documents.
(e) If at any time any Grantor shall take a security interest in any property of an Account Debtor or any other Person, the value of which is in excess of $50,000 to secure payment and performance of an Account, such Grantor shall promptly assign such security interest to the Collateral Agent for the benefit of the Secured Parties. Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other Person granting the security interest.
(f) Intellectual Property Covenants .
(i) Other than to the extent not prohibited herein or in the Loan Agreement or with respect to registrations and applications no longer used or useful, except to the extent failure to act would not, as deemed by the applicable Grantor in its reasonable business judgment, reasonably be expected to have a Material Adverse Effect, with respect to registration or pending application of each item of its Intellectual Property for which such Grantor has standing to do so, each Grantor agrees to take, at its expense, all reasonable steps, including, without limitation, in the USPTO, the USCO and any other governmental authority located in the United States, to pursue the registration and maintenance of each Patent, Trademark, or Copyright registration or application, now or hereafter included in the Intellectual Property of such Grantor.
 
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(ii) Other than to the extent not prohibited herein or in the Loan Agreement, or with respect to registrations and applications no longer used or useful, or except as would not, as deemed by the applicable Grantor in its reasonable business judgment, reasonably be expected to have a Material Adverse Effect, no Grantor shall do or permit any act or knowingly omit to do any act whereby any of its Intellectual Property may prematurely lapse, be terminated, or become invalid or unenforceable or placed in the public domain (or in the case of a trade secret, become publicly known).
(iii) Other than as excluded or as not prohibited herein or in the Loan Agreement, or with respect to Patents, Copyrights or Trademarks which are no longer used or useful in the applicable Grantor’s business operations or except where failure to do so would not, as deemed by the applicable Grantor in its reasonable business judgment, reasonably be expected to have a Material Adverse Effect, each Grantor shall take all reasonable steps to preserve and enforce each item of its Intellectual Property, including, without limitation, maintaining the quality of any and all products or services used or provided in connection with any of the Trademarks, consistent with the quality of the products and services as of the date hereof, and taking reasonable steps necessary to ensure that all licensed users of any of the material Trademarks abide by the applicable license’s terms with respect to standards of quality.
(iv) Notwithstanding any other provision of this Agreement, nothing in this Agreement prevents or shall be deemed to prevent any Grantor from disposing of, discontinuing the use or maintenance of, failing to pursue, or otherwise allowing to lapse, expire, terminate or be put into the public domain, any of its Intellectual Property to the extent any such action or inaction is permitted by the Loan Agreement if such Grantor determines in its reasonable business judgment that such discontinuance is desirable in the conduct of its business.
(v) Within 30 days after each March 31 and September 30, the Borrower shall provide a list of any additional registrations of Intellectual Property of all Grantors with the USPTO and USCO not previously disclosed to the Collateral Agent including such information as is necessary for such Grantor to make appropriate filings in the USPTO and USCO.
(g) Commercial Tort Claims . If any Grantor shall at any time hold or acquire a Commercial Tort Claim in an amount reasonably estimated by such Grantor to exceed $1,000,000 for which this clause has not been satisfied and for which a complaint in a court of competent jurisdiction has been filed, such Grantor shall within 30 days after the end of the fiscal quarter in which such complaint was filed notify the Collateral Agent thereof in a writing signed by such Grantor including a summary description of such claim and grant to the Collateral Agent, for the benefit of the Secured Parties, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement.
(h) Each Grantor shall not cause or permit any Person other than the Collateral Agent to have “ control ” (within the meaning of Sections 9-104, 9-105, 9-106 or 9-107 of the UCC) of any Deposit Account, Securities Account, Commodities Account, Electronic Chattel Paper, Investment Property or Letter-of-Credit Right constituting part of the Collateral.
 
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(i) Assigned Agreements .
(i) Anything herein to the contrary notwithstanding, (A) each Grantor shall (until acquisition of such Grantor’s rights by a third party other than an Affiliate as a consequence of foreclosure, assumption or transfer of the Assigned Agreements), remain liable under the Assigned Agreements to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed; (B) the exercise by the Collateral Agent of any of the rights hereunder (other than following an acquisition of such Grantor’s rights by a third party other than an Affiliate as a consequence of foreclosure, assumption or transfer of the Assigned Agreements) shall not release such Grantor from any of its duties or obligations under the Assigned Agreements; and (C) until assumed or transferred as aforesaid, the Collateral Agent shall have no obligation or liability under the Assigned Agreements by reason of this Agreement, nor shall the Collateral Agent be obligated to perform any of the obligations or duties of such Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.
(ii) Except as otherwise provided in this clause (ii) , each Grantor shall continue to collect, at its own expense, all amounts due or to become due to such Grantor under the Assigned Agreements. In connection with such collections, such Grantor may take (and during an Event of Default, at the Collateral Agent’s direction shall take) such action as such Grantor or the Collateral Agent, as applicable, may deem necessary or advisable to enforce collection of the amounts due under the Assigned Agreements. Such Grantor agrees and confirms that, if requested by the Collateral Agent, it shall notify each party to the Assigned Agreements of the grant of the security interest therein and collateral assignment thereof to the Collateral Agent. No Grantor shall, except as specifically required or permitted by the Tax Equity Transaction Documents, take any action in connection with any Assigned Agreement which would impair the security interest of the Collateral Agent in the Collateral.
ARTICLE IV
REMEDIES
Section 4.01 Remedies Upon Default . Upon the occurrence and during the continuance of an Event of Default, it is agreed that the Collateral Agent shall have the right to exercise any and all rights afforded to a secured party with respect to the Secured Obligations under the Uniform Commercial Code or other applicable Law and also may (i) require each Grantor to, and each Grantor agrees that it will at its expense and upon request of the Collateral Agent promptly, assemble all or part of the Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place and time to be designated by the Collateral Agent that is reasonably convenient to both parties; (ii) occupy any premises owned or, to the extent lawful and permitted, leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under Law, without obligation to such Grantor in respect of such occupation; provided that the Collateral Agent shall provide the applicable Grantor with notice
 
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thereof prior to such occupancy; (iii) exercise any and all rights and remedies of any of the Grantors under or in connection with the Collateral, or otherwise in respect of the Collateral; (iv) in its name or in the name of such Grantor or otherwise, demand, sue for, collect or receive any money or other property at any time payable or receivable on account of or in exchange for any of the Collateral, but shall be under no obligation to do so; (v) make any reasonable compromise or settlement deemed desirable with respect to any of the Collateral and may extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, any of the Collateral; (vi) require such Grantor to notify (and such Grantor hereby authorizes the Collateral Agent to so notify) each account debtor in respect of any Account, Chattel Paper or General Intangible, and each obligor on any Instrument, constituting part of the Collateral and on any Assigned Agreement that such Collateral has been assigned to the Collateral Agent hereunder, and to instruct that any payments due or to become due in respect of such Collateral shall be made directly to the Collateral Agent or as it may direct (and if any such payments, or any other Proceeds of the Collateral, are received by such Grantor they shall be held in trust by such Grantor for the benefit of the Administrative Agent and as promptly as possible remitted or delivered to the Collateral Agent for application as provided herein); (vii) in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Assigned Agreement and execute, in connection with any sale provided for in this Section 4.01 , any endorsements, assignments or other instruments or documents of conveyance or transfer with respect to the Collateral; and (viii) subject to the mandatory requirements of applicable Law and the notice requirements described below, sell or otherwise dispose of all or any part of the Collateral securing the Secured Obligations at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any sale of Collateral shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by Law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any Law now existing or hereafter enacted.
Notwithstanding anything herein to the contrary, the Collateral Agent acknowledges and agrees that, in connection with the foreclosure or sale of any Equity Interests of Vivint Solar Hannah Manager, LLC, the assignee of such Equity Interests (i) cannot be a person who is (A) a Tax Exempt Person, (B) restricted under OFAC, or (C) a Competitor, (ii) must otherwise comply with the requirements of Section 3.03(b)(iii) of the Limited Liability Company Agreement of Vivint Solar Hannah Manager, LLC, and (iii) to the extent involving more than forty-nine percent (49%) of the Class B Units, must be to a Qualified Transferee; provided, however, the assignee can satisfy the operator standard requirements set forth in clause (i) of the definition of Qualified Transferee by appointing (i) a third party who meets such operator standard requirements to perform the Managing Member’s duties or (ii) the Provider under the Maintenance Services Agreement. For purposes of this paragraph, all terms are as defined in the Limited Liability Company Agreement of Vivint Solar Hannah Project Company, LLC, dated as of February 14, 2014.
 
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The Collateral Agent shall give the applicable Grantors 10 days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the UCC or its equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by Law, private) sale made pursuant to this Agreement, any Secured Party may bid for or purchase, free (to the extent permitted by Law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by Law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Secured Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at Law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 4.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the UCC or its equivalent in other jurisdictions.
 
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The Collateral Agent shall incur no liability as a result of the sale of the Collateral, or any part thereof, at any private sale pursuant to this Section 4.01 conducted in a commercially reasonable manner. Each Grantor hereby waives any claims against the Collateral Agent arising by reason of the fact that the price at which the Collateral may have been sold at such a private sale was less than the price that might have been obtained at a public sale or was less than the aggregate amount of the Secured Obligations, even if the Collateral Agent accepts the first offer received and does not offer the Collateral to more than one offeree.
Upon the occurrence and during the continuance of an Event of Default, it is agreed that the Collateral Agent shall have the right to exercise dominion and control over and refuse to permit further withdrawals from any Deposit Account, Securities Account or Commodities Account and provide instructions directing the disposition of funds in any Deposit Account, Securities Account or Commodities Account and provide entitlement orders with respect to Security Entitlements and other Investment Property constituting a part of the Collateral and, without notice to such Grantor, transfer to or register in the name of the Collateral Agent or any of its nominees any or all security Collateral.
Section 4.02 Application of Proceeds . The Collateral Agent shall apply the proceeds of any collection or sale of Collateral, including any Collateral consisting of cash in accordance with the terms of the Loan Agreement and the other Financing Documents to which it is a party.
The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof.
The Collateral Agent shall have no liability to any of the Secured Parties for actions taken in reliance on information supplied to it as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Secured Obligations, provided that nothing in this sentence shall prevent any Grantor from contesting any amounts claimed by any Secured Party in any information so supplied. All distributions made by the Collateral Agent pursuant to this Section 4.02 shall be (subject to any decree of any court of competent jurisdiction) final (absent manifest error), and the Collateral Agent shall have no duty to inquire as to the application by the Administrative Agent of any amounts distributed to it.
Section 4.03 Grant of License to Use Intellectual Property . For the exclusive purpose of enabling the Collateral Agent to exercise rights and remedies under this Agreement at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies at any time after and during the continuance of an Event of Default, each Grantor hereby grants to the Collateral Agent a non-exclusive, royalty-free, limited license to use, license or, solely to the extent necessary to exercise those rights and remedies, sublicense any of the Intellectual
 
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Property now owned or hereafter acquired by such Grantor, and wherever the same are located, and including in such license necessary access to media in which such licensed items are recorded or stored and to computer software and programs used for the compilation or printout thereof; provided , however , that all of the foregoing rights of the Collateral Agent to use such licenses, sublicenses and other rights, and (to the extent permitted by the terms of such licenses and sublicenses) all licenses and sublicenses granted thereunder, shall be exercised by the Collateral Agent solely during the continuance of an Event of Default and upon 10 Business Days’ prior written notice to the applicable Grantor; provided, further , that nothing in this Section 4.03 shall require Grantors to grant any license that is prohibited by any rule of law, statute or regulation, or is prohibited by, or constitutes a breach or default under or results in the termination of or gives rise to any right of cancellation under any contract, license, agreement, instrument or other document evidencing, giving rise to or theretofore granted, to the extent permitted by the Loan Agreement, with respect to such property or otherwise prejudices the value thereof to the relevant Grantor; provided , further , that such licenses granted hereunder with respect to Trademarks material to the business of such Grantor shall be subject to restrictions, including, without limitation restrictions as to goods or services associated with such Trademarks and the maintenance of quality standards with respect to the goods and services on which such Trademarks are used, sufficient to preserve the validity and value of such Trademarks. For the avoidance of doubt, the use of such license by the Collateral Agent may be exercised, at the option of the Collateral Agent, only during the continuation of an Event of Default and upon 10 Business Days’ prior written notice to the applicable Grantor. Upon the occurrence and during the continuance of an Event of Default and upon 10 Business Days’ prior written notice to the applicable Grantor, the Collateral Agent may also exercise the rights afforded under Section 4.01 of this Agreement with respect to Intellectual Property contained in the Article 9 Collateral.
ARTICLE V
SUBORDINATION
Section 5.01 Subordination .
(a) Notwithstanding any provision of this Agreement to the contrary, all rights of the Grantors of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the payment in full in cash of the Secured Obligations. No failure on the part of the Borrower or any Grantor to make the payments required under applicable law or otherwise shall in any respect limit the obligations and liabilities of any Grantor with respect to its obligations hereunder, and each Grantor shall remain liable for the full amount of the obligations of such Grantor hereunder.
(b) Each Grantor hereby agrees that upon the occurrence and during the continuance of an Event of Default, all Indebtedness owed to it by any other Grantor shall be fully subordinated to the payment in full in cash of the Secured Obligations.
 
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ARTICLE VI
MISCELLANEOUS
Section 6.01 Notices . All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 10.1 of the Loan Agreement. All communications and notices hereunder to the Borrower or any other Grantor shall be given to it in care of the Borrower as provided in Section 10.1 of the Loan Agreement.
Section 6.02 Waivers; Amendment .
(a) No failure or delay by any Secured Party in exercising any right, remedy, power or privilege hereunder or under any other Financing Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges of the Secured Parties herein provided, and provided under each other Financing Document, are cumulative and are not exclusive of any rights, remedies, powers and privileges provided by Law. No waiver of any provision of this Agreement or consent to any departure by any Grantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 6.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or the provision of services under Cash Management Obligations or Secured Hedge Agreements shall not be construed as a waiver of any Default, regardless of whether any Secured Party may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and the Grantor or Grantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.12 of the Loan Agreement.
Section 6.03 Collateral Agent’s Fees and Expenses; Indemnification .
(a) The parties hereto agree that the Collateral Agent shall be entitled to reimbursement of its reasonable out-of-pocket expenses incurred hereunder and indemnity for its actions in connection herewith, in each case, as provided in Section 10.4 of the Loan Agreement.
(b) Any such amounts payable as provided hereunder shall be additional Secured Obligations secured hereby and by the other Collateral Documents. The provisions of this Section 6.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Financing Document, the consummation of the transactions contemplated hereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Financing Document, or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 6.03 shall be payable within 10 days of written demand therefor.
 
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Section 6.04 Successors and Assigns . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
Section 6.05 Survival of Agreement . All covenants, agreements, representations and warranties made by the Grantors hereunder and in the other Financing Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of the Financing Documents, the making of any Loans and the provision of services under Cash Management Obligations or Secured Hedge Agreements, regardless of any investigation made by any Secured Party or on its behalf and notwithstanding that any Secured Party may have had notice or knowledge of any Default at the time any credit is extended under the Loan Agreement, and shall continue in full force and effect as long as this Agreement has not been terminated or released pursuant to Section 6.12 below.
Section 6.06 Counterparts; Effectiveness; Several Agreement . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by facsimile or other electronic communication of an executed counterpart of a signature page to this Agreement shall be effective as delivery of an original executed counterpart of this Agreement. This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Grantor and the Collateral Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Grantor, the Collateral Agent and the other Secured Parties and their respective permitted successors and assigns, except that no Grantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by the Loan Agreement. This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.
Section 6.07 S everability . If any provision of this Agreement is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Section 6.08 Right of Set-Off . In addition to any rights and remedies of the Secured Parties provided by Law, upon the occurrence and during the continuance of any Event of Default, each Secured Party and its Affiliates is authorized at any time and from time to time, without prior notice to any Grantor, any such notice being waived by each Grantor to the fullest
 
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extent permitted by applicable Law, to set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other Indebtedness at any time owing by, such Secured Party and its Affiliates to or for the credit or the account of the respective Grantors against any and all Obligations owing to such Secured Party and its Affiliates under the Financing Documents, now or hereafter existing, irrespective of whether or not such Secured Party or Affiliate shall have made demand under this Agreement and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or Indebtedness. Each Secured Party agrees promptly to notify the applicable Grantor and the Collateral Agent after any such set-off and application made by such Secured Party; provided , that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Secured Party under this Section 6.08 are in addition to other rights and remedies (including other rights of set-off) that such Secured Party may have at Law.
Section 6.09 Governing Law; Jurisdiction; Venue; Waiver of Jury Trial; Consent to Service of Process .
(a) THIS AGREEMENT AND EACH OTHER FINANCING DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING ARISING UNDER ANY FINANCING DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY FINANCING DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY, EACH AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH LOAN PARTY, EACH AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS , WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY FINANCING DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY FINANCING DOCUMENTS IN THE MANNER PROVIDED FOR NOTICES (OTHER THAN TELECOPIER) IN SECTION 4.01. NOTHING IN THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY FINANCING DOCUMENT OR IN ANY WAY CONNECTED WITH OR
 
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RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY FINANCING DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 4.09 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section 6.10 Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
Section 6.11 Security Interest Absolute . To the extent permitted by Law, all rights of the Collateral Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Loan Agreement, any other Financing Document, any agreement with respect to any of the Secured Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Loan Agreement, any other Financing Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Secured Obligations or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Secured Obligations or this Agreement.
Section 6.12 Termination or Release . This Agreement shall create a continuing pledge and assignment of and security interest in the Collateral and shall (a) remain in full force and effect until the date all Secured Obligations (other than contingent obligations not yet accrued and payable) have been paid in full, all Commitments have terminated or expired and each Agent, upon request of the Grantors, has taken such actions as shall be required to release the security interest created under this Agreement in the Collateral (the “ Discharge Date ”); (b) be binding upon each Grantor and its respective successors and permitted assigns; and (c) inure, together with the rights and remedies of Collateral Agent, to the benefit of Collateral Agent, the other Secured Parties and their respective successors, transferees and permitted assigns; provided, however, that upon the conditions set forth in Section 2.10(c) of the Loan Agreement being met with respect to a Subsidiary Guarantor (a “ Released Subsidiary Guarantor ”), the security interest granted herein with respect to the Pledged Equity (and any other rights as specified in Section 4 hereof) of the applicable Released Subsidiary Guarantor and the Pledged Equity of any Subject Fund owned by the Released Subsidiary Guarantor (together, the “ Released Subsidiary Guarantor Collateral ”) shall be automatically released, the security interest granted hereby in the Released Subsidiary Guarantor Collateral shall terminate and all
 
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rights to the Released Subsidiary Guarantor Collateral shall revert to Borrower or Released Subsidiary Guarantor, as applicable, and any certificated securities and irrevocable proxies and/or power relating to the Released Subsidiary Guarantor Collateral shall be returned to the Borrower or Released Subsidiary Guarantor, as applicable. Collateral Agent or any of the other Secured Parties may assign or otherwise transfer all or any part of or interest in the Financing Documents or other evidence of indebtedness held by them to any other Person to the extent permitted by and in accordance with the Loan Agreement and the CADA, and such other Person shall thereupon become vested with all or an appropriate part of the benefits in respect thereof granted to the Secured Parties herein or otherwise. The release of the security interest in any or all of the Collateral, the taking or acceptance of additional security, or the resort by Collateral Agent to any security it may have in any order it may deem appropriate, shall not affect the liability of any Person on the indebtedness secured hereby. Upon the Discharge Date, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Grantors. Upon the Discharge Date, Collateral Agent will, at the Grantors’ expense, execute and deliver to each Grantor such documents as any Grantor shall reasonably request to evidence the termination of this Agreement. If this Agreement shall be terminated or revoked by operation of Law, each Grantor shall indemnify and hold Collateral Agent and the other Secured Parties harmless from any cost or expense which may be suffered or incurred by Collateral Agent and the other Secured Parties in acting hereunder in accordance with the indemnification provisions set forth in the Loan Agreement, prior to the receipt by Collateral Agent, its successors, transferees or assigns of notice of such termination or revocation.
Section 6.13 Additional Grantors . Pursuant to Section 2.10(b) of the Loan Agreement, certain additional Subsidiaries of the Borrower may be required to enter into this Agreement as Grantors. Upon execution and delivery by the Collateral Agent and a Subsidiary of a Security Agreement Supplement, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any such instrument shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.
Section 6.14 Collateral Agent Appointed Attorney-in-Fact . Each Grantor hereby appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof at any time after and during the continuance of an Event of Default, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent’s name or in the name of such Grantor (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (d) to send
 
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verifications of Accounts Receivable to any Account Debtor; (e) to commence and prosecute any and all suits, actions or proceedings at Law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (g) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent; (h) to make, settle and adjust claims in respect of Article 9 Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance; (i) to make all determinations and decisions with respect thereto; (j) to obtain or maintain the policies of insurance required by Section 5.17 of the Loan Agreement or paying any premium in whole or in part relating thereto; and (k) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes; provided that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence, bad faith, or willful misconduct or that of any of their Affiliates, directors, officers, employees, counsel, agents or attorneys-in-fact, in each case, as determined by a final non-appealable judgment of a court of competent jurisdiction. All sums disbursed by the Collateral Agent in connection with this paragraph, including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, within 10 days of demand, by the Grantors to the Collateral Agent and shall be additional Secured Obligations secured hereby.
Section 6.15 General Authority of the Collateral Agent . By acceptance of the benefits of this Agreement and any other Collateral Documents, each Secured Party (whether or not a signatory hereto) shall be deemed irrevocably (a) to consent to the appointment of the Collateral Agent as its agent hereunder and under such other Collateral Documents, (b) to confirm that the Collateral Agent shall have the authority to act as the exclusive agent of such Secured Party for the enforcement of any provisions of this Agreement and such other Collateral Documents against any Grantor, the exercise of remedies hereunder or thereunder and the giving or withholding of any consent or approval hereunder or thereunder relating to any Collateral or any Grantor’s obligations with respect thereto, (c) to agree that it shall not take any action to enforce any provisions of this Agreement or any other Collateral Document against any Grantor, to exercise any remedy hereunder or thereunder or to give any consents or approvals hereunder or thereunder except as expressly provided in this Agreement or any other Collateral Document and (d) to agree to be bound by the terms of this Agreement and any other Collateral Documents.
 
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Section 6.16 Reasonable Care . The Collateral Agent is required to use reasonable care in the custody and preservation of any of the Collateral in its possession; provided, that the Collateral Agent shall be deemed to have used reasonable care in the custody and preservation of any of the Collateral, if such Collateral is accorded treatment substantially similar to that which the Collateral Agent accords its own property.
Section 6.17 Delegation; Limitation . The Collateral Agent may execute any of the powers granted under this Agreement and perform any duty hereunder either directly or by or through agents or attorneys-in-fact, and shall not be responsible for the gross negligence or willful misconduct of any agents or attorneys-in-fact selected by it with reasonable care and without gross negligence or willful misconduct.
Section 6.18 Reinstatement . The obligations of the Grantors under this Security Agreement shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower or other Loan Party in respect of the Secured Obligations is rescinded or must be otherwise restored by any holder of any of the Secured Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.
Section 6.19 Miscellaneous . The Collateral Agent shall not be deemed to have actual, constructive, direct or indirect notice or knowledge of the occurrence of any Event of Default unless and until the Collateral Agent shall have received a notice of Event of Default or a notice from the Grantor or the Secured Parties to the Collateral Agent in its capacity as Collateral Agent indicating that an Event of Default has occurred.
[ Signature Pages Follow ]
 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above.

VIVINT SOLAR FINANCING I, LLC , a	
Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR LIBERTY MANAGER,	
LLC , a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR MARGAUX	
MANAGER, LLC , a Delaware limited	
liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR FUND III MANAGER,	
LLC , a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR MIA MANAGER, LLC ,	
a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page to Pledge and Security Agreement]

			
VIVINT SOLAR AALIYAH	
MANAGER, LLC , a Delaware limited	
liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR REBECCA	
MANAGER, LLC , a Delaware limited	
liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR HANNAH MANAGER,	
LLC , a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR NICOLE MANAGER,	
LLC , a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
	
VIVINT SOLAR ELYSE MANAGER,	
LLC , a Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page to Pledge and Security Agreement]

			
VIVINT SOLAR OWNER I, LLC , a	
Delaware limited liability company	
		
By:	 	/s/ Thomas Plagemann	
Name:	 	Thomas Plagemann	
Title:	 	Executive Vice President, Capital Markets	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page to Pledge and Security Agreement]

			
BANK OF AMERICA, N.A., as Collateral	
Agent	 		
		
By:	 	/s/ Darleen R. Parmelee	
Name:	 	Darleen R. Parmelee	
Title:	 	Vice President	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	
[Signature Page to Pledge and Security Agreement]

Schedule I to
the Security Agreement
[Intentionally omitted.]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Schedule I to
the Security Agreement
PLEDGED EQUITY
Pledged Stock:
None.
Pledged LLC Interests:

Issuer	  	Record Owner	 	Certificate
No.	 	No. of Shares	 	Percentage Ownership	
Vivint Solar Financing I, LLC	  	Vivint Solar
Holdings, Inc.	 	1	 	(n/a)/100%	 	100%	
Vivint Solar Liberty Manager, LLC	  	Vivint Solar Financing I, LLC	 	3	 	(n/a)/100%	 	100%	
Vivint Solar Margaux Manager, LLC	  	Vivint Solar
Financing I, LLC	 	3	 	(n/a)/100%	 	100%	
Vivint Solar Fund III Manager, LLC	  	Vivint Solar
Financing I, LLC	 	3	 	(n/a)/100%	 	100%	
Vivint Solar Mia
Manager, LLC	  	Vivint Solar
Financing I, LLC	 	3	 	(n/a)/100%	 	100%	
Vivint Solar Aaliyah Manager, LLC	  	Vivint Solar
Financing I, LLC	 	3	 	(n/a)/100%	 	100%	
Vivint Solar Rebecca Manager, LLC	  	Vivint Solar
Financing I, LLC	 	3	 	(n/a)/100%	 	100%	
Vivint Solar Hannah Manager, LLC	  	Vivint Solar
Financing I, LLC	 	3	 	(n/a)/100%	 	100%	
Vivint Solar Nicole
Manager, LLC	  	Vivint Solar
Financing I, LLC	 	2	 	(n/a)/100%	 	100%	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

									
Vivint Solar Elyse Manager, LLC	  	Vivint Solar Financing I, LLC	 	2	 	(n/a)/100%	 	100%	
Vivint Solar Owner I, LLC	  	Vivint Solar Financing I, LLC	 	1	 	(n/a)/100%	 	100%	
Vivint Solar Liberty Master Tenant, LLC	  	Vivint Solar Liberty Manager, LLC	 	1	 	(n/a)	 	***% (pre-flip), ***% (post-flip)	
Vivint Solar Liberty Owner, LLC	  	Vivint Solar Liberty Manager, LLC	 	1	 	(n/a)	 	***%	
Vivint Solar Margaux Master Tenant, LLC	  	Vivint Solar Margaux Manager, LLC	 	1	 	(n/a)	 	***% (pre-flip), ***% (post-flip)	
Vivint Solar Margaux Owner, LLC	  	Vivint Solar Margaux Manager, LLC	 	1	 	(n/a)	 	***%	
Vivint Solar Fund III Master Tenant, LLC	  	Vivint Solar Fund III Manager, LLC	 	1	 	(n/a)	 	***% (pre-flip), ***% (post-flip)	
Vivint Solar Fund III Owner, LLC	  	Vivint Solar Fund III Manager, LLC	 	1	 	(n/a)	 	***%	
Vivint Solar Mia Project Company, LLC	  	Vivint Solar Mia Project Company, LLC	 	B-1	 	100 Class B Membership Interests	 	100% of Class B Equity Interests (***% of Mia Project Co. Equity Interests)	
Vivint Solar Aaliyah Project Company, LLC	  	Vivint Solar Aaliyah Manager, LLC	 	B-2	 	100 Class B Membership Interests	 	100% of Class B Equity Interests (***% of Aaliyah Project Co. Equity Interests)	
Vivint Solar Rebecca Project Company, LLC	  	Vivint Solar Rebecca Manager, LLC	 	B-1	 	100 Class B Membership Interests	 	100% of Class B Equity Interests (***% of Rebecca Project Co. Equity Interests)	
Vivint Solar Hannah Project Company, LLC	  	Vivint Solar Hannah Manager, LLC	 	B-1	 	1,000 Class B Units	 	***%	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

									
Vivint Solar Nicole Master Tenant, LLC	  	Vivint Solar Nicole Manager, LLC	 	1	 	(n/a)	 	***% (pre-flip), ***% (post-flip)	
Vivint Solar Nicole Owner, LLC	  	Vivint Solar Nicole Manager, LLC	 	1	 	(n/a)	 	***%	
Vivint Solar Elyse Project Company, LLC	  	Vivint Solar Elyse Manager, LLC	 	B-1	 	100 Class B Units	 	***%	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Schedule II to
the Security Agreement
COMMERCIAL TORT CLAIMS
None.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Schedule III to
the Security Agreement
LLC AGREEMENTS
 
1.	Amended and Restated Limited Liability Company Agreement of Vivint Solar Liberty Manager, LLC, dated September 12, 2014	
 
2.	Amended and Restated Limited Liability Company Agreement of Vivint Solar Margaux Manager, LLC, dated September 12, 2014	
 
3.	Amended and Restated Limited Liability Company Agreement of Vivint Solar Fund III Manager, LLC, dated September 12, 2014	
 
4.	Amended and Restated Limited Liability Company Agreement of Vivint Solar Mia Manager, LLC, dated September 12, 2014	
 
5.	Amended and Restated Limited Liability Company Agreement of Vivint Solar Aaliyah Manager, LLC, dated September 12, 2014	
 
6.	Amended and Restated Limited Liability Company Agreement of Vivint Solar Rebecca Manager, LLC, dated September 12, 2014	
 
7.	Amended and Restated Limited Liability Company Agreement of Vivint Solar Hannah Manager, LLC, dated September 12, 2014	
 
8.	Amended and Restated Limited Liability Company Agreement of Vivint Solar Nicole Manager, LLC, dated September 12, 2014	
 
9.	Amended and Restated Limited Liability Company Agreement of Vivint Solar Elyse Manager, LLC, dated September 12, 2014	
 
10.	Limited Liability Company Agreement of Vivint Solar Owner I, LLC, dated September 12, 2014	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Exhibit I to the
Security Agreement
SUPPLEMENT NO.     dated as of [ — ], to the Security Agreement (the “ Security Agreement ”), dated as of September 12, 2014, among the Grantors identified therein and Bank of America, N.A., as Collateral Agent.
A. Reference is made to the Loan Agreement dated as of September 12, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), among Vivint Solar Holdings, Inc., a Delaware corporation (the “ Borrower ”), certain Guarantors from time to time party thereto, Bank of America, N.A., as Administrative Agent and Collateral Agent, and each lender from time to time party thereto (collectively, the “ Lenders ” and individually, a “ Lender ”).
B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement and the Security Agreement.
C. The Grantors have entered into the Security Agreement in order to induce the Lenders to make Loans. Section 6.13 of the Security Agreement provides that additional Subsidiaries of the Borrower may become Grantors under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned (the “ New Grantor ”) is executing this Supplement in accordance with the requirements of the Loan Agreement to become a Grantor under the Security Agreement as consideration for Loans previously made.
Accordingly, the Collateral Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 6.13 of the Security Agreement, the New Grantor by its signature below becomes a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of the Security Agreement applicable to it as a Grantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Grantor, as security for the payment and performance in full of the Secured Obligations, does hereby create and grant to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all of the New Grantor’s right, title and interest in and to the Collateral (as defined in the Security Agreement) of the New Grantor. Each reference to a “Grantor” in the Security Agreement shall be deemed to include the New Grantor. The Security Agreement is hereby incorporated herein by reference.
SECTION 2. The New Grantor represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by Debtor Relief Laws and by general principles of equity.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Collateral Agent shall have received a counterpart of this Supplement that bears the signature of the New Grantor and the Collateral Agent has executed a counterpart hereof. Delivery of an executed signature page to this Supplement by facsimile transmission or other electronic communication shall be as effective as delivery of a manually signed counterpart of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that (a) set forth on Schedule I attached hereto is a true and correct schedule of the information required by Schedules II and III to the Security Agreement applicable to it and its and its’ subsidiaries legal name, jurisdiction of formation and location of Chief Executive Office and (b) set forth under its signature hereto is the true and correct legal name of the New Grantor, its jurisdiction of formation and the location of its chief executive office.
SECTION 5. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. If any provision of this Supplement is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Supplement shall not be affected or impaired thereby. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 6.01 of the Security Agreement.
SECTION 9. The New Grantor agrees to reimburse the Collateral Agent for its reasonable out-of-pocket expenses in connection with the execution and delivery of this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Collateral Agent.
[ Signature pages follow ]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

[NAME OF NEW GRANTOR]	
		
By:	 	 	
Name:	 	 	
Title:	 	 	
	
Legal Name:	
Jurisdiction of Formation:	
Location of Chief Executive office:	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
BANK OF AMERICA, N.A.,
as Collateral Agent	
		
By:	 	 	
Name:	 	 	
Title:	 	 	
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Schedule I
to the Supplement No_ to the
Security Agreement

EQUITY INTERESTS	
					
Issuer	 	Number of
Certificate	 	Registered
Owner	 	Number and
Class of
Equity Interest	 	Percentage
of Equity
Interests	

