<PAGE>
As filed with the Securities and Exchange Commission on June 4, 1999
Registration No. 333-75171
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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GREENMOUNTAIN.COM COMPANY
(Exact name of Registrant as specified in its charter)
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Delaware 5961 03-0360441
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation or Code Number)
organization)
55 Green Mountain Drive
South Burlington, Vermont 05403
(802) 846-6100
(Address, including zip code, and telephone number,
including area code, or Registrant's principal executive offices)
PETER H. ZAMORE, ESQ.
Vice President, General Counsel and Secretary
55 Green Mountain Drive
South Burlington, Vermont 05403
(802) 846-6100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies to:
JOHN T. McCAFFERTY, Esq. THOMAS A. COLL, Esq.
TROY B. LEWIS, Esq. NANCY E. DENYES, Esq.
Jones, Day, Reavis & Pogue Cooley Godward LLP
2300 Trammell Crow Center 4365 Executive Drive, Suite 1100
2001 Ross Avenue San Diego, California 92121
Dallas, Texas 75201 (619) 550-6000
(214) 220-3939
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. +
+GreenMountain.com may not sell these securities until the registration +
+statement filed with the Securities and Exchange Commission is effective. +
+This prospectus is not an offer to sell these securities and it is not +
+soliciting an offer to buy these securities in any jurisdiction where the +
+offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION--JUNE 4, 1999
PROSPECTUS
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25,000,000 Shares
[GreenMountain.com logo]
["Choose wisely. It's a small planet." logo]
Common Stock
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GreenMountain.com Company is offering shares of its common stock in an initial
public offering. Prior to this offering, there has been no public market for
GreenMountain.com's common stock.
We anticipate that the public offering price will be between $11.00 and $13.00
per share. The shares of GreenMountain.com will be included for quotation in
the Nasdaq National Market under the symbol "GMTN."
<TABLE>
<CAPTION>
Per Share Total
<S> <C> <C>
Public offering price...................................... $ $
Underwriting discounts and commissions..................... $ $
Proceeds, before expenses, to GreenMountain.com............ $ $
</TABLE>
See "Risk Factors" on pages 9 to 17 for factors that you should consider before
investing in the shares of GreenMountain.com.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
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The underwriters may purchase up to 3,750,000 additional shares from
GreenMountain.com at the public offering price, less underwriting discounts and
commissions, to cover over-allotments. Delivery of the shares will be on ,
1999.
Prudential Securities BancBoston Robertson Stephens
Deutsche Banc Alex. Brown
Volpe Brown Whelan & Company
FAC/Equities
First Union Capital Markets Corp.
The Robinson-Humphrey Company
E*Offering
facilitating Internet distribution
, 1999
<PAGE>
[Description of Front Cover Artwork]
Cover Page
Right: image of sun rings
Bottom right: image of caterpillar
Outside portion of gatefold
- ---------------------------
Top left: image of cocoon hanging from leaf
Right: image of sun rings
Top center: text reading "g* commerce: using consumer purchase decisions to
effect positive environmental change"
Middle: screenprint of greenmountain.com's home page
Bottom right: greenmountain.com logo, with "Choose wisely. It's a small
planet." logo
Gatefold
- --------
Left: image of planet earth with sun rings and flying butterfly, surrounded by
following text:
Left: image of planet Earth with sun rings and flying butterfly, surrounded
by following text:
"Small sensitive planet seeks caring individuals"
"Imagine a company where Internet commerce, basic consumer needs and the
environment all intersect. A place that easily empowers ordinary people to make
a real difference--one click at a time."
Bottom right: greenmountain.com logo, with "Choose wisely. It's a small
planet." logo
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
---- ----
<S> <C> <C> <C>
Prospectus Summary.................. 4 Environmental Advisory Board........ 56
Risk Factors........................ 9 Management.......................... 57
Use of Proceeds..................... 18 Related Party Transactions.......... 73
Dividend Policy..................... 18 Principal Stockholders.............. 78
Capitalization...................... 19 Description of Capital Stock........ 80
Dilution............................ 20 Shares Eligible for Future Sale..... 83
Selected Financial Information...... 21 Underwriting........................ 85
Management's Discussion and Analysis Legal Matters....................... 86
of Financial Condition and Results Experts............................. 86
of Operations...................... 22 Additional Information.............. 87
Business............................ 32 Index to Financial Statements....... F-1
</TABLE>
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You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information. We are
not making an offer of these securities in any jurisdiction where the offer or
sale is not permitted. You should not assume that the information contained in
this prospectus is accurate as of any date other than the date on the front
cover of this prospectus.
3
<PAGE>
PROSPECTUS SUMMARY
This summary sets forth the material highlights of the information contained
elsewhere in this prospectus. It may not contain all of the information that
you should consider before investing in GreenMountain.com, and you should read
the entire prospectus carefully.
Unless otherwise indicated, all information in this prospectus reflects our
conversion from a limited liability company to a corporation, which will occur
prior to the closing of this offering, and the related exchange of each common
unit of the limited liability company for three shares of common stock of the
corporation. See "Related Party Transactions--Reorganization Transaction."
GreenMountain.com
GreenMountain.com uses the Internet and other media to offer environmentally
friendly electricity and other green products to consumers. Our Web site--
www.greenmountain.com--will use the rich interactive resources of the Internet
to educate consumers about the environmental impact of their everyday purchases
and make it easy and appealing for them to use those purchases as agents of
change for a cleaner and healthier environment. We refer to the concept of
using consumer purchase decisions to effect positive environmental change as
"g*commerce." Our mission is to make Green Mountain the leading brand for
environmentally friendly products.
"Environmentally friendly" or "green" products, as we use these terms for
purposes of our business plan, are those products that have a less harmful
effect on the environment than other products available to consumers having the
same or a similar use. Based on number of customers served, we currently are
the leading retailer of green electricity to residential customers in
Pennsylvania and California--the two states that have effectively opened their
residential electricity markets to competition. Our green electricity products
are produced from renewable and other environmentally preferable generation
sources, such as wind, water, geothermal, biomass, landfill gas and natural
gas. In addition, we offer solar generation equipment and have very recently
begun to offer other green consumer products over the Internet.
Three broad trends support our business plan.
. Environmental Awareness. We believe that there is growing concern about
the environment among consumers today and that there is an excellent
opportunity to build a strong environmental brand presence. We believe
that, if offered a convenient, cost-effective choice, a large market of
consumers will purchase a product that is environmentally friendly over
one that is not.
. Deregulation of Electric Utility Markets. We expect deregulation of the
$200 billion electric utility industry--the largest industrial source of
air pollution in the United States--to provide consumers in more than
half the states with a choice of electricity supplier and generation
source by the end of 2003.
. Growth of the Internet. The Internet is emerging as one of the most
significant global communications media, enabling millions of people to
share information and conduct business electronically. We believe that
online retailers are able to communicate more efficiently and
effectively with more customers than traditional retailers.
Our predecessor, GreenMountain Energy Resources L.L.C., was formed in
February 1997 and commenced operations in August 1997. As a result, we have
only a limited operating history upon which you can evaluate our business and
prospects. For the year ended December 31, 1998, we generated revenues of $1.5
million and
4
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<PAGE>
incurred net losses of $46.0 million, and for the first quarter of 1999, we
generated revenues of $4.1 million and incurred net losses of $19.8 million.
More than 99% of our revenues have come from green electricity sales in
Pennsylvania and California. We expect to incur net losses in subsequent fiscal
periods. Because we expect to continue to incur significant market development
expenses, we will need to generate significant revenues to achieve
profitability in the future.
Our Web address is www.greenmountain.com. Our principal executive offices
are at 55 Green Mountain Drive, South Burlington, Vermont 05403. Our telephone
number is 802.846.6100. The information on our Web site is not part of this
prospectus.
Our Business Strategy
We are the first and only company to offer green electricity to residential
customers in both Pennsylvania and California. Although to date we have
primarily utilized traditional media in our marketing efforts, we are also one
of the first companies to offer green electricity products over the Internet.
We intend to take advantage of this first mover momentum to offer a wide
variety of green consumer products over the Internet.
To fulfill our mission, we have developed a strategy consisting of the
following key elements:
.Position Green Mountain as the most trusted and best known environmental
brand;
.Offer convenience and selection to purchasers of green consumer products;
.Develop and maintain our Web site as a state-of-the-art, interactive
commerce platform that makes purchasing our green products easy and
appealing; and
.Develop and maintain an online community that fosters and supports
g*commerce.
The GreenMountain.com Web Site
Our Web site is being upgraded to provide consumers with easy access to a
broad selection of green consumer products and in-depth, educational
environmental content. Our focus in this effort is on providing content with
environmental appeal to people of all ages, such as news articles, product
research information, corporate environmental value added reports and
environment-related tools, games and quizzes. Our approach is to compile
content from multiple sources and integrate it with our own editorial content
to increase its usefulness and the convenience, relevance and enjoyment of
consumers' visits to our Web site, thereby promoting increased traffic and
sales of our green products. We expect that our current upgrade will be
complete by October 1, 1999.
Our Management Team
Our management team is led by Sam Wyly, our Chairman. Mr. Wyly, a computer
software entrepreneur, has created and managed several public and private
companies. In 1981, he co-founded Sterling Software, a New York Stock Exchange-
listed supplier of software products and services, and he currently serves as
its Chairman. He also serves as Chairman of the Executive Committee of Sterling
Commerce, a leading provider of business-to-business electronic commerce
software and network services that was spun off by Sterling Software in 1996.
Since August 1997, entities affiliated with the Wyly family have invested more
than $70 million in our company. After this offering, Sam Wyly, Evan Wyly and
Lisa Wyly will collectively own of record or otherwise have voting control over
2,431,866 shares, or 4.8% of the shares outstanding. Because of this interest,
as well as the management positions of these individuals, we expect that the
Wyly family will continue to exercise significant control over our direction
and management following the closing of this offering.
5
It's a small planet.(SM)
<PAGE>
Our managers have substantial expertise in brand development and marketing,
as well as Internet-related technologies. In addition, we have established
strategic relationships with leading marketing and technology companies to help
us accomplish our mission.
Our Environmental Commitment
Our ability to obtain customers and generate sales depends on maintaining
our reputation as a company making a positive contribution to the environment.
We stake our reputation on the environmental soundness of our green products,
and we view our environmental integrity as one of our most important assets.
We believe strongly in our g*commerce vision. We intend to use the broad
reach of the Internet to aggregate the g*commerce impact of the large online
community, and we believe that the power of this community to effect
environmental change will be significant.
We intend to closely monitor our effect on the environment and consider it
an essential measure of our success. We have established an Environmental
Advisory Board, the management position of Chief Environmental Officer and a
committee of our board of directors, which will be responsible for reviewing
our adherence to our environmental principles.
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<PAGE>
The Offering
<TABLE>
<S> <C>
Shares offered by 25,000,000 shares
GreenMountain.com................
Total shares outstanding after 50,546,500 shares
this offering....................
Use of proceeds................... To provide working capital for brand
awareness and marketing, technology and
development expenses, repayment of any debt
and other general corporate purposes
Nasdaq National Market symbol..... GMTN
</TABLE>
Additional Potential Share Issuances
You should be aware that we are permitted, and in some cases obligated, to
issue shares of common stock in addition to the common stock expected to be
outstanding after this offering as indicated above. If and when we issue these
shares, the percentage of the common stock you own may be diluted. The
following is a summary of additional shares of common stock that may be issued
pursuant to the underwriters' over-allotment option and that we have currently
approved, or we expect to approve, for issuance upon the exercise of options
and warrants or grant of stock awards after this offering:
. 3,750,000 shares issuable upon the exercise of the underwriters' over-
allotment option;
. 6,200,229 shares issuable upon the exercise of the options outstanding as
of the date of this prospectus;
. 6,436,396 shares available for issuance upon the exercise of options
awarded under our 1999 Stock Option Plan in the future, including an
option to purchase 625,000 shares of common stock expected to be granted
to Sam Wyly, an option to purchase 487,500 shares of common stock
expected to be granted to Dennis Crumpler, a Vice Chairman and Director
of GreenMountain.com, and an option to purchase 675,000 shares of common
stock expected to be granted to Dennis Kelly, our President and Chief
Operating Officer, in each case in connection with this offering;
. 150,000 shares available for issuance under our 1999 Director Stock Award
Plan; and
. 11,907 shares issuable upon the exercise of warrants outstanding as of
the date of this prospectus.
Except as otherwise indicated, the number of shares outstanding set forth in
this prospectus does not reflect these potential issuances.
7
It's a small planet.(SM)
<PAGE>
Summary Financial Data
The following table summarizes our statements of operations for the period
from inception on February 26, 1997 to December 31, 1997, for the year ended
December 31, 1998 and for the three-month periods ended March 31, 1998 and 1999
and our balance sheet as of March 31, 1999. The statement of operations per
share data reflect our conversion from a limited liability company to a
corporation as if that conversion had occurred as of the beginning of the
period indicated. See our financial statements and the notes to those
statements included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Three Months
Ended March 31,
----------------
February 26, 1997
(Inception) to Year Ended
December 31, 1997 December 31, 1998 1998 1999
----------------- ----------------- ------ --------
(Unaudited)
(In thousands, except share data)
<S> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues................. $ -- $ 1,530 $ -- $ 4,150
Cost of sales............ -- 1,097 -- 3,096
Total operating
expenses................ 13,905 46,465 6,731 21,064
Operating loss........... (13,905) (46,032) (6,731) (20,010)
Net loss................. (13,862) (46,039) (6,707) (19,795)
======== ======== ====== ========
Basic and diluted loss
per common share........ $ (21.81) $ (6.06) $(3.94) $ (0.89)
======== ======== ====== ========
Basic and diluted
weighted average common
shares
outstanding............. 636 7,595 1,704 22,327
======== ======== ====== ========
</TABLE>
<TABLE>
<CAPTION>
At March 31, 1999
---------------------------
Actual As Adjusted (1)
------- ---------------
(Unaudited)
(In thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Cash................................................ $20,476 $298,101
Restricted cash..................................... 2,513 2,513
Total assets........................................ 29,750 307,375
Total liabilities................................... 12,313 12,313
Stockholders' equity................................ 17,437 295,062
</TABLE>
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(1)As adjusted to reflect the sale of the 25,000,000 shares of common stock
offered in this offering at an assumed initial public offering price of
$12.00 per share, after deducting underwriting discounts and commissions and
estimated offering expenses, as if this offering had been completed as of
March 31, 1999. See "Use of Proceeds" and "Capitalization."
8
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<PAGE>
RISK FACTORS
This offering involves a high degree of risk. You should carefully consider
the following risk factors, in addition to the other information in this
prospectus, before purchasing shares of GreenMountain.com common stock. Each of
these risk factors could adversely affect our business, operating results and
financial condition and the price of our common stock.
RISKS RELATED TO ESTABLISHMENT OF OUR BUSINESS
Our Business Plan Is Novel And Our Business May Not Prove To Be Profitable.
Our business plan is novel and without established precedent. It relies on
three broad trends:
.The willingness of consumers to use their purchasing decisions to address
environmental concerns;
.The movement from government controls to free market competition in the
electric utility industry; and
.Increasing use of the Internet for commerce transactions.
Our ability to grow our customer base and to generate sales sufficient for us
to achieve profitability depends on the continuation of these trends and the
successful implementation of the primary components of our business strategy.
To date, more than 99% of our revenues have come from sales of our green
electricity products in Pennsylvania and California. To grow our customer base
and generate increased sales, we must:
.Increase awareness of the Green Mountain brand;
.Offer a broad selection of green consumer products;
.Upgrade our Web site to accommodate and support expanded product
offerings; and
.Create an online community of people with shared concerns about the
environment.
The novel interaction of these factors presents a high degree of uncertainty
as to whether we can achieve profitability. Many of these factors are outside
our control. We cannot assure you that our business or your investment in our
stock will be profitable.
Both Investors And Our Management Will Have Very Limited Information
Available To Them In Making Decisions Relating To GreenMountain.com Because Of
Our Very Short Operating History And Because Of The New And Rapidly Evolving
Markets In Which We Operate. We commenced active operations in August 1997 as
a retail marketer of green electricity products and determined in late 1998 to
expand our retail marketing efforts by developing a state-of-the-art,
interactive commerce platform to offer other green consumer products. We have a
very limited operating history upon which an investor may evaluate our company,
our current business and our prospects can be based. Our business model is
evolving and an investor in our common stock must consider the substantial and
sometimes unforeseeable expenses frequently encountered by early stage
companies, companies that are in the midst of significant business changes and
companies that are in new and rapidly evolving markets, such as the retail
marketing of electricity and online commerce. Similarly, our management has
only a limited operating history on which to base important business decisions.
This lack of information will make these management decisions very difficult
and the outcome of the decisions uncertain. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business--Our
Strategy."
9
It's a small planet.(SM)
<PAGE>
We Have Incurred Losses, We Anticipate Losses Will Continue And We May Never
Achieve Profitability. We have recorded a substantial net loss for each fiscal
period since our inception and expect to continue to incur substantial net
losses for the foreseeable future. We incurred net losses of approximately
$46.0 million in 1998 and approximately $19.8 million in the first quarter of
1999. In connection with the implementation of our expanded business strategy
and the growth of our business, we expect our cost of sales and operating
expenses to increase significantly, especially in the areas of sales, marketing
and brand promotion. We will, therefore, need to generate significant revenues
to achieve profitability. We may never achieve profitability. Even if we do, we
may be unable to sustain or increase profitability in the future. See "Selected
Financial Information" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Our Ability To Grow Our Customer Base And Generate Sales Depends On
Positioning The Green Mountain Brand And Maintaining Our Reputation And The
Credibility Of Our Products. In order to grow our customer base and generate
sales, we believe we must position the Green Mountain name as the leading
environmental brand and maintain our reputation as a company making a positive
contribution to the environment, particularly in the Internet market and in
deregulated electricity markets within the United States. Promoting and
positioning the brand will depend largely on the success of our marketing
efforts and our ability to provide high quality products and customer service.
We cannot assure you that we will be successful in this regard. Building the
Green Mountain brand will require substantial marketing expenditures. Our sales
and marketing expenses were $33.0 million for 1998 and $12.4 million in the
first quarter of 1999. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." We cannot assure you that our brand
promotion activities will result in increased revenues or that any such
revenues will offset our marketing expenditures.
State and federal regulators and environmental and consumer groups
scrutinize claims regarding the environmental benefits of products and from
time to time challenge the environmental benefits of products that claim to be
green, including those offered by us. In addition, state or federal regulators
may establish criteria which we would be required to meet in order to
characterize our products as "environmentally friendly" or "green," or they may
require detailed disclosure of the basis of our characterization of our
products. Compliance with rules of this type could be burdensome, particularly
in the highly technical area of electricity marketing. Maintaining our
reputation and the credibility of our products, as well as our environmental
message, will depend on our ability to respond to these claims and comply with
these rules effectively and efficiently. Although we believe that our claims
regarding the environmental benefits of our products are accurate and
supportable and that we will be able to comply with any applicable regulations,
we cannot assure you that these challenges or compliance with regulations of
this type will not adversely affect our reputation, our customer base or our
revenues. See "Business--Our Strategy."
Our Ability To Grow Our Customer Base And Generate Sales Depends On
Broadening Our Product Offerings. Until very recently, our consumer product
offerings consisted solely of green electricity products and solar generation
equipment, each of which we currently offer only in Pennsylvania and
California. To date, more than 99% of our revenues have come from green
electricity sales in those two states. We have recently begun offering a
limited number of other products that are also available to consumers outside
Pennsylvania and California. See "Business--Other Products--Recently Announced
Product Offerings." In order to grow our customer base and generate sales, we
must broaden our product offerings to include other green consumer products
that can be offered outside of deregulated utility markets. We cannot assure
you that we will be able to do so. We do not intend to manufacture any products
but rather will sell products produced for us by others under the Green
Mountain brand and, accordingly, we will need to establish relationships with
third parties to purchase or otherwise obtain such products. We will also need
to enter into relationships with third parties to make their own green products
available through our Web site. Our experience in purchasing and marketing
green electricity may not be effective in purchasing and marketing other green
consumer products. We cannot assure you that we will be able to establish the
third-party relationships necessary to broaden our product offerings as we
plan. Moreover, the commercial availability of some of the products that we
hope to offer--for example, fuel cells for homes, offices and cars--is
dependent on technological advances. We cannot assure you when or even that
such advances will occur, that we will be able to develop profitably a
sufficient selection of green consumer products or that any of our products
will achieve market acceptance. See "Business--Our Strategy."
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To Attract Customers And Make Sales Over The Internet, We Must Develop Our
Web Site And Implement Ongoing Improvements To Our Web Site In The Face Of
Rapid Technological Change. Our ability to attract consumers and sell them our
products over the Internet will depend on our ability to design, develop and
maintain a state-of-the-art Web site. The development of Web sites requires
substantial expenditures and lead time. As of March 31, 1999, we have spent
$1.1 million on the current upgrade of our Web site, and we expect to spend
another $4.5 million by October 1, 1999, when we expect this upgrade to be
complete. We are depending on Strategic Interactive Group, a specialized Web
site developer, for the upgrade of our Web site. If Strategic Interactive Group
does not meet our expectations, we would have to retain another Web site
developer and the upgrade of our Web site could be delayed. We cannot assure
you that the current upgrade of our Web site will be complete by October 1,
1999 or that our Web site will be successful in attracting customers after this
upgrade is complete. When we launch our upgraded Web site, it could contain
errors that are discovered after it is launched and, as a result, we may be
required to modify the Web site to correct these errors. We cannot assure you
that we will be able to modify our Web site to correct any errors or that we
will be able to implement the ongoing improvements that we believe are required
for the continued success of a Web site, and we cannot estimate the related
costs with any certainty. To date, approximately 4% of our customer sign-ups
for our green electricity products have come through our Web site. We have only
very recently begun offering other green consumer products over the Internet.
The online commerce industry is characterized by:
.Rapid technological changes;
.Frequent emergence of new industry standards and practices; and
.Continual changes in user and customer requirements and preferences.
Failure to adapt to the evolving technologies, industry standards and user
requirements and preferences on an ongoing basis could have a material adverse
effect on our ability to attract customers to and make sales through our Web
site. We cannot assure you that we will be successful in this regard. See
"Business--Our Strategy" and "Business--Our Web Site."
Our Failure To Develop And Maintain Strategic Web Site Relationships Could
Adversely Affect Our Ability To Attract Customers To Our Web Site. We believe
that in order to attract significant traffic to our Web site and thereby grow
our customer base we will need to establish and maintain relationships with
Internet portals, which are Web sites that offer a broad array of resources and
services on the Internet such as e-mail, discussion forums, search engines and
on-line shopping malls, to attract traffic to their site, and other high-
traffic Web sites that will carry links to our new Web site. For example, we
have entered into an arrangement with Yahoo! under which Yahoo! will place
banner advertising and button links on its properties and deliver e-mail, all
containing information about our energy business. We will also need to
establish and maintain relationships with content providers that will provide
our Web site with content that appeals to consumers who are concerned about the
environment. Competition exists for these types of relationships and we likely
will have to pay significant fees to establish and maintain these
relationships. We cannot assure you that we will be able to enter into or
maintain appropriate relationships or that, even if we do, we will attract
significant traffic to our Web site, grow our customer base or generate sales.
Our Ability To Expand Our Existing Green Electricity Business Into New
Markets Depends On The Outcome Of The Deregulation Process In Each State. We
believe that utility deregulation in the United States will continue on a
state-by-state basis. To date, however, only four states--Pennsylvania,
California, Massachusetts and Rhode Island--have implemented competition on a
statewide basis. Moreover, deregulation is a political process and its
continuation, as well as the timing and form of deregulation in any particular
state, cannot be predicted with any certainty. Specific features of
deregulation programs vary significantly from state to state. Our ability to
enter and compete in any particular deregulated market will depend on the
specific features, including the consumer protection provisions, of that
market's deregulation program. For example, the Pennsylvania program has
afforded us greater opportunity than the California program. We cannot assure
you that deregulation will continue or that the deregulation program
implemented in any particular state in the future will allow effective
competition. If it does, we may face additional competition and we cannot
assure you that we will be able to compete successfully in any state. If
deregulation does not continue as we currently anticipate, we would be unable
to expand our existing green electricity business as contemplated by our
11
It's a small planet.(SM)
<PAGE>
business plan and our financial prospects would be materially and adversely
affected. In any event, we may incur significant expenses in connection with
our lobbying efforts. See "Business--The Opportunity--Deregulation is
Empowering Consumers to Change the Way Electricity is Made."
OTHER RISKS RELATED TO OUR BUSINESS GENERALLY
Our Operating Results May Fluctuate Significantly And Cause Volatility In
Our Stock Price. Our operating results may fluctuate significantly from quarter
to quarter and year to year. Our limited operating history, in combination with
the recent expansion of our business strategy, also makes the prediction of
future results of operations impossible. We believe that period-to-period
comparisons of our operating results are not meaningful and that the results
for any particular period should not be relied on as an indication of future
performance.
Our revenues and operating results may vary significantly from quarter to
quarter or year to year depending on a number of factors, including:
.Our ability to attract and retain customers;
.The level of consumer concern about the environment;
.The timing of deregulation of the electric utility industry and changes in
deregulation programs; and
.Other factors discussed under other captions under "Risk Factors."
Our limited operating history, together with the expansion of our business
strategy to include using our Web site to offer green consumer products other
than green electricity, also makes it difficult to fully assess the impact of
seasonal factors on our business. However, we expect to experience seasonality
in our business, reflecting a combination of seasonal fluctuations in Internet
usage, seasonal fluctuations of electricity usage and traditional retail
seasonality patterns. With respect to our existing retail electricity business,
higher than average use of electricity is expected in the summer and winter
months for Pennsylvania and California.
Fluctuations in operating results may result in volatility of the price of
our common stock in the public market. It is likely that, from time to time in
the future, our operating results will be below the expectations of public
market analysts and investors. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Intense Competition May Affect Our Ability To Grow Our Customer Base And
Generate Sales. Both the deregulated electricity and online commerce markets
are new, rapidly evolving and highly competitive. We face intense competition,
and many of our competitors and potential competitors have:
.Longer operating histories;
.Greater name recognition;
.Larger customer bases; and
.Greater financial and other resources.
Competitors may enter the online commerce market easily and at relatively
little cost. In addition, our competitors, and competitors offering non-green
products in particular, may be able to devote significantly greater resources
than we can to the development and marketing of products. They may also be able
to offer better prices to our potential customers and make more attractive
offers to our potential strategic partners. We also anticipate competition from
other retailers attempting to offer a broad selection of green products. See
"Business--Our Competitive Position."
Poor Performance By One Or More Of Our Outside Service Providers Could Be
Disruptive To Our Business Operations. We rely on third-party service
providers for several key functions, including:
.Web site development;
.Mass media advertising;
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<PAGE>
.Direct mail marketing;
.Inbound and outbound telephone marketing;
.Mail response processing;
.Customer fulfillment;
.Billing and customer care; and
.Information technology functions.
Any interruption in these third-party services, or a deterioration in their
service, could be disruptive to our business. Many of the agreements with our
third-party service providers are terminable upon short notice. If any of these
arrangements is terminated, we cannot assure you that we will be able to find
an alternative provider on a timely basis or on similar terms. In addition,
changes in providers may result in increased administrative costs. See
"Business--Marketing, Sales and Customer Service."
Our Existing Green Electricity Business Depends On Our Ability To Obtain
From Wholesale Electricity Suppliers, On Acceptable Terms, Electricity Meeting
Our Customers' Requirements. We do not generate electricity. For electricity
supply to serve the requirements of our green electricity customers, we
currently rely on short-term requirement contracts with wholesale electricity
suppliers. Under these contracts, our suppliers provide electricity, usually
for a one-year period, that matches the aggregate customer requirements that
are assigned to them. These contracts are not dependent on any minimum number
of customers being assigned to them and permit us to service customers
throughout a state. Under some of these contracts, the supplier can discontinue
the assignment of additional customers upon 90 days' notice. The wholesale
price is fixed or based upon a fixed price spread for the term of the
contracts. We attempt to reduce our risk related to fluctuations in wholesale
prices and customer usage by using these contracts, but cannot assure you that
price fluctuations will not adversely affect our business.
We may be unable to obtain sufficient electric power to meet our future
supply needs, both for our existing operations in Pennsylvania and California
and future operations in new deregulated electricity markets that we are likely
to enter. We may be unable to extend or replace our existing supply contracts.
Moreover, any future supply contracts may not provide for a term or a price
comparable to those of our existing supply contracts and may not be
requirements contracts that enable us to reduce our risk relating to
fluctuations in wholesale prices and customer usage. In addition, specific
features of a deregulation program in any particular state may affect our
access to and the cost of supply arrangements for that state. See "Business--
Our Green Electricity Products."
Our Ability To Grow Our Customer Base And Generate Sales Depends Upon Public
Environmental Consciousness. Our ability to grow our customer base and generate
revenues from the sale of green consumer products depends on the continued
development of public concern about environmental issues. While we believe that
such concern is rooted in improvements to education and the wider dissemination
of environmental information in recent years, we cannot assure you that these
trends will continue or that the current levels of environmental consciousness
will be sustained. Given our business plan, the failure of such concern to
continue to develop could materially and adversely affect the growth of our
customer base and sales revenues and, accordingly, our financial prospects.
Potential Rapid Growth May Strain Our Human Resources. We have rapidly and
significantly expanded our operations, and future expansion will be required in
order for us to realize our business objectives. We have grown from 28
employees as of September 1, 1997 to 68 employees as of March 31, 1999, and our
operations have grown to serve approximately 68,000 electricity customers in
Pennsylvania and California as of March 31, 1999. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations." We expect that
future growth will place a significant strain on our managerial, operational
and financial resources. We must manage our growth through appropriate systems
and controls in each of these areas. We must also expand, train and manage our
workforce. There is intense competition for personnel in the areas of our
activities, and there can be no assurance that we will be able to continue to
attract and retain personnel with the qualifications necessary for the
development of our business.
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It's a small planet.(SM)
<PAGE>
Our Business Operations Could Be Disrupted And Business Opportunities Lost
If We Are Unable To Integrate Our New Senior Executives And Retain An Able
Management Team. The operation of our business depends on our ability to grow,
integrate and retain an able management team. We recently hired a new Chief
Executive Officer, President and Chief Operating Officer, Chief Financial
Officer and Chief Technology Officer. We cannot assure you that we will
successfully integrate these and other new arrivals with our existing staff
without disruption to our business operations or that we will retain the
services of key personnel.
Failure To Protect Our Intellectual Property Could Adversely Affect Our
Brand And Our Business. We rely on a combination of trademark and copyright
law, trade secret protection, confidentiality and license agreements with our
employees, strategic partners and others to protect our rights to our
intellectual property. We have filed applications to register some of our
service marks in the United States. Effective trademark, copyright and trade
secret protection may not be available in every country in which we intend
ultimately to offer our products. Despite our efforts, we cannot assure you
that our rights will be enforceable even if registered, and we may be unable to
deter misappropriation of our intellectual property. Misappropriation could
have a material adverse effect on our brand and our business by causing us to
lose customers and revenue opportunities. In addition, pursuing persons who
might misappropriate our intellectual property could be costly and divert the
attention of management from the operation of our business. See "Business--The
Protection of our Intellectual Property."
Products Sold By Us May Subject Us To Litigation And The Related Costs. We
will sell products produced by others under the Green Mountain brand. We will
also have relationships with third parties who make their green products
available through our Web site. These sales and relationships may subject us to
liabilities, including consumer product liabilities. Defending against any such
claims could be costly and divert the attention of management from the
operation of our business. While we intend to require our suppliers and other
parties in these relationships to indemnify us against those types of
liabilities, any available indemnification may not be adequate. We currently
have product liability insurance coverage in the amount of $35 million, with a
$200,000 deductible per occurrence. Our liability insurance may not adequately
protect us against these types of liabilities.
Claims Of Our Infringement On The Intellectual Property Rights Of Others
Could Be Costly And Disruptive To Our Business Operations. Other parties may
assert infringement claims against us or claims that we have violated a patent
or infringed a copyright, trademark or other proprietary right belonging to
them directly or through the use of technology that we license from others.
Defending against any such claim could be costly and divert the attention of
management from the operation of our business. In addition, the inability to
obtain or maintain the use of licenses or other technology could adversely
affect our business operations.
Year 2000 Complications Could Be Disruptive To Our Business Operations. On
January 1, 2000, many currently installed computer systems and software
products could fail or malfunction because they may not be able to distinguish
between 20th century dates and 21st century dates. We are subject to external
Year 2000-related failures or disruptions that might generally affect industry
and commerce, such as failures by energy generation or utility distribution
companies and related service interruptions. These failures or disruptions are
especially critical to us as a seller of retail electricity products.
Notwithstanding our Year 2000 efforts, the failure of our systems or those of
any of our information technology service providers, outsourcing partners or
suppliers, or the failure of the Internet generally, to be Year 2000 ready
could harm the operation of our systems or have unforeseen, material adverse
consequences to us. These consequences could include power supply interruptions
to our customers or the inability to bill our customers. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Year
2000 Readiness Disclosure."
RISKS RELATED TO THE INTERNET AND ONLINE COMMERCE ASPECTS OF OUR BUSINESS
Our Ability To Generate Sales Depends On Continued Growth Of Online
Commerce. Our ability to generate sales of green consumer products through our
Web site depends on continued growth in the use of the
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<PAGE>
Internet and in the acceptance and volume of commerce transactions on the
Internet. We cannot assure you that the number of Internet users will continue
to grow or that commerce over the Internet will become more widespread or that
our sales will grow at a comparable rate. As is typical in the case of a new
and rapidly evolving industry, demand and market acceptance for recently
introduced services are subject to a high level of uncertainty. The Internet
may not prove to be a viable commercial marketplace for a number of reasons,
including:
.Lack of acceptable security technologies;
.Lack of access and ease of use;
.Congestion of traffic;
.Inconsistent quality of service and lack of availability of cost-
effective, high-speed service;
.Potentially inadequate development of the necessary infrastructure;
.Governmental regulation; and
.Uncertainty regarding intellectual property ownership.
We cannot assure you that the Internet will support increasing use or will
prove to be a viable commercial marketplace.
We May Lose Customers And Revenue Opportunities If We Are Not Able To
Acquire Or Maintain An Effective Web Address. We currently hold the domain name
"greenmountain.com," as well as other related names. We may not be able to
prevent third parties from acquiring Web addresses that are similar to ours. If
that should occur, we could lose customers and revenue opportunities to those
third parties. Domain names generally are regulated by Internet regulatory
bodies and their designees. The regulation of domain names in the United States
and in foreign countries is subject to change. As a result, we may not acquire
or maintain the "greenmountain.com" domain name in all of the countries in
which we may conduct business in the future. Furthermore, the relationship
between regulations governing such addresses and laws protecting trademarks is
not clear.
Failure Or Inadequate Performance Of Our Technology Systems May Interrupt
Our Operations And Result In The Loss Of Customers And Revenue
Opportunities. Our ability to grow our customer base and generate sales of our
green consumer products over the Internet will depend on the efficient and
uninterrupted operation of our Web-related technology systems that are required
to accommodate a high volume of traffic. We cannot assure you that our Web site
infrastructure will be able to accommodate the volume of traffic that could
develop or that upgrade requirements will not have an adverse impact on our
business. Although we intend to implement security measures, our systems will
be vulnerable to physical damage or interruption from human error, natural
disasters, telecommunication failures, break-ins, sabotage, computer viruses,
intentional acts of vandalism and similar events. We do not intend to have
redundant systems and have not adopted a formal disaster recovery plan.
Therefore, any system failure, including network, software or hardware failure,
that causes an interruption in our service or a decrease in responsiveness of
our Web site could cause us to lose customers and revenue opportunities and
could harm our reputation and brand. In addition, our business interruption
insurance may not compensate us for all losses that could occur as a result of
system failures.
Security Concerns Could Hinder Our Online Sales And May Require Significant
Expenditures. Concern about the transmission of confidential information over
the Internet has been a significant barrier to online commerce over the
Internet. We cannot assure you that consumers will not limit their use of the
Internet to purchase products because of security concerns. We rely on
encryption and authentication technology licensed from third parties to provide
the security and authentication necessary to effect secure transmission of
confidential information, such as customer credit card numbers. We cannot
assure you that advances in computer capabilities, new discoveries in the field
of cryptography or other events or developments will not result in a compromise
or breach of the security measures that we use to protect customer transaction
data. In addition, we may be required to make significant expenditures to
protect against the threat of security breaches or to alleviate problems caused
by such breaches.
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It's a small planet.(SM)
<PAGE>
Information Displayed On Our Web Site May Subject Us To Litigation And The
Related Costs. We may be subject to claims for defamation, libel, copyright or
trademark infringement or based on other theories relating to information
published on our Web site. We could also be subject to claims based upon the
content that is accessible from our Web site through links to other Web sites.
Defending against any such claims could be costly and divert the attention of
management from the operation of our business.
Government Regulation Of The Internet And Online Commerce Is Still
Developing And Could Increase Our Operating Costs Or Otherwise Adversely Affect
Our Business. There are existing laws and regulations that specifically
regulate communications or commerce on the Internet. Further, laws and
regulations that address issues such as user privacy, pricing, content,
taxation and the characteristics and quality of online products and services
are under consideration by federal, state, local and foreign governments and
agencies. New laws or regulations relating to the Internet, or new applications
or interpretations of existing laws, could adversely affect our business by
increasing our operating costs or otherwise.
RISKS RELATED TO THIS OFFERING
Our Existing Stockholders Will Exercise Significant Control And Could Make
Decisions That Adversely Affect New Investors. We expect that the Wyly family
will continue to exercise significant control over our direction and management
following the closing of this offering. In addition, our directors and
executive officers and their affiliates will, in the aggregate, own
approximately 9.3% of the outstanding shares of GreenMountain.com common stock
upon the closing of this offering, or 8.7% if the underwriters exercise their
over-allotment option in full. As a result of their share ownership, these
stockholders will have a significant influence on all matters requiring
stockholder approval, including the election of directors. This concentration
of ownership could delay or prevent another person from acquiring control or
causing a change in control of GreenMountain.com, which may affect your ability
to resell your shares at a favorable price. See "Principal Stockholders."
Our Shares Have Never Been Publicly Traded And A Public Market May Not
Develop Or Be Liquid. Prior to this offering, there has been no public market
for our common stock. We cannot predict the extent to which a trading market
will develop or how liquid that market might become. The initial public
offering price for the shares will be determined by negotiations between us and
the representative of the underwriters and may not be indicative of prices that
will prevail in the trading market following this offering. See "Underwriting."
Our Stock Price Is Likely To Be Volatile And This Volatility Could Affect
Your Ability To Resell Your Shares At A Profit. The trading price of our common
stock is likely to be volatile. The stock market has experienced significant
price and volume fluctuations, and the market prices of technology company
stocks, particularly those of Internet-related companies, have been highly
volatile. As a result, you may not be able to resell your shares at a price
equal to or greater than the initial public offering price. In the past,
following periods of volatility in the market price of a company's securities,
securities class action litigation has often been instituted against the
issuing company, resulting in substantial costs and a diversion of management's
attention from the operation of its business. See "Underwriting."
Shares Eligible For Future Sale By Our Existing Stockholders May Adversely
Affect Our Stock Price. The market price of our common stock could drop due to
the sales of a large number of shares of our common stock or the perception
that such sales could occur. These factors could also make it more difficult to
raise funds through future offerings of common stock. After this offering,
50,546,500 shares of common stock will be outstanding. Of these shares, the
25,000,000 shares sold in this offering will be freely tradeable without
restrictions under the Securities Act of 1933, except for any shares purchased
by our "affiliates," as defined in Rule 144 under the Securities Act. The
number of shares of common stock outstanding would increase to 54,296,500 and
the number of freely tradeable shares would increase to 28,750,000 if the
underwriters exercise their over-allotment option in full. Our officers and
directors and
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stockholders holding in the aggregate 25,464,000 outstanding shares of common
stock have entered into lock-up agreements pursuant to which they have agreed
not to offer or sell any shares of common stock for a period of 180 days after
the date of this prospectus without the prior written consent of Prudential
Securities, on behalf of the underwriters. Also, Prudential Securities may, at
any time and without notice, waive the terms of these lock-up agreements as
specified in the underwriting agreement. Upon expiration of this lock-up
period, the shares owned by these persons prior to completion of this offering
may be sold into the public market without registration under the Securities
Act in compliance with the volume limitations and other applicable restrictions
of Rule 144 under the Securities Act. After the date of this prospectus, we
intend to file one or more registration statements under the Securities Act to
register all shares of common stock issuable upon the exercise of outstanding
stock options or reserved for issuance under our 1999 Stock Option Plan and all
shares of common stock reserved for issuance under our 1999 Director Stock
Award Plan. Those registration statements are expected to become effective
immediately upon filing, and subject to the vesting requirements and exercise
of the related options and the grant of stock awards (as well as the terms of
the lock-up agreements), shares covered by those registration statements will
be eligible for sale in the public markets, except for any shares held by our
"affiliates." See "Shares Eligible for Future Sale."
Investors Will Experience Immediate And Substantial Dilution And May
Experience Further Dilution. The initial public offering price of the common
stock in this offering will be substantially higher than the net tangible book
value per share of the common stock immediately after this offering. Therefore,
if you purchase shares of common stock in this offering, you will incur
immediate and substantial dilution of $6.19 per share in the net tangible book
value per share of common stock from the price you paid, assuming an initial
public offering price of $12.00 per share. The exercise prices of most of our
outstanding options are below the anticipated initial public offering price. To
the extent these options are exercised, you will experience further dilution.
See "Dilution."
Our Management Will Have Broad Discretion In Use Of Proceeds And It May Not
Effectively Utilize Those Funds. Our management will have broad discretion in
how we use the net proceeds of this offering. Investors will be relying on the
judgment of our management regarding the application of the net proceeds of
this offering. Our management's decision regarding use of the net proceeds may
not be the most effective utilization of those funds. See "Use of Proceeds."
Provisions In Our Governing Documents And Delaware Law Could Make
Transactions Beneficial To Our Stockholders More Difficult. Provisions of our
certificate of incorporation, our bylaws and Delaware law could make it more
difficult for a third party to acquire us, even if doing so would be beneficial
to our stockholders. See "Description of Capital Stock."
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements based largely on our
current expectations and projections about future events and financial trends
affecting the financial condition of our business. The words "believe," "may,"
"will," "estimate," "continue," "anticipate," "intend," "expect" and similar
expressions identify these forward-looking statements. These forward-looking
statements are subject to a number of risks, uncertainties and assumptions,
including those described above under the caption "Risk Factors." In light of
these risks and uncertainties, the forward-looking events and circumstances
discussed in this prospectus may not occur and actual results could differ
materially from those anticipated in the forward-looking statements. We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
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<PAGE>
USE OF PROCEEDS
We estimate that the net proceeds to GreenMountain.com from the sale of the
common stock in this offering, assuming an initial public offering price of
$12.00 per share, will be $277,625,000, after deducting underwriting discounts
and commissions and estimated offering expenses. The estimated net proceeds
would increase to $319,643,750 if the underwriters exercise their over-
allotment option in full.
The principal purpose of this offering is to obtain funds to be used as
working capital and for general corporate purposes. We currently anticipate
that we will use approximately 50% to 60% of the net proceeds for brand
awareness and marketing, 10% to 20% of the net proceeds for technology and
development, and 25% to 35% of the net proceeds for other general corporate
purposes, including acquisitions of or investments in strategic businesses or
technologies. We cannot assure you, however, that the amount of the net
proceeds of this offering actually applied for any particular use will not
differ from the amount we currently expect to use for that purpose.
As part of our general corporate purpose spending, we expect to allocate an
amount equal to 2% to 6% of the net proceeds to make substantial contributions
to the political process and for public education. The purpose of these
expenditures will be to help accelerate the deregulation of the electric
utility industry and to help impose on the sources of industrial air pollution
the costs of their pollution.
We currently have no commitments or agreements relating to any acquisition
or investment in any strategic business or technologies. We are, however,
exploring, and expect from time to time in the future to explore, possible
acquisitions or investments that would further our business objectives.
If prior to the closing of this offering we have obtained advances from
Green Funding I, L.L.C., an investment vehicle managed by the Wyly family, to
permit us to meet our working capital requirements, we will use a portion of
the net proceeds to repay the advances in full. There are currently no amounts
outstanding under our funding agreement with Green Funding I. However, we may
obtain advances under that agreement prior to the closing of this offering. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Related Party Transactions--Subsequent Transactions--Working
Capital Funding Commitment."
As of the date of this prospectus, we cannot specify, other than as
indicated above, the particular uses for the net proceeds to be received upon
the closing of this offering. Accordingly, our management will have broad
discretion in the application of the net proceeds. See "Risk Factors--Risks
Related to this Offering--Our Management Will Have Broad Discretion in Use of
Proceeds and It May Not Effectively Utilize Those Funds."
Pending these uses, the net proceeds of this offering will be invested in
short-term, interest-bearing, investment-grade securities or guaranteed
obligations of the U.S. Government.
DIVIDEND POLICY
We have not declared or paid any cash dividends on our common stock, and we
do not anticipate declaring or paying any cash dividends on our common stock in
the foreseeable future. We intend to retain any future earnings for use in the
operation of our business.
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CAPITALIZATION
The following table sets forth our capitalization as of March 31, 1999. Our
capitalization is presented:
.on an actual basis, but reflecting our conversion from a limited liability
company to a corporation as if that conversion had occurred as of March
31, 1999; and
.as adjusted to reflect the sale of the 25,000,000 shares of common stock
offered in this offering at an assumed initial public offering price of
$12.00 per share, after deducting underwriting discounts and commissions
and estimated offering expenses, as if this offering had been completed as
of March 31, 1999. See "Use of Proceeds."
You should read this information together with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our financial
statements and the notes to those statements included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
At March 31, 1999
---------------------
Actual As Adjusted
-------- -----------
(In thousands)
<S> <C> <C>
Cash................................................. $ 20,476 $298,101
======== ========
Long-term obligations................................ $ -- $ --
Stockholders' equity:
Common stock, $0.01 par value, 150,000,000 shares
authorized; 25,546,500 shares issued (actual);
50,546,500 shares issued (as adjusted)............. 255 3,255
Additional paid-in capital.......................... 104,269 378,895
Notes receivable.................................... (5,108) (5,108)
Deferred compensation............................... (1,636) (1,636)
Accumulated deficit................................. (79,696) (79,696)
Treasury stock...................................... (647) (647)
-------- --------
Total stockholders' equity.......................... 17,437 295,063
-------- --------
Total capitalization................................ $ 17,437 $295,063
======== ========
</TABLE>
The number of shares of common stock reflected as issued in the table above,
both on an actual basis and on an adjusted basis, does not reflect shares that
may be issued upon the exercise of options or warrants. You should be aware
that we are permitted, and in some cases obligated, to issue additional shares
of common stock. If and when we issue these shares, the percentage of the
common stock you own may be diluted. The following is a summary of additional
shares of common stock that may be issued pursuant to the underwriters' over-
allotment option and that we have currently approved, or we expect to approve,
for issuance upon the exercise of options and warrants or grant of stock awards
after this offering:
. 3,750,000 shares issuable upon the exercise of the underwriters' over-
allotment option;
. 6,200,229 shares issuable upon the exercise of the options outstanding as
of the date of this prospectus;
. 6,436,396 shares available for issuance upon the exercise of options
awarded under our 1999 Stock Option Plan in the future, including an
option to purchase 625,000 shares of common stock expected to be granted
to Sam Wyly, an option to purchase 487,500 shares of common stock
expected to be granted to Dennis Crumpler and an option to purchase
675,000 shares of common stock expected to be granted to Dennis Kelly, in
each case in connection with this offering;
. 150,000 shares available for issuance under our 1999 Director Stock Award
Plan; and
. 11,907 shares issuable upon the exercise of warrants outstanding as of
the date of this prospectus.
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<PAGE>
DILUTION
Purchasers of the common stock in this offering will experience immediate
and substantial dilution in the net tangible book value of the common stock
from the initial public offering price. Net tangible book value represents the
amount of our total tangible assets less our total liabilities, divided by the
number of shares of common stock outstanding.
.At March 31, 1999, our net tangible book value was $16,194,862 or $0.63
per share on an actual basis, but reflecting our conversion from a limited
liability company to a corporation as if that conversion had occurred as
of March 31, 1999.
.After giving effect to the sale of the 25,000,000 shares of common stock
offered in this offering at an assumed initial public offering price of
$12.00 per share and after deducting underwriting discounts and
commissions and estimated offering expenses, as if this offering had been
completed as of March 31, 1999, our pro forma net tangible book value on
March 31, 1999 would have been $293,819,862 or $5.81 per share.
This represents an immediate increase in the net tangible book value of
approximately $5.20 per share to our existing stockholders and an immediate and
substantial dilution of $6.17 per share to new investors purchasing common
stock in this offering. The following table illustrates this per-share
dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price........................ $12.00
Pro forma net tangible book value as of March 31, 1999...... $0.63
Increase attributable to new investors...................... 5.18
Net tangible book value after this offering.................. 5.81
------
Dilution to new investors.................................... $ 6.19
======
</TABLE>
The following table summarizes as of March 31, 1999, on a pro forma basis
assuming our conversion from a limited liability company to a corporation had
occurred as of that date, the differences between the number of shares
purchased from GreenMountain.com, the total consideration paid and the average
price paid per share assuming an initial public offering price of $12.00.
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ -------------------- Price per
Number Percent Amount Percent Share
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders......... 25,546,500 50.5% 104,310,000 25.8% $ 4.08
New investors................. 25,000,000 49.5 300,000,000 74.2 12.00
---------- ----- ------------ -----
Total..................... 50,546,500 100.0% $404,310,000 100.0%
========== ===== ============ =====
</TABLE>
The discussion and table above assumes no exercise of any stock options or
warrants outstanding as of March 31, 1999. The following table sets forth the
number of shares of common stock purchasable upon the exercise of options and
warrants outstanding as of the date of this prospectus and the related exercise
price.
<TABLE>
<CAPTION>
Number of Shares
Purchasable Under
Stock Options or Warrants Exercise Price
------------------------- --------------
<S> <C>
11,907 $75.59
41,946 $75.40
47,883 $75.20
4,835,400 $ 3.33
1,062,000 $ 6.67
78,000 $13.33
135,000 $12.00
</TABLE>
In addition, in connection with the closing of this offering, we expect to
grant to Sam Wyly an option to purchase 625,000 shares of common stock, Dennis
Crumpler an option to purchase 487,500 shares of common stock and Dennis Kelly
an option to purchase 675,000 shares of common stock, in each case at an
exercise price per share equal to the initial public offering price.
To the extent any options having an exercise price lower than the initial
public offering price are exercised, there will be further dilution to new
investors. See "Risk Factors--Risks Related to This Offering--Investors Will
Experience Immediate and Substantial Dilution and May Experience Further
Dilution."
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SELECTED FINANCIAL INFORMATION
The following selected financial data should be read together with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and the notes to those statements
included elsewhere in this prospectus. The statement of operations data for the
period from inception on February 26, 1997 through December 31, 1997, for the
year ended December 31, 1998 and for the three-month periods ended March 31,
1998 and 1999, and the balance sheet data at December 31, 1997 and 1998 and
March 31, 1999, are derived from our financial statements included elsewhere in
this prospectus. The statement of operations per share data reflect our
conversion from a limited liability company to a corporation as if that
conversion had occurred as of the beginning of the period indicated. See
"Related Party Transactions--Reorganization Transaction." The historical
results presented here are not necessarily indicative of future results.
<TABLE>
<CAPTION>
Three Months Ended
February 26, 1997 March 31,
(Inception) to Year Ended --------------------
December 31, 1997 December 31, 1998 1998 1999
----------------- ----------------- ------- -----------
(Unaudited)
(In thousands, except share data)
<S> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues............... $ -- $ 1,530 $ -- $ 4,150
Cost of sales.......... -- 1,097 -- 3,096
Operating Expenses:
Customer and regional
operations............ 982 4,834 652 2,270
Sales and marketing.... 4,337 33,010 4,065 12,375
General and
administrative........ 1,742 4,226 1,012 3,928
Technology and
development........... 2,048 2,918 833 2,268
Depreciation and
amortization.......... 90 768 169 223
Organizational costs... 4,706 709 -- --
-------- -------- ------- --------
Total operating
expenses............. 13,905 46,465 6,731 21,064
-------- -------- ------- --------
Operating loss......... (13,905) (46,032) (6,731) (20,010)
Interest income
(expense), net........ 43 (7) 24 215
-------- -------- ------- --------
Net loss............... $(13,862) $(46,039) $(6,707) $(19,795)
======== ======== ======= ========
Basic and diluted loss
per common share...... $ (21.81) $ (6.06) $ (3.94) $ (0.89)
======== ======== ======= ========
Basic and diluted
weighted average
common shares
outstanding........... 636 7,595 1,704 22,327
======== ======== ======= ========
<CAPTION>
At December 31, At March 31, 1999
----------------------------------- --------------------
As
1997 1998 Actual Adjusted(1)
----------------- ----------------- ------- -----------
(Unaudited)
(In thousands)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash................... $ 1,933 $ 5,654 $20,476 $298,101
Working capital........ 141 (2,268) 14,854 292,479
Total assets........... 4,183 11,411 29,750 307,375
Total liabilities...... 2,445 11,959 12,313 12,313
Stockholders' equity... 1,738 (548) 17,437 295,062
</TABLE>
- --------
(1) As adjusted to reflect the sale of the 25,000,000 shares of common stock
offered in this offering at an assumed initial public offering price of
$12.00 per share after deducting underwriting discounts and commissions and
estimated offering expenses, as if this offering had been completed as of
March 31, 1999. See "Use of Proceeds" and "Capitalization."
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements and the notes to those statements included elsewhere in this
prospectus. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in these forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, those discussed below and elsewhere in this prospectus, particularly in
"Risk Factors."
Overview
We were formed as a limited liability company in February 1997. Prior to the
closing of this offering, we will convert from a limited liability company to a
corporation. See "Related Party Transactions-- Reorganization Transaction."
Between August 1997 and March 31, 1998, Green Funding I and Green Funding
II, investment vehicles managed by the Wyly family, contributed to us a total
of $70.0 million. In August 1997, as required under the limited liability
company agreement, Green Mountain Power Corporation, through a subsidiary,
contributed to us
.service marks, including our Choose wisely. It's a small planet.SM and
Green Mountain Energy ResourcesSM service marks,
.research conducted by Green Mountain Power Corporation prior to formation
of the limited liability company to evaluate the viability of a
nationally-marketed, premium priced green electricity product, including
marketing studies and analyses and
.rights under agreements with third-party service providers,
which collectively were valued at $4.0 million, in exchange for an equity
interest in the limited liability company of 33%, after the effect of the
return of capital discussed below. In accordance with the limited liability
company agreement, the $4.0 million value associated with Green Mountain Power
Corporation's initial capital contribution was credited to the subsidiary's
capital account. In August 1997, Green Funding I contributed $8.0 million and
committed to contribute an additional $22.0 million in exchange for a 67%
equity interest. Immediately following the initial contribution by Green
Funding I, as required under the limited liability company agreement the
subsidiary of Green Mountain Power Corporation received a distribution from the
limited liability company of $4.0 million, representing reimbursement for the
cost of market studies and analyses and other development costs incurred by
Green Mountain Power Corporation prior to the formation of the limited
liability company. By December 1998, as a result of capital contributions made
by Green Funding I after August 1997, the equity interest owned indirectly by
Green Mountain Power Corporation had been diluted to approximately 1%. In late
December 1998, we negotiated with Green Mountain Power Corporation and agreed
to pay the subsidiary of Green Mountain Power Corporation $1.0 million in cash,
the management committee's estimate of the fair value, for its remaining 1%
equity interest, a non-compete agreement, rights to the Green Mountain name and
other concessions. This agreement enabled us to eliminate our ties to a
traditional regulated utility that had elected not to contribute additional
equity to us. In addition, this agreement includes provisions favorable to us
relating to non-competition and the use of the Green Mountain name. During
January and February 1999, we raised $35.2 million in cash through private
equity offerings. See "Related Party Transactions--Subsequent Transactions,"
"Principal Stockholders" and Notes (1) and (11) to our financial statements
included elsewhere in this prospectus.
Since commencing active operations in August 1997, we have:
.Established relationships with several outsourcing partners to perform
most of the marketing, sales and customer service functions necessary for
the operation of our business;
.Established relationships with environmental groups and entered into
affinity marketing programs with some of them;
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.Designed and built our Information Network to provide for the efficient
communication of information with and among our outsourcing partners;
.Integrated our Web site into our Information Network to enable consumers
to purchase our electricity products online;
.Implemented an aggressive marketing campaign using the Internet and other
media aimed at creating awareness of the Green Mountain brand in
California, which opened for competition on April 1, 1998, and
Pennsylvania, which opened for competition on January 1, 1999;
.Established supply relationships for green electricity in California and
Pennsylvania;
.Commenced marketing green electricity to residential customers in the
deregulated electric utility markets of California and Pennsylvania;
.Established supply relationships for Green Mountain SolarSM systems and
commenced marketing them in California and Pennsylvania; and
.Recruited a management team with substantial expertise in brand
development and marketing, as well as Internet-related technologies.
As of March 31, 1999, we were serving approximately 19,900 customers in
California. We began selling electricity products in Pennsylvania on January 1,
1999. As of March 31, 1999, we were serving approximately 48,100 customers in
Pennsylvania.
We had 28 employees as of September 1, 1997. As of March 31, 1999, we had 68
employees, including management and staff personnel, and an additional seven
temporary employees. We will add additional management and staff personnel as
necessary, but we expect to continue to rely heavily on outsourcing
arrangements.
We have only a limited operating history upon which you can evaluate our
business and prospects. We have not achieved profitability, and expect to incur
net losses in 1999 and subsequent fiscal periods. We expect our costs of sales
and operating expenses, especially in the areas of sales, marketing and brand
promotion, to increase significantly, and, as a result, will need to generate
significant revenues to achieve profitability. Even if we do achieve
profitability, we may be unable to sustain or increase profitability on a
quarterly or annual basis in the future. We believe that period-to-period
comparisons of our operating results are not meaningful and that results for
any particular period should not be relied on as an indication of future
performance. See "Risk Factors."
Results Of Operations--Year Ended December 31, 1998 Compared To The Year Ended
December 31, 1997
Revenues And Cost Of Sales
We did not generate revenues until the last half of 1998. Revenues increased
from zero in 1997 to $1.5 million in 1998. Cost of sales representing
electricity wholesale costs increased from zero in 1997 to $1.1 million in
1998. These increases were attributable to the commencement of electric service
to customers in California beginning April 1, 1998.
Customer And Regional Operations Expense
Customer and regional operations expense increased by $3.8 million from $1.0
million to $4.8 million from 1997 to 1998. This expense is comprised primarily
of the cost of our billing and customer care operations and expenses incurred
for operations within particular states, including general operating expenses,
supply personnel, legal and regulatory expenses and consulting and lobbying
expenses. Overall, the increase from 1997 to 1998 primarily represents:
.Approximately a $1.5 million increase attributable to the commencement of
billing activity when the California retail electricity market opened for
competition;
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.Approximately a $0.9 million increase in regional operating activities
within states expected to open their electric utility markets for retail
competition in the foreseeable future;
.The preparation for commencement of service to customers in Pennsylvania
on January 1, 1999; and
.Costs associated with increased business development efforts.
In 1998, we entered into two electricity supply agreements to serve our
customers in California, and we entered into three electricity supply
agreements to cover anticipated customer requirements in Pennsylvania to
commence in 1999.
Sales And Marketing Expense
Sales and marketing expense increased by $28.7 million from $4.3 million to
$33.0 million from 1997 to 1998. Our sales and marketing expenses consist
primarily of payroll and the costs related to (1) building brand awareness,
including traditional media advertising, such as television, radio, print and
billboards, and special events and promotions and (2) direct marketing,
including direct mail, affinity programs, Internet and inbound and outbound
telemarketing. Total sales and marketing costs included the following amounts:
. Approximately $10.0 million for the year ended December 31, 1998 and
$0.7 million for the period from inception on February 26, 1997 through
December 31, 1997 for building brand awareness; and
. Approximately $17.4 million for the year ended December 31, 1998 and
$2.4 million for the period from inception on February 26, 1997 through
December 31, 1997 for direct marketing costs in Pennsylvania and
California.
These increases are primarily attributable to the commencement of service in
California in April 1998 and the anticipation of the commencement of service in
Pennsylvania effective January 1, 1999. These increases involve our use of
marketing services from The Cullinan Group in 1998. We expect sales and
marketing expense to continue to increase as we expand our green electricity
business to additional states and expand the products offered through our Web
site.
General And Administrative Expense
General and administrative expenses increased $2.5 million from $1.7 million
to $4.2 million from 1997 to 1998. This expense is comprised primarily of
payroll and miscellaneous expenses relating to our administrative, human
resources, finance, legal and regulatory functions. Total payroll costs
included in general and administrative expense were approximately $2.8 million
for the year ended December 31, 1998 and $1.1 million for the period from
inception on February 26, 1997 through December 31, 1997. The increase in
payroll costs reflects the increase in the number of employees needed to
accommodate our growth in 1998. Total miscellaneous costs related to our
administrative, human resources, finance, legal and regulatory functions were
approximately $1.4 million for the year ended December 31, 1998 and $0.6
million for the period from inception on February 26, 1997 through December 31,
1997. Miscellaneous costs primarily included costs related to travel, office
supplies and meals and entertainment due to costs incurred for activities
supporting the entry into deregulated electric utility markets.
Technology And Development Expense
Technology and development expense increased $0.9 million from $2.0 million
to $2.9 million from 1997 to 1998. This expense is comprised primarily of
payroll, general operating expenses and costs of consultants relating to the
preliminary development and operation of our information technology systems.
The increase in this expense primarily relates to information technology
consulting services provided by Sterling Software. The increase was also
partially attributable to increased payroll and general operating costs related
to operating in 1998 for a full year rather than less than six months in 1997.
We anticipate this expense will increase in future periods as we continue to
implement improvements in our Web site and our Information Network.
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Depreciation And Amortization
Depreciation and amortization increased $0.7 million from $0.1 million to
$0.8 million from 1997 to 1998. Our first full year of operations was 1998.
Depreciation and amortization for 1998 represent one full year, while
depreciation and amortization for 1997 represents a period from commencement of
operations in August 1997 to December 31, 1997. This increase is also due to
$0.9 million of property and equipment additions during 1998.
Organizational Costs
Organizational costs decreased $4.0 million from $4.7 million to $0.7
million from 1997 to 1998. In 1997, these costs were comprised primarily of
start-up and organizational development costs of approximately $4.0 million.
Unamortized organization costs in the amount of $0.3 million were written off
in the fourth quarter of 1998, in accordance with a new accounting
pronouncement.
Interest Income/(Expense), Net
Interest income/(expense), net, increased $0.1 million from 1997 to 1998
resulting primarily from interest on cash and cash equivalents offset in part
by interest expense on a short-term, $10.0 million loan. This loan was both
obtained and repaid in 1998. Our operations have been funded almost exclusively
by capital contributions.
Income Tax Expense
No benefit for federal and state income taxes is reported in our financial
statements because we have elected to be taxed as a partnership prior to our
conversion from a limited liability company to a corporation. For the periods
presented, the federal and state tax effects of our tax losses were the
responsibility of Green Funding I as a member of the limited liability company
in accordance with our limited liability company agreement. Subsequent to our
conversion into a corporation, we will account for income taxes in accordance
with Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for
Income Taxes. If we had applied this statement for the period from our
inception through December 31, 1998, the deferred tax asset generated,
primarily from net operating loss carry forwards, would have been offset by a
full valuation allowance.
Results Of Operations--Three Months Ended March 31, 1999 Compared To The Three
Months Ended March 31, 1998
Revenues And Cost Of Sales
Revenues increased from zero in the first quarter of 1998 to $4.1 million in
the first quarter of 1999. Cost of sales increased from zero in the first
quarter of 1998 to $3.1 million in the first quarter of 1999. The increase was
attributable to the commencement of electric service to customers in
Pennsylvania and California.
Customer And Regional Operations Expense
Customer and regional operations expense increased by $1.6 million from $0.7
million to $2.3 million from the first quarter of 1998 to the first quarter of
1999. The increase primarily represents:
. Approximately a $0.7 million increase attributable to the commencement
of billing activity when the Pennsylvania retail electricity market
opened for competition on January 1, 1999;
. Approximately a $0.7 million increase in regional operating expenses
within states expected to open their electric utility markets for retail
competition in the foreseeable future; and
. Costs associated with increased business development efforts.
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Sales And Marketing Expense
Sales and marketing expense increased by $8.3 million from $4.1 million to
$12.4 million from the first quarter of 1998 to the first quarter of 1999. Our
sales and marketing expenses consist primarily of payroll and the costs related
to (1) building brand awareness, including traditional media advertising, such
as television, radio, print and billboards, and special events and promotions
and (2) direct marketing, including direct mail, affinity programs, Internet
and inbound and outbound telemarketing. Total sales and marketing costs
included the following amounts:
. Approximately $3.7 million for the quarter ended March 31, 1999 and $0.8
million for the quarter ended March 31, 1998, for building brand
awareness; and
. Approximately $5.7 million for the quarter ended March 31, 1999 and $2.6
million for the quarter ended March 31, 1998, for direct marketing costs
in Pennsylvania and California;
These increases are primarily attributable to the commencement of service in
Pennsylvania effective January 1, 1999. These increases as discussed above
involve our use of marketing services from The Cullinan Group. The first
quarter of 1999 amounts also reflect approximately $0.4 million of compensation
expense associated with the difference between the purchase price and exercise
price of shares and options issued and their fair market value at the date of
sale or grant. We expect sales and marketing expense to continue to increase as
we expand our green electricity business to additional states and expand the
products offered through our Web site.
General And Administrative Expense
General and administrative expenses increased $2.9 million from $1.0 million
for the first quarter of 1998 to $3.9 million for the first quarter of 1999.
This expense is comprised primarily of payroll and miscellaneous expenses
relating to our administrative, human resources, financial, legal and
regulatory functions. Total payroll costs included in general and
administrative expense were approximately $2.5 million for the first quarter of
1999 and $0.7 million for the first quarter of 1998. Total general and
administrative expense for the first quarter of 1999 reflects the recording of
approximately $2.1 million of compensation expense associated with the
difference between the purchase price and the exercise price of shares and
options issued and their fair market value at the date of sale or grant. We
charged $1.5 million of the total compensation expense to payroll expenses and
$0.6 million to consulting expenses. Total miscellaneous costs related to our
administrative, human resources, finance, legal and regulatory functions were
approximately $1.4 million for the first quarter of 1999 and $0.3 million for
the first quarter of 1998. Miscellaneous costs primarily included costs related
to travel, office supplies and meals and entertainment.
Technology And Development Expense
Technology and development expense increased $1.5 million from $0.8 million
for the first quarter of 1998 to $2.3 million for the first quarter of 1999.
This expense is comprised primarily of payroll, general operating expenses and
costs of consultants relating to the preliminary development and operation of
our information technology systems and our Web site. The increase in this
expense was primarily attributable to increased payroll and general operating
costs related to increased consultant services for current operations provided
by Sterling Software and increased network development. We anticipate this
expense will increase in future periods as we continue to implement
improvements in our Web site and our Information Network.
Depreciation And Amortization
Depreciation and amortization for the first quarter of 1999 remained
consistent with the first quarter of 1998. Capitalized assets include primarily
computers and furniture and fixtures that were purchased when we commenced
operations.
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Interest Income/(Expense), Net
The increase in interest income/(expense), net, of $0.2 million from the
first quarter 1998 to the first quarter 1999 resulted primarily from interest
earned on cash and cash equivalents as a result of our equity offerings in
January and February of 1999.
Liquidity And Capital Resources
Our operations have been funded almost entirely using proceeds raised
through the sale of equity interests.
Net cash used in operating activities was $12.3 million for 1997, $39.9
million for 1998, $5.1 million for the first quarter of 1998 and $19.1 million
for the first quarter of 1999. The period-to-period increases in net cash used
in operating activities resulted primarily from increasing net losses,
partially offset by increases in accrued expenses and accounts payable.
Net cash used in investing activities was $1.3 million for 1997, $0.8
million for 1998, $0.1 million for the first quarter of 1998 and $0.2 million
for the first quarter of 1999, entirely the result of purchases of property
and equipment, primarily computer equipment and furniture and fixtures.
Net cash provided by financing activities was $15.6 million for 1997 and
$44.4 million for 1998. Net cash provided by financing activities in both 1997
and 1998 resulted primarily from capital contributions by Green Funding I.
During the first quarter of 1999, we raised $35.2 million of cash through
private equity offerings.
We are seeking additional investors through this offering to obtain working
capital for brand development and marketing, product development, enhancement
to our Web site and technology systems, expansion of our green electricity
business into new deregulated markets, environmental programs and other
general corporate purposes. The implementation of our expanded business plan
is dependent on this offering. Although we have no material commitments for
capital expenditures, we anticipate a substantial increase in our capital
expenditures and lease commitments consistent with anticipated growth in
operations, infrastructure and personnel. These expenditures will primarily be
for computer equipment, furniture and fixtures and leasehold improvements. We
also have total minimum lease obligations of $0.4 million under cancelable
operating leases. Several of our outsourcing agreements have minimum financial
commitments as follows:
. Our outsourcing agreement with en.able, L.L.C. currently commits us to
pay minimum monthly service charges for call center service and billing
services in the amount of $112,500;
. Our teleservices agreement with ICT Group, Inc., which we may terminate
on 30 days' notice, commits us to pay fixed monthly fees of
approximately $8,700, as well as actual costs associated with service
representatives' time and communication costs incurred resulting from
inbound and outbound calls;
. Our marketing services agreement with The Cullinan Group requires us to
pay a minimum monthly retainer fee of $30,000 as well as monthly advance
payments in the amount of anticipated expenses less the monthly retainer
fee; and
. Our marketing agreement with Yahoo! Inc. commits us to pay approximately
$6,000,000 over the one-year term of the contract commencing in May
1999, as well as payment of referral fees, not to exceed $400,000 in the
aggregate, for new energy services accounts opened as a result of the
Yahoo! promotions. Expenses, including referral fees, will be recognized
under this contract throughout the term of the contract and in a manner
consistent with receipt of services provided by Yahoo!
Our contracts with four electricity suppliers provide for separate letters
of credit or equivalent financial assurances to satisfy credit requirements.
The amounts of the letters of credit range from 15 days' to two months' of
receivables based on our load forecast. In addition, we have delivered to one
electricity supplier irrevocable letters of credit in association with the
supplier's purchase and installation of three wind power
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<PAGE>
turbines. We also delivered letters of credit to regulators securing our
performance as an energy service provider. Total supply and regulatory letters
of credit outstanding at December 31, 1998 were $2,765,230 and at March 31,
1999 were $2,477,251.
If we are unable to obtain financing through this offering, we will curtail
our current growth plans and we believe our existing cash resources, together
with up to $22.0 million available under a funding agreement with Green Funding
I, will be sufficient to fund our operations at least through 1999. There are
currently no amounts outstanding under the funding agreement. However, we may
obtain advances under that agreement prior to the closing of this offering. See
"Related Party Transactions--Subsequent Transactions--Working Capital Funding
Commitment" and Note (1) to our financial statements included elsewhere in the
prospectus. We believe that, assuming this offering closes, the net proceeds
from the offering, together with cash resources, will be sufficient to meet our
anticipated cash needs for working capital and capital expenditures for the
foreseeable future. However, there may arise circumstances in which we need to
raise additional funds through public or private financings or other
arrangements, and we cannot assure you that we will be able to do so. The
failure to raise additional funds when needed could have a material adverse
effect on our business, results of operations and financial condition.
Market Risk Disclosures
We currently have no indebtedness, hold no derivative instruments and do not
earn foreign-sourced income. Accordingly, changes in interest rates or currency
exchange rates do not generally have a direct effect on our financial position.
Our commodity price risk is limited, as our electricity supply contracts are
generally short-term requirements contracts that match the aggregate customer
requirements that are assigned to them and they were not entered into for
trading or speculative purposes. Under some of these contracts, either we or
our suppliers can discontinue the assignment of additional customers with
advance notice. The wholesale price is either fixed or includes a fixed margin
to the wholesale clearing price for the term of the contracts. In the future,
as our electricity requirements reach substantial levels, we may increase the
volume of electricity contracts that we buy directly from electricity
wholesalers other than under requirements contracts in order to reduce our
overall costs of electricity supply and allow us greater marketing flexibility.
As of March 31, 1999, we did not face the level of equity price risk that we
expect to be subject to subsequent to this offering. To the extent that changes
in interest rates and currency exchange rates affect general economic
conditions, we would be affected by such changes.
Year 2000 Readiness Disclosure
State Of Readiness
On January 1, 2000, technology systems and software applications may fail or
malfunction due to the inability to distinguish between 20th century dates and
21st century dates. We have defined "Year 2000 readiness" or "Year 2000 ready"
as meaning a hardware or software system is suitable for continued use into the
Year 2000 and beyond. Specifically, date dependant systems may represent the
year 2001 as "01," but will not cease to perform the functions necessary for
its use.
We have determined during our initial assessment that our internal corporate
systems, including both hardware and software applications, are Year 2000
ready, with some exceptions. Those systems determined not to be Year 2000 ready
and which are critical to our operations will either be replaced or upgraded in
order to be Year 2000 ready. We expect to achieve Year 2000 readiness for all
of our systems by the end of the third quarter of 1999. The phases of our Year
2000 readiness program are as follows: (1) Planning and Awareness,
(2) Assessment, and (3) Remediation and Testing.
. Our Planning and Awareness phase includes the creation and maintenance
of an area of our Web site to present Year 2000 contact information,
links to additional sites and GreenMountain.com Year 2000 statements.
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Employee awareness consists of company newsletters, Intranet/extranet
pages, inter-office bulletins and staff meeting updates. Partners and
suppliers will receive mailings, Year 2000 surveys and telephone calls,
and, if appropriate, site-visits. This phase is currently approximately
80% complete and is expected to be completed by the end of the third
quarter of 1999.
. The overall Assessment phase includes risk assessment within three areas
of our business: corporate operations, business partners and wholesale
power suppliers. Risks will be ranked by low, medium and high depending
on their perceived impact to our business. Corporate inventory is
included in this phase to determine all components that comprise the
corporate information systems and building mechanical systems (including
heating, ventilation, air conditioning and security). Questionnaires and
telephone calls, visits to Web sites and requests for readiness
disclosures will be used to determine the initial state of readiness and
Year 2000 preparations of all parties external to GreenMountain.com. As
part of Assessment, inventory is approximately 30% complete overall, with
internal corporate systems inventory approximately 40% complete and
outsourced business systems inventory approximately 20% complete. Year
2000 readiness of corporate systems is substantially complete due to the
fact that we use current software and have no proprietary systems. We
have been researching Web sites of the manufacturers of our corporate
systems and have found that with the installation of patches or service
packs, this software is already ready or will be ready by the end of
1999. The internal figure will increase significantly when the
implementation of Microsoft SMS, a package which will assist us in
assessing our Year 2000 readiness, is complete. The percentage of
outsourced business systems inventory will increase significantly when we
receive the feedback to our inquiries on vendor and partner Year 2000
readiness in response to the systems they employ to meet our
requirements. We expect the overall Assessment phase to be completed by
the end of the second quarter of 1999.
. Remediation and Testing of corporate systems includes using Microsoft SMS
to continue to ensure ongoing Year 2000 readiness of corporate systems
and software, working with vendors on building mechanical systems and
testing of Year 2000 readiness of applications, such as our financial
package and payroll system. Supplier remediation and testing involves the
testing of transactions across our vendor/partner network. This phase is
currently approximately one-third complete for corporate internal
systems' remediation and we expect to complete all remediation no later
than the beginning of the fourth quarter of 1999.
In addition to building mechanical systems, we distinguish technology
systems into two categories, business systems and corporate systems. The
business systems consist of the hardware and software employed to support the
business operations of GreenMountain.com, including third-party service
providers. The corporate systems consist of the hardware and software required
to support the corporate infrastructure such as our network servers, desktop
computers, desktop applications and the financial system.
. For business systems, we have outsourced the majority of our operations.
We have relationships with electricity suppliers, local utility
distribution companies, billing centers, call centers, customer
acquisition, mailing list providers, Web content providers, network
managers, and marketing groups. We have begun research into the state of
Year 2000 readiness with each of the organizations we do business with.
We believe we have a level of comfort that each will be able to continue
functioning and fulfilling their obligations to us. To formalize this, we
are in the process of preparing material to be sent to each supplier
asking them to certify that the equipment and software they employ to
meet their contractual obligations to us has been tested and will be
suitable for continued use into the Year 2000 and beyond. Additionally,
we will be reviewing the business sustainability of our key suppliers of
billing and customer care and some of their information technology
functions. Lastly, our network manager service provider will be assisting
in the coordination of a system level test plan that will push and pull
transactions across our network to and from our different suppliers and
partners. The test data will be designed to test transactions with key
dates aimed at confirming Year 2000 readiness. We expect to complete the
mailing, review of business sustainability and testing by the end of the
third quarter of 1999.
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. For corporate systems, we are a young company with new technology and no
legacy applications. All of our hardware is less than two years old and
is still supported by vendors and suppliers. Corporate software consists
mainly of desktop applications, the financial system and the payroll
system--preparing these applications to be Year 2000 ready consists of
applying patches and installing software upgrades. We are in the process
of installing Microsoft SMS, which will enable our organization to
inventory every desktop and server to determine the extent of those
items' Year 2000 readiness. Estimated time of completion for this project
is July 1999. We believe that in the majority of cases, we will be
applying software upgrades or patches to correct potential issues that
could result from the Year 2000 issue. Remediation of non-ready systems
is expected to be completed during the third quarter of 1999.
