Exhibit 10.1

Confidential Treatment

Requested

 

 

 

DIRECT LOAD CONTROL

DELIVERY AGREEMENT

BETWEEN

THE CONNECTICUT LIGHT AND POWER COMPANY

AND

ALTERNATIVE ENERGY RESOURCES, INC.

Amended and Restated as of February 27, 2008

 

 

 

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

DIRECT LOAD CONTROL DELIVERY AGREEMENT

Table of Contents

 

DIRECT LOAD CONTROL DELIVERY AGREEMENT

   1

ARTICLE 1 – DEFINITIONS

   2

1.1

   Defined Terms    2-8

1.2

   Interpretation    8-9

ARTICLE 2 – TERM AND TERMINATION

   9

2.1

   Term and Termination    9

2.2

   DLCS Performance Reviews    9

2.3

   ***    9

2.4

   Continuance in Effect    9-10

2.5

   AMI and Technological Improvements and Interfaces    10

ARTICLE 3 – PROJECT DESCRIPTION

   10

3.1

   Summary Description    10

ARTICLE 4 – CONTRACT CAPACITY AND DISPATCH

   10

4.1

   Capacity    10-12

4.2

   Dispatch    12

4.3

   Forward Capacity Auction    13-15

ARTICLE 5 – CAPACITY PRICING / PAYMENT CALCULATIONS

   15

5.1

   Payments    15

5.2

   Requested Changes    15

ARTICLE 6 – MARKETING, RECRUITMENT AND RETENTION

   15

6.1

   Scope of Work    15-16

6.2

   Marketing Materials    16

ARTICLE 7 – EQUIPMENT INSTALLATION

   16

7.1

   Scope of Work    16

ARTICLE 8 – MAINTENANCE; SITE CLEAN UP

   16

8.1

   Scope of Work    16

8.2

   Tracking, Verification and Resolution of Participant Complaints    16

8.3

   Preventive, Routine and Non-Routine Maintenance and Repairs    17

8.4

   Systems Quality Assurance    17

8.5

   AER Monitoring and Testing    17

8.6

   Reporting    17

8.7

   Site Clean Up    17

ARTICLE 9 - MEASUREMENT AND VERIFICATION (M&V) PLAN

   17

9.1

   AER Responsibility    18

 

i

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

9.2

   Audit and Independent Verification    18

ARTICLE 10 – SOFTWARE SYSTEM

   18

10.1

   Software System    18

ARTICLE 11 – BILLING AND PAYMENT

   18

11.1

   Invoicing, Payment and True-Up    18

11.2

   AER Responsibility    19

11.3

   CL&P Responsibility    19

11.4

   Late Payments    19

11.5

   Billing Disputes    19

ARTICLE 12 – DEFAULT; TERMINATION

   19

12.1

   Events of Default of AER    19-20

12.2

   Events of Default of CL&P    20-21

12.3

   Termination    21-22

12.4

   Special Bankruptcy Provision    22

ARTICLE 13 – CONTRACT ADMINISTRATION AND NOTICES

   22

13.1

   Notices in Writing    22

13.2

   Changes    22

13.3

   Authority of Representatives    23

13.4

   Operating Records    23

13.5

   Billing and Payment Records    23

13.6

   Program Management Procedures    23

13.7

   Dispute Resolution    23-25

ARTICLE 14 – FORCE MAJEURE

   25

14.1

   Definition of Force Majeure    25

14.2

   Exceptions to Force Majeure    25-26

14.3

   Applicability of Force Majeure    26

14.4

   Limitations on Effect of Force Majeure    26

14.5

   Effect of Force Majeure on Capacity Payments    27

ARTICLE 15 – REPRESENTATIONS AND WARRANTIES

   27

15.1

   AER’s Representations and Warranties    27-29

15.2

   CL&P’s Representations and Warranties    29-30

ARTICLE 16 - INSURANCE

   30

16.1

   AER’s Insurance Requirements    30

16.2

   Changes to Insurance Minimum Limits    31

16.3

   Notice to CL&P    31

16.4

   Certificates of Insurance Required    31

16.5

   Application of Proceeds    31

ARTICLE 17 – INDEMNITY

   31

17.1

   General    31

17.2

   Environmental    32

17.3

   Intellectual Property    32

 

ii

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

17.4

   Procedures    32-33

ARTICLE 18 – LIMITATION OF LIABILITY

   33

18.1

   Limitation of Liability    33-34

ARTICLE 19 – COMPLIANCE WITH LAW AND REGULATORY REQUIREMENTS

   34

19.1

   Compliances with the Law    34

19.2

   Regulatory Compliance    34-35

19.3

   Termination Due To Regulatory or Legislative Change / Disallowance    35

ARTICLE 20 – ASSIGNMENT AND OTHER TRANSFER RESTRICTIONS

   35

20.1

   No Assignment Without Consent    35-36

ARTICLE 21 – JOINT INTEREST

   36

21.1

   Cooperation by Parties    36

ARTICLE 22 – MISCELLANEOUS

   36

22.1

   Waiver    36

22.2

   Taxes / Permits    36

22.3

   Disclaimer of Third Party Beneficiary Rights    36

22.4

   Relationship of the Parties    36-37

22.5

   Confidentiality    37-38

22.6

   Survival of Obligations    38

22.7

   Invalidity    38

22.8

   Complete Agreement; Amendments    38

22.9

   Binding Effect    38

22.10

   Headings    38

22.11

   Counterparts    38

22.13

   Governing Law    39

22.14

   No Gifts or Inducements    39

22.15

   Financial Statements    39

22.16

   Document Retention    39

 

APPENDIX A –

   CONTRACT CAPACITY    A1

APPENDIX B –

   PRICING/PAYMENT CALCULATIONS    B1 – B7

APPENDIX C –

   MARKETING, RECRUITMENT AND RETENTION    C1 – C6

APPENDIX D –

   EQUIPMENT INSTALLATION AND MAINTENANCE SCOPE OF WORK    D1 –D4

APPENDIX E –

   MEASUREMENT AND VERIFICATION PROGRAM    E1 – E9

APPENDIX F –

   NOTICES    F1

APPENDIX G –

   INSURANCE    G1 –G2

APPENDIX H –

   SOFTWARE    H1 –H8

APPENDIX I –

   PROGRAM DESCRIPTION    I1 – I2

APPENDIX J –

   PARENT GUARANTY    J1 – J3

APPENDIX K –

   CL&P CORPORATE IT SECURITY REQUIREMENTS    K1 –K5

 

iii

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

DIRECT LOAD CONTROL DELIVERY AGREEMENT

This DIRECT LOAD CONTROL DELIVERY AGREEMENT (“Agreement”), amended and restated
as of February 27, 2008, is entered into by and between The Connecticut Light
and Power Company, with principal offices at 107 Selden Street, Berlin,
Connecticut 06037 (“CL&P”) and Alternative Energy Resources, Inc., a Delaware
corporation, located at 120 Eagle Rock Avenue, Suite 190, East Hanover, NJ 07936
(“AER”). CL&P and AER are sometimes hereinafter referred to as the “Parties” or
individually as a “Party.”

RECITALS

WHEREAS, pursuant to the directives of the Connecticut Department of Public
Utility Control (“DPUC”), CL&P and *** (“***”) (collectively the “Utilities”)
and AER developed a direct load control (“DLC”) program (“Program”) that
primarily targets curtailment of air conditioning loads with the goal of
providing benefit to Connecticut’s electric distribution system in the form of
reduced peak kW demand and a corresponding lowering of generation costs
associated with such demand during New England’s critical peak demand periods,
and in addition, the Program is intended to result in longer term capacity cost
benefits by lowering Connecticut’s peak load share proportionate to the New
England region’s coincident peak determined by New England’s Independent System
Operator (“ISO-NE”), and

WHEREAS, *** and CL&P’s joint plan was filed in response to Order No. 8 in DPUC
Docket 05-07-14 PH01, DPUC Investigation of Measures to Reduce Federally
Mandated Congestion Charges, which required the Utilities to submit a plan for a
direct load control program to serve residential and small commercial and
industrial customers throughout CL&P and *** service territories, and

WHEREAS, the Utilities conducted a request for proposal (“RFP”) process to
solicit bids from vendors for the implementation of the Program via one-way
switch technology and Comverge, Inc., acting through its wholly owned
subsidiary, AER, was selected by the Utilities pursuant to such RFP process, and

WHEREAS, consistent with the Utilities’ joint plan and the terms and conditions
contained in this Agreement, CL&P will contract with AER to design, develop,
build, and own a DLC system using one-way switch technology (“DLCS”) in CL&P’s
service territory, and to aggregate eligible multiple individual customer loads,
including new and existing assets, to be controlled by this DLCS to produce,
pursuant to Appendix A, a “Minimum Contract Capacity” for a Demand Reduction of
*** megawatts (“MW”), *** and with a targeted growth to a “Target Contract
Capacity” of up to 130 MW statewide (i.e., including the Demand Reduction
provided under any *** Contract, or such other capacities as may be agreed to in
advance by CL&P in writing and in its sole discretion, all as set forth in this
Agreement, deliverable to CL&P, all as defined herein), and

WHEREAS, CL&P and AER desire to enter into this Agreement under the terms of
which, among other things, AER will deliver for CL&P to purchase an amount not
less than the

 

- 1 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

Minimum Contract Capacity and up to the Target Contract Capacity arising from
demand reduction delivered by AER pursuant to the operation of the DLCS Program,
and

WHEREAS, as a condition to entering into this Agreement,***

WHEREAS, the Parties entered into an agreement on October 4, 2007, as amended on
December 5, 2007 (collectively the “Original Agreement”) and this Agreement
amends and restates the Original Agreement.

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the
Parties agree as follows:

ARTICLE I – DEFINITIONS

1.1 Defined Terms. Unless otherwise defined herein or in any Exhibit, Schedule
or Appendix hereto, the following terms, when used in this Agreement (including
the Recitals and any Exhibit, Schedule or Appendix hereto) shall have the
meanings set forth below. The capitalized terms listed in this Article shall
have the meanings set forth herein whenever the terms appear in this Agreement,
whether in the singular or the plural or in the present or past tense. Other
terms used in this Agreement but not specifically defined in this Article shall
have meanings as commonly used in the English language and, where applicable, in
Good Industry Practice.

“Advanced Metering Infrastructure” (AMI) means a meter reading network that
allows for remote reading of electric meters and is also capable of load control
of multiple devices at the customer’s premises.

“AER Dispatch Event” is any period of no more than *** (***) continuous hours in
any single Control Season Day in which CL&P does not Dispatch the DLCS pursuant
to a Utility Dispatched Event but where the DLCS is activated by AER to control
the End-use Equipment to demonstrate the available Demand Reduction of the DLCS.

“Automated Meter Reading” (AMR) means a meter reading network that allows for
remote reading of electric meters.

“Affiliate” means an entity that controls, is controlled by, or is under common
control with another entity. For purposes of this Agreement, “control” means the
direct or indirect ownership of more than 50% of the outstanding capital stock
or other equity interests having ordinary voting power

“Agreement” means this Direct Load Control Delivery Agreement and the Exhibits,
Schedules and Appendices hereto.

“Business Day” means Monday through Friday of each week, except for Holidays.

“Capacity Benefits” shall mean ***

 

- 2 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

“Capacity Payments” means the monthly payments to be paid by CL&P to AER as
defined in Appendix B.

“Capacity Program” shall mean the Forward Capacity Market or other ISO initiated
market, auction, or program.

“CL&P/Third-Party Marketing Channel” is a method of promoting the Program to
Customers using a third-party acting on behalf of CL&P.

“CL&P-Generated Customer Enrollment Information” means Customer information,
including name, address and phone number collected by CL&P or its third-party in
connection with Customers desiring enrollment in the Program in response to
CL&P/Third-Party Marketing Channel promotions.

“Commercial Operation” means the period during the Term of this Agreement that a
Facility is a Participating Facility operating pursuant to the terms of this
Agreement.

“Contract(ed) Capacity” for each Program Year has the meaning set forth in
Appendix A.

“Control Device” means a one-way switch or other mutually agreed equipment
installed at a Participating Facility and used to control a Participating
Facility’s End-use Equipment pursuant to this Agreement.

“Control Season” means May 1 through September 30 of each Program Year or any
other time period as necessitated by Emergency or as may be agreed by the
Parties in writing.

“Control Season Day” means the period beginning midnight and ending on the
following 11:59 p.m. Eastern Standard Time (“EST”) of any Business Day during
the Control Season.

“Control Season Month” means any calendar month within a Control Season.

“CT DPUC” or “DPUC” means the Connecticut Department of Utility Control or any
successor or replacement regulatory agency.

“Customers” means the persons or entities eligible to participate in the Program
pursuant to (i) the applicable DLC Program tariff authorized by the DPUC or
(ii) as otherwise agreed to by the Parties in writing on a case-by-case basis,
who contract to participate in the Program.

“Deliverable” is any document or work product required to be delivered or
submitted under this Agreement by either Party.

“Demand Reduction” means the actual aggregate reduction of electricity demand
achieved by Customers, whether new or existing, measured in kilowatts resulting
from the Dispatch of the DLCS, as determined by the Measurement and Verification
Plan.

 

- 3 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

“Direct Load Control System” or “DLCS” means any and all equipment and
components, including new or existing assets, necessary for the operation of the
Program including Control Devices, a Head-end Control System (“HECS”),
proprietary software and required third-party application software.

“Dispatch” means activating the DLCS via a Dispatch Event in such a manner that
the Control Devices are placed into control such that the Participating
Facility’s End-use Equipment is activated with the intention of reducing
aggregate demand on the CL&P system or determining the capacity available for
the DLCS.

“Dispatch Event” means either a Utility Dispatch Event or an AER Dispatch Event.

“DPUC Approval” means the DPUC’s approval of the Program, including but not
limited to, approval of this Agreement, CL&P’s associated tariff rider, *** and
Program terms and conditions (all in their entirety and without conditions or
modifications), ***

“Emergency” shall mean any sudden, generally unexpected occurrence, event, or
set of circumstances which may necessitate immediate response and implementation
of the DLCS, where Emergency shall not include a Dispatch primarily for economic
purposes.

“End-use Equipment” means central air conditioning compressors, commercial
heating ventilating and air-conditioning (“HVAC”) equipment, commercial
lighting, motor loads and other similar loads, pool pumps, irrigation pumps,
electric water heaters and any other mutually agreed equipment with curtailable
loads located at a Participating Facility site.

“Energy Independence Act” means Public Act No. 05-01.

“Environmental Contamination” means the presence of hazardous wastes, hazardous
substances, hazardous materials, toxic substances, hazardous air pollutants and
other hazardous pollutants, and toxic pollutants, as those terms are used in the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Hazardous Materials Transportation
Act, the Toxic Substances Control Act, the Clean Air Act, the Clean Water Act,
the Safe Drinking Water Act, the Oil Pollution and Hazardous Substances Control
Act, and all other applicable federal, state and local laws and regulations as
amended, at such levels or quantities or location, or of such form or character,
to be of regulatory concern under said federal, state and local laws and
regulations.

“Expected Contract Capacity” the amount of Demand Reduction capacity (in MW) ***

“Facility” means a physical customer premises in CL&P’s service territory
containing one meter or a set of meters totalized for billing purposes as one
customer account.

“FMCCs” means Federally Mandated Congestion Charges as defined in Section 16-1
of the Connecticut General Statutes, as such definition may be amended, modified
or replaced.

“Forward Capacity Auction” shall mean the annual auction to be held in
connection with the

 

- 4 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

Forward Capacity Market, or any successor auction thereto, as defined in the
ISO-NE Tariff, FERC Electric Tariff No. 3.

“Forward Capacity Market” shall mean the forward market for procuring capacity
pursuant to the ISO-NE Tariff, FERC Electric Tariff No. 3, and any successor or
replacement capacity procurement process thereto.

“Good Industry Practice” means the practices, methods and acts (including but
not limited to the practices, methods and acts engaged in or approved by a
significant portion of the electric utility industry) that, at a particular
time, in the exercise of reasonable judgment in light of the facts known or that
should reasonably have been known at the time a decision was made, would have
been expected to accomplish the desired result in a manner consistent with law,
regulation, codes, standards, equipment manufacturers’ recommendations,
reliability, safety, environmental protection, economy and expedition. With
respect to each Participating Facility, Good Industry Practice(s) includes
taking reasonable steps to ensure that:

 

  (1) Equipment, materials, resources and supplies, including spare parts
inventories, are supplied or made available by AER to meet the Participating
Facilities’ needs;

 

  (2) AER has sufficient operating personnel available at all times and who are
adequately experienced and trained and licensed as necessary to operate the DLCS
properly, efficiently, and in coordination with CL&P and are capable of
responding to reasonably foreseeable emergency conditions;

 

  (3) Preventive, routine and non-routine maintenance and repairs are performed
by AER at no additional cost to CL&P on a timely basis that ensures reliable
long term and safe operation, and are performed by knowledgeable, trained and
experienced personnel utilizing proper equipment and tools;

 

  (4) Appropriate monitoring and testing are performed to ensure equipment is
functioning as designed;

 

  (5) Equipment is not operated in a reckless manner, in violation of
manufacturers’ guidelines or in a manner unsafe to workers, the general public,
or CL&P’s transmission or distribution grid or contrary to environmental laws or
regulations or without regard to defined limitations; and

 

  (6) The equipment will function properly under normal conditions at the
Participating Facilities.

“Holiday” means all holidays as defined from time to time by ISO–NE and any
holidays specified by CL&P.

“Information” is all data, information, lists, and records produced, collected,
and/or created by AER during the performance of its services pursuant to this
Agreement, including information stored on any information system owned by AER
or CL&P.

 

- 5 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

***

“ISO-NE Manual M-MVDR” means the ISO New England Manual for Measurement and
Verification of Demand Reduction Value from Demand Resources, as such may be
amended, supplemented, revised or modified from time to time or any successor
document(s) thereto.

“ISO-NE Dispatch Event” means an event called by ISO-NE where the system will be
Dispatched according with the Utility’s request that falls within the definition
of Utility Dispatch Event.

“kW Factor” means on an annual basis, the Demand Reduction per installed Control
Device(s) for End-use Equipment under an M&V Event as more fully described in
Appendix B.

“Measurement and Verification Event” or “M&V Event”, as further described in
Appendix E, means any Dispatch Event whereby Customer load is curtailed by
operation of the DLCS for at least one clock hour on the hour (e.g., 1:00:00 to
1:59:59 p.m. and not 1:30:00 to 2:29:59 p.m.) during the Control Season.