	 		 		 		 		
INSTRUMENTS AND DEBT SECURITIES

Issuer	 	Principal
Amount	 	Date of Note	 	Maturity Date	

	 		 		 		
COMMERCIAL TORT CLAIMS
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Exhibit II to the
Security Agreement
FORM OF PERFECTION CERTIFICATE
See attached.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Exhibit III to the
Security Agreement
FORM OF
PATENT SECURITY AGREEMENT (SHORT FORM)
PATENT SECURITY AGREEMENT
Patent Security Agreement , dated as of [    ], by [    ] and [                ] (the “ Grantor ”), in favor of BANK OF AMERICA, N.A., in its capacity as Collateral Agent pursuant to the Loan Agreement (in such capacity, the “ Collateral Agent ”).
W   I   T   N   E   S   S   E   T   H:
WHEREAS, the Grantor is party to a Security Agreement dated as of September 12, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Security Agreement ”) in favor of the Collateral Agent pursuant to which the Grantor is required to execute and deliver this Patent Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent, for the benefit of the Secured Parties, to enter into the Loan Agreement, the Grantor hereby agrees with the Collateral Agent as follows:
SECTION 1. Defined Terms . Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.
SECTION 2. Grant of Security Interest in Patent Collateral . The Grantor hereby pledges and grants to the Collateral Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral of the Grantor:
(a) Patents of the Grantor listed on Schedule I attached hereto.
SECTION 3. The Security Agreement . The security interest granted pursuant to this Patent Security Agreement is granted in conjunction with the security interest granted to the Collateral Agent pursuant to the Security Agreement and the Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral Agent with respect to the security interest in the Patents made and granted hereby are more fully set forth in the Security Agreement. In the event that any provision of this Patent Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Collateral Agent shall otherwise determine.
SECTION 4. Termination . Upon the termination of the Security Agreement in accordance with Section 6.12 thereof, the Collateral Agent shall, at the expense of the Grantor, execute, acknowledge, and deliver to the Grantor an instrument in writing in recordable form
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

releasing the lien on and security interest in the Patents under this Patent Security Agreement and any other documents required to evidence the termination of the Collateral Agent’s interest in the Patents.
SECTION 5. Counterparts . This Patent Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Patent Security Agreement by signing and delivering one or more counterparts.
[Signature pages follow.]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
[GRANTOR]	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
BANK OF AMERICA, N.A.,
as Collateral Agent	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Schedule I
to
PATENT SECURITY AGREEMENT
UNITED STATES PATENTS AND PATENT APPLICATIONS
Patents:

OWNER	  	PATENT
NUMBER	  	TITLE	
	  		  		
Patent Applications:

OWNER	  	APPLICATION
NUMBER	  	TITLE	

***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Exhibit IV to the
Security Agreement
FORM OF
TRADEMARK SECURITY AGREEMENT (SHORT FORM)
TRADEMARK SECURITY AGREEMENT
Trademark Security Agreement , dated as of [    ], by [    ] and [                ] (the “ Grantor ”), in favor of BANK OF AMERICA, N.A., in its capacity as Collateral Agent pursuant to the Loan Agreement (in such capacity, the “ Collateral Agent ”).
W I T N E S S E T H:
WHEREAS, the Grantor is party to a Security Agreement dated as of September 12, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Security Agreement ”) in favor of the Collateral Agent pursuant to which the Grantor is required to execute and deliver this Trademark Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent, for the benefit of the Secured Parties, to enter into the Loan Agreement, the Grantor hereby agrees with the Collateral Agent as follows:
SECTION 1. Defined Terms . Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.
SECTION 2. Grant of Security Interest in Trademark Collateral . The Grantor hereby pledges and grants to the Collateral Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral of the Grantor:
(a) registered Trademarks of the Grantor listed on Schedule I attached hereto.
SECTION 3. The Security Agreement . The security interest granted pursuant to this Trademark Security Agreement is granted in conjunction with the security interest granted to the Collateral Agent pursuant to the Security Agreement and Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral Agent with respect to the security interest in the Trademarks made and granted hereby are more fully set forth in the Security Agreement. In the event that any provision of this Trademark Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Collateral Agent shall otherwise determine.
SECTION 4. Termination . Upon the termination of the Security Agreement in accordance with Section 6.12 thereof, the Collateral Agent shall, at the expense of the Grantor, execute, acknowledge, and deliver to the Grantor an instrument in writing in recordable form releasing the lien on and security interest in the Trademarks under this Trademark Security Agreement and any other documents required to evidence the termination of the Collateral Agent’s interest in the Trademarks.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

SECTION 5. Counterparts . This Trademark Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Trademark Security Agreement by signing and delivering one or more counterparts.
[Signature pages follow]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
[GRANTOR]	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
BANK OF AMERICA, N.A.,
as Collateral Agent	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Schedule I
to
TRADEMARK SECURITY AGREEMENT
UNITED STATES TRADEMARK REGISTRATIONS AND APPLICATIONS
Trademark Registrations:

OWNER	 	REGISTRATION
NUMBER	 	TRADEMARK	

	 		 		
Trademark Applications:

OWNER	 	APPLICATION
NUMBER	 	TRADEMARK	

	 		 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Exhibit V to the
Security Agreement
FORM OF
COPYRIGHT SECURITY AGREEMENT (SHORT FORM)
COPYRIGHT SECURITY AGREEMENT
Copyright Security Agreement , dated as of [    ], by [    ] and [                ] (the “ Grantor ”), in favor of BANK OF AMERICA, N.A., in its capacity as Collateral Agent pursuant to the Loan Agreement (in such capacity, the “ Collateral Agent ”).
W I T N E S S E T H:
WHEREAS, the Grantor is party to a Security Agreement dated as of September 12, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Security Agreement ”) in favor of the Collateral Agent pursuant to which the Grantor is required to execute and deliver this Copyright Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent, for the benefit of the Secured Parties, to enter into the Loan Agreement, the Grantor hereby agrees with the Collateral Agent as follows:
SECTION 1. Defined Terms . Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.
SECTION 2. Grant of Security Interest in Copyright Collateral . The Grantor hereby pledges and grants to the Collateral Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all the following Pledged Collateral of the Grantor:
(a) registered Copyrights of the Grantor listed on Schedule I attached hereto.
SECTION 3. The Security Agreement . The security interest granted pursuant to this Copyright Security Agreement is granted in conjunction with the security interest granted to the Collateral Agent pursuant to the Security Agreement and the Grantor hereby acknowledges and affirms that the rights and remedies of the Collateral Agent with respect to the security interest in the Copyrights made and granted hereby are more fully set forth in the Security Agreement. In the event that any provision of this Copyright Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Collateral Agent shall otherwise determine.
SECTION 4. Termination . Upon termination of the Security Agreement in accordance with Section 6.12 thereof, the Collateral Agent shall, at the expense of the Grantor, execute, acknowledge, and deliver to the Grantor an instrument in writing in recordable form releasing the lien on and security interest in the Copyrights under this Copyright Security Agreement and any other documents required to evidence the termination of the Collateral Agent’s interest in the Copyrights.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

SECTION 5. Counterparts . This Copyright Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Copyright Security Agreement by signing and delivering one or more counterparts.
[Signature pages follow.]
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
[GRANTOR]	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

			
BANK OF AMERICA, N.A., as Collateral Agent	
		
By:	 	 	
Name:	 		
Title:	 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Schedule I
to
COPYRIGHT SECURITY AGREEMENT
UNITED STATES COPYRIGHT REGISTRATIONS

OWNER	 	REGISTRATION
NUMBER	 	COPYRIGHT TITLE	

	 		 		
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Exhibit VI to the
Security Agreement
UCC FINANCING STATEMENTS
To be attached.
 
***	Confidential treatment has been requested for the portions marked by “***”. The confidential redacted portions have been omitted and filed separately with the Commission	

Exhibit 10.47
LEASE TERMINATION AGREEMENT
Thanksgiving Park Five, LLC/Vivint Solar, Inc.
THIS AGREEMENT (this “ Agreement ”) is entered into as of the 15 th day of September, 2014, between THANKSGIVING PARK FIVE, LLC , a Utah limited liability company (“ Landlord ”), and VIVINT SOLAR, INC. , a Delaware corporation (“ Tenant ”). (Landlord and Tenant are referred to in this Agreement collectively as the “ Parties ” and individually as a “ Party .”)
FOR GOOD AND VALUABLE CONSIDERATION , the receipt and sufficiency of which are acknowledged, the Parties agree as follows:
1. Definitions . As used in this Agreement, each of the following terms shall have the indicated meaning:
“ Lease ” means the Lease, dated May 5, 2014, entered into between Landlord, as landlord, and Tenant, as tenant, covering the Premises.
“ Premises ” means Suite 100 on the first floor, consisting of approximately 6,900 usable square feet and approximately 8,118 rentable square feet, and Suite 500 on the fifth floor, consisting of approximately 25,909 usable square feet and approximately 29,111 rentable square feet, comprising in the aggregate a total of approximately 32,809 usable square feet and approximately 37,229 rentable square feet, together with Balconies A and B, in the office building located at 3101 North Thanksgiving Way, Lehi, Utah.
“ Termination Date ” means the later of:
(i) the date of “Substantial Completion,” as defined in the new Lease, dated of even date with this Agreement, entered into between T-Stat One, LLC, a Utah limited liability company, an affiliate of Landlord, as landlord, and Tenant, as tenant; or
(ii) two (2) weeks after Tenant vacates the Premises in accordance with Paragraph 17.1 of the Lease,
provided that on or about such date, Tenant takes possession of the premises covered by such new Lease, and begins paying the rent required thereunder.
2. Termination . As of the Termination Date, except as provided below in this Paragraph:
(a) the Lease and all right, title and interest of Tenant under the Lease and in and to the Premises are terminated;
(b) the Lease shall have no further force or effect;
(c) Tenant shall surrender the Premises to Landlord in accordance with the provisions of the Lease relating to the surrender of the Premises on the expiration of the Lease term or the sooner termination of the Lease; and
(d) the Parties are relieved of all of their respective obligations under the Lease,

except (only) for any obligations accruing on or before the Termination Date or any obligations which, by their express terms, survive the expiration of the Term or the sooner termination of the Lease, including, without limitation, the obligations set forth in Paragraph 11 of the Lease. On or prior to the Termination Date, Tenant shall pay all amounts due under the Lease for the period on or prior to the Termination Date, remove all of Tenant’s furniture and other personal property currently located in the Premises, and otherwise comply with Paragraph 17.1 of the Lease. Following the Termination Date, Landlord shall return to Tenant the Security Deposit (as defined in the Lease), subject to and in accordance with Paragraph 6 of the Lease.
3. Representations and Warranties . As an inducement to Landlord to permit the termination of the Lease, Tenant:
(a) represents and warrants to Landlord that Tenant is the holder of all right, title and interest of the tenant under the Lease; and
(b) agrees with Landlord that all terms, covenants and conditions of the Lease have been fully performed and complied with in all respects by Landlord.
4. Attorneys’ Fees . If either Party brings suit to enforce or interpret this Agreement, the prevailing Party shall be entitled to recover from the other Party the prevailing Party’s reasonable attorneys’ fees and costs incurred in any such action or in any appeal from such action, in addition to the other relief to which the prevailing Party is entitled.
5. General Provisions . Time is of the essence with respect to each provision of this Agreement. This Agreement shall inure to the benefit of, and be binding on, the Parties and their respective successors and assigns. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws (excluding the choice of laws rules) of the state of Utah. This Agreement may be executed in any number of duplicate originals or counterparts, each of which when so executed shall constitute in the aggregate but one and the same document. Each individual executing this Agreement represents and warrants that such individual has been duly authorized to execute and deliver this Agreement in the capacity and for the entity set forth where such individual signs.
[Remainder of page intentionally left blank; signatures on following page]
 
-2-

THE PARTIES have executed this Agreement on the respective dates set forth below, to be effective as of the date first set forth above.

LANDLORD :	
	
THANKSGIVING PARK FIVE, LLC,
a Utah limited liability company	
		
By	 	/s/ Andrew Bybee	
	 	Andrew Bybee	
	 	Authorized Agent	
		
Date	 	9-15-14	
	
TENANT :	
	
VIVINT SOLAR, INC. ,
a Delaware corporation	
		
By	 	/s/ Paul Dickson	
	
Print or Type Name of Signatory:	
	
Paul Dickson	
		
Its	 	 	
		
Date	 	9/15/2014	
 
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Exhibit 10.48
LEASE
Thanksgiving Station—Building One
between
T-STAT ONE, LLC,
a Utah limited liability company,
as Landlord,
and
VIVINT SOLAR, INC.,
a Delaware corporation,
as Tenant
Dated September 15, 2014

TABLE OF CONTENTS

Paragraph	  	Page	 	
			
1.	  	Definitions	  	 	1	  	
			
2.	  	Agreement of Lease; Work of Improvement; Certain References	  	 	12	  	
			
3.	  	Term; Commencement Date; Tenant Rights	  	 	13	  	
			
4.	  	Basic Monthly Rent	  	 	20	  	
			
5.	  	Operating Expenses	  	 	21	  	
			
6.	  	Security Deposit	  	 	23	  	
			
7.	  	Use and Operation	  	 	24	  	
			
8.	  	Utilities and Services	  	 	26	  	
			
9.	  	Maintenance and Repairs; Alterations; Access to Premises; Reserved Rights in Common Areas	  	 	28	  	
			
10.	  	Assignment and Subleasing	  	 	31	  	
			
11.	  	Indemnity	  	 	34	  	
			
12.	  	Insurance	  	 	35	  	
			
13.	  	Damage and Destruction	  	 	37	  	
			
14.	  	Condemnation	  	 	38	  	
			
15.	  	Landlord’s Financing	  	 	39	  	
			
16.	  	Default	  	 	39	  	
			
17.	  	Expiration and Termination	  	 	42	  	
			
18.	  	Estoppel Certificate; Financial Statements	  	 	43	  	
			
19.	  	Parking; Signage	  	 	44	  	
			
20.	  	Landlord’s Representations and Warranties	  	 	45	  	
			
21.	  	Rules	  	 	46	  	
			
22.	  	General Provisions	  	 	47	  	
 
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EXHIBIT A	  	PREPARATION OF PREMISES FOR OCCUPANCY	  	Exhibit A-1	
			
EXHIBIT B	  	RULES	  	Exhibit B-1	
			
EXHIBIT C	  	SUBLEASE CONSENT AGREEMENT	  	Exhibit C-1	
			
EXHIBIT D	  	CROWN SIGNAGE LOCATION	  	Exhibit D-1	
			
EXHIBIT E	  	LAND	  	Exhibit E-1	
			
EXHIBIT F	  	ADJACENT LAND	  	Exhibit F-1	
 
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LEASE
Thanksgiving Station—Building One
THIS LEASE (this “ Lease ”) is entered into as of the 12 th day of August, 2014, between T-STAT ONE, LLC , a Utah limited liability company (“ Landlord ”), and VIVINT SOLAR, INC. , a Delaware corporation (“ Tenant ”). (Landlord and Tenant are referred to in this Lease collectively as the “ Parties ” and individually as a “ Party .”)
FOR GOOD AND VALUABLE CONSIDERATION , the receipt and sufficiency of which are acknowledged, the Parties agree as follows:
1. Definitions . As used in this Lease, each of the following terms shall have the meaning indicated:
“ ADA ” means the Americans with Disabilities Act of 1990, as amended and with its associated regulations.
“ affiliate ” means an entity that directly or indirectly controls (including a direct or indirect parent), is controlled by (including a direct or indirect subsidiary), or is under common control with, the entity concerned, where “ control ” is the holding of fifty percent (50%) or more of the outstanding voting interests, or the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract or otherwise.
“ Alteration ” means any alteration, change, addition, improvement or repair to the Premises, including, without limitation, the attachment of any fixture (including any so-called “trade fixture”), equipment or signage, or the addition of any pipe, line, wire, cable, conduit or related facility for water, electricity, natural gas, telecommunication (including Tenant’s voice and data lines, wiring, cabling and facilities), sewer or other utility, but excluding (i) the moving of Tenant’s furniture (including cubicles), phones, computers and other personal property, provided that each of the foregoing is readily movable and unattached to the Premises, and (ii) the hanging of typical pictures, diplomas and similar items.
“ applicable municipality ” means the City of Lehi, Utah.
“ Base Year ” means calendar year 2016.
“ Base Year Operating Expenses ” means Operating Expenses that are actually incurred in the Base Year, as adjusted in accordance with this Lease.
“ Basic Monthly Rent ” means the following amounts per calendar month for the periods indicated based on 120,000 rentable square feet, which amounts are subject to adjustment as set forth in the definition of “Premises”; provided, however, that if the Commencement Date occurs on a date other than the Projected Commencement Date, then the periods set forth below shall begin on such other date that is the Commencement Date (as memorialized in a certificate entered into between the Parties) and shall shift accordingly in a manner consistent with the definition of “Expiration Date” (with the Expiration Date being on the last day of the relevant month):

Periods	  	Basic Monthly Rent	 	  	Annual Cost Per
Rentable Square Foot	 	
			
January 15, 2016 through January 31, 2016, inclusive	  	$	145,322.58 per month	  	  	$	26.50	  	
			
February 1, 2016 through January 31, 2017, inclusive	  	$	265,000.00 per month	  	  	$	26.50	  	
			
February 1, 2017 through January 31, 2018, inclusive	  	$	273,000.00 per month	  	  	$	27.30	  	
			
February 1, 2018 through January 31, 2019, inclusive	  	$	281,100.00 per month	  	  	$	28.11	  	
			
February 1, 2019 through January 31, 2020, inclusive	  	$	289,600.00 per month	  	  	$	28.96	  	
			
February 1, 2020 through January 31, 2021, inclusive	  	$	298,300.00 per month	  	  	$	29.83	  	

“ best efforts ” means best, commercially reasonable efforts, exercised in good faith and with due diligence.
“ Building ” means the to-be-constructed building on the land generally shown on the attached Exhibit E , located in Lehi, Utah, which building will contain approximately 127,500 usable square feet and approximately 150,000 rentable square feet, subject to final measurement and verification as set forth in the definition of “Premises”.
“ Building Hours ” means Monday through Friday from 7:00 a.m. to 7:00 p.m., and Saturday from 9:00 a.m. to 3:00 p.m.
“ business day ” means any day other than a Saturday, Sunday or legal holiday on which banks in Utah are authorized by Laws to close.
“ Commencement Date ” means the earlier of the following, with either of such dates to be certified by the Architect (as defined in Paragraph 1(b) of the attached Exhibit A ) to Tenant:
(i) the date on which Substantial Completion occurs; or
(ii) the date on which Substantial Completion would have occurred, but for Tenant Delay.
“ Common Areas ” means all areas and facilities on the Property that are provided for the general, nonexclusive use and convenience of more than one tenant of the Building, including, without limitation, driveways, parking areas, walkways, delivery areas, trash removal areas, landscaped areas, entryways, lobbies, hallways, stairways, elevators, restrooms and showers, subject to Paragraph 9.4 .
“ Comparable Buildings ” means other comparable Class “A” suburban office buildings in the southern Salt Lake County and northern Utah County areas.
“ Condemnation Proceeding ” means any action or proceeding in which any interest in the Property is taken for any public or quasi-public purpose by any lawful authority through the exercise of the power of eminent domain or by purchase or other means in lieu of such exercise.
“ Default Rate ” means twelve percent (12%) per annum.
 
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“ Environmental Laws ” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Hazardous Materials Transportation Act and the Resource Conservation and Recovery Act, each as amended and with its associated regulations, and all other Laws relating to Hazardous Materials existing on or after the date of this Lease.
“ Estimated Operating Expenses ” means the projected amount of Operating Expenses for any given Operating Year as reasonably estimated by Landlord in a manner consistent with Comparable Buildings.
“ Expiration Date ” means the date that is the last day of the month, five (5) years after the later of the following:
(i) the Commencement Date, if the Commencement Date occurs on the first day of a calendar month; or
(ii) the first day of the first full calendar month following the Commencement Date, if the Commencement Date does not occur on the first day of a calendar month,
as such date may be extended or sooner terminated in accordance with this Lease.
“ force majeure ” has the meaning set forth in Paragraph 22.2 .
“ Hazardous Materials ” means substances defined as “hazardous materials,” “hazardous wastes”, “hazardous substances” or “toxic substances” or similarly defined in any Environmental Laws, as well as so-called industrial and biomedical wastes.
“ HVAC ” means heating, ventilating and air conditioning.
“ Improvements ” means the Building and the related improvements owned by Landlord.
“ Interest Rate ” means the Prime Rate plus two percent (2%) per annum.
“ Landlord Default ” has the meaning set forth in Paragraph 16.4 .
“ Landlord’s Work ” means Landlord’s obligation to construct and complete the Initial Improvements, as set forth on the attached Exhibit A .
“ Laws ” means any or all applicable federal, state and local laws, statutes, codes, ordinances, rules, regulations requirements, judgments, decrees, writs, orders, licenses, guidelines and policies, including, without limitation, the ADA and Environmental Laws, together with future enactments and amendments, insurance regulations and requirements, utility company requirements, administrative promulgations and governmental orders, and any requirements or conditions on or with respect to the issuance, maintenance or renewal of any permits, consents, decisions, qualifications, licenses, certifications or exemptions from, and all filings with, and any notice to, any government or quasi-governmental authority.
“ Lease end ” means the expiration of the Term or the sooner termination of this Lease.
“ Non-Consent Transfer ” means any assignment or sublease permitted without Landlord’s consent, as described in Paragraph 10.2 .
 
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“ Operating Expenses ” means all reasonable, customary and actual costs, expenses, fees and other charges incurred or payable by Landlord in connection with this Lease (including, without limitation, those incurred or payable under Paragraphs 8.1, 9.1 and 12.2 ) and the ownership, operation, management, maintenance and repair of the Property (which operation, management, maintenance and repair shall be performed by Landlord in a manner consistent with Comparable Buildings), determined in accordance with generally accepted accounting principles consistently applied to the extent applicable to cash-basis accounting, including, without limitation, the reasonable, customary and actual costs, expenses, fees and other charges of the following, subject to the OpEx Adjustments and excluding the OpEx Exclusions:
(i) real property taxes and assessments and, if applicable (e.g., lobby furniture, movable generators and other personal property directly and reasonably related to the operation of the Property), personal property taxes and assessments (and any tax levied in whole or in part in lieu of or in addition to such taxes and assessments);
(ii) rent and gross receipts taxes, except to the extent imposed in lieu of income taxes;
(iii) assessments for the Project levied under a common maintenance regime; provided, that such assessments shall not exceed assessments generally charged under common maintenance regimes for projects comparable to the Project, and the cost of common area maintenance allocated to the Building shall be determined by reference to the floor area of the Building compared to the floor area of all buildings included within such common maintenance regime;
(iv) removal of snow, ice, trash and other refuse;
(v) landscaping, cleaning, sweeping, janitorial, parking and security services;
(vi) resurfacing, re-striping and resealing of parking areas, and replacing damaged or worn-out Improvements (including lighting) located in the Common Areas;
(vii) fire protection, including alarm and sprinkler systems;
(viii) utilities (including, without limitation, the utilities used in the Premises, but excluding the cost of separately metered utilities provided to the Premises and paid directly by Tenant or provided to other premises and paid directly by other tenants);
(ix) supplies and materials used in connection with the operation, management, maintenance and repair of the Property;
(x) premiums for insurance carried by Landlord pursuant to Paragraph 12.2 (except for any increase in insurance premiums caused by the acts or omissions of other tenants of the Building);
(xi) licenses, permits and inspections directly and reasonably related to the operation of the Property;
(xii) administrative services, including, without limitation, clerical and accounting services, directly and reasonably related to the operation, management, maintenance and repair of the Property;
 
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(xiii) labor and personnel directly and reasonably related to the operation, management, maintenance and repair of the Property (but excluding costs, expenses, fees and other charges for employees of Landlord above the senior building manager level);
(xiv) reasonable reserves for Operating Expenses;
(xv) rental or a reasonable allowance for depreciation of personal property used for normal maintenance, repair and janitorial services in connection with the Property;
(xvi) improvements to and maintenance and repair of the Building and all equipment used in the Building, so long as such equipment is maintained as required by the manufacturer’s specifications;
(xvii) management services attributable to the Property; provided, that:
(a) the cost of such management services shall not exceed management fees generally charged by property management companies for Comparable Buildings; and
(b) the cost of such management services comprising a part of Base Year Operating Expenses shall not be at a discounted cost;
(xviii) that part of office rent or the rental value of space in the Building or another building used by Landlord to operate, manage, maintain and repair the Property; provided, however, that the office rent or the rental value of such space and the amount of such space shall be reasonable under the circumstances; and
(xix) compliance with Laws.
“ Operating Year ” means each calendar year, all or a portion of which falls within the Term.
“ OpEx Adjustments ” means the following adjustments to Operating Expenses:
(i) All Operating Expenses shall be computed on an annual basis, and shall be reduced by all cash, trade or quantity discounts, reductions, reimbursements, refunds or credits received by Landlord (net of reasonable expenses incurred in obtaining the same, if any) in the purchase of any goods, utilities, insurance or services in connection with the operation, management, maintenance and repair of the Property.
(ii) All Operating Expenses (including, without limitation, replacement of existing equipment, parking areas and other improvements) required to be capitalized for federal income tax purposes in excess of $5,000, together with interest thereon at the Interest Rate, shall be amortized by Landlord over a period equal to the useful life of the improvement concerned in accordance with federal income tax law, such amortized cost and related interest shall only be included in Operating Expenses for that portion of the useful life of such improvement that falls within the Term, and only the amortized portion of such cost and related interest applicable to a given Operating Year shall be included in the Operating Expenses for such Operating Year.
(iii) When Landlord, acting reasonably, deems it reasonable to do so, Landlord shall contest any real property taxes or assessments applicable to the Property, and any reduction in, or refund of, such taxes or assessments, less any reasonable expenses incurred by Landlord in achieving such reduction, shall inure to the benefit of Tenant and the other tenants of the Building.
 
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(iv) If any Operating Expenses relate to the Building as well as other buildings, Landlord shall equitably and in good faith allocate the same among the buildings concerned based on the floor area of the Building as compared with the floor area of the other buildings involved in the Operating Expense concerned.
(v) If the Building is in operation for less than all of the Base Year, Base Year Operating Expenses shall reasonably be adjusted by Landlord to the amount that Operating Expenses would have been if the Building had been in operation for all of the Base Year.
(vi) If all or any portion of the Property is subject to any tax abatement program or otherwise not fully assessed for the purpose of real property taxes for the Base Year, Base Year Operating Expenses shall be grossed up to reflect what the real property taxes would have been for the Base Year if the Property had been fully assessed. After the retirement of any special assessments included in Base Year Operating Expenses, Base Year Operating Expenses shall be reduced to eliminate such special assessments to the extent that such special assessments are included in Base Year Operating Expenses but not included in Operating Expenses in the Operating Year concerned. Operating Expenses in any Operating Year following the Base Year shall not include any increases in real property taxes resulting solely from a new addition to the Building or other portions of the Property, such as the new addition of a Building floor or a structured parking terrace.
(vii) Operating Expenses (including, without limitation, Base Year Operating Expenses) that vary with occupancy (including, without limitation, real property taxes) and are attributable to any part of the Term in which less than ninety-five percent (95%) of the rentable area of the Building is occupied by tenants shall be adjusted by Landlord to the amount that Operating Expenses that were actually incurred or payable would have been if ninety-five percent (95%) of the rentable area of the Building had been occupied by tenants for the period concerned.
(viii) If Landlord furnishes a service to tenants in the Building, the cost of which constitutes an Operating Expense, and a tenant other than Tenant has undertaken to perform such service itself, Operating Expenses shall be increased by the amount that Landlord would have incurred if Landlord had furnished such service to such tenant. For example, if Landlord does not furnish premises janitorial services to a tenant other than Tenant who has undertaken to perform such janitorial services itself, Operating Expenses shall be increased by the amount that Landlord would have incurred if Landlord had furnished such janitorial services to such tenant, so that when Tenant’s Share of Operating Expenses is calculated, Tenant will continue to pay its fair share of the cost of its janitorial services.
(ix) Base Year Operating Expenses shall not include any atypical, non-repetitive costs, expenses, fees or other charges incurred or payable by Landlord in the Base Year that would artificially inflate Base Year Operating Expenses, such as (without limiting the generality of the foregoing) costs comprising Landlord’s reasonable insurance deductible related to a casualty occurring in the Base Year or a one-time governmental or quasi-governmental assessment made in the Base Year.
“ OpEx Commencement Date ” means January 1 st of the Operating Year following the Base Year.
“ OpEx Exclusions ” means the following, which shall be excluded from Operating Expenses:
(i) costs incurred in connection with the initial development and improvement of the Property, including, without limitation, impact fees;
(ii) any expenditure required to be capitalized for federal income tax purposes that is in the nature of a new addition to the Building or other portions of the Property, such as the new addition of a Building floor or a structured parking terrace, as distinguished from such an expenditure (the amortized cost of which shall be included in Operating Expenses) that is in the nature of a replacement of an existing improvement, such as a replacement HVAC unit or the replacement of parking area surfaces;
 
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(iii) non-cash items, such as but not limited to depreciation and amortization (except as expressly set forth in subparagraph (xv)  in the definition of “Operating Expenses” with respect to certain personal property);
(iv) debt service on indebtedness secured by any mortgage, deed of trust or similar instrument encumbering the Property, and points, prepayment penalties and financing and refinancing costs for such indebtedness, including, without limitation, the cost of appraisals, title insurance and environmental, geotechnical, zoning and other reports;
(v) expenses of procuring tenants and marketing, negotiating and enforcing Building leases, including, without limitation, brokerage commissions, attorneys’ fees, advertising and promotional expenses, rent concessions and costs incurred in removing and storing the property of former tenants and other occupants of the Building;
(vi) expenses of any tenant improvement work that Landlord performs for any tenant or prospective tenant of the Building, including, without limitation, tenant improvement work to the Premises that Landlord performs for Tenant, and alteration or renovation of vacant or vacated space in the Building, and of relocating and moving any tenant in the Building;
(vii) items for which Landlord is otherwise reimbursed or entitled to be reimbursed, including, without limitation, by insurance or condemnation proceeds or under any warranties;
(viii) expenses (including, without limitation, penalties and interest) resulting from the violation of Laws or any contract by Landlord, Landlord’s employees, agents or contractors or other tenants of the Building;
(ix) penalties, charges and interest for late payment by Landlord;
(x) (a) Landlord’s income, franchise, capital stock, inheritance, estate, gift, sales, capital levy, excess profits, transfer and revenue taxes; (b) other taxes, assessments and charges imposed on or measured by gross income; (c) Landlord’s general corporate overhead; and (d) leasehold taxes on other tenants’ personal property;
(xi) to the extent of such excess, any expense paid to Landlord or an affiliate of Landlord for goods and services that is in excess of the amount that would be paid in the absence of such relationship for comparable goods and services delivered or rendered by unaffiliated third parties on a competitive basis;
(xii) expenses for repairs and other work caused by (a) construction or design defects, (b) subsurface or soil conditions, (c) the failure of the Improvements to comply as of the Commencement Date with any then-existing Laws, (d) the exercise of the right of eminent domain, or (e) fire, windstorm and other insured casualty (excluding costs comprising Landlord’s reasonable insurance deductible), and any uninsured or under-insured casualty;
(xiii) expenses as a result of the presence of Hazardous Materials in the Building or on the Property;
(xiv) expenses in connection with services or other benefits provided on an ongoing basis to other Building tenants that are not available to Tenant;
 
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(xv) costs as a result of (a) the negligence or willful misconduct of Landlord or Landlord’s employees, agents or contractors, (b) the breach by Landlord of any lease in the Building, and (c) the negligence or willful misconduct of other identified tenants of the Building;
(xvi) costs for which Landlord is entitled to bill other tenants directly (other than as a part of Operating Expenses) under the provisions of such tenants’ leases, and the cost of any item or service for which Tenant separately reimburses Landlord or pays third parties;
(xvii) rental under any ground or underlying lease and under any lease or sublease assumed, directly or indirectly, by Landlord (e.g., a take-back sublease);
(xviii) charitable, civic and political contributions and professional dues;
(xix) costs for the acquisition, leasing, maintenance and insurance of paintings, sculptures and other objects of art located in the Building;
(xx) costs arising from actual and potential claims, litigation and arbitration pertaining to Landlord and the Property (including in connection therewith all attorneys’ fees and costs of settlement and judgments and payments in lieu thereof);
(xxi) expenses for the use of the Building to accommodate events including, without limitation, shows, promotions, kiosks, displays, filming, photography, private events and parties and ceremonies;
(xxii) entertainment, dining and travel expenses;
(xxiii) costs of flowers (excluding flowers used to decorate the lobbies and other common areas in the Building), gifts, balloons, etc. provided to any person, including, without limitation, Tenant, other tenants, employees, vendors, contractors, prospective tenants and agents;
(xxiv) costs of selling, syndicating and otherwise transferring the Property and Landlord’s interest in the Property, including, without limitation, brokerage commissions, attorneys’ and accountants’ fees, closing costs, title insurance premiums and transfer and other similar taxes and charges;
(xxv) costs of installing, operating and maintaining any specialty service such as an observatory, broadcast facility, luncheon, athletic or recreational club, child care, restaurant, cafeteria, delicatessen or other dining facility, hair salon or other retail use or commercial concession operated by Landlord, but Operating Expenses may include the costs of operating and maintaining any gym or fitness center for the general use of tenants in the Building (including Tenant);
(xxvi) costs of magazine, newspaper, trade and other subscriptions;
(xxvii) costs of “tenant relations” parties, events and promotions inconsistent with other Comparable Buildings;
(xxviii) costs of “tap fees” and sewer and water connection fees for the benefit of any particular tenant in the Building;
 