. We have performed an internal risk assessment to identify mechanical and
building systems that could be at risk for Year 2000-related issues. As
part of the Year 2000 readiness effort, we have identified non-computer
technology and outside suppliers that may be susceptible to Year 2000
issues, including our local electricity supplier and our security access
system provider. Completion of assessment and testing of mechanical and
building systems is expected to be completed during the third quarter of
1999.
We have performed research on the Year 2000 readiness of each of our major
suppliers, including Sterling Software, en.able, PGI Companies, Midwest
Graphics, ICT Group, Transcom USA and our wholesale electricity suppliers,
Dynegy, Conectiv, Allegheny Energy, DTE Co-Energy and PacifiCorp. We have
relied on Internet postings, SEC filings, Year 2000 readiness disclosure and
documentation provided by suppliers and partners. The research has obtained
standard responses on Year 2000 readiness, specifically that each company is
either Year 2000 ready or in the process of becoming Year 2000 ready. For those
business systems that we deem critical to our operations and business
sustainability, we will require a more detailed response. We are in the process
of preparing material to be sent to these suppliers and vendors and expect that
letters will be sent by the end of the second quarter of 1999, requesting
responses to be received in the following quarter. These letters are being
prepared and sent in tandem with our system wide test to ensure that these
suppliers and vendors are in fact Year 2000 ready. We expect to complete this
process during the third quarter of 1999. However, we cannot assure you that
the failure of one of these third parties to be Year 2000 ready will not have a
material adverse effect on us. If we determine no later than September 1999
that an information technology service provider, outsourcing provider or
supplier will not be Year 2000 ready, we believe we will be able to select in a
timely manner alternatives which are Year 2000 ready.
Costs To Address Year 2000 Issues
In order to meet current and future business needs, we are assessing our
hardware and software applications and making them Year 2000 ready. We are also
utilizing the services of Sterling Software to assist with the integration
testing of data shared with our information technology service providers,
outsourcing providers and suppliers. We have expensed less than $0.1 million in
connection with our Year 2000 readiness efforts since inception through
March 31, 1999 and we expect to incur approximately $0.4 million during the
remainder of 1999. These costs represent work to be performed to both make our
corporate and business systems Year 2000 ready and to assess the Year 2000
readiness of our information technology service providers, outsourcing partners
and suppliers.
Risks Associated With Year 2000 Issues
We are subject to external Year 2000-related failures or disruptions that
might generally affect industry and commerce, such as failures by energy
generation or utility distribution companies and related service interruptions.
These failures or disruptions are especially critical to us as a seller of
retail electricity products. Notwithstanding our Year 2000 efforts, the failure
of our systems or those of any of our information technology service providers,
outsourcing partners or suppliers, or the failure of the Internet generally, to
be Year 2000 ready could harm the operation of our systems or have unforeseen,
material adverse consequences to us. These consequences could include the
inability to bill our customers. All of these factors could materially
adversely affect our business, results of operations and financial condition.
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Contingency Plans
We have no formal overall worst-case scenario because we divide up our Year
2000 risk into internal and external systems. An overall worst-case would be if
the highest risk areas of the internal and external were to occur
simultaneously. The internal corresponds to business sustainability and the
external deals with servicing our customers; accordingly, these two areas have
different priorities and different exposure to risks. We expect that at the
corporate level we would sustain no adverse effects due to the short-term loss
of corporate information technology systems. For our business systems, a long-
term disruption could impact our ability to serve customers, including customer
billing, customer service and our ability to interact with electric utility and
distribution companies. This would not, however, impact the ability for
customers to receive our energy products or electric distribution and
generation in general. As part of our contingency planning, which we expect to
complete no later than the beginning of the fourth quarter of 1999, we will use
risk assessment to develop contingency plans for worst-case scenarios in each
area of our business.
Recent Accounting Pronouncements
The Financial Accounting Standard Board (FASB) recently issued SFAS No. 130,
Reporting Comprehensive Income. SFAS No. 130 establishes standards for
reporting and displaying comprehensive income and its components in financial
statements. Comprehensive income, as defined, includes all changes to equity
(net assets) during a period from non-owner sources. SFAS No. 130 is effective
for financial statements for fiscal years beginning after December 15, 1997. We
have not had any transactions that are required to be reported in comprehensive
income.
The FASB recently issued SFAS No. 131, Disclosure about Segments of an
Enterprise and Related Information. SFAS No. 131 establishes standards for the
way public business enterprises are to report information about operating
segments in annual financial statements and requires those enterprises to
report selected information about operating segments in interim financial
reports. SFAS No. 131 is effective for financial statements for fiscal years
beginning after December 15, 1997. We do not believe we currently operate in
more than one segment.
The FASB, in June 1998, issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument, including
derivative instruments embedded in other contracts, be recorded in the balance
sheet as either an asset or liability measured at its fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate and assess the effectiveness of transactions
that receive hedge accounting. SFAS No. 133 is effective for fiscal years
beginning after June 15, 1999. A company may also implement SFAS No. 133 as of
the beginning of any fiscal quarter after June 16, 1998. SFAS No. 133 cannot be
applied retroactively. SFAS No. 133 must be applied to derivative instruments
and derivative instruments embedded in hybrid contracts that were issued,
acquired or substantively modified after December 31, 1997 (and, at the
company's election, before January 1, 1998). We do not have any derivative
instruments at this time; however, such instruments may be embedded in future
electricity contracts.
The American Institute of Certified Public Accountants Statement of Position
(SOP) No. 98-1, Software for Internal Use, provides guidance on accounting for
the cost of computer software developed or obtained for internal use. SOP No.
98-1 is effective for financial statements for fiscal years beginning after
December 15, 1998. We do not expect that SOP No. 98-1 will have a material
impact on our financial statements. GreenMountain.com anticipates that in the
second quarter of 1999 it will begin capitalizing certain costs in accordance
with SOP No. 98-1 associated with projects that enter the development stage,
including its Web site development project.
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BUSINESS
Our Mission
GreenMountain.com uses the Internet and other media to offer environmentally
friendly electricity and other products to consumers. Our Web site--
www.greenmountain.com--will use the rich interactive resources of the Internet
to educate consumers about the environmental impact of their everyday purchases
and to make it easy and appealing for them to use those purchases as agents of
change for a cleaner and healthier environment. Our mission is to make Green
Mountain the leading brand for environmentally friendly products.
Based on number of customers served, we are the leading retailer of green
electricity to residential customers in Pennsylvania and California -- the two
states that have effectively opened their residential electricity markets to
competition. We intend to offer green electricity products in each deregulated
utility market in which we can compete effectively. We also offer solar
generation equipment.
We have very recently expanded our product offerings to include a Green
Mountain co-branded Visa card, ecological tours and vacations, electric
bicycles and environment-related books, and we expect to continue to expand our
selection of green consumer products.
The Opportunity
Public Concern About Environmental Problems Is High
Our environment faces serious problems.
.Air pollutants released by the burning of fossil fuels pose serious
threats to human health, ecosystems, visibility, crops and buildings.
.113 million Americans live in approximately 130 localities that fail air
quality standards.
.Smog (ground level ozone) contributes to respiratory ailments.
.Emissions of nitrogen oxide are a major contributor to formation of smog.
.Electric utility generation accounts for 30% of nitrogen oxide emissions
in the United States.
.The mixture of sulfur dioxide and nitrogen oxide causes acid rain,
resulting in the acidification of lakes and streams, damage to trees at
high elevations and accelerated decay of buildings and paints.
.Electric utility generation accounts for 66% of sulfur dioxide emissions
in the United States.
.1998 was the hottest year on record and this decade has been the hottest
decade on record.
.Scientists generally believe that increases in carbon dioxide emissions
contribute to global warming.
.Electric utility generation accounts for 36% of carbon dioxide emissions
in the United States.
A recent Worldwatch publication stated:
. . . [There] is an exciting alternative economic model that
promises a better life everywhere without destroying the earth's
natural support systems. The new economy will be powered not by
fossil fuels, but by various sources of solar energy and hydrogen
. . . Instead of a throwaway economy, we will have a
reuse/recycle economy.
Even large oil companies seem to recognize the need for cleaner burning fuels
and renewable energy sources and are actively exploring alternatives to fossil
fuels. According to Worldwatch Institute:
.Atlantic Richfield's chief executive officer sees his company's large
holdings of natural gas playing a key role in the transition from a
carbon-based energy economy to one based on hydrogen.
.Royal Dutch Shell has announced a commitment of $500 million to renewable
energy sources.
According to Environmental Data Services, British Petroleum has announced plans
to expand its subsidiary BP Solar ten-fold over the next decade to achieve
annual sales of solar photovoltaic cells of $1 billion.
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We are convinced of the need to switch from the current fossil-fuel-based,
throwaway economy to an environmentally sustainable economy, and we believe
that our g*commerce model can help accelerate this change.
We believe that Americans are more concerned than ever about environmental
problems and are more knowledgeable than ever about green products and
processes. We also believe that Americans are increasingly sensitive to the
effect that their individual behavior can have on the environment and are
willing to change that behavior in order to protect the environment. We believe
that this behavioral trend is evidenced by the recent growth of recycling.
According to BioCycle Magazine, the percentage of recycled waste grew from 8%
in 1990 to 28% in 1997.
[BAR CHART REPRESENTING PERCENTAGE INCREASE
IN WASTE RECYCLED FROM 1990 TO 1997]
In addition, BioCyle Magazine reported in April 1998 that the number of
community curbside recycling programs had increased from 1,042 in 1989 to 8,937
in 1997.
According to the 1998 Green Gauge Report by Roper Starch Worldwide, 47% of
Americans "cite difficulty in finding pro-environmental versions of products
they need and say not having time to shop around to find them is a "major
reason' or "something of a reason' for not doing more environmentally." We
believe that if offered a convenient, cost-effective choice, many consumers
will purchase a product that is green over one that is not. Jacquelyn Ottman,
the author of Green Marketing: Opportunity for Innovation, has said "[p]eople
are "greener' today than ever before" and "[g]reen marketing is looking more
mainstream all the time." The 1998 Green Gauge Report states:
As Americans' levels of environmental concern are high and
sizable numbers of Americans say they would feel more favorable
toward a business that takes environmental action, marketing
around environmental issues is an excellent way to reach
consumers and build a "power brand."
We aim to make Green Mountain a leading brand for green products.
Deregulation Is Empowering Consumers To Change The Way Electricity Is Made
Deregulation of the $200 billion electric utility industry--the largest
industrial source of air pollution in the United States--is part of a global
trend away from government control and toward free markets. The electricity
industry includes three basic functions: the production or generation of
electricity, wholesale and retail marketing of electricity and transmission and
distribution of electricity to the end user. Historically, in the United States
regulated electric utilities have provided bundled electricity service,
including generation,
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<PAGE>
marketing and distribution, within exclusive franchise service territories. The
underlying premise of the regulatory system guaranteed the utilities freedom
from competition and a "reasonable" rate of return on their investment in
exchange for a limitation on that investment return in the form of government
regulation of the prices the utilities were allowed to charge their customers.
The wholesale power sector is largely subject to federal regulation, while
the retail operations of electric utilities are principally regulated at the
state level. Since the passage of federal legislation in 1992, the Federal
Energy Regulatory Commission has implemented measures to facilitate competition
in wholesale power marketing. On a state-by-state basis, states have begun to
introduce competition to the retail power marketing and generation sectors.
Because of the inherent inefficiencies that would be involved in the
duplication of the "poles and wires" and other facilities required for the
distribution of electricity, this function remains in the hands of state-
franchised monopolies, subject to traditional rate of return price regulation.
As a result of deregulation, the power generation and marketing sectors have
been separated from the distribution function. Thus, the electric utility
industry is changing from one characterized by a single provider of bundled
electricity service to one having a number of electricity generators and
marketers who are not subject to governmental price regulation, but are subject
to market price competition and risk.
Currently, the industry segment in which we compete is retail marketing and
our primary target customers are residential customers. Deregulation is
providing consumers with a choice of electricity supplier and of generation
source. Because all electricity delivered into the electric distribution system
serving an area is fungible, choice does not affect the actual electrons
delivered for the consumer's use. It does, however, influence the source of the
electricity delivered to the distribution system. Choice allows the growing
community of informed and environmentally conscious consumers a convenient way
to direct market forces toward positive environmental change.
Because deregulation is a political process, the timing and outcome of
deregulation in any particular state is unpredictable. The specific features of
the deregulation program implemented in a particular state affect whether and
to what extent free competition will develop in that market. To date, four
states--Pennsylvania, California, Massachusetts and Rhode Island--have opened
their retail electricity markets to competition with varying degrees of
success.
.Pennsylvania. Pennsylvania's deregulation program has been the most
successful, resulting in the most active electricity retail market in the
United States. Pennsylvania consumers considering selection of a power
marketer other than their traditional electric utility compare their
"shopping credit" to the rate offered by that marketer. The "shopping
credit" is an amount deducted from the bill that the consumer would
receive from the utility if the consumer selects another supplier. The
prices charged for electricity by the suppliers are not subject to
Pennsylvania price regulation. Unregulated suppliers, including
unregulated affiliates of the traditional utilities, have been able to
offer power to consumers at prices equal to or less than the Pennsylvania
shopping credit, thus providing an incentive for consumers to switch from
their traditional utility supplier. We have not used discounts or price
incentives in establishing our rates, which are based on wholesale market
prices and competitive retail margins. From time to time, we do offer
sign-up incentives, such as an initial month of free service. The cost of
these incentives has been included in customer acquisition costs and has
not had a significant effect on our results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations." While we do not view ourselves as a price competitor, we
believe that we benefit from price competition because it contributes to
an active market of consumers who have made a deliberate choice of
electricity supplier.
Pennsylvania's retail electricity market opened for competition on January
1, 1999. As of March 31, 1999, approximately 7% of the households in the
Pennsylvania market had elected to switch from their incumbent electricity
provider. Of those households, we estimate slightly less than one-third
switched to a green electricity product. As of March 31, 1999, there were
seven significant residential electricity suppliers (excluding incumbent
electric utilities and their affiliates) competing in the residential
Pennsylvania market, and two of them offered green electricity products.
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.California. California's deregulation program is currently in a
transitional phase that is substantially less favorable to free market
competition than the Pennsylvania program. Under the California program,
consumers considering selection of an unregulated supplier are allowed a
shopping credit equal to the average wholesale cost of power available
under a pool known as the California Power Exchange. Because the shopping
credit is equal only to the wholesale value of the electricity consumed,
independent suppliers cannot generally offer consumers a price savings
compared to the traditional utilities. A limited exception exists as a
result of credits available for the production of electricity from
renewable resources. The absence of legitimate price competition has
limited the development of a vibrant, deregulated market in California.
California's retail electricity market opened for competition on April 1,
1998. As of March 31, 1999, 1% of the households in California had chosen
to switch from their incumbent electricity provider. As of March 31, 1999,
there were five residential electricity suppliers (excluding incumbent
electric utilities and their affiliates) competing for new customers in
the California market, and all of them offered green electricity products.
As a result, all households that have switched are receiving green
electricity.
.Massachusetts. Although the Massachusetts retail electricity market
nominally opened for competition on March 1, 1998, to date the shopping
credit in Massachusetts has not achieved a level permitting competitive
retail suppliers to match the rates offered by incumbent electricity
providers. Accordingly, no significant competition for residential
customers has developed. Under the Massachusetts deregulation program, the
shopping credit increases over time.
.Rhode Island. Although Rhode Island's residential retail electricity
market was formally open for competition by July 1998, no significant
competition has developed in Rhode Island for the same reason competition
for residential customers has not developed in Massachusetts. Under the
Rhode Island deregulation program, the shopping credit increases over
time.
The primary reason for the success of the Pennsylvania deregulation program
as compared to the programs in California, Massachusetts and Rhode Island is
that Pennsylvania's program has stimulated customer interest by allowing
competitive retail suppliers to offer consumers savings. Although the political
nature of the deregulation process makes it impossible to provide any assurance
in this regard, we believe that the legislators and regulators in states
opening their electric utility markets for competition in the future will
consider the success of the Pennsylvania deregulation program when establishing
the specific features of the deregulation program to be implemented in their
respective states. As the only independent power marketer focusing on
residential customers and operating in both the Pennsylvania and California
markets, we believe that we have established a credibility that will allow us
to effectively advocate the Pennsylvania model in consultation with government
officials in states exploring electric utility deregulation. See "Risk
Factors--Risks Related to Establishment of our Business--Our Ability to Expand
our Existing Green Electricity Business into New Markets Depends on the Outcome
of the Deregulation Process in Each State."
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<PAGE>
The following map indicates the status of electric utility deregulation
across the continental United States.
MAP OF THE CONTINENTAL UNITED STATES APPEARS HERE DEPICTING
LEGISLATIVE OR OTHER ACTION TAKEN IN EACH STATE TO DEREGULATE
THE ELECTRIC UTILITY MARKET, INDICATING STATES WHERE:
.RESTRUCTURING PLAN ADOPTED BY COMMISSION OR LEGISLATION
.COMPANIES ORDERED TO FILE RESTRUCTURING PLANS OR ENABLING LEGISLATION ENACTED
.COMMISSION OR LEGISLATIVE INVESTIGATION UNDERWAY LIKELY TO LEAD TO A
RESTRUCTURING PLAN
.AN INFORMATIONAL OR FACT-FINDING STUDY IS UNDERWAY
.NO SUBSTANTIVE ACTIVITY IS UNDERWAY
SOURCE: REGULATORY RESEARCH ASSOCIATES, MAY 14, 1999]
Pennsylvania, California, Massachusetts and Rhode Island are currently the
only states that have implemented competition on a statewide basis. In addition
to these four states, Arizona, Arkansas, Connecticut, Delaware, Illinois,
Maine, Maryland, Michigan, Montana, Nevada, New Hampshire, New Jersey, New
Mexico, New York, Oklahoma, Virginia and, most recently, Texas have taken
formal action to deregulate. We expect that more than half of the states will
provide consumers a choice of electricity supplier and generation source by the
end of 2003.
The deregulation of electricity follows the precedent of deregulation of
long distance telephone services, with some important differences. While long
distance telephone service (like wholesale electric sales) is largely governed
by federal laws, electric utilities are principally regulated by the states.
Also, we will be able to differentiate our products by their generation source
whereas the long distance telephone market is marked by an absence of product
differentiation.
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The Internet And Online Commerce Are Growing
We believe that the Internet is emerging as one of the most significant
global communications media. It is enabling millions of people to share
information and conduct business electronically. A number of factors are
contributing to the dramatic growth of this new medium, including:
.Ease of use;
.Reduced costs;
.Faster access;
.Improved content; and
.Increased attention in other media.
Jupiter Communications estimates that the number of Internet users in the world
will grow from 112 million in 1998 to 244 million in 2002.
Online retailers are able to communicate effectively with customers by
providing:
.Visual product presentations;
.Up-to-date pricing and product information;
.Customer support and opportunities for customer feedback;
.Product offerings tailored to customer preferences; and
.Electronic billing and payment systems.
These features, together with the widespread availability of express delivery
services, make online retailing a viable alternative to traditional stores.
Online retailers also avoid the burden of managing and maintaining numerous
local facilities and enjoy lower transaction costs.
An increasingly broad base of products and services are being sold online,
including books, brokerage services, computers, music and travel services.
Jupiter Communications estimates that the value of goods and travel services
purchased on the Internet in the United States alone will grow from $7.1
billion in 1998 to $41.1 billion in 2002. We cannot assure you that our sales
will have a comparable growth rate. Our growth rate will be affected by a
number of factors, including:
. Our ability to position the Green Mountain brand name;
. Our ability to broaden our product offerings;
. The timing of deregulation in the states that have not yet opened their
residential electricity markets to competition;
. The competition for customers interested in purchasing green consumer
products; and
. The continued development of public concern about environmental issues.
See "Risk Factors." To date, approximately 4% of customer sign-ups for our
green electricity have come through our Web site. We have only very recently
begun to offer other green consumer products over the Internet.
As the number of online content, commerce and service providers has
expanded, strong brand recognition and strategic alliances have become critical
to success. Brand development is especially important for online retailers due
to the need to establish trust and loyalty with customers in the absence of
face-to-face interaction.
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The Green Mountain Advantage
We believe that a significant opportunity exists for a company to market
green consumer products over the Internet. Research performed for us by
Copernicus, The Marketing Investment Strategy Group, which has assisted us with
the development of our overall marketing strategy, indicates that our green
electricity customers in Pennsylvania are 31% more likely to have accessed the
Internet in the last three months than the general population. According to the
1998 Green Gauge Report, an annual environmental survey conducted by Roper
Starch Worldwide, "the Internet is one source by which Americans are gaining
information about the environment" and "[i]ndeed, 71% of [households with one
or more personal computers] say they know "a lot' or "a fair' amount about the
environment." We believe that by creating an Internet destination site that
will appeal to people who care about the environment, we can make Green
Mountain a leading brand for green products.
We believe that we are uniquely qualified to capitalize on the opportunity
to market green products over the Internet as a result of:
.Our success in marketing green electricity to residential customers in the
deregulated utility markets of Pennsylvania and California; and
.The growing awareness of our Green Mountain brand name.
Based on number of customers served, we are currently the leading seller of
green electricity to residential customers in Pennsylvania and California --
the two states that have effectively opened their residential electricity
markets to competition. In June 1998, we began marketing electricity products
in Pennsylvania, which opened for competition on January 1, 1999. As of March
31, 1999, we were serving approximately 48,100 customers in Pennsylvania. The
Xenergy 1999 Retail Wheeling Multi-Client Study Phase 4 Final Report states:
The survey analysis identified Green Mountain as "the" green
marketer in Pennsylvania, with a total market share of 29
percent of all switchers, and with nearly all of the green
market share. Much of their success may be attributable to
their ability to effectively market, as their prices are often
higher than those of other green marketers in Pennsylvania.
They are the most recognized supplier in the market, whether
or not the customers are green purchasers.
California's retail electricity market opened for competition on April 1, 1998.
Our marketing strategy in California was to concentrate first on northern
California due to its higher concentration of environmentally sensitive
consumers. We have recently increased our efforts in southern California. As of
March 31, 1999, we were serving approximately 19,900 customers in California,
approximately 75% of which were in northern California.
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The following table illustrates the number of our customers as of the end of
each calendar quarter commencing on or after April 1, 1998.
[BAR CHART REPRESENTING INCREASE IN QUARTERLY CUSTOMER GROWTH FROM 2ND QTR 1998
TO 1ST QTR 1999 IN TERMS OF CUSTOMERS SERVED APPEARS HERE]
Quarter to quarter comparisons of the number of customers is not necessarily
meaningful and should not be relied on as an indication of future growth in the
number of customers. Growth in the number of our customers is expected to be
affected significantly by the timing of our entry into new deregulated markets.
We are likely to experience higher customer acquisition rates during the
initial market opening period.
Market research performed for us by Copernicus indicates that from its first
introduction to the Pennsylvania market in June 1998, awareness of the Green
Mountain brand grew to 55% of residential households by April 1999. Similar
market research performed for us by Copernicus indicates that in November 1998,
16% of residential households in northern California and 11% of residential
households in the entire state were aware of our Green Mountain brand. By April
1999, awareness of the brand had grown to 31% in northern California and 24%
statewide. See "--Marketing, Sales and Customer Service--Marketing."
Our Strategy
Position "Green Mountain" As The Most Trusted And Best Known Green Brand
We are the first and only company to offer green electricity products
primarily to residential customers in the deregulated electric utility markets
of both California and Pennsylvania and one of the first companies to offer
green electricity products over the Internet. We intend to take advantage of
this first mover momentum to offer a wide variety of green products over the
Internet and position Green Mountain as the most trusted and best known
environmental brand. We are engaged in aggressive marketing aimed at increasing
awareness both of the environmental impacts of people's everyday purchases and
of the Green Mountain brand through traditional media, principally in states in
which we offer our energy products. We will continue to expand our marketing
effort, especially on the Internet, as we identify new green products that can
be marketed beyond those states.
We seek to establish relationships with environmental groups in support of
our message that personal purchasing decisions can effect positive
environmental change.
Some of our green electricity products are identified as environmentally
preferred by:
.Natural Resources Defense Council
.Environmental Defense Fund
.Clean Air Council (of Pennsylvania)
In addition, the Union of Concerned Scientists has chosen one of our products
to serve its California office and the electric vehicle charging station in its
parking lot.
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We have an affinity marketing program with each of the following
organizations:
.Redwood Alliance, Arcata, California
.Bay Keeper, San Francisco, California
.Save Our Shores, Santa Cruz, California
.AIDS Fund, Philadelphia, Pennsylvania
Each of the following organizations has supported our work in community
outreach programs:
.Coalition of Clean Air, Los Angeles, California
.The Nature Company, Berkeley, California
The Episcopal Diocese of California under its Episcopal Power & Light
Program has recommended Green Mountain as the preferred electricity provider in
California. Several Episcopal churches have chosen our products to serve their
church facilities.
We stake our reputation on the environmental soundness of our products. We
participate in the nation's first voluntary certification program for
environmentally preferred electricity products--the Green-e Renewable
Electricity Branding Program. Two of our three green electricity products
offered to customers in Pennsylvania and both of our green electricity products
currently being offered to new customers in California are Green-e certified.
The Green-e program is intended to ensure that retail suppliers of Green-e
certified electricity actually buy the renewable energy promised to their
customers and to help consumers compare different electricity offerings. Under
the program, annual independent audits of the delivery of certified products
are conducted. Green-e is administered by the Center for Resource Solutions, a
non-profit organization based in San Francisco, with an independent board of
environmentalists, consumer advocates and renewable energy experts. In order
for an electricity product to be certified by Green-e, it currently must
satisfy the following criteria:
. At least 50% of the product must come from specified renewable sources;
. Emissions of sulfur dioxide, nitrogen oxide and carbon dioxide from the
non-renewable generation component of the product must not exceed average
emissions rates of fossil fuel power that is otherwise available in the
electricity distribution system and the total fossil fuel emissions of
the product must not exceed the average emissions rate of power that is
otherwise available in the electricity distribution system;
. None of the product may come from nuclear power, other than a proportion
that is no greater than the proportion of nuclear power that is otherwise
available in the electricity distribution system; and
. The product must be offered by a company committed to following the
Green-e Code of Conduct on ethical treatment of customers, including
using simple contracts and disclosure labels.
Offer Convenience And Selection
In order to make it convenient for consumers to find pro-environmental
versions of products they need, we are expanding the offerings on our Web site
to include a broad selection of green consumer products in addition to the
green electricity products and solar generation equipment that we currently
offer in Pennsylvania and California. We will offer products obtained through
contracts with suppliers under our Green Mountain brand name, but do not intend
to do any manufacturing. We intend to pursue relationships with others to make
their green products available on our Web site, and we expect to derive
revenues from any sales of these products made through our site.
Develop And Maintain Our Web Site As A State-of-the-Art, Interactive Online
Commerce Platform
We are upgrading our Web site and technology systems to create a state-of-
the-art, interactive commerce platform that will enhance our expanded product
offerings and take advantage of the unique characteristics of online retailing.
Among other technology objectives, we intend for our Web site to:
.Provide personalized service programs;
.Make the user interface as intuitive, engaging and expedient as possible;
and
.Provide efficient fulfillment of product orders.
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We currently use traditional media both to sell our products and to
encourage people to visit our Web site. As the Green Mountain brand becomes
more recognizable, we expect that the majority of our sales transactions will
be made through our Web site.
Develop And Maintain An Online Community That Fosters And Supports
"g*commerce"
We are seeking to develop an online community of individuals who are
concerned about the environment and want to use their personal purchase
decisions to effect positive environmental change. We believe that these
individuals will purchase a green product if:
.It is convenient;
.It is equal or better in quality;
.It has no more than a relatively minimal incremental cost; and
.They perceive that their purchase of that product will have a positive
effect on the environment.
We refer to the concept of harnessing free market forces to effect positive
environmental change as "g*commerce." We believe that educating consumers about
their own ability to effect positive environmental change through prudent
purchases will result in both revenue opportunities for us and improvements to
the environment.
Further, we believe that creating a large community of consumers of green
products will permit us to utilize the collective buying power of these
individual consumers to obtain and, in turn, offer green products at lower
prices than might otherwise be available and that, as we are able to lower
prices in this manner, we will attract additional customers.
Our approach to community development also includes affinity programs
intended to retain existing customers, increase revenue opportunities and
attract new customers.
Marketing, Sales And Customer Service
Outside Service Providers
We use third-party service providers to perform a number of key functions in
the operation of our business that would otherwise be performed by our
employees. We refer to our use of third-party service providers to perform
these functions as "outsourcing" and refer to these service providers as our
"outsourcing partners." Our extensive use of outsourcing reduces our internal
human resource and office space requirements and enables our management to
focus on our overall marketing strategy and the identification of new product
opportunities. See "Risk Factors--Other Risks Related to our Business
Generally--Poor Performance by One or More of our Outside Service Providers
Could be Disruptive to our Business Operations."
Key functions that we outsource and the outside service providers currently
performing those functions for us are identified below.
Marketing
Mass Media. To date, our brand awareness efforts have been focused on
Pennsylvania and California and have utilized primarily television, print,
radio and billboard advertisements.
The Internet. We have engaged in extensive Internet banner advertising in
Pennsylvania and California. We intend increasingly to use the Internet in our
brand awareness efforts. We are pursuing marketing relationships with Internet
portals and other high-traffic Web sites in order to increase the level of
traffic to our
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It's a small planet.(SM)
<PAGE>
Web site. These arrangements typically involve banner advertising containing
our message and an interactive link to our Web site, but can also involve other
products such as e-mail.
Direct Mail. We employ a highly targeted, database-driven direct mail
marketing strategy, in which direct mail is followed by outbound telemarketing.
We use two main categories of lists to target potential customers--membership
lists for environmental organizations and demographically-profiled lists
obtained from national databases. We outsource the list processing and analysis
function to Experian Database Marketing Solutions and the mailing function to
PGI Companies.
Affinity Programs. We use affinity marketing programs to market our products
through groups that share our interest in the environment. We have entered into
agreements with approximately 40 groups for the promotion of our electricity
products. Under these agreements, which have terms that range from three months
to more than a year, we pay the affinity partner a fee for each electricity
customer referred by the partner. These affinity partners promote our
electricity products through bill inserts, telemarketing, in-store activities
and other means. See "--Our Strategy--Position "Green Mountain" as the Most
Trusted and Best Known Green Brand."
Events and Promotions. We utilize special events and promotions such as:
.Sponsorship of festivals and concerts by our spokesperson, Kenny Loggins;
.Appearances by GreenMountain.com representatives at local environmental,
health and sporting events to distribute information about us and our
products;
.Sponsorship of a tour through California by the "Veggie Van," an
alternative fuel vehicle that provides information about renewable energy;
and
.Appearances of our hot air balloon.
Marketing Relationships. Our overall marketing strategy has been developed
with the assistance of Copernicus, The Marketing Investment Strategy Group,
with which we have an ongoing relationship. In March 1995, Green Mountain Power
Corporation entered into a consulting agreement with Copernicus, which was
amended in March 1997. The agreement, which was assigned to us by a subsidiary
of Green Mountain Power Corporation, continues in effect for a series of
consecutive one-month terms until terminated by either party upon 90 days'
prior written notice. Under the agreement, we are required to pay a monthly
retainer fee of $20,000. The agreement provides for the placement of separate
purchase orders that are governed by the agreement. Total payments under this
agreement for 1998 were approximately $491,491 and for the three months ended
March 31, 1999 were $170,254. Other clients of Copernicus include such well-
known companies as AT&T, Compaq Computer, Hewlett-Packard, Michelin, Miller
Brewing, Mobil, Nasdaq, Pepsi-Cola, Polaroid and Visa.
We have established a relationship with The Cullinan Group, an integrated
marketing communications agency, to assist us with our brand development. More
specifically, on January 1, 1998, we entered into a marketing services
agreement with The Cullinan Group to prepare and execute marketing
communications plans and projects and place advertising for our energy
business. The agreement will continue until terminated by either party upon 90
days' prior written notice. Under the agreement, we are required to pay a
minimum monthly retainer fee of $30,000, which is credited against charges
incurred by The Cullinan Group on our behalf. Under the agreement, prior to the
commencement of each calendar quarter, we and The Cullinan Group agree upon a
budget for monthly expenses during the quarter and we then make monthly advance
payments in the amount of anticipated expenses for the month as reflected in
the agreed budget, less the monthly retainer fee. Following each month, The
Cullinan Group invoices us for actual expenses in excess of the advance
payments. The Cullinan Group may not exceed budgeted amounts by more than 10%
without our prior written approval. Total payments under this agreement for
1998 were approximately $16,228,000 and for the three months ended March 31,
1999 were $6,511,613. Other clients of The Cullinan Group include Georgia
Pacific and Thinsulate Insulation/3M.
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In addition, we have established a relationship with Strategic Interactive
Group, an interactive media consulting agency and specialized Web site
developer, to assist us with enhancements to our Web site and our use of the
Internet in our brand awareness efforts. Our agreement with Strategic
Interactive Group may be terminated by either party by giving the other party
at least 90 days prior written notice. In addition, if Strategic Interactive
Group breaches its obligations or engages in action or inaction that
significantly endangers timely completion of its obligations and the breach,
action or inaction continues for more than 30 days after notice by us, we may
terminate the agreement at any time thereafter. If Strategic Interactive Group
is not in default and we fail to make any payment when due and that failure
continues for more than 30 days after notice by Strategic Interactive Group,
then Strategic Interactive Group may terminate the agreement. The agreement
contemplates that we will prepare and submit specific, authorizing
documentation for the procurement of specific services under the agreement.
This documentation when agreed to by us and Strategic Interactive Group
establishes the estimated budget for the specific services to be provided.
Under the agreement, we pay for services based on actual hours worked, but not
more than the agreed budget estimate without our prior approval. We also
reimburse Strategic Interactive Group for expenses incurred by it in
performance of its services to us. Total payments under this agreement for 1998
were approximately $1,191,257 and for the three months ended March 31, 1999
were $435,070. Other clients of Strategic Interactive Group include Dell
Computer, Federal Express, Kraft Foods, L.L. Bean and American Express.
Sales
Customers may purchase our products through the following three methods:
.Internet. Customers may purchase our products through our Web site.
.Telephone. Customers may purchase our products through inbound or outbound
telephone contact. We outsource call center functions to ICT Group. On
January 30, 1998, we entered into a contract with ICT Group to manage our
call center and resulting databases. This agreement continues until either
party terminates it by providing the other party with 30 business days'
prior written notice. Under this agreement, we pay fixed monthly fees of
approximately $8,700, as well as actual costs associated with service
representatives' time and communication costs incurred resulting from
inbound and outbound calls. We have also begun to outsource call center
functions to Transcom USA.
.Mail. Customers may purchase our products by mail. We outsource our mail
response processing to Midwest Graphics.
When a customer purchases our products through one of these three methods,
information about the customer is placed into our Information Network and an
electronic data package is sent to a transaction router system. The transaction
router automatically submits an order for the appropriate customer service
activity. Our Information Network is managed by Sterling Software, and the
transaction router is managed by en.able, L.L.C. See "Information Technology"
and "Related Party Transactions--Other Transactions and Relationships."
Customer Service
Orders submitted through our Information Network initiate customer service
functions. These functions include primarily:
.Customer Fulfillment. This function fulfills customer requests for
additional information about us and our products. We outsource this
function to PGI Companies.
.Product Delivery. Product delivery is effected directly by our suppliers.
.Billing and Customer Care. We outsource billing and customer care
functions to en.able, L.L.C. We have entered into an agreement with
en.able which provides that it will provide billing and the related
customer care to our residential customers and will develop and implement
a system to facilitate our electronic interface with electric utility
distribution centers. Unless earlier terminated, the initial term of the
agreement ends on November 1, 2002, but the agreement may be renewed prior
to the end of the initial term and each renewal term for an additional
one-year period by mutual agreement of the parties.
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It's a small planet.(SM)
<PAGE>
Beginning January 1, 2000, during the initial term either party may
terminate the agreement upon 270 days' prior written notice to the other
party. Following the initial term, the parties may terminate the agreement
on 180 days' notice. In addition, either party may terminate the agreement
if the other party breaches a material provision of the agreement and that
breach is not cured within 30 days after notice is given to the breaching
party by the non-breaching party. We have agreed to pay en.able monthly
service charges for call center and billing services, additional resource
charges and cost of living adjustments. The monthly charges are variable
and are based on the number of billable accounts maintained each month;
however, we have agreed to pay minimum monthly service charges for call
center service and billing services, currently $112,500 per month.
Our Green Electricity Products
Deregulation of the electric utility industry is providing environmentally
conscious consumers with a choice of electricity supplier and generation
source. We are currently offering green electricity products--electricity
produced from renewable and other environmentally preferable generation
sources--in Pennsylvania and California. To date, more than 99% of our revenues
have come from the sale of our green electricity products in Pennsylvania and
California.
[PRINT ADVERTISEMENT--"IF YOU'RE PLANNING TO RECYCLE" --APPEARS HERE.]
We offer three green electricity products to residential electricity
customers in Pennsylvania. The following table indicates, for each of these
products, its generation composition and the average monthly additional cost or
savings of the product as compared to the price of non-green electricity
offered by incumbent electricity providers, weighted across all utility service
territories based on our actual sales.
<TABLE>
<CAPTION>
Average Monthly
Additional Cost
Product Generation Composition or Savings
------- ---------------------- ---------------
<S> <C> <C>
["ECOSMART" LOGO .1% from new renewable landfill gas, + $1.18
APPEARS HERE] which means electricity generated
from the conversion of methane gas
collected from decomposing landfill
waste
.99% from natural gas and/or large-scale + $6.85
hydroelectric facilities
["ENVIROBLEND" LOGO .3% from new renewable landfill gas
APPEARS HERE]
["E" LOGO .47% from other renewable resources,
APPEARS HERE] including small-scale hydroelectric,
landfill gas and/or wind facilities
.50% from natural gas and/or large-scale
hydroelectric facilities
["NATURE'S CHOICE" .5% from new renewable landfill gas + $10.37
LOGO APPEARS HERE]
["E" LOGO .95% from other renewable resources,
APPEARS HERE] including small-scale hydroelectric,
landfill gas and/or wind facilities
</TABLE>
The pricing of these products varies by utility service territory based on,
among other things, the wholesale supply prices available to us.
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We currently offer two green electricity products to new residential
electricity customers in California. The following table indicates, for each of
these products, its generation composition and the expected average monthly
additional cost or savings of the product as compared to the price of non-green
electricity offered by incumbent electricity providers.
<TABLE>
<CAPTION>
Average Monthly
Additional Cost
Product Generation Composition or Savings
------- ---------------------- ---------------
<S> <C> <C>
.5% from new renewable wind, -$0.66
["RENEWABLE POWER" geothermal or landfill gas
LOGO APPEARS HERE]
["E" LOGO APPEARS HERE] .95% from other renewable
resources, including
small-scale hydroelectric,
geothermal facilities and
biomass, which means fuels
that include wood waste,
agricultural wastes, methane
gas from landfills and crops
grown specifically for energy
production
["WIND FOR THE FUTURE" .25% from newly-built wind +$12.19
LOGO APPEARS HERE] turbine generators
["E" LOGO APPEARS HERE]
.75% from other renewable
resources, including
small-scale hydroelectric,
biomass and geothermal facilities
</TABLE>
There may be a construction-related delay for up to 12 months from the time
a customer orders the Wind for the Future 2.0SM product until the commencement
of wind-powered generation. During this delay, the customer will receive
electricity from renewable generation sources. Wind for the Future 2.0SM
customers pay the rate for the Wind for the Future 2.0SM product during the
delay period and would receive a refund of the difference between that price
and the price of the product actually delivered if the wind turbine does not
commence operations within 12 months.
Our current California electricity products were only recently introduced.
The products we previously offered in California--Water Power, 75% Renewable
Power and Wind for the FutureSM--remain available only to customers who
purchased them prior to the introduction of our current products. These
products were priced higher than our current 100% Renewable Power 2.0SM
product, which resulted in an average monthly additional cost to the consumer
of $5.17 for Water Power, $6.36 for 75% Renewable Power and $11.13 for Wind for
the FutureSM.
We expect to offer green electricity products similar to those offered in
Pennsylvania and California in the retail electricity market of any state that
deregulates in a manner that we believe will allow us to compete effectively.
See "Risk Factors--Risks Related to Establishment of our Business--Our Ability
to Expand our Existing Green Electricity Business into New Markets Depends on
the Outcome of the Deregulation Process in Each State."
We currently offer our electricity products in both Pennsylvania and
California at a guaranteed price based on a specified term, generally one year,
and three years for our Wind for the Future 2.0SM product. When a
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It's a small planet.( SM)
<PAGE>
customer's initial term [PRINT ADVERTISEMENT--"NO COAL. NO NUKES. NO KIDDING."
of service expires, we --APPEARS HERE]
offer products for
continued service that are priced based upon market prices available at that
time. Our customers may switch to another electricity supplier at any time,
although there is a small termination fee for the Wind for the Future 2.0SM
product.
Our strategy has been to obtain supply contracts that obligate wholesale
suppliers to provide electricity meeting our specifications sufficient to meet
all requirements of a specified number of customers for the full term of our
arrangement with those customers. These requirements contracts generally provide
that during the relevant term the suppliers will deliver into the electricity
distribution system a volume of electricity having the characteristics of the
product selected by the customer equal to the amount of electricity used by the
customer during the service term. These supply contracts also require our
suppliers to provide all associated services, including transmission, scheduling
and settlement services, as applicable. These contracts are not generally
dependent on any minimum number of customers being assigned to them and permit
us to service customers throughout a state.
We originally entered into three agreements with major wholesale electricity
suppliers to serve the requirements of our Pennsylvania customers. Under these
agreements, each supplier agreed to provide an amount of electricity that
matches the requirements of each customer assigned to that supplier for a
period of twelve months. For two of the agreements, either we or the supplier
may discontinue the assignment of additional customers
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upon three months' notice. After the assignment of additional customers has
been discontinued, these suppliers will be obligated to continue to provide
electricity to us in an amount that matches the requirements of each customer
that was previously assigned to that supplier for the remainder of that
customer's twelve-month period, whereupon the supply contract will terminate.
These supply contracts may also be terminated by either party if an event of
default occurs relating to the other party. The third agreement provided for
the assignment of customers from January 1, 1999 to March 31, 1999 and, under
that agreement, the supplier is obligated to provide an amount of electricity
that matches the requirements of each customer assigned to that supplier for a
period of twelve months. We are now assigning new customers in the areas served
by this supplier to one of the other existing suppliers referred to above.
We have entered into agreements with two wholesale electricity suppliers to
serve the requirements of our California customers. Under both of these
agreements, the wholesale price is based on a fixed price spread related to the
wholesale electricity price in California as determined by the California power
exchange. One of these agreements provides for a surcharge on the Wind for the
Future SM wind power product. Under one of these agreements, the supplier has
agreed to provide to us electricity in an amount that matches the requirements
for each customer assigned to it for a period of twelve months, and either
party may discontinue the assignment of additional customers upon three months'
notice. After the assignment of additional customers has been discontinued,
this supplier will be obligated to provide us an amount of electricity that
matches the requirements of each customer that was previously assigned to the
supplier for the remainder of that customer's twelve-month period, whereupon
the supply contract will terminate. Under the other agreement, the supplier
provides electricity for one- and three-year service periods, depending on the
product being served, and may be assigned additional customers through December
31, 1999. The term of this agreement terminates on the earlier of the
expiration of the term of the last customer assigned to the agreement or
December 31, 2002 with respect to some products and December 31, 2005 with
respect to others. Both of these agreements generally provide that either party
may terminate the agreement if an event of default occurs relating to the other
party.
Total payments under our electricity supply contracts for 1998 were
approximately $992,181 and for the three months ended March 31, 1999 were
$2,728,125.
Our contracts with four suppliers provide for separate letters of credit or
equivalent financial assurances to satisfy credit requirements. The amounts of
the letters of credit range from 15 days' to two months' of receivables based
on our load forecast. In addition, we have delivered to one supplier
irrevocable letters of credit in connection with the supplier's purchase and
installation of three wind power turbines. We also delivered letters of credit
to regulators securing our performance as an energy service provider. Total
supply and regulatory letters of credit outstanding at December 31, 1998 were
$2,765,230 and at March 31, 1999 were $2,477,251.
With the exception of minor costs associated with specialty content that
makes up less than 15% of our electricity requirements and limited reservation
and liquidation fees, to date we have avoided taking on electricity supply
costs that are not tied directly to customer sales volumes. As described above,
under our supply contracts the price we pay for electricity is either fixed or,
in California, based on the price established by the California Power Exchange
plus a specified amount. Because the price terms for our customers reflect our
wholesale price of the electricity plus a retail margin and the term of our
supply contract is coextensive with the term of the contract with our customer,
we generally are not at risk that the wholesale price of power will exceed the
price to be paid by our customers. In the future, as our electricity
requirements reach substantial levels, we may increase the volume of
electricity contracts that we buy directly from electricity generators and
wholesale marketers in order to reduce our overall costs of electricity supply
and allow us greater marketing flexibility. We believe that we will be able to
obtain sufficient electric power to meet our supply needs, both for our
existing operations in Pennsylvania and California and future operations in new
deregulated electricity markets that we are likely to enter, for the
foreseeable future, although we can provide no assurance in this regard. See
"Risk Factors--Other Risks Related to our Business Generally--Our Existing
Green Electricity Business Depends on our Ability to Obtain from Wholesale
Electricity Suppliers, on Acceptable Terms, Electricity Meeting our Customers'
Requirements" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
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<PAGE>
Other Products
Solar Generation
Equipment
[PRINT ADVERTISEMENT--"SOLAR POWER."--APPEARS We market Green
HERE] Mountain SolarSM
systems in California.
These systems typically
allow individual
homeowners to generate
from 20% to 50% of
their electric power
from the sun. We offer
five different Green
Mountain SolarSM systems
using two different
technologies. The price
of a Green Mountain
SolarSM system is
between $6,000 and
$13,000 in areas in
California qualifying
for the most favorable
state and federal
subsidy programs and
between $9,000 and
$21,000 in other areas
of California and in
Pennsylvania. Applied
Power Corporation
designs and installs
systems offered in
California and
Pennsylvania using
components manufactured
by Solarex Corporation.
We intend to expand our
marketing of Green Mountain SolarSM systems to other markets.
Recently Announced Product Offerings
Credit Cards. We have recently begun to offer, through our Web site, a First
USA credit card that is co-branded with the Green Mountain brand and Visa.
Under our five-year agreement with First USA, we will promote the credit card
to our customers and registered users. First USA is responsible for
applications, provision of credit, billing and collection and related services.
We will be paid a fee for each person who signs up for the credit card, plus a
royalty on credit card purchases. We presently intend to dedicate 25% of these
royalties to environmental activities, including the construction of solar
power generation facilities. We believe this product will foster a sense of
community among our customers and a sense of identification with
GreenMountain.com.
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Ecotourism. We have recently begun to offer, through our Web Site,
ecological tours and vacations arranged by The Green Travel Network. The
product we offer -- ecotourism -- is a nature-based form of specialty travel
that promotes responsible travel aimed at conserving the destination's natural
areas and sustaining the well-being of the local people.
Electric Bicycles. We have recently begun to offer electric bicycles sold by
ESI Energy Services. Through our Web site, our customers can obtain information
about and order different models of electric bicycles.
Books. We have recently begun to offer books relating to environmental
topics by partnering with Amazon. com. Our customers through our Web site view
the books on our Web site and then link to Amazon.com's Web site to place their
order.
Additional Product Offerings Under Consideration
We do not intend to manufacture any products, but rather will sell products
produced for us by others under the Green Mountain brand. We also expect to
enter into additional relationships with third parties to make their green
products available through our Web site. See "Risk Factors--Risks Related to
Establishment of our Business--Our Ability to Grow our Customer Base and
Generate Sales Depends on Broadening our Product Offerings" and "--Risks
Related to the Internet and Online Commerce Aspects of our Business--Products
Sold by us May Subject us to Litigation and the Related Costs."
Some of the additional product offerings we have under consideration are
described below.
Energy Efficient Home Products. We expect to offer on our Web site a home
energy audit feature which will enable visitors to our site to review the
energy efficiency of their home. In conjunction with that feature, we expect to
offer a variety of products principally related to the home which will assist
the user in reducing energy use and expenditures. These will initially consist
of relatively small items such as energy efficient lighting, but we expect to
expand our selection of offerings to include more substantial products such as
major appliances.
Natural Gas. We are developing a marketing and branding strategy for natural
gas, which is a cleaner fossil fuel that we believe complements our electricity
products. Although the natural gas we would offer would generally not be
different from natural gas offered by other suppliers, we believe customers who
have chosen our electricity products will also be inclined to purchase natural
gas from us. We are also exploring the feasibility of offering a "green gas"
product, which would be a blend of landfill-gas derived fuel (methane) and
standard natural gas.
Like the electric utility industry, the natural gas utility industry is
being deregulated. We expect to offer retail natural gas products in each state
that deregulates in a manner that we believe will allow us to compete
effectively. Competition has opened in parts of the California and Pennsylvania
residential natural gas markets. We are currently negotiating with natural gas
suppliers in these markets.
Alternative Fuel Vehicles. We are currently exploring the feasibility of
marketing alternative fuel vehicles. Alternative fuel vehicles are vehicles
that operate using natural gas, ethanol, electricity or propane. There has been
increased attention to development of alternative fuel vehicles by automakers,
which has been primarily due to legislative trends that favor lower emission
vehicles and growing demand from consumers
who care about the environment. We believe that these trends will provide the
opportunity to market these vehicles on an increasingly larger scale.
Fuel Cells. We are exploring the feasibility of marketing fuel cells--a near
zero-emission electricity generation technology. Fuel cells convert natural
gas, gasoline or hydrogen into electricity without any combustion and the
related harmful by-products of nitrogen or sulfur dioxide. Fuel cells would be
a strong strategic addition to our green electricity products. Delivery of 100%
of the electricity needs of an average-
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It's a small planet.(SM)
<PAGE>
sized residence would require placement of a fuel cell unit the approximate
size of a dishwasher. Potential residential customers include customers who are
interested in the environmental benefits of fuel cell technology, as well as
rural homes and households that desire back-up or uninterrupted electricity
generation. Our ability to offer fuel cells, as well as other products, is
dependent on technological advances, and we cannot assure you whether or when
those advances will occur. See "Risk Factors--Risks Related to Establishment of
our Business--Our Ability to Grow our Customer Base and Generate Sales Depends
on Broadening our Product Offerings."
Financial Services. We are considering ways in which we can provide our
customers financial services related to environmentally responsible
investments, such as investments in companies which have a demonstrated record
of environmental accomplishment. The Social Investment Forum's November 1997
Report on Responsible Investing Trends in the United States reported the
existence of $1.2 trillion in professionally managed portfolios incorporating
at least one social investment strategy.
Our Web Site
Our goal is to create a Web site that will be a state-of-the-art,
interactive commerce platform. In addition to the tools necessary for the sale,
fulfillment and customer service functions, our Web site will offer content and
community features that will appeal to people who are concerned about the
environment. We are depending on Strategic Interactive Group, a specialized Web
site developer, for the upgrade of our Web site. We expect that the current
upgrade of our Web site will be complete by October 1, 1999. See "Risk
Factors--Risks Related to Establishment of our Business--To Attract Customers
and Make Sales Over the Internet, We Must Develop our Web Site and Implement
Ongoing Improvements to our Web Site in the Face of Rapid Technological
Change."
Strategic Web Site Relationships
We believe that in order to attract significant traffic to our Web site we
need to establish and maintain relationships with Internet portals and other
high-traffic Web sites that will carry links to our new Web site. For example,
on March 25, 1999, we entered into an Advertising and Promotion Agreement with
Yahoo! becoming Yahoo!'s Premier Merchant for consumer energy. The agreement
provides for the placement of banner advertising and button links promoting our
energy business on Yahoo! properties and delivery of Yahoo! e-mail messages
about our energy business for a one-year period. This one-year period began May
1, 1999. For these services, GreenMountain.com agreed to pay Yahoo! a fixed fee
of $6.0 million and a fee for each new energy service account opened through
promotion provided by Yahoo!, with a cap of $400,000 on the total amount to be
paid for accounts opened. Under the agreement, Yahoo! will market promotions to
its registered users on a geographically-targeted basis. The banner advertising
and button links will be displayed to, and the e-mail will be delivered to,
residents of the states of California, Pennsylvania and New Jersey.
GreenMountain.com has the right to redirect promotions that would otherwise be
directed to New Jersey if New Jersey's deregulation program is delayed more
than one month. See "--Marketing, Sales and Customer Service--Marketing." To
date, other than the Yahoo! agreement, we have not entered into any agreements
with any Internet portals or other high-traffic Web sites.
We will also need to establish relationships with content providers that
will provide our Web site with content that appeals to environmentally-
conscious consumers. To date, we have entered into content agreements with:
.Autobytel.com to provide information on fuel efficient vehicles;
.American Council for an Energy Efficient Economy to provide information on
vehicle fuel efficiency and emissions ratings for conventional vehicles;
and
.SocialFunds.com to provide investment research and analysis regarding
socially-responsible investments.
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See "Risk Factors--Risks Related to Establishment of our Business--Our Failure
to Develop and Maintain Strategic Web Site Relationships Could Adversely Affect
our Ability to Attract Customers to our Web Site."
Community
Community will be an integral feature throughout our Web site. We believe
that through community activities such as e-mail newsletters, bulletin boards,
chat forums and eco-greeting cards, customers will have a unique opportunity to
share ideas about environmental issues and marketing solutions. We are
exploring community fostering elements for our Web site, including:
.A "socially responsible" business opportunities bulletin board;
.Live chats with environmental experts;
.Bulletin boards discussing environmental issues;
.User home pages--that will allow users to create their own home page on
our Web site;
.An eco-event locator--that will allow individuals to post and obtain
information about local, environment-related events;
.Teacher's tools--that will help teachers educate children about the
environment; and
.Environment-related charitable and volunteer opportunities.
Content
We intend for our Web site to offer a broad range of engaging and
educational environment-related content. The role of content at our Web site
will be to:
.Inform visitors about how to use g*commerce to improve the environment;
.Communicate the tangible difference that purchasing through
GreenMountain.com can have on the environment;
.Influence customer purchase behavior;
.Educate visitors about relevant environmental issues; and
.Report our environmental performance to the GreenMountain.com community.
We have entered into relationships with several content providers as described
above and are exploring relationships with other content providers. See "--
Strategic Web Site Relationships." We expect our content partners to include:
.Our suppliers and other vendors that sell products through our Web site,
who will provide direct product-related content;
.Leading environmental organizations; and
.Other environmental news providers.
Our Web site currently offers the content described above. See "--Strategic Web
Site Relationships." Examples of additional content that we are considering
include:
.Additional news articles and reports about the environment and issues that
impact the environment;
.Additional product research information;
.""Eco-tools" such as a home energy audit, a pollution locator, an eco-
investment tracker and an eco-travel planner;
.Expert roundtables addressing environment-related topics;
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.Corporate environmental value added reports;
.Quizzes such as an eco-IQ quiz; and
.Games and other interactive activities for children.
We will maintain editorial oversight of all material contained on our Web site.
Online Purchasing
Our Web site will provide full online purchasing capability for many
products that we offer. Following placement of an order, the customer will
receive an e-mail confirmation. The e-mail confirmation will summarize the
purchase, the total amount of sale and any shipping information and will
include the anticipated delivery or activation date.
Following order placement by a customer, order information will enter our
Information Network and will be routed to the appropriate supplier. Product
delivery or activation will be effected directly by our suppliers.
The following forms of online customer service will be available:
.Visitors will be able to search for answers to their questions on our Web
site. Answers to frequently asked customer inquiries may be searched by
topic, product and category. Visitors will have access to their complete
account information and will be able to update their personal information.
.Customers will be able to complete a form at our Web site or e-mail
questions or concerns directly to our customer support staff. An inquiry
will be acknowledged immediately, and we anticipate that a personalized
response will be delivered within 24 hours.
.We will provide 24 hour a day live customer service support through a
toll-free telephone number. Our customer service representatives will have
complete access to and familiarity with our Web site and applications.
Visitors may modify their online preferences or profile through this
channel if necessary.
Features
Our Web site will encourage visitors to register upon entering to receive a
more personalized site experience. The registration process will consist of a
short questionnaire that will gather information about the visitor's
environmental concerns, product and service interests and standard contact
information. Visitors will not be required to register in order to purchase
products or experience our complete Web site.
After registering, a visitor will be invited to establish a personalized "My
GreenMountain.com" containing product information and content of particular
interest to the visitor. Using "My GreenMountain.com," visitors will be able to
check order status and account balance, make payments, see how their purchases
have contributed to helping the environment and communicate with customer
service to answer questions or resolve problems.
Information Technology
Our Information Network electronically routes customer information in a
manner that allows each of our outsourcing partners to efficiently and
effectively perform the specific marketing, sales or customer service function
for which it is responsible. The Information Network also:
.Collects customer usage information;
.Communicates billing data;
.Provides customers with electronic payment options; and
.Interfaces with local utility distribution companies to share customer
information.
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The design of our Information Network gives us the ability to:
.Service a rapidly growing customer base;
.Minimize our capital expenditures and reduce fixed costs by outsourcing
functions that are priced based on variable, per customer or transaction
charges; and
.Maximize the expertise and competitive advantages of our outsourcing
partners.
The use of standard data sets that can adapt to the needs of each outsourcing
partner provides flexibility and allows for significant changes, such as the
replacement of an outsourcing partner, on relatively short notice.
We are in the process of implementing an enterprise database as part of our
Information Network. This will provide us with the ability to access and
manipulate data that has entered the Information Network on a real time basis
giving us even greater flexibility and control.
We manage our Information Network with the assistance of Sterling Software,
a supplier of software products and services with expertise in network
management and automation. Products from Sterling Software are used in more
than 90% of the Fortune 100 companies including Ford Motor Company, Wal-Mart
Stores Inc. and Lockheed Martin, and are used in more than 20,000 customer
sites worldwide. For a discussion of our agreement with Sterling Software, see
"Related Party Transactions--Other Transactions and Relationships--Agreements
with Sterling Software."
Our Competitive Position
Because both the deregulated electricity and online commerce markets are
new, rapidly evolving and highly competitive, we face intense competition and
anticipate that the competition will intensify in the future. Our competitors
and potential competitors include:
.Companies that offer competitive non-green products, like some of our
competitors in the deregulated electric utility markets, including Exelon
and Allegheny Energy in Pennsylvania, both of which are affiliates of
incumbent electric utilities;
.Companies that market green products in a single line of business, like
some of our competitors in the deregulated electric utility markets,
including Commonwealth Energy in California, that offer only green
electricity products;
.Retailers that do not specialize in offering green products, but do
include one or more green products among their offerings, like some of our
competitors in the deregulated electric utility markets, including
Conectiv in Pennsylvania; and
.Emerging online retailers that specialize in offering electricity
products.
We also anticipate competition from other retailers attempting to aggregate a
broad selection of green products.
We currently offer green electricity products in the deregulated utility
markets of Pennsylvania and California. To date, more than 99% of our revenues
have come from sales of our electricity products in those two states. In
Pennsylvania, as of March 31, 1999, approximately 7% of the households in the
Pennsylvania market had switched from their incumbent electricity provider. Of
those that switched from their incumbent electricity providers, approximately
30% switched to green electricity, and of those that switched to green
electricity, approximately 97% switched to us. In California, as of March 31,
1999, only 1% of the households in California had chosen to switch from their
incumbent electricity provider, and of those that had switched, approximately
25% switched to us. In California, all of those that switched are receiving
green electricity.
We believe that the most significant barrier to entry for a company seeking
to create a national consumer brand in order to compete in deregulated
electricity markets is the significant capital investment necessary for
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brand development and technology infrastructure. We believe that the principal
competitive factors in the retail green electricity market are:
.First mover momentum;
.Strong brand recognition and presence;
.Marketing ability;
.Environmental credibility; and
.Competitive pricing.
We are focusing on increasing our Internet presence and expanding our
Internet sales of green electricity and other green products. The online
commerce market has relatively minimal barriers to entry in that current and
new competitors can launch new sites at a relatively low cost. We believe that
the principal competitive factors in the online commerce market include:
.First mover momentum;
.Strong brand recognition and presence;
.Broad product selection;
.Quality of site experience;
.Purchasing convenience;
.Competitive pricing; and
.Reliability and speed of fulfillment.
Many of our current and potential competitors have longer operating
histories, larger customer bases, greater brand recognition and significantly
greater financial, marketing and other resources than we do. We may face
increased competitive pressures as new technologies are developed and existing
technologies are improved. See "Risk Factors--Other Risks Related to our
Business Generally--Intense Competition May Affect our Ability to Grow our
Customer Base and Generate Sales."
The Protection Of Our Intellectual Property
We regard our copyrights, service marks, trademarks, trade dress, trade
secrets and similar intellectual property as critical to our success, and rely
on trademark and copyright law, trade secret protection and confidentiality
and/or license agreements with our employees, strategic partners and others to
protect our intellectual property rights. See "Risk Factors--Other Risks
Related to our Business Generally--Failure to Protect our Intellectual Property
Could Adversely Affect our Brand and our Business."
The Impact Of Government Regulation On Our Business
In addition to regulations applicable to businesses generally, including
federal and state consumer protection laws and regulations, we are subject to
the laws and regulations applicable to electric power retailers in the
deregulated electric utility markets in which we compete. See "Risk Factors--
Risks Related to Establishment of our Business--Our Ability to Expand our
Existing Electricity Business into New Markets Depends on the Outcome of the
Deregulation Process in Each State." We are also subject to laws and
regulations applicable to online commerce. See "Risk Factors--Risks Related to
the Internet and Online Commerce Aspects of our Business--Government Regulation
of the Internet and Online Commerce is Still Developing and Could Increase our
Operating Costs or Otherwise Adversely Affect our Business."
Our Employees
As of March 31, 1999, we employed 68 full-time employees and seven temporary
employees. None of our employees is represented by a labor union, and we
consider our relations with employees to be good.
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The Facilities Used In Our Business
Our headquarters are located in South Burlington, Vermont. We lease
approximately 16,000 square feet of space, which houses our administrative,
sales and marketing and operations and support staffs under a cancelable
operating lease that expires on September 30, 2002. Future minimum lease
payments required at December 31, 1998, assuming that we do not cancel the
lease, were $114,675 in each of 1999, 2000 and 2001 and $86,006 in 2002. The
lease agreement has a termination provision that enables us to terminate the
lease at (1) September 30, 1999 and pay an early termination payment of
$33,000, (2) September 30, 2000 and pay an early termination payment of
$25,000, and (3) September 30, 2001 and pay an early termination payment of
$12,500. We anticipate that we will require additional space within the next
six months, but that suitable additional space will be available at reasonable
cost.
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ENVIRONMENTAL ADVISORY BOARD
To obtain expert advice on critical environmental issues and to facilitate
communication between GreenMountain.com and environmental community leaders, we
have assembled an Environmental Advisory Board which includes the following
individuals:
<TABLE>
<CAPTION>
Principal Affiliation and
Name Position Held
---- -------------------------
<S> <C>
Ralph Cavanagh............................... Natural Resource Defense
Council Co-Director, Energy
Program
Christopher Flavin........................... Worldwatch Institute
Senior Vice President
Lewis Milford................................ Clean Energy Group
President
V. John White................................ Center for Energy Efficiency
and Renewable Technologies
Executive Director
</TABLE>
Each member of the Environmental Advisory Board serves in his individual
capacity and not as a representative of the organization with which he is
affiliated. We currently have no standard arrangement under which we compensate
members of our Environmental Advisory Board, except that we reimburse them for
their out-of-pocket expenses incurred in connection with their service on the
Environmental Advisory Board. Members of the Environmental Advisory Board will
be eligible to receive stock option grants under our 1999 Stock Option Plan.
See "--Stock Option Agreements and Plans--1999 Stock Option Plan."
We are actively recruiting additional environmental experts and leaders to
serve on the Environmental Advisory Board. In addition, we intend to broaden
the scope of the Environmental Advisory Board to include, or create one or more
new advisory boards that will include, members who will provide expert advice
on technical and business matters. Accordingly, we are recruiting technical and
business advisors for that purpose.
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MANAGEMENT
Our Executive Officers And Directors
The following table sets forth information regarding our executive officers
and directors as of June 4, 1999.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Sam Wyly............ 64 Chairman and Director
Dennis M. Crumpler.. 46 Vice Chairman and Director
Evan A. Wyly........ 37 Vice Chairman and Director
Mark Cuban.......... 40 Director*
Richard E. Hanlon... 51 Director*
Reed E. Maltzman.... 32 Director*
Lisa Wyly........... 33 Director
H. Lee S. Hobson.... 34 Director
M. David White...... 37 Chief Executive Officer
Dennis W. Kelly..... 46 President and Chief Operating Officer
Kevin W. Hartley.... 39 Executive Vice President and Chief Marketing Officer
Julie D. Blunden.... 33 Vice President, Strategic Planning
Thomas C. Boucher... 44 Vice President, Energy Supply and Business Development
Karen K. O'Neill.... 46 Vice President, New Markets
Peter H. Zamore..... 47 Vice President, General Counsel and Secretary
Jay LeDuc........... 43 Director of Operations and Systems
Thomas H. Rawls..... 53 Chief Environmental Officer
K. Scott Canon...... 37 Chief Financial Officer
Jeffrey D. Liotta... 46 Chief Technology Officer
</TABLE>
- --------
* Expected to be appointed to the board of directors prior to the closing of
this offering.
Sam Wyly has been our Chairman and a director of GreenMountain.com since
March 1999 and a member of the management committee of our predecessor since
August 1997. Mr. Wyly is a computer software entrepreneur who has created and
managed several public and private companies. In the 1960's, he founded
University Computing Company, which became one of the first computer utility
networks and one of the first software products companies. His data
transmission company, Datran, was one of the pioneering telecommunications
ventures that contributed to the breakup of the telephone monopoly. He is a
founder and currently serves as Chairman and a director of Sterling Software, a
worldwide supplier of software products. He is also Chairman of the Executive
Committee and a director of Sterling Commerce, a provider of business-to-
business electronic commerce software to 80 of America's 100 largest
corporations, Chairman and a director of Michaels Stores, a large arts and
crafts retail chain, and Chairman and a director of Scottish Annuity & Life
Holdings, a variable life insurance and reinsurance company. He is a founding
partner of Maverick Capital, a manager of equity hedge funds. Mr. Wyly is the
father of Evan Wyly and Lisa Wyly who also serve as directors. Mr. Wyly
received his B.A. from Louisiana Tech University in 1956 and his M.B.A. from
the University of Michigan Business School in 1957.
Dennis M. Crumpler has been a Vice Chairman and a director of
GreenMountain.com since March 1999 and a member of the management committee of
our predecessor since February 1999. From September 1997 to the present, Mr.
Crumpler has served as an investment manager for Cimco, LLC, a private
investment firm that is managing general partner of Crumpler Family LP. From
July 1998 to October 1998, he served as Senior Vice President, Strategic
Initiatives of Sterling Commerce. From September 1986 to July 1998, Mr.
Crumpler was Chief Executive Officer of XcelleNet, a company specializing in
systems management solutions for remote and mobile users. XcelleNet was founded
by Mr. Crumpler and was acquired by Sterling Commerce in July 1998. Mr.
Crumpler received his B.S. from the Massachusetts Institute of Technology in
1975 and his M.B.A. from Harvard Business School in 1982.
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Evan A. Wyly has been a Vice Chairman and a director of GreenMountain.com
since March 1999 and a member of the management committee of our predecessor
since August 1997. Mr. Wyly is a founder, and since 1990 has been a Managing
Partner, of Maverick Capital, a manager of equity hedge funds with $3 billion
in assets. Mr. Wyly is also a director of Sterling Commerce, Sterling Software
and Michaels Stores. Mr. Wyly received his B.A. from Princeton University in
1984 and his M.B.A. from Harvard Business School in 1988.
Mark Cuban has been a member of the management committee of our predecessor
since February 1999 and is expected to be appointed as a director of
GreenMountain.com prior to the closing of this offering. From May 1995 to the
present Mr. Cuban has served as President and Chairman of the Board of
broadcast.com, a provider of live and on-demand audio and video programs over
the Internet, which he co-founded in 1995. From 1991 to May 1995, Mr. Cuban was
President of Radical Computing, a Dallas-based venture capital and investment
company specializing in technology companies. Mr. Cuban received his B.S. from
Indiana University in 1981.
Richard E. Hanlon has been a member of the management committee of our
predecessor since February 1999 and is expected to be appointed as a director
of GreenMountain.com prior to the closing of this offering. Mr. Hanlon has been
Vice President, Investor Relations of America Online, a global provider of
Internet online services, since February 1995. From March 1993 to February
1995, Mr. Hanlon was President of Hanlon & Co., a consulting firm. Mr. Hanlon
is also a director of Michaels Stores. Mr. Hanlon received his B.A. from the
University of London in 1969.
Reed E. Maltzman has been a member of the management committee of our
predecessor since February 1999 and is expected to be appointed as a director
of GreenMountain.com prior to the closing of this offering. From July 1998 to
the present, Mr. Maltzman has served as Director of Strategy at eBay, an
Internet auction company. From June 1997 to July 1998, he was an Associate
Research Analyst covering Internet stocks for BT Alex Brown, an investment
banking firm. From August 1995 to June 1997, Mr. Maltzman served as the Manager
of New Media Business Development of CKS Interactive, an interactive
advertising agency. Mr. Maltzman received his B.A. from Harvard University in
1989 and his M.B.A. from Stanford Graduate School of Business in 1995.
Lisa Wyly has served as a director of GreenMountain.com since March 1999 and
a member of the management committee of our predecessor since August 1997. Ms.
Wyly is a Managing Director of Highland Stargate, Ltd., a private company that
oversees 100 family trusts and partnerships. From 1992 to 1997, Ms. Wyly was
Program Director of the Family Sign Language Program for the Massachusetts
State Association of the Deaf, Inc. From 1990 to 1992, Ms. Wyly was a teacher
at R.E.A.D.S., a program for deaf and hard of hearing children. Ms. Wyly
received her B.A. from Principia College in 1989 and her M.Ed. from Boston
University in 1993.
H. Lee S. Hobson has been a director of GreenMountain.com since March 1999
and a member of the management committee of our predecessor since January 1999.
Since 1994, Mr. Hobson has been a Senior Analyst, then Partner, of Maverick
Capital. Mr. Hobson focuses on investments in global consumer products
companies and in Latin America. Before joining Maverick in 1994, Mr. Hobson
served as an associate in the new business development division of PepsiCo
Foods International, a division of PepsiCo., a marketer of branded beverages
and snack foods. Mr. Hobson received his B.A. from Princeton University in 1987
and his M.B.A. from Harvard Business School in 1992.
M. David White has been our Chief Executive Officer since October 1998. From
February 1998 to October 1998, Mr. White served as Senior Vice President,
Investment Banking Division, Donaldson, Lufkin & Jenrette, an investment
banking firm. Mr. White was Vice President of Finance of Boston Chicken, a
restaurant chain, from December 1994 to June 1997. From August 1986 to December
1994 and from June 1997 to
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January 1998, Mr. White was in the Investment Banking Department of Merrill
Lynch & Co., an investment banking firm, and became a Director of the
Investment Banking Department in January 1993. Mr. White received his B.A. from
the University of Texas at Austin in 1983.
Dennis W. Kelly has been our President since February 1999 and became our
Chief Operating Officer in May 1999. From December 1982 to February 1999, Mr.
Kelly served in both executive and managerial capacities with The Coca-Cola
Company, a beverage and consumer products company, including Vice President,
Director of Marketing for Europe, and Deputy Chief Marketing Officer from
February 1997 to February 1999, Vice President and Director, Global Strategic
Marketing Research from February 1995 to February 1997 and Vice President and
General Manager, Noncarbonated Beverages, USA from January 1993 to February
1995. Prior to December 1982, Mr. Kelly held positions with Procter & Gamble, a
consumer products company, and Touche Ross & Company, an accounting firm. Mr.
Kelly received his B.M.E. from the Georgia Institute of Technology in 1976 and
his M.B.A. from Harvard Business School in 1981.
Kevin W. Hartley has been our Chief Marketing Officer and Executive Vice
President since December 1998. Prior to that, he served as our Vice President
of Marketing beginning August 1997. From May 1994 to August 1997, Mr. Hartley
held several positions with Green Mountain Power Corporation, including Vice
President of Marketing from May 1997 to August 1997. Between 1990 and 1994, Mr.
Hartley was Director of Retail Fiberglass Marketing for the Manville
Corporation (now the Schuller Corporation), a manufacturer of building and
insulation products. Mr. Hartley received his B.S. from the University of
Vermont in 1981 and his M.B.A. from the University of Colorado in 1990.
Julie D. Blunden has been our Vice President of Strategic Planning since
October 1998. Prior to that, she served as our Regional Director of California
beginning August 1997. From January 1997 to August 1997, Ms. Blunden was
Director of Sales, then Regional Director, for the California region of Green
Mountain Power Corporation. From 1987 to August 1996, Ms. Blunden held several
positions with AES, a worldwide developer, owner and operator of power plants,
including Project Director from September 1995 to August 1996. From September
1993 to June 1995, Ms. Blunden also attended graduate business school, and
during part of 1994, she worked for the Center for Energy Efficiency and
Renewable Technologies. Ms. Blunden received her B.A. from Dartmouth College in
1988 and her M.B.A. from Stanford Graduate School of Business in 1995.
Thomas C. Boucher has been our Vice President of Energy Supply and Business
Development since August 1997. From 1992 to August 1997, Mr. Boucher held
several financial, business and energy planning positions at Green Mountain
Power Corporation, including Vice President of Business Strategy from May 1996
to August 1997. Mr. Boucher received his B.S.E.E. from the University of
Vermont in 1976.
Karen K. O'Neill has been our Vice President of New Markets since August
1997. From 1985 to August 1997, Ms. O'Neill held several positions with Green
Mountain Power Corporation, including Assistant Vice President, then Vice
President, of Organization Development and Human Resources from 1994 to August
1997 and Assistant General Counsel from 1989 to 1994. Prior to that, Ms.
O'Neill held management positions with the Justice Department and was an
Assistant United States Attorney for the District of Columbia. Ms. O'Neill
received her B.A. from the University of Pennsylvania in 1973 and her J.D. from
the National Law Center at George Washington University in 1977.
Peter H. Zamore has been our Vice President, General Counsel and Secretary
since August 1997. From January 1995 to August 1997, Mr. Zamore was General
Counsel of Green Mountain Power Corporation. From 1984 to 1995, Mr. Zamore was
an associate and then partner of Sheehey Brue Gray and Furlong, P.C., a
Burlington, Vermont law firm. Mr. Zamore received his B.A. from Marlboro
College in 1974 and his J.D. from Vermont Law School in 1979.
Jay LeDuc has been our Director of Operations and Systems since January
1999. Prior to that, he held other positions with us, including Director of
Regional Development from November 1997 to January 1999. From October 1992 to
October 1997, Mr. LeDuc served in several marketing positions with The Systems
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House, a marketer of information systems solutions to the office products
industry, in Chicago, Illinois. Mr. LeDuc has served as co-chair of the
Pennsylvania Data Exchange Working Group and as a member of the Pennsylvania
Pilot Implementation Committee. Mr. LeDuc received his B.S. from the University
of Vermont in 1978.
Thomas H. Rawls has been our Chief Environmental Officer since January 1999.
Prior to that, he served as our Director of Environmental Affairs beginning
August 1997. From March 1993 to August 1997, Mr. Rawls held several positions
with Green Mountain Power Corporation, including Manager of Marketing from June
1996 to July 1997. Since 1978, he has been chief editor of Country Journal, of
Harrowsmith, a magazine devoted primarily to topics about the environment and
rural life, and of Natural Health. He is the author of Small Places, In Search
of a Vanishing America (Little, Brown). Mr. Rawls is the former vice-chairman
of the Board of the Vermont Natural Resources Council, a statewide
environmental group, and is Chair of the Board of the Renewable Energy
Alliance, a national group of wholesale and retail power marketers. Mr. Rawls
received his B.A. from Princeton University in 1968.
K. Scott Canon has been our Chief Financial Officer since February 1999.
From March 1992 to February 1999, he has served in the following capacities
with the broker-dealer affiliate of Security Capital Group, a global real
estate research, investment and operating management company: member of the
board of directors from June 1996 to February 1999, Senior Vice President from
March 1997 to February 1999, President from January 1996 to March 1997 and Vice
President from May 1993 to January 1996. From October 1991 to March 1992, he
worked for Chase Manhattan Bank, and from August 1987 to October 1991 for
Goldman, Sachs, an investment banking firm. Mr. Canon received his B.A. in 1984
and his M.B.A. in 1987 from the University of Texas at Austin.
Jeffrey D. Liotta has been our Chief Technology Officer since May 1999. From
March 1997 to May 1999, Mr. Liotta served as Vice President Research and
Development of Eastman Software, a subsidiary of Eastman Kodak that develops
document management software. From January 1996 to February 1997, he was Vice
President Client Server Development of Dun & Bradstreet Software, a designer
and manufacturer of client/server enterprise resource planning systems. From
September 1995 to January 1996, he was Vice President Software Engineering of
Ascom Nexicon, a developer of high-end asynchronous transfer mode switches.