“Measurement and Verification Plan” or “M&V Plan” is defined in Appendix E.

“Minimum Contract Capacity” means the minimum amount of MW capacity of Demand
Reduction to be secured by AER under this Agreement as set forth in the schedule
in Appendix A .

“Participant” means the CL&P residential, commercial, municipal or industrial
Customer name of record of a Participating Facility.

“Participating Facility” means one CL&P-metered residential or small commercial
and industrial (“C&I”) Facility that is participating in the Program as a
Residential Participating Customer or a Small Commercial and Industrial
Participating Facility.

“Program” or “DLCS Program” means CL&P’s Direct Load Control System program as
described in this Agreement.

“Program Availability Hours” means all hours between *** EST of any Control
Season Day except in the event of an Emergency, or as otherwise agreed to by the
Parties.

“Program Month” means the period beginning on the first calendar day of the
month and ending on the last calendar day of the month for any month falling
within a Program Year.

“Program Run Time” means the number of hours that the DCLS is activated due to a
Utility Dispatch Event as determined by PowerCAMP™ reports that log every event
by date and time, ***

“Program Year” means October 1 through September 30. Program Year 1 commences
upon the Start Date and ends on the next September 30th after the completion of
one (1) full calendar year

 

- 6 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

(ex. Start Date is May 1, 2008, PY 1 ends on September 30, 2009.) Each
subsequent Program Year shall follow Program Year 1 and begin on October 1 and
continue through September 30.

“Prospect” means any CL&P residential or small C&I customer who is eligible for
the Program.

“Residential Participating Customer” means all single family residential
customers or multi-family customer throughout CL&P’s service territories that is
receiving electric service under an applicable DLC Program tariff authorized by
the DPUC.

“Small Commercial and Industrial Participating Facility” means non Residential
Participating Customers having peak demand of approximately *** and who are
eligible to participate in the Program pursuant to the applicable DLC Program
tariff authorized by the DPUC. Larger C&I customers will be evaluated and may be
considered by the Parties for inclusion in the Program on a case by case basis
and as agreed to in writing by the Parties. For multi-site commercial
facilities, which are not Residential or Small C&I Participating Facilities,
CL&P may, in its sole reasonable discretion on a case-by-case basis, determine
if that Facility will be permitted to participate in the Program as a
Participating Facility.

“Start Date” means the date that CT DPUC Approval has been obtained.

“System Dispatch Operator” or “SDO” means CL&P’s representative(s) responsible
for centralized Dispatch of Participating Facilities’ Control Devices and
control of tie-line power flows. Authorized personnel with login access will be
considered authorized users within the definition of SDO.

“Target Contract Capacity” means one hundred and thirty (130) MW of Demand
Reduction obtained throughout the State of Connecticut, whether through ***
and/or CL&P’s territory, or such other quantity of capacity as may be presented
by *** and/or CL&P and accepted by the DPUC in writing pursuant to the terms and
conditions contained in this Agreement.

“Term” means the period of time during which this Agreement shall remain in full
force and effect as defined in Article 2.

“*** Contract” means that Direct Control Delivery Agreement by and between AER
and The *** pursuant to which AER will secure and provide Demand Reduction via
the DLCS for *** in connection with the Program.

“Utility Dispatched Event” is any period of typically no more than four
(4) hours in any single Control Season Day (except in the case of an Emergency,
in which case AER shall make commercially best efforts to accommodate a request
for a Dispatch Event for a longer period or during a period outside of the
Control Season Day) in which the DLCS is activated through a CL&P initiated
event, which includes without limitation an ISO-NE Dispatch Event, to control
the End-use Equipment by system, region, substation or circuit.

1.2 Interpretation. In this Agreement, unless otherwise stated,

1.2.1 Any references to:

 

- 7 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

(a) any Section, Schedule, Appendix, Exhibit or other provision thereof, shall
be construed, at any particular time, as including a reference to the Section,
Schedule, Appendix, Exhibit or the relevant provision thereof as it may have
been amended, modified or supplemented;

(b) any agreement (including this Agreement or any Schedule, Appendix or Exhibit
hereto) shall be construed, at any particular time, as including a reference to
the relevant agreement as it may have been amended, modified, supplemented or
novated;

(c) a Party to this Agreement includes, in the case of any Party, that Party’s
successors and permitted assigns and any entity succeeding to its functions and
capacities;

(d) a month shall be construed as a reference to a calendar month unless
otherwise stated; and

(e) a particular Section, Schedule, Exhibit or Appendix shall be a reference to
the relevant Section, Schedule, Exhibit or Appendix in or to this Agreement.

1.2.2 Words in the singular may be interpreted as referring to the plural and
vice versa, and words denoting natural persons may be interpreted as referring
to corporations and any other legal entities and vice versa.

1.2.3 Whenever this Agreement refers to a number of days, such number shall
refer to the number of calendar days unless Business Days are specified. A
requirement that a payment or Deliverable be made on a day that is not a
Business Day shall be construed as a requirement that the payment or Deliverable
be made on the next following Business Day.

1.2.4 The words “include” and “including” are to be construed as being at all
times followed by the words “without limitation”, unless the context otherwise
requires.

1.2.5 Words not otherwise defined herein that have well-known and generally
acceptable technical or trade meanings are used herein in accordance with such
well-recognized meanings.

ARTICLE 2 – TERM AND TERMINATION

2.1 Term and Termination. This Agreement is effective upon the date of execution
for purposes of having the Parties meet to discuss marketing issues. The
remaining obligations of the Parties under this Agreement become effective as of
the Start Date. If DPUC Approval has not been obtained by ***, this Agreement
shall terminate automatically as of such date, or if the DPUC’s approval is
conditioned upon changes to the Agreement that the Parties cannot agree upon
after a thirty (30) day period of good faith negotiation, this Agreement shall
terminate upon written notice by either Party to the other, with no further
action required by either Party and without liability or obligation to any
Party. After the Start Date, the Agreement shall remain in

 

- 8 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

full force and effect until the end of Program Year 10 unless terminated earlier
pursuant to Sections 12.3 or Section 19.3.

2.2 DLCS Performance Reviews. ***, from time to time, as requested by either
Party, the Parties shall meet to review the Program performance, including but
not limited to customer enrollments, vendor performance, equipment performance,
load control technologies, marketing and overall performance of the Program
against initial ***, in order to further refine the Program with the goal of
increasing enrollment *** , then CL&P and AER shall work together to adjust
Program parameters as necessary or required to achieve *** Program ***. In
addition to the foregoing, AER shall cooperate with CL&P as necessary and
required to prepare and file with the CT DPUC any and all reports required or
requested to be filed by the CT DPUC throughout the Term, including but not
limited to with respect to *** and the Program’s performance during the same.

2.3 ***

2.4 Continuance in Effect. Applicable provisions of this Agreement shall
continue in effect after termination to the extent necessary to satisfy the
terms and conditions of this Agreement and, as applicable, to provide for, for
example, removal of Control Devices from Participating Facilities as may be
requested by a Participant and provided for under Appendices C and D, final
billings and adjustments related to any period prior to termination, repayment
of any money due and owing either Party pursuant to this Agreement, and the
indemnifications specified in this Agreement.

2.5 AMI and Technological Improvements and Interfaces. The parties acknowledge
that CL&P is investigating an AMR network and AMI technology through which
consumer electricity consumption and costs may be metered, monitored and/or
reduced. As part of its investigation and subject to DPUC approval, CL&P is
planning to commence an AMI pilot in 2008, whereby AMI meters will be deployed
on a sample of customers for use in testing AMI technology features. Based on
AMI pilot results and subject to further DPUC approval, CL&P may elect to
refresh its AMR network on a broader scale, throughout its service territory, to
a full two-way network that would be capable of load control for multiple
devices at Customers’ premises. In this scenario, the network would be capable
of all communications for that control. In the event that CL&P opts to implement
an AMI, it is anticipated that the CL&P AMI network would be capable of all
communication necessary to control customer load. In the event that, during the
Term, CL&P opts to pursue implementation of these technologies or any other
technologies that may become available, including such implementation in
connection with the aforementioned AMI pilot; AER, at CL&P’s request, agrees to
work cooperatively with CL&P and its AMI vendors to integrate Control Devices
with CL&P technologies and develop a module and/or upgrade that enables
communications between the AER Control Devices and such technologies. AER shall
provide a written estimate as to the cost and expense for upgrading the Control
Devices to be compatible with the CL&P technologies, including the AMR and AMI
technologies referenced herein provided however that CL&P may in its discretion,
elect to have AER install any equipment upgrades during AER’s scheduled
inspections, in which case, any reasonable additional charges, ***. AER will
also use its commercially reasonable efforts to minimize costs to upgrade or
modify its DLCS equipment to integrate such equipment with

 

- 9 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

CL&P technologies. Nothing contained herein shall be considered to obligate CL&P
to make any network changes whatsoever nor shall obligate CL&P to integrate its
network and AER Control Devices.

ARTICLE 3 – PROJECT DESCRIPTION

3.1 Summary Description. The Program is a utility offering that encourages
certain of CL&P’s eligible customers (as defined herein) to permit CL&P (via the
AER DLCS) to control customer end-use equipment (e.g., central air conditioning)
in order to advance the goals of the Energy Independence Act (i.e., a reduction
in FMCCs by lowering Connecticut’s peak demand). *** Attachment I attached
hereto sets forth the basic Program framework that outlines the respective
activities of AER and CL&P in connection with the implementation of the Program.

ARTICLE 4 – CONTRACT CAPACITY AND DISPATCH

4.1 Capacity

 

  4.1.1 Contract Capacity. For each Program Year, AER shall make commercially
best efforts to provide CL&P *** not less than the Minimum Contract Capacity and
not more than the Target Contract Capacity, unless the Target Contract Capacity
has been modified pursuant to the terms and conditions contained herein.
Pursuant to Section 4.3, AER will work with CL&P in a timely fashion to prepare
documentation for the purpose of submitting such Contract Capacity into the
Forward Capacity Market or other appropriate ISO-NE market.

 

  4.1.2 Increase in Capacity. AER acknowledges and agrees that it shall promptly
notify CL&P in writing in the event that AER reasonably anticipates that the
number of Customers with which it has contracted pursuant to this Agreement will
achieve a Demand Reduction near to or in excess of the Target Contract Capacity
within the next forward-looking six-month period. In the event that such notice
is provided to CL&P by AER, CL&P may, in its discretion and without obligation,
promptly provide notice to the DPUC explaining and requesting (i) an increase to
the Target Contract Capacity and (ii) recovery of all of CL&P’s Program costs
associated with the same. In the event that the notice is approved and CL&P has
received assurance from the DPUC of approval of such capacity increase and cost
recovery to its satisfaction, the Target Contract Capacity as defined in this
Agreement will mean the target level of Demand Reduction to be achieved under
this Agreement as determined by the DPUC in response to CL&P’s request.

 

  4.1.3

Capacity Ownership and Related Programs. AER acknowledges and agrees that it is
securing Customers for participation in the Program as a CL&P contractor that is
providing certain services that will enable implementing the Program in
accordance with the directives of the DPUC and in furtherance of the Program’s
objectives as may be expressed by the DPUC from time to time and as are set
forth in the Energy Independence Act. Accordingly, in order to ensure the

 

- 10 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

 

integrity of the Program and to avoid any diminution of the goodwill of CL&P,
the Parties acknowledge and agree that:

(i) until such time and for so long as AER continues to achieve the Target
Contract Capacity, AER ***

(ii) Any and all information regarding CL&P customers (including but not limited
to customer lists, customer usage patterns, etc.), whether prospects or
Customers, shall only be utilized by AER as expressly set forth in this
Agreement and solely for the purposes of providing services to CL&P under this
Agreement in connection with the Program. Except as otherwise expressly provided
herein, in no event shall AER at any time (whether during the Term or
thereafter) utilize any customer or utility information that becomes available
to it as a result of the Program and this Agreement for any other purpose(s)
other than providing services under this Agreement. As the Parties acknowledge
that AER owns the DLCS, AER shall only be allowed to utilize such information
(i) that pertains to the Participants enrolled in the Program and (ii) solely
for demand response purposes, whether under the Agreement or any other agreement
between AER and those end-use participants. AER shall not otherwise sell,
transfer or otherwise disclose this information for such enrolled Participants
other than for demand response purposes.

(iii) AER owns the DLCS. After the termination or expiration of this Agreement,
the Parties acknowledge that AER shall be able to utilize the DLCS to the extent
it is permitted to do so pursuant to its contractual agreements with enrolled
Participants and applicable legal and regulatory requirements.

 

  4.1.4 ***

4.2 Dispatch. Dispatch of the DLCS may be made as follows:

 

  4.2.1 Utility Dispatch – CL&P shall have the right to Dispatch the DLCS via an
AER-supplied website, email, or phone (as agreed to by the Parties), consistent
with this Agreement, for the control of the Participating Facilities.
Participating Facilities shall be capable of responding to CL&P’s dispatch
signal within *** . CL&P shall provide to AER the names of all approved SDOs at
least thirty (30) days before the start of each Control Season. AER represents
and warrants that the mechanism for initiating and implementing a Dispatch will
*** of the time be operational and capable of effectuating the Dispatch as
requested by CL&P during the Control Season (including but not limited to within
the time frames so requested), as the case may be.

 

  4.2.2 AER Dispatch Event – AER shall have the right to Dispatch consistent
with this Agreement, for the control of Participating Facilities. AER is
permitted to dispatch the system on *** different Control Season days during
each Program Year, except for ***.

 

- 11 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  4.2.3 AER utilizes its PowerCamp System described in Appendix H attached
hereto and incorporated by reference. PowerCamp is a program that is capable of
providing CL&P or other parties as CL&P may designate including ISO-NE, direct
dispatch control of the DLCS system through a secure website.

4.3 Forward Capacity Auction.

 

  4.3.1 AER acknowledges and agrees that the capacity benefits associated with a
reduction in peak demand form an essential part and purpose of this Agreement.
Accordingly, the Parties agree that Capacity Benefits belong to CL&P subject to
the Capacity Program bidding arrangements between the Parties set forth in this
Section 4.3.

 

  4.3.2 Except as otherwise notified in writing by CL&P, AER shall prepare the
documentation *** necessary to make a capacity bid on behalf of CL&P into any
Forward Capacity Auction and shall submit each Customer’s Demand Reduction in
connection with the Capacity Program, in accordance with this Section and
Appendix B(II). ***

 

  4.3.3 With respect to any Forward Capacity Auction or comparable Capacity
Program during the Term, AER shall ensure the show of interest, qualification
packages, and any and all associated documentation (collectively “Capacity
Program Bid”) are properly and timely submitted to allow CL&P to recover
capacity benefits pursuant to Section 4.3.1 and shall prepare all required
documentation. AER shall provide to CL&P a projected timeline and action item
list detailing the workflow and requirements for upcoming Capacity Program Bids
and shall coordinate all meetings, drafting sessions, and other action items
leading up to the submission.

The Parties shall work in good faith together to agree upon the (i) proper
category to place capacity, (ii) the amount of capacity to bid to any Capacity
Program, and (iii) any other items which may affect both Parties; however, if
the Parties do not reach agreement as to (i) and (ii), AER shall have the sole
and final authority in regards to these issues for such capacity under the
Capacity Program Bid, provided (i) such decision is commercially reasonable,
(ii)***, and (iii) ***.

***

 

  4.3.4 In consideration of AER undertaking the requirements under this
Section 4.3, CL&P shall pay AER pursuant to Appendix B(II).

 

  4.3.5

CL&P reserves the right during the term of this Agreement, but only at the end
of the current Capacity Program for which AER has provided documentation and
financial assurance, to discontinue having AER prepare the documentation and
provide the financial assurance for submission to any Capacity Program, in which

 

- 12 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

 

event the applicable fees payable to AER by CL&P shall be adjusted pursuant to
this Article 4 and Appendix B (II). In such event, effective upon written notice
by CL&P to AER, AER hereby reassigns all right, title and interest to the
Capacity Benefits associated with any capacity bid into any Capacity Program in
connection with such submission to CL&P and to take any and all action necessary
to assure such assignments, including but not limited to executing any and all
documents to evidence the same. The Parties acknowledge and agree that upon
assignment pursuant to this Section 4.3.5, CL&P shall be the sole entity to
determine whether or not to bid Customer Demand Reduction into the Capacity
Program and (ii) bid Customer Demand Reduction into the Capacity Program,
provided that the Parties must mutually agree to such bid amount *** and CL&P
shall provide full financial assurance to the ISO with each bid. ***
Accordingly, CL&P will be the “Enrolling Participant” (as defined by ISO-NE)
with respect to Program resources. In addition to the foregoing, the Parties
acknowledge and agree that, upon expiration or termination of this Agreement,
the Parties shall work together and communicate with the Participants in regards
to any termination, expiration or continuation of the Program.

 

  4.3.6 In the event that CL&P bids Customer Demand Reduction into the Forward
Capacity Market pursuant to Section 4.3.5 and AER ***

 

  4.3.7 AER agrees that it will cooperate with CL&P in connection with CL&P’s
bidding of Customer Demand Reduction into the Forward Capacity Market pursuant
to Section 4.3.5, including but not limited to providing reasonable assistance
in connection with submitting Show of Interest forms, Qualification packages,
Measurement and Verification Plans and an other ISO-NE requirements for
participation in the Forward Capacity Market for $*** as provided in Appendix
B(II), ***.

ARTICLE 5 – CAPACITY PRICING / PAYMENT CALCULATIONS

5.1 Payments. Capacity Payments to be paid by CL&P to AER will be calculated
monthly pursuant to Appendix B. The Measurement and Verification Plan will be
used to determine the kW Factor. The kW Factor will be utilized to calculate
Demand Reduction and will also serve as the basis for calculating monthly
Capacity Payments.

5.2 Requested Changes. On a quarterly basis for the first Program Year, and
thereafter, at the end of each Program Year (unless otherwise reasonably
requested by CL&P), the Parties will evaluate the performance under this
Agreement, schedule and other Program performance measures as deemed necessary
by each Party and/or as required by the DPUC. Following each evaluation, each
Party reserves the right to request the other Party to make reasonable changes
to the current program, if either Party is believed to be underperforming by the
other Party, for the consecutive years that may result in the Parties mutually
agreeing in good faith to changes to $/kW payments to AER.