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(xxix) costs of traffic studies, environmental impact reports, transportation system management plans and reports, traffic mitigation measures and other similar matters;
(xxx) auditing fees other than those incurred by Landlord in connection with the performance of its obligations under this Lease and other leases in the Building; and
(xxxi) bad debt and rent loss reserves.
“ Permitted Use ” means only the following, and no other purpose: general office purposes, including normal and reasonable uses customarily incidental thereto, such as executive, administrative, technical support, customer service, data functions and research and development. In no event may the Premises be used as a call center or as an executive office suite operation without Landlord’s prior consent; provided, however, that the prohibition of a call center shall not prohibit or limit any typical business or customer service telephone communication of the type currently conducted by Vivint Solar, Inc.
“ person ” means any individual (male or female), corporation, limited liability company, partnership, joint venture, estate, trust, association or other entity.
“ Premises ” means the following:
(i) Suite 100 on the first floor of the Building, consisting of approximately 25,500 usable square feet and approximately 30,000 rentable square feet;
(ii) Suite 200 on the second floor of the Building, consisting of approximately 25,500 usable square feet and approximately 30,000 rentable square feet;
(iii) Suite 400 on the fourth floor of the Building, consisting of approximately 25,500 usable square feet and approximately 30,000 rentable square feet; and
(iv) Suite 500 on the fifth floor of the Building, consisting of approximately 25,500 usable square feet and approximately 30,000 rentable square feet,
comprising in the aggregate a total of approximately 102,000 usable square feet and approximately 120,000 rentable square feet, all as shown on Appendix 1 to the attached Exhibit A , subject to final measurement and verification as set forth below in this definition. The Premises do not include, and Landlord reserves, the land and other area beneath the floor of the Premises, the pipes, ducts, conduits, wires, fixtures and equipment above the suspended ceiling of the Premises and the structural elements that serve the Premises or comprise the Building; provided, however, that, subject to Paragraphs 9.2 and 17.1 , Tenant may, at Tenant’s sole cost and expense, install Tenant’s voice and data lines, wiring, cabling and facilities above the suspended ceiling of the Premises for the conduct by Tenant of business in the Premises for the Permitted Use. Landlord’s reservation includes the right to install, use, inspect, maintain, repair, alter and replace those areas and items and to enter the Premises in order to do so in accordance with and subject to Paragraph 9.3 . For all purposes of this Lease, the calculation of usable square feet contained within the Premises and the Building shall be subject to final measurement and verification by Landlord’s licensed architect, at Landlord’s sole cost and expense, according to ANSI/BOMA Standard Z65.1-2010 (or any successor standard), and the rentable square feet contained within the Premises and the Building shall be the quotient of the usable square feet so calculated divided by .85; provided, however, that if the Premises are comprised (in whole or in part) of the entire usable area on any floor (including the common lobby on such floor), the rentable square feet for such full floor (only) shall be the quotient of the usable square feet on such floor so calculated divided by .89, and any rentable square feet comprising a portion of the Premises not contained on such full floor shall be the quotient of the usable
 
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square feet so calculated divided by .85, which measurement and verification may, at Tenant’s option and at Tenant’s sole cost and expense, be confirmed by Tenant’s licensed architect. (The immediately preceding sentence shall be the sole and exclusive method used for the measurement and calculation of usable and rentable square feet under this Lease for the Premises and the Building.) On request of Tenant, Landlord shall provide Tenant with a copy of the Architect’s verification and certification as to the actual usable and rentable square feet of the Premises prior to the Commencement Date. In the event of a variation between the square footage set forth above in this definition and the square footage set forth in such verification and certification, the Parties shall amend this Lease accordingly to conform to the square footage set forth in such verification and certification, amending each provision that is based on usable or rentable square feet, including, without limitation, Basic Monthly Rent, Security Deposit, Tenant’s Parking Stall Allocation, Tenant’s Percentage of Operating Expenses and the TI Allowance, and shall appropriately reconcile any payments already made pursuant to those provisions; provided, that if the Architect and Tenant’s architect disagree on the amount of usable or rentable square feet within the Premises and the Building, and such disagreement is not resolved within ten (10) business days after such measurement and verification is completed by the Architect, such disagreement shall be resolved by an independent, licensed architect mutually selected by the Parties, acting reasonably, the cost of which architect shall be shared equally by the Parties.
“ Prime Rate ” means a variable interest rate per annum equal to the highest rate quoted in the “Money Rates” section (or replacement section) of the Wall Street Journal as the “Prime Rate” for such day (or the previous day of publication for days on which the Wall Street Journal is not published). The Prime Rate shall be adjusted on and as of the effective date of any change in the Prime Rate. If the Wall Street Journal ceases to publish the Prime Rate, the Prime Rate shall be the highest prevailing base or reference rate on corporate loans at U.S. money center commercial banks.
“ Project ” means Thanksgiving Station, located in Lehi, Utah.
“ Projected Commencement Date ” means January 15, 2016; provided, however, that if for any reason the Commencement Date has not occurred on or before the Projected Commencement Date, Tenant’s sole and exclusive remedy therefor shall be only as expressly set forth in Paragraph 3.2 .
“ Property ” means the Improvements and the related land owned by Landlord.
“ Punch List Items ” means, with respect to Landlord’s Work, any punch list items that do not materially interfere with the reasonable use and enjoyment of the Premises or the conduct of business in the Premises for the Permitted Use.
“ reasonable ” means “good faith and commercially reasonable” and “ reasonably ” means in good faith and in a commercially reasonable manner.
“ Rent ” means Basic Monthly Rent and Tenant’s Share of Operating Expenses.
“ Security Deposit ” means an amount equal to Basic Monthly Rent for the final calendar month of the initial period constituting the Term ($298,300.00), which amount is subject to adjustment as set forth in the definition of “Premises”.
“ structural ” means only footings, foundations, floor slabs, load-bearing walls, exterior walls, roofs and beams that support the roof joists.
 
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“ Substantial Completion ” means the date on which all of the following have occurred:
(i) Landlord’s Work has been completed in accordance with the attached Exhibit A , subject only to the completion by Landlord of any Punch List Items, as evidenced by a written approval to occupy the Premises issued by the applicable municipality that will permit the conduct of business in the Premises for the Permitted Use;
(ii) Landlord has delivered vacant, “broom clean” and exclusive possession of the Premises to Tenant; and
(iii) the parking stalls constituting Tenant’s Parking Stall Allocation and other Common Areas requisite for the reasonable use and enjoyment of the Premises and the conduct of business in the Premises for the Permitted Use are, in fact, available for use by Tenant.
“ Tenant Default ” has the meaning set forth in Paragraph 16.1 , and includes any applicable notice and cure period given therein to Tenant.
“ Tenant Delay ” has the meaning set forth in Paragraph 4 of the attached Exhibit A .
“ Tenant Improvements ” has the meaning set forth in Paragraph 1 of the attached Exhibit A .
“ Tenant’s Estimated Share of Operating Expenses ” means the result obtained by subtracting Base Year Operating Expenses from the Estimated Operating Expenses for any given Operating Year, and then multiplying the difference by Tenant’s Percentage of Operating Expenses. Tenant’s Estimated Share of Operating Expenses for any fractional Operating Year shall be calculated by determining Tenant’s Estimated Share of Operating Expenses for the relevant Operating Year and then prorating such amount over such fractional Operating Year.
“ Tenant’s Occupants ” means any assignee, subtenant, employee, agent, contractor, licensee, franchisee or invitee of Tenant.
“ Tenant’s Parking Stall Allocation ” means five hundred sixty-one (561) parking stalls, based on 5.5 parking stalls per 1,000 usable square feet of the Premises having 102,000 usable square feet, which number of parking stalls is subject to adjustment as set forth in the definition of “Premises”, inclusive of the reserved parking stalls described in Paragraph 19.1(a) .
“ Tenant’s Percentage of Operating Expenses ” means 80.000 percent, which is the percentage determined by dividing the rentable square feet of the Premises (120,000 rentable square feet) by the rentable square feet of the Building (150,000 rentable square feet) (whether or not leased), multiplying the quotient by 100 and rounding to the third (3 rd ) decimal place, which percentage is subject to adjustment as set forth in the definition of “Premises”.
“ Tenant’s Property ” means only the following if, but only if, installed in or made to the Premises by Tenant at Tenant’s sole cost and expense, and not paid for in whole or in part from the TI Allowance or otherwise paid for in whole or in part, directly or indirectly, by Landlord (which shall remain the property of Tenant, subject to Paragraph 17.1 ):
(i) Tenant’s furniture, phones, computers, equipment and other personal property, provided that each of the foregoing is readily movable and unattached to the Premises; provided, however, that typical pictures, diplomas and other similar items, and movable cubicles with electrical connections, shall not be considered to be “attached” to the Premises for purposes of this definition;
(ii) Tenant’s signage;
 
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(iii) Tenant’s voice and data lines, wiring, cabling and facilities; and
(iv) any other Alteration made by Tenant with Landlord’s prior consent if, but only if, at the time such consent was given and prior to installation, Tenant also obtained Landlord’s express consent and agreement to such Alteration remaining the property of Tenant and being removed from the Premises at Lease end.
“ Tenant’s Share of Operating Expenses ” means the result obtained by subtracting Base Year Operating Expenses from Operating Expenses actually incurred in any given Operating Year, and then multiplying the difference by Tenant’s Percentage of Operating Expenses. Tenant’s Share of Operating Expenses for any fractional Operating Year shall be calculated by determining Tenant’s Share of Operating Expenses for the relevant Operating Year and then prorating such amount over such fractional Operating Year. By way of explanation only, Tenant’s Share of Operating Expenses in any given calendar year is, in essence, Tenant’s pro rata share of the increase (only) of Operating Expenses for such calendar year over Operating Expenses for the Base Year. And, since Tenant’s Share of Operating Expenses is calculated in reference to an increase of Operating Expenses over Base Year Operating Expenses, Tenant’s Share of Operating Expenses during the Base Year shall be zero, and Tenant will not commence paying Tenant’s Share of Operating Expenses until the OpEx Commencement Date.
“ Term ” means the period commencing at 12:01 a.m. of the Commencement Date and expiring at midnight of the Expiration Date, as such period may be extended or sooner terminated in accordance with this Lease.
“ TI Allowance ” has the meaning set forth in Paragraph 3(a) of the attached Exhibit A .
“ untenantable ” means that the Premises are reasonably incapable for use and occupancy by Tenant for the Permitted Use.
2. Agreement of Lease; Work of Improvement; Certain References .
2.1. Agreement of Lease . Subject to and in accordance with the provisions set forth in this Lease, Landlord leases the Premises to Tenant and Tenant leases the Premises from Landlord for the Term, together with the nonexclusive right to use the Common Areas in common with other tenants of the Building (subject to Paragraph 9.4 ), subject to any covenants, conditions and restrictions affecting the Property. Landlord shall not have the right to relocate Tenant to premises other than the Premises during the Term. Notwithstanding any references in this Lease to the contrary, Landlord acknowledges that, as of the date of this Lease, there is no guarantor of this Lease.
2.2. Work of Improvement .
(a) Landlord shall perform Landlord’s Work promptly, diligently, in a first-class and workmanlike manner and in accordance with all Laws, and shall use its best efforts to complete Landlord’s Work on or before the Projected Commencement Date. All improvements made to the Premises pursuant to the attached Exhibit A , whether made by or at the expense of either Party, shall on installation be and remain the property of Landlord, excluding only Tenant’s Property.
(b) On or about the date of Substantial Completion, the Parties, the Architect and contractor and, if desired by Tenant, Tenant’s architect shall perform a walk-through of the Premises, confirming that Landlord’s Work has been completed, and identifying the Punch List Items. The Punch List Items shall be completed by Landlord within thirty (30) days after such walk-through (but shall not include any items resulting from the delivery or installation of Tenant’s furniture, fixtures or equipment, which items shall be repaired promptly by Tenant, at Tenant’s sole cost and expense, in accordance with all applicable provisions of this Lease). In addition to Landlord’s obligation to complete the
 
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Punch List Items, Landlord shall, at Landlord’s sole cost and expense, remedy any defects in Landlord’s Work of which Tenant gives Landlord notice within the one (1)-year period following the Commencement Date. Landlord shall also use its best efforts to obtain and enforce all warranties customarily provided by all contractors, subcontractors and material suppliers in connection with the Improvements.
2.3. Certain References . Whenever in this Lease (including in the Exhibits attached to this Lease):
(a) the consent or approval of either Party is required, such consent or approval shall not be unreasonably withheld, conditioned or delayed, unless expressly provided to the contrary;
(b) there is a reference to costs, expenses, fees or other charges (including, without limitation, attorneys’ fees and costs), such reference shall be deemed to be to reasonable, reasonably necessary and actual costs, expenses, fees and other charges, of which the Party incurring such costs, expenses, fees or other charges has some reasonable documentation, record or evidence, a copy of which shall be provided to the other Party;
(c) either Party is given the right to take action, exercise discretion, establish rules and regulations or make allocations or other determinations, such Party shall act reasonably;
(d) there is a reference to “days”, such reference shall be deemed to be to “calendar days” unless the phrase “business days” is expressly set forth;
(e) payment or performance is required but a specific date or number of days within which payment or performance is to be made is not set forth, or the words “immediately”, “promptly”, “on demand” or the equivalent are used to specify when such payment or performance is due, then such payment or performance shall be due within ten (10) business days after receipt of written notice by the paying or performing Party;
(f) the date on which any payment is due under this Lease is not a business day, such payment shall be due on the immediately following business day; and
(g) there is a reference to a consent, approval, description, designation, estimate, notice, request, response, statement or other communication between the Parties, such reference shall be deemed to require the same to be in writing, unless otherwise expressly set forth.
3. Term; Commencement Date; Tenant Rights .
3.1. Term; Commencement Date . Tenant’s obligation to pay Basic Monthly Rent and other amounts due under this Lease shall commence on the Commencement Date unless otherwise set forth in the definition of “Basic Monthly Rent”, and shall be for the Term. Within ten (10) business days after the Commencement Date, the Parties shall execute an acknowledgement of the Commencement Date, the Expiration Date and the Basic Monthly Rent schedule, which acknowledgement shall be deemed to be a part of this Lease and, to the extent applicable, shall serve to amend this Lease.
3.2. Commencement Date Delay .
(a) Subject to force majeure and Tenant Delay, if:
(i) a building permit (covering at least footings and foundation) has not been issued for the Building, or the pouring of such footings has not commenced, on or before the date that is two hundred ten (210) days after the date on which this Lease is fully executed and delivered; or
(ii) Substantial Completion has not occurred on or before the date that is sixty (60) days after the Projected Commencement Date (subject to postponement as set forth in this Paragraph 3.2 , the dates referenced in the foregoing subparagraph (i) and in this subparagraph (ii)  are each referred to as an “ Outside Date ”),
 
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then Tenant may terminate this Lease on notice given to Landlord on or before (but not after) the date that is ten (10) days after the relevant Outside Date for which the described condition is not met. As indicated by the immediately preceding sentence, each Outside Date shall be postponed one day for each day of force majeure delay or Tenant Delay, and the Outside Date (only) with respect to Substantial Completion set forth in the foregoing subparagraph (ii)  shall also be postponed one day for each day after the respective dates set forth below that any of the following matters are actually accomplished:

Matters to be Accomplished	  	Dates by which to be Accomplished	
		
Lease fully executed and delivered by the Parties	  	September 15, 2014	
		
Final space plan for the Premises approved by the Parties	  	April 1, 2015	
		
Final construction drawings for the Premises approved by the Parties	  	June, 1, 2015	
(b) Termination of this Lease in accordance with the foregoing subparagraph (a)  shall be effective as of the date of receipt by Landlord of notice of termination from Tenant, the Parties shall thereafter be released and discharged from all further obligations under this Lease (except for any obligations that expressly survive Lease end and except as provided in the remainder of this sentence) and Tenant shall receive a refund of any Security Deposit and prepaid Basic Monthly Rent actually received by Landlord.
(c) In addition to the foregoing, Landlord may at any time give Tenant notice that Substantial Completion will not occur by the Outside Date set forth in the foregoing subparagraph (a)(ii) , which notice shall also set forth Landlord’s then-current estimate of the date (the “ New Date ”) on which Substantial Completion will occur, and Tenant shall have ten (10) business days after receipt of such notice to exercise the termination right set forth in the foregoing subparagraph (a) , or such right will be deemed to have been waived (but such waiver shall not affect the termination right set forth in subparagraph (d)  below).
(d) Thereafter, subject to force majeure and Tenant Delay, if Substantial Completion has not occurred on or before the New Date, then Tenant may terminate this Lease on notice given to Landlord on or before (but not after) the date that is ten (10) days after the New Date. Termination of this Lease in accordance with the immediately preceding sentence shall be effective as of the date of receipt by Landlord of notice of termination from Tenant, the Parties shall thereafter be released and discharged from all further obligations under this Lease (except for any obligations that expressly survive Lease end and except as provided in the remainder of this sentence) and Tenant shall receive a refund of any Security Deposit and prepaid Basic Monthly Rent actually received by Landlord.
3.3. Extension .
(a) Tenant shall have the option to extend the initial period constituting the Term under this Lease for two (2) additional periods of seven (7) years each, provided that Tenant gives Landlord notice of the exercise of each such option on or before the date that is twenty-four (24) months prior to the expiration of the then-existing period constituting the Term, and that at the time each such notice is given and on the commencement of the extension term concerned:
(i) this Lease is in full force and effect;
 
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(ii) no Tenant Default then exists; and
(iii) Tenant has not assigned this Lease or subleased all or any portion of the Premises under any then-existing sublease (excluding any Non-Consent Transfer), and such extension is not being made in connection with or for the purpose of facilitating any such assignment or sublease.
Each such extension term shall commence at 12:01 a.m. on the first day following the expiration of the immediately preceding period constituting the Term.
(b) During each such extension term, all provisions of this Lease shall apply, except for any provision relating to the improvement of the Premises by Landlord or at Landlord’s expense, and except that the amount of Basic Monthly Rent for each such extension term shall be the amount that would result if Basic Monthly Rent continued to increase each year (including, without limitation, the first year of each such extension term) by three percent (3%) on a compounding basis.
(c) If Tenant exercises either such option in a timely manner, the Parties shall, within thirty (30) days thereafter, enter into an amendment to this Lease reflecting the new Basic Monthly Rent and the new Expiration Date. If Tenant fails to exercise either such option in a timely manner, the relevant option to extend (and any subsequent option to extend) shall automatically terminate and be of no further force or effect.
3.4. Expansion of Premises in Building .
3.4.1. Option . Commencing on the full execution and delivery of this Lease and continuing for a period of one (1) year thereafter, and provided that (i) this Lease is in full force and effect, (ii) no Tenant Default then exists, (iii) Tenant has not assigned this Lease or subleased all or any portion of the Premises under any then-existing sublease (excluding any Non-Consent Transfer), and (iv) the right of expansion described in this Paragraph 3.4.1 is not being exercised in connection with or for the purpose of facilitating any such assignment or sublease, Tenant may, on written notice given to Landlord prior to the expiration of such one (1)-year period, elect to expand the Premises to include the premises (the “ Expansion Space ”) described as Suite 300 on the third floor of the Building, consisting of approximately 25,500 usable square feet and approximately 30,000 rentable square feet, subject to final measurement and verification as set forth in the definition of “Premises”. If Tenant makes such election in a timely manner, then the Parties shall promptly proceed to enter into a mutually acceptable amendment to this Lease, adding the Expansion Space to the Premises for the balance of the Term, and such amendment shall have the following terms and conditions:
(a) the same Basic Monthly Rent (on a per rentable square foot basis) as is payable under this Lease for the Premises originally covered by this Lease for the period on and after the date (the “ Expansion Date ”) on which Substantial Completion (as that term may be made applicable to the Expansion Space) with respect to the Expansion Space has occurred;
(b) a tenant improvement allowance equal to $38.00 per usable square foot of the Expansion Space, to be handled in a manner consistent with the way in which the TI Allowance (provided under this Lease with respect to the original Premises covered by this Lease) is handled; and
(c) terms and conditions as otherwise set forth in this Lease, including, without limitation, the attached Exhibit A , which shall govern the build out of the Expansion Space to the extent applicable.
 
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If Tenant fails to give such notice of exercise to Landlord within such one (1)-year period, or if Tenant fails to enter into such amendment to this Lease within thirty (30) days after such notice of exercise is given by Tenant, such option to expand shall automatically terminate and thereafter cease to have any further force or effect, and the right of first refusal set forth below in Paragraph 3.4.2 shall then be applicable.
3.4.2. Right of First Refusal .
(a) If Tenant fails to exercise the option to expand the Premises in accordance with the foregoing Paragraph 3.4.1 , then during the Term, and provided that (i) this Lease is in full force and effect, (ii) no Tenant Default then exists, (iii) Tenant has not assigned this Lease or subleased all or any portion of the Premises under any then-existing sublease (excluding any Non-Consent Transfer), and (iv) the right of first refusal described in this Paragraph 3.4.2 is not being exercised in connection with or for the purpose of facilitating any such assignment or sublease, if Landlord receives a request for proposal from a tenant that Landlord desires to accept to lease all or a portion of the Expansion Space, or sends out (or has decided to send out) a bona fide proposal to a specific, bona fide prospective tenant to lease all or a portion of the Expansion Space (either, a “ Lease Offer ”), then Landlord shall give to Tenant notice of such Lease Offer. (For purposes of this Paragraph 3.4.2 , any space covered by any renewal or extension option given by Landlord to any then-existing tenant for its then-existing space shall not be “available for lease” until after each such option has expired.)
(b) Tenant shall have a period of five (5) business days after such notice is given (determined in accordance with Paragraph 22.3 ) to elect to lease the Expansion Space concerned on the same terms and conditions as are set forth in such Lease Offer.
(c) If within such five (5)-business day period, Tenant delivers notice to Landlord that Tenant elects to lease the Expansion Space concerned on such offered terms and conditions, the Parties shall promptly proceed to enter into an amendment to this Lease, adding the Expansion Space concerned to this Lease in a manner consistent with such terms and conditions.
(d) If either of the following occurs: (i) within such five (5)-day period, Tenant either delivers notice to Landlord that Tenant elects not to lease the Expansion Space concerned, or fails to deliver any written response to Landlord; or (ii) Tenant fails to enter into a mutually acceptable amendment to this Lease within ten (10) business days after Tenant delivers notice to Landlord that Tenant elects to lease the Expansion Space concerned, adding the Expansion Space concerned to this Lease in a manner consistent with such offered terms and conditions, then such right of first refusal with respect to the Expansion Space concerned shall terminate and be of no further force or effect, but shall continue to apply to any portion of the Expansion Space, if any, not covered by such Lease Offer.
3.4.3. Termination . Notwithstanding anything contained in this Paragraph 3.4. to the contrary, if Tenant subleases any portion of the Premises (excluding any Non-Consent Transfer), this Paragraph 3.4 and the rights of Tenant hereunder shall automatically terminate and cease to have any further force or effect.
3.5. Crown Signage .
(a) Subject to the conditions set forth below in this Paragraph 3.5 , if and so long as Tenant leases (or subleases as the subtenant) at least a Full Floor (defined below) of the Building and has not subleased more than fifty percent (50%) of the Premises (excluding any Non-Consent Transfer) (meaning that any rights of Tenant under this Paragraph 3.5 shall not exist (or if previously existing, shall automatically terminate) as of the date on which Tenant does not
 
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lease (or sublease as the subtenant) at least a Full Floor of the Building or has subleased more than fifty percent (50%) of the Premises (excluding any Non-Consent Transfer)), Tenant may, at Tenant’s sole cost and expense, but under Landlord’s supervision, install, maintain, repair and from time to time replace, on a nonexclusive basis, one (1) sign on the exterior crown of the Building with the name “Vivint Solar” or such other name to which Landlord consents in advance, in the location indicated on the attached Exhibit D ; provided, however, that the attachment of Exhibit D to this Lease is only for the purpose of indicating the side of the Building on which such sign may be located, and shall have no other purpose or effect, including without limitation, the purpose or effect of constituting any representation, warranty or guaranty whatever of the actual location, design or existence of any improvements shown thereon. (Such sign, together with any lines, wires, conduits or related improvements installed by Tenant in connection therewith, are referred to in this Paragraph 3.5 collectively as the “ Crown Signage .”) As of the date of this Lease, the Parties understand that the applicable municipality will permit the Crown Signage. So long as Tenant leases the Premises (as currently defined in this Lease) and has not subleased more than fifty percent (50%) of the Premises (excluding any Non-Consent Transfer), Tenant will qualify as a Full Floor tenant entitled to such Crown Signage rights.
(b) As used in this Paragraph 3.5 , a “ Full Floor ” of the Building means either:
(i) if the Premises are located on only one (1) floor of the Building, the entire usable area of such floor (including, unless such floor is the first floor of the Building, the common lobby on such floor); or
(ii) if the Premises are located on more than one (1) floor of the Building, an amount of usable square footage in the Building that is equal to or greater than the average usable square footage for each floor of the Building, which average shall be calculated by dividing the total above-ground usable square footage of the Building by the number of above-ground floors of the Building,
where the square footage concerned is either office space, or non-office space leased at full Building rental rates for office space. For example purposes only with respect to subparagraph (ii)  above, if the average usable square footage for each floor of the Building is 25,000 usable square feet, to meet the Full Floor condition set forth in subparagraph (a)  above, Tenant must, on multiple floors of the Building, lease Premises in the aggregate equal to at least 25,000 usable square feet.
(c) If a Tenant Default occurs, whether caused by Tenant or Tenant’s subtenant, including, without limitation, Tenant’s failure to properly maintain the Crown Signage in accordance with subparagraph (h)  below, and, as a result of such Tenant Default, Landlord retakes possession of the Premises (with or without terminating this Lease), Landlord may (in addition to any other rights or remedies of Landlord under this Lease), on at least ten (10) business days’ prior notice, terminate Tenant’s rights to the Crown Signage under this Paragraph 3.5 . Tenant’s rights to the Crown Signage under this Paragraph 3.5 shall automatically terminate ten (10) business days after:
(i) the assignment of this Lease by Tenant (excluding any Non-Consent Transfer); or
(ii) the sublease by Tenant as the sublandlord (whether in one or more subleases) where Tenant’s remaining occupancy in the Building after such sublease(s) fails to meet the Full Floor tenant requirements of subparagraph (a) above (excluding any Non-Consent Transfer),
and shall have no further force or effect. Tenant’s rights to the Crown Signage under this Paragraph 3.5 shall be personal to Tenant and any person to which this Lease is assigned in a Non-Consent Transfer, and no other assignee or subtenant shall have any rights to the Crown Signage.
 
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(d) Signage location is largely designated by the signage ordinances of the applicable municipality, but is allowed on certain flat exterior wall surfaces of the crown of Building. For purposes of the Project, the Building crown is defined as “the flat wall surface between the top of the window of the top floor of the Building to the bottom of the cornice of the parapet wall,” and the Crown Signage must be centered vertically between the two equally and left-justified horizontally. Any mechanical/storage penthouse is excluded from the Building crown, and the Crown Signage is not permitted on any curved surfaces of the Building.
(e) The Crown Signage shall be subject to the following design requirements:
(i) letters: reverse pan channel letters on 1” inch stand-offs with 3” returns;
(ii) dual lit: (A) type: rout out back up; (B) material: brushed aluminum; and (C) lighting: white LED (cabinet to be face lit and halo lit);
(iii) back up material: white polycarbonate;
(iv) stand-offs: (A) size: 1”; and (B) color: to match Building; and
(v) reverse pan: (A) materials: brushed aluminum; and (B) lighting: white LED.
Maximum letter height will vary depending on the Building, but cannot extend below the top of the window or above the cornice as specified in subparagraph (d)  above. All Crown Signage letters must have clear Lexan backs to keep birds out (or other similar material subject to Landlord’s reasonable approval), and an approved vapor barrier/sealer shall be installed on all Building penetrations.
(f) Tenant shall submit to Landlord for approval in advance of any work being done the name, address, proof of insurance, references and evidence of ability to perform of Tenant’s proposed signage and installation companies for the Crown Signage. Landlord reserves the right to reject any signage or installation company that is not approved by Landlord. All necessary permits must be obtained prior to any work commencing. The installer shall work with Landlord’s preferred electrical provider (who shall provide its services to Tenant at competitive market rates) for all electrical connections, time clocks and light sensors, and signage installation shall be coordinated and scheduled through Landlord.
(g) In connection with the Crown Signage, Tenant shall, at Tenant’s sole cost and expense, comply with all Laws, the conditions of any warranty or insurance maintained by Landlord on the Building and any applicable requirements of any covenants, conditions and restrictions affecting the Property. The size, location, design, color and all other aspects and specifications of the Crown Signage must be submitted to, and approved in advance by, Landlord and the applicable municipality prior to the manufacture and installation of the Crown Signage. All designs and specifications for the Crown Signage must be in full compliance with the signage ordinance of the applicable municipality. Tenant shall be solely responsible for any cleanup, damage or other mishaps that may occur during the installation or removal of the Crown Signage by Tenant and agrees to fully indemnify Landlord for all injuries to persons or damage to property related thereto. Final, executed releases of lien by all signage and installation companies must be provided by Tenant to Landlord prior to Tenant making final payment to the signage and installation companies.
(h) Tenant shall maintain the Crown Signage at all times in a good, safe and clean condition. Tenant shall repair any damage to the Building caused by Tenant’s installation, maintenance, repair, replacement, use or removal of the Crown Signage. The Crown Signage shall remain the property of Tenant, and Tenant may, at Tenant’s sole cost and expense, remove the Crown Signage at any time during the Term. Tenant shall, at Tenant’s sole cost and expense,
 
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remove the Crown Signage prior to Lease end or the sooner termination of Tenant’s rights to the Crown Signage under this Paragraph 3.5 , including, without limitation, if Tenant ceases to lease at least a Full Floor of the Building or subleases more than fifty percent (50%) of the Premises (excluding any Non-Consent Transfer). On removal of the Crown Signage, Tenant shall repair and restore all areas of the Building concerned to their condition prior to the installation of the Crown Signage.
(i) If a Tenant Default occurs and, as a result of such Tenant Default, Landlord retakes possession of the Premises (with or without terminating this Lease), or if Tenant fails to remove the Crown Signage prior to Lease end or the sooner termination of Tenant’s rights to the Crown Signage under this Paragraph 3.5 , Landlord may, at Tenant’s sole cost and expense, remove the Crown Signage and repair and restore all areas of the Building concerned to their condition prior to the installation of the Crown Signage, and Tenant shall promptly reimburse Landlord for all costs and expenses incurred by Landlord in connection with such removal, repair and restoration and any storage of the Crown Signage.
(j) If Tenant does not lease all of premises in the Building, Landlord may (but is not obligated to) permit other tenants occupying at least 25,000 rentable square feet in the Building to have secondary eyebrow signage mounted at or below the third floor of the Building, with the location of such signage being mutually agreed to by the Parties, acting reasonably.
3.6. Lease of Space in Building on Adjacent Land .
3.6.1. Option . Commencing on the full execution and delivery of this Lease and continuing until the Commencement Date, and provided that (i) this Lease is in full force and effect, (ii) no Tenant Default then exists, (iii) Tenant has not assigned this Lease or subleased all or any portion of the Premises under any then-existing sublease (excluding any Non-Consent Transfer), (iv) the right of expansion described in this Paragraph 3.6 is not being exercised in connection with or for the purpose of facilitating any such assignment or sublease, and (v) on the request of Landlord’s affiliate, Tenant provides to Landlord current financial statements for Tenant, prepared in accordance with generally accepted accounting principles consistently applied and certified by Tenant to be true and correct, demonstrating sufficient Tenant financial strength for such additional space, Tenant may, on written notice given to Landlord prior to the Commencement Date, elect to lease additional space in all or a portion of the building (the “ Adjacent Building ”) to be constructed by Landlord’s affiliate on the land adjacent to the Property, as such land is generally described on the attached Exhibit F . If Tenant makes such election in a timely manner, Tenant and Landlord’s affiliate shall reasonably negotiate the terms and conditions of such lease. If Tenant and Landlord’s affiliate are able to agree on the terms and conditions of such lease within thirty (30) days after receipt by Landlord of Tenant’s notice of election, Tenant and Landlord’s affiliate shall promptly enter into a new lease prepared by Landlord’s affiliate in form similar to this Lease, reflecting the agreed on terms and conditions of such lease. If Tenant and Landlord’s affiliate, after using their best efforts, are unable to agree on the terms and conditions of such lease within such thirty (30)-day period (as evidenced by the execution and delivery of a new lease), or if Tenant fails to give such notice of exercise to Landlord prior to the Commencement Date, then such option to lease additional space shall automatically terminate and thereafter cease to have any further force or effect, and the right of first refusal set forth below in Paragraph 3.6.2 shall then be applicable.
3.6.2. Right of First Refusal .
(a) If Tenant fails to exercise the option to lease additional space in accordance with the foregoing Paragraph 3.6.1 , and if Landlord’s affiliate constructs the Adjacent Building, then during the Term, and provided that (i) this Lease is in full force and effect, (ii) no Tenant Default then exists, (iii) Tenant has not assigned this Lease or subleased all or any portion of the Premises under any then-existing sublease (excluding any Non-Consent Transfer), and (iv) the right of first refusal described in this Paragraph 3.6.2 is not being exercised in connection with or for the purpose of facilitating any such assignment or sublease, if Landlord’s affiliate receives a request for proposal from a
 
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tenant that Landlord’s affiliate desires to accept to lease space (the “ ROFR Space ”) in the Adjacent Building, or sends out (or has decided to send out) a bona fide proposal to a specific, bona fide prospective tenant to lease such ROFR Space (either, a “ Lease Offer ”), then Landlord shall give to Tenant notice of such Lease Offer. (For purposes of this Paragraph 3.6.2 , any space covered by any renewal or extension option given by Landlord’s affiliate to any then-existing tenant for its then-existing space shall not be “available for lease” until after each such option has expired.)
(b) Tenant shall have a period of five (5) business days after such notice is given (determined in accordance with Paragraph 22.3 ) to elect to lease such ROFR Space on the same terms and conditions as are set forth in such Lease Offer.
(c) If within such five (5)-business day period, Tenant delivers notice to Landlord that Tenant elects to lease such ROFR Space on such offered terms and conditions, Tenant and Landlord’s affiliate shall promptly proceed to enter into a new lease prepared by Landlord’s affiliate in a mutually acceptable form similar to this Lease, covering such ROFR Space, with terms and conditions consistent with such offered terms and conditions.
(d) If either of the following occurs: (i) within such five (5)-day period, Tenant either delivers notice to Landlord that Tenant elects not to lease such ROFR Space, or fails to deliver any written response to Landlord; or (ii) Tenant fails to enter into a lease having such offered terms and conditions for the ROFR Space within ten (10) business days after Tenant delivers notice to Landlord that Tenant elects to lease such ROFR Space, then such right of first refusal with respect to such ROFR Space shall terminate and be of no further force or effect, but shall continue to apply to other ROFR Space.
3.6.3. Termination . Notwithstanding anything contained in this Paragraph 3.6. to the contrary, if Tenant subleases any portion of the Premises (excluding any Non-Consent Transfer), this Paragraph 3.6 and the rights of Tenant hereunder shall automatically terminate and cease to have any further force or effect. In addition, this Paragraph 3.6 shall not apply or be binding with respect to any successor or assign of Landlord under this Lease that is not an affiliate of the original Landlord, including, without limitation, any successor to Landlord as a result of foreclosure or a deed in lieu of foreclosure. Landlord represents that, as of the date of this Lease, Landlord is an affiliate of the owner of the land adjacent to the Property, as such land is generally described on the attached Exhibit F , and has the authority to bind Landlord’s affiliate to the terms of this Paragraph 3.6 .
3.7. Termination of Existing Lease . Tenant is currently leasing space in the Thanksgiving Park Five building pursuant to the Lease (the “ Existing Lease ”), dated May 5, 2014, between Tenant and Landlord’s affiliate, Thanksgiving Park Five, LLC, a Utah limited liability company (“ TP Five ”). Pursuant to the Lease Termination Agreement (the “ Lease Termination ”) between Tenant and TP Five, which shall be executed and delivered concurrently with the execution and delivery of this Lease, the Existing Lease shall be terminated effective as of the Termination Date (as defined in the Lease Termination). If either Party defaults in any of its obligations under the Lease Termination, such default shall constitute a default under this Lease.
4. Basic Monthly Rent .
(a) Tenant covenants to pay to Landlord, without (except as expressly provided in this Lease) abatement, deduction, offset, prior notice or demand, Basic Monthly Rent in lawful money of the United States at the address for Landlord set forth in Paragraph 22.3 , or at such other such place as Landlord may designate to Tenant not less than ten (10) business days prior to the next payment due date, in advance on or before the first day of each calendar month during the Term, commencing on the Commencement Date unless otherwise set forth in the definition of “Basic Monthly Rent”. Tenant may make payments to Landlord under this Lease by electronic transfer or similar means, but each payment of Basic Monthly Rent shall be made pursuant to an automatic payment procedure set up by Tenant that ensures that each such payment will be received by Landlord on or before the first day of each calendar month.
 