From October 1994 to September 1995, Mr. Liotta held several positions with
Banyan Systems, a developer of network and system management software products
including General Manager Network Management Business from January 1995 to
September 1995. Mr. Liotta received his B.A. from Duke University in 1975 and
his M.B.A. from the University of North Carolina at Chapel Hill in 1980.
None of the directors or director nominees is an employee of
GreenMountain.com.
Classified Board Of Directors
Prior to the closing of this offering, our certificate of incorporation will
be amended to provide that our board of directors will be divided into three
classes of directors. Each class will serve a staggered three-year term, except
that the initial directors will serve as indicated in the following paragraph.
Approximately one-third of our board of directors will be elected each year.
Vacancies on the board will be filled only by persons elected by a majority of
the remaining directors, and a director elected by the board to fill a vacancy
will serve for the remainder of the full term of the class of directors in
which the vacancy occurred and until such director's successor has been elected
and qualified. See "Description of Capital Stock--Provisions of our Certificate
of Incorporation, our Bylaws and Delaware Law."
Sam Wyly, Mark Cuban and Lee Hobson will serve as Class I directors, whose
terms expire at the 2000 annual meeting of stockholders. Dennis Crumpler, Reed
Maltzman and Evan Wyly will serve as Class II directors, whose terms expire at
the 2001 annual meeting of stockholders. Richard Hanlon and Lisa Wyly will
serve as Class III directors, whose terms expire at the 2002 annual meeting of
stockholders.
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Board Committees
Prior to the closing of this offering, our board of directors expects to
establish six board committees--an Executive Committee, an Environmental
Integrity Committee, an Audit Committee, a Special Compensation Committee, a
Compensation Committee and a Nominating and Corporate Governance Committee.
Executive Committee
Between meetings of our full board of directors, the Executive Committee may
exercise all of the power and authority of the board in the oversight of the
management of our business and affairs, subject to limitations imposed under
Delaware law. The initial Executive Committee members will be Sam Wyly, Dennis
Crumpler and Evan Wyly, and Mr. Crumpler will serve as Chairman of the
Executive Committee.
Environmental Integrity Committee
The Environmental Integrity Committee will be responsible for reviewing our
effect on the environment and our adherence to our environmental principles and
making recommendations to the full board of directors as to how we can improve
our environmental performance. The initial members of the Environmental
Integrity Committee will be Sam Wyly, Dennis Crumpler and Reed Maltzman. The
members of the committee will determine which of them will serve as the
committee chairman.
Audit Committee
The Audit Committee will review our internal accounting procedures and
controls and consult with and review the services provided by our independent
accountants. The initial Audit Committee members will be Mark Cuban, Richard
Hanlon and Reed Maltzman. The members of the committee will determine which of
them will serve as the committee chairman.
Special Compensation Committee
The Special Compensation Committee will review and determine the salaries,
benefits, stock option grants and other compensation of the Chairman, any Vice
Chairman, any director serving on the Compensation Committee, the Chief
Executive Officer and all other executive officers. The initial Special
Compensation Committee members will be Mark Cuban, Richard Hanlon and Reed
Maltzman. The members of the committee will determine which of them will serve
as the committee chairman.
Compensation Committee
The Compensation Committee will review and determine the salaries, benefits,
stock option grants and other compensation of all employees, consultants,
directors and other individuals compensated by us whose compensation is
determined by action of the board of directors (other than the Chairman, any
Vice Chairman, any director serving on the Compensation Committee, the Chief
Executive Officer and all other executive officers). The initial Compensation
Committee members will be Sam Wyly, Dennis Crumpler and Evan Wyly. The members
of the committee will determine which of them will serve as the committee
chairman.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee will responsible for
considering and making recommendations to the full board of directors regarding
nominees for election to the board of directors and board committee
assignments. The Nominating and Corporate Governance Committee will also review
and report to the board of directors on a periodic basis with regard to matters
of corporate governance. The initial members of the Nominating and Corporate
Governance Committee will be Sam Wyly, Evan Wyly and Richard Hanlon. The
members of the committee will determine which of them will serve as the
committee chairman.
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Director Compensation
Each director will be paid a semi-annual retainer in the form of shares of
unrestricted common stock having a fair market value of $15,000. The fair
market value per share for the six-month retainer period beginning January 1
and ending June 30 of each year will be equal to the closing price of the
common stock on the last trading day of the preceding calendar year, and the
shares for the retainer period will be issued to the directors as soon as
practicable after January 1 of each year. The fair market value per share for
the six-month retainer period beginning July 1 and ending December 31 will be
equal to the closing price of the common stock on the last trading day
preceding July 1, and the shares for the retainer period will be issued to the
directors as soon as practicable after July 1 of each year.
If a director is first elected to the board of directors after the first day
of a retainer period, he or she will receive, as soon as possible after the
election, a pro rata portion of the semi-annual retainer for that retainer
period based on the number of days remaining in the period, and the fair market
value per share will be equal to the closing price of the common stock on the
last trading day preceding the date of the director's election to the board of
directors.
The shares of common stock issued to each director in payment of the
director's retainer will not be subject to forfeiture if the director ceases to
be a member of the board of directors. However, if a director ceases to be a
director before the last day of a retainer period other than by reason of
death, disability or retirement from the board of directors at or after age 65,
he or she will be required to pay the company in cash an amount equal to the
unearned portion of the $15,000 retainer based on the number of days remaining
in the retainer period.
We have reserved 150,000 shares for issuance under the 1999 Director Stock
Award Plan, subject to adjustment as provided in the plan.
In addition, each director will receive $2,000 in cash for each board of
directors meeting attended and for each committee meeting attended on days on
which the board of directors does not also meet. We also reimburse directors
for out-of-pocket expenses incurred in connection with attending board of
directors and committee meetings.
Directors will also be eligible to receive stock option grants under our
1999 Stock Option Plan. See "-- Stock Option Agreements and Plans--1999 Stock
Option Plan." Those persons who have become or are expected to become directors
of GreenMountain.com have been granted options to purchase units in the limited
liability company. See "Principal Stockholders."
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<PAGE>
Executive Compensation
The following table sets forth summary information concerning the
compensation awarded to, earned by or paid for services rendered to us in all
capacities during 1997 and 1998, by our former and current Chief Executive
Officer and our four most highly compensated executive officers, other than our
Chief Executive Officer, who were serving as executive officers at the end of
1998. Mr. Hyde ceased to be an executive officer effective as of October 6,
1998. Mr. Luther retired as an executive officer effective as of January 30,
1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------- -------------------------
Name and All Other
Principal Position Year Salary Bonus Shares Underlying Options Compensation
------------------ ---- ------------------- ------------------------- ------------
<S> <C> <C> <C> <C> <C>
M. David White(1)....... 1998 $ 37,576 $ 0 0 $ 258(2)
Chief Executive Officer 1997 -- -- -- --
Douglas G. Hyde(3)...... 1998 285,000 0 0 153,697(4)
Chief Executive Officer 1997 98,679 106,875 5,970 1,200(4)
Kevin W. Hartley........
Vice President, 1998 155,000 125,000 0 8,348(5)
Marketing 1997 54,524 34,875 7,761 775(5)
Thomas C. Boucher....... 1998 150,000 45,000 0 9,743(6)
Vice President, Energy 1997 51,786 33,750 6,567 1,125(6)
Supply and Business
Development
David B. Luther(7)......
Vice President, 1998 150,000 45,000 0 18,820(8)
Operations 1997 60,714 33,750 2,985 8,413(8)
Peter H. Zamore......... 1998 140,000 45,000 0 9,204(9)
Vice President, General 1997 48,952 31,500 5,970 1,050(9)
Counsel and Secretary
</TABLE>
- --------
(1) Mr. White became the Chief Executive Officer as of October 5, 1998. Mr.
White's annualized salary for 1998 was $155,000.
(2) Represents contributions to our 401(k) plan.
(3) Mr. Hyde resigned as Chief Executive Officer and ceased to be an executive
officer as of October 6, 1998. After that date, he continued as an employee
at the same level of compensation until April 6, 1999, when he ceased to be
an employee.
(4) For 1998, represents severance compensation in the amount of $142,500,
contributions to our 401(k) plan in the amount of $9,832 and payments for
life insurance in the amount of $1,365. For 1997, represents contributions
to our 401(k) plan in the amount of $1,200.
(5) For 1998, represents contributions to our 401(k) plan in the amount of
$7,932 and payments for life insurance in the amount of $416. For 1997,
represents contributions to our 401(k) plan in the amount of $775.
(6) For 1998, represents contributions to our 401(k) plan in the amount of
$9,132 and payments for life insurance in the amount of $611. For 1997,
represents contributions to our 401(k) plan in the amount of $1,125.
(7) Mr. Luther retired effective as of January 30, 1999.
(8) For 1998, represents contributions to our 401(k) plan in the amount of
$6,820 and payments for housing costs in the amount of $12,000. For 1997,
represents contributions to our 401(k) plan in the amount of $1,125 and
payments for housing costs in the amount of $7,288.
(9) For 1998, represents contributions to our 401(k) plan in the amount of
$8,432 and payments for life insurance in the amount of $772. For 1997,
represents contributions to our 401(k) plan in the amount of $1,050.
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<PAGE>
Option Exercises In Last Fiscal Year And Option Grants In Last Fiscal Year
We did not grant any options to the executive officers named in the summary
compensation table above during 1998.
Fiscal Year End Option Values
The following table provides information, for each of the executive officers
named in the summary compensation table above, regarding unexercised options
held as of December 31, 1998. No options were exercised during 1998.
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
December 31, 1998(1) December 31, 1998
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
M. David White........... 0 0 0 0
Douglas G. Hyde.......... 5,970 0 0 0
Kevin W. Hartley......... 3,104 4,657 0 0
Thomas C. Boucher........ 2,627 3,940 0 0
David B. Luther.......... 1,194 1,791 0 0
Peter H. Zamore.......... 2,388 3,582 0 0
</TABLE>
- --------
(1) Assuming our conversion from a limited liability company to a corporation
had occurred as of December 31, 1998.
Employment Agreements
Agreement With Vice Chairman
We have entered into a letter agreement, dated February 5, 1999, and amended
June 1, 1999 with Dennis M. Crumpler relating to his service to us as a
director, Vice Chairman, Chairman of the Executive Committee and consultant.
Under the agreement, Mr. Crumpler purchased an equity interest under our
Employee Unit Purchase Plan. See "Related Party Transactions--Subsequent
Transactions--Employee Unit Purchase Plan." In connection with the execution of
the agreement, in February 1999, we granted him an option exercisable to
purchase 60,000 shares of common stock at an exercise price of $3.33 per share
in connection with his service as a director. See "Management--Director
Compensation." At that time, we also granted him an option exercisable to
purchase 427,500 shares of common stock at an exercise price of $3.33 per share
in connection with his service as Vice Chairman. Under the agreement as
amended, and subject to the approval of the Special Compensation Committee, we
expect to grant him additional options to purchase 60,000 shares in connection
with his service as a director and 427,500 shares in connection with his
service as Vice-Chairman and Chairman of the Executive Committee, in each case
at an exercise price per share equal to the initial public offering price.
These options provide or will provide for vesting as to 20% of the underlying
equity interest on the date of grant and vesting as to 5% of the underlying
equity interest on the first day of each of the next 16 calendar quarters.
Employment Agreement With Our Chief Executive Officer
On October 5, 1998, we entered into an employment agreement with M. David
White, our Chief Executive Officer. The agreement provides that Mr. White will
receive an initial annual base salary of $155,000 and an annual incentive bonus
payable at the discretion of our board of directors. Mr. White did not receive
a bonus for 1998. In addition, he receives an annual expense allowance of up to
$50,000 for transportation and housing. Mr. White also receives health, term
life and disability insurance and is eligible to participate in other benefit
plans made available to our senior executives.
Under the agreement, Mr. White purchased an equity interest under our
Employee Unit Purchase Plan. See "Related Party Transactions--Subsequent
Transactions--Employee Unit Purchase Plan." Under the agreement, in January
1999 we granted him an option exercisable to purchase 900,000 shares of common
stock at an exercise price of $3.33 per share. This option provides for vesting
as to 20% of the underlying equity interest on February 2, 1999 and vesting as
to 5% of the underlying equity interest on the first day of each of
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<PAGE>
the next 16 calendar quarters. In addition, pursuant to antidilution provisions
of the agreement, in connection with the completion of a private equity
offering in February 1999 we granted him an option exercisable to purchase
225,000 shares of common stock at an exercise price of $6.67 per share. This
option provides for vesting as to 20% of the underlying equity interest on the
date of grant and vesting as to 5% of the underlying equity interest on the
first day of each of the next 16 calendar quarters.
Mr. White's employment agreement provides for his employment until December
31, 2003, but his employment may be terminated earlier by either party. If we
terminate his employment for cause or he terminates his employment without good
reason, he will receive no further compensation or other benefits from us,
except compensation that has been accrued but not paid and benefits that we are
required by law to continue. If we terminate his employment without cause or he
terminates his employment with good reason, he will receive salary and
benefits, including health, life and disability insurance, for up to one year
following his termination and, if no member of the Wyly family is chairman of
the board of directors of GreenMountain.com, the options granted to him as
described above will immediately vest and be exercisable.
Agreement Between Highland Stargate And Our Chief Executive Officer
At the time he accepted his position with us, David White, our Chief
Executive Officer, also entered into an agreement with Highland Stargate, an
entity controlled by the Wyly family. That agreement contemplates that
Mr. White will provide investment advisory services to Highland and its
affiliates, but expressly provides that performance of those services will not
interfere with the performance by him of his duties to us on a substantially
full-time basis. In consideration for his services, Highland agreed to pay Mr.
White an amount sufficient to cause Mr. White's total annual compensation from
Highland, its affiliates and GreenMountain.com to equal not less than
$1,000,000 for the years 1999 through 2003 and a similar prorated amount for
that portion of 1998 subject to the agreement. Highland also agreed to lend
Mr. White $3,000,000 for the purpose of refinancing outstanding indebtedness
and making investments. Highland further agreed to provide Mr. White investment
opportunities, including the opportunity to invest in any significant new
venture of any Highland affiliate on a cost basis similar to Highland and its
affiliates. The loans to Mr. White bear interest at 6%, compounded annually,
are recourse and are secured by real estate and specified investment securities
owned by Mr. White including stock and options issued by us.
Highland agreed to reimburse Mr. White's business expenses incurred on its
behalf and to provide health and similar insurance benefits substantially
similar to those contemplated in his agreement with us if we do not provide
them. The agreement contains provisions related to confidentiality,
noninterference by Mr. White in Highland's business, indemnification of
Mr. White against claims resulting from his employment by Highland and other
matters of a nature commonly found in agreements of this type.
Mr. White's Highland agreement provides for his employment until
December 31, 2003. Upon termination of his employment by Mr. White, by Highland
for cause or as a result of death or disability, the agreement provides that
Mr. White will receive no further compensation except for compensation that has
accrued prior to termination and for benefits required by law. Upon termination
by Highland without cause, the agreement further provides for the payment of
aggregate salary and bonus compensation which he would otherwise have been
entitled to receive through December 31, 2003. The contract further provides
that the compensation obligations of Highland to Mr. White will be deemed
satisfied if Mr. White's realized and unrealized profits with respect to
specified investment securities securing the loans described above exceed
$10,000,000.
Agreement Between Highland Stargate And Our Chief Financial Officer
At the time he accepted his position with us Scott Canon, our Chief
Financial Officer, entered into a substantially similar agreement with
Highland. Mr. Canon's agreement provided that Mr. Canon would receive a minimum
of $500,000 per year for the years 1999 through 2002, together with an amount
of $1,250,000 if GreenMountain.com becomes bankrupt or insolvent, or has been
liquidated or dissolved, on or before December 31, 2003. Mr. Canon's agreement
with Highland does not provide for loans. Highland's obligation to
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It's a small planet.(SM)
<PAGE>
pay compensation to Mr. Canon will be deemed satisfied if his realized and
unrealized profits with respect to investment in fully transferable
GreenMountain.com securities shall exceed $5,000,000 for ten consecutive days
following consummation of an initial public offering.
Employment Agreements With Other Executive Officers
On August 6, 1997, in connection with our initial formation we entered into
a three-year employment agreement with each of Thomas C. Boucher, Kevin W.
Hartley, Douglas G. Hyde, David B. Luther and Peter H. Zamore. Each of these
agreements provides that the executive will receive a minimum specified annual
salary and will be entitled to participate in any benefit plan made generally
available by us to our executives and key management employees. The minimum
specified annual salaries are as follows:
<TABLE>
<CAPTION>
Base
Name Salary
---- --------
<S> <C>
Thomas C. Boucher............................................... $150,000
Kevin W. Hartley................................................ 155,000
Douglas G. Hyde................................................. 285,000
David B. Luther................................................. 150,000
Peter H. Zamore................................................. 140,000
</TABLE>
During 1998, each of these executives was paid a salary equal to his base
salary and each of these executives, other than Mr. Hyde, who received no bonus
for 1998, received bonuses for 1998 as follows: Mr. Hartley, $125,000; Mr.
Boucher, $45,000; Mr. Luther, $45,000; and Mr. Zamore, $45,000. The bonuses
were determined by the management committee of the limited liability company on
a case-by-case basis based on each executive's contribution to the limited
liability company; the bonus awards were not tied to any specific performance
or similar criteria.
If we terminate the executive's employment for cause or the executive
terminates his employment without good reason, we have no further obligations
under the agreement other than to pay the executive's salary through the date
of termination. If we terminate the executive's employment without cause or the
executive terminates his employment for good reason, we are required to
continue to pay the executive an amount equal to his salary and provide medical
and dental insurance coverage for up to one year following termination.
Contemporaneously with the execution and delivery of these employment
agreements on August 6, 1997, each of these executives was granted an option
exercisable to purchase the number of shares indicated below at an exercise
price of $75.40 per share:
<TABLE>
<CAPTION>
Number of Shares
Name Underlying Option
---- -----------------
<S> <C>
Thomas C. Boucher...................................... 6,567
Kevin W. Hartley....................................... 7,761
Douglas G. Hyde........................................ 14,925
David B. Luther........................................ 2,985
Peter H. Zamore........................................ 5,970
</TABLE>
These options provide for vesting as to 20% of the underlying equity interest
on the date of grant and vesting as to 20% of the underlying equity interest on
each of the first four anniversaries of the grant date. In addition, the
unvested portion of these options becomes immediately exercisable upon the
closing of this offering.
On October 6, 1998, we entered into a separation agreement and release with
Mr. Hyde. Under that agreement Mr. Hyde resigned as our President, but
continued as our employee at the level of compensation provided in his
employment contract until April 6, 1999. We made an initial cash payment of
$142,500 to him shortly after the execution of the agreement, a second cash
payment of $142,500 to him shortly after December 31, 1998 and a third cash
payment of $142,500 to him in April 1999. The agreement provides that
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<PAGE>
his option granted on August 6, 1997, to the extent vested on April 6, 1999,
will remain exercisable until August 6, 2002. Under the agreement, he was
permitted to invest under the Employee Unit Purchase Plan. See "Related Party
Transactions--Subsequent Transactions--Employee Unit Purchase Plan." Under the
agreement, Mr. Hyde is prohibited from engaging in some competitive activities
and from recruiting our employees and soliciting our customers during the two-
year period ending April 6, 2001.
Stock Option Agreements And Plans
Options Granted Upon Formation Of The Limited Liability Company
On August 6, 1997, options were granted to officers and advisors of the
limited liability company in connection with its formation. These grants are
evidenced by Operating Management Option Agreements and Supervisory Management
Option Agreements dated as of August 6, 1997. As of March 31, 1999, there were
outstanding under these agreements options exercisable for 47,883 shares of
common stock at an exercise price of $75.20 per share and options exercisable
for 34,029 shares of common stock at an exercise price of $75.40 per share. See
"Management--Employment Agreements--Employment Agreements with Other Executive
Officers" and "Shares Eligible for Future Sale."
1997 Employee Ownership Plan
In 1997, our predecessor adopted a 1997 Employee Ownership Plan. Under the
1997 Employee Ownership Plan, our predecessor from time to time granted options
to employees who had not previously entered into an agreement concerning an
option to purchase interests in the limited liability company. Options were
granted under the 1997 Employee Ownership Plan during the fiscal year ended
December 31, 1998 on a case-by-case basis. Based on input from the executive
officers, the management committee of the limited liability company considered
the contributions of each recipient to the limited liability company in making
the grants. In addition, to attract the talent necessary to enhance our growth,
the management committee considered the potential contributions of the
individuals in granting options to new employees.
As of March 31, 1999, there were outstanding under the 1997 Employee
Ownership Plan options exercisable for 7,917 shares of common stock at an
exercise price of $75.40. No additional options are expected to be granted
under the 1997 Employee Ownership Plan. See "Shares Eligible for Future Sale."
1999 Unit Option Plan
In 1999, our predecessor adopted a 1999 Unit Option Plan pursuant to which
the management committee or the committee administering the plan could
designate individuals eligible to receive options. Under the 1999 Unit Option
Plan, our predecessor granted options to directors, executive officers,
employees and consultants. As of March 31, 1999, there were outstanding under
the 1999 Unit Option Plan options exercisable for 4,835,400 shares of common
stock at an exercise price of $3.33 and 1,062,000 shares of common stock at an
exercise price of $6.67. Since March 31, 1999, options to purchase an
additional 78,000 shares at an exercise price of $13.33 and 135,000 shares at
an exercise price of $12.00 have been granted in connection with the hiring of
new employees. See "Shares Eligible for Future Sale."
Grants, including grants to members of the management committee of the
limited liability company, made under the 1999 Unit Option Plan were approved
by the management committee of the limited liability company. The intent of the
management committee in making grants is to attract and retain the best
available talent and encourage the highest level of performance by providing an
opportunity to participate in any increase in our equity value. Based on input
from the executive officers, the management committee considered the
contributions of each recipient to the limited liability company in making the
grants. In addition, the management committee considered the economic
incentives necessary to attract directors, executive officers and employees to
a company of our size and limited operating history.
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<PAGE>
1999 Stock Option Plan
Prior to the closing of this offering, we will adopt a 1999 Stock Option
Plan, which will amend and restate the 1997 Employee Ownership Plan and the
1999 Unit Option Plan. The purpose of the 1999 Stock Option Plan is to attract
and retain the best available talent and encourage the highest level of
performance by executive officers, key employees, directors, advisors and
consultants, and to provide them with incentives to put forth maximum efforts
for the success of our business, in order to serve the best interests of
GreenMountain.com and its stockholders. We expect that option grants under the
1999 Stock Option Plan will be a key element of our compensation strategy, and
that we will utilize the reservation of shares under the 1999 Stock Option
Plan to the maximum extent practicable. Subject to the approval of the Special
Compensation Committee and our board of directors, we expect in connection
with this offering to grant to Sam Wyly an option to purchase 625,000 shares
of common stock, to Dennis Crumpler an option to purchase 487,500 shares of
common stock and to Dennis Kelly an option to purchase 675,000 shares of
common stock, in each case at an exercise price per share equal to the initial
public offering price. These options will vest as to 20% of the underlying
shares on the date of grant and will vest as to 5% of the underlying shares on
the first day of each of the next 16 calendar quarters. Further, we expect
that, following the closing of this offering our directors who are actively
involved in the management of our business and our executive officers will
from time to time receive substantial option grants.
Administration. The 1999 Stock Option Plan will be administered by the
Special Compensation Committee or the full board of directors.
Options. The 1999 Stock Option Plan will authorize the grant of stock
options to purchase shares of GreenMountain.com common stock. Grants under the
1999 Stock Option Plan are not intended to qualify as incentive stock options
under Section 422 of the Internal Revenue Code.
Number of Shares Reserved. The total number of shares of common stock that
will be available for issuance under the 1999 Stock Option Plan is 12,554,713.
However, this number will be increased, if necessary, on the last date of each
fiscal quarter so that the sum of:
(1) the total number of shares of common stock previously issued upon the
exercise of stock options;
(2) the total number of shares of common stock then subject to outstanding
stock options; and
(3) the total number of shares of common stock then remaining available
under the 1999 Stock Option Plan to be made subject to future grants of
stock options
equals 20% of the total number of outstanding shares of common stock of
GreenMountain.com, computed on a fully-diluted basis.
The Special Compensation Committee and the board of directors may make
additional adjustments in the maximum number of shares available under the
1999 Stock Option Plan or in the number of shares of common stock covered by
outstanding options, in the purchase price per share of common stock covered
by options, and/or in the kind of shares covered (including shares of another
issuer), as the Special Compensation Committee or the board of directors in
its sole discretion, exercised in good faith, may determine is equitably
required to prevent dilution or enlargement of the rights of 1999 Stock Option
Plan participants resulting from any change in our capital structure, merger,
consolidation, spin-off, reorganization, liquidation, issuance of rights or
warrants to purchase securities or any other corporate transaction or event
having a similar effect.
Eligibility. Our executive officers, key employees, directors, advisors and
consultants, and prospective employees, directors, advisors and consultants,
will be eligible to receive grants of stock options.
Transferability. Each option granted pursuant to the 1999 Stock Option Plan
may be subject to any transfer restrictions as the Special Compensation
Committee or the board of directors determines.
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Description of Awards. The 1999 Stock Option Plan will not specify a maximum
term for stock options. The exercise price of the options may not be less than
the fair market value per share of common stock on the grant date. The Special
Compensation Committee or the board of directors may, without the consent of
the holder of an option, amend the terms of the option in several respects,
including acceleration of the time at which the option may be exercised,
extension of the expiration date, reduction of the exercise price and waiver of
other conditions or restrictions.
Each grant of options will specify the number of shares of common stock, the
exercise price and any vesting schedule and state whether the exercise price is
payable in cash, by the actual or constructive transfer to GreenMountain.com of
nonforfeitable, unrestricted shares of common stock already owned by the
participant having an actual or constructive value as of the time of exercise
equal to the total exercise price, by any other legal consideration authorized
by the Special Compensation Committee or the board of directors or by a
combination of such methods of payment.
The maximum aggregate number of shares of common stock with respect to which
options may be granted to any participant during any single calendar year will
not exceed 3,159,156.
Vesting of Options Upon a Change in Control. The stock option agreement
evidencing any stock option granted under the 1999 Stock Option Plan may
provide that the stock option will become exercisable if there is a change in
control of GreenMountain.com or in the event of similar transactions or events.
The specific terms of any such provision will be set forth in the stock option
or other agreement or in any agreement.
Amendment and Termination. The board of directors may amend or terminate the
1999 Stock Option Plan at any time. The termination of the 1999 Stock Option
Plan will not adversely affect the terms of any outstanding options. If any
law, rule or regulation removes or lessens any restrictions imposed for
options, the Special Compensation Committee or the board of directors may amend
the 1999 Stock Option Plan and all options then outstanding will be subject to
such amendment.
Grants Under the Plan. No options have been granted under the 1999 Stock
Option Plan and it is not possible to determine the specific awards of options
that will be granted to various individuals in the future under the 1999 Stock
Option Plan. However, we expect to issue options under the 1999 Stock Option
Plan to Sam Wyly, Dennis Crumpler and Dennis Kelly as indicated above.
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It's a small planet.(SM)
<PAGE>
Grants To Directors, Director Nominees And Executive Officers Named In Summary
Compensation Table
The following table sets forth information regarding options granted prior
to, and outstanding as of, the date of this prospectus to directors and
director nominees and executive officers named in the summary compensation
table included above.
<TABLE>
<CAPTION>
Number of
Shares
Date Underlying Exercise Expiration
Name Granted Options(1) Price Date
---- ------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Sam Wyly(2)........................ 8/06/97 11,970 (3) $75.20 8/06/02
1/15/99 487,500 (4) $ 3.33 4/02/03
2/17/99 172,500 (5) $ 6.67 4/18/03
Dennis M. Crumpler(6).............. 2/05/99 487,500 (7) $ 3.33 4/06/03
Evan A. Wyly....................... 8/06/97 13,464 (3) $75.20 8/06/02
1/15/99 487,500 (4) $ 3.33 4/02/03
2/17/99 112,500 (5) $ 6.67 4/18/03
Mark Cuban......................... 2/14/99 75,000 (8) $ 3.33 4/16/03
Reed E. Maltzman................... 2/04/99 75,000 (8) $ 3.33 4/16/03
Richard E. Hanlon.................. 2/04/99 75,000 (8) $ 3.33 4/16/03
Lisa Wyly(9)....................... 8/06/97 5,985 (3) $75.20 8/06/02
1/15/99 150,000 (4) $ 3.33 4/02/03
H. Lee S. Hobson................... 1/15/99 261,000 (10) $ 3.33 4/02/03
M. David White..................... 1/15/99 900,000 (4) $ 3.33 4/02/03
2/17/99 225,000 (11) $ 6.67 4/17/03
Douglas G. Hyde.................... 8/06/97 5,970 (12) $75.40 8/06/02
Kevin W. Hartley................... 8/06/97 7,761 (3) $75.40 8/06/02
1/15/99 195,000 (4) $ 3.33 4/02/03
2/17/99 15,000 (5) $ 6.67 4/18/03
Thomas C. Boucher.................. 8/06/97 6,567 (3) $75.40 8/06/02
1/15/99 135,000 (4) $ 3.33 4/02/03
2/17/99 15,000 (5) $ 6.67 4/18/03
David B. Luther.................... 8/06/97 1,194 (13) $75.40 8/06/02
Peter H. Zamore.................... 8/06/97 5,970 (3) $75.40 8/06/02
1/15/99 135,000 (4) $ 3.33 4/02/03
2/17/99 15,000 (5) $ 6.67 4/18/03
</TABLE>
- --------
(1) Reflects our conversion from a limited liability company to a corporation.
(2) Does not include 2,396 shares issuable upon the exercise of options that
have become vested and are owned by four family trusts of which Sam Wyly is
trustee or 3,592 shares issuable upon the exercise of unvested options that
become exercisable upon the completion of this offering and are owned of
record by the same four family trusts. Subject to the approval of the
Special Compensation Committee and our board of directors, we expect in
connection with this offering to grant to Sam Wyly an option to purchase
625,000 shares, at an exercise price per share equal to the initial public
offering price. This option will provide for vesting as to 20% of the
underlying shares on the date granted and vesting as to 5% of the
underlying shares on the first day of each of the next 16 calendar
quarters.
(3) To date, these options have become vested with respect to 40% of the
underlying shares; the unvested portion will become exercisable upon the
closing of this offering.
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(4) These options provide for vesting as to 20% of the underlying shares on
February 2, 1999 and vesting as to 5% of the underlying shares on the first
day of each of the next 16 calendar quarters.
(5) These options provide for vesting as to 20% of the underlying shares on
February 18, 1999 and vesting as to 5% of the underlying shares on the
first day of each of the next 16 calendar quarters.
(6) Subject to the approval of the Special Compensation Committee and our board
of directors, we expect in connection with this offering to grant to Mr.
Crumpler an option to purchase 487,500 shares at an exercise price per
share equal to the initial public offering price. This option will provide
for vesting as to 20% of the underlying shares on the date granted and
vesting as to 5% of the underlying shares on the first day of each of the
next 16 calendar quarters.
(7) These options provide for vesting as to 20% of the underlying shares on
February 6, 1999 and vesting as to 5% of the underlying shares on the first
day of each of the next 16 calendar quarters.
(8) These options provide for immediate vesting.
(9) Does not include 599 shares issuable upon the exercise of options that
have become vested and are owned of record by a family trust of which Lisa
Wyly is trustee or 898 shares issuable upon the exercise of unvested
options which become exercisable upon the closing of this offering and are
owned of record by the same family trust.
(10) These options provide for vesting as to 20% of the underlying shares on
February 2, 1999 and vesting as to 5% of the underlying shares on the
first day of the next 16 calendar quarters. Pursuant to internal policies
of Maverick Capital, Ltd., Mr. Hobson has transferred the options to
purchase 16,800 shares to Maverick Fund II, Ltd., 79,200 shares to
Maverick Fund USA, Ltd. and 165,000 shares to Maverick Fund L.D.C.
(11) These options provide for vesting as to 20% of the underlying shares on
the date granted and vesting as to 5% of the underlying shares on the
first day of each of the next 16 calendar quarters.
(12) Pursuant to Mr. Hyde's separation agreement and release, these options
will remain exercisable until August 6, 2002. See "Management--Employment
Agreements--Employment Agreements with Other Executive Officers."
(13) Upon his retirement, Mr. Luther forfeited options to purchase an
additional 1,791 shares.
Compensation Committee Interlocks And Insider Participation
The limited liability company does not have a compensation committee.
Decisions regarding compensation have been made by the full management
committee of the limited liability company, including Sam Wyly, the Chairman of
that committee. Mr. Wyly may be deemed to be an executive officer of the
limited liability company because of policy making functions performed by him
as Chairman of its management committee.
Sam Wyly is an executive officer and director of Sterling Software and
Michaels Stores. He serves as a member of the executive committee and stock
option committee of Sterling Software and as a member of the compensation
committee of Michaels Stores. Accordingly, Sam Wyly has participated in
decisions related to compensation of executive officers of each of
GreenMountain.com, Sterling Software and Michaels Stores.
Other than Sam Wyly, who may be deemed to have been an executive officer,
none of the limited liability company's executive officers has served on the
compensation committee, or on any full board of directors or other board
committee that performs functions similar to a compensation committee, of any
entity that has one or more of its executive officers who has served as a
member of the limited liability company's management committee.
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<PAGE>
Limitation Of Liability And Indemnification Matters
Prior to the closing of this offering, our certificate of incorporation and
bylaws will be amended. Our amended certificate will limit the liability of our
directors to the maximum extent permitted by Delaware law. Delaware law
provides that a director of a corporation will not be personally liable for
monetary damages for breach of that individual's fiduciary duties as a director
except for liability for any of the following:
.a breach of the director's duty of loyalty to the corporation or its
stockholders;
.any act or omission not in good faith or that involves intentional
misconduct or a knowing violation of the law;
.unlawful payments of dividends or unlawful stock repurchases or
redemptions; or
.any transaction from which the director derived an improper personal
benefit.
This limitation of liability does not apply to liabilities arising under
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or recission.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers, as well as other employees
and individuals, against attorneys' fees and other expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with any threatened, pending or completed actions, suits or
proceedings in which such person was or is a party or is threatened to be made
a party by reason of such person being or having been a director, officer,
employee or agent of the corporation. The Delaware General Corporation Law
provides that Section 145 is not exclusive of other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Our amended certificate and amended bylaws will provide that we are required
to indemnify our directors and officers to the maximum extent permitted by law.
Our amended bylaws will also require us to advance expenses incurred by an
officer or director in connection with the defense of any action or proceeding
arising out of that party's status or service as a director or officer of
GreenMountain.com or as a director, officer, employer or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, if serving as such at our request. Our amended bylaws will also
permit us to secure insurance on behalf of any director or officer for any
liability arising out of his or her actions in a representative capacity.
We intend to enter into indemnification agreements with our directors and
some of our officers containing provisions that:
.indemnify, to the maximum extent permitted by Delaware law, those
directors and officers against liabilities that may arise by reason of
their status or service as directors or officers, except liabilities
arising from willful misconduct of a culpable nature;
.to advance their expenses incurred as a result of any proceeding against
them as to which they could be indemnified; and
.to obtain directors' and officers' liability insurance if maintained for
other directors or officers.
We believe that the provisions of our certificate of incorporation and
bylaws described above and indemnification agreements are necessary to attract
and retain qualified persons as directors and officers. The limited liability
company currently has liability insurance for its management committee members
and officers and we intend to obtain directors' and officers' liability
insurance for directors and officers of GreenMountain.com.
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<PAGE>
RELATED PARTY TRANSACTIONS
Formation Of The Business
Background Of The Business
Between 1994 and 1997, an affiliate of Green Mountain Power Corporation
conducted extensive market research to evaluate the viability of a nationally-
marketed, premium-priced green electricity product supported by a strong pro-
environmental brand identity. This market research was designed to identify:
.The most attractive consumer segments;
.The key elements of environmental positioning; and
.The optimal design of potential green electricity products.
An affiliate of Green Mountain Power Corporation also participated, together
with 20 other companies, in deregulated energy pilot programs in Massachusetts
and New Hampshire in order to test the viability of marketing green electricity
and natural gas products.
Formation Of The Limited Liability Company
On August 6, 1997, a subsidiary of Green Mountain Power Corporation and
Green Funding I entered into a limited liability company agreement relating to
the formation of Green Mountain Energy Resources L.L.C.
Limited Liability Company Agreement. Under the limited liability company
agreement:
.The subsidiary of Green Mountain Power Corporation contributed service
marks, including our "Choose wisely. It's a small planet." and "Green
Mountain Energy Resources" service marks, some marketing studies and
analyses and its rights under agreements with several third-party service
providers, in exchange for a 33% equity interest in the limited liability
company;
.Green Funding I contributed $8.0 million and committed to contribute an
additional $22.0 million over time, in exchange for a 67% equity interest
in the limited liability company; and
.Immediately following the initial contribution by Green Funding I, the
subsidiary of Green Mountain Power Corporation received a distribution
from the limited liability company of $4.0 million.
The limited liability company agreement also contained provisions relating
to, among other things, the allocation of profits and losses, the management of
the limited liability company, restrictions on transfer and registration
rights.
Non-Compete and Name Use Agreement. In connection with the formation of the
limited liability company, on August 6, 1997, Green Mountain Power Corporation,
Green Funding I and the limited liability company entered into an agreement
containing:
.Covenants by Green Mountain Power Corporation and Green Funding I
generally not to engage in the retail energy business, subject to
exceptions related to Green Mountain Power Corporation's then-existing
business activities;
.Covenants by Green Mountain Power Corporation and Green Funding I not to
use the Green Mountain name in connection with business activities similar
to those conducted by the limited liability company; and
.Other covenants by Green Mountain Power Corporation relating to the use of
the Green Mountain name.
Transfer of Employees. In connection with the formation of the limited
liability company, on or about August 6, 1997, some individuals who were
employed by Green Mountain Power Corporation ceased their employment with that
company and became employees of the limited liability company. These
individuals included Ms. Blunden, Mr. Boucher, Mr. Hartley, Mr. Hyde, Mr.
Luther, Ms. O'Neill, Mr. Rawls and Mr. Zamore.
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<PAGE>
Subsequent Transactions
September 1997 Capital Infusion
On September 29, 1997, Green Funding I committed an additional $10.0 million
to the limited liability company in exchange for an additional equity interest
in the limited liability company, raising Green Funding I's total equity
interest to approximately 73%.
August 1998 Short-Term Loan
On August 26, 1998, the limited liability company arranged to borrow $10.0
million from Security Capital, Ltd. This loan, which bore interest at a rate of
10% per annum, was made by Security Capital, Ltd. Several entities, whose stock
is owned by irrevocable trusts of which members of the Wyly family are
beneficiaries, provided credit enhancement for the loan. The loan from Security
Capital was repaid in full as described below effective as of November 25,
1998. Total interest paid on that loan was $167,083.
November 1998 Capital Infusion
On November 20, 1998, Green Funding I committed an additional $20.0 million
to the limited liability company in exchange for an additional equity interest
in the limited liability company, raising Green Funding I's total equity
interest to approximately 99%. This contribution consisted of the payment in
full of the $10.0 million short-term note described above for the benefit of
the limited liability company and $10.0 million in cash.
December 1998 Repurchase Of Green Mountain Power Corporation's Equity
Interest
On December 23, 1998, Green Mountain Power Corporation, its subsidiaries,
Green Funding I and the limited liability company entered into an agreement
that provided for the termination of the non-compete and name use agreement
described above and the repurchase by the limited liability company of the
remaining approximately 1% equity interest held by the subsidiary of Green
Mountain Power Corporation. Under this agreement:
.Green Mountain Power Corporation agreed not to engage in the unregulated
marketing or retail sale of electricity or gas outside Vermont for seven
years;
.Green Mountain Power Corporation agreed not to use the Green Mountain
name, subject to a limited exception for activities in Vermont;
.The subsidiary of Green Mountain Power Corporation transferred to the
limited liability company its remaining equity interest, withdrew as a
member and caused its representative on the management committee of the
limited liability company to resign;
.The limited liability company agreed to pay Green Mountain Power
Corporation $1,000,000 in cash; and
.There were mutual releases granted between Green Funding I and the limited
liability company, on the one hand, and Green Mountain Power Corporation
and its subsidiaries, on the other hand.
As of January 1999, Green Funding I owned 100% of the equity interests in
the limited liability company represented by 6,000,000 common units.
Employee Unit Purchase Plan
During January and early February 1999, pursuant to our Employee Unit
Purchase Plan, 50 employees, consultants and advisors purchased 956,000 common
units in the limited liability company in the aggregate for total consideration
of $9.56 million. Upon our conversion from a limited liability company to a
corporation, these 956,000 common units will be converted to 2,868,000 shares
of common stock. Under the Employee Unit Purchase Plan, participants were
permitted to pay for the common units purchased with cash or promissory
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<PAGE>
notes, or with any combination of cash and promissory notes. Promissory notes
used to pay for the equity interests bear interest at 6% per annum and become
payable on the earliest of the obligor's death, termination of the obligor's
employment or services and December 31, 2003. On each of the first four
anniversaries of the date of the note, accrued and unpaid interest will be
added to principal. The notes are secured by all equity interests that the
participant currently owns, including those acquired under the Employee Unit
Purchase Plan, and all equity interests that the participant acquires in the
future, but are otherwise non-recourse to the obligor. The equity interests
securing these notes are held in escrow for our benefit. The following table
sets forth, for the persons named, the number of shares purchased and the
aggregate amount and type of consideration paid for them.
<TABLE>
<CAPTION>
Number of Amount of
Name Shares Cash Loan Total Consideration
---- --------- ---------- ---------- -------------------
<S> <C> <C> <C> <C>
Dennis M. Crumpler...... 600,000 $1,000,000 $1,000,000 $2,000,000
M. David White.......... 900,000 1,500,000 1,500,000 3,000,000
Dennis W. Kelly......... 120,000 200,000 200,000 400,000
Kevin W. Hartley........ 198,000 115,000 545,000 660,000
Julie D. Blunden........ 30,000 50,000 50,000 100,000
Thomas C. Boucher....... 31,200 52,000 52,000 104,000
Karen K. O'Neill........ 30,000 50,000 50,000 100,000
Peter H. Zamore......... 34,200 57,000 57,000 114,000
Jay LeDuc............... 7,800 13,000 13,000 26,000
Thomas Rawls............ 3,000 5,000 5,000 10,000
K. Scott Canon.......... 315,000 400,000 650,000 1,050,000
Michael Fulton.......... 60,000 100,000 100,000 200,000
--------- ---------- ---------- ----------
Totals................ 2,329,200 $3,542,000 $4,222,000 $7,764,000
========= ========== ========== ==========
</TABLE>
During this same period, 12 of our consultants and advisors purchased, in a
private equity offering, 44,000 common units in the limited liability company
in the aggregate for total consideration of $440,000. Upon our conversion from
a limited liability company to a corporation these 44,000 common units will be
converted into 132,000 shares of common stock.
Private Equity Offering
On February 17, 1999, the limited liability company closed a private equity
offering. Investors in the offering purchased 1,515,500 common units in the
limited liability company in the aggregate for total consideration of $30.31
million. Upon our conversion from a limited liability company to a corporation,
these 1,515,500 common units will be converted into 4,546,500 shares of common
stock. As a result of such purchases, Maverick Capital became the beneficial
owner of 750,000 common units, which will be represented by 2,250,000 shares
upon our conversion from a limited liability company to a corporation, for an
aggregate purchase price of $15.0 million. Evan Wyly is a Managing Partner and
Lee Hobson is a Partner of Maverick Capital. In addition, Green Funding II
acquired directly 500,000 common units, which will be represented by 1,500,000
shares upon our conversion from a limited liability company to a corporation,
for an aggregate purchase price of $10.0 million.
Working Capital Funding Commitment
Pursuant to an agreement entered into in April 1999, Green Funding I has
committed to provide us with up to $22.0 million in cash to permit us to meet
our working capital needs for the remainder of our 1999 fiscal year. Any
advances under the agreement will bear interest at 6.0% per annum. The
agreement provides that accrued and unpaid interest will be capitalized and
added to principal on each June 30 and December 31.
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<PAGE>
Principal, together with accrued and unpaid interest, will be payable on the
earlier of April 23, 2001 or the tenth day after the closing of this offering.
Green Funding's obligation to make advances under the agreement terminates upon
the closing of this offering. See "Use of Proceeds."
Reorganization Transaction
Prior to the closing of this offering, we will convert our business from a
limited liability company to a corporation in order to have a business
organization form that is more typical of other publicly traded entities. This
conversion will be accomplished by merging Green Mountain Energy Resources
L.L.C., a Delaware limited liability company, into GreenMountain.com Company, a
Delaware corporation. In connection with the conversion, the limited liability
company agreement will terminate, except for covenants that, by their terms,
require performance after the termination of such agreement, and each common
unit in the limited liability company held by a member will be exchanged for
three shares of GreenMountain.com common stock. In addition, all outstanding
options and warrants exercisable for common units in the limited liability
company will, in effect, be converted into options or warrants exercisable for
GreenMountain.com common stock.
The former members of the limited liability company will have registration
rights with respect to shares of GreenMountain.com they receive in the
conversion. See "Description of Capital Stock--Registration Rights."
We have been informed that, following our conversion from a limited
liability company to a corporation, but prior to the closing of this offering,
the shares of GreenMountain.com owned by each of Green Funding I and Green
Funding II will be distributed to the beneficial holders of the ownership
interests in those entities.
Other Transactions And Relationships
Agreements With Sterling Software
In February 1998, we entered into an agreement with Sterling Software, a
supplier of software products and services with expertise in network management
and automation. Under that agreement, Sterling Software provides us with
network management services and other information systems consulting services.
Under that agreement, we paid Sterling Software $828,611 for services provided
by it during 1998. We paid Sterling Software $576,857 during the first quarter
of 1999 in connection with that agreement.
In addition, we entered into another agreement with Sterling Software in
early 1999 for the 1999 calendar year. This contract expanded the scope of
Sterling Software services to include programming and operational support for
data transmissions with all utility companies with which GreenMountain.com
interfaces, development of an enterprise database for our Information Network
and other software development projects for an approximate contract amount of
$4.4 million. As of March 31, 1999, we owed Sterling Software $771,117 under
that agreement, of which $391,365 was paid to it as of June 4, 1999.
Each of the agreements with Sterling Software terminates upon the earliest
to occur of completion of the services by Sterling Software, the date 30 days
after Sterling Software's receipt of written notice by us terminating the
agreement and the date on which either party is declared in default if that
party has breached a material provision of the agreement and failed within 15
days after receipt of notice of the default to cure or commence curing the
breach.
Sam Wyly and Evan Wyly are directors and stockholders of Sterling Software.
Each of the agreements with Sterling Software was negotiated on an arms' length
basis and GreenMountain.com believes that the terms of these agreements are
comparable to those that could have been obtained with an unrelated third
party.
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<PAGE>
Agreements With Former Management Committee Member
Effective as of January 4, 1999, Jason Elliott, son-in-law of Sam Wyly and
brother-in-law of Evan Wyly and Lisa Wyly, completed his service as a member of
the management committee of the limited liability company and agreed to serve
as a consultant. In connection with these services, as of the date of this
prospectus, Mr. Elliott has been paid $110,000 and has been granted options to
purchase 5,985 shares of common stock at an exercise price of $75.20, 75,000
shares of common stock at an exercise price of $3.33 and 75,000 shares of
common stock at an exercise price of $6.67.
Transactions With Green Mountain Power Corporation
We paid $165,365 to Green Mountain Power Corporation for facilities
maintenance and other services during 1998. We received from Green Mountain
Power Corporation $73,191 for services provided to it by our employees during
1998.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information, as of the date of this
prospectus, with respect to beneficial ownership of shares of common stock of
GreenMountain.com, by each person who we expect to beneficially own more than
5% of the common stock after the offering, by each director and director
nominee, by each executive officer named in the summary compensation table
included above and by all directors, director nominees and executive officers
as a group. The information in the table reflects the distributions of shares
owned by Green Funding I and Green Funding II to the beneficial holders of the
ownership interests in those entities. See "Related Party Transactions--
Reorganization Transaction."
<TABLE>
<CAPTION>
Percentage of
Shares
Beneficially
Owned
------------------
Name and Address Number of Shares Prior to After the
of Beneficial Owner(1) Beneficially Owned (2) Offering Offering
---------------------- ---------------------- -------- ---------
<S> <C> <C> <C>
Sam Wyly.......................... 2,084,325(3) 8.1% 4.1%
Dennis M. Crumpler................ 746,250(4) 2.9 1.5
Evan A. Wyly...................... 208,575 * *
Mark Cuban........................ 75,000 * *
Richard E. Hanlon................. 75,000 * *
Reed E. Maltzman.................. 75,000 * *
Lisa Wyly......................... 600,870(5) 2.3 1.2
H. Lee S. Hobson.................. 7,500 * *
M. David White.................... 1,237,500 4.8 2.4
Douglas G. Hyde................... 52,770 * *
Kevin W. Hartley.................. 268,761 1.0 *
Thomas C. Boucher................. 82,767 * *
Peter H. Zamore................... 85,170 * *
David B. Luther................... 33,594 * *
Maverick Capital, Ltd............. 4,200,300(6) 16.4 8.3
Locke Limited..................... 6,503,862(7) 25.5 12.9
All directors, director nominees
and executive officers as a group
(19 persons)..................... 6,305,505 23.2% 12.1%
</TABLE>
- --------
*Less than 1%.
(1) Except as otherwise indicated, the address for each beneficial owner is c/o
GreenMountain.com Company, 55 Green Mountain Drive, P.O. Box 2206, South
Burlington, Vermont 05407-2206.
(2) For some beneficial owners, includes shares issuable upon the exercise of
options exercisable within 60 days and upon the closing of this offering,
as set forth in detail in the table set forth below.
(3) Includes 1,639,944 shares owned of record by four family trusts of which
Sam Wyly is trustee and 219,357 shares owned by the Cheryl R. Wyly Marital
Trust. Sam Wyly disclaims beneficial ownership of the shares and options
owned by these trusts.
(4) Includes 600,000 shares owned of record by a limited partnership of which
Dennis Crumpler is Manager and General Partner.
(5) Includes 548,388 shares owned of record by a family trust of which Lisa
Wyly is trustee. Ms. Wyly disclaims beneficial ownership of the shares and
options owned by the trust.
(6) Shares shown as beneficially owned by Maverick Capital, Ltd. are owned of
record by Maverick Fund II, Ltd., Maverick Fund USA, Ltd. and Maverick Fund
L.D.C. Maverick Capital, Ltd. is the investment advisor for each of
Maverick Fund II, Ltd. and Maverick Fund L.D.C., and is the general partner
of Maverick Fund USA, Ltd. As a result of such positions, Maverick Capital,
Ltd. has voting and investment power over shares owned of record by these
three entities. Evan Wyly is a managing partner of Maverick Capital, Ltd.
and may be deemed to be a beneficial owner of the shares shown as
beneficially owned by Maverick Capital, Ltd. Evan Wyly disclaims beneficial
ownership of all shares beneficially owned by Maverick Capital, Ltd., and,
accordingly, such shares are excluded from the information in the table
with respect to Evan Wyly. Lee S. Ainslie, III controls the voting and
disposition decisions of Maverick Capital, Ltd. The address of Maverick
Capital, Ltd. is 300 Crescent Court, Suite 1000, Dallas, Texas 75201.
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<PAGE>
(7) All of the shares of Locke Limited are owned by a trust the sole trustee of
which is Aundyr Trust Company Ltd., a corporation possessing trust powers.
The beneficiaries of the trust, which include members of the family of Sam
Wyly, have no control over the trust or the trustee. The address of Locke
Limited is Locke Limited c/o Aundyr Trust Company Ltd., International
House, Castle Hill, Victoria Road, Douglas, Isle of Man IM2 4RB.
The following table sets forth information, as of the date of this
prospectus, with respect to beneficial ownership of shares of common stock of
GreenMountain.com issuable upon the exercise of options exercisable within 60
days or upon consummation of this offering, by each person who we expect to own
more than 5% of the common stock after the offering, by each director and
director nominee, by each executive officer named in the summary compensation
table included above and by all directors, director nominees and executive
officers as a group. The information in our table reflects the distributions of
shares owned by Green Funding I and Green Funding II to the beneficial holders
of the ownership interests in those entities.
<TABLE>
<CAPTION>
Shares Underlying
Shares Underlying Options Exercisable
Options Exercisable Upon Closing of
Name of Beneficial Owner Within 60 Days This Offering
------------------------ ------------------- -------------------
<S> <C> <C>
Sam Wyly........................... 205,184(1) 10,774(2)
Dennis M. Crumpler................. 146,250 0(3)
Evan A. Wyly....................... 185,386 8,078
Mark Cuban......................... 75,000 0
Richard E. Hanlon.................. 75,000 0
Reed E. Maltzman................... 75,000 0
Lisa Wyly.......................... 47,993(4) 4,489(5)
H. Lee S. Hobson................... 0 0
M. David White..................... 337,500 0
Douglas G. Hyde.................... 5,970 0
Kevin W. Hartley................... 66,104 4,657
Thomas C. Boucher.................. 47,627 3,940
Peter H. Zamore.................... 47,388 3,582
David B. Luther.................... 1,194 0
Maverick Capital, Ltd.............. 78,300 0
Locke Limited...................... 0 0
All directors, director nominees
and executive officers as a group
(19 persons)...................... 1,557,047 39,892(6)
</TABLE>
- --------
(1) Includes 2,396 shares issuable upon the exercise of options owned of record
by four family trusts of which Sam Wyly is trustee. Sam Wyly disclaims
beneficial ownership of the options owned by these trusts.
(2) Includes 3,592 shares issuable upon the exercise of options owned of record
by four family trusts of which Sam Wyly is trustee. Sam Wyly disclaims
beneficial ownership of the options owned by the trust. This number does
not include 125,000 shares issuable immediately upon the exercise of an
option expected to be granted to Sam Wyly in connection with the closing of
this offering. See "Management--1999 Stock Option Plan."
(3) This number does not include 97,500 shares issuable immediately upon the
exercise of an option expected to be granted to Dennis Crumpler in
connection with the closing of this offering. See "Management--1999 Stock
Option Plan."
(4) Includes 599 shares issuable upon the exercise of options owned of record
by a family trust of which Lisa Wyly is trustee. Ms. Wyly disclaims
beneficial ownership of the options owned by the trust.
(5) Includes 898 shares issuable upon the exercise of options owned of record
by a family trust of which Lisa Wyly is trustee. Ms. Wyly disclaims
beneficial ownership of the options owned by the trust.
(6) This number does not include 135,000 shares issuable immediately upon the
exercise of an option expected to be granted to Dennis Kelly in connection
with the closing of this offering. See "Management--1999 Stock Option
Plan."
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
Our certificate of incorporation provides that we are authorized to issue
150,000,000 shares of common stock, par value $0.01 per share, and, prior to
the closing of this offering, our certificate of incorporation will be amended
so that we will be authorized to issue 50,000,000 shares of preferred stock,
par value $0.01 per share. As of March 31, 1999, there were 25,546,500 shares
of common stock outstanding held of record by 91 stockholders, outstanding
options to purchase 5,987,229 shares of common stock and outstanding warrants
to purchase 11,907 shares of common stock. These amounts assume our conversion
from a limited liability company to a corporation and the related exchange of
each common unit of the limited liability company for three shares of common
stock of the corporation had occurred as of that date.
Common Stock
Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive
proportionately any dividends that may be declared by our board of directors,
subject to any preferential dividend rights of outstanding preferred stock. In
the event of the liquidation, dissolution or winding up of GreenMountain.com,
holders of common stock would be entitled to receive proportionately any of our
assets remaining after the payment of liabilities and subject to the prior
rights of any outstanding preferred stock. Holders of common stock have no
preemptive, subscription, redemption or conversion rights. Our outstanding
shares of common stock are, and the shares offered by us in this offering will
be, when issued and paid for, fully paid and nonassessable.
Preferred Stock
The board of directors will have the authority, within the limitations and
restrictions stated in our amended certificate of incorporation, to provide by
resolution for the issuance of shares of preferred stock, in one or more
classes or series, and to fix the rights, preferences, privileges and
restrictions for them, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preferences and the number of shares
constituting any series and the designation of that series. The issuance of
preferred stock could adversely affect the voting and other rights of the
holders of common stock.
Registration Rights
After the closing of this offering, the holders of 50.5% of the outstanding
shares of common stock will hold registration rights that will allow them to
"piggyback" the registration of their shares under the Securities Act on future
registrations of our securities. Accordingly, whenever we propose to register
any shares of our common stock under the Securities Act (other than
registrations on Forms S-4 or S-8), these stockholders have the right to
include their shares of common stock in that registration. However, the number
of shares that those stockholders may include in any registration will be
reduced if the underwriters for that offering advise us that the aggregate
number of shares should be reduced. We are generally obligated to bear all
expenses, other than underwriting discounts and sales commissions, of the
registration of all shares of common stock of those stockholders. The
registration rights require those stockholders to indemnify us in some
circumstances. Registration of any of the shares of common stock held by
holders of registration rights generally would result in those shares becoming
freely tradable without restriction under the Securities Act immediately
following their distribution in the manner described in the applicable
registration statement.
Provisions Of Our Certificate of Incorporation, Our Bylaws And Delaware Law
Prior to the closing of this offering, our certificate of incorporation and
bylaws will be amended. Some provisions of our certificate of incorporation and
bylaws, as so amended, and Delaware law may have an anti-
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takeover effect and delay, defer or prevent a tender offer or takeover attempt
that a stockholder may consider in its best interest, including those attempts
that might result in a premium over the market price for the shares held by
stockholders.
Classified Board Of Directors, Removal Of Directors And Filling Vacancies In
Directorships
Our amended certificate of incorporation will provide that our board of
directors is divided into three classes of directors serving staggered three-
year terms. See "Management--Classified Board of Directors." In addition, our
amended certificate of incorporation will provide that directors may be removed
only for cause by the affirmative vote of the holders of at least 80% of our
voting securities entitled to vote. Under our amended certificate of
incorporation, any vacancy on our board of directors, including a vacancy
resulting from an enlargement of our board of directors, may be filled by the
vote of a majority of our directors then in office. The classification of our
board of directors and the limitations on the removal of directors and filling
of vacancies may deter a third party from seeking to remove incumbent directors
and simultaneously gaining control of the board of directors by filling the
vacancies created by such removal with its own nominees.
Cumulative Voting
Our amended certificate of incorporation will expressly deny stockholders
the right to cumulate votes in the election of directors. As a result, the
holders of a majority of the shares voted can elect all directors standing for
election.
Stockholder Action And Special Meeting Of Stockholders
Our amended certificate of incorporation will eliminate the ability of
stockholders to act by written consent in lieu of a meeting. It will also
provide that special meetings of the stockholders may only be called by our
Chairman, a Vice Chairman, by our Secretary within ten calendar days after
receipt of a written request of a majority of the total number of directors
(assuming no vacancies) or as otherwise may be provided in a preferred stock
designation and the business permitted to be conducted at any such meeting will
be limited to that brought before the meeting that is specified in the notice
of the meeting given by or at the direction of our Chairman, a Vice Chairman or
a majority of the total number of directors (assuming no vacancies) or that is
otherwise properly brought before the meeting by the presiding officer or by or
at the direction of a majority of the total number of directors (assuming no
vacancies).
Advance Notice Requirements For Stockholder Proposals And Directors
Nominations
Our amended bylaws will provide that stockholders seeking to bring business
before an annual meeting of stockholders or nominate candidates for election as
directors at an annual meeting of stockholders must provide timely notice in
writing. To be timely, a stockholder's notice must be delivered to or mailed
and received at our principal executive offices not less than 60 days nor more
than 90 days prior to the anniversary date of the date on which we first mail
our proxy materials for the prior year's annual meeting of stockholders, except
that if there was no annual meeting held during the prior year or if the annual
meeting is called for a date that is not within 30 days before or after that
anniversary, notice by the stockholder in order to be timely must be received
not later than the close of business on the tenth day following the date on
which public announcement was first made of the date of the annual meeting. Our
amended bylaws will also specify requirements as to the form and content of a
stockholder's notice. These provisions may preclude stockholders from bringing
matters before an annual meeting of stockholders or from making nominations for
directors at an annual meeting of stockholders.
Authorized But Unissued Shares
Authorized but unissued shares of common stock and preferred stock under our
amended certificate of incorporation will be available for future issuance
without stockholder approval. These additional shares may be used for a variety
of corporate purposes, including future public offerings to raise additional
capital,
81
It's a small planet.(SM)
<PAGE>
corporate acquisitions and employee benefit plans. The existence of authorized
but unissued shares of common stock and preferred stock could render more
difficult or discourage an attempt to obtain control of us by means of a proxy
contest, tender offer, merger or otherwise.
Supermajority Vote Requirements
Delaware law provides generally that the affirmative vote of a majority of
the shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or bylaws, unless a corporation's certificate of
incorporation or bylaws, as the case may be, requires a greater percentage. Our
amended certificate of incorporation and bylaws will require the affirmative
vote of the holders of at least 80% of our voting securities entitled to vote,
to amend, repeal or adopt any provision inconsistent with some provisions,
including those provisions relating to:
.our classified board of directors;
.directorship vacancies and removal of directors;
.action by written consent of stockholders;
.special meetings of stockholders; and
.stockholder proposals and nominations of directors.
Delaware Section 203
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Section 203 prohibits a publicly held Delaware corporation
from engaging in a "business combination" with an "interested stockholder" for
a period of three years after the person became an interested stockholder,
unless the interested stockholder attained that status with the approval of the
board of directors or the business combination is approved in a prescribed
manner. A "business combination" includes some mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
Subject to some exceptions, an "interested stockholder" is a person who,
together with affiliates and associates, owns, or within the prior three years
did own, 15% or more of the corporation's voting stock.
Market Information
Prior to this offering, there has been no public trading market for our
common stock. We have filed an application to include our common stock in the
Nasdaq National Market under the symbol "GMTN."
Transfer Agent
Our registrar and transfer agent for our common stock is Harris Trust and
Savings Bank.
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common
stock. The market price of our common stock could drop due to sales of a large
number of shares of our common stock or the perception that such sales could
occur. These factors could also make it more difficult to raise funds through
future offerings of common stock.
After this offering, 50,546,500 shares of common stock will be outstanding,
assuming the conversion of each common unit of the limited liability company
outstanding as of the date of this prospectus into shares of common stock. See
"Capitalization." Of these shares, the 25,000,000 shares sold in this offering
will be freely tradeable without restriction under the Securities Act except
for any shares purchased by "affiliates" of GreenMountain.com as defined in
Rule 144 under the Securities Act. The remaining 25,546,500 shares are
"restricted securities" within the meaning of Rule 144 under the Securities
Act. The restricted securities generally may not be sold unless they are
registered under the Securities Act or are sold pursuant to an exemption from
registration, such as the exemption provided by Rule 144 under the Securities
Act. If the underwriters exercise their over-allotment option in full, the
number of shares of common stock outstanding after this offering would increase
to 54,296,500 and, of those shares, 28,750,000 shares would be freely tradeable
and 25,546,500 would be restricted securities as described above.
Our officers, directors and stockholders holding in the aggregate 25,464,000
outstanding shares of common stock have entered into lock-up agreements under
which they have agreed not to offer or sell any shares of common stock for a
period of 180 days after the date of this prospectus without the prior written
consent of Prudential Securities, on behalf of the underwriters. See
"Underwriting." Prudential Securities may, at any time and without notice,
waive any of the terms of these lock-up agreements specified in the
underwriting agreement. Following the lock-up period, these shares will not be
eligible for sale in the public market without registration under the
Securities Act unless such sales meet the applicable conditions and
restrictions of Rule 144 as described below.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, any person (or persons whose shares are
aggregated), including an affiliate, who has beneficially owned shares for a
period of at least one year is entitled to sell, within any three-month period,
a number of shares that does not exceed the greater of:
(1) 1% of the then-outstanding shares of common stock, and
(2) the average weekly trading volume in the common stock during the four
calendar weeks immediately preceding the date on which the notice of
such sale on Form 144 is filed with the Securities and Exchange
Commission.
Sales under Rule 144 are also subject to provisions relating to notice and
manner of sale and the availability of current public information about us. In
addition, a person (or persons whose shares are aggregated) who has not been an
affiliate of us at any time during the 90 days immediately preceding a sale,
and who has beneficially owned the shares for at least two years, would be
entitled to sell such shares under Rule 144(k) without regard to the volume
limitation and other conditions described above. While the foregoing discussion
is intended to summarize the material provisions of Rule 144, it may not
describe all of the applicable provisions of Rule 144, and, accordingly, you
are encouraged to consult the full text of that Rule.
In addition, our employees, directors, officers, advisors or consultants who
were issued shares pursuant to a written compensatory plan or contract may be
entitled to rely on the resale provisions of Rule 701, which permits non-
affiliates to sell their Rule 701 shares without having to comply with the
public information, holding period, volume limitation or notice provisions of
Rule 144, and permits affiliates to sell their Rule 701 shares without having
to comply with Rule 144's holding period restrictions, in each case commencing
90 days after the date of this prospectus.
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It's a small planet.(SM)
<PAGE>
As soon as practicable following the closing of this offering, we intend to
file one or more registration statements under the Securities Act to register
12,636,625 shares of common stock issuable upon the exercise of outstanding
stock options or reserved for issuance under our 1999 Stock Option Plan and
150,000 shares of common stock reserved for issuance under our 1999 Director
Stock Award Plan. See "Management--Director Compensation" and "--Stock Option
Agreements and Plans." After the effective date of such registration
statements, when issued these shares will be available for sale in the open
market subject to the lock-up agreements described above and, for our
affiliates, to the conditions and restrictions of Rule 144.
84
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<PAGE>
UNDERWRITING
We have entered into an underwriting agreement with the underwriters named
below, for whom Prudential Securities Incorporated, BancBoston Robertson
Stephens, BT Alex. Brown Incorporated, Volpe Brown Whelan & Company, LLC,
FAC/Equities, a division of First Albany Corporation, First Union Capital
Markets Corp., The Robinson-Humphrey Company and E*Offering are acting as
representatives. We are obligated to sell, and the underwriters are obligated
to purchase, all of the shares of the common stock offered on the cover page of
this prospectus, if any are purchased. Subject to conditions set forth in the
underwriting agreement, each underwriter has severally agreed to purchase from
us the number of shares of common stock set forth below opposite its name:
<TABLE>
<CAPTION>
Number
Underwriter of Shares
----------- ----------
<S> <C>
Prudential Securities Incorporated...................................
BancBoston Robertson Stephens........................................
BT Alex. Brown Incorporated..........................................
Volpe Brown Whelan & Company, LLC....................................
First Albany Corporation.............................................
First Union Capital Markets Corp.....................................
The Robinson-Humphrey Company........................................
E*Offering...........................................................
Additional...........................................................
----------
Total.............................................................. 25,000,000
==========
</TABLE>
The underwriters may sell more shares than the total number of shares
offered on the cover page of this prospectus and they have, for a period of 30
days from the date of this prospectus, an over-allotment option to purchase up
to 3,750,000 additional shares from us. If any of the additional shares are
purchased, the underwriters will severally purchase the additional shares in
the same proportion as set forth above.
The representative of the underwriters has advised us that the shares will
be offered to the public at the public offering price set forth on the cover
page of this prospectus. The underwriters may allow to selected dealers a
commission not in excess of $ per share and those dealers may reallow a
commission not in excess of $ per share to other dealers. After the shares are
released for sale to the public, the public offering price, the concession to
selected dealers and the reallowance to other dealers may be changed by the
underwriters. The representative has informed us that the underwriters do not
intend to sell shares to any investor who has granted them discretionary
authority.
We have engaged Prudential Securities to act as our financial advisor in
connection with various business and strategic matters, in consideration for a
fee of 0.625% of the gross proceeds received by GreenMountain.com in this
offering.
We have agreed to pay to the underwriters the following fees, assuming both
no exercise and full exercise of the underwriters' over-allotment option to
purchase additional shares:
<TABLE>
<CAPTION>
Total Fees
-------------------------------------------
Fee Without Exercise of Full Exercise of
Per Share Over-Allotment Option Over-Allotment Option
--------- --------------------- ---------------------
<S> <C> <C> <C>
Fees paid by
GreenMountain.com...... $ $ $
</TABLE>
In addition, we estimate that we will spend approximately $4,375,000 in
expenses for this offering. We have agreed to indemnify the underwriters
against some liabilities, including liabilities under the Securities Act or
contribute to payments that the underwriters may be required to make in respect
of these liabilities.
85
It's a small planet.(SM)
<PAGE>
Our officers, directors and stockholders holding in the aggregate 25,464,000
outstanding shares of common stock have entered into lock-up agreements
pursuant to which we and they have agreed not to offer or sell any shares of
common stock or securities convertible into or exchangeable or exercisable for
shares of common stock for a period of 180 days from the date of this
prospectus, subject to limited exceptions for option grants and exercises,
without the prior consent of Prudential Securities. Prudential Securities may,
at any time and without notice, waive the terms of these lock-up agreements as
specified in the underwriting agreement.
Prior to this offering, there has been no public market for our common
stock. The public offering price, negotiated between the representative and us,
is based upon factors such as our financial and operating history and
conditions, our prospects, the prospects of our industry and prevailing market
conditions.
Prudential Securities, representing the underwriters, may engage in the
following activities in accordance with applicable securities rules:
.Over-allotments involving sales in excess of the offering size, creating a
short position. Prudential Securities may elect to reduce this short
position by exercising some or all of the over-allotment option.
.Stabilizing and short covering: stabilizing bids to purchase the shares
are permitted if they do not exceed a specified maximum price. After the
distribution of shares has been completed, short covering purchases in the
open market may also reduce the short position. These activities may cause
the price of the shares to be higher than would otherwise exist in the
open market.
.Penalty bids permit the representatives to reclaim commissions from a
syndicate member for the shares purchased in the stabilizing or short
covering transactions.
Such activities, which may be commenced and discontinued at any time, may be
effected on the Nasdaq National Market, in the over-the-counter market or
otherwise.
We have asked the underwriters to reserve shares for sale at the same
offering price directly to our customers, employees, officers, directors and
other business affiliates or related third parties. The number of shares
available for sale to the general public in the offering will be reduced to the
extent such persons purchase the reserved shares.
LEGAL MATTERS
The validity of the common stock under Delaware law will be passed upon for
us by Jones, Day, Reavis & Pogue, Dallas, Texas. Additional legal matters in
connection with the offering will be passed upon for the underwriters by Cooley
Godward LLP, San Diego, California.
EXPERTS
The financial statements and schedules of GreenMountain.com as of December
31, 1998, included in this prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
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<PAGE>
ADDITIONAL INFORMATION
We have filed a registration statement on Form S-1 with the Securities and
Exchange Commission for the common stock we are offering by this prospectus.
This prospectus does not include all of the information contained in the
registration statement. You should refer to the registration statement and its
exhibits for additional information. Whenever we make reference in this
prospectus to any of our contracts, agreements or other documents, the
references are intended to set forth the material information regarding these
contracts agreements or other documents. These references, however, are not
necessarily complete and you should refer to the exhibits attached to the
registration statement for copies of the actual contract, agreement or other
document. When we complete this offering, we will also be required to file
annual, quarterly and special reports, proxy statements and other information
with the Commission.
You can reach our Commission filings, including the registration statement,
over the Internet at the Commission's web site at http://www.sec.gov. You may
also read and copy any document we file with the Commission at its public
reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549; Seven
World Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may also
obtain copies of these documents at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the Commission at 1-800-SEC-0330 for further information on
the operation of the public reference facilities. Our Commission filings are
also expected to be available at the office of the Nasdaq National Market. For
further information on obtaining copies of our public filings at the Nasdaq
National Market, you should call (212) 656-5060.
We have applied for registration of the following marks used in this
prospectus: Choose wisely. It's a small planet.SM, EcoSmartSM, Enviro BlendSM,
g*commerceSM, GreenMountain.comSM, Green Mountain EnergySM, Green Mountain
Energy ResourcesSM, Green Mountain SolarSM, Nature's ChoiceSM, 100% Renewable
Power 2.0SM, Wind for the FutureSM and Wind for the Future 2.0SM. All other
trademarks, trade names or service marks appearing in this prospectus belong to
their respective holders.
87
It's a small planet.(SM)
<PAGE>
GREENMOUNTAIN.COM COMPANY
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants.................................. F-2
Balance Sheets as of December 31, 1997 and 1998 and March 31, 1999
(Unaudited).............................................................. F-3
Statements of Operations for the Period from Inception (February 26, 1997)
through December 31, 1997 and for the Year Ended December 31, 1998
and for the Three Months Ended March 31, 1998 and 1999 (Unaudited)....... F-4
Statements of Stockholders' Equity for the Period from Inception (February
26, 1997)
through December 31, 1997, for the Year Ended December 31, 1998
and for the Three Months Ended March 31, 1999 (Unaudited)................ F-5
Statements of Cash Flows for the Period from Inception (February 26, 1997)
through December 31, 1997 and for the Year Ended December 31, 1998
and for the Three Months Ended March 31, 1998 and 1999 (Unaudited)....... F-6
Notes to Financial Statements............................................. F-7
</TABLE>
F-1
<PAGE>
After the reorganization transaction discussed in Note 12 to
GreenMountain.com Company's financial statements is effected, we expect to be
in a position to render the following audit report.
/s/ Arthur Andersen LLP
Boston, Massachusetts
June 4, 1999
Report of Independent Public Accountants
To the Stockholders of
GreenMountain.com Company:
We have audited the accompanying balance sheets of GreenMountain.com Company
(a Delaware corporation) as of December 31, 1997 and 1998, and related
statements of operations, stockholders' equity and cash flows for the period
from inception (February 26, 1997) through December 31, 1997 and for the year
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of GreenMountain.com Company
as of December 31, 1997 and 1998, and the related statements of operations,
stockholders' equity and cash flows for the period from inception (February 26,
1997) through December 31, 1997 and for the year ended December 31, 1998, in
conformity with generally accepted accounting principles.
F-2
<PAGE>
GreenMountain.com Company
Balance Sheets
<TABLE>
<CAPTION>
December 31,
-------------------------- March 31,
1997 1998 1999
------------ ------------ -----------
(Unaudited)
<S> <C> <C> <C>
Assets
Cash.................................. $ 1,933,403 $ 5,653,854 $20,475,503
Restricted Cash (Note 2).............. -- 2,920,407 2,513,247
Accounts Receivable (net of allowance
of $34,956 and $159,454 at December
31, 1998 and March 31, 1999
(unaudited), respectively) (Note 8).. -- 434,585 2,004,678
Unbilled Accounts Receivable (Note
2)................................... -- 235,732 1,116,578
Accounts Receivable--Related Party
(Note 6)............................. 16,457 23,915 66,504
Prepaid Expenses and Other Current
Assets............................... 636,232 422,268 990,552
------------ ------------ -----------
Total current assets.............. 2,586,092 9,690,761 27,167,062
------------ ------------ -----------
Property and Equipment, net of
depreciation (Notes 2 and 3)......... 1,268,708 1,367,360 1,340,450
Other Assets (Note 2)................. 328,565 352,600 1,242,420
------------ ------------ -----------
Total assets...................... $ 4,183,365 $ 11,410,721 $29,749,932
============ ============ ===========
Liabilities and Stockholders' Equity
Accounts Payable...................... $ 1,018,903 $ 4,270,946 $ 4,287,022
Accrued Expenses (Note 7)............. 1,426,476 7,688,254 8,025,628
------------ ------------ -----------
Total liabilities................. 2,445,379 11,959,200 12,312,650
Commitments and Contingencies (Note 5)
Stockholders' Equity:
Preferred stock ($0.01 par value;
50,000,000 authorized and 0 issued
and outstanding at December 31,
1997 and 1998 and March 31, 1999
(unaudited))....................... -- -- --
Common stock ($0.01 par value;
150,000,000 authorized and 720,000,
18,000,000 and 25,546,500 issued at
December 31, 1997 and 1998 and
March 31, 1999 (unaudited),
respectively)...................... 7,200 180,000 255,465
Additional paid-in capital.......... 15,592,800 59,820,000 104,269,156
Notes receivable from stockholders.. -- -- (5,108,250)
Deferred compensation............... -- -- (1,635,920)
Accumulated deficit................. (13,862,014) (59,901,079) (79,695,769)
Treasury stock (194,220 shares at
cost).............................. -- (647,400) (647,400)
------------ ------------ -----------
Total stockholders' equity........ 1,737,986 (548,479) 17,437,282
------------ ------------ -----------
Total liabilities and
stockholders' equity............. $ 4,183,365 $ 11,410,721 $29,749,932
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
GreenMountain.com Company
Statements of Operations
<TABLE>
<CAPTION>
Period from
Inception Three Months Ended
(February 26, 1997) Year Ended March 31,
through December 31, -------------------------
December 31, 1997 1998 1998 1999
------------------- ------------ ----------- ------------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues................ $ -- $ 1,530,496 $ -- $ 4,149,941
Cost of Sales........... -- 1,097,379 -- 3,096,161
Operating Expenses:
Customer and regional
operations........... 982,085 4,834,379 652,244 2,269,841
Sales and marketing... 4,336,623 33,010,308 4,065,064 12,374,808
General and
administrative....... 1,741,892 4,225,716 1,011,582 3,928,378
Technology and
development.......... 2,048,191 2,918,056 833,125 2,267,880
Depreciation and
amortization......... 90,597 767,605 168,957 222,253
Organizational costs.. 4,705,713 709,068 -- --
------------ ------------ ----------- ------------
Total operating
expenses........... 13,905,101 46,465,132 6,730,972 21,063,160
------------ ------------ ----------- ------------
Operating loss...... (13,905,101) (46,032,015) (6,730,972) (20,009,380)
Interest income
(expense), net......... 43,087 (7,050) 23,583 214,690
------------ ------------ ----------- ------------
Net loss............ $(13,862,014) $(46,039,065) $(6,707,389) $(19,794,690)
============ ============ =========== ============
Basic and diluted loss
per common share....... $ (21.81) $ (6.06) $ (3.94) $ (0.89)
============ ============ =========== ============
Basic and diluted
weighted average common
shares outstanding..... 635,613 7,595,342 1,704,347 22,326,697
============ ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
GreenMountain.com Company
Statements of Stockholders' Equity
for the Period from Inception (February 26, 1997) through December 31, 1997,
for the Year Ended December 31, 1998 and for the Three Months Ended March 31,
1999 (Unaudited)
<TABLE>
<CAPTION>
Notes
Common Shares Additional Receivable Treasury Shares Total
------------------- Paid-In from Deferred Accumulated ------------------- Stockholders'
Shares Amount Capital Stockholders Compensation Deficit Shares Amount Equity
---------- -------- ------------ ------------ ------------ ------------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of
common stock on
August 6, 1997.. 588,546 $ 5,885 $ 11,994,115 $ -- $ -- $ -- -- $ -- $ 12,000,000
Return of
capital on
August 7, 1997.. -- -- (4,000,000) -- -- -- -- -- (4,000,000)
Issuance of
common stock... 131,454 1,315 7,598,685 -- -- -- -- -- 7,600,000
Losses
accumulated
during the
development
stage.......... -- -- -- -- -- (13,862,014) -- -- (13,862,014)
---------- -------- ------------ ----------- ----------- ------------- -------- --------- ------------
Balance at
December 31,
1997............ 720,000 7,200 15,592,800 -- -- (13,862,014) -- -- 1,737,986
Issuance of
common stock... 17,280,000 172,800 44,227,200 -- -- -- -- -- 44,400,000
Repurchase of
shares......... -- -- -- -- -- -- (194,220) (647,400) (647,400)
Net loss........ -- -- -- -- -- (46,039,065) -- -- (46,039,065)
---------- -------- ------------ ----------- ----------- ------------- -------- --------- ------------
Balance at
December 31,
1998............ 18,000,000 180,000 59,820,000 -- -- (59,901,079) (194,220) (647,400) (548,479)
Issuance of
common stock... 7,546,500 75,465 40,234,535 -- -- -- -- -- 40,310,000
Notes receivable
issued to
shareholders... -- -- -- (5,108,250) -- -- -- -- (5,108,250)
Deferred
Compensation... -- -- 4,454,700 -- (1,635,920) -- -- -- 2,818,780
Costs associated
with the
issuance of
common stock... -- -- (240,079) -- -- -- -- -- (240,079)
Net loss........ -- -- -- -- -- (19,794,690) -- -- (19,794,690)
---------- -------- ------------ ----------- ----------- ------------- -------- --------- ------------
Balance at March
31, 1999........ 25,546,500 $255,465 $104,269,156 $(5,108,250) $(1,635,920) $ (79,695,769) (194,220) $(647,400) $17,437,282
========== ======== ============ =========== =========== ============= ======== ========= ============
</TABLE>
The accompanying notes are an integral part to these financial statements.