 

- 13 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

ARTICLE 6 – MARKETING, RECRUITMENT AND RETENTION

6.1 Scope of Work. Marketing, recruitment and retention will include all
activities required to solicit and retain Participants for the DLCS Program.
Each Party’s duties are described in Appendix C. Within thirty (30) days after
DPUC Approval of the Agreement, the Parties shall have an initial meeting to
structure the marketing objectives. AER shall supply a marketing plan to CL&P
within thirty (30) Business Days after the Start Date. Within fifteen
(15) Business Days of receipt of the marketing plan, CL&P shall either approve
the marketing plan or provide recommendations to allow for approval of the plan.
In the event that CL&P provides recommendations for incorporation into the plan,
such reasonable recommendations shall be incorporated by AER into the plan and
resubmitted to CL&P for review and approval within five (5) Business Days of
AER’s receipt of such recommendations. ***. CL&P agrees and acknowledges that
its commercially best efforts to make timely responses to requests for approval
of the marketing plan and all marketing documentation is material to this
Agreement and may result in a failure of AER to fulfill its obligations herein.
After approval by CL&P of the marketing plan, AER and CL&P may, from time to
time, provide to each other proposals or recommendations for incorporation into
the marketing plan. Such proposals and/or recommendations shall only be
incorporated into the marketing plan upon the express written approval of CL&P.
***

6.2 Marketing Materials. With the exception of materials developed in connection
with marketing activities associated with the CL&P/Third-Party Marketing
Channel, all marketing materials for use in the Program shall be developed by
AER at CL&P standards at AER’s sole cost and expense pursuant to Appendix C. In
addition to the foregoing, all such marketing materials must be submitted to
CL&P for CL&P’s express written approval and shall not be disseminated by AER
until such express written approval has been obtained. AER acknowledges and
agrees that this Agreement does not assign, license, or transfer to AER any
right, title or interest to the copyrights, trademarks, and other intellectual
property rights used in connection with the operation and promotion of the
Program except for the right to use the CL&P name and logo in accordance with
the terms of this Agreement. The limited right to use the CL&P name and logo
provided for in this Agreement shall automatically terminate upon termination or
expiration of this Agreement and no further use may be made by AER of the CL&P
name and logo. CL&P reserves the right at any time to review any approved use of
the CL&P name and logo and to require changes in such further use, and AER will
comply with any such requirements.

6.3 During the Term, CL&P shall, at its reasonable discretion, have the right to
market the Program using CL&P/Third-Party Marketing Channels. CL&P will supply
CL&P-Generated Customer Enrollment Information to AER for customers identified
from a CL&P/Third-Party Marketing Channel for AER’s enrollment of such customers
in the Program. For CL&P/ Third-Party Marketing Channel, CL&P shall provide to
AER any materials or messages to be distributed for AER’s prior written
approval, which will not be unreasonably withheld.

6.4 Customer loads enrolled and installed from a CL&P/Third-Party Marketing
Channel will be included as part of Demand Reduction achieved and AER’s
Contracted Capacity obligations under this Agreement but in no event shall CL&P
be obligated to obtain any enrollments using

 

- 14 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

CL&P/Third-Party Marketing Channels, nor shall CL&P’s performance in obtaining
such enrollments be a cause for default or termination.

6.5 ***

ARTICLE 7 – EQUIPMENT INSTALLATION

7.1 Scope of Work. Equipment installation includes all DLCS Program activities
that interface with a Participating Facility from the time of receipt of a
signed customer enrollment form, obtained by AER or by CL&P-Generated Customer
Enrollment Information, through the measurement and verification of the Control
Device, as set forth in Appendix D. AER shall use commercially reasonable
efforts to ensure that no damage is caused to persons or property in connection
with any and all equipment installations and AER shall be solely responsible for
any and all such damages, including but not limited to any and all costs and
expenses to take corrective action to repair such damages to Customers’
satisfaction.

ARTICLE 8 – MAINTENANCE; SITE CLEAN UP

8.1 Scope of Work. Maintenance will include all activities that interface with a
Participating Facility to ensure continued operation of the DLCS at the
Participating Facility throughout the Term of this Agreement.

8.2 Tracking, Verification and Resolution of Participant Complaints. AER shall
follow standard procedures for resolving Participant complaints pursuant to
Appendices C and D.

8.3 Preventive, Routine and Non-Routine Maintenance and Repairs. AER shall be
responsible for preventive, routine and non-routine maintenance and repairs
(“Maintenance”). Maintenance will be performed on a basis that ensures reliable
long-term and safe operation, and will be performed by knowledgeable, trained
and experienced personnel utilizing proper equipment and tools.

8.4 Systems Quality Assurance. For each Program Year, AER shall, at its sole
cost and expense, make on-site inspections of installed switches and any and all
equipment necessary for the operation of the Program by physically inspecting
each Control Device at least every ***, targeting approximately *** inspection
rate per year. The inspection will ensure that each Control Device is
operational and has the ability to control Participants’ End-use Equipment. If
the inspection reveals that the Control Device is not operating or is
disconnected, AER shall be responsible for restoring the Control Device to
Commercial Operation immediately and at no cost to CL&P. AER shall provide CL&P
with a written report of the results of all inspections conducted pursuant to
this Section 8.4 within thirty (30) days of completing the same. AER is solely
responsible at all times for the Control Devices and their operation, including
but not limited to, addressing any and all Customer inquiries regarding the same
in a timely manner.

8.5 AER Monitoring and Testing. AER shall be responsible for conducting routine
monitoring and testing to ensure equipment is functioning as designed and
capable of achieving

 

- 15 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

intended levels of kW demand reductions. CL&P will be notified in writing of
these routine system tests. System tests will include, but not be limited to,
monthly tests of the communication system to insure that Control Devices are
receiving the signal.

8.6 Reporting. AER will provide written monthly customer contact logs and
written monthly customer participation reports no later than the 15th day of
each month in a format and containing such information as reasonably specified
by CL&P and as may be required by the DPUC from time to time. Customer
participation reports will include program enrollment and installation activity,
including a separate line item for the number Participants obtained through
CL&P/Third-Party Marketing Channel for the preceding month and for the
year-to-date, repairs, customer complaints and resolution and such other data as
CL&P may reasonably request.

8.7 Site Clean Up. AER shall use commercially best efforts to collect and
responsibly dispose of (as required by any and all applicable law, rule, or
regulation) any trimmed wire clippings, unused screws or brackets, hazardous
materials and any other material waste that may result from the installation of
the Control Device. For any work performed at any Customer’s site, AER shall at
all times keep the site free from accumulations of waste material or rubbish and
shall remove at its sole cost and expense from the site and from all public and
private property all tools and equipment other than the installed equipment and
rubbish and waste materials resulting from AER’s operation. AER shall be solely
responsible for its obligations under this Section 8.7.

ARTICLE 9 – MEASUREMENT AND VERIFICATION (M&V) PLAN

9.1 AER Responsibility. AER shall be responsible for implementing the field
work, data collection and analyses for a Measurement and Verification Plan that
shall comport with the requirements of Appendix E.

9.2 Audit and Independent Verification. CL&P reserves the right to audit field
work at any time. CL&P reserves the right to audit data collection and analyses
completed by AER at any time, other than during the Control Season unless an
Emergency exists, or as mandated by regulatory requirements and may, at any
time, conduct or cause to be conducted an independent verification and/or audits
of data collection and analyses completed by AER pursuant to this Agreement. AER
shall cooperate fully with CL&P, and any contractor retained by CL&P, in
connection with any such audits or independent verification.

ARTICLE 10 – SOFTWARE SYSTEM

10.1 Software System. AER will implement its PowerCAMP™ software for operating
the DLCS. This software shall be hosted and run at AER facilities as provided in
Appendix H. The Parties acknowledge AER is in compliance with CL&P’s corporate
IT Security requirements according to information provided to CL&P prior to
executing this Agreement, a copy of which is attached hereto as Appendix K. AER
will continue to take commercially best efforts to comply with CL&P’s corporate
IT security requirements, as provided from CL&P, over the term of this
Agreement.

 

- 16 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

ARTICLE 11 – BILLING AND PAYMENT

11.1 Invoicing, Payment and True-Up. AER shall invoice CL&P monthly for Capacity
Payments pursuant to Appendix B.

11.2 AER Responsibility.

 

  11.2.1 AER shall prepare and submit to CL&P monthly invoices within ten
(10) days of the end of the Program Month showing (i) a verified list of Control
Devices installed in the previous month, including a list of Participants
obtained through CL&P/Third-Party Marketing Channel for the preceding month,
(ii) a cumulative list of Control Devices installed since the end of the prior
Program Year, and (iii) Demand Reduction per switch, which shall be determined
from the previous Program Year’s M&V Event(s) (except for the first Program Year
during which monthly payments will be based on the Engineering Estimate as set
forth in Appendix B . The monthly invoices shall be calculated pursuant to
Appendix B. Data in items (i) and (ii) shall be provided in an electronic format
agreeable to both Parties. In accordance with Sec. 6.5 and Appendix B, the
annual true-up calculations will include a credit to CL&P based on a one-time
amount of $25 for each net installed Control Device enrolled from a
CL&P/Third-Party Marketing Channel and installed during the associated annual
true-up period.

 

  11.2.2 No later than October 15 of each year, AER shall prepare, and provide
to CL&P, a statement showing Demand Reduction achieved by Customers for the
previous Program Year. The statement will list: (i) all Participating Facilities
for that Program Year, (ii) all M&V Events and Dispatch Events called, including
the date, time and duration of each such event, (iii) the total Program Run
Time, and (iv) the Demand Reduction used to determine the monthly Capacity
Payment, as set forth in Appendix B and any other data reasonably pertinent to
the calculation of monthly payments due to AER and/or required or reasonably
requested by CL&P to audit and verify claimed aggregate load reductions. The
latter shall include, but is not limited to, the information listed above,
sampling plans and methodologies, analyses of sample data and methodologies, and
anything else that is needed for independent verification.

11.3 CL&P Responsibility. CL&P shall pay all undisputed portions of monthly
invoices and annual true-up invoices within *** after receipt of the invoice. In
the case where CL&P is owed an annual true-up payment, AER shall pay this amount
within *** after the determination has been made and verified.

11.4 Late Payments. Unless otherwise specified herein, payments due under this
Agreement shall be due and payable by check or by wire transfer, on or before
the *** following receipt of the invoice. Remittances received by mail will be
considered to have been paid when due if the

 

- 17 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

postmark indicates the payment was mailed on or before the *** following receipt
of the invoice. If any amount due is not paid on or before the due date, a late
payment charge shall be applied to the unpaid undisputed balance and shall be
added to the next invoice. Such late payment charge shall bear interest at the
rate of 1 1/2% per month or at the highest rate permitted by law (whichever is
less), from the date due until paid. If the due date occurs on a weekend or
Holiday, the late payment charge shall begin to accrue on the next succeeding
Business Day.

11.5 Billing Disputes. In the event of a billing dispute, the Party asserting
the billing dispute must notify the other Party in writing within the time
period specified herein for raising billing disputes. Each Party must furnish
within ten (10) days of notice of such dispute all detailed billing calculations
for the amount in dispute to the other Party. When the billing dispute is
resolved, the Party owing shall pay the amount owed within thirty (30) days of
the date of such resolution, with late payment interest charges calculated on
the amount owed in accordance with Section 11.4. Undisputed portions of amounts
invoiced under this Agreement shall be paid on or before the due date or shall
be subject to the late payment interest charges set forth in Section 11.4.
Neither Party shall have the right to challenge with a monthly bill or annual
true-up invoice or bring to court or take any administrative action with respect
to a billing dispute after a period of two (2) years from the date that an
invoice was due.

ARTICLE 12 – DEFAULT; TERMINATION

12.1 Events of Default of AER.

12.1.1 Any of the following shall constitute an Event of Default of AER upon its
occurrence and no cure period shall be applicable:

 

  A. AER’s or Comverge, Inc.’s dissolution or liquidation; provided, however,
that a reorganization of AER or Comverge, Inc.’s into other or multiple entities
shall not constitute dissolution or liquidation if AER and Comverge, Inc.
(and/or the applicable entity) continues to guarantee full performance under the
Agreement in a writing reasonably acceptable to CL&P ;

 

  B. AER’s or Comverge, Inc.’s filing of a petition in bankruptcy or insolvency
or for reorganization or arrangement under the bankruptcy laws of the United
States or under any insolvency act of any state, or AER or Comverge, Inc.’s
voluntarily taking advantage of any such law or act by answer or otherwise; or

 

  C. The making of an assignment contrary to Article 20.

12.1.2 Except for any other specified notice and cure periods, any of the
following shall constitute an Event of Default of AER upon its occurrence unless
cured within thirty (30) days after the date of written notice from CL&P to AER
as provided for in Section 13.1:

 

- 18 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  A. AER’s failure to perform any material obligations under the terms of this
Agreement, or to maintain in effect any material agreements that would impair
its ability to deliver Contract Capacity

 

  B. AER’s failure to comply with any other material obligation under this
Agreement; or,

 

  C. Any material misrepresentation by AER related to this Agreement;

12.1.3 Any of the following shall constitute an Event of Default of AER upon its
occurrence unless cured within sixty (60) days after the date of written notice
from CL&P to AER as provided for in Section 13.1:

 

  A. The filing of a case in bankruptcy or any proceeding under any other
insolvency law against AER and/or Comverge as debtor that could materially
impact AER’s ability to perform its obligations hereunder; provided, however,
that AER does not obtain a stay or dismissal of the filing within the cure
period, or,

 

  B. AER’s failure to maintain ***

12.1.4 The following event shall constitute an Event of Default of AER upon its
occurrence unless cured within ten (10) days after the date of written notice
from CL&P to AER as provided for in Section 13.1: AER’s failure to make any
payment due hereunder. For all late payments, regardless of any cure period,
Section 11.4 applies.

12.2 Events of Default of CL&P.

12.2.1 Any of the following shall constitute an Event of Default of CL&P upon
its occurrence and no cure period shall be applicable:

 

  A. CL&P’s dissolution or liquidation; provided, however, that a reorganization
of CL&P into other or multiple entities shall not constitute dissolution or
liquidation if CL&P (and/or the applicable entity as the case may be) continues
to guarantee full performance under the Agreement in a writing reasonably
acceptable to AER; or

 

  B. CL&P’s filing of a petition in bankruptcy or insolvency or for
reorganization or arrangement under the bankruptcy laws of the United States or
under any insolvency act of any state, or CL&P voluntarily taking advantage of
any such law or act by answer or otherwise.

12.2.2 Any of the following shall constitute an Event of Default of CL&P upon
its occurrence unless cured within thirty (30) days after the date of written
notice from AER to CL&P as provided for in Section 13.1.

 

- 19 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  A. CL&P’s failure to comply with any material obligation under this Agreement;
or,

 

  B. Any material misrepresentation by CL&P related to this Agreement.

12.2.3 The following event shall constitute an Event of Default of CL&P upon its
occurrence unless cured within sixty (60) days after the date of written notice
from AER to CL&P as provided for in Section 13.1: the filing of a case in
bankruptcy or any proceeding under any other insolvency law against CL&P that
could materially impact CL&P’s ability to perform its obligations hereunder;
provided, however, that CL&P does not obtain a stay or dismissal of the filing
within the cure period.

12.2.4 The following event shall constitute an Event of Default of CL&P upon its
occurrence unless cured within ten (10) days after the date of written notice
from AER to CL&P as provided for in Section 13.1: CL&P’s failure to make any
payment due hereunder. For all late payments, regardless of any cure period,
Section 11.4 applies.

12.3 Termination. Either Party may, upon written notice to the other Party,
terminate this Agreement if any one or more of the Events of Default of the
other Party described in this Article 12 occurs and is not cured within the cure
periods set forth herein. Neither Party shall have the right to terminate this
Agreement, except as provided for upon the occurrence of an Event of Default as
described above or as otherwise may be explicitly provided for in this
Agreement, ***. Except as expressly provided in this Agreement, nothing in this
Agreement shall be construed to limit any right or remedy available at law or in
equity to the Parties, including the right to any and all damages for any breach
or other failure to perform hereunder. All remedies in this Agreement shall
survive termination, cancellation or expiration of this Agreement and are
cumulative. Upon termination, AER shall cease all operations and actions under
the Agreement and CL&P shall pay AER for all payments due up until the
termination date. Each Party shall promptly return to the other any and all
materials, information, documentation, or other product belonging to that Party.
***:

(a)***

(i) ***

(ii) ***

(iii) ***.

(b) ***.

12.4 Special Bankruptcy Provision. Because of the importance of this Agreement
in promoting the goals of the Energy Independence Act, it is agreed that in the
event AER should ever seek protection under the provisions of the bankruptcy
laws of the United States or under any insolvency act of any state, and AER or
its representative trustee considers whether to assume or reject this Agreement
under such bankruptcy law provisions, the appropriate standard to apply in
consideration of rejection is a standard more rigorous than the usual business
judgment standard, such more rigorous standard being appropriate to balance the
burdens to the bankruptcy estate against the impact on Connecticut electric
ratepayers; and in such consideration, to give equal or greater weight to the
public interest in the adequate, efficient and

 

- 20 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

reasonable provision of electric utility service at just and reasonable rates,
including the effect that a rejection of this Agreement would have on
Connecticut electric ratepayers.

ARTICLE 13 – CONTRACT ADMINISTRATION AND NOTICES

13.1 Notices in Writing. Notices required by this Agreement shall be addressed
to the other Party, including the other Party’s representative at the addresses
noted in Appendix F. Any notice, request, consent or other communication
required or authorized under this Agreement to be given by one Party to the
other Party shall be in writing. It shall either be personally delivered, or
mailed, return receipt requested, or by overnight carrier. Any such notice,
request, consent or other communication shall be deemed to be given when
delivered. Routine communications concerning Participating Facility operations
or other matters as expressly agreed to by the Parties shall be exempt from the
requirements of this Section 13.1 and may be made in any manner agreed to by the
Parties.

13.2 Changes. Either Party may, by written notice to the other Party (pursuant
to the provisions contained in Article 13.1), change the representative or the
address to which such notices and communications are to be sent.

13.3 Authority of Representatives. The Parties’ designated representatives,
including Frank Evans for AER and Ronald Araujo for CL&P shall have authority to
act for their respective principals in all technical matters relating to
performance of this Agreement and to attempt to resolve disputes or potential
disputes. However, they shall not have the authority to amend or modify any
provision of this Agreement.