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(b) If the first day on which Basic Monthly Rent is due under this Lease is not the first day of a calendar month, on or before such due date Basic Monthly Rent shall be paid for the initial fractional calendar month prorated on a per diem basis. If the Term expires or this Lease terminates on a day other than the last day of a calendar month, Basic Monthly Rent for such fractional month shall be prorated on a per diem basis.
(c) In addition to the foregoing, concurrently with its execution and delivery of this Lease, Tenant shall pay to Landlord in advance Basic Monthly Rent for the first full calendar month following the Commencement Date in which full Basic Monthly Rent is payable (that is, $26.50 per rentable square foot on an annual basis), which shall be applied by Landlord to pay Basic Monthly Rent for such month on the date due.
5. Operating Expenses .
5.1. Payment of Operating Expenses .
(a) In addition to Basic Monthly Rent, Tenant covenants to pay to Landlord, without (except as expressly provided in this Lease) abatement, deduction, offset, prior notice or demand, Tenant’s Share of Operating Expenses (to the extent that Operating Expenses in the Operating Year concerned are greater than Base Year Operating Expenses) in lawful money of the United States at the address for Landlord set forth in Paragraph 22.3 , or at such other such place as Landlord may designate to Tenant not less than ten (10) business days prior to the next payment due date, in advance (as Tenant’s Estimated Share of Operating Expenses) on or before the first day of each calendar month during the Term, commencing on the OpEx Commencement Date, in accordance with the provisions of this Paragraph 5 ; provided, however, that Tenant’s Share of Operating Expenses for the Base Year and any prior year shall be zero.
(b) On or prior to the OpEx Commencement Date, and prior to each Operating Year after the Operating Year commencing on the OpEx Commencement Date, or as soon thereafter as is reasonably practicable (but not later than May 1 st of the Operating Year concerned), Landlord shall furnish Tenant with a statement (the “ Estimated OpEx Statement ”) showing in reasonable detail, reasonably sufficient for Tenant verification, the component breakdown of the Estimated Operating Expenses for the Operating Year concerned and the computation of Tenant’s Estimated Share of Operating Expenses for such Operating Year. Each such estimate of Operating Expenses shall be based on the actual Operating Expenses for the immediately prior year and Landlord’s reasonable estimate of Operating Expenses for the coming year.
(c) On or prior to the OpEx Commencement Date, and on the first day of each month following the OpEx Commencement Date, Tenant shall pay to Landlord one-twelfth (1/12th) of Tenant’s Estimated Share of Operating Expenses as specified in the Estimated OpEx Statement for such Operating Year. If Landlord fails to give Tenant an Estimated OpEx Statement prior to any applicable Operating Year, Tenant shall continue to pay on the basis of the Estimated OpEx Statement for the prior Operating Year until the Estimated OpEx Statement for the current Operating Year is received. If at any time it appears to Landlord that Operating Expenses for a particular Operating Year will vary from Landlord’s original estimate, Landlord may (but if the variation is a material reduction in such Operating Expenses from Landlord’s original estimate, Landlord shall) deliver to Tenant (but not more than once in any Operating Year) a revised Estimated OpEx Statement for such Operating Year, and subsequent payments by Tenant for such Operating Year shall be based on such revised Estimated OpEx Statement; provided, however, that in all events, Tenant shall be given at least ten (10) business days after the delivery of any original or revised Estimated OpEx Statement to make any payment required to be made pursuant to the statement concerned.
 
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(d) As soon as reasonably practicable after the expiration of any applicable Operating Year (but not later than May 1 st following the Operating Year concerned), Landlord shall furnish Tenant with a statement (the “ Actual OpEx Statement ”) showing in reasonable detail, reasonably sufficient for verification, the component breakdown of Operating Expenses for the Operating Year concerned, the computation of Tenant’s Share of Operating Expenses for such Operating Year and the amount by which Tenant’s Share of Operating Expenses exceeds or is less than the amounts paid by Tenant during such Operating Year, which shall be deemed to be certified by Landlord to be true and accurate when furnished. If the Actual OpEx Statement indicates that the amount actually paid by Tenant for the relevant Operating Year is less than Tenant’s Share of Operating Expenses for such Operating Year, Tenant shall pay to Landlord such deficit within thirty (30) days after delivery of the Actual OpEx Statement. Such payments by Tenant shall be made even though the Actual OpEx Statement is furnished to Tenant after Lease end, provided that Tenant receives the Actual OpEx Statement within ninety (90) days after Lease end. If the Actual OpEx Statement indicates that the amount actually paid by Tenant for the relevant Operating Year exceeds Tenant’s Share of Operating Expenses for such Operating Year, such excess shall be refunded to Tenant within thirty (30) days after delivery to Tenant of the Actual OpEx Statement. The Parties’ obligations set forth in this subparagraph (d)  shall survive Lease end.
(e) No failure by Landlord to require the payment of Tenant’s Share of Operating Expenses for any period shall constitute a waiver of Landlord’s right to collect Tenant’s Share of Operating Expenses for such period or for any subsequent period; provided, however, that, except for Operating Expenses that are being amortized over a term of years, Landlord shall not be entitled to collect from Tenant any Operating Expenses that are billed to Tenant for the first time more than eighteen (18) months after the Operating Year in which such Operating Expenses arise. If Base Year Operating Expenses exceed Operating Expenses that were actually incurred or payable for any full or (on a pro rata basis) partial Operating Year after the Base Year, Tenant shall not be entitled to any refund, credit or adjustment of Basic Monthly Rent. Tenant shall, however, be entitled to receive a refund of, or credit for, any Estimated Operating Expenses paid by Tenant during such full or partial Operating Year.
(f) Landlord shall use its best efforts to control Operating Expenses to the extent reasonably practicable, and shall pay all Operating Expenses in a timely manner prior to delinquency, subject to payment of Rent by Tenant in a timely manner. For any particular Operating Year, Landlord may not collect Operating Expenses from tenants in the Building in an amount (as grossed up to account for any base year or expense stop provided to such tenants) that is in excess of one hundred percent (100%) of Operating Expenses actually paid or incurred by Landlord for such Operating Year.
(g) Notwithstanding the other provisions of this Paragraph 5 , Tenant shall have sole responsibility for, and shall pay when due, all taxes, assessments, charges and fees levied by any governmental or quasi-governmental authority on Tenant’s use of the Premises or Tenant’s Property.
5.2. Resolution of Disagreement .
(a) Every statement given by Landlord to Tenant under Paragraph 5.1 at the address for notices to Tenant set forth in Paragraph 22.3 shall be conclusive and binding on Tenant unless within sixty (60) days after the receipt of such statement, Tenant:
(i) notifies Landlord that Tenant disputes the correctness of such statement, specifying the particular respects in which the statement is claimed to be incorrect;
(ii) requests reasonable clarification of Landlord’s information and computations, including reasonable detail as to any questioned expense item; or
(iii) initiates an audit of such statement.
 
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Pending the determination of such dispute by agreement between the Parties, Tenant shall, within thirty (30) days after receipt of such statement, pay the amounts set forth in such statement in accordance with such statement, and such payment shall be without prejudice to Tenant’s position. Tenant may not audit Base Year Operating Expenses following the first audit of Operating Expenses for any Operating Year after the Base Year.
(b) If such dispute exists and it is subsequently determined that Tenant has paid amounts in excess of those then due and payable under this Lease, Landlord shall refund such excess to Tenant within thirty (30) days after such determination is made. If such dispute is not resolved between the Parties within sixty (60) days, then at the request of either Party, such dispute shall be resolved by an independent certified public accountant, whose decision shall be binding. The Parties, acting reasonably, shall mutually select, and equally share the cost of, such accountant.
5.3. Tenant Audit Right .
(a) Landlord shall maintain its books and records relating to Operating Expenses for a period of at least three (3) years following the year in which such Operating Expenses were incurred, in a manner that is consistent with generally accepted accounting principles consistently applied to the extent applicable to cash-basis accounting. Such books and records shall be available after at least five (5) business days’ request by Tenant at Landlord’s office during normal business hours for audit, examination and copying by Tenant and Tenant’s employees or agents during such period, at Tenant’s sole cost and expense, provided that:
(i) neither Tenant nor Tenant’s employees or agents may divulge the contents of such books and records or the results of such examination to any third party, except as may reasonably be necessary in Tenant’s business operations (so long as the person to whom such contents or results are divulged also agrees to maintain their confidentiality) or as may otherwise be required by applicable legal requirements;
(ii) Tenant has not previously examined such books and records with respect to the same Operating Year; and
(iii) Tenant provides to Landlord, at no cost, a copy of the report of such examination within ten (10) business days after receipt by Tenant.
(b) Notwithstanding the foregoing to the contrary, if such verification reveals that Tenant’s Share of Operating Expenses set forth in any Actual OpEx Statement exceeded by more than five percent (5%) the amount that actually was due, Landlord shall reimburse Tenant for the lesser of the actual cost of such examination or the reasonable charges of such examination based on a reasonable hourly charge (even if such accountant is actually paid on some other basis), together with other reasonable expenses incurred by such accountant. Tenant may not hire an accountant or other person to perform such examination on a contingency, percentage, bonus or similar basis, unless such accountant or other person is nationally recognized, reputable and reasonable in its approach. Any overcharge or underpayment revealed thereby shall be reconciled between the Parties, acting reasonably and in good faith, within thirty (30) days after the completion of such verification and examination.
6. Security Deposit .
(a) Concurrently with its execution and delivery of this Lease, Tenant shall deposit with Landlord the Security Deposit as security for the faithful performance by Tenant of its obligations under this Lease. Landlord may intermingle the Security Deposit with Landlord’s own funds. The Security Deposit is not a limitation on Landlord’s damages or other rights under this Lease, a payment of liquidated damages or prepaid Rent and shall not be applied by Tenant to Rent for the last (or any) month of the Term, or to any other amount due under this Lease.
 
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(b) If a Tenant Default occurs under this Lease, then Landlord may, prior to, concurrently with, or subsequent to, exercising any other right or remedy, use, apply or retain all or any part of the Security Deposit for the payment of any monetary obligation due under this Lease, or to compensate Landlord for any other expense, loss or damage that Landlord may reasonably incur by reason of Tenant’s failure, including any damage or deficiency in the reletting of the Premises. If all or any portion of the Security Deposit is so used, applied or retained, Landlord shall promptly notify Tenant of such use, application or retention, and Tenant shall, within ten (10) business days following such notification, deposit with Landlord cash in an amount sufficient to restore the Security Deposit to its original amount.
(c) The Security Deposit shall be returned (without interest) to Tenant within thirty (30) days after Lease end and surrender of possession of the Premises to Landlord in accordance with Paragraph 17.1 if, at such time, Tenant has paid to Landlord all amounts payable under this Lease and no Tenant Default then exists; provided, however, that if such Tenant Default is a monetary default, and the Security Deposit is equal to or greater than the amount concerned, then Landlord shall apply the Security Deposit in full payment of such amount and remit to Tenant any remaining portion of the Security Deposit within such thirty (30)-day period, together with an itemization of any deductions therefrom, provided that Tenant has paid all other amounts payable under this Lease. Notwithstanding the foregoing, Landlord may withhold the Security Deposit after Lease end until Tenant has paid in full Tenant’s Share of Operating Expenses for the Operating Year in which Lease end occurs, provided that Landlord provides to Tenant an Actual OpEx Statement for such Operating Year (or portion thereof) within ninety (90) days after Lease end, and concurrently returns to Tenant any remaining Security Deposit balance, together with an itemization of any deductions therefrom.
(d) If Landlord’s interest in this Lease is conveyed, transferred or assigned and the transferee assumes in writing Landlord’s obligations under this Lease, Landlord shall transfer or credit the Security Deposit to Landlord’s successor in interest, and Landlord shall be released from any liability for the return of the Security Deposit.
7. Use and Operation .
7.1. Prohibitions . The Premises shall not be used or occupied for any purpose other than for the Permitted Use, and neither Tenant nor Tenant’s Occupants shall do anything that will:
(a) increase the existing rate or violate the provisions of any insurance carried with respect to the Property (and Landlord represents that the Permitted Use does not do so);
(b) create a public or private nuisance, constitute a disreputable business or purpose, commit waste or unreasonably interfere with or disturb any other tenant or occupant of the Building or Landlord in the operation of the Building;
(c) overload the floors or otherwise damage the structure of the Building;
(d) increase the cost of any utility service beyond the level permitted by Paragraph 8 unless Tenant pays such increased cost in accordance therewith; or
(e) in its use of, operations in, and improvements to, the Premises, violate any Laws.
 
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7.2. Covenants . Tenant shall, at Tenant’s sole cost and expense:
(a) use the Premises in a careful, safe and proper manner, consistent with normal business practices;
(b) in its use of, operations in, and improvements to, the Premises, comply with all Laws; provided, that:
(i) subject to reimbursement as part of Operating Expenses to the extent permitted by Paragraph 5 , Landlord shall be solely responsible for compliance with the ADA and other Laws in connection with the Common Areas (except to the extent of any additional costs incurred by Landlord solely as a result of Tenant’s particular use of the Premises, which additional costs shall be payable solely by Tenant within ten (10) business days after receipt of an invoice therefor) and any improvements made by Landlord to the Premises; and
(ii) Tenant shall have no obligation to Landlord with respect to:
(A) any Hazardous Materials on the Property not stored, used or disposed of by Tenant or Tenant’s Occupants; or
(B) any failure of the Improvements to comply as of the Commencement Date with any then-existing Laws, except to the extent of improvements made by Tenant;
(c) keep the Premises free of reasonably objectionable noises and odors; and
(d) not store, use or dispose of any Hazardous Materials on the Property, except for de minimis quantities of typical cleaning and office supplies, all of which shall be stored, used and disposed of in accordance with all Laws.
7.3. Qualifications . Nothing contained in this Paragraph 7 shall be deemed to impose any obligation on Tenant to make any structural changes, repairs or improvements unless necessitated solely by reason of a particular use by Tenant of the Premises, or shall be deemed to impose any obligation on Tenant with respect to actions or omissions of persons other than Tenant and Tenant’s Occupants. Tenant’s Occupants will be required to smoke outside the Building in compliance with the Utah Indoor Clean Air Act.
7.4. No Continuous Operation . Systematic and continuous occupancy or operation in all or any portion of the Premises before or after Building Hours is not permitted. This includes, but is not limited to, any ongoing twenty-four (24) hour, seven (7) day a week operation or use of the Premises. However, the foregoing portion of this Paragraph 7.4 shall not:
(a) prohibit or limit the continuous operation of data servers or other similar equipment in the Premises; or
(b) prevent late or early hour or all night work that would be typical in the offices of a company similar to Vivint Solar, Inc., including, without limitation, a limited number of employees working all day and all night for a limited number of days when necessary to complete a particular project,
and Tenant may have a limited number of technical and customer service employees regularly working after Building Hours in the Premises. To the extent set forth in the immediately preceding sentence, Landlord acknowledges that Tenant’s employees may, from time to time, work in the Premises before and after Building Hours; however, in all events
 
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Tenant shall pay to Landlord the cost of any increased security, maintenance, repair (including repair as a result of any after-hours damage), janitorial and similar items resulting from such work within ten (10) business days after receipt by Tenant of an invoice therefor.
8. Utilities and Services .
8.1. Services Provided .
(a) Landlord shall, as part of Operating Expenses, cause to be furnished to the Premises:
(i) electricity for normal lighting and office computers, servers, copiers and other typical office equipment used by Tenant for the Permitted Use;
(ii) HVAC in sufficient quantities for the reasonably comfortable use and occupancy of the Premises by Tenant;
(iii) janitorial services and window washing consistent with Comparable Buildings, with the janitorial service provider being bonded, insured and licensed, and its employees having passed appropriate criminal background checks;
(iv) cleaning and stocking services for restrooms and showers;
(v) replacement bulbs and ballasts for Building standard ceiling fluorescent lighting;
(vi) hot and cold water in the restrooms and showers and, if any, in Tenant’s kitchen/break room area, and water for drinking in the water fountains;
(vii) functioning toilets;
(viii) snow removal, landscaping, grounds keeping and elevator service; and
(ix) security to the Building consistent with the security provided to other buildings in the Project,
all in a manner consistent with Comparable Buildings. Tenant shall, at Tenant’s sole cost and expense, provide telecommunication service to the Premises.
(b) Subject to the provisions of this Lease, Tenant shall have reasonable access over the Common Areas to the Premises at all times during the Term, twenty-four (24) hours a day, seven (7) days a week, including (if the Premises are located above the first floor) passenger elevators without operators serving the floor on which the Premises are located and freight elevator service in common with other tenants of the Building.
(c) Tenant may, at its sole cost and expense (subject to the TI Allowance), install its own backup generator. Alternatively, if Tenant elects to connect to the Building backup generator prior to Landlord’s commencement of the construction of the Tenant Improvements, such connection shall be made by Landlord for Tenant, at Tenant’s sole cost and expense (subject to the TI Allowance), and an additional $0.50 per rentable square foot of the Premises (on an annual basis) shall be added to any Basic Monthly Rent payable on the Commencement Date.
 
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8.2. Excess Services .
(a) If Landlord provides:
(i) electric current to the Premises for Tenant load (that is, excluding HVAC and lighting) in excess of two (2) watts per usable square foot to enable Tenant to operate any office computers, servers, copiers or other equipment requiring extra electric current; or
(ii) any other utility or service that is in excess of that typically required for routine office purposes, including additional cooling necessitated by Tenant’s equipment and additional services relating to after-hours usage of the Property as contemplated by Paragraph 7.4 , all as determined by reference to general Building tenant usage and Comparable Buildings,
Landlord shall reasonably determine or calculate the actual, reasonable cost of such additional electric current, utility or service, and Tenant shall pay such cost, together with a reasonable charge for administrative costs related to such determination, calculation and billing, on a monthly basis to Landlord within ten (10) business days after receipt by Tenant of an invoice therefor.
(b) If Landlord reasonably believes that Tenant is using excess electricity or water, Landlord may cause an electric or water meter to be installed in the Premises in order to measure the amount of electricity or water consumed for any excess use described in the foregoing subparagraph (a) , and if such meter actually evidences excess use, the reasonable cost of such meter and of any related wiring or plumbing and their installation shall be paid by Tenant within ten (10) business days after receipt by Tenant of an invoice therefor. (The Building will have one meter for electricity and one meter for water, with respect to each of which Landlord will receive a single bill; therefore, any meter installed in order to measure the amount of electricity or water consumed for any such excess use by Tenant will, in fact, be a sub-meter, and the actual cost of any electricity or water sub-metered to the Premises will be determined by Landlord by extrapolating from the Building cost concerned.) Any such utility expense that is separately billed to and paid for by Tenant pursuant to this Paragraph 8.2 shall not be part of Operating Expenses.
8.3. Certain After-Hours Services . Subject to the provisions of this Lease, and as part of Operating Expenses, Landlord shall furnish lighting and HVAC to the Premises during Building Hours. Tenant may require such services after Building Hours on demand, and may be separately billed, and if billed shall pay within ten (10) business days after receipt by Tenant of an invoice therefor Landlord’s standard charges (set forth below), for any lighting and HVAC used in the Premises during any period other than during Building Hours, provided that such after-hours services are requested or activated by Tenant or Tenant’s Occupants. Currently, Landlord’s standard charges (which approximate actual costs) for such after-hours services are approximately $4.00 per hour per zone for lighting and approximately $25.00 per hour for HVAC. Landlord may, from time to time, increase the charge for providing such after-hours services to reflect any increase in Landlord’s approximate actual costs, which increased charge shall be consistently applied to all Building tenants. Landlord shall use its best efforts to charge Tenant and other Building tenants for after-hours services in a consistent, non-discriminatory manner. Any such charges for after-hours services that are separately billed to and paid for by Tenant pursuant to this Paragraph 8.3 shall not be part of Operating Expenses.
 
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8.4. Service Interruption . Tenant shall immediately notify Landlord of the interruption (a “ Service Interruption ”) of any service furnished by Landlord under this Lease, and following the receipt of such notice, Landlord shall use its best efforts to restore such service to the Premises as soon as reasonably practicable. Subject to force majeure, and except in cases covered by Paragraphs 13 or 14 , with respect to any Service Interruption that renders the Premises untenantable and is not caused by Tenant or Tenant’s Occupants:
(a) commencing on the sixth (6 th ) consecutive business day of such Service Interruption, Tenant shall be entitled to an equitable diminution of Rent to the extent that the Premises are untenantable as a result of such Service Interruption; and
(b) if the Premises will be or are untenantable for a period of more than ninety (90) consecutive days as a result of such Service Interruption, Tenant shall be entitled to terminate this Lease on notice given to Landlord within ten (10) business days after the later of:
(i) the date on which Landlord provides to Tenant an estimate of the time required to cure such Service Interruption (which notice shall be given by Landlord to Tenant as soon as reasonably practicable, but Landlord shall use its best efforts to provide such notice to Tenant no later than ten (10) days after the occurrence of such Service Interruption); or
(ii) the expiration of such ninety (90)-day period,
and on such notice, Tenant shall vacate and surrender the Premises to Landlord in accordance with the applicable provisions of this Lease.
9. Maintenance and Repairs; Alterations; Access to Premises; Reserved Rights in Common Areas .
9.1. Maintenance and Repairs .
(a) Landlord shall, as part of Operating Expenses, maintain the Property (excepting the Premises and other leased premises in the Building) in good order, condition and repair, in a clean and sanitary condition and in compliance with Laws, in a manner consistent with those procedures and practices generally employed by owners or managers of Comparable Buildings; provided, however, that, subject to reimbursement of Landlord to the extent provided by Paragraph 5 , and, subject to Paragraph 12.3 , excluding damage caused by Tenant or Tenant’s Occupants, Landlord shall be solely responsible for maintenance and repair of the exterior windows and structural components of the Building, the electrical, gas, plumbing, fire, life safety, HVAC and other base systems and facilities of the Building (excepting any installed by Tenant) and the restrooms, lobbies and other Common Areas, in such manner. Any costs, expenses and fees incurred or payable by Landlord in connection with the maintenance, repair or replacement of any supplemental or other HVAC equipment (beyond the standard Building HVAC) for any data room of Tenant shall not be part of Operating Expenses and shall be directly reimbursed by Tenant to Landlord within ten (10) business days after receipt by Tenant of an invoice therefor. In addition, Tenant shall pay to Landlord the cost of any increased maintenance and repair (including repair as a result of any after-hours damage) resulting from Tenant’s employees’ work in the Premises before and after Building Hours, as set forth in Paragraph 7.4 .
(b) Except as expressly set forth in the foregoing subparagraph (a)  or elsewhere in this Lease, and excluding damage caused by Landlord or Landlord’s employees, agents or contractors, Tenant shall, at Tenant’s sole cost and expense, maintain the interior, nonstructural elements of the Premises (including, without limitation, all floor and wall coverings, doors and locks) and Tenant’s Property in good order, condition and repair and in a clean and sanitary condition, subject to normal and reasonable wear and tear and the other provisions of this Lease regarding casualty, condemnation, insurance and indemnification.
(c) All work to be performed by either Party under this Paragraph 9.1 shall be completed promptly (and such work shall be performed by Landlord in a manner that is reasonably calculated to minimize disruption to Tenant’s business to the extent reasonably practicable), but in any event each Party shall use its best efforts to complete such work within twenty-four (24) hours in any emergency and within ten (10) business days for all other repairs. If any
 
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work cannot reasonably be completed within twenty-four (24) hours or ten (10) business days, as the case may be, such work shall be commenced within the applicable period and thereafter prosecuted continuously and diligently until completed.
9.2. Alterations .
(a) Tenant shall not make or cause or permit to be made any Alteration, unless such Alteration:
(i) equals or exceeds the then-current standard for the Building, including the minimum performance criteria of all design and construction elements contributing to energy savings beyond the LEED baseline claimed in the whole building energy simulation per ANSI/ASHRAE/IESNA 90.1-2007, and utilizes only new and first-grade materials;
(ii) is in conformity with Laws, and is made after obtaining any required permits and licenses;
(iii) is made with the prior consent of Landlord, which consent, in the case of nonstructural, cosmetic Alterations such as carpeting or painting that have absolutely no impact or effect on the structure or the roof, exterior, mechanical, water, electrical, gas, plumbing, fire, life safety, HVAC, telephone, sewer or other systems or facilities of the Building, shall be given or denied within five (5) business days after receipt by Landlord of Tenant’s written request therefor, accompanied by a reasonably detailed description of the change, addition or improvement to be made;
(iv) is made pursuant to plans and specifications approved in advance by Landlord or, if such Alteration does not require a building permit, is made pursuant to a description of such proposed work; provided, that Landlord may not charge Tenant a fee for the review of such plans and specifications or description;
(v) is carried out by persons approved by Landlord, who, if required by Landlord, deliver to Landlord before commencement of their work proof of such insurance coverage as Landlord may reasonably require, with Landlord named as an additional insured; and
(vi) is done only at such time and in such manner as Landlord may reasonably specify.
Notwithstanding the foregoing to the contrary, Paragraphs 9.2(a)(iii), (iv) and (v)  (only) shall not apply if (1) the cost of such Alteration does not exceed, in the aggregate, $10,000 in any twelve (12)-month period, (2) such Alteration is purely cosmetic and nonstructural in nature and does not affect or involve the roof, exterior or electrical, gas, plumbing, fire, life safety, HVAC or other systems or facilities of the Building (that is, painting, wall covering and carpet only), and (3) Tenant gives Landlord at least five (5)-business days’ notice prior to making such Alteration.
(b) Subject to Paragraph 17.1 , any such Alteration (excluding only Tenant’s Property) shall immediately become and remain the property of Landlord, unless otherwise agreed by the Parties in writing prior to the installation of such Alteration. Tenant shall pay when due the entire cost of any such Alteration. Within thirty (30) days following the imposition of any lien resulting from any such Alteration, Tenant shall cause such lien to be released of record by payment of money or posting of a proper bond.
 