F-5
<PAGE>
GreenMountain.com Company
Statements of Cash Flows
<TABLE>
<CAPTION>
for the Period
from Inception Three Months Ended
(February 26, 1997) Year Ended March 31,
through December 31, -------------------------
December 31, 1997 1998 1998 1999
------------------- ------------ ----------- ------------
(Unaudited)
<S> <C> <C> <C> <C>
Cash Flows from
Operating Activities:
Net loss.............. $(13,862,014) $(46,039,065) $(6,707,389) $(19,794,690)
Adjustments to
reconcile net loss to
net cash used in
operating
activities--
Depreciation and
amortization....... 90,597 767,605 168,957 222,253
Provision for
doubtful accounts.. -- 34,956 -- 124,498
Loss on disposals of
property and
equipment.......... -- 17,225 -- --
Write-off of
organization
costs.............. -- 269,892 -- --
Deferred
compensation
charge............. -- -- -- 2,748,900
Other............... -- -- -- 69,880
Changes in assets
and liabilities--
Restricted cash... -- (2,920,407) -- 407,160
Accounts
receivable....... (16,457) (476,999) (13,070) (1,737,180)
Unbilled accounts
receivable....... -- (235,732) -- (880,846)
Prepaid expenses
and other current
assets........... (636,232) 213,964 547,859 (568,284)
Organization
costs............ (352,034) -- -- --
Accounts payable.. 1,018,903 3,252,043 (502,612) 16,076
Accrued expenses.. 1,426,476 5,261,778 1,392,315 337,374
------------ ------------ ----------- ------------
Net cash used in
operating
activities..... (12,330,761) (39,854,740) (5,113,940) (19,054,859)
------------ ------------ ----------- ------------
Cash Flows from
Investing Activities:
Purchases of property
and equipment........ (1,335,836) (824,809) (98,094) (182,743)
------------ ------------ ----------- ------------
Net cash used in
investing
activities..... (1,335,836) (824,809) (98,094) (182,743)
------------ ------------ ----------- ------------
Cash Flows from
Financing Activities:
Proceeds of short-term
borrowing............ -- 10,000,000 -- --
Payment of short-term
borrowing............ -- (10,000,000) -- --
Proceeds from issuance
of stock............. 19,600,000 44,400,000 5,900,000 35,201,750
Return of capital..... (4,000,000) -- -- --
Equity financing
costs................ -- -- -- (240,079)
Deferred financing
costs................ -- -- -- (902,420)
------------ ------------ ----------- ------------
Net cash
provided by
financing
activities..... 15,600,000 44,400,000 5,900,000 34,059,251
------------ ------------ ----------- ------------
Net Increase in Cash.... 1,933,403 3,720,451 687,966 14,821,649
Cash, beginning of
period................. -- 1,933,403 1,933,403 5,653,854
------------ ------------ ----------- ------------
Cash, end of period..... $ 1,933,403 $ 5,653,854 $ 2,621,369 20,475,503
============ ============ =========== ============
Supplemental Disclosure:
Interest paid......... $ -- $ -- $ -- 167,083
============ ============ =========== ============
Taxes paid............ $ -- $ 950 $ -- --
============ ============ =========== ============
Supplemental Disclosure
of Noncash Items:
Repurchase of shares
(see Note 1)......... $ -- $ 647,400 $ -- --
============ ============ =========== ============
Purchase of intangible
assets (Note 1)...... $ -- $ 352,600 $ -- --
============ ============ =========== ============
Stock sales financed
with notes receivable
(Note 11)............ -- -- -- $ 5,108,250
============ ============ =========== ============
</TABLE>
The accompanying notes are an integral part to these financial statements.
F-6
<PAGE>
GreenMountain.com Company
Notes to Financial Statements
(Information at March 31, 1999 and for the
Three Months Ended March 31, 1998 and 1999 is Unaudited)
(1) Organization and Business
GreenMountain.com Company, formerly known as Green Mountain Energy Resources
L.L.C., is a Delaware corporation, originally formed as a limited liability
company. As further discussed in Note 12, Green Mountain Energy Resources
L.L.C. reorganized into a corporation in 1999.
On August 6, 1997, a subsidiary of Green Mountain Power Corporation and
Green Funding I, L.L.C., an investment vehicle controlled by the Wyly family,
negotiated and entered into a limited liability company agreement relating to
the formation of Green Mountain Energy Resources L.L.C. Green Mountain Energy
Resources L.L.C. was formed to become a national retail marketer of electricity
produced from renewable and other environmentally preferable sources to
residential customers. Under the limited liability agreement:
. A subsidiary of Green Mountain Power Corporation contributed certain
service marks, research performed by Green Mountain Power Corporation
prior to formation of the limited liability company related to evaluating
the viability of a nationally-marketed, premium priced green electricity
product, including marketing studies and analyses, and its rights under
agreements with several third-party service providers, in exchange for a
33% equity interest, after the effect of the return of capital discussed
below, in the limited liability company;
. Green Funding I contributed $8,000,000 and committed to contribute an
additional $22,000,000 over time, in exchange for a 67% equity interest in
the limited liability company; and
. Immediately following the initial contribution by Green Funding I, the
subsidiary of Green Mountain Power Corporation received a distribution
from the limited liability company of $4,000,000, representing
reimbursement for the cost of market studies and analyses and other
development costs incurred by Green Mountain Power Corporation prior to
formation of the limited liability company based on a provision in the
limited liability company agreement.
The limited liability company agreement also contained provisions relating
to the allocation of profits and losses, the management of the limited
liability company and restrictions on transfer and registration rights.
Green Mountain Energy Resources L.L.C. began active operations on August 6,
1997 under the terms of an operating agreement, dated August 6, 1997. On
September 29, 1997, Green Funding I committed an additional $10,000,000 to the
limited liability company. Green Mountain Power Corporation elected not to
contribute additional equity, resulting in an increase in Green Funding I's
equity interest to 73%. On November 20, 1998, Green Funding I committed an
additional $20,000,000 to the limited liability company. Green Mountain Power
Corporation again elected not to contribute additional equity, resulting in an
increase in Green Funding I's equity interest to 99%.
On December 23, 1998, Green Mountain Energy Resources L.L.C. negotiated and
entered into an agreement with Green Mountain Power Corporation to buy back its
equity interests in the limited liability company and to obtain a non-compete
agreement, certain rights to the Green Mountain name and certain mutual
releases for $1,000,000. This agreement enabled the limited liability company
to eliminate its ties to a traditional, regulated utility that had elected not
to contribute additional equity to the limited liability company. In addition,
this agreement contained favorable provisions relating to non-competition and
the use of the Green Mountain name. The payments were made in two installments
on January 4, 1999 and February 16, 1999. The limited liability company
allocated $647,400 to the repurchased equity interest ($3.33 a share) and
$352,600 to the non-compete agreement, certain rights to the Green Mountain
name and certain mutual releases obtained. This allocation was based on the
management committee's determination of the fair value of the equity interest
and other intangible assets obtained given an anticipated offering in early
January and February of 1999 at $3.33 per share.
F-7
<PAGE>
GreenMountain.com Company
Notes to Financial Statements--(Continued)
(Information at March 31, 1998 and for the
Three Months Ended March 31, 1998 and 1999 is Unaudited)
The limited liability company losses for the period and year ended
December 31, 1997 and 1998 were allocated 100% to Green Funding I under the
operating agreement. Accordingly, the Company has no tax loss carry forwards
related to losses during those periods. The operating agreement was amended
January 4, 1999 to allocate losses, first to members other than Green Funding
I, to the extent of those members' capital contributions and, thereafter, to
members, including Green Funding I, in proportion to their respective ownership
interests.
GreenMountain.com has generated approximately $1.5 million in residential
electric revenue sales in California during 1998 and $4.1 million in California
and Pennsylvania during the three months ended March 31, 1999. The retail
energy market is at an early stage of development, as only a few states have
deregulated sales of electricity on a statewide basis as of December 1998.
GreenMountain.com began serving customers in Pennsylvania on January 1, 1999.
As of December 31, 1998 and March 31, 1999, GreenMountain.com had accumulated
deficits of $59,901,079 and $79,695,769, respectively. GreenMountain.com is
seeking additional investors, through an initial public offering, to fund its
planned expansion of its existing electricity business into new deregulated
markets and to broaden its green product offerings. The implementation of
GreenMountain.com's business plan is dependent on this offering. There can be
no assurance that such additional financing will be available. If
GreenMountain.com is unable to obtain financing through an initial public
offering, GreenMountain.com will curtail its current growth plans and
GreenMountain.com believes its existing cash resources, together with financing
available under an agreement with Green Funding I, in an amount up to $22
million, will be sufficient to fund its operations at least through 1999. Any
advances under the agreement will bear interest at 6% per annum. The agreement
provides that accrued and unpaid interest will be added to the principal on
each June 30 and December 31. Principal, together with accrued and unpaid
interest, will be payable on April 23, 2001. This agreement terminates upon an
initial public offering and any advances made under the agreement become due
and payable. As of June 4, 1999, no amounts were outstanding under this
agreement.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
Financial statements of a development stage company are prepared and
presented in the same manner as those of operating enterprises.
GreenMountain.com was considered a development stage company as of and for the
period from inception through December 31, 1997.
(b) Reclassifications
Certain prior year amounts have been reclassified to be consistent with the
current presentation.
(c) Restricted Cash
Certain of GreenMountain.com's power supply vendors and state regulators
require letters of credit to ensure fulfillment of the Company's commitments.
Associated amounts have been classified as restricted cash on the accompanying
balance sheet.
(d) Organization Costs
In April 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) No. 98-5, Reporting on the Costs of
Start-Up Activities, which requires that all start-up costs, including
organization costs, should be expensed as incurred. The new standard is
effective for fiscal years
F-8
<PAGE>
GreenMountain.com Company
Notes to Financial Statements--(Continued)
(Information at March 31, 1999 and for the
Three Months Ended March 31, 1998 and 1999 is Unaudited)
beginning after December 15, 1998, with early application encouraged. In the
fourth quarter of 1998 GreenMountain.com wrote off the remaining unamortized
balance of organization costs, amounting to $269,892, or $0.04 per share, in
accordance with the new pronouncement. This amount is included in development
and transaction costs in the accompanying Statements of Operations.
(e) Property and Equipment
Property and equipment are stated at cost. GreenMountain.com provides for
depreciation on property and equipment on the straight-line basis over their
estimated useful lives as follows:
<TABLE>
<S> <C>
Computer hardware.............................................. 2 years
Computer software.............................................. 1-5 years
Furniture and fixtures......................................... 5-7 years
</TABLE>
(f) Other Assets
Other assets include a non-competition agreement being amortized over seven
years and deferred costs related to GreenMountain.com's planned initial public
offering. These deferred costs will be reclassified to additional paid-in
capital upon the closing of the equity offering.
(g) Federal Income Taxes
Federal income taxes have not been recorded in the accompanying financial
statements because such taxes, if any, were the responsibility of the
stockholders prior to the reorganization described in Note 12.
(h) Impairment of Long-Lived Assets
GreenMountain.com follows SFAS No. 121, Accounting for Long-Lived Assets and
for Long-Lived Assets To Be Disposed Of. SFAS No. 121 requires that long-lived
assets be reviewed for impairment by comparing the fair value of the assets
with their carrying amount. Any write-downs are to be treated as permanent
reductions in the carrying amount of the assets. Accordingly, GreenMountain.com
evaluates the possible impairment of long-lived assets at each reporting period
based on the undiscounted projected cash flows of the related asset. Should
there be an impairment, the cash flow estimates that will be used will contain
management's best estimates, using appropriate and customary assumptions and
projections at the time. To date GreenMountain.com does not believe that an
impairment exists.
(i) Use of Estimates in the Preparation of Financial Statements
The presentation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of income and expenses during the
reporting period. Operating results in the future could vary from the amounts
derived from management's estimates and assumptions.
(j) Fair Value of Financial Instruments
GreenMountain.com's financial instruments consist primarily of cash,
accounts receivable, unbilled accounts receivable and accounts payable. The
carrying amounts of these financial instruments as of December 31, 1997 and
1998 and March 31, 1999 approximate their fair values due to their short-term
nature.
F-9
<PAGE>
GreenMountain.com Company
Notes to Financial Statements--(Continued)
(Information at March 31, 1999 and for the
Three Months Ended March 31, 1998 and 1999 is Unaudited)
(k) Revenue Recognition and Unbilled Accounts Receivable
Customers are billed for their use of electricity on a cycle basis
throughout the month. To reflect revenues in the proper period, the estimated
amount of unbilled sales revenue related to customer electricity usage is
recorded each month.
(l) Earnings per Share
The dilutive effect of potential common shares, consisting of outstanding
stock options and warrants is determined using the treasury method in
accordance with SFAS No. 128, Earnings per Share, which established standards
for computing and presenting earnings per share and which applies to entities
with publicly held common stock or potential common stock. In accordance with
SEC Staff Accounting Bulletin (SAB) No. 98, GreenMountain.com has determined
that there were no nominal issuances of common stock or potential common stock
in the period prior to GreenMountain.com's planned initial public offering.
Diluted weighted average shares outstanding for 1997 and 1998 exclude the
potential common shares from warrants and stock options because to do so would
have been antidilutive. The potential common shares excluded as of December 31,
1997 and 1998, and March 31, 1998 and 1999 related to outstanding warrants and
stock options were 111,267, 103,527, 112,077 and 5,999,136 respectively.
(m) Unaudited Interim Information
The financial information as of March 31, 1999 and for the three months
ended March 31, 1998 and 1999 is unaudited. In the opinion of management, such
information contains all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation of the results of such period.
(n) Employee Benefit Plan
GreenMountain.com has a defined contribution plan in which GreenMountain.com
contributes 2% of each employee's base salary up to the social security wage
base and 4% of such base above the social security wage base up to $160,000.
Additionally, GreenMountain.com matches 50% of each employee's contribution up
to the employee's first 6% contribution. Both GreenMountain.com and employee
contributions vest immediately. The charges included in the accompanying
Statements of Operations under this plan for the year ended December 31, 1998
and the period from inception through December 31, 1997 are $153,719 and
$20,821, respectively, and for the three months ended March 31, 1999 and 1998
are $46,354 and $34,084, respectively.
(o) Advertising Costs
Advertising costs are expensed as incurred as such efforts historically have
not met the direct-response criteria required for capitalization.
GreenMountain.com advertising to date have related to (1) building brand
awareness, including traditional media advertising such as television, radio,
print and billboards and sponsorship of special events and promotions and (2)
direct marketing, including direct mail, affinity programs, internet and
inbound and outbound telemarketing. Total advertising costs for the period from
inception, February 26, 1997 through December 31, 1997, for the year ended
December 31, 1998 and for the three months ended March 31, 1998 and 1999, were
$4.3 million, $33.0 million, $4.1 million and $12.4 million, respectively. As
new advertising agreements are entered into, such as the Yahoo! Inc. agreement
which commences in May 1999, such costs could have long-term value and result
in capitalization and amortization over the period benefited. See Note (5)(d)-
Commitments and Contingencies for a discussion of GreenMountain.com's Marketing
Services Agreement and Note (5)(f) for a discussion of its contract with Yahoo!
F-10
<PAGE>
GreenMountain.com Company
Notes to Financial Statements--(Continued)
(Information at March 31, 1999 and for the
Three Months Ended March 31, 1998 and 1999 is Unaudited)
(3) Property and Equipment
Property and equipment consisted of the following as of:
<TABLE>
<CAPTION>
December 31,
---------------------
1997 1998 March 31, 1999
---------- ---------- --------------
<S> <C> <C> <C>
Computer hardware.......................... $ 809,920 $1,139,923 $1,215,103
Computer software.......................... 295,290 426,278 431,086
Furniture and fixtures..................... 230,626 567,685 670,440
---------- ---------- ----------
1,335,836 2,133,886 2,316,629
Less--Accumulated depreciation............. 67,128 766,526 976,179
---------- ---------- ----------
$1,268,708 $1,367,360 $1,340,450
========== ========== ==========
</TABLE>
(4) Options and Warrants
(a) 1997 and 1998 Options
During 1997 and 1998, GreenMountain.com granted options to employees,
officers, consultants and advisors at market value. The options expire on the
fifth anniversary of the grant date.
Option activity is as follows:
<TABLE>
<CAPTION>
Weighted
Average
Number of Exercise
Shares Price
--------- --------
<S> <C> <C>
Granted, August 6, 1997...................................... 92,658 $75.30
Granted...................................................... 6,702 $75.40
------ ------
Outstanding, December 31, 1997............................... 99,360 75.31
Granted.................................................... 1,821 75.40
Forfeited.................................................. (9,561) 75.40
------ ------
Outstanding, December 31, 1998............................... 91,620 $75.30
Granted.................................................... -- --
Forfeited.................................................. (1,791) 75.40
------ ------
Outstanding, March 31, 1999.................................. 89,829 $75.30
====== ======
</TABLE>
(b) 1999 Option Plan
During the first quarter of 1999, GreenMountain.com adopted an option plan
whereby options may be granted to employees, officers, directors, consultants
and advisors at market value. These options would vest over four years and
expire fifty months following the anniversary of the grant date. The authorized
number of options available for grant would remain fixed in an amount equal to
an ownership interest representing approximately 20% of GreenMountain.com.
F-11
<PAGE>
GreenMountain.com Company
Notes to Financial Statements--(Continued)
(Information at March 31, 1999 and for the
Three Months Ended March 31, 1998 and 1999 is Unaudited)
Option activity is as follows:
<TABLE>
<CAPTION>
Weighted
Average
Number of Exercise
Shares Price
--------- --------
<S> <C> <C>
Outstanding, December 31, 1998............................... -- --
Granted.................................................... 5,897,400 $3.93
Forfeited.................................................. -- --
--------- -----
Outstanding, March 31, 1999.................................. 5,897,400 $3.93
========= =====
</TABLE>
(c) Warrants
During 1997, GreenMountain.com issued warrants to its consultants and
advisors for 11,907 shares at fair market value. The warrants vested
immediately and expire on the fifth anniversary date of the grant.
(d) Stock-Based Compensation
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation. SFAS No. 123 requires the measurement of the fair value of stock
options to be included in the statements of income or disclosed in the notes to
financial statements. GreenMountain.com has determined that it will continue to
account for stock-based compensation for employees under Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees, and elect the
disclosure-only alternative under SFAS No. 123.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions used for
grants during the applicable period:
<TABLE>
<CAPTION>
Three Months
Ended March
1997 1998 31, 1999
---------- -------------- -------------
<S> <C> <C> <C>
Volatility.............................. 0% 0% 0%
Risk free rate of return................ 5.8% to 6% 5.46% to 5.65% 4.58% to 5.1%
Dividend yield.......................... -- -- --
Expected life in years.................. 2 2 3.5
</TABLE>
The weighted average fair value per share of options granted during 1997,
1998 and 1999 was $15.01, $7.13 and $0.85, respectively.
The following information is presented as of March 31, 1999 for two
identified groups of options, one group granted in 1997 and 1998 and the other
group granted in 1999.
<TABLE>
<CAPTION>
1997 and
1998 1999
Grants Grants
--------- ---------
<S> <C> <C>
Number of options outstanding............................. 89,829 5,897,400
Weighted-average exercise price........................... $75.30 $3.93
Weighted-average remaining contractual life............... 41 months 48 months
Number of options currently exercisable................... 40,172 1,359,480
Weighted-average exercise price of options currently
exercisable.............................................. $75.31 $3.85
</TABLE>
F-12
<PAGE>
GreenMountain.com Company
Notes to Financial Statements--(Continued)
(Information at March 31, 1999 and for the
Three Months Ended March 31, 1998 and 1999 is Unaudited)
The following information is presented as of December 31, 1997, March 31,
1998 and December 31, 1998, respectively, for the group of options granted in
1997 and 1998.
<TABLE>
<CAPTION>
December March December
31, 1997 31, 1998 31, 1998
--------- --------- ---------
<S> <C> <C> <C>
Number of options outstanding................... 99,360 100,170 91,620
Weighted-average exercise price................. $75.31 $75.31 $75.30
Weighted-average remaining contractual life..... 56 months 53 months 44 months
Number of options currently exercisable......... 19,868 20,031 39,999
Weighted-average exercise price of options
currently exercisable.......................... $75.31 $75.31 $75.31
</TABLE>
Had compensation cost for GreenMountain.com's plans been determined
consistent with SFAS No. 123, GreenMountain.com's net income and earnings per
share of common stock would have been reduced to the following pro forma
amounts:
<TABLE>
<CAPTION>
Period from Inception
(February 26, 1997) Year Ended Three Months
through December 31, December 31, Ended March 31,
1997 1998 1999
--------------------- ------------ ---------------
<S> <C> <C> <C> <C>
Net Income.............. As reported $(13,862,014) $(46,039,065) $(19,794,690)
Pro Forma (13,971,841) (46,330,132) (20,927,779)
Earnings per shares of
Common Stock........... As reported $(21.81) $(6.06) $(0.89)
Pro Forma $(21.98) $(6.10) $(0.94)
</TABLE>
GreenMountain.com recorded a charge to compensation expense of $2,681,530
and deferred compensation of $1,635,920 during the first quarter of 1999 for
the difference between the purchase price and exercise price of shares and
options issued and their fair market value. Compensation expense for purchased
shares is recognized at the time shares are purchased and expense for options
is recognized over the periods options vest. GreenMountain.com recorded a
charge to expense of $42,430 related to the fair market value of options issued
to nonemployees, as calculated using the Black-Scholes option-pricing model.
(5) Commitments and Contingencies
(a) Power Supply Agreements
For the Pennsylvania market, GreenMountain.com has entered into three
agreements with major wholesale suppliers for electricity supply to serve the
requirements of GreenMountain.com's customers. Under all of the agreements, the
suppliers will provide electricity for a period of one year that matches the
aggregate customer requirements that are assigned to them. For two of the
agreements, either GreenMountain.com or the supplier can discontinue the
assignment of additional customers upon three months' notice. The wholesale
price is fixed for the term of the agreements.
For the California market, GreenMountain.com has negotiated requirements
contracts with two suppliers to supply its current product offerings in the
California market. Under both agreements, the wholesale price is based on a
fixed price spread related to the PX price of power (refers to the per kwh
wholesale electricity price in California, as determined by the California
Power Exchange) with one agreement providing for a surcharge on the Wind for
the FutureSM wind power product. One supplier provides electricity for a period
of one year for each of GreenMountain.com's customers assigned to it and either
party may discontinue the assignment of
F-13
<PAGE>
GreenMountain.com Company
Notes to Financial Statements--(Continued)
(Information at March 31, 1999 and for the
Three Months Ended March 31, 1998 and 1999 is Unaudited)
additional customers to the agreement upon three months' notice. The other
supplier provides electricity for one and three year service periods, depending
on the product being served, and can be assigned additional customers through
December 31, 1999.
GreenMountain.com's contracts with four suppliers provide for separate
letters of credit or equivalent financial assurances to satisfy credit
requirements. The amounts of the letters of credit range from fifteen days' to
two months' of receivables based on GreenMountain.com's load forecast. In
addition, GreenMountain.com has delivered to one supplier irrevocable letters
of credit in connection with the supplier's purchase and installation of three
wind power turbines. GreenMountain.com also delivered letters of credit to
regulators securing its performance as an energy service provider. Total supply
and regulatory letters of credit outstanding at December 31, 1998 and March 31,
1999 were $2,765,230 and $2,477,251, respectively, reflected on the balance
sheet as restricted cash.
(b) Outsourcing Agreement
On May 15, 1998, GreenMountain.com entered into an amended outsourcing
agreement with en . able, L.L.C. (en . able) with respect to the development
and implementation of a system that facilitates the data and communications
interface between utility distribution centers and GreenMountain.com.
GreenMountain.com has also retained en . able to provide billing and the
related customer care to residential customers at prices defined in the
contract. The agreement continues until November 1, 2002 (Initial Term), unless
terminated at an earlier date. Commencing at the start of the third contract
year, but only during the Initial Term, either party may terminate this
agreement without cause for any reason upon 270 days' prior written notice to
the other party. The contract states that prior to the end of the Initial Term
and each renewal term, the parties may mutually agree to extend this agreement
for one additional contract year. GreenMountain.com has agreed to pay monthly
service charges for call center and billing services, additional resource
charges and cost of living adjustment to compensate en . able for the volumes
processed and all of the resources used in providing the services. The monthly
charges are variable and are based on the number of billable accounts
maintained each month. GreenMountain.com has agreed to pay minimum monthly
service charges for call center service and billing services in the amount of
$112,500 based on a customer billable unit baseline of 50,000 customers.
(c) Teleservices Agreement
On January 30, 1998, GreenMountain.com entered into a contract with ICT
Group, Inc. to manage its call center and resulting databases to support
GreenMountain.com's various teleservices requirements. Either party may
terminate this agreement without cause by providing the other party with 30
business days prior written notice. Under this contract, GreenMountain.com has
fixed monthly fees of approximately $8,700, as well as actual costs associated
with service representatives' time and communication costs incurred resulting
from inbound and outbound calls.
(d) Marketing Services Agreement
On January 1, 1998, GreenMountain.com entered into a marketing services
agreement with The Cullinan Group to create, prepare and execute marketing
communications plans and projects and place advertising with respect to
retailing electricity, natural gas and related products and services. The
contract is enforceable until terminated by 90 days notice in writing. Under
the terms of the agreement, GreenMountain.com is required to pay a minimum
monthly retainer fee of $30,000 as well as monthly advance payments in the
amount of anticipated expenses less the monthly retainer fee. Total
GreenMountain.com payments under this contract in 1998 and for the three months
ended March 31, 1999 were approximately $16,228,000 and $6,511,613,
respectively.
F-14
<PAGE>
GreenMountain.com Company
Notes to Financial Statements--(Continued)
(Information at March 31, 1999 and for the
Three Months Ended March 31, 1998 and 1999 is Unaudited)
(e) Facility Lease Agreement
GreenMountain.com leases an office facility in Vermont under a cancelable
operating lease that expires September 30, 2002. Future minimum lease payments
required, provided GreenMountain.com does not cancel the lease, at December 31,
1998 are as follows:
<TABLE>
<S> <C>
1999............................................................. $114,675
2000............................................................. 114,675
2001............................................................. 114,675
2002............................................................. 86,006
--------
$430,031
========
</TABLE>
The lease agreement has a termination provision that enables
GreenMountain.com to terminate the lease at September 30, 1999, 2000 or 2001.
If GreenMountain.com elects to terminate the lease at any one of these dates,
GreenMountain.com is obligated to pay $33,000, $25,000, or $12,500,
respectively, as consideration for early termination.
(f) Advertising And Promotion Agreement
In March 1999, GreenMountain.com entered into an advertising and promotion
agreement with Yahoo! Inc., which provides banner advertisements and other
promotions for GreenMountain.com on the Yahoo! web sites. The total
consideration due during the one year term of the agreement is approximately
$6.0 million, commencing in May of 1999, as well as the payment of referral
fees for each new energy services account opened as a result of the Yahoo!
promotions. Expenses will be recognized under this contract throughout the term
of the contract and in a manner consistent with receipt of services provided by
Yahoo!
(6) Other Related Party Transactions
During 1998, GreenMountain.com paid Sterling Software, Inc. (an affiliate of
Sam Wyly, GreenMountain.com's Chairman) $828,611 for information technology
consulting services, and owed an additional $382,396 at December 31, 1998,
which is included in accounts payable on the balance sheet. During the three
months ended March 31, 1999, GreenMountain.com paid Sterling Software, Inc.
$576,857 for its services. GreenMountain.com has no minimum financial
commitment with regard to the agreement with Sterling Software, Inc.
GreenMountain.com has paid Green Mountain Power Corporation $470,653 and
$165,365 for electricity, facilities maintenance and other expenses paid by
Green Mountain Power Corporation on behalf of GreenMountain.com for 1997 and
1998, respectively. In addition, GreenMountain.com received $31,803 and $73,191
during 1997 and 1998, respectively, for services provided to Green Mountain
Power Corporation by GreenMountain.com's employees. As of December 31, 1998,
Green Mountain Power Corporation is no longer an affiliate of
GreenMountain.com.
(7) Accrued Expenses
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31,
---------------------
1997 1998 March 31, 1999
---------- ---------- --------------
<S> <C> <C> <C>
Accrued customer and
regional operations.... $ 78,880 $ 955,255 $1,801,524
Accrued sales and
marketing.............. 226,081 3,639,386 4,474,384
Accrued general and
administrative......... 742,074 2,899,914 1,749,720
Accrued technology and
development............ 379,441 193,699 --
---------- ---------- ----------
$1,426,476 $7,688,254 $8,025,628
========== ========== ==========
</TABLE>
F-15
<PAGE>
GreenMountain.com Company
Notes to Financial Statements--(Continued)
(Information at March 31, 1999 and for the
Three Months Ended March 31, 1998 and 1999 is Unaudited)
(8) Accounts Receivable
As of December 31, 1998 and March 31, 1999, GreenMountain.com is owed
$137,970 and $223,805, respectively, from the California Energy Commission
related to renewable energy credits provided to GreenMountain.com for selling
renewable energy to customers. GreenMountain.com expects to collect these
amounts in 1999.
(9) Short-Term Borrowings
GreenMountain.com borrowed a total of $10,000,000 in September and October
1998 from a financing company, which was subsequently repaid with a portion of
Green Funding I's additional $20,000,000 commitment. The interest due on such
borrowings was paid in early 1999. This loan, which bore interest at a rate of
10% per annum, was made by Security Capital, Ltd. Several entities, whose stock
is owned by irrevocable trusts of which certain members of the Wyly family are
beneficiaries, provided credit enhancement for the loan.
(10) Recent Accounting Pronouncements
The FASB recently issued SFAS No. 130, Reporting Comprehensive Income. SFAS
No. 130 establishes standards for reporting and displaying comprehensive income
and its components in financial statements. Comprehensive income, as defined,
includes all changes to equity (net assets) during a period from non-owner
sources. SFAS No. 130 is effective for financial statements for fiscal years
beginning after December 15, 1997. To date, GreenMountain.com has not had any
transactions that are required to be reported in comprehensive income.
The FASB recently issued SFAS No. 131, Disclosure About Segments of an
Enterprise and Related Information. SFAS No. 131 establishes standards for the
way public business enterprises are to report information about operating
segments in annual financial statements and requires those enterprises to
report selected information about operating segments in interim financial
reports. SFAS No. 131 is effective for financial statements for fiscal years
beginning after December 15, 1997. GreenMountain.com has determined that it
does not have any separately reportable business segments.
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting. SFAS No. 133 is
effective for fiscal years beginning after June 15, 1999. A company may also
implement the statement as of the beginning of any fiscal quarter after
issuance (that is, fiscal quarters beginning June 16, 1998 and thereafter).
SFAS No. 133 cannot be applied retroactively. SFAS No. 133 must be applied to
(a) derivative instruments and (b) certain derivative instruments embedded in
hybrid contracts that were issued, acquired, or substantively modified after
December 31, 1997 (and, at the company's election, before January 1, 1998).
This statement could increase volatility in earnings and other comprehensive
income for companies with applicable contracts. GreenMountain.com does not have
any derivative instruments at this time; however, such instruments may be
embedded in future electricity contracts.
F-16
<PAGE>
GreenMountain.com Company
Notes to Financial Statements--(Continued)
(Information at March 31, 1999 and for the
Three Months Ended March 31, 1998 and 1999 is Unaudited)
The AICPA issued SOP No. 98-1, Software for Internal Use, which provides
guidance on accounting for the cost of computer software developed or obtained
for internal use. SOP No. 98-1 is effective for financial statements for fiscal
years beginning after December 15, 1998. The adoption of SOP No. 98-1 did not
have a material impact on GreenMountain.com's financial statements.
GreenMountain.com anticipates that in the second quarter of 1999 it will begin
capitalizing certain costs in accordance with SOP No. 98-1 associated with
projects that enter the development stage, including its web site development
project.
(11) Subsequent Event--Private Placement Offerings
During 1999, GreenMountain.com completed two private placement offerings.
The first offering, completed in early January and early February 1999, was for
$10,000,000 from a sale of 3,000,000 shares to GreenMountain.com's employees
and certain consultants for $3.33 per share. Net proceeds included $4,891,750
of cash and $5,108,250 of promissory notes from employees and certain
consultants. GreenMountain.com recognized compensation expense of $2,072,300 in
connection with the issuance of shares. The second offering, completed in mid-
February 1999, resulted in net proceeds of $30,310,000 from a sale of 4,546,500
shares to investors for $6.67 per share. As a result of purchases during the
second offering, Maverick Capital became the beneficial owner of 2,250,000
shares for an aggregate purchase price of $15.0 million. Evan Wyly, a Vice
Chairman and a Director of GreenMountain.com, is a Managing Partner and H. Lee
S. Hobson, a GreenMountain.com Director, is a Partner of Maverick Capital. In
addition, Green Funding II, L.L.C., an investment vehicle controlled by the
Wyly family, acquired directly 1,500,000 shares for an aggregate purchase price
of $10.0 million.
(12) Subsequent Event--Reorganization
In 1999, GreenMountain.com merged into a newly formed Delaware corporation,
which (i) was the entity surviving the merger, succeeding to all rights,
properties and obligations of GreenMountain.com; (ii) is named
GreenMountain.com Company; and (iii) is taxable as a corporation. In connection
with the conversion, the limited liability company agreement will terminate,
except for certain covenants that, by their terms, require performance after
the termination of such agreement and each member will receive three shares of
GreenMountain.com common stock in exchange for each of its common units in the
limited liability company (subject to the payment of cash in lieu of fractional
shares). Additionally, any undistributed tax losses at the date of
reorganization will be reclassified against additional paid in capital. All
outstanding options and warrants exercisable for common units in the limited
liability company will, in effect, be converted into options or warrants
exercisable for GreenMountain.com common stock. The common stock information in
the financial statements and notes has been restated as if the common units
were converted to common shares.
F-17
<PAGE>
[Description of Inside Back Cover Page Artwork]
Top: text reading "Wouldn't it be great if what was purchased online helped
create a brighter future for your kids & the planet?"
Left middle: text reading "GreenMountain.com seeks to become a new
marketplace community where families, kids and others can help create a better
world. The site will be a cool and quick destination that translates
environmental awareness into action. Motivated to dramatically shape shopping
habits, GreenMountain.com hopes to benefit consumers and the world we all live
in."
Right bottom: image of child holding planet earth.
<PAGE>
Until , 1999, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the obligation of dealers to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
[GreenMountain.com logo]
Prudential Securities
BancBoston Robertson Stephens
Deutsche Banc Alex. Brown
Volpe Brown Whelan & Company
FAC/Equities
First Union Capital Markets Corp.
The Robinson-Humphrey Company
E*Offering
facilitating Internet distribution
["Choose wisely. It's a small planet." logo]
[Description of Outside Back Cover Artwork]
Bottom: image of children each holding planet Earth, with sun rings in
background
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses, other than the underwriting
discounts and commissions, paid or payable by the Registrant in connection with
the distribution of the securities being registered. All amounts are estimates
except the SEC registration fee, the NASD filing fee and the Nasdaq National
Market listing fee.
<TABLE>
<S> <C>
SEC Registration Fee........................................... $ 166,800
NASD Filing Fee................................................ 30,500
Nasdaq National Market Listing Fee............................. 95,000
Advisory Fee................................................... 1,875,000
Printing costs................................................. 550,000
Legal Fees and Expenses........................................ 1,000,000
Accounting Fees and Expenses................................... 500,000
Blue Sky Fees and Expenses..................................... 2,000
Miscellaneous.................................................. 155,700
-----------
Total $ 4,375,000
===========
</TABLE>
Item 14. Indemnification of Directors and Officers.
Limitation Of Liability And Indemnification Matters
Prior to the closing of this offering, the Registrant's certificate of
incorporation and bylaws will be amended. The Registrant's amended certificate
of incorporation will limit the liability of the Registrant's directors to the
maximum extent permitted by Delaware law. Delaware law provides that a director
of a corporation will not be personally liable for monetary damages for breach
of that individual's fiduciary duties as a director except for liability for
(1) a breach of the director's duty of loyalty to the corporation or its
stockholders, (2) any act or omission not in good faith or that involves
intentional misconduct or a knowing violation of the law, (3) unlawful payments
of dividends or unlawful stock repurchases or redemptions, or (4) any
transaction from which the director derived an improper personal benefit.
This limitation of liability does not apply to liabilities arising under
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or recission.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers, as well as other employees
and individuals, against attorneys fees and other expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with any threatened, pending or completed actions, suits or
proceedings in which such person was or is a party or is threatened to be made
a party by reason of such person being or having been a director, officer,
employee or agent of the corporation. The Delaware General Corporation Law
provides that Section 145 is not exclusive of other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
The Registrant's amended certificate of incorporation and amended bylaws
will provide that the Registrant is required to indemnify its directors and
officers to the maximum extent permitted by law. The Registrant's amended
bylaws will also require the Registrant to advance expenses incurred by an
officer or director in connection with the defense of any action or proceeding
arising out of that party's status or service as a director or officer of the
Registrant or as a director, officer, employer or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
if serving as such at the Registrant's request. The Registrant's amended bylaws
will also permit the Registrant to secure insurance on behalf of any director
or officer for any liability arising out of his or her actions in a
representative capacity.
II-1
<PAGE>
The Registrant intends to enter into indemnification agreements with its
directors and some of its officers containing provisions that (1) indemnify, to
the maximum extent permitted by Delaware law, those directors and officers
against liabilities that may arise by reason of their status or service as
directors or officers except liabilities arising from willful misconduct of a
culpable nature, (2) to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and (3) to
obtain directors' and officers' liability insurance if maintained for other
directors or officers.
The Registrant's predecessor limited liability company currently has
liability insurance for its management committee members and officers and the
Registrant intends to obtain directors' and officers' liability insurance for
its directors and officers.
Reference is also made to the Underwriting Agreement to be filed as Exhibit
1.1 to the Registration Statement for information concerning the underwriters'
obligation to indemnify the Registrant and its officers and directors in
certain circumstances.
Item 15. Recent Sales of Unregistered Securities.
Since its formation on February 26, 1997, the limited liability company (the
"LLC") predecessor to the Registrant has issued and sold the following
securities:
(1) In August 1997, the LLC issued and sold membership interests
representing 67% of the LLC to Green Funding I, L.L.C. in exchange for $8.0
million in cash and a commitment to contribute an additional $22.0 million
in cash over time and membership interests representing 33% to Green
Mountain Resources, Inc., a subsidiary of Green Mountain Power Corporation,
in exchange for a contribution of property. The issuance of these
membership interests was exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended (the "Act").
(2) In August 1997, the LLC issued warrants to purchase membership
interests to its consultants and advisors in exchange for services
performed by such consultants and advisors. The issuance of these warrants
was exempt from registration under Section 4(2) of the Act. These warrants
are currently exercisable to purchase 3,969 common units of the LLC at an
exercise price of $226.76 per unit.
(3) In September 1997, the LLC issued and sold additional membership
interests to Green Funding I, L.L.C. in exchange for $10.0 million in cash,
increasing Green Funding I, L.L.C.'s ownership interest to approximately
73% of the LLC. The issuance of these membership interests was exempt from
registration under Section 4(2) of the Act.
(4) In November 1998, the LLC issued and sold additional membership
interests to Green Funding I, L.L.C., in exchange for $20.0 million in
cash, increasing Green Funding I, L.L.C.'s ownership interest to
approximately 99% of the LLC. The issuance of these membership interests
was exempt from registration under Section 4(2) of the Act.
(5) In early January and early February 1999, membership interests in
the LLC were unitized and the LLC issued and sold 47,750 common units in
the LLC to 34 of its employees in a private offering under a compensatory
plan, the Employee Unit Purchase Plan, in exchange for an aggregate of
$477,500, of which $250,500 was paid in cash and $227,000 was paid using
promissory notes payable to the LLC and secured by the acquired units as
permitted under the Employee Unit Purchase Plan. The issuance of these
common units was exempt from registration under Rule 701 promulgated by the
Securities and Exchange Commission (the "Commission") under Section 3(b) of
the Act.
(6) In early January and early February 1999, the LLC issued and sold
952,250 common units in the LLC in a private offering to 28 individuals,
each of whom qualified as an accredited investor as defined in Rule 501(a).
Sixteen of these individuals acquired 908,250 common units for an aggregate
of $9,082,500, of which $4,201,250 was paid in cash and $4,881,250 was paid
using promissory notes payable to the LLC and secured by the acquired units
as permitted under the Employee Unit Purchase
II-2
<PAGE>
Plan. Twelve of these individuals were consultants or advisors who acquired
44,000 common units for an aggregate of $440,000 in cash. The issuance of
these common units was exempt from registration under Section 4(2) of the
Act and was made in compliance with Rule 506 under the Act.
(7) In February 1999, the LLC issued and sold 1,515,500 common units in
the LLC in a private offering to 28 individuals and entities in exchange
for an aggregate of $30,310,000 in cash. Each individual and entity
qualified as an accredited investor under Rule 501(a). The issuance of
these common units was exempt from registration under Section 4(2) of the
Act and was made in compliance with Rule 506 under the Act.
All sales were made without general solicitation or general advertising.
Each purchaser represented that such purchaser was acquiring the interest for
investment purposes.
Prior to the closing of this offering, the LLC will be merged into the
Registrant and each common unit in the LLC will be exchanged for three shares
of Registrant's common stock. In addition, all outstanding options and warrants
exercisable for common units in the LLC will, in effect, be converted into
options or warrants exercisable for the Registrant's common stock.
Item 16. Exhibits.
(a) Exhibits
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement
2.1 Form of Agreement and Plan of Merger by and between the LLC and
the Registrant
3.1 Certificate of Incorporation of the Registrant, as amended
3.2 Form of Amended and Restated Certificate of Incorporation of the
Registrant
3.3 Bylaws of the Registrant
3.4 Form of Amended and Restated Bylaws of the Registrant
4.1 Specimen Certificate of the Registrant's Common Stock
4.2 Form of Registration Rights Agreement by and among the Registrant
and the stockholders indicated therein**
4.3 Warrant to Purchase Interest in Green Mountain Energy Resources
L.L.C. issued to Shallowbrook Securities, Ltd., dated as of
August 6, 1997**
4.4 Warrant to Purchase Interest in Green Mountain Energy Resources
L.L.C. issued to Capital Investment Group, Inc., dated as of
August 6, 1997**
5.1 Form of Opinion of Jones, Day, Reavis & Pogue
10.1 Second Amended and Restated Operating Agreement of the LLC, dated
as of March 26, 1999**
10.2 Employee Unit Purchase Plan of the LLC, as amended**
10.3 1997 Employee Ownership Plan of the LLC**
10.4 1999 Unit Option Plan of the LLC**
10.5 Form of 1999 Stock Option Plan of the Registrant
10.6 Employment Agreement, dated as of October 5, 1998, by and between
the LLC and M. David White, as amended
10.7 Employment Agreement, dated as of August 6, 1997, by and between
the LLC and Douglas G. Hyde**
10.8 Separation Agreement and Release, dated as of October 6, 1998, by
and between the LLC and Douglas G. Hyde**
10.9 Form of Employment Agreement, dated as of August 6, 1997, by and
between the LLC and each of the following individuals: Kevin W.
Hartley, Thomas C. Boucher, David B. Luther and Peter H. Zamore**
10.10 Form of Operating Management Option Agreement, dated as of August
6, 1997, by and between the LLC and each of the following
individuals: Douglas G. Hyde, Kevin W. Hartley, Thomas C.
Boucher, David B. Luther and Peter H. Zamore**
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.11 Form of Supervisory Management Option Agreement, dated as of
August 6, 1997, by and between the LLC and each of the following
individuals: Sam Wyly, Evan A. Wyly and Lisa Wyly**
10.12 Letter Agreement, dated as of February 5, 1999, by and between
the LLC and Dennis M. Crumpler, as amended
10.13 Form of Indemnification Agreement**
10.14 Agreement, dated as of December 23, 1998, among the LLC, Green
Mountain Power Corporation, Green Mountain Resources, Inc. and
Green Funding I, L.L.C.**
10.15 Funding Agreement, dated as of April 23, 1999, by and between
Green Funding I, L.L.C. and the LLC
10.16 Form of Promissory Note, made by Messrs. Boucher, Canon,
Crumpler, Hartley, Kelly, LeDuc, Rawls, White and Zamore and
Mmes. Blunden and O'Neill, to the order of the Registrant, in
connection with the purchase of common units of the limited
liability company
10.17 Form of 1999 Director Stock Award Plan*
10.18 Agreement, dated as of January 1, 1998, by and between The
Cullinan Group and the Registrant+
10.19 Master Agreement, dated as of September 11, 1998, by and between
DTE-CoEnergy, L.L.C. and the Registrant+
10.20 First Amendment to Master Agreement, dated as of November 25,
1998, by and between DTE-CoEnergy, L.L.C. and the Registrant
10.21 Second Amendment to Master Agreement, dated as of February 18,
1999, by and between DTE-CoEnergy, L.L.C. and the Registrant
10.22 Advertising and Promotion Agreement, dated as of March 25, 1999,
by and between Yahoo! and the Registrant+
23.1 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP, independent public accountants
24.1 Power of Attorney**
27.1 Financial Data Schedule for the Period from Inception (February
26, 1997) through December 31, 1997
27.2 Financial Data Schedule for the Year ended December 31, 1998
27.3 Financial Data Schedule for the Three-Month Period Ended March
31, 1998
27.4 Financial Data Schedule for the Three-Month Period Ended March
31, 1999
99.1 Consent of Mark Cuban pursuant to Rule 438 under the Act**
99.2 Consent of Richard E. Hanlon pursuant to Rule 438 under the Act**
99.3 Consent of Reed E. Maltzman pursuant to Rule 438 under the Act**
99.4 Consent of Copernicus, The Marketing Investment Strategy Group**
99.5 Consent of Jupiter Communications
99.6 Consent of Jacquelyn Ottman**
99.7 Consent of Regulatory Research Associates
99.8 Consent of Roper Starch Worldwide Inc.**
99.9 Consent of Social Investment Forum**
99.10 Consent of Worldwatch Institute
99.11 Consent of Xenergy**
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 406 under the Act. In accordance with Rule
406, these confidential portions have been omitted from this exhibit and
filed separately with the Commission.
II-4
<PAGE>
(b) Financial Statement Schedules
Report of Independent Public Accountants
Schedule II -- Reserves for the Period from Inception (February 26,
1997) through December 31, 1997
Schedule II -- Reserves for the Year ended December 31, 1998
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to 424(b)(1) or (4), or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 3 to Registration Statement No.
333-75171 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of South Burlington, State of Vermont, on June 4, 1999.
GREENMOUNTAIN.COM COMPANY
By: /s/ M. David White
----------------------------------
M. David White
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 3 to Registration Statement No. 333-75171 has been signed below
by the following persons in the capacities indicated on June 4, 1999:
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ M. David White Chief Executive Officer
___________________________________________ (Principal Executive Officer)
M. David White
* Controller
__________________________________________ (Principal Financial Officer)
K. Scott Canon
* Controller
___________________________________________ (Principal Financial Officer)
Michael Bursell
* Director
___________________________________________
Sam Wyly
* Director
___________________________________________
Dennis M. Crumpler
* Director
___________________________________________
Evan A. Wyly
* Director
___________________________________________
H. Lee S. Hobson
* Director
___________________________________________
Lisa Wyly
</TABLE>
* The undersigned, by signing his or her name hereto, does sign and execute
this Amendment No. 3 to Registration Statement No. 333-75171 pursuant to the
Powers of Attorney executed on behalf of the above-named officers and directors
and previously filed with the Securities and Exchange Commission.
By: /s/ M. David White
- -------------------------------------
M. David White,
Attorney-in-fact
II-6
<PAGE>
After the reorganization transaction discussed in Note 12 to
GreenMountain.com Company's financial statements is effected, we expect to be
in a position to render the following audit report.
/s/ Arthur Andersen LLP
Boston, Massachusetts
June 4, 1999
Report of Independent Public Accountants
To the Stockholders of
GreenMountain.com Company:
We have audited, in accordance with generally accepted auditing standards,
the financial statements of GreenMountain.com Company included in this
registration statement and have issued our report thereon. Our audit was made
for the purpose of forming an opinion on the basic financial statements taken
as a whole. The schedules listed in the accompanying index are the
responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
<PAGE>
SCHEDULE II
GreenMountain.com Company
Reserves
For the Period From Inception (February 26, 1997) through December 31, 1997
<TABLE>
<CAPTION>
Balance at Balance at
beginning end of
of year Additions Deductions year
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Reserves deducted from assets to
which they apply:
Reserve for uncollectible
accounts receivable............. $ -- $ -- $ -- $ --
----- ----- ----- -----
</TABLE>
<PAGE>
SCHEDULE II
GreenMountain.com Company
Reserves
Year ended December 31, 1998
<TABLE>
<CAPTION>
Balance at Balance at
beginning end of
of year Additions Deductions year
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Reserves deducted from assets to
which they apply:
Reserve for uncollectible
accounts receivable............. $ -- $34,956 $ -- $34,956
----- ------- ----- -------
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement
2.1 Form of Agreement and Plan of Merger by and between the LLC and the
Registrant
3.1 Certificate of Incorporation of the Registrant, as amended
3.2 Form of Amended and Restated Certificate of Incorporation of the
Registrant
3.3 Bylaws of the Registrant
3.4 Form of Amended and Restated Bylaws of the Registrant
4.1 Specimen Certificate of the Registrant's Common Stock
4.2 Form of Registration Rights Agreement by and among the Registrant and
the stockholders indicated therein**
4.3 Warrant to Purchase Interest in Green Mountain Energy Resources L.L.C.
issued to Shallowbrook Securities, Ltd., dated as of August 6, 1997**
4.4 Warrant to Purchase Interest in Green Mountain Energy Resources L.L.C.
issued to Capital Investment Group, Inc., dated as of August 6, 1997**
5.1 Form of Opinion of Jones, Day, Reavis & Pogue
10.1 Second Amended and Restated Operating Agreement of the LLC, dated as
of March 26, 1999**
10.2 Employee Unit Purchase Plan of the LLC, as amended**
10.3 1997 Employee Ownership Plan of the LLC**
10.4 1999 Unit Option Plan of the LLC**
10.5 Form of 1999 Stock Option Plan of the Registrant
10.6 Employment Agreement, dated as of October 5, 1998, by and between the
LLC and M. David White, as amended
10.7 Employment Agreement, dated as of August 6, 1997, by and between the
LLC and Douglas G. Hyde**
10.8 Separation Agreement and Release, dated as of October 6, 1998, by and
between the LLC and Douglas G. Hyde**
10.9 Form of Employment Agreement, dated as of August 6, 1997, by and
between the LLC and each of the following individuals: Kevin W.
Hartley, Thomas C. Boucher, David B. Luther and Peter H. Zamore**
10.10 Form of Operating Management Option Agreement, dated as of August 6,
1997, by and between the LLC and each of the following individuals:
Douglas G. Hyde, Kevin W. Hartley, Thomas C. Boucher, David B. Luther
and Peter H. Zamore**
10.11 Form of Supervisory Management Option Agreement, dated as of August 6,
1997, by and between the LLC and each of the following individuals:
Sam Wyly, Evan A. Wyly and Lisa Wyly**
10.12 Letter Agreement, dated as of February 5, 1999, by and between the LLC
and Dennis M. Crumpler, as amended
10.13 Form of Indemnification Agreement**
10.14 Agreement, dated as of December 23, 1998, among the LLC, Green
Mountain Power Corporation, Green Mountain Resources, Inc. and Green
Funding I, L.L.C.**
10.15 Funding Agreement, dated as of April 23, 1999, by and between Green
Funding I, L.L.C. and the LLC
10.16 Form of Promissory Note, made by Messrs. Boucher, Canon, Crumpler,
Hartley, Kelly, LeDuc, Rawls, White and Zamore and Mmes. Blunden and
O'Neill, to the order of the Registrant, in connection with the
purchase of common units of the limited liability company
10.17 Form of 1999 Director Stock Award Plan*
Agreement, dated as of January 1, 1998, by and between The Cullinan
10.18 Group and the Registrant+
10.19 Master Agreement, dated as of September 11, 1998, by and between DTE-
CoEnergy, L.L.C. and the Registrant+
10.20 First Amendment to Master Agreement, dated as of November 25, 1998, by
and between DTE-CoEnergy, L.L.C. and the Registrant
10.21 Second Amendment to Master Agreement, dated as of February 18, 1999,
by and between DTE-CoEnergy, L.L.C. and the Registrant
10.22 Advertising and Promotion Agreement, dated as of March 25, 1999, by
and between Yahoo! and the Registrant+
23.1 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP, independent public accountants
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
24.1 Power of Attorney**
27.1 Financial Data Schedule for the Period from Inception (February 26,
1997) through December 31, 1997
27.2 Financial Data Schedule for the Year ended December 31, 1998
27.3 Financial Data Schedule for the Three-Month Period Ended March 31,
1998
27.4 Financial Data Schedule for the Three-Month Period Ended March 31,
1999
99.1 Consent of Mark Cuban pursuant to Rule 438 under the Act**
99.2 Consent of Richard E. Hanlon pursuant to Rule 438 under the Act**
99.3 Consent of Reed E. Maltzman pursuant to Rule 438 under the Act**
99.4 Consent of Copernicus, The Marketing Investment Strategy Group**
99.5 Consent of Jupiter Communications
99.6 Consent of Jacquelyn Ottman**
99.7 Consent of Regulatory Research Associates
99.8 Consent of Roper Starch Worldwide Inc.**
99.9 Consent of Social Investment Forum**
99.10 Consent of Worldwatch Institute
99.11 Consent of Xenergy**
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 406 under the Act. In accordance with Rule
406, these confidential portions have been omitted from this exhibit and
filed separately with the Commission.
<PAGE>
EXHIBIT 1.1
GreenMountain.com Company
________ Shares/1/
Common Stock
UNDERWRITING AGREEMENT
________ ___, 1999
PRUDENTIAL SECURITIES INCORPORATED
BANC BOSTON ROBERTSON STEPHENS
BT ALEX. BROWN
VOLPE BROWN WHELAN & COMPANY
FAC/EQUITIES
FIRST UNION CAPITAL MARKETS
THE ROBINSON-HUMPHREY COMPANY
E*OFFERING
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Ladies and Gentlemen:
GreenMountain.com Company, a Delaware corporation (the "Company"), hereby
confirms its agreement with the several underwriters named in Schedule 1 hereto
(the "Underwriters"), for whom you have been duly authorized to act as
representatives (in such capacities, the "Representatives"), as set forth below.
If you are the only Underwriters, all references herein to the Representatives
shall be deemed to be to the Underwriters.
1. Securities. Subject to the terms and conditions herein contained, the
----------
Company proposes to issue and sell to the several Underwriters an aggregate of
___ shares (the "Firm Securities") of the Company's Common Stock, par value
$0.01 per share ("Common Stock"). The Company also proposes to issue and sell
to the several Underwriters not more than _______________ additional shares of
Common Stock if requested by the Representatives as provided in Section 3 of
this Agreement. Any and all shares of Common Stock to be purchased by the
Underwriters pursuant to such option are referred to herein as the "Option
Securities", and the Firm Securities and any Option Securities are collectively
referred to herein as the "Securities".
- ----------------------------
/1/ Plus an option to purchase from GreenMountain.com Company up to
____________ additional shares to cover over-allotments.
1.
<PAGE>
2. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to, and agrees with, each of the several Underwriters
that:
(a) A registration statement on Form S-1 (File No. 333-75171) with
respect to the Securities, including a prospectus subject to completion, has
been filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), and one
or more pre effective amendments to such registration statement may have been so
filed. After the execution of this Agreement, the Company will file with the
Commission either (i) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective under the Act,
either (A) if the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Securities that shall identify the
Preliminary Prospectus (as hereinafter defined) that it supplements containing
such information as is required or permitted by Rules 434, 430A and 424(b) under
the Act or (B) if the Company does not rely on Rule 434 under the Act, a
prospectus in the form most recently included in an amendment to such
registration statement (or, if no such amendment shall have been filed, in such
registration statement), with such changes or insertions as are required by Rule
430A under the Act or permitted by Rule 424(b) under the Act, and in the case of
either clause (i)(A) or (i)(B) of this sentence as have been provided to and
approved by the Representatives prior to the execution of this Agreement, or
(ii) if such registration statement, as it may have been amended, has not been
declared by the Commission to be effective under the Act, an amendment to such
registration statement, including a form of prospectus, a copy of which
amendment has been furnished to and approved by the Representatives prior to the
execution of this Agreement. The Company may also file a related registration
statement with the Commission pursuant to Rule 462(b) under the Act for the
purpose of registering certain additional Securities, which registration shall
be effective upon filing with the Commission. As used in this Agreement, the
term "Original Registration Statement" means the registration statement
initially filed relating to the Securities, as amended at the time when it was
or is declared effective, including all financial schedules and exhibits thereto
and including any information omitted therefrom pursuant to Rule 430A under the
Act and included in the Prospectus (as hereinafter defined); the term "Rule
462(b) Registration Statement" means any registration statement filed with the
Commission pursuant to Rule 462(b) under the Act (including the Original
Registration Statement and any Preliminary Prospectus or Prospectus incorporated
in such registration statement at the time such registration statement becomes
effective pursuant to Rule 462(b)); the term "Registration Statement" means the
Original Registration Statement together with any Rule 462(b) Registration
Statement; the term "Preliminary Prospectus" means each prospectus subject to
completion included in the registration statement initially filed relating to
the Securities or any amendment thereto (including the prospectus subject to
completion, if any, included in the Original Registration Statement or any
amendment thereto at the time it was or is declared effective); the term
"Prospectus" means:
(i) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed pursuant to Rule 424(b)(7)
under the Act, together with the Preliminary Prospectus identified therein
that such Term Sheet supplements;
2.
<PAGE>
(ii) if the Company does not rely on Rule 434 under the Act, the
prospectus first filed with the Commission pursuant to Rule 424(b) under
the Act; or
(iii) if the Company does not rely on Rule 434 under the Act and if
no prospectus is required to be filed pursuant to Rule 424(b) under the
Act, the prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or suspending
use of any Preliminary Prospectus. When any Preliminary Prospectus was filed
with the Commission it (i) contained all statements required to be stated
therein in accordance with, and complied in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that solely with respect to any Preliminary Prospectus as
filed with the Commission prior to May 28, 1999, the foregoing shall be subject
to changes in the Preliminary Prospectus in response to comments received from
the Commission and to blanks in the Preliminary Prospectus which are apparent on
their face as blanks. When the Registration Statement or any amendment thereto
was or is declared effective, it (i) contained or will contain all statements
required to be stated therein in accordance with, and complied or will comply in
all material respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (ii) did not or will not include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. When the Prospectus or
any Term Sheet that is a part thereof or any amendment or supplement to the
Prospectus is filed with the Commission pursuant to Rule 424(b) (or, if the
Prospectus or part thereof or such amendment or supplement is not required to be
so filed, when the Registration Statement or the amendment thereto containing
such amendment or supplement to the Prospectus was or is declared effective) and
on the Firm Closing Date and any Option Closing Date (both as hereinafter
defined), the Prospectus, as amended or supplemented at any such time, (i)
contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of the Act and the rules and regulations of the Commission
thereunder and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph (b) do not
apply to statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(c) If the Company has elected to rely on Rule 462(b), (i) the Company
has filed a Rule 462(b) Registration Statement in compliance with and that is
effective upon filing pursuant to Rule 462(b) and has received confirmation of
its receipt and (ii) the Company has
3.
<PAGE>
given irrevocable instructions for transmission of the applicable filing fee in
connection with the filing of the Rule 462(b) Registration Statement in
compliance with Rule 111 promulgated under the Act or the Commission has
received payment of such filing fee.
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and is duly
qualified to transact business as a foreign corporation and is in good standing
under the laws of all other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified would not, singly or in the aggregate, have
a material adverse change in the condition (financial or otherwise), management,
business prospects, net worth, or results of the operations of the Company (a
"Material Adverse Effect").
(e) The Company has full corporate power to own or lease its
properties and conduct its business as described in the Registration Statement
and the Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus; and the Company has full corporate power to enter into
this Agreement and to carry out all the terms and provisions hereof to be
carried out by it.
(f) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus. All of the issued shares of
capital stock of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and were issued in compliance with all applicable
federal and state securities laws and were not issued in violation of or subject
to any preemptive rights or other rights to subscribe for or purchase
securities. The Firm Securities and the Option Securities have been duly
authorized and at the Firm Closing Date or the related Option Closing Date (as
the case may be), after payment therefor in accordance herewith, will be validly
issued, fully paid and nonassessable. No holders of outstanding shares of
capital stock of the Company are entitled as such to any preemptive or other
rights to subscribe for any of the Securities, and no holder of securities of
the Company has any right which has not been fully exercised or waived to
require the Company to register the offer or sale of any securities owned by
such holder under the Act in the public offering contemplated by this Agreement.
(g) The capital stock of the Company conforms to the description
thereof contained in the Prospectus or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus.
(h) Except as disclosed in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there are no
outstanding (A) securities or obligations of the Company convertible into or
exchangeable for any capital stock of the Company, (B) warrants, rights or
options to subscribe for or purchase from the Company any such capital stock or
any such convertible or exchangeable securities or obligations, or (C)
obligations of the Company to issue any shares of capital stock, any such
convertible or exchangeable securities or obligations, or any such warrants,
rights or options.
(i) The financial statements and schedules of the Company included in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most
4.
<PAGE>
recent Preliminary Prospectus) fairly present the financial position of the
Company and the results of operations and changes in financial condition as of
the dates and periods therein specified. Such financial statements and schedules
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise noted
therein). The selected financial data set forth under the caption "Selected
Financial Information" in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) fairly present, on the basis
stated in the Prospectus (or such Preliminary Prospectus), the information
included therein.
(j) Arthur Andersen LLP, who have certified certain financial statements of
the Company and delivered their report with respect to the audited financial
statements and schedules included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), are independent public accountants as required by the
Act and the applicable rules and regulations thereunder.
(k) The execution and delivery of this Agreement have been duly authorized
by the Company and this Agreement has been duly executed and delivered by the
Company, and, assuming the due authorization, execution and delivery by all
parties hereto other than the Company, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditor's rights, general
equitable principles and public policy considerations.
(l) No legal or governmental proceedings are pending to which the Company
is a party or to which the property of the Company is subject that are required
to be described in the Registration Statement or the Prospectus and are not
described therein (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and, to the Company's knowledge, no such proceedings
have been threatened against the Company or with respect to any of its
properties; and no contract or other document is required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) or filed as required.
(m) The issuance, offering and sale of the Securities to the Underwriters
by the Company pursuant to this Agreement, the compliance by the Company with
the other provisions of this Agreement and the consummation of the other
transactions herein contemplated do not require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except (A) such as have been obtained, (B) such as may be required
under state securities or blue sky laws, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations thereunder and the
bylaws of the National Association of Securities Dealers, Inc., (C) if the
registration statement filed with respect to the Securities (as amended) is not
effective under the Act as of the time of execution hereof, such as may be
required (and shall be obtained as provided in this Agreement) under the Act,
and (D) with respect to any consents, approvals, authorizations, registrations
or qualifications other than those referred to in the foregoing clauses (A), (B)
and (C), where the failure to obtain any such consent, approval, authorization,
registration or qualification would not, in the aggregate, have a Material
Adverse Effect. The issuance, offering and sale of the Securities to the
5.
<PAGE>
Underwriters by the Company pursuant to this Agreement, the compliance by the
Company with the other provisions of this Agreement and the consummation of the
other transactions herein contemplated do not conflict with or result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, (A) any indenture, mortgage, deed of trust, lease or other
agreement or instrument to which the Company is a party or by which the Company
or its properties are bound, or (B) the charter documents or bylaws of the
Company, or (C) any statute or any judgment, decree, order, rule or regulation
of any court or other governmental authority or any arbitrator applicable to the
Company, except where such conflict, breach, violation or default would not, in
the aggregate, have a Material Adverse Effect.
(n) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus, the Company has not sustained
any loss or interference with their respective businesses or properties that has
had a Material Adverse Effect from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding and there has not been any Material Adverse
Effect, or any development involving a prospective Material Adverse Effect,
except in each case as described in or contemplated by the Prospectus or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus.
(o) The Company has not, directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement (A) sold, bid
for, purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company, in each case
except as expressly contemplated by this Agreement.
(p) The Company has not distributed and, prior to the later of (i) the Firm
Closing Date and (ii) the completion of the distribution of the Securities, will
not distribute any offering material in connection with the offering and sale of
the Securities other than the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or other materials, if any, permitted by (and in compliance with) the
Act.
(q) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), (i) the Company has not
incurred any material liability or obligation, direct or contingent, nor entered
into any material transaction not in the ordinary course of business; (ii) the
Company has not purchased any of its outstanding capital stock, nor declared,
paid or otherwise made any dividend or distribution of any kind on its capital
stock; and (iii) there has not been any material change in the capital stock,
short-term debt or long-term debt of the Company, except in each case as
described in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
6.
<PAGE>
(r) The Company does not own any real property. The Company has good and
marketable title to all personal property owned by it free and clear of any
security interests, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of such property
and do not interfere with the use made or proposed to be made of such property
by the Company, and any buildings held under lease by the Company are held under
valid, subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the use made or proposed to be made of such
buildings by the Company, in each case except as described in or contemplated by
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(s) No labor dispute with the employees of the Company exists or, to the
best of the Company's knowledge, is threatened or imminent that could have a
Material Adverse Effect, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(t) The Company owns or possesses, or can acquire on reasonable terms, the
right to use all patents, patent applications, trademarks, service marks, trade
names, licenses, copyrights and proprietary or other confidential information
currently employed by it in connection with its business, except where the
failure to own or possess, or to be able to acquire on reasonable terms, the
right to use any such items would not, in the aggregate, have a Material Adverse
Effect, and the Company has not received any notice of infringement of or
conflict with asserted rights of any third party with respect to any such items
except where such infringements or conflicts, in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would not have a Material Adverse
Effect, except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(u) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which it is engaged; the Company has not been
refused any insurance coverage sought or applied for; and the Company has no
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect, except as described in or contemplated
by the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(v) The Company possesses all certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct its business, except where the failure to possess such
certificates, authorizations and permits would not, in the aggregate, have a
Material Adverse Effect, and the Company has not received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit, except where such proceedings, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
not have a Material Adverse Effect, except as described in or contemplated by
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(w) The Company will conduct its operations in a manner that will not
subject it to registration as an investment company under the Investment Company
Act of 1940, as
7.
<PAGE>
amended, and the Company will not become an investment company subject to
registration under such Act as a result of the consummation of the transactions
contemplated by this Agreement and the application of the net proceeds
therefrom, as described in the Prospectus.
(x) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a Material
Adverse Effect) and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith or as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(y) The Company is not in violation of any federal or state law or
regulation relating to occupational safety and health or to the storage,
handling or transportation of hazardous or toxic materials, has received all
permits, licenses or other approvals required of it under such laws and
regulations and is in compliance with all terms and conditions of such permits,
licenses or approvals, except where violations of such laws and regulations,
failures to receive required permits, licenses or other approvals or failures to
comply with the terms and conditions of such permits, licenses or approvals that
would not, singly or in the aggregate, have a Material Adverse Effect, or except
as described in or contemplated by the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus).
(z) Each certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
(aa) The Company does not own any shares of stock or any other equity
securities of any corporation or have any equity interest in any firm,
partnership, association or other entity, except as described in or contemplated
by the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(bb) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(cc) No default exists, and no event has occurred which, with notice or
lapse of time or both, would constitute a default in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, lease or other agreement or instrument to which the Company is a party
or by which the Company or any of its properties is bound or may be affected,
except for any such defaults that, in the aggregate, would not have a Material
Adverse Effect.
8.
<PAGE>
(dd) The merger of the Predecessor with and into the Company
(the "Merger") became effective on _____________, 1999 upon the filing of the
Agreement and Plan of Merger dated _____________, 1999, between the Predecessor
and the Company (the "Merger Agreement") with the Secretary of State of the
State of Delaware in accordance with Sections 265 and 251 of the Delaware
General Corporation Law and Section 18-209 of the Delaware Limited Liability
Company Act. When the Merger became effective (the time of such effectiveness
being hereinafter referred to as the "Effective Time"), the separate existence
of the Predecessor ceased and the Merger had the other effects specified in
Section 259(a) of the Delaware General Corporation Law and Section 18-209(g) of
the Delaware Limited Liability Company Act. At the Effective Time, (i) each
common unit in the Predecessor outstanding immediately prior to the Effective
Time was converted into the right to receive shares of Common Stock, (ii) each
then-outstanding option to purchase common units in the Predecessor was assumed
by the Company and became an option to acquire shares of Common Stock, and (iii)
each then-outstanding warrant to purchase common units of the Predecessor became
exercisable to purchase shares of Common Stock, in each case as contemplated by
Article II of the Merger Agreement. Prior to the Effective Time, the Merger
Agreement and the Merger were duly approved by the Predecessor by all requisite
limited liability company action, including all requisite action by its managers
and members, and by the Company by all requisite corporate action, including all
requisite action of its directors and stockholders. The consummation of the
Merger did not (i) violate any statute or regulation applicable to, or any
order, writ, judgment, injunction, decree, determination or award entered
against, the Predecessor or the Company or (ii) conflict with or breach any of
the terms of, or constitute a default under, the Company's Amended and Restated
Certificate of Incorporation or Amended and Restated Bylaws, the Predecessor's
Second Amended and Restated Operating Agreement or any material agreement or
instrument to which the Predecessor or the Company was or is a party or by which
the Predecessor or the Company was or is bound. To the best of the Company's
knowledge, there is no action, proceeding or investigation pending or threatened
that questions the validity of such merger, nor is there any basis therefor.
3. Purchase, Sale and Delivery of the Securities.
---------------------------------------------
(a) On the basis of the representations, warranties, agreements
and covenants herein contained and subject to the terms and conditions herein
set forth, the Company agrees to issue and sell to each of the Underwriters, and
each of the Underwriters, severally and not jointly, agrees to purchase from the
Company, at a purchase price of $________ per share, the number of Firm
Securities set forth opposite the name of such Underwriter in Schedule 1 hereto.
One or more certificates in definitive form for the Firm Securities that the
several Underwriters have agreed to purchase hereunder, and in such denomination
or denominations and registered in such name or names as the Representatives
request upon notice to the Company at least 48 hours prior to the Firm Closing
Date, shall be delivered by or on behalf of the Company to the Representatives
for the respective accounts of the Underwriters, against payment by or on behalf
of the Underwriters of the purchase price therefor by wire transfer in same-day
funds (the "Wired Funds") to the account of the Company. Such delivery of and
payment for the Firm Securities shall be made at the offices of Cooley Godward
LLP, 4365 Executive Drive, Suite 1100, San Diego, California 92121, at 6:30
A.M., San Diego time, on __________, 1999, or at such other place, time or date
as the Representatives and the Company may agree upon or as the Representatives
may determine pursuant to Section 9 hereof, such time and date of
9.
<PAGE>
delivery against payment being herein referred to as the "Firm Closing Date".
The Company will make such certificate or certificates for the Firm Securities
available for checking and packaging by the Representatives at the offices in
New York, New York of the Company's transfer agent or registrar or of Prudential
Securities Incorporated at least 24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection with
the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company hereby grants to the several Underwriters an option to
purchase, severally and not jointly, the Option Securities. The purchase price
to be paid for any Option Securities shall be the same price per share as the
price per share for the Firm Securities set forth above in paragraph (a) of this
Section 3. The option granted hereby may be exercised as to all or any part of
the Option Securities from time to time within 30 days after the date of the
Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday, on
the next business day thereafter when the New York Stock Exchange is open for
trading). The Underwriters shall not be under any obligation to purchase any of
the Option Securities prior to the exercise of such option. The Representatives
may from time to time exercise the option granted hereby by giving notice in
writing or by telephone (confirmed in writing) to the Company setting forth the
aggregate number of Option Securities as to which the several Underwriters are
then exercising the option and the date and time for delivery of and payment for
such Option Securities. Any such date of delivery shall be determined by the
Representatives but shall not be earlier than two business days or later than
five business days after such exercise of the option and, in any event, shall
not be earlier than the Firm Closing Date. The time and date set forth in such
notice, or such other time on such other date as the Representatives and Company
may agree upon or as the Representatives may determine pursuant to Section 9
hereof, is herein called the "Option Closing Date" with respect to such Option
Securities. Upon exercise of the option as provided herein, the Company shall
become obligated to sell to each of the several Underwriters, and, subject to
the terms and conditions herein set forth, each of the Underwriters (severally
and not jointly) shall become obligated to purchase from the Company, the same
percentage of the total number of the Option Securities as to which the several
Underwriters are then exercising the option as such Underwriter is obligated to
purchase of the aggregate number of Firm Securities, as adjusted by the
Representatives in such manner as they deem advisable to avoid fractional
shares. If the option is exercised as to all or any portion of the Option
Securities, one or more certificates in definitive form for such Option
Securities, and payment therefor, shall be delivered on the related Option
Closing Date in the manner, and upon the terms and conditions, set forth in
paragraph (a) of this Section 3, except that reference therein to the Firm
Securities and the Firm Closing Date shall be deemed, for purposes of this
paragraph (b), to refer to such Option Securities and Option Closing Date,
respectively.
(c) The Company hereby acknowledges that the wire transfer by or on
behalf of the Underwriters of the purchase price for any Securities does not
constitute closing of a purchase and sale of the Securities. Only execution and
delivery of a receipt for Securities by the Underwriters indicates completion of
the closing of a purchase of the Securities from the Company. Furthermore, in
the event that the Underwriters wire funds to the Company prior to the
completion of the closing of a purchase of Securities, the Company hereby
acknowledges that until the Underwriters execute and deliver a receipt for the
Securities, by facsimile or otherwise, the Company will not be entitled to the
Wired Funds and shall return the Wired Funds
10.
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to the Underwriters as soon as practicable (by wire transfer of same-day funds)
upon demand. In the event that the closing of a purchase of Securities is not
completed and the Wired Funds are not returned by the Company to the
Underwriters on the same day the Wired Funds were received by the Company, the
Company agrees to pay to the Underwriters in respect of each day the Wired Funds
are not returned by it, in same-day funds, interest on the amount of such Wired
Funds in an amount representing the Underwriters' cost of financing as
reasonably determined by Prudential Securities Incorporated.