13.4 Operating Records. AER shall each keep complete and accurate records and
all other data required for the purposes of proper administration of this
Agreement (including but not limited to verification of performance of
Participating Facilities), including such records as may be required from time
to time by state or federal regulatory authorities. AER shall retain all such
records pursuant to the requirements in Section 22.16 and allow CL&P access to
such records for *** following termination or expiration of this Agreement and
forward all such records to CL&P within ten days following the termination or
expiration of this Agreement. In addition to the foregoing, AER shall provide to
CL&P and/or the CT DPUC any such operating records as may be required by AER
and/or CL&P to verify the performance of the Program and/or the performance of
the Parties under this Agreement.

13.5 Billing and Payment Records. To facilitate payment and verification, AER
and CL&P shall keep all books and records necessary for billing and payments (as
well as verification of the same) and grant the other Party reasonable access to
those records during regular business hours and with reasonable notice. Each
Party shall bear its own costs and expenses incurred in connection with any
review or audit of such records for a period of two (2) years following
termination or expiration of the Agreement.

13.6 Program Management Procedures. The Parties shall design and institute
program management procedures within thirty (30) days following the Start Date,
which procedures shall include, without limitation, a provision for regular
meeting times to discuss the Program,

 

- 21 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

including a governance and an escalation plan. To the extent such procedures are
signed by both Parties, such program procedures will form a part of this
Agreement.

13.7 Dispute Resolution.

 

  13.7.1 Negotiation Between Executives. AER and CL&P shall attempt in good
faith to resolve any dispute arising out of or relating to this Agreement and/or
the Work, promptly by negotiation between executives with authority to settle
the controversy and who are at a higher level of management than the persons
with direct responsibility for administration of this Agreement. Any party may
give the other party written notice of any dispute not resolved in the normal
course of business. Such notice shall include: (a) a statement of that
requesting party’s position and a summary of arguments supporting that position;
and (b) the name and title of the executive who will be representing that party
and of any other person who will accompany the executive. Within fifteen
(15) days after delivery of the notice, the receiving party shall respond with:
(i) a statement of that party’s position and a summary of arguments supporting
that position; and (ii) the name and title of the executive who will represent
that party and of any other person who will accompany the executive. Within
thirty (30) days after delivery of the initial notice, the executives of both
parties shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to attempt to resolve the dispute. All
negotiations pursuant to this Article 13 are confidential and shall be treated
as compromise and settlement negotiations for purposes of applicable law and
rules of evidence.

 

  13.7.2 Mediation. If the dispute has not been resolved by negotiation within
forty-five (45) days after the disputing party’s notice, or if the parties
failed to meet within thirty (30) days, each as contemplated in this Article 42,
the parties shall endeavor to settle the dispute by non-binding mediation under
the then current CPR Mediation Procedure; provided, however, that if one party
fails to participate as provided herein, the other party can initiate mediation
prior to the expiration of the forty-five (45) days. Unless otherwise agreed,
the parties will select a mediator from the CPR Panels of Distinguished
Neutrals.

 

  13.7.3

Arbitration. All Disputes in question not resolved by mediation between the
parties to this Agreement shall be submitted to private, binding arbitration
with AAA at the AAA regional office closest to the headquarters of the CL&P or
at a mutually agreed upon location, and shall be conducted in accordance with
the then current AAA Commercial Arbitration Rules, as applicable, then in
effect, or a mutually agreed upon set of arbitration rules. This agreement to
arbitrate and any other agreement or consent to arbitrate entered into in
accordance herewith will be specifically enforceable by any court having
jurisdiction. Notice of demand for arbitration must be filed in writing with the
other party to this Agreement and with AAA. The demand must be made within a
reasonable time after the dispute has arisen. In no event may the demand for
arbitration be made if the institution of legal or equitable proceedings based
on such dispute is barred by the applicable

 

- 22 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

 

statute of limitations. Any arbitration may be consolidated with any other
arbitration proceedings. The arbitrators will have no authority to award
attorneys’ fees, punitive, or treble damages to any party. The award of the
arbitrator shall be specifically enforceable in a court of competent
jurisdiction. If the total dispute, exclusive of interest and arbitration costs,
does not equal or exceed one million dollars ($1,000,000.00), the arbitration
shall be heard by one (1) neutral arbitrator. If the total dispute equals or
exceeds one million dollars ($1,000,000.00), then the arbitration shall be heard
by three (3) neutral arbitrators. The procedures for the resolution of disputes
set forth herein shall be the sole and exclusive procedures for the resolution
of disputes; provided, however, that a party may seek a preliminary injunction
or other preliminary judicial relief if in its judgment such action is necessary
to avoid irreparable damage or to preserve the status quo. Despite such action,
the parties will continue to participate in good faith in the procedures
specified herein.

 

  13.7.4 Powers of Arbitrator(s). The arbitrator is not empowered to award
damages in excess of compensatory damages (including liquidated damages
specified herein) and each party expressly waives and foregoes any right to
punitive, exemplary or similar damages unless a statute requires that
compensatory damages be increased in a specified manner. All costs of the
arbitration shall be paid equally by the parties, unless the award shall specify
otherwise. Each party shall be responsible for its own expenses, including
attorney’s fees. Both parties shall be afforded adequate opportunity to present
information in support of its position on the dispute being arbitrated. The
arbitrator may also request additional information from the parties.

 

  13.7.5 Continued Performance. Unless otherwise directed by CL&P, AER shall
continue performance of the Work in compliance with the Agreement and CL&P shall
pay AER for such performance, notwithstanding the existence of any claim,
dispute and/or proceeding between AER and/or Comverge and CL&P. Nothing herein
shall prejudice, impair or otherwise prevent CL&P from receiving equitable
relief, including an order for specific performance and/or an injunction, from
an appropriate governmental authority pending the conclusion of any mediation
and/or arbitration proceeding.

ARTICLE 14 – FORCE MAJEURE

14.1 Definition of Force Majeure. The term Force Majeure, as used in this
Agreement, means causes or events beyond the reasonable control of, and without
the fault or negligence of the Party claiming Force Majeure, including, without
limitation, acts of God, sudden actions of the elements such as floods,
earthquakes, hurricanes or tornadoes; sabotage; vandalism beyond that which
could reasonably be prevented by a Party; terrorism; war; riots; fire;
explosion; epidemic or pandemic; extreme weather conditions, blockades;
insurrection; strike; slow down or labor disruptions (even if such difficulties
could be resolved by conceding to the demands of a labor group); network or
internet failure by reason of a computer virus provided that AER has complied
with CL&P approved corporate IT security measures, as provided in advance by

 

- 23 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

CL&P; any disruption of electrical power in the CL&P service territory preceding
a Dispatch Event or during a Dispatch Event that prevents the proper operation
of the DLCS; any failure, or partial failure of a paging tower or system;
actions by federal, state, municipal or any other government or agency
(including the adoption or change in any rule or regulation or environmental
constraints lawfully imposed by federal, state or local government bodies, with
the exception of any regulatory or legislative changes leading to a termination
but only if such actions or failures to act prevent or delay performance); and
inability, despite due diligence, to obtain required licenses, permits or
approvals, provided that such inability is not caused by the Party claiming the
Force Majeure.

14.2 Exceptions to Force Majeure. Except as otherwise provided in Section 14.1,
the term Force Majeure does not include:

14.2.1 any full or partial curtailment in the operation of a Participating
Facility that is caused by or arises from the act or acts of any vendor,
materialman, customer or supplier of AER, unless such act or acts is itself
excused by reason of Force Majeure; or

14.2.2 any full or partial curtailment in the operation of a Participating
Facility that is caused by or arises from a Control Device breakdown, or fires,
explosions, or other mishap or events or conditions attributable to normal wear
and tear or flaws in the Control Device

14.2.3 any inability by AER to sign up sufficient customers for participation in
the Program as required under this Agreement

14.2.4 ***

14.3 Applicability of Force Majeure. Neither Party shall be responsible or
liable for any delay or failure in its performance under this Agreement (except
for payment obligations) due solely to conditions or events of Force Majeure,
provided that:

14.3.1 the non-performing Party gives the other Party prompt written notice
describing the particulars of the occurrence of the event of Force Majeure;

14.3.2 the suspension of performance is of no greater scope and of no longer
duration than is required by the event of Force Majeure;

14.3.3 the non-performing Party proceeds with reasonable diligence to remedy its
inability to perform and provides weekly progress reports to the other Party
describing actions taken to end the event of Force Majeure; and

14.3.4 when the non-performing Party is able to resume performance of its
obligations under this Agreement, the non-performing Party shall give the other
Party written notice to that effect.

14.4 Limitations on Effect of Force Majeure. In the event of any delay or
failure of performance caused by conditions or events of Force Majeure, which
would otherwise constitute

 

- 24 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

an Event of Default pursuant to Article 12, the cure provisions of Article 12
shall not apply and such delay or failure of performance, if not previously
cured, shall become an Event of Default on that date which is six (6) months
from the date of notice provided for in Section 14.3.1. The Party not claiming
Force Majeure may, at any time following the end of such six (6) month period,
terminate this Agreement upon written notice to the affected Party, without
further obligation by the terminating Party except as to costs and balances
incurred prior to the effective date of such termination. The Party not claiming
Force Majeure may, but shall not be obligated to, extend such six (6) month
period, for such additional time as it, at its sole discretion, deems
appropriate, if the affected Party is exercising due diligence in its efforts to
cure the conditions or events of Force Majeure.

14.5 Effect of Force Majeure on Capacity Payments. For purposes of, and pursuant
to, the monthly Capacity Payment calculation specified in Appendix B, a
Participating Facility’s Contract Capacity shall be considered to be unavailable
during all hours where AER is unable to provide or deliver such Contract
Capacity due to an event of Force Majeure (i.e., no Capacity Payment is required
to be made), provided, that such event is not caused by, and does not result
from, CL&P’s failure to perform in accordance with the provisions of this
Agreement.

ARTICLE 15 – REPRESENTATIONS AND WARRANTIES

 

15.1 AER’s Representations and Warranties. AER represents and warrants the
following:

15.1.1 AER is a corporation duly organized under the laws of the State of
Delaware. AER is qualified to do business in each jurisdiction where the failure
to so qualify would have a material adverse effect on the business or financial
condition of AER. AER has all requisite power and authority to conduct its
business, to own its properties, and to execute, deliver and perform its
obligations under this Agreement.

15.1.2 t***

15.1.3 AER has the expertise, experience and qualifications to perform its
obligations under this Agreement, including an understanding of CL&P’s needs and
the requirements of the Energy Independence Act.

15.1.4 AER is or will be properly licensed and permitted insofar as required to
perform its obligations under this Agreement.

15.1.5 AER possesses all ownership of intellectual property rights required to
be used in connection with AER’s performance of its obligations under this
Agreement and use of the Software will not infringe any third party copyright,
patent, trade secret or any other proprietary right.

15.1.6 The execution, delivery and performance of its obligations under this
Agreement by AER have been duly authorized by all necessary action, and do not
and will not:

 

- 25 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  A. require any consent or approval of AER’s Board of Directors, or
shareholders, other than that which has been obtained and is in full force and
effect;

 

  B. violate any provision of law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award currently in effect having
applicability to AER or violate any provision in any formation documents of AER,
the violation of which could have a material adverse effect on the ability of
AER to perform its obligations under this Agreement;

 

  C. result in a breach of or constitute a default under AER’s formation
documents or bylaws, or under any agreement relating to the management or
affairs of AER or any indenture or loan or credit agreement, or any other
agreement, lease or instrument to which AER is a party or by which AER or its
properties or assets may be bound or affected, the breach or default of which
could reasonably be expected to have a material adverse effect on the ability of
AER to perform its obligations under this Agreement; or

 

  D. other than results from financing documents involving AER’s senior lender,
result in, or require the creation or imposition of any mortgage, deed of trust,
pledge, lien, security interest or other charge or encumbrance of any nature
(other than as may be contemplated by this Agreement) upon or with respect to
any of the assets or properties of AER now owned or hereafter acquired, the
creation or imposition of which could reasonably be expected to have a material
adverse effect on the ability of AER to perform its obligations under this
Agreement.

15.1.7 This Agreement is a valid and binding obligation of AER.

15.1.8 The execution and performance of this Agreement by AER will not conflict
with or constitute a breach or default under any contract or agreement of any
kind to which AER is a party or any judgment, order, statute or regulation that
is applicable to AER.

15.1.9 AER shall (i) respond to Customer complaints, with CL&P’s reasonable
assistance, in a timely fashion, and to Customer’s and CL&P’s reasonable
satisfaction and (ii) shall make commercially reasonable efforts to resolve any
such complaints, resulting from the Program, both of which the Parties agree are
material obligations under this Agreement.

15.1.10 AER shall comply with all applicable local, state and federal laws,
regulations and ordinances, including but not limited to equal opportunity and
affirmative action requirements and all applicable federal, state and local
environmental laws and regulations presently in effect or which may be enacted
during the Term of this Agreement

 

- 26 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

15.1.11 AER shall disclose to CL&P, to the extent that, and as soon as it is
known to AER, any alleged violation of any environmental laws or regulations
arising out of the construction or operation of any Participating Facility, or
the alleged presence of Environmental Contamination at any Participating
Facility or on its site, or the existence of any past or present enforcement,
legal or regulatory action or proceeding relating to such alleged violation or
alleged presence of Environmental Contamination.

15.1.12 For the term of this Agreement, AER warrants that all DLCS equipment,
Software, systems and materials it supplies shall be free from defects in title,
design, material and workmanship and shall conform to the specifications
provided to CL&P and any specifications set forth in the Agreement. If the
warranty set forth in this Section 15.1.8 is breached, AER shall at its option
and expense, either repair or replace the affected equipment and materials
within thirty days of notice.

15.1.13 AER warrants that any services performed or provided by, through, or on
behalf of AER as part of or in connection with the Agreement shall (i) be
performed by personnel who are fully qualified and competent and whose
recommendations, guidance and performance reflect professional knowledge,
judgment, and performance in accordance with professional standards applicable
to the utility industry and/or the direct load control industry; and (ii) comply
with and conform to all provisions of the Agreement and to any and all
provisions of any and all applicable laws. If CL&P determines that any portion
of the Services performed by, through, and/or on behalf of AER fails to comply
with the warranties set forth in this Section 15.1, AER shall, at its sole cost
and at CL&P’s option, (i) correctly re-perform such services or correct the
defect or error in the design, plan, drawing, specification, data or
information, or (ii) return to CL&P the charges paid by CL&P and attributable to
such services or defective or erroneous design, plan, drawing, specification,
data or information supplied. CL&P shall have the right to set-off against other
amounts due AER hereunder or otherwise any amount owed by AER to CL&P.

15.1.14 Completion Warranty. AER warrants that it shall complete all services in
accordance with the Project schedule. If the services fall behind schedule due
to causes attributable to AER or any subcontractor or any person under its
and/or their respective control, AER shall, at its sole expense, use its
commercially best efforts to restore the services to schedule, including but not
limited to the following measures: placing its forces and those of its
subcontractors on extended working hours; assigning additional forces to the
work, establishing expedited, priority treatment for the acquisition,
fabrication, and delivery of the materials, equipment and supplies necessary to
complete the work.

In the event that AER fails to satisfy any warranty obligations or remedies set
forth in this Agreement and /or any other obligations in accordance with
applicable Agreement terms, CL&P may exercise all available rights and remedies
under law and/or equity.

 

15.2 CL&P’s Representations and Warranties. CL&P represents and warrants the
following:

 

- 27 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

15.2.1 CL&P is a corporation duly organized under the laws of the State of
Connecticut and is qualified to do business in each other jurisdiction where the
failure to so qualify would have a material adverse effect upon the business or
financial condition of CL&P. CL&P has all requisite power and authority to
conduct its business, to own its properties, and to execute, deliver and perform
its obligations under this Agreement.

15.2.2 The execution, delivery and performance of its obligations under this
Agreement by CL&P have been duly authorized by all necessary corporate action,
and do not and will not:

 

  A. subject to obtaining the regulatory approvals identified in Section 19.2,
violate any provision of law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award currently in effect having
applicability to CL&P or violate any provision in any corporate documents of
CL&P, the violation of which could have a material adverse effect on the ability
of CL&P to perform its obligations under this Agreement;

 

  B. result in a breach of or constitute a default under CL&P’s charter or
bylaws, or under any agreement relating to the management or affairs of CL&P, or
any indenture or loan or credit agreement, or any other agreement, lease or
instrument to which CL&P is a party or by which CL&P or its properties or assets
may be bound or affected, the breach or default of which could reasonably be
expected to have a material adverse effect on the ability of CL&P to perform its
obligations under this Agreement; or

 

  C. result in, or require the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance of any
nature (other than as may be contemplated by this Agreement) upon or with
respect to any of the assets or properties of CL&P now owned or hereafter
acquired, the creation or imposition of which could reasonably be expected to
have a material adverse effect on the ability of CL&P to perform its obligations
under this Agreement.

15.2.3 This Agreement is a valid and binding obligation of CL&P.

15.2.4 The execution and performance of this Agreement will not conflict with or
constitute a breach or default under any contract or agreement of any kind to
which CL&P is a party or any judgment, order, statute or regulation that is
applicable to CL&P.

ARTICLE 16 – INSURANCE

16.1 AER’s Insurance Requirements. AER shall obtain and maintain in effect
throughout the Term of this Agreement such insurance policies and coverage as is
required by law and as set out in Appendix G. AER shall be solely responsible
for payment of any and all deductible amounts relating to any and all of the
policies of insurance required by this Article 16 and Appendix G. AER shall
ensure that its broker shall provide CL&P with replacement certificates
evidencing required

 

- 28 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

insurance coverage prior to the expiration of prior certificates. Failure to
provide such certificates shall be grounds for withholding payment .

16.2 Changes to Insurance Minimum Limits. CL&P shall have the right, at times
deemed appropriate by CL&P during the Term of this Agreement, to request AER to
increase the insurance minimum limits specified in Appendix G in order to
maintain reasonable coverage amounts. AER shall make all reasonable efforts to
comply with such request at CL&P’s expense, unless AER already has the requested
coverage.

16.3 Notice to CL&P. Notwithstanding any provision of the insurance policies,
such policies may not be canceled, non-renewed or materially changed without the
insurer giving thirty (30) days’ prior written notice to CL&P or ten (10) days
prior written notice in the event of non-payment. All other terms and conditions
of such policy shall remain unchanged.

16.4 Certificates of Insurance Required. Within 15 days of execution of this
Agreement, AER shall provide CL&P a certificate(s) of insurance verifying the
existence of insurance coverages and endorsements required by Appendix G.
Failure of AER to obtain the insurance coverages required by this Article 16, or
to provide CL&P with the certificates of insurance, shall in no way relieve AER
of the insurance requirements of this Article 16 or limit AER’s obligations and
liabilities under any provision of this Agreement.