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9.3. Access to Premises .
(a) Landlord and Landlord’s employees, agents and contractors may enter the Premises at reasonable times (including during Building Hours) on at least twenty-four (24) hours’ prior written or verbal notice to Tenant (except in the event of an emergency) for the purpose of:
(i) cleaning, inspecting, altering, improving and repairing the Premises or other parts of the Building;
(ii) at reasonable intervals, ascertaining compliance with the provisions of this Lease by Tenant; and
(iii) showing the Premises to prospective purchasers, tenants or mortgagees (but with respect to prospective tenants for the Premises, only during the last six (6) months of the Term, as the same may be extended, and at any time a Tenant Default exists under this Lease).
Landlord shall have free access to the Premises in an emergency, but Landlord shall use its best efforts to notify Tenant of such emergency as soon as possible. Landlord shall at all times have a key with which to unlock all of the doors in the Premises (excluding Tenant’s vaults, safes and similar areas designated by Tenant in advance); provided, however, that Tenant may designate a limited number of specified rooms, offices or closets within the Premises as off-limits to janitorial service providers, and such providers shall not be permitted to enter therein.
(b) In any entry into the Premises and in any work done by Landlord in the Building, Landlord and Landlord’s employees, agents and contractors shall:
(i) use their best efforts to avoid and minimize any damage or injury to, interference with, and disturbance of, Tenant and the operation of Tenant’s business in the Premises;
(ii) comply with all reasonable security regulations and procedures as may then be in effect with respect to Tenant’s operations in the Premises; and
(iii) use their best efforts to maintain the confidentiality of any materials within the Premises.
Tenant may secure the Premises at all times and may require that any individual entering the Premises be accompanied by an employee of Tenant at all times (except in the case of an emergency).
9.4. Reserved Rights in Common Areas . Landlord reserves the right, at any time or from time to time, to:
(a) establish and enforce reasonable rules and regulations for the use of the Common Areas (including, without limitation, the delivery of goods and the disposal of trash), in accordance with and subject to Paragraph 21 ;
(b) use or permit the use of the Common Areas by persons to whom Landlord may grant or may have granted such rights in such manner as Landlord may from time to time reasonably designate;
 
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(c) close all or any portion of the Common Areas to make repairs or changes to, to prevent a dedication of, to prevent the accrual of any rights of any person or the public in, or to discourage non-Tenant Occupant use of or parking on, the Common Areas;
(d) construct additional buildings in, or expand existing buildings into, the Common Areas and change the layout of the Common Areas, including, without limitation, enlarging or reducing the shape and size of the Common Areas, whether by the addition of buildings or other improvements or in any other manner;
(e) enter into operating agreements relating to the Common Areas with persons selected by Landlord; and
(f) do such other acts in and to the Common Areas as in Landlord’s reasonable judgment may be desirable;
provided, however, that Landlord, in exercising its reserved rights under the foregoing portion of this sentence, shall exercise reasonable efforts to minimize any adverse impact on the Premises and the operation of Tenant’s business in the Premises, and except during non-Business Hours, shall not shall not materially impair the access to and from the Premises, or reduce the amount of Tenant’s Parking Stall Allocation. If the Common Areas are diminished in accordance with and subject to the foregoing proviso, Landlord shall not be subject to any liability, Tenant shall not be entitled to any compensation or diminution of rent and such diminishment shall not be deemed to be an actual or constructive eviction.
10. Assignment and Subleasing .
10.1. Prohibition .
(a) Except as expressly provided in Paragraph 10.2 , Tenant shall not do any of the following without the prior consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed:
(i) assign, transfer, mortgage, encumber, pledge or hypothecate this Lease or Tenant’s interest in this Lease, in whole or in part, directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise;
(ii) sublease the Premises or any part of the Premises; or
(iii) permit the use and occupancy of the Premises or any part of the Premises by any persons other than (A) employees of Tenant, (B) employees of Tenant’s affiliates, or (C) persons occupying a portion of the Premises for the purpose of transacting business with Tenant.
Consent to any assignment or sublease shall not operate as a waiver of the necessity for consent to any subsequent assignment or sublease and the terms of such consent shall be binding on any person holding by, through or under Tenant. At Landlord’s option, any assignment or sublease without Landlord’s prior consent, when such consent is required by the terms of this Lease, shall be void ab initio (from the beginning).
(b) Without limiting the other instances in which it may be reasonable for Landlord to withhold its consent, Landlord may withhold its consent under subparagraph (a)  unless:
(i) Tenant provides to Landlord (A) the name and address of the proposed assignee or subtenant, (B) the terms and conditions of (including all consideration for) the proposed assignment or sublease, (C) any information reasonably required by Landlord with respect to the nature and character of the proposed assignee or subtenant and its business, business history, activities and intended use of the Premises, and (D) a copy of the proposed assignment or sublease;
 
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(ii) the nature, character and reputation of the proposed assignee or subtenant and its business, activities and intended use of the Premises are suitable to and in keeping with the standards of the Building, and in compliance with this Lease (including, without limitation, the Permitted Use) and Laws;
(iii) the proposed assignee or subtenant (and any affiliate of such assignee or subtenant) is not then an occupant of the Building or of any other building within the Project or a person who actively dealt with Landlord or any affiliate of Landlord or any employee, agent or representative of Landlord or any affiliate of Landlord (directly or through a broker) with respect to space in the Building or of any other building within the Project during the three (3) months immediately preceding Tenant’s request for Landlord’s consent (with “ actively dealt with ” meaning, at least, written correspondence and negotiation for the lease of space within the Project, but excluding, without more, the mere delivery of advertising, leasing or property information relating to the Project); provided, however, that Landlord shall not unreasonably withhold, condition or delay its consent to an assignment of this Lease or a sublease of the Premises to a proposed assignee or subtenant under the foregoing portion of this subparagraph (iii)  if neither Landlord nor any affiliate of Landlord is willing and able to accommodate the space needs of such assignee or subtenant within the Project, and Tenant is able to do so by such assignment or sublease;
(iv) the proposed assignee or subtenant is not a governmental entity or instrumentality thereof, unless otherwise approved by Landlord, which approval may be withheld by Landlord if Landlord reasonably determines that the use to be made of the Premises by such governmental entity would be undesirable (such as, for example purposes only, and without limiting the generality of the foregoing, use as a welfare or other social services office for indigent individuals, as a court to which handcuffed defendants may be brought, or as an office to which uniformed or armed individuals may come and go);
(v) the proposed assignment or sublease will not violate any enforceable exclusive use or similar clause in another lease in the Project or give a tenant in the Project a right to cancel its lease;
(vi) neither Landlord nor its affiliates have experienced previous defaults by, and are not in litigation with, the proposed assignee or subtenant or its affiliates;
(vii) (A) the proposed assignee’s or subtenant’s anticipated use of the Premises does not involve the generation, storage, use, treatment or disposal of Hazardous Material; (B) the proposed assignee or subtenant has not been required by any other landlord, lender or governmental authority to take remedial action in connection with Hazardous Material contaminating a property if the contamination resulted from such assignee’s or subtenant’s actions or use of the property in question; or (C) the proposed assignee or subtenant is not subject to an enforcement order issued by any governmental authority in connection with the use, disposal or storage of a Hazardous Material;
(viii) the use of the Premises by the proposed assignee or subtenant will not violate Law, and will not violate Paragraph 7 or any other provision of this Lease;
(ix) the assignment or sublease is not prohibited by Landlord’s lender;
(x) the proposed assignment or sublease will not result in a number of occupants on a floor that exceeds the design capacity of the Building systems;
 
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(xi) the proposed assignment or sublease will not trigger incremental ADA or other legal requirements in the Common Areas or by Landlord in the Premises, or result in a materially greater burden to the Common Areas or require increased services by Landlord; and
(xii) the proposed assignee or subtenant is not a controversial entity such as a terrorist organization, is not an entity traditionally thought or perceived to be sexist such as Playboy, Hustler and Penthouse magazines and the like, and is not an organization traditionally perceived to be racist such as the Ku Klux Klan, American Nazi Party and the like.
(c) If the rent to be charged by Tenant during the term of any assignment or sublease is less than the rent being quoted by Landlord at the time of such assignment or sublease for comparable space in the Building for a comparable term, calculated using a present-value analysis, Tenant shall not publicly advertise such rent and, further, shall require any such assignee or subtenant, in writing, to keep the amount of such rent confidential.
10.2. Affiliate and Certain Other Transfers . Notwithstanding anything contained in Paragraph 10.1 to the contrary, Tenant may, without the consent of Landlord, assign this Lease or sublease all or any portion of the Premises to:
(a) an affiliate, franchisor or franchisee of Tenant;
(b) a person that acquires all or substantially all of the assets or stock of Tenant;
(c) an entity resulting from a merger, consolidation or reorganization with Tenant or Tenant’s parent organization; or
(d) any of Tenant’s business divisions,
provided that (i) such assignee or subtenant assumes the relevant obligations of Tenant under this Lease, (ii) Tenant gives Landlord notice of such assignment or sublease no later than ten (10) business days thereafter, accompanied by an executed counterpart of any assignment or sublease agreement concerned (from which any financial terms may be redacted) if such an assignment or sublease agreement exists, and (iii) such assignee or subtenant has a net worth, cash balance and operating income immediately following such transaction that is reasonably sufficient to satisfy the financial obligations under this Lease or such sublease, as the case may be. In addition, the sale of stock or other equity interests in Tenant on a public stock exchange (e.g., NYSE or NASDAQ), whether in connection with an initial public offering or thereafter, shall not be deemed an assignment of this Lease and shall not require Landlord’s consent.
10.3. Landlord’s Rights .
(a) If this Lease is assigned or if all or any portion of the Premises is subleased or occupied by any person without obtaining Landlord’s prior consent when such consent is required, Landlord may collect Rent and other charges from such assignee or other person, and apply the amount collected to Rent and other charges payable under this Lease, but such collection and application shall not constitute consent or waiver of the necessity of consent to such assignment, sublease or occupancy, nor shall such collection and application constitute the recognition of such assignee, subtenant or occupant as Tenant under this Lease or a release of Tenant from the further payment and performance of all obligations of Tenant under this Lease.
(b) No consent by Landlord to any assignment or sublease by Tenant (and no assignment or sublease by Tenant, whether made with or without Landlord’s consent) shall relieve Tenant of any obligation to be paid or
 
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performed by Tenant under this Lease, whether occurring before or after such consent, assignment or sublease, but rather Tenant and Tenant’s assignee or (to the extent of its obligations under its sublease) subtenant, as the case may be, shall be jointly and severally primarily liable for such payment and performance (including, without limitation, the provisions of this Lease limiting the use of the Premises), which shall be confirmed to Landlord in writing on Landlord’s standard form.
(c) Tenant shall reimburse Landlord for Landlord’s reasonable attorneys’ and other fees and costs, not to exceed $2,000 per occurrence (assuming that Landlord is not asked to prepare the assignment or sublease agreement, or to negotiate or revise substantially Landlord’s standard form consent documents) incurred in connection with both determining whether to give consent and giving consent when such consent is required.
(d) No assignment under this Lease requiring Landlord’s consent shall be effective unless and until Tenant provides to Landlord an executed counterpart of the assignment agreement concerned in form and substance reasonably satisfactory to Landlord, in which the assignee has assumed and agreed to perform all of Tenant’s obligations under this Lease on and after the effective date of such assignment, and Landlord has executed and delivered a consent thereto on Landlord’s standard form. No subleasing under this Lease requiring Landlord’s consent shall be effective unless and until Tenant provides to Landlord an executed counterpart of the sublease agreement concerned in form and substance reasonably satisfactory to Landlord and the Sublease Consent Agreement attached as Exhibit C (with such modifications thereto as shall be reasonably requested by Tenant’s subtenant and reasonably agreed to by Landlord), and Landlord has executed and delivered such Sublease Consent Agreement.
(e) Without affecting any of its other obligations under this Lease, if this Lease is assigned or all or any portion of the Premises is subleased (excluding any Non-Consent Transfer), and the rent, additional rent, compensation and other economic consideration received or to be received by Tenant in connection with such assignment or sublease (including, without limitation, any payment in excess of fair market value for services rendered by Tenant to the assignee or subtenant or for assets, fixtures, inventory, equipment or furniture transferred by Tenant to the assignee or subtenant) exceeds Rent payable by Tenant under this Lease for the period concerned (calculated on a per rentable square foot basis if less than all of the Premises is subleased), then Tenant shall pay fifty percent (50%) of such excess to Landlord when received, after deducting reasonable advertising expenses, brokerage commissions, tenant improvement costs and attorneys’ fees actually incurred by Tenant and payable to non-affiliated third parties in connection with such assignment or subleasing, all of which must be amortized over the applicable assignment or sublease term. Prior to Landlord consenting to any such assignment or sublease, Tenant shall provide to Landlord a detailed written schedule of all rent, additional rent, compensation and other economic consideration received or to be received by Tenant in connection with such assignment or sublease, and all reasonable advertising expenses, brokerage commissions, tenant improvement costs and attorneys’ fees actually incurred or to be incurred by Tenant and payable to non-affiliated third parties in connection with such assignment or subleasing, which schedule shall be certified by Tenant to Landlord as true, correct and complete in all respects, with such certification executed by Tenant. As used in this subparagraph (e) , the term “Tenant” refers to the assignor in the event of an assignment, and to the sublandlord in the event of a sublease.
11. Indemnity .
11.1. Indemnity by Tenant . Subject to Paragraph 12.3 , Tenant shall indemnify, defend and hold harmless Landlord and Landlord’s employees from and against all demands, claims, causes of action, judgments, losses, damages, liabilities, fines, penalties, costs and expenses, including attorneys’ fees, arising from either of the following:
(a) the occupancy or use of any portion of the Property by Tenant or Tenant’s Occupants (including, without limitation, any slip and fall or other accident on the Property involving Tenant or Tenant’s Occupants), unless directly and proximately caused by Landlord or Landlord’s employees, agents or contractors; or
(b) any Hazardous Materials deposited, released or stored by Tenant or Tenant’s Occupants on the Property.
 
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If any action or proceeding is brought against Landlord or Landlord’s employees by reason of any of the matters set forth in the preceding sentence that creates an obligation under the preceding sentence for Tenant to defend, Tenant, on notice from Landlord, shall defend Landlord and Landlord’s employees at Tenant’s sole cost and expense with competent and licensed legal counsel reasonably satisfactory to Landlord, but selected by Tenant. The provisions of this Paragraph 11.1 shall survive Lease end.
11.2. Indemnity by Landlord . Subject to Paragraph 12.3 , Landlord shall indemnify, defend and hold harmless Tenant and Tenant’s employees from and against all demands, claims, causes of action, judgments, losses, damages, liabilities, fines, penalties, costs and expenses, including attorneys’ fees, arising from either of the following:
(a) the occupancy or use of any portion of the Property by Landlord or Landlord’s employees, agents or contractors (including, without limitation, any slip and fall or other accident on the Property involving Landlord or Landlord’s employees, agents or contractors), unless directly and proximately caused by Tenant or Tenant’s Occupants; or
(b) any Hazardous Materials deposited, released or stored by Landlord or Landlord’s employees, agents or contractors on the Property.
If any action or proceeding is brought against Tenant or Tenant’s employees by reason of any of the matters set forth in the preceding sentence that creates an obligation under the preceding sentence for Landlord to defend, Landlord, on notice from Tenant, shall defend Tenant and Tenant’s employees at Landlord’s sole cost and expense with competent and licensed legal counsel reasonably satisfactory to Tenant, but selected by Landlord. The provisions of this Paragraph 11.2 shall survive Lease end.
Notwithstanding anything contained in this Paragraph 11 to the contrary, the indemnities set forth in this Paragraph 11 shall not cover employees of Federal Express, United Parcel Service, the United States Postal Service or other mail/package courier companies who enter onto the Property to service multiple tenants of the Building or the Building generally.
12. Insurance .
12.1. Tenant’s Insurance . On or before the date of this Lease, Tenant shall, at Tenant’s sole cost and expense, procure and continue in force the following insurance coverage:
(a) commercial general liability insurance with a combined single limit for bodily injury and property damage of not less than $1,000,000 per occurrence and $2,000,000 in the aggregate, and at least a $5,000,000 umbrella;
(b) property insurance with special causes of loss including theft coverage, insuring against fire, extended coverage risks, vandalism and malicious mischief, and including boiler and sprinkler leakage coverage, in an amount equal to the full replacement cost (without deduction for depreciation) of Tenant’s Property; and
(c) workers’ compensation insurance satisfying Tenant’s obligations under the workers’ compensation laws of the state of Utah, and other insurance required by Laws for the protection of employees of Tenant working on or around the Property with no less than the limits required by Laws,
 
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and furnish Landlord with certificates of coverage of such insurance. Such minimum limits shall in no event limit the liability of Tenant under this Lease. Such liability insurance shall name Landlord as an additional insured, and both such liability and property insurance shall be with companies authorized to do business in Utah and having a rating of not less than A:XII in the most recent issue of Best’s Key Rating Guide, Property-Casualty . All such policies shall be written as primary policies, not contributing with and not in excess of the coverage that Landlord may carry, and shall only be subject to reasonable deductibles. Tenant may maintain all or any part of the insurance required pursuant to this Lease in the form of a blanket policy covering other locations in addition to the Premises, and Tenant may satisfy its obligations under this Lease with its umbrella policies. Tenant shall, at least ten (10) days prior to the expiration of such policies or as soon thereafter as the same are received by Tenant, furnish Landlord with renewed certificates of insurance. Landlord shall use its best efforts to impose the foregoing insurance requirements on all tenants of the Building.
12.2. Landlord’s Insurance . Landlord shall, as part of Operating Expenses, procure and continue in force:
(a) commercial general liability insurance with a combined single limit for bodily injury and property damage of not less than $1,000,000 per occurrence and $2,000,000 in the aggregate, and at least a $5,000,000 umbrella;
(b) at least basic form property insurance covering the Building for its full replacement cost, subject to such reasonable deductibles as Landlord may select, together with rental income insurance in a reasonable amount;
(c) any insurance required by Laws for the protection of employees of Landlord working on or around the Property (including, without limitation, worker’s compensation insurance) with no less than the limits required by Laws; and
(d) such other reasonable insurance as may reasonably be (i) deemed prudent by Landlord, (ii) required by Landlord’s mortgage lender, or (iii) carried by landlords in Comparable Buildings.
Such minimum limits shall in no event limit the liability of Landlord under this Lease. All such insurance shall be with companies authorized to do business in Utah and having a rating of not less than A:XII in the most recent issue of Best’s Key Rating Guide, Property-Casualty .
12.3. Waiver of Subrogation . Tenant shall cause the property insurance policy required to be carried by Tenant pursuant to Paragraph 12.1(b) , and Landlord shall cause the property insurance policy required to be carried by Landlord pursuant to Paragraph 12.2(b) , to be written in a manner so as to provide that the insurance company waives all right of recovery by way of subrogation against the other Party in connection with any loss or damage covered by such policy. Regardless of whether such waivers are included in the applicable property insurance policies, and notwithstanding any other provision of this Lease to the contrary:
(a) Tenant waives (with the intent that the waiver be effective against Tenant itself and against any third party claiming by, through or under Tenant, including any insurance company claiming by way of subrogation) all rights that Tenant may have now or in the future against Landlord for compensation for any damage to or destruction of Tenant’s Property caused by fire or other casualty to the extent that Tenant is or will be compensated by property insurance or would be but for a failure of Tenant to maintain property insurance for the full replacement cost of Tenant’s Property (excluding a reasonable deductible) that is required to be carried by Tenant pursuant to Paragraph 12.1(b) ; and
(b) Landlord waives (with the intent that the waiver be effective against Landlord itself and against any third party claiming by, through or under Landlord, including any insurance company claiming by way of
 
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subrogation) all rights that Landlord may have now or in the future against Tenant for compensation for any damage to or destruction of the Building caused by fire or other casualty to the extent that Landlord is or will be compensated by property insurance or would be but for a failure of Landlord to maintain property insurance for the full replacement cost of the Building (excluding a reasonable deductible) that is required to be carried by Landlord pursuant to Paragraph 12.2(b) .
The foregoing provisions of this Paragraph 12.3 shall survive Lease end.
13. Damage and Destruction .
13.1. Repair . If the Premises are damaged or destroyed by any casualty, then unless this Lease is terminated in accordance with this Paragraph 13 , Landlord shall, as soon as reasonably practicable, in a reasonable, good and workmanlike manner and in accordance with Laws, repair the Premises to the condition in which the Premises were immediately prior to such damage or destruction; provided, however, that Landlord shall not be required to repair any damage to, or to make any restoration or replacement of, Tenant’s Property. If Tenant does not occupy the Premises during the period of such repairs, then during such period, Landlord shall regularly communicate with Tenant regarding the progress of such repairs so that Tenant can reasonably plan for the recommencement of Tenant’s occupancy of the Premises. Landlord shall permit Tenant and its agents to enter the Premises during the thirty (30)-day period prior to the completion of such repairs to prepare the Premises for Tenant’s use and occupancy, including the installation of Tenant’s Property. Any such permission shall constitute a license only and shall be subject to the conditions set forth in Paragraph 5 of the attached Exhibit A .
13.2. Abatement . Until such repair is complete or this Lease is terminated in accordance with this Paragraph 13 , Rent shall be abated proportionately commencing on the date of such damage or destruction as to that portion of the Premises rendered untenantable by such damage or destruction, if any; provided, that if only a portion of the Premises is damaged, but such damage causes the entire Premises to be untenantable, the entire Rent shall be abated. If the damage is caused by the negligence or willful misconduct of Tenant or Tenant’s Occupants, Rent shall not abate except to the extent of rental income insurance proceeds relating to this Lease actually received by Landlord, or which would have been received by Landlord had Landlord carried the rental income insurance required to be carried by Landlord pursuant to Paragraph 12.2 . Landlord shall use its best efforts to collect such insurance proceeds. If Landlord elects to repair any such damage and Tenant has not elected to terminate this Lease as provided below, any abatement of Rent shall end on the date on which a factually correct notice is given by Landlord to Tenant that the Premises have been repaired, and exclusive possession of the Premises is delivered to Tenant.
13.3. Termination by Landlord . If:
(a) the Premises are damaged as a result of a risk not required to be covered by insurance;
(b) the Premises are damaged in whole or in part during the last twelve (12) months of the Term existing as of the date immediately prior to such damage or destruction;
(c) the Building (whether or not the Premises are damaged) is damaged to the extent of forty percent (40%) or more of its then-replacement value;
(d) the Premises are damaged to the extent that it would take, according to the reasonable estimate of Landlord’s architect or contractor, in excess of nine (9) months after the date on which such damage occurs to complete the requisite repairs; or
(e) insurance proceeds adequate to repair the Property are not available to Landlord for any reason beyond Landlord’s reasonable control (other than any applicable deductible amount) (excluding Landlord’s failure to carry the insurance required under Paragraph 12.2 ),
 
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then Landlord may either elect to repair the damage or terminate this Lease by notice of termination given to Tenant within thirty (30) days after such event, so long as Landlord terminates leases in the Building covering an aggregate of at least seventy-five percent (75%) of the rentable square footage of the Building.
13.4. Termination by Tenant . If the Premises are damaged, Landlord shall provide to Tenant as soon as reasonably practicable, but in no event later than thirty (30) days after the occurrence of such damage, a reasonable estimate of Landlord’s architect or contractor, setting forth the estimated time required to complete the requisite repairs. If the Premises are damaged to the extent that it would take, according to such estimate, in excess of nine (9) months after the date on which such damage occurs, or three (3) months after the date on which such damage occurs if such damage occurs within the last twelve (12) months of the Term, to complete the requisite repairs, and the Premises would be untenantable for such nine (9)-month or three (3)-month period, respectively, Tenant may elect to terminate this Lease by notice of termination given by Tenant to Landlord within ten (10) business days after Landlord provides to Tenant such estimate. If Tenant has the right to, but does not, terminate this Lease pursuant to the immediately preceding sentence, but, subject to force majeure, Landlord fails to repair or restore the Building and Premises within thirty (30) days after the later of (a) the date set forth in such estimate, or (b) the expiration of such nine (9)-month or three (3)-month period, respectively, then Tenant may terminate this Lease as of the date of such damage by giving notice of such termination to Landlord within ten (10) business days after the expiration of such thirty (30)-day period.
13.5. On Termination . If this Lease is terminated pursuant to Paragraphs 13.3 or 13.4 , Tenant shall vacate and surrender the Premises to Landlord as soon as reasonably practicable in accordance with Paragraph 17.1 , but in no event later than thirty (30) days after Tenant receives or gives a notice of termination. If this Lease is so terminated, Landlord shall return the Security Deposit to Tenant in accordance with Paragraph 6 .
14. Condemnation .
14.1. Termination . If the whole of the Premises is taken through a Condemnation Proceeding, this Lease shall automatically terminate as of the date of the taking. The phrase “ the date of the taking ” means the date of taking actual physical possession by the condemning authority, the entry of an order of occupancy or such earlier date as the condemning authority gives notice that it is deemed to have taken possession. If part, but not all, of the Premises is taken, either Party may terminate this Lease as set forth in this Paragraph 14.1 . Landlord may terminate this Lease if any portion of the Property (whether or not including the Premises) is taken that, in Landlord’s reasonable judgment, substantially interferes with Landlord’s ability to operate or use the Property for the purposes for which the Property was intended, so long as Landlord terminates leases in the Building covering an aggregate of at least seventy-five percent (75%) of the rentable square footage of the Building. Tenant may terminate this Lease if any portion of the Property (not including the Premises) is taken that:
(a) terminates all physical access to and from the Premises and the public rights-of-way abutting the Property, and Landlord fails to provide reasonably acceptable substitute access; or
(b) reduces the parking available to Tenant and Tenant’s Occupants on the Property below Tenant’s Parking Stall Allocation, unless Landlord provides to Tenant replacement parking within reasonable proximity to the Building.
 
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Any such termination must be accomplished through notice given no later than thirty (30) days after, and shall be effective as of, the date of the taking. If this Lease is so terminated, Landlord shall return the Security Deposit to Tenant in accordance with Paragraph 6 .
14.2. Restoration . In all other cases, or if neither Landlord nor Tenant exercises its right to terminate, this Lease shall remain in effect and Landlord shall restore the remaining portion of the Property and, to the extent affected thereby, the Building and the Premises to the extent of Building standard improvements, to its and their former condition as nearly as is reasonably practicable, and any condemnation award paid in connection with such taking shall be used to the extent necessary for such purpose.
14.3. General . If a portion of the Premises is taken and this Lease is not terminated, Rent shall be reduced in the proportion that the floor area of the Premises taken bears to the total floor area of the Premises immediately prior to such taking. Whether or not this Lease is terminated as a consequence of a Condemnation Proceeding, all damages or compensation awarded for a partial or total taking, including any award for severance damage and any sums compensating for diminution in the value of or deprivation of the leasehold estate under this Lease, shall be the sole and exclusive property of Landlord; provided, that Tenant shall be entitled to any award for loss of, or damage to, Tenant’s Property, loss of business and moving expenses, if a separate award is actually made to Tenant.
15. Landlord’s Financing . Within ten (10) business days after Landlord’s request, Tenant shall execute a subordination, non-disturbance and attornment agreement or other similar document, subordinating this Lease to any mortgage, deed of trust or similar instrument covering the Property, and providing a non-disturbance agreement in favor of Tenant, all in reasonable form and substance reasonably satisfactory to Tenant and the lender concerned. If the holder of any mortgage or deed of trust elects to have this Lease superior to the lien of its mortgage or deed of trust and gives written notice of such election to Tenant, this Lease shall be deemed prior to such mortgage or deed of trust, whether such notice is given before or after foreclosure. On any sale, assignment or transfer of Landlord’s interest under this Lease or in the Premises, including any such disposition resulting from Landlord’s default under a debt obligation, such sale, assignment or transfer shall be subject to this Lease, and Tenant shall attorn to Landlord’s successors and assigns and shall recognize such successors or assigns as Landlord under this Lease, regardless of any rule of law to the contrary or absence of privity of contract, provided that such successors and assigns recognize this Lease and do not disturb Tenant’s use and occupancy of the Premises so long as no Tenant Default exists under this Lease. Landlord shall use its best efforts to obtain a subordination, non-disturbance and attornment agreement in favor of Tenant from Landlord’s current mortgage lender in form and substance reasonably satisfactory to the Parties and such lender. Tenant shall be responsible for any costs, expenses or fees payable to such lender or such lender’s legal counsel in connection therewith up to $3,000.00, and Landlord shall be responsible for any costs, expenses or fees payable to such lender or such lender’s legal counsel in connection therewith in excess of $3,000.00.
16. Default .
16.1. Tenant Default . The occurrence of any of the following events shall constitute a “ Tenant Default ” under this Lease:
(a) Tenant fails to pay any Rent or other sum on the date when due under this Lease, and such failure is not cured within three (3) business days after notice is given to Tenant that the same is past due;
(b) Tenant fails to observe or perform any other term, covenant or condition to be observed or performed by Tenant on the date when due under this Lease, and such failure is not cured within ten (10) business days after notice is given to Tenant of such failure; provided, however, that if more than ten (10) business days is reasonably required to cure such failure, no Tenant Default shall occur if Tenant commences such cure within such ten (10)-business day period and thereafter diligently prosecutes such cure to completion;
 
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(c) Tenant (i) files a petition in bankruptcy, (ii) becomes insolvent, (iii) has taken against it in any court, pursuant to state or federal statute, a petition in bankruptcy or insolvency or for reorganization or appointment of a receiver or trustee (and such petition is not dismissed within sixty (60) days), (iv) petitions for or enters into an arrangement for the benefit of creditors, or (v) suffers this Lease to become subject to a writ of execution; or
(d) Tenant vacates the Premises, if such vacation would adversely affect or render void the property insurance carried by Landlord on the Building; provided, however, that if the sole, adverse effect caused by such vacation is an increase in the premium for such property insurance and Tenant pays the incremental amount of such increase within ten (10) business days after notice thereof, such vacation shall not be a Tenant Default under this Lease.
16.2. Remedies .
(a) Subject to applicable Utah Laws, on any Tenant Default under this Lease, Landlord may at any time, without waiving or limiting any other right or remedy available to Landlord:
(i) perform in Tenant’s stead any obligation that Tenant has failed to perform, and Landlord shall be reimbursed within ten (10) business days after demand for any reasonable cost incurred by Landlord, with interest thereon at the Default Rate from the date of such expenditure until paid in full, with interest;
(ii) terminate Tenant’s rights under this Lease by notice;
(iii) reenter and take possession of the Premises by any lawful means (with or without terminating this Lease); or
(iv) pursue any other remedy allowed by Law.
(b) Tenant shall pay to Landlord the reasonable cost of recovering possession of the Premises, all reasonable costs of reletting (including reasonable renovation, remodeling and alteration of the Premises in a manner that is typical and customary for Comparable Buildings), the reasonable amount of any commissions paid by Landlord in connection with such reletting, and all other reasonable costs and damages proximately caused by the Tenant Default, including attorneys’ fees and costs actually incurred, and shall repay to Landlord all free rent and any other similar concession given to Tenant; provided, however, that for purposes of Tenant’s liability under the foregoing portion of this sentence, such costs of reletting and commissions (only) shall be amortized over the initial term of the new lease, with interest thereon at the Interest Rate, and Tenant shall be liable only for that portion so amortized falling within the remaining portion of the Term.
(c) Notwithstanding any termination or reentry, the liability of Tenant for Rent payable under this Lease shall not be extinguished for the balance of the Term, and Tenant agrees to compensate Landlord on demand for any deficiency (which deficiency shall be reduced by all amounts actually received by Landlord from reletting the Premises). In the event of a Tenant Default, Landlord shall use its best efforts to mitigate its damages in accordance with Utah law.
(d) No reentry or taking possession of the Premises or other action by Landlord or Landlord’s employees, agents or contractors on or following the occurrence of any Tenant Default shall be construed as an election by Landlord to terminate this Lease or as an acceptance of any surrender of the Premises, unless Landlord provides Tenant notice of such termination or acceptance.
 
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16.3. Past Due Amounts .
(a) If Tenant fails to pay when due any amount required to be paid by Tenant under this Lease, such unpaid amount shall bear interest at the Default Rate from the due date of such amount to the date of payment in full, with interest, and Landlord may also charge a sum of five percent (5%) of such unpaid amount as a service fee. This late payment charge is intended to compensate Landlord for Landlord’s additional administrative costs resulting from Tenant’s failure to perform in a timely manner Tenant’s obligations under this Lease, and has been agreed on by the Parties after negotiation as a reasonable estimate of the additional administrative costs that will be incurred by Landlord as a result of such failure. The actual cost in each instance is extremely difficult, if not impossible, to determine. This late payment charge shall constitute liquidated damages and shall be paid to Landlord together with such unpaid amount.
(b) Notwithstanding the foregoing to the contrary, such interest and late payment charge shall not apply if the failure by Tenant to pay when due any amount required to be paid by Tenant under this Lease is cured within three (3) business days after the date on which Landlord gives Tenant written or verbal notice of such failure; provided, that such three (3)-day notice and cure period shall not be applicable more than once in any twelve (12)-month period. Therefore, on the second time in any twelve (12)-month period that Tenant fails to pay when due any amount required to be paid by Tenant under this Lease, such interest and late payment charge will be due and payable by Tenant and such notice and cure period will be inapplicable. (Such notice and cure period applies only to such interest and late payment charge.)
(c) All amounts due under this Lease are and shall be deemed to be rent or additional rent, and shall be paid without (except as expressly provided in this Lease) abatement, deduction, offset, prior notice or demand. Landlord shall have the same remedies for a failure to pay any amount due under this Lease as Landlord has for the failure to pay Basic Monthly Rent.
16.4. Landlord Default . Landlord shall be in default under this Lease (a “ Landlord Default ”) if Landlord fails to perform an obligation required of Landlord, or to correct a representation or warranty of Landlord made, under this Lease within thirty (30) days after notice by Tenant to Landlord and the holder of any mortgage or deed of trust covering the Property whose name and address have been furnished to Tenant, specifying the respects in which Landlord has failed to perform such obligation, and such holder fails to perform such obligation within a second thirty (30)-day period commencing on the expiration of such first thirty (30)-day period; provided, however, that if the nature of such obligation is such that more than thirty (30) days are reasonably required for performance or cure, no Landlord Default shall occur if Landlord or such holder commences performance or cure within its thirty (30)-day cure period and thereafter diligently prosecutes the same to completion. In no event may Tenant terminate this Lease or withhold the payment of rent or other charges provided for in this Lease as a result of a Landlord Default, unless Tenant first obtains a judicial order expressly authorizing Tenant to do so pursuant to a judicial proceeding, notice of which has been given to Landlord by personal service as required by the Utah Rules of Civil Procedure for such proceeding. Subject to the foregoing provisions of this Paragraph 16.4 and to the provisions of Paragraph 22.8 , in the event of a Landlord Default, Tenant shall have the right to pursue all rights and remedies (legal and equitable) available to Tenant under Utah law. Notwithstanding the foregoing portion of this Paragraph 16.4 , on receipt of any notice of default from Tenant, Landlord shall promptly commence, and thereafter diligently prosecute to completion, the cure of such default, whether or not Tenant gives notice of such default to the holder of any mortgage or deed of trust covering the Property whose name and address have been furnished to Tenant.
 
