<PAGE>
As filed with the Securities and Exchange Commission on April 26, 1999
Registration No. 333-75171
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
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 jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification Number)
organization) Code Number)
55 Green Mountain Drive
South Burlington, Vermont 05407
(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 05407
(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. [_]
---------------
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--APRIL 26, 1999
PROSPECTUS
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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.
GreenMountain.com uses the Internet and other media to market "green" consumer
products and has become the leading retailer of green electricity to
residential customers in deregulated utility markets within the United States.
GreenMountain.com's mission is to make Green Mountain the leading brand for
environmentally friendly products.
It is anticipated that the public offering price will be between $ and $ per
share. We have filed an application to include the shares of GreenMountain.com
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 to for factors that should be considered 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, under certain circumstances, purchase up to additional
shares from GreenMountain.com at the public offering price, less underwriting
discounts and commissions. Delivery and payment for the shares will be on
, 1999.
Prudential Securities
, 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 "greenmountain.com the power of g* commerce to help
transform the environment"
Middle: three overlapping screenprints from greenmountain.com web site
("Welcome to GreenMountain.com"; "Solar Power Challenge"; and "Green Mountain
Energy" pages)
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"
"Jupiter Communications estimates that the number of Web users in the United
States will grow from 76.6 million at the end of 1998 to 131.2 million by the
end of 2002. They also estimate that the value of goods and services purchased
on the Internet in the United States will grow from $7.1 billion in 1998 to
$41.1 billion in 2002."
"Nearly half of American adults changed brands if the product, its packaging
or manufacturing harmed the environment, according to a recent study by
Environmental Research Associates"
"76% of consumers in a 1997 Roper/Cone Poll would switch brands & retailers
for products of equal value and price that were associated with a good cause"
"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."
Right: image of child holding planet earth, surrounded by following text:
"Wouldn't it be great if what was purchased online helped create a brighter
future for your kids & the planet?"
"34% of parents changed their shopping behavior because of what they learned
about the environment from their children, according to a national survey by
INFOCUS Environmental"
"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."
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................................................... 4
Risk Factors.......................................................... 9
Use of Proceeds....................................................... 16
Dividend Policy....................................................... 16
Capitalization........................................................ 17
Dilution.............................................................. 18
Selected Financial Information........................................ 20
Management's Discussion and Analysis
of Financial Condition and Results
of Operations........................................................ 21
Business.............................................................. 28
Environmental Advisory Board.......................................... 47
Management............................................................ 48
Certain Transactions.................................................. 60
Principal Stockholders................................................ 64
Description of Capital Stock.......................................... 68
Shares Eligible for Future Sale....................................... 71
Underwriting.......................................................... 72
Legal Matters......................................................... 73
Experts............................................................... 73
Additional Information................................................ 74
Index to Financial Statements......................................... F-1
</TABLE>
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The terms "GreenMountain.com," "we," "our" and "us" refer to
GreenMountain.com Company and its predecessor, Green Mountain Energy Resources
L.L.C., unless the context suggests otherwise. The term "you" refers to a
prospective investor.
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 2.5 shares of common stock of the
corporation. See "Certain Transactions--Reorganization Transaction."
Our Web address is www.greenmountain.com. The information on our Web site is
not part of this prospectus.
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.
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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 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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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 highlights information contained elsewhere in this prospectus.
This summary is not complete and may not contain all of the information that
you should consider before investing in GreenMountain.com. Investors should
read the entire prospectus carefully.
GreenMountain.com
GreenMountain.com uses the Internet and other media to market green consumer
products and has become the leading retailer of green electricity to
residential customers in deregulated utility markets within the United States.
Our Web site--www.greenmountain.com--will use the rich interactive resources of
the Internet to make it easy and appealing for people to use everyday purchases
as agents of change for a cleaner and healthier environment. Our mission is to
make Green Mountain the leading brand for green products.
"Environmentally friendly" or "green" products are those products that have
a less harmful effect on the environment than other products having a similar
use. 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. Consumers today are more environmentally aware
than typical consumers 20 years ago, and surveys consistently show increasing
majorities of the public support renewable energy over other energy
alternatives. 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 the $200 billion electric utility industry--the largest
source of industrial air pollution in the United States--is providing
environmentally conscious consumers with a choice of electricity supplier and
generation source. Four states have implemented competition on a statewide
basis, 14 states have taken formal action to deregulate, and we expect that a
total of 29 states will have implemented electricity deregulation by the end of
2003. We are currently offering green electricity products--electricity
produced from renewable and other environmentally preferable generation
sources--in Pennsylvania and California, and we expect to offer environmentally
friendly electricity products in each other deregulated electricity market in
which we can compete effectively.
The Internet is emerging as the most significant global communications
medium, 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.
Jupiter Communications estimates that the number of Web users in the United
States will grow from 76.6 million at the end of 1998 to 131.2 million by the
end of 2002 and that the value of goods and services purchased on the Internet
in the United States will grow from $7.1 billion in 1998 to $41.1 billion in
2002. We believe that by becoming the dominant Internet destination site for
people who care about the environment, we can capitalize on this opportunity to
make Green Mountain the leading brand for green products.
We believe in the interaction of education and free markets. Informed
consumers can use the power of their market decisions as forces for positive
environmental change. We refer to this concept as "g*commerce." We intend to
use the broad reach of the Internet to aggregate the g*commerce impact of a
large online community. We believe that the power of this community to effect
environmental change will be significant.
We are the first and only company to offer environmentally friendly
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 to position Green Mountain as the best
known and most trusted environmental brand.
4
Choose wisely.
<PAGE>
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 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. 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 05407. Our telephone
number is 802.846.6100. The information on our Web site is not part of this
prospectus.
Our Business Strategy
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 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 developed to provide consumers with easy access to a
broad selection of green products and in-depth, educational environmental
content through a real-time interactive medium. Our focus 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 aggregate
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.
Our Management Team
Our management team is led by Sam Wyly, our Chairman. Mr. Wyly, a Dallas,
Texas-based entrepreneur, has created and managed several public and private
companies. He co-founded Sterling Software, a New York Stock Exchange-listed
supplier of software products and services, in 1981 and 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 controlled by the Wyly family have invested more
than $70 million in our company.
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.
5
It's a small planet.(SM)
<PAGE>
Our Environmental Commitment
We stake our reputation on the environmental soundness of our green
products. We view our environmental integrity as one of our most important
assets.
We believe strongly in our g*commerce vision. We intend to closely monitor
our effect on the environment and consider it an essential measure of our
success. We have established the management position of Chief Environmental
Officer, and a committee of our board of directors will be responsible for
reviewing our adherence to our environmental principles.
6
Choose wisely.
<PAGE>
The Offering
<TABLE>
<S> <C>
Shares offered by
GreenMountain.com................. shares
Total shares outstanding after this
offering.......................... shares (1)
Use of proceeds.................... To provide working capital for brand
development and marketing, product
development, enhancements to our Web site
and technology systems, expansion of our
green electricity business into new
deregulated markets, environmental
programs, potential strategic acquisitions
and investments, repayment of any debt and
other general corporate purposes
Proposed Nasdaq National Market
symbol............................ GMTN
</TABLE>
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(1)Does not include up to shares that the underwriters may purchase if they
exercise their over-allotment option and does not include 4,999,282 shares
of common stock issuable upon exercise of options and warrants outstanding
as of March 31, 1999 (assuming our conversion from a limited liability
company to a corporation had occurred as of that date).
Risk Factors
You should consider the risk factors before investing in GreenMountain.com's
common stock and the impact from various events which could adversely affect
its business. See "Risk Factors."
7
It's a small planet.(SM)
<PAGE>
Summary Financial Data
The following table summarizes our statements of operations for the period
from February 26, 1997 (inception) 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. 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................ $ -- $ 1,531 $ -- $ 4,150
Cost of sales........... -- 1,098 -- 3,096
Total operating
expenses............... 13,905 46,465 6,731 21,080
Operating loss.......... (13,905) (46,032) (6,731) (20,026)
Net loss................ (13,862) (46,039) (6,707) (19,811)
======== ======== ======= ========
Basic loss per common
share (1).............. $ (26.17) $ (7.27) $ (4.72) $ (1.06)
======== ======== ======= ========
Diluted loss per common
share (1).............. $ (26.17) $ (7.27) $ (4.72) $ (1.02)
======== ======== ======= ========
Basic weighted average
common shares
outstanding (1)........ 530 6,329 1,420 18,606
======== ======== ======= ========
Diluted weighted average
common shares
outstanding (1)........ 530 6,329 1,420 19,403
======== ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
At March 31, 1999
---------------------------
Actual As Adjusted (2)
------- ---------------
(Unaudited)
(In thousands)
<S> <C> <C>
Balance Sheet Data:
Cash................................................ $20,476 $
Restricted cash..................................... 2,513
Total assets........................................ 29,733
Total liabilities................................... 12,313
Stockholders' equity................................ 17,421
</TABLE>
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(1)Reflects our conversion from a limited liability company to a corporation,
which will occur prior to the closing of this offering, as if that
conversion had occurred at the beginning of each period indicated.
(2)As adjusted to reflect the sale of the shares of common stock offered in
this offering at an assumed initial public offering price of $ 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
Choose wisely.
<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 Unproven. Our business plan is novel and without
established precedent. It relies on three broad trends:
.The willingness of consumers to use economic decisions to address
environmental concerns;
.Increasing use of the Internet for commerce transactions; and
.The movement from government controls to free market competition in the
electric utility industry.
Our success will depend upon the continuation of these trends. Our success
also depends on our ability to implement the primary components of our business
strategy. To date, our business has consisted of the sale of green electricity
products in Pennsylvania and California, with only a small portion of revenues
derived from sales made over the Internet. To be successful, we must:
.Increase awareness of the Green Mountain brand;
.Aggregate a broad selection of green products;
.Redesign our Web site to accommodate and support expanded product
offerings; and
.Create an online community of people with shared concerns about the
environment.
Our success is also dependent on a number of other factors, including:
.Our ability to attract and retain satisfied customers;
.Interest of consumers in environmentally friendly products;
.The timing and form of deregulation of the electric utility industry;
.Our ability to secure competitively priced supply from environmentally
preferable sources;
.New competitors and new products introduced by our competitors; and
.A high level of Internet usage.
The novel interaction of these features presents a high degree of risk. Many
of the factors upon which our success depends are outside our control. We
cannot assure you that we will be successful or that your investment in our
stock will be profitable.
We Have A Very Limited Operating History. We commenced active operations in
August 1997 as a retail marketer of green electricity products and accelerated
a substantial expansion of our business strategy in late 1998. We have a
limited operating history upon which an evaluation of our company, our current
business and our prospects can be based. Our business model is evolving and is
particularly reliant on expanded Internet sales. An investor in our common
stock must consider the risks, expenses and difficulties 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. We cannot
assure you that our business strategy will be successful. 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 And We Anticipate Losses Will Continue. 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."
We Must Position The Green Mountain Brand And Maintain Our Reputation. In
order to succeed, we believe we must position the Green Mountain name as the
leading environmental brand and maintain our reputation as an environmentally
oriented company, particularly in the Internet market and in the deregulated
electricity market 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 expenditures. We cannot assure you that our
brand promotion activities will result in increased revenues or that any such
revenues will offset these expenditures. State 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. We cannot assure you that these challenges will not
adversely affect our reputation. See "Business--Our Strategy."
We Must Broaden Our Product Offerings. Our revenues have been based solely
on green electricity sales in Pennsylvania and California. We must broaden
substantially the array of green products that we offer without geographic
limitation. We cannot assure you that we will be able to do so. Our experience
in purchasing and marketing green electricity may not be effective in
purchasing and marketing other green products. Moreover, the commercial
availability of certain products that we hope to offer (such as 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 products or that any of our
products will achieve market acceptance. See "Business--Our Strategy."
We Must Develop Our Web Site And Implement Ongoing Improvements To Our Web
Site In The Face Of Rapid Technological Change. Our success will depend on our
ability to design, develop and maintain a state-of-the-art Web site. The
development of Web sites entails significant technical and business risks and
requires substantial expenditures and lead time. We depend 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 our new Web site will be launched by
October 1, 1999 or that it will be successful when launched. We also cannot
assure you that we will be able to implement the ongoing improvements that we
believe are required for the continued success of a Web site, or that we will
in fact attract customers. To date, we have generated only a small portion of
our revenue from our Web site.
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 business. We cannot assure you that we will be successful in this
regard. See "Business--Our Strategy."
10
Choose wisely.
<PAGE>
We Must Develop And Maintain Strategic Web Site Relationships. We believe
that in order to attract significant traffic to our Web site we will need to
establish and maintain relationships with Internet portals and high-traffic Web
sites that will carry links to our new Web site and with content providers that
will provide our Web site with content that appeals to consumers who are
concerned about the environment. Intense 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.
We Face Risks Related To The Deregulation Process. We believe that utility
deregulation in the United States will continue on a state-by-state basis. To
date, however, only four states have adopted state-wide deregulation. 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 successfully in any particular
deregulated market will depend on the specific features 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. We may incur significant expenses in
connection with our lobbying efforts in various states. 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. Our operating results may
fluctuate significantly from quarter-to-quarter and year-to-year. Our limited
operating history, in combination with substantial 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
upon as an indication of future performance.
Our revenues and operating results may vary significantly from quarter-to-
quarter or year-to-year due to a number of factors, including factors discussed
under other captions under "Risk Factors."
Our limited operating history, together with our expanded business strategy,
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."
We Face Intense Competition. 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
11
It's a small planet.(SM)
<PAGE>
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 aggregate a broad
selection of green products. See "Business--Our Competitive Position."
We Depend On Outside Service Providers. We rely on third-party service
providers for certain key functions, including:
.Web site development;
.Mass media advertising;
.Direct mail marketing;
.Inbound and outbound telephone marketing;
.Billing and customer care; and
.Various 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."
We Are Dependent On Third Parties To Supply The Electricity Products We
Sell. 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, suppliers provide electricity for a period (usually one year) that
matches the aggregate customer requirements that are assigned to them. 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 commodity prices and customer usage
by using these contracts, but cannot assure you that price fluctuations will
not adversely affect our business. In addition, we may be unable to obtain
supply contracts for our future needs or to extend or replace our existing
supply contracts, and we cannot assure you that any future supply contracts
will reduce risk relating to price and customer usage to a similar extent.
Moreover, 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."
We Depend Upon Public Environmental Consciousness. Our success will depend
upon 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.
We Must Manage Potential Rapid Growth. We have rapidly and significantly
expanded our operations, and future expansion will be required in order for us
to realize our business objectives. 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.
We Must Integrate And Retain Senior Management. Our success will depend on
our ability to grow, integrate and retain an able management team. We recently
hired a new Chief Executive Officer, President and
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<PAGE>
Chief Financial Officer. We cannot assure you that we will successfully
integrate new arrivals with our existing staff or that we will retain the
services of key personnel.
We Must Protect Our Intellectual Property. 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. See
"Business--The Protection of Our Intellectual Property."
We Could Face Claims Of Our Infringement On The Intellectual Property Rights
Of Others. 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. Defense against claims or the inability to obtain
or maintain the use of licenses or other technology could adversely affect our
business.
We Face Year 2000 Risks. 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
Dependence On Continued Growth Of Online Commerce. Our future success is
dependent upon continued growth in the use of the 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. 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.
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<PAGE>
We May Not Be Able To Acquire Or Maintain An Effective Web Address. We
currently hold the domain name "greenmountain.com," as well as various other
related names. We may not be able to prevent third parties from acquiring Web
addresses that are similar to ours. 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.
Our Technology Systems May Fail Or Perform Inadequately. Our success 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. We do not intend to have redundant systems and
have not adopted a formal disaster recovery plan. 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 Online Commerce. 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 significantly limit their use of the Internet to
purchase products because of security concerns. 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.
We Face Potential Liability For Information Displayed On Our Web Site. 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.
We Face Potential Liability For Products Sold Through Our Web Site. We will
sell products produced by others under the Green Mountain brand. We also plan
to enter into relationships with others to make their green products available
on our Web site. These sales and relationships may subject us to liabilities,
including consumer product liabilities. While we intend to require our
suppliers and other parties in these relationships to indemnify us against
those types of liabilities, available indemnification may not be adequate. We
currently have product liability insurance coverage in the amount of $35
million, with a $200,000 deductible, covering sales of electricity. Our
liability insurance, including any additional product liability insurance that
we obtain to cover sales of other products, may not adequately protect us
against these types of liabilities.
Government Regulation Of The Internet And Online Commerce Is Still
Developing. Certain existing laws or regulations 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.
RISKS RELATED TO THIS OFFERING
Certain Of Our Existing Stockholders Will Exercise Significant Control. Our
directors and officers and their affiliates will, in the aggregate,
beneficially own approximately % of the outstanding shares of
GreenMountain.com common stock upon the closing of this offering ( % if the
underwriters exercise their over-allotment option in full). As a result, 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."
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Our Shares Have Never Been Publicly Traded. 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. 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. 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. After this offering, shares of common stock
will be outstanding ( shares if the underwriters exercise their over-allotment
option in full), assuming the exchange of each common unit of the limited
liability company outstanding as of the date of this prospectus for shares of
common stock in connection with our conversion from a limited liability company
to a corporation. Of these shares, the shares sold in this offering ( shares
if the underwriters exercise their over-allotment option in full) 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). Our officers, directors and certain stockholders 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. 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 restrictions
of Rule 144 under the Securities Act. After the date of this prospectus, we
intend to file a registration statement under the Securities Act to register
all shares of common stock issuable upon the exercise of outstanding stock
options and reserved for issuance under our 1999 Stock Option Plan. This
registration statement is expected to become effective immediately upon filing,
and subject to the vesting requirements and exercise of the related options (as
well as the terms of the lock-up agreements), shares covered by this
registration statement will be eligible for sale in the public markets. 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 $ per share (assuming an initial public
offering price of $ per share) in the net tangible book value per share of
common stock from the price you paid. The exercise prices of most of our
outstanding options are significantly 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. 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. See "Use of Proceeds."
There Exist Certain Anti-Takeover Provisions. 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."
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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 a public offering price of $ per
share, will be $ ($ if the underwriters exercise their over-allotment
option in full), after deducting underwriting discounts and commissions and
estimated offering expenses.
The principal purposes of this offering are to provide working capital for
brand development and marketing, product development, enhancements to our Web
site and technology systems, expansion of our green electricity business into
new deregulated markets, environmental programs and other general corporate
purposes. We may also use a portion of the net proceeds to acquire or invest in
strategic businesses, technologies, services or products; however, we currently
have no commitments or agreements in this regard. In addition, 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, in order to permit us
to meet our working capital requirements, we will use a portion of net proceeds
to repay such advances in full. See "Certain Transactions--Subsequent
Transactions--Working Capital Funding Commitment."
As of the date of this prospectus, we cannot specify with certainty 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."
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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<PAGE>
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, which will occur prior to the closing of this
offering, as if that conversion had occurred as of March 31, 1999; and
.as adjusted to reflect the sale of the shares of common stock offered
in this offering at an assumed initial public offering price of $ per
share, after deducting the 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 $
======= ===
Long-term obligations................................. $ -- $
Stockholders' equity:
Common stock, $.01 par value, 150,000,000 shares
authorized; 15,000,000 shares issued (actual);
21,288,750 shares issued (as adjusted)(1)........... 213
Additional paid-in capital........................... 104,312
Notes receivable..................................... (5,108)
Deferred compensation................................ (1,636)
Accumulated deficit.................................. (79,713)
Treasury stock....................................... (647)
------- ---
Total stockholders' equity........................... 17,421
------- ---
Total capitalization................................. $17,421 $
======= ===
</TABLE>
- --------
(1)Excludes 4,999,282 shares issuable upon exercise of options and warrants
outstanding as of March 31, 1999 (assuming our conversion from a limited
liability company to a corporation had occurred as of that date).
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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
$(0.76) per share on an actual basis (but reflecting our conversion from a
limited liability company to a corporation, which will occur prior to the
closing of this offering, as if that conversion had occurred as of March
31, 1999).
.After giving effect to the sale of the shares of common stock offered
in this offering at an assumed initial public offering price of $ per
share and after deducting the 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 $ or $ per share.
This represents an immediate increase in the net tangible book value of
approximately $ per share to our existing stockholders and an immediate and
substantial dilution of $ 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........................... $
Pro forma net tangible book value as of March 31, 1999......... $
Increase attributable to new investors.........................
Net tangible book value after this offering.....................
----
Dilution to new investors....................................... $
====
</TABLE>
The following table summarizes, on a pro forma basis, as of March 31, 1999
(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 $ (before
the deduction of underwriting discounts and commissions and estimated offering
expenses).
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------- --------------------- Price per
Number Percent Amount Percent Share
------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders... % % $
New investors...........
------- --------- --------- ----------
Total............... 100.0% $ 100.0%
======= ========= ========= ==========
</TABLE>
The discussion and table above assumes no exercise of any stock options or
warrants outstanding as of March 31, 1999. As of March 31, 1999, there were
outstanding options and warrants exercisable to purchase shares of common stock
(assuming our conversion from a limited liability company to a corporation had
occurred as of that date) as follows:
<TABLE>
<CAPTION>
Number of Shares
Purchasable Under
Stock Options or Warrants Exercise Price
------------------------- --------------
<S> <C>
9,922 $90.70
34,958 $90.48
39,902 $90.24
4,029,500 $ 4.00
885,000 $ 8.00
</TABLE>
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<PAGE>
To the extent any of the 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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<PAGE>
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 February 26, 1997 (inception) 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, which will occur
prior to the closing of this offering, as if that conversion had occurred as of
the beginning of the period indicated. See "Certain 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............... $ -- $ 1,531 $ -- $ 4,150
Cost of sales.......... -- 1,098 -- 3,096
Operating Expenses:
Customer and regional
operations............ 982 4,834 652 2,270
Sales and marketing.... 4,337 33,010 4,065 13,496
General and
administrative........ 1,742 4,226 1,012 3,928
Technology and
development........... 2,048 2,918 833 1,147
Depreciation and
amortization.......... 90 768 169 239
Development and
transaction costs..... 4,706 709 -- --
-------- -------- ------- --------
Total operating
expenses............. 13,905 46,465 6,731 21,080
-------- -------- ------- --------
Operating loss......... (13,905) (46,032) (6,731) (20,026)
Interest income
(expense), net........ 43 (7) 24 215
-------- -------- ------- --------
Net loss............... $(13,862) $(46,039) $(6,707) $(19,811)
======== ======== ======= ========
Basic loss per common
share................. $ (26.17) $ (7.27) $ (4.72) $ (1.06)
======== ======== ======= ========
Diluted loss per common
share................. $ (26.17) $ (7.27) $ (4.72) $ (1.02)
======== ======== ======= ========
Basic weighted average
common shares
outstanding........... 530 6,329 1,420 18,606
======== ======== ======= ========
Diluted weighted
average common shares
outstanding........... 530 6,329 1,420 19,403
======== ======== ======= ========
<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 $
Working capital........ 141 (2,268) 14,854
Total assets........... 4,183 11,411 29,733
Total liabilities...... 2,445 11,959 12,313
Stockholders' equity... 1,738 (548) 17,420
</TABLE>
- --------
(1) As adjusted to reflect the sale of the shares of common stock offered
in this offering at an assumed initial public offering price of $ 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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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
GreenMountain.com uses the Internet and other media to market green consumer
products and has become the leading retailer of green electricity to
residential customers in deregulated utility markets within the United States.
Our mission is to make Green Mountain the leading brand for green products.
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 "Certain Transactions--Reorganization Transaction."
Between August 1997 and March 31, 1998, Green Funding I, L.L.C. (Green
Funding I) and Green Funding II, L.L.C. (Green Funding II), investment vehicles
managed by the Wyly family, contributed to us a total of $70.0 million. In
August 1997, Green Mountain Power Corporation contributed to us, indirectly
through one of its subsidiaries, property, including intellectual property and
contractual rights. In August 1997, Green Funding I owned 67% of our equity
interests and Green Mountain Power Corporation indirectly owned the other 33%.
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
agreed to pay the subsidiary of Green Mountain Power Corporation $1.0 million
in cash for its remaining 1% equity interest, a non-compete agreement, certain
rights to the Green Mountain name and other concessions. During January and
February 1999, we raised $35.2 million in cash through private equity
offerings. See "Certain 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 various outsourcing partners to perform
most of the marketing, sales and customer service functions necessary for
the operation of our business;
.Established relationships with various environmental groups and entered
into affinity marketing programs with some of them;
.Designed and built our Information Network to provide for the efficient
communication of information with and among our various 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;
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<PAGE>
.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 had approximately 21,700 customers in California.
We began selling electricity products in Pennsylvania on January 1, 1999. As of
March 31, 1999, we had approximately 57,300 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:
.Costs associated with increased business development efforts;
.Commencement of billing activity when the California retail electricity
market opened for competition;
.The preparation for commencement of service of customers in Pennsylvania
on January 1, 1999; and
.The increase in regional operating activities within various states
expected to open their electric utility markets for retail competition in
the foreseeable future.
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.
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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 marketing efforts utilize traditional
media (television, radio, print and billboards), direct mail, affinity
programs, Internet, inbound and outbound telemarketing and special events and
promotions. Sales and marketing expense for 1998 includes significant
expenditures in anticipation of the commencement of service in Pennsylvania
effective January 1, 1999.
General And Administrative Expense
General and administrative expense increased $2.5 million from $1.7 million
to $4.2 million from 1997 to 1998. This expense is comprised primarily of
payroll and other expenses relating to our administrative, human resources,
finance, legal and regulatory functions. Much of the increase in 1998 relates
to activities in preparation for expanded Internet marketing and entry into
deregulated electric utility markets. Additionally, the increase partially
reflects the increase in the number of employees needed to accommodate our
growth in 1998.
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
development and operation of our information technology systems. 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 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 (August 1997) to December 31, 1997.
Development And Transaction Costs
Development and transaction 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 development costs of approximately $4.0 million
contributed indirectly by Green Mountain Power Corporation. 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, resulted 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 operating 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
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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:
. Costs associated with increased business development efforts;
. Commencement of billing activity when the Pennsylvania retail
electricity market opened for competition on January 1, 1999; and,
. The increase in regional operating activities within various states
expected to open their electric utility markets for retail competition
in the foreseeable future.
Sales And Marketing Expense
Sales and marketing expense increased by $9.4 million from $4.1 million to
$13.5 million from the first quarter of 1998 to the first quarter of 1999.
Sales and marketing expense for the first quarter of 1999 includes significant
expenditures related to the commencement of service in Pennsylvania effective
January 1, 1999. 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.
General And Administrative Expense
General and administrative expense increased $3.0 million from $1.0 million
to $4.0 million from the first quarter of 1998 to the first quarter of 1999.
This expense is comprised primarily of payroll and other expenses relating to
our administrative, human resources, finance, legal and regulatory functions.
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 exercise price of shares and options issued and their fair market
value at the date of sale or grant. The increase also reflects the increase in
the number of employees needed to accommodate our growth in 1998 and 1999.
Technology And Development Expense
Technology and development expense increased $0.3 million from $.8 million
to $1.1 million from the first quarter of 1998 to the first quarter of 1999.
This expense is comprised primarily of payroll, general operating expenses and
costs of consultants relating to the development and operation of our
information technology systems. 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, $5.0 million for the first quarter of 1998 and $19.0 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 certain
cancelable operating leases. Certain outsourcing agreements have minimum
financial commitments of various amounts and terms. 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, L.L.C., will be
sufficient to fund our operations at least through 1999. See "Certain
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 all of our electricity
supply contracts are short-term requirements contracts that generally 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.
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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, many currently installed computer systems and software
applications could fail or malfunction because they may not be able 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 in the Year 2000.
We have determined during our initial assessment that our internal corporate
systems, including both hardware and software applications, are Year 2000
ready, with certain exceptions. Those 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 will upgrade our financial and human resource
applications in order to make them Year 2000 ready by the end of the second
quarter of 1999. Overall, we expect to achieve Year 2000 readiness for all of
our corporate financial and human resources systems by the end of the third
quarter of 1999.
We have requested Year 2000 readiness information from our information
technology service providers, outsourcing providers and suppliers. While this
process is not yet complete, based upon responses to date, many of those
information technology service providers, outsourcing providers and suppliers
have indicated that they will be Year 2000 ready in a timely manner. 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 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
applications and making them Year 2000 ready. We are also utilizing the
services of Sterling Software to assist with the integration testing of systems
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 $0.5 million during the remainder of 1999. These
costs represent work performed to both make our internal 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 power
supply interruptions to our customers or the inability to bill our customers.
All of these factors could materially adversely affect our business, results of
operations and financial condition.
Contingency Plans
We are developing our contingency plan to address situations that may result
if we are unable to achieve Year 2000 readiness. We expect to be completed with
our plan by the end of the third quarter of 1999.
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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
certain 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 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). 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.
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BUSINESS
Our Mission
GreenMountain.com uses the Internet and other media to market green consumer
products and has become the leading retailer of green electricity to
residential customers in deregulated utility markets within the United States.
Our Web site--www.greenmountain.com--will use the rich interactive resources of
the Internet to make it easy and appealing for people to use everyday purchases
as agents of change for a cleaner and healthier environment. Our mission is to
make Green Mountain the leading brand for green 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.
.62 million Americans live in approximately 60 to 70 metropolitan areas
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 has been 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.
We believe that Americans are more concerned than ever about environmental
problems and are more knowledgeable than ever about green products and
processes. The percentage of the U.S. public that would choose environmental
protection over meeting adequate energy needs increased from 35% in 1973 to 80%
in 1993. We also believe that Americans are increasingly sensitive to the
effect that their individual behavior can have on the environment. These trends
are reflected in the growth of recycling. According to BioCycle Magazine, the
percentage of recycled waste grew from 8% in 1990 to 28% in 1997.
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[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.
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 recent Worldwatch publications:
.Atlantic Richfield sees its large holdings of natural gas playing a key
role in the transition from a carbon-based energy economy to one based on
hydrogen.
.British Petroleum has committed $1 billion to the development of wind and
solar energy.
.Royal Dutch Shell has announced a $500 million investment in renewable
energy sources.
Another recent Worldwatch publication stated:
. . . [T]here 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.
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 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 prepared by
Roper Starch International 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 the dominant environmental brand.
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Deregulation Is Empowering Consumers To Change The Way Electricity Is Made
Deregulation of the $200 billion electric utility industry--the largest
source of industrial air pollution in the United States--is part of a global
trend away from governmental control and toward free markets. Historically, in
the United States regulated electric utilities have provided bundled
electricity service, including the generation, transmission and distribution of
electricity, within exclusive franchise service territories. The wholesale
power sector is largely governed by federal laws and regulations, while the
retail operations of electric utilities are principally regulated on the state
level. Since the passage of federal legislation in 1992, the Federal Energy
Regulatory Commission has implemented measures to facilitate competition in the
wholesale power marketing area. On a state-by-state basis, states have begun to
introduce competition to the retail power sector. As a result of deregulation,
the electric utility industry is changing from one characterized by a single
provider of bundled electricity to one having a number of generators and
electricity marketers. With deregulation, power generation and marketing are
open to competition while distribution and transmission of electricity remain
regulated. Currently, the industry segment in which we compete is retail
marketing and our primary target customers are residential customers.
Deregulation is providing the growing community of informed and
environmentally conscious consumers with a choice of electricity supplier and
of generation source. Because all electricity delivered into the electric power
grid 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 grid. Choice allows 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's retail electricity market opened for
competition on January 1, 1999. As of March 31, 1999, approximately 10% of
the households in the Pennsylvania market had elected to switch from their
incumbent electricity provider. 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.
.California. Certain features of California's deregulation program that are
presently applicable make it substantially less favorable to free market
competition than the Pennsylvania program. California's retail electricity
market opened for competition on April 1, 1998. As of March 31, 1999, only
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.
.Massachusetts. Although the Massachusetts retail electricity market
nominally opened for competition on March 1, 1998, under the Massachusetts
deregulation program competitive retail suppliers are unable to match the
standard rates offered by incumbent electricity providers. Accordingly, no
significant competition has developed in the residential retail
electricity market in Massachusetts.
.Rhode Island. Although Rhode Island's residential retail electricity
market was formally open for competition by July 1998, as in Massachusetts
there has been very little market activity because competitive electricity
suppliers cannot compete with the standard rates offered by incumbent
electricity providers.
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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--We Face Risks Related
to the Deregulation Process."
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 (14 STATES AND THE
DISTRICT OF COLUMBIA)
.COMPANIES ORDERED TO FILE RESTRUCTURING PLANS OR ENABLING LEGISLATION
ENACTED (4 STATES)
.COMMISSION OR LEGISLATIVE INVESTIGATION UNDERWAY LIKELY TO LEAD TO A
RESTRUCTURING PLAN (4 STATES)
.AN INFORMATIONAL OR FACT-FINDING STUDY IS UNDERWAY (23 STATES)
.NO SUBSTANTIVE ACTIVITY IS UNDERWAY (3 STATES)
SOURCE: REGULATORY RESEARCH ASSOCIATES, FEBRUARY 16, 1999]
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 the most significant global
communications medium. 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 Web users in the world will
grow from 124 million at the end of 1998 to 213 million by the end of 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 services purchased
on the Internet in the United States will grow from $7.1 billion in 1998 to
$41.1 billion in 2002.
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.
The Green Mountain Advantage
We believe that a significant opportunity exists for a company to market
green consumer products over the Internet. Our research 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 becoming the dominant
Internet destination site for people who care about the environment, we can
capitalize on this opportunity to make Green Mountain the leading brand for
green products.
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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.
We are the leading seller of green electricity to residential customers in
deregulated utility markets within the United States based on number of
households served. In June 1998, we began marketing electricity products in
Pennsylvania, which opened for competition on January 1, 1999. As of March 31,
1999, we had approximately 57,300 customers in Pennsylvania. The Xenergy 1999
Retail Wheeling Multi-Client Study Phase 4 Final Report, prepared by Applied
Marketing Service and Xenergy, 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 has been to concentrate first on
northern California due to its higher concentration of environmentally
sensitive consumers and to increase our efforts in southern California later.
As of March 31, 1999, we had approximately 21,700 customers in California
(approximately 75% of which were in northern California).
The following table illustrates the number of our customers for each month
from July 1998 through March 1999.
[BAR CHART REPRESENTING INCREASE IN CUSTOMER GROWTH FROM JULY 1998 TO MARCH
1999 IN TERMS OF ACTUAL CUSTOMERS BEING SERVED APPEARS HERE]
Market research performed for us by independent third parties indicates that
from November 1998 to January 1999, awareness of our Green Mountain brand name
in Pennsylvania grew from 35% of residential households to more than 60%.
Similar market research 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 name.
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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 of the Green Mountain brand through traditional media, principally in
states in which we offer our energy products. We will 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 economic decisions can effect positive environmental
change.
.Certain of our green electricity products are identified as
environmentally preferred by:
.Natural Resources Defense Council
.Environmental Defense Fund
.Clean Air Council (of Pennsylvania)
.Union of Concerned Scientists has chosen one of our products to serve
their California office and the electric vehicle charging station in
their parking lot.
We have an affinity marketing program with each of the following
organizations:
.Redwood Alliance, Arcata, California
.Bay Keeper, San Francisco, California
.The American Lung Association, Los Angeles, California
.Environmental Media Association, Los Angeles, California
.Save Our Shores, Santa Cruz, California
.AIDS Fund, Philadelphia, Pennsylvania
Each of the following organizations have supported our work in community
outreach programs:
.Coalition of Clean Air, Los Angeles, California
.Heal the Bay, Santa Monica, 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.
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<PAGE>
Offer Convenience And Selection
According to the 1998 Green Gauge Report, 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." To fill this need, we are expanding the
offerings on our Web site to include a broad selection of green products in
addition to our existing energy products. 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 developing our Web site and technology systems as 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.
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 economic
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.
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<PAGE>
Marketing, Sales And Customer Service
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
traffic aggregators in order to increase the level of traffic to our Web site.
These arrangements typically involve banner advertising on the aggregator's
site or network containing our message and an interactive link to our Web site,
but can also involve other products such as e-mail.
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 banners advertising our energy business
on certain Yahoo! properties and Yahoo! mail for a one-year period. The
agreement is the first in which Yahoo! will employ a new technology allowing it
to market certain promotions to its registered users on a geographically-
targeted basis.
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, as well as the mailing function.
Affinity Programs. We use affinity marketing programs to market our products
through groups that share our interest in the environment. 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.
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. Other clients of The Cullinan Group include Georgia Pacific and
Thinsulate Insulation/3M. 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. 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.
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.Telephone. Customers may purchase our products through inbound or outbound
telephone contact. We outsource our call center functions.
.Mail. Customers may purchase our products by mail. We outsource our mail
response processing.
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.
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.
.Product Delivery. Product delivery is effected directly by our suppliers.
.Billing and Customer Care. We outsource billing and customer care
functions.
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<PAGE>
Our Green Electricity Products
[GRAPHIC APPEARS HERE]
Deregulation of the $200 billion electric utility industry--the largest
source of industrial air pollution in the United States--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.
[PRINT ADVERTISEMENTS--"IF YOU'RE PLANNING TO RECYCLE" AND "NO COAL. NO NUKES.
NO KIDDING."--APPEAR HERE.]
We offer three green electricity products to residential electricity
customers in Pennsylvania. The following 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.
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<PAGE>
<TABLE>
<CAPTION>
Average Monthly
Additional Cost
Product Generation Composition or Savings
------- ---------------------- ---------------
<C> <S> <C>
[Eco Smart logo] .1% from new renewable + $1.18
landfill gas facilities
.99% from natural gas and/or
large-scale hydroelectric
facilities
[Enviro Blend logo] .3% from new renewable + $6.85
[Green-e logo] landfill gas facilities
.47% from other renewable
resources, including small-
scale hydroelectric,
landfill gas and/or wind
facilities
.50% from natural gas and/or
large-scale hydroelectric
facilities
[Nature's Choice logo] .5% from new renewable + $10.37
[Green-e logo] landfill gas facilities
.95% from other renewable
resources, 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.
We currently offer two green electricity products to new residential
electricity customers in California. The following 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
------- ---------------------- ---------------
<C> <S> <C>
[100% Renewable Power 2.0 .5% from new renewable wind, -$0.66
logo] [Green-e logo] geothermal or landfill gas
facilities
.95% from other renewable
resources, including small-
scale hydroelectric,
biomass and geothermal
facilities
[Wind for the Future 2.0 .25% from newly-built wind +$12.19
logo] turbine generators
[Green-e logo]
.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 the
100% Renewable Power 2.0SM product.
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.
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It's a small planet.(SM)
<PAGE>
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--We Face
Risks Related to the Deregulation Process."
We offer our electricity products in both Pennsylvania and California at a
guaranteed price based on a one-year term, except for our Wind for the Future
2.0SM product which is offered for a three-year term. 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 provide that
during the relevant term the suppliers will deliver into the grid a volume of
electricity having the characteristics 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 supply contracts are designed to minimize our risk related to fluctuating
commodity pricing and usage. With the exception of minor costs associated with
specialty content that makes up less than 5% of our electricity requirements,
to date we have avoided taking on electricity supply costs that are not tied
directly to customer sales volumes. 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 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 for the foreseeable future, although we
can provide no assurance in this regard. See "Risk Factors--Other Risks Related
to Our Business Generally--We are Dependent on Third Parties to Supply the
Electricity Products We Sell" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
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<PAGE>
Other Products
Solar Generation Equipment
We market Green Mountain SolarSM [PRINT ADVERTISEMENT--"SOLAR
systems in California. These systems POWER"--APPEARS HERE]
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 in California
is between $6,000 and $13,000 in areas
qualifying for the most favorable state
and federal subsidy programs and
between $10,000 and $20,000 in other
areas. Applied Power Corporation
designs and installs systems offered in
California using components
manufactured by Solarex Corporation. We
began offering Green Mountain SolarSM
systems in Pennsylvania in April 1999
and intend to expand our marketing of
Green Mountain SolarSM systems to other
markets.
New Products Under Development
Energy Efficient Home
Products. On our Web site we expect
to offer 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 certain 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
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It's a small planet.(SM)
<PAGE>
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-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--We Must Broaden Our Product
Offerings."
Credit Cards. We expect to offer a credit card that will be co-branded with
the Green Mountain brand and Visa or MasterCard. This credit card would be
available exclusively over the Internet using an online application process,
and monthly statements would also be delivered over the Internet. A portion of
our revenues from these credit cards would be invested in environmentally
beneficial projects such as large-scale solar generation facilities. We believe
this product would foster a sense of community among our customers and a sense
of identification with GreenMountain.com.
Ecotourism. We are exploring the possibility of offering ecological tours
and vacations by partnering with high-quality travel providers. The travel we
would 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. According to The Ecotourism
Society, nature travel is increasing at an annual rate of between 10% and 30%,
as compared to overall tourism which is increasing at an annual rate of 4%.
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 managed portfolios incorporating at least one
social investment strategy. Approaches under consideration include the
provision of reports identifying the performance of environmentally oriented
mutual funds as well as more active marketing or sponsorship roles, possibly in
cooperation with a strategic partner.
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 expect that our Web site will be fully functional by October 1,
1999.
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 various 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;
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.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.
Examples of content that we are considering include:
.News articles and reports about the environment and issues that impact the
environment;
.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;
.Corporate environmental value added reports;
.Quizzes such as an eco-IQ quiz; and
.Games and other interactive activities for children.
We are exploring relationships with various content providers. 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.
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 all 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.
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<PAGE>
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 certain of this
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.
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.
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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 Lockheed Martin, TWA and Zurich
Financial Services, and are used in more than 20,000 customer sites worldwide.
Because most aspects of our customer relationships are handled by our
outsourcing partners based on communications through the Information Network,
we can focus on our overall marketing strategy and product development.
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 certain 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
certain 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 certain 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 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 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;
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It's a small planet.(SM)
<PAGE>
.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--We Face Intense Competition."
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--We Must Protect Our Intellectual Property."
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--We Face Risks Related to the
Deregulation Process." 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."
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.
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. Our lease for this space
expires on September 30, 2002. 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........................... World Watch 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. The members of our Environmental Advisory Board do not currently
receive any compensation for serving on that board, but are reimbursed for
their out-of-pocket expenses incurred in connection with their service on the
Environmental Advisory Board.
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<PAGE>
MANAGEMENT
Our Executive Officers and Directors
The following table sets forth certain information regarding our executive
officers and directors as of April 26, 1999.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Sam Wyly................ 64 Chairman and Director
Dennis M. Crumpler...... 46 Vice Chairman, acting Chief Technology Officer and Director
Evan A. Wyly............ 37 Vice Chairman and Director
M. David White.......... 37 Chief Executive Officer
Dennis W. Kelly......... 45 President
Kevin W. Hartley........ 39 Executive Vice President and Chief Marketing Officer
Julia D. Blunden........ 32 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......... 52 Chief Environmental Officer
K. Scott Canon.......... 37 Chief Financial Officer
H. Lee S. Hobson........ 34 Director
Lisa Wyly............... 33 Director
Mark Cuban.............. 40 Director*
Richard E. Hanlon....... 51 Director*
Reed E. Maltzman........ 32 Director*
</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 an 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.
Dennis M. Crumpler has been a Vice Chairman, our acting Chief Technology
Officer 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.
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<PAGE>
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 $2.5 billion
in assets. Mr. Wyly is also a director of Sterling Commerce, Sterling Software
and Michaels Stores.
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 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.
Dennis W. Kelly has been our President since February 1999. From December
1982 to February 1999, Mr. Kelly served in various 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.
Kevin W. Hartley has been our Chief Marketing Officer and Executive Vice
President since December 1998. From August 1997 to December 1998, Mr. Hartley
served as our Vice President of Marketing. From May 1994 to August 1997, he
served in the following capacities with Green Mountain Power Corporation: Vice
President of Marketing from May 1997 to August 1997, Managing Director of
Marketing from May 1996 to May 1997 and Director of Marketing from May 1994 to
May 1996. 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.
Julia D. Blunden has been our Vice President of Strategic Planning since
October 1998. She served as our Regional Director for the California region
from August 1997 to October 1998. From January 1997 to August 1997, Ms. Blunden
was Director of Sales, then Regional Director, of the California region of
Green Mountain Power Corporation. From 1987 to August 1996, Ms. Blunden worked
in power plant development and acquisition with The AES Corporation, a
worldwide developer, owner and operator of power plants. The last capacity in
which she served at AES was Project Director from September 1995 to August
1996. From September 1993 to June 1995, Ms. Blunden attended graduate business
school, and during part of 1994, she worked for the Center for Energy
Efficiency and Renewable Technologies.