16.5 Application of Proceeds. For the Term, and subject to the requirements of
the financing documents and the rights or remedies of the senior lender
thereunder, AER shall apply any and all insurance proceeds received in
connection with the damage or destruction of the Participating Facilities toward
the repair, reconstruction or replacement of the Participating Facilities. In
the event that such proceeds are insufficient to repair, reconstruct or replace
the Participating Facilities, AER will remain solely responsible for the same.

ARTICLE 17 – INDEMNITY

17.1 General. *** (THE “INDEMNIFYING PARTY”) SHALL FULLY INDEMNIFY AND DEFEND
*** AND HOLD HARMLESS *** AND EACH OF *** SUBSIDIARIES AND AFFILIATES, AND THE
PARTNERS, MEMBERS, PARTICIPANTS, PRINCIPALS, REPRESENTATIVES, SHAREHOLDERS,
DIRECTORS, TRUSTEES, OFFICERS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS OF EACH
OF THEM (THE “INDEMNIFIED PARTY”) FROM AND AGAINST ANY AND ALL LOSSES, COSTS,
DAMAGES, INJURIES, LIABILITIES, CLAIMS, DEMANDS, PENALTIES AND INTEREST,
INCLUDING REASONABLE ATTORNEYS’ FEES (“DAMAGES”), DIRECTLY OR INDIRECTLY RELATED
TO THIS AGREEMENT OR THE PERFORMANCE OR NON-PERFORMANCE THEREOF, TO THE EXTENT
CAUSED OR CONTRIBUTED TO BY (A) THE FAULT, INTENTIONAL ACT, NEGLIGENCE OR STRICT
LIABILITY OF THE INDEMNIFYING PARTY OR ITS SUBSIDIARIES, AFFILIATES, CONTRACTORS
OR SUBCONTRACTORS OR ANY OF THE OFFICERS, PARTNERS, MEMBERS, PARTICIPANTS,
SHAREHOLDERS, PRINCIPALS, DIRECTORS, TRUSTEES, EMPLOYEES, AGENTS,
REPRESENTATIVES, SUCCESSORS OR ASSIGNS OF ANY OF

 

- 29 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

THEM OR (B) A BREACH BY THE INDEMNIFYING PARTY OF THIS AGREEMENT, INCLUDING THE
MATERIAL BREACH OF THE REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
INDEMNIFYING PARTY.

17.2 Environmental. AER shall indemnify, defend and hold CL&P harmless from and
against all claims, demands, losses, liabilities, penalties and expenses
(including reasonable attorneys’ fees) for personal injury or death to persons,
damage to or loss of property, and response costs relating to Environmental
Contamination, arising out of, resulting from or caused by the violation of any
applicable environmental laws or the negligent or tortuous acts, errors or
omissions of AER (or its respective officers, employees, agents and contractors)
with respect to the release of hazardous materials at or from any Participating
Facility, except to the extent that such violation, injury, death, loss,
liability or response costs are attributable to the negligent or tortuous acts,
errors or omissions of CL&P (or its officers, employees, agents or contractors).
***

17.3 Intellectual Property. AER will indemnify, defend and hold CL&P harmless
from and against all losses incurred by CL&P arising out of or connected with a
thirty party claim relating to: infringement of such third party’s patent,
copyright, trademark, trade secret, confidentiality or other right by AER’s
DLCS; provided, that (i) such use by CL&P that infringes is consistent with the
use described in or contemplated by the Parties; (ii) such infringement or
misappropriation is not based on the combination or integration of any software
or any other device or product not contemplated by AER or this Agreement;
(iii) such design or software, if any, was not effected by CL&P with CL&P’s
knowledge (actual or constructive) of any infringement or misappropriation issue
related thereto. If CL&P provides AER with notice of a claim of infringement
with respect to any material, equipment of information used in connection with
the DLCS or if the use of all or any portion of the DLCS is enjoined due to a
claim of infringement, AER shall promptly and at its sole cost and expense
either (i) procure for CL&P the right to continue to use the DLCS or
(ii) replace the DLCS with non-infringing and functionally equivalent DLCS,
(iii) modify the DLCS so that it becomes non-infringing and functionally
equivalent or (iv) take such other action as is necessary to assure CL&P’s
uninterrupted use of the DLCS. *** .

17.4 Procedures.

17.4.1 Promptly after receipt by a Party of any claim or notice of the
commencement of any action, administrative or legal proceeding, or investigation
as to which the indemnity provided for in this Article may apply, the
Indemnified Party shall notify the Indemnifying Party in writing of such fact,
but the failure so to notify such Indemnifying Party of any such action shall
not relieve the Indemnifying Party from any liability which it may have to the
Indemnified Party except to the extent that such failure to notify shall
adversely affect the rights of the Indemnifying Party. The Indemnifying Party
shall be entitled to participate at its own expense in the defense or, if it so
elects, to assume the defense thereof with counsel designated by the
Indemnifying Party and satisfactory to the Indemnified Party; provided, however,
that if the defendants in any such action include both the Indemnified Party and
the Indemnifying Party and the Indemnified Party shall have reasonably concluded
that there may be legal defenses available to it which are different from or
additional to, or inconsistent with, those available to the Indemnifying

 

- 30 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

Party, the Indemnified Party shall have the right to select and be represented
by separate counsel, at the Indemnifying Party’s expense, unless a liability
insurer is willing to pay such costs.

17.4.2 The Indemnifying Party shall bear the reasonable fees and expenses of the
counsel retained by the Indemnified Party if (i) the Indemnified Party shall
have retained such counsel in accordance with the preceding paragraph 17.4.1,
(ii) the Indemnifying Party shall elect not to assume the defenses of such
action, (iii) the Indemnifying Party, within a reasonable time after notice of
the commencement of the action, shall not have employed counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party, or
(iv) the Indemnifying Party shall have authorized the employment of counsel for
the Indemnified Party at the expense of the Indemnifying Party. An Indemnified
Party shall not enter into a settlement or other compromise with respect to any
claim without the prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed. The Indemnifying Party shall not
enter into a settlement or other compromise with respect to any claim against
the Indemnified Party without the Indemnified Party’s consent unless (i) there
is no finding or admission of any violation of law or any violation of the
rights of any person, and (ii) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Party. If the Indemnifying Party fails to
assume the defense of a claim meriting indemnification, the Indemnified Party
may at the expense of the Indemnifying Party contest, settle or pay such claim,
provided that settlement or full payment of any such claim may be made only
following consent of the Indemnifying Party or, absent such consent, with the
written opinion of the Indemnified Party’s counsel that such claim is
meritorious or warrants settlement.

17.4.3 Except as otherwise provided in this Article, in the event that a Party
is obligated to indemnify and hold the other Party and its successors and
assigns harmless under this Article 17, the amount owing to the Indemnified
Party will be the amount of the Indemnified Party’s actual loss net of any
insurance proceeds received by the Indemnified Party following a reasonable
effort by the Indemnified Party.

ARTICLE 18 – LIMITATION OF LIABILITY

18.1 LIMITATION OF LIABILITY. NEITHER PARTY NOR ITS SUBSIDIARIES OR AFFILIATES
NOR THE OFFICERS, AGENTS, EMPLOYEES, REPRESENTATIVES, PARTICIPANTS, PARTNERS,
MEMBERS, SHAREHOLDERS, PRINCIPALS, DIRECTORS, TRUSTEES, SUCCESSORS OR ASSIGNS OF
ANY OF THEM SHALL IN ANY EVENT BE LIABLE TO THE OTHER PARTY OR ITS SUBSIDIARIES
OR AFFILIATES OR THE OFFICERS, AGENTS, EMPLOYEES, REPRESENTATIVES, PARTICIPANTS,
PARTNERS, MEMBERS, SHAREHOLDERS, PRINCIPALS, DIRECTORS OR TRUSTEES OF ANY OF
THEM FOR INCIDENTAL, PUNITIVE, CONSEQUENTIAL (EXCEPT AS PROVIDED FOR HEREIN),
SPECIAL, OR INDIRECT DAMAGES OF ANY NATURE, ARISING AT ANY TIME, FROM ANY CAUSE
WHATSOEVER, WHETHER ARISING IN TORT, CONTRACT, WARRANTY, STRICT LIABILITY, BY
OPERATION OF LAW OR OTHERWISE, CONNECTED WITH OR RESULTING FROM PERFORMANCE OR
NON-PERFORMANCE UNDER THIS AGREEMENT. NOTHING IN THIS ARTICLE 18 SHALL BE DEEMED
TO

 

- 31 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

AFFECT OR LIMIT THE RIGHT OF AN INDEMNIFIED PARTY TO CLAIM INDEMNIFICATION FROM
THE INDEMNIFYING PARTY UNDER ARTICLE 17. THE LIMITATIONS OF LIABILITY CONTAINED
HEREIN SHALL NOT APPLY IN CONNECTION WITH THIRD PARTY CLAIMS FOR LOSS OF LIFE,
PERSONAL INJURY OR DAMAGE TO PROPERTY.

ARTICLE 19 – COMPLIANCE WITH LAW AND REGULATORY REQUIREMENTS

19.1 Compliance with the Law. Each Party shall at all times comply with all
applicable laws, ordinances, rules and regulations applicable to it. As
applicable, each Party shall give all required notices and shall procure and
maintain all necessary governmental licenses, necessary for performance of this
Agreement, and shall pay its respective charges and fees in connection
therewith.

19.2 Regulatory Compliance. AER acknowledges that CL&P is required to file with
the CT DPUC certain information regarding the Program, including this Agreement.
CL&P is further required by the CT DPUC to monitor the Program. Accordingly, AER
acknowledges and agrees that nothing in this Agreement shall prohibit CL&P from
providing any and all information to the CT DPUC as the CT DPUC may, from time
to time, require and request, with respect to the Program and this Agreement,
including the filing of this Agreement with the CT DPUC. CL&P will file this
Agreement, and any other confidential information, with the CT DPUC pursuant to
a motion for protective order for confidential treatment of the same. AER
further acknowledges and agrees that it will cooperate with CL&P as necessary or
required in order for to CL&P to comply with any and all requirements or
directives of the CT DPUC in connection with the Program. In the event that the
CT DPUC does not approve the Agreement in its entirety or does not allow CL&P to
recover all costs of the Program from retail ratepayers on a timely non-deferred
basis, the Parties shall negotiate in good faith terms and conditions of the
Agreement that may need to be amended in light of such CT DPUC’s action,
provided that if such an amendment is not reached within sixty (60) days of the
DPUC’s disapproval of the Agreement or disallowance of cost recovery, as the
case may be, then this Agreement shall be of no further force and effect as of
the expiration of such sixty (60) day period and neither party shall have any
further obligation to the other party in connection with the Program or this
Agreement. CL&P acknowledges that AER, through its parent, may be required to
file with the Securities and Exchange Commission (“SEC”) certain information
regarding the Program, including this Agreement. Accordingly, CL&P acknowledges
and agrees that nothing in this Agreement shall prohibit AER from providing any
and all information to the SEC as the SEC may, from time to time, require and
request, with respect to the Program and this Agreement, including the filing of
this Agreement with the SEC, provided that AER will provide CL&P with prompt and
timely notice of any and all SEC requirements regarding the Program and this
Agreement and reasonably cooperate with CL&P in using commercially reasonably
efforts to ensure that confidential information that may be required to be
provided to the SEC is accorded such confidential treatment (including but not
limited to working together in connection with redacting confidential,
proprietary and commercially sensitive information from the Agreement). If
required to do so, AER will file this Agreement, and any other confidential
information, with

 

- 32 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

the SEC pursuant to a motion for protective order for confidential treatment of
the same. CL&P further acknowledges and agrees that it will cooperate with AER
as necessary or required in order for to AER to comply with any and all
requirements or directives of the SEC in connection with the Program. The
Parties agree that AER has required deadlines for filing with SEC and shall
comply with those guidelines.

 

19.3 ***

***

ARTICLE 20 – ASSIGNMENT AND OTHER TRANSFER RESTRICTIONS

20.1 No Assignment Without Consent. Except as permitted below, neither Party
shall assign this Agreement or any portion hereof, without the prior written
consent of the other Party, which consent shall not be unreasonably withheld or
delayed. Prior notice of any such assignment shall be given to the other Party.
Notwithstanding the above:

 

  20.1.1 This Agreement may be assigned by AER, without the prior approval of
CL&P: (i) as part of a reorganization, merger, share exchange, consolidation or
sale or disposition of all or substantially all of the assets of AER, (ii) in an
initial public offering, (iii) to a wholly owned subsidiary of AER, where AER
shall be a guarantor, or (iv) for the benefit of AER’s lenders provided that, in
all case, AER shall not be relieved from its obligations and liabilities under
this Agreement. In the event of any such assignment, AER shall remain liable
under this Agreement until (x) CL&P consents to the release of AER, (which such
release shall not be unreasonably withheld or delayed) and (y) AER’s successor
or assignee consents in writing to be bound by the obligations of AER.

 

  20.1.2 This Agreement may be assigned by CL&P, without the prior approval of
AER: (i) as part of a reorganization, merger, share exchange, consolidation or
sale or disposition of all or substantially all of the assets of CL&P; (ii) to
an affiliate; or (iii) for the benefit of CL&P’s lenders. In the event of any
such assignment, CL&P shall remain liable under this Agreement until (x) AER
consents to the release of CL&P (which shall not be unreasonably withheld or
delayed) and (y) CL&P’s successor or assignee consents in writing to be bound by
the obligations of CL&P.

ARTICLE 21 – JOINT INTEREST

21.1 Cooperation by Parties. CL&P and AER believe it to be in their joint
interest that the Program achieves a high degree of success and reaches the
maximum possible number of Participants. Accordingly, CL&P and AER intend that,
during the Term of the Agreement, CL&P shall, subject to the terms and
conditions of this Agreement and of all applicable regulatory requirements which
may exist during the Term of this Agreement, use commercially reasonable efforts
to support and work with AER in connection with this Agreement.

 

- 33 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

ARTICLE 22 – MISCELLANEOUS

22.1 Waiver. The failure of either Party to enforce or insist upon compliance
with or strict performance of any of the terms or conditions of this Agreement,
or to take advantage of any of its rights thereunder, shall not constitute a
waiver or relinquishment of any such terms, conditions or rights, but the same
shall be and remain at all times in full force and effect.

22.2 Taxes/ Permits. AER shall be responsible for any and all present or future
federal, state, municipal or other lawful taxes applicable by reason of the
installation, ownership and operation of the DLCS under this Agreement, and all
ad valorem taxes relating to the DLCS. For equipment that AER installs, AER
shall be responsible for obtaining required and all permits necessary or
requirement for the operation of the Program and performance of this Agreement
and CL&P will provide reasonable support as may be necessary if requested to do
so by AER.

22.3 Disclaimer of Third Party Beneficiary Rights. In executing this Agreement,
CL&P does not, nor should it be construed to, extend its credit or financial
support for the benefit of any third parties lending money to or having other
transactions with AER. Nothing in this Agreement shall be construed to create
any duty to, or standard of care with reference to, or any liability to, any
person not a party to this Agreement.

22.4 Relationship of the Parties.

22.4.1 This Agreement does not create an association, joint venture or
partnership between the Parties and does not impose any partnership obligation
or liability upon either Party. Neither Party shall have any right, power or
authority to enter into any agreement or undertaking for, or act on behalf of,
or to act as an agent or representative of, the other Party. The relationship of
AER to CL&P shall be that of independent contractor. This Agreement does not
create an association, joint venture or partnership between the Parties and does
not impose any partnership obligation or liability upon either Party. Neither
Party shall have any right, power or authority to enter into any agreement or
undertaking for, or act on behalf of, or to act as an agent or representative
of, the other Party.

22.4.2 AER shall be solely liable for the payment of all wages, taxes and other
costs related to the employment of persons to perform such services, including
all federal, state and local income, social security, payroll and employment
taxes and statutorily mandated workers’ compensation coverage. None of the
persons employed by AER shall be considered employees of CL&P for any purpose;
nor shall AER represent to any person that he or she is or shall become a CL&P
employee.

22.4.4 All benefits, protections, indemnifications and other rights in favor of
either Party under the Agreement shall also benefit, protect and indemnify the
principals of that Party.

22.5 Confidentiality. The parties acknowledge and agree that during the Term,
each party may provide to the other party confidential and/or proprietary
information that is designated or

 

- 34 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

otherwise identified orally or in writing as confidential or proprietary or
which, under the circumstances surrounding disclosure, the receiving party
should know is treated as confidential by the other party, including but not
limited to information or materials related to the business of such party (the
“Confidential Information”). Confidential Information shall include, without
limitation, notes, documents, memoranda, or other writings including any
materials which copy or disclose Confidential Information. Each party shall
protect all such Confidential Information with at least the same degree of care
its uses to protect its own confidential information, but under no circumstances
with not less than a reasonable degree of care. Each party shall not disclose,
provide or permit any other person to obtain the Confidential Information except
for such of its employees with a need to know such information solely for the
purpose of performing a party’s obligations under this Agreement and who are
informed of the confidential nature of the Confidential Information. Such
employees shall use the Confidential Information solely in connection with the
performance of obligations under this Agreement and for no other purpose. Each
party agrees to be responsible for any breach of this Section 22.5 by its
employees. The confidentiality obligations set forth in this Section 22.5 shall
not apply to any information that (i) is generally available to the public or
previously known to the public, (ii) can reasonably be demonstrated was known to
the receiving party prior to the execution of this Agreement, (iii) was obtained
from a third party who did not, directly or indirectly, receive the same from
the other party to this Agreement or from a party who was under an obligation of
confidentiality to the other party to this Agreement, or (iv) was developed by
either party independent of and without use or reference to any Confidential
Information. Each receiving party shall, upon termination of this Agreement or
at any time upon the request of the disclosing party, cease use of and promptly
return or destroy all Confidential Information of the disclosing party then in
its possession together with all copies thereof and certify in writing to the
same.

Notwithstanding the preceding, Confidential Information may be disclosed to any
governmental, judicial or regulatory authority requiring and requesting such
Confidential Information pursuant to any applicable law, regulation, ruling, or
order, provided that: (a) such Confidential Information is submitted under any
applicable provision, if any, for confidential treatment by such governmental,
judicial or regulatory authority; and (b) except with respect to a party’s
regular reporting requirements under this Agreement, prior to such disclosure,
the other party is given prompt notice of the disclosure requirement so that it
may take whatever action it deems appropriate, including intervention in any
proceeding and the seeking of any injunction to prohibit such disclosure.