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17. Expiration and Termination .
17.1. Surrender of Premises .
(a) Prior to Lease end, Tenant shall, at Tenant’s sole cost and expense:
(i) remove only Tenant’s Property, excluding Tenant’s voice and data lines, wiring, cabling and facilities, and all other property shall, unless otherwise directed by Landlord in accordance with this Paragraph 17.1 , remain in the Premises as the property of Landlord without compensation; provided, however, that (A) Tenant shall not remove Tenant’s Property from the Premises without Landlord’s prior consent if such removal will impair or damage the structure of the Building, and (B) at Landlord’s option, Landlord may, at Lease end, remove Tenant’s voice and data lines, wiring, cabling and facilities in accordance with the National Electric Code, as amended, and Tenant shall reimburse Landlord for the reasonable cost of such removal within ten (10) business days after receipt of an invoice therefor;
(ii) repair any damage to the Property caused by or in connection with the removal of any property from the Premises by or at the direction of Tenant; and
(iii) deliver all keys and access cards to the Premises to Landlord, and promptly and peaceably surrender the Premises to Landlord “broom clean,” in good order and condition, subject to normal and reasonable wear and tear and the other provisions of this Lease regarding maintenance, repair, casualty, condemnation, insurance and indemnification.
(b) Any of Tenant’s Property not removed from the Premises on the abandonment of the Premises or on Lease end for any cause shall conclusively be deemed to have been abandoned and may be appropriated, removed, sold, stored, destroyed or otherwise disposed of by Landlord without notice to, and without any obligation to account to, Tenant or any other person unless required to do so by Laws. Tenant shall pay to Landlord all reasonable expenses incurred in connection with the removal and disposition of such Tenant’s Property in excess of any amount received by Landlord from such removal and disposition.
(c) In addition, Landlord may require Tenant to remove any other Alteration made to the Premises by Tenant or by Landlord for Tenant and to restore the Premises to their condition prior to making such Alteration; provided, that, except as set forth in subparagraph (a)(i) above with respect to Tenant’s Property, Tenant shall have no obligation to remove:
(i) the Tenant Improvements made pursuant to Exhibit A ; or
(ii) any other Alteration made by Tenant with Landlord’s prior consent if, but only if, at the time such consent was given and prior to installation, Tenant also obtained Landlord’s express consent and agreement to such Alteration remaining in the Premises at Lease end.
17.2. Holding Over .
(a) Tenant must obtain the prior consent of Landlord in order to remain in possession of the Premises after Lease end. If Tenant remains in possession of the Premises after Lease end without obtaining the prior consent of Landlord:
(i) such occupancy shall constitute an unlawful detainer of the Premises (and Tenant shall be subject to an unlawful detainer action therefor), for which period of occupancy Tenant shall pay to Landlord a rental (and not a penalty) in the amount of one hundred fifty percent (150%) of the last Rent payable by Tenant to Landlord, plus all other charges payable under this Lease; and
(ii) Tenant shall reimburse Landlord within ten (10) business days after the receipt of an invoice therefor, accompanied by such detail as may reasonably be requested by Tenant, for all reasonable out-of-pocket
 
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costs, expenses, fees, charges or penalties incurred or payable by Landlord in connection with any other tenant or lease for the Premises resulting from the delay by Tenant in surrendering the Premises in accordance with the provisions of this Lease, including, without limitation, penalties or holdover rent paid or credit given to the next tenant for the Premises as a result of late delivery to such tenant of the Premises.
(b) If Tenant remains in possession of the Premises after Lease end with the prior consent of Landlord, such occupancy shall be a tenancy from month-to-month on all of the terms of this Lease and provisions of Utah law applicable to a month-to-month tenancy (which tenancy shall be terminable as of the end of any calendar month by written notice given by either Party to the other at least fifteen (15) days prior to the end of the month concerned) at a rental (and not as a penalty) in the amount of one hundred twenty-five percent (125%) of the last Rent payable by Tenant to Landlord, plus all other charges payable under this Lease.
(c) Notwithstanding anything contained in this Paragraph 17.2 to the contrary, on any termination of this Lease pursuant to Paragraphs 13 or 14 , Tenant shall have up to thirty (30) days to surrender the Premises after the effective date of such termination, and the provisions of this Paragraph 17.2 shall not be applicable until after the expiration of such thirty (30)-day period.
17.3. Survival . The provisions of this Paragraph 17 shall survive Lease end.
18. Estoppel Certificate; Financial Statements .
18.1. Estoppel Certificate . Either Party shall, within ten (10) business days after request by the other Party, execute and deliver to the requesting Party an estoppel certificate in commercially reasonable form in favor of the requesting Party and such other persons as the requesting Party may reasonably request setting forth the following:
(a) a ratification of this Lease;
(b) the Commencement Date and Expiration Date;
(c) that this Lease is in full force and effect and (if Landlord is the responding Party, to Landlord’s current, actual knowledge) this Lease has not been assigned, subleased, modified, supplemented or amended (except by such writing as shall be stated);
(d) that, to the current, actual knowledge of the responding Party, all conditions under this Lease to be performed by the requesting Party have been satisfied or, in the alternative, those claimed by the responding Party to be unsatisfied;
(e) that, to the current, actual knowledge of the responding Party, no defenses, claims or offsets exist against the enforcement of this Lease by the requesting Party or, in the alternative, those claimed by the responding Party to exist;
(f) that, to the current, actual knowledge of the responding Party, the responding Party is not in default under this Lease;
(g) that (if true) Tenant has accepted and occupied the Premises;
(h) the amount of advance Rent, if any (or none if such is the case), paid by Tenant;
 
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(i) the date to which Rent has been paid;
(j) the amount of the Security Deposit; and
(k) such other factual information reasonably related to this Lease as the requesting Party may reasonably request.
The requesting party and third parties reasonably designated by the requesting Party shall be entitled to rely on any such estoppel certificate.
18.2. Financial Statements . Tenant shall, within ten (10) business days after Landlord’s request, furnish to Landlord current financial statements for Tenant, prepared in accordance with generally accepted accounting principles or other reasonable accounting standards consistently applied and certified by Tenant to be true and correct. If such financial statements are available online, Tenant shall have complied with the requirements of this Paragraph 18.2 if Tenant provides to Landlord within such ten (10)-business day period the website where such financial statements may readily be obtained by Landlord. If Tenant is a public reporting company registered with the SEC, Tenant shall have complied with the requirements of this Paragraph 18.2 if Tenant provides to Landlord within such ten (10)-business day period its most recent annual 10-K report and any then-existing subsequent quarterly 10-Q and 8-K reports. After the date of this Lease, Landlord shall only request Tenant’s financial statements if required or requested to do so by a current or prospective lender or purchaser. Tenant shall have no obligation to produce financial statements in addition to those, if any, then existing, and shall have no obligation to produce financial statements more often than twice in any twelve (12)-month period.
19. Parking; Signage .
19.1. Parking .
(a) Parking on the Property is provided generally to tenants of the Building on a non-reserved, first-come-first-served basis. During the Term, Landlord shall provide at least the same number of visitor parking spaces as are currently provided for the Building. Tenant and Tenant’s Occupants shall have the non-exclusive right (together with other tenants of the Building) without charge, other than as contemplated by Paragraph 5 with respect to Operating Expenses, to use a number of parking stalls located on the Property equal to Tenant’s Parking Stall Allocation only, and shall not use a number of parking stalls greater than Tenant’s Parking Stall Allocation (excluding de minimis , occasional excess use), unless prior consent has been given by Landlord; provided, however, that as part of Tenant’s Parking Stall Allocation, Landlord shall provide to Tenant, and mark with appropriate signage (at Tenant’s cost), a minimum of twenty-five (25 reserved, underground covered parking stalls, with elevator access to all floors of the Building and roll-down security door, at no other additional cost in the parking structure serving the Building in a mutually acceptable location; provided further, however, that if Tenant fails to lease the balance of the premises in the Building pursuant to Paragraph 3.4 , such twenty-five (25) parking stalls shall be reduced by five (5) parking stalls (or, alternatively, there shall be a proportionate reduction to the extent that Tenant leases some but not all of the balance of the premises in the Building pursuant to Paragraph 3.4) .
(b) Automobiles of Tenant and Tenant’s Occupants shall be parked only within parking areas not otherwise reserved by Landlord or specifically designated for use by any other tenant or occupants associated with any other tenant. Landlord and Landlord’s employees, agents or contractors may cause to be removed any automobile of Tenant or Tenant’s Occupants that may be parked wrongfully in a prohibited or reserved parking area, provided that such prohibited or reserved parking area is adequately marked with signs placed in reasonable locations. Each Building lease shall contain limitations on parking substantially similar to those contained in this Paragraph 19.1 , and Landlord shall diligently enforce such limitations in a nondiscriminatory manner.
 
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19.2. Signage .
(a) Tenant shall be entitled to Building standard signage on the Building interior directory, at the entrance to the Premises and on the Building exterior multi-tenant monument sign, as well as the Crown Signage described in Paragraph 3.5 (subject to the provisions of Paragraph 3.5 ), all at Tenant’s sole cost and expense. Tenant shall not place or suffer to be placed (i) on any exterior door, wall or window of the Premises, (ii) on any part of the inside of the Premises that is visible from the outside of the Premises, or (iii) elsewhere on the Property, any sign, decoration, lettering, attachment, advertising matter or other thing of any kind, without first obtaining Landlord’s approval. Unless expressly permitted by this Lease, neither Tenant nor Tenant’s Occupants shall erect, install, hold or place by any method any signage of any type outside of the Premises and on or around the Property, including, without limitation, any banner or placard sign held by individuals on any public property adjacent to or near the Property. Landlord may, at Tenant’s sole cost and expense, following at least ten (10) business days’ prior notice, remove any item erected in violation of this Paragraph 19.2 , and may enter the Premises to do so when necessary.
(b) All approved signs or letterings on doors shall be printed, painted and affixed at the sole cost and expense of Tenant by a person approved by Landlord, and shall comply with the requirements of the applicable municipality. At Tenant’s sole cost and expense, Tenant shall maintain all permitted signs and shall, on Lease end, remove all of its signs and repair any damage caused by such removal.
20. Landlord’s Representations and Warranties .
20.1. Representations and Warranties . Landlord represents and warrants to Tenant that (unless otherwise expressly indicated) as of the date of this Lease:
(a) (i) Landlord has good and marketable fee simple title to the Premises and the Property, with full right and authority to lease the Premises to Tenant;
(ii) there are no liens, encumbrances or other matters affecting such title that would interfere with the Permitted Use;
(iii) the Property is zoned to permit the Permitted Use; and
(iv) to Landlord’s current, actual knowledge, there are no covenants, restrictions or other agreements that would interfere with the Permitted Use;
(b) to Landlord’s current, actual knowledge :
(i) the Property has not been used to treat, store, process or dispose of Hazardous Materials;
(ii) there are no releases nor have there ever been any releases of Hazardous Materials at, on or under the Property that would give rise to a cleanup or remediation obligation under any applicable Environmental Laws; and
(iii) the Property does not contain (A) any underground storage tanks, nor have there ever been any underground storage tanks on the Property, (B) asbestos in any form, including insulation or flooring, (C) PCB-containing equipment, including transformers or capacitors, or (D) any other Hazardous Materials that could affect or impair Tenant’s use of or operations at the Property or the health or safety of Tenant’s employees,
 
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and notwithstanding anything contained in this Lease to the contrary, Tenant shall have no liability of any kind to Landlord for any pre-existing Hazardous Materials located on the Property as of the date of this Lease, or for any Hazardous Materials that migrate onto or under the Property or otherwise become present at the Property as the result of the activities of anyone other than Tenant or Tenant’s Occupants;
(c) to Landlord’s current, actual knowledge, the Building (including the Premises) complies (and will, as of the Commencement Date, comply) with Laws and any covenants, conditions and restrictions affecting the Building;
(d) to Landlord’s current, actual knowledge, as of the Commencement Date:
(i) the Building (including the Premises) will be free from any material defect in materials or workmanship;
(ii) the Premises will be in good, structurally sound condition and watertight;
(iii) the Building utilities and mechanical, electrical and HVAC systems will be in good, working condition and repair; and
(iv) the fire sprinklers in the Building (including in the Premises) will have adequate flow and pressure in accordance with the regulations of the National Fire Protection Association;
(e) no pending Condemnation Proceeding relating to or affecting the Property exists, and Landlord has no current, actual knowledge that any such action is presently threatened or contemplated; and
(f) as of the Commencement Date, Tenant shall have exclusive possession of the Premises.
20.2. Remedy . If any representation or warranty set forth in Paragraph 20.1 is inaccurate or untrue as of the date when made, Landlord’s sole and exclusive obligation and liability (and Tenant’s sole and exclusive right and remedy) under this Paragraph 20 shall be to cause the condition causing such representation or warranty to be inaccurate or untrue to be corrected or remedied at Landlord’s sole cost and expense, subject, however, to any provision of this Lease (such as, but without limitation, Paragraphs 7 and 9 ) expressly allocating responsibility to Tenant. Landlord shall so correct or remedy such condition as soon as reasonably practicable following notice of such condition.
21. Rules . Tenant and Tenant’s Occupants shall faithfully observe and comply with all of the rules set forth on the attached Exhibit B , and Landlord may from time to time amend, modify or make additions to or deletions from such rules in a reasonable and nondiscriminatory manner, consistent with Comparable Buildings; provided, that no such amendments, modifications, additions or deletions (either individually or in the aggregate) shall, without Tenant’s prior consent:
(a) adversely affect Tenant’s business operations as permitted under this Lease, Tenant’s compliance with Laws, or Tenant’s use of, or access to and from, the Premises;
 
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(b) materially increase any of Tenant’s obligations, or materially decrease any of Tenant’s rights, under this Lease, or require the payment of any monies to Landlord; or
(c) conflict with any of the express provisions of this Lease;
provided further, that Tenant shall have a reasonable time to bring its operations at the Premises into compliance with any such amendments, modifications, additions and deletions. Such amendments, modifications, additions and deletions shall be effective ten (10) business days after receipt by Tenant of notice, accompanied by a copy of such amendments, modifications, additions or deletions. Although Landlord shall use its best efforts to enforce such rules in a consistent and nondiscriminatory manner against all tenants of the Building (and shall promptly undertake to enforce such rules (without the obligation of bringing a lawsuit) on receipt of notice from Tenant of another tenant’s or occupant’s breach of the rules that is disturbing Tenant or Tenant’s Occupants), Landlord shall not be responsible to Tenant for the failure of any other tenant or person to observe such rules. In the event of any conflict between such rules and the provisions of this Lease, the provisions of this Lease shall prevail.
22. General Provisions .
22.1. No Partnership . Landlord does not by this Lease, in any way or for any purpose, become a partner or joint venturer of Tenant in the conduct of Tenant’s business or otherwise.
22.2. Force Majeure . If either Party is delayed or hindered in or prevented from the performance of any act required under this Lease by reason of acts of God, weather, strikes, boycotts, lockouts, other labor troubles (other than within such Party’s organization), inability to procure labor or materials, fire or other casualty, accident, failure of power, governmental requirements, restrictive Laws of general applicability, riots, civil commotion, insurrection, terrorism, war or other reason not the fault of the Party delayed, hindered or prevented and beyond the control of such Party (financial inability excepted) (any of the foregoing, “ force majeure ”), performance of the action in question shall be excused for the period of delay and the period for the performance of such action shall be extended for a period equivalent to the period of such delay; provided, however, that the time period customarily associated with obtaining any approvals, permits, consents or waivers shall not be an event of force majeure. The provisions of this Paragraph 22.2 shall not, however, operate to excuse Tenant from the prompt payment of Rent or any other amount required to be paid by Tenant under this Lease, or excuse Landlord from the prompt payment of any amount required to be paid by Landlord under this Lease, except with respect to Tenant as otherwise expressly provided in Paragraphs 8.4, 13 and 14 . The Party claiming the benefit of any force majeure delay shall use its best efforts to notify the other Party promptly following the occurrence of any event constituting a force majeure delay.
22.3. Notices . Unless otherwise expressly provided in this Lease, any communication to be given by either Party to the other shall be given in writing by personal service, express mail, Federal Express or any other similar form of courier or delivery service providing proof of delivery, or mailing in the United States mail, postage prepaid, certified, return receipt requested and addressed to such Party as follows:
If to Landlord :
T-Stat One, LLC
3400 North Ashton Boulevard, Suite 100
Lehi, Utah 84043
Attention: Andrew Bybee
 
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with a required copy to :
the holder of any mortgage or deed of trust covering the Property
whose name and address have been furnished to Tenant
If to Tenant :
Vivint Solar, Inc.
4931 North 300 West
Provo, Utah 84604
Attention: President
Either Party may change the address at which such Party desires to receive notice on notice of such change to the other Party. Any such notice shall be deemed to have been given, and shall be effective, on delivery to the notice address then applicable for the Party to which the notice is directed; provided, however, that refusal to accept delivery of a notice or the inability to deliver a notice because of an address change that was not properly communicated shall not defeat or delay the giving of a notice. Notwithstanding the foregoing, communications under this Lease may also be delivered via fax (provided that a hard copy of any such notice has been dispatched by one of the other means for giving notice within twenty-four (24) hours after faxing). Such fax notice given in the foregoing manner shall be deemed given upon confirmed transmission if sent by fax transmission, provided such transmission is prior to 5:00 p.m. on a business day. If such transmission is after 5:00 p.m. on a business day or is on a non-business day, such notice will be deemed given on the following business day. Any notice to be given by either Party may be given by such Party’s employee, attorney or other agent.
22.4. Severability . If any provision of this Lease or the application of any provision of this Lease to any person or circumstance shall to any extent be invalid, the remainder of this Lease or the application of such provision to persons or circumstances other than those as to which such provision is held invalid shall not be affected by such invalidity. Each provision of this Lease shall be valid and enforceable to the fullest extent permitted by Laws.
22.5. Brokerage Commissions . Except as may be set forth in one or more separate agreements between (i) Landlord and Landlord’s broker, or (ii) Landlord or Landlord’s broker and Tenant’s broker:
(a) Landlord represents and warrants to Tenant that no claim exists for a brokerage commission, finder’s fee or similar fee in connection with this Lease based on any agreement made by Landlord; and
(b) Tenant represents and warrants to Landlord that no claim exists for a brokerage commission, finder’s fee or similar fee in connection with this Lease based on any agreement made by Tenant.
Landlord shall indemnify, defend and hold harmless Tenant from and against any claim for a brokerage commission, finder’s fee or similar fee in connection with this Lease based on an actual or alleged agreement made by Landlord. Tenant shall indemnify, defend and hold harmless Landlord from and against any claim for a brokerage commission, finder’s fee or similar fee in connection with this Lease based on an actual or alleged agreement made by Tenant.
22.6. Use of Pronouns . The use of the neuter singular pronoun to refer to either Party shall be deemed a proper reference even though either Party may be comprised of one or more persons. The necessary grammatical changes required to make the provisions of this Lease apply in the plural sense where more than one Party exists and to two or more persons, shall in all instances be assumed as though in each case fully expressed. Unless the context clearly requires otherwise, the singular includes the plural, and vice versa, and the masculine, feminine and neuter adjectives include one another.
 
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22.7. Successors . Subject to Paragraph 10 , all provisions contained in this Lease shall be binding on, and shall inure to the benefit of, the Parties and their respective successors and assigns; provided, however, that on and after any sale of the Premises and assignment of this Lease by Landlord and assumption in writing of this Lease by the transferee, Landlord shall be relieved entirely of all of Landlord’s obligations under this Lease to the extent arising after such sale, assignment and assumption, and such obligations shall automatically pass to Landlord’s successor in interest.
22.8. Recourse by Tenant . Notwithstanding anything in this Lease to the contrary, Tenant shall look solely to the right, title and interest of Landlord in the Property, together with the rents, issues and profits, the proceeds of any sale or insurance carried by Landlord, and the awards of any Condemnation Proceeding, with respect to the Property, subject to the prior rights of the holder of any superior mortgage or deed of trust, for the collection of any judgment (or other judicial process) requiring the payment of money by Landlord on any Landlord Default, and no other asset of Landlord or any other person shall be subject to levy, execution or other procedure for the satisfaction of Tenant’s remedies. Nothing contained in this Paragraph 22.8 shall limit or affect any right that Tenant may otherwise have to obtain injunctive relief or to exercise any other remedies or actions against Landlord that do not require Landlord to respond with other than Landlord’s interest in the Property. The provisions of this Paragraph apply not only to claims under the express terms of this Lease, but also to claims of any kind whatsoever arising from the relationship between the Parties or any rights and obligations they may have relating to the Property or this Lease.
22.9. Quiet Enjoyment . On Tenant paying Rent and all other amounts payable by Tenant under this Lease and observing and performing all of the terms, covenants and conditions on Tenant’s part to be observed and performed under this Lease within any applicable notice and cure period given to Tenant in this Lease, Tenant shall have quiet use and enjoyment of the Premises for the Term without interference, hindrance or interruption from Landlord, or anyone claiming by, through or under Landlord (including, without limitation, any transferee of Landlord’s interest under this Lease, whether by voluntary act or foreclosure), subject to all of the provisions of this Lease.
22.10. No Waiver . No failure by either Party to insist on the strict performance of any covenant, duty or condition of this Lease or to exercise any right or remedy on a breach of this Lease by the other Party shall constitute a waiver of such covenant, duty, condition or breach. Either Party may, but shall not be obligated to, waive any covenant or duty of any other Party, or any of its rights, or any conditions to its obligations, under this Lease by notice to the other Party. No such waiver by either Party will imply or constitute its further waiver of the same or any other matter. No waiver shall affect or alter the remainder of this Lease, but each other covenant, duty and condition of this Lease shall continue in full force and effect with respect to any other then-existing or subsequently-occurring breach. No act or thing done by Landlord or Landlord’s agents during the Term will be deemed an acceptance of a surrender of the Premises, and no agreement to accept a surrender will be valid unless in writing signed by Landlord. The delivery of Tenant’s keys to any employee or agent of Landlord will not constitute a termination of this Lease unless Landlord has entered into a written agreement to that effect. No payment by either Party, or receipt from either Party, of a lesser amount than the Rent or other amount due will be deemed to be anything other than a payment on account of the earliest Rent or other amount due. No endorsement or statement on any check, or any letter accompanying any check or payment as Rent or other amount, will be deemed an accord and satisfaction. The recipient will accept any check for payment without prejudice to its right to recover the balance of such Rent or other amount due or to pursue any other remedy available to such recipient.
22.11. Rights and Remedies . Except as expressly set forth in this Lease, the rights and remedies of the Parties shall not be mutually exclusive and the exercise of one or more of the provisions of this Lease shall not preclude the exercise of any other provision. The Parties confirm that damages at law may be an inadequate remedy for a breach or threatened breach by either Party of any of the provisions of this Lease. The Parties’ respective rights and obligations under this Lease shall be enforceable by specific performance, injunction or any other equitable remedy. Neither Landlord nor Tenant shall be liable to the other for any consequential, indirect, special, exemplary, punitive or similar damages under Paragraphs 11, 16.2 or 16.4 or any other provision of this Lease.
 
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22.12. Authorization . Each entity Party represents and warrants that:
(a) the individual executing this Lease on behalf of such entity has full power and authority under such entity’s governing documents to execute and deliver this Lease in the name of, and on behalf of, such entity and to cause such entity to perform its obligations under this Lease, without the consent of any third party;
(b) such entity is duly organized and in good standing under the Laws of the state of its formation; and
(c) such entity has the power and authority under Laws and its governing documents to execute and deliver this Lease and to perform its obligations under this Lease.
22.13. Attorneys’ Fees . If any action, lawsuit, mediation, arbitration or proceeding, including bankruptcy proceeding, is brought to recover any Rent or other amount due under this Lease because of any Landlord Default or Tenant Default, to enforce or interpret any provision of this Lease, or for recovery of possession of the Premises, the Party prevailing in such action shall be entitled to recover from the other Party reasonable attorneys’ fees (including those incurred in connection with any appeal), the amount of which shall be fixed by the court and made a part of any judgment rendered. Tenant shall be responsible for all expenses, including, without limitation, reasonable attorneys’ fees, incurred by Landlord in any case or proceeding involving Tenant or any assignee or subtenant of Tenant as the debtor under or related to any bankruptcy or insolvency law. Landlord shall be responsible for all expenses, including, without limitation, reasonable attorneys’ fees, incurred by Tenant in any case or proceeding involving Landlord as the debtor under or related to any bankruptcy or insolvency law. The foregoing provisions of this Paragraph 22.13 shall survive Lease end.
22.14. Merger . Neither the surrender of this Lease by Tenant nor the termination of this Lease by agreement of the Parties or as a result of a Tenant Default shall work a merger, and shall, at Landlord’s option, either terminate any subleases of part or all of the Premises or operate as an assignment to Landlord of any of those subleases. Landlord’s option under this Paragraph 22.14 may be exercised by notice to Tenant and all known subtenants in the Premises.
22.15. Anti-Terrorism .
(a) Tenant represents and warrants to Landlord that:
(i) Tenant and, to Tenant’s actual knowledge, each person owning an interest in Tenant, is (A) not currently identified on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (“ OFAC ”) or on any other similar list maintained by OFAC pursuant to any authorizing statute, executive order or regulation (collectively, the “ List ”), and (B) not a person with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction or other prohibition of United States law, regulation or Executive Order of the President of the United States;
(ii) to Tenant’s actual knowledge, none of the funds or other assets of Tenant constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person (as defined below);
(iii) to Tenant’s actual knowledge, no Embargoed Person has any interest of any nature whatsoever in Tenant (whether directly or indirectly);
 
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(iv) to Tenant’s actual knowledge, none of the funds of Tenant has been derived from any unlawful activity with the result that the investment in Tenant is prohibited by Laws or that this Lease is in violation of Laws; and
(v) Tenant has implemented procedures, and will consistently apply those procedures, to ensure the foregoing representations and warranties remain true at all times.
The term “ Embargoed Person ” means any person or government subject to trade restrictions under U.S. law, including, without limitation, the International Emergency Economic Powers Act, 50 U.S.C. §1701 et seq. , The Trading with the Enemy Act, 50 U.S.C.S. Appx. §1 et seq. , and any Executive Orders or regulations promulgated under it with the result that the investment in Tenant is prohibited by law or Tenant is in violation of law.
(b) Tenant agrees:
(i) to comply with all requirements of law applicable to Tenant relating to money laundering, anti-terrorism, trade embargos and economic sanctions, in effect now or after the date of this Lease;
(ii) to notify Landlord promptly in writing if any of the representations, warranties or covenants set forth in this Paragraph 22.15 are no longer true or have been breached or if Tenant has a reasonable basis to believe that they may no longer be true or have been breached;
(iii) not knowingly to use funds from any “Prohibited Person” (as such term is defined in the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) to make any payment due to Landlord under this Lease; and
(iv) at the request of Landlord, to provide such information as may reasonably be requested by Landlord to determine Tenant’s compliance with the terms of this Paragraph 22.15 .
(c) Tenant’s inclusion on the List at any time during the Term shall be a default under this Lease. Tenant shall not knowingly permit all or any portion of the Premises to be used or occupied by any person on the List or by any Embargoed Person (on a permanent, temporary or transient basis).
22.16. Entire Agreement . This Lease (including Exhibits A, B and C (with any Appendixes to Exhibit A )) exclusively encompasses the entire agreement of the Parties, and supersedes all previous negotiations, understandings and agreements between the Parties, whether oral or written, including, without limitation, any oral discussions, letters of intent and email correspondence. The Parties have not relied on any representation, understanding, information, discussion, assertion, guarantee, warranty, collateral contract or other assurance (including, without limitation, one relating to square footage), made by or on behalf of any other Party or any other person whatsoever (including, without limitation, any real estate broker or agent), prior to the execution of this Lease. The Parties hereby waive all rights and remedies, at law or in equity, arising or that may arise as the result of a Party’s reliance on any such representation, understanding, information, discussion, assertion, guarantee, warranty, collateral contract or other assurance.
22.17. Construction . This Lease has been prepared by Landlord and its professional advisors and reviewed by Tenant and its professional advisors. Landlord, Tenant and their separate advisors believe that this Lease is the product of all of their efforts, that it expresses their agreement, and that it should not be interpreted in favor of either Party or against either Party merely because of such Party’s efforts in preparing it. The Table of Contents and captions to the Paragraphs of this Lease are for convenience of reference only, do not define, limit or describe the scope or intent of any
 
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provisions of this Lease and shall not be deemed relevant in resolving questions of construction or interpretation under this Lease. Unless otherwise set forth in this Lease, all references to Paragraphs are to Paragraphs in this Lease. Exhibits referred to in this Lease and any addendums, riders and schedules attached to this Lease shall be deemed to be incorporated in this Lease as though a part of this Lease.
22.18. Miscellaneous . Tenant shall not record this Lease or a memorandum or notice of this Lease, and any such recordation by or at the direction of Tenant shall be shall be void ab initio (from the beginning) and shall be a breach of this Lease. No amendment to this Lease shall be binding on either Party unless reduced to writing and signed by both Parties. This Lease shall be governed by and construed and interpreted in accordance with the laws (excluding the choice of laws rules) of the state of Utah. Venue on any action arising out of this Lease shall be proper only in the state or federal courts having jurisdiction over the county in which the Property is located. THE PARTIES KNOWINGLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER ON ALL MATTERS ARISING OUT OF THIS LEASE OR THE USE AND OCCUPANCY OF THE PREMISES OR RELATED IN ANY WAY TO THE PROPERTY OR THE PARTIES’ LANDLORD/TENANT RELATIONSHIP. Time is of the essence of each provision of this Lease. If there is more than one Tenant named in this Lease (or if more than one Tenant at any time assumes this Lease), the liability of each such Tenant under this Lease for payment and performance according to this Lease shall be joint and several. The submission of this Lease to Tenant is not an offer to lease the Premises or an agreement by Landlord to reserve the Premises for Tenant. Landlord shall not be bound to Tenant until Tenant has duly executed and delivered duplicate original copies of this Lease to Landlord, and Landlord has duly executed and delivered one of those duplicate original copies to Tenant.
[Remainder of page intentionally left blank; signatures on following page]
 
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THE PARTIES have executed this Lease on the respective dates set forth below, to be effective as of the date first set forth above.

LANDLORD:	
	
T-STAT ONE, LLC ,
a Utah limited liability company	
		
By	 	/s/ Andrew Bybee	
	 	Andrew Bybee	
	 	Authorized Agent	
		
Date	 	9-15-14	
	
TENANT:	
	
VIVINT SOLAR, INC. ,
a Delaware corporation	
		
By	 	/s/ Paul Dickson	
	
Print or Type Name of Signatory:	
	
Paul Dickson	
		
Its	 	 	
		
Date	 	9/15/2014	
 
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EXHIBIT A
to
LEASE

PREPARATION OF PREMISES FOR OCCUPANCY
THIS EXHIBIT is attached to, and is a part of, the foregoing Lease (the “ Lease ”). All words capitalized in this Exhibit shall have the same meaning given in the Lease. If any conflict exists between the provisions of this Exhibit and the provisions of the Lease, the provisions of this Exhibit shall control.
1. Initial Improvements .
(a) Preliminary drawings of the floor plans of the Premises are attached as Appendix 1 .
(b) Landlord shall cause the Base Building Improvements (the “ Base Building Improvements ”) described on the attached Appendix 2 to be completed in accordance with the plans and specifications (the “ Building Plans ”) prepared by Landlord, at Landlord’s cost and expense, the Building Standards and Specifications attached as Appendix 3 and Laws. The Parties shall work together to select an appropriate core/shell architect (the “ Architect ”). In addition, Landlord shall seek input from and consult with Tenant regarding the design and layout of the Base Building Improvements, and shall use reasonable efforts to incorporate Tenant’s comments and suggestions in the preparation of the Building Plans so long as such comments and suggestions do not increase the cost of the Base Building Improvements (unless Tenant agrees to bear such cost). Landlord shall engage RAPT Studios to assist in the design of the Building exterior as well as the interior space unless otherwise agreed to by Tenant. The Base Building Improvements shall be made at Landlord’s sole cost and expense (which shall not be less than $92.00 per rentable square foot of the Building, inclusive of up to $100,000.00 of Landlord’s costs for the Amenities, as defined in paragraph 20 of the attached Appendix 2 , but exclusive of the fees for the preparation of the Building Plans and the fees paid to RAPT Studios), and the cost thereof shall not reduce the TI Allowance, except as provided in Paragraph 2 of this Exhibit and except that any changes, alterations, modifications or upgrades to:
(i) the Base Building Improvements or the Building Plans requested by Tenant and approved by Landlord; or
(ii) the Tenant Improvements or the Tenant Improvement Plans (both defined below) that result in changes, alterations, modifications or upgrades to the Base Building Improvements or the Building Plans,
shall be made at Tenant’s sole cost and expense, subject to the TI Allowance.
(c) Landlord shall cause a space plan (the “ Space Plan ”) for the Premises to be prepared by the Architect. Landlord shall furnish the initial draft of the Space Plan to Tenant for Tenant’s review and approval. Tenant shall within five (5) business days after receipt either provide comments to such Space Plan or approve the same. If Tenant provides Landlord with comments to the initial draft of the Space Plan, Landlord shall provide a revised Space Plan to Tenant incorporating Tenant’s comments within three (3) business days after receipt of Tenant’s comments. Tenant shall within five (5) business days after receipt then either provide comments to such revised Space Plan or approve such Space Plan. The process described above shall be repeated, if necessary, until the Space Plan finally has been approved by Tenant. The Space Plan shall be made at Tenant’s sole cost and expense, subject to the TI Allowance.
 