Thomas C. Boucher has been our Vice President of Energy Supply and Business
Development since August 1997. From May 1996 to August 1997, Mr. Boucher was
Vice President of Business Strategy and Development of Green Mountain Power
Corporation. Between 1992 and 1996, Mr. Boucher held a variety of financial,
business and energy planning positions at Green Mountain Power Corporation.
Karen K. O'Neill has been our Vice President of New Markets since August
1997. Ms. O'Neill held various positions with Green Mountain Power Corporation
since 1989, including Vice President of Organization Development and Human
Resources from January 1995 to August 1997 and Assistant General Counsel from
1992 to 1995.
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.
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It's a small planet.(SM)
<PAGE>
Jay LeDuc has been our Director of Operations and Systems since January
1999. From October 1997 to January 1999, Mr. LeDuc served as our Manager, then
Director, of Regional Business Development. From October 1992 to October 1997,
Mr. LeDuc served in various marketing positions with The Systems 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.
Thomas H. Rawls has been our Chief Environmental Officer since January 1999.
From August 1997 to January 1999, he served as our Director of Environmental
Affairs. From March 1993 to August 1997, Mr. Rawls served as Manager of
Corporate Relations, then Manager of Marketing, of Green Mountain Power
Corporation. 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.
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 1992 to March 1993, he
worked for Chase Manhattan Bank, and from August 1987 to October 1992 for
Goldman, Sachs, an investment banking firm.
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.
Mr. Hobson is a Partner and Senior Analyst 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, with 27
control investments in companies outside the United States. Earlier he was an
analyst with Goldman Sachs in New York and an analyst with Societe Generale, an
investment banking firm, in Paris.
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 Deaf. From 1990 to 1992, Ms. Wyly was a teacher at
R.E.A.D.S., a program for deaf and hard of hearing children.
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.
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.
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<PAGE>
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. From 1994 to August 1995, Mr. Maltzman attended the
Stanford School of Business.
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--Certain 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. We have retained a director search firm to assist us in
identifying candidates in our search for an additional director. We anticipate
that the board of directors will appoint the individual selected as a director
as soon as practicable after the search is completed and that he or she will be
appointed to serve in Class III.
Board Committees
Prior to the closing of this offering, our board of directors expects to
establish five board committees--an Executive Committee, an Environmental
Integrity Committee, an Audit and Special Compensation Committee, a
Compensation Committee and a Nominating 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 certain limitations under
Delaware law. The initial Executive Committee members will be Sam Wyly, Evan
Wyly and Lisa Wyly.
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, Evan Wyly and Lisa Wyly.
Audit and Special Compensation Committee
The Audit and Special Compensation Committee will review our internal
accounting procedures and controls and consult with and review the services
provided by our independent accountants. The Audit and Special Compensation
Committee will also review and determine the salaries, benefits, stock option
grants and
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It's a small planet.(SM)
<PAGE>
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 Audit and Special Compensation Committee members will be
Mark Cuban, Richard Hanlon and Reed Maltzman.
Compensation Committee
The Compensation Committee will review and recommend to the full board of
directors the salaries, benefits, stock option grants and other compensation of
all employees, consultants, directors and other individuals compensated by us
(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, Evan
Wyly and Lisa Wyly.
Nominating Committee
The Nominating 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 initial members
of the Nominating Committee will be Sam Wyly, Evan Wyly and Lisa Wyly.
Director Compensation
We currently have no standard arrangement under which we compensate
directors for their services provided in that capacity, except that we
reimburse them for out-of-pocket expenses incurred in connection with attending
board of directors and committee meetings. Directors will 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 certain 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 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 4,974 1,200(4)
Kevin W. Hartley........
Vice President, 1998 155,000 125,000 0 8,348(5)
Marketing 1997 54,524 34,875 6,466 775(5)
Thomas C. Boucher....... 1998 150,000 45,000 0 9,743(6)
Vice President, Energy 1997 51,786 33,750 5,471 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 2,487 8,413(8)
Peter H. Zamore......... 1998 140,000 45,000 0 9,204(9)
Vice President, General 1997 48,952 31,500 4,974 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. Since that date, he has continued as an
employee at the same level of compensation and will cease to be an employee
as of April 6, 1999.
(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.......... 4,975 0 0 0
Kevin W. Hartley......... 2,587 3,880 0 0
Thomas C. Boucher........ 2,190 3,282 0 0
David B. Luther.......... 997 1,490 0 0
Peter H. Zamore.......... 1,990 2,985 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
On February 5, 1999, we entered into a letter agreement with Dennis M.
Crumpler relating to his service to us as a director, Vice Chairman and
consultant. Under the agreement, Mr. Crumpler purchased an equity interest
under our Employee Unit Purchase Plan. See "Certain Transactions--Subsequent
Transactions--Employee Unit Purchase Plan." In connection with the execution of
the agreement, in February 1999, we granted him an option to purchase 50,000
shares of common stock at an exercise price of $4.00 per share (assuming our
conversion from a limited liability company to a corporation had occurred as of
the date of that grant), in connection with his service as a director. See
"Management--Director Compensation." At that time, we also granted him an
option to purchase 356,250 shares of common stock at an exercise price of $4.00
per share (assuming our conversion from a limited liability company to a
corporation had occurred as of the date of that grant), in connection with his
service as Vice Chairman. These options 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. 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.
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<PAGE>
Under the agreement, Mr. White purchased an equity interest under our
Employee Unit Purchase Plan. See "Certain Transactions--Subsequent
Transactions--Employee Unit Purchase Plan." Under the agreement, in January
1999 we granted him an option to purchase 750,000 shares of common stock at an
exercise price of $4.00 per share (assuming our conversion from a limited
liability company to a corporation had occurred as of the date of that grant).
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 the next 16 calendar quarters. In addition, pursuant to
certain antidilution provisions of the agreement, in connection with the
completion of a private equity offering in February 1999 we granted him an
option to purchase 187,500 shares of common stock at an exercise price of $8.00
per share (assuming our conversion from a limited liability company to a
corporation had occurred as of the date of that grant). 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. Under the agreement, we will also grant Mr.
White an option in connection with the closing of this offering that will
entitle him to purchase a number of shares of common stock equal to 5% of the
number of shares issued in this offering at an exercise price per share equal
to the initial public offering price. This option will be subject to a vesting
schedule similar to that of Mr. White's other options described in this
paragraph.
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, under certain circumstances, the options granted
to him as described above will immediately vest and be exercisable.
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. Under that agreement, Highland Stargate
has agreed to provide compensation and certain benefits to Mr. White in
consideration for services provided by Mr. White to Highland Stargate. The
agreement expressly provides that the performance of Mr. White's duties to
Highland Stargate will not interfere with the performance by him of his duties
to us on a substantially full-time basis. At the time he accepted his position
with us, Scott Canon, our Chief Financial Officer, also entered into a similar
agreement with Highland Stargate.
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>
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.
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It's a small planet.(SM)
<PAGE>
Contemporaneously with the execution and delivery of these employment
agreements on August 6, 1997, each of these executives was granted an option to
purchase the number of shares indicated below at an exercise price of $90.48
per share (assuming our conversion from a limited liability company to a
corporation had occurred as of that date):
<TABLE>
<CAPTION>
Number of Shares
Name Underlying Option
---- -----------------
<S> <C>
Thomas C. Boucher...................................... 5,472
Kevin W. Hartley....................................... 6,467
Douglas G. Hyde........................................ 12,437
David B. Luther........................................ 2,487
Peter H. Zamore........................................ 4,975
</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 March, 1999. The agreement provides that 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 "Certain Transactions--
Subsequent Transactions--Employee Unit Purchase Plan." Under the agreement, Mr.
Hyde is prohibited from engaging in certain 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 certain 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,
options exercisable for 39,902 shares of common stock at an exercise price of
$90.24 per share and 28,360 shares of common stock of an exercise price of
$90.48 per share (assuming our conversion from a limited liability company to a
corporation had occurred as of that date) were outstanding under these
agreements. 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 eligible employees. As of March 31, 1999, options exercisable for 6,597
shares of common stock at an exercise price of $90.48 (assuming our conversion
from a limited liability company to a corporation had occurred as of that date)
were outstanding under the 1997 Employee Ownership Plan. No additional options
are expected to be granted under the 1997 Employee Ownership Plan. See "Shares
Eligible for Future Sale."
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<PAGE>
1999 Unit Option Plan
In 1999, our predecessor adopted a 1999 Unit Option Plan. Under the 1999
Unit Option Plan, our predecessor granted options to eligible participants,
including employees, directors and consultants. As of March 31, 1999, options
exercisable for 4,029,500 shares of common stock at an exercise price of $4.00
and 885,000 shares of common stock at an exercise price of $8.00 (assuming our
conversion from a limited liability company to a corporation had occurred as of
that date) were outstanding under the 1999 Unit Option Plan. See "Shares
Eligible for Future Sale."
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 Audit and
Special Compensation Committee and our board of directors, we expect in
connection with the closing of this offering to grant to Sam Wyly, our
Chairman, an option to purchase a number of shares of common stock equal to 5%
of the number of shares issued in this offering at an exercise price per share
equal to the initial public offering price. This option 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.
David White, our Chief Executive Officer, will receive a similar grant under
the terms of his employment agreement. See "--Employment Agreements--Employment
Agreement with Our Chief Executive Officer." 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 Audit
and 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 .
However, this number will be increased, if necessary, on 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 Audit and 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
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<PAGE>
covered by options, and/or in the kind of shares covered (including shares of
another issuer), as the Audit and 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 Audit and Special
Compensation Committee or the board of directors determines.
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 Audit
and 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 various
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 Audit and 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 .
Vesting of Options Upon a Change in Control. The stock option agreement
evidencing any stock option may provide that the stock option will become
exercisable if there is a change in control of GreenMountain.com (as defined in
the stock option agreement or in any agreement referenced in such stock option
agreement) or in the event of any other similar transaction or event.
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 Audit and 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.
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.
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<PAGE>
None of the limited liability company's executive officers (other than Sam
Wyly, who may be deemed to have been an executive officer) 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.
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 expenses (including attorneys' fees), 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 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
certain 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 (other than 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>
CERTAIN 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, L.L.C., an investment vehicle controlled by the Wyly family,
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 certain
service marks, including our "Choose wisely. It's a small planet." and
"Green Mountain Energy Resources" service marks, various marketing studies
and analyses and its rights under agreements with various 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 certain
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.
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<PAGE>
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.
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. Certain companies, 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.
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It's a small planet.(SM)
<PAGE>
Employee Unit Purchase Plan
During January and early February 1999, employees, consultants and other
participants in our Employee Unit Purchase Plan purchased 1,000,000 common
units in the limited liability company in the aggregate for total consideration
of $10.0 million. Upon our conversion from a limited liability company to a
corporation, these 1,000,000 common units will be converted to 2,500,000 shares
of common stock. Under the Employee Unit Purchase Plan, participants were
permitted to pay for the common units purchased with cash or promissory note,
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 certain information
regarding the number of shares purchased by our executive officers and
directors (assuming our conversion from a limited liability company to a
corporation had occurred), indicating the aggregate amount and type of
consideration paid.
<TABLE>
<CAPTION>
Number of Amount of
Name and Position Shares Cash Loan Total Consideration
----------------- --------- ---------- ---------- -------------------
<S> <C> <C> <C> <C>
Dennis M. Crumpler...... 500,000 $1,000,000 $1,000,000 $2,000,000
M. David White.......... 750,000 1,500,000 1,500,000 3,000,000
Dennis W. Kelly......... 100,000 200,000 200,000 400,000
Kevin W. Hartley........ 165,000 115,000 545,000 660,000
Julia D. Blunden........ 25,000 50,000 50,000 100,000
Thomas C. Boucher....... 26,000 52,000 52,000 104,000
Karen K. O'Neill........ 25,000 50,000 50,000 100,000
Peter H. Zamore......... 28,500 57,000 57,000 114,000
Jay LeDuc............... 6,500 13,000 13,000 26,000
Thomas Rawls............ 2,500 5,000 5,000 10,000
K. Scott Canon.......... 262,500 400,000 650,000 1,050,000
--------- ---------- ---------- ----------
Totals................ 1,891,000 $3,442,000 $4,122,000 $7,564,000
========= ========== ========== ==========
</TABLE>
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 $30.3
million. Upon our conversion from a limited liability company to a corporation,
these 1,515,500 common units will be converted into 3,788,750 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 1,875,000 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
H. Lee S. Hobson is a Partner of Maverick Capital. In addition, Green Funding
II, L.L.C., an investment vehicle controlled by the Wyly family, acquired
directly 500,000 common units, which will be represented by 1,250,000 shares
upon our conversion from a limited liability company to a corporation, for an
aggregate purchase price of $10.0 million.
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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. Principal, together with
accrued and unpaid interest, will be payable on April 23, 2001. In addition, we
will be required to repay any advances in full from the net proceeds 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 certain covenants that, by their
terms, require performance after the termination of such agreement, and each
member will have the right to receive 2.5 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). 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 certain
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.
Certain Other Transactions and Relationships
Agreement 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
certain network management services and other information systems consulting
services. We paid Sterling Software $826,611 for services provided by it during
1998 and owed it an additional $382,396 for those services as of December 31,
1998. We paid Sterling Software $576,857 during the first quarter of 1999. Sam
Wyly and Evan Wyly are directors and stockholders of Sterling Software.
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, 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 both our conversion from a limited
liability company to a corporation, the related exchange of each common unit of
the limited liability company for 2.5 shares of common stock in the corporation
and 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
"Certain Transactions--Reorganization Transaction."
<TABLE>
<CAPTION>
Percentage of
Shares
Beneficially
Number of Shares Owned
Beneficially Owned ------------------
Name and Address Prior to the Prior to After the
of Beneficial Owner(1) Offering Offering Offering
---------------------- ------------------ -------- ---------
<S> <C> <C> <C>
Sam Wyly............................. 1,709,437 (2) 8.0%
Dennis M. Crumpler................... 601,562 (3) 2.8
Evan A. Wyly......................... 148,812 (4) *
M. David White....................... 984,375 (5) 4.6
Douglas G. Hyde...................... 43,975 (6) *
Kevin W. Hartley..................... 215,217 (7) 1.0
Thomas C. Boucher.................... 62,722 (8) *
Peter H. Zamore...................... 64,725 (9) *
David B. Luther...................... 27,997 (10) *
H. Lee S. Hobson..................... 60,625 (11) *
Lisa Wyly............................ 494,474 (12) 2.3
Richard E. Hanlon.................... 62,500 (13) *
Mark Cuban........................... 62,500 (13) *
Reed E. Maltzman..................... 62,500 (13) *
Maverick Capital, Ltd................ 3,435,000 (14) 16.1
Locke Limited........................ 5,419,885 (15) 25.5
All directors, director nominees and
executive officers as a group (18
persons)............................ 5,104,211 22.7% %
</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) Includes: (A) 141,490 shares issuable upon the exercise of options owned of
record by Mr. Sam Wyly and 2,000 shares owned by four family trusts of
which Mr. Sam Wyly is trustee, all of which are exercisable within 60 days;
(B) 5,985 shares issuable upon the exercise of options owned of record by
Mr. Sam Wyly and 2,990 shares issuable upon the exercise of options owned
of record by four family trusts of which Mr. Sam Wyly is trustee, all of
which become exercisable upon the closing of this offering; (C) 1,366,620
shares owned of record by four family trusts of which Mr. Sam Wyly is
trustee; and (D) 182,797 shares owned by the Cheryl R. Wyly Marital Trust.
Mr. Sam Wyly disclaims beneficial ownership of the shares and options owned
by these trusts.
(3) Includes 101,562 shares issuable upon the exercise of options exercisable
within 60 days.
(4) Includes 142,080 shares issuable upon the exercise of options exercisable
within 60 days and 6,732 shares issuable upon the exercise of options that
will become exercisable upon the closing of this offering.
(5) Includes 234,375 shares issuable upon the exercise of options exercisable
within 60 days.
(6) Includes 4,975 shares issuable upon the exercise of options exercisable
within 60 days.
(7) Includes 46,337 shares issuable upon the exercise of options exercisable
within 60 days and 3,880 shares issuable upon exercise of options that
will become exercisable upon the closing of this offering.
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(8) Includes 33,440 shares issuable upon the exercise of options exercisable
within 60 days and 3,282 shares issuable upon exercise of options that
will become exercisable upon the closing of this offering.
(9) Includes 33,240 shares issuable upon the exercise of options exercisable
within 60 days and 2,985 shares issuable upon exercise of options that
will become exercisable upon the closing of this offering.
(10) Includes 997 shares issuable upon the exercise of options exercisable
within 60 days.
(11) Includes 54,375 shares issuable upon the exercise of options exercisable
within 60 days.
(12) Includes: (A) 33,245 shares issuable upon the exercise of options owned of
record by Ms. Wyly and 500 shares issuable upon the exercise of options
owned of record by a family trust of which Ms. Wyly is trustee, all of
which are exercisable within 60 days; (B) 2,992 shares issuable upon the
exercise of options owned of record by Ms. Wyly and 747 shares issuable
upon the exercise of options owned of record by a family trust of which
Ms. Wyly is trustee, all of which become exercisable upon the closing of
this offering; and (C) 456,990 shares owned of record by a family trust of
which Ms. Wyly is trustee. Ms. Wyly disclaims beneficial ownership of the
shares and options owned by the trust.
(13) Consists of 62,500 shares issuable upon the exercise of options
exercisable within 60 days.
(14) 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
these entities and, as a result of such position, Maverick Capital, Ltd.
has voting and investment power over shares owned by them of record. Mr.
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. Mr. Evan Wyly disclaims beneficial ownership of
all shares held of record by Maverick Capital, Ltd., and, accordingly,
such shares are excluded from the information in the table with respect to
Mr. Evan Wyly. The address of Maverick Capital, Ltd. is 300 Crescent
Court, Suite 1000, Dallas, Texas 75201.
(15) 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.
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<PAGE>
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 9,975 (3) $90.24 8/06/02
1/15/99 406,250 (4) $ 4.00 4/02/03
2/17/99 143,750 (5) $ 8.00 4/18/03
Dennis M. Crumpler................. 2/05/99 406,250 (6) $ 4.00 4/06/03
Evan A. Wyly....................... 8/06/97 11,220 (3) $90.24 8/06/02
1/15/99 406,250 (4) $ 4.00 4/02/03
2/17/99 93,750 (5) $ 8.00 4/18/03
M. David White(7).................. 1/15/99 750,000 (8) $ 4.00 4/02/03
2/17/99 187,500 (9) $ 8.00 4/17/03
Douglas G. Hyde.................... 8/06/97 4,975 (10) $90.48 8/06/02
Kevin W. Hartley................... 8/06/97 6,467 (3) $90.48 8/06/02
1/15/99 162,500 (4) $ 4.00 4/02/03
2/17/99 12,500 (5) $ 8.00 4/18/03
Thomas C. Boucher.................. 8/06/97 5,472 (3) $90.48 8/06/02
1/15/99 112,500 (4) $ 4.00 4/02/03
2/17/99 12,500 (5) $ 8.00 4/18/03
David B. Luther.................... 8/06/97 997 (11) $90.48 8/06/02
Peter H. Zamore.................... 8/06/97 4,975 (3) $90.48 8/06/02
1/15/99 112,500 (4) $ 4.00 4/02/03
H. Lee S. Hobson................... 1/15/99 217,500 (4) $ 4.00 4/02/03
Lisa Wyly(12)...................... 8/06/97 4,987 (3) $90.24 8/06/02
1/15/99 125,000 (4) $ 4.00 4/02/03
Mark Cuban......................... 2/14/99 62,500 (13) $ 4.00 4/16/03
Reed E. Maltzman................... 2/04/99 62,500 (13) $ 4.00 4/16/03
Richard E. Hanlon.................. 2/04/99 62,500 (13) $ 4.00 4/16/03
</TABLE>
- --------
(1) Reflects our conversion from a limited liability company to a corporation.
(2) Does not include 2,000 shares issuable upon the exercise of options that
have become vested and are owned by four family trusts of which Mr. Sam
Wyly is trustee or 2,990 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 Audit and Special Compensation Committee and our board of directors,
we expect in connection with the closing of this offering to grant to Sam
Wyly an option to purchase a number of shares equal to 5% of the number of
shares issued in this offering 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.
(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.
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(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) 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.
(7) Pursuant to Mr. White's employment agreement, in connection with the
closing of this offering we will grant to him an option that will entitle
him to purchase a number of shares equal to 5% of the number of shares
issued in this offering 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.
(8) 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.
(9) 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.
(10) 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."
(11) Upon his retirement, Mr. Luther forfeited options to purchase an
additional 1,490 shares.
(12) Does not include 500 shares issuable upon the exercise of options that
have become vested and are owned of record by a family trust of which Ms.
Wyly is trustee or 747 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.
(13) These options provide for immediate vesting.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
Prior to the closing of this offering, our certificate of incorporation will
be amended so that we are authorized to issue 150,000,000 shares of common
stock, par value $0.01 per share, and 50,000,000 shares of preferred stock, par
value $0.01 per share. As of March 31, 1999, there were 21,288,750 shares of
common stock outstanding held of record by 91 stockholders, outstanding options
to purchase 4,979,360 shares of common stock and outstanding warrants to
purchase 19,922 shares of common stock (assuming our conversion from a limited
liability company to a corporation and the related exchange of each common unit
of the limited liability company for 2.5 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 has the authority, within the limitations and
restrictions stated in our 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 % 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 under certain
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.
Certain 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. Certain provisions of our certificate of incorporation
and bylaws, as so amended, and Delaware law may have an anti-
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<PAGE>
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 certain 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
69
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<PAGE>
be used for a variety of corporate purposes, including future public offerings
to raise additional capital, 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 certain 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 certain mergers, asset sales and
other transactions resulting in a financial benefit to the interested
stockholder. Subject to certain 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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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, shares of common stock will be outstanding (
shares if the underwriters exercise their over-allotment option in full),
assuming the exchange of each common unit of the limited liability company
outstanding as of the date of this prospectus for shares of common stock. See
"Capitalization." Of these shares, the shares ( shares if the underwriters
exercise their over-allotment option in full) 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 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.
Our officers, directors and certain stockholders 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 certain 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. The foregoing
summary of Rule 144 is not intended to be a complete description.
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.
As soon as practicable following the closing of this offering, we intend to
file a registration statement under the Securities Act to register shares
of common stock issuable upon the exercise of outstanding stock options or
reserved for issuance under our 1999 Stock Option Plan. See "--Stock Option
Agreements and Plans." After the effective date of such registration statement,
these shares will be available for sale in the open market subject to the lock-
up agreements described above and, for our affiliates, to certain conditions
and restrictions of Rule 144.
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<PAGE>
UNDERWRITING
We have entered into an underwriting agreement with the underwriters named
below, for whom Prudential Securities Incorporated is acting as representative.
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 certain conditions of 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...................................
---
Total..............................................................
===
</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 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 certain 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 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[s] Over-Allotment Option[s]
--------- ------------------------ ------------------------
<S> <C> <C> <C>
Fees paid by
GreenMountain.com...... $ $ $
</TABLE>
In addition, we estimate that we will spend approximately $ in expenses for
this offering. We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act or contribute to
payments that the underwriters may be required to make in respect of these
liabilities.
Our officers, directors, and certain stockholders 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 certain exceptions, without the prior consent of
Prudential Securities. Prudential Securities may, at any time and without
notice, waive the terms of these lock-up agreements 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 various factors such as our financial and operating history and
conditions, our prospects, the prospects of our industry and prevailing market
conditions.
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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. Certain 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 Company 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 the our contracts, agreements or other documents, the
references 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.
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<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
April 26, 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 1,225,620
------------ ------------ -----------
Total assets...................... $ 4,183,365 $ 11,410,721 $29,733,132
============ ============ ===========
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 600,000,
15,000,000 and 21,288,750 issued at
December 31, 1997 and 1998 and
March 31, 1999 (unaudited),
respectively)...................... 6,000 150,000 212,888
Additional paid-in capital.......... 15,594,000 59,850,000 104,311,733
Notes receivable from stockholders.. -- -- (5,108,250)
Deferred compensation............... -- -- (1,635,920)
Accumulated deficit................. (13,862,014) (59,901,079) (79,712,569)
Treasury stock (161,850 shares at
cost).............................. -- (647,400) (647,400)
------------ ------------ -----------
Total stockholders' equity........ 1,737,986 (548,479) 17,420,482
------------ ------------ -----------
Total liabilities and
stockholders' equity............. $ 4,183,365 $ 11,410,721 $29,733,132
============ ============ ===========
</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 13,495,724
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 1,146,964
Depreciation and
amortization......... 90,597 767,605 168,957 239,053
Development and
transaction costs.... 4,705,713 709,068 -- --
------------ ------------ ----------- ------------
Total operating
expenses........... 13,905,101 46,465,132 6,730,972 21,079,960
------------ ------------ ----------- ------------
Operating loss...... (13,905,101) (46,032,015) (6,730,972) (20,026,180)
Interest income
(expense), net......... 43,087 (7,050) 23,583 214,690
------------ ------------ ----------- ------------
Net loss............ $(13,862,014) $(46,039,065) $(6,707,389) $(19,811,490)
============ ============ =========== ============
Basic loss per common
share.................. $ (26.17) $ (7.27) $ (4.72) $ (1.06)
============ ============ =========== ============
Diluted loss per common
share.................. $ (26.17) $ (7.27) $ (4.72) $ (1.02)
============ ============ =========== ============
Basic weighted average
common shares
outstanding............ 529,677 6,329,452 1,420,289 18,605,581
============ ============ =========== ============
Diluted weighted average
common shares
outstanding............ 529,677 6,329,452 1,420,289 19,403,460
============ ============ =========== ============
</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>
Common Shares Treasury Shares
------------------------ -----------------
Shares Amount Shares Amount Total
---------- ------------ ------- --------- ------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock
on August 6, 1997...... 490,455 $ 12,000,000 -- $ -- $ 12,000,000
Return of capital on
August 7, 1997....... -- (4,000,000) -- -- (4,000,000)
Issuance of common
stock................ 109,545 7,600,000 -- -- 7,600,000
Losses accumulated
during the
development stage.... -- (13,862,014) -- -- (13,862,014)
---------- ------------ ------- --------- ------------
Balance, December 31,
1997................... 600,000 1,737,986 -- -- 1,737,986
Issuance of common
stock................ 14,561,850 44,400,000 -- -- 44,400,000
Repurchase of shares.. (161,850) -- 161,850 (647,400) (647,400)
Net loss.............. -- (46,039,065) -- -- (46,039,065)
---------- ------------ ------- --------- ------------
Balance, December 31,
1998................... 15,000,000 98,921 161,850 -- (548,479)
Issuance of common
stock................ 6,288,750 44,524,621 -- -- 44,524,621
Notes receivable from
shareholders......... -- (5,108,250) -- -- (5,108,250)
Deferred
compensation......... -- (1,635,920) -- -- (1,635,920)
Net loss.............. -- (19,811,490) -- -- (19,811,490)
---------- ------------ ------- --------- ------------
Balance, March 31,
1999................... 21,288,750 $ 18,067,882 161,850 $(647,400) $17,420,482
========== ============ ======= ========= ============
</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) $(19,811,490)
Adjustments to
reconcile net loss to
net cash used in
operating
activities--
Depreciation and
amortization....... 90,597 767,605 168,957 239,053
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 (the Company, formerly known as Green Mountain
Energy Resources L.L.C.) is a Delaware corporation, originally formed on
February 26, 1997 as a limited liability company. As further described in Note
12, the Company reorganized into a corporation in early 1999. The Company was
founded by Green Funding I, L.L.C. (the Investor), an affiliate of the Wyly
family, and Green Mountain Resources, Inc. (GMR), a subsidiary of Green
Mountain Power Corporation. The Company was formed to become a national retail
marketer of electricity produced from renewable and other environmentally
preferable sources to residential customers. The Company is actively marketing
and soliciting residential electric service customers in Pennsylvania and
California with plans to expand into additional markets as they open.
The Company began active operations on August 6, 1997 under the terms of an
operating agreement, dated August 6, 1997 (the Operating Agreement). The
Investor initially committed to aggregate cash capital contributions in the
amount of $30,000,000. On October 31, 1997, the Company issued additional
shares to the Investor upon an additional capital commitment of $10,000,000. As
of December 1998, the Investor had funded the $40,000,000 in original
commitments and had committed and funded an additional $20,000,000.
On August 6, 1997, GMR made capital contributions to the Company in the form
of the transfer to the Company of certain property, including certain
intellectual property and contract rights. On August 6, 1997, GMR's capital
account recorded on the Company's books was $4,000,000 which was subsequently
offset by a $4,000,000 payment to GMR for a return of capital on August 7,
1997. In December 1998, the Company entered into an agreement with GMR to buy
back its equity interests in the Company and to obtain a non-compete agreement,
certain rights to the Green Mountain name and other concessions for $1,000,000,
which was paid in two installments on January 4, 1999 and February 16, 1999.
The Company allocated $647,400 to the repurchased equity interest ($4 a share)
and $352,600 to the non-compete agreement, certain rights to the Green Mountain
name and other concessions obtained. This allocation was based on the Company's
estimate of the fair value of the equity interest and the other intangible
assets obtained.
The losses for the period and year ended December 31, 1997 and 1998,
respectively, while the Company was a limited liability company (see Note 12)
were allocated 100% to the Investor 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 such
losses, first to members other than the Investor, to the extent of those
members' capital contributions and, thereafter, to members, including the
Investor, in proportion to their respective ownership interests.
The Company has generated approximately $1.5 million in residential electric
revenue sales in California during 1998 and $4.2 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. The
Company began serving customers in Pennsylvania on January 1, 1999. As of
December 31, 1998 and March 31, 1999, the Company had accumulated deficits of
$59,901,079 and $79,712,569, respectively. The Company 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 the Company's business plan
is dependent on this offering. There can be no assurance that such additional
financing will be available. If the Company is unable to obtain financing
through an initial public offering, the Company will curtail its current growth
plans and the Company believes its existing cash resources, together with
financing available under an agreement with Green Funding I, L.L.C., in an
amount up to $22 million, will be sufficient to fund its operations at least
through 1999.
F-7
<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)
(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. The Company 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 the Company'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 beginning after December 15, 1998, with early
application encouraged. In the fourth quarter of 1998 the Company wrote off the
remaining unamortized balance of organization costs, amounting to $269,892, in
accordance with the new pronouncement.
(e) Property and Equipment
Property and equipment are stated at cost. The Company 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.............................................. 3-5 years
Furniture and fixtures......................................... 5-7 years
</TABLE>
(f) Other Assets
A non competition agreement and certain other intangibles included in other
assets are being amortized over 3 years.
(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
The Company has assessed the realizability of its long-lived assets in
accordance with Statement of Financial Accounting Standards (SFAS) No. 121,
Accounting for the Impairment of Long-Lived Assets and for
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)
Long-Lived Assets To Be Disposed Of. The Company does not believe that any
material impairment of its long-lived assets has occurred.
(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
The Company'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.
(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, the Company has determined that
there were no nominal issuances of common stock or potential common stock in
the period prior to the Company'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 in 1997 and 1998 related to
outstanding warrants and stock options were 92,673 and 86,220, 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
The Company has a defined contribution plan in which the Company 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, the
Company matches 50% of each employee's contribution up to the employee's first
6% contribution. Both Company and employee contributions vest immediately.
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)
(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, the Company 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 7, 1997...................................... 82,750 $90.45
------ ------
Outstanding, December 31, 1997............................... 82,750 90.45
Granted.................................................... 1,512 90.45
Forfeited.................................................. (7,965) 90.45
------ ------
Outstanding, December 31, 1998............................... 76,297 $90.45
Granted....................................................
Forfeited.................................................. (596) 90.45
------ ------
Outstanding, March 31, 1999.................................. 75,701 $90.45
====== ======
</TABLE>
(b) 1999 Option Plan
During the first quarter of 1999, the Company 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 the Company.
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)
Option activity is as follows:
<TABLE>
<CAPTION>
Weighted
Average
Number of Exercise
Shares Price
--------- --------
<S> <C> <C>
Outstanding, December 31, 1998............................... -- --
Granted.................................................... 4,914,500 $4.72
Forfeited.................................................. -- --
--------- -----
Outstanding, March 31, 1999.................................. 4,914,500 $4.72
========= =====
</TABLE>
(c) Warrants
During 1997, the Company issued warrants to its consultants and advisors for
9,923 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. The Company 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............................. -- 90% 90%
Risk free rate of return............... 5.8% to 6% 5.46% to 5.65% 4.46% to 4.69%
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 $20.00, $45.65 and $3.34, 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............................. 84,783 4,914,500
Weighted-average exercise price........................... $90.45 $4.72
Weighted-average remaining contractual life............... 41 months 48 months
Number of options currently exercisable................... 13,502 453,160
Weighted-average exercise price of options currently
exercisable.............................................. $90.45 $4.62
</TABLE>
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)
Had compensation cost for the Company's plans been determined consistent
with SFAS No. 123, the Company'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) $(19,811,490)
Pro Forma (13,971,841) (46,341,104) (23,345,978)
Earnings per shares of
Common Stock........... As reported
Basic $(26.17) $(7.27) $(1.06)
Diluted (26.17) (7.27) (1.02)
Pro Forma
Basic $(26.38) $(7.32) $(1.25)
Diluted (26.38) (7.32) (1.20)
</TABLE>
The Company recorded a charge to compensation expense of $2,748,900 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. The
Company also recorded a charge to expense of $69,880 related to the fair market
value of options issued to nonemployees.
(5) Commitments and Contingencies
(a) Power Supply Agreements
For the Pennsylvania market, the Company has entered into three agreements
with major wholesale suppliers for electricity supply to serve the requirements
of the Company'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 the Company 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, the Company 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 the Company's customers assigned to it and either party
may discontinue the assignment of 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.
The Company'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 the Company's load forecast. In addition, the Company has
delivered to one supplier irrevocable letters of credit in the amounts of
$334,006 and $481,200 in association with the supplier's purchase and
installation of three wind power turbines. The Company also delivered letters
of credit to
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)
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, the Company 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 the Company. The Company 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 December 31, 2003 (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. The Company 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. The
Company 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, the Company entered into a contract with ICT Group,
Inc. to manage its call center and resulting databases to support the Company'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, the Company has minimum annual financial
commitments for teleservices and communications costs of $392,000.
(d) Marketing Services Agreement
On January 1, 1998, the Company 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, the Company 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 Company 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.
(e) Facility Lease Agreement
The Company leases an office facility in Vermont under a cancelable
operating lease that expires September 30, 2002. Future minimum lease payments
required, provided the Company 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>
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)
The lease agreement has a termination provision that enables the Company to
terminate the lease at September 30, 1999, 2000 or 2001. If the Company elects
to terminate the lease at any one of these dates, the Company is obligated to
pay $33,000, $25,000, or $12,500, respectively, as consideration for early
termination.
(6) Other Related Party Transactions
During 1998, the Company paid Sterling Software, Inc. (an affiliate of Sam
Wyly, the Company's Chairman) $826,611 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, the Company paid Sterling Software, Inc. $576,857 for its
services. The Company has no minimum financial commitment with regard to the
agreement with Sterling Software, Inc.
The Company 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 the Company for 1997 and 1998,
respectively. In addition, the Company received $31,803 and $73,191 during 1997
and 1998, respectively, for services provided to Green Mountain Power
Corporation by the Company's employees. As of December 31, 1998, Green Mountain
Power Corporation is no longer an affiliate of the Company.
(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>
(8) Accounts Receivable
As of December 31, 1998 and March 31, 1999, the Company is owed $137,970 and
$223,805, respectively, from the California Energy Commission related to
renewable energy credits provided to the Company for selling renewable energy
to customers. The Company expects to collect these amounts in 1999.
(9) Short-Term Borrowings
The Company borrowed a total of $10,000,000 in September and October 1998
from a financing company, which was subsequently repaid with a portion of the
Investor'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. Certain companies, whose
stock is owned by irrevocable trusts of which certain members of the Wyly
family are beneficiaries, provided credit enhancement for the loan.
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)
(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, the Company 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. The Company 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. The Company does not have any
derivative instruments at this time; however, such instruments may be embedded
in future electricity contracts.
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 the Company's financial statements.
(11) Subsequent Event--Unit Offerings
During 1999, the Company completed two private placement offerings. The
first offering, completed in January and early February 1999, was for
$10,000,000 from a sale of units to the Company's employees and certain
consultants. Net proceeds included $4,891,750 of cash and $5,108,250 of
promissory notes from employees and certain consultants. The second offering,
completed in mid-February 1999, resulted in net proceeds of $30,310,000. As a
result of such purchases during the second offering, Maverick Capital became
the beneficial owner of 750,000 common units, which will be represented by
1,875,000 shares upon the conversion from a limited liability company to a
corporation, for an aggregate purchase price of $15.0 million. Evan Wyly, a
Vice Chairman and a Director of the Company, is a Managing Partner and H. Lee
S. Hobson, a Company Director, is a Partner of Maverick Capital. In addition,
Green Funding II, L.L.C., an investment
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)
vehicle controlled by the Wyly family, acquired directly 500,000 common units,
which will be represented by 1,250,000 shares upon the conversion from a
limited liability company to a corporation, for an aggregate purchase price of
$10.0 million.
(12) Subsequent Event--Reorganization
In early 1999, the Company merged into a newly formed Delaware corporation,
which (i) was the entity surviving the merger, succeeding to all rights,
properties and obligations of the Company; (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 2.5 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). 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-16
<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]
["Choose wisely. It's a small planet." logo]
[Description of 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
Printing costs.................................................. 550,000
Legal Fees and Expenses......................................... 800,000
Accounting Fees and Expenses.................................... 400,000
Blue Sky Fees and Expenses...................................... 2,000
Miscellaneous................................................... 155,700
----------
Total $2,200,000
==========
</TABLE>
Item 14. Indemnification of Directors and Officers.
The information set forth under the caption "Management--Limitation of
Liability and Indemnification Matters" in the prospectus forming a part of this
Registration Statement is incorporated herein by this reference.
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 persons. The issuance of these warrants was exempt from
registration under Section 4(2) of the Act.
(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.
II-1
<PAGE>
(5) In January and early February 1999, membership interests in the LLC
were unitized and the LLC issued and sold 330,550 common units in the LLC
in a private offering to its employees under a compensatory plan in
exchange for an aggregate of $3,305,500, of which $1,279,500 was paid in
cash and $2,026,000 was paid using promissory notes payable to the LLC. 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 January and early February 1999, the LLC issued and sold 669,450
common units in the LLC in a private offering to its employees, consultants
and certain individuals who provided services to the LLC in exchange for an
aggregate of $6,694,500, of which $3,412,450 was paid in cash and
$3,282,050 was paid using promissory notes payable to the LLC. 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 certain individuals and entities in
exchange for an aggregate of $30,310,000 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.
Prior to the closing of this offering, the LLC will be merged into the
Registrant. Following the merger, each member in the LLC will have the right to
receive 2.5 shares of Registrant's common stock in exchange for each of its
common units in the LLC (subject to the payment of cash in lieu of fractional
shares). 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
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 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
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
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
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
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
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**
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
(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.
II-3
<PAGE>
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-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 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 April 26,
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. 1 to Registration Statement No. 333-75171 has been signed below
by the following persons in the capacities indicated on April 26, 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. 1 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-5
<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
April 26, 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
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 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
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
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
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**
</TABLE>
- --------
* To be filed by amendment.
** Previously filed.
<PAGE>
EXHIBIT 2.1
FORM
OF
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of
_____________ __, 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 ___ 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,
rounded down to the nearest whole share, determined by multiplying the number of
Units subject to such Option immediately prior to the Effective Time by ___ (the
"Conversion Factor"), at an exercise price per share of Common Stock (increased
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 (and cash in lieu of
fractional shares, if any, receivable pursuant to Section 3.4 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 (and cash in lieu of fractional shares, if any, as
contemplated by Section 3.4 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 whole 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
cash in lieu of fractional shares, if any, as contemplated by Section 3.4
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 (and cash in lieu of fractional shares, if any) 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 (and cash in lieu of fractional shares,
if any) as provided in this Agreement. The shares of Common Stock (and any cash
in lieu of fractional shares) 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, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 3.4, 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 whole 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 whole shares of
Common Stock with a record date after the Effective Time that would have been
paid with respect to such whole shares of Common Stock had those shares been
issued and outstanding as of such record date, and the amount of any cash
payable in lieu of a fractional share of Common Stock to which such holder is
entitled pursuant to Section 3.4, and (b) at the appropriate payment date, the
amount of dividends or other distributions with respect to such whole 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 whole shares of Common Stock had those shares
been issued and outstanding as of such record date.
3.4 No Fractional Shares. (a) No certificates or scrip representing
--------------------
fractional shares of Common Stock shall be issued upon the surrender for
exchange of Certificates which have been converted pursuant to Section 2.1
hereof, and such fractional share interests shall not entitle the owner thereof
to vote or to any rights of a stockholder of the Corporation.
(b) In lieu of any such fractional shares, each holder of Units who would
otherwise have been entitled to a fraction of a share of Common Stock upon
surrender of Certificates for exchange pursuant to this Article III shall be
paid an amount in cash (without interest), rounded to the nearest cent,
determined by multiplying (i) $__________ by (ii) the fractional interest to
which such holder otherwise would be entitled.
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 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>
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 was filed with the
Secretary of State of the State of Delaware on March 3, 1999.
3. This Amended and Restated Certificate of Incorporation amends,
restates and integrates the provisions of the original Certificate of
Incorporation 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........... -8-
-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
-2-
<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.
-3-
<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.
-4-
<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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may also choose any or all of the following: a Chairman of the Board of
Directors, one or more Vice Presidents, a Controller, General Counsel, and one
or more Assistant Secretaries and Assistant Treasurers. 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 President and the
Secretary or an Assistant Secretary or 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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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................. 7
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
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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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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
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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 or similar
medium.
16. Special Meetings. Special meetings of the Board may be called by the
----------------
Chairman on one day's notice to each director by whom such notice is not waived,
given either personally or by mail, overnight courier, telephone, facsimile or
similar medium of communication, and will be called by the Chairman in like
manner and on like notice on the written 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.
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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 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
<PAGE>
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 telephone, facsimile, e-mail or similar medium
of communication or as may otherwise be permitted by these Bylaws.
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
<PAGE>
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
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
9
<PAGE>
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
10
<PAGE>
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
<PAGE>
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
12
<PAGE>
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 34 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
14
<PAGE>
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
14
<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.
<PAGE>
EXHIBIT 4.2
FORM
OF
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of
______________________, 1999 (the "Effective Date"), is made by and among
GreenMountain.com Company, a Delaware corporation (the "Corporation"), and each
of the persons that are deemed to be bound by this Agreement as described in the
Recitals below (collectively, the "Stockholders").
RECITALS
--------
A. Green Mountain Energy Resource L.L.C., a Delaware limited liability
company (the "LLC"), and the Corporation have entered into an Agreement and Plan
of Merger, dated as of ______________________________________, 1999 (the "Merger
Agreement"), pursuant to which the LLC will be merged with and into the
Corporation.
B. In accordance with the terms of the Merger Agreement, the Corporation
desires to provide for the registration of the sale by the Stockholders of the
Registrable Securities (as defined below) from time to time, on the terms and
subject to conditions set forth below.
C. As a result of the Merger Agreement and the transactions contemplated
thereby, each of the Stockholders has become the Beneficial Owner (as defined
below) of shares of common stock, par value $0.01 per share, of the Company
("Common Shares").
D. Each person surrendering certificates representing common units in the
LLC in exchange for Common Shares as contemplated by the Merger Agreement, by
delivery to the Corporation of a properly completed and duly executed Letter of
Transmittal, together with such certificates, will be deemed to be bound by the
terms of this Agreement as if such person had executed a copy hereof.
AGREEMENTS
----------
NOW, THEREFORE, the parties hereto hereby agree as follows:
I. Definitions
-----------
1.1. Definitions. For purposes of this Agreement, the following terms have
-----------
the following meanings:
(a) Affiliate: As defined in Rule 12b-2 under the Exchange Act.
---------
(b) Agreement: As defined in the introductory paragraph hereof.
---------
(c) Beneficial Owner or Beneficial Ownership: As defined in Rule 13d-
----------------------------------------
3 under the Exchange Act.