(d) It is understood that any of you, individually and not as
one of the Representatives, may (but shall not be obligated to) make payment on
behalf of any Underwriter or Underwriters for any of the Securities to be
purchased by such Underwriter or Underwriters. No such payment shall relieve
such Underwriter or Underwriters from any of its or their obligations hereunder.
4. Offering by the Underwriters. Upon your authorization of the
----------------------------
release of the Firm Securities, the several Underwriters propose to offer the
Firm Securities for sale to the public upon the terms set forth in the
Prospectus.
5. Covenants of the Company. The Company covenants and agrees
------------------------
with each of the Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto to become effective as promptly as
possible. If required, the Company will file the Prospectus or any Term
Sheet that constitutes a part thereof and any amendment or supplement
thereto with the Commission in the manner and within the time period
required by Rules 434 and 424(b) under the Act. During any time when a
prospectus relating to the Securities is required to be delivered under the
Act, the Company (i) will comply with all requirements imposed upon it by
the Act and the rules and regulations of the Commission thereunder to the
extent necessary to permit the continuance of sales of or dealings in the
Securities in accordance with the provisions hereof and of the Prospectus,
as then amended or supplemented, and (ii) will not file with the Commission
the Prospectus or the amendment referred to in the second sentence of
Section 2(a) hereof, any amendment or supplement to the Prospectus or any
amendment to any Registration Statement unless the Representatives
previously have been advised and furnished with a copy thereof within a
reasonable period of time prior to the proposed filing and as to which
filing the Representatives shall not have given their consent, which
consent shall not have been unreasonably withheld. The Company will prepare
and file with the Commission, in accordance with the rules and regulations
of the Commission, promptly upon request by the Representatives or counsel
for the Underwriters, any amendments to any Registration Statement or
amendments or supplements to the Prospectus that may be necessary or
advisable in connection with the distribution of the Securities by the
several Underwriters, and will use its best efforts to cause any such
amendment to the Registration Statement to be declared effective by the
Commission as promptly as possible. The Company will advise the
Representatives, promptly after receiving notice thereof, of the time when
any Registration Statement or any amendment thereto has been filed or
declared effective or the Prospectus or any amendment or supplement thereto
has been filed and will provide evidence satisfactory to the
Representatives of each such filing or effectiveness.
11.
<PAGE>
(b) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the Original
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
(ii) the suspension of the qualification of the Securities for offering or sale
in any jurisdiction, (iii) the institution, threatening or contemplation of any
proceeding for any such purpose or (iv) any request made by the Commission for
amending the Original Registration Statement or any Rule 462(b) Registration
Statement, for amending or supplementing the Prospectus or for additional
information. The Company will use its best efforts to prevent the issuance of
any such stop order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of the Securities for
offering and sale under the securities or blue sky laws of such jurisdictions as
the Representatives may designate and will continue such qualifications in
effect for as long as may be necessary to complete the distribution of the
Securities, provided, however, that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction.
(d) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the Act
or (ii) the Option Closing Date, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if for any other reason it is necessary at any time to
amend or supplement the Prospectus to comply with the Act or the rules or
regulations of the Commission thereunder, the Company will promptly notify the
Representatives thereof and, subject to Section 5(a) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the Representatives
and to counsel for the Underwriters a conformed copy of the registration
statement originally filed with respect to the Securities and each amendment
thereto (in each case including exhibits thereto) or any Rule 462(b)
Registration Statement, certified by the Secretary or an Assistant Secretary of
the Company to be true and complete copies thereof as filed with the Commission
by electronic transmission, (ii) to each other Underwriter, a conformed copy of
such registration statement or any Rule 462(b) Registration Statement and each
amendment thereto (in each case without exhibits thereto) and (iii) so long as a
prospectus relating to the Securities is required to be delivered under the Act,
as many copies of each Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto as the Representatives may reasonably request; without
limiting the application of clause (iii) of this sentence, the Company, not
later than (A) 6:00 P.M., New York City time, on the date of determination of
the public offering price, if such determination occurred at or prior to 10:00
A.M., New York City time, on such date or (B) 2:00 P.M., New York City time, on
the business day following the date of determination of the public offering
price, if such determination occurred after 10:00 A.M., New York City time, on
such date, will deliver to the Underwriters, without charge, as many copies of
the Prospectus and any
12.
<PAGE>
amendment or supplement thereto as the Representatives may reasonably request
for purposes of confirming orders that are expected to settle on the Firm
Closing Date.
(f) The Company, as soon as practicable, will make generally available
to its securityholders and to the Representatives an earnings statement of the
Company and its subsidiaries that satisfies the provisions of Section 11(a) of
the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus.
(h) The Company will not, directly or indirectly, without the prior
written consent of Prudential Securities Incorporated on behalf of the
Underwriters, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose (or announce any offer, sale,
offer of sale, contract of sale, pledge, grant of any option to purchase or
other sale or disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common Stock for
a period of 180 days after the date hereof, except pursuant to this Agreement
and except for (i) issuances of Common Stock pursuant to the exercise of
warrants or employee stock options of the Company to persons who have signed an
agreement referred to in Section 7(f), and (ii) the grant of employee stock
options with vesting schedules consistent with past practice under the option
plans of the Company.
(i) Until the date 25 days following the completion of the offering of
the Securities contemplated hereby, the Company will not, directly or
indirectly, (i) take any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or (ii) (A) sell, bid for,
purchase, or pay anyone any compensation for soliciting purchases of, the
Securities or (B) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Company, in each case
except as expressly contemplated in this Agreement.
(j) The Company will use its best efforts to obtain the agreements
described in Section 7(f) hereof prior to the Firm Closing Date.
(k) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date, any
rumor, publication or event relating to or affecting the Company shall occur as
a result of which in your opinion the market price of the Common Stock has been
or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after notice from you advising the Company to the
effect set forth above, forthwith prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such rumor,
publication or event, unless the Company, after consultation with its counsel
and underwriters' counsel, determines that such action would be inappropriate.
(l) If the Company elects to rely on Rule 462(b), the Company shall both
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) and pay the applicable fees in accordance with Rule 111 promulgated
under the Act by the earlier of
13.
<PAGE>
(i) 10:00 P.M. Eastern time on the date of this Agreement and (ii) the time
confirmations are sent or given, as specified by Rule 462(b)(2).
(m) The Company will cause the Securities to be duly included for
quotation in The Nasdaq Stock Market's National Market (the "Nasdaq National
Market") prior to the Firm Closing Date. The Company will use its reasonable
best efforts to ensure that the Securities remain included for quotation on the
Nasdaq National Market or otherwise become listed on the New York Stock Exchange
following the Firm Closing Date.
6. Expenses. The Company will pay all costs and expenses incident to
--------
the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 11 hereof, including all costs and expenses incident to (i)
the printing or other reproduction of documents with respect to the
transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto, any
Rule 462(b) Registration Statement, any Preliminary Prospectus and the
Prospectus and any amendment or supplement thereto and the reproduction other
than printing of this Agreement and any blue sky memoranda, (ii) all
arrangements relating to the delivery to the Underwriters of copies of the
foregoing documents, (iii) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Company, (iv)
preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Securities, including transfer agent's and registrar's fees, (v)
the qualification of the Securities under state securities and blue sky laws,
including filing fees and reasonable fees and disbursements of counsel for the
Underwriters relating thereto (which fees and disbursements will in no event
exceed $15,000 provided that the Securities are included for quotation in the
Nasdaq National Market), (vi) the filing fees of the Commission and the National
Association of Securities Dealers, Inc. relating to the Securities, (vii) any
quotation of the Securities in the Nasdaq National Market, (viii) any meetings
with prospective investors in the Securities (other than as shall have been
specifically approved by the Representatives to be paid for by the Underwriters)
and (ix) advertising relating to the offering of the Securities specifically
approved by the Representatives to be paid for by the Underwriters (other than a
tombstone advertisement in the Wall Street Journal National Edition which shall
be paid for by the Underwriters and as shall otherwise have been specifically
approved by the Representatives to be paid for by the Underwriters). If the
sale of the Securities provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth in Section 7 hereof
is not satisfied, because this Agreement is terminated pursuant to Section 11
hereof or because of any failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon demand
for all out-of-pocket expenses (including counsel fees and disbursements) that
shall have been incurred by them in connection with the proposed purchase and
sale of the Securities. The Company shall not in any event be liable to any of
the Underwriters for the loss of anticipated profits from the transactions
covered by this Agreement.
7. Conditions of the Underwriters' Obligations. The obligations of
-------------------------------------------
the several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company contained
14.
<PAGE>
herein as of the date hereof and as of the Firm Closing Date, as if made on and
as of the Firm Closing Date, to the accuracy of the statements of the Company's
officers made pursuant to the provisions hereof, to the performance by the
Company of its covenants and agreements hereunder and to the following
additional conditions:
(a) If the Original Registration Statement or any amendment thereto filed
prior to the Firm Closing Date has not been declared effective as of the time of
execution hereof, the Original Registration Statement or such amendment and, if
the Company has elected to rely upon Rule 462(b), the Rule 462(b) Registration
Statement, shall have been declared effective not later than the earlier of (i)
11:00 A.M., New York time, on the date on which the amendment to the
registration statement originally filed with respect to the Securities or to the
Registration Statement, as the case may be, containing information regarding the
initial public offering price of the Securities has been filed with the
Commission and (ii) the time confirmations are sent or given as specified by
Rule 462(b)(2) or with respect to the Original Registration Statement, or such
later time and date as shall have been consented to by the Representatives; if
required, the Prospectus or any Term Sheet that constitutes a part thereof and
any amendment or supplement thereto shall have been filed with the Commission in
the manner and within the time period required by Rules 434 and 424(b) under the
Act; no stop order suspending the effectiveness of the Registration Statement or
any amendment thereto shall have been issued, and no proceedings for that
purpose shall have been instituted or threatened or, to the knowledge of the
Company or the Representatives, shall be contemplated by the Commission; and the
Company shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise).
(b) The Representatives shall have received an opinion, dated the Firm
Closing Date, from Peter H. Zamore, Vice President, General Counsel and
Secretary of the Company, to the effect that:
(i) the Company is qualified to transact business as a foreign
corporation and is in good standing under the laws of all jurisdictions where
the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified does
not amount to a material liability or disability of the Company.
(c) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Jones Day Reavis & Pogue LLP, counsel for the Company, to the
effect that:
(i) the Company is validly existing as a corporation in good
standing under the laws of the State of Delaware, is duly qualified to transact
business as a foreign corporation in good standing in the State of California,
the Commonwealth of Massachussetts, the State of Rhode Island and the State of
Vermont and is qualified to transact business as a foreign corporation in the
Commonwealth of Pennsylvania;
(ii) the Company has corporate power to own or lease its properties
and conduct its business as described in the Prospectus;
(iii) the Company has authorized, issued and outstanding shares of
capital stock as described in the first paragraph under the caption "Description
of Capital Stock"
15.
<PAGE>
in the Prospectus; all of the issued and outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with any and all applicable
federal and state securities or Blue Sky laws and were not issued in violation
of or subject to any statutory preemptive rights or other statutory rights to
subscribe for or purchase securities or, to such counsel's knowledge, any
contractual preemptive rights or other contractual rights to subscribe for or
purchase securities; the Firm Securities have been duly authorized and, when
issued and paid for as contemplated by this Agreement, will be validly issued,
fully paid and nonassessable; the Securities have been duly included for trading
in the Nasdaq National Market; the holders of the Company's outstanding shares
of capital stock are not entitled to any preemptive rights or any rights to
subscribe for or purchase shares of Common Stock under the Company's Amended and
Restated Certificate of Incorporation or Amended and Restated Bylaws or any
other document filed as an exhibit to the Original Registration Statement or any
Rule 462(b) Registration Statement; and no holder of any of the Company's
outstanding shares of capital stock has any contractual right to require such
shares held by it to be included in the registration effected by the Original
Registration Statement or any Rule 462(b) Registration Statement under any
document filed as an exhibit to the Original Registration Statement or any Rule
462(b) Registration Statement;
(iv) the statements under the captions "Description of Capital
Stock" and "Shares Eligible for Future Sale" in the Prospectus, insofar as such
statements purport to summarize the provisions of documents referred to therein,
present fair summaries of such provisions and, insofar as they purport to
describe matters of law, are accurate in all material respects;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) (A) such counsel is not acting as counsel for the Company in
any pending litigation or governmental proceeding in which the Company is a
party or to which property of the Company is subject that is required to be
described in the Original Registration Statement, any Rule 462(b) Registration
Statement or the Prospectus and is not so described as required (including any
litigation or proceeding challenging the validity of the Merger), and such
counsel has not had referred to it by the Company for legal advice or legal
representation any matter that it believes might be deemed to be overtly
threatened litigation or an overtly threatened governmental proceeding in which
the Company might become a party or to which property of the Company might
become subject (including any litigation or proceeding challenging the validity
of the Merger); and (B) such counsel does not know of any agreement or other
documents required to be filed as exhibits to the Original Registration
Statement or any Rule 462(b) Registration Statement or described in the
Registration Statement, any Rule 462(b) Registration Statement or the Prospectus
that are not so filed or described as required;
(vii) no consent, approval, authorization, registration,
qualification or order of, by or with any governmental body is necessary in
connection with the execution and delivery of this Agreement and the
consummation of the transactions herein contemplated (other than as may be
required under state securities or Blue Sky laws, as to which such counsel need
express no opinion) except such as have been obtained;
16.
<PAGE>
(viii) the execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not (a)
result in a violation of any statute or regulation of the United States, the
State of New York or the State of Texas or the Delaware General Corporation Law
or the Delaware Limited Liability Company Act (other than state securities or
Blue Sky laws, as to which such counsel need express no opinion) or (b) conflict
with or result in a breach of any of the terms or provisions of, or constitute a
default under, the Company's Amended and Restated Certificate of Incorporation
or Amended and Restated Bylaws Rule 462(b) Registration Statement;
(ix) The Original Registration Statement and any Rule 462(b)
Registration Statement have become effective under the Act, and to the best of
such counsel's knowledge, no stop order suspending the effectiveness of the
Original Registration Statement or any Rule 462(b) Registration Statement has
been issued and no proceedings for that purpose are pending or threatened by the
Commission;
(x) the Original Registration Statement and any Rule 462(b)
Registration Statement and the Prospectus (other than the financial statements,
related schedules and other statistical and financial data included therein, as
to which such counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the applicable rules and
regulations of the Commission thereunder;
(xi) the Company is not, and will not become, solely as a result of
the consummation of the transactions contemplated by this Agreement and
application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment Company under the Investment Company Act
of 1940, as amended; and
(xii) the Merger became effective on ________, 1999 upon the filing
of the Merger Agreement with the Secretary of State of the State of Delaware in
accordance with Sections 265 and 251 of the Delaware General Corporation Law and
Section 18-209 of the Delaware Limited Liability Company Act; when the Merger
became effective, the separate existence of the Predecessor ceased and the
Merger had the other effects specified in Section 259(a) of the Delaware General
Corporation Law and Section 18-209(g) of the Delaware Limited Liability Company
Act; at the Effective Time, (A) each common unit in the Predecessor outstanding
immediately prior to the Effective Time was converted into the right to receive
shares of Common Stock, (B) each then-outstanding option to purchase common
units in the Predecessor was assumed by the Company and became an option to
acquire shares of Common Stock, and (C) each then-outstanding warrant to
purchase common units in the Predecessor became exercisable to purchase shares
of Common Stock, in each case as contemplated by Article II of the Merger
Agreement; prior to the Effective Time, the Merger Agreement and the Merger were
duly approved by the Predecessor by all requisite limited liability company
action, including all requisite action of its managers and members, and by the
Company by all requisite corporate action, including all requisite action of its
directors and stockholders; and the consummation of the Merger did not (a)
violate any statute or regulation of the United States, the State of New York or
the State of Texas or the Delaware General Corporation Law or the Delaware
Limited Liability Company Act or (b) conflict with or breach any of the terms
of, or constitute a default under the Company's Amended and Restated Certificate
of Incorporation or Amended and Restated Bylaws, the Predecessor's Second
Amended and Restated Operating
17.
<PAGE>
Agreement or any other document filed as an exhibit to the Original Registration
Statement or any Rule 462(b) Registration Statement.
Such counsel shall also have furnished to the Representatives a written
statement, dated the Firm Closing Date, addressed to the Underwriters, to the
effect that (x) such counsel has participated in the preparation of the Original
Registration Statement and any Rule 462(b) Registration Statement, and (y) based
upon such participation, no facts have come to their attention which lead them
to believe that the Original Registration Statement or any 462(b) Registration
Statement (other than the financial statements, related schedules and other
statistical and financial data included therein, as to which such counsel need
express no belief), as of the time it became effective under the Act, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or that the Prospectus (other than the financial
statements, related schedules and other statistical and financial data included
therein, as to which such counsel need express no belief), as of its date or the
date of such opinion, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing opinion
and statement may be qualified by a statement to the effect that such counsel
has not independently verified, does not pass upon and does not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Original Registration Statement, any Rule 462(b) Registration
Statement or the Prospectus.
In rendering such opinion, such counsel may rely, as to certain factual
matters, without any independent investigation, inquiry or verification, upon
statements or certificates of officers and other representatives of the Company
(including the representations of the Company contained in this Agreement),
certificates of public officials, certificates or written statements of officers
of departments of various jurisdictions having custody of documents relating to
the corporate existence, foreign qualification and good standing of the Company
and written statements of representatives of The Nasdaq Stock Market.
References to the Original Registration Statement, any Rule 462(b)
Registration Statement and the Prospectus in this paragraph (b) shall include
any amendment to supplement thereto at the date of such opinion.
(d) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Cooley Godward LLP, counsel for the Underwriters, with
respect to the issuance and sale of the Firm Securities, the Registration
Statement and the Prospectus, and such other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as such counsel may reasonably request for the
purpose of enabling them to pass upon such matters.
(e) The Representatives shall have received from Arthur Andersen
LLP a letter or letters dated, respectively, the date hereof and the Firm
Closing Date, in form and substance satisfactory to the Representatives, to the
effect that:
18.
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(i) they are certified public independent accountants with
respect to the Company within the meaning of the Act and the applicable
published rules and regulations thereunder;
(ii) in their opinion, the financial statements and
schedules audited by them and included in the Registration Statement and the
Prospectus comply in form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(iii) on the basis of a reading of the latest available
interim unaudited condensed financial statements of the Company, carrying out
certain specified procedures (which do not constitute an examination made in
accordance with generally accepted auditing standards) that would not
necessarily reveal matters of significance with respect to the comments set
forth in this paragraph (iii), a reading of the minute books of the
shareholders, the board of directors and any committees thereof of the Company,
and inquiries of certain officials of the Company who have responsibility for
financial and accounting matters, nothing came to their attention that caused
them to believe that:
(A) the unaudited condensed financial statements of the
Company included in the Registration Statement and the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations thereunder or are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in
the Registration Statement and the Prospectus;
(B) at a specific date not more than five business days
prior to the date of such letter, there were any changes in the
capital stock or long-term debt of the Company or any decreases in net
current assets or stockholders' equity of the Company, in each case
compared with amounts shown on the March 31, 1999 unaudited balance
sheet included in the Registration Statement and the Prospectus, or
for the period from the date of such balance sheet to such specified
date there were any decreases, as compared with the quarterly period
ending as of the date of such balance sheet, in total revenues,
operating loss, net loss or basic and diluted loss per common share of
the Company, except in all instances for changes, decreases or
increases set forth in the Registration Statement.
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting records of
the Company and are included in the Registration Statement and the Prospectus
under the captions "Prospectus Summary - Summary Financial Data," "Risk
Factors," "Use of Proceeds," "Capitalization," "Dilution," "Selected Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business," "Management - Executive Compensation,"
"Management - Employment Agreements," "Management - Stock Option Plans,"
"Certain Transactions,"
19.
<PAGE>
"Principal Stockholders," "Description of Capital Stock" and "Shares Eligible
for Future Sale" and in Exhibit 11 to the Registration Statement, and have
compared such amounts, percentages and financial information with such records
of the Company and with information derived from such records and have found
them to be in agreement, excluding any questions of legal interpretation.
In the event that the letters referred to above set forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (A) such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(f) The Representatives shall have received a certificate, dated
the Firm Closing Date, of the chief executive officer and the chief financial
officer of the Company to the effect that:
(i) the representations and warranties of the Company in
this Agreement are true and correct as if made on and as of the Firm Closing
Date; the Registration Statement, as amended as of the Firm Closing Date, does
not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading, and the
Prospectus, as amended or supplemented as of the Firm Closing Date, does not
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Company has
performed all covenants and agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been instituted or threatened or, to the best
of the Company's knowledge, are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
Company has not sustained any loss or interference with its business or
properties that has had a Material Adverse Effect from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding, and there has not been
any event having a Material Adverse Effect, or any development involving a
prospective Material Adverse Effect, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or supplement
thereto).
20.
<PAGE>
(g) The Representatives shall have received from each person who
is a director, officer or shareholder of the Company an agreement to the effect
that such person will not, directly or indirectly, without the prior written
consent of Prudential Securities Incorporated, on behalf of the Underwriters,
offer, sell, offer to sell, contract to sell, pledge, grant any option to
purchase or otherwise sell or dispose (or announce any offer, sale, offer of
sale, contract of sale, pledge, grant of any option to purchase or other sale or
disposition) of any shares of Common Stock or any securities convertible into,
or exchangeable or exercisable for, shares of Common Stock for a period of 180
days after the date of this Agreement.
(h) On or before the Firm Closing Date, the Representatives and
counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(i) Prior to the commencement of the offering of the Securities,
the Securities shall have been included for trading in the Nasdaq National
Market, subject to official notice of issuance.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and pay
for any Option Securities shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Firm Securities, except that all references
to the Firm Securities and the Firm Closing Date shall be deemed to refer to
such Option Securities and the related Option Closing Date, respectively.
8. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made
by the Company in Section 2 of this Agreement;
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Securities under the securities or blue sky laws thereof or filed
with the Commission or any securities association or securities exchange (each
an "Application");
21.
<PAGE>
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or any Application a
material fact required to be stated therein or necessary to make the statements
therein not misleading; or
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials prepared by the Company
or based upon written information furnished by or on behalf of the Company,
including, without limitation, slides, videos, films, tape recordings, used in
connection with the marketing of the Securities, including, without limitation,
statements communicated to securities analysts employed by the Underwriters;
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement or
any amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Underwriter through the Representatives specifically for use therein; and
provided, further, that the Company will not be liable to any Underwriter or any
person controlling such Underwriter with respect to any such untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus that is corrected in the Prospectus (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or liability
purchased Securities from such Underwriter but was not sent or given a copy of
the Prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by the
Act, unless such failure to deliver the Prospectus (as amended or supplemented)
was a result of noncompliance by the Company with Section 5(d) and (e) of this
Agreement. This indemnity agreement will be in addition to any liability which
the Company may otherwise have. The Company will not, without the prior written
consent of the Underwriter or Underwriters purchasing, in the aggregate, more
than fifty percent (50%) of the Securities, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not any such Underwriter or any person who controls any such Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of all of the
Underwriters and such controlling persons from all liability arising out of such
claim, action, suit or proceeding.
(b) Each Underwriter, severally and not jointly, will indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become subject
22.
<PAGE>
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or any
Application or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto, or any Application or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
specifically for use therein: and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company or any such director, officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or any action in respect thereof. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such 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 one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 8 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representatives in the case of
paragraph (a) of this Section 8, representing the indemnified parties under such
paragraph (a) who are parties to such action or actions) or (ii) the
indemnifying party does not promptly retain counsel satisfactory to the
indemnified party or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at
23.
<PAGE>
the expense of the indemnifying party. After such notice from the indemnifying
party to such indemnified party, the indemnifying party will not be liable for
the costs and expenses of any settlement of such action effected by such
indemnified party without the consent of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 8 is unavailable or insufficient,
for any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received by
the Underwriters. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters, the parties'
relative intents, knowledge, access to information and opportunity to correct or
prevent such statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company and the Underwriters agree that it
would not be equitable if the amount of such contribution were determined by pro
rata or per capita allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take
into account the equitable considerations referred to above in this paragraph
(d). Notwithstanding any other provision of this paragraph (d), no Underwriter
shall be obligated to make contributions hereunder that in the aggregate exceed
the total public offering price of the Securities purchased by such Underwriter
under this Agreement, less the aggregate amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same or any
substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and not
joint, and contributions among Underwriters shall be governed by the provisions
of the Prudential Securities Incorporated Master Agreement Among Underwriters.
For purposes of this paragraph (d), each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, shall
have the same rights to contribution as the Company.
24.
<PAGE>
9. Default of Underwriters. If one or more Underwriters default in their
-----------------------
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Securities that is more than ten percent of the aggregate number of
Firm Securities or Option Securities, as the case may be, to be purchased by all
of the Underwriters at such time hereunder, and if arrangements satisfactory to
the Representatives are not made within 36 hours after such default for the
purchase by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as provided
in Section 10 hereof. In the event of any default by one or more Underwriters
as described in this Section 9, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 3 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Securities or Option
Securities, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
10. Survival. The respective representations, warranties, agreements,
--------
covenants, indemnities and other statements of the Company, its officers and the
several Underwriters set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any Underwriter or any controlling person
referred to in Section 8 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
11. Termination.
-----------
(a) This Agreement may be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company given prior to the Firm Closing Date or
the related Option Closing Date, respectively, in the event that the Company
shall have failed, refused or been unable to perform all obligations and satisfy
all conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Firm Closing Date or such Option Closing Date,
respectively,
25.
<PAGE>
(i) the Company has, in the sole judgment of the
Representatives, sustained any loss or interference with its businesses or
properties that has had a Material Adverse Effect from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding or there shall have been
any Material Adverse Effect, or any development involving a prospective Material
Adverse Effect (including without limitation a change in management or control
of the Company), except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto);
(ii) trading in the Common Stock shall have been suspended
by the Commission or the Nasdaq National Market or trading in securities
generally on the New York Stock Exchange or Nasdaq National Market shall have
been suspended or minimum or maximum prices shall have been established on
either such exchange;
(iii) a banking moratorium shall have been declared by New
York or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an outbreak or
escalation of any other insurrection or armed conflict involving the United
States or (C) any other calamity or crisis or material adverse change in general
economic, political or financial conditions having an effect on the U.S.
financial markets that, in the sole judgment of the Representatives, makes it
impractical or inadvisable to proceed with the public offering or the delivery
of the Securities as contemplated by the Registration Statement, as amended as
of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by Underwriters. The information set forth in
------------------------------------
the last paragraph on the front cover page (insofar as such information relates
to the underwriters) and the information as set forth under the heading
"Underwriting" in any Preliminary Prospectus or the Prospectus (to the extent
such statements relate to the Underwriters) constitute the only information
furnished by any Underwriter through the Representatives to the Company for the
purposes of Sections 2(b) and 8 hereof. The Underwriters confirm that such
statements (to such extent) are correct.
13. Notices. All communications hereunder shall be in writing and, if
-------
sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, One New York Plaza, New York, New York 10292, Attention: Equity
Transactions Group; and if sent to the Company, shall be delivered or sent by
mail, telex or facsimile transmission and confirmed in writing to the Company at
55 Green Mountain Drive, South Burlington, Vermont 05403.
14. Successors. This Agreement shall inure to the benefit of and shall be
----------
binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in
26.
<PAGE>
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person except that (i) the indemnities of the Company contained in Section 8 of
this Agreement shall also be for the benefit of any person or persons who
control any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act and (ii) the indemnities of the Underwriters contained in
Section 8 of this Agreement shall also be for the benefit of the directors of
the Company, the officers of the Company who have signed the Registration
Statement and any person or persons who control the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Securities from any Underwriter shall be deemed a successor because of such
purchase.
15. Applicable Law. The validity and interpretation of this Agreement,
--------------
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any provisions relating to conflicts of laws.
16. Consent to Jurisdiction and Service of Process. All judicial
----------------------------------------------
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of New York, and
by execution and delivery of this Agreement, the Company accepts for itself and
in connection with its properties, generally and unconditionally, the
nonexclusion jurisdiction of the aforesaid courts and waives any defense of
forum non conveniens and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. The Company designates and appoints
CT Corporation System, 1633 Broadway, New York, New York, and such other persons
as may hereafter be selected by the Company irrevocably agreeing in writing to
so serve, as its agent to receive on its behalf service of all process in any
such proceedings in any such court, such service being hereby acknowledged by
the Company to be effective and binding service in every respect. A copy of any
such process so served shall be mailed by registered mail to Prudential
Securities Incorporated at its address provided in Section 13 hereof; provided,
--------
however, that, unless otherwise provided by applicable law, any failure to mail
- -------
such copy shall not affect the validity of service of such process. If any
agent appointed by the Company refuses to accept service, the Company hereby
agrees that service of process sufficient for personal jurisdiction in any
action against the Company in the State of New York may be made by registered or
certified mail, return receipt requested, to the Company at its address provided
in Section 13 hereof, and the Company hereby acknowledges that such service
shall be effective and binding in every respect. Nothing herein shall affect
the right to serve process in any other manner permitted by law or shall limit
the right of any Underwriter to bring proceedings against the Company in the
courts of any other jurisdiction.
17. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
27.
<PAGE>
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and each of the
several Underwriters.
Very truly yours,
GREENMOUNTAIN.COM COMPANY
By
----------------------------------------
M. David White
Chief Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
BANC BOSTON ROBERTSON STEPHENS
BT ALEX. BROWN
VOLPE BROWN WHELAN & COMPANY
FIRST UNION CAPITAL MARKETS
FAC/EQUITIES
THE ROBERTSON-HUMPHREY COMPANY
E*OFFERING
By PRUDENTIAL SECURITIES INCORPORATED
By
----------------------------------------
Jean-Claude Canfin
Managing Director
For itself and on behalf of the Representatives.
28.
<PAGE>
SCHEDULE 1
UNDERWRITERS
<TABLE>
<CAPTION>
<S> <C>
Underwriter Number of Firm Securities to be Purchased
- ---------------------------------------------- -----------------------------------------
Prudential Securities Incorporated.......
Banc Boston Robertson Stephens
BT Alex. Brown
Volpe Brown Whelan & Company
FAC/Equities
First Union Capital Markets
The Robinson-Humphrey Company
E*Offering
-----------------------------------------
Total
</TABLE>
29.
<PAGE>
EXHIBIT 2.1
FORM
OF
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of June __,
1999, is made by and between Green Mountain Energy Resources L.L.C., a Delaware
limited liability company (the "LLC"), and GreenMountain.com Company, a Delaware
corporation (the "Corporation").
RECITALS
--------
A. In accordance with the LLC's limited liability company agreement, the
management committee of the LLC has duly adopted a resolution approving this
Agreement and the Merger, thereby satisfying the applicable approval
requirements under Section 18-209 of the Delaware Limited Liability Company Act
(the "DLLCA").
B. The board of directors of the Corporation has duly adopted a
resolution approving this Agreement and declaring its advisability, thereby
satisfying the applicable approval requirements under Section 264 and 251 of the
Delaware General Corporation Law (the "DGCL").
C. No shares of stock of the Corporation were issued prior to the
adoption by the board of directors of the Corporation of the resolution
approving this Agreement and, accordingly, under Sections 264 and 251 of the
DGCL no vote of stockholders of the Corporation is necessary to authorize the
Merger.
AGREEMENTS
----------
NOW, THEREFORE, in consideration of the mutual agreements herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
I. The Merger
----------
1.1 Merger. At the Effective Time (as defined below), the LLC shall be
------
merged with and into the Corporation (the "Merger") in accordance with the
applicable provisions of the DLLCA and the DGCL, and separate existence of the
LLC will thereupon cease. The Corporation shall be the surviving entity in the
Merger (as such, the "Surviving Entity"). The Merger shall have the effects
specified in the DLLCA and the DGCL.
1.2 Effective Time. The LLC and the Corporation shall cause this
--------------
Agreement to be filed with the Secretary of State of the State of Delaware in
accordance with Section 18-209 of the DLLCA and Sections 251 and 264 of the DGCL
at such time as they shall mutually agree. Upon the completion of the filing,
the Merger shall become effective in accordance with the DLLCA and the DGCL.
The time and date on which the Merger becomes effective is herein referred to as
the "Effective Time."
<PAGE>
1.3 Governing Documents of the Surviving Entity. (a) At the Effective
-------------------------------------------
Time, the certificate of incorporation of the Corporation as in effect
immediately prior to the Effective Time shall be amended and restated in its
entirety to read as set forth in Exhibit A hereto. The certificate of
---------
incorporation, as so amended and restated, shall be the certificate of
incorporation of the Surviving Entity from and after the Effective Time until
amended in accordance with its terms and the DGCL.
(b) The bylaws of the Corporation as in effect immediately prior to the
Effective Time shall be the bylaws of the Surviving Entity from and after the
Effective Time until amended in accordance with their terms and the DGCL.
1.4 Directors and Officers of the Surviving Entity. (a) The members of
----------------------------------------------
the board of directors of the Corporation immediately prior to the Effective
Time shall be the members of the board of directors of the Surviving Entity and
shall continue to serve as members of the board of directors of the Surviving
Entity until their respective successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the certificate of incorporation or bylaws of the Surviving Entity.
(b) The officers of the Corporation immediately prior to the Effective
Time shall be the officers of the Surviving Entity and shall continue to serve
as officers of the Surviving Entity until their respective successors have been
appointed and qualified or until their earlier death, resignation or removal in
accordance with the certificate of incorporation and bylaws of the Surviving
Entity.
II. Effect of Merger on Securities
------------------------------
2.1 Conversion of Units. At the Effective Time, each common unit in the
-------------------
LLC (each, a "Unit") outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive 3.0 shares of fully paid and
nonassessable common stock, par value $0.01 per share, of the Corporation
("Common Stock") upon surrender of the certificate formerly representing such
Unit in accordance with this Agreement.
2.2 Options to Purchase Units. At the Effective Time, each then-
-------------------------
outstanding option to purchase Units (each, an "Option"), whether or not then
exercisable or fully vested, shall be assumed by the Corporation and shall
constitute an option to acquire, on substantially the same terms and subject to
substantially the same conditions as were applicable under such Option
immediately prior to the Effective Time, the number of shares of Common Stock,
determined by multiplying the number of Units subject to such Option immediately
prior to the Effective Time by 3.0 (the "Conversion Factor"), at an exercise
price per share of Common Stock (rounded to the nearest whole cent) equal to the
exercise price per Unit of Units subject to such Option divided by the
Conversion Factor.
2.3 Warrants to Purchase Units. From and after the Effective Time, the
--------------------------
holder of any warrant to purchase Units outstanding at the Effective Time (each,
a "Warrant") shall have the right until the expiration date thereof to exercise
such Warrant for the number of whole shares of
2
<PAGE>
Common Stock receivable pursuant to Section 2.1 hereof by a holder of the number
of Units for which such Warrant might have been exercised immediately prior to
the Effective Time.
2.4 No Shares of the Corporation Outstanding. There will be no shares of
----------------------------------------
stock of the Corporation outstanding immediately prior to the Effective Time.
III. Exchange of Certificates
------------------------
3.1 Letters of Transmittal; Surrender of Certificates. The Corporation
-------------------------------------------------
shall provide to each holder of record of a certificate or certificates that,
immediately prior to the Effective Time, evidenced outstanding Units (the
"Certificates") a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Corporation, and
shall be in such form and have such other provisions as the Corporation may
specify), together with related instructions, for use in effecting the surrender
of the Certificates in exchange for shares of Common Stock as contemplated by
Section 2.1 hereof. Upon surrender of a Certificate for cancellation to the
Corporation (or an exchange agent designated by the Corporation), together with
a duly executed letter of transmittal and such other customary documents as may
be required pursuant to such instructions, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing the
number of shares of Common Stock that the aggregate number of Units previously
represented by such Certificate shall have been converted into the right to
receive pursuant to Section 2.1 hereof, and the Certificate so surrendered shall
forthwith be canceled.
3.2 Cancellation of Units; No Further Rights. As of the Effective Time,
----------------------------------------
all Units issued and outstanding immediately prior to the Effective Time shall
cease to be outstanding, shall automatically be canceled and shall cease to
exist, and each holder of a Certificate theretofore representing any such Units
shall cease to have any rights with respect thereto, except the right to receive
shares of Common Stock upon surrender of such Certificate in accordance with
Section 3.1 hereof, and until so surrendered, each such Certificate shall
represent for all purposes only the right to receive shares of Common Stock as
provided in this Agreement. The shares of Common Stock delivered upon the
surrender for exchange of Certificates in accordance with the terms of this
Article III shall be deemed to have been delivered in full satisfaction of all
rights pertaining to the Units theretofore represented by such Certificates.
3.3 Distributions with Respect to Unexchanged Units. No dividends or
-----------------------------------------------
other distributions with respect to Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Common Stock issuable upon the surrender of such
Certificate pursuant to Section 3.1, until the surrender of such Certificate
pursuant to Section 3.1. Subject to the effect of applicable escheat or similar
laws, following the surrender of any such Certificate pursuant to Section 3.1
there shall be paid to the holder of the certificate representing the shares of
Common Stock issued in
3
<PAGE>
exchange therefor, without interest, (a) at the time of such surrender, the
amount of dividends or other distributions with respect to such shares of Common
Stock with a record date after the Effective Time that would have been paid with
respect to such shares of Common Stock had those shares been issued and
outstanding as of such record date, and (b) at the appropriate payment date, the
amount of dividends or other distributions with respect to such shares of Common
Stock with a record date after the Effective Time but prior to such surrender
and with a payment date subsequent to such surrender that would have been
payable with respect to such shares of Common Stock had those shares been issued
and outstanding as of such record date.
IV. Miscellaneous
-------------
4.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time by mutual agreement of the LLC and the Corporation,
notwithstanding any prior approvals.
4.2 Registration Rights Agreement. At or prior to the Effective Time, the
-----------------------------
Corporation shall execute a Registration Rights Agreement in such form as the
Corporation may determine, pursuant to which each holder of record of
Certificates, upon such holder's surrender thereof in accordance with Section
3.1, shall be entitled to "piggyback" registration rights with respect to Common
Stock.
4.3 Tax Treatment. The Merger is intended to constitute an exchange
-------------
described in Section 351 of the Internal Revenue Code of 1986, as amended.
4.4 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings between the parties with respect thereto.
4.5 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflict of laws thereof.
4
<PAGE>
4.6 Counterparts. This Agreement may be executed by the parties hereto in
------------
separate counterparts, each of which when so executed and delivered will be an
original, but all such counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
GREEN MOUNTAIN ENERGY
RESOURCES L.L.C.
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
GREENMOUNTAIN.COM COMPANY
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
5
<PAGE>
CERTIFICATION
As Secretary of the Corporation, I hereby certify that this Agreement was
adopted by the board of directors of the Corporation, without a vote of
stockholders, pursuant to subsection (f) of Section 251 of the DGCL, and I
hereby further certify that no shares of stock of the Corporation were issued
prior to the adoption by the board of directors of the Corporation of the
resolution approving this Agreement.
GREENMOUNTAIN.COM COMPANY
By:
------------------------------------
Name:
-----------------------------
Title: Secretary
6
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
greenmountain.com company
A STOCK CORPORATION
I, the undersigned, for the purpose of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
hereby certify as follows:
FIRST: The name of the corporation (the "Corporation") is
greenmountain.com company.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle,
Delaware 19801. The name of the Corporation's registered agent at such address
is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares which the Corporation shall have
authority to issue is 1,000 shares of Common Stock, par value of $1.00 per
share.
FIFTH: Each person who is or was or had agreed to become a director or
officer of the Corporation, or each such person who is or was serving or who had
agreed to serve at the request of the Board of Directors or an officer of the
Corporation as an employee or agent of the Corporation or as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (including the heirs, executors, administrators or
estate of such person), shall be indemnified by the Corporation to the full
extent permitted by the General Corporation Law of the State of Delaware or any
other applicable laws as presently or hereafter
<PAGE>
in effect. Without limiting the generality or the effect of the foregoing, the
Corporation may enter into one or more agreements with any person which provide
for indemnification greater or different than that provided in this Article. Any
repeal or modification of this Article Fifth shall not adversely affect any
right or protection existing hereunder immediately prior to such repeal or
modification.
SIXTH: In furtherance and not in limitation of the rights, powers,
privileges, and discretionary authority granted or conferred by the General
Corporation Law of the State of Delaware or other statutes or laws of the State
of Delaware, the Board of Directors is expressly authorized to make, alter,
amend or repeal the by-laws of the Corporation, without any action on the part
of the stockholders, but the stockholders may make additional by-laws and may
alter, amend or repeal any by-law whether adopted by them or otherwise. The
Corporation may in its by-laws confer powers upon its Board of Directors in
addition to the foregoing and in addition to the powers and authorities
expressly conferred upon the Board of Directors by applicable law.
SEVENTH: The Corporation reserves the right at any time and from time to
time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed herein or by applicable law; and all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this Certificate of
Incorporation in its present form or as hereafter amended are granted subject to
this reservation.
EIGHTH: The name and mailing address of the incorporator is Peter H.
Zamore, 55 Green Mountain Drive, South Burlington, Vermont 05407-2206.
2
<PAGE>
IN WITNESS WHEREOF, I the undersigned, being the incorporator hereinabove
named, do hereby execute this Certificate of Incorporation this 3rd day of
March, 1999.
/s/ Peter H. Zamore
---------------------------------------------
Peter H. Zamore
3
<PAGE>
CERTIFICATE OF CORRECTION
FILED TO CORRECT A CERTAIN ERROR IN
THE CERTIFICATE OF INCORPORATION
OF
greenmountain.com company
greenmountain.com company (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "DGCL"),
DOES HEREBY CERTIFY that:
1. The name of the Corporation is greenmountain.com company.
2. A Certificate of Incorporation (the "Certificate") was filed by the
Secretary of State of Delaware on March 3, 1999, and the Certificate requires
correction as permitted by Section 103 of the DGCL.
3. The inaccuracy or defect of the Certificate to be corrected is as
follows:
certain typographical errors in the name of the Corporation.
4. Article 1 of the Certificate is corrected to read in its entirety as
follows:
"FIRST: The name of the corporation (the "Corporation") is
GreenMountain.com Company."
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Correction to be signed by Peter H. Zamore, its Secretary, this 15th day of
March, 1999.
greenmountain.com company
By:/s/ Peter H. Zamore
---------------------------------------------
Peter H. Zamore, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
GREENMOUNTAIN.COM COMPANY
GreenMountain.com Company (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: The Corporation has not received any payment for any of its stock.
SECOND: The Board of Directors of the Corporation has duly adopted the
following resolution setting forth and adopting an amendment to the Certificate
of Incorporation of the Corporation:
RESOLVED, that the Board of Directors of GreenMountain.com Company
(the "Company") hereby adopts, approves and declares advisable the
following amendment to the Company's Certificate of Incorporation in order
to increase the authorized Common Stock of the Company from 1,000 shares to
150,000,000 shares and change the par value per share of the Common Stock
of the Company from $1.00 to $0.01:
"Paragraph FOURTH of the Certificate of Incorporation of the
Corporation is hereby amended and restated in its entirety as follows:
FOURTH: The total number of shares which the Corporation shall
have authority to issue is 150,000,000 shares of Common Stock,
par value of $0.01 per share."
THIRD: The amendment was duly adopted in accordance with the provisions of
Section 241 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, GreenMountain.com Company has caused this certificate
to be signed by Peter H. Zamore, its Secretary, on May 20, 1999.
By: /s/ PETER H. ZAMORE
--------------------------------
Peter H. Zamore, Secretary
<PAGE>
EXHIBIT 3.2
FORM OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GREENMOUNTAIN.COM COMPANY
GreenMountain.com Company, a corporation organized and existing under the
laws of the State of Delaware (the "Company"), hereby certifies as follows:
1. The name of the Company is GreenMountain.com Company.
2. The original Certificate of Incorporation of the Company was filed
with the Secretary of State of the State of Delaware ("Delaware SOS")
on March 3, 1999. A Certificate of Correction to the Company's
Certificate of Incorporation was filed with the Delaware SOS on March
16, 1999. A Certificate of Amendment to the Company's Certificate of
Incorporation was filed with the Delaware SOS on May 20, 1999.
3. This Amended and Restated Certificate of Incorporation amends,
restates and integrates the provisions of the original Certificate of
Incorporation pursuant to resolutions adopted by a majority of the
Board of Directors of the Company in accordance with Sections 241 and
245 of the General Corporation Law of the State of Delaware and as
provided in a written agreement and plan of merger that has been duly
approved under Sections 264 and 251 of the General Corporation Law of
the State of Delaware.
4. The text of the Certificate of Incorporation is hereby amended and
restated to read in its entirety as follows:
ARTICLE I
The name of the company is GreenMountain.com Company (the "Company").
ARTICLE II
The address of the Company's registered office in the State of Delaware is
1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801.
The name of the Company's registered agent at such address is The Corporation
Trust Company.
ARTICLE III
The purpose of the Company is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware (the "DGCL").
ARTICLE IV
Section 1. Authorized Capital Stock. The total number of shares of
------------------------
capital stock that the Company is authorized to issue is 200,000,000 shares,
consisting of 150,000,000 shares of Common Stock, par value $0.01 per share
("Common Stock"), and 50,000,000 shares of Preferred Stock, par value $0.01 per
share ("Preferred Stock").
Section 2. Preferred Stock. The Preferred Stock may be issued in one or
---------------
more series as may be determined by the Board of Directors of the Company (the
"Board"). The Board is authorized to fix the number of shares to be included in
any such series and the designation, relative powers, preferences and rights and
qualifications, limitations and restrictions of all shares of such series. The
authority of the Board with respect to each such series will include, without
limiting the generality or effect of the foregoing, the determination of any or
all of the following:
(a) The number of shares of any series and the designation to
distinguish the shares of such series from the shares of all other series;
(b) The voting powers, if any, and whether such voting powers are
full or limited in such series;
(c) The redemption provisions, if any, applicable to such series,
including the redemption price or prices to be paid;
<PAGE>
(d) Whether dividends, if any, will be cumulative or noncumulative,
the dividend rate of such series and the dates and preferences of dividends
on such series;
(e) The rights of such series upon the voluntary or involuntary
dissolution of, or upon any distribution of the assets of, the Company;
(f) The provisions, if any, pursuant to which the shares of such
series are convertible into, or exchangeable for, shares of any other class
or classes or of any other series of the same or any other class or classes
of stock, or any other security, of the Company or any other corporation or
other entity, and the price or prices or the rates of exchange applicable
thereto;
(g) The right, if any, to subscribe for or to purchase any securities
of the Company or any other corporation or other entity;
(h) The provisions, if any, of a sinking fund applicable to such
series; and
(i) Any other relative, participating, optional or other special
powers, preferences, rights, qualifications, limitations or restrictions
thereof;
all as may be determined from time to time by the Board and stated in the
resolution or resolutions providing for the issuance of such Preferred Stock
(collectively, a "Preferred Stock Designation").
Section 3. Common Stock. Except as may otherwise be provided in a
------------
Preferred Stock Designation, the holders of Common Stock will be entitled to one
vote on each matter submitted to a vote at a meeting of stockholders for each
share of Common Stock held of record by the holder as of the record date for
that meeting.
ARTICLE V
The Board may make, amend and repeal the Bylaws of the Company. Any Bylaw
made by the Board under the powers conferred hereby may be amended or repealed
by the Board (except as specified in any such Bylaw so made or amended) or by
the stockholders in the manner provided in the Bylaws of the Company.
Notwithstanding the foregoing and anything contained in this Amended and
Restated Certificate of Incorporation to the contrary, Bylaws 1, 3, 8, 10, 11,
12, 13, 34 and 40 may not be amended or repealed by the stockholders, and no
provision inconsistent therewith may be adopted by the stockholders, without the
affirmative vote of the holders of record of at least 80% of the Voting Stock,
voting together as a single class. For the purposes of this Amended and
Restated Certificate of Incorporation, "Voting Stock" means the capital stock of
the Company of any class or series entitled to vote generally in the election of
Directors. Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of record of at least 80% of the Voting Stock, voting together as a
single class, is required to amend or repeal, or to adopt any provision
inconsistent with, this Article V.
-2-
<PAGE>
ARTICLE VI
Subject to the rights of the holders of any series of Preferred Stock:
(a) any action required or permitted to be taken by the stockholders of
the Company must be effected at a duly called annual or special
meeting of stockholders of the Company and may not be effected by any
consent in writing of the stockholders; and
(b) special meetings of the stockholders of the Company may be called only
by (i) the Chairman of the Board (the "Chairman"), (ii) a Vice
Chairman of the Board, (iii) the Secretary of the Company within ten
calendar days after receipt of a written request of a majority of the
total number of Directors that the Company would have if there were no
vacancies (the "Whole Board"), or (iv) as otherwise provided in a
Preferred Stock Designation.
At any annual meeting or special meeting of the stockholders of the Company,
only such business will be conducted or considered as has been brought before
such meeting in the manner provided in the Bylaws of the Company.
Notwithstanding anything contained in this Amended and Restated Certificate of
Incorporation to the contrary, the affirmative vote of the holders of record of
at least 80% of the Voting Stock, voting together as a single class, is required
to amend or repeal, or to adopt any provision inconsistent with, this Article
VI.
ARTICLE VII
Section 1. Number, Election and Terms of Directors. Subject to the
---------------------------------------
rights, if any, of the holders of any series of Preferred Stock to elect
additional Directors under circumstances specified in a Preferred Stock
Designation, the number of the Directors of the Company will not be less than
three nor more than 15 and will be fixed from time to time in the manner
described in the Bylaws of the Company. The Directors, other than those who may
be elected by the holders of any series of Preferred Stock, will be classified
with respect to the time for which they severally hold office into three
classes, as nearly equal in number as possible, designated Class I, Class II and
Class III. The Directors first appointed to Class I will hold office for a term
expiring at the annual meeting of stockholders to be held in 2000; the Directors
first appointed to Class II will hold office for a term expiring at the annual
meeting of stockholders to be held in 2001; and the Directors first appointed to
Class III will hold office for a term expiring at the annual meeting of
stockholders to be held in 2002. The members of each class will hold office
until their successors are elected and qualified or until their earlier
resignation or removal. At each succeeding annual meeting of the stockholders
of the Company, the successors of the class of Directors whose terms expire at
that meeting will be elected by plurality vote of all votes cast at such meeting
to hold office for a term expiring at the annual meeting of stockholders held in
the third year following the year of their election. Subject to the rights, if
any, of the holders of any series of Preferred Stock to elect additional
Directors under circumstances specified in a Preferred Stock Designation,
Directors may be elected by the stockholders only at an annual meeting of
stockholders. Election of Directors of the Company need not be by written
ballot unless requested by the Chairman or by
-3-
<PAGE>
the holders of a majority of the Voting Stock present in person or represented
by proxy at a meeting of the stockholders at which Directors are to be elected.
Section 2. Nomination of Director Candidates. Advance notice of
---------------------------------
stockholder nominations for the election of Directors must be given in the
manner provided in the Bylaws of the Company.
Section 3. Newly Created Directorships and Vacancies. Subject to the
-----------------------------------------
rights, if any, of the holders of any series of Preferred Stock to elect
additional Directors under circumstances specified in a Preferred Stock
Designation, newly created directorships resulting from any increase in the
number of Directors and any vacancies on the Board resulting from death,
resignation, disqualification, removal or other cause will be filled solely by
the affirmative vote of a majority of the remaining Directors then in office,
even though less than a quorum of the Board, or by a sole remaining Director, or
if there is no remaining Director, by the stockholders of the Company. Any
Director elected in accordance with the preceding sentence will hold office for
the remainder of the full term of the class of Directors in which the new
directorship was created or the vacancy occurred and until such Director's
successor has been elected and qualified. No decrease in the number of
Directors constituting the Board may shorten the term of any incumbent Director.
Section 4. Removal. Subject to the rights, if any, of the holders of any
-------
series of Preferred Stock to elect additional Directors under circumstances
specified in a Preferred Stock Designation, any Director may be removed from
office by the stockholders only for cause and only in the manner provided in
this Section 4. At any annual or special meeting of the stockholders, the
notice of which states that the removal of a Director or Directors is among the
purposes of the meeting, the affirmative vote of the holders of at least 80% of
the Voting Stock, voting together as a single class, may remove such Director or
Directors for cause.
Section 5. Amendment, Repeal, Etc. Notwithstanding anything contained in
-----------------------
this Amended and Restated Certificate of Incorporation to the contrary, the
affirmative vote of at least 80% of the Voting Stock, voting together as a
single class, is required to amend or repeal, or to adopt any provision
inconsistent with, this Article VII.
ARTICLE VIII
To the fullest extent permitted by the DGCL or any other applicable law
currently or hereafter in effect, no Director of the Company will be personally
liable to the Company or its stockholders for or with respect to any acts or
omissions in the performance of his or her duties as a Director of the Company.
Any repeal or modification of this Article VIII will not adversely affect any
right or protection of a Director of the Company in respect of any act or
omission occurring in whole or in part prior to such repeal or modification.
-4-
<PAGE>
ARTICLE IX
The Company will to the fullest extent permitted by applicable law as then
in effect indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative and whether brought by
or in the right of the Company or otherwise, by reason of the fact that such
person is or was a director or officer of the Company, or is or was a director
or officer of the Company and is or was serving at the request of the Company as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding. The right to indemnification shall extend to
the heirs, executors, administrators and estate of any such director or officer.
The right to indemnification provided in this Article IX: (a) will not be
exclusive of any other rights to which any person seeking indemnification may
otherwise be entitled, including without limitation, pursuant to any contract
approved by a majority of the Whole Board (whether or not the Directors
approving such contract are or are to be parties to such contract or similar
contracts); and (b) will be applicable to matters otherwise within its scope
whether or not such matters arose or arise before or after the adoption of this
Article IX. Without limiting the generality or the effect of the foregoing, the
Company may adopt Bylaws, or enter into one or more agreements with any person,
that provide for indemnification greater or otherwise different than that
provided in this Article IX or the DGCL, and any such agreement approved by a
majority of the Whole Board will be a valid and binding obligation of the
Company regardless of whether one or more members of the Board, or all members
of the Board, are parties thereto or to similar agreements. Notwithstanding
anything to the contrary in this Article IX, in the event that the Company
enters into a contract with any person providing for indemnification of such
person, the provisions of that contract will exclusively govern the Company's
obligations in respect of indemnification for or advancement of fees or
disbursements of that person's counsel or any other professional engaged by that
person. Any amendment or repeal of, or adoption of any provision inconsistent
with, this Article IX will not adversely affect any right or protection existing
hereunder, or arising out of events occurring or circumstances existing, in
whole or in part, prior to such amendment, repeal or adoption, and no such
amendment, repeal or adoption will affect the legality, validity or
enforceability of any contract entered into or right granted prior to the
effective date of such amendment, repeal or adoption.
-5-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this certificate to be
executed by _____________________, its ____________________________ as of
___________, 1999.
GreenMountain.com Company
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
-6-
<PAGE>
EXHIBIT 3.3
GreenMountain.com Company
BYLAWS
As Adopted and in Effect as of March 15, 1999
<PAGE>
GreenMountain.com Company
BYLAWS
Table of Contents
Page
----
ARTICLE I
MEETINGS OF STOCKHOLDERS..................................... -1-
Section 1. Time and Place of Meetings....................... -1-
Section 2. Annual Meeting................................... -1-
Section 3. Special Meetings................................. -1-
Section 4. Notice of Meetings............................... -1-
Section 5. Quorum........................................... -2-
Section 6. Voting........................................... -2-
ARTICLE II
DIRECTORS.................................................... -3-
Section 1. Powers........................................... -3-
Section 2. Number and Term of Office........................ -3-
Section 3. Vacancies and New Directorships.................. -3-
Section 4. Regular Meetings................................. -4-
Section 5. Special Meetings................................. -4-
Section 6. Quorum........................................... -4-
Section 7. Written Action................................... -4-
Section 8. Participation in Meetings by Conference
Telephone........................................ -4-
Section 9. Committees....................................... -5-
Section 10. Compensation..................................... -5-
Section 11. Rules............................................ -6-
ARTICLE III
NOTICES...................................................... -6-
Section 1. Generally........................................ -6-
Section 2. Waivers.......................................... -6-
ARTICLE IV
OFFICERS..................................................... -6-
Section 1. Generally........................................ -6-
Section 2. Compensation..................................... -7-
Section 3. Succession....................................... -7-
Section 4. Authority and Duties............................. -7-
Section 5. Execution of Documents and Action with Respect
to Securities of Other Corporations.............. -7-
ARTICLE V
STOCK........................................................ -8-
Section 1. Certificates..................................... -8-
Section 2. Transfer......................................... -8-
Section 3. Lost, Stolen or Destroyed Certificates........... -9-
-i-
<PAGE>
Table of Contents
(continued)
ARTICLE VI
GENERAL PROVISIONS........................................... -9-
Section 1. Fiscal Year...................................... -9-
Section 2. Corporate Seal................................... -9-
Section 3. Reliance upon Books, Reports and Records......... -9-
Section 4. Time Periods..................................... -10-
ARTICLE VII
AMENDMENTS................................................... -10-
Section 1. Amendments....................................... -10-
<PAGE>
GreenMountain.com Company
BYLAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place of Meetings. All meetings of the stockholders
for the election of directors or for any other purpose shall be held at such
time and place, within or without the State of Delaware, as may be designated by
the Board of Directors, or by the Chairman of the Board, the President or the
Secretary in the absence of a designation by the Board of Directors, and stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meeting. An annual meeting of the stockholders,
commencing with the year 2000, shall be held on such date and at such time as
shall be designated from time to time by the Board of Directors, at which
meeting the stockholders shall elect by a plurality vote the directors to
succeed those whose terms expire and shall transact such other business as may
properly be brought before the meeting.
Section 3. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by law or by Certificate of
Incorporation, may be called by the Board of Directors.
Section 4. Notice of Meetings. Written notice of every meeting of the
stockholders, stating the place, date and hour of the meeting and, in the case
of a special meeting, the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting, except as
otherwise provided herein or by law.
<PAGE>
Section 5. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by law or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented.
Section 6. Voting. Except as otherwise provided by law or by the
Certificate of Incorporation, each stockholder shall be entitled at every
meeting of the stockholders to one vote for each share of stock having voting
power standing in the name of such stockholder on the books of the Corporation
on the record date for the meeting and such votes may be cast either in person
or by written proxy. Every proxy must be duly executed and filed with the
Secretary of the Corporation. A stockholder may revoke any proxy which is not
irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or another duly executed proxy bearing
a later date with the Secretary of the Corporation. The vote upon any question
brought before a meeting of the stockholders may be by voice vote, unless the
holders of a majority of the outstanding shares of all classes of stock entitled
to vote thereon present in person or by proxy at such meeting shall so
determine. Every vote taken by written ballot shall be counted by one or more
inspectors of election appointed by the Board of Directors. When a quorum is
present at any meeting, the vote of the holders of a majority of the stock which
has voting power present in person or represented by proxy shall decide any
question properly brought before such meeting, unless the question is one upon
which by express
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<PAGE>
provision of law, the Certificate of Incorporation or these bylaws, a different
vote is required, in which case such express provision shall govern and control
the decision of such question.
ARTICLE II
DIRECTORS
Section 1. Powers. The business and affairs of the Corporation shall be
managed by or under the direction of its Board of Directors, which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by law or by the Certificate of Incorporation directed or required to be
exercised or done by the stockholders.
Section 2. Number and Term of Office. The Board of Directors shall
consist of one or more members. The number of directors shall be fixed by
resolution of the Board of Directors or by the stockholders at the annual
meeting or a special meeting. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 3 of this Article,
and each director elected shall hold office until his successor is elected and
qualified, except as required by law. Any decrease in the authorized number of
directors shall not be effective until the expiration of the term of the
directors then in office, unless, at the time of such decrease, there shall be
vacancies on the Board which are being eliminated by such decrease.
Section 3. Vacancies and New Directorships. Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
which occur between annual meetings of the stockholders may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so elected shall hold office until
the next annual meeting of the stockholders and until their successors are
elected and qualified, except as required by law.
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<PAGE>
Section 4. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice immediately after the annual meeting of the
stockholders and at such other time and place as shall from time to time be
determined by the Board of Directors.
Section 5. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President on one day's written
notice to each director by whom such notice is not waived, given either
personally or by mail, facsimile or telegram, and shall be called by the
President or the Secretary.
Section 6. Quorum. At all meetings of the Board of Directors, a majority
of the total number of directors then in office shall constitute a quorum for
the transaction of business, and the act of a majority of the directors present
at any meeting at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time to another place, time or date, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 7. Written Action. Any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes or proceedings of the Board or Committee.
Section 8. Participation in Meetings by Conference Telephone. Members of
the Board of Directors, or any committee designated by the Board of Directors,
may participate in a meeting of the Board of Directors, or any such committee,
by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
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<PAGE>
Section 9. Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation and each
to have such lawfully delegable powers and duties as the Board may confer. Each
such committee shall serve at the pleasure of the Board of Directors. The Board
may designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the committee.
Except as otherwise provided by law, any such committee, to the extent provided
in the resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it. Any committee or committees so
designated by the Board shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors. Unless otherwise
prescribed by the Board of Directors, a majority of the members of the committee
shall constitute a quorum for the transaction of business, and the act of a
majority of the members present at a meeting at which there is a quorum shall be
the act of such committee. Each committee shall prescribe its own rules for
calling and holding meetings and its method of procedure, subject to any rules
prescribed by the Board of Directors, and shall keep a written record of all
actions taken by it.
Section 10. Compensation. The Board of Directors may establish such
compensation for, and reimbursement of the expenses of, directors for attendance
at meetings of the Board of Directors or committees, or for other services by
directors to the Corporation, as the Board of Directors may determine.
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<PAGE>
Section 11. Rules. The Board of Directors may adopt such special rules
and regulations for the conduct of their meetings and the management of the
affairs of the Corporation as they may deem proper, not inconsistent with law or
these bylaws.
ARTICLE III
NOTICES
Section 1. Generally. Whenever by law or under the provisions of the
Certificate of Incorporation or these bylaws, notice is required to be given to
any director or stockholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the Corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram, facsimile or telephone.
Section 2. Waivers. Whenever any notice is required to be given by law
or under the provisions of the Certificate of Incorporation or these bylaws, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time of the event for which notice is to be
given, shall be deemed equivalent to such notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
ARTICLE IV
OFFICERS
Section 1. Generally. The officers of the Corporation shall be elected
by the Board of Directors and shall consist of a President, a Secretary and a
Treasurer. The Board of Directors
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<PAGE>
may also choose any or all of the following: a Chairman, a Chief Executive
Officer, one or more Vice Chairmen, one or more Vice Presidents, a Controller, a
General Counsel, one or more Assistant Secretaries, one or more Assistant
Treasurers and such other officers as the Board of Directors may from time to
time determine. Any of the offices may be left vacant from to time as the Board
of Directors may determine. Any number of offices may be held by the same
person.
Section 2. Compensation. The compensation of all officers and agents of
the Corporation who are also directors of the Corporation shall be fixed by the
Board of Directors. The Board of Directors may delegate the power to fix the
compensation of other officers and agents of the Corporation to an officer of
the Corporation.
Section 3. Succession. The officers of the Corporation shall hold office
until their successors are elected and qualified. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the directors. Any vacancy occurring in any
office of the Corporation may be filled by the Board of Directors.
Section 4. Authority and Duties. Each of the officers of the Corporation
shall have such authority and shall perform such duties as are customarily
incident to their respective offices, or as may be specified from time to time
by the Board of Directors in a resolution which is not inconsistent with these
bylaws.
Section 5. Execution of Documents and Action with Respect to Securities
of Other Corporations. The President shall have and is hereby given, full power
and authority, except as otherwise required by law or directed by the Board of
Directors, (a) to execute, on behalf of the Corporation, all duly authorized
contracts, agreements, deeds, conveyances or other obligations of the
Corporation, applications, consents, proxies and other powers of attorney, and
other documents and instruments, and (b) to vote and otherwise act on behalf of
the Corporation, in person or by proxy, at any meeting of stockholders (or with
respect to any action of such stockholders) of any other corporation in which
the Corporation may hold securities and
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<PAGE>
otherwise to exercise any and all rights and powers which the Corporation may
possess by reason of its ownership of securities of such other corporation. In
addition, the President may delegate to other officers, employees and agents of
the Corporation the power and authority to take any action which the President
is authorized to take under this Section 5, with such limitations as the
President may specify; such authority so delegated by the President shall not be
re-delegated by the person to whom such execution authority has been delegated.
ARTICLE V
STOCK
Section 1. Certificates. Certificates representing shares of stock of
the Corporation shall be in such form as shall be determined by the Board of
Directors, subject to applicable legal requirements. Such certificates shall be
numbered and their issuance recorded in the books of the Corporation, and such
certificate shall exhibit the holder's name and the number of shares and shall
be signed by, or in the name of the Corporation by, the Chairman, a Vice
Chairman, the Chief Executive Officer, the President or a Vice President and the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of
the Corporation. Any or all of the signatures and the seal of the Corporation,
if any, upon such certificates may be facsimiles, engraved or printed.
Section 2. Transfer. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue, or to cause its
transfer agent to issue, a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction upon its books.
Section 3. Lost, Stolen or Destroyed Certificates. The Secretary may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued
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<PAGE>
by the Corporation alleged to have been lost, stolen or destroyed upon the
making of an affidavit of that fact, satisfactory to the Secretary, by the
person claiming the certificate of stock to be lost, stolen or destroyed. As a
condition precedent to the issuance of a new certificate or certificates the
Secretary may require the owner of such lost, stolen or destroyed certificate or
certificates to give the Corporation a bond in such sum and with such surety or
sureties as the Secretary may direct as indemnity against any claims that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed or the issuance of the new certificate.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
fixed from time to time by the Board of Directors.
Section 2. Corporate Seal. The Board of Directors may adopt a corporate
seal and use the same by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 3. Reliance upon Books, Reports and Records. Each director, each
member of a committee designated by the Board of Directors, and each officer of
the Corporation shall, in the performance of his or her duties, be fully
protected in relying in good faith upon the records of the Corporation and upon
such information, opinions, reports or statements presented to the Corporation
by any of the Corporation's officers or employees, or committees of the Board of
Directors, or by any other person as to matters the director, committee member
or officer believes are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Corporation.
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<PAGE>
Section 4. Time Periods. In applying any provision of these bylaws which
requires that an act be done or not be done a specified number of days prior to
an event or that an act be done during a period of a specified number of days
prior to an event, calendar days shall be used, the day of the doing of the act
shall be excluded and the day of the event shall be included.
ARTICLE VII
AMENDMENTS
Section 1. Amendments. These bylaws may be altered, amended or repealed,
or new bylaws may be adopted, by the stockholders or by the Board of Directors.
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<PAGE>
EXHIBIT 3.4
FORM OF
AMENDED AND RESTATED
BYLAWS
OF
GREENMOUNTAIN.COM COMPANY
(AS ADOPTED AND IN EFFECT
AS OF___________, 1999)
<PAGE>
GREENMOUNTAIN.COM COMPANY
BYLAWS
TABLE OF CONTENTS
Page
----
STOCKHOLDERS' MEETINGS........................................................ 1
1. Time and Place of Meetings........................................ 1
2. Annual Meeting.................................................... 1
3. Special Meetings.................................................. 1
4. Notice of Meetings................................................ 1
5. Inspectors........................................................ 1
6. Quorum............................................................ 2
7. Voting............................................................ 2
8. Order of Business................................................. 2
DIRECTORS..................................................................... 4
9. Function.......................................................... 4
10. Number and Term of Office......................................... 4
11. Vacancies and New Directorships................................... 4
12. Removal........................................................... 4
13. Nominations of Directors; Election................................ 4
14. Resignation....................................................... 6
15. Regular Meetings.................................................. 6
16. Special Meetings.................................................. 6
17. Quorum............................................................ 6
18. Written Action.................................................... 6
19. Participation in Meetings by Telephone Conference................. 6
20. Committees........................................................ 7
21. Compensation...................................................... 8
22. Rules............................................................. 8
NOTICES....................................................................... 8
23. Generally......................................................... 8
24. Waivers........................................................... 8
OFFICERS...................................................................... 8
25. Generally......................................................... 8
26. Compensation...................................................... 9
27. Succession........................................................ 9
28. Authority and Duties.............................................. 9
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STOCK......................................................................... 9
29. Certificates...................................................... 9
30. Classes of Stock.................................................. 9
31. Transfers......................................................... 9
32. Lost, Stolen or Destroyed Certificates............................10
33. Record Dates......................................................10
INDEMNIFICATION...............................................................10
34. Damages and Expenses..............................................10
35. Insurance, Contracts and Funding..................................14
GENERAL.......................................................................14
36. Fiscal Year.......................................................14
37. Seal..............................................................14
38. Reliance upon Books, Reports and Records..........................14
39. Time Periods......................................................14
40. Amendments........................................................14
41. Certain Defined Terms.............................................15
ii
<PAGE>
STOCKHOLDERS' MEETINGS
1. Time and Place of Meetings. All meetings of the stockholders for the
--------------------------
election of directors or for any other purpose will be held at such time and
place, within or without the State of Delaware, as may be designated by the
Board of Directors ("Board") or, in the absence of a designation by the Board,
the Chairman, a Vice Chairman or the Chief Executive Officer, and stated in the
notice of meeting. The Board, the Chairman or a Vice Chairman may postpone any
previously scheduled annual or special meeting of the stockholders.
2. Annual Meeting. An annual meeting of the stockholders will be held at
--------------
such date and time as may be designated from time to time by the Board, at which
meeting the stockholders will elect, by a plurality vote of the Voting Stock of
the stockholders present in person or represented by proxy, the directors to
succeed those whose terms expire and will transact such other business as may
properly be brought before the meeting in accordance with these Bylaws. For
purposes of these Bylaws, the term "Voting Stock" means the capital stock of the
Company of any class or series entitled to vote generally in the election of
directors.
3. Special Meetings. Special meetings of the stockholders, for any
----------------
purpose or purposes, unless otherwise prescribed by law or by the certificate of
incorporation of the Company, as amended from time to time (the "Certificate of
Incorporation"), may be called only by (a) the Chairman, (b) a Vice Chairman,
(c) the Secretary within 10 calendar days after receipt of a written request of
a majority of the total number of directors that the Company would have if there
were no vacancies (the "Whole Board"), or (d) as otherwise provided in a
Preferred Stock Designation. Any such request by a majority of the Whole Board
must be sent to the Chairman and the Secretary and must state the purpose or
purposes of the proposed meeting. Special meetings of holders of the
outstanding Preferred Stock, if any, may be called in the manner and for the
purposes provided in the applicable Preferred Stock Designation.
4. Notice of Meetings. Written notice of every meeting of the
------------------
stockholders, stating the place, date and hour of the meeting and, in the case
of a special meeting, the purpose or purposes for which the meeting is called,
will be given not less than 10 nor more than 60 calendar days before the date of
the meeting to each stockholder of record entitled to vote at such meeting,
except as otherwise provided in these Bylaws or by law. When a meeting is
adjourned to another place, date or time, written notice need not be given of
the adjourned meeting if the place, date and time thereof are announced at the
meeting at which the adjournment is taken; provided, however, that if the
adjournment is for more than 30 calendar days, or if after the adjournment a new
record date is fixed for the adjourned meeting, written notice of the place,
date and time of the adjourned meeting must be given in conformity with these
Bylaws. At any adjourned meeting, any business may be transacted which might
have been transacted at the original meeting.
5. Inspectors. The Board may appoint one or more inspectors of election
----------
to act as judges of the voting and to determine those entitled to vote at any
meeting of the stockholders, or any adjournment thereof, in advance of the
meeting. The Board may designate one or more persons as alternate inspectors to
replace any inspector who fails to act. If no inspector or
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<PAGE>
alternate is able to act at a meeting of stockholders, the presiding officer of
the meeting may appoint one or more substitute inspectors.
6. Quorum. Except as otherwise provided by law or in a Preferred Stock
------
Designation, the holders of a majority of the stock issued and outstanding and
entitled to vote at a meeting of stockholders, present in person or represented
by proxy, will constitute a quorum at all meetings of the stockholders for the
transaction of business at a meeting of the stockholders. If, however, such
quorum is not present or represented at any meeting of the stockholders, the
stockholders entitled to vote at that meeting of stockholders, present in person
or represented by proxy, will have the power to adjourn, without notice other
than announcement at the meeting, the meeting from time to time until a quorum
is present or represented.
7. Voting. Except as otherwise provided by law or in a Preferred Stock
------
Designation, each stockholder will be entitled at every meeting of the
stockholders to one vote for each share of stock having voting power standing in
the name of that stockholder on the books of the Company on the record date for
the meeting and those votes may be cast either in person or by written proxy.
Every proxy must be duly executed and filed with the Secretary. A stockholder
may revoke any proxy that is not irrevocable by attending the meeting and voting
in person or by filing an instrument in writing revoking the proxy or another
duly executed proxy bearing a later date with the Secretary. The vote upon any
question brought before a meeting of the stockholders may be by voice vote,
unless otherwise required by these Bylaws or unless the presiding officer of the
meeting or the holders of a majority of the outstanding shares of all classes of
stock entitled to vote on that question present in person or by proxy at the
meeting otherwise determine. Every vote taken by written ballot will be counted
by the inspectors of election. When a quorum is present at any meeting, the
vote of the holders of a majority of the stock which has voting power present in
person or represented by proxy and which has actually voted will decide any
question properly brought before such meeting, unless the question is one upon
which by express provision of law, the Certificate of Incorporation, a Preferred
Stock Designation or these Bylaws, a different vote is required, in which case
that express provision will govern and control the decision of such question.
8. Order of Business. (a) The Chairman, or such other officer of the
-----------------
Company designated by a majority of the Whole Board, will call meetings of the
stockholders to order and will act as presiding officer thereof. Except as
otherwise provided by law or in a Preferred Stock Designation or unless
otherwise determined by the Board prior to the meeting, the presiding officer of
the meeting of the stockholders will also determine the order of business and
have the authority in his or her sole discretion to regulate the conduct of the
meeting, including without limitation, by imposing restrictions on the persons
(other than stockholders of the Company or their duly appointed proxies) who may
attend any such stockholders' meeting, by ascertaining whether any stockholder
or the stockholder's proxy may be excluded from any meeting of the stockholders
based upon any determination by the presiding officer, in his or her sole
discretion, that any such person has unduly disrupted or is likely to disrupt
the proceedings at the meeting of the stockholders and by determining the
circumstances in which any person may make a statement or ask questions at any
meeting of the stockholders.
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(b) At an annual meeting of the stockholders, only such business will be
conducted or considered as is properly brought before the meeting. To be
properly brought before an annual meeting, business must be (i) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Chairman or the Board in accordance with these Bylaws, (ii) otherwise
properly brought before the meeting by the presiding officer or by or at the
direction of a majority of the Whole Board, or (iii) otherwise properly
requested to be brought before the meeting by a stockholder of the Company in
accordance with these Bylaws.
(c) For business to be properly requested by a stockholder to be brought
before an annual meeting, the stockholder must (i) be a stockholder of the
Company of record at the time of the giving of the notice for such annual
meeting provided for in these Bylaws, (ii) be entitled to vote at such meeting,
and (iii) have given timely notice thereof in writing to the Secretary. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Company not less than 60 nor more than 90
calendar days prior to the anniversary of the date on which the Company first
mailed its proxy materials for the prior year's annual meeting of stockholders;
provided, however, that in the event that (i) there was no annual meeting held
during the prior year or (ii) the annual meeting is called for a date that is
not within 30 calendar days before or after the anniversary of the prior year's
annual meeting, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth calendar day
following the day on which public announcement was first made of the date of the
annual meeting. In no event will the public announcement of an adjournment of
an annual meeting commence a new time period for the giving of a stockholder's
notice as described above. For purposes of the foregoing, the date on which the
Company first mailed its proxy materials to stockholders will be the date so
described in such proxy materials.
A stockholder's notice to the Secretary must set forth as to each matter
the stockholder proposes to bring before the annual meeting (i) a description in
reasonable detail of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and address, as they appear on the Company's books, of the stockholder
proposing such business and the beneficial owner, if any, on whose behalf the
proposal is made, (iii) the class and number of shares of the Company that are
owned beneficially and of record by the stockholder proposing such business and
by the beneficial owner, if any, on whose behalf the proposal is made, and (iv)
any material interest of such stockholder proposing such business and the
beneficial owner, if any, on whose behalf the proposal is made in such business.
Notwithstanding the foregoing provisions of this Bylaw, a stockholder must also
comply with all applicable requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations thereunder with
respect to the matters set forth in this Bylaw. For purposes of this Bylaw and
Bylaw 13, "public announcement" means disclosure in a press release reported by
the Dow Jones News Service, Associated Press or comparable national news service
or otherwise published by the Company in substantial conformity with its
ordinary practice in a document publicly filed by the Company with the
Securities and Exchange Commission (the "Commission") pursuant to Section 13, 14
or 15(d) of the Exchange Act, or furnished to stockholders. Nothing in this
Bylaw will be deemed to affect any rights of stockholders to request inclusion
of proposals in the Company's proxy statement pursuant to Rule 14a-8 under the
Exchange Act.
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(d) At a special meeting of stockholders, only such business may be
conducted or considered as is properly brought before the meeting. To be
properly brought before a special meeting, business must be (i) specified in the
notice of the meeting (or any supplement thereto) given by or at the direction
of the Chairman, a Vice Chairman or a majority of the Whole Board in accordance
with these Bylaws or (ii) otherwise properly brought before the meeting by the
presiding officer or by or at the direction of a majority of the Whole Board.