22.6 Survival of Obligations. Cancellation, expiration or early termination of
this Agreement shall not relieve the Parties of obligations that by their nature
should survive such cancellation, expiration or termination, prior to the term
of the applicable statute of limitations, including without limitation
confidentiality, remedies or indemnities which obligation shall survive for the
period of the applicable statute(s) of limitation including without limitation
the following: After the expiration or termination of this Agreement, as the
DLCS is owned by AER, AER forever releases CL&P and agrees to hold harmless,
defend, and indemnify CL&P from any and all claims asserted by third-parties
related, whether directly or indirectly, to the DLCS.

22.7 Invalidity. In case one or more of the provisions of this Agreement is
determined to be invalid, illegal, or unenforceable in any respect, such
provisions shall be reformed to the

 

- 35 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

minimum extent necessary to cause such provision to be valid, legal or
enforceable. If no such reformation is possible, then such provisions shall be
deemed omitted and the balance of the Agreement shall remain valid and
enforceable.

22.8 Complete Agreement; Amendments. The terms and provisions contained in this
Agreement, including all appendices attached hereto, constitute the entire
agreement between CL&P and AER with respect to the subject matter hereof and
supersede all previous communications, representations or agreements, either
oral or written, between CL&P and AER with respect to the subject matter hereof.
*** . *** This Agreement may be amended, changed, modified or altered, provided
that such amendment, change, modification or alteration shall be in writing and
signed by both Parties, provided, however that no such amendment shall be
effective until submitted to and approved in its entirety by the CT DPUC.

22.9 Binding Effect. This Agreement, as it may be amended from time to time,
shall be binding upon and inure to the benefit of the Parties’ respective
successors-in-interest, legal representatives and assigns.

22.10 Headings. Captions and headings used in the Agreement are for ease of
reference only and do not constitute a part of this Agreement.

22.11 Counterparts. This Agreement may be executed in any number of
counterparts, and each executed counterpart shall have the same force and effect
as an original instrument. All counterparts shall constitute a single
instrument.

22.13 Governing Law. The interpretation and performance of this Agreement and
each of its provisions shall be governed and construed in accordance exclusively
with the laws of the State of Connecticut without regard to its conflicts of
laws provisions.

22.14 No Gifts Or Inducements. Comverge and AER warrant and represent to CL&P
that neither it has neither provided nor offered to provide any gifts, payments,
or other inducements to any officer, employee or agent of CL&P for any purpose.
Comverge and AER shall not provide or offer any gifts, payments, or other
inducements to any officer, employee or agent of Utility for any purpose and
shall ensure that no employee or agent of Comverge or AER offers and such gifts,
payments or inducements.

22.15 Financial Statements. AER shall provide to CL&P all such financial
information as CL&P may reasonably request from time to time. In addition to any
such requested information, AER shall deliver to CL&P by April 15 of each
Program Year a copy of Comverge, Inc.’s audited consolidated financial
statements for the prior Program Year. All statements shall be prepared in
accordance with generally accepted accounting principles. Upon becoming listed
on a national stock exchange, AER shall make available its audited, annual
financial statements to CL&P at the same time it releases such information
publicly.

22.16 Document Retention. AER shall preserve the Program Information in its
care, custody or control for a period of *** following termination of this
Agreement (“Document Retention Period”) or, with respect to CL&P’s Confidential
Information, return such Information to CL&P in a form acceptable to CL&P . AER
shall not destroy any such Program Information prior to

 

- 36 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

the expiration of the Document Retention Period absent CL&P’s prior written
consent. All CL&P’s Confidential Information shall remain the exclusive property
of CL&P, regardless of where it is stored. Subject to the restrictions contained
herein regarding AER’s Confidential Information, CL&P reserves the right to
access such Program Information at any time while such Information is in AER’s
possession and such Information shall be provided to CL&P on a timely basis
whenever requested, regardless of whether such requests are for audits,
regulatory or legal proceedings such as lawsuits or arbitrations. Any CL&P
Confidential Information in AER’s possession shall be disclosed to third parties
only as necessary to comply with applicable laws and government orders or
requests so long as CL&P receives advance written notice of such disclosure and
an opportunity to contest such requests. AER agrees to access Confidential
Information in its possession only for the purposes of performing the services
under this Agreement and to operate or maintain its information systems and will
take appropriate and CL&P approved measures and precautions to protect against
unauthorized access or disclosure. It is AER’s responsibility to ensure that the
Program Information is protected from damage or loss while in the AER’s care,
custody or control, including making backups of such Program Information and
using disaster recovery best practices for any computer systems used to store
the Program Information. CL&P reserves the right to audit AER to ensure such
Program Information is managed in accordance with this Article 22.16. Any
Program Information that is AER’s Confidential Information shall be disclosed to
CL&P or third parties only as necessary to comply with applicable laws and
government orders or requests so long as AER receives advance written notice of
such disclosure and an opportunity to contest such requests.

 

- 37 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

IN WITNESS WHEREOF, the signatories hereto represent that they have been
appropriately authorized to enter into this Agreement on behalf of the Party for
whom they sign. This Agreement is hereby executed as of the date first above
stated.

 

ALTERNATIVE ENERGY RESOURCES, INC.

   CONNECTICUT LIGHT AND POWER COMPANY By:  

/s/ Frank A. Magnotti

   By:  

/s/ Raymond Necci

Name:   Frank A. Magnotti    Name:   Raymond Necci (Type or Print)    (Type or
Print) Title:   President    Title:   President & COO

 

- 38 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

APPENDIX A

CONTRACT CAPACITY

 

I. Contract Capacity Schedule

The following table sets forth the cumulative Contract Capacity that AER will
make available during the Term of the Agreement:

 

Program Year

  

Minimum Contract

CapacityA (MW)

   Expected Contract
CapacityB (MW)    Target Contract
CapacityC (MW)

PY 1

   ***    ***    ***

PY 2

   ***    ***    ***

PY 3

   ***    ***    ***

PY 4

   ***    ***    ***

PY 5

   ***    ***    ***

PY 6

   ***    ***    ***

PY 7

   ***    ***    ***

PY 8

   ***    ***    ***

PY 9

   ***    ***    ***

PY 10

   ***    ***    ***

 

A.

The Minimum Contract Capacity represents the cumulative Demand Reduction that
must be delivered to CL&P in each Program Year.

B.

The Expected Contract Capacity Schedule represents the projected enrollment for
Demand Reduction that the parties anticipate will be delivered to CL&P in each
Program Year.

C.

The Target Contract Capacity represents the cumulative Demand Reduction that AER
may not exceed in each of the Program Years under both this Agreement and the
*** Contract.

 

A- 1 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

APPENDIX B

PRICING/PAYMENT CALCULATIONS

I.    ***       ***             ***         

 

II. Capacity Program Administration Payment.

As consideration for assuming responsibility for preparing the documentation and
providing the financial assurance necessary to participate in the Forward
Capacity Auction or comparable capacity program during the Term as authorized by
CL&P in its discretion, in addition to the Annual Capacity Price, CL&P shall pay
to AER ***

In the event that CL&P elects to assume responsibility for preparing the
documentation and providing the financial assurance necessary to participate in
the Forward Capacity Auction or comparable capacity program during the Term,
CL&P shall pay to AER ***

 

III. Total Payment Calculations per Program Year: *** :

***

***

***

 

  A. ***

***

***

***:

***

                ***

***

***

***

 

B- 1 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

***

***

***

***

***

***

***

***

***

***

***

***

***

***

***

***

1.***.

2.***

   ***

***

***

(1). ***

***

***

***

***

***

***

***

 

B- 2 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

***

***

***

***

-

****

***

***

(2).***

***

***

***

***

***

***

***

***

***

(3).***

***

***

***

***

***

***

***

***

***

***

 

  E. ***

***

 

IV. ***

***

 

B- 3 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  (i) ***

 

  (ii) ***

 

B- 4 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

***

***

***

***

***

***

 

B- 5 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

APPENDIX C

MARKETING, RECRUITMENT AND RETENTION

1.0 Scope of Work. The Parties intend that the Program will be marketed as a
CL&P Program, that AER’s role is acting solely as an agent on behalf of CL&P to
administer the Program, and that all marketing materials will feature CL&P
prominently. Marketing, recruitment and retention will include all activities
required to solicit and retain Participants for the DLCS Program. Activities
include, but are not limited to, the development of a Marketing Plan, enrollment
and education materials and periodic communications to minimize Participant
abandonment. CL&P will have final approval of all marketing and recruitment
activities pursuant to Article 6. The Program will be evaluated by both Parties
annually to monitor customer recruitment and retention.

2.0 Marketing Plan. On or before *** of the year preceding the marketing year,
CL&P and AER will work together to develop a Marketing Plan as provided in
Article 6. CL&P and AER will agree on the final components of the Marketing
Plan. The Marketing Plan will include:

 

  2.1 Identifying and quantifying the target markets.

 

  2.2 Developing a Communications and Marketing Plan to reach the target
markets.

 

  2.3 Developing the key messaging and support points.

 

  2.4 The Marketing Plan may include the following promotional channels
(“Marketing Channels”)

 

  2.4.1 Direct Mail (timing TBD),

 

  2.4.2 CL&P Bill Inserts, if mutually agreed to targets can be selected,

 

  2.4.3 Employee awareness and ambassador program,

 

  2.4.4 Grass Roots campaigns for residential and commercial customers,

 

  2.4.5 CL&P’s small and medium commercial account reps and contractors to help
support and cross sell the Program, as time allows as determined by CL&P,

 

  2.4.6 Radio and Newspaper ads,

 

  2.4.7 CL&P to strategically help cross promote the Program via its regular
customer touches such as news letters, direct mail, brochures and online
information as appropriate and as space is available,

 

  2.4.8 Participation in fairs, events and cause marketing events to promote the
Program,

 

  2.4.9 Integrate Program information and signup process developed by AER at the
CL&P website,

 

  2.4.10 Banner Ads on the web - such as at Weather.com based on zip code entry,

 

  2.4.11 HVACs Partnerships, and

 

C- 1 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  2.4.12 Co-marketing and other marketing channels given CL&P approval of AER
for co-branding.

 

  2.5 In addition to Marketing Channels described above in Sec. 2.4, the
Marketing Plan may include promotional strategies to be performed by third party
entities marketing on behalf of CL&P (“CL&P/Third-Party Marketing Channels”), as
approved by AER in writing, where such approval shall not be unreasonably
withheld. In no way will CL&P’s performance in obtaining enrollments from
CL&P/Third Party Marketing Channels diminish AER’s obligations to satisfy
Contracted Capacity or any other obligations under this Agreement, nor shall
CL&P’s performance in obtaining such enrollments be a cause for default or
termination.

3.0 AER Responsibilities. AER agrees to:

3.1 Commence execution of the Marketing Plan and Recruiting Prospects. CL&P will
prepare Prospect lists based on previously determined targets (including, as
available, metering information, geographic location, NAICS codes and any other
demographic information deemed appropriate in the marketing plan). *** AER
retains the right to decline certain Prospects based solely on objective
circumstances that prevent customer participation such as faulty or dangerous
end-use equipment, unsafe working conditions for AER employees or low
curtailment signal strength or objective criteria regarding load value, such as
loads that are not coincident with CL&P’s summer peak.

3.2 Assign dedicated AER Project management staff to design, develop and
distribute all enrollment materials including enrollment operations, education
packages and other activities. Project management staff shall provide the
following support activities:

 

  •  

Coordination and Planning;

 

  •  

Prepare Weekly and Ad-Hoc as needed Status Reports;

 

  •  

Attend Weekly and Ad Hoc as needed Implementation Meetings (phone); and

 

  •  

Attend Meetings when requested by CL&P.

3.3 Design and development of the marketing collateral. AER will design CL&P
branded marketing collateral, according to CL&P standards and subject to CL&P
approval pursuant to Article 6, which shall not be unreasonably withheld. Such
approval shall include, without limitation, CL&P’s right to approve all uses of
and references to its logos, trademarks and name at its sole discretion. As time
is of the essence, CL&P will respond to request for approval of all requested
materials in accordance with Article 6.

3.4 Mail an initial education package to potential Prospects. The package shall
include information that describes how the specific features of the Program will
work. The information shall be professionally printed and may include direct
mail letters, brochures, free standing inserts, posters and CDs.

 

C- 2 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

3.5 Be responsible for costs associated with a direct mail campaign, including
but not limited to, concept, design, production, mailing and postage of all
marketing collateral for the *** mailed. *** In addition to direct mail, AER
will be responsible for outreach to organizations such as trade associations,
Chambers of Commerce and local publications.

3.6 ***

***

***

***

3.7 With the assistance of CL&P, add to the existing CL&P Website a link
acceptable to CL&P to include a comprehensive on-line customer education and
enrollment experience.

3.8 Maintain the Customer Call Center to receive and respond to customer
inquiries. AER will work with CL&P and provide example scripting for the call
center agents. CL&P shall have the opportunity to comment on and approve the
scripts, and such comments or approval shall be provided with 15 days of receipt
of the final copy. AER will work with CL&P to identify linkages necessary
between call centers.

3.8.1 Call Center Performance Metrics. AER shall set up a system to monitor and
report to CL&P on a regular basis and will perform commercially best efforts to
achieve the following call center performance metrics:

3.8.1.1 ***

3.8.1.2. ***

3.9 Maintain an electronic Customer Contact log of the Facilities interested in
participating in the Program and results from the inquiries. The Customer
Contact Log shall include Customer Name, Facility Address, Contact Name and
Phone number, customer feedback and answer time

3.10 Educate and train CL&P’s small and medium commercial account reps and
contractors, if any, about the Program so that they can effectively cross sell
to their eligible customer base.

3.11 Develop and distribute periodic Participant communications designed to
maintain high customer satisfaction and minimize dropout.

3.12 Track various customer incentives in the AER Tracking system. At the end of
the Control Season, AER will create a listing of all customers who are eligible
to receive an incentive by incentive type. AER will supply this list to CL&P
within thirty (30) days of the M&V results being accepted by CL&P. Upon receipt,
CL&P will review the customer list, and

 

C- 3 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

approve the participants for payment or recommend reasonable changes for
approval, within fifteen (15) days of receipt of the list from AER.

3.13 Upon receipt by AER of the wire transfer, as defined and contingent upon
Sections 4.13 and 4.14 in this Appendix, AER shall within thirty (30) days pay
Participating Facilities either Residential Incentive Payments or Commercial
Incentive Payments, as applicable, and provide the facilities with materials
mutually acceptable by both Parties.

3.14 Contingent upon Sections 4.13 and 4.14 in this Appendix, AER will generate
a Participating Facility letter and check, including without limitation the one
time incentive, as required for each customer. The letter will thank customers
for participating in the Program and explain the enclosed check. The letter will
be in a format mutually acceptable by both Parties, and CL&P will approve all
incentive letters prior to the letters being printed. AER will insert checks, as
required, into the end of year Participating Facility letter. Checks will be
issued with instructions stating that they will expire if not cashed within 60
days; however AER will honor checks for up to one year. AER will include fraud
detection. AER will create a monthly reports list to include the customer, check
number assigned to each payee, and the report will indicate when each check
clears. AER will reissue checks as requested by CL&P utilizing existing
processing procedures.

3.15 ***

 

   

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

 

***

***   ***   ***   ***   ***   ***   ***   ***   ***   ***   ***

4.0 CL&P Marketing Responsibilities. CL&P agrees to:

 

  4.1 ***

 

  4.2 Respond to request for approval of all Marketing Channels for use by AER
in a timely manner.

 

  4.3 Make commercially best efforts to provide AER with all current marketing
restrictions at the time of the approval of the Marketing Plan.

 

  4.4 CL&P will prepare Prospect lists based on previously determined targets
(including metering information, geographic location, available demographic
codes and any other demographic information deemed appropriate in the marketing
plan). *** This list will include all Customers in the targeted area, including
but not limited to Customer Name, Site Address, Mailing Address, available
demographic codes (when available), and 12-month consumption history (where
available), and any appliance information available.

 

  4.5 Provide Updated Target List to the final place of fulfillment of marketing
materials (mail house) once a signed confidentiality agreement is received.

 

C- 4 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  4.6 ***

 

  4.7 Respond to requests for approval of all marketing activities in a timely
manner pursuant to Article 6, including approval of all ongoing marketing,
including without limitation direct mail, bill inserts, print ads, call center
scripts, or scripts for face-to-face meetings, surveys, partnership marketing,
radio commercials, web banner ads, website based campaigns. CL&P shall, within
fifteen (15) days of receipt of such proposals for ongoing marketing, either
approve the proposed marketing plan or provide reasonable recommendations for
modifications acceptable to CL&P to allow for approval of the proposal. In the
event that CL&P provides recommendations for incorporation into the plan, such
reasonable recommendations shall be incorporated by AER into the plan and
resubmitted to CL&P for review and approval within five (5) Business Days of
AER’s receipt of such recommendations.

 

  4.8 Provide AER with limited use of brand name and logo at no cost to AER and
subject to CL&P’s guidelines and restrictions as to such use.

 

  4.9 Provide other activities generally in support of the Program such as
references to the Program on CL&P’s website and/or on newsletters.

 

  4.10 Authorize CL&P branded program name and subject to CL&P’s guidelines and
restrictions as to such use.

 

  4.11 Respond to requests for approval of the first six (6) months of marketing
activities and collateral based on mutual agreement between CL&P and AER
pursuant to Article 6. Subsequently, AER will provide quarterly campaigns to
CL&P for approval.

 

  4.12 Reimburse AER for any direct costs resulting from third party marketing
materials previously approved by CL&P, but subsequently cancelled solely and
directly due to change in CL&P’s marketing direction, change in name of Program
or change in name of company provided however that AER shall make commercially
best efforts to mitigate such costs. CL&P will not be responsible for changes in
program materials including all collateral, marketing and advertising due to
requirements not previously stipulated by the CT DPUC subsequent to or
proceeding CL&P’s approval. The foregoing shall not apply to any costs of
CL&P/Third-Party Marketing Channel.

 

  4.13 Make commercially reasonable efforts to make available its public
relations team, at no cost or expense to AER, to assist (a) in coordination with
local news media for publicity coverage of the Program, at AER’s expense;
(b) AER in developing communities of interest and making inroads with local
Universities, Schools, Hospitals and elected officials for Program endorsement
and signup as appropriate.