<PAGE>
(d) Common Shares: As defined in Recital C.
-------------
(e) Corporation: As defined in the introductory paragraph hereof.
-----------
(f) Effective Date: As defined in the introductory paragraph hereof.
--------------
(g) Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
(h) Indemnified Party: As defined in Section 5.3.
-----------------
(i) Indemnifying Party: As defined in Section 5.3.
------------------
(j) LLC: As defined in Recital B.
---
(k) Losses: As defined in Section 5.1.
------
(l) Merger Agreement: As defined in Recital A.
----------------
(m) NASDAQ: As defined in Section 4.1(l).
------
(n) Other Equity Securities: Any shares of capital stock of the
-----------------------
Corporation and any other securities issued by the Corporation in respect of any
Owned Common Shares.
(o) Other Stockholders: As defined in Section 2.2.
------------------
(p) Owned Common Shares: Outstanding Common Shares Beneficially Owned
-------------------
by a Stockholder, whether acquired on or after the Effective Date, including
without limitation those that are acquired by a Stockholder as contemplated by
the Merger Agreement.
(q) Permitted Assignee: With respect to any Stockholder, means (i) an
------------------
Affiliate of such Stockholder, (ii) any Person who acquires, in a single
transaction, from such Stockholder all of such Stockholder's Owned Common
Shares, and (iii) any Person who acquires from such Stockholder outstanding
Common Shares by means of a pro rata distribution by such Stockholder to holders
of its equity interests of all of such Stockholder's Owned Common Shares.
(r) Person (or person): Any individual, corporation, general or
------------------
limited partnership, limited liability company, joint venture, trust or other
entity or association, including without limitation any governmental authority.
(s) Piggyback Notice: As defined in Section 2.1.
----------------
(t) Piggyback Registration: As defined in Section 2.1.
----------------------
(u) Prospectus: With respect to any Registration Statement: if Rule
----------
434 under the Securities Act is relied on, the term sheet that is first filed
pursuant to Rule 424(b)(7) under
2
<PAGE>
the Securities Act, together with the preliminary prospectus identified therein
that such term sheet supplements; if Rule 434 under the Securities Act is not
relied on, the prospectus first filed with the SEC pursuant to Section 424(b)
under the Securities Act; and if Rule 434 under the Securities Act is not relied
on and no prospectus is required to be filed pursuant to Rule 424(b) under the
Securities Act, the prospectus included in such Registration Statement at the
time when it is or was declared effective; in each case, as amended or
supplemented by any prospectus supplement, all other amendments and supplements
to such prospectus (including post-effective amendments), and all exhibits and
all material incorporated by reference or deemed to be incorporated by reference
in such prospectus.
(v) Registrable Securities: The Owned Common Shares and the Other
----------------------
Equity Securities; provided, however, that as to any Registrable Securities,
-------- -------
such securities will cease to constitute "Registrable Securities" for purposes
of this Agreement if and when (i) a Registration Statement with respect to the
sale of such securities has been declared effective by the Commission and such
securities have been sold pursuant thereto in accordance with the intended plan
and method of distribution therefor set forth in the final Prospectus forming
part of such Registration Statement, (ii) such securities have been sold in
satisfaction of all applicable resale provisions of Rule 144 under the
Securities Act, (iii) such securities have been transferred to any person or
entity other than a Permitted Assignee, or (iv) such securities may be freely
sold publicly without either (A) registration under the Securities Act or (B)
compliance with any restrictions (including without limitation restrictions as
to volume or manner of sale) under Rule 144 of the Securities Act.
(w) Registration Expenses: As defined in Section 4.4.
---------------------
(x) Registration Statement: Any registration statement of the
----------------------
Corporation under the Securities Act that covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the related
Prospectus, all amendments and supplements to such registration statement
(including post-effective amendments), and all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
(y) Rule 144: Rule 144 promulgated under the Securities Act, as such
--------
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
(z) SEC: The Securities and Exchange Commission.
---
(aa) Securities Act: The Securities Act of 1933, as amended.
--------------
(bb) Stockholder: As defined in the introductory paragraph hereof.
-----------
(cc) Underwritten Registration or Underwritten Offering: A
--------------------------------------------------
registration in which securities of the Corporation are sold to an underwriter
for reoffering to the public.
3
<PAGE>
II. Piggyback Registration
----------------------
2.1. Right to Piggyback. If at any time the Corporation proposes to file a
------------------
registration statement under the Securities Act with respect to an offering of
any class of equity securities (other than a registration statement (i) on Form
S-4, S-8 or any successor form thereto or (ii) filed solely in connection with
(A) an initial public offering of securities by the Corporation or (B) an
offering made solely to employees of the Corporation), whether or not for its
own account, then the Corporation will give written notice (the "Piggyback
Notice") of such proposed filing to the Stockholders at least 30 calendar days
before the anticipated filing date. Such notice will offer the Stockholders the
opportunity to register such amount of Registrable Securities as each
Stockholder may request (a "Piggyback Registration"). Subject to Section 2.2
hereof, the Corporation will include in each such Piggyback Registration all
Registrable Securities with respect to which the Corporation has received
written requests for inclusion therein within 15 calendar days after delivery of
the Piggyback Notice. The Stockholders will be permitted to withdraw all or
part of the Registrable Securities from a Piggyback Registration at any time
prior to the third calendar day immediately preceding the effective date of such
Piggyback Registration.
2.2. Priority on Piggyback Registrations. The Corporation will cause the
-----------------------------------
managing underwriter or underwriters of a proposed Underwritten Offering to
permit the Stockholders that have requested Registrable Securities to be
included in the Piggyback Registration for such offering to include all such
Registrable Securities on the same terms and conditions as any similar
securities, if any, of the Corporation included therein. Notwithstanding the
foregoing, if the managing underwriter or underwriters of such Underwritten
Offering advises the Corporation and the selling Stockholder or Stockholders
that the total amount of securities that the Corporation, such Stockholders and
any other persons having rights to participate in such Piggyback Registration
("Other Stockholders") propose to include in such offering is such as to
materially and adversely affect the success of such Underwritten Offering, then:
(a) if such Piggyback Registration is a primary registration by the
Corporation for its own account, the Corporation will include in such Piggyback
Registration: (i) first, all securities to be offered by the Corporation and
(ii) second, up to the full amount of securities requested to be included in
such Piggyback Registration by the Stockholders and Other Stockholders having
rights to participate in such Piggyback Registration (allocated pro rata among
such Stockholders and Other Stockholders on the basis of the amount of
securities requested to be included therein by each such Stockholder or Other
Stockholder) so that the total amount of securities to be included in such
Underwritten Offering is the full amount that, in the opinion of such managing
underwriter or underwriters, can be sold without materially and adversely
affecting the success of such Underwritten Offering; and
(b) if such Piggyback Registration is an underwritten secondary
registration for the account of holders of securities of the Corporation, the
Corporation will include in such registration: (i) first, all securities of the
persons exercising "demand" registration rights requested to be included therein
(including without limitation the person who demands registration and any
persons who are entitled to participate in such Piggyback Registration pursuant
to the same agreement as the person demanding such registration) and (ii)
second, up to the full amount of securities requested to be included in such
Piggyback Registration by the Stockholders and Other
4
<PAGE>
Stockholders having rights to participate in such Piggyback Registration
(allocated pro rata among such Stockholders and Other Stockholders on the basis
of the amount of securities requested to be included therein by each such
Stockholder or Other Stockholder) so that the total amount of securities to be
included in such Underwritten Offering is the full amount that, in the written
opinion of such managing underwriter or underwriters, can be sold without
materially and adversely affecting the success of such Underwritten Offering.
III. Restrictions on Sale
--------------------
Each Stockholder whose Registrable Securities are covered by a Registration
Statement filed pursuant to Article II hereof agrees that, if such Stockholder
is so requested (pursuant to a timely written notice) by the managing
underwriter or underwriters in any Underwritten Offering by the Corporation for
its own account, not to effect any public or private sale or distribution of any
Registrable Securities (except as part of such Underwritten Offering), including
a sale pursuant to Rule 144, during the 10 calendar day period prior to, and
during the 180 calendar day period beginning on, the closing date of such
Underwritten Offering. In the event of such a request, the Corporation may
impose, during such period, appropriate stop-transfer instructions with respect
to the Registrable Securities subject to such restrictions.
IV. Procedures and Expenses
-----------------------
4.1. Registration Procedures. In connection with the Corporation's
-----------------------
registration obligations pursuant to Article II, the Corporation will effect
such registrations to permit the sale of Registrable Securities by a Stockholder
in accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Corporation will as promptly as reasonably practicable:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on an appropriate form under the Securities Act
available for the sale of the Registrable Securities by the selling Stockholder
in accordance with the intended method or methods of distribution thereof,
provided, however, that the Corporation (i) will, before filing, furnish to the
- -------- -------
selling Stockholder, its counsel and the managing underwriter or underwriters,
if any, copies of the Registration Statement or Prospectus proposed to be filed,
which documents will be subject to the review of such Stockholder, its counsel
and such underwriters, (ii) will provide such Persons with a reasonable
opportunity to review and comment on such Registration Statement or Prospectus,
and (iii) will not file any such Registration Statement or Prospectus to which
the selling Stockholder, its counsel or such underwriter, if any, shall
reasonably object on a timely basis.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary; cause the related
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provision then in
force) under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended
5
<PAGE>
methods of disposition by the selling Stockholder set forth in such Registration
Statement as so amended, or in such Prospectus as so supplemented.
(c) Promptly notify the selling Stockholder, its counsel and the
managing underwriter or underwriters, if any, orally (with subsequent written
confirmation) (i) when a Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the SEC or any other federal or state governmental
authority for amendments or supplements to a Registration Statement or related
Prospectus or for additional information, (iii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) of the receipt by the Corporation of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) of the occurrence of any event which makes any statement made in
such Registration Statement or Prospectus untrue in any material respect or
which requires the making of any changes in a Registration Statement or
Prospectus or other documents so that, (A) in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and (B) in the case of the Prospectus, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (vi) of the Corporation's reasonable determination that a post-
effective amendment to a Registration Statement would be appropriate.
(d) Use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, at the earliest practicable
date.
(e) If requested by the managing underwriter or underwriters, if any,
or the selling Stockholder, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment such information as the managing underwriter or
underwriters, if any, and such selling Stockholder agree should be included
therein under applicable law and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment as soon as practicable
after the Corporation has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
provided, however, that the Corporation will not be required to take any actions
- -------- -------
under this Section 4.1(e) that are not, in the opinion of counsel for the
Corporation, in compliance with applicable law.
(f) Furnish to the selling Stockholder, its counsel and each managing
underwriter, if any, at least one conformed copy of the Registration Statement
and any post-effective amendment thereto, including financial statements (but
excluding schedules, all documents incorporated or deemed incorporated therein
by reference and all exhibits).
6
<PAGE>
(g) Deliver to the selling Stockholder, its counsel and the
underwriter or underwriters, if any, as many copies of the Prospectus relating
to such Registrable Securities (including each preliminary Prospectus) and any
amendment or supplement thereto as such persons may reasonably request and, by
such delivery, the Corporation will be deemed to have consented to the use of
such Prospectus or such amendment or supplement thereto by the selling
Stockholder and the underwriter or underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by such Prospectus or
any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to
register or qualify, or cooperate with the selling Stockholder, the underwriter
or underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions within the United States as
the selling Stockholder or underwriter or underwriters reasonably request in
writing; keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective; and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided, however, that the
-------- -------
Corporation will not be required to (i) qualify generally to do business in any
jurisdiction in which it is not then so qualified or (ii) take any action that
would subject it to general service of process in any jurisdiction in which it
is not then so subject.
(i) Cooperate with the selling Stockholder and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold, which
certificates will not bear any restrictive legends; and cause such certificates
to be in such denominations and registered in such names as the managing
underwriters, if any, shall request at least two business days prior to any sale
of Registrable Securities to the underwriters.
(j) Cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States, including such as
may be required solely as a consequence of the nature of the selling
Stockholder's business.
(k) As promptly as practicable upon the occurrence of any event
contemplated by Section 4.1(c)(v) or 4.1(c)(vi) hereof, prepare a supplement or
post-effective amendment to each Registration Statement or a supplement to the
related Prospectus, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
such Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(l) Use its best efforts to cause all Registrable Securities covered
by such Registration Statement to be (i) listed on each securities exchange, if
any, on which similar securities issued by the Corporation are then listed or
(ii) authorized to be quoted on The Nasdaq
7
<PAGE>
Stock Market ("NASDAQ") and on the Nasdaq National Market of NASDAQ if the
securities qualify to be so quoted; in each case, if requested by the managing
underwriter or underwriters, if any.
(m) Engage an appropriate transfer agent and provide such transfer
agent with printed certificates for the Registrable Securities in a form
eligible for deposit with The Depository Trust Company, and provide a CUSIP
number for the Registrable Securities.
(n) Enter into such agreements (including, in the event of an
Underwritten Offering, an underwriting agreement in form, scope and substance as
is customary in Underwritten Offerings) and take all such other actions in
connection therewith (including those reasonably requested by the selling
Stockholder or, in the event of an Underwritten Offering, those reasonably
requested by the managing underwriter or underwriters) reasonably necessary or
desirable to expedite or facilitate the disposition of such Registrable
Securities, and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an Underwritten
Registration, (i) make such representations and warranties to the selling
Stockholder and the underwriter or underwriters, if any, with respect to the
business of the Corporation and its subsidiaries, the Registration Statement or
Prospectus, in each case, in form, substance and scope as are customarily made
by issuers to underwriters in Underwritten Offerings and confirm the same if and
when requested, (ii) obtain opinions of counsel to the Corporation and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriter or underwriters, if any, and
the selling Stockholder) addressed to the selling Stockholder and the
underwriter or underwriters, if any, covering the matters customarily covered in
opinions requested in Underwritten Offerings and such other matters as may be
reasonably requested by the selling Stockholder and underwriter or underwriters,
if any, including without limitation the matters referred to in clause (i)
above, (iii) use its best efforts to obtain "comfort" letters and updates
thereof from the independent certified public accountants of the Corporation
(and, if necessary, any other certified public accountants of any subsidiary of
the Corporation or of any business acquired by the Corporation for which
financial statements and financial data is, or is required to be, included in
the Registration Statement), addressed to the selling Stockholder and each of
the underwriter or underwriters, if any, such letters to be in customary form
and covering matters of the type customarily covered in "comfort" letters in
connection with Underwritten Offerings, and (iv) deliver such documents and
certificates as may be reasonably requested by the selling Stockholder, its
counsel or the managing underwriter or underwriters, if any, to evidence the
continued validity of the representations and warranties of the Corporation and
its subsidiaries made pursuant to clause (i) above and to evidence compliance
with any customary conditions contained in the underwriting agreement or similar
agreement entered into by the Corporation. The foregoing actions will be taken
in connection with each closing under such underwriting or similar agreement as
and to the extent required thereunder.
(o) Make available for inspection by a representative of the selling
Stockholder, any underwriter and any attorney or accountant retained by such
selling Stockholder or underwriter, all financial and other records, pertinent
corporate documents and properties of the Corporation and its subsidiaries, and
cause the officers, directors and employees of the Corporation and its
subsidiaries to supply all information reasonably requested by any such
8
<PAGE>
representative, underwriter, attorney or accountant in connection with such
Registration Statement; provided, however, that any records, information or
-------- -------
documents that are designated by the Corporation in writing as confidential at
the time of delivery of such records, information or documents will be kept
confidential by such persons unless (i) such records, information or documents
are in the public domain or otherwise publicly available (other than by reason
of breach of this confidentiality provision), (ii) disclosure of such records,
information or documents is required by court or administrative order or is
necessary to respond to inquires of regulatory authorities, or (iii) disclosure
of such records, information or documents, in the opinion of counsel to such
person, is otherwise required by law or regulation (including without limitation
pursuant to the requirements of the Securities Act or regulations promulgated
thereunder); provided, however, that, in the case of subsections (ii) and (iii)
-------- -------
hereof, prior to making such disclosure the Stockholder will advise and consult
with the Corporation and its counsel as to such disclosure and the nature and
wording of such disclosure and will use its reasonable best efforts to obtain
confidential treatment therefor.
(p) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45
calendar days after the end of any 12-month period (or 90 calendar days after
the end of any 12-month period if such period is a fiscal year) (i) commencing
at the end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts Underwritten Offering and (ii)
if not sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Corporation, after the effective date of a
Registration Statement, which statements shall cover such 12-month period.
4.2. Information from Stockholder. (a) The Corporation may require each
----------------------------
selling Stockholder that has requested inclusion of its Registrable Securities
in any Registration Statement to furnish to the Corporation such information
regarding the Stockholder and its plan and method of distribution of such
Registrable Securities as the Corporation may, from time to time, reasonably
request in writing. The Corporation may refuse to proceed with the registration
of such selling Stockholder's Registrable Securities if such selling Stockholder
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
(b) Each selling Stockholder will as expeditiously as possible (i)
notify the Corporation of the occurrence of any event that makes any statement
made in a Registration Statement or Prospectus regarding such selling
Stockholder untrue in any material respect or that requires the making of any
changes in a Registration Statement or Prospectus so that, in such regard, (A)
in the case of a Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and
(B) in the case of a Prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and (ii) provide the Corporation with such
information as may be required to enable the Corporation to prepare a supplement
or post-effective amendment to any such Registration Statement or a supplement
to such Prospectus as contemplated by Section 4.1(k).
9
<PAGE>
(c) With respect to any Registration Statement for an Underwritten
Offering, the inclusion of a Stockholder's Registrable Securities therein will
be conditioned upon such Stockholder's participation in such Underwritten
Offering and the execution and delivery by such Stockholder of an underwriting
agreement in form, scope and substance as is customary in Underwritten
Offerings.
4.3. Suspension of Disposition. Each selling Stockholder will be deemed to
-------------------------
have agreed that, upon receipt of any notice from the Corporation of the
occurrence of any event of the kind described in Section 4.1(c)(ii),
4.1(c)(iii), 4.1(c)(iv), 4.1(c)(v) or 4.1(c)(vi) hereof, such Stockholder will
discontinue disposition of Registrable Securities covered by a Registration
Statement or Prospectus until such Stockholder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 4.1(k) hereof or
until it is advised in writing by the Corporation that the use of the applicable
Prospectus may be resumed and has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus.
4.4. Registration Expenses. (a) All fees and expenses incurred by the
---------------------
Corporation in complying with Articles II and III hereof ("Registration
Expenses") will be borne by the Corporation. Such fees and expenses will
include, without limitation, (i) all registration and filing fees (including
without limitation fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (y) of
compliance with securities or blue sky laws (including without limitation
reasonable fees and disbursements of counsel for the underwriters and selling
Stockholder in connection with blue sky qualifications of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as the managing underwriter
or underwriters, if any, or the selling Stockholder may designate)), (ii)
printing expenses (including without limitation the expenses of printing
certificates for securities in a form eligible for deposit with The Depository
Trust Company and of printing prospectuses if the printing of prospectuses is
requested by the selling Stockholder), (iii) messenger, telephone and delivery
expenses, (iv) reasonable fees and disbursements of counsel for the Corporation,
(v) reasonable fees and disbursements of one counsel for all selling
Stockholders collectively (which counsel will be selected by Stockholders
holding a majority of the Registrable Securities sought to be included in the
Registration Statement), (vi) reasonable fees and disbursements of all
independent certified public accountants referred to in Section 4.1(n)(iii)
hereof (including the expenses of any special audit and "comfort" letters
required by or incident to such performance), (vii) reasonable fees and expenses
of any "qualified independent underwriter" or other independent appraiser
participating in an offering pursuant to Section 2720(c) of the Conduct Rules of
the National Association of Securities Dealers, Inc., and (viii) reasonable fees
and expenses of all other persons retained by the Corporation. In addition, the
Corporation will pay its internal expenses (including without limitation all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange, if any, on which similar securities issued by the
Corporation are then listed or the quotation of such securities on NASDAQ.
10
<PAGE>
(b) Notwithstanding anything to the contrary herein contained, all
underwriting fees, discounts, selling commissions and stock transfer taxes
applicable to the sale of Registrable Securities will be borne by the
Stockholder owning such Registrable Securities.
(c) Notwithstanding anything to the contrary herein contained, each
selling Stockholder may have its own separate counsel in connection with the
registration of any of its Registrable Securities, which counsel may participate
therein to the full extent provided herein; provided, however, that all fees and
-------- -------
expenses of such separate counsel will be paid for by such selling Stockholder.
V. Indemnification
---------------
5.1. Indemnification by the Corporation. The Corporation will indemnify
----------------------------------
and hold harmless, to the fullest extent permitted by law, each Stockholder
owning Registrable Securities registered pursuant to this Agreement, its
officers, directors, trustees, agents and employees, each person who controls
such Stockholder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, trustees, agents
and employees of any such controlling person, from and against all losses,
claims, damages, liabilities, costs (including without limitation the costs of
investigation and attorneys' fees) and expenses (collectively, "Losses"), as
incurred, arising out of or based upon any untrue or alleged untrue statement of
a material fact contained in any Registration Statement, Prospectus or
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are based solely upon information furnished in writing to the Corporation
by or on behalf of such Stockholder expressly for use therein; provided,
--------
however, that the Corporation will not be liable to any Stockholder to the
- -------
extent that any such Losses arise out of or are based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in any
preliminary prospectus if either (i) (A) such Stockholder failed to send or
deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale by such Stockholder of a Registrable Security to the
person asserting the claim from which such Losses arise and (B) the Prospectus
would have completely corrected such untrue statement or alleged untrue
statement or such omission or alleged omission, or (ii) such untrue statement or
alleged untrue statement or such omission or alleged omission is completely
corrected in an amendment or supplement to the Prospectus previously furnished
by or on behalf of the Corporation, such Stockholder was furnished with copies
of the Prospectus as so amended or supplemented, and such Stockholder thereafter
failed to deliver such Prospectus as so amended or supplemented prior to or
concurrently with the sale of a Registrable Security to the person asserting the
claim from which such Losses arise.
5.2. Indemnification by Stockholders. Each Stockholder will indemnify and
-------------------------------
hold harmless, to the fullest extent permitted by law, the Corporation, its
officers, directors, agents and employees, each person who controls the
Corporation (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act), and the directors, officers, agents and employees of
any such controlling person, from and against all Losses, as incurred, arising
out of or based upon any untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus, or arising out of
or based upon any omission of a material
11
<PAGE>
fact required to be stated therein or necessary to make the statements therein
not misleading, to the extent, but only to the extent, that such untrue
statement or omission was made in reliance upon and in conformity with
information so furnished in writing by or on behalf of such Stockholder to the
Corporation expressly for use in such Registration Statement, Prospectus or
preliminary prospectus. In no event will the liability of any Stockholder
hereunder be greater in amount than the dollar amount of the proceeds received
by such Stockholder upon the sale of the Registrable Securities giving rise to
such indemnification obligation.
5.3. Conduct of Indemnification Proceedings. If any person shall become
--------------------------------------
entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party
will give prompt notice to the party from which such indemnity is sought (the
"Indemnifying Party") of any claim or of the commencement of any action or
proceeding with respect to which such Indemnified Party seeks indemnification or
contribution pursuant hereto; provided, however, that the failure to so notify
-------- -------
the Indemnifying Party will not relieve the Indemnifying Party from any
obligation or liability except to the extent that the Indemnifying Party has
been prejudiced materially by such failure. If such an action or proceeding is
brought against the Indemnified Party, the Indemnifying Party will be entitled
to participate therein and, to the extent it may elect by written notice
delivered to the Indemnified Party promptly after receiving the notice referred
to in the immediately preceding sentence, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party will have the right to employ its own counsel
in any such case, but the fees and expenses of such counsel will be at the
expense of the Indemnified Party unless (i) the employment of such counsel shall
have been authorized in writing by the Indemnifying Party, (ii) the Indemnifying
Party shall not have employed counsel (reasonably satisfactory to the
Indemnified Party) to take charge of such action or proceeding within a
reasonable time after notice of commencement thereof, or (iii) the Indemnified
Party reasonably shall have concluded that there may be defenses available to it
which are different from or additional to those available to the Indemnifying
Party which, if the Indemnifying Party and the Indemnified Party were to be
represented by the same counsel, could result in a conflict of interest for such
counsel or materially prejudice the prosecution of defenses available to the
Indemnified Party. If any of the events specified in clause (i), (ii) or (iii)
of the immediately preceding sentence are applicable, then the fees and expenses
of separate counsel for the Indemnified Party shall be borne by the Indemnifying
Party. If, in any case, the Indemnified Party employs separate counsel, the
Indemnifying Party will not have the right to direct the defense of such action
or proceeding on behalf of the Indemnified Party. All fees and expenses
required to be paid to the Indemnified Party pursuant to this Article V will be
paid periodically during the course of the investigation or defense, as and when
reasonably itemized bills therefor are delivered to the Indemnifying Party in
respect of any particular Loss that is incurred. Notwithstanding anything to
the contrary contained in this Section 5.3, an Indemnifying Party will not be
liable for the settlement of any action or proceeding effected without its prior
written consent. The Indemnifying Party will not consent to entry of any
judgment or enter into any settlement or otherwise seek to terminate any action
or proceeding in which any Indemnified Party is or could be a party and as to
which indemnification or contribution could be sought by such Indemnified Party
under this Article V, unless such judgment, settlement or other termination
provides solely for the payment of money and includes as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release, in form and substance satisfactory to the Indemnified Party, from
12
<PAGE>
all liability in respect of such claim or litigation for which such Indemnified
Party would be entitled to indemnification hereunder.
5.4. Contribution, Etc. (a) If the indemnification provided for in this
------------------
Article V is unavailable to an Indemnified Party under Section 5.1 or 5.2 hereof
in respect of any Losses or is insufficient to hold such Indemnified Party
harmless, then each applicable Indemnifying Party, in lieu of indemnifying such
Indemnified Party, will, jointly and severally, contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party or
Indemnifying Parties, on the one hand, and such Indemnified Party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party or Indemnifying Parties, on the one
hand, and such Indemnified Party, on the other hand, will be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission of a material fact, has been taken or made by, or related to
information supplied by, such Indemnifying Party or Indemnifying Parties or such
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses will
be deemed to include any legal or other fees or expenses incurred by such party
in connection with any action or proceeding.
(b) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 5.4 were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding anything contained in this Section 5.4 to the contrary, an
Indemnifying Party that is a selling Stockholder will not be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities were sold by such selling Stockholder to the public
exceeds the amount of any damages which such selling Stockholder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(c) The provisions of this Article V will survive indefinitely,
notwithstanding any transfer of the Registrable Securities by any Stockholder.
VI. Rule 144
--------
The Corporation will file all reports required to be filed by it under
the Securities Act and the Exchange Act, and will cooperate with any Stockholder
(including without limitation by making such representations as any such
Stockholder may reasonably request), all to the extent required from time to
time to enable such Stockholder to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemptions
provided by Rule 144. Upon the request of any Stockholder, the Corporation will
deliver to such Stockholder a written statement as to whether it has complied
with such filing requirements.
13
<PAGE>
VII. Miscellaneous
-------------
7.1. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given or made by
delivery in person, by courier service, by facsimile transmission or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
7.1):
(a) If to the Corporation:
GreenMountain.com Company
55 Green Mountain Drive
South Burlington, VT 05407-2206
Attention: General Counsel
Fax No.: (802) 846-6102
(b) If to a Stockholder, to the then-current address thereof contained
in the stock records of the Corporation.
All such notices and communications will be deemed to have been delivered or
given: upon delivery, if personally delivered; one business day after being
dispatched, if dispatched by same-day or next-day courier guaranteeing timely
delivery; when receipt acknowledged, if sent by facsimile transmission; and five
business days after being deposited in the mail, if mailed.
7.2. Assignment. Neither this Agreement nor the rights and obligations
----------
hereunder may be assigned by operation of law or otherwise (except that this
Agreement and rights and obligations hereunder may be assigned by any
Stockholder to a Permitted Assignee thereof, which Permitted Assignee shall be
deemed to be a Stockholder and a party hereto for all purposes of this Agreement
upon receipt by the Corporation of such Permitted Assigner's written agreement
to be bound by the terms hereof). Notwithstanding the foregoing, nothing herein
contained shall restrict the right of any Stockholder to transfer securities of
the Corporation held by it.
7.3. No Third-Party Beneficiaries. This Agreement will be binding upon and
----------------------------
inure solely to the benefit of the parties hereto and their respective
successors and permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
7.4. Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral, among the parties with
respect to the subject matter hereof.
7.5. No Inconsistent Agreements. The Corporation does not have, as of the
--------------------------
Effective Date, and will not, on or after the Effective Date, enter into, any
agreement with respect to its securities which is inconsistent with the rights
granted to the Stockholders in this Agreement or otherwise conflicts with the
provisions hereof.
14
<PAGE>
7.6. Amendment and Waiver. This Agreement may not be amended or modified
--------------------
or any provision hereof waived except by an instrument in writing signed by the
Corporation and holders of a majority of the then-outstanding Registrable
Securities. Notwithstanding anything contained herein to the contrary, a waiver
that does not adversely affect all of the parties hereto may be executed by only
the adversely affected party or parties.
7.7. Headings. The descriptive headings contained in this Agreement are
--------
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
7.8. Certain Interpretative Matters and Definitions. Unless the context
----------------------------------------------
otherwise requires, (i) all references to Articles, Sections, or Schedules are
to Articles, Sections, or Schedules of this Agreement, (ii) each term defined in
this Agreement has the meaning assigned to it, (iii) all uses of "herein,"
"hereto," "hereof" and words similar thereto in this Agreement refer to this
Agreement in its entirety, and not solely to the Article, Section, or provision
in which it appears, (iv) "or" is disjunctive but not necessarily exclusive, and
(v) words in the singular include the plural and vice versa.
---- -----
7.9. Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced under any law or public policy,
all other terms and provisions of this Agreement will nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner.
7.10. Governing Law. This Agreement will 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.
7.11. Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties will be
entitled to specify performance of the terms hereof, in addition to any other
remedy at law or equity.
7.12. Attorneys' Fees. In any action or proceeding brought to enforce any
---------------
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the successful party will be entitled to recover reasonable
attorneys' fees in addition to its costs and expenses and any other available
remedy.
7.13. Further Assurances. The parties hereto will do such further acts and
------------------
things necessary to ensure that the terms of this Agreement are carried out and
observed.
15
<PAGE>
IN WITNESS WHEREOF, the Corporation has executed this Agreement as of
the date first written above.
GREENMOUNTAIN.COM COMPANY
By:
-------------------------------------
Name:
-------------------------------
Title:
-------------------------------
16
<PAGE>
EXHIBIT 4.3
WARRANT
To Purchase Interest in GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
THIS CERTIFIES that, for value received, Shallowbrook Securities,
Ltd., or its registered assigns, is entitled, subject to the other provisions of
this Warrant, to purchase from GREEN MOUNTAIN ENERGY RESOURCES L.L.C. (the
"Company"), a 1.9% Interest (subject to adjustment as provided herein) in the
Company, in whole or in part, at the Exercise Price as provided herein, all on
the terms and conditions and pursuant to the provisions hereinafter set forth.
Section l. Definitions. The terms defined in this Section, whenever
used in this Warrant, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified.
"Business Day" shall mean any day which is not a day on which banks
are authorized or required to close under the laws of the State of New York.
"Company" shall mean Green Mountain Energy Resources L.L.C., and any
successor entity or corporation by merger, consolidation or otherwise.
"Exercise Price" shall mean with respect to the Warrant $450,000 per
whole percentage (1%) Interest (such price subject to adjustment as provided
herein).
"Initial Public Offering" means an initial public offering and sale of
Interests for cash pursuant to an effective registration statement on Form S-1
(or any successor form) under the Securities Act of 1933, as amended (the
"Securities Act").
"Interest" shall have the definition set forth in the Operating
Agreement (as defined below), but shall mean an Interest, the holder of which
shall have the rights and obligations of a Member other than Green Funding I,
L.L.C.
"Management Committee" shall mean the Management Committee established
pursuant to Section 4.01 of the Operating Agreement.
"Member" shall mean each Person identified as a Member on Schedule I
of the Operating Agreement and each Person who subsequently becomes a Member of
the Company in accordance with Article VI of the Operating Agreement.
"Operating Agreement" shall mean the Operating Agreement of the
Company, dated as of August 6, 1997 among Green Mountain Resources, Inc., a
Delaware corporation and Green Funding I, L.L.C., a Delaware limited liability
company.
1
<PAGE>
"Person" shall mean any individual, corporation, association, limited
liability company, partnership, trust, unincorporated association, Governmental
Authority or other entity.
"Warrant" shall mean this Warrant.
Section 2. Exercise of Warrant.
A. Time of Exercise. This Warrant may be exercised by the holder
hereof at any time on any Business Day for all of the Interest purchasable upon
its exercise; provided, however, that this Warrant shall expire and be void and
all rights represented hereby shall cease unless the Warrant is exercised before
the fifth anniversary of the date hereof.
B. Manner of Exercise. In order to exercise this Warrant, in whole
or in part, the holder hereof shall deliver to the Company at its office (i) a
written notice of such holder's election to exercise this Warrant in the form of
the Exercise Form appearing at the end of this Warrant, (ii) cash, a certified
or official bank check drawn upon a U.S. bank, or a wire transfer of immediately
available funds in an amount equal to the aggregate Exercise Price, (iii) this
Warrant and (iv) a duly executed counterpart signature page to the Operating
Agreement.
C. Reservation of Interests. The Company shall at all times maintain
its ability to create and issue Interests sufficient to provide for the exercise
in full of all outstanding Warrants.
D. Delivery of Interests. The Company shall, upon receipt of the
materials described in Subsection B of this Section 1, as promptly as
practicable, and in any event within five Business Days thereafter, amend its
books and records to reflect the name of the exercising holder or its designee
as set forth on the Exercise Form and the Interest purchased upon such exercise.
This Warrant shall be deemed to have been exercised, and such holder or any
other person so designated to be named therein shall be deemed to have become a
recordholder of such Interests for all purposes, as of the date said amendment
is recorded by the Company as aforesaid.
E. Payment of Taxes, etc. The Company and the exercising holder
shall each pay its own expenses in connection with the issuance of the Interest
hereunder, and all taxes and other governmental charges that may be imposed in
respect of such issuance shall be paid by the Company. Notwithstanding the
foregoing, the Company shall not be required to pay any tax or other charge
imposed in connection with any transfer involved in the issue of any Interest in
any name other than that of the registered holder of this Warrant, and in such
case the Company shall not be required to create any Interest until such tax or
other charge has been paid by the exercising holder or it has been established
to the Company's satisfaction that no such tax or other charge is due.
2
<PAGE>
Section 3. Transfer. Upon notice duly given to the Company, this
Warrant may be transferred by the holder hereof.
Section 4. Adjustments. The Exercise Price and the percentage
Interest purchasable upon exercise of this Warrant shall be subject to
adjustment, as determined in good faith by the Management Committee, from time
to time as set forth in this Section.
A. Creation of Interests. In the event that at any time or from time
to time the Company shall create additional Interests, then the percentage
Interest purchasable upon exercise of this Warrant shall be adjusted
appropriately to reflect the dilutive effect of the creation of the additional
Interest.
B. Reorganization. If the Company shall consolidate or merge with or
into another company or corporation, then the holder hereof shall have the right
to receive upon exercise of this Warrant such Interest and other assets,
properties or securities which such holder would have been entitled to receive
upon or as a result of such consolidation or merger had such Warrant been
exercised immediately prior to such event, at an Exercise Price adjusted
proportionately.
C. Other Events. If any event occurs as to which the foregoing
provisions of this Section 4 are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Management Committee,
fairly and adequately protect the purchase rights of this Warrant in accordance
with the essential intent and principles of the provisions hereof, then the
Management Committee shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, as shall be
reasonably necessary, in the good faith opinion of such Management Committee, to
protect such purchase rights.
Section 5. Notices to Warrant Holders. If the Interest purchasable
upon exercise of this Warrant, or the Exercise Price of this Warrant, has been
or is required to be adjusted pursuant to Section 4 hereof, the Company shall
forthwith prepare a certificate setting forth the adjusted Interest purchasable
upon exercise hereof, the adjusted Exercise Price and a brief statement of the
facts requiring such adjustment and the computation thereof. The Company shall
promptly cause a signed copy of such certificate to be delivered to the holder
of this Warrant in accordance with Section 8.
The Company shall keep at its principal office, and shall cause to be
available for inspection at said office during normal business hours by the
holder of this Warrant copies of (i) any certificates or notices required by
this Section 5, and (ii) the following statements prepared in accordance with
generally accepted accounting principles consistently applied and reported upon
by the Company's independent public accountants: (a) within 90 days after the
close of each fiscal year, an audited balance sheet of the Company as of the end
of such fiscal year and audited statements of income, changes in financial
position and Members' equity for such fiscal year, in each case setting forth in
comparative form the corresponding figures for the preceding fiscal year, and
(b) within 45 days after the close of each of the first three
3
<PAGE>
quarters of each fiscal year of the Company, an unaudited balance sheet of the
Company as of the end of such quarter and unaudited statements of income,
changes in financial position and Members' equity for the portion of such fiscal
year preceding the end of such quarter, in each case setting forth in
comparative form the corresponding figures for the corresponding period of the
preceding fiscal year. Copies of such materials may be obtained by, and at the
expense of, the holder of this Warrant upon written request by mail to the
Company at its office in accordance with Section 8.
Section 6. Registration. Promptly after the consummation of an
Initial Public Offering, the Company will take all reasonable steps to register
the Warrant, and the shares of common stock of the Company issued or issuable
upon exercise thereof, pursuant to the Securities Act.
Section 7. Interest Purchased for Investment. Shallowbrook
Securities, Ltd., by accepting this Warrant, represents, warrants, covenants and
agrees on behalf of itself and its successors and assigns that the Interest
acquired upon exercise of this Warrant will be acquired for investment and not
for resale or distribution, and that upon the exercise of this Warrant, the
Person entitled to exercise the same will furnish evidence satisfactory to the
Company (including a written and signed representation) to the effect that the
Interest is being acquired in good faith for investment and not for resale or
distribution. The holder shall furnish or execute such documents as the Company
in its discretion deems necessary to (a) evidence such exercise of the Warrant,
(b) determine whether registration is then required under the Securities Act, as
then in effect, and (c) comply with or satisfy the requirements of the
Securities Act, or any other federal, state or local law, as then in effect.
Section 8. Transfer Books. The Company will not at any time, except
upon dissolution, liquidation or winding up of the Company, close its books so
as to result in preventing or delaying the exercise of this Warrant.
Section 9. Loss or Mutilation. Upon receipt by the Company of
evidence satisfactory to it (in the exercise of its reasonable discretion) of
the ownership of and the loss, theft, destruction or mutilation of this Warrant
and (in case of loss, theft or destruction) of indemnity satisfactory to it in
the exercise of its reasonable discretion (it being understood that the written
agreement of the holder hereof shall be sufficient indemnity) and in case of
mutilation upon surrender and cancellation hereof, the Company will execute and
deliver in lieu hereof a new Warrant of like tenor.
Section 10. Notice Generally. Any notice, demand delivery or other
communication required or permitted to be given hereunder shall be in writing
and shall be delivered by hand or sent prepaid telex, cable or telecopy, or
sent, postage prepaid, by registered, certified or express mail, or reputable
overnight courier service and shall be deemed given when so delivered by hand,
telexed, cables or telecopied, or if mailed domestically, three days after
mailing (one business day in the case of express mail or overnight courier
service), or if mailed overseas, five days after mailing (two business days in
the case of express mail or overnight courier service) as follows:
4
<PAGE>
(i) if to the Company,
Green Mountain Energy Resources L.L.C.
Box 2206
25 Green Mountain Drive
South Burlington, Vermont 05402-2206
with a copy to:
Michael C. French, Esq.
Green Funding I, L.L.C.
300 Crescent, Suite 1000
Dallas, Texas 75201
(ii) if to Shallowbrook Securities, Ltd.,
1330 Avenue of the Americas, 36th Floor
New York, New York 10019
Attention: G. Chris Andersen
Section 11. Limitation of Liability. No provision hereof, in the
absence of affirmative action by the holder hereof to purchase an Interest, and
no mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Exercise Price or as a
Member of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
Section 12. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of August 6, 1997.
Green Mountain Energy Resources L.L.C.
By: /s/ Douglas G. Hyde
--------------------------------------
Name: Douglas G. Hyde
Title: President
5
<PAGE>
EXERCISE FORM
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases the Interest in GREEN MOUNTAIN ENERGY RESOURCES
L.L.C., purchasable with this Warrant, and herewith makes payment therefor, all
at the price and on the terms and conditions specified in this Warrant.
Dated:
________________________________
(Signature of Registered Owner)
________________________________
(Street Address)
________________________________
(City)
(State) (Zip Code)
6
<PAGE>
EXHIBIT 4.4
WARRANT
To Purchase Interest in GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
THIS CERTIFIES that, for value received, Capital Investment Group,
Inc., or its registered assigns, is entitled, subject to the other provisions of
this Warrant, to purchase from GREEN MOUNTAIN ENERGY RESOURCES L.L.C. (the
"Company"), a 0.1% Interest (subject to adjustment as provided herein) in the
Company, in whole or in part, at the Exercise Price as provided herein, all on
the terms and conditions and pursuant to the provisions hereinafter set forth.
Section l. Definitions. The terms defined in this Section, whenever
used in this Warrant, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified.
"Business Day" shall mean any day which is not a day on which banks
are authorized or required to close under the laws of the State of New York.
"Company" shall mean Green Mountain Energy Resources L.L.C., and any
successor entity or corporation by merger, consolidation or otherwise.
"Exercise Price" shall mean with respect to the Warrant $450,000 per
whole percentage (1%) Interest (such price subject to adjustment as provided
herein).
"Initial Public Offering" means an initial public offering and sale of
Interests for cash pursuant to an effective registration statement on Form S-1
(or any successor form) under the Securities Act of 1933, as amended (the
"Securities Act").
"Interest" shall have the definition set forth in the Operating
Agreement (as defined below), but shall mean an Interest, the holder of which
shall have the rights and obligations of a Member other than Green Funding I,
L.L.C.
"Management Committee" shall mean the Management Committee established
pursuant to Section 4.01 of the Operating Agreement.
"Member" shall mean each Person identified as a Member on Schedule I
of the Operating Agreement and each Person who subsequently becomes a Member of
the Company in accordance with Article VI of the Operating Agreement.
"Operating Agreement" shall mean the Operating Agreement of the
Company, dated as of August 6, 1997 among Green Mountain Resources, Inc., a
Delaware corporation and Green Funding I, L.L.C., a Delaware limited liability
company.
1
<PAGE>
"Person" shall mean any individual, corporation, association, limited
liability company, partnership, trust, unincorporated association, Governmental
Authority or other entity.
"Warrant" shall mean this Warrant.
Section 2. Exercise of Warrant.
A. Time of Exercise. This Warrant may be exercised by the holder
hereof at any time on any Business Day for all of the Interest purchasable upon
its exercise; provided, however, that this Warrant shall expire and be void and
all rights represented hereby shall cease unless the Warrant is exercised before
the fifth anniversary of the date hereof.
B. Manner of Exercise. In order to exercise this Warrant, in whole
or in part, the holder hereof shall deliver to the Company at its office (i) a
written notice of such holder's election to exercise this Warrant in the form of
the Exercise Form appearing at the end of this Warrant, (ii) cash, a certified
or official bank check drawn upon a U.S. bank, or a wire transfer of immediately
available funds in an amount equal to the aggregate Exercise Price, (iii) this
Warrant and (iv) a duly executed counterpart signature page to the Operating
Agreement.
C. Reservation of Interests. The Company shall at all times maintain
its ability to create and issue Interests sufficient to provide for the exercise
in full of all outstanding Warrants.
D. Delivery of Interests. The Company shall, upon receipt of the
materials described in Subsection B of this Section 1, as promptly as
practicable, and in any event within five Business Days thereafter, amend its
books and records to reflect the name of the exercising holder or its designee
as set forth on the Exercise Form and the Interest purchased upon such exercise.
This Warrant shall be deemed to have been exercised, and such holder or any
other person so designated to be named therein shall be deemed to have become a
recordholder of such Interests for all purposes, as of the date said amendment
is recorded by the Company as aforesaid.
