Committed Land Trust Discussion

1. Committed Land Trust Discussion Proposed Conservation Defense Insurance Program Legal Structure March 2011

2. Progress Since Rally • Devised legal structure • Developed fundraising prospectus • 460 committed land trusts • Working on all 460 meeting eligibility criteria • Over 18,000 conservation interests • Alliance board approval to file regulator applications

3. Legal Structure Needs Simple and effective Attractive to funders Protects Alliance and land trusts Integrates the insurance program and Alliance prevention and risk management services Ensures stability through quality control and guidance by the Alliance subsidiary Complies with all laws, regulations and accounting standards 3

4. Development Process • Alliance convened volunteer team of prominent attorneys • Philip Tabas, VP and General Counsel of TNC • Andy Dana (MT) and Jessica Jay (CO) • Conservation Insurance Pioneers and Authors • Fred Rich and Ted Holt of Sullivan & Cromwell • Evaluated alternative legal structures • Recommended structure to the Alliance board • We are grateful for their pro bono services to create the conservation defense insurance program

5. Proposed Legal Structure LAND TRUST OWNER MEMBERS THE INSURANCE COMPANY (LCI)* LAND CONSERVATION INSURANCE RRG LLC (Vermont manager-managed not-for-profit LLC) Name is placeholder only; subject to change The Manager (ARMS) ALLIANCE RISK MANAGEMENT SERVICES LLC (Vermont LLC; Alliance sole member) THE LAND TRUST ALLIANCE, INC. (Massachusetts not-for-profit corporation) COMMERCIAL PROVIDER OF CAPTIVE MANAGEMENT SERVICES CAPTIVE MANAGEMENT COMPANY

6. Proposed Legal Structure • LAND TRUST OWNER MEMBERS • Members are the § 501(c)(3) land trusts insured by the RRG • Land trust Members are the owners of the RRG • Land trust Members are all limited liability parties to the “LLC Agreement” by which the RRG is formed • THE INSURANCE COMPANY (LCI) • Land Conservation Insurance RRG LLC • Corporate Status: a Vermont manager-managed not-for-profit LLC pursuant to VT. STAT. ANN. tit. 8, ch. 21 • Regulatory Status: Risk Retention Group (“RRG”) pursuant to FLRRA; compliant with VT. STAT. ANN. tit. 8, ch. 141–142 (captive insurance and RRG laws) • Tax Status: § 501(n) charitable risk pool (requires IRS determination); eligible for tax-deductible contributions and program-related investment • Employees: None • Governance: LLC Agreement provides for: • Management by designated non-member Manager, subject to replacement by supermajority of Members • Members Committee, to represent the Members (seven persons; six persons elected by Members on regional basis and one person being a Vermont resident appointed by Members Committee with the advice of the Manager; nominated persons must be senior staff or board trustee/director of Member land trusts) • Claims Committee, with authority to make decisions on claims disposition (initial members appointed in LLC Agreement, to be supplemented and replaced from time to time by Manager with approval of Members Committee) • THE MANAGER (ARMS) • Alliance Risk Management Services LLC • (Vermont LLC; Alliance sole member) • Alliance Risk ManagementServices LLC is a single purpose entity; only purpose is serving as Manager for RRG • Appointed to be the sole non-member manager of RRGby the Members in LLC Agreement • Manager can be replaced at any time by supermajority vote of Members • Staff provided under contract with Alliance • Includes National Coordinating Attorney • RRG reimburses Manager for costs • Manager performs all non-administrative tasks and supervises commercial provider of captive management services, which performs all administrative tasks • THE LAND TRUST ALLIANCE, INC. • (Massachusetts not-for-profit corporation) • Staff provided to ARMS, LLC under contract with RRG • Alliance board oversight of ARMS, LLC • COMMERCIAL PROVIDER OF CAPTIVE MANAGEMENT SERVICES • Accounting, financial and premium administration • Claims administration • Administrative and ministerial matters

7. Proposed Legal Structure: The Land Trust Owners LAND TRUSTS • Ownership • 501(c)(3) land trusts insured by the RRG • Own the RRG • Members Committee • Six persons elected from land trust member owners • One Vermont resident (required) The RRG Insurance Company

8. Proposed Legal Structure: The Insurance Company RRG THE INSURANCE COMPANY (LCI RRG LLC) • Owners: The land trusts insured by the RRG • Corporate Status: a Vermont manager-managed not-for-profit Limited Liability Company • Tax Status: IRC § 501(n) charitable risk pool • Regulatory Status: Risk Retention Group • Governance: LLC Agreement and Members Committee • Employees: None • Services: On contract basis from the Alliance manager and from private third party expert providers such as the captive manager

9. Proposed Legal Structure:The Alliance Role • THE ALLIANCE MANAGER • Alliance Risk Management Services LLC (ARMS) • (VT LLC; Alliance sole member) • Appointed by Members Committee • Is sole non-member manager of RRG • Handles all substantive issues • Staffs RRG • Manages for profit providers The RRG Insurance Company (LCI) LAND TRUST ALLIANCE

10. Proposed Legal Structure:Third Party For Profit Providers COMMERCIAL PROVIDER OF CAPTIVE MANAGEMENT SERVICES This is a third party provider with expertise in insurance captives. Captive manager is an insurance term. The Alliance manager is the legal term for the LLC manager. Captive Management Contract Administrative and ministerial matters Supervised by the Alliance Manager The RRG Insurance Company

11. Proposed Legal Structure LAND TRUST OWNER MEMBERS THE INSURANCE COMPANY (LCI)* LAND CONSERVATION INSURANCE RRG LLC (Vermont manager-managed not-for-profit LLC) Name subject to change The Manager (ARMS) ALLIANCE RISK MANAGEMENT SERVICES LLC (Vermont LLC; Alliance sole member) THE LAND TRUST ALLIANCE, INC. (Massachusetts not-for-profit corporation) COMMERCIAL PROVIDER OF CAPTIVE MANAGEMENT SERVICES CAPTIVE MANAGEMENT COMPANY