(e) The determination of whether any business sought to be brought before
any annual or special meeting of the stockholders is properly brought before
such meeting in accordance with this Bylaw will be made by the presiding officer
of such meeting. If the presiding officer determines that any business is not
properly brought before such meeting, he or she will so declare to the meeting
and any such business will not be conducted or considered.
DIRECTORS
9. Function. The business and affairs of the Company will be managed
--------
under the direction of the Board.
10. Number and Term of Office. Subject to the rights, if any, of any
-------------------------
series of Preferred Stock to elect additional directors under circumstances
specified in a Preferred Stock Designation and to the minimum and maximum number
of authorized directors provided in the Certificate of Incorporation, the
authorized number of directors may be determined from time to time by a vote of
a majority of the Whole Board. The directors, other than those who may be
elected by the holders of any series of the Preferred Stock, will be classified
with respect to the time for which they severally hold office in accordance with
the Certificate of Incorporation.
11. Vacancies and New Directorships. Subject to the rights, if any, of
-------------------------------
the holders of any series of Preferred Stock under a Preferred Stock Designation
to elect additional directors, any newly created directorships resulting from
any increase in the authorized number of directors and any vacancies on the
Board resulting from death, resignation, disqualification, removal or other
cause will be filled solely by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the Board,
or by a sole remaining director, or if there is no remaining director, by the
stockholders. Any director elected in accordance with the preceding sentence
will hold office for the remainder of the full term of the class of directors in
which the new directorship was created or the vacancy occurred and until such
director's successor has been elected and qualified. No decrease in the number
of directors constituting the Board may shorten the term of any incumbent
director.
12. Removal. Subject to the rights, if any, of the holders of any series
-------
of Preferred Stock to elect additional directors under circumstances specified
in a Preferred Stock Designation, any director may be removed from office by the
stockholders only for cause and only in the manner provided in the Certificate
of Incorporation.
13. Nominations of Directors; Election. Subject to the rights, if any, of
----------------------------------
the holders of any series of Preferred Stock to elect additional directors under
circumstances specified in a
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Preferred Stock Designation, only persons who are nominated in accordance with
the following procedures will be eligible for election at a meeting of
stockholders as directors of the Company.
(a) Nominations of persons for election as directors of the Company may be
made only at an annual meeting of stockholders (i) by or at the direction of the
Board or (ii) by any stockholder who is a stockholder of record at the time of
giving of notice provided for in this Bylaw, who is entitled to vote for the
election of directors at such meeting and who complies with the procedures set
forth in this Bylaw. All nominations by stockholders must be made pursuant to
timely notice in proper written form to the Secretary.
(b) To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Company not less than 60
nor more than 90 calendar days prior to the anniversary of the date on which the
Company first mailed its proxy materials for the prior year's annual meeting of
stockholders; provided, however, that in the event that (i) there was no annual
meeting held during the prior year or (ii) the annual meeting is called for a
date that is not within 30 calendar days before or after the anniversary of the
prior year's annual meeting, notice by the stockholder in order to be timely
must be so received not later than the close of business on the tenth calendar
day following the day on which public announcement was first made of the date of
the annual meeting. In no event will the public announcement of an adjournment
of an annual meeting commence a new time period for the giving of a
stockholder's notice as described above. For purposes of the foregoing, the date
on which the Company first mailed its proxy materials to stockholders will the
date so described in such proxy materials.
To be in proper written form, such stockholder's notice must set forth or
include (i) the name and address, as they appear on the Company's books, of the
stockholder giving the notice and of the beneficial owner, if any, on whose
behalf the nomination is made; (ii) a representation that the stockholder giving
the notice is a holder of record of stock of the Company entitled to vote at
such annual meeting and intends to appear in person or by proxy at the annual
meeting to nominate the person or persons specified in the notice; (iii) the
class and number of shares of stock of the Company owned beneficially and of
record by the stockholder giving the notice and by the beneficial owner, if any,
on whose behalf the nomination is made; (iv) a description of all arrangements
or understandings between or among any of (A) the stockholder giving the notice,
(B) the beneficial owner on whose behalf the notice is given, (C) each nominee,
and (D) any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the stockholder giving the
notice; (v) such other information regarding each nominee proposed by the
stockholder giving the notice as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Commission under the Exchange
Act had the nominee been nominated, or intended to be nominated, by the Board;
and (vi) the signed consent of each nominee to serve as a director of the
Company if so elected. At the request of the Board, any person nominated by the
Board for election as a director must furnish to the Secretary that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee. The presiding officer of any annual meeting will, if the facts
warrant, determine that a nomination was not made in accordance with the
procedures prescribed by this Bylaw, and if he or she should so determine, he or
she will so declare to the meeting and the defective nomination will be
disregarded. Notwithstanding the foregoing provisions of this Bylaw, a
stockholder must also comply with all applicable requirements of the
5
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Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Bylaw.
(c) Notwithstanding anything in this Bylaw to the contrary, in the event
that the number of directors to be elected to the Board is increased and there
is no public announcement by the Company naming all of the nominees for director
or specifying the size of the increased Board at least 70 calendar days prior to
the anniversary of the date on which the Company first mailed its proxy
materials for the preceding year's annual meeting of stockholders, a
stockholder's notice required by this Bylaw will also be considered timely, but
only with respect to nominees for any new positions created by such increase, if
it is delivered to or mailed and received at the principal executive offices of
the Company not later than the close of business on the tenth day following the
day on which such public announcement was first made by the Company.
14. Resignation. Any director may resign at any time by giving written
-----------
notice of his resignation to the Chairman or the Secretary. Any resignation
will be effective upon actual receipt by any such person or, if later, as of the
date and time specified in such written notice.
15. Regular Meetings. Regular meetings of the Board may be held
----------------
immediately before or after the annual meeting of the stockholders and at such
other time and place as may from time to time be determined by the Board. Prior
written notice of regular meetings of the Board must be given not less than 24
hours prior to such meeting by mail, overnight courier, facsimile, e-mail or
similar medium.
16. Special Meetings. Special meetings of the Board may be called by the
----------------
Chairman on 24 hours' notice to each director by whom such notice is not waived,
given either personally or by mail, overnight courier, telephone, facsimile, e-
mail or similar medium of communication, and will be called by the Chairman in
like manner and on like notice on the request of four or more directors. Special
meetings of the Board may be held at such time and place within or without the
State of Delaware as is determined by the Board or specified in the notice of
any such meeting.
17. Quorum. At all meetings of the Board, a majority of the total number
------
of directors then in office will constitute a quorum for the transaction of
business. Except for the designation of committees as provided in these Bylaws
and except for actions required by these Bylaws or the Certificate of
Incorporation to be taken by a majority of the Whole Board, the act of a
majority of the directors present at any meeting at which there is a quorum will
be the act of the Board. If a quorum is not present at any meeting of the
Board, the directors present at the meeting may adjourn the meeting from time to
time to another place, time or date, without notice other than announcement at
the meeting, until a quorum is present.
18. Written Action. Any action required or permitted to be taken at any
--------------
meeting of the Board or of any committee of the Board may be taken without a
meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes or
proceedings of the Board or committee.
19. Participation in Meetings by Telephone Conference. Members of the
-------------------------------------------------
Board, or any committee designated by the Board, may participate in a meeting of
the Board, or any such
6
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committee, by means of telephone conference or similar means by which all
persons participating in the meeting can hear each other, and such participation
in a meeting will constitute presence in person at the meeting.
20. Committees. (a) The Board, by resolution passed by a majority of the
----------
Whole Board, may designate an executive committee (the "Executive Committee") of
not less than two and not more than four members of the Board, one of whom will
be the Chairman. The Executive Committee will have and may exercise all of the
authority of the Board in the management of the business and affairs of the
Company, except where action of the full Board is expressly required by the
DGCL, the Certificate of Incorporation or the Bylaws. Two-thirds of the members
of the Executive Committee will constitute a quorum for the transaction of
business, and the act of two-thirds of the members of the Executive Committee
(which must include the affirmative vote of the Chairman) will constitute the
act of such committee.
(b) The Board, by resolution passed by a majority of the Board, may
designate one or more additional committees, each such committee to consist of
one or more directors and each to have such lawfully delegable powers and duties
as the Board may confer.
(c) The Executive Committee and each other committee of the Board will
serve at the pleasure of the Board or as may be specified in any resolution from
time to time adopted by the Board. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In lieu of such action by
the Board, in the absence or disqualification of any member of a committee of
the Board, the members thereof present at any meeting of the committee and not
disqualified from voting, whether or not they constitute a quorum, may, by
unanimous action, appoint another member of the Board to act at the meeting in
the place of any absent or disqualified member.
(d) Except as otherwise provided in these Bylaws or by law, any committee
of the Board, to the extent provided in these Bylaws or, if applicable, in the
resolution of the Board designating a committee, will have and may exercise all
the powers and authority of the Board in the direction of the management of the
business and affairs of the Company. Any committee designated by the Board will
have such name as may be determined from time to time by resolution adopted by
the Board. Except as provided in these Bylaws or as otherwise prescribed by the
Board, a majority of the members of any committee of the Board will constitute a
quorum for the transaction of business, and the act of a majority of the members
will be the act of the committee. Each committee of the Board may prescribe its
own rules for calling and holding meetings and its method of procedure, subject
to any rules prescribed by the Board, and will keep a written record of all
actions taken by it.
(e) All of the members of any committee the primary responsibilities of
which include (i) reviewing the professional services to be provided by the
Company's independent auditors and the independence of such firm from the
Company's management, reviewing financial statements with management or
independent auditors and/or reviewing internal accounting controls and (ii)
reviewing and approving the compensation of the Company's
7
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executive officers, will be directors who qualify as "outside directors" within
the meaning of Section 162(m) of the Internal Revenue Code of 1986, as in effect
from time to time, and as "non-employee directors" within the meaning of Rule
16b-3 of the Exchange Act. Notwithstanding any provision of the Certificate of
Incorporation or these Bylaws to the contrary, this Bylaw may not be amended or
repealed by the Board, and no provision inconsistent therewith may be adopted by
the Board, without the affirmative vote of the holders of at least a majority of
the Voting Stock present or represented by proxy and entitled to vote at any
annual or special meeting of stockholders at which such vote is to be taken.
21. Compensation. The Board may establish such compensation for, and
------------
reimbursement of the expenses of, directors for membership on the Board and on
committees of the Board, attendance at meetings of the Board or committees of
the Board, or for other services by directors to the Company or any of its
majority-owned subsidiaries, as the Board may determine.
22. Rules. The Board may adopt rules and regulations for the conduct of
-----
its meetings and the management of the affairs of the Company.
NOTICES
23. Generally. Whenever by law or under the provisions of the Certificate
---------
of Incorporation or these Bylaws, notice is required to be given to any director
or stockholder, it will not be construed to require personal notice, but such
notice may be given in writing, by mail, addressed to such director or
stockholder, at his, her or its address as it appears on the records of the
Company, with postage thereon prepaid, and such notice will be deemed to be
given at the time when the same is deposited in the United States mail. Notice
to directors may also be given by overnight courier, telephone, facsimile, e-
mail or similar medium of communication or as may otherwise be permitted by
these Bylaws. Notice by overnight courier will be deemed to be given one
business day after being dispatched; notice by telephone will be deemed to be
given when given personally; notice by e-mail will be deemed to be given when
dispatched; and notice by facsimile transmission will be deemed to be given when
receipt is acknowledged.
24. Waivers. Whenever any notice is required to be given by law or under
-------
the provisions of the Certificate of Incorporation or these Bylaws, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time of the event for which notice is to be given,
will be deemed equivalent to such notice. Attendance of a person at a meeting
will constitute a waiver of notice of such meeting, except when the person
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.
OFFICERS
25. Generally. The officers of the Company will be elected by the Board
---------
and will consist of a Chairman, a Chief Executive Officer, a Chief Financial
Officer, a President, a Secretary and a Treasurer. The Board may also choose
any one or more Vice Chairmen, Vice Presidents, Assistant Secretaries, Assistant
Treasurers and any such other officers as the Board may from time to time
determine. Notwithstanding the foregoing, by specific action, the Board may
authorize the Chairman, a Vice Chairman or the Chief Executive Officer to
appoint any person to any office other than Chairman, Vice Chairman, Chief
Executive Officer, President,
8
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Secretary or Treasurer. Any number of offices may be held by the same person.
Any of the offices may be left vacant from time to time as the Board may
determine. In the case of the absence or disability of any officer of the
Company or for any other reason deemed sufficient by a majority of the Board,
the Board may delegate the absent or disabled officer's powers or duties to any
other officer or to any director.
26. Compensation. The compensation of all officers and agents of the
------------
Company who are also directors of the Company will be fixed by the Board or by a
committee of the Board. The Board may fix, or delegate the power to fix, the
compensation of other officers and agents of the Company to an officer of the
Company.
27. Succession. The officers of the Company will hold office until their
----------
successors are elected and qualified. Any officer may be removed at any time
(a) by the affirmative vote of a majority of the Whole Board or (b) with respect
to any officer other than the Chairman, a Vice Chairman or the Chief Executive
Officer, by the Chief Executive Officer. Any vacancy occurring in any office of
the Company may be filled by the Board as provided in these Bylaws.
28. Authority and Duties. Each of the officers of the Company will have
--------------------
such authority and will perform such duties as are customarily incident to their
respective offices or as may be specified from time to time by the Board or by
the Chairman or a Vice Chairman.
STOCK
29. Certificates. Certificates representing shares of stock of the
------------
Company will be in such form as is determined by the Board or an authorized
committee thereof, subject to applicable legal requirements. Each certificate
will be numbered and its issuance recorded in the books of the Company and each
certificate will exhibit the holder's name and the number of shares and will be
signed by, or in the name of the Company by, the Chairman, a Vice Chairman, the
Chief Executive Officer, the President or a Vice President and by the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and will
also be signed by, or bear the facsimile signature of, any properly designated
transfer agent of the Company. Any or all of the signatures and the seal of the
Company, if any, upon the certificates may be facsimiles, engraved or printed.
The certificates may be issued and delivered notwithstanding that the person
whose facsimile signature appears thereon may have ceased to be an officer at
the time certificates are issued and delivered.
30. Classes of Stock. The designations, preferences and relative
----------------
participating, optional or other special rights of the various classes of stock
or series thereof, and the qualifications, limitations or restrictions thereof,
will be set forth in full or summarized on the face or back of the certificates
which the Company issues to represent its stock or, in lieu thereof, such
certificates will set forth the office of the Company from which the holders of
certificates may obtain a copy of such information.
31. Transfers. Upon surrender to the Company or the transfer agent of the
---------
Company of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it will be the duty
of the Company to issue, or cause its
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transfer agent to issue, a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction upon its books.
32. Lost, Stolen or Destroyed Certificates. The Secretary may direct a
--------------------------------------
new certificate or certificates to be issued in place of any certificate or
certificates previously issued by the Company alleged to have been lost, stolen
or destroyed upon the making of an affidavit of that fact, satisfactory to the
Secretary, by the person claiming the certificate of stock to be lost, stolen or
destroyed. As a condition precedent to the issuance of a new certificate or
certificates, the Secretary may require the owners of such lost, stolen or
destroyed certificate or certificates to give the Company a bond in such sum and
with such surety or sureties as the Secretary may direct as indemnity against
any claims that may be made against the Company with respect to the certificate
alleged to have been lost, stolen or destroyed or the issuance of the new
certificate.
33. Record Dates. (a) In order that the Company may determine the
------------
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board may fix a record date, which will not be more
than 60 nor less than 10 calendar days before the date of such meeting. If no
record date is fixed by the Board, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders will be at the
close of business on the calendar day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the calendar day
next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of the
stockholders will apply to any adjournment of the meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting.
(b) In order that the Company may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board may fix a record date, which record date will not be more than 60
calendar days prior to such action. If no record date is fixed, the record date
for determining stockholders for any such purpose will be at the close of
business on the calendar day on which the Board adopts the resolution relating
thereto.
(c) The Company will be entitled to treat the person in whose name any
share of its stock is registered as the owner thereof for all purposes, and will
not be bound to recognize any equitable or other claim to, or interest in, such
share on the part of any other person, whether or not the Company has notice
thereof, except as expressly provided by applicable law.
INDEMNIFICATION
34. Damages and Expenses. (a) Without limiting the generality or effect
--------------------
of Article IX of the Certificate of Incorporation, the Company will to the
fullest extent permitted by applicable law as then in effect indemnify any
person (an "Indemnitee") who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative and whether brought by
or in the right of the Company or otherwise (a "Proceeding"), by reason of the
fact that such person is or was a director or officer of the Company, or is or
was a director or officer of the Company and is or
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was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such Proceeding. Such indemnification
will be a contract right and will include the right to receive payment in
advance of any expenses incurred by an Indemnitee in connection with such
Proceeding, consistent with the provisions of applicable law as then in effect.
(b) The rights to indemnification and advancement of expenses provided by,
or granted pursuant to, this Bylaw will not be exclusive of any other rights to
which any person seeking indemnification or advancement of expenses may
otherwise be entitled, and will be applicable to Proceedings commenced or
continuing after the adoption of this Bylaw, whether arising from acts or
omissions occurring before or after such adoption. The rights to
indemnification and advancement of expenses provided by, or granted pursuant to,
this Bylaw will continue as to a person who has ceased to be a director or
officer of the Company and shall inure to the benefit of the heirs, executors,
administrators and estate of such person.
(c) In furtherance, but not in limitation of the foregoing provisions, the
following procedures, presumptions and remedies will apply with respect to
advancement of expenses and the right to indemnification under this Bylaw:
(i) All reasonable expenses incurred by or on behalf of an
Indemnitee in connection with any Proceeding will be advanced to the
Indemnitee by the Company within 30 calendar days after the receipt by the
Company of a statement or statements from the Indemnitee requesting an
advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements will
reasonably evidence the expenses incurred by the Indemnitee and, if and to
the extent required by law at the time of such advance, will include or be
accompanied by an undertaking by or on behalf of the Indemnitee to repay
such amounts advanced as to which it may ultimately be determined that the
Indemnitee is not entitled. If such an undertaking is required by law at
the time of an advance, no security will be required for the undertaking
and the undertaking will be accepted without reference to the recipient's
financial ability to make repayment.
(ii) To obtain indemnification under this Bylaw, the Indemnitee will
submit to the Secretary a written request, including such documentation
supporting the claim as is reasonably available to the Indemnitee and is
reasonably necessary to determine whether and to what extent the
Indemnitee is entitled to indemnification (the "Supporting
Documentation"). The determination of the Indemnitee's entitlement to
indemnification will be made not less than 60 calendar days after receipt
by the Company of the written request for indemnification together with
the Supporting Documentation. The Secretary within 10 days after receipt
of such a request for indemnification will advise the Board in writing
that the Indemnitee has requested indemnification. The Indemnitee's
entitlement to indemnification under this Bylaw will be determined in one
of the following ways: (A) by a majority vote of the directors who are not
and were not parties to the Proceeding for which indemnification is
sought, even though less than a quorum, (B) by a committee
11
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of such directors designated by majority vote of such directors, even
though less than a quorum, (C) if there are no such directors, or if such
directors so direct, by Independent Counsel in a written opinion, or (D)
by the stockholders. If the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to clause
(C) above, a majority of the directors who are not and were not parties to
the Proceeding for which indemnification is sought will select the
Independent Counsel, but only an Independent Counsel to which the
Indemnitee does not reasonably object.
(iii) Except as otherwise expressly provided in this Bylaw, the
Indemnitee will be presumed to be entitled to indemnification under this
Bylaw upon submission of a request for indemnification together with the
Supporting Documentation in accordance with subparagraph (c)(ii) of this
Bylaw, and thereafter the Company will have the burden of proof to
overcome that presumption in reaching a contrary determination. In any
event, if the person or persons empowered under subparagraph (c)(ii) of
this Bylaw to determine entitlement to indemnification have not been
appointed or have not made a determination within 60 calendar days after
receipt by the Company of the request therefor together with the
Supporting Documentation, the Indemnitee will be deemed to be entitled to
indemnification and the Indemnitee will be entitled to such
indemnification unless (A) the Indemnitee misrepresented or failed to
disclose a material fact in making the request for indemnification or in
the Supporting Documentation or (B) such indemnification is prohibited by
law. The termination of any Proceeding described in Bylaw 34(a), or of any
claim, issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, will not,
of itself, adversely affect the right of the Indemnitee to indemnification
or create a presumption that the Indemnitee did not act in good faith and
in a manner which the Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any
criminal Proceeding, that the Indemnitee had reasonable cause to believe
that his or her conduct was unlawful.
(iv) (A) In the event that a determination is made pursuant to
subparagraph (c)(ii) of this Bylaw that the Indemnitee is not entitled to
indemnification under this Bylaw, (1) the Indemnitee will be entitled to
seek an adjudication of his entitlement to such indemnification either, at
the Indemnitee's sole option, in (x) an appropriate court of the State of
Delaware or any other court of competent jurisdiction or (y) an
arbitration to be conducted by a single arbitrator pursuant to the rules
of the American Arbitration Association, (2) any such judicial proceeding
or arbitration will be de novo and the Indemnitee will not be prejudiced
by reason of such adverse determination, and (3) in any such judicial
proceeding or arbitration the Company will have the burden of proving that
the Indemnitee is not entitled to indemnification under this Bylaw.
(B) If a determination is made or deemed to have been made,
pursuant to subparagraph (c)(ii) or (iii) of this Bylaw that the
Indemnitee is entitled to indemnification, the Company will be obligated
to pay the amounts constituting such indemnification within five business
days after such determination has been made or deemed to have been made
and will be conclusively bound by such determination unless (1) the
Indemnitee misrepresented or failed to disclose a material fact in making
the
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request for indemnification or in the Supporting Documentation or (2) such
indemnification is prohibited by law. In the event that advancement of
expenses is not timely made pursuant to subparagraph (c)(i) of this Bylaw
or payment of indemnification is not made within five business days after
a determination of entitlement to indemnification has been made or deemed
to have been made pursuant to subparagraph (c)(ii) or (iii) of this Bylaw,
the Indemnitee will be entitled to seek judicial enforcement of the
Company's obligation to pay to the Indemnitee such advancement of expenses
or indemnification. Notwithstanding the foregoing, the Company may bring
an action, in an appropriate court in the State of Delaware or any other
court of competent jurisdiction, contesting the right of the Indemnitee to
receive indemnification hereunder due to the occurrence of any event
described in subclause (1) or (2) of this clause (B) (a "Disqualifying
Event"); provided, however, that in any such action the Company will have
the burden of proving the occurrence of such Disqualifying Event.
(C) The Company will be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to the provisions of
this subparagraph (c)(iv) that the procedures and presumptions of this
Bylaw are not valid, binding and enforceable and will stipulate in any
such court or before any such arbitrator that the Company is bound by all
the provisions of this Bylaw.
(D) In the event that the Indemnitee, pursuant to the
provisions of this subparagraph (c)(iv), seeks a judicial adjudication of,
or an award in arbitration to, enforce his or her rights under, or to
recover damages for breach of, this Bylaw, the Indemnitee will be entitled
to recover from the Company, and will be indemnified by the Company
against, any expenses actually and reasonably incurred by the Indemnitee
if the Indemnitee prevails in such judicial adjudication or arbitration.
If it is determined in such judicial adjudication or arbitration that the
Indemnitee is entitled to receive part but not all of the indemnification
or advancement of expenses sought, the expenses incurred by the Indemnitee
in connection with such judicial adjudication or arbitration will be
prorated accordingly.
(v) For purposes of this paragraph (c), "Independent Counsel" means
a law firm or a member of a law firm that neither presently is, nor in the
past five years has been, retained to represent (A) the Company or the
Indemnitee in any matter material to either such party or (B) any other
party to the Proceeding giving rise to a claim for indemnification under
this Bylaw. Notwithstanding the foregoing, the term "Independent Counsel"
will not include any person who, under the applicable standards of
professional conduct then prevailing under the law of the State of
Delaware, would be precluded from representing either the Company or the
Indemnitee in an action to determine the Indemnitee's rights under this
Bylaw.
(d) If any provision or provisions of this Bylaw are held to be invalid,
illegal or unenforceable for any reason whatsoever: (i) the validity, legality
and enforceability of the remaining provisions of this Bylaw (including without
limitation all portions of any paragraph of this Bylaw containing any such
provision held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) will not in any way be affected or impaired
13
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thereby and (ii) to the fullest extent possible, the provisions of this Bylaw
(including without limitation all portions of any paragraph of this Bylaw
containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) will be construed so as to
give effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
35. Insurance, Contracts and Funding. The Company may purchase and
--------------------------------
maintain insurance to protect itself and any Indemnitee against any expenses,
judgments, fines and amounts paid in settlement or incurred by any Indemnitee in
connection with any Proceeding referred to in Bylaw 34 or otherwise, to the
fullest extent permitted by applicable law as then in effect. The Company may
enter into contracts with any person entitled to indemnification under Bylaw 34
or otherwise, and may create a trust fund, grant a security interest or use
other means (including without limitation a letter of credit) to ensure the
payment of such amounts as may be necessary to effect indemnification as
provided in Bylaw 34. Notwithstanding anything to the contrary contained in
Bylaw 34, in the event that the Company enters into a contract with any person
providing for indemnification of such person, the provisions of such contract
will exclusively govern the Company's obligations in respect of indemnification
for or advancement of fees or disbursements of such person's counsel or any
other professional engaged by such person.
GENERAL
36. Fiscal Year. The fiscal year of the Company will be fixed from time
-----------
to time by the Board.
37. Seal. The Board may adopt a corporate seal and use the same by
----
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
38. Reliance upon Books, Reports and Records. Each director, each member
----------------------------------------
of a committee designated by the Board and each officer of the Company will, in
the performance of his or her duties, be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any of the Company's officers
or employees, committees of the Board or any other person or entity as to
matters the director, committee member or officer believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company.
39. Time Periods. In applying any provision of these Bylaws that requires
------------
that an act be done or not be done a specified number of days prior to an event
or that an act be done during a period of a specified number of days prior to an
event, calendar days will be used unless otherwise specified, the day of the
doing of the act will be excluded and the day of the event will be included.
40. Amendments. Except as otherwise provided by law or by the Certificate
----------
of Incorporation or these Bylaws, these Bylaws or any of them may be amended in
any respect or repealed at any time, either (a) at any meeting of stockholders,
provided that any amendment or
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<PAGE>
PAGE>
supplement proposed to be acted upon at any such meeting has been described or
referred to in the notice of such meeting, or (b) at any meeting of the Board,
provided that no amendment adopted by the Board may vary or conflict with any
amendment adopted by the stockholders.
41. Certain Defined Terms. Terms used herein with initial capital letters
---------------------
that are defined in the Certificate of Incorporation are used herein as so
defined.
-15-
<PAGE>
EXHIBIT 4.1
COUNTERSIGNED AND REGISTERED:
HARRIS TRUST AND SAVINGS BANK
TRANSFER AGENT AND REGISTRAR
BY: AUTHORIZED SIGNATURE
COMMON STOCK COMMON STOCK
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
COMMON STOCK
(ART) (ART)
[LOGO OF GREENMOUNTAIN.COM APPEARS HERE]
GreenMountain.com Company
THIS CERTIFICATE IS
TRANSFERABLE IN
CHICAGO, IL OR NEW
YORK, NY
CUSIP 395381
10 6
SEE REVERSE
FOR CERTAIN
DEFINITIONS
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $.01 PAR VALUE EACH,
OF
GreenMountain.com Company (hereinafter called the
"Corporation") transferable on the books of the Corporation
by the holder hereof, in person or by duly authorized
attorney, upon surrender of this Certificate properly
endorsed or accompanied by a proper assignment. This
Certificate and the shares represented hereby are issued
and shall be held subject to all of the provisions of the
Certificate of Incorporation and Bylaws of the Corporation
and all amendments thereof, to all of which the holder by
the acceptance hereof consents. This Certificate is not
valid until countersigned and registered by the Transfer
Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
Chairman of the Board
[GREENMOUNTAIN.COM CORPORATE SEAL APPEARS HERE]
Vice President, General
Counsel and Secretary
<PAGE>
GreenMountain.com Company
There is on file at the office of the Secretary of State of the State of
Delaware a full statement of the powers, designations, preferences, and
relative participating, optional, and other special rights, qualifications,
limitations, and restrictions of each class of stock of the Corporation
contained in the Certificate of Incorporation of the Corporation. The
Corporation will furnish a copy of such statement to any stockholder without
charge upon written request to the Corporation at its principal corporate
offices, or at its registered office on file with the Secretary of State of
the State of Delaware.
The Board of Directors of the Corporation may require the owner of a lost or
destroyed stock certificate, or his legal representative, to give the
Corporation a bond to indemnify it and its transfer agent and registrar
against any claim that may be made against them on account of the alleged loss
or destruction of any such certificate.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-- as tenants in common UNIF GIFT MIN Custodian..
ACT --....
TEN ENT--as tenants by the entireties (Cust) (Minor)
under Uniform
Gifts to
Minors
JT TEN--as joint tenants with right of
survivorship and not as tenants in common
Act..............
(State)
Additional abbreviations may also be used though not in the above list.
For value received, ____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL
SECURITY OR OTHER
IDENTIFYING NUMBER OF
ASSIGNEE
- -------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
________________________________________________________________________ Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
______________________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated, ___________________________
X __________________________________
NOTICES: (SIGNATURE)
THE
SIGNATURE(S)
TO THIS
ASSIGNMENT
MUST
CORRESPOND
WITH THE
NAME(S)
AS WRIT-
TEN UPON
THE FACE
OF THE
CERTIFICATE
IN EVERY
PARTICULAR
WITHOUT
ALTERATION
OR EN-
LARGEMENT
OR ANY
CHANGE
WHATEVER.
.
X __________________________________
(SIGNATURE)
THE SIGNATURE(S) MUST BE
GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE
17Ad-15.
------------------------------------
SIGNATURE(S) GUARANTEED BY:
<PAGE>
EXHIBIT 5.1
[FORM OF LEGAL OPINION OF JONES, DAY, REAVIS & POGUE]
, 1999
GreenMountain.com Company
55 Green Mountain Drive
South Burlington, Vermont 05403
Re: Underwritten Offering of up to 28,750,000
Shares of Common Stock, par value $0.01
per share, of GreenMountain.com Company
---------------------------------------
Ladies and Gentlemen:
We are acting as counsel to GreenMountain.com Company, a Delaware
corporation (the "Company"), in connection with the offering and sale of up to
28,750,000 shares (the "Shares") of common stock, par value $0.01 per share,
pursuant to the Underwriting Agreement (the "Underwriting Agreement") to be
entered into among the Company and Prudential Securities Incorporated, Banc
Boston Robertson Stephens, BT Alex. Brown, Volpe Brown Whelan & Company,
FAC/Equities, First Union Capital Markets, The Robinson-Humphrey Company and
E*OFFERING as the Representatives of the several Underwriters (the
"Underwriters") to be named in Schedule I thereto.
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. Based on such examination and
subject to the qualifications and limitations hereinafter specified, we are of
the opinion that the Shares are duly authorized and, when issued and delivered
to the Underwriters in accordance with the Underwriting Agreement against
payment of the consideration therefor as provided therein and as contemplated by
the Registration Statement on Form S-1 (the "Registration Statement") filed by
the Company to effect the registration of the Shares under the Securities Act of
1933, as amended, will be validly issued, fully paid and nonassessable.
In rendering the foregoing opinion, we have (i) assumed the authenticity of
all documents represented to us to be originals, the conformity to original
documents of all copies of documents submitted to us, the accuracy and
completeness of all corporate records made available to us by the Company, the
accuracy of the statements contained in the certificates described in the
following clause (ii) and the genuineness of all signatures that purport to have
been made in a
<PAGE>
GreenMountain.com Company
, 1999
Page 2
corporate, governmental, fiduciary or other capacity, and that the persons who
affixed such signatures had authority to do so, and (ii) relied, as to certain
factual matters, without any independent investigation, inquiry or verification,
upon certificates of officers of the Company and public officials.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and the reference to us under the caption "Legal Matters"
in the Prospectus constituting a part of the Registration Statement.
Very truly yours,
<PAGE>
EXHIBIT 10.5
FORM
OF
GREENMOUNTAIN.COM COMPANY
1999 STOCK OPTION PLAN
GreenMountain.com Company, a Delaware corporation (the "Company") and
successor by merger to Green Mountain Energy Resources L.L.C., a Delaware
limited liability company, hereby adopts the GreenMountain.com Company 1999
Stock Option Plan (the "Plan"), effective as of __________, 1999. The Plan
amends and completely restates the Green Mountain Energy Resources L.L.C.
Employee Ownership Plan and the Green Mountain Energy Resources L.L.C. 1999 Unit
Option Plan, except that the provisions of each such prior option plan will
remain in effect after the effective date of this Plan solely for purposes of
supplying any necessary terms not set forth in this Plan and incorporated by
reference into the options granted under each such prior option plan.
1. Purpose. The purpose of the Plan is to attract and retain the best
-------
available talent and encourage the highest level of performance by executive
officers, key employees, directors, advisors and consultants, and to provide
them with incentives to put forth maximum efforts for the success of the
Company's business, in order to serve the best interests of the Company and its
stockholders. All options granted under the Plan are intended to be
nonstatutory stock options.
2. Definitions. The following terms, when used in the Plan with initial
-----------
capital letters, will have the following meanings:
(a) "Act" means the Securities Exchange Act of 1934 as in effect from
time to time.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as in effect from
time to time.
(d) "Common Stock" means the common stock, par value $.01 per share,
of the Company or any security into which such common stock may be changed
by reason of any transaction or event of the type described in Paragraph 7.
(e) "Date of Grant" means the date specified by the Stock Option
Committee or the Board, as applicable, on which a grant of Stock Options
will become effective (which date will not be earlier than the date on
which the Stock Option Committee or the Board takes action with respect
thereto).
(f) "Market Value per Share" means the fair market value per share of
the Common Stock on the Date of Grant as determined by the Stock Option
Committee or the Board, as applicable.
<PAGE>
(g) "Option Price" means the purchase price per share payable on
exercise of a Stock Option.
(h) "Participant" means a person who is selected by the Stock Option
Committee or the Board, as applicable, to receive Stock Options under
Paragraph 5 of the Plan and who is at that time (i) an executive officer or
other key employee of the Company or any Subsidiary, (ii) an advisor or
consultant to the Company or any Subsidiary, (iii) a member of the Board or
(iv) a prospective employee, advisor, consultant or Board member selected
to receive Stock Options pursuant to a written offer of employment or a
written offer to perform services in any other capacity for the Company or
any Subsidiary.
(i) "Prior Option Plan" means each of the Green Mountain Energy
Resources L.L.C. Employee Ownership Plan and the Green Mountain Energy
Resources L.L.C. 1999 Unit Option Plan.
(j) "Rule 16b-3" means Rule 16b-3 under Section 16 of the Act as such
Rule is in effect from time to time.
(k) "Stock Option Committee" means the Audit and Special Compensation
Committee, which is a committee of the Board whose members are appointed by
the Board from time to time. All of the members of the Stock Option
Committee, which may not be less than two, are intended at all times to
qualify as "outside directors" within the meaning of Section 162(m) of the
Code and as "Non-Employee Directors" within the meaning of Rule 16b-3;
provided, however, that the failure of a member of such committee to so
-------- -------
qualify will not invalidate any Stock Option granted by such committee.
(l) "Stock Option" means the right to purchase one or more shares of
Common Stock upon exercise of an option granted pursuant to Paragraph 5.
(m) "Subsidiary" means any corporation, partnership, limited liability
company, joint venture or other entity in which the Company owns or
controls, directly or indirectly, not less than 50% of the total combined
voting power or equity interests represented by all classes of stock or
other equity interests issued by such corporation, partnership, limited
liability company, joint venture or other entity.
3. Shares Available Under Plan. The shares of Common Stock which may be
---------------------------
issued under the Plan will not exceed in the aggregate 12,554,713, subject to
adjustment as provided in this Paragraph 3. Such shares may be shares of
original issuance or treasury shares or a combination of the foregoing.
(a) Any shares of Common Stock which are subject to Stock Options that
are terminated unexercised, forfeited or surrendered or that expire for any
reason will again be available for issuance under the Plan.
-2-
<PAGE>
(b) If, as of the close of business on the last day of each fiscal
quarter of the Company following the effective date of the Plan, the sum of
(i) the total number of shares of Common Stock previously issued upon the
exercise of Stock Options and options granted by the Company or its
predecessor prior to the effective date hereof, (ii) the total number of
shares of Common Stock then subject to outstanding Stock Options and
options granted by the Company or its predecessor prior to the effective
date hereof, and (iii) the total number of shares of Common Stock then
remaining available for future Stock Option grants under the Plan (such sum
being the "Plan Shares") is less than 20% of the total number of shares of
Common Stock then outstanding computed on a fully diluted basis (such total
number being the "Outstanding Shares"), the number of shares of Common
Stock available for issuance under the Plan will be increased (but not
decreased) so that the number of Plan Shares will be equal to 20% of the
number of Outstanding Shares. For purposes of the foregoing adjustment, all
outstanding Stock Options and options granted under a Prior Option Plan or
any other Company plans will be treated as fully exercised in computing the
number of outstanding shares of Common Stock on a fully diluted basis,
without regard to whether such options are then fully exercisable.
(c) The shares available for issuance under the Plan also will be
subject to adjustment as provided in Paragraph 7.
4. Individual Limitation on Stock Options. The maximum aggregate number
--------------------------------------
of shares of Common Stock with respect to which Stock Options may be granted to
any Participant during any single calendar year will not exceed 3,159,156.
5. Grants of Stock Options. The Stock Option Committee or the Board may
-----------------------
from time to time authorize grants to any Participant of Stock Options upon such
terms and conditions as the Stock Option Committee or the Board, as applicable,
may determine in accordance with the provisions set forth below.
(a) Each grant will specify the number of shares of Common Stock to
which it pertains.
(b) Each grant will specify the Option Price, which will not be less
than 100% of the Market Value per Share on the Date of Grant.
(c) Successive grants may be made to the same Participant whether or
not any Stock Options previously granted to such Participant remain
unexercised.
(d) Each grant will specify the required period or periods (if any) of
continuous service by the Participant with the Company or any Subsidiary
and/or any other conditions to be satisfied before the Stock Options or
installments thereof will become exercisable, and any grant may provide, or
may be amended to provide, for the earlier exercise of the Stock Options in
the event of a change in control of the Company (as defined in the stock
option agreement evidencing such grant or in any agreement referred to in
such stock option agreement) or in the event of any other similar
transaction or event.
-3-
<PAGE>
(e) Each Stock Option may be made subject to such transfer
restrictions as the Stock Option Committee or the Board, as applicable, may
determine.
(f) Each grant will be evidenced by a stock option agreement executed
on behalf of the Company by the Chief Executive Officer (or another officer
designated by the Stock Option Committee or the Board, as applicable) and
delivered to the Participant and containing such further terms and
provisions, consistent with the Plan, as the Stock Option Committee or the
Board, as applicable, may approve.
(g) For purposes of any provision in a stock option agreement relating
to the effect on a Stock Option of a Participant's ceasing to perform
services for the Company or any Subsidiary, a termination of employment or
other separation from service will occur when the Participant permanently
ceases to perform services for the Company and all Subsidiaries or when the
entity for which the Participant is performing services ceases to be a
Subsidiary, unless the Participant immediately becomes employed by the
Company or another Subsidiary.
6. Payment. The Option Price will be payable, as required by the Stock
-------
Option Committee or the Board in such Committee's or the Board's sole
discretion, as applicable, (i) in cash or by check acceptable to the Company,
(ii by the transfer to the Company of shares of Common Stock owned by the
Participant for at least six months (or, with the consent of the Stock Option
Committee or the Board, as applicable, for less than six months) having an
aggregate fair market value per share at the date of exercise equal to the
aggregate Option Price, (ii by authorizing the Company to withhold a number of
shares of Common Stock otherwise issuable to the Participant having an aggregate
fair market value per share on the date of exercise equal to the aggregate
Option Price, (iv in any other form of valid consideration or (v) by a
combination of such methods of payment; provided, however, that the payment
-------- -------
methods described in clauses (ii) and (iii) will not be available at any time
that the Company is prohibited from purchasing or acquiring such shares of
Common Stock. The Stock Option Committee or the Board, as applicable, may
permit deferred payment of the Option Price from the proceeds of sale through a
bank or broker of some or all of the shares to which such exercise relates.
7. Adjustments. The Stock Option Committee or the Board may make or
-----------
provide for such adjustments in the maximum number of shares specified in
Paragraphs 3 and 4, in the number of shares of Common Stock covered by
outstanding Stock Options granted hereunder, in the Option Price applicable to
any such Stock Options, and/or in the kind of shares covered thereby (including
shares of another issuer), as the Stock Option Committee or the Board, as
applicable, in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the rights of
Participants that otherwise would result from any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, merger, consolidation, spin-off, reorganization, partial or
complete liquidation, issuance of rights or warrants to purchase securities or
any other corporate transaction or event having an effect similar to any of the
foregoing. Moreover, in the event of any such transaction or event, the Stock
Option Committee or the Board, as applicable, in its sole discretion, may
provide in substitution for Common Stock to be delivered upon the exercise of
outstanding Stock Options such alternative consideration as it, in good faith,
may determine to be
-4-
<PAGE>
equitable in the circumstances. In the event the Stock Option Committee
disagrees with the Board with respect to the foregoing adjustments, the Board's
determination will be final and conclusive. Any fractional shares resulting from
the foregoing adjustments will be eliminated.
8. Withholding of Taxes. To the extent that the Company is required to
--------------------
withhold federal, state, local or foreign taxes in connection with any benefit
realized by a Participant under the Plan, or is requested by a Participant to
withhold additional amounts with respect to such taxes, and the amounts
available to the Company for such withholding are insufficient, it will be a
condition to the realization of such benefit that the Participant make
arrangements satisfactory to the Company for payment of the balance of such
taxes required or requested to be withheld. In addition, if permitted by the
Stock Option Committee or the Board, a Participant may elect to have any
withholding obligation of the Company satisfied with shares of Common Stock that
would otherwise be transferred to the Participant on exercise of a Stock Option.
9. Administration of the Plan. (a) The Plan will be administered by the
--------------------------
Stock Option Committee and the Board. For purposes of any action taken by the
Stock Option Committee or the Board, whichever is applicable, a majority of the
members will constitute a quorum, and the action of the members present at any
meeting at which a quorum is present, or acts unanimously approved in writing,
will be the acts of the Stock Option Committee or the Board.
(b) The Stock Option Committee and the Board have the full authority
and discretion to administer the Plan and to take any action that is necessary
or advisable in connection with the administration of the Plan, including
without limitation the authority and discretion to interpret and construe any
provision of the Plan or of any agreement, notification or document evidencing
the grant of a Stock Option and to make any determination of fact relating to
the foregoing. The interpretation and construction by the Stock Option
Committee or the Board, as applicable, of any such provision and any
determination by the Stock Option Committee or the Board pursuant to any
provision of the Plan or of any such agreement, notification or document will be
final and conclusive; provided, that in the event the Stock Option Committee
--------
disagrees with the Board with respect to such interpretation, construction or
determination, the Board's determination will be final and conclusive. No
member of the Stock Option Committee or the Board will be liable for any such
action or determination made in good faith.
(c) Notwithstanding any provision of the Plan to the contrary, the
Stock Option Committee will have the exclusive authority and discretion to take
any action required or permitted to be taken under the provisions of Paragraph
7, Paragraph 9(a), Paragraph 9(b), Paragraph 10(a) and Paragraph 10(b) with
respect to Stock Options granted under the Plan that are intended to comply with
the requirements of Section 162(m) of the Code.
10. Amendments, Etc. (a) The Stock Option Committee or the Board, as
----------------
applicable, may, without the consent of the Participant, amend any agreement
evidencing a Stock Option granted under the Plan, or otherwise take action, to
accelerate the time or times at which the Stock Option may be exercised, to
extend the expiration date of the Stock Option, to waive any other condition or
restriction applicable to such Stock Option or to the exercise of such Stock
Option, to reduce the exercise price of such Stock Option, to amend the
definition of a change in control of the Company (if such a definition is
contained in such agreement) to expand the events
-5-
<PAGE>
that would result in a change in control of the Company and to add a change in
control provision to such agreement (if such provision is not contained in such
agreement) and may amend any such agreement in any other respect with the
consent of the Participant.
(b) The Plan may be amended from time to time by the Board or any duly
authorized committee thereof. In the event any law, or any rule or regulation
issued or promulgated by the Internal Revenue Service, the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc., any
stock exchange upon which the Common Stock is listed for trading, or any other
governmental or quasi-governmental agency having jurisdiction over the Company,
the Common Stock or the Plan, requires the Plan to be amended, or in the event
Rule 16b-3 is amended or supplemented (e.g., by addition of alternative rules)
----
or any of the rules under Section 16 of the Act are amended or supplemented, in
either event to permit the Company to remove or lessen any restrictions on or
with respect to Stock Options, the Stock Option Committee and the Board each
reserves the right to amend the Plan to the extent of any such requirement,
amendment or supplement, and all Stock Options then outstanding will be subject
to such amendment.
(c) The Plan may be terminated at any time by action of the Board.
The termination of the Plan will not adversely affect the terms of any
outstanding Stock Option.
(d) The Plan will not confer upon any Participant any right with
respect to continuance of employment or other service with the Company or any
Subsidiary, nor will it interfere in any way with any right the Company or any
Subsidiary would otherwise have to terminate a Participant's employment or other
service at any time.
(e) The Plan will be governed by the laws of the State of Delaware
without regard to conflicts or choice of laws principles.
GREENMOUNTAIN.COM COMPANY
By:
-------------------------------------
Name:
-------------------------------
Title:
-------------------------------
-6-
<PAGE>
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is being executed as of October 5,
1998 (the "Effective Date"), between Green Mountain Energy Resources L.L.C.
("Green Mountain" or the "Employer") and M. David White (the "Employee")
(collectively, the "Parties").
WHEREAS, the Employer desires to employ the Employee on the terms and
conditions described herein, and the Employee wishes to be so employed;
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
terms and conditions set forth in this Agreement, the Parties hereby agree,
effective as of the Effective Date, as follows:
1. Employment. Employer hereby employs Employee, and Employee hereby
accepts employment subject to the terms and conditions set forth below.
1.1 Term. The employment of the Employee shall commence on the
Effective Date and shall continue until December 31, 2003 (the "Term").
Notwithstanding the foregoing, this Agreement shall be subject to termination at
any time prior to the expiration of the Term as provided in Sections 4 and 5
hereof.
1.2 Capacity. Employee is and shall be employed in the capacity of
President, Chief Executive Officer, and Chief Financial Officer of Green
Mountain and in such capacity, shall have the rights and responsibilities
attendant to that of the Chief Executive Officer of a publicly traded company.
Employer shall consult with Employee, and Employee will participate in any
decisions, with respect to changing Green Mountain's policies, personnel,
culture, compensation structure, reporting systems or configuration and
alignment of operating divisions; without limiting the generality of the
foregoing, all material decisions affecting Green Mountain, other than those not
in the ordinary course of business, shall be made by Employee. Employee's
duties in such capacity shall be to control, direct and supervise the day-to-day
operations of Green Mountain. Employee's exercise of the foregoing duties shall
be subject at all times to the oversight and direction of Green Mountain's
Management Committee or Board of Directors.
1.3 Place of Performance. In connection with his employment by the
Employer, Employee's principal place of business will be in Dallas, Texas.
Duties of Employee to be performed in connection with his employment for Green
Mountain that cannot be performed in Dallas, Texas will be performed at the
Company's offices in South Burlington, Vermont, and at such other locations as
may be reasonably required by the Company, consistent with the duties of
Employee as set forth in Section 1.2 above.
2. [Reserved]
1
<PAGE>
3. Compensation.
3.1 Salary, Bonus and Withholding.
3.1.1 Salary and Bonus. During the Term, as compensation for
services rendered by Employee, Green Mountain shall pay Employee a base salary
("Green Mountain Salary") in monthly installments equal to one twelfth (1/12) of
the then Annualized Amount (herein defined). Employee may be paid an annual
incentive bonus (the "Incentive Bonus") at the absolute discretion of the
Management Committee or Board of Directors of Employer.
3.1.2 Definition of Annualized Amount. As used herein, the term
"Annualized Amount" shall mean $155,000. The Annualized Amount may be subject
to reduction pursuant to an expenditure control review; provided, however, that
Employee must receive written notice of any proposed reduction in the Annualized
Amount prior to the effective date of such reduction.
3.1.3 Withholding for Taxes. Compensation (as herein defined)
shall be subject to any and all applicable payroll and withholding deductions
required by the law of any jurisdiction, state or federal, with taxing authority
with respect to such Compensation.
3.1.4 Definition of Compensation. The Green Mountain Salary, the
Incentive Bonus (if any), the Benefits, and the other perquisites set forth in
this Agreement are herein collectively referred to as the "Compensation."
3.2 Expenses. Green Mountain shall provide Employee an annual expense
allowance of up to $50,000 for transportation and housing within Vermont (the
"Vermont Allowance"). Green Mountain shall reimburse Employee, in accordance
with Green Mountain's standard expense reimbursement policy applicable to senior
executives of Green Mountain, for reasonable and necessary expenses incurred by
Employee while traveling pursuant to Green Mountain's directions (including,
without limitation, air fare, aircraft charter and hotel expenses incurred in
connection with travel between the locations specified in Section 1.3) upon
presentation of documentation reasonably acceptable to Green Mountain. In
connection with such reimbursement, Green Mountain may, but shall not be
obligated to, provide Employee with a credit card or cards to be used for paying
such expenses. Such card or cards shall be the property of Green Mountain and
upon termination of the employment shall be returned to Green Mountain by
Employee. Employee shall be responsible for and shall reimburse Green Mountain
for any and all payments made by Green Mountain for Employee's personal, non-
reimbursable expenses charged on any such card or cards.
3.3 Other Benefits. During the Term, Employer shall provide the
following additional benefits to Employee:
(a) Health Insurance. Medical, dental and hospitalization
insurance for Employee and his family with the same scope and coverage as is
provided by Employer to its senior executives.
2
<PAGE>
(b) Term Life Insurance. Term life insurance upon the life of
Employee in an amount consistent with insurance made available to the senior
executives of Employer, including, if applicable, split-dollar insurance
policies.
(c) Disability Insurance. Disability insurance in an amount
consistent with insurance made available to the senior executives of Employer.
(d) Other Benefit Programs. Employee shall be entitled to
participate in all other employee benefit programs of Employer which the
Management Committee or Board of Directors of Employer may, in its sole
discretion, regularly make available to all of its senior executives (such as a
stock bonus plan, a retirement plan and other fringe benefits).
(e) Offices. Employer shall provide reasonable office facilities
in Dallas, Texas with secretarial and support services, for the use of Employee.
Employee shall also be entitled to an office with secretarial and support
services at the principal offices of Green Mountain in Vermont.
(f) Vacation. Employee shall be entitled to a minimum of four
(4) weeks of paid vacation during each calendar year.
(g) Equity Interest. Employee will have an opportunity to
purchase 300,000 Common Units of the Employer (i.e., an equity interest in the
Employer equal to 5% of the existing equity interests) pursuant to the
Employer's Employee Equity Loan Program. Such interest will be subject to
dilution resulting from the sale of additional equity interests in Employer.
(h) Options. Employer will grant to Employee options to purchase
300,000 Common Units of the Employer (i.e., an equity interest in the Employer
equal to 5% of the existing equity interests, (20% of such options to vest
immediately and the remaining options to vest 20% per year on each anniversary
of the Effective Date). Contemporaneously with the consummation of any
additional equity financing by the Employer (other than in connection with the
Employer's Employee Unit Purchase Plan and other than any equity financing
consummated after the successful completion of an initial public offering of the
Employer's equity securities), Employer will grant to Employee additional
options to purchase equity interests in the Employer equal to 5% of the
additional equity interests issued, such additional options to be at an exercise
price equal to the issue price of the equity interests issued.
(i) Definition of Benefit. The expense allowance and
reimbursement of expenses provided for in Section 3.2, the benefits provided for
in this Section 3.3 and any other benefits hereafter granted to Employee by the
Employer are herein referred to as the "Benefits."
3
<PAGE>
4. Termination of Employment.
4.1 Termination by the Employer.
4.1.1 Termination for Cause. Employer may terminate the
Employee's employment with Employer "for Cause" by written notice to the
Employee specifying the reasons for termination, with the consequences set forth
in Section 4.3.1 below. "For Cause," as used in this Agreement, shall mean (a)
conviction of a felony involving an act of dishonesty or moral turpitude, (b)
material breach by Employee of a provision of this Agreement, or (c) gross
negligence or willful malfeasance by Employee in the management of Green
Mountain.
4.1.2 Other Termination. In addition, the Employer shall have
the right in its sole discretion to terminate the Employee's employment with
Employer for any reason whatsoever, or for no reason, with the consequences set
forth in Section 4.3.2 below.
4.2 Termination by the Employee. The Employee shall have the right to
terminate his employment with Employer, with the consequences set forth in
Section 4.3.2 below, by giving written notice to Employer.
4.3 Severance Benefits.
4.3.1 Termination by the Employee or by the Employer for Cause.
If Employer terminates the Employee's employment with Employer for Cause
pursuant to Section 4.1.1 hereof, or if the Employee terminates the Employee's
employment with the Employer pursuant to Section 4.2 hereof, the Employee shall
have no right to any further compensation, except for (a) any accrued but unpaid
portions of the Annualized Amount, and (b) such health benefits as the Employer
is required by law to continue to provide for a period of thirty (30) days
following termination.
4.3.2 Termination by the Employer other than For Cause. If the
Employer terminates the Employee's employment with the Employer prior to the
expiration of the Term for any reason other than pursuant to Section 4.1.1
hereof, the Employee shall be entitled to receive (a) any Compensation or
Benefit provided under this Agreement that has accrued up to the termination
date, and (b) the Green Mountain Salary and the Benefits specified in clauses
3.3(a), (b), and (c) until the earlier to occur of (i) the expiration of one
year following the termination and (ii) the commencement of substantially full-
time employment by Employee. Employee agrees to give Employer prompt written
notice of any subsequent employment following termination of the Employee's
employment pursuant to this Section 4.3.2. In addition, if the Employer
terminates the Employee's employment with the Employer prior to the expiration
of the Term for any reason other than pursuant to Section 4.1.1 hereof, and if
no Wyly family member is serving as the chairman of the management committee,
board of directors, or other governing body of the Employer, all options granted
pursuant to Section 3.3(h) shall immediately vest and be exercisable.
4
<PAGE>
4.3.3 Sole Benefits. The benefits and payments provided for in
this Section 4.3 will be the Employee's only severance benefits.
5. Termination of this Agreement upon Employee's Death or Permanent
Disability. This Agreement shall be deemed terminated in the event of death or
permanent and total disability of Employee during the Term.
5.1 Effect. In such event, Employer shall be obligated to (i) pay to
Employee, Employee's guardian, or Employee's estate, as applicable, all Salary
earned by Employee through the date of death or the date that Employee is
considered permanently and totally disabled, and (ii) grant to Employee all
Benefits accrued as of the date of death or the date that Employee is considered
to be permanently and totally disabled. Also in such event, the Employer will
allow the Employee's spouse and dependent children to continue to participate in
the Employer's medical plan on the same basis as such continued participation is
provided to spouses and dependent children of other executive employees. In the
event such continued participation is not possible for any reason, the Employer
will purchase health insurance coverage for the Employee's spouse and dependent
children that provides, to the extent practicable, reasonably comparable
benefits for a period of 1 year. In no event will the Employer be obligated to
provide any medical plan or other health insurance coverage in the event
Employee's spouse and dependent children become eligible for medical benefits
offered by another employer. Upon the payments of the aforesaid sums by the
Employer, all obligations of Employer to Employee hereunder shall be totally and
completely satisfied, and Employer shall have no further obligations of any type
to Employee pursuant to this Agreement.
5.2 Definition. Employee shall be considered "permanently and totally
disabled" for purposes of this Section 5 in the event he is unable to perform
with reasonable continuity his material duties hereunder by reason of any
medically determinable physical or mental impairment which has lasted for a
continued period of not less than nine (9) months.
6. Confidentiality. Employer agrees to provide access to, and the
Employee acknowledges that his employment under this Agreement may bring the
Employee into close contact with, many of the Employer's (which for purposes of
this Section 6 and Section 7 shall mean the Employer, its subsidiaries and
affiliated companies of each) confidential affairs, including information about
costs, profits, business opportunities, key personnel, operational methods,
plans for future development, and other business affairs, and other information
not readily available to the public. The Employee further acknowledges that the
services agreed to under this Agreement are of a special and unique character
and that the Employer competes in nearly all of its business activities with
other organizations for which the Employee's services and expertise would be
valuable. In recognition thereof, the Employee agrees and covenants:
(a) to keep confidential all information of the Employer which is not
publicly known or generally known to persons engaged in businesses similar or
related to those of Employer and not to disclose such matters to anyone outside
the Employer either while the Employee is employed with the Employer or
thereafter, except (i) with the Employer's express prior written authorization,
or (ii) pursuant to subpoena, court order or similar judicial process
5
<PAGE>
about which the Employee has given the Employer notice as soon as practicable
upon the Employee's receipt thereof;
(b) to deliver promptly to the Employer, upon termination of the
Employee's employment with the Employer (whether upon expiration of the Term or
prior thereto), or at any other time that the Employer may so request, all
memoranda, notes, records, reports, and other documents or other repositories of
information (all copies thereof) containing any information concerning
confidential information, whether prepared by the Employee, the Employer or
anyone else;
(c) not to make, publicly or privately, any disparaging remarks of any
nature whatsoever about the Employer or any of its employees, customers or
prospect (and the Employer agrees not to make, publicly or privately, any
disparaging remarks of any nature whatsoever about the Employee);
(d) to coordinate with the Employer concerning comments, made publicly or
privately (other than to his immediate family), on his employment, except to the
extent reasonably required to obtain new employment, provided that all such
statements shall in any event be consistent with clause 6(c) hereof; and
(e) to keep confidential the terms of this Employment Agreement and to
disclose this Agreement's terms only to (i) a financial institution considering
a loan to Employee, (ii) tax or other governmental authorities, or (iii)
counsel, advisors or related parties of Employee who have been advised of the
confidentiality provisions of this Agreement.
For purposes of this Section 6 (other than clause (b) of the preceeding
sentence), all references to Employer shall include the Employer, any member of
the Wyly family or any affiliate of either.
7. Non-Interference. During the Employee's tenure of employment with the
Employer and for one year thereafter, the Employee agrees to refrain from
interfering with the employment relationship between the Employer and its other
employees by soliciting, directly or indirectly, any such individual to
participate in, or be employed by, any business venture other than the Employer.
During the Employee's tenure of employment with the Employer and for a period of
one year thereafter, the Employee agrees to refrain from soliciting (for himself
or for any entity in which the Employee has an interest or by which the Employee
is employed) any business in any area or activity in which Employee or such
entity competes with Employer from any person who is a current client or
customer of the Employer at the termination date of the Employee's employment
with the Employer.
8. Return of Property on Termination. In order to prevent the intentional
or unintentional disclosure of Employer's trade secrets by Employee, the Parties
agree that on termination of the Employee's employment, all of Employer's
property shall be promptly returned to Employer by Employee. Without limiting
the generality of the term "Employer's property," Employer and Employee
stipulate that for the purposes of this Agreement, that term includes, but is
not limited to: all credit cards, sales manuals, leasing manuals, brochures,
charts,
6
<PAGE>
graphs, price lists, customer account lists, prospective mailing lists, and any
other written or printed materials, recordings, photographs, films or slides
relating to the Employer's business, or any copies or reproductions of the
foregoing, and all equipment, hardware, and other property, given by the
Employer to the Employee or owned by Employer and in the possession or under the
direct or indirect control of Employee.
9. Notice. Any notice, request, reply, instruction, or other
communication provided or permitted in this Agreement must be given in writing
and may be served by depositing same in the United States mail in certified or
registered form, postage prepaid, addressed to the Party or Parties to be
notified with return receipt requested, or by delivering the notice in person to
such Party or Parties. Unless actual receipt is required by any provision of
this Agreement, notice deposited in the United States mail in the manner herein
prescribed shall be effective on dispatch. For purposes of notice, the address
of Employee, his spouse, any purported donee or transferee or any administrator,
executor or legal representative of Employee or his estate, as the case may be,
shall be as follows:
The address of Employee shall be:
M. David White
3800 Potomac
Dallas, Texas 75205
with a copy to:
J. Kenneth Menges, Jr., P.C.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
The address of Employer shall be:
Green Mountain Energy Resources L.L.C.
55 Green Mountain Drive
P.O. Box 2206
South Burlington, Vermont 05407-2206
Attention: General Counsel
with a copy to:
Green Mountain Energy Resources L.L.C.
300 Crescent Court, Suite 1000
Dallas, Texas 75201
Attention: Evan Wyly
7
<PAGE>
Employer shall have the right from time to time and at any time to change its
address and shall have the right to specify as its address any other address by
giving at least ten (10) days written notice to Employee. Employee shall have
the right from time to time and at any time to change his address and shall have
the right to specify as his address any other address by giving at least ten
(10) days written notice to Employer.
10. Controlling Law. The execution, validity, interpretation and
performance of this Agreement shall be determined and governed by the
substantive laws of the State of Texas.
11. Entire Agreement. This Agreement contains the entire agreement of the
Parties with respect to the employment of Employee. The Agreement may not be
changed orally or by action or inaction, but only by an agreement in writing
signed by the Party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
12. Severability. If any provision of the Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, the Parties shall
promptly meet and negotiate substitute provisions for those rendered or declared
illegal or unenforceable, but all remaining provisions of this Agreement shall
remain in full force and effect.
13. Effect of Agreement, Assignment, Required Assumption. This Agreement
shall be binding upon Employee and his heirs, executors, administrators, legal
representatives, successors and assigns and the Employer and its successors and
assigns. Employee may not assign any rights hereunder without the prior written
consent of Employer. Employer may assign its rights and obligations hereunder
to any successor entity or transferee carrying on a substantial portion of the
business currently carried on by the Employer. Employer shall require any
person who is the successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to substantially all of the business or assets of
Employer to assume, by a written agreement in form and substance satisfactory to
the Employee, all of the obligations of Employer under this Agreement.
14. Indemnification. Employer shall indemnity, defend and hold Employee
harmless to the maximum extent permitted by law against judgments, fines,
amounts paid in settlement, and reasonable expenses, including attorneys' fees
incurred by Employee, in connection with the defense of, or as a result of any
action or proceeding (or any appeal from any action or proceeding) in which
Employee is made or is threatened to be made a party by reason of the fact that
Employee is or was an officer, employee or director of any corporation,
partnership or other organization which, directly or indirectly, controls or is
controlled by Employer, regardless of whether such action or proceeding is one
brought by or in the right of Employer. Employer further represents and
warrants: (i) that Employee shall be covered and insured up to the maximum
limits provided by all insurance which Employer maintains to indemnify its
directors and officers; and (ii) that Employer shall maintain such insurance, in
not less than its present limits, in effect throughout the term of this
Agreement.
8
<PAGE>
15. Relief. The Employee acknowledges that, because the Employer's legal
remedies may be inadequate in the event of a breach of, or other failure to
perform, by the Employee any of the agreements set forth in Sections 6, 7, and 8
hereof, the Employer may, in addition to obtaining any other remedy or relief
available to it (including without limitation damages at law), enforce the
provisions of such Sections by injunction and other equitable relief.
16. Attorneys' Fees. Employer shall pay in a timely and prompt manner any
and all legal fees and expenses incurred by the Employee in connection with
negotiation and preparation of this Agreement and from time to time as a result
of Employer's contesting the validity or enforceability of the Agreement.
17. Execution. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which shall constitute one
instrument.
EXECUTED effective as of the date first above written.
EMPLOYER:
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
By: /s/ Evan Wyly
-------------------------------------
EMPLOYEE:
/s/ M. David White
-------------------------------------------
M. David White
9
<PAGE>
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
This Amendment to Employment Agreement (the "Amendment") is entered
into effective as of June 1, 1999 by and between Green Mountain Energy Resources
L.L.C. (the "Employer") and M. David White (the "Employee"). All capitalized
terms used herein that are not otherwise defined shall have the meanings
ascribed to them in the Employment Agreement dated October 5, 1998, by and
between Employer and Employee (the "Employment Agreement").
WHEREAS, Employer and Employee entered into the Employment Agreement;
WHEREAS, Employer has granted Employee options to purchase 375,000
Common Units of the Employer prior to the effective date hereof;
WHEREAS, Employer has undertaken a reorganization and an initial
public offering of its securities and Employer and Employee, as an employee and
officer of Employer and as a holder of Employer's securities, desire to maximize
the likelihood of success and the results of such offering; and
WHEREAS, Employer and Employee have mutually reviewed the terms of the
Employment Agreement and the relationship established thereunder, and have
agreed that they wish to continue that relationship under modified terms as
provided herein;
NOW, THEREFORE, in consideration of the agreements and covenants set
forth herein and in the Employment Agreement and other good and valuable
consideration, Employer and Employee agree as follows:
1. Options. Section 3.3(h) of the Employment Agreement is hereby
-------
amended to read in its entirety as follows:
(h) Options. Contemporaneously with the consummation of any
-------
equity financing by Employer (other than in connection with Employer's
Employee Unit Purchase Plan) that occurs prior to the closing of an
initial public offering of Employer's equity securities, Employer will
grant to employee additional options to purchase equity interests in
Employer equal to 5% of the additional equity interests issued, such
additional options to have an exercise price equal to the issue price
of the equity interests issued.
2. Additional Compensation. With respect to 1999, Employer will pay
-----------------------
Employee $10,000 in addition to the compensation otherwise payable pursuant to
the
1
<PAGE>
Employment Agreement. Such amount shall be paid, subject to withholding of
applicable taxes, on or before June 30, 1999.
3. Remaining Provisions. Except as set forth in Sections 1 and 2
--------------------
hereof, all other terms and conditions of the Employment Agreement shall remain
in full force and effect as set forth therein.
4. Entire Agreement. The Employment Agreement, as amended hereby,
----------------
constitutes the entire agreement between the parties hereto with respect to the
matters covered thereby and supersedes all prior agreements and understandings
between the parties.
5. Binding Effect. This Amendment shall be binding upon and inure
--------------
to the benefit of the parties hereto and their respective successors and
permitted assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the day and year first above written.
EMPLOYER:
GREEN MOUNTAIN ENERGY
RESOURCES L.L.C.
By: /s/ EVAN WYLY
------------------------------------------
Evan Wyly
EMPLOYEE
/s/ M. DAVID WHITE
---------------------------------------------
M. David White
2
<PAGE>
EXHIBIT 10.12
Green Mountain
February 5, 1999
Mr. Dennis Crumpler:
This term sheet sets forth the agreement between you and Green Mountain.
Position: Mr. Crumpler will be a member of the Board of Directors of Green
- --------
Mountain, serving as Vice Chairman and as an independent consultant providing
such consulting services as the company requests, including recruiting
management talent, coaching top executives, and giving business advice regarding
technology and internet strategy. Mr. Crumpler will not join any other Boards
of Directors nor have any other consulting activities that would interfere with
his availability to the company as needed.
Location: Mr. Crumpler will provide such services from his principal place of
- --------
business in Atlanta as feasible. He will spend four to six days per month on
average working on Green Mountain. Green Mountain will pay expenses for private
aircraft business travel from his principal place of business in Atlanta to
perform his duties at the company.
Investments and Financing: Mr. Crumpler will invest $1 million and be provided
- -------------------------
a loan of $1 million by Green Mountain to purchase 200,000 common units as
described in the Employee Unit Purchase Plan. He will make this investment by
February 9, 1999.
Options: Mr. Crumpler will be awarded two sets of options at $10 per common
- -------
unit with 20% vesting immediately and with 80% vesting quarterly on a straight
line basis over the next sixteen quarterly anniversaries. As a Director, he
will have options on 20,000 common units. As Vice Chairman, he will have
options on 142,500 common units. If the Chairman of the Board determines that
Mr. Crumpler is not fulfilling his duties, Mr. Crumpler may be required to
relinquish his title of Vice Chairman, and some or all of his unvested Vice
Chairman options may be terminated. In addition, we will explore an alternate
to this option plan that would be mutually desirable.
Taxes: Mr. Crumpler is responsible for income taxes on compensation. The
- -----
company may withhold amounts required by law.
Confidentiality: Mr. Crumpler will keep in the strictest confidence all
- ---------------
confidential information regarding Green Mountain and its affiliates, as well as
be subject to noncompetition with Green Mountain, nonsolicitation of Green
Mountain employees and nondisparagement of Green Mountain and its affiliates.
Green Mountain
By: /s/ Sam Wyly
-------------------------------------
Acknowledged and Agreed To:
/s/ Dennis Crumpler 2/6/99
- --------------------------------
Dennis Crumpler Date
<PAGE>
Green Mountain Energy Resources L.L.C.
June 1, 1999
Mr. Dennis Crumpler
Green Mountain Energy Resources L.L.C.
55 Green Mountain Drive
South Burlington, Vermont 05403
Dear Mr. Crumpler:
This letter amends the terms of the Letter Agreement between you and Green
Mountain Energy Resources L.L.C. ("Green Mountain"), dated February 5, 1999 (the
"Letter").
Position: In addition to your duties as a member of the Board of Directors,
- --------
Vice Chairman and an independent consultant as set forth in the Letter, you will
serve as Chairman of the Executive Committee after the merger (the "Merger") of
Green Mountain with and into GreenMountain.com Company (the "Corporation"), as
described in Registration Statement on Form S-1 of the Corporation.
Location: Effective as of the date hereof, you agree to increase the amount of
- --------
your time which you will devote to Green Mountain (and the Corporation) from
four to six days per month to eight to twelve days per month.
Investments and Financing: In addition to the investments set forth in the
- -------------------------
Letter, you will have the opportunity to invest an additional $250,000 -
$500,000 pursuant to the Corporation's initial public offering.
Options: Following the Merger, and subject to the approval of the Corporation's
- -------
Special Compensation Committee, you will be awarded two grants of options to
purchase the Corporation's stock. The exercise price per share of the options
will be equal to the initial public offering price. In the case of each option
grant, 20% will vest immediately and 80% will vest quarterly on a straight line
basis over the following sixteen quarters. As a Director, you will receive a
grant of options to purchase 60,000 shares. As Vice Chairman and Chairman of
the Executive Committee, you will receive a grant of options to purchase 427,500
shares. If the Chairman of the Board determines that you are not fulfilling
your duties, you may be required to relinquish your titles of Vice Chairman and
Chairman of the Executive Committee, and some or all of your unvested options
may be terminated in accordance with the terms of the grant.
<PAGE>
Remaining Provisions: All other terms and conditions in the Letter shall remain
- --------------------
in full force and effect as set forth therein.
Green Mountain Energy Resources L.L.C.
By: /s/ EVAN WYLY
-------------------------------------
Evan Wyly
Acknowledged and Agreed To:
/s/ DENNIS CRUMPLER 6/4/99
- ---------------------------------------
Dennis Crumpler Date
2
<PAGE>
EXHIBIT 10.15
FUNDING AGREEMENT
This Funding Agreement (this "Agreement"), dated as of April 23, 1999, is
made by and between Green Funding I, L.L.C. ("Green Funding") and Green Mountain
Energy Resources L.L.C. (the "Company").
RECITALS
--------
A. The Company may require additional financing in order to meet its
anticipated working capital needs for the remainder of its 1999 fiscal year.
B. Green Funding is willing to provide additional financing to the
Company on the terms set forth in this Agreement.
AGREEMENTS
----------
I. Funding Commitment
------------------
1.1 Commitment. During the period commencing on the date of this
----------
Agreement and ending on January 3, 2000, Green Funding shall advance to the
Company, in cash, such amounts as may be determined from time to time by the
Company, in its sole discretion, to be necessary to enable the Company to meet
its working capital needs for such period; provided, however, (i) in no event
-------- -------
shall Green Funding be required to advance to the Company more than $22.0
million in the aggregate, (ii) all advances hereunder shall be made on the first
business day of a calendar month and (iii) the Company shall give Green Funding
not less than 30 days notice of the amount to be advanced. Notwithstanding
anything to the contrary herein contained, Green Funding shall have no further
obligations to make advances pursuant to this Agreement if the Company (or its
successor) closes a sale of securities pursuant to its initial public offering.
1.2 Terms of Advances. All amounts advanced by Green Funding pursuant to
-----------------
this Agreement shall bear interest at a rate of 6% per annum. On each December
31 and June 30, all accrued and unpaid interest shall be capitalized and added
to the then outstanding principal. Principal, together with accrued and unpaid
interest thereon, shall be payable on the earlier to occur of the second
anniversary of the date of this Agreement or the tenth day following the closing
by the Company (or its successor) of a sale of securities pursuant to its
initial public offering. Simultaneously with the execution of this Agreement,
the Company will execute and deliver a promissory note (the "Working Capital
Note") payable to Green Funding in the form attached as Exhibit A hereto in
order to evidence the advances made pursuant to this Agreement.
1.3 Investment Intent. Green Funding hereby represents and warrants that:
-----------------
(a) It is an accredited investor as defined in Rule 501 of Regulation
D promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), and is, or is directed and advised by, a sophisticated person who
has such knowledge and experience in financial and business matter as to be
capable of evaluating the merits and risks of investing in the Working
Capital Note.
<PAGE>
(b) It is accepting the Working Capital Note as contemplated hereby
for its own account and not as a nominee for any other person or entity.
(c) It is accepting the Working Capital Note as contemplated hereby as
an investment and not with a view to distribute such Working Capital Note
and it has no present intention to sell or otherwise transfer the Working
Capital Note.
(d) It understands that (i) the Working Capital Note has not been, and
will not be, registered under the Securities Act or the securities laws of
any state, (ii) it cannot sell such Working Capital Note unless the Working
Capital Note is registered under the Securities Act and any applicable
state securities law or an exemption from such registration is available,
and (iii) the Working Capital Note received by such party will bear a
legend to the effect of the foregoing clauses (i) and (ii).
II. Miscellaneous
-------------
2.1 Further Assurances. Each of the parties will, at any time, upon the
------------------
request of any other party hereto, take, or cause to be taken, all actions and
do, or cause to be done, all things (including without limitation executing,
acknowledging and delivering any additional agreements, instruments and
documents) as may be necessary, appropriate or advisable in order to consummate
or make effective the intentions, purposes and transactions of or contemplated
by this Agreement.
2.2 Successors and Assigns. This Agreement will be binding upon the
----------------------
parties hereto and their respective successors and assigns and will inure to the
benefit of the parties hereto and their respective successors and assigns.
2.3 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties with respect to the subject matter hereof.
2.4 Amendment. This Agreement may not be amended except by an instrument
---------
signed by the parties hereto.
2.5 Headings. Section headings in this Agreement are included herein for
--------
convenience of reference only and will not constitute a part of this Agreement
for any other purpose.
2.6 Governing Law. This Agreement will be governed by, and construed in
-------------
accordance with, the law of the State of Texas, without giving effect to the
principles of conflict of laws of such State.
2.7 Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be an original, but all of which together shall constitute but one
and the same agreement.
-2-
<PAGE>
IN WITNESS WHEREOF, Green Funding and the Company have caused this
Agreement to be executed as of April 23, 1999.
GREEN FUNDING I, L.L.C.
By: /s/ SAM WYLY
-------------------------------------
Name: Sam Wyly
-----------------------------------
Title: Designated Representative
----------------------------------
GREEN MOUNTAIN ENERGY
RESOURCES L.L.C.
By: /s/ M. DAVID WHITE
-------------------------------------
Name: M. David White
-----------------------------------
Title: Chief Executive Officer
----------------------------------
-3-
<PAGE>
EXHIBIT A
---------
PROMISSORY NOTE
---------------
Dallas, Texas $22,000,000 April 23, 1999
GREEN MOUNTAIN RESOURCES L.L.C., a Delaware limited liability company
having offices at 55 Green Mountain Drive, South Burlington, Vermont 05407
("Borrower"), for value received, promises to pay to the order of GREEN FUNDING
I, L.L.C., a Delaware limited liability company having offices at 300 Crescent
Court, Suite 1000, Dallas, Texas 75201, or its assigns ("Lender"), the principal
sum of $22,000,000.00 or such lesser amount advanced to Borrower from time to
time hereunder, together with all accrued and unpaid interest thereon, on or
before the earlier to occur of (i) April 23, 2001 or (ii) the tenth day
following the closing of a sale by the Borrower (or its successor) of securities
pursuant to its initial public offering (the "Maturity Date"). This Note will
evidence advances made from time to time prior to December 31, 1999 by Lender to
Borrower pursuant to the terms of the Funding Agreement, dated as of April 23,
1999 (the "Funding Agreement"), by and between Lender and Borrower.
The unpaid principal balance of each advance hereunder will bear interest
at a per annum rate equal to 6%. On each June 30 and December 31 all accrued
and unpaid interest will be capitalized and added to the then outstanding
principal. In the event that the unpaid principal balance hereunder is not paid
in full on the Maturity Date, such unpaid principal balance will continue to
bear interest at a per annum rate equal to 6% as provided above, and principal,
interest and all other amounts owing hereunder will be due and payable on
demand.
Notwithstanding any provision to the contrary herein contained, all amounts
owing under this Note will be due and payable in full on the Maturity Date.