E. Payment of Taxes, etc. The Company and the exercising holder
shall each pay its own expenses in connection with the issuance of the Interest
hereunder, and all taxes and other governmental charges that may be imposed in
respect of such issuance shall be paid by the Company. Notwithstanding the
foregoing, the Company shall not be required to pay any tax or other charge
imposed in connection with any transfer involved in the issue of any Interest in
any name other than that of the registered holder of this Warrant, and in such
case the Company shall not be required to create any Interest until such tax or
other charge has been paid by the exercising holder or it has been established
to the Company's satisfaction that no such tax or other charge is due.
2
<PAGE>
Section 3. Transfer. Upon notice duly given to the Company, this
Warrant may be transferred by the holder hereof.
Section 4. Adjustments. The Exercise Price and the percentage
Interest purchasable upon exercise of this Warrant shall be subject to
adjustment, as determined in good faith by the Management Committee, from time
to time as set forth in this Section.
A. Creation of Interests. In the event that at any time or from time
to time the Company shall create additional Interests, then the percentage
Interest purchasable upon exercise of this Warrant shall be adjusted
appropriately to reflect the dilutive effect of the creation of the additional
Interest.
B. Reorganization. If the Company shall consolidate or merge with or
into another company or corporation, then the holder hereof shall have the right
to receive upon exercise of this Warrant such Interest and other assets,
properties or securities which such holder would have been entitled to receive
upon or as a result of such consolidation or merger had such Warrant been
exercised immediately prior to such event, at an Exercise Price adjusted
proportionately.
C. Other Events. If any event occurs as to which the foregoing
provisions of this Section 4 are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Management Committee,
fairly and adequately protect the purchase rights of this Warrant in accordance
with the essential intent and principles of the provisions hereof, then the
Management Committee shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, as shall be
reasonably necessary, in the good faith opinion of such Management Committee, to
protect such purchase rights.
Section 5. Notices to Warrant Holders. If the Interest purchasable
upon exercise of this Warrant, or the Exercise Price of this Warrant, has been
or is required to be adjusted pursuant to Section 4 hereof, the Company shall
forthwith prepare a certificate setting forth the adjusted Interest purchasable
upon exercise hereof, the adjusted Exercise Price and a brief statement of the
facts requiring such adjustment and the computation thereof. The Company shall
promptly cause a signed copy of such certificate to be delivered to the holder
of this Warrant in accordance with Section 8.
The Company shall keep at its principal office, and shall cause to be
available for inspection at said office during normal business hours by the
holder of this Warrant copies of (i) any certificates or notices required by
this Section 5, and (ii) the following statements prepared in accordance with
generally accepted accounting principles consistently applied and reported upon
by the Company's independent public accountants: (a) within 90 days after the
close of each fiscal year, an audited balance sheet of the Company as of the end
of such fiscal year and audited statements of income, changes in financial
position and Members' equity for such fiscal year, in each case setting forth in
comparative form the corresponding figures for the preceding fiscal year, and
(b) within 45 days after the close of each of the first three
3
<PAGE>
quarters of each fiscal year of the Company, an unaudited balance sheet of the
Company as of the end of such quarter and unaudited statements of income,
changes in financial position and Members' equity for the portion of such fiscal
year preceding the end of such quarter, in each case setting forth in
comparative form the corresponding figures for the corresponding period of the
preceding fiscal year. Copies of such materials may be obtained by, and at the
expense of, the holder of this Warrant upon written request by mail to the
Company at its office in accordance with Section 8.
Section 6. Registration. Promptly after the consummation of an
Initial Public Offering, the Company will take all reasonable steps to register
the Warrant, and the shares of common stock of the Company issued or issuable
upon exercise thereof, pursuant to the Securities Act.
Section 7. Interest Purchased for Investment. Capital Investment
Group, Inc., by accepting this Warrant, represents, warrants, covenants and
agrees on behalf of itself and its successors and assigns that the Interest
acquired upon exercise of this Warrant will be acquired for investment and not
for resale or distribution, and that upon the exercise of this Warrant, the
Person entitled to exercise the same will furnish evidence satisfactory to the
Company (including a written and signed representation) to the effect that the
Interest is being acquired in good faith for investment and not for resale or
distribution. The holder shall furnish or execute such documents as the Company
in its discretion deems necessary to (a) evidence such exercise of the Warrant,
(b) determine whether registration is then required under the Securities Act, as
then in effect, and (c) comply with or satisfy the requirements of the
Securities Act, or any other federal, state or local law, as then in effect.
Section 8. Transfer Books. The Company will not at any time, except
upon dissolution, liquidation or winding up of the Company, close its books so
as to result in preventing or delaying the exercise of this Warrant.
Section 9. Loss or Mutilation. Upon receipt by the Company of
evidence satisfactory to it (in the exercise of its reasonable discretion) of
the ownership of and the loss, theft, destruction or mutilation of this Warrant
and (in case of loss, theft or destruction) of indemnity satisfactory to it in
the exercise of its reasonable discretion (it being understood that the written
agreement of the holder hereof shall be sufficient indemnity) and in case of
mutilation upon surrender and cancellation hereof, the Company will execute and
deliver in lieu hereof a new Warrant of like tenor.
Section 10. Notice Generally. Any notice, demand delivery or other
communication required or permitted to be given hereunder shall be in writing
and shall be delivered by hand or sent prepaid telex, cable or telecopy, or
sent, postage prepaid, by registered, certified or express mail, or reputable
overnight courier service and shall be deemed given when so delivered by hand,
telexed, cables or telecopied, or if mailed domestically, three days after
mailing (one business day in the case of express mail or overnight courier
service), or if mailed overseas, five days after mailing (two business days in
the case of express mail or overnight courier service) as follows:
4
<PAGE>
(i) if to the Company,
Green Mountain Energy Resources L.L.C.
Box 2206
25 Green Mountain Drive
South Burlington, Vermont 05402-2206
with a copy to:
Michael C. French, Esq.
Green Funding I, L.L.C.
300 Crescent, Suite 1000
Dallas, Texas 75201
(ii) if to Capital Investment Group, Inc.,
Capital Investment Group, Inc.
17 Glenwood Avenue
Raleigh, NC 27603
Attention: Peter Coker
Section 11. Limitation of Liability. No provision hereof, in the
absence of affirmative action by the holder hereof to purchase an Interest, and
no mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Exercise Price or as a
Member of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
Section 12. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of August 6, 1997.
Green Mountain Energy Resources L.L.C.
By: /s/ Douglas G. Hyde
---------------------------------
Name: Douglas G. Hyde
Title: President
5
<PAGE>
EXERCISE FORM
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases the Interest in GREEN MOUNTAIN ENERGY RESOURCES
L.L.C., purchasable with this Warrant, and herewith makes payment therefor, all
at the price and on the terms and conditions specified in this Warrant.
Dated:
________________________________
(Signature of Registered Owner)
________________________________
(Street Address)
________________________________
(City)
(State) (Zip Code)
6
<PAGE>
EXHIBIT 10.1
================================================================================
SECOND AMENDED AND RESTATED OPERATING AGREEMENT
of
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
dated as of
March 26, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS; GENERAL PROVISIONS...................................... 1
Section 1.01. Definitions........................................ 1
Section 1.02. Rules of Usage..................................... 7
Section 1.03. Name............................................... 7
Section 1.04. Principal Executive Office and Place of Business;
Registered Offices; Service of Process............. 7
Section 1.05. Term............................................... 7
Section 1.06. Purposes........................................... 8
Section 1.07. Powers............................................. 8
ARTICLE II
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; ALLOCATIONS................. 8
Section 2.01. Initial Capital Contributions...................... 8
Section 2.02. Additional Capital Contributions................... 9
Section 2.03. Capital Accounts................................... 9
Section 2.04. Rights in Capital Account..........................10
ARTICLE III
ALLOCATIONS; DISTRIBUTIONS...........................................10
Section 3.01. Allocation of Profits..............................10
Section 3.02. Allocation of Losses...............................10
Section 3.03. Allocations from Capital Transactions..............10
Section 3.04. Special Allocations................................10
Section 3.05. Distributions of Cash Available for Distribution
from Operations....................................12
Section 3.06. Distribution of Cash Available from Capital
Transactions.......................................12
Section 3.07. 704(c) Allocations.................................12
ARTICLE IV
MANAGEMENT...........................................................12
Section 4.01. Management Committee...............................12
Section 4.02. Matters Requiring Approval of the Management
Committee..........................................13
Section 4.03. Manager............................................14
Section 4.04. Authority and Responsibility of the Chief
Executive Officer..................................14
Section 4.05. Limitations on Members.............................16
Section 4.06. Meetings of Members; Special Meetings; Action
Without a Meeting..................................16
Section 4.07. Indemnification....................................17
i
<PAGE>
Page
----
Section 4.08. Officers of the Company............................17
Section 4.09. Regulations........................................18
ARTICLE V
TRANSFERS OF UNITS...................................................18
Section 5.01. Assignment or Transfer.............................18
Section 5.02. Assignment or Transfer not Permitted by this
Agreement..........................................19
Section 5.03. Substituted Member.................................19
Section 5.04. Right of First Refusal.............................19
Section 5.05. Tag-Along Right....................................20
Section 5.06. Transfer Upon Death................................21
Section 5.07. Other Permitted Transfers..........................21
Section 5.08. Call Options.......................................22
ARTICLE VI
ADMISSION OF NEW MEMBERS.............................................23
Section 6.01. New Members........................................23
Section 6.02. Common and Preferred Units.........................23
Section 6.03. Financial Adjustments..............................23
Section 6.04. Options and Warrants...............................24
ARTICLE VII
TERMINATION OF MEMBERS...............................................24
Section 7.01. Withdrawal of Members..............................24
Section 7.02. Removal of Members.................................24
ARTICLE VIII
DISSOLUTION AND WINDING-UP...........................................24
Section 8.01. Dissolution........................................24
Section 8.02. No Dissolution.....................................24
Section 8.03. Winding Up; Distribution of Assets.................25
ARTICLE IX
BOOKS; REPORTS TO MEMBERS; TAX ELECTIONS.............................25
Section 9.01. Books and Records, Fiscal Year and Method of
Accounting.........................................25
Section 9.02. Certain Information................................25
Section 9.03. Annual Reports.....................................26
Section 9.04. Other Reports......................................26
Section 9.05. Tax Matters Partner................................26
ii
<PAGE>
Page
----
Section 9.06. Tax Audits; Special Assessments....................26
ARTICLE X
MEMBER REPRESENTATIONS AND WARRANTIES................................27
Section 10.01. Organization and Existence; Capacity...............27
Section 10.02. Power and Authority................................27
Section 10.03. Authorization and Enforceability...................27
Section 10.04. No Conflict or Breach..............................27
Section 10.05. No Proceedings.....................................27
ARTICLE XI
CERTAIN AGREEMENTS OF THE MEMBERS....................................28
Section 11.01. Registration Rights................................28
Section 11.02. Dilution...........................................31
ARTICLE XII
MISCELLANEOUS........................................................32
Section 12.01. Fiscal Year........................................32
Section 12.02. Notices............................................32
Section 12.03. Entire Agreement...................................32
Section 12.04. Modification.......................................32
Section 12.05. Waivers............................................32
Section 12.06. Severability.......................................32
Section 12.07. Further Assurances.................................32
Section 12.08. Governing Law......................................33
Section 12.09. Limitation of Rights of Others; Successors and
Assigns............................................33
Section 12.10. Waiver of Partition................................33
Section 12.11. Headings; Table of Contents........................33
Section 12.12. Counterparts.......................................33
Section 12.13. Survival...........................................33
Section 12.14. Expenses, Taxes....................................33
Section 12.15. Conflict with Regulations..........................33
EXHIBIT A REGULATIONS
SCHEDULE I MANAGEMENT COMMITTEE AND EXECUTIVE OFFICERS
iii
<PAGE>
SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
-------------------
This Second Amended and Restated Operating Agreement (this
"Agreement") of Green Mountain Energy Resources L.L.C., a Delaware limited
liability company (the "Company"), is dated as of March 26, 1999, and amends and
restates the Amended and Restated Operating Agreement of the Company dated as of
January 4, 1999 in its entirety (the "Prior Agreement").
W I T N E S S E T H:
WHEREAS, the Members (as defined below) have agreed, in accordance
with the Act (as defined below) and the terms of the Prior Agreement, to amend
and restate the Prior Agreement with this Agreement in order to regulate and
establish aspects of the affairs of the Company and the relations of the Members
as set forth herein;
NOW, THEREFORE, in consideration of the mutual agreements of the
parties, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and all Members agree as follows:
ARTICLE I
DEFINITIONS; GENERAL PROVISIONS
Section 1.01. Definitions. For purposes of this Agreement, the
-----------
following terms shall have the meanings set forth below:
"Act" means the Delaware Limited Liability Company Act, 6 Del. Code
(S) 18-101, et seq., and shall include any amendments to the Act which become
-- ---
mandatorily applicable to the Company without necessity for an election by the
Company.
"Adjusted Capital Account" means, with respect to each Member, the
balance in the Capital Account of such Member, after crediting to such Capital
Account the amounts such Member is deemed obligated to restore as described in
the penultimate sentences of Treasury Regulations Section 1.704-2(g)(2) and
Treasury Regulations Section 1.704-2(i)(5), or any successor provisions.
"Affiliate" means, with respect to a Member, a Person which, directly
or indirectly, controls or is controlled by or is under common control with such
Member, and includes, in the case of any Member which is an individual, any
parent, grandparent, sibling, child, grandchild, or spouse of such Member or any
of the foregoing individuals, or any trust established for the benefit of any
such individual or any partnership or corporation controlled by any such
individual. For purposes of this Agreement, the term "control" (including the
terms "controlled by" and "under common control with") means possession, direct
or indirect, of the power to direct or cause the direction of management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise; provided, however, that beneficial ownership of 10% or
-------- -------
more of the voting securities of any Person shall be deemed to be control.
<PAGE>
"Agreement" has the meaning specified in the introductory paragraph
hereof.
"Annual Meeting" has the meaning specified in Section 4.06(a).
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in South Burlington, Vermont, New York, New York,
or Dallas, Texas, are authorized or required to close.
"Business Plan" means the annual business plan of the Company,
prepared by the Manager and approved by the Management Committee as set forth in
Section 4.02(a)(iv).
"Capital Account" means the capital account of a Member, established
in accordance with Section 2.03.
"Capital Contributions" means the amount contributed by a Member to
the capital of the Company pursuant to Section 2.01.
"Capital Transactions" means a sale, exchange or other disposition of
the assets of the Company other than in the ordinary course of trade or
business, and any financing or refinancing.
"Cash Available for Distribution from Operations" means for any
period, the excess, if any, of (i) the cash receipts of the Company (other than
from Capital Transactions) over (ii) disbursements of cash by the Company (other
than distributions to Members and amounts paid with receipts from Capital
Transactions), including the payment of operating expenses, debt service on
loans from Members and third parties, capital expenditures, and amounts
deposited in reserves.
"Cash Available for Distribution from Capital Transactions" means, for
any period, the excess, if any of (i) cash receipts of the Company from Capital
Transactions (other than a Terminating Capital Transaction), over (ii)
disbursements of cash by the Company (other than distributions to Members and
amounts paid with receipts from other than Capital Transactions), including loan
repayments and capital expenditures properly attributable to Capital
Transactions.
"Cause" means (i) a violation of this Agreement, (ii) actual fraud or
(iii) a breach of fiduciary duty owed to the Company or any Member; provided,
--------
however, that with respect to any employment agreement of the Company, "cause"
- -------
has the meaning given thereto in such employment agreement.
"Change of Control" means (i) any change in the ownership of the
interests in the Company if, immediately after giving effect thereto, any Person
(or group of Persons acting in concert) other than the Investor and its
Affiliates will have the direct or indirect power to elect a majority of the
members of the Management Committee; (ii) any sale or other disposition
(including without limitation by way of a merger or consolidation of the Company
with another Person) of all or substantially all of the assets of the Company to
another Person (the "Change of Control Transferee") if, immediately after giving
effect thereto, any Person (or group of Persons acting in concert) other than
the Investor and its Affiliates will have the power to elect a majority of the
members of the Management Committee (or other similar governing body) of the
Change of Control
2
<PAGE>
Transferee; or (iii) any change in the ownership of the Company if, immediately
after giving effect thereto, the Investor and its Affiliates shall own less than
25% of the issued and outstanding Units, assuming for this purpose, that all
Options and Warrants are exercised and all Units issuable in respect thereof are
issued and outstanding. Notwithstanding the foregoing, a Transfer made pursuant
to Section 5.07(a) shall not constitute a Change in Control.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Units" means the common units of the Company representing an
equity interest in the Company.
"Company Minimum Gain" has the meaning set forth in Treasury
Regulations Section 1.704-2(d). In accordance with Treasury Regulations Section
1.704-2(d), the amount of Company Minimum Gain is determined by first computing,
for each nonrecourse liability of the Company, any gain the Company would
realize if it disposed of the property subject to that liability for no
consideration other than full satisfaction of the liability, and then
aggregating the separately computed gains. A Member's share of Company Minimum
Gain shall be determined in accordance with Treasury Regulations Section 1.704-
2(g)(1).
"Depreciation" means, for each Fiscal Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period (as a result
of property contributions or adjustments to such values), Depreciation shall be
adjusted as necessary so as to be an amount which bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided, however, that if the
-------- -------
federal income tax depreciation, amortization, or other cost recovery deduction
for such year or other period is zero, Depreciation for such year or other
period shall be determined with reference to such beginning Gross Asset Value
using any reasonable method selected by the Manager.
"Effective Date" means, with respect to a Member, the date on which
such Member first (i) became a party to this Agreement or any preceding
Operating Agreement of the Company or (ii) becomes a party to this Agreement, as
it may be amended from time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fiscal Year" has the meaning specified in Section 12.01 hereof.
"Governmental Authority" means any national, state or sovereign
government, and any federal, regional, state, local or city government or other
political subdivision, legislative body, court, tribunal, administrative agency
or governmental body exercising executive, legislative, judicial, regulatory or
administrative functions of a government.
3
<PAGE>
"Gross Asset Value" means, with respect to any asset of the Company or
to be acquired by the Company, the asset's adjusted basis for federal income tax
purposes, except that the Gross Asset Value of any property contributed to the
Company for federal income tax purposes shall be its gross fair market value on
the date of contribution as determined by the Management Committee, and the
Gross Asset Value of all Company assets shall be adjusted to equal their
respective gross fair market values (taking into account Section 7701(g) of the
Code) as determined by the Management Committee, as of the following times: (A)
immediately before the acquisition of any Interest in the Company by any new or
existing Member in exchange for more than a de minimis Capital Contribution, (B)
immediately before the distribution by the Company to a Member of more than a de
minimis amount of Company assets as consideration for an Interest in the
Company, in either case if the Management Committee reasonably determines that
such adjustment is necessary or appropriate to reflect the relative economic
interests of the Members within the meaning of Treasury Regulations Section
1.704-1(b)(2)(iv)(g), (C) immediately before the liquidation of the Company
within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g), and (D)
in connection with an election under Sections 734(b) or 743(b) of the Code, but
only as provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(m). The
Gross Asset Value of an asset shall be adjusted by Depreciation taken into
account with respect to such asset after its adjustment pursuant to this
definition.
"Indemnitee" has the meaning specified in Section 11.01(h)(ii).
"Initial Public Offering" means an initial Public Offering registered
on Form S-1 (or any successor form) under the Securities Act.
"Interest" means the interest, expressed as a number of Units, of any
Member in the Company, including (i) as set forth for each Member in the
Company's books and records as of March 26, 1999, (ii) as subsequently
established for each Newly Admitted Member upon the admission of such Newly
Admitted Member to the Company, and (iii) acquired by any Person upon the
exercise by such Person of an Option or Warrant held by such Person, in each
case, as such Interest may be changed from time to time in accordance with the
provisions of this Agreement.
"Investor" means Green Funding I, L.L.C., a Delaware limited liability
company.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other pledge agreement or preferential arrangement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction in respect of
any of the foregoing.
"Management Committee" has the meaning specified in Section 4.01.
"Manager" means the Chief Executive Officer of the Company.
4
<PAGE>
"Member" means each Person identified as a Member on the Company's
books and records as of March 26, 1999 and each Person who subsequently becomes
a Member of the Company in accordance with Article V or Article VI.
"Member Nonrecourse Debt" means any nonrecourse debt (as defined in
Treasury Regulations Section 1.704-2(b)(4)) of the Company for which any Member
bears the economic risk of loss, in accordance with Treasury Regulations
Sections 1.704-2(b)(4) and 1.752-2.
"Member Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulations Section 1.704-2(i). A Member's share of Member Nonrecourse
Debt Minimum Gain shall be determined in accordance with Treasury Regulations
Section 1.704-2(i)(5).
"Member Nonrecourse Deduction" has the meaning set forth in Treasury
Regulations Section 1.704-2(i)(2).
"Newly Admitted Member" means any Person who becomes a Member of the
Company after March 26, 1999 other than by reason of a Transfer.
"Option" means any option to acquire an Interest granted to any Person
by the Company.
"Option Notice" has the meaning specified in Section 5.08(c).
"Option Purchase Period" has the meaning specified in Section 5.08(c).
"Person" means any individual, corporation, association, limited
liability company, business, partnership, trust, unincorporated association,
Governmental Authority or other entity.
"Preferred Units" means preferred units of the Company representing an
equity interest in the Company with such rights, preferences and privileges
designated by the Management committee in connection with the issuance thereof.
"Prior Agreement" has the meaning specified in the introductory
paragraph hereof.
"Profits" and "Losses" means, for each Fiscal Year or other period, an
amount equal to the Company's taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with
following adjustments:
(a) Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant
to Treasury Regulations
5
<PAGE>
Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits or Losses pursuant to this definition, shall be
subtracted from such taxable income or loss;
(c) Gain or loss resulting from any disposition of Company property
with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the
property disposed of, notwithstanding that the adjusted tax basis of such
property differs from such Gross Asset Value;
(d) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or
other period, computed in accordance with the definition of "Depreciation"
herein; and
(e) Notwithstanding any other provisions of this definition, any items
which are specifically allocated pursuant to Sections 3.04(a), (b), or (c)
shall not be taken into account in computing Profits or Losses.
"Public Offering" means a public offering and sale of Units, or other
equity interest in the Company or a successor to the Company, for cash pursuant
to an effective registration statement under the Securities Act.
"Purchase Notice" has the meaning specified in Section 5.04(a).
"Regulations" has the meaning specified in Section 4.09.
"Securities Act" means the Securities Act of 1933, as amended.
"Substituted Member" means an assignee or transferee of an Interest
which has complied with the requirements of Article V to become a Member.
"Tag-Along Notice" has the meaning specified in Section 5.05.
"Terminating Capital Transaction" means the sale, exchange, or other
disposition of the assets of the Company, incident to the dissolution and
termination of the Company.
"Transfer" means any sale, assignment, gift, hypothecation, pledge or
other disposition, whether voluntary or by operation of law, of an Interest or
any portion thereof, or an interest in the profits and losses of and/or
distributions by the Company, and shall include any change in control of any
Member. The admission of any new Member, whether as a result of the exercise by
any Person of any Option or Warrant in accordance with Section 6.04 or the
result of the admission of a new Member to the Company pursuant to Section 6.01
shall not constitute a Transfer.
"Transferring Member" has the meaning specified in Section 5.04(a).
"Treasury Regulations" means the Treasury Regulations issued under the
Code, as amended and as hereafter amended from time to time. Reference to any
particular provision of the
6
<PAGE>
Treasury Regulations shall mean that provision of the Treasury Regulations on
the date hereof and any succeeding provision of the Treasury Regulations.
"Units" shall mean the Common Units and Preferred Units, if any, of
the Company.
"Warrant" means any warrant to acquire an Interest granted to any
Person by the Company.
Section 1.02. Rules of Usage. The terms defined in Section 1.01 have
--------------
the respective meanings set forth herein for all purposes, and such meanings are
equally applicable to both the singular and plural forms of the terms defined,
and references to the masculine gender shall mean and include the feminine and
neutral genders and vice versa. The words "include", "includes" and "including"
shall be deemed to be followed by the words "without limitation" whether or not
they are in fact followed by such words or words of like impact. References to
a Person are, unless the context otherwise requires, also to such Person's
permitted successors and assigns. All accounting terms not otherwise defined in
any instrument, agreement or other document have the meanings assigned to them
in accordance with generally accepted accounting principles (whether or not such
is indicated), and, except as expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereby shall mean such United States accounting principles as are generally
accepted at the date of such calculation. The words "herein", "hereof" and
"hereunder" and comparable terms refer, unless the context otherwise requires,
to the entire instrument, agreement or other document in which such terms are
used and not to any particular article, section or other subdivision thereof.
References in any instrument, agreement or other document to "Article",
"Section" or another subdivision are, unless the context otherwise requires, to
an article, section or subdivision hereof. The term "State" includes the
District of Columbia.
Section 1.03. Name. The name of the Company is "GREEN MOUNTAIN
----
ENERGY RESOURCES L.L.C."
Section 1.04. Principal Executive Office and Place of Business;
-------------------------------------------------
Registered Offices; Service of Process.
- --------------------------------------
(a) The principal executive office where the business operations of
the Company shall be conducted shall be located in the State of Vermont or
at any other place which the Management Committee may designate at any time
and from time to time. The Management Committee may establish other places
of business of the Company when the Management Committee deems it
advantageous to the Company.
(b) The address of the Company's registered office in the State of
Delaware is 1013 Centre Road, Wilmington, New Castle County, Delaware
19805. The name of the Company's registered agent for service of process
in the State of Delaware at such address is Corporation Service Company.
Section 1.05. Term. The Company shall have a term commencing on the
----
date the Certificate of Formation of the Company was filed with the Secretary of
State of the State of
7
<PAGE>
Delaware and continuing until December 31, 2085, unless sooner terminated
pursuant to Article VIII.
Section 1.06. Purposes. As stated in the Certificate of Formation of
--------
the Company, as amended, the Company is organized to perform any purpose
authorized to be performed by limited liability companies under the Act;
provided, however, that the Company is not permitted to own or operate any
- -------- -------
facilities used for the generation, transmission or distribution of electric
energy or natural gas for sale, as contemplated by the Public Utility Holding
Company Act of 1935, as amended. Notwithstanding the immediately preceding
sentence, the Management Committee may, at any time it deems it to be in the
best interest of the Company and without the approval of Members, cause the
Certification of Formation of the Company to be amended to provide that the
Company is organized to perform any purpose authorized to be performed by
limited liability companies under the Act.
Section 1.07. Powers. The Company shall have all powers of a limited
------
liability company under the Act.
ARTICLE II
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; ALLOCATIONS
Section 2.01. Initial Capital Contributions.
-----------------------------
(a) Units. Interests shall consist solely of Common Units and such
Preferred Units, if any, as the Company shall determine by resolution of
the Management Committee to issue. The Management Committee shall by
resolution determine the rights, preferences and privileges of each class
of Preferred Units. Units are personal property and a Member has no
interest in specific property of the Company. Except for any percentage
differences in the Interests of Members as a result of their ownership of
differing numbers of Units and except for the specific rights and
obligations of particular Members set forth herein, all Common Units will
be of equal standing, and there will be no preferences, rights, limitations
or restrictions among or between them.
(b) Capital Contributions. The Members hereby acknowledge that the
Investor and the other Members have made aggregate Capital Contributions as
set forth in the books and records of the Company as of March 26, 1999.
(c) Capital Contributions by Newly Admitted Members. Each Newly
Admitted Member will make the Capital Contribution required of such Newly
Admitted Member in connection with the admission of such Newly Admitted
Member to the Company.
(d) Capital Contributions by Persons Exercising Options. Any Person
becoming a Member of the Company as a result of the exercise of any Option
or Warrant shall make a Capital Contribution in an amount equal to the
exercise price for such Option or Warrant.
8
<PAGE>
Section 2.02. Additional Capital Contributions. Except as otherwise
--------------------------------
agreed by the affected Members, no Capital Contributions shall be required of
any Member in addition to the Capital Contribution, if any, made by such Member
on such Member's Effective Date.
Section 2.03. Capital Accounts.
----------------
(a) Establishment of Capital Accounts; Credits and Debits. A separate
capital account (a "Capital Account") shall be maintained for each Member
in accordance with the rules of Treasury Regulations Section 1.704-
1(b)(2)(iv). Consistent therewith, the Capital Account for each Member
shall be (x) credited with the sum of (i) the amount of any cash Capital
Contributions contributed to the Company by such Member, whether made at
such Member's Effective Date or thereafter, (ii) the Gross Asset Value of
any other property contributed by a Member to the Company, net of any
liabilities encumbering such property which the Company takes subject to or
assumes, and (iii) all Profits allocated to the Member pursuant to Article
III and (y) debited with the sum of (i) the amount of money at any time
distributed to such Member, (ii) the Gross Asset Value of any property
distributed to such Member by the Company, net of any liability encumbering
such property which the Member takes subject to or assumes, and (iii) all
Losses allocated to such Member pursuant to Article III. The Capital
Account shall be adjusted by all other adjustments required by Treasury
Regulations Section 1.704-1(b)(2)(iv).
(b) Effect of Transfers. A transferee of a Unit shall succeed to the
Capital Account attributable to the transferred Unit, and there shall be no
adjustment to the Capital Accounts as a result of such Transfer.
(c) Adjustments to Gross Asset Value. If the Gross Asset Value of any
Company asset is adjusted pursuant to the terms of this Agreement, the
Capital Account of the Members shall be adjusted to reflect the manner in
which the unrealized gain or loss inherent in such asset would have been
allocated among the Members pursuant to Section 3.03 had there been a
taxable disposition of such asset for such adjusted Gross Asset Value, and
items of Company income, gain, loss or deduction with respect to such asset
thereafter shall be specially allocated among the Members to take account
of any variation between the adjusted tax basis of such asset and its
adjusted Gross Asset Value, in the same manner as under Section 704(c) of
the Code and the Treasury Regulations thereunder.
(d) Section 754 Elections. In any year in which the Company has in
effect an election under Section 754 of the Code, the Members' Capital
Accounts shall be adjusted in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(m).
(e) Treatment of Member Loans. Loans to the Company by a Member shall
not be considered contributions to the capital of the Company and shall not
increase any Member's Capital Account. No Member shall have any obligation
to make any loan to the Company at any time.
(f) Distributions. Upon a distribution of Company property to a
Member, the Capital Accounts of the Members shall be adjusted to reflect
the manner in which the
9
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unrealized income, gain, loss, or deduction inherent in the distributed
property (to the extent it has not been previously reflected in the Capital
Account balances) would be allocated among the Members pursuant to Section
3.03 if there were a taxable disposition of such property for the
property's Gross Asset Value on the date of distribution.
Section 2.04. Rights in Capital Account. No interest shall be paid
-------------------------
by the Company on any Capital Contributions. A Member shall not be entitled to
withdraw from the Company any part of its Capital Contribution or any balance in
its Capital Account, or to receive any distribution, except as provided for in
this Agreement. No Member shall be liable for the return of the Capital
Contributions of any other Member and no Member shall have any obligation to
restore the amount of any deficit in its Capital Account to the Company.
ARTICLE III
ALLOCATIONS; DISTRIBUTIONS
Section 3.01. Allocation of Profits. After giving effect to the
---------------------
special allocations set forth in Section 3.04 hereof and except as otherwise
provided in Section 3.03, Profits for any Fiscal Year shall be allocated among
the Members in the following order of priority:
(a) first, to each Member, until the Adjusted Capital Account balances
of the Members stand in proportion to their respective Interests; and
(b) thereafter, to the Members in proportion to their respective
Interests.
Section 3.02. Allocation of Losses. After giving effect to the
--------------------
special allocations set forth in Section 3.04 hereof and except as otherwise
provided in Section 3.03, if there are Losses for any Fiscal Year, such Losses
shall be allocated in the following order of priority:
(a) first, to the Members, other than the Investor, until each such
Member has been allocated aggregate Losses under this Section 3.02(a) for
all periods in an amount equal to such Member's Capital Contributions (pro
---
rata among such Members in proportion to the aggregate amount of Losses
----
they would be entitled to receive under this Section 3.02(a) for such
Fiscal Year if a full allocation could be made under this Section 3.02(a));
and
(b) thereafter, to the Members in proportion to their respective
Interests.
Section 3.03. Allocations from Capital Transactions. All Profit and
-------------------------------------
Losses arising from Capital Transactions shall be allocated among the Members
(after giving effect to the allocations contained in Sections 3.02 and 3.04) so
as to make their respective Adjusted Capital Account balances stand in
proportion to their respective Interests.
Section 3.04. Special Allocations. Notwithstanding anything to the
-------------------
contrary in Sections 3.01, 3.02 and 3.03, the following special allocations and
rules shall apply to allocations of Profits and Losses to the Members:
10
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(a) Notwithstanding any provision to the contrary, (i) any expense of
the Company that is a "nonrecourse deduction" within the meaning of
Treasury Regulations Section 1.704-2(b)(1) shall be allocated to the
Members in accordance with their respective Interests, (ii) any expense of
the Company that is a Member Nonrecourse Deduction shall be allocated in
accordance with the meaning of Treasury Regulations Section 1.704-2(i)(1),
(iii) if there is a net decrease in Company Minimum Gain within the meaning
of Treasury Regulations Section 1.704-2(f)(1) for any Fiscal Year, items of
gain and income shall be allocated among the Members in accordance with
Treasury Regulations Section 1.704-2(f) and the ordering rules contained in
Treasury Regulations Section 1.704-2(j), and (iv) if there is a net
decrease in Member Nonrecourse Debt Minimum Gain within the meaning of
Treasury Regulations Section 1.704-2(i)(4) for any Fiscal Year, items of
gain and income shall be allocated among the Members in accordance with
Treasury Regulations Section 1.704-2(i)(4) and the ordering rules contained
in Treasury Regulations Section 1.704-2(j). For purposes of Treasury
Regulations Section 1.752-3(a)(3), "excess nonrecourse liabilities" shall
be allocated among the Members in a manner consistent with the manner in
which "nonrecourse deductions" are allocated hereunder.
(b) If a Member receives in any Fiscal Year an adjustment, allocation,
or distribution described in subparagraphs (4), (5), or (6) of Treasury
Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a
negative balance in such Member's Capital Account that exceeds the sum of
such Member's shares of Company Minimum Gain and Member Nonrecourse Debt
Minimum Gain, as determined in accordance with Treasury Regulations Section
1.704-2(g) and 1.704-2(i), such Member shall be allocated specially for
such Fiscal Year (and, if necessary, later Fiscal Years) items of income
and gain in an amount and manner sufficient to eliminate such negative
Capital Account balance as quickly as possible as provided in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d).
(c) Loss shall not be allocated to a Member to the extent that such
allocation would cause a deficit in such Member's Capital Account (after
reduction to reflect the items described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5), and (6)) to exceed the sum of such Member's
shares of Company Minimum Gain and Member Nonrecourse Debt Minimum Gain.
Any loss in excess of that limitation shall be allocated to the other
Members.
(d) If a Member Transfers any part or all of its Interest and the
transferee is admitted as a Substituted Member, the distributive shares of
the various items of Profit and Loss allocable among the Members during
such Fiscal Year shall be allocated between the transferor and the
Substituted Member either (i) as if the Fiscal Year had ended on the date
of the Transfer or (ii) based on the number of days of such Fiscal Year
that each was a Member without regard to the results of Company activities
in the respective portions of such Fiscal Year in which the transferor and
Substituted Member were Members. The Manager, in its sole discretion,
shall determine which method shall be used by the Company to allocate the
distributive shares of the various items of Profit and Loss between the
transferor and the Substituted Member.
11
<PAGE>
(e) The amounts of income, profit, gain, loss and deduction allocated
pursuant to Section 3.04 shall be determined by applying rules analogous to
those used in the definition of Profits and Losses. All allocations of
income, profits, gains, expenses, and losses (and all items contained
therein) for federal income tax purposes shall be identical to all
allocations of such items set forth in this Article III, except as
otherwise required by Section 704(c) of the Code and Treasury Regulations
Section 1.704-1(b)(4).
Section 3.05. Distributions of Cash Available for Distribution from
-----------------------------------------------------
Operations. Cash Available for Distribution from Operations shall be
- ----------
distributed, as and when determined by the Management Committee, to the Members
in accordance with their respective Interests.
Section 3.06. Distribution of Cash Available from Capital
-------------------------------------------
Transactions. Cash Available from Capital Transactions shall be distributed as
- ------------
and when determined by the Management Committee to the Members in accordance
with their respective Interests.
Section 3.07. 704(c) Allocations. In accordance with Section 704(c)
------------------
of the Code and the Treasury Regulations thereunder, income, gain, loss and
deduction with respect to any property contributed to the Company or which has a
Gross Asset Value different from its adjusted tax basis shall, for federal
income tax purposes be allocated among the Members to take account any variation
between the adjusted tax basis of such property and its Gross Asset Value under
such method provided in the Treasury Regulations under Section 704(c) of the
Code as determined by the Management Committee.
ARTICLE IV
MANAGEMENT
Section 4.01. Management Committee.
--------------------
(a) The business and affairs of the Company shall be directed by a
committee (the "Management Committee"), which shall be elected in
accordance with this Section 4.01.
(b) The members of the Management Committee as of March 26, 1999 are
those individuals listed in Schedule I.
(c) Each holder of Units hereby agrees to cast all votes to which such
holder is entitled, whether at any annual or special meeting, by written
consent or otherwise, (i) to fix the number of members of the Management
Committee at three or such higher number (no greater than 15) as may be
specified from time to time by the Investor and (ii) to elect (whether to
fill a vacancy or otherwise) as the members of the Management Committee
those individuals designated by the Investor.
(d) The Management Committee shall be elected annually, at the Annual
Meeting of the Members of the Company.
12
<PAGE>
(e) The Management Committee shall have at least one regular meeting
per Fiscal Year of the Company, immediately following the Annual Meeting.
The Management Committee may have other regular meetings at such times,
dates and locations as may from time to time by determined by the
Management Committee. Notice of regular meetings of the Management
Committee need not be given. The Management Committee may hold special
meetings at any time at the written request of any two members thereof
given to the Manager of the Company. Written notice with respect to each
such special meeting, containing the time, date, location and a proposed
agenda for such special meeting, shall be given by the Manager to each
member of the Management Committee in accordance with the Regulations no
later than 24 hours prior to the scheduled time of such special meeting.
Attendance at any such meeting shall constitute waiver of notice thereof by
each member of the Management Committee attending such meeting.
(f) Any matter requiring the consent by or other participation of the
Management Committee may be taken at a meeting of the Management Committee.
Any action permitted to be taken at a meeting of the Management Committee
may be also taken without a meeting if the members of the Management
Committee having the votes necessary to take action at a meeting of the
Management Committee at which all members are present consent to the action
in one or more writings (of substantially similar tenor) and the written
actions are filed with the records of the Company. Each such written
action shall be treated for all purposes as an action taken at a meeting.
No notice shall be required in connection with any action taken by written
consent of the Management Committee.
(g) Members of the Management Committee may participate in a meeting
by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other
at the same time. Participation in a meeting by such means shall
constitute presence in person at a meeting. Any member of the Management
Committee desiring to participate in any meeting by such means shall
provide the Manager with a telephone number for such participation prior to
the time stated in the notice for commencement of the meeting.
Section 4.02. Matters Requiring Approval of the Management Committee.
------------------------------------------------------
(a) The following actions shall require the approval of the Management
Committee, except as expressly provided below:
(i) the issuance and sale or repurchase by the Company of any
security other than an Option or Warrant pursuant to Section 6.04;
(ii) the election of a new Manager following the removal of the
Manager pursuant to Section 4.08(g);
(iii) the distribution of Cash Available for Distribution from
Operations pursuant to Section 3.05 or Cash Available for Distribution from
Capital Transactions pursuant to Section 3.06;
13
<PAGE>
(iv) the approval of the Business Plan (which shall include the
annual budget for the Company) of the Company;
(v) the approval of any material amendment to the Business Plan
of the Company or any material action not consistent with the Business Plan
of the Company;
(vi) any change in the business of the Company which would cause
the Company to be engaged in any business which is other than or not
related to the sale of power and energy to residential and small commercial
and industrial customers (i.e., less than 15 employees) or the use of the
----
Internet and other media to market "environmentally friendly" or "green"
consumer products (i.e., products that have a less harmful effect on the
----
environment than other products having a similar use);
(vii) the approval of the offering and issuance of any
additional Units;
(viii) the removal of the Manager pursuant to Section 4.08(g);
(ix) the approval (which approval may not be unreasonably
withheld) of any Transfer pursuant to Section 5.01(g);
(x) the approval of the admission of any Person to the Company
as a Newly Admitted Member pursuant to Section 6.01(a);
(xi) the approval of the terms of any Preferred Units; and
(xii) the determination of the Gross Asset Value of a Company
asset (in accordance with the definition thereof).
(b) Notwithstanding any other provision of this Agreement, the
Management Committee at any time may, without the approval of the Members,
cause the Company to be converted or otherwise reorganized into a
corporation, whether by merger, consolidation or otherwise, to facilitate
an Initial Public Offering or for any other reason deemed by the Management
Committee to be in the best interests of the Company.
Section 4.03. Manager. The Chief Executive Officer is hereby
-------
designated as the "Manager" of the Company.
Section 4.04. Authority and Responsibility of the Chief Executive
---------------------------------------------------
Officer.
- -------
(a) Subject to the authority of, and powers reserved to, the
Management Committee and the Members, the Chief Executive Officer shall
have the authority to manage, conduct and operate the Company's business.
Specifically, but not by way of limitation, the Chief Executive Officer
shall be authorized and responsible, subject to the limitations elsewhere
set forth in this Agreement, in the name and on behalf of the Company,
without the consent or approval of any other Member or the Management
Committee:
14
<PAGE>
(i) to take any action which is consistent with, contemplated
by or in furtherance of the Business Plan or which is otherwise duly
authorized under the terms of this Agreement;
(ii) to cause to be paid on or before the due date thereof all
amounts due and payable by the Company to any Person;
(iii) to employ or cause the Company to employ such agents,
employees, managers, consultants and other persons necessary or
appropriate to carry out the business and affairs of the Company, and
to pay reasonable and appropriate fees, expenses, salaries, wages and
other compensation to such persons;
(iv) to cause to be paid any and all taxes, charges and
assessments that may be levied, assessed or imposed upon any of the
assets of the Company;
(v) to sign checks and to make disbursements of Company funds
and to issue receipts for and on behalf of the Company;
(vi) to keep all books of account and other records of the
Company;
(vii) to provide to the Members reports and statements and other
information as required by Article IX;
(viii) to take all steps as shall be reasonably necessary to
protect, preserve and defend the title to and interest of the Company
in its assets, properties and franchises;
(ix) to give notice of all regular meetings of the Members and
the Management Committee, if any;
(x) to cause the Company to comply with all applicable present
and future laws, ordinances, orders, rules, regulations and
requirements of all Governmental Authorities which may have
jurisdiction over the Company, its assets or its business; and
(xi) with respect to Options to be granted to the Company's
management and senior executives pursuant to Section 6.04 hereof, to
make recommendations to the Management Committee, including, but not
limited to, the identity of Persons to receive Options, the amount
thereof, and any other special exercise or other terms of such
Options.
(b) The Chief Executive Officer or the President, or any Person
designated by the Chief Executive Officer, the President or the Management
Committee, on behalf of the Company, may execute and deliver any agreement,
instrument, document, certificate or filing to be executed and delivered by
the Company.
15
<PAGE>
Section 4.05. Limitations on Members. Except as otherwise provided
----------------------
in this Agreement, no Member shall have the authority or power in his, her or
its capacity as a Member to act as agent for or on behalf of the Company or any
other Member, to do any act which would be binding on the Company or any other
Member or to incur any expenditures on behalf of or with respect to the Company.
Section 4.06. Meetings of Members; Special Meetings; Action Without a
-------------------------------------------------------
Meeting.
- -------
(a) The annual meeting of the Members (the "Annual Meeting") shall be
held at the principal place of business of the Company or at such other
place in the continental United States as the Management Committee shall
designate at least once per Fiscal Year of the Company. A written notice
containing the time, date, location and a proposed agenda for each Annual
Meeting shall be given by the Manager to each Member no later than ten days
prior to the scheduled date of such Annual Meeting. Attendance at any such
meeting shall constitute waiver of notice thereof by each Member attending
such meeting.