Exhibit A-1

(d) After the Space Plan finally has been approved by the Parties, Landlord shall also cause the Tenant Improvements (the “ Tenant Improvements ”) described on Appendix 2 to be completed in accordance with the plans and specifications (including the tenant finishes) (the “ Tenant Improvement Plans ”) approved by the Parties, the Building Standards and Specifications attached as Appendix 3 and Laws. The Tenant Improvements shall be made, and the Tenant Improvement Plans shall be prepared, at Tenant’s sole cost and expense, subject to the TI Allowance. (The Base Building Improvements and the Tenant Improvements are referred to in this Exhibit collectively as the “ Initial Improvements .”) The Initial Improvements shall be completed free of any mechanics’ liens, except to the extent of any dispute in connection therewith, in which case Landlord shall adequately protect the Property from the foreclosure of any such lien.
(e) Landlord shall cause the Tenant Improvement Plans to be prepared by a registered professional architect and mechanical and electrical engineer(s). Landlord shall furnish the initial draft of the Tenant Improvement Plans to Tenant for Tenant’s review and approval. Tenant shall within three (3) business days after receipt either provide comments to such Tenant Improvement Plans or approve the same. Tenant shall be deemed to have approved such Tenant Improvement Plans if Tenant does not timely provide comments on such Tenant Improvement Plans. If Tenant provides Landlord with comments to the initial draft of the Tenant Improvement Plans, Landlord shall provide revised Tenant Improvement Plans to Tenant incorporating Tenant’s comments within three (3) business days after receipt of Tenant’s comments. Tenant shall within three (3) business days after receipt then either provide comments to such revised Tenant Improvement Plans or approve such Tenant Improvement Plans. Tenant shall be deemed to have approved such revised Tenant Improvement Plans if Tenant does not timely provide comments on such Tenant Improvement Plans. The process described above shall be repeated, if necessary, until the Tenant Improvement Plans have finally been approved by Tenant.
(f) All bids and all costs will be provided to Tenant for approval per an “open book” process. The cost of the Tenant Improvements shall be calculated at Landlord’s actual cost, with no additional markup or profit to Landlord. Landlord shall provide Tenant with reasonable input into the bidding process (including bid review) so long as Tenant’s actions do not delay such process or the completion of the Initial Improvements, and shall obtain at least two (2) bids for the general contract; provided, however, that Landlord reserves the sole right and discretion, acting reasonably, to make all final decisions regarding selection of contractors, subcontractors and material suppliers, unless (except for all design/build subcontractors, that is, fire/life safety, mechanical, electrical and plumbing subcontractors, which shall not be subject to the following limitation) Tenant, acting reasonably, objects within three (3) business days after the acceptance of any bid of any subcontractor or material supplier to such bid as being an above-market bid (which objection shall be accompanied by a statement of the correct amount of a market bid and reasonable supporting evidence for such statement, such as, for example, a market bid from another reputable subcontractor or material supplier), in which case Landlord shall either cause such subcontractor or material supplier to reduce its bid to a market bid, or designate to Tenant another subcontractor or material supplier that provides a market bid. Landlord shall negotiate with its architects, contractors and suppliers to ensure that the design and construction of the Tenant Improvements are completed using high quality materials and workmanship, with such materials and workmanship being completed at fair market/industry standard costs. Landlord shall use its best efforts to cause the final bids to be competitive for tenant improvements to Comparable Buildings.
(g) Within three (3) business days following the award of all bids for the Tenant Improvements, Landlord shall prepare or caused to be prepared on an open-book basis a construction budget for the Tenant Improvements, which shall reflect the costs set forth in all of such bids and shall be submitted to Tenant for Tenant’s approval. Tenant shall have five (5) business days following receipt of such budget to approve or request clarifications to the same and/or to perform value engineering and make changes to the Tenant Improvement Plans. Tenant shall be deemed to have approved such budget if Tenant does not timely provide comments on such budget. If Tenant provides Landlord with comments to the
 
Exhibit A-2

initial draft of such budget, Landlord shall provide a revised construction budget to Tenant incorporating Tenant’s comments within three (3) business days after receipt of Tenant’s comments. Tenant shall within five (5) business days after receipt then either provide comments to such revised budget or approve such budget. Tenant shall be deemed to have approved such revised budget if Tenant does not timely provide comments on such budget. The process described above shall be repeated, if necessary, until such budget finally has been approved by Tenant. On Tenant’s approval of the budget, Landlord shall submit to Tenant for Tenant’s signature a “Notice To Proceed With Construction” agreement which shall itemize all costs associated with the Tenant Improvements, and include Tenant’s agreement to pay for any such improvement costs in excess of the TI Allowance. Tenant shall execute the Notice to Proceed with Construction within three (3) business days after Tenant’s receipt of the same and prior to construction.
(h) Landlord shall provide project management services in connection with the construction of the Initial Improvements and the Change Orders (defined below). Such project management services shall be performed at Tenant’s sole cost and expense, subject to the TI Allowance, for a fee of one percent (1%) of all costs related to the preparation of the Tenant Improvement Plans and the construction of the Tenant Improvements and the Change Orders. Except for the fee described in the immediately preceding sentence, and for the general conditions, overhead and profit of the general contractor, no other administrative or supervisory fee shall be payable by Tenant in connection with the Tenant Improvements or Change Orders. Tenant may, at Tenant’s discretion and sole cost and expense, engage a representative to oversee construction activities on Tenant’s behalf. Said representative shall coordinate its efforts with Landlord’s project manager and/or contractor, shall have full access to all information and documentation with respect to the Tenant Improvements and may be engaged throughout the design and construction process of the Tenant Improvements.
2. Change Orders . If, prior to the Commencement Date and after the Tenant Improvement Plans and the construction budget have finally been approved by Tenant, Tenant requires improvements or changes (individually or collectively, the “ Change Orders ”) to the Premises in addition to, revision of, or substitution for, the Tenant Improvements, Tenant shall deliver to Landlord for its approval plans and specifications for such Change Orders. Within three (3) business days after such delivery by Tenant, Landlord shall either approve or disapprove such Change Orders, and if Landlord disapproves such Change Orders, Landlord shall advise Tenant of the revisions required. In addition, if specifically requested to do so by Tenant in a request accompanying the plans and specifications for such Change Orders, Landlord shall deliver to Tenant concurrently with Landlord’s approval or disapproval Landlord’s good faith estimate of any Tenant Delay that will result from the contractor’s performance of such Change Orders. Tenant shall revise and redeliver the plans and specifications to Landlord within three (3) business days after Landlord’s advice of its disapproval of a proposed Change Order or Tenant shall be deemed to have abandoned its request for such Change Orders. Tenant shall pay the reasonable, out-of-pocket costs for all preparations and revisions of plans and specifications for, and the construction of, all Change Orders, subject to the TI Allowance.
3. TI Allowance .
(a) Landlord shall contribute an amount of $50.00 per usable square foot of the Premises ($5,100,000.00) based on 102,000 usable square feet) (the “ TI Allowance ”), the total amount of which shall be subject to adjustment as set forth in the definition of “Premises” in Paragraph 1 of the Lease, toward the costs incurred for the Tenant Improvements and Change Orders, including, without limitation, painting, carpeting, voice and data cabling, signage, tile, wall covering, light fixtures, plans, permits, insurance and architectural fees (but expressly excluding Tenant’s Property); provided, however, that if all or any portion of the TI Allowance is not used on or before the date that is one (1) year after the Commencement Date, the TI Allowance or such portion that is not used shall be lost and shall no longer be available to Tenant. In calculating the cost of Tenant Improvements and Change Orders, Landlord shall give Tenant the benefit of any cash, trade and quantity discounts actually received by Landlord.
 
Exhibit A-3

(b) Except as expressly provided in this Paragraph 3 :
(i) Landlord has no obligation to pay for the cost of any Tenant Improvements or Change Orders in excess of the TI Allowance; and
(ii) if the cost of the Tenant Improvements and Change Orders exceeds the TI Allowance, Tenant shall pay such overage to Landlord within ten (10) business days after the receipt of an invoice therefor, accompanied by such detail as may reasonably be requested by Tenant, which invoice may be delivered prior to the commencement of construction.
4. Commencement Date Delay . The Commencement Date shall be delayed as set forth in Paragraph 1 of the Lease, except, as set forth in said Paragraph 1 , to the extent that the delay is actually caused solely by any one or more of the following (each, a “ Tenant Delay ”):
(a) Tenant’s request for Change Orders (whether or not such Change Orders are actually performed) and the contractor’s performance of any approved Change Orders, except to the extent that the delay exceeds any estimated delay set forth in any Landlord delay estimate for the Change Order concerned;
(b) Tenant’s request for materials, finishes or installations requiring unusually long lead times, provided that Landlord gives notice to Tenant of such lead times at the time of Tenant’s request or as soon thereafter as is reasonably practicable;
(c) Tenant’s delay in reviewing, revising or approving plans and specifications beyond the periods set forth in this Exhibit;
(d) Tenant’s delay in providing information critical to the normal progression of the Tenant Improvements (Tenant shall provide such information as soon as reasonably practicable, but in no event longer than three (3) business days after receipt of such request for information from Landlord);
(e) Tenant’s delay in making payments to Landlord for costs of the Tenant Improvements and/or Change Orders in excess of the TI Allowance;
(f) any other act or omission by Tenant or its agents or contractors or persons employed by any of such persons that actually causes a delay of the Commencement Date; or
(g) the failure of any of the following to occur on or before the date set forth (unless such failure is caused by someone other than Tenant):

Matters to be Accomplished	  	Dates by which to be Accomplished	
		
Lease fully executed and delivered by Tenant	  	September 15, 2014	
		
Final space plan for the Premises approved by Tenant	  	April 1, 2015	
		
Final construction drawings for the Premises approved by Tenant	  	June 1, 2015	
If Substantial Completion is delayed by reason of Tenant Delay, then Landlord shall cause the Architect to certify the date on which Substantial Completion would have occurred but for such Tenant Delay, which date shall be the Commencement Date
 
Exhibit A-4

for all purposes of the Lease; provided, however, that if Tenant objects to the decision of the Architect by giving notice to Landlord within five (5) business days after receipt of such certification, the dispute shall be resolved by an independent architect mutually selected by the Parties, acting reasonably, the cost of which architect shall be shared equally by the Parties. Landlord shall use its best efforts to provide Tenant with notice of any Tenant Delay as soon as reasonably practicable.
5. Access by Tenant Prior to Commencement Date . Landlord shall permit Tenant and its employees, agents and contractors to enter the Premises during Business Hours during the thirty (30)-day period prior to the Commencement Date to prepare the Premises for Tenant’s use and occupancy, including the installation of Tenant’s Property. Any such permission shall constitute a license only, conditioned on Tenant’s:
(a) working in harmony with Landlord, Landlord’s employees, agents and contractors and other tenants and occupants of the Building, and not interfering with, delaying or otherwise adversely affecting Landlord’s Work;
(b) obtaining in advance Landlord’s approval of the contractors proposed to be used by Tenant and, if requested by Landlord, depositing with Landlord in advance of any work the contractor’s affidavit for the proposed work and the waivers of lien from the contractor and all subcontractors and suppliers of materials; and
(c) furnishing Landlord with such insurance as Landlord may reasonably require against liabilities that may arise out of such entry.
Any such activities shall be governed by Paragraph 9.2 and all other terms of the Lease.
6. Parties’ Representatives . Tenant shall designate an individual to act as Tenant’s representative with respect to all approvals, directions and authorizations pursuant to this Exhibit. Landlord shall designate an individual to act as Landlord’s representative with respect to all approvals, directions and authorizations pursuant to this Exhibit.
 
Exhibit A-5

Appendix 1
Floor Plans
(See attached)
 
Exhibit A-6

Appendix 2
Base Building Improvements and Tenant Improvements
Base Building Improvements
(to be provided at Landlord’s sole cost and expense)
General Building Information
 
1.	Code: 2009 International Building Code	
 
2.	Jurisdiction: Lehi City and State of Utah	
 
3.	Type of Construction: Type IIA, Occupancy Classification B	
 
4.	Building Height: 5 Stories + Mechanical Penthouse	
 
5.	Fire Sprinklers: Wet Fire Sprinkler system throughout	
 
6.	Structural Design: Reinforced concrete walls for the bathroom and elevators cores, wide flange structural steel columns and beams, and lightweight composite concrete floor over metal decking.	
 
7.	Floor Live Loads:	

a)	    	Office and partitions:	 	50 PSF + 20 PSF	
			
b)	    	Lobbies and main floor:	 	100 PSF	
			
c)	    	Corridors above main floor:	 	80 PSF	
			
d)	    	Mechanical rooms:	 	125 PSF	
			
e)	    	Concentrated Loads - All Areas:	 	2000 PSF	
 
8.	Floor to Floor heights: 13’-10” (structure)	
 
9.	Ceiling heights:	
 
 	a)	Lobbies and corridors 9’-6” to 11’ (finished)	
 
 	b)	Tenant Areas 9’ to 9’-6” ceilings finished	
 
10.	Elevators:	
Three high speed, high efficient Otis Gen2 traction elevators servicing all floors finished with granite floors, stainless steel doors, granite & wood panel wall finishes and 9’ ceiling heights.
 
Exhibit A-7

11.	Two exit steel stairways with concrete pans from all floors – painted and finished.	
 
12.	Heating, Ventilation and Air Conditioning (HVAC):	
 
 	a)	Ventilation and cooling is provided by a floor-by-floor Variable Air Volume (VAV) system served by one (1) roof-mounted, air-cooled liquid chiller of 350 tons nominal capacity. Chilled water is circulated through a closed loop vertical plumbing riser to air handlers located in the equipment room on each floor. Supply and return air ducts are extended from the air handler into the lease area and looped around each floor to supply conditioned air to the VAV terminal boxes. VAV terminal boxes are installed on each floor complete with heating coils, piping and control valves—approximately one VAV terminal box per 1,200 square feet of usable office space. All ductwork and piping are installed “high and tight” against the structural members to allow for lighting and data/communication cabling as part of the Tenant Improvements.	
 
 	b)	Air conditioning equipment capacity is sized using the following load assumptions: Occupancy load: Average of one person per 240 square feet of usable office space.	
 
 	c)	The initial warm shell improvements done during the core and shell, including installation of VAV boxes, heating coils, piping, control valves, and medium pressure duct; along with completion of the HVAC finish, including any new VAV boxes, low pressure ductwork, dampers, grills, diffusers, temperature controls, testing and balancing and standalone air conditioning for server rooms are at Tenant’s sole cost and expense, to the extent that such costs (together with any other all costs payable by Tenant) exceed the TI Allowance.	
 
 	d)	Heating: One (1) natural gas-fired boiler of 2 million BTU’s, located in the mechanical penthouse on the roof, and is providing hot water to all VAV terminal boxes through a vertical plumbing riser in the building core with plumbing loops on each floor.	
 
 	e)	Complete HVAC systems servicing all common areas of the building (including, without limitation, main 1 st floor lobby, elevator lobbies, restrooms and showers) is provided as part of the Base Building Improvements.	
 
13.	Domestic Water:	
Cold and warm water is provided to all restrooms and showers in the core of the building via 2 stand-alone, gas-fired hot water heaters in the penthouse. A circulation pump will continuously circulate warm water from the boiler through a vertical plumbing riser in the core of the building. Cold domestic water is stubbed out into lease space on each floor for future tenant use. The hot water side is serviced with a water softener located in the penthouse.
 
14.	Fire Protection System.	
A fire riser is constructed to meet applicable national and local Building code requirements. The fire protection water supply enters the Building underground at the fire control room on the main floor near the exterior of the Building. Wet standpipes rise vertically through the stairwells. Branch lines complete with sprinkler heads are installed in the building core. A main branch line (defined as 2-  1 ⁄ 2 ” in diameter or larger) is extended from the core into the tenant lease areas on each floor in two directions as part of the Base Building Improvements. The main branch line extended into tenant lease areas along with secondary branch lines (defined as 2” in diameter or less) and all sprinkler head installation are at Tenant’s sole cost and expense, to the extent that such costs (together with all other costs payable by Tenant) exceed the TI Allowance.
 
Exhibit A-8

15.	Electrical Systems:	
Electrical service is installed to meet applicable national and local building codes.
 
 	a)	Power to Panel Electrical service is provided from the electrical utilities service entry point to the switchboard and panels in the equipment room located on each floor.	
 
 	•	 	Lighting load: Average lighting load is .60 watts per one square foot for all areas.	
 
 	•	 	Office equipment load: Average of one personal computer (CPU and monitor) per 240 square feet of usable office space.	
 
 	b)	Fire alarm system is provided to meet applicable building codes in the core areas of the Building. Systems are designed to the necessary capacity to integrate future horns and strobes on Tenant’s floors. Horns, strobes, pull stations and cabinets in the lease areas are at Tenant’s sole cost and expense, to the extent that such costs (together with all other costs payable by Tenant) exceed the TI Allowance.	
 
 	c)	Communication conduit and interduct is provided from the elevator core to Thanksgiving Way and to Ashton Boulevard for Qwest copper lines and fiber lines as well as conduits for other communication providers. Conduit has also been extended between buildings for future communication connections in Thanksgiving Park. Tenant must have arrangements made with a communication provider in the park for communication services no later than 75 days prior to occupancy.	
 
 	d)	Emergency back-up generator is provided for life safety in the building core and shell. Landlord has provided a 750KW generator as part of this package and is sized for additional tenant use in their leased areas and is available to each tenant for an additional cost.	
 
16.	After Hours Usage	
Advanced Control System (ACS), is an after-hours system, and is installed to monitor after hours usage for the tenants. ACS is a PC based, tenant override, and automatic billing system. ACS provides tenants with direct access for implementation of after-hours requests for HVAC and or lighting usage via the internet.
 
17.	Access Control System	
An after-hour exterior door access control system is installed as part of the Base Building Improvements. The system includes electro-magnetic locks installed at the head of all exterior doors and is connected to a server in the main floor electrical room. Card readers are installed at primary entrances to the Building. Scheduling and monitoring of after-hour usage is controlled by a computer in Landlord’s office. The system is expandable. The incremental cost for additional expansion control modules and/or cards and readers for Tenant use is at Tenant’s sole cost and expense, to the extent that such costs exceed the TI Allowance.
 
18.	Surveillance System:	
Landlord has an IP based video surveillance system that monitors all exterior building entrances and parking lots. Surveillance cameras are mounted on the roof, in the main floor lobby, and in the main floor exit corridors. All cameras are monitored and controlled on a computer in Landlord’s office.
 
19.	Parking:	
A minimum of 90% of all parking stalls are sized 9’ x’18’. Handicap accessible parking stalls are provided according to all applicable laws along with designated parking stalls for high fuel efficient vehicles and secure bicycle storage.
 
Exhibit A-9

20.	Special Amenities:	
Landlord shall install a basketball court and pavilion on the Property and such other amenities, if any, as are reasonably agreed to by the Parties, all of which shall be referred to as the “ Amenities .” As part of Landlord’s minimum of $92.00 per rentable square foot of the Building for the Base Building Improvements, Landlord shall spend at least $100,000 in connection with the Amenities. If, as a result of Tenant requests (which shall be subject to the reasonable approval of Landlord), Landlord spends more than $100,000 in connection with the Amenities, all incremental costs of the Amenities above $100,000 (not to exceed an additional $200,000.00) shall be divided equally between Landlord and Tenant. With respect to such incremental costs of the Amenities above $100,000, such costs allocated to Tenant may not be paid for out of the TI Allowance, and such costs allocated to Landlord may not be paid out of the $92.00 per rentable square foot of the Building for the Base Building Improvements.
Base Building Improvement Standard Finishes
Base Building Improvements are constructed in accordance with applicable national and local building and life-safety code requirements including stairwells, elevators, restrooms, showers, equipment rooms, mechanical systems, fire protection systems and electrical systems on each floor, finished per the following Building standards:
 
•	 	Exterior Building Finishes: Combination of Terra-Neo, EFIS, GFRC, reflective glass and glass curtain walls, aluminum frames & entrances.	
 
•	 	Exterior common areas of hardscape and landscape completed per approved site plan including lighted walkways to building entrances, up lighting on the building exterior and lighted parking areas.	
Interior Common Areas
 
•	 	1 st floor entrance and elevator lobby: Floors are granite tile; walls are a combination of glass windows, granite wainscot and wood paneling; lighting is a combination of indirect recessed fluorescent light fixtures and wall sconces.	
 
•	 	2 nd , 3 rd , 4 th and 5 th level elevator lobbies: Granite floor tile; granite base; granite borders around the elevators; painted sheetrock walls; lighting is a combination of indirect recessed fluorescent lights.	
 
•	 	Building Directory: An electronic touch screen Building directory is provided in the elevator lobby on the first floor.	
 
•	 	Postal Boxes: A bank of Post Office Boxes are provided for each tenant and are located on the main floor in the exit corridor behind the restroom area.	
 
•	 	Restrooms: Floors are granite tile, walls are a granite wainscot, walls (above the wainscot) and ceilings are painted sheetrock, recessed and surface mounted lighting and wall sconces are provided. Countertops are of natural granite with stainless steel sinks. Ceiling mounted stainless steel toilet partitions in both the men’s and women’s restrooms. Motion censored faucets and paper towel dispensers. The men’s’ restrooms have wall mounted fixtures with pressurized flush values with motion censored water closets along with waterless urinals to conserve water. The women’s restrooms have dual flush valves in each water closet to conserve water.	
 
•	 	2 Drinking fountains per floor located just outside the restrooms.	
 
•	 	Equipment rooms: Concrete walls, sealed concrete floors; exposed structure ceilings; fluorescent strip lighting hung from structure above.	
 
•	 	Stairwells: Concrete and steel stairs and landings, with painted concrete walls, sealed concrete floors and painted steel handrails. Lighting for emergency egress is included.	
 
•	 	Elevators: Combination of wood and granite panels on the walls; granite flooring; standard ceiling with recessed lighting metal trim and accessories.	
 
•	 	Life-safety exit and egress lighting with alarms and horns as required by code.	
 
•	 	Building signage including stairwells, exiting, and elevator instructions as per code.	
 
Exhibit A-10

No-Smoking
Tenants, employees, or visitors may not smoke in the building or within 25 feet of any door or operable window. A designated smoking area has been provided on the outside corner of the building with a smoker’s pole for proper disposal of cigarette butts.
Lease Areas
All improvements, except as provided above and specifically noted elsewhere, within the Premises are excluded from the Base Building Improvements and are at Tenant’s sole cost and expense, to the extent that such costs (together with all other costs payable by Tenant) exceed the TI Allowance, including but not limited to: interior partitions; sheetrock on perimeter walls; sheetrock column wraps; doors; hardware; interior sidelights; interior glass walls; ceilings; painting; floor coverings; cabinetry; millwork; VAV boxes: HVAC finish; plumbing; electrical service from the panel; phone/data/communication service from the first floor point of demarcation; wall finishes; lighting; building permits and project management services as described.
Tenant Improvements
(to be provided at Tenant’s sole cost and expense, subject to the TI Allowance)
Structure and Shell
 
 	•	 	Any structural support required for Tenant equipment	
 
 	•	 	Any structural support required for roof-mounted Tenant equipment	
HVAC and Plumbing
 
 	•	 	Building standard HVAC, including VAV boxes, medium and low-pressure ductwork, diffusers, sensors and controls.	
 
 	•	 	Independent HVAC/cooling systems for computer rooms, server rooms, etc.	
 
 	•	 	Plumbing and fixtures for kitchens, break rooms, additional restrooms, drinking fountains, etc.	
Electrical and Fire Sprinkler System
 
 	•	 	Fire sprinkler drops and finish sprinkler heads	
 
 	•	 	Building standard light fixtures	
 
 	•	 	Illuminated exit lights in Tenant corridors and space	
 
 	•	 	Tenant electrical panels, electrical wiring from panels to equipment, outlets, furniture, cubicles, FF&E, etc.	
 
 	•	 	Building standard switches and power outlets	
 
 	•	 	Building standard voice and data boxes	
Finishes and Miscellaneous
 
 	•	 	Building standard acoustical ceilings	
 
 	•	 	Building standard sheetrock ceilings	
 
 	•	 	Building standard paints, wall coverings, etc.	
 
 	•	 	Building standard doors	
 
 	•	 	Interior walls (framing, insulation, sheetrock, finishes, etc.)	
 
 	•	 	Additional thermal insulation (exterior walls), as requested by Tenant	
 
 	•	 	Additional sound insulation (interior walls), as requested by Tenant	
 
 	•	 	Tenant lobby and corridor finishes	
 
Exhibit A-11

 	•	 	Floor coverings (carpet, ceramic tile, VCT tile, etc.) including base	
 
 	•	 	Window blinds	
 
 	•	 	Cabinetry (break room, kitchen, offices, copy centers, etc.)	
 
 	•	 	All other finishes and improvements not included in Base Building Improvements	
 
 	•	 	Tenant signage/logo	
 
 	•	 	Voice and data cabling	
Tenant Property (to be provided at Tenant’s sole cost and expense)
Miscellaneous
 
 	•	 	Tenant furniture, fixtures and equipment	
 
 	•	 	All Tenant personal property	
 
Exhibit A-12

Appendix 3
Building Standards and Specifications

Space Planning Assumptions
 
 	•	 	60% open floor plan	
 
 	•	 	40% individual rooms & offices	
Doors
 
 	•	 	VT Industries – Architectural Wood Doors	
 
 	•	 	3’ x 8’ x 1  3 ⁄ 4 ” Solid staved wood core, Premium Grade A - Mahogany Veneer	
 
 	•	 	Matching hardwood edges	
 
 	•	 	Plain Sliced mahogany wood (use recycled wood for a Leed point)	
 
 	•	 	Factory Finished - Natural Clear Finish	
Door Frames & Sidelights
 
 	•	 	Minimum 16 gauge, cold rolled steel w/welded corners	
 
 	•	 	Finish: enamel paint (see paint below)	
Hardware
 
 	•	 	Entrances and or offices: Sargent 10G05 26D commercial grade series – solid cast lever door handles - Keyed for a master building key and a tenant master key.	
 
 	•	 	Passage set at interior doors: Sargent 10G04 26D commercial grade series – solid cast lever door handles	
 
 	•	 	Privacy or bathroom set at interior doors: Sargent 10U65 26D commercial grade series – solid cast lever door handles	
 
 	•	 	Finish: US26D Brushed Aluminum	
 
 	•	 	Hinges: McKinney Full Mortise Hinges 26D TA2714 4  1 ⁄ 2 X 4  1 ⁄ 2	
 
 	•	 	Entry door closer: Sargent 351 CPS commercial grade EN finish or equal	
 
 	•	 	Door stop: Wall bumper – Rockwood 409, US32D (provide backing in wall)	
 
 	•	 	Flush Bolts: Rockwood 1942, US26D	
Paint – Manufacture is Kwal Paint
 
 	•	 	Wallboard: Sheetrock primer and one-two coats egg-shell or flat finishes	
 
 	•	 	Ferrous Metals: Metal primer & one-two coats enamel semi-gloss	
Wall coverings for Tenant Lease Areas
 
 	•	 	To be approved by Landlord	
Carpet
 
 	•	 	Shaw Carpet Mills, Divide 5A065 – Color: Calculate 65500	
 
 	•	 	Minimum weight: 26 AZ/SQ.YD, 11 stitches per inch	
 
 	•	 	Matching carpet base with bounded edge	
 
•	 	Select from color palette approved by Landlord	
 
•	 	Alternate carpet or carpet squares as approved by Landlord	
 
Exhibit A-13

Vinyl Composite Tile
 
 	•	 	For use in break rooms or workrooms	
 
 	•	 	Manufacturers: Armstrong or approved equal	
 
•	 	Select from color palette approved by Landlord	
Ceilings in Tenant Lease Areas
 
 	•	 	2’ x 2’ white acoustical tile	
 
 	•	 	Regressed tegular edge	
 
 	•	 	White metal grid	
 
•	 	Use of other colors and or sizes to be approved by Landlord	
Exterior Window Coverings
 
 	•	 	Levolor 1” Sheer View Metal blind – color #34	
 
 	•	 	Or Similar – Hunter Douglas 1” perforated metal blind	
Window Sills
Painted gyp board
Mechanical Specifications
 
 	•	 	Floor by floor air handlers	
 
 	•	 	Air cooled chiller	
 
 	•	 	Fan-powered VAV terminal units with DDC controls and hot water coils	
 
 	•	 	2’ x 2’ ceiling supply air diffusers, pre finished steel (Nailor Industries or an approved equal)	
 
 	•	 	Perforated return air diffusers (Nailor Industries or an approved equal)	
 
 	•	 	Johnson Controls and ACS Management controls for HVAC and after hours lighting	
Ducting
 
 	•	 	Medium Pressure duct: Galvanized steel oval and round	
 
 	•	 	Rectangular Medium Pressure- Single wall-galvanized sheet metal with 1” acoustical liner (as shown on drawings)	
 
 	•	 	Low Pressure (downstream of VAV): Flexible Polyethylene encapsulated steel wire helical duct with 1” fiberglass insulation and polyethylene vapor barrier	
Electrical Specifications
The following are a list of Building standard lighting fixtures:
 
 	•	 	2’ x 4’, Recessed Direct Indirect fixture 2 T5 fluorescent lamps, electronic ballast, 277 volt	
 
 	•	 	2’ x 2’, Recessed Direct Indirect fixture, 2 T5 fluorescent lamps, electronic ballast, 277 volt	
 
 	•	 	Recessed fluorescent down light with one (1) 26 to 32 watt lamp, or equal	
 
 	•	 	Recessed florescent washer light with one (1) 26 to 32 watt lamp, or equal	
 
 	•	 	Emergency egress lights as required per code.	
 
 	•	 	All lighting except for emergency egress and exit lighting are controlled by the building energy management system with tenant override switching; any use of the lighting systems outside of the standard building occupancy schedule will incur an after-hours charge.	
 
Exhibit A-14

 	•	 	Fluorescent lighting fixtures are budgeted at the rate of one (1) fixture per 75 square feet of usable office area.	
 
 	•	 	Decorative and recess lighting is considered an over standard tenant improvement	
Lighting load is not to exceed 0.60 watts per square foot.
Power & communication raceways and outlets as follows:
 
 	•	 	Each 12’ x 14’ typical office is allotted two (2) 15Amp duplex outlets (6 to 8 per 20 amp circuit) and one (1) voice/data ring and string to accessible ceiling. Additional can be added at request of Tenant.	
 
 	•	 	Open area power will allow for either one (1) 15Amp duplex outlet (6 to 8 per 20 amp circuit) per 50 SF, or a 3 circuit furniture feed for each group of 6 to eight cubicles, or a 4 circuit feed for each group of 10 to 12 cubicles. Additional can be added at request of Tenant.	
 
 	•	 	Landlord is providing a building fire alarm system meeting local and national building codes. Base system is of sufficient capacity to allow installation of horns/strobes in all lease areas as required to meet local code.	
 
Exhibit A-15

EXHIBIT B
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RULES
The rules set forth in this Exhibit are a part of the foregoing Lease (the “ Lease ”). Whenever the term “Tenant” is used in these rules, such term shall be deemed to include Tenant and Tenant’s Occupants. The following rules may from time to time be modified by Landlord in the manner set forth in the Lease. The terms used in this Exhibit shall have the same meaning as set forth in the Lease. If any provision of these rules conflicts with any provision of the Lease, the provision of the Lease shall control.
1. Obstruction . Any sidewalks, entries, exits, passages, corridors, halls, lobbies, stairways, elevators or other similar Common Areas shall not be obstructed by Tenant or used for any purpose other than ingress and egress to and from the Premises. Tenant shall not place any item in any of such locations, whether or not such item constitutes an obstruction, without the prior consent of Landlord. Landlord may remove any obstruction or any such item without notice to Tenant and at the sole cost and expense of Tenant. Any sidewalks, entries, exits, passages, corridors, halls, lobbies, stairways, elevators or other Common Areas are not for the general public, and Landlord shall in all cases retain the right to control and prevent access to them by all individuals whose presence, in the reasonable judgment of Landlord, would be prejudicial to the safety, character, reputation or interests of the Property or Landlord’s tenants. Tenant shall not go on the roof of the Building, except as may otherwise be expressly provided in the Lease.
2. Deliveries . All deliveries and pickups of supplies, materials, garbage and refuse to or from the Premises shall be made only through such access as may reasonably be designated by Landlord for deliveries and only during normal weekday business hours. Tenant shall not obstruct or permit the obstruction of such access. Tenant shall be liable for the acts and omissions of any persons making such deliveries or pickups, in accordance with and subject to Paragraph 11.1 of the Lease.
3. Moving . Furniture and equipment shall be moved in and out of the Building only through such access as may reasonably be designated by Landlord for deliveries and then only during such hours and in such manner as may reasonably be prescribed by Landlord, but Landlord shall not impose any additional or special charge in connection therewith. If Tenant’s movers damage any part of the Improvements, Tenant shall pay to Landlord on demand the amount required to repair such damage, and Landlord shall thereafter repair such damage.
4. Heavy Articles . No safe or article, the weight of which may, in the reasonable opinion of Landlord, constitute a hazard of damage to the Building, shall be moved into the Premises. Other safes and heavy articles shall be moved into, from or about the Building only during such hours and in such manner as shall reasonably be prescribed by Landlord, and Landlord may reasonably designate the location of such safes and articles.
5. Building Security . On business days and on other days between the hours of 6:00 p.m. that evening and 8:00 a.m. the following day, access to the Building, the halls, corridors, elevators or stairways in the Building or to the Premises may be refused unless the individual seeking access is known to the individual or employee of the Building in charge or has a pass and is properly identified, but will not be refused if the individual seeking access is known to the individual or employee of the Building in charge or has a pass and is properly identified. In the event of an invasion, mob, riot, public excitement or other commotion, Landlord reserves the right to prevent access to the Building during the continuance of the
 
Exhibit B-1

same by closing the doors of the Building or any other reasonable method, for the safety of the tenants and protection of the Building and property in the Building. Landlord may from time to time adopt appropriate systems and procedures for the security or safety of the Building (including, without limitation, the installation of security cameras, scanning devices and other security technology in the Common Areas), provided that such systems and procedures shall not unreasonably disturb Tenant’s business. Tenant shall be entitled to receive a number of key cards for after-hours access to the Building equal to Tenant’s Parking Stall Allocation for a fee of not less than $3 per key card, provided that Tenant first has paid to Landlord in full any amounts due under Exhibit A attached to the Lease. Additional cards and replacement cards for any key cards that are lost or stolen may be issued by Landlord for a handling fee to be reasonably determined by Landlord, but such fee will not be less than $25 per replacement card.
6. Pass Key . The janitor of the Building may at all times keep a pass key to the Premises, and, subject to Paragraph 9.3 of the Lease, shall be allowed reasonable admittance to the Premises (excluding Tenant’s vaults, safes and similar areas designated by Tenant in advance); provided, that in any entry of the Premises, such janitor shall use its best efforts to minimize any interference with, or disturbance of, Tenant and the operation of Tenant’s business in the Premises.
7. Locks, Access Cards and Keys . No additional lock or locks shall be placed by Tenant on any door in the Building and no existing lock shall be changed unless consent of Landlord shall first have been obtained, except for any card access system being installed as part of the initial improvements to the Premises made in accordance with Exhibit A to the Lease. A reasonable number of access cards and keys to the Premises and to the toilet rooms, if locked by Landlord, will be furnished by Landlord without charge, other than as contemplated by Paragraph 5 with respect to Operating Expenses, and Tenant shall not have any additional access cards or keys made. At Lease end, Tenant shall promptly return to Landlord all access cards and keys to offices and toilet rooms and provide Landlord with all combinations and keys for any locks, safes, cabinets and vaults remaining in the Premises. Tenant shall keep the doors of the Premises closed and securely locked when Tenant is not at the Premises. Subject to the provisions of the Lease, including, without limitation, Paragraphs 9.2 and 9.3 , Tenant may, at Tenant’s sole cost and expense, install its own card-reader system for the Premises.
8. Use of Water Fixtures . Toilets and other water fixtures shall not be used for any purpose other than that for which the same are intended. No foreign substances of any kind shall be placed in them, and any damage resulting to the same from use on the part of Tenant shall be paid for by Tenant. No individuals shall waste water by tying back or wedging the faucets or in any other manner. On leaving the Premises, Tenant shall shut off all water faucets located within the Premises. Tenant shall use all public restrooms in the Building in a reasonable and typical manner consistent with Comparable Buildings.
9. No Animals; Excessive Noise . No animals shall be allowed in the Building, other than service animals for disabled persons. Neither Tenant nor Tenant’s Occupants shall disturb the occupants of the Building or adjoining buildings or space by the use of any electronic equipment or musical instrument or by the making of loud or improper noises.
10. Bicycles . Bicycles and other vehicles shall not be permitted anywhere inside or on the sidewalks outside of the Building, except in those areas designated by Landlord for bicycle parking. Landlord shall provide for the use of Tenant’s employees enclosed, secure bike storage in a building located near the Building.
11. Trash . Tenant shall not allow anything to be placed on the outside of the Building, nor shall anything be thrown by Tenant out of the windows or doors, or down the corridors or ventilating ducts or shafts, of the Building. All trash and refuse shall be placed in receptacles provided by Landlord for the Building or by Tenant for the Premises.
12. Exterior Windows, Walls and Doors . No window shades, blinds, curtains, shutters, screens or draperies shall be attached or detached by Tenant and no awnings shall be placed over the windows without Landlord’s prior consent.
 