All or any portion of the principal amount owing under this Note may be
prepaid from time to time, in whole or in part, without premium or penalty. Any
prepayment of this Note will be accompanied by all interest accrued on the
principal amount being prepaid.
Principal, interest and all other amounts owing hereunder are payable to
Lender at the address designated by it from time to time. All payments on this
Note will be made in lawful currency of the United States of America,
constituting same day funds, without setoff, counterclaim or other defense.
All computations of interest hereunder will be made on the basis of a year
of 365 or 366 days, as the case may be.
It is not the intention of any party hereto or any subsequent holder hereof
to make an agreement violative of the laws of any applicable jurisdiction
relating to usury. In no event will Borrower be obligated to pay any amount in
excess of the maximum amount of interest permitted under applicable law. If
from any circumstance the holder hereof ever receives anything of value deemed
excess interest under applicable law, an amount equal to such excess will be
applied to the reduction of the principal amount hereof, and any remainder will
be promptly refunded to the payor.
-1-
<PAGE>
Borrower agrees to indemnify and hold harmless each holder of this Note
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
such holder or any of its partners, representatives, officers, directors,
employees or agents, in any way relating to or arising out of this Note or any
act, omission or transaction of Borrower or any of its partners,
representatives, officers, directors, employees or agents (including in
connection with or as a result, in whole or part, of the negligence of any such
person); provided, however, that a holder of this Note will not be so
indemnified and held harmless for any losses or damages which Borrower proves
were caused by such holder's willful misconduct or gross negligence, and such
holder will be liable to Borrower only to the extent of any direct (as opposed
to consequential) damages suffered by Borrower as a result of such holder's
willful misconduct or gross negligence.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower agrees to pay reasonable
attorneys' fees and collection costs incurred.
Borrower hereby waives demand, presentment for payment, protest, notices of
any kind, including without limitation notice of protest and notice of intention
to accelerate the maturity of this Note, the bringing of any suit against any
party, and any notice of defense on account of any extensions, renewals, partial
payments or changes in any manner of or in this Note or in any of its terms,
provisions and covenants, or any releases or substitutions of any security, or
any delay, indulgence or other act of any holder hereof, whether before or after
maturity.
If any provision of this Note is held to be illegal, invalid or
unenforceable under present or future laws during the term hereof, such improper
provision will be fully severable, this Note will be construed and enforced as
if such improper provision had never comprised a part hereof, and the remaining
provisions hereof will remain in full force and effect and will not be affected
by the improper provision or by its severance herefrom. Furthermore, in lieu of
such improper provision, there will be added automatically as a part of this
Note a legal, valid and enforceable provision as similar in terms to the
improper provision as may be possible.
Borrower may not assign or transfer its rights or obligations hereunder
without the prior written consent of the holder of this Note. The holder of
this Note is hereby authorized by Borrower to record on a schedule annexed to
this Note (or on a supplemental schedule thereto) the amount of each advance to
Borrower hereunder and each payment made on this Note by Borrower, which
schedule will be conclusive and binding absent manifest error. The failure to
make any such notation, however, will not affect the rights of the holder of
this Note or the obligations of Borrower hereunder or under any related
documents.
This Note will be deemed to be a contract made and to be performed in
Dallas, Texas. This Note will be governed by and construed in accordance with
the laws of the State of Texas (without giving effect to conflict of law
principles) and the United States of America. Without
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<PAGE>
excluding any other jurisdiction, Borrower agrees that the state and federal
courts of Texas located in Dallas, Texas will have jurisdiction over proceedings
in connection herewith.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER HEREBY WAIVES ANY
RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN
TORT, CONTRACT, EQUITY OR OTHERWISE) ARISING UNDER OR RELATING TO THIS NOTE OR
ANY RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE WILL BE TRIED BEFORE A
JUDGE SITTING WITHOUT A JURY.
THIS NOTE AND THE FUNDING AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED UNLESS THIS NOTE IS REGISTERED UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
BORROWER:
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
By: /s/ M. DAVID WHITE
-------------------------------------
Name: M. David White
-----------------------------------
Title: Chief Executive Officer
----------------------------------
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<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
----------------------------------
Amount of Unpaid
Amount of Principal Principal
Date Advance Payment Balance
- ---- --------- --------- ---------
-4-
<PAGE>
EXHIBIT 10.16
PROMISSORY NOTE
---------------
$_____,000 January __, 1999
FOR VALUE RECEIVED, the undersigned, _____________________ ("Maker"),
hereby promises to pay to the order of Green Mountain Energy Resources L.L.C., a
Delaware limited liability company (the "Payee" or the "Company"), at such
location as the Payee may from time to time designate in writing, in lawful
money of the United States of America, the principal sum of
________________________ and No/100 Dollars ($_____________), or so much thereof
as may be outstanding hereunder, together with interest on the outstanding
principal balance thereof at the rate of interest specified herein, on the
earlier of (a) the death or other termination of the Maker's employment or
performance of other services with the Payee or (b) December 31, 2003.
The outstanding principal of this Note shall bear interest prior to
maturity at the rate of six percent (6%) per annum. On each of the first four
anniversaries of the date of this Note, all outstanding accrued and unpaid
interest shall be capitalized and added to the then outstanding principal of
this Note and, after giving effect to each such capitalization of interest, the
outstanding principal of this Note (including all capitalized interest) shall
bear interest at the rate specified above. All past due principal of and
interest on this Note shall bear interest at the Maximum Rate (hereinafter
defined).
This Note is delivered to the Payee pursuant to the Subscription Agreement
between the Maker and the Payee of even date herewith as partial payment for
Units of the Company purchased by the Maker pursuant to the Company's Employee
Unit Purchase Plan (the "Plan"). Payment of this Note is secured by said Units
and any other securities issued by the Payee owned or hereafter acquired by the
Maker (the "Collateral"). The Maker hereby grants to the Payee a first priority
security interest in the Collateral which is held as security on behalf of the
Payee by Evan A. Wyly, as Escrow Agent, pursuant to an Escrow Agreement entered
into in connection with the Plan. The Maker represents and warrants that the
Maker has delivered (or caused to be delivered) all Collateral owned on the date
hereof to the Escrow Agent on or before the Maker's execution of this Note and
agrees so to deliver (or cause to be delivered) any Collateral hereafter
acquired. The Maker acknowledges and agrees that the Escrow Agent is authorized
to act on behalf of the Payee pursuant to the terms of the Escrow Agreement.
If, while the Collateral is in the possession of the Escrow Agent, the Company
makes any distribution to the holders of its equity securities, other than a
distribution of cash, the property so distributed in respect of the Collateral
will be delivered to the Escrow Agent and held pursuant to the terms of this
Note and the Escrow Agreement. The Payee shall have the right to cause its
rights in the Collateral to be noted in the Unit ownership records of the
Company, provided that such notation shall be removed upon the Maker's
satisfaction of all obligations secured by the Collateral. Except to the extent
of the Collateral, this Note is without recourse to, and does not constitute a
general liability of, the Maker. All payments on this Note shall be made
without offset, counterclaim or other defense.
In the event the Maker sells or otherwise disposes of all or a portion of
the Collateral (including any disposition for no consideration), as permitted
under the terms of the Plan, the Maker shall pay to the Payee a portion of the
then outstanding principal and accrued interest under this Note. The amount of
such required payment shall represent the same proportion of the outstanding
principal and interest under this Note as the Collateral sold or disposed of
represents of all Units acquired under the Plan and owned by the Maker (subject
to the security interest of the Payee) immediately prior to such sale or other
disposition. The amount of such required repayment will be made to the Payee in
cash upon the closing of the sale or disposition of the Collateral.
In addition to the repayment obligation described in the preceding
paragraph, in the event the Maker sells or otherwise disposes of all or a
portion of the Collateral, the Maker will be obligated to repay
<PAGE>
an additional amount of principal and interest under this Note equal to 50% of
the Maker's gain, but in no event more than the outstanding principal balance
and accrued interest under this Note. For purposes of this paragraph, the Maker
will be deemed to have realized gain (i) upon the sale or other disposition of
the Collateral, to the extent the Maker receives cash or other consideration
with a fair market value in excess of $10.00 per Unit (net of (A) related
transaction costs and (B) income taxes on such excess (determined without regard
to this clause and computed on the basis of an assumed rate of 25%)) and (ii)
upon the disposition of Collateral without consideration, to the extent the fair
market value of the Collateral transferred exceeds $10.00 per Unit. The fair
market value of the Collateral will be determined from time to time by the
Committee, established under the terms of the Plan, at the sole discretion of
the Committee.
Any determination of fair market value by the Committee shall be final and
binding unless and until updated or changed by the Committee. Such amount shall
be due and payable to the Payee in cash upon the closing of the sale or other
disposition of the Collateral. For purposes hereof, in the event the Maker
sells or otherwise disposes of Units held as Collateral, the Units first sold or
otherwise disposed of by the Maker will be deemed to be Units purchased under
the Plan.
All times of payment of principal, interest and any other amounts due under
this Note shall be of the strict essence.
Interest on the indebtedness evidenced by this Note shall be computed on
the basis of a year of 360 days and the actual number of days elapsed (including
the first day but excluding the last day) unless such calculation would result
in a usurious rate, in which case interest shall be calculated on the basis of a
year of 365 or 366 days, as the case may be. The Maker shall have the right to
prepay, at any time and from time to time without premium or penalty, the entire
unpaid principal balance of this Note or any portion thereof.
All payments made under this Note shall be applied, regardless of how they
are designated by the Maker, as follows: first, to the payment of any costs
incurred by the Payee in collecting or enforcing this Note; second, to the
payment of interest due under this Note; and third, to the outstanding principal
balance of this Note.
As used in this Note, "Maximum Rate" means the lesser of twelve percent
(12%) or the maximum rate of nonusurious interest permitted from day to day by
applicable law.
Notwithstanding anything to the contrary contained herein, no provisions of
this Note shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess interest in such respect is herein
provided for, or shall be adjudicated to be so provided, in this Note, the
provisions of this paragraph shall govern and prevail, and neither of the Maker
nor the sureties, guarantors, successors or assigns of Maker shall be obligated
to pay the excess amount of such interest, or any other excess sum paid for the
use, forbearance or detention of sums loaned pursuant hereto. If for any reason
interest in excess of the Maximum Rate shall be deemed charged, required or
permitted by any court of competent jurisdiction, any such excess shall be
applied as a payment and reduction of the principal of indebtedness evidenced by
this Note; and, if the principal amount hereof has been paid in full, any
remaining excess shall forthwith be paid to the Maker. In determining whether
or not the interest paid or payable exceeds the Maximum Rate, the Maker and the
Payee shall, to the extent permitted by applicable law, (i) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof and (iii) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the indebtedness evidenced
by this Note so that the interest for the entire term does not exceed the
Maximum Rate.
The Maker shall be in default hereunder upon the happening of any of the
following events or conditions (each such event or condition hereinafter
referred to as an "Event of Default"):
2
<PAGE>
(a) Any representation, warranty, or statement made or deemed made by
Maker to the Payee shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(b) Maker shall default in the timely payment or performance of any
obligation, covenant or agreement made or owed by Maker to the Payee.
(c) Maker shall commence a voluntary proceeding seeking liquidation,
reorganization, or other relief with respect to itself or its debts under
any bankruptcy, insolvency, or other similar law now or hereafter in
effect, or seeking the appointment of a trustee, receiver, liquidator,
custodian, or other similar official for it or a substantial part of its
property or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it or shall make a general assignment for the
benefit of creditors or shall generally fail to pay its debts as they
become due.
(d) Any involuntary proceeding shall be commenced against Maker
seeking liquidation, reorganization, or other relief with respect to Maker
or Maker's debts under any bankruptcy, insolvency, or other similar law now
or hereafter in effect, or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official for Maker or a substantial
part of Maker's property, and such involuntary proceeding shall remain
undismissed and unstayed for a period of thirty (30) days.
(e) Maker shall fail to discharge within a period of thirty (30) days
after the commencement thereof any attachment, sequestration, or similar
proceeding or proceedings involving an aggregate amount in excess of
Twenty-Five Thousand Dollars ($25,000) against any of Maker's assets or
properties.
(f) Maker shall fail to satisfy and discharge promptly any judgment or
judgments against Maker (not stayed pending appeal) for the payment of
money in an aggregate amount in excess of Twenty-Five Thousand Dollars
($25,000).
(g) Maker shall default in the payment of any of its indebtedness
beyond any applicable grace period, or shall default in a material way in
its performance of any agreement binding upon it or its property, or a
default or event of default shall occur under the terms of any agreement,
document or instrument securing or otherwise relating to this Note.
(h) This Note shall cease to be in full force and effect or shall be
declared null and void or the validity or enforceability hereof shall be
contested or challenged by Maker, or Maker shall deny that it has any
further liability or obligation under this Note.
(i) Maker or any guarantor, surety, or other person or entity ever
liable for the payment of this Note shall have died or become incompetent.
Any determination that any such person is incompetent shall be based upon
either (i) the written opinion of a physician that such person is
incompetent to handle his or her own financial affairs or (ii) a court
order adjudicating such person to be incompetent.
Upon the occurrence of any Event of Default, the holder hereof may, at its
option, terminate any commitment on the part of the Payee or its affiliates to
make loans to Maker and declare the entire unpaid principal of and accrued
interest on this Note immediately due and payable without notice (including
notice of acceleration or of intent to accelerate), demand, protest, or
presentment, all of which are hereby waived, and upon such declaration, the same
shall become and shall be immediately due and payable, and the holder hereof
shall have the right immediately and without notice, except as otherwise
provided below, (a) to foreclose or otherwise enforce and realize upon all liens
or security interests securing payment hereof, or any part hereof, and in
connection therewith, sell or otherwise dispose of and deliver the Collateral,
or any
3
<PAGE>
part thereof, in one or more parcels at public or private sale or sales at the
holder's offices or elsewhere, at such prices and on such terms as the holder
may deem acceptable, (b) to offset against this Note any sum or sums owed by the
holder hereof to Maker, (c) exercise any and all rights of a secured party as
provided for in the Uniform Commercial Code, (d) proceed to have all Collateral
registered in the holder's name or in the name of a nominee, and (e) enforce any
one or more remedies hereunder, successively or concurrently. In connection with
any sale or disposition of the Collateral hereunder, the holder need not give
more than ten (10) calendar days notice of the time and place of any public sale
or of the time after which a private sale may take place, which notice Maker
hereby acknowledges to be adequate and reasonable. Failure of the holder hereof
to exercise its rights hereunder shall not constitute a waiver of the right to
exercise the same upon the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort or money in any attempt to enforce
payment of all or any part or installment of any sum due the holder hereunder,
or if this Note is placed in the hands of an attorney for collection, or if it
is collected through any legal proceedings, Maker agrees to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
This Note shall be governed by and construed in accordance with the laws of
the State of _____________ and the applicable laws of the United States of
America. This Note is performable in ________________________________. Any
action or proceeding under or in connection with this Note against Maker or any
surety, guarantor, endorser or other party liable for payments owed hereunder
may be brought in any state or federal court in
________________________________. Maker and each such other party hereby
irrevocably (i) submits to the nonexclusive jurisdiction of such courts and (ii)
waives any objection it may now or hereafter have as to the venue of any such
action or proceeding brought in such court or that such court is an inconvenient
forum. Nothing herein shall affect the right of the Payee to bring any action
or proceeding against Maker or any other party liable hereunder or with respect
to any collateral in any state or federal court in any other jurisdiction. Any
action or proceeding by Maker or any other party liable hereunder against the
Payee shall be brought only in a court located in
________________________________.
Maker and each surety, guarantor, endorser, and other party ever liable for
payment of any sums of money payable on this Note jointly and severally waive
notice, presentment, demand for payment, protest, notice of protest and non-
payment or dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, diligence in collecting, grace, and all other
formalities of any kind, and consent to all extensions without notice for any
period or periods of time and partial payments, before or after maturity, and
any impairment of any collateral securing this Note, all without prejudice to
the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
THIS NOTE AND ALL OTHER INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND
DELIVERED BY THE MAKER IN CONNECTION WITH THE INDEBTEDNESS EVIDENCED BY THIS
NOTE EMBODY THE FINAL, ENTIRE AGREEMENT OF THE MAKER AND THE PAYEE WITH RESPECT
TO THE INDEBTEDNESS EVIDENCED BY THIS NOTE AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE INDEBTEDNESS EVIDENCED BY THIS NOTE AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE MAKER AND THE PAYEE. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE MAKER AND THE PAYEE RELATING TO THIS NOTE.
___________________________________
[Name]
4
<PAGE>
EXHIBIT 10.18
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS DOCUMENT.
CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
[THE CULLINAN GROUP LETTERHEAD]
January 1, 1998
Green Mountain Energy Resources L.L.C.
Att'n: Mr. Andrew Perkins
55 Green Mountain Drive, P.O. Box 2206
South Burlington, VT 05407-2206
Ladies and Gentlemen:
This agreement is made effective as of January 1, 1998, and supersedes and
replaces our Agreement for the Provision of Consulting Services, dated June 3,
1996.
1. Assignment
Our assignment shall relate to the following product, project or service:
Green Mountain Energy Resources marketing efforts with respect to retailing
electricity, natural gas and related products and services.
During the term of this agreement, we shall be the sole company charged
with the responsibility of creating, preparing, and executing marketing
communications plans and projects and placing advertising with respect to such
product, project or service,except in internet media, including your website. If
additional products, projects or services are assigned to us, all terms and
conditions hereof shall apply in the same manner as with respect to the
originally assigned product, project or service. We agree that services in
connection with Kenny Loggins or another general spokesperson and the hotair
balloon operating agreement shall be governed under separate agreements and
shall not be subject to the terms of this agreement.
2. Agency Services
A. In accordance with the above, we will perform the following services for
you professionally and in a manner consistent with that expected of other
national advertising agencies. :
(1) Study your products and services;
(2) Analyze your present and potential markets;
(3) Apply our knowledge of sales and distribution channels, methods and
<PAGE>
operations, and available media, targeted communications, advertising,
promotion, public relations and other means of marketing communications which
can profitably be used to market your products and services; and
(4) Acting on the study, analysis and knowledge described above, formulate and
recommend definite communications plan(s).
B. In the execution of the plan(s), we will do the following:
(1) Conceive, write, design, produce, illustrate and otherwise prepare, and
submit to you for your approval, your advertisements and other marketing
communications in the appropriate forms for your message, including print and
broadcast;
(2) Recommend and, with your prior approval, place orders for space, time or
other means for your advertising, exercising due care in selecting media and
suppliers and endeavoring to secure the most advantageous rates available;
(3) Recommend and, with your prior approval, enter into agreements with
subcontractors providing strategic services such as fulfillment, direct mail
consulting, mail processing and brand identity services. We may hire other
subcontractors without your prior approval, provided that such contracts shall
include provisions defining required performance standards, confidentiality
provisions, rights upon termination and ownership rights in all Work Product (as
hereafter defined) in a manner consistent with the terms of this agreement. You
shall retain the right to advise us of unsatisfactory performance by any of our
sub-contractors, which we will take reasonable steps to correct, including but
not limited to terminating an unsatisfactory sub-contractor;
(4) Properly incorporate the message in mechanical or other form and forward
it with proper instructions for fulfillment;
(5) Verify insertions, displays, broadcasts or other means used to such degree
as is usually performed by agencies;
(6) Audit all invoices; and
(7) Cooperate with your marketing and sales staff and other marketing
consultants to help make your advertising and other marketing communications
effective.
3. Charges
A. Minimum Monthly Retainer
You agree to pay us a minimum monthly fee, due by the first of each month, of
$30,000 during the term of this agreement ("Minimum Monthly Retainer"). The
Minimum Monthly Retainer will be credited against charges incurred on your
behalf for all agency services/purchases except: a) media time/space, and b)
direct response postage charges.
B. Quarterly Budgets and Monthly Advance Payments
<PAGE>
Prior the the commencement of each calendar quarter, we shall agree upon a
budget for monthly expenditures during such quarter. You agree to make monthly
advance payments, due by the first day of each month, in the amount of
anticipated prepaid expenses, including media time/space and direct response
postage, for such month as reflected in the quarterly budget less the amount of
the Minimum Monthly Retainer described above ("Monthly Advance Payments").
Within 15 days of the end of each month, we will provide you with an invoice for
the actual charges by job incurred during such month in excess of the Monthly
Advance Payment and such amount shall be due and payable by you within 30 days
of your receipt of such invoice. During any quarter, you may amend the budget as
you deem appropriate and we will implement the budget as amended. We agree not
to exceed approved quarterly budgets by more than ten percent in any quarter
without your prior written approval. The budget for the period January 1, 1998
though March 31, 1998 is set forth on Exhibit A attached hereto.
Quarterly Budgets shall include the following line items if applicable:
1. Advertising Space and Time
You agree to pay us at current published rates (or at lower rates when
available) plus an amount which (together with commission, if any, allowed by
media) will yield us ***% of our total charge to you before cash discounts, if
any.
2. Direct Response Marketing
To the extent not paid in Monthly Advance Payments, postage relative to direct
response marketing must be paid a minimum of 2 days prior to submission to post
office and will be billed at "Net Cost." As used in this agreement, Net Cost
shall mean our actual cost, net of any realized discounts.
You agree to pay us the Net Cost of all Freight/Shipping materials and services
purchased on your behalf, plus an amount that will yield us ***% of our total
charges to you.
3. Design Materials and Services
You agree to pay us the Net Cost of all design materials and services purchased
from Yamamoto Moss, Inc., on your behalf, plus an amount that will yield us ***%
of our total charge to you.
4. General Agency Services
Except as otherwise noted herein, you agree to pay us the net cost of all
materials and services purchased on your behalf, plus an amount that will yield
us ***% of our total charge to you, except that for all "merchandise" purchased
on your behalf our commission shall be ***% of our total charge to you.
"MERCHANDISE" SHALL MEAN TANGIBLE/DIMENSIONAL ARTICLES, NOT PRINTED, TO INCLUDE:
(A) ADVERTISING SPECIALTIES, SOME BEARING LOGO IMPRINTS; (B) DIMENSIONAL ITEMS
USED IN CONJUNCTION WITH TRADE SHOW EXHIBITS, GOODWILL GESTURES OR PREMIUM
INCENTIVE OFFERS. This fee
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
<PAGE>
includes all cost of client services which are clearly defined below the line on
our General Agency Fee Schedule, attached hereto as Exhibit B. We Agree to
renegotiate merchandise compensation on a quarterly basis, if requested by you.
5. Taxes
You agree to pay all sales, use and payroll taxes that we are required by law
to collect or pay in connection with your account for any purchases made or
talent charges incurred on your behalf.
6. Agency Time Charges
You agree to pay us for services rendered on your behalf at our then current
hourly rates. When relative to a specific project, the anticipated charge for
agency services will be incorporated into the project estimate in quarterly
budgets. Consultation and strategic planning of a general nature will be
undertaken at your request and will be charged as incurred at our then current
hourly rates (General Agency Fee Schedule attached hereto as Exhibit B).
7. Miscellaneous
You agree to pay us at our then current rates for color outputs and color copies
related to the production of advertising/marketing materials. You also agree to
pay us for travel and/or incidental costs which you request or which are
connected with the production of your marketing materials.
8. Advertising Placed Outside the U.S.
Since conditions vary from company to company and from country to country, it is
not feasible to establish a policy regarding compensation to us for advertising
you adapt, translate or use in part or whole outside the U.S. If such use
occurs, it is agreed that we will jointly review to determine the amount of
compensation to be paid to us for such use.
4. Terms of Payment
A. Fundamental Principles
Our relationship is based on three fundamental principles:
(1) We will finance our own agency services, but not the advertising of our
clients; and
(2) We are solely liable for payment of media invoices only after we have been
paid for those invoices by you. Prior to payment to us, you are and will remain
solely liable; and
(3) All services obtained or provided by us or our subcontractors to you and
Work Product produced thereby shall, upon payment by you, become your exclusive
property to the extent of property rights otained by us on your behalf which
shall be maintained in confidence as required under this
<PAGE>
agreement.
B. Agreement to Pay
Payment of each month's statement is due thirty (30) days following receipt of
the invoice by you and will be past due after that date. A monthly service
charge of 1-1/2% will be added to the outstanding balance of accounts over
thirty (30) days past due. You are liable for any collection charges or attorney
fees incurred by us in collecting your account, if delinquent.
C. Collateral, Print, and Broadcast Production
We will prepare estimates for collateral materials, and print and broadcast ad
production for your approval in quarterly budgets. Based on the estimate
approved by you, which may vary by plus or minus 10%, we will invoice you for
the estimated cost at the inception of a project. You agree to pay these
invoices in accordance with the terms stated above. Estimated charges will be
reconciled to actual costs upon project completion.
D. Advertising Space and Time
We will invoice you for advertising space and time in the month prior to the
flight or circulation, so that your payment to us will coincide, as closely as
possible, with our payment responsibility to media.
E. Right to Change Payment Terms
We reserve the right in case of delinquency in your payments to us, or such
impairment of your credit as in our reasonable opinion might endanger future
payments to us, to change the requirements as to terms of payment under this
agreement.
F. Cash Discounts
Cash discounts from media or other suppliers, to which we may be entitled by
your prompt payment to us, will be passed on to you.
5. General Provisions
A. Mutually Exclusive Arrangement
During the term of this agreement and for a period of six months following its
termination, we agree to refrain from acting as advertising agency for any
environmentally branded products directly competitive with yours, without your
written consent. During the term of this agreement, you agree not to engage the
services of any other advertising agency without first obtaining our written
consent.
Notwithstanding the foregoing, we acknowledge and agree that you have previously
engaged other parties as marketing consultants, including but not limited to
Copernicus with respect to marketing research and strategy and The Weber Group
with respect to public relations and events, and
<PAGE>
that you may in the future engage other consultants. We agree to cooperate with
your other consultants.
B. Agent Relationship
With respect to goods and services for which you have given prior approval, we
are acting as your authorized agent in purchasing such goods and services for
you and performing such services required by us under this agreement.
C. Care of Property
We will keep in our care, for a reasonable length of time, advertising and other
materials entrusted to us as your property, and will use reasonable efforts to
secure their return from third parties.
D. Cancellation of Plans
You reserve the right in your discretion, to modify, reject, cancel, delay or
stop any and all plans, schedules or work in process which you previously
approved; and in such event we will take proper steps to carry out your
instructions; but you agree to assume all liability for all commitments, and to
reimburse us for any losses we may sustain or expenses we may incur derived
therefrom, and to pay us any service charges relating thereto.
E. Failure of Suppliers to Perform
To the best of our ability, we will endeavor to guard against loss to you
through the failure of media or suppliers to properly execute their commitments,
but we are not responsible for any failure on their part.
F. Releases
We will obtain all necessary releases, licenses, permits or other authorizations
to use photographs, trademarks, copyrighted materials, artwork or any other
property or rights belonging to third parties obtained by us for use in
performing services for you and we agree to discuss with you the scope of such
rights acquired on your behalf. You will obtain the same for any materials
obtained by you that are used by us in performing our services, and you will be
responsible for any claims with respect to such use.
G. Indemnification of Agency and Client
We agree to exercise our best judgment in preparing and placing advertising,
publicity, and other marketing communications for you, with a view to avoiding
any claims, challenges, proceedings or suits against you or ourselves.
You are responsible for the accuracy, completeness and propriety of information
concerning your products and services that you furnish to us.
We will indemnify and hold you harmless with respect to any claims or actions
against you, based upon material prepared by us, involving any claim for libel,
slander, piracy, plagiarism, invasion of privacy,
<PAGE>
infringement of copyright, infringement of trade dress, unfair competition or
deceptive advertising, except (1) where any such claim or action may arise out
of information or material supplied by you to us and incorporated in material
prepared by us, or (2) for any such claim or action arising under regulations
specifically applicable to energy retailers or based on disclosures concerning
the environmental attributes of your products and services.
You will indemnify and hold us harmless with respect to any claims or actions
instituted by a third party which results from the use by us of material
furnished by you or where material created by us is substantially changed by
you. Information or data obtained by us from you to substantiate claims made in
advertising shall be deemed to be "material furnished to us by you."
The terms of this Section shall survive the termination of this agreement.
H. Confidentiality
You and we each shall treat all documentation and data received from the other
that is not publicly known or available ("Confidential Information") as
proprietary and will maintain it in confidence. The Confidential Information
shall not be used for any purpose other than in connection with our services to
you under this agreement. Only those of our and your employees, and those
employees of our sub-contractors, involved in such work shall be afforded access
to the Confidential Information, and all such employees shall maintain its
confidentiality under the terms hereof. Each party shall take all reasonable
steps to ensure that no other persons gain access to the Confidential
Information except as otherwise agreed herein or subsequently consented to in
advance in writing by the disclosing party.
The Confidential Information shall not be provided to any firm, organization or
individual without the prior written consent of the disclosing party unless such
recipient executed an equivalent confidentiality agreement. The receiving party
will instruct employees accessing the Confidential Information regarding
maintenance of the confidentiality of the information so obtained. Only enough
copies of any of the documentation or data to complete a project shall be made
without prior written consent of the disclosing party. At the disclosing party's
option each receiving party employee or agent which is provided access to
Confidential Information shall be required, in advance of being afforded such
access, to read and countersign a facsimile of this provision.
At the conclusion of performance of this agreement, or upon demand by the
disclosing party, the Confidential Information and any copies made thereof shall
be immediately returned to the disclosing party, notwithstanding the existence
of any claim or dispute between the parties, or the availability of any legal or
equitable basis, including any lien, upon which either party or its successors
or assigns might assert a claim to continued possession thereof.
The parties and their employees and agents agree that disclosure of any
<PAGE>
Confidential Information except as authorized in this provision, or any
violation of this provision, will cause the disclosing party immediate and
irreparable harm remediable by preliminary and permanent injunctive relief, in
addition to any actual damage caused by such disclosure or violation.
Notwithstanding the preceding, this provision and the restrictions contained
therein shall not apply to any data and documentation:
a) which is independently developed by either party without the involvement of
the other; or
b) which becomes known to either party from a source other than the other party
without breach of any agreement relating to such information; or
c) pursuant to any order of a regulatory body or a court, after five (5) working
days notice to the disclosing party.
The terms of this provision shall survive the termination or expiration of this
agreement.
I. Authorized Representative
Until otherwise notified by you in writing, we will direct all inquires
regarding your account to Andrew Perkins, who shall have full authority to grant
your approval and to act for you with respect to this agreement.
6. Term of Agreement
A. Term of Agreement and Notice of Termination
This agreement will start on January 1, 1998, and will continue in force until
terminated by 90 day notice (the "Notice Period") in writing sent by registered
or certified mail to our or your principal place of business, but in no event
may this agreement be terminated effective earlier than twelve (12) months from
the commencement of the term.
Notwithstanding the foregoing, you shall have the right at any time to terminate
this agreement for causewhen the breach, action or inaction continues for more
than 30 days after written notice by you to us. Cause shall include our material
breach of this agreement.
Notwithstanding the foregoing you shall also have the right to terminate this
agreement by giving thirty days prior written notice prior to January 1, 1999
that you have abandoned your plans to participate in the retail market for
electricity, natural gas and related products and services, after which you
shall refrain from such business for not less than one year.
Upon any such termination, you shall have no further obligation to us, other
than as set forth below.
B. Placing Advertising and Compensation During Period of Notice
<PAGE>
This agreement will continue in full force during the Notice Period including
the ordering and billing of advertising in media whose closing dates or
broadcast dates fall within such period, and we are entitled to all commissions
and any other compensation relating to such advertising, regardless of who
places it.
After the Notice period, no rights or liabilities will arise out of our
relationship with one another, regardless of any plans that may have been made
for future advertising, except that any uncancelable contract(s) made on your
authorization, and still existing at the expiration of the Notice Period, will
be carried to completion by us and paid for by you unless mutually agreed in
writing to the contrary. In the event of termination of this Agreement, we agree
to assign to you,upon your request, any STRATEGIC subcontract As defined in
section 2.B.3 hereof entered into by us on your behalf and to insure that such
agreements are so assignable. In such circumstances, our rights to commissions
on such assigned contracts shall cease as of the date of termination of this
agreement.
C. Payment for Purchase and Work Done
Any materials, services, etc. we have committed ourselves to purchase for your
account, with your approval, will be paid for by you in accordance with the
provisions of this agreement.
D. Disposition of Property and Transfer of Contracts With Media
Upon the termination of this contract, we will assign and make available to you
or your representative, all property in our possession or control belonging to
and paid for by you, and all information regarding your advertising. We also
agree to give all reasonable cooperation toward transferring with approval of
third parties in interest all reservations, contracts, and arrangements with
advertising media or others, for advertising space, broadcasting time, or
materials yet to be used and all rights and claim thereto, upon being duly
released from the obligation thereof.
E. Work Product
As used in this agreement, "Work Product" means all plans, specifications,
calculations, reports and other output whether in written, electronic or other
form, including source code, resulting from providing services by us or by our
sub-contractors under this agreement. The Work Product shall become your
property to the extent of property rights obtained on your behalf upon payment
in full of all outstanding invoices. No licenses or rights under any patent,
trademark or copyright are granted by this agreement. We hereby assign to you
all property rights in the Work Product.
F. Commissions on Short Rate Bills and Refunds
In the event that contracts with advertising media are transferred to another
advertising agency, it is understood that after the Notice Period, we will
<PAGE>
retain no rights to commissions on short rate bills nor have the obligation to
pay back commissions or refunds made by reason of the earning of a lower rate,
unless agreed to the contrary.
G. Examination of Records
You may at any time during the term of this agreement, upon reasonable notice,
examine our records directly pertaining to the handling of your account.
H. Arbitration
The sole remedy for the resolution of disputes between us under this agreement
will be arbitration before one arbitrator, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, such arbitration to
be held in Burlington, Vermont. Any arbitration under this agreement may be
consolidated with any arbitration between either party and any third party which
relates to the services provided under this agreement, and in that event the
arbitrator(s) shall have the authority to determine the site for the
consolidated arbitration.
I. Governing Law
This agreement will be interpreted in accordance with the laws of Vermont.
ACKNOWLEDGMENT OF ARBITRATION
YOU AND WE UNDERSTAND THAT THIS AGREEMENT CONTAINS AN AGREEMENT TO ARBITRATE.
AFTER SIGNING THIS AGREEMENT, YOU AND WE UNDERSTAND THAT NEITHER OF US WILL BE
ABLE TO BRING A LAWSUIT CONCERNING ANY DISPUTE THAT MAY ARISE WHICH IS COVERED
BY THE ARBITRATION AGREEMENT, UNLESS IT INVOLVES A QUESTION OF CONSTITUTIONAL OR
CIVIL RIGHTS. INSTEAD, YOU AND WE AGREE TO SUBMIT ANY SUCH DISPUTE TO AN
IMPARTIAL ARBITRATOR.
ACCEPTED AND AGREED BY CLIENT GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
Title: President & CEO Title: Mgr. Mktg. Op.
Date: 2-18-98 Date: 2-18-98
By: /s/Wayne A. Cullinan By: /s/ Andrew Perkins
<PAGE>
By: Andrew K. Perkins
Title: Manager, Marketing Operations
Date: 2-18-98
ATTACHED SCHEDULES:
1.) Exhibit A - Approved Budget (January 1, 1998 - March 31, 1998)
2.) Exhibit B - General Agency Fee Schedule
Exhibit A
---------
Exhibit A: Approved Budget (January 1, 1998 - March 31, 1998)
Item Jan. '98 Feb. '98 Mar. '98
- ---- -------- -------- --------
TV Production 150,000 - -
Radio Production 20,000 - -
Newsp. - Production 35,000 - -
Direct Marketing - 266,750 252,500
List Acquisition 135,000 125,000 85,000
Fulfillment 55,000 50,000 50,000
Welcome Package 10,000 10,000 30,000
Customer Retention - 25,000 25,000
Collateral - 25,000 12,500
Cullinan 30,000 30,000 30,000
Web Site 25,000 75,000
C&I Program 10,000 25,000 15,000
------- ------- -------
Total 470,000 556,750 575,000
Exhibit B
---------
GENERAL AGENCY FEE SCHEDULE
Consultation/Strategic Planning:................................. $***
Day Rate Applicable @............................................ $***
Senior Project Management:....................................... $***
Account Planning:................................................ $***
Research:........................................................ $***
Creative Direction:.............................................. $***
Senior Art Direction:............................................ $***
Art Direction/Layout/Design...................................... $***
Computer Production:............................................. $***
Sr. Copywriting/Editing:......................................... $***
Copywriting/Editing:............................................. $***
Proofreading:.................................................... $***
Production Management:........................................... $***
On-site logistics, three-dimensional, mockups, etc.
Media Planning:.................................................. $***
Public Relations Coordination:
Internal:........................................................ $***
External: cost + Agency Admin. Fee............................... (***%)
Legal:
Internal:........................................................ $***
External: cost + Agency Admin. Fee............................... (***%)
Endorsement Negotiations:
Personalities, Licensing, Sponsorships........................... $***
Plus ***% of Total Fee
Direct Mail Consultation........................................... $***
Computer Color Outputs: $***/original generation Color Copies:.... $***/copy
====
ALL SERVICES BELOW THE LINE ARE PROVIDED AS AN INTEGRAL PART OF OUR AGENCY
SERVICES AND ARE NOT BILLED, BUT ARE ABSORBED AS A COST OF OUR OPERATING
OVERHEAD.
Account Services:
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
<PAGE>
Account Executive:............................................ $***
Account Coordinator:.......................................... $***
Print Production: Estimating, Buying and Supervision......... $***
Traffic/Coordination:......................................... $***
Media Placement & Buying...................................... $***
Reporting/Post Analysis...................................... $***
General Agency Services:...................................... $***
Direct Mail Coordinator:.......................................$***
As a standard of our compensation agreement, TCG will add a mark-up to all
outside purchases for printing, collateral and related activities.
Media buying will also return a standard rate of commission in consideration of
our management services rendered.
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
<PAGE>
EXHIBIT 10.19
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS DOCUMENT.
CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
CONFIDENTIAL
MASTER AGREEMENT
BETWEEN
DTE - CoEnergy
AND
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
This Master Agreement ("Agreement") is executed as of the date set forth
below by and between DTE-CoEnergy, L.L.C ("Supplier") and Green Mountain Energy
Resources L.L.C. ("Green Mountain") and, together with Supplier, (the
"Parties"). This Agreement sets forth the agreement of the Parties concerning
the sale and delivery of capacity and associated energy by Supplier to Green
Mountain under the terms and conditions set forth below. Sales by Supplier will
be made pursuant to Supplier's FERC Rate Schedule No 1.
1. Definitions:
Actual Metered Load: The amount of energy actually delivered to Designated
Green Mountain Customers, as measured at the Designated Green Mountain
Customers' meters.
Customer Groups: Collections of Designated Green Mountain Customers
corresponding to the calendar month in which they begin to receive service.
Clean Power Resources: Electric generation facilities that are fueled by
Natural Gas-fired Resources and/or Water Resources.
Cumulative Estimated Energy Requirements ("CEER"): The estimated annual
energy requirements of Designated Green Mountain Customers, based upon
historical data where available, and otherwise based on estimated data using
customer averages for the corresponding EDC calculated from customers for which
historical data is available.
Designated Green Mountain Customers: Green Mountain Load Profiled Retail
Customers in the Pennsylvania EDC service territories, that sign up for
deliveries of energy that are supplied by Clean Power Resources, Renewable
Resources and New Renewable Resources that are allocated to Supplier for each
Measurement Period.
Designated Green Mountain Customer Load: The aggregate energy requirements
of Designated Green Mountain Customers.
Distribution Loss Factors: Multipliers determined by the applicable EDC to
account for distribution and transmission losses from the Energy Delivery Points
to the Designated Green Mountain Customer Load.
<PAGE>
Confidential
EDC: The public utility providing facilities for the PaPUC jurisdictional
transmission and distribution of electricity to retail customers.
Energy Delivery Points: Delivery points on the EDC's Transmission System
that are selected by Supplier in accordance with the ISO/EDC requirements and
that constitute delivery, as recognized by the ISO and the appropriate EDC.
Full Requirements Service: The amount of service required to provide
capacity, energy (including Distribution Loss Factors) and all necessary
ancillary services, transmission, coordination, scheduling and pre-scheduling
power supply, and imbalances up to the Energy Delivery Point, to fully meet the
needs of the Designated Green Mountain Customer Load in accordance with the
requirements of the PJM Interconnection, L.L.C. ("PJM") or the East Central
Area Reliability Coordination Agreement ("ECAR"), as appropriate and the EDC(s)
and delivery to the EDCs at the Energy Delivery Points but does not include
Reconciliation.
ISO: The Independent System Operator as constituted by PJM and/or
equivalent system requirements of control area operators (for the ECAR EDCs.)
Load Profile(s): The factors used by each EDC for each Designated Green
Mountain Customer to allocate the customer's energy usage to each hour of the
billing cycle.
Load Profile-Type(s): The Load Profile applied to a particular Designated
Green Mountain Customer for a particular period of time.
Load Profiled Retail Customer: A residential or small commercial Retail
Customer without real time meters or those that the EDC determines will be
served on a Load Profiled Basis.
Measurement Period: The consecutive 12-month period of service associated
with each Customer Group.
New Renewable Resources: Renewable Resources with a first commercial
operation date after January 1, 1998.
Natural Gas-Fired Resources: Generating resources that are fueled by
natural gas, having a heat rate of less than 8500 BTU/kWh (LHV) and NOx and SOx
emissions of less than 25 PPM and 2 PPM, respectively.
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<PAGE>
Confidential
PaPUC: Pennsylvania Public Utility Commission.
PJM Network Integration Transmission Service Charge: The fixed rate per
megawatt per year as specified in the PJM Open Access Tariff, in paragraph 1 of
Attachment H-1 through H-10, as applicable to each EDC associated with this
Agreement.
Random Basis: The method used to allocate Load Profiled Retail Customers to
Supplier in the proportions specified in the Quantity Section. This allocation
method is intended to result in Green Mountain's Load Profiled Retail Customer
load being allocated in an unbiased manner to Green Mountain's suppliers such
that the Green Mountain's Load Profiled Retail Customer load is shared by all
suppliers in the proportions noted in the Quantity Section.
Reconciliation: The process of aggregating Actual Metered Load by Load
Profile Type and each Wholesale Product by EDC.
Renewable Resources: Generating resources that are photovoltaic, wind, low
head hydropower of 30 MW or less, geothermal, biomass, and landfill gas.
Retail Products: As defined in Attachment A, attached hereto and made a
part hereof.
Special Content Declaration: Monthly declarations to be provided by Green
Mountain to Supplier stating in the form of a ratio the relative amounts of
energy from Clean Power Resources, Renewable Resources and New Renewable
Resources to be delivered or deemed delivered by Supplier.
Undifferentiated System Power: Energy generated by resources of Supplier's
choice not claimed by Supplier to be from Renewable Resources, New Renewable
Resources or Clean Resources.
Water Resources: Hydroelectric generation of any size.
Wholesale Products: Energy generated by Clean Power Resources, New
Renewable Resources, or Renewable Resources, and any combination thereof. Each
"Wholesale Product" will refer individually to each of Clean Power Resources,
New Renewable Resources, and Renewable Resources.
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<PAGE>
Confidential
2. Type of Service:
Subject to the terms, conditions and restrictions contained herein,
Supplier will provide Full Requirements Service to Green Mountain.
3. Term:
A. This Agreement shall become effective on the date set forth below;
provided, however, neither Party shall have any obligations relative to
deliveries of any Wholesale Products or Undifferentiated System Power until the
date that Green Mountain is permitted under the regulatory laws of the
Commonwealth of Pennsylvania and the applicable EDC to commence deliveries of
Retail Products to Designated Green Mountain Customers (anticipated to be
January 1, 1999). Unless terminated earlier in accordance with Paragraph 23
hereof, this Agreement shall continue until the expiration of the Measurement
Period for the last Customer Group.
B. Either Party may give the other at least three months advance written
notice of such Party's decision to cease assigning or accepting allocation of
Load Profiled Retail Customers to Supplier. The earliest that such notice may
be effective is March 31, 1999. Upon the effective date of such notice, Green
Mountain shall cease allocating customers in the Pennsylvania EDC service
territories to Supplier. However; (a) this Agreement and all rights and
obligations hereunder shall remain in full force and effect, following the
effective date of such notice, with respect to each Customer Group allocated to
Supplier prior to such effective date until the expiration of the Measurement
Period for each such Customer Group; and (b) Green Mountain shall be able to
allocate additional Load Profiled Retail Customers to existing Customer Groups
through April 2000, if the total CEER of the then existing Customer Groups is
below 50% of the generation resource levels as indicated in Paragraph 5
(Quantity) as it may be reduced as provided in Paragraph 5(D) or (E) until such
CEER of the Customer Groups is 50% or more of the level stated in Paragraph 5 as
it may be reduced as provided in Paragraph 5(D) or (E).
C. If there are PJM, ECAR, PaPUC or FERC Rule, policy or other changes;
establishment of new ISO(s) or dissolution of existing ISO(s), other than
reallocation of charges covered by Base Charge Adder (b), that are proposed by
the applicable regulatory body after the date of this Agreement to be effective
before the expiration of this Agreement that have a material adverse effect on
either or both Parties, then upon written notice from the adversely effected
Party, the Parties shall attempt to negotiate changes to the Agreement
acceptable to both Parties. In the event that mutually acceptable changes are
not negotiated and executed within 10 days of such notice, either Party may
cease the allocation of additional Load Profiled Retail Customers to Supplier on
5 days written notice; provided, however, that regardless of the dates of such
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<PAGE>
Confidential
notices Green Mountain may allocate Load Profiled Retail Customers to Supplier
through October 31, 1998 unless Supplier documents that the adverse effect
resulted or will result in a cost increase of 10% or more.
4. [Intentionally Omitted]
5. Quantity:
A. Green Mountain shall purchase energy from Supplier that is necessary to
provide Full Requirements Service to Designated Green Mountain Customers as
follows: at least ***% of the total number of Load Profiled Retail Customers of
Green Mountain in the Pennsylvania EDC service territories that agree to
purchase each of the Retail Products set forth in Attachment A. Load Profiled
Retail Customers shall be allocated for each EDC on a Random Basis to Supplier,
with the exception that Green Mountain shall use reasonable efforts to ensure
that Supplier employees and/or their families requesting retail service from
Green Mountain shall become Designated Green Mountain Customers.
B. In the event that one or more EDC's do not allow Green Mountain to
utilize multiple suppliers of Wholesale Products, Green Mountain shall have the
right to allocate Load Profiled Retail Customers within any such EDC to a single
supplier of a Wholesale Product, which supplier may or may not be Supplier. In
such a situation, Green Mountain will endeavor to allocate Load Profiled Retail
Customers in other EDC's to its Wholesale Product suppliers in a manner which
adjusts equitably for Green Mountain's inability to allocate Load Profiled
Retail Customers in such EDC(s) to more than one Wholesale Product supplier.
Prior to such a reallocation of Load Profiled Retail Customers, Green Mountain
shall pursue on a good faith basis the establishment of a single coordination
agent to consolidate interface requirements with any such EDC to allow for
provision of Wholesale Products by multiple suppliers.
C. For each Wholesale Product, Supplier's obligation to accept additional
Load Profiled Retail Customers shall cease at such time as the CEER would
exceed the following generation resource levels, by region:
PJM Region ECAR Region
---------- ------------
Clean Power Resources *** ***
Renewable Resources *** ***
New Renewable Resources *** ***
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
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<PAGE>
Confidential
D. Supplier has an option to reduce any or all the above generation
resource levels by up to 10% by giving Green Mountain 30 days advance written
notice but not below the level required by Designated Green Mountain Customers
previously allocated to Supplier.
E. Supplier's obligation to accept additional Designated Green Mountain
Customers is Wholesale Product specific, and remains in force for any Wholesale
Product generation resource types that have not exceeded their respective CEER.
In the event that regulatory or legal action or force majeure prevents or
interrupts the introduction of retail access in one or more of the EDC's, the
above generation resource levels shall be reduced by the ratio of the amount of
retail electric energy requirements of the affected EDC(s) measured by the
system sales (MWh) of such EDC for 1997 to the total retail electric energy
requirements of all EDC's in the Commonwealth of Pennsylvania measured by the
total of such EDC's system sales (MWh) for 1997 for the period during which
such retail access is prevented or interrupted.
F. Supplier acknowledges that Green Mountain is blending various full
requirements purchases of Wholesale Products from multiple suppliers on a
monthly basis to create and serve its Retail Products. Green Mountain intends to
blend New Renewable Resources purchased from Supplier with other Wholesale
Products purchased from other suppliers to create Retail Products for Green
Mountain customers in Pennsylvania served by said other suppliers. The Retail
Products are differentiated by the ratio of energy from Clean Power Resources,
Renewable Resources, and New Renewable Resources which they contain. Green
Mountain will track the respective loads and content requirements of each of its
Wholesale Product suppliers, including Supplier, and will determine the quantity
of New Renewable Resources required from Supplier for blending with the
Wholesale Products supplied by other Wholesale Product suppliers to meet the
energy content required for Green Mountain's Retail Load Profiled Customers. To
the extent that Supplier supplies Green Mountain with quantities of New
Renewable Resources in any calendar year in excess of the quantities required to
meet the New Renewable Resources content for the Designated Green Mountain
Customers due to Green Mountain's blending requirements, the quantities of Clean
Resources and Renewable Resources to be supplied hereunder by Supplier for such
calendar year shall be reduced by an amount corresponding with the excess
quantity of New Renewable Resources delivered.
G. Green Mountain will issue a Special Content Declaration to Supplier on
a monthly basis specifying the mix required from Supplier for its Wholesale
Product. The Special Content Declaration will be calculated by Green
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<PAGE>
Confidential
Mountain as described in Attachment B attached hereto and made a part hereof,
for both PJM and ECAR and provided to Supplier as soon as possible but no later
than 5 days before the beginning of each month.
H. Supplier shall schedule and deliver energy from Renewable Resources,
Clean Power Resources, New Renewable Resources, in the ratio specified in the
Special Content Declarations and/or Undifferentiated System Power to the Energy
Delivery Points at times and amounts sufficient to provide Full Requirements
Service.
I. Green Mountain will be responsible for obtaining measured load and
energy consumption information and shall provide, or cause to be provided, such
information to Supplier as and when received as well as Reconciliation with the
EDC(s) and PJM to the extent not provided by the EDC(s) or PJM. Any costs
associated with reading a particular Designated Green Mountain Customer's
metering equipment or meter reading will be borne by Green Mountain.
J. To the extent that there are no adverse economic or operational effects
on Supplier, Supplier will use Supplying Resources it has secured in PJM to
deliver to Energy Delivery Points in PJM and use Supplying Resources it has
secured in ECAR to deliver to Energy Delivery Points in ECAR.
6. New Renewable Resources:
Supplier agrees to secure energy from New Renewable Resources, which will
include landfill gas, for delivery under this Agreement. Such New Renewable
Resources shall have a planned availability date of no later than October 1,
1999. Supplier shall begin procurement upon execution of this Agreement and
shall thereafter diligently pursue completion of construction and/or necessary
purchase contracts.
Green Mountain is pursuing the development of a photovoltaic ("PV")
facility to be sited in Pennsylvania with a target commercial operation date of
November 1, 1999. If requested by Green Mountain, Supplier agrees to accept
assignment of the electric energy output of this facility during the term of
this Agreement, and will be compensated through an administrative fee and full
cost reimbursement. All costs associated with such PV facility, including but
not limited to energy, transmission, distribution and ancillary service charges,
shall be documented by Supplier and be paid by Green Mountain. Supplier will
have no responsibility for the output, other than scheduling, and Green Mountain
will indemnify Supplier for all expenses or liabilities it may incur in
connection with such PV facility, including, but not limited to energy imbalance
or unauthorized use charges. The PV generation shall either displace New
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<PAGE>
Confidential
Renewable Resource or Renewable Resources as determined by Supplier.
Green Mountain anticipates the acquisition and retail sale of other
Renewable Resources and New Renewable Resources which may further alter content
requirements of its Wholesale Products. The Parties agree to attempt to
negotiate an arrangement to accommodate these additional resources.
7. Liquidated Damages:
(a) If, for reasons other than force majeure or Green Mountain's failure
to perform Supplier fails to deliver the Full Requirements Service
and, Green Mountain acting in a commercially reasonable manner incurs
incremental costs and expenses to provide such Full Requirements
Service over and above those it would have incurred had Supplier
fulfilled its obligation, then such costs and expenses shall be
charged to Supplier, and Green Mountain shall have the right to deduct
such costs and expenses from any amounts payable to Suppliers.
(b) If, for reasons other than force majeure or Green Mountain's failure
to perform, Supplier fails to satisfy its delivery obligations with
respect to Wholesale Products, Green Mountain acting in a commercially
reasonable manner shall be free to purchase substitute Wholesale
Products from third parties to cover Supplier's failure to deliver
same and Supplier shall reimburse Green Mountain for any incremental
costs and expenses which it incurs to purchase said Wholesale Products
less the revenue received by Green Mountain from the sale of such
Wholesale products if Supplier has not failed to supply Full
Requirements Service.
(c) Incremental costs and expenses reimbursable hereunder are energy,
transmission services, scheduling functions, ancillary services
reasonably incurred in connection with securing such replacement
supplies in excess of what would have been paid to Supplier. Green
Mountain will use reasonable efforts to mitigate the damages payable
or reimbursable by Supplier hereunder.
(d) If, for reasons other than force majeure or Supplier's failure to
perform, Green Mountain fails to purchase Full Requirements Service,
Green Mountain shall pay Seller, on the date payment would otherwise
be due, an amount for each MWh of such deficiency equal to the
positive difference, if any, obtained by
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Confidential
subtracting the per unit Sales Price from the prices that would have
been paid by Green Mountain.
"Sales Price" means the price at which Supplier, acting in a
commercially reasonable manner, resells, or if not resold would have
been able to resell, the Wholesale Products not received by Green
Mountain, reduced by additional transmission charges, if any
(including, without limitation, charges for any applicable ancillary
services), incurred by Supplier to effect such resale.
8. Product Verification:
A. Resources that will be relied upon by Supplier to meet the Wholesale
Product requirements shall be either owned by Supplier, subject to contracts
with any party having dispatch rights to the energy, or subject to other
contractual entitlements sufficient to meet the verification requirements.
B. Supplier will use reasonable efforts to attempt to deliver Wholesale
Products as specified in the Special Content Declarations in the calendar year
but each Wholesale Product may be delivered, at Supplier's option, either to
Green Mountain for delivery to Designated Green Mountain Customers or other
customers as follows:
Supplier will have satisfied all of its obligations with respect to
delivery of each Wholesale Product in PJM if Supplier:
(a) Delivers Wholesale Products to Green Mountain in PJM in the ratio
specified in the December Special Content Declaration for PJM and in
an amount equal to 95-105% of the Designated Green Mountain Customer
Load each calendar year or with 4 months after the end of the calendar
year;
(b) Delivers Wholesale Products to retail or wholesale customers in PJM
other than Green Mountain or Designated Green Mountain Customers in
the ratio specified in the December Special Content Declaration and in
an amount equal to 95-105% of the Designated Green Mountain Customer
Load in PJM each calendar year where Supplier does not transfer to
such other customer(s) the rights to claim the environmental
attributes that differentiate such Wholesale Products from
Undifferentiated System Power; or
(c) Any combination of (a) or (b).
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Supplier will have satisfied all of its obligations with respect to
delivery of each Wholesale Product in Pennsylvania EDC(s) in ECAR, if Supplier:
(d) Delivers Wholesale Products to Green Mountain in Pennsylvania EDC(s)
ECAR in the ratio specified in the December Special Content
Declaration for ECAR and in an amount equal to 95-105% of the
Designated Green Mountain Customer Load in ECAR, each calendar year or
within 4 months after the end of the calendar year;
(e) Delivers Wholesale Products to retail or wholesale customers in
Pennsylvania EDC(s) in ECAR other than Green Mountain or Designated
Green Mountain Customers in the ratio specified in the December
Special Content Declaration and in an amount equal to 95-105% of the
Designated Green Mountain Customer Load in ECAR, each calendar year or
within 4 months after the end of the calendar year where Supplier does
not transfer to such other customer(s) the rights to claim the
environmental attributes that differentiate such Wholesale Products
from Undifferentiated System Power; or
(f) Any combination of (d) or (e).
Supplier will deliver Wholesale Products within 4 months of the end of the
calendar year that in the aggregate equal 100% of the Designated Green Mountain
Customer Load as described in the adjusted Special Content Declaration issued in
January and in a final Special Content Declaration in February, even though each
Wholesale Product may be within the 95 - 105% range.
Any delivery to other customers will not diminish Supplier's obligation to
provide Full Requirements Service.
Any deliveries after the end of the calendar year as described above will
not be used to satisfy Wholesale Product delivery obligations in the current
year.
C. Supplier will develop and deliver to Green Mountain a list of potential
generating units for Wholesale Products ("Candidate List") within 30 days of
execution of this Agreement. Green Mountain and Supplier will review resources
on the Candidate List with environmental leaders/groups selected by Supplier and
Green Mountain ("Supplying Resources"). Supplier will give due consideration to
any objections that such environmental leaders/groups may
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have to any Supplying Resources and will use reasonable efforts to obtain energy
from other than objectionable Supplying Resources provided that there are no
adverse economic or operation effects on Supplier. From the list of Supplying
Resources, Supplier, in its sole discretion may select any combination of the
Supplying Resources to supply the Wholesale Products. The foregoing shall not
require Supplier to have firm contracts with Supplying Resources for any amount
of capacity or energy and Supplier may dispatch a Supplying Resource in a way
that best meets the interests of Supplier provided that the obligations of
Supplier with respect to Wholesale Product delivery and Wholesale Product
verification are met. Supplier may at any time add Supplying Resources,
consistent with the review process described previously in this section.
D. Within 15 days following the end of each calendar quarter, Supplier
will provide Green Mountain with a written report identifying its use, expressed
volumetrically, of Supplying Resources that it (a) has used during the prior
calendar quarter and (b) expects to use during the current calendar quarter, to
satisfy its Wholesale Product delivery obligations. In the event that any such
report does not reflect the use or intended use of the Supplying Resources in
such relative quantities as required to meet the Supplier's Wholesale Product
delivery obligations, Green Mountain shall have the right to demand written
assurance from Supplier that it will meet its Wholesale Product delivery
obligations. Supplier shall provide such assurance to Green Mountain in writing
within (30) days of such request. If Supplier does not provide assurance, which
is reasonably satisfactory to Green Mountain, Green Mountain upon written notice
to Supplier shall have the right to procure Wholesale Product from other
suppliers if Supplier is not currently supplying such Wholesale Product as
required by this Agreement until Supplier provides such assurances or begins
supply of such Wholesale Products as required by this Agreement. Supplier will
be responsible for incremental costs as described in Section 7(b) and (c),
incurred by Green Mountain in such volumes as may be necessary to meet the
Supplier's Wholesale Product delivery obligation.
E. If at any time during the term of this Agreement it is determined that
a Supplying Resource no longer meets the requirements for supply under this
Agreement, such non-complying Supplying Resource may become ineligible for
supply of capacity and energy hereunder provided that the following conditions
are met. If the independent third party evaluator (as described in Paragraph F)
makes a determination that a Supplying Resource's generation does not meet the
requirements as described in this Agreement, then such Supplying Resource shall
be removed or its use limited to that which it is qualified to supply. If
Supplier has entered into a term arrangement for supply of Wholesale Products
from the Supplying Resource that has been removed or
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limited for reasons other than failure to meet the Renewable Resources
definition, Supplier shall be permitted to continue to purchase Wholesale
Products from such Supplying Resource for the remainder of the Measurement
Period or until the end of the term of Supplier's supply agreement with such
Supplying Resource, whichever is less.
F. Supplier shall maintain and make available for independent third party
verification, on an annual basis, records that document the delivery of energy
from Supplying Resources to the respective Energy Delivery Points and document
that the Wholesale Product requirements are fulfilled. Any such independent
third party shall be selected by Supplier and shall be subject to approval by
Green Mountain which shall not be unreasonably withheld. If the parties are
unable to agree upon such independent third party evaluator, an evaluator shall
be selected pursuant to paragraph 23, Dispute Resolution. Any independent
evaluator shall perform its verification under the terms of a confidentiality
agreement and shall not disclose or discuss any of the information revealed in
the verification process with any party other than Green Mountain and Supplier.
Supplier shall bear the cost of the verification. Green Mountain and Supplier
shall cooperate reasonably to meet regulatory requirements to disclose the
characteristics of Retail Products sold to retail customers in the Commonwealth
of Pennsylvania during the term of this Agreement to the extent required by
applicable environmental or other regulatory laws.
G. Green Mountain and Supplier shall comply, and shall maintain records to
evidence compliance with this Agreement and any applicable laws governing the
transactions contemplated by this Agreement. Green Mountain and Supplier shall
have the right to audit the other party's records associated with this section
through a mutually agreed upon third party to assure compliance with the
Agreement, all in accordance with the mechanism for selecting such independent
evaluator described above.
9. Delivery:
Green Mountain shall take title to the energy delivered under this
Agreement at the Energy Delivery Points. Although title to the energy delivered
hereunder will pass to Green Mountain at the Energy Delivery Points, Supplier
shall be responsible for scheduling, and imbalance costs up to the Designated
Green Mountain Customer's meter. Supplier shall bear all risk of loss before the
Energy Delivery Points and Green Mountain shall bear all risk of loss (excluding
Distribution Loss Factors) beyond the Energy Delivery Points. Except as
otherwise provided above, each party shall be responsible for all costs, damages
and other liabilities for energy delivered hereunder on their respective sides
of the Energy Delivery Points.
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10. Charges:
For Wholesale Products, Green Mountain will pay Supplier an amount as
defined and described below for energy associated with each resource, times the
energy measured at the Designated Green Mountain Customer meters. For purposes
of payment, all deliveries will be deemed to be Wholesale Products in the ratios
specified in the Special Content Declaration for such month. Green Mountain
shall be responsible for paying Supplier these amounts regardless of whether
Green Mountain collects any revenues from the Designated Green Mountain
Customers.
(a) A base charge ("Base Charge") will apply, as follows, for each
Wholesale Product to cover all costs associated with Full Requirements
Service, except for PJM Network Transmission Service. To the extent
that Green Mountain is charged or receives credit from the ISO or
EDC(s) for under or over deliveries, such costs shall be deducted from
Supplier's charges or credits added to Supplier's charges as the case
may be.
Clean Power Resources delivered in PJM: $ ***
Clean Power Resources delivered in ECAR: $ ***
Renewable Resources delivered in PJM: $ ***
Renewable Resources delivered in ECAR: $ ***
New Renewable Resources
Located in PJM, delivered in PJM: $ ***
New Renewable Resources
Located in PJM, delivered in ECAR: $ ***
New Renewable Resources
Located in ECAR, delivered in ECAR: $ ***
New Renewable Resources
Located in ECAR, delivered in PJM: $ ***
Base Charge Adders are as follows:
(a) All costs associated with PV energy plus an administrative fee for
handling the assignment of PV energy to Supplier and incorporation thereof into
the Wholesale Products will be applied based upon actual energy content at:
$***.
(b) For other than the PJM Network Integration Transmission Service Charge
which Green Mountain has agreed to reimburse Supplier, if an EDC or ISO
allocates charges for services required prior to the Energy Delivery Point(s) to
Green Mountain, Supplier will reimburse Green Mountain. If an EDC or ISO
allocates charges for services required after the Energy Delivery Point(s) other
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
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than imbalance or Distribution Loss Factors to Supplier, Green Mountain will
reimburse Supplier.
(c) PJM Network Integration Transmission Service Charge if incurred by
Supplier.
(d) If Green Mountain does not purchase at least *** (or as reduced by the
same ratio as reduction pursuant to Paragraph 5(D) or (E)) through April 2000,
Green Mountain shall pay Supplier a reservation fee of $*** for each MWh not
purchased and shall be payable on or before May 31, 2000.
If Supplier exercises its option to cease acceptance of allocation of
additional Load Profiled Retail Customers as provided in Paragraph 3(C) no
reservation fee will be owed.
This paragraph (d) shall not limit Green Mountain's liability for
failure to purchase Full Requirements Service.
11. Taxes and Franchise Fees:
Each Party shall be responsible for paying any taxes or franchise fees
imposed by any governmental entity having jurisdiction over such Party.
Specifically, Green Mountain shall be responsible for collecting and submitting
to the applicable governmental authority any sales tax imposed on, or collected
from Designated Green Mountain Customers, and franchise fees or taxes imposed
upon Green Mountain related to the delivery of Wholesale Products and
Undifferentiated System Power to the Designated Green Mountain Customers, and
any other taxes or franchise fees of whatever nature that are imposed on Green
Mountain from and after the delivery of the Wholesale Products and
Undifferentiated System Power to the Energy Delivery Points (the "Green Mountain
Taxes"). Supplier shall be responsible for collecting and submitting to the
applicable governmental authority any wholesale sales tax, franchise fees or
taxes, and any other taxes or franchise fees of whatever nature that are imposed
on Supplier before the delivery of the Wholesale Products and Undifferentiated
System Power to the Energy Delivery Points (the "Supplier Taxes"). Each Party
shall indemnify and hold the other Party harmless from and against any liability
associated with the indemnifying party's failure to comply with this paragraph.
12. Billing:
After commencement of deliveries, Supplier shall bill Green Mountain on a
monthly basis, no earlier than the first day of the month following the month of
service ("Invoice Month") and using best efforts to bill on or before the tenth
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
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(10th) day of the Invoice Month, based upon an estimation of the Base Charge and
Base Charge Adders (based on energy in MWh) scheduled to the ISO/EDC on behalf
of Green Mountain, adjusted for ISO/EDC transmission and distribution losses, as
applicable (collectively "Estimated Charges"), as described below. The monthly
invoice shall be paid in full within 20 days of the date of the invoice. In
anticipation of the need to pay such bills, Green Mountain will utilize an
independent third party(ies) to receive all payments from the Designated Green
Mountain Customers into a separate account in the name of and for the benefit of
Supplier. The Supplier shall be entitled to receive the foregoing revenues up
to the amount of the Estimated Charges for the current billing period plus or
minus any adjustments based on Actual Meter Load. Such arrangements with the
independent third parties shall be satisfactory to Supplier, which shall not be
unreasonably withheld. Green Mountain grants Supplier a security interest in
these receivables and will execute and file Security Agreement(s), Financing
Statement(s) and such other documents as Supplier may request to maintain and
perfect its security interest. Green Mountain shall instruct said independent
third party(ies) to transfer the funds so segregated into the Supplier's account
on a weekly basis. All amounts so transferred shall be credited against the
amount due from Green Mountain under Supplier's monthly bill.
In addition to the other security provisions, on or before December 24,
1998, Green Mountain will provide Supplier with, and maintain, a letter of
credit or cash deposit, at its option, equal to Supplier's January 1999
receivables based upon the Green Mountain forecast pursuant to Paragraph
13(a)(ii) and the Special Content Declaration. The letter of credit shall be
updated five days prior to the commencement of service for the next calendar
month to equal the amount of the forecasted receivables for the next month or
the current month which ever is more. Any such letter of credit shall be issued
or confirmed by a bank which is acceptable to Supplier; shall be in a form
acceptable to Supplier; shall be irrevocable in Supplier's favor; and shall be
fully enforceable and not the subject of any action to restrain payment
thereunder. After six consecutive months of satisfactory lockbox operation,
timely payment history by Green Mountain, and full payment of Supplier's
invoices for the first six months, Green Mountain shall no longer be required to
provide the letter of credit or cash deposit as described in this paragraph.
Should Green Mountain fail to comply with the foregoing lockbox procedure
in any material respect, or fail to make any payment when due, Supplier may in
addition to any other remedy, provide Green Mountain with written notice of such
failure and, if Green Mountain fails to correct such
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failure within six days after receipt of such notice, Supplier shall have the
right to require Green Mountain to provide and maintain security during the term
of this Agreement and until final payment is made, in the form, of cash or a
letter of credit at Green Mountain's option. Any such letter of credit shall be
issued or confirmed by a bank which is acceptable to Supplier; shall be in a
form acceptable to Supplier; shall be irrevocable in Supplier's favor; and shall
be fully enforceable and not the subject of any action to restrain payment
thereunder and in an amount equal to 60 days of Supplier's sales hereunder. Such
security shall be provided within 3 business days of Supplier's request.
Bills which are not paid in full by Green Mountain when due shall
thereafter bear interest until paid at the rate of 1% per month or at the
maximum rate of interest allowed by law, whichever is less.
Each month, Green Mountain shall notify Supplier of the Actual Metered Load
associated with the previous month's service, which shall be the basis for an
adjustment to the Estimated Charges under this Agreement. Supplier shall credit
or charge Green Mountain appropriately during the next monthly billing to
account for this adjustment. Supplier shall have the right to audit Green
Mountain's records associated with the Actual Metered Load through a mutually
agreed upon third party.
13. Customer Forecasts:
Green Mountain expects that some EDCs will administer most of the forecast
requirements of Designated Green Mountain Customer Loads. Where this is done,
the Supplier will work directly with the EDC, while keeping Green Mountain
informed of the status of its load. Green Mountain will also supply
supplemental information, such as longer-term forecasts, beyond those expected
to be provided by the EDC.
If scheduling services are not provided by the EDC:
(a) Green Mountain will then provide Supplier:
(i) No later than the 15th day of each month, its best estimate of
the energy required of Supplier to meet Designated Green Mountain
Customer Load for each Wholesale Product, for each month of the
succeeding Measurement Period. Green Mountain will support and
facilitate and will use best efforts to assist in the preparation of
daily load forecasts by Supplier.
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(ii) Five working days prior to each calendar month, the total
number of Designated Green Mountain Customers for each Customer Group,
at the necessary level of disaggregation to match the Energy Delivery
Points' requirements associated with the scheduling services provided
by Supplier, by Load Profile-Type and Wholesale Product selected.
Green Mountain will also provide average historical daily usage for
the Designated Green Mountain Customers (based upon actual and
estimated data) for each combination of location, Load Profile-Type,
and Wholesale Product.
(b) Supplier shall prepare the final day ahead and hour ahead forecasts
required by the ISO/EDC for scheduling based on the information supplied by
Green Mountain in the foregoing Paragraph, and day-ahead updates of Load
Profiles and Distribution Loss Factors provided by the EDCs, and other supplier-
based information such as weather forecasts.
Included in the above will be recognition of the decremental customer
counts by Load Profile-Type and Retail Product selected in the event that
Designated Green Mountain Customers are terminated or are returned to service by
the EDC for whatever reason. Green Mountain will notify Supplier at
approximately the same time that it notifies the EDC that a Designated Green
Mountain Customer is converting to another supplier, but in no event later than
forty-eight hours following Green Mountain's notice to the EDC.
In all cases, the Supplier will make available to Green Mountain, in a
timely fashion (at least monthly), all documents pertaining to the Supplier's
scheduling or settlement of Designated Green Mountain Customer Loads for all ISO
and/or EDC transactions.
To the extent that the Supplier has Green Mountain Load Profiles and
Distribution Loss Factors for each Energy Delivery Point for each day, that are
not easily accessible to Green Mountain, the Supplier shall provide to Green
Mountain this information, upon written request.
Green Mountain shall be responsible for Reconciliation with the EDCs.
14. Data Transfer:
This Agreement contemplates the exchange of information and data necessary
to implement the schedules, delivery arrangements and other data and information
described herein. The Parties shall develop mutually agreeable standards for the
content and protocols for data transfer required
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under this Agreement.
15. Relationship of the Parties:
The Supplier is a wholesale supplier to Green Mountain at the Delivery
Point(s). Green Mountain is the retail Electric Generation Supplier ("EGS"),
certified by the Pennsylvania Public Utilities Commission, and as such will be
responsible, or contract with third parties, for all interactions with the
Designated Green Mountain Customers, including transmission and distribution
after the Energy Delivery Points, metering, billing and reconciliation. Nothing
in this Agreement (1) creates a partnership, joint venture or any relationship
other than that of supplier-purchaser, (2) confers any right to Supplier to
influence pricing or other sales practices of Green Mountain as between Green
Mountain and the Designated Green Mountain Customers or any third party, or (3)
confers any right to Green Mountain to influence supply contracting or
scheduling practices of Supplier.
16. Confidentiality:
Neither party shall use for any purpose other than its performance of this
Agreement or disclose to any third party (other than such party's employees,
lenders, counsel, accountants or suppliers any non-public information designated
as confidential by the disclosing Party except as is necessary to perform this
Agreement the or in order to comply with any applicable law, order, regulatory
or exchange rule; provided each Party shall notify the other Party of any
proceeding of which it is aware that may result in disclosure, consult with the
other Party on the advisability of legally available steps to resist or narrow
such request and use reasonable efforts to prevent or limit the disclosure. The
disclosing Party will inform the recipient of the confidential nature of the
information at the time of disclosure of any confidential information. This
obligation shall survive for a period of three years after the termination of
this Agreement. The Parties agree that unauthorized disclosure of confidential
information will cause irreparable injury for which money damages are inadequate
and, therefore, in addition to any other remedy, the disclosing Party shall be
entitled to injunctive relief or specific performance.
No publicity concerning the relationship of the Parties shall be released
without the consent of both Parties.
17. Governing Law:
This Agreement and any service agreement hereunder shall be interpreted,
construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania or the laws of the United States of America,
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whichever is applicable, as if executed and to be performed wholly within the
Commonwealth of Pennsylvania.
18. Force Majeure:
In the event either Party is rendered unable, by an event of force majeure,
----- -------
to carry out wholly or in part its obligations under the provisions hereunder,
it is agreed that if such Party gives notice and full particulars of such event
of force majeure to the other Party as soon as practicable after the occurrence
----- -------
of the cause relied on, then the obligations of the Party affected by such event
of force majeure, other than the obligation to make payments then due or
----- -------
becoming due hereunder, shall be excused from the inception and throughout the
period of continuance of any such inability so caused, but for no longer period,
and such event of force majeure shall, as far as practicable, be remedied with
----- -------
all reasonable dispatch.
The term "force majeure" as employed herein shall mean physical or
----- -------
governmental causes of the kind not reasonably within the control of the Party
claiming suspension and which by the exercise of due diligence such Party could
not have prevented or is unable to overcome. Such causes shall include
interruptions of firm transmission service relied on to make delivery, strikes,
labor difficulties, shutdowns in anticipation of strikes, accidents, equipment
breakdown, riots, fire, flood, wars, delays or interruptions in transportation,
failure of generating equipment, failure or threat of failure of facilities,
materially disruptive actions or failure to act of any government or government
agency (whether or not legal force and including without limitation any Court
order or any environmental compliance order or notice) or any other disabling
cause or contingency of similar or dissimilar nature not reasonably within the
control of the party claiming such force majeure event, whether of the nature or
----- -------
subject matter herein enumerated or noted. Nothing contained herein, however,
shall be construed to require a Party to prevent or settle a strike against its
will. Economic hardship shall not constitute force majeure.
----- -------
19. Indemnification:
Supplier hereby agrees to indemnify, defend and hold harmless Green
Mountain, its agents, servants, members, partners, officers, directors and
employees (collectively, "Green Mountain Indemnities") of each, from and against
any and all losses, claims damages or liabilities to third parties (including
reasonable attorneys' fees actually incurred and including, without limitation,
penalties or fines imposed by government authorities) arising from the act or
neglect of its own employees, agents or contractors, including breach
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of this Agreement, provided that Supplier shall be promptly notified in writing
of any such claim or suit brought against any such Green Mountain Indemnitee and
shall be permitted, upon accepting financial responsibility, to control a
defense against or settlement (other than any settlement involving criminal
liability or admission of guilt or responsibility by such Green Mountain
Indemnitee) of such claim or suit through counsel of its choice. The foregoing
notwithstanding, Supplier's obligations under this Agreement towards any Green
Mountain Indemnitee are conditioned upon such Green Mountain Indemnitee
providing such cooperation as Supplier may reasonably request in connection with
its defense or settlement of the claim or suit against such Green Mountain
Indemnitee.
Green Mountain hereby agrees to indemnify, defend and hold harmless
Supplier, its agents, servants, partners, officers, directors and employees and
suppliers (collectively, "Supplier Indemnities") of each, from and against any
and all losses, claims, damages or liabilities to third parties (including
reasonable attorneys' fees actually incurred and including, without limitation,
penalties or fines imposed by governmental authorities) arising from the act or
neglect of its own employees, agents or contractors, including breach of this
Agreement, provided that Green Mountain shall be promptly notified in writing of
any such claim or suit brought against any such Supplier Indemnity and shall be
permitted, upon accepting financial responsibility, to control a defense against
or settlement (other than any settlement involving criminal liability or
admission of guilt or responsibility by such Supplier Indemnity) of such claim
or suit through counsel of its choice. The foregoing notwithstanding, Green
Mountain's obligations under this Agreement towards any Supplier Indemnity are
conditioned upon such Supplier Indemnity providing such cooperation as Green
Mountain may reasonably request in connection with its defense or settlement of
the claim or suit against such Supplier Indemnitee.
These obligations shall survive for three years after termination of this
Agreement.
20. Assignment:
Either Party may assign this Agreement with the prior written consent of
the other Party, which consent shall not be unreasonably withheld; provided that
such consent shall not be necessary with respect to assignment to a successor in
interest or an affiliate. Upon any assignment made in compliance with this
Paragraph, this Agreement shall inure to and be binding upon the successors and
assigns of the assigning parties.