(b) The Management Committee may hold special meetings of the Members
at any place at which the Annual Meeting may be held. The Management
Committee shall hold a special meeting of the Members upon the written
request of one or more Members holding not less than 10% of the outstanding
Units. A written notice with respect to each such special meeting,
containing the time, date, location and a proposed agenda for such special
meeting shall be given by the Manager to all Members no later than three
days prior to the scheduled date of such special meeting. Attendance at
any such meeting shall constitute waiver of notice thereof by each Member
attending such meeting.
(c) Any matter requiring the consent by or other participation by the
Members may be taken at a meeting of the Members. Any action permitted to
be taken at any meeting of the Members may be taken without a meeting if
the Members having the votes necessary to take action at a meeting at which
all Members are present consent to the action in one or more writings (of
substantially similar tenor) and the written actions are filed with the
records of the Company. Each such written action shall be treated for all
purposes as an action taken at a meeting.
(d) Members may participate in a meeting by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time.
Participation in a meeting by such means shall constitute presence in
person at a meeting. Any Member desiring to participate in any meeting by
such means shall provide the Manager with a telephone number for such
participation prior to the time stated in the notice for commencement of
the meeting.
(e) At any meeting of the Members, every Member having the right to
vote shall be entitled to vote either in person or by proxy executed in
writing by such Member. A telegram, telecopy, cablegram or similar
transmission by the Member, or a photographic, photostatic, facsimile or
similar reproduction of a writing executed by the Member shall be treated
as an execution in writing for purposes of this Section 4.06(e). No proxy
shall be valid after three years from the date of its execution unless
otherwise provided in the proxy.
16
<PAGE>
Each proxy shall be revocable unless the proxy form conspicuously states
that the proxy is irrevocable and the proxy is coupled with an interest.
Each proxy must be delivered to the Manager prior to or at the time of the
meeting to be effective.
(f) Any meeting provided for in this Section 4.06 shall be deemed to
have been duly called and held if notice has been given as provided herein.
No notice shall be required in connection with any action taken by written
consent of the Members.
(g) The Manager shall cause to be kept a book of minutes of all
meetings of the Members in which there shall be recorded (i) the time and
place of each meeting, (ii) whether a meeting is an Annual Meeting or a
special meeting, (iii) the notice thereof given and (iv) the proceedings
thereof.
Section 4.07. Indemnification. Each officer, agent and employee of
---------------
the Company and each member of the Management Committee shall be indemnified by
the Company as provided in the Regulations.
Section 4.08. Officers of the Company. Subject to and in accordance
-----------------------
with the Regulations, the Management Committee shall designate such officers of
the Company with such responsibilities as it shall from time to time deem
necessary and appropriate, initially including the following officers of the
Company, each of which shall have the functions described below for such office.
(a) Chief Executive Officer. The Chief Executive Officer of the
Company shall be the chief executive officer of the Company and shall be
the Manager. The Chief Executive Officer shall report to the Management
Committee. The Chief Executive Officer shall have such duties and
responsibilities as shall be assigned to him or her by the Management
Committee.
(b) President. The President shall report to the Chief Executive
Officer of the Company. The President shall have such duties as shall be
assigned to him or her by the Management Committee or the Chief Executive
Officer.
(c) Vice Presidents. The Company shall have one or more Vice
Presidents, as designated by the Management Committee, who shall report to
the Chief Executive Officer and President of the Company. The Vice
Presidents shall have such duties as shall be assigned to them by the
Management Committee, the Chief Executive Officer or the President.
(d) Chief Financial Officer. The Chief Financial Officer of the
Company shall be the chief financial officer of the Company and shall be
responsible for keeping the financial books and records and funds of the
Company. The Chief Financial Officer shall be designated by the Management
Committee and shall report to the Chief Executive Officer and President of
the Company and shall have such additional duties as shall be assigned to
him or her by the Management Committee, the Chief Executive Officer or the
President.
17
<PAGE>
(e) Secretary. The Secretary of the Company shall be responsible for
maintaining the books and records of the Company. The Secretary shall be
designated by the Management Committee and shall report to the Chief
Executive Officer and President of the Company and shall have such
additional duties as may be assigned to him or her by the Management
Committee, the Chief Executive Officer or the President.
(f) Additional Officers. The Company may have such other additional
officers as the Management Committee shall determine to be necessary or
desirable in connection with the management of the business and affairs of
the Company.
(g) Designation and Removal. The Management Committee shall have the
sole and exclusive power to designate the persons who shall fill each
office of the Company and may remove any such person at any time in its
sole discretion.
(h) Executive Officers. The executive officers of the Company as of
March 26, 1999 are listed in Schedule I.
Section 4.09. Regulations. The Regulations attached hereto as
-----------
Exhibit A (the "Regulations") are adopted as the Company's Regulations. The
Management Committee shall have the authority to enact such further Regulations
or amend the Regulations from time to time; provided, however, that the rights
-------- -------
of Members pursuant to this Agreement may not be adversely affected by enactment
by the Management Committee of further Regulations or amendment of the
Regulations.
ARTICLE V
TRANSFERS OF UNITS
Section 5.01. Assignment or Transfer. No Member may make a Transfer
----------------------
with respect to all or any of such Member's Units unless all of the following
conditions shall have been satisfied or, except for the conditions specified in
Sections 5.01(a) and (f), waived by the Management Committee:
(a) such Member shall have complied with the provisions of this
Article V;
(b) receipt by the Company of an opinion of counsel reasonably
satisfactory to the Company that such Transfer will not result in the
violation of the Securities Act or any other applicable laws or the order
of any Governmental Authority having jurisdiction over the Company or its
property;
(c) such Transfer will not constitute a breach or violation of or an
event of default under any agreement or instrument to which the Company is
a party;
(d) such Transfer will not result in or create a prohibited
transaction under, or cause the Company to become a "party in interest" as
defined in section 3(14) of, ERISA,
18
<PAGE>
or otherwise result in any holder of Units or the assets of the Company
being subject to the provisions of ERISA;
(e) such Transfer will not cause the classification of the Company as
a partnership for purposes of the Code to be lost or adversely affected;
(f) the Management Committee shall have approved such Transfer, except
in the case of (i) Transfer by any Member to an Affiliate that (i) is an
individual (or a trust for the benefit of such individual) or (ii) if not
an individual (or a trust for the benefit of such individual) is directly
or indirectly controlled by, or under common control with, such Member; and
(g) the assignor or transferor and assignee and transferee shall have
executed and delivered an instrument conveying such Units, which instrument
shall be satisfactory to the Manager and shall have been delivered to the
Manager for recordation on the books of the Company.
Section 5.02. Assignment or Transfer not Permitted by this Agreement.
-------------------------------------------------------
Unless any Person to whom an assignment or transfer is made becomes a
Substituted Member in accordance with the provisions of this Article V, such
Person shall not be entitled to any of the rights granted to a Member under this
Agreement other than the right to receive all or part of the share of the
allocations, distributions or returns of capital to which his assignor would
otherwise be entitled.
Section 5.03. Substituted Member. Any permitted transferee or
------------------
assignee of Units shall, upon compliance with Section 5.01, become a Substituted
Member entitled to all the rights of a Member.
Section 5.04. Right of First Refusal.
----------------------
(a) In the event that a Member desiring to make a Transfer (the
"Transferring Member") shall have reached a bona fide, arm's length
agreement with a third party to effect a Transfer for value of all or part
of such Transferring Member's Units, the Transferring Member shall
thereupon give written notice of such proposed Transfer to the Manager and
all Members of the Company not less than 30 days prior to the scheduled
closing date of such Transfer. Each Member shall have the right, by
written notice (a "Purchase Notice") given to the Transferring Member and
all other Members prior to five days prior to the scheduled closing date
for such Transfer, to purchase the Units to be transferred, upon the same
terms and conditions as shall have been agreed by the Transferring Member
and the third party. In the event that the Transferring Member shall
receive Purchase Notices from Members interested in purchasing more than
the aggregate number of Units to be transferred, such Members shall be
entitled to purchase up to their pro rata share (determined by dividing the
number of such Units by the aggregate number of Units held by all Members
delivering Purchase Notices) of the Units of the Transferring Member. In
the event that the Transferring Member shall receive Purchase Notices from
Members aggregating less than the aggregate number of Units to be
transferred, the Transferring Member shall give telephonic notice of such
event to the Members delivering such Purchase Notices and shall
19
<PAGE>
offer any remaining portion of the Units to be transferred to such Members
in proportion to their respective Interests, until all such Units to be
transferred have been agreed to be purchased by such Members. In the event
that the purchasing Members shall not purchase all such Units, the portion
not so purchased may be transferred to such third party, subject to the
provisions of this Agreement.
(b) Notwithstanding anything contained in this Section 5.04 to the
contrary, the provisions of this Section 5.04 shall not apply to any
Transfer which is being made by a Member to an Affiliate that (i) is an
individual (or a trust for the benefit of such individual) or (ii) if not
an individual (or a trust for the benefit of such individual), is directly
or indirectly controlled by or under common control with, such Member.
(c) The closing of any purchase pursuant to this Section 5.04 shall
take place as soon as reasonably practicable and in no event later than 30
days after receipt of a Purchase Notice, at the principal office of the
Company, or at such other time and location as the parties to such purchase
may mutually determine. At the closing of any purchase and sale pursuant
to this Section 5.04, the holder of Units to be sold shall execute and
deliver to the purchasing Members an assignment or such other instrument(s)
of transfer reasonably requested by the purchasing Members, and the
purchasing Members shall pay to such holder by certified or bank check or
wire transfer of immediately available federal funds the purchase price of
the applicable Units. The delivery by any Person pursuant to this Section
5.04 of an assignment or such other instrument(s) of transfer shall be
deemed a representation and warranty by such Person that: (i) such Person
has full right, title and interest in and to such Units; (ii) such Person
has all necessary power and authority and has taken all necessary action to
sell such Units as contemplated; and (iii) such Units are free and clear of
any and all Liens.
(d) The foregoing provisions of Section 5.04 shall expire on the
earlier of (i) an Initial Public Offering and (ii) a Change of Control.
Section 5.05. Tag-Along Right.
---------------
(a) In the event that a Transferring Member shall have reached a bona
fide, arm's length agreement with a third party to effect a Transfer for
value of any of such Transferring Member's Units, the Transferring Member
shall thereupon give written notice of such proposed Transfer to the
Manager and all Members of the Company not less than 30 days prior to the
scheduled closing date of such Transfer. Each Member not exercising its
rights under Section 5.04 shall have the right, by written notice (a "Tag-
Along Notice") given to the Transferring Member and all other Members prior
to five days prior to the scheduled closing date for such Transfer, to
include in such Transfer, and to sell upon the same terms and conditions as
shall have been agreed by the Transferring Member and the third party, a
portion of such Member's Units such that the number of each selling
Member's Units included in such Transfer is equal in proportion to the
number of Units retained by such Member.
20
<PAGE>
(b) Notwithstanding anything contained in this Section 5.05 to the
contrary, the provisions of this Section 5.05 shall not apply to any
Transfer which is being made by a Member to an Affiliate that (i) is an
individual (or a trust for the benefit of such individual) or (ii) if not
an individual (or a trust for the benefit of such individual), is directly
or indirectly controlled by or under common control with, such Member.
(c) The closing of any purchase pursuant to this Section 5.05 shall
take place as soon as reasonably practicable and in no event later than 30
days after receipt of a Tag-Along Notice, at the principal office of the
Company, or at such other time and location as the parties to such purchase
may mutually determine. At the closing of any purchase and sale pursuant
to this Section 5.05, the holder of the Units to be sold shall execute and
deliver to the purchaser an assignment or such other instrument(s) of
transfer reasonably requested by the purchaser, and the purchaser shall pay
to such holder the purchase price of the applicable Units. The delivery by
any Person pursuant to this Section 5.05 of an assignment or such other
instrument(s) of transfer shall be deemed a representation and warranty by
such Person that: (i) such Person has full right, title and interest in
and to such Units; (ii) such Person has all necessary power and authority
and has taken all necessary action to sell such Units as contemplated; and
(iii) such Units are free and clear of any and all Liens.
(d) Notwithstanding the foregoing provisions of Section 5.05, a Member
may effect Transfer in respect of an aggregate of 10% of the initial number
Units held by such Member as of March 26, 1999 without compliance with this
Section 5.05.
(e) The foregoing provisions of Section 5.05 shall expire on the
earlier of (i) an Initial Public Offering and (ii) a Change of Control.
Section 5.06. Transfer Upon Death. Notwithstanding the provisions of
-------------------
Section 5.04, but subject to the provisions of Section 5.08, upon the death of
any Member, the Units of such Member may be distributed by will or other
instrument taking effect at death or by applicable laws of descent and
distribution to such Member's estate, executors, administrators and personal
representatives, and then to such Member's heirs, legatees or distributees;
provided, however, that no such Transfer shall be effective until the recipient
- -------- -------
has delivered to the Company a written acknowledgment and agreement in form and
substance reasonably satisfactory to the Company that the Units to be received
by such recipient are subject to all the provisions of this Agreement.
Section 5.07. Other Permitted Transfers. Notwithstanding any other
-------------------------
provision of this Article V, any Member may effect a Transfer as set forth
below:
(a) Each of the Investor and any of its Affiliates may Transfer, by
means of a pro rata distribution, any Units owned by it to the holders of
its equity interests, and any such holder (and any direct or indirect
distributee of any such holder) may subsequently transfer, by means of a
pro rata distribution, any Units owned by it to the holders of its equity
interests.
(b) Any Member may transfer any or all of its Units in a Public
Offering in which such Member participates pursuant to Section 11.01
hereof.
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Section 5.08. Call Options. In the circumstances and upon the terms
------------
set forth below, upon the termination of the employment by the Company and its
subsidiaries of any individual who is a Member, and who was an employee when he
or she first became a Member, the Company shall have the right to purchase all
or any portion of the Units of such Member or any transferee of such Member
pursuant to Section 5.04(b) or Section 5.06.
(a) (i) If such termination is the result of (A) the death or
disability of such Member or (B) termination of such Member's employment by
the Company without Cause then, in either such event, the Company may
purchase all or any portion of the Units held by such Member at a price
equal to the fair market value of such Units.
(ii) In each case Units are purchased pursuant to clause (a) (i)
above, the Company will pay for such Units in cash.
(b) If such termination is by the Company or its subsidiaries for
Cause or by the Member, then the Company may purchase all or any portion of
the Units of such Member at a price equal to the fair market value of such
Units.
(c) Any right described in this Section 5.08 may be exercised by
delivery of written notice thereof (the "Option Notice") within 90 days of
the effectiveness of such right (the "Option Purchase Period"). Any such
right not duly exercised within the applicable Option Purchase Period shall
thereafter terminate. The Option Notice shall state that the Company has
elected to exercise such right and the number of the Units with respect to
which the right is being exercised. The Company may assign its purchase
rights (in whole or in part) under this Section 5.08 to any third party,
who shall to the extent of the assignment perform all obligations of the
Company under this Section 5.08. Notwithstanding such assignment, the
Company shall remain liable for all obligations of the Company under this
Section 5.08.
(d) The closing of any purchase and sale of Units pursuant to the
exercise of any right granted pursuant to this Section 5.08 shall take
place as soon as reasonably practicable and in no event later than 30 days
after termination of the applicable Option Purchase Period at the principal
office of the Company, or at such other time and location as the parties to
such purchase may mutually determine. In the event the price of any Units
to be purchased is specified to be fair market value, such fair market
value shall be determined as of the date such right becomes effective. At
the closing of any purchase and sale of Units pursuant to this Section
5.08, the holder of the Units to be sold shall execute and deliver to the
Company an assignment or such other instrument(s) of transfer reasonably
requested by the Company, and the Company shall pay to such holder the
purchase price therefor by certified or bank check or wire transfer of
immediately available federal funds. The delivery of an assignment or such
other instrument(s) of transfer by any Person selling Units pursuant to
this Section 5.08 shall be deemed a representation and warranty by such
Person that: (i) such Person has full right, title and interest in and to
such Units; (ii) such Person has all necessary power and authority and has
taken all necessary action to sell such Units as contemplated; and (iii)
such Units are free and clear of any and all Liens.
22
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(e) Unless otherwise specified by the Management Committee, the
provisions of this Section 5.08 shall not apply to Units acquired directly
from the Company pursuant to the Green Mountain Energy Resources L.L.C.
Employee Unit Purchase Plan, as such plan may be amended or modified, or
any similar plan adopted by the Company.
(f) The foregoing provisions of Section 5.08 shall expire on the
earlier of (i) an Initial Public Offering by the Company and (ii) a Change
of Control.
ARTICLE VI
ADMISSION OF NEW MEMBERS
Section 6.01. New Members.
-----------
(a) Subject to Section 6.04, from and after March 26, 1999, any Person
acceptable to the Management Committee may become a Newly Admitted Member
of the Company after the issuance by the Company of Units for such fair
market value consideration as the Management Committee shall determine,
subject to the terms and conditions of this Agreement. A Newly Admitted
Member shall be allocated such Interest as the Management Committee shall
determine to be appropriate. A new Member shall execute, acknowledge and
deliver to the Company such representations and documents, and perform such
other acts as the Management Committee deems necessary or desirable to
assure compliance with any applicable state and federal laws, including,
without limitation, securities laws and regulations.
(b) Upon the admission of a Newly Admitted Member, the books and
records of the Company shall be revised to add such Newly Admitted Member,
to indicate the number and class of the Units of such Newly Admitted Member
(if different from the class of Units of the existing Members) and the
Capital Contribution and address for notice for such Newly Admitted Member.
Section 6.02. Common and Preferred Units. The Management Committee
--------------------------
may permit any Person to become a Member of the Company by issuance or transfer
to such Person of Common Units or Preferred Units, having such different rights,
preferences and privileges, and subject to such terms and conditions as shall be
agreed upon by the Management Committee and such Person.
Section 6.03. Financial Adjustments. No new Member shall be entitled
---------------------
to any allocation of losses, income or expense incurred by the Company prior to
such Person becoming a Member of the Company. The Management Committee may, at
its option, at the time a Newly Admitted Member is admitted, close the Company
books as though the Company's tax year had ended or make pro rata allocations of
loss, income and expense deductions to a Newly Admitted Member for that portion
of the Company's tax year in which a Member was admitted in accordance with the
provisions of Section 706(d) of the Code and the Treasury Regulations
promulgated thereunder.
23
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Section 6.04. Options and Warrants. The Management Committee may
--------------------
cause, or may designate a committee consisting of one or more individuals and
the committee so designated may cause, the Company to issue Units and Options
and Warrants to purchase Units, whether pursuant to one or more option or
deferred compensation plans or otherwise. Options and/or Warrants may be
issued, inter alia, to individuals who are members of the Management Committee
----------
or officers, employees or consultants of the Company or as a part of any
financing. The terms of any such Options and/or Warrants, which may include a
requirement that the optionee or grantee execute a counterpart of this
Agreement, shall be determined by the Management Committee. Prior to the date
on which such Options and/or Warrants are actually exercised, no holder of any
thereof shall be, or shall be deemed to be, a Member of the Company or have
rights with respect to any allocations of loss, income and expense prior to the
date on which such holder becomes a Member of the Company. Upon the exercise of
any such Option or Warrant, the holder thereof shall become a Member of the
Company, having the number and class of Units represented by such Option or
Warrant as was exercised by such holder, and a Capital Account shall be
established for such Member, into which shall be credited the exercise price of
such Option or Warrant, which shall constitute the Capital Contribution of such
Member. No approval of any Member or the Management Committee shall be required
for the admission of any Person upon the exercise of any Option or Warrant held
by such Person.
ARTICLE VII
TERMINATION OF MEMBERS
Section 7.01. Withdrawal of Members. No Member shall be permitted to
---------------------
withdraw from the Company other than as a consequence of the Company's
repurchase of all of the Units of such Member or the Transfer by such Member of
all of the Units held by such Member and the admission of the transferee as a
Substitute Member.
Section 7.02. Removal of Members. No Member shall be removed from
------------------
the Company.
ARTICLE VIII
DISSOLUTION AND WINDING-UP
Section 8.01. Dissolution. The Company shall be dissolved upon the
-----------
occurrence of any of the following:
(a) the affirmative vote of the Management Committee; or
(b) the expiration of the term of the Company pursuant to Section
1.05.
Section 8.02. No Dissolution. Notwithstanding anything in the Act to
--------------
the contrary, the Company shall not be dissolved upon, and its business shall be
continued after, the occurrence of any other event.
24
<PAGE>
Section 8.03. Winding Up; Distribution of Assets.
----------------------------------
(a) Upon dissolution of the Company, the Management Committee (or a
"liquidating trustee" appointed by the Members) shall proceed to wind up
the affairs of the Company, liquidate the remaining property and assets of
the Company and terminate the Company. The process of winding-up and
liquidation shall be carried out in accordance with any then effective
written policies and procedures adopted by the Management Committee.
(b) The proceeds of such liquidation shall be applied in the following
order of priority: first, to the creditors of the Company, including
Members who are creditors, to the extent otherwise permitted by law, in
satisfaction of the liabilities of the Company (whether by payment or the
making of reasonable provision for payment thereof); second, to each of the
Members in proportion to the positive balances in their respective Capital
Accounts until the balance in each of such Capital Accounts has been
reduced to zero; and third, to the Members in proportion to their
respective Interests. For purposes of this Section 8.03(b), the Capital
Account of each Member shall be determined after all adjustments made in
accordance with Article III hereof resulting from the Company's operations
and from all sales and dispositions of all or any part of the Company's
assets. Any distributions pursuant to this Section 8.03(b) should be made
by the end of the Fiscal Year in which the liquidation occurs (or, if
later, within 90 days after the date of the liquidation). To the extent
deemed advisable by the Management Committee, appropriate arrangements
(including the use of a liquidating trust) may be made to assure that
adequate funds are available to pay any contingent debts or obligations.
ARTICLE IX
BOOKS; REPORTS TO MEMBERS; TAX ELECTIONS
Section 9.01. Books and Records, Fiscal Year and Method of
--------------------------------------------
Accounting. The Company shall maintain at its principal place of business
- ----------
separate books of account for the Company which shall show a true and accurate
record of all costs and expenses incurred, all charges made, all credits made
and received and all income derived in connection with the conduct of the
Company and the operation of its business, and in accordance with this
Agreement. Books of the Company shall be kept on the accrual basis in
accordance with generally accepted accounting principles. To the extent
required by law, the books and records of the Company shall be open to
inspection, examination and audit by each Member and its representatives at all
reasonable times for a purpose reasonably related to such Member's Interest at
such Member's sole cost and expense, but subject to appropriate confidentiality
standards to ensure that such books and records are not subject to review by any
Governmental Authority not having access thereto as a matter of applicable law
and to ensure that such books and records are only used in connection with the
business of the Company.
Section 9.02. Certain Information. The Manager shall cause to be
-------------------
prepared and delivered:
(a) to all Members, as promptly as reasonably practicable after the
end of each Fiscal Year, a copy of the Company tax returns and Schedule K-1
for the Company with
25
<PAGE>
respect to such Fiscal Year (with copies of the same being provided to the
Members as far in advance of the filing with the Internal Revenue Service
as reasonably practicable), together with such information with respect to
the Company as may be required to enable each Member to complete properly
its federal income tax return, any required income tax return of any state
and any other reporting or filing requirement imposed by any governmental
authority;
(b) to each Member, if deemed appropriate by the tax matters partner
designated pursuant to Section 9.05, tax returns prepared by the Company on
behalf of such Member for filing by such Member in the relevant state or
states; and
(c) from time to time and with reasonable promptness, and subject to
appropriate confidentiality restrictions and use solely for Company-related
business, such further information available to the Manager in respect of
the business, affairs and financial condition of the Company as any Member
may reasonably request (including information necessary to make estimated
tax payments).
Section 9.03. Annual Reports. Within 90 days after of the end of
--------------
each Fiscal Year, the Management Committee shall cause to be prepared, and each
Member furnished with, financial statements accompanied by a report thereon of
the Company's accountants stating that such statements are prepared and fairly
stated in all material respects in accordance with generally accepted accounting
principles, and, to the extent inconsistent therewith, in accordance with this
Agreement, including the following:
(a) A copy of the balance sheet of the Company as of the last day of
such Fiscal Year;
(b) A statement of income or loss for the Company for such Fiscal
Year; and
(c) A statement of the Members' Capital Accounts, changes thereto for
such Fiscal Year and percentage Interest at the end of such Fiscal Year.
Section 9.04. Other Reports. Within 45 days after the end of each
-------------
quarter, the Management Committee shall cause to be prepared, and each Member
furnished with, unaudited financial statements.
Section 9.05. Tax Matters Partner. The Investor shall designate a
-------------------
Member to be the "tax matters partner" of the Company within the meaning of
Section 6231(a)(7) of the Code and may file a designation of such Member as such
with the Internal Revenue Service.
Section 9.06. Tax Audits; Special Assessments. If the federal tax
-------------------------------
return of either the Company or an individual Member with respect to an item or
items of Company income, loss, deduction, etc., potentially affecting the tax
liability of the Members generally is subject to an audit by the Internal
Revenue Service, the Management Committee may, in the exercise of its business
judgment, determine that it is necessary to contest proposed adjustments to such
return or items.
26
<PAGE>
ARTICLE X
MEMBER REPRESENTATIONS AND WARRANTIES
Each Member represents and warrants to the Company and each other
Member that, on such Member's Effective Date:
Section 10.01. Organization and Existence; Capacity. Such
------------------------------------
Member, if not an individual, is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization or, if an
individual is of legal age and capacity.
Section 10.02. Power and Authority. Such Member, if not an
-------------------
individual, has the full power and authority to execute, deliver and perform
this Agreement and to carry out the transactions contemplated hereby.
Section 10.03. Authorization and Enforceability. The execution
--------------------------------
and delivery of this Agreement by such Member, if not an individual, and the
carrying out by such Member of the transactions contemplated hereby have been
duly authorized by all requisite action of such Member, and this Agreement has
been duly executed and delivered by such Member and constitutes the legal, valid
and binding obligation of such Member, enforceable against it in accordance with
the terms hereof, subject, as to enforceability of remedies, to limitations
imposed by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws relating to or affecting the enforcement of
creditors' rights generally and to general principles of equity.
Section 10.04. No Conflict or Breach. None of the execution,
---------------------
delivery and performance by such Member of this Agreement, the compliance with
the terms and provisions hereof and the carrying out of the transactions
contemplated hereby, conflicts or will conflict with or will result in a breach
or violation of any of the terms, conditions, or provisions of any law,
governmental rule or regulation or the charter documents or by-laws of such
Member or any applicable order, writ, injunction, judgment or decree of any
Governmental Authority against such Member or by which it or any of its
properties is bound, or any loan agreement, indenture, mortgage, bond, note,
resolution, contract or other agreement or instrument to which such Member is a
party or by which it or any of its properties is bound, or constitute or will
constitute a default thereunder or will result in the imposition of any lien
upon any of its properties.
Section 10.05. No Proceedings. There is no suit, action, hearing,
--------------
inquiry, investigation or proceeding, at law or in equity, pending, or, to the
knowledge of such Member, threatened, before, by, or in any court or before any
Governmental Authority against or affecting such Member which could have a
material adverse effect, either individually or in the aggregate, on the
business, affairs, financial position, results of operations, properties or
assets, or condition, financing or otherwise, of such Member or on its ability
to fulfill its obligations hereunder.
27
<PAGE>
ARTICLE XI
CERTAIN AGREEMENTS OF THE MEMBERS
Each Member hereby covenants and agrees with the Company and each
other Member as set forth in this Article XI, and, to the extent of any conflict
or inconsistency between any provision of this Agreement and any provision of
this Article XI, the provisions of this Article XI shall govern.
Section 11.01. Registration Rights.
-------------------
(a) If at any time the Company proposes to register any of its Units
under the Securities Act, for its own account or for the account of any
holder of Units, for sale in a Public Offering, the Company will each such
time give notice to all holders of Units of its intention to do so. Any
such holder may by written response delivered to the Company within 20 days
after such notice request that all or a specified number of the Units held
by such holder be included in such registration. The Company thereupon
will use its reasonable efforts to cause to be included in such
registration under the Securities Act all Units which the Company has been
so requested to register by such holders of Units, to the extent required
to permit the disposition (in accordance with the methods to be used by the
Company or other holders of Units in such Public Offering) of the Units to
be so registered.
(b) The Company shall not be obligated to effect any registration of
Units under this Section 11.01 incidental to the registration of any of its
Units in connection with:
(i) any Public Offering relating to employee benefit plans or
dividend reinvestment plans;
(ii) any Public Offering relating to the acquisition or merger
after the date hereof by the Company or any of its subsidiaries of or with
any other businesses; or
(iii) the Initial Public Offering.
(c) The Company shall pay all expenses of holders of Units incurred in
connection with each registration of Units requested pursuant to this
Section 11.01, other than underwriting discount and commission, if any, and
applicable transfer taxes, if any; provided, however, that the Company
-------- -------
shall not be required to pay in respect of the fees and expenses of any
attorneys or other advisers retained by such holders more than an aggregate
for all such holders of $20,000 in the case of each such registration.
Such amount shall be allocated pro rata among such holders based upon the
gross proceeds to be received by them in the Public Offering which is the
subject of each such registration.
(d) Members participating in any Public Offering pursuant to this
Section 11.01 shall take all such actions and execute all such documents
and instruments that are reasonably requested by the Company to effect the
sale of their Units in such Public
28
<PAGE>
Offering, including, without limitation, being parties to the underwriting
agreement with the underwriters for such offering containing such
representations and warranties by the Company and such holders and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, customary indemnity and contribution provisions.
(e) In connection with any registration, the underwriter may determine
that marketing factors (including, without limitation, an adverse effect on
the per share offering price) require a limitation of the number of Units
to be underwritten. Notwithstanding any contrary provision of this
paragraph (e) and subject to the terms of this Section 11.01, the
underwriter may limit the number of Units which would otherwise be included
in such registration by excluding any or all Units from such registration
(it being understood that the number of Units which the Company seeks to
have registered in such registration shall not be subject to exclusion, in
whole or in part, under this Section 11.01). Upon receipt of notice from
the underwriter of the need to reduce the number of Units to be included in
the registration, the Company shall advise all holders of the Units that
would otherwise be registered and underwritten pursuant hereto, and the
number of such Units that may be included in the registration shall be
allocated in proportion, as nearly as practicable, to the respective
amounts of Units which each such holder requested be registered under
Section 11.01 in such registration. For purposes of any underwriter
cutback, all Units held by any holder which is a partnership or corporation
shall also include any Units held by the partners, retired partners,
shareholders or affiliated entities of such holder, or the estates and
family members of any such partners and retired partners and any trusts for
the benefit of any of the foregoing persons, and such holder and other
persons shall be deemed to be a single selling holder, and any pro rata
reduction with respect to such selling holder shall be based upon the
aggregate number of Units owned by all entities and individuals included in
such selling holder, as defined in this sentence. No Units excluded from
the underwriting by reason of the underwriter's marketing limitation shall
be included in such registration. If any holder of Units disapproves of
the terms of the underwriting, it may elect to withdraw therefrom by
written notice to the Company and the underwriter. The Units so withdrawn
shall also be withdrawn from registration.
(f) The underwriters and legal counsel to be retained in connection
with any Public Offering shall be selected by the Management Committee.
(g) Without the approval of the Management Committee, for a period
beginning seven days immediately preceding and ending on the 180th day
following the effective date of the registration statement used in
connection with such offering, no holder of Units (whether or not a selling
holder pursuant to such registration statement) shall transfer any Units
except pursuant to such registration statement.
(h) (i) The Company may require, as a condition to including any
Units in any registration statement filed pursuant to this Section 11.01,
that the Company shall have received an undertaking satisfactory to it from
the prospective seller of such Units, to indemnify and hold harmless the
Company, each member of the Management Committee, each director or officer
of the Company or any of its subsidiaries who shall sign such
29
<PAGE>
registration statement and each other Person (other than such seller), if
any, who controls the Company and any of its subsidiaries within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act with respect to any statement in or omission from such registration
statement, any preliminary prospectus or final prospectus included therein,
or any amendment or supplement thereto, or any other disclosure document
(including, without limitation, reports and other documents filed under the
Exchange Act or any document incorporated therein) or other document or
report, if such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company or any of its
subsidiaries through an instrument executed by such seller specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement, incorporated document or other document or report.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company, any of its subsidiaries
or any such director, officer or controlling Person and shall survive any
transfer of securities.
(ii) Promptly after receipt by a Person entitled to
indemnification under the foregoing provisions of this Section 11.01 (an
"Indemnitee") of notice of the commencement of any action or proceeding
involving a claim of the type referred to in the foregoing provisions of
this Section 11.01, such Indemnitee will, if a claim in respect thereof is
to be made by such Indemnitee against any indemnifying party, give written
notice to each such indemnifying party of the commencement of such action;
provided, however, that the failure of any Indemnitee to give notice to
-------- -------
such indemnifying party as provided herein shall not relieve any
indemnifying party of its obligations under the foregoing provisions of
this Section 11.01, except and solely to the extent that such indemnifying
party is actually materially prejudiced by such failure to give notice. In
case any such action is brought against an Indemnitee, each indemnifying
party will be entitled to participate in and to assume the defense thereof,
jointly with any other indemnifying party similarly notified, to the extent
that it may wish, with counsel reasonably satisfactory to an Indemnitee,
and after notice from an indemnifying party to such an Indemnitee of its
election so to assume the defense thereof, such indemnifying party will not
be liable to such an Indemnitee for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof;
provided, however, that
-------- -------
(A) if the Indemnitee reasonably determines that there may
be a conflict between the positions of such indemnifying party and the
Indemnitee in conducting the defense of such action, then counsel for
the Indemnitee shall conduct the defense to the extent reasonably
determined by such counsel to be necessary to protect the interests of
the Indemnitee and such indemnifying party shall employ separate
counsel for its own defense,
(B) in any event, the Indemnitee, at its own expense, shall
be entitled to have counsel chosen by such Indemnitee participate in,
but not conduct, the defense and
(C) the indemnifying party shall bear the legal expenses
incurred in connection with the conduct of the defense as referred to
in clause (A) above.
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<PAGE>
If, within a reasonable time after receipt of the notice, such indemnifying
party shall not have elected to assume the defense of the action, such
indemnifying party shall be responsible for any legal or other expenses
incurred by such Indemnitee in connection with the defense of the action,
suit, investigation, inquiry or proceeding. Without the consent of any
such Indemnitee (which consent will not unreasonably be withheld), no
indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnitee of a release from
all liabilities in respect of such claim or litigation.
(iii) If the indemnification provided for in Section 11.01 hereof
is unavailable to a party that would have been an Indemnitee under any such
Section in respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to therein, then each
party that would have been an indemnifying party thereunder shall, in lieu
of indemnifying such Indemnitee, contribute to the amount paid or payable
by such Indemnitee as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such
proportion as is appropriate to reflect the relative fault of such
indemnifying party on the one hand and such Indemnitee on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof). The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or such Indemnitee and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties
agree that it would it not be just or equitable if contribution pursuant to
this paragraph (iii) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to in the preceding sentence. The amount paid or
payable by a contributing party as a result of the losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) referred to
above in this paragraph (iii) shall include any legal or other expenses
reasonably incurred by such Indemnitee in connection with investigating or
defending any such action or claim. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation.
(i) Notwithstanding anything contained herein to the contrary, no
Member shall have any right to demand registration of all or any part of
its Interest in the Company other than as expressly provided in this
Section 11.01.
Section 11.02. Dilution. Unless otherwise specified in the
--------
instruments granting an Option or Warrant, no holder of Units, Options or
Warrants shall be protected from dilution upon the issuance of additional Units,
Options or Warrants whether pursuant to the exercise of any Option or Warrant or
otherwise or upon the making of additional Capital Contributions.
31
<PAGE>
ARTICLE XII
MISCELLANEOUS
Section 12.01. Fiscal Year. The Fiscal Year of the Company shall
-----------
be the calendar year or such other taxable year as may be required by Section
706(b) of the Code ("Fiscal Year").
Section 12.02. Notices.
-------
(a) Whenever by law or under the provisions of this Agreement, notice
is required to be given to any member of the Management Committee or
Member, such notice may be given by (a) mail, addressed to such Person 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 five
Business Days after the same is deposited in the United States mail or (b)
overnight delivery service, addressed to such Person at his, her or its
address as it appears on the records of the Company, and such notice will
be deemed to be given one Business Day after the same is delivered to such
delivery service. Notice to members of the Management Committee may also
be given by telephone (unless written notice is required), telegram, telex,
facsimile, or similar medium of communication, and shall be effective upon
actual receipt thereof.
(b) Any Member may change its address for the receipt of notices at
any time by giving notice thereof to the Manager. Upon receipt of any
notice of change, the Manager shall cause such change to be reflected in
the books and records of the Company.
Section 12.03. Entire Agreement. This instrument contains the
----------------
entire agreement of the Members relating to the rights granted and obligations
assumed in this Agreement and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any oral
representations or modifications concerning this instrument shall be of no force
or effect unless contained in a subsequent written modification signed by the
party to be bound.
Section 12.04. Modification. No change or amendment or
------------
modification of this Agreement shall be of any force or effect unless such
change or amendment or modification is in writing and has been signed by Members
owning a majority of the issued and outstanding Units.
Section 12.05. Waivers. No waiver of any breach of the terms of
-------
this Agreement shall be effective unless such waiver is in writing and signed by
the Member by whom such waiver is claimed to have been made or given. No waiver
of any breach shall be deemed to be a waiver of any other or subsequent breach.
Section 12.06. Severability. If any provision of this Agreement
------------
shall be held to be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 12.07. Further Assurances. Each Member shall execute or
------------------
otherwise join in or confirm such deeds, assignments, endorsements, evidences of
Transfer and other instruments
32
<PAGE>
and documents and shall give such further assurances as shall be necessary to
perform its obligations hereunder or as shall be necessary or advisable to
enable the Manager to perform its obligations hereunder.
Section 12.08. Governing Law. THIS AGREEMENT AND (UNLESS
-------------
OTHERWISE EXPRESSLY PROVIDED) ALL AMENDMENTS AND SUPPLEMENTS TO, AND ALL
CONSENTS AND WAIVERS PURSUANT TO, THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF DELAWARE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
Section 12.09. Limitation of Rights of Others; Successors and
----------------------------------------------
Assigns. No Person other than a Member shall have any legal or equitable right,
- -------
remedy or claim under or in respect of this Agreement. This Agreement shall be
binding upon and inure to the benefit of the Members and their respective
successors and permitted assigns.
Section 12.10. Waiver of Partition. To the extent permitted by
-------------------
applicable law, each of the Members irrevocably waives, during the term of this
Company and during the period of its liquidation following any dissolution, any
right that such Member might have to maintain any action for partition with
respect to any assets of the Company.
Section 12.11. Headings; Table of Contents. The title of the
---------------------------
Articles and headings of the Sections of this Agreement, and the table of
contents, are for convenience of reference only and are not to be considered in
construing the terms and provisions of this Agreement.
Section 12.12. Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
Section 12.13. Survival. The general principles set forth in
--------
Article XI hereof shall be included in the certificate of incorporation, bylaws
and/or the governing documents, or other appropriate agreement, of any
corporation succeeding to the assets, rights and obligations of the Company;
provided, however, that such principles need not be extended to holders of
- -------- -------
equity interests in such succeeding corporation if such holders were not Members
of the Company.
Section 12.14. Expenses, Taxes. Except as expressly provided
---------------
herein, whether or not the transactions contemplated herein shall be
consummated, each party shall pay its own expenses incident to the negotiation,
preparation and performance of this Agreement, including but not limited to the
fees and expenses of its legal counsel, financial advisors and accounting
advisors.
Section 12.15. Conflict with Regulations. In the event that any
-------------------------
provision of the Regulations of the Company conflicts with any provision of this
Agreement, the provision of this Agreement shall prevail.
33
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
the Company's limited liability company agreement under the Act as of the date
first above written.
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
By: /s/ M. DAVID WHITE
---------------------------------------
Name: M. David White
----------------------------------
Title: Chief Executive Officer
---------------------------------
GREEN FUNDING I, L.L.C.
By: /s/ EVAN A. WYLY
---------------------------------------
Name: Evan A. Wyly
----------------------------------
Title: Designated Representative
---------------------------------
34
<PAGE>
EXHIBIT A
---------
================================================================================
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
REGULATIONS
As Adopted and in Effect
as of March 26, 1999
================================================================================
<PAGE>
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
REGULATIONS
TABLE OF CONTENTS
Page
----
MEETINGS OF MEMBERS.......................................................... 1
1. Place of Meeting........................................... 1
2. Annual Meetings............................................ 1
3. Special Meetings........................................... 1
4. Notice..................................................... 1
5. Quorum..................................................... 1
6. Voting..................................................... 2
7. Written Action............................................. 2
8. Participation in Meeting by Telephone Conference........... 2
MANAGEMENT COMMITTEE......................................................... 2
9. Function................................................... 2
10. Number and Election of Members of the Management Committee. 2
11. Vacancies, New Memberships and Removal of Members
of the Management Committee............................. 2
12. Resignation................................................ 3
13. Regular Meetings........................................... 3
14. Quorum..................................................... 3
15. Written Action............................................. 3
16. Participation in Meetings by Telephone Conference.......... 3
17. Committees................................................. 3
18. Compensation............................................... 4
19. Rules...................................................... 4
NOTICES...................................................................... 4
20. Generally.................................................. 4
21. Waivers.................................................... 5
OFFICERS..................................................................... 5
22. Generally.................................................. 5
23. Compensation............................................... 5
24. Succession................................................. 5
25. Authority and Duties....................................... 5
INDEMNIFICATION.............................................................. 6
26. Damages and Expenses....................................... 6
27. Insurance, Contracts, and Funding.......................... 9
i
<PAGE>
TABLE OF CONTENTS (cont'd)
GENERAL...................................................................... 10
28. Seal....................................................... 10
29. Reliance upon Books, Reports, and Records.................. 10
30. Time Periods............................................... 10
31. Amendments................................................. 10
32. Certain Defined Terms...................................... 10
33. Operating Agreement Priority............................... 10
ii
<PAGE>
MEETINGS OF MEMBERS
-------------------
1. Place of Meeting. Meetings of the Members of Green Mountain
----------------
Energy Resources L.L.C. (the "Company") shall be held at the principal place of
business of the Company or at such other place in the continental United States
as the Management Committee may determine.
2. Annual Meetings. Annual meetings of Members, commencing with
---------------
year 1999, shall be held at such date and time as shall be designated from time
to time by the Management Committee, to elect a Management Committee in
accordance with the Second Amended and Restated Operating Agreement of the
Company, dated as of March 26, 1999 (the "Operating Agreement").
3. Special Meetings.
----------------
(a) Special meetings of the Members, for any purpose or purposes,
unless otherwise prescribed by law or by the Operating Agreement, may be called
only upon written request of one or more Members holding not less than 10% of
the outstanding Units (a "Meeting Request"). Any such request must be sent to
the Chief Executive Officer and must state the purpose or purposes of the
proposed meeting.
(b) The Chief Executive Officer shall inform the Management Committee
of the receipt of a Meeting Request, and thereafter the Management Committee
will call a special meeting of the Members for any lawful purpose; provided,
--------
however, that no separate special meeting of Members requested pursuant to a
- -------
Meeting Request will be required to be convened if (A) the Management Committee
calls an annual or special meeting of Members to be held not later than 90
calendar days after receipt of such Meeting Request and (B) the purposes of such
annual or special meeting include (among any other matters properly brought
before the meeting) the purposes specified in such Meeting Request.
4. Notice. Written notice of every meeting of the Members, stating
------
the time, date and location 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 three nor more than 60 calendar days before the date of the
meeting to each Member, except as otherwise provided herein or by law. When a
meeting is adjourned to another time, date or location, written notice need not
be given of the adjourned meeting if the time, date and location 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, written notice of the
time, date and location of the adjourned meeting must be given in conformity
herewith. At any adjourned meeting, any business may be transacted which might
have been transacted at the original meeting. No notice shall be required in
connection with any action taken by written consent of the Members.
5. Quorum. Except as otherwise provided by law, the holders of a
------
majority of the issued and outstanding Units, present in person or by a proxy,
will constitute a quorum at all meetings of the Members for the transaction of
business thereat. If, however, such quorum is not present or represented at any
meeting of the Members, the Members present in person or represented
<PAGE>
by proxy, will have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present or
represented. At any meeting of the Members that has been adjourned three times,
the holders of outstanding Units present in person or represented by proxy, will
constitute a quorum for the transaction of business at such third adjourned
meeting.