Exhibit B-2

13. Hazardous Operations and Items . Tenant shall not install or operate any steam or gas engine or boiler, or carry on any mechanical business in the Premises without Landlord’s prior consent. (The phrase “mechanical business” does not include typical office use of computers, printers, copiers, fax machines and other similar office equipment.) Tenant shall not use or keep in the Premises or the Building any kerosene, gasoline or other inflammable or combustible fluid or material, or, without Landlord’s prior consent, use any HVAC other than that supplied by Landlord; provided, however, that the foregoing shall not prohibit the storage, use or disposal of cleaning materials, ink, toner and other typical office supplies that are stored in reasonable quantities and are transported, stored, used and disposed of in accordance with Laws. Explosives or other articles deemed extra hazardous shall not be brought into the Building.
14. Hours for Repairs, Maintenance and Alteration . Any repairs, maintenance and alterations required or permitted to be done by Tenant under the Lease shall be done only during the normal weekday business hours unless Landlord shall have first consented to such work being done at other times; provided, however, that Tenant may proceed with after-hours emergency repairs to Tenant’s property without the prior consent of Landlord if Tenant has a bona fide emergency, and despite its best efforts, Tenant has been unable to communicate with Landlord in advance, so long as Tenant promptly delivers to Landlord a description, in reasonable detail, of the repairs made. If Tenant desires to have any repairs or maintenance required to be done by Landlord under the Lease to be done by Landlord’s employees on Saturdays, Sundays, holidays or weekdays outside of normal weekday business hours, Tenant shall pay the extra cost for such labor, unless such work, if done during ordinary business hours, will impede Tenant’s ability to operate Tenant’s business in a reasonable fashion, in which case the cost of such labor shall be included in Operating Expenses, subject to the provisions of the Lease.
15. No Defacing of Premises . Except as permitted by Landlord by prior consent or as otherwise expressly permitted by the terms of the Lease, Tenant shall not paint, mark on, place signs on, cut, drill into, drive nails or screws into, or in any way deface the walls, ceilings, partitions or floors of the Premises or of the Building, with the exception of hanging artwork and LCD screens, whiteboards and internal marketing materials customarily utilized by Tenant in the normal course of Tenant’s business operations in a normal and reasonable manner (but excluding any construction), so long as prior to Lease end the same are removed and all holes and other damage caused thereby are repaired in accordance with Paragraph 17.1 of the Lease. Pictures or diplomas shall be hung on tacks or small nails and, notwithstanding the foregoing, may be hung without Landlord’s prior consent; Tenant shall not use adhesive hooks for such purposes. Tenant shall not be obligated to repair any holes caused by such tacks or small nails.
16. Chair Pads . Tenant is advised to install and maintain under all caster chairs a chair pad, or to take other reasonable steps, to protect the carpeting. If Tenant fails to comply with the immediately preceding sentence, Tenant shall be responsible for any wear and tear of the carpet that would not have occurred had Tenant so complied.
17. Solicitation; Food and Beverages . Landlord reserves the right to restrict, control or prohibit canvassing, soliciting and peddling within the Building. Tenant shall not grant any concessions, licenses or permission for the sale or taking of orders for food or services or merchandise in the Premises, install or permit the installation or use of any machine or equipment for dispensing food or beverage in the Building, nor permit the preparation, serving, distribution or delivery of food or beverages in the Premises, without the prior approval of Landlord and only in compliance with arrangements prescribed by Landlord. Only individuals approved by Landlord shall be permitted to serve, distribute or deliver food and beverage within the Building outside the Premises or to use the public areas of the Building for that purpose. No cooking shall be done or permitted by Tenant on the Premises; provided, that Tenant may use microwave or toaster ovens, refrigerators (but shall not connect any water lines to such refrigerators without the prior written consent of Landlord) and coffee pots in connection with its use of the Premises. Notwithstanding anything in this Paragraph 17 to the contrary, Tenant may, at Tenant’s sole cost and expense, install or have installed in the Premises vending machines for the use of Tenant’s Occupants, and have food and beverage delivered to and served in the Premises for Tenant’s Occupants.
 
Exhibit B-3

18. Directory . Any bulletin board, directory or monument sign for Building tenants shall be provided exclusively for the display of the name and location of Building tenants only and Landlord reserves the right to exclude any other names. Landlord reserves the right to review and approve all signage and directory listings. Tenant shall pay Landlord’s reasonable charges for changing any directory listing at Tenant’s request.
19. Building Name . Landlord may, without notice or liability to Tenant, name the Building and change the name, number or designation by which the Building is commonly known, provided that such name will not lessen the first-class status of the Building. If Landlord changes the address of the Building and such change necessitates a change in Tenant’s stationery or business cards, Landlord shall reimburse Tenant for Tenant’s out-of-pocket costs for a one-month’s supply of replacement stationery and business cards showing the new address. Tenant shall not use the name of the Building for any purpose other than the address of the Building.
20. Expulsion . Landlord reserves the right to exclude or expel from the Building any individual who, in the reasonable judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any of the rules and regulations of the Building.
21. Public Areas . Subject to the terms and conditions of the Lease, Landlord may control and operate the public portions of the Building, and the public facilities and HVAC, as well as facilities furnished for the common use of the tenants, in such manner as Landlord reasonably deems best for the benefit of the tenants, consistent with Comparable Buildings, provided that such control and operation shall not unreasonably interfere with Tenant’s access to, or use of, the Premises.
22. Wireless Internet . If Tenant’s wireless internet service causes interference with the wireless internet of other tenants in the Building, Tenant shall promptly eliminate such interference. If any other tenant’s or occupant’s wireless internet service causes interference with Tenant’s wireless internet service, Landlord shall use its best efforts (without an obligation to file a lawsuit) to cause such interference to cease as soon as possible after Landlord’s receipt of notice from Tenant of such interference.
 
Exhibit B-4

EXHIBIT C
to
LEASE

SUBLEASE CONSENT AGREEMENT
(See attached)
 
Exhibit C-1

SUBLEASE CONSENT AGREEMENT
THIS AGREEMENT (this “ Agreement ”) is entered into as of the      day of             , 20    , among the following:
(i) T-STAT ONE, LLC , a Utah limited liability company (“ Landlord ”), whose address is 3400 North Ashton Boulevard, Suite 100, Lehi, Utah 84043, Attention: Andrew Bybee;
(ii)                      , a                     (“ Tenant ”), whose address is                                         ; and
(iii)                      , a                     (“ Subtenant ”), whose address is                                         .
(Landlord, Tenant and Subtenant are referred to in this Agreement collectively as the “ Parties ,” and individually as a “ Party .”)
FOR GOOD AND VALUABLE CONSIDERATION , the receipt and sufficiency of which are acknowledged, the Parties agree as follows:
1. Definitions . As used in this Agreement, each of the following terms shall have the indicated meaning:
“ Lease ” means the Lease, dated                     , [as amended by                     ,] entered into between Landlord or its predecessor in interest, as landlord, and Tenant or its predecessor in interest, as tenant, a copy of which is attached as Exhibit A ;
“ Premises ” means the premises covered by the Lease;
“ Sublease ” means the [Sublease], dated                     , entered into between Tenant, as sublandlord, and Subtenant, as subtenant, covering the Subleased Premises, a copy of which is attached as Exhibit B ; and
“ Subleased Premises ” means [a portion of] Suite[s]              on the              floor[s] of the office building located at                     , consisting of approximately                      square feet and shown on the attached Exhibit C .
2. Consent to Sublease; Representations and Warranties .
2.1. Consent to Sublease . Landlord consents to the subleasing by Tenant to Subtenant of the Subleased Premises; provided, however, that:
(a) such consent does not:
(i) relieve, release or discharge Tenant of any obligation to be paid or performed by Tenant under the Lease, including, without limitation, the payment of rent and other amounts when due under the Lease, whether occurring before or after such consent or the date of the Sublease, and Tenant will not be released from any liability under the Lease because of Landlord’s failure to give notice of default by Subtenant under or with respect to any of the provisions of the Lease, but rather Tenant and, with respect to the Subleased Premises (except as expressly set forth in the Sublease with respect to the amount of rent or security deposit payable), Subtenant shall be jointly and severally primarily liable for such payment and performance;

(ii) constitute consent by Landlord to, approval or ratification by Landlord of, or agreement by Landlord with, any particular provision of the Sublease or a representation or warranty by Landlord with respect to the Sublease, and Landlord shall not in any respect or for any purpose be bound or estopped by the Sublease; or
(iii) constitute a consent to any change, alteration, addition, improvement or repair to the Subleased Premises, including the installation of signage, which must be separately obtained from Landlord by Tenant in accordance with Paragraphs 9.2 or 19.2 (as the case may be) of the Lease;
(b) Subtenant may not further sublease the Subleased Premises, allow the Subleased Premises to be used by others or assign, transfer, mortgage, encumber, pledge or hypothecate the Sublease or Subtenant’s interest in the Sublease, in whole or in part, without the prior written consent of Landlord in each instance, which consent may be withheld in accordance with the provisions of the Lease relating to assignment and subleasing of the Lease; this consent is not, and shall not be deemed or construed as, a consent to any future or other sublease, assignment or transfer, or a consent to a sublease term beyond the term of the Lease, or a renewal or extension of the Lease or the Sublease;
(c) such consent shall not be deemed or construed to be an assignment or partial assignment of the Lease, or, except to the extent expressly provided by this Agreement, if at all, to create any privity of contract between Landlord and Subtenant with respect to the Lease;
(d) such consent shall not be deemed or construed to modify, amend, waive or affect any term, condition or other provision of the Lease, waive any breach of the Lease or any of the rights or remedies of Landlord, enlarge or increase Landlord’s obligations or Tenant’s rights under the Lease, grant to Subtenant rights that are greater than those granted to Tenant under the Lease, or waive or affect Tenant’s obligations under the Lease, which shall continue to apply to the Premises and the occupants of the Premises as if the Sublease had not been made, with the Sublease remaining in all respects subject and subordinate to the Lease, as the same may be amended; if any conflict exists between the Lease or this Agreement and the Sublease (except, as to Subtenant, as expressly set forth in the Sublease with respect to the amount of rent or security deposit payable), then the Lease or this Agreement, as applicable, shall control and prevail;
(e) notwithstanding any provision of the Sublease to the contrary, Subtenant shall have no right to enforce any of Tenant’s rights under the Lease directly against Landlord, all of such rights being personal to Tenant;
(f) Tenant and Subtenant shall not amend the Sublease in any respect without the prior written approval of Landlord, and in no event shall any such amendment, whether or not approved by Landlord, affect or modify or be deemed to affect or modify the Lease in any respect;
(g) for the benefit of Landlord, Subtenant agrees that Subtenant will be fully and completely bound by each and every term of the Lease relating to Subtenant’s occupancy and use of the Subleased Premises, and, except as expressly set forth in the Sublease with respect to the amount of rent or security deposit payable, Subtenant expressly assumes and agrees to perform and comply with every obligation of Tenant under the Lease as to the Subleased Premises, as if Subtenant was the tenant under the Lease with respect to the Subleased Premises, including, without limitation, Tenant’s obligation to indemnify Landlord in accordance with Paragraph 11.1 of the Lease and deliver financial statements in accordance with Paragraph 18.2 of the Lease; Subtenant acknowledges that Subtenant has examined and is familiar with all of the provisions of the Lease;
(h) Tenant shall be liable to Landlord for any default under the Lease, whether such default is caused by either or both Tenant and Subtenant or anyone claiming by, through or under either Tenant or Subtenant; subject to the notice and cure provisions given to Tenant and set forth in Paragraph 16.1 of the Lease, Landlord may proceed directly against Tenant without first exhausting Landlord’s remedies against Subtenant, Landlord may proceed directly
 
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against Subtenant without first exhausting Landlord’s remedies against Tenant, or Landlord may proceed directly against Tenant and Subtenant simultaneously; therefore, such consent shall not be deemed to restrict or diminish any right that Landlord may have against Tenant or Subtenant pursuant to the Lease, or at law or in equity for violation of the Lease or otherwise, including, without limitation, the right to enjoin or otherwise restrain any violation of the Lease by Subtenant, and Landlord may at any time enforce the Lease against either or both Tenant and Subtenant; any breach of the Lease by either Tenant or Subtenant will entitle Landlord to avail itself of any remedy set forth in the Lease in the event of such breach, as well as any other remedy available at law to Landlord;
(i) notwithstanding anything to the contrary contained in this Agreement, Landlord shall not be liable at any time for any cost or obligation of any kind arising in connection with the Sublease, including, without limitation, any failure of Tenant or Subtenant to perform any of their respective obligations under the Sublease, brokerage commissions or other charges or expenses, improvements to the Subleased Premises, or security required to be given by Subtenant under the Sublease; Tenant and Subtenant jointly and severally agree to indemnify, protect, defend and hold harmless Landlord from all claims, losses, liabilities, costs and expenses (including reasonable attorneys’ fees) that Landlord may incur as a result of any claim to pay any person any commission, finder’s fee or other charge in connection with the Sublease;
(j) to the extent that any provisions of the Sublease are contrary to the provisions of the Lease, such Sublease provisions are deemed revoked as to Landlord, and Tenant and Subtenant shall fully perform all provisions of the Lease; without limiting the generality of the foregoing, and notwithstanding anything to the contrary contained in the Sublease: (i) nothing in the Sublease shall expand the liability or obligations of Landlord, whether to Tenant, Subtenant or any other party, and Landlord withholds consent to anything in the Sublease that does expand or purports to expand the liability or obligations of Landlord; and (ii) Subtenant shall have no right to expand or relocate the Subleased Premises beyond the Premises, to extend or renew the term of the Sublease beyond the initial term of the Lease or to exercise any option to terminate, right of first offer or right of first refusal, regardless of whether Tenant may have any such right under the Lease, and Subtenant shall have no right to exercise Tenant’s rights thereunder; Subtenant’s sole remedy for any alleged or actual breach of its rights in connection with the Subleased Premises shall be solely and exclusively against Tenant; and
(k) pursuant and subject to Paragraph 10.3 of the Lease, concurrently with the execution and delivery of this Agreement, Tenant shall pay to Landlord all of Landlord’s reasonable and customary attorneys’ fees and costs incurred in connection with the Sublease and this Agreement.
2.2. Representations and Warranties . As an inducement for Landlord to give the foregoing consent, Tenant represents and warrants to Landlord that:
(a) the Lease was duly authorized, executed and delivered by Tenant, is in full force and effect, and constitutes the legal, valid and binding obligation of Tenant, enforceable in accordance with its terms;
(b) any improvements to be constructed on the Premises by Landlord have been completed and accepted by Tenant (subject to any “punch list” items to be completed by Landlord under the Lease and to any items warranted by Landlord under the Lease), and any tenant improvement allowance due to Tenant has been paid to Tenant in full;
(c) Tenant unconditionally accepts the Premises in their current “as is” condition and does not have any claim against Landlord for any defect, limitation or deficiency in the Premises (subject to any “punch list” items to be completed by Landlord under the Lease and to any items warranted by Landlord under the Lease), or any defenses against the enforcement of the Lease;
 
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(d) to Tenant’s knowledge, neither Landlord nor Tenant is in default in any manner in the performance of any of their respective obligations under the Lease, and no circumstance exists which, with the passage of time or the giving of notice or both, would constitute such a default; and
(e) except for the Sublease, Tenant has not assigned the Lease or subleased or otherwise transferred or encumbered its interest under the Lease.
3. Payments under Sublease .
3.1. Payment to Landlord . As additional consideration for Landlord’s consent to the Sublease, Tenant irrevocably, absolutely and unconditionally conveys, transfers and assigns to Landlord all rent and other amounts due to Tenant under the terms of the Sublease, together with the right, power and authority to collect such rent and other amounts, subject to Paragraph 10.3 of the Lease. Therefore, notwithstanding any Sublease provision to the contrary, Subtenant covenants to pay directly to Landlord without abatement, deduction, offset, prior notice or demand by Landlord all rent and other amounts payable to Tenant under the Sublease in lawful money of the United States at the address set forth above for Landlord or at such other place as Landlord may designate to Subtenant in writing, on or before the date due. To the extent of all rent and other amounts actually paid by Subtenant and received by Landlord, Tenant shall receive credit under the Lease against current amounts then payable by Tenant to Landlord under the Lease, and Subtenant shall receive credit under the Sublease for those amounts; provided, however, that the receipt by Landlord of any rent or other amounts from Subtenant shall not be deemed or construed as releasing Tenant from Tenant’s obligations under the Lease (except to the extent of such amounts actually received by Landlord) or the acceptance of Subtenant as a direct tenant; provided further, however, that if the rent actually received by Landlord from Subtenant under the Sublease exceeds the rent payable by Tenant under the Lease, Landlord shall promptly remit fifty percent (50%) of such excess to Tenant in accordance with and subject to Paragraph 10.3 of the Lease (meaning that such excess shall be calculated after reimbursing Tenant for reasonable advertising expenses, brokerage commissions, tenant improvement costs and attorneys’ fees actually incurred by Tenant and payable to non-affiliated third parties in connection with such assignment or subleasing, all of which must be amortized over the applicable assignment or sublease term). Landlord shall give Tenant prompt written notice if Subtenant fails to pay any monthly rent to Landlord when due under this Agreement, and no late charge or default interest shall be payable by Tenant on such monthly rent payable by Subtenant in such event if Tenant cures such failure within three (3) business days after the receipt of such notice from Landlord.
3.2. Consideration . Tenant and Subtenant each represent and warrant to, and covenant with, Landlord that the rent expressly set forth in the Sublease (which shall be paid to Landlord in accordance with Paragraph 3.1 of this Agreement) is the only rent or other consideration paid or to be paid by Subtenant to Tenant in connection with the Sublease or the Subleased Premises, and that no other rent or consideration has been paid or is to be paid by Subtenant to Tenant, including, without limitation, any money, property, services or anything else of value (including, without limitation, the payment of costs, cancellation of indebtedness, discounts, rebates or any other items). Landlord may, at its expense, following at least five (5) business days’ written notice to Tenant, audit and review Tenant’s records and accounts relating to the Sublease and the Subleased Premises at any time or from time to time during normal business hours. If such audit and review reveals that Tenant has paid to Landlord less than the amount owed pursuant to Paragraph 10.3 of the Lease, then Tenant shall pay on demand the reasonable cost of such audit and review and any additional rent or other sums owed to Landlord hereunder.
 
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4. Termination of Sublease . If at any time prior to the expiration or sooner termination of the Sublease:
(a) the Lease expires or terminates for any reason, including, without limitation, as a result of a Tenant default, a rejection of the Lease in Tenant bankruptcy proceedings, a voluntary termination agreed to by Landlord and Tenant, or the expiration of the term of the Lease; or
(b) Tenant’s right to possession terminates by surrender, as a result of an unlawful detainer proceeding, or by any other cause, without termination of the Lease,
then the Sublease shall automatically and simultaneously terminate as a matter of law, and Subtenant shall vacate the Subleased Premises on or before the effective date of such expiration, termination or surrender, subject to the provisions of Paragraph 5 of this Agreement. If Subtenant fails to vacate the Subleased Premises in a timely manner, Landlord shall be entitled to all of the rights and remedies available to a landlord against a tenant wrongfully holding over after expiration of the term of a lease without Landlord’s prior written consent, including, without limitation, the rights and remedies available to Landlord under Paragraph 17.2 of the Lease (including, without limitation, those provisions relating to increased rent). Landlord shall not be liable to Tenant or Subtenant for any claim or damage because of the termination.
5. Discretionary Continuance of Sublease .
5.1. Right to Continue . Notwithstanding anything to the contrary contained in Paragraph 4 of this Agreement, if at any time prior to the expiration or sooner termination of the Sublease:
(a) the Lease expires or terminates for any reason (other than a termination under the provisions of the Lease relating to damage, destruction or condemnation), including, without limitation, as a result of a Tenant default, a rejection of the Lease in Tenant bankruptcy proceedings, a voluntary termination agreed to by Landlord and Tenant, or the expiration of the term of the Lease; or
(b) Tenant’s right to possession terminates by surrender, as a result of an unlawful detainer proceeding, or by any other cause, without termination of the Lease,
then Landlord may, at its sole option (which may be exercised in Landlord’s sole and absolute discretion and without any obligation to do so), on written notice delivered to Subtenant not more than thirty (30) days after the effective date of such expiration, termination or surrender, and without any additional or further agreement of any kind by Subtenant (such notice being self-operative without the execution of any further instrument), elect to continue the Sublease without interruption with the same effect as if Landlord, as landlord, and Subtenant, as tenant, had entered into a lease as of the end of the Lease containing the same provisions as those contained in the Sublease for a term equal to the unexpired term of the Sublease, subject, however, to the right of Landlord, in its sole discretion, to terminate the Sublease thereafter on not less than thirty (30) days’ advance written notice given by Landlord to Subtenant. That is, even if Landlord elects to continue the Sublease pursuant to this Paragraph 5 , Landlord may nevertheless at any time thereafter, on at least thirty (30) days’ written notice to Subtenant, terminate the Sublease, in which case the Sublease and all right, title and interest of Subtenant under the Sublease shall terminate, and Subtenant shall vacate the Subleased Premises in accordance with the Sublease and the Lease, as of the effective date of such termination.
5.2. Conditions on Continuance . If Landlord elects to continue the Sublease:
(a) Subtenant shall attorn to Landlord as tenant, and Landlord shall accept such attornment, subject, however, to the foregoing right of Landlord thereafter to terminate the Sublease, and Subtenant shall, within ten (10) days after the request of Landlord, confirm such attornment in writing;
 
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(b) Landlord shall thereafter stand in the place and stead of Tenant under the Sublease, and all rent and other sums payable to Tenant under the Sublease, and all other obligations to be performed by Subtenant under the Sublease, shall continue to be paid and performed when due by Subtenant to Landlord; provided, however, that in no event will Landlord:
(i) be liable for any act, omission or default of Tenant under the Sublease;
(ii) be subject to any claims, offsets or defenses that Subtenant had or might have against Tenant;
(iii) be obligated to cure any default of Tenant that occurred prior to the time that Landlord succeeded to the interest of Tenant under the Sublease, to perform any obligation under the Sublease to have been paid or performed by Tenant prior to the giving of such notice, or for any construction, improvement or repair that is not the obligation of Landlord under the Lease;
(iv) be bound by any payment of rent or other payment made by Subtenant to Tenant in advance of any periods reserved for that payment in the Sublease;
(v) be bound by any modification or amendment of the Sublease made without the written consent of Landlord; or
(vi) be liable for the return of any security deposit not actually received by Landlord;
(c) neither Landlord’s election under this Paragraph 5 nor its acceptance of any rent from Subtenant will be deemed a waiver by Landlord of any provisions of the Lease or this Agreement; and
(d) Landlord shall have the same remedies against Subtenant for the nonperformance of any agreement contained in the Sublease, for the recovery of rent, for the commission of any waste, and for any other default that Tenant had or would have had if the Lease had not ended.
6. Services . Landlord may furnish services to the Subleased Premises requested by Subtenant other than or in addition to those to be provided under the Lease, and bill Subtenant directly for such services for the convenience of, and without notice to, Tenant. Subtenant shall pay to Landlord all amounts that may become due for such services on the due dates therefor. If a separate submeter is installed to measure any utility furnished to the Subleased Premises, then payment for the utility so furnished will be made by Subtenant directly to Landlord as and when billed, and the furnishing of such utility will be in accordance with and subject to all of the applicable provisions of the Lease. Tenant shall not be liable for any bills rendered by Landlord for charges incurred by or imposed on Subtenant for services rendered and materials supplied to the Subleased Premises pursuant to this Paragraph 6 .
7. Insurance . Subtenant shall, with respect to Subtenant and the Subleased Premises, carry the insurance policies required to be carried by Tenant pursuant to Paragraph 12 of the Lease and shall deliver evidence of such policies to Landlord prior to occupancy of the Subleased Premises by Subtenant. The insurance shall name Landlord as an additional insured or as a loss payee, as applicable, and provide that the policy will not be subject to cancellation or change except after at least thirty (30) days’ prior written notice to Landlord and Tenant.
8. No Modifications to Sublease . Neither Subtenant nor its successors or assigns shall enter into any agreement that modifies, surrenders or merges the Sublease without the prior written consent of Landlord. Any agreement made in contravention of the immediately preceding sentence shall not affect or be binding on Landlord.
 
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9. Sale of Subleased Premises . The term “Landlord” as used in this Agreement means only the owner of the Subleased Premises during the term of such owner’s ownership, so that in the event of any sale or other transfer of Landlord’s interest in the Subleased Premises, Landlord will be relieved of all covenants and obligations of Landlord thereafter arising under this Agreement. The provisions of this Agreement, however, shall bind any subsequent owner of the Subleased Premises.
10. Estoppel Certificate . Subtenant shall, within ten (10) days after Landlord’s request, execute and deliver to Landlord an estoppel certificate in favor of Landlord and such other persons as Landlord shall reasonably request setting forth the following: (a) a ratification of the Sublease; (b) the commencement date and expiration date of the Sublease; (c) that the Sublease is in full force and effect and has not been assigned, modified, supplemented or amended (except by such writing as shall be stated); (d) that all conditions under the Sublease to be performed by Tenant have been satisfied or, in the alternative, those claimed by Subtenant to be unsatisfied; (e) that no defenses or offsets exist against the enforcement of the Sublease or, in the alternative, those claimed by Subtenant to exist; (f) the amount of advance rent, if any (or none if such is the case), paid by Subtenant; (g) the date to which rent has been paid; (h) the amount of any security deposit under the Sublease; and (i) such other information regarding the status of the Sublease as Landlord may reasonably request.
11. Notices . Any notice or demand to be given by one Party to another under this Agreement shall be given in writing by personal service, telecopy (provided that a hard copy of any such notice has been dispatched by one of the other means for giving notice within twenty-four (24) hours after telecopying), express mail, Federal Express or any other similar form of courier or delivery service, or mailing in the United States mail, postage prepaid, certified and return receipt requested, and addressed to such Party as set forth at the outset of this Agreement. Any Party may change the address at which such Party desires to receive notice on written notice of such change to the other Party. Any such notice shall be deemed to have been given, and shall be effective, on delivery to the notice address then applicable for the Party to which the notice is directed; provided, however, that refusal to accept delivery of a notice or the inability to deliver a notice because of an address change that was not properly communicated shall not defeat or delay the giving of a notice. Notwithstanding any provision of the Sublease to the contrary, Landlord shall have no obligation to deliver to Subtenant any notice or copy of any notice given under the Lease, and no obligation to accept, consider or respond to any request, inquiry, demand or other communication from Subtenant, whether of a type described in the Lease, the Sublease or otherwise, except as expressly set forth in this Agreement. Tenant and Subtenant shall each, concurrently with the mailing of any default notice to the other under the Sublease, provide a copy of such notice to Landlord in accordance with this Paragraph.
12. Attorneys’ Fees . If any Party brings suit to enforce or interpret this Agreement, the prevailing Party shall be entitled to recover from the other Party or Parties the prevailing Party’s reasonable attorneys’ fees and costs incurred in any such action or in any appeal from such action, in addition to the other relief to which the prevailing Party is entitled.
13. Miscellaneous . This Agreement shall inure to the benefit of, and be binding on, the Parties and their respective successors and assigns, subject to the other provisions of this Agreement. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws (excluding the choice of laws rules) of the state of Utah. This Agreement may be executed in any number of duplicate originals or counterparts, each of which when so executed shall constitute in the aggregate but one and the same document. Each individual executing this Agreement represents and warrants that such individual has been duly authorized to execute and deliver this Agreement in the capacity and for the entity set forth where such individual signs. A modification of, or amendment to, any provision contained in this Agreement shall be effective only if the modification or amendment is in writing and signed by all of the Parties. Any oral representation or modification concerning this Agreement shall be of no force or effect. Each exhibit referred to in, and attached to, this Agreement is an integral part of this Agreement and is incorporated in this Agreement by this reference.
 
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THE PARTIES have executed this Agreement on the respective dates set forth below, to be effective as of the date first set forth above.

LANDLORD :	
	
T-STAT ONE, LLC ,
a Utah limited liability company	
		
By	 	 	
	 	Nathan W. Ricks	
	 	Manager	
		
Date	 	 	
 
Sublease Consent Agreement
Signatures-1

			
TENANT :	

		
By	 	 	
	
Print or Type Name of Signatory:	

		
Its	 	 	
		
Date	 	 	
 
Sublease Consent Agreement
Signatures-2

			
SUBTENANT :	

		
By	 	 	
	
Print or Type Name of Signatory:	

		
Its	 	 	
		
Date	 	 	
 
Sublease Consent Agreement
Signatures-3

CONSENT AND CONFIRMATION OF SUBLEASE GUARANTOR
THE UNDERSIGNED , the guarantor of the Sublease (the “ Sublease ”) identified in the foregoing Sublease Consent Agreement (the “ Agreement ”), (i) consents and agrees to the Agreement, (ii) agrees that the undersigned’s guaranty of the Sublease is in full force and effect and will continue to apply to the Sublease, as the Sublease may be amended after the date of this instrument, or as the Sublease may be enforced by Landlord (as defined in the Agreement), (iii) agrees that the undersigned has no defenses to the enforcement of such guaranty, which is and shall continue to be enforceable in accordance with its terms, and (iv) agrees that such guaranty shall by fully enforceable by Landlord with respect to any obligation of Subtenant (as defined in the Agreement) running in favor of Landlord.
DATED :                     .

 	 	, individually	
		
Date	 	 	
 
Sublease Consent Agreement
Signatures-4

EXHIBIT A
to
SUBLEASE CONSENT AGREEMENT

LEASE
(See attached)
 
Sublease Consent Agreement
Exhibit A-1

EXHIBIT B
to
SUBLEASE CONSENT AGREEMENT

SUBLEASE
(See attached)
 
Sublease Consent Agreement
Exhibit B-1

EXHIBIT C
to
SUBLEASE CONSENT AGREEMENT

SUBLEASED PREMISES
(See attached)
 
Sublease Consent Agreement
Exhibit C-1

EXHIBIT D
to
LEASE

CROWN SIGNAGE LOCATION
(See attached)
 
Exhibit D-1

EXHIBIT E
to
LEASE

LAND
(See attached)
 
Exhibit E-1

 

EXHIBIT F
to
LEASE

ADJACENT LAND
(See attached)
 
Exhibit F-1

 

E XHIBIT  21.1
S UBSIDIARIES OF V IVINT SOLAR , I NC .

Name of Subsidiary	  	Jurisdiction of Incorporation	
VIVINT SOLAR AALIYAH MANAGER, LLC	  	Delaware	
VIVINT SOLAR AALIYAH PROJECT COMPANY, LLC	  	Delaware	
VIVINT SOLAR DEVELOPER, LLC	  	Delaware	
VIVINT SOLAR ELYSE MANAGER, LLC	  	Delaware	
VIVINT SOLAR ELYSE PROJECT COMPANY, LLC	  	Delaware	
VIVINT SOLAR FINANCING I, LLC	  	Delaware	
VIVINT SOLAR FUND III MANAGER, LLC	  	Delaware	
VIVINT SOLAR FUND III MASTER TENANT, LLC	  	Delaware	
VIVINT SOLAR FUND III OWNER, LLC	  	Delaware	
VIVINT SOLAR FUND X MANAGER, LLC	  	Delaware	
VIVINT SOLAR FUND X PROJECT COMPANY, LLC	  	Delaware	
VIVINT SOLAR HANNAH MANAGER, LLC	  	Delaware	
VIVINT SOLAR HANNAH PROJECT COMPANY, LLC	  	Delaware	
VIVINT SOLAR HOLDINGS, INC.	  	Delaware	
VIVINT SOLAR, INC.	  	Delaware	
VIVINT SOLAR LIBERTY MANAGER, LLC	  	Delaware	
VIVINT SOLAR LIBERTY MASTER TENANT, LLC	  	Delaware	
VIVINT SOLAR LIBERTY OWNER, LLC	  	Delaware	
VIVINT SOLAR LICENSING, LLC	  	Delaware	
VIVINT SOLAR MARGAUX MANAGER, LLC	  	Delaware	
VIVINT SOLAR MARGAUX MASTER TENANT, LLC	  	Delaware	
VIVINT SOLAR MARGAUX OWNER, LLC	  	Delaware	
VIVINT SOLAR MIA MANAGER, LLC	  	Delaware	
VIVINT SOLAR MIA PROJECT COMPANY, LLC	  	Delaware	
VIVINT SOLAR NICOLE MANAGER, LLC	  	Delaware	
VIVINT SOLAR NICOLE MASTER TENANT, LLC	  	Delaware	
VIVINT SOLAR NICOLE OWNER, LLC	  	Delaware	
VIVINT SOLAR OPERATIONS, LLC	  	Delaware	
VIVINT SOLAR OWNER I, LLC	  	Delaware	
VIVINT SOLAR PROVIDER, LLC	  	Delaware	
VIVINT SOLAR REBECCA MANAGER, LLC	  	Delaware	
VIVINT SOLAR REBECCA PROJECT COMPANY, LLC	  	Delaware	
SOLMETRIC CORPORATION	  	California	

Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption “Experts” and to the use of our report dated May 14, 2014 (except for Note 2, as to which the date is August 26, 2014), in Amendment No. 1 to the Registration Statement (Form S-1 No. 333-198372) and related Prospectus of Vivint Solar, Inc. for the registration of shares of its common stock.
/s/ Ernst & Young LLP
Salt Lake City, UT
September 17, 2014