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21. Limitation of Liability:
FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF
DAMAGES IS PROVIDED IN THIS AGREEMENT, THE LIABILITY OF THE DEFAULTING PARTY
SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER DAMAGES OR
REMEDIES HEREBY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY
PROVIDED, THE LIABILITY OF THE DEFAULTING PARTY SHALL BE LIMITED TO DIRECT,
ACTUAL DAMAGES ONLY AND ALL OTHER DAMAGES AND REMEDIES ARE WAIVED. IN NO EVENT
SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR CONSEQUENTIAL, INCIDENTAL,
PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES IN TORT, CONTRACT OR OTHERWISE. THE
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT ARE OBLIGATIONS OF THE PARTIES
ONLY, AND NO RECOURSE SHALL BE AVAILABLE AGAINST ANY OFFICER, DIRECTOR,
STOCKHOLDER, MEMBER, OR PARTNER OF A PARTY OR ANY AFFILIATE OF A PARTY.
22. Exclusion of Warranties:
(a) SUPPLIER WILL NOT BE LIABLE TO GREEN MOUNTAIN OR ANY CUSTOMER FOR
DAMAGES CAUSED BY INTERRUPTION OF SERVICE, VOLTAGE OR FREQUENCY
VARIATIONS, SINGLE PHASE TO THREE PHASE LINES, REVERSAL OF PHASE
ROTATION OR CARRIER CURRENT FREQUENCIES.
(b) SUPPLIER MAKES NO WARRANTIES OF ANY KIND WHETHER STATUTORY, ORAL,
WRITTEN EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
23. Dispute Resolution:
ANY DISPUTE UNDER THIS AGREEMENT, EXCEPT WITH RESPECT TO CLAIMS TO ENFORCE
THE CONFIDENTIALITY OBLIGATIONS OF PARAGRAPH 16 HEREOF, SHALL BE SUBMITTED TO
BINDING ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION (THE "AAA") BY ONE ARBITRATOR WHO HAS NOT
PREVIOUSLY BEEN EMPLOYED BY EITHER PARTY, AND DOES NOT HAVE A DIRECT OR INDIRECT
INTEREST IN EITHER PARTY OR THE SUBJECT MATTER OF THE ARBITRATION. SUCH
ARBITRATOR SHALL EITHER BE AS MUTUALLY AGREED BY THE PARTIES WITHIN THIRTY DAYS
AFTER WRITTEN NOTICE FROM EITHER PARTY REQUESTING ARBITRATION, OR FAILING
AGREEMENT, SHALL BE SELECTED UNDER THE EXPEDITED RULES OF THE AAA. UNLESS THE
PARTIES OTHERWISE AGREE, SUCH
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ARBITRATION SHALL BE HELD IN PHILADELPHIA, PENNSYLVANIA. THE EXPEDITED
PROCEDURES OF THE COMMERCIAL ARBITRATION RULES OF THE AAA SHALL APPLY TO THE
EXTENT NOT INCONSISTENT WITH THE RULES HEREIN SPECIFIED. JUDGMENT ON THE
ARBITRATOR'S AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF. THE
PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.
EACH PARTY UNDERSTANDS THAT THIS AGREEMENT CONTAINS AN AGREEMENT TO
ARBITRATE WITH RESPECT TO ANY DISPUTE PERTAINING TO THIS AGREEMENT. AFTER
SIGNING THIS AGREEMENT, EACH PARTY UNDERSTANDS THAT IT WILL NOT BE ABLE TO BRING
A LAWSUIT CONCERNING ANY DISPUTE THAT MAY ARISE WHICH IS COVERED BY THE
ARBITRATION PROVISION. INSTEAD, EACH PARTY AGREES TO SUBMIT ANY SUCH DISPUTE TO
AN IMPARTIAL ARBITRATOR.
24. Default:
(a) Events of Default -- The occurrence or existence of any of the
-----------------
following constitutes a "Default":
(i) Failure to Pay -- A party fails to make a payment when due under
--------------
this Agreement and does not cure such failure within five (5)
days after written notice of such failure is given by the non-
defaulting party.
(ii) Failure of Supplier to Deliver - Supplier fails to deliver
------------------------------
Wholesale Product or Undifferentiated System Power to the energy
delivery Points in accordance with the terms of this Agreement
and does not cure such failure within fifteen (15) days after
written notice of such failure is given by the non-defaulting
party.
(iii) Failure to Provide Security - Green Mountain's failure to
---------------------------
provide security as required pursuant to Paragraph 12 and there
shall be no cure period.
(iv) Breach of Agreement -- A party fails in any material respect to
-------------------
observe or perform any of the other covenants, conditions or
provisions of this Agreement and does not cure such failure
within fifteen (15) days after written notice of such failure is
given by the non-defaulting party.
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(v) Receivership -- Appointment of a receiver or liquidator or
------------
trustee of such party or of the property of a party by order of
a court of competent jurisdiction.
(vi) Bankruptcy -- Filing by a party of a voluntary petition in
----------
bankruptcy under any provision of any Federal or State
bankruptcy law or consent to the filing of any bankruptcy or
reorganization petition against it under any similar law and
such petition is not withdrawn or dismissed within 30 days after
filing; filing of a petition or answer or consent seeking relief
or assisting in seeking relief in a proceeding under any of the
provisions of the Federal Bankruptcy Code, as it now exists or
as it may be amended or pursuant to any other similar State
statute applicable to such party, as it is or may be in effect
or an answer admitting the material allegations of a petition
filed against it in such a proceeding; or if a party makes a
general assignment for the benefit of its creditors, admits in
writing its inability to pay its debts generally as they become
due; or if such party consents to the appointment of a receiver
or trustee or liquidator of it or all of its property.
(b) Rights of Non-Defaulting Party -- When a Default exists, the party not
------------------------------
in Default ("Non-Defaulting Party") shall have the right to (i)
terminate this Agreement in accordance with Paragraph 24.c below, (ii)
pursue any other remedy provided under this Agreement or available at
law or in equity, and (iii) suspend performance of its obligations
hereunder. Said remedies, are intended to be cumulative and the non-
defaulting Party shall be entitled to pursue simultaneously any one or
more of said remedies.
(c) Termination Right If the party in Default does not remedy the Default
-----------------
within the stated period, then this Agreement shall terminate, at the
option of the Non-Defaulting Party,. Termination of this Agreement
shall be without prejudice of the right of the Non-Defaulting Party
to collect any amounts due and without waiver of any other remedy to
which the party not in Default may be entitled for Default under this
Agreement. If this Agreement is terminated as herein provided, such
termination shall relieve Supplier from any further obligations
effective immediately upon such date of termination, provided such
termination shall not
-23-
<PAGE>
Confidential
effect the Non-Defaulting Party's right to collect damages for the
term of the Agreement arising from such Default.
25. Notice:
Any notice required to be given under this Agreement shall be in writing
and shall be deemed to be properly served if delivered in person, sent by
overnight courier or sent by telecopier, to the following:
Green Mountain: Thomas C. Boucher, Vice President
Green Mountain Energy Resources L.L.C.
55 Green Mountain Dr., P.O. Box 2206
South Burlington, VT 05407-2206
Telecopier: 802.846.6162
Supplier: David M. Breitmayer, Director, Mid-Atlantic Region
DTE CoEnergy, L.L.C.
5500 Brooktree Road
Wexford, PA 15090
Telecopier: 724-940-2300
Invoices to Green Mountain are to be sent to:
Green Mountain Energy Resources L.L.C.
Attn: Carmel Ewing, Accounts Payable
55 Green Mountain Dr., P.O. Box 2206
South Burlington, VT 05407-2206
Payments by Wire Transfer to Supplier are to be sent as specified by
Supplier.
Either Party may change notice, invoice and payment, persons or addresses
upon written notice to the other Party.
26. Set-off:
Each party reserves to itself all rights, set-offs, counterclaims and other
remedies and/or defenses to which it is or may be entitled, arising from or out
of this Agreement. All outstanding obligations to make payment in connection
therewith or under this Agreement may be offset against each other, or set off
or recouped therefrom.
-24-
<PAGE>
Confidential
27. Entirety:
This Agreement and any documentation of the transactions contemplated
hereunder constitute the entire agreement between the Parties hereto. There are
no prior or contemporaneous agreements or representations affecting the same
subject matter other than those herein expressed. No amendment, modification or
change herein shall be enforceable, except as specifically provided for in this
Agreement, unless reduced to writing and executed by both Parties.
28. Non Waiver:
No waiver by either Party hereto of any one or more defaults by the other
in the performance of any of the provisions of this Agreement shall be construed
as a waiver of any other default or defaults whether of a like kind or different
nature. Any delay, less than any applicable statutory period of limitations, in
asserting or enforcing any rights under this Agreement, shall not be deemed a
waiver of such rights. Failure of either Party to enforce any provision of this
Agreement or to require performance by the other Party of any of the provisions
hereof shall not be construed to waive such provision, or to affect the validity
of this Agreement or any party thereof, or the right of either party thereafter
to enforce each and every provision hereof.
29. Severability:
Except as otherwise stated herein, any provision, article or section
declared or rendered unlawful by a court of law or regulatory agency with
jurisdiction over the parties, or deemed unlawful because of statutory change,
will not otherwise affect the lawful obligations that arise under this
Agreement.
30. Headings:
The headings used for the Paragraphs herein are for convenience and
reference purposes only and shall in no way affect the meaning or interpretation
of the provisions of this Agreement.
Executed to be effective as of the 11th day of SEPTEMBER, 1998.
DTE-CoEnergy, L.L.C. Green Mountain Energy
Resources, L.L.C.
By: /s/ Richard A. Zachariason By: /s/ Thomas C. Boucher
-------------------------- --------------------------
Title: President Title: Vice President
-------------------------- --------------------------
Date: 9-11-98 Date: 9-11-98
-------------------------- --------------------------
-25-
<PAGE>
Confidential
Retail Products Energy Content ATTACHMENT A
(Measurement Periods Including 1/1/99 - 4/30/2000)
Retail Product
PA1 PA2 PA3
--- --- ---
Clean Power
Resources 99% 50% 0%
Renewable
Resources 0% 47% 95%
New Renewable
Resources 1% 3% 5%
- ---------------------------------------------------------------------
Total 100% 100% 100%
- ---------------------------------------------------------------------
Contingent
New Renewable
Resources - PV less than or less than or less than or
equal to 0.1% equal to 0.2% equal to 0.3%
Note: Contingent New Renewable Resources - PV may replace either Renewable
Resources or New Renewable Resources
-26-
<PAGE>
Attachment B
Description of Green Mountain's Special Content Declaration
January, 1999: Estimates are created for all of 1999. DTE is allocated 40%
customer share. January's declaration will be the residual blend (total minus
other suppliers) falling out from Green Mountain's expected product mix.
January's declaration will be used for billing purposes for January deliveries
(showing a weighting of the component rates).
February, 1999: Estimates may be updated. Better information for all months may
be available, including revised estimates of January volumes. The only figures
fixed are the percentages of the January declaration. If the January volumes
differed from forecast, the percentages declared times the revised volume would
constitute the revised January deliveries. The declaration for February would be
the sum of the revised requirements through February, less the revised
deliveries for January. The revised figures for the rest of the year allows for
the best calculation of the year-end aggregate requirement.
March, 1999: Estimates may be updated. Better information for all months may be
available, including EDC-declared January actuals. The percentages of the
January and February declarations are held constant. The declaration for March
would be the sum of the revised requirements through March, less the revised
deliveries for January and February.
<PAGE>
<TABLE>
<CAPTION>
Pennsylvania DTE-CoEnergy Requirements Attachment B
12 Month Initial Forecast (for January Declaration) (All figures illustrative only)
<S> <C> <C> <C> <C> <C> <C>
Aggregate-Green Mountain Jan-99 Feb-99 Mar-99 Apr-99 May-99 Jun-99
- ------------------------------ ----------------------------------------------------------------------------
Retail Product PA 1 (MWh) 4,500 4,650 4,800 4,950 5,100 5,250
Retail Product PA 2 (MWh) 6,000 6,200 6,400 6,600 6,800 7,000
Retail Product PA 3 (MWh) 4,500 4,650 4,800 4,950 5,100 5,250
- ------------------------------ ----------------------------------------------------------------------------
Total (MWh) 15,000 15,500 16,000 16,500 17,000 17,500
Basis: Estimated Estimated Estimated Estimated Estimated Estimated
Aggregate GM
- ------------------------------
Clean (MWh) 7,455 7,704 7,952 8,201 8,449 8,698
ReNu (MWh) 7,095 7,332 7,568 7,805 8,041 8,278
New (MWh) 450 465 480 495 510 525
- ------------------------------ ----------------------------------------------------------------------------
Total (MWh) 15,000 15,500 16,000 16,500 17,000 17,500
Other Suppliers
- --------------------------
Clean (MWh) 4,500 4,650 4,800 4,950 5,100 5,250
ReNu (MWh) 4,500 4,650 4,800 4,950 5,100 5,250
New (MWh) - - - - - -
- ------------------------------ ----------------------------------------------------------------------------
Total (MWh) 9,000 9,300 9,600 9,900 10,200 10,500
============================================================================================================
DTE-CoEnergy Jan-99 Feb-99 Mar-99 Apr-99 May-99 Jun-99
- ------------------------------ ----------------------------------------------------------------------------
Retail Product PA 1 (Count) 8,308 8,585 8,862 9,138 9,415 9,692
Retail Product PA 2 (Count) 11,077 11,446 11,815 12,185 12,554 12,923
Retail Product PA 3 (Count) 8,308 8,585 8,862 9,138 9,415 9,692
- ------------------------------ ----------------------------------------------------------------------------
Total (Count) 27,692 28,615 29,538 30,462 31,385 32,308
Clean (MWh) 2,955 3,054 3,152 3,251 3,349 3,448
ReNu (MWh) 2,595 2,682 2,768 2,855 2,941 3,028
New (MWh) 450 465 480 495 510 525
- ------------------------------ ----------------------------------------------------------------------------
Total (MWh) 6,000 6,200 6,400 6,600 6,800 7,000
Special Content Declaration: 49.3% 49.3% 49.3% 49.3% 49.3% 49.3%
43.3% 43.3% 43.3% 43.3% 43.3% 43.3%
7.5% 7.5% 7.5% 7.5% 7.5% 7.5%
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate-Green Mountain Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Year-End
- ------------------------------ -----------------------------------------------------------------------------------------
Retail Product PA 1 (MWh) 5,400 5,550 5,700 5,850 6,000 6,150 63,900
Retail Product PA 2 (MWh) 7,200 7,400 7,600 7,800 8,000 8,200 85,200
Retail Product PA 3 (MWh) 5,400 5,550 5,700 5,850 6,000 6,150 63,900
- ------------------------------ -----------------------------------------------------------------------------------------
Total (MWh) 18,000 18,500 19,000 19,500 20,000 20,500 213,000
Basis: Estimated Estimated Estimated Estimated Estimated Estimated Estimated
Aggregate GM
- --------------------------
Clean (MWh) 8,946 9,195 9,443 9,692 9,940 10,189 105,861
ReNu (MWh) 8,514 8,751 8,987 9,224 9,460 9,697 100,749
New (MWh) 540 555 570 585 600 615 6,390
- ------------------------------ -----------------------------------------------------------------------------------------
Total (MWh) 18,000 18,500 19,000 19,500 20,000 20,500 213,000
Other Suppliers
- --------------------------
Clean (MWh) 5,400 5,550 5,700 5,850 6,000 6,150 63,900
ReNu (MWh) 5,400 5,550 5,700 5,850 6,000 6,150 63,900
New (MWh) - - - - - - -
- ------------------------------ -----------------------------------------------------------------------------------------
Total (MWh) 10,800 11,100 11,400 11,700 12,000 12,300 127,800
=========================================================================================================================
DTE-CoEnergy Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Year-End
- ------------------------------ -----------------------------------------------------------------------------------------
Retail Product PA 1 (Count) 9,969 10,246 10,523 10,800 11,077 11,354 11,354
Retail Product PA 2 (Count) 13,292 13,662 14,031 14,400 14,769 15,138 15,138
Retail Product PA 3 (Count) 9,969 10,246 10,523 10,800 11,077 11,354 11,354
- ------------------------------ -----------------------------------------------------------------------------------------
Total (Count) 33,231 34,154 35,077 36,000 36,923 37,846 37,846
Clean (MWh) 3,546 3,645 3,743 3,842 3,940 4,039 41,961
ReNu (MWh) 3,114 3,201 3,287 3,374 3,460 3,547 36,849
New (MWh) 540 555 570 585 600 615 6,390
- ------------------------------ -----------------------------------------------------------------------------------------
Total (MWh) 7,200 7,400 7,600 7,800 8,000 8,200 85,200
Special Content Declaration: 49.3% 49.3% 49.3% 49.3% 49.3% 49.3% 49.3%
43.3% 43.3% 43.3% 43.3% 43.3% 43.3% 43.3%
7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5%
<CAPTION>
<S> <C>
Notes: All values estimated
Products show expected energy by region (note PJM and ECAR will be separate declarations)
Aggregate Green Mountain componants calculated on (99,0,1), (50,47,3) and (0,95,5) for PA Products 1-3 respectively.
Other suppliers calculated to serve 60% of load with (100,0,0), (50,50,0) and (0,100,0) products respectively.
DTE serves remaining 40% of load, with a customer count provided for reference.
DTE Resource components are total requirements required less those provided by other suppliers.
Special Content declarations do not change once declared, with possible exception of December's, if there is a true-up.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pennsylvania DTE-CoEnergy Requirements Attachment B
1999 Forecast (for February Declaration) (All figures illustrative only)
Aggregate Green Mountain Jan-99 Feb-99 Mar-99 Apr-99 May-99 Jun-99 Jul-99
- ------------------------------ -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Retail Product PA1 [MWh] 3,816 5,126 5,301 5,476 5,651 5,826 6,001
Retail Product PA2 [MWh] 5,897 5,858 6,058 6,258 6,458 6,658 6,858
Retail Product PA3 [MWh] 4,432 3,661 3,786 3,911 4,036 4,161 4,286
- ------------------------------ -----------------------------------------------------------------------------------------------
Total [MWh] 14,145 14,645 15,145 15,645 16,145 16,645 17,145
Basis: Rev. Est. Rev. Est. Rev. Est. Rev. Est. Rev. Est. Rev. Est. Rev. Est.
Aggregate GM
- ------------------------------
Clean [MWh] 6,726 8,003 8,277 8,550 8,823 9,096 9,370
ReNu [MWh] 6,982 6,231 6,444 6,657 6,870 7,082 7,295
New [MWh] 437 410 424 438 452 466 480
- ------------------------------ -----------------------------------------------------------------------------------------------
Total [MWh] 14,145 14,645 15,145 15,645 16,145 16,645 17,145
Other Suppliers
- ------------------------------
Clean [MWh] 4,059 4,833 4,998 5,163 5,328 5,493 5,658
ReNu [MWh] 4,428 3,954 4,089 4,224 4,359 4,494 4,629
New [MWh] - - - - - - -
- ------------------------------ -----------------------------------------------------------------------------------------------
Total [MWh] 8,487 8,787 9,087 9,387 9,687 9,987 10,287
===============================================================================================================================
DTE-CoEnergy Jan-99 Feb-99 Mar-99 Apr-99 May-99 Jun-99 Jul-99
- ------------------------------ -----------------------------------------------------------------------------------------------
Retail Product PA1 [Count] 7,045 9,463 9,786 10,109 10,432 10,755 11,078
Retail Product PA2 [Count] 10,887 10,815 11,184 11,553 11,922 12,292 12,661
Retail Product PA3 [Count] 8,182 6,759 6,990 7,221 7,452 7,682 7,913
- ------------------------------ -----------------------------------------------------------------------------------------------
Total [Count] 26,114 27,037 27,960 28,883 29,806 30,729 31,652
Clean [MWh] 2,787 3,052 3,279 3,387 3,495 3,604 3,712
ReNu [MWh] 2,447 2,384 2,355 2,433 2,511 2,588 2,666
New [MWh] 424 422 424 438 452 466 480
- ------------------------------ -----------------------------------------------------------------------------------------------
Total [MWh] 5,658 5,858 6,058 6,258 6,458 6,658 6,858
Special Content Declaration: 49.3% 52.1% 54.1% 54.1% 54.1% 54.1% 54.1%
43.3% 40.7% 38.9% 38.9% 38.9% 38.9% 38.9%
7.5% 7.2% 7.0% 7.0% 7.0% 7.0% 7.0%
<CAPTION>
Aggregate Green Mountain Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Year-End
- ------------------------------ -------------------------------------------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Retail Product PA1 [MWh] 6,176 6,351 6,526 6,701 6,876 69,824
Retail Product PA2 [MWh] 7,058 7,258 7,458 7,658 7,858 81,335
Retail Product PA3 [MWh] 4,411 4,536 4,661 4,786 4,911 51,581
- ------------------------------ ---------------------------------------------------------------------------------------
Total [MWh] 17,645 18,145 18,645 19,145 19,645 202,740
Basis: Rev. Est. Rev. Est. Rev. Est. Rev. Est. Rev. Est. Estimated
Aggregate GM
- ------------------------------
Clean [MWh] 9,643 9,916 10,189 10,463 10,736 109,794
ReNu [MWh] 7,508 7,721 7,933 8,146 8,359 87,229
New [MWh] 494 508 522 536 550 5,717
- ------------------------------ ---------------------------------------------------------------------------------------
Total [MWh] 17,645 18,145 18,645 19,145 19,645 202,740
Other Suppliers
- ------------------------------
Clean [MWh] 5,823 5,988 6,153 6,318 6,483 66,295
ReNu [MWh] 4,764 4,899 5,034 5,169 5,304 55,349
New [MWh] - - - - - -
- ------------------------------ ---------------------------------------------------------------------------------------
Total [MWh] 10,587 10,887 11,187 11,487 11,787 121,644
=======================================================================================================================
DTE-CoEnergy Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Year-End
- ------------------------------ -------------------------------------------------------------------- -------------
Retail Product PA1 [Count] 11,401 11,724 12,048 12,371 12,694 12,694
Retail Product PA2 [Count] 13,030 13,399 13,769 14,138 14,507 14,507
Retail Product PA3 [Count] 8,144 8,375 8,605 8,836 9,067 9,067
- ------------------------------ ---------------------------------------------------------------------------------------
Total [Count] 32,575 33,498 34,422 35,345 36,268 36,268
Clean [MWh] 3,820 3,928 4,037 4,145 4,253 43,498
ReNu [MWh] 2,744 2,822 2,899 2,977 3,055 31,880
New [MWh] 494 508 522 536 550 5,717
- ------------------------------ ---------------------------------------------------------------------------------------
Total [MWh] 7,058 7,258 7,458 7,658 7,858 81,096
Special Content Declaration: 54.1% 54.1% 54.1% 54.1% 54.1% 53.6%
38.9% 38.9% 38.9% 38.9% 38.9% 39.3%
7.0% 7.0% 7.0% 7.0% 7.0% 7.1%
Note: Assumed mix changed, revised Jan. estimates, January declaration held constant.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pennsylvania DTE-CoEnergy Requirements Attachment B
1999 Forecast (for March Declaration) (All figures illustrative only)
<S> <C> <C> <C> <C> <C> <C>
Aggregate Green Mountain Jan-99 Feb-99 Mar-99 Apr-99 May-99 Jun-99
- ------------------------------ --------------------------------------------------------------------------
Retail Product PA 1 (MWh) 3,810 4,612 5,301 5,476 5,651 5,826
Retail Product PA 2 (MWh) 3,916 5,029 6,058 6,258 6,458 6,658
Retail Product PA 3 (MWh) 4,427 3,216 3,786 3,911 4,036 4,161
- ------------------------------ --------------------------------------------------------------------------
Total (MWh) 12,153 12,857 15,145 15,645 16,145 16,645
Basis: Actual Rev. Est. Rev. Est. Rev. Est. Rev. Est. Rev. Est.
Aggregate GM
- ------------------------------
Clean (MWh) 5,730 7,080 8,277 8,550 8,823 9,096
ReNu (MWh) 6,046 5,419 6,444 6,657 6,870 7,082
New (MWh) 377 358 424 438 452 466
- ------------------------------ --------------------------------------------------------------------------
Total (MWh) 12,153 12,857 15,145 15,645 16,145 16,645
Other Suppliers
- ------------------------------
Clean (MWh) 3,461 4,276 4,998 5,163 5,328 5,493
ReNu (MWh) 3,831 3,438 4,089 4,224 4,359 4,494
New (MWh) - - - - - -
- ------------------------------ --------------------------------------------------------------------------
Total (MWh) 7,292 7,714 9,087 9,387 9,687 9,987
==============================================================================================================
DTE-CoEnergy Jan-99 Feb-99 Mar-99 Apr-99 May-99 Jun-99
- ------------------------------ --------------------------------------------------------------------------
Retail Product PA 1 (Count) 7,034 8,514 9,786 10,109 10,432 10,755
Retail Product PA 2 (Count) 7,230 9,284 11,184 11,553 11,922 12,292
Retail Product PA 3 (Count) 8,173 5,937 6,990 7,221 7,452 7,682
- ------------------------------ --------------------------------------------------------------------------
Total (Count) 22,436 23,736 27,960 28,883 29,806 30,729
Clean (MWh) 2,394 2,679 3,279 3,387 3,495 3,604
ReNu (MWh) 2,102 2,093 2,355 2,433 2,511 2,588
New (MWh) 365 371 423 438 452 466
- ------------------------------ --------------------------------------------------------------------------
Total (MWh) 4,861 5,143 6,058 6,258 6,458 6,658
Special Content Declaration: 49.3% 52.1% 54.1% 54.1% 54.1% 54.1%
43.3% 40.7% 38.9% 38.9% 38.9% 38.9%
7.5% 7.2% 7.0% 7.0% 7.0% 7.0%
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Green Mountain Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Year-End
- ----------------------------- ----------------------------------------------------------------------- ------------------
Retail Product PA 1 (MWh) 6,001 6,176 6,351 6,526 6,701 6,876 69,305
Retail Product PA 2 (MWh) 6,858 7,058 7,258 7,458 7,658 7,858 78,525
Retail Product PA 3 (MWh) 4,286 4,411 4,536 4,661 4,786 4,911 51,131
- ------------------------------ -------------------------------------------------------------------------------------------
Total (MWh) 17,145 17,645 18,145 18,645 19,145 19,645 198,960
Basis: Rev. Est. Rev. Est. Rev. Est. Rev. Est. Rev. Est. Rev. Est. Estimated
Aggregate GM
- ------------------------------
Clean (MWh) 9,370 9,643 9,916 10,189 10,463 10,736 107,874
ReNu (MWh) 7,295 7,508 7,721 7,933 8,146 8,359 85,481
New (MWh) 480 494 508 522 536 550 5,605
- ------------------------------ -------------------------------------------------------------------------------------------
Total (MWh) 17,145 17,645 18,145 18,645 19,145 19,645 198,960
Other Suppliers
- ------------------------------
Clean (MWh) 5,658 5,823 5,988 6,153 6,318 6,483 65,140
ReNu (MWh) 4,629 4,764 4,899 5,034 5,169 5,304 54,236
New (MWh) - - - - - - -
- ------------------------------ -------------------------------------------------------------------------------------------
Total (MWh) 10,287 10,587 10,887 11,187 11,487 11,787 119,376
===============================================================================================================================
DTE-CoEnergy Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Year-End
- ------------------------------ ----------------------------------------------------------------------- ------------------
Retail Product PA 1 (Count) 11,078 11,401 11,724 12,048 12,371 12,694 12,694
Retail Product PA 2 (Count) 12,661 13,030 13,399 13,769 14,138 14,507 14,507
Retail Product PA 3 (Count) 7,913 8,144 8,375 8,605 8,836 9,067 9,067
- ------------------------------ -------------------------------------------------------------------------------------------
Total (Count) 31,652 32,575 33,498 34,422 35,345 36,268 36,268
Clean (MWh) 3,712 3,820 3,928 4,037 4,145 4,253 42,734
ReNu (MWh) 2,666 2,744 2,822 2,899 2,977 3,055 31,245
New (MWh) 480 494 508 522 536 550 5,605
- ------------------------------ -------------------------------------------------------------------------------------------
Total (MWh) 6,858 7,058 7,258 7,458 7,658 7,858 79,584
Special Content Declaration: 54.1% 54.1% 54.1% 54.1% 54.1% 54.1% 53.7%
38.9% 38.9% 38.9% 38.9% 38.9% 38.9% 39.3%
7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%
Note: Estimates held constant, actuals for Jan. and rev. estimate for Feb. added.
</TABLE>
<PAGE>
EXHIBIT 10.20
FIRST AMENDMENT TO MASTER AGREEMENT
BETWEEN
DTE - CoEnergy
AND
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
This First Amendment to Master Agreement ("Amendment") is executed as of
November 25, 1998 by and between DTE-CoEnergy, L.L.C ("Supplier") and Green
Mountain Energy Resources L.L.C. ("Green Mountain") and, together with Supplier,
(the "Parties").
The Parties are Parties to a Master Agreement dated September 11, 1998
("Agreement") and agree to amend the Agreement as follows:
1. Section 8B(b) is deleted and the following in inserted in lieu thereof:
"(b) Delivers Wholesale Products to retail or wholesale customers in
PJM other than Green Mountain Customers in the ratio specified in the
December Special Content Declaration and in an amount equal to 95-105%
of the Designated Green Mountain Customer Load in PJM each calendar
year or within 4 months after the end of the calendar year where
Supplier does not transfer to such other customer(s) the rights to
claim the environmental attributes that differentiate such Wholsesale
Products from Undifferentiated System Power; or"
2. The first paragraph of Section 12, Billing, is deleted and the
following is inserted in lieu thereof:
"After commencement of deliveries, Supplier shall bill Green Mountain
on a monthly basis, no earlier than the first day of the month
following the month of service ("Invoice Month") and using best efforts
to bill on or before the tenth (10th) day of the Invoice Month, based
upon an estimation of the Base Charge and Base Charge Adders (for the
energy in MWh) scheduled to the ISO/EDC on behalf of Green Mountain
adjusted for ISO/EDC transmission and distribution losses, as
applicable (collectively "Estimated Charges"). The monthly invoice
shall be paid in full within 20 days of the date of the invoice. In
anticipation of the need to pay such bills, Green Mountain will utilize
an independent third party(ies) to receive all payments from the
Designated Green Mountain Customers into a separate account in the name
of and for the benefit of Supplier. The Supplier shall be entitled to
receive the foregoing revenues up to the amount of the Estimated
Charges for the current billing period plus or minus any adjustments
based on Actual Meter Load. Such arrangements with the independent
third parties shall be satisfactory to Supplier, which shall not be
unreasonably withheld. Green Mountain grants Supplier a security
interest in these receivables and will
<PAGE>
execute and file Security Agreement(s), Financing Statement(s) and such
other documents as Supplier may request to maintain and perfect its
security interest. Green Mountain shall instruct said independent third
party(ies) to transfer the funds so segregated into the Supplier's
account on a weekly basis. All amounts so transferred shall be credited
against the amount due from Green Mountain under Supplier's monthly
bill."
3. Except as hereinbefore set forth, the Agreement remains unchanged.
DTE-CoEnergy, L.L.C. Green Mountain Energy
Resources, L.L.C.
By: /s/Richard A. Zachariason By: /s/Thomas C. Boucher
Title: President Title: Vice President, Energy
Supply & Bus. Dev.
Date: 11/25/98 Date: 11/25/98
- 2 -
<PAGE>
EXHIBIT 10.21
SECOND AMENDMENT TO MASTER AGREEMENT
BETWEEN
DTE-COENERGY, L.L.C.
AND
GREEN MOUNTAIN ENERGY RESOURCES, L.L.C.
This Second Amendment to Master Agreement ("Amendment") is executed as of
February 18, 1999 by and between DTE-CoEnergy, L.L.C. ("Supplier") and Green
Mountain Energy Resources, L.L.C. ("Green Mountain") and, together with
supplier, (the "Parties").
The Parties are Parties to a Master Agreement dated September 11, 1998, as
amended, ("Agreement") and agree to amend the Agreement as follows:
1. The following defined term is added to Paragraph 1:
"SETTLEMENT PROCESS: The process of settling with the EDC for the charges
or credits associated with volumetric differences between the scheduled
deliveries and the Designated Green Mountain Customers' actual use."
2. The following is added to the end Paragraph 5B:
Green Mountain shall allocate Supplier a percentage share of the total
aggregate energy requirements of its' Load Profiled Retail Customers for each
ECAR EDC, representing one hundred percent (100%) of incremental customer
additions, until such time as Supplier has been allocated the minimum percentage
specified in Paragraph 5A as may be limited by Paragraph 5C. Such allocation
shall commence by May 1 or as soon as thereafter as practical and continue until
all EDC's allow Green Mountain to utilize multiple suppliers of Wholesale
Products. An example of the allocation is set forth in Exhibit A to the Second
Amendment.
Sixty days after the first billing month in which an EDC allows Green
Mountain to use multiple suppliers of Wholesale Products the percentage share
referred to in the preceding paragraph will be converted to Designated Green
Mountain Customers and which will be included in the Customer Group
corresponding to the date they began to receive service pursuant to the
preceding paragraph
Green Mountain shall be responsible for the Settlement Process for each EDC
where the Designated Green Mountain Customers are served by more than one
supplier of Wholesale Products. Green Mountain's responsibility for the
Settlement Process shall last until 60 days after the first billing month in
which such EDC allows Green Mountain to use multiple suppliers of Wholesale
Products at which time the Supplier shall resume responsibility for the
Settlement Process. Green Mountain shall allocate Settlement Process credits
and charges among all of its Wholesale Product suppliers serving Load Profiled
Retail Customers in each EDC based on the percentage share of the total
aggregate energy requirements served by each such supplier. Any charge or
credit to the
-1-
<PAGE>
Supplier by the EDC will be included on the Supplier's next monthly invoice to
Green Mountain and be paid by Green Mountain or deducted by Supplier as the case
may be.
3. Except as hereinbefore set forth, the Agreement remains unchanged.
DTE-CoEnergy, L.L.C. Green Mountain Energy
Resources, L.L.C.
By: /s/Richard A. Zachariason By: /s/Thomas C. Boucher
Title: President Title: Vice President
Date: 2/19/99 Date: 2/18/99
Daily Settlement Example Exhibit A
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Aggregate Allocation
- ------------------------
(54%) (46%) Composite Reconciled Reconciled EDC Excess Deficient
Sch. 1 Sch. 2 Schedule Load Load Rate Reimburse. Charge Total
MW MW MW MW MW $/MWh $ $ $
---------------------------- ----------- ------------ ----------- ------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hour 1 3 2 5 4.6 0.4 18.00 (7.20) - (7.20)
Hour 2 3 2 5 5.7 -0.7 18.50 - 12.95 12.95
Hour 3 3 2 5 6.1 -1.1 18.30 - 20.13 20.13
Hour 4 3 3 6 5.5 0.5 18.60 (9.30) - (9.30)
Hour 5 3 3 6 6.1 -0.1 18.20 - 1.82 1.82
Hour 6 4 3 7 6.5 0.5 19.70 (9.85) - (9.85)
Hour 7 4 4 8 7.5 0.5 25.73 (12.87) - (12.87)
Hour 8 4 4 8 8.0 0.0 25.00 - - -
Hour 9 4 4 8 8.5 -0.5 24.50 - 12.25 12.25
Hour 10 4 4 8 8.4 -0.4 25.00 - 10.00 10.00
Hour 11 4 4 8 8.3 -0.3 25.00 - 7.50 7.50
Hour 12 4 4 8 8.9 -0.9 25.00 - 22.50 22.50
Hour 13 4 4 8 7.9 0.1 25.00 (2.50) - (2.50)
Hour 14 5 4 9 8.6 0.4 25.00 (10.00) - (10.00)
Hour 15 5 5 10 9.2 0.8 25.00 (20.00) - (20.00)
Hour 16 5 5 10 10.6 -0.6 25.00 - 15.00 15.00
Hour 17 5 4 9 8.8 0.2 25.00 (5.00) - (5.00)
Hour 18 4 4 8 7.9 0.1 26.03 (2.60) - (2.60)
Hour 19 4 4 8 7.6 0.4 25.00 (10.00) - (10.00)
Hour 20 4 4 8 6.5 1.5 25.00 (37.50) - (37.50)
Hour 21 4 4 8 7.0 1.0 25.00 (25.00) - (25.00)
Hour 22 3 3 6 6.8 -0.8 24.97 - 19.98 19.98
Hour 23 3 3 6 6.7 -0.7 18.07 - 12.65 12.65
Hour 24 3 3 6 5.2 0.8 17.96 (14.37) - (14.37)
---------------------------- ----------- ------------ ----------- ------------------------------------
92 86 178 176.9 1.1 (166.19) 134.78 (31.41)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Supplier 1 Allocation
- -------------------------- (54%)
(54%) (46%) Composite Reconciled Reconciled EDC Excess Deficient
Sch. 1 Sch. 2 Schedule Load Load Rate Reimburse. Charge Total
MW MW MW MW MW $/MWh $ $ $
---------------------------- ----------- ------------ ----------- ------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hour 1 3 3 2.48 0.5 18.00 (9.29) - (9.29)
Hour 2 3 3 3.08 -0.1 18.50 - 1.44 1.44
Hour 3 3 3 3.29 -0.3 18.30 - 5.38 5.38
Hour 4 3 3 2.97 0.0 18.60 (0.56) - (0.56)
Hour 5 3 3 3.29 -0.3 18.20 - 5.35 5.35
Hour 6 4 4 3.51 0.5 19.70 (9.65) - (9.65)
Hour 7 4 4 4.05 -0.1 25.73 - 1.29 1.29
Hour 8 4 4 4.32 -0.3 25.00 - 8.00 8.00
Hour 9 4 4 4.59 -0.6 24.50 - 14.46 14.46
Hour 10 4 4 4.54 -0.5 25.00 - 13.40 13.40
Hour 11 4 4 4.48 -0.5 25.00 - 12.05 12.05
Hour 12 4 4 4.81 -0.8 25.00 - 20.15 20.15
Hour 13 4 4 4.27 -0.3 25.00 - 6.65 6.65
Hour 14 5 5 4.64 0.4 25.00 (8.90) - (8.90)
Hour 15 5 5 4.97 0.0 25.00 (0.80) - (0.80)
Hour 16 5 5 5.72 -0.7 25.00 - 18.10 18.10
Hour 17 5 5 4.75 0.2 25.00 (6.20) - (6.20)
Hour 18 4 4 4.27 -0.3 26.03 - 6.92 6.92
Hour 19 4 4 4.10 -0.1 25.00 - 2.60 2.60
Hour 20 4 4 3.51 0.5 25.00 (12.25) - (12.25)
Hour 21 4 4 3.78 0.2 25.00 (5.50) - (5.50)
Hour 22 3 3 3.67 -0.7 24.97 - 16.78 16.78
Hour 23 3 3 3.62 -0.6 18.07 - 11.17 11.17
Hour 24 3 3 2.81 0.2 17.96 (3.45) - (3.45)
---------------------------- ----------- ------------ ----------- -----------------------------------
92 92 95.53 -3.5 (56.60) 143.74 87.14
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Supplier 2 Allocation
- ------------------------- (46%)
(54%) (46%) Composite Reconciled Reconciled EDC Excess Deficient
Sch. 1 Sch. 2 Schedule Load Load Rate Reimburse. Charge Total
MW MW MW MW MW $/MWh $ $ $
---------------------------- ----------- ------------ ----------- ------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hour 1 2 2 2.12 -0.1 18.00 - 2.09 2.09
Hour 2 2 2 2.62 -0.6 18.50 - 11.51 11.51
Hour 3 2 2 2.81 -0.8 18.30 - 14.75 14.75
Hour 4 3 3 2.53 0.5 18.60 (8.74) - (8.74)
Hour 5 3 3 2.81 0.2 18.20 (3.53) - (3.53)
Hour 6 3 3 2.99 0.0 19.70 (0.20) - (0.20)
Hour 7 4 4 3.45 0.6 25.73 (14.15) - (14.15)
Hour 8 4 4 3.68 0.3 25.00 (8.00) - (8.00)
Hour 9 4 4 3.91 0.1 24.50 (2.21) - (2.21)
Hour 10 4 4 3.86 0.1 25.00 (3.40) - (3.40)
Hour 11 4 4 3.82 0.2 25.00 (4.55) - (4.55)
Hour 12 4 4 4.09 -0.1 25.00 - 2.35 2.35
Hour 13 4 4 3.63 0.4 25.00 (9.15) - (9.15)
Hour 14 4 4 3.96 0.0 25.00 (1.10) - (1.10)
Hour 15 5 5 4.23 0.8 25.00 (19.20) - (19.20)
Hour 16 5 5 4.88 0.1 25.00 (3.10) - (3.10)
Hour 17 4 4 4.05 0.0 25.00 - 1.20 1.20
Hour 18 4 4 3.63 0.4 26.03 (9.53) - (9.53)
Hour 19 4 4 3.50 0.5 25.00 (12.60) - (12.60)
Hour 20 4 4 2.99 1.0 25.00 (25.25) - (25.25)
Hour 21 4 4 3.22 0.8 25.00 (19.50) - (19.50)
Hour 22 3 3 3.13 -0.1 24.97 - 3.20 3.20
Hour 23 3 3 3.08 -0.1 18.07 - 1.48 1.48
Hour 24 3 3 2.39 0.6 17.96 (10.92) - (10.92)
---------------------------- ----------- ------------ ----------- -----------------------------------
0 86 86 81.37 4.6 (155.12) 36.57 (118.55)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
EXHIBIT 10.22
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS DOCUMENT.
CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
ADVERTISING AND PROMOTION AGREEMENT
This Advertising and Promotion Agreement (this "Agreement") is entered into
---------
as of March 25, 1999 (the "Effective Date") between Yahoo! Inc., a California
--------------
corporation with offices at 3420 Central Expressway, Santa Clara, CA 95051
("Yahoo") and Green Mountain Energy Resources, L.L.C., a Delaware limited
-------
liability corporation with offices at 55 Green Mountain Drive, South Burlington,
VT 05407-2206 ("Green Mountain").
In consideration of the mutual promises contained in this Agreement, Yahoo
and Green Mountain hereby agree as follows:
1. Definitions.
-----------
The following terms are used in this Agreement with the respective meanings
set forth below:
"Green Mountain Banner" shall mean an advertising promotion substantially
---------------------
similar in form as that set forth on Exhibit A that: (a) promotes Green Mountain
---------
energy services, (b) has dimensions no larger than 468 pixels wide by 60 pixels
high, (c) does not have "looped" animation, (d) does not have any animation
longer than six seconds, (e) has a file size no greater than 12K, and (f) will
permit users to navigate directly to a Page on the Green Mountain Site relating
to consumer energy services. Yahoo may modify these specifications in its
discretion provided that such modification applies to Premier Merchants
generally and does not have a material adverse impact on Green Mountain.
"Green Mountain Button" shall mean a link substantially similar in form as
---------------------
that set forth on Exhibit A that: (a) contains a Green Mountain graphic or logo
---------
and has dimensions no larger than 88 pixels wide by 31 pixels high and promotes
Green Mountain energy services, (b) does not contain animation, (c) has a file
size no greater than 2K, and (d) will permit users to navigate directly to a
Page on the Green Mountain Site relating to consumer energy services. Yahoo may
modify these specifications in its discretion provided that such modification
applies to Premier Merchants generally and does not have a material adverse
impact on Green Mountain.
"Green Mountain E-Mail" shall mean an e-mail message promoting consumer
---------------------
energy services that: (a) is in HTML format (or text format if sent to email
addresses outside of the Yahoo Mail service), (b) has a file size no greater
than 30K, (c) does not have "looped" animation, (d) does not have any animation
longer than six seconds, (e) does not contain Java, JavaScript, frames, ActiveX,
dynamic HTML or background colors and (f) will permit users to navigate directly
to a Page on the Green Mountain Site relating to consumer energy services.
Yahoo may modify these specifications in its discretion provided that such
modification applies to Premier Merchants generally and does not have a material
adverse impact on Green Mountain.
"Green Mountain Link" shall mean any link placed by Yahoo under this
-------------------
Agreement, including, without limitation, the Green Mountain Banner and Green
Mountain Button. For clarity, each Green Mountain Link shall be provided as
indicated in this Agreement on a rotating basis with promotions of similarly
situated third party advertisers (i.e., no Green Mountain Link
<PAGE>
shall be permanently placed on any Page).
"Green Mountain Site" shall mean the web site owned by Green Mountain
-------------------
currently located at www.greenmountain.com.
"Launch Date" shall mean the date no later than May 1, on which Yahoo
-----------
activates a Green Mountain Link or delivers a Green Mountain E-Mail.
"Page" means any World Wide Web page (or, for online media other than Web
----
sites, the equivalent unit of the relevant protocol).
"Page View" shall mean a user's request for a Page as measured by Yahoo's
---------
advertiser reporting system and in a manner generally applicable to Yahoo's
Premier Merchants.
"Premier Merchant" shall have the meaning ascribed to such term in Section
----------------
10.3.
"Term" shall mean the period beginning on the Launch Date and continuing
----
for a period of twelve (12) months.
"Yahoo Mail Page" shall mean the home page of Yahoo's principal U.S. based
---------------
e-mail service currently located at http://mail.yahoo.com or any successor url.
---------------------
"Yahoo Main Site" shall mean Yahoo's principal U.S. based directory to the
---------------
World Wide Web currently located at http://www.yahoo.com or any successor url.
--------------------
"Yahoo Properties" shall mean any Yahoo branded or co-branded media
----------------
properties, including, without limitation, Internet guides, that are developed
in whole or in part by Yahoo or its affiliates.
2. Green Mountain Banner.
---------------------
2.1 Yahoo shall provide the Green Mountain Banner throughout the Yahoo
Properties, on a rotating basis until its Page View obligations are
met, to individuals whose Yahoo registration information indicates
that they are over the age of twenty-four and reside in California,
Pennsylvania or New Jersey; provided that Yahoo shall further define
those individuals to which the Green Mountain Banner shall be
displayed as residing in electric utility deregulated areas in
California, Pennsylvania or New Jersey on a zip code basis, if
technically feasible upon reasonable commercial efforts and, if not,
on a DMA basis if technically feasible upon reasonable commercial
efforts. Yahoo acknowledges that banners rotating throughout the Yahoo
Properties generally appear "above the fold" although Yahoo makes no
guarantee with respect to the Green Mountain Banner's placement on any
particular Page of the Yahoo Properties.
3. Green Mountain Button.
---------------------
3.1 Yahoo shall provide the Green Mountain Button on the Yahoo Mail Page,
on a rotating basis until its Page View obligations are met, to
individuals whose Yahoo registration information indicates that they
are over the age of twenty-four and
<PAGE>
reside in California, Pennsylvania or New Jersey; provided that Yahoo
shall further define those individuals to which the Green Mountain Button shall
be displayed as residing in electric utility deregulated areas in California,
Pennsylvania or New Jersey on a zip code basis, if technically feasible upon
reasonable commercial efforts, and, if not, on a DMA basis if technically
feasible upon reasonable commercial efforts. Yahoo acknowledges that merchant
buttons appearing on the Yahoo Properties generally appear "above the fold"
although Yahoo makes no guarantee with respect to the Green Mountain Button's
placement on the Yahoo Mail Page.
4. Green Mountain E-Mail.
---------------------
4.1 Yahoo shall deliver the Green Mountain E-Mail to: (i) *** registered
users of Yahoo's U.S. based email service, Yahoo Mail, that have
indicated during the registration process for such service (x) a
willingness to receive promotional solicitations via Yahoo Mail and
(y) that they are *** and reside in California, Pennsylvania or New
Jersey (provided that Yahoo shall further define those individuals to
which the Green Mountain E-Mail shall be delivered as residing in
electric utility deregulated areas in California, Pennsylvania or New
Jersey on a zip code basis if technically feasible upon reasonable
commercial efforts, and, if not, on a DMA basis if technically
feasible upon reasonable commercial efforts); and (ii) to each Yahoo
Mail user that clicks-through the Green Mountain Button (for clarity,
the e-mails delivered pursuant to this clause (ii) shall not count
against the number of e-mails that Yahoo shall deliver pursuant to
clause (i) of this Section 4.1). The text of the Green Mountain E-Mail
in either case shall be provided by Green Mountain and shall be
subject to Yahoo's approval and consistent with Yahoo's policies and
guidelines for such messages. Yahoo shall use reasonable commercial
efforts to ensure that no more than one (1) Green Mountain E-Mail
referenced in clause (i) of this Section 4.1 is delivered to a Yahoo
Mail user during each four (4) month period of the Term. In addition,
Yahoo agrees to not send such Green Mountain E-Mail to any individual
identified by Green Mountain as a current Green Mountain customer.
5. Implementation.
--------------
5.1 Subject to the provisions of this Agreement, Yahoo will be solely
responsible for the user interface and placement of the Green Mountain
Links and Green Mountain shall be solely responsible for and shall
provide Yahoo with all artwork and design elements of the Green
Mountain Links.
5.2 Green Mountain shall promptly provide Yahoo all URLs, URL formats (as
applicable), content, and other materials necessary for Yahoo to
provide the Green Mountain Links. All content and material contained
in the Green Mountain Links are subject to Yahoo's approval and must
comply with all applicable federal, state and local laws, rules and
regulations, including, without limitation, consumer protection laws
and rules and regulations governing product claims,
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
<PAGE>
truth in labeling, and false advertising.
5.3 Green Mountain hereby grants to Yahoo a non-exclusive, worldwide,
fully paid license to use, reproduce and display the Green Mountain
name and logo (i) to indicate the location of the Green Mountain Links
as set forth herein and (ii) in connection with the marketing and
promotion of Green Mountain in the Yahoo Properties.
5.4 In no event shall any Page on the Green Mountain Site to which users
click-through directly from any Green Mountain Link, contain graphic
or textual hyperlinks, banner advertisements or promotions of any
Yahoo competitors, including, but not limited to: ***
5.5 Green Mountain shall place a Yahoo graphic link on those Pages of the
Green Mountain Site to which users click-through directly from any
Green Mountain Link. Such Yahoo graphic link shall (a) be placed in a
manner approved by Yahoo (b) contain the Yahoo name and logo as
provided by Yahoo and (c) directly link the user back to the Page on
the Yahoo Properties from which the User originated.
5.6 The Green Mountain Site shall comply with the scale, speed and
performance requirements mutually agreed upon by the parties but in no
event less than that which is reasonably equivalent (taking into
account volume differences) to the Yahoo Main Site.
6. Rights of First Presentation.
----------------------------
6.1 Within *** prior to the expiration of the Term, Yahoo will provide
written notice to Green Mountain in the event that Yahoo, at its sole
discretion, elects to extend this advertising and promotion program.
Yahoo shall describe Yahoo's reasonable business requirements for the
extension in its written notice to Green Mountain. The parties will
use good-faith efforts to negotiate and execute a written extension to
this Agreement under reasonable terms and conditions. If Green
Mountain declines to commence negotiations with Yahoo within *** after
receiving such written notice from Yahoo, or if the parties fail to
reach agreement within *** following the commencement of good faith
negotiations (or such later date as is agreed by the parties), Yahoo
may offer the opportunity to any third party. Under no circumstances
shall the foregoing right of first presentation be deemed to restrict
Yahoo's ability to extend other merchant positions in relating to this
advertising and promotion program to third parties.
6.2 This advertising and promotion program is designed to apply to
residents of California, Pennsylvania and New Jersey. As Green
Mountain energy services become available in additional states, Green
Mountain shall have *** this advertising and promotion program to
include such new states on terms mutually agreed upon by the parties.
For clarity, such an extension shall include advertising and
promotions similar in scope and placement to those
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
<PAGE>
described herein, at prices to be determined by the parties at the
time of such extension.
7. Page Views.
----------
7.1 With respect to the Green Mountain Banners and Buttons, Yahoo shall
deliver no less than *** Page Views. Yahoo shall use commercially
reasonable efforts to ensure that such Page Views are delivered evenly
to unique users in accordance with Yahoo's standard advertising
delivery system procedures.
7.2 Yahoo will use reasonable commercial efforts to deliver such Page
Views as follows: *** Page Views of the Green Mountain Banner; and ***
Page Views of the Green Mountain Button. Further, Yahoo shall use
reasonable commercial efforts to ensure that the Page Views of the
Green Mountain Banner referenced in this Section 7.2 are allocated
approximately as follows: nineteen (19%) percent to New Jersey
residents, thirty-six percent (36%) to Pennsylvania residents, and
forty-five percent (45%) to California residents (in each case as such
residents are further defined in Section 3.1); provided that if
deregulation on acceptable terms in New Jersey is delayed by more than
one month, on 30 days notice Yahoo shall shift a commensurate amount
of Green Mountain Banners to California and Pennsylvania subject to
availability. Notwithstanding anything to the contrary on this Section
7.2, Yahoo's Page View obligations are with respect to the program as
a whole as set forth in Section 7.1 and Yahoo shall not be in breach
of this Agreement for failure to deliver the number of Page Views in
either of the specific areas set forth in this Section 7.2.
7.3 In the event that Yahoo fails to deliver the number of Page Views
referred to in Section 7.1 above by the expiration of the Term, Yahoo
will "make good" the shortfall by extending its obligations under
Sections 2 and 3 in the areas of the Yahoo Main Site set forth therein
(or similar inventory) beyond the end of the Term until such Yahoo
Page View obligation is satisfied, provided that such obligation shall
be satisfied within six months from the end of the Term. The
provisions set forth in this Section 7.3 set forth the entire
liability of Yahoo, and Green Mountain's sole remedy, for Yahoo's
breach of its Page View obligations set forth in this Section 7.
7.4 Yahoo will treat Green Mountain on a basis reasonably equivalent to
its other Premier Merchants in terms of placement of Green Mountain
Banners and Buttons on the Yahoo Properties and location on specific
pages, taking into account the unique characteristics of this program.
Throughout the Term, the parties shall discuss in good faith mutually
beneficial adjustments to this advertising and promotion program,
subject in all cases to Yahoo's available advertising inventory.
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
<PAGE>
7.5 Yahoo shall provide Green Mountain access twenty-four hours a day,
seven days a week, to an electronic database (updated on a monthly
basis) that describes Yahoo's calculation of the Page Views.
8. Compensation
------------
8.1 Slotting Fee. In consideration of Yahoo's performance and obligations
------------
as set forth herein, Green Mountain will pay Yahoo a non-refundable
slotting fee equal to six million nine thousand dollars ($6,009,000).
Such fee shall be payable as follows: (i) *** on the Effective Date
which shall be designated as a set up fee for design, consultation,
development, implementation and placement of the Green Mountain Links;
(ii) *** no less than seven days prior to the Launch Date, (iii) ***
ninety days after the Launch Date; (iv) *** one hundred eighty days
after the Launch Date; and (v) *** two hundred seventy days after the
Launch Date.
8.2 Referral Fee. In addition to the compensation described in Section
------------
8.1 above, Green Mountain shall pay Yahoo a quarterly referral fee
equal to *** for each new energy services account opened through the
promotions provided by Yahoo under this Agreement (the "Referral
Fee"). Such payments shall be made within ten (10) days of the end of
the calendar quarter for which such payments apply. Under no
circumstances, however, shall the Referral Fee exceed a total of four
hundred thousand dollars ($400,000) for the Term. For purposes of this
Section 8.2, the first calendar quarter of the Term shall be deemed to
be begin as of the Effective Date and end as of June 30, 1999.
8.3 Payment Information. All payments herein are non-refundable and non-
-------------------
creditable and shall be made by Green Mountain via wire transfer or
ACH electronic payment into Yahoo's main account pursuant (if by wire
transfer) to the wire transfer instructions set forth on Exhibit B.
---------
8.4 Late Payments. Any portion of the above payments which has not been
-------------
paid to Yahoo within ten (10) days of the dates set forth above shall
bear interest at the lesser of (i) one percent (1%) per month or (ii)
the maximum amount allowed by law. Notwithstanding the foregoing, any
failure by Green Mountain to make the payments specified in Sections
8.1 and 8.2 on the dates set forth therein shall constitute a material
breach of this Agreement.
9. Termination.
-----------
9.1 Term. This Agreement shall commence upon the Effective Date and,
----
unless terminated as provided herein, shall remain in effect for the
Term.
9.2 Termination by Either Party with Cause. This Agreement may be
--------------------------------------
terminated at any time
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
<PAGE>
by either party: (i) immediately upon written notice if the other
party: (a) files a petition in bankruptcy; or (b) makes an assignment
for the benefit of its creditors; or (ii) thirty (30) days after
written notice to the other party of such other party's breach of any
of its obligations under this Agreement in any material respect (ten
(10) days in the case of a failure to pay), which breach is not
remedied within such notice period. In the event that Yahoo provides a
notice of termination under clause (ii) above, Yahoo shall have the
right to suspend its performance under this Agreement for the notice
period unless and until the breach is fully remedied by Green Mountain
prior to the expiration of the notice period.
9.3 Survival. The provisions of Sections 7.3, 8, 10-14, and this 9.3
--------
shall survive expiration or termination of this Agreement.
10. Confidential Information, Publicity, Premier Merchant Status.
------------------------------------------------------------
10.1 Terms and Conditions. The terms and conditions of this Agreement, all
--------------------
discussions pertaining to or leading to this Agreement, and all
information disclosed pursuant to this Agreement shall be considered
confidential and the parties acknowledge and agree to the terms of the
Mutual Nondisclosure Agreement attached hereto as Exhibit C with
---------
respect to the use and disclosure of such confidential information.
Neither party shall make any public announcement regarding the
existence of this Agreement without the other party's prior written
approval and consent, unless required by law or government regulation
but even then only after reasonable notice to the other party.
10.2 Publicity. Any and all publicity relating to this Agreement and
---------
subsequent transactions between Yahoo and Green Mountain and the
method of its release shall be approved in advance of the release by
both Yahoo and Green Mountain.
10.3 Premier Merchant Status. This advertising and promotion program
-----------------------
shall be deemed one of Yahoo's "Premier Merchant" programs, a
designation available only to Yahoo's largest marketing partners (a
"Premier Merchant"). As such, an Account Manager in Yahoo's business
development group shall be responsible for managing this relationship.
Further, subject to Section 10.2, the parties shall be permitted to
publicly refer to this relationship as a "Premier Merchant"
relationship and to Green Mountain as Yahoo's "Premier Merchant" for
consumer energy. Additionally, Green Mountain shall have access to
data and information typically available to Yahoo's "Premier
Merchants."
10.4 User Data. All information and data provided to Yahoo by users of the
---------
Yahoo Properties or otherwise collected by Yahoo relating to user
activity on the Yahoo Properties shall be retained by and owned solely
by Yahoo.
10.5 Privacy of User Information. Green Mountain shall ensure that all
---------------------------
information provided by users of the Green Mountain Site is
maintained, accessed and transmitted in a secure environment and in
compliance with security specifications employed through the use of
SSL or similarly appropriate technology. Green Mountain
<PAGE>
shall provide a link to its policy regarding the protection of user
data on those pages of the Green Mountain Site where the user is
requested to provide personal or financial information.
11. Indemnification.
---------------
11.1 Green Mountain, at its own expense, will indemnify, defend and hold
harmless Yahoo and its employees, representatives, agents and
affiliates, against any claim, suit, action, or other proceeding
brought against Yahoo based on or arising from a claim any Green
Mountain trademark, service mark or other Green Mountain brand
feature, any material, product or service produced, distributed,
offered or provided by Green Mountain, or any material presented on
the Green Mountain Site, infringes in any manner any copyright,
patent, trademark, trade secret or any other intellectual property
right of any third party, is or contains any material or information
that is obscene, defamatory, libelous, slanderous, or that violates
any law or regulation, or that otherwise violates any rights of any
person or entity, including, without limitation, rights of publicity,
privacy or personality, or has otherwise resulted in any consumer
fraud, product liability, tort, breach of contract, injury, damage or
harm of any kind to any third party; provided, however, that in any
such case: (x) Yahoo provides Green Mountain with prompt notice of any
such claim; (y) Yahoo permits Green Mountain to assume and control the
defense of such action upon Green Mountain's written notice to Yahoo
of its intention to indemnify; and (z) upon Green Mountain's written
request, and at no expense to Yahoo, Yahoo will provide to Green
Mountain all available information and assistance necessary for Green
Mountain to defend such claim. Green Mountain will not enter into any
settlement or compromise of any such claim, which settlement or
compromise would result in any liability to Yahoo, without Yahoo's
prior written consent, which shall not unreasonably be withheld. Green
Mountain will pay any and all costs, damages, and expenses, including,
but not limited to, reasonable attorneys' fees and costs awarded
against or otherwise incurred by Yahoo in connection with or arising
from any such claim, suit, action or proceeding.
11.2 Yahoo, at its own expense, will indemnify, defend and hold harmless
Green Mountain and its employees, representatives, agents and
affiliates, against any claim, suit, action, or other proceeding
brought against Green Mountain based on or arising from a claim that
***; provided, however, that in any such case: (x) Green Mountain
provides Yahoo with prompt notice of any such claim; (y) Green
Mountain permits Yahoo to assume and control the defense of such
action *** and (z) upon Yahoo's written request, *** Green Mountain,
Green Mountain will provide to Yahoo all available information and
assistance necessary for Yahoo to defend such claim. Yahoo will not
enter into any settlement or compromise of any such claim, which
settlement or compromise
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
<PAGE>
would result in any liability to Green Mountain, without Green
Mountain's prior written consent, which shall not unreasonably be
withheld. Yahoo will pay any and all costs, damages, and expenses,
including, but not limited to, reasonable attorneys' fees and costs
awarded against or otherwise incurred by Green Mountain in connection
with or arising from any such claim, suit, action or proceeding.
12. Limitation of Liability.
-----------------------
12.1 EXCEPT AS PROVIDED IN SECTION 11, UNDER NO CIRCUMSTANCES SHALL GREEN
MOUNTAIN, YAHOO, OR ANY OF THEIR RESPECTIVE AFFILIATES BE LIABLE TO
THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
EXEMPLARY DAMAGES ARISING FROM THIS AGREEMENT, EVEN IF THAT PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, SUCH AS, BUT NOT
LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS.
13. Insurance.
---------
13.1 Green Mountain agrees that it will maintain insurance with a carrier
that is reasonably acceptable to Yahoo and with coverage for
commercial general liability and errors and omissions of at least one
million dollars per occurrence. Green Mountain will name Yahoo as an
additional insured on such insurance and will provide evidence of such
insurance to Yahoo within ten (10) days of the Effective Date. Such
insurance policy shall not be cancelled or modified without Yahoo's
prior written consent.
14. General Provisions.
------------------
14.1 Independent Contractors. It is the intention of Yahoo and Green
-----------------------
Mountain that Yahoo and Green Mountain are, and shall be deemed to be,
independent contractors with respect to the subject matter of this
Agreement, and nothing contained in this Agreement shall be deemed or
construed in any manner whatsoever as creating any partnership, joint
venture, employment, agency, fiduciary or other similar relationship
between Yahoo and Green Mountain.
14.2 Entire Agreement. This Agreement, together with all Exhibits hereto,
----------------
represents the entire agreement between Yahoo and Green Mountain with
respect to the subject matter hereof and thereof and shall supersede
all prior agreements and communications of the parties, oral or
written, including without limitation the Letter of Intent executed on
or about March 16, 1999, between Yahoo and Green Mountain.
14.3 Amendment and Waiver. No amendment to, or waiver of, any provision
--------------------
of this Agreement shall be effective unless in writing and signed by
both parties. The waiver by any party of any breach or default shall
not constitute a waiver of any different or subsequent breach or
default.
14.4 Governing Law. This Agreement shall be governed by and interpreted in
-------------
accordance with the laws of the State of California without regard to
the conflicts of laws principles thereof.
<PAGE>
14.5 Successors and Assigns. Neither party shall assign its rights or
----------------------
obligations under this Agreement without the prior written consent of
the other party, which shall not unreasonably be withheld or delayed.
Notwithstanding the foregoing, either party may assign this Agreement
to an entity who acquires substantially all of the stock or assets of
a party to this Agreement; provided that consent will be required in
the event that the non-assigning party reasonably determines that the
assignee will not have sufficient capital or assets to perform its
obligations hereunder, or that the assignee is a direct competitor of
the non-assigning party. All terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto
and their respective permitted transferees, successors and assigns.
14.6 Force Majeure. Neither party shall be liable for failure to perform
-------------
or delay in performing any obligation (other than the payment of
money) under this Agreement if such failure or delay is due to fire,
flood, earthquake, strike, war (declared or undeclared), embargo,
blockade, legal prohibition, governmental action, riot, insurrection,
damage, destruction or any other similar cause beyond the control of
such party; provided that the other party may suspend performance
during such period.
14.7 Notices. All notices, requests and other communications called for
-------
by this agreement shall be deemed to have been given immediately if
made by facsimile or Electronic mail (confirmed by concurrent written
notice sent via overnight courier for delivery by the next business
day), if to Yahoo at 3420 Central Expressway, Santa Clara, CA 95051,
Fax: (408) 731-3301 Attention: Vice President (e-mail: ellen@yahoo-
inc.com), with a copy to its General Counsel (e-mail: jplace@yahoo-
inc.com), and if to Green Mountain at the physical and Electronic mail
addresses set forth on the signature page of this Agreement with a
copy to its General Counsel (email: [email protected]), or to
such other addresses as either party shall specify to the other.
Notice by any other means shall be deemed made when actually received
by the party to which notice is provided.
14.8 Severability. If any provision of this Agreement is held to be
------------
invalid, illegal or unenforceable for any reason, such invalidity,
illegality or unenforceability shall not effect any other provisions
of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained
herein.
14.9 Sole Responsibility. Green Mountain will remain solely responsible
-------------------
for the operation of the Green Mountain Site, and Yahoo will remain
solely responsible for the operation of the Yahoo Properties. Each
party: (a) acknowledges that the Green Mountain Site and the Yahoo
Properties may be subject to temporary shutdowns due to causes beyond
the operating party's reasonable control; and (b) subject to the terms
of this Agreement, retains sole right and control over the
programming, content and conduct of transactions over its respective
Internet-based service.
<PAGE>
14.10 Counterparts. This Agreement may be executed in two counterparts,
------------
both of which taken together shall constitute a single instrument.
Execution and delivery of this Agreement may be evidenced by
facsimile transmission.
14.11 Authority. Each of Yahoo and Green Mountain represents and
---------
warrants that the negotiation and entry of this Agreement will not
violate, conflict with, interfere with, result in a breach of, or
constitute a default under any other agreement to which they are a
party.
14.12 Attorneys Fees. The prevailing party in any action to enforce this
--------------
Agreement shall be entitled to reimbursement of its expenses,
including reasonable attorneys' fees.
[Signature page follows]
<PAGE>
This Advertising and Promotion Agreement has been executed by the duly
authorized representatives of the parties, effective as of the Effective Date.
YAHOO! INC. GREEN MOUNTAIN ENERGY RESOURCES, L.L.C.
By: /s/ Ellen Siminoff By: /s/ Kevin W. Hartley
Name: Ellen Siminoff Name: Kevin W. Hartley
Title: Vice President, Business Title: Chief Marketing Officer
Development
Attn: VP, Business Development
3420 Central Expressway
Santa Clara, CA 95051
Tel.: (408) 731-3300 Tel: 802.846.6130
Fax: (408) 731-3302 Fax: 802.846.6102
e-mail: [email protected] e-mail: [email protected]
<PAGE>
EXHIBIT A
[Screen Shots of Green Mountain Links]
<PAGE>
EXHIBIT B
Wire Transfer Instructions
Yahoo's Bank Information:
Institution Name: ***
Institution Address: ***
ABA: ***
Beneficiary Name: Yahoo! Inc.
Beneficiary Account Number: ***
***Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.
<PAGE>
EXHIBIT C
MUTUAL NONDISCLOSURE AGREEMENT TERMS
1. "Confidential Information" is that confidential, proprietary, and
trade secret information being disclosed by the disclosing party pursuant to
this Agreement.
2. Except as set forth in this Section 2, all Confidential Information
shall be in tangible form and shall be marked as Confidential or proprietary
information of the disclosing party. If the Confidential Information is
disclosed orally or visually, it shall be identified as such at the time of
disclosure and confirmed in a writing to the recipient within thirty (30) days
of such disclosure.
3. Each of the parties agrees that it will not make use of, disseminate,
or in any way disclose any Confidential Information of the other party to any
person, firm or business, except to the extent necessary for negotiations,
discussions, and consultations with personnel or authorized representatives of
the other party and any purpose the other party may hereafter authorize in
writing. Each of the parties agrees that it shall disclose Confidential
Information of the other party only to those of its employees who need to know
such information and who have previously agreed, either as a condition to
employment or in order to obtain the Confidential Information, to be bound by
terms and conditions substantially similar to those of this Agreement.
4. There shall be no liability for disclosure or use of Confidential
Information which is (a) in the public domain through no fault of the receiving
party (b) rightfully received from a third party without any obligation of
confidentiality, (c) rightfully known to the receiving party without any
limitation on use or disclosure prior to its receipt from the disclosing party,
(d) independently developed by the receiving party (e) generally made available
to third parties without any restriction on disclosure, or (f) communicated in
response to a valid order by a court or other governmental body, as otherwise
required by law or governmental regulation, or as necessary to establish the
rights of either party under this Agreement (provided that the party so
disclosing has provided the other party with a reasonable opportunity to seek
protective legal treatment for such Confidential Information).
5. "Residual Information" shall mean any Confidential Information of the
disclosing party which may be retained in intangible form in the minds of those
individuals of the receiving party who have had proper access to such
Confidential Information. Notwithstanding anything else in this Agreement, the
receiving party shall be free to use any Residual Information for any purpose
whatsoever, including, without limitation, the development of its own products,
or business, provided that such party shall not be entitled to disclose Residual
Information to any third parties unless such disclosure is in the course of, or
as part of, any disclosure of its own products or business or their development.
6. Each of the parties agrees that it shall treat all Confidential
Information of the other party with the same degree of care as it accords to its
own Confidential Information, and
<PAGE>
each of the parties represents that it exercises reasonable care to protect its
own Confidential Information.
7. Each of the parties agrees that it will not modify, reverse engineer,
decompile, create other works from, or disassemble any software programs
contained in the Confidential Information of the other party unless otherwise
specified in writing by the disclosing party.
8. All materials (including, without limitation, documents, drawings,
models, apparatus, sketches, designs and lists) furnished to one party by the
other, and which are designated in writing to be the property of such party,
shall remain the property of such party and shall be returned to it promptly at
its request, together with any copies thereof.
9. This Agreement shall govern all communications between the parties
that are made during the period from the effective date of this Agreement to the
date on which either party receives from the other written notice that
subsequent communications shall not be so governed, provided, however, that each
party's obligations under Sections 2 and 3 with respect to Confidential
Information of the other party which it has previously received shall continue
unless and until such Confidential Information falls within Sections 4 or 5.
Neither party shall communicate any information to the other in violation of the
proprietary rights of any third party. Neither party acquires any licenses
under any intellectual property rights of the other party under this Agreement.
<PAGE>
EXHIBIT 23.2
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
Boston, Massachusetts
June 4, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF OPERATIONS AND THE BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> FEB-26-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 1,933,403
<SECURITIES> 0
<RECEIVABLES> 16,457
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,586,092
<PP&E> 1,335,836
<DEPRECIATION> 67,128
<TOTAL-ASSETS> 4,183,365
<CURRENT-LIABILITIES> 2,445,379
<BONDS> 0
0
0
<COMMON> 7,200
<OTHER-SE> 1,730,786
<TOTAL-LIABILITY-AND-EQUITY> 4,183,365
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,905,101
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (13,862,014)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,862,014)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,862,014)
<EPS-BASIC> (21.81)<F1>
<EPS-DILUTED> (21.81)<F2>
<FN>
<F1>EPS - PRIMARY IS EPS BASIC PER SFAS 128
<F2>EPS - FULLY DILUTED IS EPS - DILUTED PER SFAS 128
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF OPERATIONS AND THE BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 8,574,261
<SECURITIES> 0
<RECEIVABLES> 729,188
<ALLOWANCES> 34,956
<INVENTORY> 0
<CURRENT-ASSETS> 9,690,761
<PP&E> 2,133,886
<DEPRECIATION> 766,526
<TOTAL-ASSETS> 11,410,721
<CURRENT-LIABILITIES> 11,959,200
<BONDS> 0
0
0
<COMMON> 180,000
<OTHER-SE> (728,479)
<TOTAL-LIABILITY-AND-EQUITY> 11,410,721
<SALES> 1,530,496
<TOTAL-REVENUES> 1,530,496
<CGS> 1,097,379
<TOTAL-COSTS> 1,097,379
<OTHER-EXPENSES> 46,465,132
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,050
<INCOME-PRETAX> (46,039,065)
<INCOME-TAX> 0
<INCOME-CONTINUING> (46,039,065)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46,039,065)
<EPS-BASIC> (6.06)<F1>
<EPS-DILUTED> (6.06)<F2>
<FN>
<F1>EPS - PRIMARY IS EPS BASIC PER SFAS 128
<F2>EPS - FULLY DILUTED IS EPS - DILUTED PER SFAS 128
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF OPERATIONS AND THE BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 2,621,369
<SECURITIES> 0
<RECEIVABLES> 29,527
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,739,269
<PP&E> 1,433,930
<DEPRECIATION> 218,483
<TOTAL-ASSETS> 4,265,678
<CURRENT-LIABILITIES> 3,335,082
<BONDS> 0
0
0
<COMMON> 7,200
<OTHER-SE> 923,396
<TOTAL-LIABILITY-AND-EQUITY> 4,285,678
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,730,972
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (23,583)
<INCOME-PRETAX> (6,707,389)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,707,389)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,707,389)
<EPS-BASIC> (3.94)<F1>
<EPS-DILUTED> (3.94)<F2>
<FN>
<F1> EPS - PRIMARY IS EPS BASIC PER SFAS 128
<F2> EPS - DILUTED IS EPS - DILUTED PER SFAS 128
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF OPERATIONS AND THE BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 22,988,750
<SECURITIES> 0
<RECEIVABLES> 3,347,214
<ALLOWANCES> 159,454
<INVENTORY> 0
<CURRENT-ASSETS> 27,167,062
<PP&E> 2,316,629
<DEPRECIATION> 976,179
<TOTAL-ASSETS> 29,749,932
<CURRENT-LIABILITIES> 12,312,650
<BONDS> 0
0
0
<COMMON> 255,465
<OTHER-SE> 17,181,817
<TOTAL-LIABILITY-AND-EQUITY> 29,749,932
<SALES> 4,149,941
<TOTAL-REVENUES> 4,149,941
<CGS> 3,096,161
<TOTAL-COSTS> 3,096,161
<OTHER-EXPENSES> 21,063,160
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (214,690)
<INCOME-PRETAX> (19,794,690)
<INCOME-TAX> 0
<INCOME-CONTINUING> (19,794,690)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,794,690)
<EPS-BASIC> (0.89)<F1>
<EPS-DILUTED> (0.89)<F2>
<FN>
<F1>EPS - PRIMARY IS EPS BASIC PER SFAS 128
<F2>EPS - FULLY DILUTED IS EPS - DILUTED PER SFAS 128
</FN>
</TABLE>
<PAGE>
EXHIBIT 99.5
To GreenMountain.com Company:
Jupiter Communications hereby consents to the use of its name and the inclusion
of the statements attributable to Jupiter Communications included in or made a
part of the GreenMountain.com Company Registration on Form S-1 (Registration
No. 333-75171).
/s/ Marla Kammer
- -------------------------------------
Name:Marla Kammer
Title:Director of Production
Date:June 2, 1999
The following information will be included in the Registration Statement:
"Jupiter Communications estimates that the number of Internet users in the
United States will grow from 83.4 million at the end of 1998 to 144.2 million
by the end of 2002 and that the value of goods and travel services purchased on
the Internet in the United States will grow from $7.1 billion in 1998 to $41.1
billion in 2002."
"Jupiter Communications estimates that the number of Internet users in the
world will grow from 112 million at the end of 1998 to 244 million by the end
of 2002."
<PAGE>
EXHIBIT 99.7
To GreenMountain.com Company:
Regulatory Research Associates hereby consents to the use of our Report
entitled "Electric Industry Restructuring Update" dated May 14, 1999 and to all
references to us included in or made a part of the Greenmountain.com Company
Registration Statement on Form S-1 (Registration No. 333-75171).
/s/ Robert Schain
- -------------------------------------
Name:Robert Schain
Title:President
Date:June 3, 1999
<PAGE>
EXHIBIT 99.10
June 3, 1999
Worldwatch Institute hereby consents to the use of the following references and
quotes from the Worldwatch Institute as part of the GreenMountain.com Company
Registration Statement on Form S-1 (Registration No. 333-75171).
(1) Worldwatch Briefing: "An Environmental Revolution," February 25, 1999.
(2) Vital Signs, 1998, by Lester R. Brown, Michael Renner, Christopher Flavin
et al., New York, London, 1998.
(3) State of the World, 1999, by Lester R. Brown, Christopher Flavin, et al.,
New York, London, 1999.
/s/ Seth Dunn
- -------------------------------------
Name:Seth Dunn
Title:
The following information will be included in the Registration Statement:
According to the Worldwatch Institute (1) (2) (3):
. Atlantic Richfield CEO Michael Bowlin sees ARCO's large holdings of
natural gas playing a key role in the transition from a carbon-based
energy economy to one based on hydrogen.
. Royal Dutch Shell has announced a committment of $500 million to
renewable energy sources.
Another recent Worldwatch publication states (1):
. . . [There] is an exciting alternative economic model that promises a
better life everywhere without destroying the earth's natural support
systems. The new economy will be powered not by fossil fuels, but by
various sources of solar energy and hydrogen . . . Instead of a throwaway
economy, we will have a reuse/recycle economy.