6. Voting. Except as otherwise provided by law, each Member will be
------
entitled at every meeting of the Members to one vote for each Unit owned by such
Member according to the records of the Company and such votes may be cast either
in person or by proxy. The vote upon any question brought before a meeting of
the Members may be by voice vote, unless otherwise required by these Regulations
or unless the Management Committee or the holders of a majority of the Units
present in person or by proxy at such meeting otherwise determine. When a
quorum is present at any meeting, the vote of the holders of a majority of the
Units present in person or represented by proxy will decide any question
properly brought before such meeting, unless the question is one upon which by
express provision of law, the Operating Agreement, or these Regulations, a
different vote is required, in which case such express provision will govern and
control the decision of such question.
7. Written Action. Any action required or permitted to be taken at
--------------
any meeting of the Members may be taken without a meeting if the Members having
the votes necessary to take action at a meeting at which all Members are present
consent to the action in one or more writings (of substantially similar tenor)
and the written actions are filed with the records of the Company. Each such
written action shall be treated for all purposes as an action taken at a
meeting.
8. Participation in Meeting by Telephone Conference. Members may
------------------------------------------------
participate in a meeting by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear ether other at the same time, and such participation in a
meeting will constitute presence in person at the meeting.
MANAGEMENT COMMITTEE
--------------------
9. Function. The business and affairs of the Company will be
--------
managed under the direction of the Management Committee. The members of the
Management Committee may elect from among themselves a Chairman and one or more
Vice Chairmen.
10. Number and Election of Members of the Management Committee. The
----------------------------------------------------------
number of the members that shall constitute the Management Committee will be as
set forth in the Operating Agreement. Subject to provisions of the Operating
Agreement, at each annual meeting of the Members of the Company, members of the
Management Committee will be elected by plurality vote of all votes cast at such
meeting to hold office for a term expiring at the next annual meeting of
Members, or if later until their successors are elected and qualified.
11. Vacancies, New Memberships and Removal of Members of the
--------------------------------------------------------
Management Committee. Additional memberships may be created, the number of
- --------------------
members may be decreased, and vacancies and newly created memberships resulting
from any increase in the number of members may be filled by the affirmative vote
of Members holding a majority of the interest in the
2
<PAGE>
Company. Any member elected in accordance with the preceding sentence will hold
office for the remainder of the full term of the members then elected and
acting, or until such member's successor has been elected and qualified. Any
member of the Management Committee may be removed with or without cause by the
affirmative vote of holders of a majority of the issued and outstanding Units.
12. Resignation. Any member of the Management Committee may resign
-----------
at any time by giving written notice of his resignation to the Manager. 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.
13. Regular Meetings. Regular meetings of the Management Committee
----------------
shall be held after the annual meeting of the Members, unless the Management
Committee shall otherwise determine, and at such other times, dates and
locations as may from time to time be determined by the Management Committee.
Notice of regular meetings of the Management Committee need not be given.
14. Quorum. At all meetings of the Management Committee, a majority
------
of the total number of members then in office will constitute a quorum for the
transaction of business. Except for actions required by these Regulations or the
Operating Agreement to be taken by a different vote of the Management Committee,
the act of a majority of the members present at any meeting at which there is a
quorum will be the act of the Management Committee. If a quorum is not present
at any meeting of the Management Committee, the members present thereat may
adjourn the meeting from time to time to another date, time or location without
notice other than announcement at the meeting, until a quorum is present.
15. Written Action. Any action required or permitted to be taken at
--------------
any meeting of the Management Committee may be taken without a meeting if the
required members of the Management Committee consent thereto in writing, and the
writing or writings are filed with the records of the Company. Each such
written action shall be treated for all purposes as an action taken at a
meeting.
16. Participation in Meetings by Telephone Conference. Members of
-------------------------------------------------
the Management Committee, or any other committee designated by the Management
Committee, may participate in a meeting of the Management Committee, or any such
other committee, by means of telephone conference or similar communications
equipment by which all persons participating in the meeting can hear each other
at the same time, and such participation in a meeting will constitute presence
in person at the meeting.
17. Committees.
----------
(a) The Management Committee may designate one or more committees,
each such committee to consist of one or more members and each to have such
lawfully delegable powers and duties as the Management Committee may confer.
(b) Each Committee of the Management Committee will serve at the
pleasure of the Management Committee or as may be specified in any resolution
from time to time adopted by
3
<PAGE>
the Management Committee. The Management Committee may designate one or more
members as alternate members of any such committee, who may replace any absent
or disqualified member at any meeting of such committee.
(c) Except as otherwise provided in these Regulations, the Operating
Agreement or by law, any committee of the Management Committee, to the extent
provided in Paragraph (a) of this Regulation or, if applicable, in the
resolution of the Management Committee designating such committee, will have and
may exercise all the powers and authority of the Management Committee in the
direction of the management of the business and affairs of the Company. Any
such committee designated by the Management Committee will have such name as may
be determined from time to time by resolution adopted by the Management
Committee. A majority of the members of any committee of the Management
Committee will 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
will be the act of such committee. Each committee of the Management Committee
may prescribe its own rules for calling and holding meetings and its method of
procedure, subject to any rules prescribed by the Management Committee, and will
keep a written record of all actions taken by it.
(d) In addition to committees comprised of members of the Management
Committee, the Management Committee may designate one or more committees
consisting of individuals who are not members of the Management Committee, each
of which shall have such lawfully delegable powers and duties as the Management
Committee may confer, including a committee to administer any benefit plan of
the Company. A majority of the members of any such committee will 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 will be the act of such
committee. Each committee may prescribe its own rules for calling and holding
meetings and its method of procedure, subject to any rules prescribed by the
Management Committee, and will keep a written record of all actions taken by it.
18. Compensation. The Management Committee may establish such
------------
compensation for, and reimbursement of the expenses of, members for membership
on the Management Committee and on committees of the Management Committee,
attendance at meetings of the Management Committee or committees of the
Management Committee, or for other services by members of the Management
Committee to the Company as the Management Committee may determine.
19. Rules. The Management Committee may adopt rules and regulations
-----
for the conduct of its meetings and the management of the affairs of the
Company.
NOTICES
-------
20. Generally. Whenever by law or under the provisions of the
---------
Operating Agreement or these Regulations notice is required to be given to any
member of the Management Committee or Member, such notice may be given by (a)
mail, addressed to such Person 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 five Business Days after the same is deposited in the United
States mail or (b) overnight delivery service, addressed to such Person at his,
her or its address as it appears
4
<PAGE>
on the records of the Company, and such notice will be deemed to be given one
Business Day after the same is delivered to such delivery service. Notice to
members of the Management Committee may also be given by telephone (unless
written notice is required), telegram, telex, facsimile, or similar medium of
communication, and shall be effective upon actual receipt thereof.
21. Waivers. Whenever any notice is required to be given by law or
-------
under the provisions of the Operating Agreement or these Regulations, 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
--------
22. Generally. Subject to the provisions of the Operating Agreement,
---------
the officers of the Company will be elected by the Management Committee and will
consist of a Chief Executive Officer, President, and such other officers as the
Management Committee may from time to time deem necessary and appropriate,
including but not limited to, a Secretary, a Chief Financial Officer, one or
more Vice Presidents and such other officers as the Management Committee may
from time to time determine. 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
Management Committee 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 Management Committee, the Management Committee may delegate the
absent or disabled officer's powers or duties to any other officer or to any
member of the Management Committee.
23. Compensation. The compensation of all officers and agents of the
------------
Company will be fixed by the Management Committee or by a committee of the
Management Committee. The Management Committee may fix, or delegate the power
to fix, the compensation of other officers and agents of the Company to an
officer of the Company.
24. Succession. The officers of the Company will hold office until
----------
their successors are elected and qualified. Any officer may be removed at any
time by the affirmative vote of a majority of the Management Committee. Any
vacancy occurring in any office of the Company may be filled by the Management
Committee as provided in Regulation 22.
25. 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 in the Operating Agreement or
from time to time by the Management Committee.
5
<PAGE>
INDEMNIFICATION
---------------
26. Damages and Expenses.
--------------------
(a) Without limiting the generality or effect of any provision of the
Operating Agreement, the Company will to the fullest extent permitted by
applicable law as then in effect indemnify any person (an "Indemnitee") who is
or was involved in any manner (including without limitation as a party or a
witness) or is threatened to be made so involved in any threatened, pending, or
completed investigation, claim, action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (including without limitation any
action, suit, or proceeding by or in the right of the Company to procure a
judgment in its favor) (a "Proceeding") by reason of the fact that such person
is or was or had agreed to be a member of the Management Committee, officer,
employee, or agent of the Company, or is or was serving at the request of the
Management Committee or an officer of the Company as a director, manager,
officer, employee, or agent of another corporation, partnership, limited
liability company, joint venture, trust, or other entity, whether or not for
profit (including the heirs, executors, administrators, or estate of such
person), or anything done or not done by such person in any such capacity,
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 right of indemnification provided in this Regulation 26 will
not be exclusive of any other rights to which any person seeking indemnification
may otherwise be entitled, and will be applicable to Proceedings commenced or
continuing after the adoption of this Regulation 26, whether arising from acts
or omissions occurring before or after such adoption.
(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 Regulation
26:
(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 such 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 such undertaking and such
undertaking will be accepted without reference to the recipient's financial
ability to make repayment.
(ii) To obtain indemnification under this Regulation 26, 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
6
<PAGE>
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 will promptly
upon receipt of such a request for indemnification advise the Management
Committee in writing that the Indemnitee has requested indemnification. The
Indemnitee's entitlement to indemnification under this Regulation 26 will
be determined in one of the following ways: (A) by a majority vote of the
Disinterested members (as hereinafter defined), if they constitute a quorum
of the Management Committee, or, in the case of an Indemnitee that is not a
present or former officer of the Company, by any committee of the
Management Committee or committee of officers or agents of the Company
designated for such purpose by a majority of the Management Committee; (B)
by a written opinion of Independent Counsel (as hereinafter defined) if (1)
a Change of Control has occurred and the Indemnitee so requests or (2) in
the case of an Indemnitee that is a present or former officer of the
Company, a quorum of the Management Committee consisting of Disinterested
members is not obtainable or, even if obtainable, a majority of such
Disinterested members so directs; (C) by the Members (but only if a
majority of the Disinterested members, if they constitute a quorum of the
Management Committee, presents the issue of entitlement to indemnification
to the Members for their determination); or (D) as provided in subparagraph
(iii) below. In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to clause (B)
above, a majority of the Disinterested members will select the Independent
Counsel, but only an Independent Counsel to which the Indemnitee does not
reasonably object; provided, however, that if a Change of Control has
-------- -------
occurred, the Indemnitee will select such Independent Counsel, but only an
Independent Counsel to which the Management Committee does not reasonably
object.
(iii) Except as otherwise expressly provided in this Regulation 26,
the Indemnitee will be presumed to be entitled to indemnification under
this Regulation 26 upon submission of a request for indemnification
together with the Supporting Documentation in accordance with subparagraph
(c)(ii) above, 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) to
determine entitlement to indemnification has not been appointed or has 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 paragraph (a) of this Regulation 26, 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,
---- ----------
in and 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.
7
<PAGE>
(iv) (A) In the event that a determination is made pursuant to
subparagraph (c)(ii) that the Indemnitee is not entitled to indemnification
under this Regulation 26, (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 Regulation 26.
(B) If a determination is made or deemed to have been made, pursuant
to subparagraph (c)(ii) or (iii) of this Regulation 26 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 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
Regulation 26 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 Regulation 26, 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
(C) (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
Regulation 26 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 Regulation 26.
(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 Regulation 26, 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
8
<PAGE>
Indemnitee in connection with such judicial adjudication or arbitration
will be prorated accordingly.
(v) For purposes of this paragraph (c):
(A) "Disinterested Member" means a member of the Management Committee
who is not or was not a party to the Proceeding in respect of which
indemnification is sought by the Indemnitee.
(B) "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 (1) the Company or the Indemnitee in any matter material to
either such party or (2) any other party to the Proceeding giving rise to a
claim for indemnification under this Regulation 26. 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 Regulation 26.
(d) If any provision or provisions of this Regulation 26 are held to
be invalid, illegal, or unenforceable for any reason whatsoever: (i) the
validity, legality, and enforceability of the remaining provisions of this
Regulation 26 (including without limitation all portions of any paragraph
of this Regulation 26 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 thereby and (ii)
to the fullest extent possible, the provisions of this Regulation 26
(including without limitation all portions of any paragraph of this
Regulation 26 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.
27. 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 Regulation 26 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
Regulation 26 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 Regulation 26. Notwithstanding anything to the
contrary contained in Regulation 26, 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.
9
<PAGE>
GENERAL
-------
28. Seal. The Management Committee may adopt a seal and use the same
----
by causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
29. Reliance upon Books, Reports, and Records. Each member of the
-----------------------------------------
Management Committee, each member of a committee designated by the Management
Committee, 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, or committees
designated by the Management Committee, or by any other Person as to matters the
member, 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.
30. Time Periods. In applying any provision of these Regulations
------------
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.
31. Amendments. Except as otherwise provided by law or by the
----------
Operating Agreement or these Regulations, these Regulations or any of them may
be amended in any respect or repealed at any time (i) at any meeting of Members
or (ii) at a meeting of the Management Committee, provided, however, that the
-------- -------
right of Members pursuant to the Operating Agreement may not be adversely
affected by enactment by the Management Committee of further Regulations or
amendment of the Regulations.
32. Certain Defined Terms. Terms used herein with initial capital
---------------------
letters that are not defined in these Regulations but are defined in the
Operating Agreement are used herein as so defined in the Operating Agreement.
33. Operating Agreement Priority. To the extent any provisions of
----------------------------
these Regulations conflict with any provision of the Operating Agreement, the
provisions of the Operating Agreement shall control.
10
<PAGE>
SCHEDULE I
----------
MANAGEMENT COMMITTEE AND EXECUTIVE OFFICERS
Part A. Management Committee
- -----------------------------
Set forth below are the members of the Management Committee:
H. Lee S. Hobson
Evan A. Wyly
Lisa Wyly
Sam Wyly
Dennis M. Crumpler
Mark Cuban
Richard E. Hanlon
Reed Maltzman
Part B. Executive Officers
- ---------------------------
Dennis M. Crumpler...............................Acting Chief Technology Officer
M. David White...........................................Chief Executive Officer
Dennis W. Kelly........................................................President
Kevin W. Hartley............Chief Marketing Officer and Executive Vice President
Julia D. Blunden..............................Vice President, Strategic Planning
Thomas C. Boucher.........Vice President, Energy Supply and Business Development
Karen K. O'Neill.....................................Vice President, New Markets
Peter H. Zamore...................Vice President, General Counsel and Secretary
Jay Le Duc...................................Director of Operations and Systems
Thomas H. Rawls.....................................Chief Environmental Officer
K. Scott Canon..........................................Chief Financial Officer
11
<PAGE>
EXHIBIT 10.2
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
EMPLOYEE UNIT PURCHASE PLAN
Green Mountain Energy Resources L.L.C., a Delaware limited liability
company (the "Company"), hereby adopts the Green Mountain Energy Resources
L.L.C. Employee Unit Purchase Plan (the "Plan"), effective as of January 11,
1999.
1. Purpose. The purpose of the Plan is to encourage the highest level of
-------
performance by the Company's employees and certain other individuals, by
providing them with the opportunity to acquire an equity interest in the
Company.
2. Definitions. The following terms, when used in the Plan with initial
-----------
capital letters, will have the following meanings:
(a) "Committee" means the Unit Purchase Plan Committee which is
appointed by the Company to administer the Plan.
(b) "Eligible Individual" means (i) any person who is employed by the
Company on the last day of the Purchase Period if the relationship between
such person and the Company is, for federal income tax purposes, that of
employer and employee and (ii) any consultant to the Company, or any other
individual, who is designated by the Committee as eligible to purchase
Units under the Plan.
(c) "Participant" means an Eligible Individual who elects to purchase
Units under the Plan.
(d) "Purchase Period" means the period beginning December 23, 1998, and
ending on January 11, 1999, during which an Eligible Individual may elect
to participate in the Plan.
(e) "Unit" means a unit as defined in the Amended and Restated
Operating Agreement of the Company and, if such units are converted into
or exchanged for other securities of the Company or its successor, the
security into or for which such units are converted or exchanged.
3. Units Available Under Plan. The total number of Units which may be
--------------------------
purchased by all Eligible Individuals under the Plan will not exceed in the
aggregate 500,000 Units.
4. Individual Limitation on Purchase Rights. Except as otherwise
----------------------------------------
determined by the Committee in its discretion, the minimum number of units that
a Participant may purchase under the Plan is 100 Units increased by the number
of Units purchased with the proceeds of a promissory note as provided in
paragraph 5(c). The Committee may designate the maximum number of Units that a
Participant may purchase, which maximum number may differ among Participants.
<PAGE>
5. Purchase Terms.
--------------
(a) The purchase price of each Unit purchased under this Plan is $10.00.
(b) Each Participant will enter into a subscription agreement with the
Company that will contain such terms and conditions as the Committee
determines. Acceptance of the terms of subscriptions for Units under the
Plan will be in the sole discretion of the Committee.
(c) The aggregate purchase price of the Units will be payable in cash
or by check acceptable to the Company. Except as otherwise determined by
the Committee in its discretion, up to one-half of the purchase price may
be paid at the election of the Participant by the Participant's promissory
note ("Unit Purchase Note"), interest (at the rate of 6% per annum,
compounded annually) and principal on which will be payable (i) in a single
payment on the earlier of the fifth anniversary of the Unit Purchase Note
or the 90th day following the termination of the Participant's employment
with the Company for any reason, including death, or (ii) upon the sale or
other disposition of the Units in the manner provided in paragraph 6.
"Termination of employment" includes ceasing to perform services for the
Company as a consultant or in any other capacity.
(d) Payment of the Unit Purchase Note will be secured by the Units
purchased by the Participant pursuant to the Plan and any other equity
securities of the Company owned or hereafter acquired by the Participant
(the "Collateral"), but the Unit Purchase Note will otherwise be without
recourse to the Participant. The Collateral will be held in escrow until
the Unit Purchase Note has been repaid in whole or in part in accordance
with its terms (or until appropriate provision for repayment shall have
been made in a form satisfactory to the Committee) at which time the
Committee shall direct the escrow agent to release all or an appropriate
portion (determined under the principles of Section 6(a)) of the
Collateral.
6. Sale or Disposition of the Units.
---------------------------------
(a) In the event a Participant who has executed a Unit Purchase Note
sells or otherwise disposes of all or a portion of the Collateral
(including any disposition for no consideration but excluding any
conversion or exchange of the Units into or for other securities of the
Company), the Participant will be obligated to repay to the Company a
portion of the then outstanding principal and accrued interest under the
Unit Purchase Note. The amount of such required payment will represent the
same proportion (but in no event more than 100%) of the outstanding
principal and interest under the Unit Purchase Note as the Collateral sold
or disposed of represents of the Units purchased under the Plan and held by
the Participant immediately prior to such sale or other disposition. The
amount of such required repayment will be made to the Company in cash upon
the closing of the sale or disposition of the Collateral.
(b) In addition to the repayment obligation described in subparagraph
(a) above, in the event a Participant who has executed a Unit Purchase Note
sells or otherwise
2
<PAGE>
disposes of all or a portion of the Collateral (including any disposition
for no consideration but excluding any conversion or exchange of the Units
into or for other securities of the Company) and realizes a gain upon such
sale or disposition, the Participant will be obligated to repay an
additional amount of principal and interest under the Unit Purchase Note.
For purposes of this subparagraph, a Participant 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 Participant will be required to repay to the Company an amount equal to
50% of such gain, but in no event more than the outstanding principal
balance and accrued interest under the Unit Purchase Note. Such amount will
be due and payable to the Company in cash upon the closing of the sale or
other disposition of the Collateral.
(c) For purposes of subparagraphs (a) and (b) above, in the event a
Participant sells or otherwise disposes of Collateral, the Collateral first
sold or otherwise disposed of by the Participant will be deemed to be Units
purchased under the Plan.
7. 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, 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 to be withheld.
8. Administration of the Plan. The Plan will be administered by the
--------------------------
Committee. The Committee has 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 a right to purchase Units,
including any loan agreement forms. The interpretation and construction by the
Committee of any such provision and any determination by the Committee pursuant
to any provision of the Plan or of any such agreement, notification or document
will be final and conclusive. No member of the Committee will be liable for any
such action or determination made in good faith.
9. Amendments, Etc.
----------------
(a) The Plan may be amended by the Committee at any time and for any
reason.
(b) The Plan may be terminated at any time by action of the Committee.
The termination of the Plan will not adversely affect the terms of any
outstanding Units.
(c) The Plan will not confer upon any Participant any right with
respect to continuance of employment or other service with the Company, nor
will it interfere in any
3
<PAGE>
way with any right the Company would otherwise have to terminate a
Participant's employment or other service at any time.
(d) The Plan will be governed by and construed in accordance with the
laws of the State of Delaware without giving effect to the conflicts of law
provisions thereof.
GREEN MOUNTAIN ENERGY RESOURCES
L.L.C.
By /s/ M. David White
-----------------------------------
Name: M. David White
----------------------------
Title: President
----------------------------
4
<PAGE>
FIRST AMENDMENT
TO THE
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
EMPLOYEE UNIT PURCHASE PLAN
GREEN MOUNTAIN ENERGY RESOURCES L.L.C., a Delaware limited liability
company (the "Company"), hereby adopts this First Amendment (this "Amendment")
to the Green Mountain Energy Resources L.L.C. Employee Unit Purchase Plan (the
"Plan"), effective as of January 11, 1999.
WHEREAS, the Company adopted the Plan on January 11, 1999 and desires to
amend the Plan to provide, among other things, (i) for an increase in the number
of Units available for issuance under the Plan, (ii) that payment of the
purchase price may be made by the provision of services rendered to the Company
or by a written obligation to perform future services to the Company, and (iii)
that the Committee may consent to a transfer of a Participant's Common Units
(as defined in the Plan) to its affiliates.
NOW, THEREFORE, the Plan is amended as follows:
1. Definitions. The definition set forth in Section 2(b) of the Plan
-----------
shall be amended by amending clause (ii) to read in its entirety as follows:
"(ii) any consultant to the Company or any individual designated by
the Committee as eligible to purchase Units under the Plan."
2. Units Available Under the Plan. Section 3 of the Plan shall be
------------------------------
amended to replace "500,000" with "1,000,000".
3. Purchase Terms. The first sentence of Section 5(c) of the Plan shall
--------------
be amended to read in its entirety as follows:
"(c) Payment of the aggregate purchase price of the Units may be made
(i) in cash, (ii) in the sole discretion of the Committee, by the
provision of services rendered to the Company or by a written
obligation to perform future services for the Company, in each case,
on such terms as deemed appropriate by the Committee, (iii) subject to
the terms of this Section 5(c), by execution of a promissory note or
notes satisfactory in form to the Committee, or (iv) in the sole
discretion of the Committee, by any combination of the foregoing."
4. Capitalized Terms. Capitalized terms used in this Amendment and not
-----------------
otherwise defined shall have the meanings given to them in the Plan.
5. Sale or Disposition of the Units. Section 6 of the Plan shall be
--------------------------------
amended by adding a subsection (d) to read in its entirety as follows:
<PAGE>
"(d) Notwithstanding anything to the contrary set forth in the Plan,
for purposes of subparagraphs (a) and (b) above, the Committee may, in
its sole and absolute discretion, consent in writing to a transfer of
Units from a Participant to any of his, her or its affiliates and
waive the Participant's obligation to repay to the Company any
principal and interest that may become due under the Unit Purchase
Note in accordance with subparagraphs (a) and (b) of this Section 6."
6. Other Terms. All other terms and conditions of the Plan shall remain
-----------
unchanged and in full force and effect.
7. Governing Law. This Amendment shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware without giving effect to the
conflicts of law provisions thereof.
[Remainder of page intentionally left blank.]
2
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Amendment to Employee
Unit Purchase Plan effective as of the date first above written.
GREEN MOUNTAIN ENERGY
RESOURCES L.L.C.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
<PAGE>
EXHIBIT 10.3
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
EMPLOYEE OWNERSHIP PLAN
This Green Mountain Energy Resources L.L.C. Employee Ownership Plan (the
"Plan") is established by Green Mountain Energy Resources L.L.C., a Delaware
limited liability company (the "Company") as of August 25, 1997 for the
potential benefit of each employee who is granted an option to acquire a
Membership Interest in the Company and who has not heretofore entered into an
agreement with the Company concerning an Interest Option as defined below (the
"Employee").
1. Grant of Interest Option. Pursuant to the Plan, the Company may grant
to each designated Employee from the amount reserved for Operating Management
Interest Options under Schedule III of the Operating Agreement of the Company
dated as of August 6, 1997 (the "Operating Agreement"), upon and subject to the
terms and conditions set forth below an option (the "Interest Option") to
acquire from the Company all or any portion of an Interest described in a Letter
of Grant at an exercise price ("Option Price") set forth in the Letter of Grant.
The grant shall take place on the date the Interest Option is granted ("Date of
Grant"). Initial awards under the Plan are described in Attachment A. Grants
of Interest Options under the Plan made outside the scope of Attachment A shall
be approved by the Management Committee. Any terms, when used in this Plan with
initial capital letters but not defined herein have the same meanings as in the
Operating Agreement.
2. Time of Exercise. An Interest Option may be exercised, in whole or in
part, according to the following schedule:
Percentage Exercisable Vesting Schedule Dates
- ---------------------- ----------------------
20% On and after the Date of Grant
20% On and after the first anniversary of the Date of Grant
20% On and after the second anniversary of the Date of Grant
20% On and after the third anniversary of the Date of Grant
20% On and after the fourth anniversary of the Date of Grant
1
<PAGE>
Upon exercise of all or any portion of an Interest Option, the employee will be
required to execute and agree to the terms of the Operating Agreement in order
to become a Member of the Company.
Notwithstanding the foregoing schedule, in the event of a Change of
Control or a threatened Change of Control, all of the unexercised portion of any
Interest Option will become immediately exercisable, and the right of the
Employee to exercise the Interest Option as to such unexercised portion will
continue for the entire term described in Section 3 below, regardless of whether
the Employee's employment with the Company terminates before the expiration of
such term. Whether a Change of Control is threatened will be determined solely
by the Management Committee.
In addition, the dates set forth in the foregoing schedule shall be
accelerated (with the next date to occur being first accelerated), and an
Interest Option will become immediately exercisable, to the extent necessary,
taking into account any portion of the Interest Option then exercisable and any
Interest previously acquired upon the exercise of the Interest Option, to enable
the Employee to exercise any applicable rights under Section 5.05 of the
Operating Agreement.
The unexercised portion of the Interest Option from one annual period
may be carried over to a subsequent annual period or periods, and the right of
the Employee to exercise the Interest Option as to such unexercised portion will
continue for the entire term described in Section 3 below, subject to the
provisions of Sections 9 and 10 below.
All of the unexercised portion of the Interest Option will become
immediately exercisable on the date six months after consummation of an Initial
Public Offering, and the right of the Employee to exercise the Interest Option
as to the unexercised portion shall continue for the balance of the term
specified in Section 3 below subject to the provisions of Section 9 and 10
below.
In no event may the Interest Option be exercised in whole or in part,
however, after the expiration of such term.
3. Term. The Interest Option will terminate on the fifth anniversary of
the Date of Grant.
4. Restrictions on Exercise. The Interest Option may not be exercised in
whole or in part if any requisite registration with, clearance by, or consent,
approval or authorization of, any governmental authority of any kind having
2
<PAGE>
jurisdiction over the exercise of the Interest Option, has not been obtained or
secured.
5. Manner of Exercise. The Interest Option may be exercised by written
notice to the Company (on forms provided by the Company) of the Interest being
purchased and the Option Price to be paid, accompanied by full payment of the
Option Price in cash or by check acceptable to the Company. Any federal, state
or local taxes required to be paid or withheld at the time of exercise will be
paid or withheld by the Employee in full prior to any issuance of the Interest
upon exercise.
6. Transferability of Interest Options. Except as contemplated by Section
9, this Interest Option may not be assigned or transferred by the Employee
either voluntarily or by operation of law, without the consent of the Company.
7. Rights as Member. Neither the Employee nor any of the Employee's
beneficiaries will be deemed to have any rights as a Member until exercise of
this Interest Option and payment of the Option Price.
8. Exercise in Part; Adjustments. The Interest Option shall be
exercisable from time to time and in whole or in part, provided that any partial
exercise shall be for an Interest having a purchase price of at least $1,000.00.
The Exercise Price and the Interests purchasable upon exercise of the
Interest Option shall be subject to adjustment, as determined in good faith by
the Company, from time to time as set forth in this Section.
a. Creation of Interests. In the event that at any time or from time to time
the Company shall create additional Interests, then the percentage Interest
purchasable upon exercise of the Interest Option shall be adjusted appropriately
to reflect the dilutive effect of the creation of the additional Interest.
b. Reorganization. If the Company shall consolidate or merge with or into
another company or corporation, then the holder of the Interest Option shall
have the right to receive upon exercise of the Interest Option such Interest and
other assets, properties or securities which such holder would have been
entitled to receive upon or as a result of such consolidation or merger had the
Interest Option been exercised immediately prior to such event, at an Exercise
Price adjusted proportionately.
c. Other Events. If any event occurs as to which the foregoing provisions of
this Section are not strictly applicable or, if strictly applicable, would not,
in the
3
<PAGE>
good faith judgment of the Company, fairly and adequately protect the purchase
rights of the Interest Option in accordance with the essential intent and
principles of the provisions hereof, then the Company shall make such
adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of such Company, to protect such purchase rights.
9. Rights in Event of Death or Termination of Employment as a Result of
Disability of Employee. If the Employee dies or terminates employment as a
result of disability prior to termination of the Employee's rights to exercise
the Interest Option, any unexercised portion of the Interest Option will become
immediately exercisable and may be exercised, subject to all conditions of this
Agreement, until the expiration of the term set forth in Section 3. In the
event of the death of the Employee, the Interest Option may be exercised by the
Employee's estate or a person who acquired the right to exercise the Interest
Option as an heir, legatee, devisee or distributee or by reason of the death of
the Employee; provided, however, that no such exercise shall be effective until
the party exercising the Interest Option shall have delivered to the Company a
counterpart signature page to the Operating Agreement. In the event of the
death or disability of the Employee, the Interest Option and any Interest
previously acquired upon the exercise thereof shall be subject to purchase by
the Company at the Company's option, for a purchase price equal to the fair
market value thereof, payable in cash. Any portion of the Employee's Interest
Option not purchased shall continue to be exercisable for the balance of the
term specified in Section 3. For purposes of this Interest Option, the
Management Committee will have sole discretion to determine whether termination
of a Employee's employment has occurred as a result of "disability" (as herein
defined), and the term "disability" shall have the meaning specified by Company
policy. In no event may the Interest Option be exercised after the expiration
date set forth in Section 3. For purposes of the Plan, the term "fair market
value" of an Interest or Interest Option shall mean a value determined by the
Company's independent accountants as the price that would be paid and accepted
by a willing buyer and a willing seller, respectively, each under no compulsion
to purchase or sell, in an arm's-length purchase and sale transaction without
regard to any minority interest's lack of control or similar discount.
10. Rights in Event of Termination of Employment Other Than as a Result of
Death or Disability. If the Employee ceases to be employed by the Company, other
than as a result of death or disability, such Employee's rights in respect of
the Interest Option and any Interest acquired upon the exercise thereof shall be
as follows:
4
<PAGE>
a. Termination for Cause. If a Employee's employment with the Company is
terminated by the Company for any of the reasons set forth in the following
sentence ("Cause"), the Interest Option shall thereupon terminate automatically,
and any Interest previously acquired upon the exercise thereof shall be subject
to purchase by the Company at the Company's option, for a purchase price equal
to the lesser of the exercise price paid by the Employee to acquire such
Interest and the fair market value of such Interest, payable in cash. Cause
shall mean (1) breach of any confidentiality, non-competition, employment or
other agreement between the Employee and the Company, (2) willful breach of any
fiduciary duty, (3) commission of a felony involving fraud, personal dishonesty
or moral turpitude, or (4) other misconduct or gross negligence that is conduct
that is harmful to the Company's business interests.
b. Voluntary Termination. If an Employee terminates his or her employment
voluntarily, the portion of the Interest Option not then exercisable shall
terminate automatically, and the portion of the Interest Option then exercisable
and any Interest previously acquired upon the exercise thereof shall be subject
to purchase by the Company at the Company's option, for a purchase price equal
to the fair market value thereof, payable in cash; provided, however, that for
purposes of this Section 10.b., if an Employee terminates his or her employment
prior to the first anniversary of the Date of Grant, no portion of the Interest
Option shall be considered then exercisable, and any Interest previously
acquired upon the exercise thereof shall be subject to purchase by the Company
at the Company's option, for a purchase price equal to the lesser of the
exercise price paid by the Employee to acquire such Interest and the fair market
value of such Interest, payable in cash.
c. Termination Without Cause. If an Employee's employment with the Company is
terminated by the Company other than for Cause, the portion of the Interest
Option not then exercisable shall terminate automatically, and the portion of
the Interest Option then exercisable and any Interest previously acquired upon
the exercise thereof shall be subject to purchase by the Company at the
Company's option for a purchase price equal to the fair market value thereof,
payable in cash; provided, however, that for purposes of this Section 10.c., if
an Employee's employment with the Company is terminated by the Company without
cause prior to the first anniversary of the Date of Grant, the portion of the
Interest that would have become exercisable on the first anniversary of the Date
of Grant shall be considered then exercisable. Any portion of the Employee's
Interest Option not forfeited or purchased shall continue to be exercisable for
the balance of the term specified in Section 3.
d. Notices, etc. Any purchase right described in Section 9 or this Section 10
may be exercised by the Company by delivery of written notice thereof (the
5
<PAGE>
"Option Notice") within 90 days of the effectiveness of such right (the "Option
Exercise Period"). Any such right not duly exercised within the applicable
Option Exercise Period shall thereafter terminate. The Option Notice shall
state that the Company has elected to exercise such purchase right and the
Interests with respect which the right is being exercised. The Company may
assign its purchase rights (in whole or in part) to any third party, who shall
to the extent of the assignment perform all obligations of the Company under
this Section 10. Notwithstanding such assignment, the Company shall remain
liable for all obligations of the Company under this Section 10.
e. Closing. The closing of any purchase and sale of Interests pursuant to the
exercise of any right granted pursuant to Section 9 or this Section 10 shall
take place at the principal office of the Company as soon as reasonably
practicable and in no event later than 30 days after termination of the
applicable Option Exercise Period, or at such other time and location as the
parties to such purchase may mutually determine. In the event the price of any
Interest to be purchased is specified to be fair market value, such fair market
value shall be determined as of the date such right becomes effective. At the
closing of any purchase and sale of Interests pursuant to this Section 10, the
owner of the Interest to be sold shall deliver to the Company an instrument of
assignment assigning the Interest to be purchased by the Company free and clear
of any lien or encumbrance, and the Company shall pay to such holder the
purchase price therefor by certified or bank check or wire transfer of
immediately available funds. The delivery of such an instrument of assignment
by any Person selling an Interest pursuant to Section 9 or this Section 10 shall
be deemed a representation and warranty by such Person that: (i) such Person has
full right, title and interest in and to such Interest; (ii) such Person has all
necessary power and authority and has taken all necessary action to sell such
Interest as contemplated; and (iii) such Interest is free and clear of any and
all liens or encumbrances.
f. Time Period. Any right of the Company to purchase any Interest or Interest
Option which is only exercisable at fair market value shall expire upon
consummation of an Initial Public Offering.
11. Registration. Promptly after the consummation of an Initial Public
Offering, the Company will take all reasonable steps to register the Interest
Option, and the Interests issued or issuable upon exercise thereof, pursuant to
the Securities Act of 1933, as amended (the "Securities Act").
12. Interest Purchased for Investment. The Employee, by accepting the
Interest Option, represents, warrants, covenants and agrees on behalf of the
Employee and the Employee's heirs, legatees, devisees or distributees that the
6
<PAGE>
Interest acquired upon the exercise of the Interest Option will be acquired for
investment and not for resale or distribution, and that upon each exercise of
any portion of the Interest Option, the person entitled to exercise the same
will furnish evidence satisfactory to the Company (including a written and
signed representation) to the effect that the Interest is being acquired in good
faith for investment and not for resale or distribution. The Employee shall
furnish or execute such documents as the Company in its discretion deems
necessary to (a) evidence the exercise of the Interest Option, (b) determine
whether registration is then required under the Securities Act, as then in
effect, and (c) comply with or satisfy the requirements of the Securities Act,
or any other federal, state or local law, as then in effect.
13. Notices. Each notice relating to this Plan will be in writing and
delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, Box 2206, 25 Green
Mountain Drive, South Burlington, Vermont 05402-2206, attention of the
Secretary. Each notice to the Employee or other person or persons then entitled
to exercise the Interest Option will be addressed to the Employee or such other
person or persons at the Employee's address. Anyone to whom a notice may be
given under this Plan may designate a new address by notice to that effect.
14. Employment. This Plan does not confer upon the Employee any right to
be employed or to continue in the employ of the Company, nor does it in any way
interfere with the right of the Company to terminate the employment of the
Employee at any time for any reason.
15. No Obligation to Exercise Interest Option. This Plan does not impose
any obligation upon the Employee to exercise the Interest Option.
16. Amendments and Interpretations. The Company may amend or terminate
this Plan without the consent of the Employee. The Company shall have the power
to interpret the Plan, make determinations as to Employee eligibility and other
matters, and take all other actions as are necessary for the appropriate
implementation of the Plan.
17. Governing Law. The Plan will be construed and enforced in accordance
with and governed by the laws of Vermont, except as to matters of limited
liability company law, which will be governed by the laws of the State of
Delaware.
18. Operating Agreement. The Plan and the rights of the Employee
hereunder are subject to the provisions of the Operating Agreement. In the event
7
<PAGE>
of any inconsistency between the Plan and the Operating Agreement, the terms of
the Operating Agreement shall prevail.
IN WITNESS WHEREOF, Green Mountain Energy Resources L.L.C. has caused this
instrument to be executed by its duly authorized officer this 25th day of
August, 1997.
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
By: /s/ Douglas G. Hyde
-------------------------------------
Douglas G. Hyde, President
Attest: /s/ Peter H. Zamore
----------------------------
Peter H. Zamore, Secretary
8
<PAGE>
ATTACHMENT A
The President of the Company may designate employees to receive awards of
Options to acquire Membership Interests in accordance with the following
schedule by delivery of a Letter of Grant to Employees of the Company between
August 25, 1997 and October 1, 1997.
The following amounts are subject to dilution as set forth in the Operating
Agreement.
Band Membership Interests Price/.001%
C .06 $450
D .03 $450
E .01 $450
Membership Interest amounts and the price, are subject to change for grants made
after October 1, 1997.
9
<PAGE>
EXHIBIT 10.4
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
1999 UNIT OPTION PLAN
This Green Mountain Energy Resources L.L.C. 1999 Unit Option Plan (the
"Plan") is established as of February 2, 1999, by Green Mountain Energy
Resources L.L.C., a Delaware limited liability company (the "Company"), for the
potential benefit of each eligible employee and director of and consultant to
the Company. The Plan amends and completely restates the 1999 Green Mountain
Energy Resources L.L.C. Employee Unit Option Plan (the "Initial Plan"), except
that the provisions of the Initial 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 the Initial Plan.
1. Grant of Unit Option. Pursuant to the Plan, the Committee (as defined
--------------------
in Section 18) or the Management Committee may designate the individuals who are
eligible to receive options (each such individual an "Optionee") and grant to
each Optionee, upon and subject to the terms and conditions set forth below and
such additional terms and conditions consistent with the Plan, an option (the
"Unit Option") to acquire from the Company one or more common units reflecting a
Membership Interest in the Company ("Units"), at an exercise price ("Option
Price") as of a certain date on which the Unit Option is granted (the "Date of
Grant"), all as set forth in the letter of grant (the "Letter of Grant")
authorized by the Management Committee or the Committee and issued by the
Company, provided that in the case of Unit Options granted by the Management
Committee the Date of Grant specified in the Letter of Grant shall be not later
than 30 days following the date on which such Unit Options were granted by the
Management Committee. Any terms, when used in this Plan with initial capital
letters but not defined herein have the same meanings as in the Operating
Agreement of the Company, as amended and restated (the "Operating Agreement").
2. Time of Exercise. Except as otherwise provided in a Letter of Grant, a
----------------
Unit Option may be exercised, as follows: 20% on or after the Date of Grant and
an additional 5% on or after the first day of calendar quarter (i.e., January 1,
----
April 1, July 1 and October 1) after the Date of Grant.
Notwithstanding the schedule set forth in the immediately preceding
sentence, and until such time as an Initial Public Offering of the Company's
securities occurs, in the event of a Change of Control or a threatened Change of
Control, all of the unexercisable portion of any Unit Option will become
immediately exercisable, and the right of the Optionee to exercise the Unit
Option as to such unexercisable portion and any unexercised but exercisable
portion will continue for the entire term described in Section 3 below,
regardless of whether the Optionee's employment with the Company terminates
before the expiration of such term. Whether a Change of Control has occurred or
is threatened will be determined solely by the Management Committee. In
addition, the dates set forth in the foregoing schedule shall be accelerated
(with the next date to occur being first accelerated), and this Unit Option will
become immediately exercisable, to the extent necessary, taking into account any
portion of the Unit Option then exercisable and any Units previously acquired
upon the exercise of the Unit Option, to enable the Optionee to exercise any
applicable rights under Section 5.05 of the Operating Agreement.
<PAGE>
The unexercised portion of the Unit Option from one annual period may
be carried over to a subsequent annual period or periods, and the right of the
Optionee to exercise the Unit Option as to such unexercised portion will
continue for the entire term described in Section 3 below, subject to the
provisions of Sections 9 and 10 below.
In no event may the Unit Option be exercised in whole or in part,
however, after the expiration of such term.
As used in the Plan with respect to an Optionee who is a nonemployee
director or a consultant, the terms "employ" and "employment" refer to the
performance of services for the Company by such director or consultant as an
independent contractor and the term "director" refers to a member of the
Management Committee of the Company.
3. Term. Except as otherwise provided in a Letter of Grant, the Unit
----
Option will terminate upon the expiration of fifty months after the Date of
Grant.
4. Restrictions on Exercise. The Unit Option may not be exercised in
------------------------
whole or in part if any requisite registration with, clearance by, or consent,
approval or authorization of, any governmental authority of any kind having
jurisdiction over the exercise of the Unit Option, has not been obtained or
secured.
5. Manner of Exercise. The Unit Option may be exercised by written notice
------------------
to the Company (on forms provided by the Company) of the number of Units being
purchased and the Option Price to be paid, accompanied by full payment of the
Option Price.
No Units shall be delivered pursuant to the exercise of any Unit
Option, in whole or in part, until qualified for delivery under such securities
laws and regulations as the Committee may deem to be applicable thereto and
until payment in full of the Option Price is received by the Company in cash, by
check, in Units as provided in the following paragraph, or, if authorized by the
Committee, by delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to deliver promptly to the Company the
portion of sale or loan proceeds sufficient to pay the Option Price. Any
federal, state or local taxes required to be paid or withheld at the time of
exercise will be withheld by the Company or paid by the Optionee in full prior
to any issuance of the Units upon exercise. At the election of the Optionee and
with the consent of the Committee, the withholding obligation may be satisfied
in whole or in part in Units valued as set forth in the next paragraph.
An Optionee who owns Units may elect to use the previously acquired
Units, valued at the Fair Market Value as determined on the last valuation of
Units as described in Section 9 hereof prior to the date of exercise and
delivery of such Units, to pay all or part of the exercise price of a Unit
Option, provided, however, that such form of payment shall not be permitted
unless at least ten Units of such previously acquired Units are required and
delivered for such purpose and the Units delivered have been held by the
Optionee for at least six months, if required by applicable law.
6. Transferability of Unit Options. Except as otherwise provided in a
-------------------------------
Letter of Grant, Unit Options granted under the Plan may not be transferred
except by will or the laws of descent
<PAGE>
and distribution or pursuant to a qualified domestic relations order, as defined
in the Internal Revenue Code, and, during the Optionee's lifetime, may be
exercised only by the Optionee or by the Optionee's guardian or legal
representative.