 

C- 5 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  4.14 Determine within thirty (30) days of the Start Date whether CL&P desires
for AER to process certain correspondence to Customers, and with advanced
reasonable notice if CL&P chooses to have AER process after Program Year 1,
including mailing incentives/incentive letter, to Customers. If CL&P determines
that AER will process such correspondence, it shall pay to AER:

 

  4.14.1 ***

 

  4.14.2 ***

 

  4.15 Subject to DPUC Approval, allocate funds to AER for payment of
Participant incentives, pursuant to Section 4.14 herein, or to Participant,
either through a direct payment or bill reduction, by November 1 of any Program
Year the following:

 

  4.15.1 ***

 

  4.15.2 ***

 

  4.15.3 ***

 

C- 6 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

APPENDIX D

EQUIPMENT INSTALLATION AND MAINTENANCE

SCOPE OF WORK

1.0 Scope of Work. Equipment Installation includes all activities that interface
with a Participating Facility from the point of receipt of a signed Customer
Enrollment form through verification of commercial operation of the Control
Device.

2.0 Head-End Control System (HECS). The HECS will be designed, furnished,
supported and maintained by AER and/or its subcontractors.

3.0 The HECS shall include the following:

3.1 Master Station. AER will provide the master station for the HECS. AER will
provide the software and hardware to manage the end-use Control Devices
installed at the Facilities. The Master Station will be configured pursuant to
Appendix H.

3.2 Transmitter Site Equipment. A local paging company will provide the
transmitter network. If CL&P provides all paging services. *** The Parties will
determine within thirty (30) days of the Start Date whether CL&P will provide
such paging services.

3.3 Control Devices. AER will provide all Control Devices Installation. Control
Devices will be designed to switch loads on and off remotely in response to
commands from the Master Station. All control devices will be manufactured new
for use in the CL&P program and will not have been used by any other utility or
other load control program.

3.4 Control Device Installation. AER shall be responsible for scheduling the
installation of the Control Device with the Participant which shall be tracked
by the AER Business Information System (“BIS”). The BIS shall be utilized to
track customer interactions including installations, and the information shall
be the basis for programming the switches in the DLCS. AER shall also be
responsible for resolving any problems with the End-use Equipment that the
Participant may have resulting solely from the installation of a Control Device.

4.0 Systems Dispatch.

 

  4.1 CL&P Dispatch - CL&P shall be able to operate the load management control
center and dispatch the system via an AER supplied website. AER will maintain
the system and be responsible for programming the load management control center
to be able to control the End-use Equipment by system, region, substation or
circuit. CL&P will provide AER with an electronic file of the nodal addresses so
that AER can program the devices.

 

D- 1 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  4.2 ISO-NE Dispatch - CL&P’s designated ISO representative shall have the
right to Dispatch directly with AER, consistent with this Agreement, control of
the Participating Facilities.

5.0 Intentionally Deleted.

6.0 Installation Training.

6.1 AER will provide a comprehensive training and testing program that ensures
that each installer knows both the technical and customer service aspects of the
job.

6.2 If installation defect trends develop, AER’s project manager will take
corrective actions including additional training, increasing the number of
random audits for that installer, or releasing the installer from the project.

6.3 AER’s technicians will not only be trained in the technical side of the
installation, but will also be trained and equipped for customer service.

7.0 Installation workmanship, codes and licensing

7.1 AER or its subcontractors will become a registered HVAC contracting firm in
Connecticut or acquire the necessary licenses.

7.2 AER will perform all installations in a professional, workmanlike manner
according to the National Electric Code (NEC).

7.3 AER will respond to all governmental bodies, as requested by CL&P, that are
requesting information about the Program, respond to their concerns with
meetings and written explanations of the Program, the equipment and installation
techniques.

7.4 CL&P or its subcontractors will perform all installation of any ancillary
monitoring equipment in a workmanlike manner according to the NEC.

7.5 Neither CL&P, nor AER, nor their subcontractors will disable, interfere
with, or alter the installation of the other Party’s equipment unless the
Parties believe that the installation is a danger to the occupants of the
domicile. Any alteration will be brought to the other Party’s attention within
24 hours.

8.0 Tracking of Components. AER will provide:

A database system that will target, enroll and track customers through the Term
of the Agreement.

The system will begin tracking the customer when phone center personnel complete
an enrollment record for a client.

The system will produce work orders for the routes and the technicians will
install the devices.

Once the device has been installed, the work order will be entered with the
information from the device installation and this information will be tracked.

As other operations become necessary such as temporary or permanent removal,
quality control inspections or service calls, the system will track these
additional events and send this information to CL&P as required.

The systems will also track “could not install” cases and device inventory.

 

D- 2 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

AER will supply management reports, and audit trail features, from these systems
on a periodic basis.

9.0 Participating Facility Equipment Installation. For any installations, AER
will:

9.1 Inspect and make minor repairs to the air conditioning units at no charge in
order to meet electrical code before devices can be installed.

9.2 Install all devices and necessary components for the Program.

9.3 Provide and apply a label on each device indicating the DLCS component and a
number to call for customer service and support.

9.4 Record a serial number from each Control Device installed by removing the
“bar-code label” from the front of the device and attaching the label to the
work-order.

9.5 Provide work order copies for each installed unit on a monthly basis (if
requested) as part of project documentation.

9.6 Mount the Control Device in a location that provides access to the air
conditioning wiring with the least effect on aesthetics while allowing proper
functioning of the devices.

9.7 Make equipment installations in such a manner as to minimize alterations to
the current structure.

9.8 Install conduit, junction boxes and connectors to comply with applicable
building codes and the National Electric Code.

9.9 Verify that the air conditioning and DLC units function correctly.

10.0 Customer Service Telephone and Support. AER will:

10.1 Staff the telephone center with HVAC-knowledgeable Customer Service
Representatives knowledgeable in DLC and HVAC equipment,, who have received
detailed training on problem resolution over the telephone, from 8:00 am – 6:00
pm Eastern Standard Time (EST). Continue staffing call center on days of a
curtailment event until one hour after the event has concluded.

10.2 Use an answering service after hours.

10.3 Designate a service technician, who may be reached by the answering service
by pager, as “on-call” for after hours.

10.4 Provide each telephone workstation with a computer allowing access to the
customer database, tracking system and dispatch software.

10.5 Attempt to solve any problems over the phone by asking the customer a
series of scripted questions about the problem.

10.6 If the problem cannot be solved over the phone, dispatch a service
technician.

10.7 Have the service technician make a service call to the Participant’s site
(within 24 hours).

10.8 If the inspection reveals that the problem is with the appliance, the
technician will recommend the customer call an HVAC contractor.

10.9 If the switch device installation or operation caused the breakdown, repair
the appliance as soon as reasonably possible.

10.10 Report the outcome of the visit by entering all relevant information into
the tracking system.

 

D- 3 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

10.11 Deactivate equipment immediately upon customer request and schedule
equipment removal, if necessary.

10.12 Print a new work order and dispatch a service technician to remove the
device if necessary. The technician will remove the equipment and restore any
modifications to the customer’s premises and note such changes in the BIS.

10.13 Provide periodic repair reports to CL&P’s project manager as requested.

10.14 Track the resolution of customers’ complaints. Notify CL&P immediately of
any customer complaints or claims for damages that are not resolved.

 

D- 4 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

APPENDIX E

MEASUREMENT AND VERIFICATION PLAN

AER’S CONFIDENTIAL TRADE SECRETS

 

1.0 ***

***

***

***

***

 

  •  

***

 

  •  

***

 

2.0 ***

***

***

***

***

***

 

3.0 ***

***

***

***

***

***

***

 

E - 1 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

***

 

4.0 ***

***

***

 

  4.1 ***

***

***

 

  4.2 ***

 

  4.2.1 ***

***

 

  •  

***

 

  •  

***

 

  ¡  

***

  ¡  

***

  ¡  

***

***

***

 

  4.2.2 ***

 

  •  

***

  •  

***

  •  

***

  •  

***

  •  

***

  •  

***

  •  

T***

  •  

***

***

 

E - 2 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  •  

***

  •  

***

  •  

***

 

  4.3 ***

***

 

  4.4 ***

***

 

  4.5 ***

***

 

  •  

***

  •  

***

 

5.0 ***

 

  5.1 ***

***

 

  5.2 ***

***

 

6.0 ***

***

 

  6.1 ***

 

  6.1.1 ***

 

  6.1.2 ***

 

  6.1.3 ***

 

  •  

***

  •  

***

  •  

***

  •  

***

 

E - 3 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  •  

***

  •  

***

 

  6.2 ***

 

  6.2.1 ***

 

  6.2.2 ***

 

  6.2.3 ***

 

  •  

***

  •  

***

  •  

***

  •  

***

  •  

***

  •  

***

 

E - 4 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

APPENDIX F

NOTICES

 

If to AER:

   Comverge, Inc./ Alternative Energy Resources, Inc.    120 Eagle Rock Avenue,
Suite 190    East Hanover, NJ 07936    ***    with a copy to:    Comverge, Inc./
Alternative Energy Resources, Inc.    3950 Shackleford Rd., Suite 400    Duluth,
Georgia 30096    ***

If to CL&P:

   Connecticut Light and Power Company    107 Selden Street    Berlin,
Connecticut 06141    ***    with a copy to:    Connecticut Light and Power
Company    107 Selden Street    Berlin, Connecticut 06141    ***

 

F - 1 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

APPENDIX G

INSURANCE

 

    

Type of Insurance

  

Minimum Limits of Coverage

1.

   Commercial General Liability    $1,000,000 each occurrence and in the
aggregate CGL insurance shall cover liability arising from premises, operations,
independent contractors, products/completed operations, contracts, property
damage, personal injury and advertising injury, and liability assumed under an
insured contract (including the tort liability of another assumed in a business
contract), all with limits as specified above. There shall be no endorsement or
modification of the insurance limiting the scope of coverage for liability
arising from explosion, collapse, or underground property damage.

2.

   Business Automobile Liability    $1,000,000 combined single limit (each
accident), including all Owned, Non-Owned, Hired and Leased Autos

3.

   Workers Compensation, including statutory requirements.

4.

   Employers Liability    $1,000,000 each accident for bodily injury by
accident, or $1,000,000 each employee for bodily injury by disease.

5.

   “Umbrella or Excess Liability” insurance with a limit per occurrence and in
the aggregate of Ten Million ($10,000,000).

AER shall ensure that the insurance policies required above provide:

 

  (i) Insurance required in 1, 2 and 5 above shall include CL&P, and its
officers, directors, employees and agents as additional insureds.

 

  (ii) Such insurance as afforded by this policy for the benefit of CL&P, shall
be primary as respects any claims, losses, damages, expenses, or liabilities
arising out of this Agreement, and insured hereunder, and any insurance or self
insurance carried by CL&P, shall be excess of and noncontributing with insurance
afforded by this policy.

 

  (iii)

The commercial umbrella liability policy shall provide coverage excess of,

 

G- 1 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

 

and shall drop down in the event the underlying CGL, Business Automobile
Liability, and Employers Liability insurance policy limits are exhausted due to
claims during the policy term.

 

G- 2 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

APPENDIX H

SOFTWARE

The Parties hereby agree as follows:

 

1. SOFTWARE LICENSE AND TERMS

1.1 License Grant: It is generally contemplated that all Software, as defined in
the attached Scope of Work, including without limitation field applications, or
other proprietary licensed products, utilized and/or necessary for the
performance of and receipt of the Services (the “Software”) shall be used by and
run on the hardware systems owned by AER. All descriptions of the Software,
reports generated by the Software, or additional Software related documents are
collectively referred herein as “Software Documentation”. To the extent that
CL&P is required to Use, as defined below, any of AER’s Software or Software
Documentation, subject to the conditions set forth herein and the attached
Exhibits and Schedules, AER hereby grants to CL&P, and CL&P accepts from AER for
the Term of this Agreement (unless terminated as stated herein and therein,
respectively), a non-exclusive, non-transferable, royalty-free right and license
to Use the Software and Software Documentation as specified herein, installed on
the equipment as negotiated by AER and CL&P, solely in connection with AER’s
Direct Load Control System. AER shall retain ownership of all Software,
equipment, and Software Documentation. Such license shall be assignable in
connection with any assignment of this Agreement and pursuant to such assignee
agreeing to the terms contained herein.

1.2 Use Restrictions: The term “Use” solely means restricted internet access to
the Software’s web based connection by specific SDO only for the purpose of
instituting a Dispatch Event. CL&P hereby understands and agrees that (i) CL&P
shall have no right to copy the Software or any Software Documentation, except
as permitted under the Agreement; (ii) notwithstanding the foregoing, CL&P is
authorized to make a reasonable number of copies of documentation of the
Software Documentation as is necessary for CL&P’s use of the Software pursuant
to the terms of this Agreement and for backup, archive, or disaster recovery
purposes; (iii) CL&P may not modify the Software or merge the same into software
that is not provided by AER without the prior written consent of AER; (iv) CL&P
shall prevent unauthorized use or unauthorized access to Software provided that
CL&P may allow third parties to whom it has outsourced services or business
processes to access the Software and Software Documentation so long as such
parties agree to be bound by an appropriate confidentiality agreement, (v) CL&P
will only use the Software as provided for in this Agreement, and (vi) upon
termination of the Agreement or any license granted hereunder CL&P shall
promptly return any access rights, pass codes, Software Documentation, any
Software related applications or products, or any resulting merger software and
CL&P shall have no right thereafter to Use the Software or any portion thereof.

 

H- 1 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

2. MAINTENANCE

2.1 AER shall maintain the Software and DLCS. AER shall provide such repair
services and replacement parts as are necessary to keep the DLCS operating in
accordance with the requirements of this Agreement during the operational period
as defined in the this Agreement, at no additional cost to CL&P or CL&P
customers.

2.2 If, as a result of maintenance or service performed pursuant to this
Section, AER concludes that the problem results from a Software or system
failure, and that the system’s use is materially affected thereby, then AER
shall immediately commence correction procedures on such Software.

 

3. ACCEPTANCE

3.1 CL&P shall conduct an initial test as determined by the Parties to determine
if the Software performs in accordance with its specifications and capability to
perform Demand Reduction. CL&P shall notify AER, in writing, of its acceptance
of the DLCS or specify in reasonable detail those deficiencies which CL&P deems
unacceptable within thirty (30) days of notice of DLCS test completion. AER
shall have ten (10) days to correct all such deficiencies and shall notify CL&P
in writing when the deficiencies have been corrected. CL&P shall then have
fifteen (15) days to respond otherwise Software shall be deemed acceptable.
Software acceptance shall not be unreasonably withheld.

3.2 AER agrees that it will correct any nonconformities of the DLCS to the
requirements of this Agreement (“System Flaws”) in the Software and any
revisions to the Software which are reported to AER by CL&P.

 

4. TRAINING

Training sessions will be conducted and shall include hands-on training
utilizing trainers describing and demonstrating function, activation and
application of the DLCS. Two (2) training sessions will be conducted, one each
in April and May of each Program Year. All training expenses shall be borne by
AER.

 

5. CL&P RULES

5.1 AER, when on CL&P property, shall conduct its operations in strict
observation of access routes, entrance gates or doors, parking and temporary
storage areas as designated by CL&P. Under no circumstances shall any of AER’s
personnel, vehicles or equipment enter, move or be stored upon any area not
authorized by CL&P.

 

H- 2 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

5.2 AER shall abide by all CL&P security procedures, rules and regulations, and
cooperate with CL&P Security personnel whenever on CL&P premises, as provided by
CL&P prior to such visit to the premises.

 

6. OWNERSHIP OF INTELLECTUAL PROPERTY; CONFIDENTIALITY

6.1 As the owner of the DLCS, AER shall retain all rights to intellectual
property thereof.

6.2 CL&P acknowledges and agrees that AER owns all proprietary rights, including
patent, copyright, trade secret, trademark and other such proprietary rights, in
and to the DLCS, Software and Software documentation and any corrections,
remedial modifications, maintenance upgrades, updates or the other
modifications, including custom modifications to the Software whether made by
AER, CL&P or any third party.

6.3 Except as permitted pursuant to this Agreement, CL&P hereby acknowledges and
agrees that: (i) the DLCS, Software, the Software Documentation, access rights
to the Software, and all related documents and all copies thereof are AER’s
exclusive property and AER represents that they constitute a valuable TRADE
SECRET of AER (“Proprietary Information”), which CL&P may not disclose or make
available to third parties without being previously approved in writing by AER;
(ii) CL&P shall hold the Proprietary Information, including, without limitation,
any methods or concepts utilized therein, in strict confidence for the sole
benefit of AER; (iii) CL&P shall not reproduce, copy or modify the Proprietary
Information in whole or in part, except as authorized by AER in writing;
(iv) CL&P hereby agrees that, during the Term of this Agreement and at all times
thereafter, CL&P and its employees shall maintain the confidentiality of the
Proprietary Information, and CL&P shall not sell, license, publish, display,
distribute, disclose or otherwise make the Proprietary Information available to
any third party or attempt to (or allow any third-party to attempt to) reverse
engineer, decompile or disassemble or otherwise attempt to derive the source
code for the operation of the Proprietary Information, or to decode, de-encrypt,
decrypt or engineer around any measures contained in the Proprietary
Information; (v) CL&P shall not alter in any way the database schema without the
expressed written consent of AER; (vi) CL&P shall issue adequate instructions to
all persons, and take all actions reasonably necessary to satisfy CL&P’s
obligations under this Section 6.3; (vii) any use or disclosure of the
Proprietary Information in violation of this Section 6.3 may seriously and
irreparably impair and damage AER’s business; and (viii) upon any termination or
cancellation of the Agreement, CL&P shall, if requested by AER, forthwith return
to AER, or with AER’s written consent destroy, any access rights, passwords,
magnetic tape, disc, semiconductor device or other memory device or system
and/or documentation or other material including, but not limited to, all
printed material furnished by AER to CL&P.

 

H- 3 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

Scope of Work

 

1.0 Introduction

This Scope of Work describes AER’s PowerCAMP™ software system (“Software”) and
the practices and guidelines that both Parties shall use to carry out their
respective responsibilities according to Appendix H.

AER shall supply the PowerCAMP™ and provide access to CL&P via the web using a
standard web browser. Accessing the PowerCAMP™ does not require the use of AER
software or equipment.

As owner of the Software, AER may, at its sole discretion, change the
architecture to ensure a more robust, stable or secure network environment, or
create improvements to the website architecture to provide more enhanced
services to CL&P.

 

2.0 Responsibilities

2.1 AER Responsibilities: AER shall use good industry practices to design,
deploy, operate, manage, and maintain this DLCS. AER will supply all equipment
and services to ramp up to the Demand Reduction over the periods described in
Appendix A, and then operate and maintain the system for the period specified by
the terms of the Program.