7. Rights as a Member. Neither the Optionee nor any of the Optionee's
------------------
beneficiaries will be deemed to have any rights as a Member until exercise of
this Unit Option, payment of the Option Price and execution by the Optionee or
the Optionee's beneficiaries, as the case may be, of the Operating Agreement.
8. Exercise in Part; Adjustments.
-----------------------------
a. The Unit Option shall be exercisable from time to time and in
whole or in part pursuant to the terms of the Plan, provided that any partial
exercise shall be for Units having a purchase price of at least $1,000.00. No
Unit Option may at any time be exercised with respect to a fractional Unit. In
the event that Units are issued pursuant to the exercise of an option, no
fractional Units shall be issued and the Committee or the Management Committee
shall determine whether cash shall be given in lieu of such fractional Units or
whether such fractional Units shall be eliminated.
b. Reorganization and Other Events. In the event of a merger,
consolidation, reorganization, recapitalization, stock dividend, stock split, or
other changes in corporate structure or capitalization affecting the Units, such
appropriate adjustment shall be made in the number, kind, Option Price, etc., of
securities subject to Unit Options granted under the Plan, including appropriate
adjustment in the maximum number of Units authorized for issuance under the
Plan, as may be determined by the Committee or the Management Committee.
9. Rights in Event of Death or Termination of Employment as a Result of
--------------------------------------------------------------------
Disability of Optionee. If the Optionee dies or terminates employment as a
- ----------------------
result of disability prior to termination of the Optionee's rights to exercise
the Unit Option, any unexercisable portion of the Unit Option will become
immediately exercisable and such portion and any unexercised but exercisable
portion may be exercised, subject to all conditions of the Plan, until the
expiration of the term set forth in Section 3. In the event of the death of the
Optionee, the Unit Option may be exercised by the Optionee's estate or a person
who acquired the right to exercise the Unit Option as an heir, legatee, devisee
or distributee or by reason of the death of the Optionee; provided, however,
that no such exercise shall be effective until the party exercising the Unit
Option shall have delivered to the Company a counterpart signature page to the
Operating Agreement. In the event of the death or disability of the Optionee,
the Unit Option and any Units acquired upon the exercise thereof shall be
subject to purchase in whole or in part by the Company at the Company's
election, for a purchase price equal to the fair market value thereof, payable
in cash. Any portion of the Optionee's Unit Option not purchased shall continue
to be exercisable for the balance of the term specified in Section 3. For
purposes of the Plan, the Management Committee will have sole discretion to
determine whether termination of a Optionee's employment has occurred as a
result of "disability" (as herein defined), and the term "disability" shall have
the meaning specified by Company policy. In no event may a Unit Option be
exercised after the expiration date set forth in Section 3. For purposes of the
Plan, the term "fair market value" of a Unit or Unit Option shall mean a value
determined by the Management Committee as the price that would be paid and
accepted by a willing buyer and a willing seller, respectively, each under no
compulsion to
<PAGE>
purchase or sell, in an arm's-length purchase and sale transaction without
regard to any minority interest's lack of control or marketability or similar
discount. Fair market value of a Unit or Unit Option shall not be required to be
determined more frequently than once every three months, except in the
Committee's discretion, and such determination shall govern all valuations until
the next ensuing determination.
10. Rights in Event of Termination of Employment Other Than as a Result of
----------------------------------------------------------------------
Death or Disability. If the Optionee ceases to be employed by the Company,
- -------------------
other than as a result of death or disability, such Optionee's rights in respect
of the Unit Option and any Units acquired upon the exercise thereof shall be
governed by the following provisions of this Section 10, unless the terms of the
Optionee's Letter of Grant provide otherwise.
a. Termination for Cause. If an Optionee's employment with the
Company is terminated by the Company for any of the reasons set forth in the
following sentence ("Cause"), the Unit Option shall thereupon terminate
immediately, and any Units previously acquired upon the exercise thereof shall
be subject to purchase by the Company at the Company's election, for a purchase
price equal to the lesser of the Option Price paid by the Optionee to acquire
such Units and the fair market value of such Units, payable in cash. Cause
shall mean (1) breach of any confidentiality, non-competition, employment or
other agreement between the Optionee and the Company, (2) willful breach of any
fiduciary duty, (3) commission of a felony involving fraud, personal dishonesty
or moral turpitude, or (4) other misconduct or gross negligence that is conduct
that is harmful to the Company's business interests.
b. Voluntary Termination. If an Optionee terminates his or her
employment voluntarily, the portion of the Unit Option not then exercisable
shall terminate immediately, and the portion of the Unit Option then exercisable
and any Units previously acquired upon the exercise thereof shall be subject to
purchase by the Company at the Company's election, for a purchase price equal to
the fair market value thereof, payable in cash; provided, however, that for
purposes of this Section 10b., if an Optionee terminates his or her employment
prior to the first anniversary of the Date of Grant, no portion of the Unit
Option shall be considered then exercisable, and any Units previously acquired
upon the exercise thereof shall be subject to purchase by the Company at the
Company's election, for a purchase price equal to the lesser of the Option Price
paid by the Optionee to acquire such Units and the fair market value of such
Units, payable in cash. Any portion of the Optionee's Unit Option not forfeited
or purchased shall continue to be exercisable for the balance of the term
specified in Section 3.
c. Termination Without Cause. If an Optionee's employment with the
Company is terminated by the Company other than for Cause, the portion of the
Unit Option not then exercisable shall terminate immediately, and the portion of
the Unit Option then exercisable and any Units previously acquired upon the
exercise thereof shall be subject to purchase by the Company at the Company's
election for a purchase price equal to the fair market value thereof, payable in
cash. Any portion of the Optionee's Unit Option not forfeited or purchased
shall continue to be exercisable for the balance of the term specified in
Section 3.
d. Notices, etc. Any purchase right described in Section 9 or this
Section 10 may be exercised by the Company by delivery of written notice thereof
(the "Election Notice") within 90 days of the effectiveness of such right (the
"Election Exercise Period"). Any such right
<PAGE>
not duly exercised within the applicable Election Exercise Period shall
thereafter terminate. The Election Notice shall state that the Company has
elected to exercise such purchase right and the Units and/or Unit Options with
respect to which the right is being exercised. The Company may assign its
purchase rights (in whole or in part) to any third party, who shall to the
extent of the assignment perform all obligations of the Company under this
Section 10. Notwithstanding such assignment, the Company shall remain liable for
all obligations of the Company under this Section 10.
e. Closing. The closing of any purchase and sale of Units pursuant
to the exercise of any right granted pursuant to Section 9 or this Section 10
shall take place at the principal office of the Company as soon as reasonably
practicable and in no event later than 30 days after termination of the
applicable Election Exercise Period, or at such other time and location as the
parties to such purchase may mutually determine. In the event the price of any
Units and/or Unit Options to be purchased is specified to be fair market value,
such fair market value shall be based on the valuation determination in effect
as of the date of termination of employment. At the closing of any purchase and
sale of Units and/or Unit Options pursuant to this Section 10, the owner of the
Units and/or Unit Options to be sold shall deliver to the Company an instrument
of assignment assigning the Units and/or Unit Options to be purchased by the
Company free and clear of any lien or encumbrance, and the Company shall pay to
such holder the purchase price therefor by certified or bank check or wire
transfer of immediately available funds. The delivery of such an instrument of
assignment by any person selling a Unit and/or Unit Option pursuant to Section 9
or this Section 10 shall be deemed a representation and warranty by such person
that: (1) such person has full right, title and interest in and to such
securities; (2) such person has all necessary power and authority and has taken
all necessary action to sell such securities as contemplated; and (3) such
security is free and clear of any and all liens or encumbrances.
f. Time Period. Any right of the Company to purchase Units or Unit
Options shall expire upon consummation of an Initial Public Offering.
11. Interest Purchased for Investment. The Optionee, by accepting the Unit
---------------------------------
Option, represents, warrants, covenants and agrees on behalf of the Optionee and
the Optionee's heirs, legatees, devisees or distributees that the Units acquired
upon the exercise of the Unit Option will be acquired for investment and not for
resale or distribution, and that upon each exercise of any portion of the Unit
Option, the person entitled to exercise the same will furnish evidence
satisfactory to the Company (including a written and signed representation) to
the effect that the Units are being acquired in good faith for investment and
not for resale or distribution. The Optionee shall furnish or execute such
documents as the Company in its discretion deems necessary to (a) evidence the
exercise of the Unit Option, (b) determine whether registration is then required
under the Securities Act, as then in effect, and (c) comply with or satisfy the
requirements of the Securities Act, or any other federal, state or local law, as
then in effect.
12. Notices. Each notice relating to this Plan will be in writing and
-------
delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, Box 2206, 55 Green
Mountain Drive, South Burlington, Vermont 05407-2206, attention of the
Secretary. Each notice to the Optionee or other person or persons then entitled
to exercise the
<PAGE>
Unit Option will be addressed to the Optionee or such other person or persons at
the Optionee's address maintained in the Company's payroll records. Anyone to
whom a notice may be given under this Plan may designate a new address by notice
to that effect.
13. Employment. This Plan does not confer upon the Optionee any right to
----------
be employed or to continue in the employment of the Company, nor does it in any
way interfere with the right of the Company to terminate the employment of the
Optionee at any time for any reason.
14. No Obligation to Exercise Unit Option. This Plan does not impose any
-------------------------------------
obligation upon the Optionee to exercise the Unit Option.
15. Amendments and Termination. The Company may amend or terminate this
--------------------------
Plan without the consent of the Optionee, provide, however, that no such action
may be taken which would impair the rights of any Optionee with respect to any
Unit Option previously granted under the Plan without the Optionee's written
consent.
16. Governing Law. The Plan will be construed and enforced in accordance
-------------
with and governed by the laws of Delaware without regard to conflicts or choice
of laws principles.
17. Operating Agreement. The Plan and the rights of the Optionee hereunder
-------------------
are subject to the provisions of the Operating Agreement. In the event of any
inconsistency between the Plan and the Operating Agreement, the terms of the
Operating Agreement shall prevail.
18. Plan Administration.
-------------------
a. The Management Committee shall appoint a Plan Committee
("Committee"). The Management Committee and the Committee shall have the power,
discretion and authority to administer and interpret the Plan, select the
Optionees to receive awards under the Plan, grant Unit Options under the Plan
and determine the terms thereof set forth in the Letters of Grant which shall be
subject to the terms and conditions of the Plan and may contain additional terms
and conditions (which may vary from Optionee to Optionee) not inconsistent with
the Plan, as the Management Committee or the Committee may deem necessary or
desirable, provided that the Management Committee shall have the sole authority
to approve any award of Unit Options to executive officers of the Company and
members of the Committee, and further the Committee shall not grant an award
with an Option Price that is less than the fair market value per Unit as of the
date granted and as determined by the Management Committee. The Committee shall
not increase the number of Units authorized for issuance under the Plan above
the 2,200,000 Units hereby authorized except in accordance with the provisions
of Section 8 or Section 18b. The Committee shall carry out its
responsibilities in the best interests of the Company.
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 (1)
the total number of Units previously issued upon the exercise of Unit Options
and options and warrants granted prior to the adoption of the Plan, (2) the
total number of Units then subject to outstanding Unit Options and options and
warrants granted prior to the adoption of the Plan, and (3) the total number of
Units then remaining available for future Unit Option grants under the Plan
(such sum being the "Plan
<PAGE>
Units") is less than 20% of the total number of Units then outstanding computed
on a fully diluted basis (such total number being the "Outstanding Units"), the
number of Units available for issuance under the Plan will be increased (but not
decreased) so that the number of Plan Units will be equal to 20% of the number
of Outstanding Units. For purposes of the foregoing adjustment, all outstanding
Unit Options will be treated as fully exercised in computing the number of
outstanding Units on a fully diluted basis, without regard to whether the Unit
Options are then fully exercisable.
IN WITNESS WHEREOF, Green Mountain Energy Resources, L.L.C. has caused this
instrument to be executed by its duly authorized officer effective as of
February 2, 1999.
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
By: /s/ M. David White
---------------------------------------------
M. David White, President
Attest: /s/ Peter H. Zamore
--------------------------
Peter H. Zamore, Secretary
<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 ______________________,
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 and warrants 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 and warrants 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
_____________________________.
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>
EXHIBIT 10.7
================================================================================
EMPLOYMENT AGREEMENT
between
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
and
Douglas G. Hyde
dated as of
August 6, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
Recitals..................................................................... 1
1. DEFINITIONS............................................................. 1
1.1. "Affiliate"...................................................... 1
1.2. "Cause".......................................................... 1
1.3. "Change of Control".............................................. 1
1.4. "Closing Date"................................................... 2
1.5. "Code"........................................................... 2
1.6. "Date of Termination"............................................ 2
1.7. "Expiration Date"................................................ 2
1.8. "Fiscal Year".................................................... 2
1.9. "Good Reason".................................................... 2
1.10. "Holding Company Act"............................................ 2
1.11. "Investor"....................................................... 2
1.12. "Initial Public Offering"........................................ 2
1.13. "Interest"....................................................... 2
1.14. "Interest Transfer".............................................. 2
1.15. "Member"......................................................... 3
1.16. "Operating Agreement"............................................ 3
1.17. "Option"......................................................... 3
1.18. "Person"......................................................... 3
1.19. "Proprietary Rights"............................................. 3
1.20. "Public Offering"................................................ 3
1.21. "Release"........................................................ 3
1.22. "Salary"......................................................... 3
1.23. "Subsidiary"..................................................... 3
1.24. "Substituted Member"............................................. 3
2. EMPLOYMENT.............................................................. 3
2.1. Agreement........................................................ 3
2.2. Expiration Date.................................................. 4
3. POSITION AND DUTIES..................................................... 4
4. COMPENSATION............................................................ 4
4.1. Salary........................................................... 4
4.2. Business Expenses................................................ 4
4.3. Fringe Benefits.................................................. 4
4.4. Vacations........................................................ 5
4.5. Retirement Benefit............................................... 5
i
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5. OFFICES; SUBSIDIARIES AND AFFILIATES.................................... 5
6. NONCOMPETITION.......................................................... 5
6.1. Restriction on Competitive Activities............................ 5
6.2. Restriction on Taking Employees or Customers..................... 6
7. UNAUTHORIZED DISCLOSURE; INVENTIONS..................................... 6
7.1. Unauthorized Disclosure.......................................... 6
7.2. Proprietary Rights............................................... 6
8. TERMINATION............................................................. 7
8.1. Death............................................................ 7
8.2. Incapacity....................................................... 7
8.3. Termination by the Executive for Good Reason..................... 7
8.4. Cause............................................................ 8
8.5. Termination by the Company Other than for Cause.................. 8
8.6. Termination by the Executive Other than for Good Reason.......... 8
8.7. Date of Termination; Term of Employment.......................... 9
9. COMPENSATION UPON TERMINATION........................................... 9
9.1. Death............................................................ 9
9.2. Incapacity....................................................... 9
9.3. Cause............................................................ 9
9.4. Termination by the Executive Other than for Good Reason.......... 9
9.5. Good Reason Termination or Termination by the Company Other than
for Cause....................................................... 9
9.6. Post-Termination Obligations Generally........................... 10
10. WITHHOLDING............................................................. 11
11. NOTICES................................................................. 11
12. MISCELLANEOUS........................................................... 11
13. VALIDITY................................................................ 12
14. COUNTERPARTS............................................................ 12
15. ENTIRE AGREEMENT........................................................ 12
16. ASSIGNMENT.............................................................. 12
17. EFFECTIVENESS........................................................... 12
EXHIBIT A: RELEASE OF CLAIMS
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made as of August 6, 1997
between Green Mountain Energy Resources L.L.C., a Delaware limited liability
company (the "Company"), and Douglas G. Hyde (the "Executive").
Recitals
1. The Executive possesses valuable experience and knowledge in the
business and affairs of electric utility companies and their marketing policies,
methods, personnel and operations.
2. The Company desires to employ the Executive and to assure itself of
the Executive's continued employment in an executive capacity.
3. The Executive is willing to commit to serve the Company on the terms
herein provided.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS. Terms defined in this Agreement other than in this Section 1
are used herein as so defined, and the following terms shall have the following
respective meanings:
1.1. "Affiliate" shall mean with respect to any Person, a Person which,
directly or indirectly, controls or is controlled by or is under common control
with such Person, and includes, in the case of any Person which is an
individual, any parent, grandparent, sibling, child, grandchild, or spouse of
such Person or any of the foregoing persons, or any trust established for the
benefit of any such person or any partnership or corporation controlled by any
such person. For purposes of this Agreement, the term "control" (including the
terms "controlled by" and "under common control with") means possession, direct
or indirect, of the power to direct or cause the direction of management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise; provided, however, that beneficial ownership of 10% or
more of the voting securities of any Person shall be deemed to be control.
1.2. "Cause" shall have the meaning as set forth in Section 8.4.
1.3. "Change of Control" shall mean (i) any change in the ownership of the
Company if, immediately after giving effect thereto, any Person (or group of
Persons acting in concert) other than the Investor and its Affiliates will have
the direct or indirect power to elect a majority of the members of the
management committee of the Company (the "Management Committee"); (ii) any sale
or other disposition (including without limitation by way of a merger or
consolidation of the Company with another Person) of all or substantially all of
the assets of the Company to another Person (the "Change of Control Transferee")
if, immediately after giving effect thereto, any Person (or group of Persons
acting in concert) other than the
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Investor and its Affiliates will have the power to elect a majority of the
members of the board of directors (or other similar governing body) of the
Change of Control Transferee; or (iii) any change in the ownership of the
interests in the Company if, immediately after giving effect thereto, the
Investor and its Affiliates shall own Interests aggregating less than 25% of the
total Interests in the Company.
1.4. "Closing Date" shall mean the Effective Date (as defined in the
Operating Agreement) in respect of the Company and the Investor.
1.5. "Code" means the Internal Revenue Code of 1986, as amended.
1.6. "Date of Termination" shall have the meaning as set forth in Section
8.7.
1.7. "Expiration Date" shall have the meaning as set forth in Section 2.2.
1.8. "Fiscal Year" shall have the same meaning herein as in the Operating
Agreement (defined below).
1.9. "Good Reason" shall have the meaning as set forth in Section 8.3.
1.10. "Holding Company Act" means the Public Utility Company Act of 1935,
as amended, and any successor or replacement statute.
1.11. "Investor" shall have the same meaning herein as in the Operating
Agreement.
1.12. "Initial Public Offering" shall mean an initial Public Offering
registered on Form S-1 (or any successor from under the Securities Act).
1.13. "Interest" means the interest of any Member in the Company, including
(a) as set forth for each Member in Schedule I of the Operating Agreement, (b)
as subsequently established for each newly admitted Member upon the admission of
such newly admitted Member to the Company, and (c) acquired by any Person upon
the exercise by such Person of an Option or Warrant held by such Person, in each
case, as such Interest may be changed from time to time in accordance with the
provisions of the Operating Agreement.
1.14. "Interest Transfer" means any sale, assignment, gift, hypothecation,
pledge or other disposition, whether voluntary or by operation of law, of an
Interest or any portion thereof, or an interest in the profits and losses of
and/or distributions by the Company, and shall include any change in control of
any Member. The admission of any new Member, whether as a result of the
exercise by any Person of any Option or Warrant in accordance with Section 6.04
of the Operating Agreement or the result of the admission of a new Member to the
Company pursuant to Section 6.01 of the Operating Agreement shall not constitute
an Interest Transfer.
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1.15. "Member" means each Person identified as a Member on Schedule I of
the Operating Agreement and each Person who subsequently becomes a Member of the
Company in accordance with Article VI of the Operating Agreement.
1.16. "Operating Agreement" shall mean the Operating Agreement of the
Company, dated as of the date hereof among the Company and the other parties
named therein, as amended, restated, supplemented or otherwise modified.
1.17. "Option" shall mean any option granted to any Person by the Company
to acquire an Interest in the Company, and includes the term "Warrant."
1.18. "Person" shall have the same meaning herein as in the Operating
Agreement.
1.19. "Proprietary Rights" shall have the meaning as set forth in Section
7.2.
1.20. "Public Offering" shall have the same meaning herein as in the
Operating Agreement.
1.21. "Release" shall have the meaning as set forth in Section 9.5.
1.22. "Salary" shall have the meaning as set forth in Section 4.1.
1.23. "Subsidiary" shall mean any Person of which the Company (or other
specified Person) shall, directly or indirectly, own beneficially or control the
voting of at least ten percent of the outstanding capital stock (or other shares
of beneficial interest) entitled to vote generally or at least ten percent of
the partnership, joint venture or similar interests, or in which the Company (or
other specified Person) or a Subsidiary thereof shall be a general partner or
joint venturer without limited liability.
1.24. "Substituted Member" shall mean an assignee or transferee of an
Interest which has complied with the requirements of Article V of the Operating
Agreement to become a Member.
2. EMPLOYMENT.
2.1. Agreement. The Company shall employ the Executive, and the Executive
shall serve the Company, in each case subject to the terms and conditions set
forth herein.
2.2. Expiration Date. The employment of the Executive by the Company
shall be for the period commencing on the Closing Date and expiring on the date
(the "Expiration Date") that is the third anniversary of the Closing Date,
unless such employment shall have been sooner terminated as hereinafter set
forth; provided, however, that the Expiration Date shall be automatically
extended to the next occurring anniversary of the Closing Date, unless either
the Company or the Executive shall notify the other, at least one year prior to
the then Expiration Date, of its or his intention that the Expiration Date not
be so automatically extended.
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3. POSITION AND DUTIES. The Executive shall serve as President of the
Company, and shall be accountable to, and shall have such powers, duties and
responsibilities as may from time to time be prescribed by, the Management
Committee of the Company.
The Executive shall devote his or her full business time and attention and
his or her best efforts and ability to the business and affairs of the Company
and each of its Subsidiaries and shall not engage in other business activities
(whether or not compensated) during the term of this Agreement without prior
written consent of the Management Committee of the Company that are inconsistent
with the time and attention requirements of this sentence or in violation of the
other provisions of this Agreement.
4. COMPENSATION. Subject to all of the terms and conditions hereof and to the
performance by the Executive of his or her duties and obligations to the
Company:
4.1. Salary. As compensation for services performed under and during the
term of employment hereunder, the Company shall pay the Executive a salary at a
rate of $285,000 per annum or such higher amount as may from time to time be
established by the Management Committee of the Company (the annual rate of
salary in effect from time to time being referred to as the "Salary"). Salary
shall be payable in accordance with the payroll practices of the Company.
4.2. Business Expenses. During the term of employment hereunder, the
Executive shall be entitled to receive prompt reimbursement by the Company for
all reasonable business expenses incurred by the Executive on behalf of the
Company or any of its Subsidiaries (in accordance with the policies and
procedures established by the Management Committee of the Company from time to
time for the Company's executive officers) in performing services hereunder,
provided that the Executive properly accounts therefor in accordance with
requirements for federal income tax deductibility and the Company's policies and
procedures.
4.3. Fringe Benefits. During the term of employment hereunder, the
Executive shall be entitled to participate in or receive benefits under any life
insurance, disability, health and accident plans, pension, retirement, deferred
compensation and supplemental pension plans or other arrangements made generally
available by the Company to its executives and key management employees, subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Except to the extent determined
by the Management Committee, Executive shall not be entitled to any other bonus,
equity, incentive or equity type incentive plans established by the Company.
4.4. Vacations. During the term of employment hereunder, the Executive
shall be entitled to 20 paid vacation days in each Fiscal Year and shall also be
entitled to all paid holidays given by the Company to its employees. The paid
vacation days shall be prorated for any period of service hereunder less than a
full year.
4.5. Retirement Benefit. The Company will establish and fund a
supplemental retirement benefit for the Executive by establishing an account and
depositing therein $45,000 on the first, second and third anniversaries of the
date of this Agreement. The investment of
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the account shall be as directed by the Company, and income, gains and profits
shall be retained in the account.
Unless (i) the Executive's employment with the Company is terminated
voluntarily by the Executive or pursuant to Section 8.4, or (ii) the Company has
consummated an Initial Public Offering, in either of which case the Executive
shall have no beneficial interest in the assets of the account, on the last day
of the calendar month in which his 65th birthday occurs, the Executive shall be
entitled to a distribution of all amounts or assets then held in or comprising
the account, not to exceed $350,000.
5. OFFICES; SUBSIDIARIES AND AFFILIATES. The Executive shall serve during the
term of employment hereunder, if elected or appointed thereto, in one or more
positions as an officer or director of the Company or any one or more of the
Company's present or future Subsidiaries or Affiliates, or as an officer,
trustee, director or other fiduciary of any pension or other employee benefit
plan of the Company or any of its Subsidiaries or Affiliates. Service in such
additional positions will be without additional compensation except for
reimbursement of reasonably related business expenses on the same terms as
provided elsewhere in this Agreement. In connection with the Executive's
service in additional positions as provided under this Section 5, the Executive
shall be entitled to the benefit of any indemnification provisions in the
regulations of the Company, its Subsidiaries or Affiliates for which the
Executive serves in such an additional position and any director and officer
liability insurance coverage or insurance against potential liability related to
particular positions (e.g., ERISA fiduciary insurance) carried by the Company or
any such Subsidiary or Affiliate of the Company for which the Executive serves
as an officer or director.
6. NONCOMPETITION.
6.1. Restriction on Competitive Activities. During the term of the
Executive's employment hereunder and thereafter until the end of the twelfth
full month (sixth full month, if the Executive's employment is terminated
pursuant to Section 8.3 or Section 8.5) after the Date of Termination, the
Executive shall not, directly or indirectly, own, manage, operate, control or
participate in any manner in the ownership, management, operation or control of,
or be connected as an officer, employee, partner, director, principal,
consultant, agent or otherwise with, or have any financial interest in, or aid
or assist anyone else in the conduct of any business, venture or activity which
is the same as or competes with, any business, venture or activity which is
being conducted or is proposed to be conducted by the Company or by any division
or Subsidiary of the Company on or prior to the Date of Termination, in any area
where such business is being conducted or is proposed to be conducted by any of
the foregoing on or prior to the Date of Termination, whether or not the Company
is to be compensated for such participation. Ownership of less than five
percent of the publicly-held securities of any corporation shall not, in and of
itself, constitute a violation of this Section 6.1.
6.2. Restriction on Taking Employees or Customers. So long as the
restrictions of Section 6.1 hereto continue to apply to the Executive, the
Executive shall not, directly or indirectly, (i) recruit or otherwise seek to
induce any employees of the Company or any of its Subsidiaries to terminate
their employment or violate any agreement with, or duty to, the
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Company or any of its Subsidiaries, and (ii) solicit or encourage any customer
of the Company or any of its Subsidiaries to terminate or materially diminish
its relationship with the Company or any Subsidiary of the Company or to conduct
with himself or any other Person, any business, venture or activity which such
customer has conducted at any time with the Company or any of its Subsidiaries
or any of their respective successors.
7. UNAUTHORIZED DISCLOSURE; INVENTIONS.
7.1. Unauthorized Disclosure. The Executive shall not, without the
written consent of the Management Committee of the Company, disclose to any
Person, other than an employee or professional adviser of the Company or other
Person to whom disclosure is in the reasonable judgment of the Executive
necessary or appropriate in connection with the performance by the Executive of
his or her duties as an executive officer of the Company, any information the
disclosure of which the Executive knows, or in the exercise of reasonable care
should know, may be damaging to, or otherwise adverse to the interests of, the
Company or any of its Subsidiaries or Affiliates; provided, however, that such
information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by the Executive); and
provided, further, that the Executive's duties under this Section 7.1 shall not
extend to any disclosure that may be required by law in connection with any
judicial or administrative proceeding or inquiry. The Executive understands and
agrees that the restrictions of this Section 7.1 shall continue to apply after
the Executive's employment terminates, regardless of the reason for such
termination.
7.2. Proprietary Rights. Any and all inventions, discoveries,
developments, methods, processes, compositions, works, supplier and customer
lists (including without limitation information relating to the generation and
updating thereof), concepts and ideas (whether or not patentable or
copyrightable) conceived, made, developed, created or reduced to practice by the
Executive (whether at the request or suggestion of the Company or otherwise,
whether alone or in conjunction with others, and whether during regular hours of
work or otherwise) prior to or during the term of his employment by the Company,
which may be directly or indirectly useful in, or relate to, the business,
ventures or other activities of or products manufactured or sold by the Company
or any of its Subsidiaries or Affiliates or any business or products
contemplated by the Company or any of its Subsidiaries or Affiliates while the
Executive was or is an employee, officer, director, or member or stockholder of
the Company (collectively, "Proprietary Rights"), shall be promptly and fully
disclosed by the Executive to the President or the Management Committee of the
Company and shall be the Company's exclusive property as against the Executive
and his or her successors, heirs, devisees, legatees and assigns, and the
Executive hereby assigns to the Company his or her entire right, title and
interest therein and shall promptly deliver to the Company all papers, drawings,
models, data and other material relating to any of the foregoing Proprietary
Rights conceived, made, developed, created or reduced to practice by him as
aforesaid. All copyrightable Proprietary Rights shall be considered "works made
for hire."
The Executive shall, upon the Company's request and without any payment
therefor, execute any documents necessary or advisable in the opinion of the
Company's counsel to assign, and confirm the Company's title in, his or her
entire right, title and interest in the
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foregoing Proprietary Rights and to direct issuance of patents or copyrights to
the Company with respect to such Proprietary Rights as are the Company's
exclusive property as against the Executive and his or her successors, heirs,
devisees, legatees and assigns under this Section 7.2 or to vest in the Company
title to such Proprietary Rights as against the Executive and his or her
successors, heirs, devisees, legatees and assigns, the expense of securing any
such patent or copyright, however, to be borne by the Company.
8. TERMINATION.
8.1. Death. The Executive's employment hereunder shall terminate upon
death.
8.2. Incapacity. If the Executive shall have been unable to perform his
or her duties hereunder by reason of any physical or mental illness, injury or
other incapacity (i) for any period of 90 consecutive days or (ii) for a total
of 150 days in any period of 12 consecutive calendar months, in the reasonable
judgment of the Management Committee of the Company, after appropriate
consultation with such experts as the Management Committee of the Company may
deem necessary or advisable, the Company may terminate the Executive's
employment hereunder by written notice to the Executive. The Executive shall
make his or her personal medical records available to the Management Committee
of the Company and such experts for purposes of determining whether the
Executive's employment hereunder may be terminated pursuant to this Section 8.2.
8.3. Termination by the Executive for Good Reason. The Executive may
terminate his or her employment hereunder upon not less than 30 days' prior
written notice to the Company for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean (i) failure of the Company to continue the Executive in
the position of President, (ii) willful and continued failure of the Company to
provide the Executive the Salary and benefits in accordance with Section 4
hereof, (iii) the failure of the Company to withdraw a written request to the
Executive to change the location of his principal residence to outside of the
metropolitan area in which such residence is located on the Closing Date within
30 days following the Company's receipt of a written notice of decline of such
request from the Executive; provided that the Executive shall have delivered
such written notice of decline within 30 days of the delivery of the Company's
request; or (iv) a material diminution in the nature of the Executive's duties,
responsibilities or reporting relationships without his or her consent which
shall have occurred no more than 30 days prior to the giving of the written
notice referred to in the immediately preceding sentence; it being understood
and agreed that neither a Change of Control (in and of itself) nor the
diminution of the business of the Company or any of its Subsidiaries or other
Affiliates shall be the basis for termination of the Executive's employment
under this Section 8.3.
8.4. Cause. The Company may terminate the Executive's employment
hereunder for Cause at any time upon written notice to the Executive. For the
purposes of this Agreement, the Company shall have "Cause" to terminate the
Executive's employment hereunder upon (i) the Executive's breach of any of the
obligations set forth in Sections 6 and 7 of this Agreement, or (ii) conduct of
the Executive which constitutes breach of any of the obligations set forth in
this Agreement (except to the extent addressed in clause (i) above) that
continues
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for a period of 30 days after the Company has given written notice to the
Executive that it intends to terminate the Executive's employment hereunder
pursuant to this clause (ii) if such conduct continues, or (iii) the Executive's
willful failure to perform his or her duties or responsibilities in a manner
prescribed by the Management Committee or willful breach of any fiduciary duty
as an officer or director of the Company or any of its Subsidiaries or
Affiliates, or as an officer, trustee, director or other fiduciary of any
pension or employee benefit plan of the Company or its Subsidiaries or
Affiliates, or (iv) the Executive's commission of a felony involving fraud,
personal dishonesty or moral turpitude, or (v) other conduct by the Executive
that is materially harmful to the business interests of the Company or any of
its Subsidiaries or Affiliates that continues for a period of 30 days after the
Company has given written notice to the Executive that it intends to terminate
the Executive's employment hereunder pursuant to this clause (v) if such conduct
continues or if, in the case of conduct not completely within the Executive's
control, there has not been a good faith effort to discontinue such conduct, in
the case of clauses (ii) and (v) hereof, as may be determined by the Management
Committee of the Company in its reasonable judgment, but only after a meeting of
the Management Committee of the Company at which the Executive has had an
opportunity to be heard.
8.5. Termination by the Company Other than for Cause. The Company may
terminate the Executive's employment hereunder other than for Cause at any time
upon written notice to the Executive.
8.6. Termination by the Executive Other than for Good Reason. The
Executive may terminate his or her employment hereunder at any time upon 30
days' prior written notice to the Company. In the event of termination of the
Executive pursuant to this Section 8.6, the Management Committee of the Company
may elect to waive the period of notice, or any portion thereof.
8.7. Date of Termination; Term of Employment. The term "Date of
Termination" shall mean the earlier of (i) the Expiration Date or (ii) if the
Executive's employment is terminated (A) by death, the date of death, or (B) for
any other reason set forth in this Section 8, the date on which such termination
is to be effective, consistent with the applicable provision hereof, pursuant to
the notice of termination given by the party terminating the employment
relationship in accordance with this Section 8. For all purposes of this
Agreement, references to the "term" of the Executive's employment hereunder
shall mean the period commencing on the Closing Date and ending on the Date of
Termination.
9. COMPENSATION UPON TERMINATION.
9.1. Death. Notwithstanding any other provision of this Agreement, if the
Executive's employment shall be terminated by reason of death, the Company shall
pay to such Person as the Executive shall have designated in a notice filed with
the Company, or, if no such Person shall have been designated, to the
Executive's estate his or her Salary through the Date of Termination at the rate
in effect at the time of death.
9.2. Incapacity. Notwithstanding any other provision of this Agreement,
if the Executive's employment shall be terminated by reason of incapacity
pursuant to Section 8.2,
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the Company shall continue to pay the Executive his or her Salary through the
Date of Termination at the rate in effect at the time the notice of termination
is given as provided under Section 8.2 hereof.
9.3. Cause. Notwithstanding any other provision of this Agreement, if the
Company shall terminate the Executive's employment for Cause, the Company shall
have no further obligations to the Executive under this Agreement other than
payment of his or her Salary through the Date of Termination.
9.4. Termination by the Executive Other than for Good Reason.
Notwithstanding any other provision of this Agreement, if the Executive shall
terminate his or her employment pursuant to Section 8.6 hereof, the Company
shall have no further obligations to the Executive under this Agreement other
than payment of Salary through the Date of Termination at the rate in effect at
the time the notice of termination is given.
9.5. Good Reason Termination or Termination by the Company Other than for
Cause. If the Company shall terminate the Executive's employment pursuant to
Section 8.5 hereof or if the Executive shall terminate his or her employment
pursuant to Section 8.3 hereof, then the Company shall pay to the Executive: (i)
Salary through the Date of Termination at the rate in effect at the time notice
of termination is given; and (ii) until the earliest to occur of (x) the
Expiration Date, (y) the end of the twelfth full calendar month following the
Date of Termination and (z) the date the Executive commences other substantially
full-time employment (including without limitation self-employment or engaging
in an enterprise as a sole proprietor or partner), severance at a rate equal to
the Salary in effect at the time notice of termination is given multiplied by
two; provided, however, that any amounts earned by the Executive from self-
employment or consulting undertaken other than on a substantially full-time
basis shall reduce the amount of any severance payable. So long as severance is
to be paid under clause (ii) of the immediately preceding sentence, the Company
shall, if the Executive was participating in any group medical and dental
insurance plans pursuant to Section 4.3 hereof immediately prior to the
effectiveness of his or her termination of employment hereunder and subject to
any employee contribution applicable to the Executive immediately prior to such
effectiveness, continue to contribute to the cost of the Executive's
participation in such group medical and dental insurance plans, provided that
the Executive is entitled to continue such participation under applicable law
and plan terms. If the Executive ceases to be eligible for continued
participation in any such plans, the Company will pay the Executive the amount
of the premiums that it would otherwise have paid to the insurers for the
Executive's coverage pursuant to the immediately preceding sentence had the
Executive continued to be so eligible. The obligations of the Company to the
Executive under this Section 9.5 (other than clause (i) of the first sentence of
this Section 9.5) are conditioned upon the Executive's signing a release of
claims in the form attached hereto as Exhibit A (the "Release") within 21 days
of the date on which notice of termination is given and upon the Executive's not
revoking the release thereafter. All severance payments under this Section 9.5
will be in the form of salary continuation, payable in accordance with the
normal payroll practices of the Company and will begin at the Company's next
regular payroll period following the effective date of the release, but shall be
retroactive to the Date of Termination. Notwithstanding any provision of this
Agreement, if the Company shall be dissolved or its
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business and affairs wound up, the right of the Executive to severance
compensation and post-termination benefits shall be limited to six months'
Salary.
9.6. Post-Termination Obligations Generally. If the term of the
Executive's employment hereunder shall expire by reason of the occurrence of the
Expiration Date, the Company shall have no further obligations to the Executive
in respect of the compensation or benefits to be provided under this Agreement
following expiration of the term of the Executive's employment hereunder by
reason of the occurrence of the Expiration Date. If the term of the Executive's
employment hereunder shall expire other than by reason of the occurrence of the
Expiration Date, the Company shall have no obligation to the Executive except as
specifically provided in this Section 9, and performance by the Company of any
obligation specifically provided in this Section 9 shall constitute full
settlement of any claim that the Executive may have on account of such
termination against the Company and its Affiliates and all of their respective
past and present officers, directors, stockholders, controlling Persons,
employees, agents, representatives, successors and assigns and all other others
connected with any of them, both individually and in their official capacities
in respect of the compensation or benefits to be provided under this Agreement.
10. WITHHOLDING. All payments made by the Company under this Agreement shall
be net of any tax or other amounts required to be withheld by the Company under
any applicable law or legal requirement.
11. NOTICES. All notices, requests and demands to or upon the parties hereto
to be effective shall be in writing, by facsimile, by overnight courier or by
registered or certified mail, postage prepaid and return receipt requested, and
shall be deemed to have been duly given or made upon: (i) delivery by hand, (ii)
one business day after being sent by overnight courier; or (iii) in the case of
transmission by facsimile, when confirmation of receipt is obtained from the
party to whom such notice is directed. Such communications shall be addressed
and directed to the parties as follows (or to such other address as either party
shall designate by giving like notice of such change to the other party):
If to the Executive:
Douglas G. Hyde
50 Mt. Philo Road
Shelburne, VT 05482
If to the Company:
Green Mountain Energy Resources L.L.C.
Box 2206
25 Green Mountain Drive
South Burlington, VT 05402-2206
Attention: General Counsel
Telecopy: 802-865-9129
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with a copy to:
Michael C. French
Suite 1000
300 Crescent Court
Dallas, Texas 75201
Telecopy: 214-880-4042
12. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is approved by the
Management Committee of the Company and agreed to in writing signed by the
Executive and such officer as may be specifically authorized by the Management
Committee of the Company in connection with such approval. No waiver by either
party hereto at any time of compliance with or of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement and the legal relations created thereby shall be
governed by the domestic substantive laws of the State of Vermont without giving
effect to any choice or conflict of laws provision or rule that would cause the
application of the domestic substantive laws of any other jurisdiction. The
Executive acknowledges and agrees that, because the Company's legal remedies,
may be inadequate in the event of a breach of, or other failure to perform, by
the Executive, any of the covenants and agreements set forth in Sections 6 and 7
hereof, the Company may, in addition to obtaining any other remedy or relief
available to it (including without limitation damages at law), enforce the
provisions of said Sections 6 and 7 by injunction and other equitable relief.
13. VALIDITY. In the event that any provision hereof would, under applicable
law, be invalid or unenforceable, such provision shall, to the extent permitted
under applicable law, be construed by modifying or limiting it so as to be valid
and enforceable to the maximum extent possible under applicable law. The
provisions of this Agreement are severable, and in the event that any provision
hereof should be held invalid or unenforceable in any respect, it shall not
invalidate, render unenforceable or otherwise affect any other provision hereof.
14. COUNTERPARTS. This Agreement may be executed in any one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
15. ENTIRE AGREEMENT. This Agreement, along with the Interest Option
Agreement between the Executive and the Company of even date herewith,
constitutes the entire agreement between the parties hereto, and supersedes any
and all prior communications, agreements and understandings, written or oral,
with respect to the terms and conditions of the Executive's employment with the
Company.
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<PAGE>
16. ASSIGNMENT. This Agreement shall inure to the benefit of and be binding
upon (i) the Executive, his or her personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees and (ii)
the Company and its successors (including, without limitation, by means of
reorganization, merger, consolidation or liquidation) and permitted assigns.
The Company may assign this Agreement to any Subsidiary or to any successor of
the Company by reorganization, merger, consolidation or liquidation and any
transferee of all or substantially all of the business or assets of the Company
or of any division or line of business of the Company with which the Executive
is at any time associated. The Company requires the personal services of the
Executive hereunder and the Executive may not assign this Agreement.
17. EFFECTIVENESS. This Agreement shall only become effective upon the Closing
Date.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands under
seal, as of the date first above written.
/s/ Douglas G. Hyde
--------------------------------------
Douglas G. Hyde
GREEN MOUNTAIN ENERGY RESOURCES
L.L.C.
By: /s/ Evan Wyly
-----------------------------------
Name:Evan Wyly
--------------------------
Title:
-------------------------
<PAGE>
EXHIBIT A
RELEASE OF CLAIMS
FOR AND IN CONSIDERATION OF the special payments and benefits to be
provided in connection with the termination of my employment in accordance with
the terms of the Employment Agreement between me and Green Mountain Energy
Resources L.L.C. (the "Company") dated as of August 6, 1997 (the "Employment
Agreement"), I, on my own behalf and on behalf of my personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees and all others connected with me, hereby release and
forever discharge the Company and its Affiliates (as that term is defined in the
Employment Agreement) and all of their respective past and present members,
officers, directors, stockholders, controlling persons, employees, agents,
representatives, successors and assigns and all others connected with any of
them (all collectively, the "Released"), both individually and in their official
capacities, from any and all rights, liabilities, claims, demands and causes of
action of any type (all collectively "Claims") which I have had in the past, now
have, or might now have, through the date of my signing of this release of
Claims, in any way resulting from, arising out of or connected with my
employment or its termination or pursuant to any federal, state, foreign or
local employment law, regulation or other requirement (including without
limitation Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, and the fair employment
practices laws of the state or states in which I have been employed by the
Company, each as amended from time to time); provided, however, that the
foregoing release shall not apply to any right explicitly set forth in the
Employment Agreement to special payments and benefits to be provided in
connection with the termination of my employment.
In signing this Release of Claims, I acknowledge that I have had at least
21 days from the date of notice of termination of my employment to consider the
terms of this Release of Claims and that such time has been sufficient; that I
am encouraged by the Company to seek the advice of an attorney prior to signing
this Release of Claims; and that I am signing this Release of Claims voluntarily
and with a full understanding of its terms.
I understand that I may revoke this Release of Claims at any time within
seven days of the date of my signing by written notice to the Company and that
this Release of Claims will take effect only upon the expiration of such seven-
day revocation period and only if I have not timely revoked it.
Intending to be legally bound, I have signed this Release of Claims under
seal as of the date first written above.
Signature:
-----------------------------------
[Name of Executive]
Date Signed:
---------------------------------
<PAGE>
EXHIBIT 10.8
SEPARATION AGREEMENT AND RELEASE
by and between
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
and
DOUGLAS G. HYDE
This SEPARATION AGREEMENT AND RELEASE (the "Agreement"), by and between
Douglas G. Hyde ("Hyde") and Green Mountain Energy Resources L.L.C. (the
"Company") shall be effective as of October 6, 1998 (the "Effective Date").