2.1.1 AER will be responsible for configuring and programming the Software to be
able to control specific appliances by system, by region, by substation or by
circuit according to the parameters established by CL&P.

2.1.2 AER will provide CL&P access to the Software through a web-based
application interface over the Internet between CL&P’s System Operations Center
and the AER facility. Alternatively, AER will activate the system as directed by
CL&P though a telephone call, fax, or e-mail.

2.1.3 AER will create logon id’s and initial passwords for personnel designated
by CL&P to have access to the Software. AER will send these to the appropriate
CL&P personnel via the mail.

2.1.4 AER will provide password resets to authorized CL&P personnel following a
two (2) step verification process.

2.1.5 AER will be responsible to execute requests from ISO-NE and/or CL&P for
Dispatch Events.

2.2 CL&P Responsibilities: This section defines the responsibilities that CL&P
has regarding the design, implementation, and ongoing support of the Software.

2.2.1 CL&P shall provide to AER the customer data necessary to set up and
maintain current and accurate information used by the Software.

2.2.2 CL&P shall determine the scheduling, groups, and activation of the
Software in dispatching test and Dispatch Events. CL&P SDO shall have the right
to determine the Dispatch control of the Participating Facilities according to

 

H- 4 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

the operating parameters defined by the Dispatch Event set forth in this
Agreement.

2.2.3 CL&P shall Dispatch for Utility Dispatch Event events.

2.2.4 CL&P shall provide Personal Computers with internet connectivity and
Microsoft Internet Explorer (v.5.5 or above) at their system operations center
to enable users to log into the PowerCAMPTM via the web interface.

2.2.5 CL&P will notify AER who should have access to the system. Any Dispatch
Event scheduled by CL&P personnel with a valid logon id and password shall be
considered a valid event.

2.2.6 CL&P will promptly notify AER in writing of personnel who should no longer
have access, and AER will work to promptly ensure that access is no longer
allowed by those users.

 

3.0 System Description

The DLCS is a network consisting of devices which are remotely controlled over
RF transmission equipment by the PowerCAMPTM Software or equivalent. CL&P shall
have access to the PowerCAMP™ LMS (as defined below) via the web interface.

The PowerCAMPTM LMS shall include the software and hardware necessary to manage
the Control Devices installed at the End-use Equipment at Participating
Facilities.

The PowerCAMPTM LMS includes AER’s PowerCAMPTM Server and PowerCAMPTM Suite,
networking equipment, and third party software.

PowerCAMPTM LMS Hardware

 

 

a.

PowerCAMPTM LMS Servers – Two (Primary and Secondary)

 

  b. Rack-mounted Dell PowerEdge servers for scalable expansion.

 

  c. Disks in RAID mode for fault tolerance and high availability

PowerCAMPTM LMS Software

 

 

a.

AER’s PowerCAMPTM LMS (LMS) Software – Visual Basic, Microsoft Jet DB Engine

 

 

b.

AER PowerCAMPTM LMS Web Interface – Apache/Tomcat on Microsoft SQL Server

 

4.0 Web Interface

4.1 Help Feature. Help may be accessed by clicking on the Customer Service
button near the bottom of the main PowerCAMPTM screen or by contacting the AER
help desk.

4.2 Logging into Web Control Application . ***

4.3 ***, ***

 

H- 5 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

4.4 ***

4.5 ***

***

 

***

  

***

***

   ***

***

   ***

***

   ***

***

   ***

***

   ***

***

   ***

 

5.0 Security

5.1 Physical Security. ***

5.2 Network Security. AER will work to ensure that incoming connections from AER
will not compromise the overall security posture of the CL&P network perimeter.
Steps include:

 

  5.2.1 Data transfer between CL&P and AER will be ***

 

  5.2.2 AER SFTP servers sit behind the AER firewall. ***

 

  5.2.3 AER will use dedicated application servers in the Data Center to process
data from CL&P.

 

  5.2.4 AER uses ***

 

  5.2.5 AER will provide any ***

5.3 Network Redundancy. AER will provide reasonable assurance that capacity
thresholds are maintained above current network utilization and those operations
can continue in the event of unplanned disruptions. ***

5.4 Network Back-Up & Recovery. AER will perform ***

 

  5.4.1 System configurations backed up on a regular basis and stored off-site.

 

  5.4.2 The DLCS shall contain primary and secondary server.

 

  5.4.3 Node configurations are kept consistent on both machines.

 

  5.4.4 Secondary server is in warm-failover mode and can be brought up at any
time.

5.5 Audit: CL&P shall have the right from time to time and upon *** to AER,
outside of the Control Season unless an emergency exists, at its expense, to
conduct an audit to verify (i) that the Services are being performed in
accordance with

 

H- 6 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

its obligations under the Agreement; (ii) to verify the AERs’ proper management
and storage of CL&P’s data and information; (iii) AER’s security systems are
maintained in accordance with its representations at the time of the execution
of the Agreement; and (iv)compliance by AER with any of its other material
obligations under the Agreement and this Addendum (an “AUDIT”). The Audit will
be restricted to the specific matters specified by CL&P in such notice and must
be restricted to records no older than two years prior to the date of the audit
notice. The Audit may be conducted by such professional auditors or advisers
selected by CL&P (including its internal audit department). CL&P and its
professional auditors or advisers shall comply with AER’s reasonable health and
safety, security and confidentiality procedures. AER shall provide CL&P and its
advisers all reasonable facilities and access to its premises during normal
office hours, documents and information as they shall reasonably require, and
co-operate fully with CL&P in relation to any such Audit. Notwithstanding
anything to the contrary set forth in this Section, CL&P shall have the right to
conduct such Audits and at such frequency as is required by applicable laws or
regulations from time to time.

5.6 Third Party Software. AER shall be responsible for the licensing of all
third-party software utilized as part or in conjunction with this Agreement. The
terms and conditions of such licenses shall be compatible with CL&P’s intended
use of the DLCS and shall guarantee the continuous use of such third-party
software by CL&P for the term of the final, definitive agreements.

5.7 Backup. CL&P shall have the right and ability to export, backup, delete or
retrieve its data from AER at any time during its Agreement term and within 30
days after the effective date of termination. Within 30 days of any termination
of the Agreement, AER will provide CL&P with a complete copy of all CL&P and
CL&P customer data stored on AER’s system in a SQL Database format or other
format acceptable to CL&P. After 30 days after termination, AER has no
obligation to maintain or provide any CL&P or CL&P customer data and shall
thereafter, unless legally prohibited, and provided that all CL&P and CL&P
customer data has been delivered to CL&P, delete all CL&P and CL&P customer data
in its systems or otherwise in its possession or under its control and AER shall
certify in writing to CL&P that such deletion has in fact occurred.

 

H- 7 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

APPENDIX I

PROGRAM DESCRIPTION SUMMARY

 

***

 

***

 

***

***

  ***   ***

***

  ***   ***

***

  ***   ***

***

  ***   ***

***

  ***   ***

***

  ***   ***

***

  ***   ***

***

  ***   ***

 

***

  

***

  

***

***

   ***    ***

***

   ***    ***

***

   ***    ***

***

   ***    ***

***

   ***    ***

***

   ***    ***

***

   ***    ***

***

   ***    ***

***

      ü

 

I - 1 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

APPENDIX J

Guaranty

Reference is made to a certain Direct Load Control Delivery Agreement
(“Agreement”) by and between The Connecticut Light and Power Company (“CL&P”),
and Alternative Energy Resources, Inc. (“AER”), a wholly owned subsidiary of
Comverge, Inc., dated February 27, 2008.

The undersigned, COMVERGE, INC., a Delaware corporation (hereinafter referred to
as the “Guarantor”), whose is located at 120 Eagle Rock Avenue, Suite 190, East
Hanover, NJ 07936, in consideration of CL&P entering into the above-referenced
Direct Load Control Delivery Agreement (“Agreement”) with AER, does hereby
covenant and agree as follows:

 

A. The undersigned Guarantor does hereby If AER shall default at any time in the
payment of any sums, costs or charges whatsoever, or in the performance of any
of the other covenants and obligations of AER, under or pursuant to the
Agreement, then the undersigned, as its expense, shall.***

 

B. The obligations of the undersigned Guarantor hereunder are independent of the
obligations of AER. The undersigned may be joined in any action or proceeding
commenced by CL&P against AER arising out of, in connection with or based upon
the Agreement. The undersigned waives any right to require CL&P to proceed
against AER to pursue any other remedy in CL&P’s power whatsoever, any right to
complain of delay in the enforcement of CL&P’s rights under the Agreement, and
any demand by CL&P and/or prior action by CL&P or any nature whatsoever against
AER, or otherwise.

 

C. This Guaranty shall remain and continue in full force and effect and shall
not be discharged in whole or in part notwithstanding (whether prior or
subsequent to the execution hereof) any alteration, renewal, extension,
modification, amendment or assignment of, or concession, franchising, licensing
or permitting under the Agreement. Without limiting the foregoing, this Guaranty
shall be applicable to any obligations of AER arising in connection with a
termination of the Agreement, whether voluntary or otherwise. The undersigned
hereby waives notices of any of the foregoing, and agrees that the liability of
the undersigned hereunder shall be based upon the obligations of AER set forth
in the Agreement as the same may be altered, renewed, extended, modified,
amended or assigned. For the purpose of this Guaranty and the obligations and
liabilities of the undersigned hereunder, “AER” shall be deemed to include any
and all assignees or others directly or indirectly operating or conducting the
business contemplated under the Agreement, as fully as if any of the same were
the named AER under the Agreement.

 

D. The undersigned Guarantor’s obligations hereunder shall remain fully binding
although CL&P may have.***

 

J - 1 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

E. This Guaranty shall remain in full force and effect notwithstanding the
institution by or against AER,.***

 

F. This Guaranty shall be applicable to and binding upon the heirs, executors,
administrators, representatives, successors and assigns of CL&P, AER and the
undersigned. CL&P may, without notice, assign this Guaranty in whole or in part.

 

G. ***

 

H. The undersigned hereby waives trial by jury in any action, proceeding or
counterclaim brought by any person or entity with respect to any matter
whatsoever arising out of or in any way connection with: this Guaranty, the
Agreement; any liability or obligation of AER in any manner related to the
Premises; any claim of injury or damage in any way related to the Agreement or
the Premises; any action or omission of AER, its agents, employees, contractors,
suppliers, servants, customers or licensees; or any aspect of the use or
occupancy of, or the conduct of business in, on or from the Premises. The
undersigned shall not impose any counterclaim or counterclaims or claims for
set-off in any action brought by CL&P against the undersigned under this
Guaranty. The undersigned shall not be entitled to make, and hereby waives, any
and all defenses against any claim asserted by CL&P or in any suit or action
instituted by CL&P to enforce this Guaranty or the Agreement. In addition, the
undersigned hereby waives, both with respect to the Agreement and with respect
to this Guaranty, any and all rights which are waived by AER under the
Agreement, in the same manner as if all such waivers were fully restated herein.
The liability of the undersigned under this Guaranty is primary and
unconditional.

 

I. ***

 

J. Any default or failure by the undersigned to perform any of is obligations
under this Guaranty shall be deemed to be ***

 

K. The execution of this Guaranty prior to execution of the Agreement shall not
invalidate this Guaranty or lessen the obligations of Guarantor(s) hereunder.

IN WITNESS WHEREOF, the undersigned as executed this Guaranty this 27th day of
February, 2008.

 

COMVERGE, INC. By:  

/s/ Frank A. Magnotti

Name:  

Frank A. Magnotti

Title:  

President, COO, Alternative Energy Resources Group

Duly Authorized

 

J - 2 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

ACKNOWLEDGED AND ACCEPTED:

THE CONNECTICUT LIGHT AND POWER COMPANY

 

By:  

/s/ Raymond Necci

Name:   Raymond Necci Title:   Pres. & C.O.O.

 

J- 3 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

APPENDIX K

CL&P CORPORATE IT SECURITY REQUIREMENTS

Security Policies

 

  1. Has the organization published a complete set of policies and procedures
that support information integrity, availability, and confidentiality for the
organization?

Each employee and long term consultant is required to ***

 

  2. Is security awareness training mandatory, and does the training include the
concepts of confidentiality, integrity, and availability of data, corporate
security policies, information protection standards, and privacy awareness?

We train ***

 

  3. Does your company have a formal incident response and reporting procedure
in place, and is it tested regularly?

Every project has ***

Personnel Security

 

  1. Are (criminal, prior employment, identity) checks performed on all
employees that will have access to Northeast Utilities’ system?

Yes

 

  2. Are there established procedures to rescind personnel access in a timely
manner when access is no longer required?

Yes

 

  3. What is your current method of notifying your clients (like Northeast
Utilities in the future) that a person assigned to your clients’ project is no
longer employed by your company?

 

  a. How quick your disable their access in your system?

We disable their access within m***. Our IT manager is notified prior to the
termination to enable a close to contemporaneous deactivation.

 

  b. How quick do you notify your client for restricting access for that user in
your client’s network system?

Comverge Project Manager will notify client of personnel changes in the event of
employee terminations immediately

Environmental Security

 

  1. What type of access devices are used to control entrance to the facility?

 

  a. Is there 24 hour onsite security or monitoring where your

 

  i. data center is located (facility where NU will be terminating to your
company)

Yes

 

K- 1 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  ii. user community is located (the employees who will be assigned to the NU
project)

***

  2. Is management of your information processing facilities (data center)
outsourced to a third party?

***

 

  3. How is physical access to the data centers and server rooms restricted?
(referred to the data center we will be interfacing)

***

 

  4. Do you use cameras within the building and in the data center to detect
unauthorized access?

Yes

Network Management

 

  1. Does your company have a network firewall to separate the internal network
from the internet?

Yes

 

  2. Does your firewall architecture addresses the following:

 

  a. Stateful inspection of all packet traffic? Yes

 

  b. Antispoofing filtering (RFC-1918)? ***

 

  c. Log all inbound and outbound traffic? ***

 

  3. Is management of your firewall services and routers outsourced to a third
party? No

 

  4. If management of your firewall services and routers done in-house:

 

  a. How large is the team that manages your firewalls (have admin rights)? ***

 

  b. How large is the team that manages your routers (have admin rights)? ***

 

  c. For after hours: ***

 

  d. How do the administrators authenticate to the firewalls and routers to
perform administrative functions (eg. telnet, ssh, http, https, other)? ***

 

  e. Do your devices support/configured for centralized ID
verification/authentication (tacacs, ldap, radius, active directory, other)? ***

 

  5. Is wireless technology used to allow user access to the internal network -
Wireless access not available in datacenter network

 

  a. If so, then define what controls are in place to prevent “snooping” of the
network?

Access Control

 

  1. Does each individual who will be assigned to Northeast Utilities’ project
use a unique and identifiable login ID to access application and network
resources?

Remote Access is allowed through unique IDs only

 

K- 2 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

  2. Do the IDs have at least the following characteristics

 

  a. Locked after a given number of unsuccessful tries – ***

 

  b. Locked IDs can be unlocked by authorized administrator ***

 

  c. Not displayed on terminals and monitors ***

 

  3. Do the IDs have at least the following characteristics

 

  a. Predefined minimum length – Specify length – Minimum 7

 

  b. Composition rules are in effect to enforce strong passwords ***

 

  c. Users are required to change passwords periodically – Specify period – 30
days

 

  d. Not displayed on screens or in reports - True

 

  4. Do you maintain a logon history, so one can trace who logged when and
where?

Remote access is logged

End Point Security

 

  1. Do all servers and workstations utilize an antivirus solution? Yes

 

  a. Who are you using for antivirus? ***

 

  b. Does all inbound email being checked for viruses? ***

 

  c. How often are the signatures updated? ***

 

  d. How do you handle emergency updates? Immediate, upon advisory

 

  2. Do all servers and workstations are patched regularly?

 

  a. Describe process Standard patch installs tested and implemented on
schedule. Critical patches applied immediately

 

  b. If regular patch cycle, identify frequency - Monthly

 

  c. How do you handle critical security updates Applied immediately after
testing on test servers

 

  3. Are all workstations protected by password protected screen savers that
automatically activate after a period of inactivity? Yes

 

  a. How long is the inactivity interval? ***

Compliance

 

  1. Is your company in compliance with pertinent information protection
legislation (i.e. SOX, etc.)?

***

 

  2. Do you perform self-based security assessments?

 

  a. Please define frequency and type of assessment

 

  3. Are independent third party reviews conducted periodically? Client IP
protection teams have reviewed and certified Comverge Hosted Infrastructure

 

  4.             

 

  a. Please define frequency of audits

 

  b. Remediation process of findings

 

K- 3 -

PROPRIETARY AND CONFIDENTIAL

--------------------------------------------------------------------------------

EXECUTION COPY

 

Business Continuity and Disaster Recovery Planning

 

  1. Is there a Business Continuity Plan available for the Data Center where
Northeast Utilities will be connecting to your company?

 

  a. What are the expected recovery time objectives? – Should there be a
disaster, how long would it take before Northeast Utilities can establish a
connection back to your company?

***

 

  b. Is your BCP revised periodically? – Specify frequency

Yes (it is reviewed on yearly basis and revised accordingly or sooner should the
need arise)

 

  c. Has your BCP tested?

 

  i. ***

 

  2. Is there a Business Continuity Plan available for the Customer Service area
(your employees that will be assigned to Northeast Utilities’ project and the
phone lines that will be terminating at the Call Center)? Yes

 

  a. What are the expected recovery time objectives? 8 hours

 

  i. ***

 

  ii. Should there be a disaster, how long would it take before employees of
your company are assigned back to answer phone calls?

***

 

  b. Is your BCP revised periodically? – Specify frequency Yes (it is reviewed
on yearly basis and revised accordingly or sooner should the need arise)

 

  c. Has your BCP tested?

 

  i. Have the BC Plan and Test Results been subjected to an independent audit? –
Specify auditing firm, and when the audit occurred No

 

  3. Does the primary Data Center have an alternate site for Data Center
recovery? Yes

 

  4. Are there high target building, structure, or other tenants, at the
facility where your Data Center is housed? No

 

  5. Does the company subscribe to multiple, diverse carriers for local and long
distance service providers? Yes

 

  6. Is the termination point at your end for the Internet connection on dual
power supplies, on two separate circuits, on two separate power supplies? Yes

 

  7. Does the physical cable (copper or fiber) that is provided by the telecom
companies (primary and redundant) enter the building through multiple locations
on the building perimeter, and terminate into separate distribution rooms? Yes

 

K- 4 -

PROPRIETARY AND CONFIDENTIAL