This Agreement is entered into to resolve all matters between Hyde and the
Company concerning Hyde's employment with the Company and the termination of
that employment. As used herein, "the parties to this Agreement" or "the
parties" shall refer collectively to Hyde and the Company.
WHEREAS, the Company has employed Hyde since August 6, 1997 subject to an
Employment Agreement of the same date (the "Employment Agreement"); and
WHEREAS, Hyde has resigned for Good Reason as President of the Company as
of the Effective Date; and
WHEREAS Hyde shall remain an employee of the Company performing such duties
as may be agreed between Hyde and the Company until six months following the
Effective Date (the "Termination Date"); and
WHEREAS, the Company and Hyde desire by this Agreement to fully and finally
compromise, settle, resolve and release all matters relating to Hyde's
employment as President of the Company, the termination of that employment, the
termination of any employment relationship between Hyde and the Company, the
compensation and benefits payable to Hyde under the Employment Agreement, or any
relationship between Hyde and the Company; and
WHEREAS, the entering into of this Agreement is not an admission of
liability by or on the part of any party.
NOW THEREFORE, in consideration of the covenants and mutual promises and
agreements herein contained and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed as follows:
1. Resignation of Office. The parties agree that Hyde's resignation as
President was with Good Reason and was and shall be effective as of the
Effective Date.
<PAGE>
2. Post-Resignation Service. Following Hyde's resignation as President
of the Company, he shall remain an employee of the Company through the
Termination Date. He shall continue to receive the same level of compensation as
described in Section 4.1 (Salary) of the Employment Agreement. The Company
agrees that such compensation shall be paid to Hyde in all events. While Hyde is
an employee of the Company he shall receive such administrative and technical
support from the Company as may be agreed on and approved by the Company in
advance. He shall receive prompt reimbursement from the Company for all
reasonable business expenses incurred on behalf of the Company and approved by
the Company in advance. Hyde hereby resigns from the Management Committee of the
Company effective as of the Enforcement Date (as defined in Section 12 below).
Prior to the Termination Date, Hyde may provide compensable services other
than to the Company without notice to or authorization from the Company so long
as such services do not violate Section 7 hereof. Compensation received by Hyde
in respect of such services shall not cause any reduction in his compensation or
benefits described in this Agreement.
3. Termination Of Employment. The termination of Hyde's service as
President of the Company shall become effective on the Effective Date and he
shall cease to be an employee of the Company as of the Termination Date.
Following the Effective Date, Hyde shall have no further duties,
responsibilities or powers as an employee, officer or executive of the Company
and shall have no further duties, responsibilities or powers, except as shall be
agreed upon in advance between Hyde and the Company. Hyde understands,
acknowledges and agrees that as, of the Termination Date, he shall cease to be
employed by the Company and that he shall not possess any rights or claims to
any future employment with the Company, its parent company, subsidiaries,
affiliates, divisions, successors or related companies.
4. Resignation and Termination Benefits. In consideration of the
execution of this Agreement by the parties and, as a material inducement for
Hyde to execute this Agreement, the Company agrees to provide Hyde with the
following benefits.
A. On the Enforcement Date (as defined in Section 12 below), the Company
shall make an initial payment to Hyde in respect of his resignation as
President (the Initial Resignation Payment) equal to one hundred
forty-two thousand, five hundred dollars ($142,500):
B. On or before December 31, 1998, the Company shall make a contribution
on behalf of Hyde into the proposed management investing -- matching
loan program as may be adopted on behalf of the officers of the
Company (the "Investment Program") or, if the Investment Program is
not in effect as of December 31, 1998, shall make a cash payment
directly to Hyde (the "Second Resignation Payment") equal to one
hundred forty-two thousand, five hundred dollars ($142,500).
C. On the Termination Date, the Company shall make a payment to Hyde in
respect of the termination of his employment (the "Severance Payment")
equal to one hundred forty-two thousand, five hundred dollars
($142,500).
2
<PAGE>
D. For the period ending on the Termination Date the Company shall
continue to contribute to the cost of Hyde's participation in such
group medical and dental plans as was the case prior to the Effective
Date (the "Insurance Payments"), provided that Hyde is entitled to
continue such participation under applicable law and plan terms. If
Hyde ceases to be eligible for continued participation in any such
plans, the Company shall pay directly to Hyde the amount of premiums
that it would otherwise have paid to the insurers for Hyde's coverage
pursuant to the immediately preceding sentence had Hyde continued to
be so eligible.
E. Hyde may invest up to $500,000, net of any contribution made on his
behalf pursuant to Clause B above, in the Investment Program.
F. That portion of Hyde's "Interest Option", as described in the
Operating Management Interest Option Agreement (the "Option
Agreement") between Hyde and the Company effective August 6, 1997,
which has become exercisable as of the Effective Date shall remain
exercisable (and not subject to purchase by the Company at the option
of the Company) through August 6, 2002. The portion of the Interest
Option which has not become exercisable by the Effective Date may
become exercisable and remain exercisable through August 6, 2002 in
the sole discretion of the Company. Hyde shall be entitled to
participate in any opportunity afforded to officers of the Company to
extend or otherwise amend any similar Option Agreement if, as of
August 6, 2002, there has been no Initial Public Offering (as defined
in the Employment Agreement) of the shares of the Company.
G. Hyde understands, acknowledges and agrees that the Company's
undertakings herein with respect to the Initial Resignation Payment,
the Second Resignation Payment, the Severance Payment and the
Insurance Payments are made in complete satisfaction of any and all
claims for severance pay or any other compensation or benefits to
which Hyde is or may claim to be entitled under the Employment
Agreement.
5. No Other Benefits. The parties acknowledge and agree that other than
the payments and benefits set forth in this Agreement, the Company is not under
any obligation to make or provide any payments or benefits to Hyde. Hyde
expressly represents, acknowledges and agrees that, except as provided in this
Agreement, he is entitled to no wages, compensation, privileges, perquisites,
benefits or payments from the Company other than any rights Hyde may have under
any Company employee benefit plan, as that term is defined in the Employee
Retirement Income Security Act of 1974, as amended.
6. Release of Claims.
A. Hyde acknowledges that the Company's undertakings herein are a full
and complete remedy and are made in full satisfaction for any an all
claims for damages arising from or related to his employment, his
permanent separation from such employment, or any other act occurring
up to and including the date of this Agreement. Hyde covenants that
he will not at any time commence,
3
<PAGE>
maintain, prosecute, participate in as a party, or permit to be filed
by any other person on his behalf, any action, suit or proceeding
(judicial or administrative) seeking damages, reinstatement, or any
financial recovery against the Company, its parent organization, any
of its subsidiaries, affiliates, or related companies or any of its
present or former officers, directors, employees, representatives or
agents, with respect to the terms and conditions of his employment,
his permanent separation from such employment, or with respect to any
act, event or occurrence, or any alleged failure to act, occurring up
to and including the date of this Agreement.
B. In consideration of their mutual agreements herein, the parties
mutually remise, release and forever discharge, and do for each of
their heirs, executors, administrators and assigns, remise, release
and forever discharge each other, and their successors and assigns,
subsidiaries, parent and related companies, and their directors,
officers, representatives, agents, servants, employees, former
employees, of and from any and all manner of action and actions, cause
and causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages,
judgments, extents, executions, costs, attorney's fees, claims and
demands whatsoever, in law or in equity, which against either party or
any other of the above mentioned entities and persons they ever had,
now have, or which their heirs, executors, administrators or assigns,
thereafter can, shall or may have for, upon or by reason of any
matter, cause or thing whatsoever from the beginning of the world to
the date of the date of the document, including, but not in limitation
of the foregoing general terms, any charges, claims, actions and
causes of action, asserted or unasserted, with respect to, or arising
out of, Hyde's employment or the termination of his employment with
the Company.
C. In addition, and not in limitation of the foregoing, Hyde forever
releases and discharges the Company from any liability or obligation
to reinstate or reemploy him in any capacity.
D. Should Hyde die before all payments are made, remaining payments will
continue to be made as described herein to heirs of Hyde, as
determined by law.
E. The Company has carefully explained that this document is a general
release that releases all claims and causes of action which Hyde ever
had, now has, or may have in the future, including, but not limited
to, those relating to his employment and the termination of his
employment. Hyde understands that once he signs the Agreement, he
legally waives and releases any and all rights and claims he may have
under the numerous state and federal laws and regulations regulating
employment, including, without limitation, Title VII of the Civil
Rights Act of 1964, as amended; the Age Discrimination in Employment
Act of 1967, as amended; the Equal Pay Act of 1963, as amended; the
Employee Retirement Income Security Act of 1974, as amended; the
Rehabilitation Act of 1973, as amended; the Fair Labor Standards Act
of 1938, as amended; the Americans with Disabilities Act of 1990, as
amended; the National Labor Relations Act of 1935,
4
<PAGE>
as amended; Vermont's Fair Employment Practices laws, and other
statutes, as well as under any common law tort or contract theory,
including, but not limited to, wrongful discharge, breach of oral or
written contract, misrepresentation, defamation, interference with
prospective economic advantage, interference with contractual
relationships, intentional or negligent infliction of emotional
distress, negligence, promissory estoppel, and breach of covenant of
good faith and fair dealing.
7. Non-Competition; Unauthorized Disclosure; Inventions.
A. Non-Competition. Beginning on the Termination Date and continuing
through the second anniversary of the Termination Date, Hyde shall
not, directly or indirectly, own, manage, operate, control or
participate in any manner in the ownership, management, operation or
control of, or be connected as an officer, employee, partner,
director, principal, consultant, agent or otherwise with, or have any
financial interest in, or aid or assist anyone else in the conduct of
any business, venture or activity in the electric or gas green retail
energy business, whether or not the Company is to be compensated for
such participation. Ownership of less than five percent of the
publicly-held securities of any corporation shall not, in and of
itself, constitute a violation of this Section 7.A.
B. Restriction on Taking Employees or Customers. So long as the
restrictions of Section 7.A continue to apply to Hyde, Hyde shall not,
directly or indirectly, (i) recruit or otherwise seek to induce any
employees of the Company or any of its Subsidiaries (as defined in the
Employment Agreement) to terminate his or her employment or violate
any agreement with, or duty to, the Company or any of its
Subsidiaries, and (ii) solicit or encourage any customer of the
Company or any of its Subsidiaries to terminate or materially diminish
its relationship with the Company or any Subsidiary of the Company or
to conduct with himself or any other Person (as defined in the
Employment Agreement), any business, venture or activity which such
customer has conducted at any time with the Company or any of its
Subsidiaries or any of their respective successors.
C. Unauthorized Disclosure; Inventions. The parties to this Agreement
agree that the restrictions on Hyde set forth in Section 7
(Unauthorized Disclosure; Inventions) of the Employment Agreement
shall remain in effect following the Termination Date as if
incorporated herein.
8. Attorneys' Fees. The Company agrees that it shall reimburse Hyde for
the costs of attorney's fees incurred in respect of drafting this Agreement,
such amount not to exceed $5,000.
9. Non-Admission Of Liability. This Agreement is not an admission of
liability, wrongdoing, or unlawful conduct by or on the part of any party. The
parties specifically acknowledge and agree that nothing in this Agreement shall
be construed or deemed to be (a) an admission of liability by the Company of any
acts of wrongdoing whatsoever, whether by omission or commission, against Hyde
or any other entity or person, any such liability and conduct having been and
continuing to be denied, or (b) an admission of liability by Hyde of any acts of
5
<PAGE>
wrongdoing whatsoever, whether by omission or commission, against the Company or
any other entity or person, any such liability and conduct having been and
continuing to be denied.
10. Twenty-One (21) Day Waiting Period. Hyde understands and acknowledges
that he has been given a period of twenty-one (21) days from the date he was
first given a copy of this Agreement to carefully study and consider its terms
and decide whether or not to sign this Agreement. Further, Hyde acknowledges
and understands that (a) this is all the time that he needs to think about and
make this decision, (b) he may use as much of this 21 day period as he wishes
prior to signing this Agreement, (c) he may voluntarily decide to sign this
Agreement prior to the expiration of the 21 day period, and (d) to the extent he
decides to sign this Agreement prior to the expiration of the 21 day period, he
waives his right to insist upon the full 21 day period. Further, Hyde
acknowledges and agrees that if he signs this agreement prior to the expiration
of 21 days, he is doing so freely and voluntarily.
11. Opportunity For Review With Counsel. The Company hereby advises Hyde
in writing to talk with his own attorney before executing this Agreement. Hyde
expressly acknowledges that the Company has advised him to consult with an
attorney prior to signing this Agreement. By executing this Agreement, the
parties represent and agree that they fully understand their right to discuss
all aspects of this Agreement with their own attorneys, that they have availed
themselves of this right, that they have carefully read and fully understand all
the provisions of this Agreement, and that they are knowingly and voluntarily
entering into this Agreement.
12. Seven (7) Day Cancellation Period. Hyde may cancel this Agreement
within seven (7) days of signing it. Therefore, this Agreement will not become
enforceable until the eighth day after Hyde signs this Agreement. The eighth day
after Hyde signs this Agreement is called the "Enforcement Date." If the eighth
day is a weekend day or a holiday, the Enforcement Date is the next business
day. Until the Enforcement Date, Hyde has the legal right under Federal law to
cancel this Agreement. The fact that Hyde has signed this Agreement and returned
it to the Company will not prevent Hyde from canceling this Agreement prior to
the Enforcement Date. If Hyde cancels this Agreement, then this Agreement shall
not be effective or enforceable and Hyde shall not be entitled to receive any of
the payments or benefits described above (except for wages, payments and
benefits due and owing to Hyde as a matter of law). If Hyde decides to cancel
this Agreement, he must do so by notifying the Company in writing (by facsimile
or by registered, certified or overnight mail) addressed as follows:
Green Mountain Energy Resources L.L.C.
PO Box 2206
25 Green Mountain Drive
South Burlington, VT 05402-2206
Attention: General Counsel
Facsimile: 802/846-6162
Any written notice to cancel must be delivered to the Company no later than the
day prior to the Enforcement Date. If Hyde has signed and returned this
Agreement and does not give the Company a written notice to cancel before the
Enforcement Date, this Agreement shall become binding on the parties.
6
<PAGE>
13. Remedies Upon Breach. Hyde acknowledges and agrees that, in the event
he breaches any of the terms and provisions of this Agreement, nothing herein
shall be construed to preclude or limit the Company from asserting claims or
filing a lawsuit against Hyde for the purpose of (a) enforcing its rights under
this Agreement, (b) recovering moneys paid under this Agreement, or (c) pursuing
any other rights and remedies available under law. The Company acknowledges and
agrees that, in the event it breaches any of the terms and provisions of this
Agreement, nothing herein shall be construed to preclude or limit Hyde from
asserting claims or filing a lawsuit against the Company for the purpose of (a)
enforcing his rights under this Agreement, or (b) pursuing any other rights and
remedies available under law. This Agreement may be introduced as evidence in a
proceeding or court action only for purposes of enforcing its terms or to
evidence the parties intent in executing it.
The parties agree that in the event that either party claims a breach
of this Agreement by the other, should the party that claims the breach fail to
prevail in its claim, it shall reimburse the other party for the reasonable
costs (including reasonable attorney's fees) of that party's defense against
such claim.
14. Waiver of a Breach. A waiver by any party of a breach of any of the
provisions of this Agreement shall not operate or be construed as a waiver of
any other provision of this Agreement or of any subsequent breach of the same or
any other provision of this Agreement. The understandings and representations
of the parties set forth in this Agreement shall survive any breach of this
Agreement and be enforceable by any non-breaching party.
15. Severability. The provisions of this Agreement are severable.
If any portion of this Agreement is held, by a court of competent jurisdiction,
to be invalid or unenforceable or to conflict with any federal, state or local
law, such portion or portions of this Agreement are hereby declared to be of no
force or effect in such jurisdiction, and this Agreement shall otherwise remain
in full force and effect and be construed as if such portion had not been
included. In the event that any provision of this Agreement is held to be
unenforceable for being unduly broad as written, such provision shall be deemed
amended to narrow its application to the extent necessary to make the provision
enforceable according to applicable law and shall be enforced as amended.
16. Entire Agreement. This Agreement is the entire agreement between the
parties with respect to Hyde's employment with the Company, the termination of
that employment, and the compensation and benefits payable to Hyde upon the
termination of his employment with the Company and supersedes and replaces any
and all prior and contemporaneous agreements, representations, promises or
understandings of any kind between the parties, specifically including the
Employment Agreement (except as provided in Section 7 hereof). No modification,
amendment or waiver of any of the provisions of this Agreement shall be
effective unless in writing and signed by both parties.
17. Confidentiality of Agreement; Non-Disparagement. Hyde shall not at
any time talk about, write about or otherwise publicize the terms of this
Agreement or any fact concerning its negotiation, execution or implementation
except with (i) an attorney who may be advising Hyde in connection with this
Agreement, (ii) a financial consultant, tax advisor or executive outplacement
7
<PAGE>
counselor; and (iii) Hyde's immediate family (including Hyde's spouse and
children residing with Hyde) provided that such person agree in advance to keep
said information confidential and not to disclose it to others or as necessary
to enforce the terms and conditions hereof or as required by order of a court or
government entity having jurisdiction and authority to require disclosure.
Hyde agrees that at no time will he criticize or disparage: (i) the
Company; (ii) any current or former member, affiliate, subsidiary, partner,
investor or officer of the Company; (iii) in respect of matters related to the
Company, any employee, agent, representative or attorney of the Company; (iv)
any aspect of the Company's business or business practices; or (v) the electric
or gas green retail energy business generally. The Company agrees that neither
it nor anyone acting on its behalf shall at any time disparage or criticize
Hyde.
18. Binding Effect. This Agreement, and all the provisions contained
herein, shall be binding upon, and shall inure to the benefit of, the parties
hereto, and their respective heirs, successors and assigns. The undertakings of
the Company hereunder are solely the obligations of the Company, and do not
constitute obligations or liabilities of any member of the Company or any other
person.
19. Governing Law. This Agreement and any disputes arising under or in
connection with it shall be construed and governed in accordance with the laws
of the State of Vermont.
20. Captions. The captions of the paragraphs of this Agreement are for
convenience only and shall not be considered or referenced in resolving
questions of construction or interpretation.
21. Withholding. All payments required to be made by the Company under
this Agreement shall be net of any tax or other amounts required to be withheld
by the Company under any applicable law or legal requirement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first set forth above.
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
Dated: 11/4/98 By: /s/ M. David White
----------------------- -----------------------------------
Name: M. David White
---------------------------------
Its: President
----------------------------------
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<PAGE>
I have read everything in this Agreement and I understand everything in
this Agreement. I understand that this Agreement is a contract and a legal
document and I have been told by the Company that I should talk to a lawyer
about it before signing it. I understand and have been told by the Company that
I may take 21 days to decide whether or not I want to sign this Agreement. I
acknowledge and agree that if I decide to sign this Agreement prior to
considering it for 21 days, I do so knowingly and voluntarily and by so doing
waive my right to use the full 21 days to consider this Agreement. I hereby
state that I have had all of the time I want and need to talk to a lawyer about
this Agreement before signing it. No one has made me any promises to get me to
sign this Agreement, except for the promises that are written in this Agreement
itself. No one has forced me to sign this Agreement and I sign it of my own free
will. I understand that I can cancel this Agreement within 7 days if I want to.
I hereby accept and agree to all of the terms of this Agreement.
Dated: 11/6/98 /s/ Douglas G. Hyde
------------------ -----------------------------------
Douglas G. Hyde
State of Vermont
County of Chittenden
Personally appeared before me this 6th day of November, 1998, the above-
named Douglas G. Hyde to me known to be the individual described in and who
executed the within foregoing instrument and acknowledged that he signed the
same as his free and voluntary act and deed for the uses and purposes therein
mentioned.
/s/ Peter H. Zamore
----------------------------------
Notary Public
My commission expires: 2/10/99
------------
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EXHIBIT 10.9
================================================================================
FORM OF
EMPLOYMENT AGREEMENT
between
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
and
[Name of Employee]
dated as of
August 6, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Recitals..................................................................... 1
- ----------
1. DEFINITIONS............................................................. 1
1.1. "Affiliate"....................................................... 1
1.2. "Cause"........................................................... 1
1.3. "Change of Control"............................................... 1
1.4. "Closing Date".................................................... 2
1.5. "Code"............................................................ 2
1.6. "Date of Termination"............................................. 2
1.7. "Expiration Date"................................................. 2
1.8. "Fiscal Year"..................................................... 2
1.9. "Good Reason"..................................................... 2
1.10. "Holding Company Act"............................................. 2
1.11. "Investor"........................................................ 2
1.12. "Initial Public Offering"......................................... 2
1.13. "Interest"........................................................ 2
1.14. "Interest Transfer"............................................... 2
1.15. "Member".......................................................... 3
1.16. "Operating Agreement"............................................. 3
1.17. "Option".......................................................... 3
1.18. "Person".......................................................... 3
1.19. "Proprietary Rights".............................................. 3
1.20. "Public Offering"................................................. 3
1.21. "Release"......................................................... 3
1.22. "Salary".......................................................... 3
1.23. "Subsidiary"...................................................... 3
1.24. "Substituted Member".............................................. 3
2. EMPLOYMENT.............................................................. 3
2.1. Agreement......................................................... 3
2.2. Expiration Date................................................... 4
3. POSITION AND DUTIES..................................................... 4
4. COMPENSATION............................................................ 4
4.1. Salary............................................................ 4
4.2. Business Expenses................................................. 4
4.3. Fringe Benefits................................................... 4
4.4. Vacations......................................................... 5
5. OFFICES; SUBSIDIARIES AND AFFILIATES.................................... 5
</TABLE>
i
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<TABLE>
<C> <S> <C>
6. NONCOMPETITION.......................................................... 5
6.1. Restriction on Competitive Activities............................. 5
6.2. Restriction on Taking Employees or Customers...................... 5
7. UNAUTHORIZED DISCLOSURE; INVENTIONS..................................... 6
7.1. Unauthorized Disclosure........................................... 6
7.2. Proprietary Rights................................................ 6
8. TERMINATION............................................................. 7
8.1. Death............................................................. 7
8.2. Incapacity........................................................ 7
8.3. Termination by the Executive for Good Reason...................... 7
8.4. Cause............................................................. 8
8.5. Termination by the Company Other than for Cause................... 8
8.6. Termination by the Executive Other than for Good Reason........... 8
8.7. Date of Termination; Term of Employment........................... 8
9. COMPENSATION UPON TERMINATION........................................... 9
9.1. Death............................................................. 9
9.2. Incapacity........................................................ 9
9.3. Cause............................................................. 9
9.4. Termination by the Executive Other than for Good Reason........... 9
9.5. Good Reason Termination or Termination by the Company
Other than for Cause............................................. 9
9.6. Post-Termination Obligations Generally............................ 10
10. WITHHOLDING............................................................. 10
11. NOTICES................................................................. 10
12. MISCELLANEOUS........................................................... 11
13. VALIDITY................................................................ 12
14. COUNTERPARTS............................................................ 12
15. ENTIRE AGREEMENT........................................................ 12
16. ASSIGNMENT.............................................................. 12
17. EFFECTIVENESS........................................................... 12
</TABLE>
EXHIBIT A: RELEASE OF CLAIMS
ii
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made as of August 6, 1997
between Green Mountain Energy Resources L.L.C., a Delaware limited liability
company (the "Company"), and [name of employee] (the "Executive").
Recitals
1. The Executive possesses valuable experience and knowledge in the
business and affairs of electric utility companies and their marketing policies,
methods, personnel and operations.
2. The Company desires to employ the Executive and to assure itself of
the Executive's continued employment in an executive capacity.
3. The Executive is willing to commit to serve the Company on the terms
herein provided.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS. Terms defined in this Agreement other than in this Section 1
are used herein as so defined, and the following terms shall have the following
respective meanings:
1.1 "Affiliate" shall mean with respect to any Person, a Person which,
directly or indirectly, controls or is controlled by or is under common control
with such Person, and includes, in the case of any Person which is an
individual, any parent, grandparent, sibling, child, grandchild, or spouse of
such Person or any of the foregoing persons, or any trust established for the
benefit of any such person or any partnership or corporation controlled by any
such person. For purposes of this Agreement, the term "control" (including the
terms "controlled by" and "under common control with") means possession, direct
or indirect, of the power to direct or cause the direction of management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise; provided, however, that beneficial ownership of 10% or
more of the voting securities of any Person shall be deemed to be control.
1.2 "Cause" shall have the meaning as set forth in Section 8.4.
1.3 "Change of Control" shall mean (i) any change in the ownership of
the Company if, immediately after giving effect thereto, any Person (or group of
Persons acting in concert) other than the Investor and its Affiliates will have
the direct or indirect power to elect a majority of the members of the
management committee of the Company (the "Management Committee"); (ii) any sale
or other disposition (including without limitation by way of a merger or
consolidation of the Company with another Person) of all or substantially all of
the assets of the Company to another Person (the "Change of Control Transferee")
if, immediately after giving effect thereto, any Person (or group of Persons
acting in concert) other than the
<PAGE>
Investor and its Affiliates will have the power to elect a majority of the
members of the board of directors (or other similar governing body) of the
Change of Control Transferee; or (iii) any change in the ownership of the
interests in the Company if, immediately after giving effect thereto, the
Investor and its Affiliates shall own Interests aggregating less than 25% of the
total Interests in the Company.
1.4 "Closing Date" shall mean the Effective Date (as defined in the
Operating Agreement) in respect of the Company and the Investor.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Date of Termination" shall have the meaning as set forth in Section
8.7.
1.7 "Expiration Date" shall have the meaning as set forth in Section
2.2.
1.8 "Fiscal Year" shall have the same meaning herein as in the Operating
Agreement (defined below).
1.9 "Good Reason" shall have the meaning as set forth in Section 8.3.
1.10 "Holding Company Act" means the Public Utility Company Act of 1935,
as amended, and any successor or replacement statute.
1.11 "Investor" shall have the same meaning herein as in the Operating
Agreement.
1.12 "Initial Public Offering" shall mean an initial Public Offering
registered on Form S-1 (or any successor from under the Securities Act).
1.13 "Interest" means the interest of any Member in the Company,
including (a) as set forth for each Member in Schedule I of the Operating
Agreement, (b) as subsequently established for each newly admitted Member upon
the admission of such newly admitted Member to the Company, and (c) acquired by
any Person upon the exercise by such Person of an Option or Warrant held by such
Person, in each case, as such Interest may be changed from time to time in
accordance with the provisions of the Operating Agreement.
1.14 "Interest Transfer" means any sale, assignment, gift, hypothecation,
pledge or other disposition, whether voluntary or by operation of law, of an
Interest or any portion thereof, or an interest in the profits and losses of
and/or distributions by the Company, and shall include any change in control of
any Member. The admission of any new Member, whether as a result of the
exercise by any Person of any Option or Warrant in accordance with Section 6.04
of the Operating Agreement or the result of the admission of a new Member to the
Company pursuant to Section 6.01 of the Operating Agreement shall not constitute
an Interest Transfer.
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1.15 "Member" means each Person identified as a Member on Schedule I of
the Operating Agreement and each Person who subsequently becomes a Member of the
Company in accordance with Article VI of the Operating Agreement.
1.16 "Operating Agreement" shall mean the Operating Agreement of the
Company, dated as of the date hereof among the Company and the other parties
named therein, as amended, restated, supplemented or otherwise modified.
1.17 "Option" shall mean any option granted to any Person by the Company
to acquire an Interest in the Company, and includes the term "Warrant."
1.18 "Person" shall have the same meaning herein as in the Operating
Agreement.
1.19 "Proprietary Rights" shall have the meaning as set forth in Section
7.2.
1.20 "Public Offering" shall have the same meaning herein as in the
Operating Agreement.
1.21 "Release" shall have the meaning as set forth in Section 9.5.
1.22 "Salary" shall have the meaning as set forth in Section 4.1.
1.23 "Subsidiary" shall mean any Person of which the Company (or other
specified Person) shall, directly or indirectly, own beneficially or control the
voting of at least ten percent of the outstanding capital stock (or other shares
of beneficial interest) entitled to vote generally or at least ten percent of
the partnership, joint venture or similar interests, or in which the Company (or
other specified Person) or a Subsidiary thereof shall be a general partner or
joint venturer without limited liability.
1.24 "Substituted Member" shall mean an assignee or transferee of an
Interest which has complied with the requirements of Article V of the Operating
Agreement to become a Member.
2. EMPLOYMENT.
2.1 Agreement. The Company shall employ the Executive, and the Executive
shall serve the Company, in each case subject to the terms and conditions set
forth herein.
2.2 Expiration Date. The employment of the Executive by the Company
shall be for the period commencing on the Closing Date and expiring on the date
(the "Expiration Date") that is the third anniversary of the Closing Date,
unless such employment shall have been sooner terminated as hereinafter set
forth; provided, however, that the Expiration Date shall be automatically
extended to the next occurring anniversary of the Closing Date, unless either
the Company or the Executive shall notify the other, at least one year prior to
the then Expiration Date, of its or his intention that the Expiration Date not
be so automatically extended.
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3. POSITION AND DUTIES. The Executive shall serve as [title of employee] of
the Company, and shall be accountable to, and shall have such powers, duties and
responsibilities as may from time to time be prescribed by, the Management
Committee of the Company.
The Executive shall devote his or her full business time and attention and
his or her best efforts and ability to the business and affairs of the Company
and each of its Subsidiaries and shall not engage in other business activities
(whether or not compensated) during the term of this Agreement without prior
written consent of the Management Committee of the Company that are inconsistent
with the time and attention requirements of this sentence or in violation of the
other provisions of this Agreement.
4. COMPENSATION. Subject to all of the terms and conditions hereof and to the
performance by the Executive of his or her duties and obligations to the
Company:
4.1 Salary. As compensation for services performed under and during the
term of employment hereunder, the Company shall pay the Executive a salary at a
rate of [salary of employee] per annum or such higher amount as may from time to
time be established by the Management Committee of the Company (the annual rate
of salary in effect from time to time being referred to as the "Salary"). Salary
shall be payable in accordance with the payroll practices of the Company.
4.2 Business Expenses. During the term of employment hereunder, the
Executive shall be entitled to receive prompt reimbursement by the Company for
all reasonable business expenses incurred by the Executive on behalf of the
Company or any of its Subsidiaries (in accordance with the policies and
procedures established by the Management Committee of the Company from time to
time for the Company's executive officers) in performing services hereunder,
provided that the Executive properly accounts therefor in accordance with
requirements for federal income tax deductibility and the Company's policies and
procedures.
4.3 Fringe Benefits. During the term of employment hereunder, the
Executive shall be entitled to participate in or receive benefits under any life
insurance, disability, health and accident plans, pension, retirement, deferred
compensation and supplemental pension plans or other arrangements made generally
available by the Company to its executives and key management employees, subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Except to the extent determined
by the Management Committee, Executive shall not be entitled to any other bonus,
equity, incentive or equity type incentive plans established by the Company.
4.4 Vacations. During the term of employment hereunder, the Executive
shall be entitled to 20 paid vacation days in each Fiscal Year and shall also be
entitled to all paid holidays given by the Company to its employees. The paid
vacation days shall be prorated for any period of service hereunder less than a
full year.
5. OFFICES; SUBSIDIARIES AND AFFILIATES. The Executive shall serve during the
term of employment hereunder, if elected or appointed thereto, in one or more
positions as an
4
<PAGE>
officer or director of the Company or any one or more of the Company's present
or future Subsidiaries or Affiliates, or as an officer, trustee, director or
other fiduciary of any pension or other employee benefit plan of the Company or
any of its Subsidiaries or Affiliates. Service in such additional positions will
be without additional compensation except for reimbursement of reasonably
related business expenses on the same terms as provided elsewhere in this
Agreement. In connection with the Executive's service in additional positions as
provided under this Section 5, the Executive shall be entitled to the benefit of
any indemnification provisions in the regulations of the Company, its
Subsidiaries or Affiliates for which the Executive serves in such an additional
position and any director and officer liability insurance coverage or insurance
against potential liability related to particular positions (e.g., ERISA
fiduciary insurance) carried by the Company or any such Subsidiary or Affiliate
of the Company for which the Executive serves as an officer or director.
6. NONCOMPETITION.
6.1 Restriction on Competitive Activities. During the term of the
Executive's employment hereunder and thereafter until the end of the twelfth
full month (sixth full month, if the Executive's employment is terminated
pursuant to Section 8.3 or Section 8.5) after the Date of Termination, the
Executive shall not, directly or indirectly, own, manage, operate, control or
participate in any manner in the ownership, management, operation or control of,
or be connected as an officer, employee, partner, director, principal,
consultant, agent or otherwise with, or have any financial interest in, or aid
or assist anyone else in the conduct of any business, venture or activity which
is the same as or competes with, any business, venture or activity which is
being conducted or is proposed to be conducted by the Company or by any division
or Subsidiary of the Company on or prior to the Date of Termination, in any area
where such business is being conducted or is proposed to be conducted by any of
the foregoing on or prior to the Date of Termination, whether or not the Company
is to be compensated for such participation. Ownership of less than five percent
of the publicly-held securities of any corporation shall not, in and of itself,
constitute a violation of this Section 6.1.
6.2 Restriction on Taking Employees or Customers. So long as the
restrictions of Section 6.1 hereto continue to apply to the Executive, the
Executive shall not, directly or indirectly, (i) recruit or otherwise seek to
induce any employees of the Company or any of its Subsidiaries to terminate
their employment or violate any agreement with, or duty to, the Company or any
of its Subsidiaries, and (ii) solicit or encourage any customer of the Company
or any of its Subsidiaries to terminate or materially diminish its relationship
with the Company or any Subsidiary of the Company or to conduct with himself or
any other Person, any business, venture or activity which such customer has
conducted at any time with the Company or any of its Subsidiaries or any of
their respective successors.
7. UNAUTHORIZED DISCLOSURE; INVENTIONS.
7.1 Unauthorized Disclosure. The Executive shall not, without the
written consent of the Management Committee of the Company, disclose to any
Person, other than an employee or professional adviser of the Company or other
Person to whom disclosure is in the reasonable judgment of the Executive
necessary or appropriate in connection with the
5
<PAGE>
performance by the Executive of his or her duties as an executive officer of the
Company, any information the disclosure of which the Executive knows, or in the
exercise of reasonable care should know, may be damaging to, or otherwise
adverse to the interests of, the Company or any of its Subsidiaries or
Affiliates; provided, however, that such information shall not include any
information known generally to the public (other than as a result of
unauthorized disclosure by the Executive); and provided, further, that the
Executive's duties under this Section 7.1 shall not extend to any disclosure
that may be required by law in connection with any judicial or administrative
proceeding or inquiry. The Executive understands and agrees that the
restrictions of this Section 7.1 shall continue to apply after the Executive's
employment terminates, regardless of the reason for such termination.
7.2 Proprietary Rights. Any and all inventions, discoveries,
developments, methods, processes, compositions, works, supplier and customer
lists (including without limitation information relating to the generation and
updating thereof), concepts and ideas (whether or not patentable or
copyrightable) conceived, made, developed, created or reduced to practice by the
Executive (whether at the request or suggestion of the Company or otherwise,
whether alone or in conjunction with others, and whether during regular hours of
work or otherwise) prior to or during the term of his employment by the Company,
which may be directly or indirectly useful in, or relate to, the business,
ventures or other activities of or products manufactured or sold by the Company
or any of its Subsidiaries or Affiliates or any business or products
contemplated by the Company or any of its Subsidiaries or Affiliates while the
Executive was or is an employee, officer, director, or member or stockholder of
the Company (collectively, "Proprietary Rights"), shall be promptly and fully
disclosed by the Executive to the President or the Management Committee of the
Company and shall be the Company's exclusive property as against the Executive
and his or her successors, heirs, devisees, legatees and assigns, and the
Executive hereby assigns to the Company his or her entire right, title and
interest therein and shall promptly deliver to the Company all papers, drawings,
models, data and other material relating to any of the foregoing Proprietary
Rights conceived, made, developed, created or reduced to practice by him as
aforesaid. All copyrightable Proprietary Rights shall be considered "works made
for hire."
The Executive shall, upon the Company's request and without any payment
therefor, execute any documents necessary or advisable in the opinion of the
Company's counsel to assign, and confirm the Company's title in, his or her
entire right, title and interest in the foregoing Proprietary Rights and to
direct issuance of patents or copyrights to the Company with respect to such
Proprietary Rights as are the Company's exclusive property as against the
Executive and his or her successors, heirs, devisees, legatees and assigns under
this Section 7.2 or to vest in the Company title to such Proprietary Rights as
against the Executive and his or her successors, heirs, devisees, legatees and
assigns, the expense of securing any such patent or copyright, however, to be
borne by the Company.
8. TERMINATION.
8.1 Death. The Executive's employment hereunder shall terminate upon
death.
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<PAGE>
8.2 Incapacity. If the Executive shall have been unable to perform his
or her duties hereunder by reason of any physical or mental illness, injury or
other incapacity (i) for any period of 90 consecutive days or (ii) for a total
of 150 days in any period of 12 consecutive calendar months, in the reasonable
judgment of the Management Committee of the Company, after appropriate
consultation with such experts as the Management Committee of the Company may
deem necessary or advisable, the Company may terminate the Executive's
employment hereunder by written notice to the Executive. The Executive shall
make his or her personal medical records available to the Management Committee
of the Company and such experts for purposes of determining whether the
Executive's employment hereunder may be terminated pursuant to this Section 8.2.
8.3 Termination by the Executive for Good Reason. The Executive may
terminate his or her employment hereunder upon not less than 30 days' prior
written notice to the Company for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean (i) failure of the Company to continue the Executive in
the position of Vice President, Marketing (ii) willful and continued failure of
the Company to provide the Executive the Salary and benefits in accordance with
Section 4 hereof, (iii) the failure of the Company to withdraw a written request
to the Executive to change the location of his principal residence to outside of
the metropolitan area in which such residence is located on the Closing Date
within 30 days following the Company's receipt of a written notice of decline of
such request from the Executive; provided that the Executive shall have
delivered such written notice of decline within 30 days of the delivery of the
Company's request; or (iv) a material diminution in the nature of the
Executive's duties, responsibilities or reporting relationships without his or
her consent which shall have occurred no more than 30 days prior to the giving
of the written notice referred to in the immediately preceding sentence; it
being understood and agreed that neither a Change of Control (in and of itself)
nor the diminution of the business of the Company or any of its Subsidiaries or
other Affiliates shall be the basis for termination of the Executive's
employment under this Section 8.3.
8.4 Cause. The Company may terminate the Executive's employment
hereunder for Cause at any time upon written notice to the Executive. For the
purposes of this Agreement, the Company shall have "Cause" to terminate the
Executive's employment hereunder upon (i) the Executive's breach of any of the
obligations set forth in Sections 6 and 7 of this Agreement, or (ii) conduct of
the Executive which constitutes breach of any of the obligations set forth in
this Agreement (except to the extent addressed in clause (i) above) that
continues for a period of 30 days after the Company has given written notice to
the Executive that it intends to terminate the Executive's employment hereunder
pursuant to this clause (ii) if such conduct continues, or (iii) the Executive's
willful failure to perform his or her duties or responsibilities in a manner
prescribed by the Management Committee or willful breach of any fiduciary duty
as an officer or director of the Company or any of its Subsidiaries or
Affiliates, or as an officer, trustee, director or other fiduciary of any
pension or employee benefit plan of the Company or its Subsidiaries or
Affiliates, or (iv) the Executive's commission of a felony involving fraud,
personal dishonesty or moral turpitude, or (v) other conduct by the Executive
that is materially harmful to the business interests of the Company or any of
its Subsidiaries or Affiliates that continues for a period of 30 days after the
Company has given written notice to the Executive that it intends to terminate
the Executive's employment hereunder pursuant to
7
<PAGE>
this clause (v) if such conduct continues or if, in the case of conduct not
completely within the Executive's control, there has not been a good faith
effort to discontinue such conduct, in the case of clauses (ii) and (v) hereof,
as may be determined by the Management Committee of the Company in its
reasonable judgment, but only after a meeting of the Management Committee of the
Company at which the Executive has had an opportunity to be heard.
8.5 Termination by the Company Other than for Cause. The Company may
terminate the Executive's employment hereunder other than for Cause at any time
upon written notice to the Executive.
8.6 Termination by the Executive Other than for Good Reason. The
Executive may terminate his or her employment hereunder at any time upon 30
days' prior written notice to the Company. In the event of termination of the
Executive pursuant to this Section 8.6, the Management Committee of the Company
may elect to waive the period of notice, or any portion thereof.
8.7 Date of Termination; Term of Employment. The term "Date of
Termination" shall mean the earlier of (i) the Expiration Date or (ii) if the
Executive's employment is terminated (A) by death, the date of death, or (B) for
any other reason set forth in this Section 8, the date on which such termination
is to be effective, consistent with the applicable provision hereof, pursuant to
the notice of termination given by the party terminating the employment
relationship in accordance with this Section 8. For all purposes of this
Agreement, references to the "term" of the Executive's employment hereunder
shall mean the period commencing on the Closing Date and ending on the Date of
Termination.
9. COMPENSATION UPON TERMINATION.
9.1 Death. Notwithstanding any other provision of this Agreement, if the
Executive's employment shall be terminated by reason of death, the Company shall
pay to such Person as the Executive shall have designated in a notice filed with
the Company, or, if no such Person shall have been designated, to the
Executive's estate his or her Salary through the Date of Termination at the rate
in effect at the time of death.
9.2 Incapacity. Notwithstanding any other provision of this Agreement,
if the Executive's employment shall be terminated by reason of incapacity
pursuant to Section 8.2, the Company shall continue to pay the Executive his or
her Salary through the Date of Termination at the rate in effect at the time the
notice of termination is given as provided under Section 8.2 hereof.
9.3 Cause. Notwithstanding any other provision of this Agreement, if the
Company shall terminate the Executive's employment for Cause, the Company shall
have no further obligations to the Executive under this Agreement other than
payment of his or her Salary through the Date of Termination.
9.4 Termination by the Executive Other than for Good Reason.
Notwithstanding any other provision of this Agreement, if the Executive shall
terminate his or her employment
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pursuant to Section 8.6 hereof, the Company shall have no further obligations to
the Executive under this Agreement other than payment of Salary through the Date
of Termination at the rate in effect at the time the notice of termination is
given.
9.5 Good Reason Termination or Termination by the Company Other than for
Cause. If the Company shall terminate the Executive's employment pursuant to
Section 8.5 hereof or if the Executive shall terminate his or her employment
pursuant to Section 8.3 hereof, then the Company shall pay to the Executive: (i)
Salary through the Date of Termination at the rate in effect at the time notice
of termination is given; and (ii) until the earliest to occur of (x) the
Expiration Date, (y) the end of the twelfth full calendar month following the
Date of Termination and (z) the date the Executive commences other substantially
full-time employment (including without limitation self-employment or engaging
in an enterprise as a sole proprietor or partner), severance at a rate equal to
the Salary in effect at the time notice of termination is given; provided,
however, that any amounts earned by the Executive from self-employment or
consulting undertaken other than on a substantially full-time basis shall reduce
the amount of any severance payable. So long as severance is to be paid under
clause (ii) of the immediately preceding sentence, the Company shall, if the
Executive was participating in any group medical and dental insurance plans
pursuant to Section 4.3 hereof immediately prior to the effectiveness of his or
her termination of employment hereunder and subject to any employee contribution
applicable to the Executive immediately prior to such effectiveness, continue to
contribute to the cost of the Executive's participation in such group medical
and dental insurance plans, provided that the Executive is entitled to continue
such participation under applicable law and plan terms. If the Executive ceases
to be eligible for continued participation in any such plans, the Company will
pay the Executive the amount of the premiums that it would otherwise have paid
to the insurers for the Executive's coverage pursuant to the immediately
preceding sentence had the Executive continued to be so eligible. The
obligations of the Company to the Executive under this Section 9.5 (other than
clause (i) of the first sentence of this Section 9.5) are conditioned upon the
Executive's signing a release of claims in the form attached hereto as Exhibit A
(the "Release") within 21 days of the date on which notice of termination is
given and upon the Executive's not revoking the release thereafter. All
severance payments under this Section 9.5 will be in the form of salary
continuation, payable in accordance with the normal payroll practices of the
Company and will begin at the Company's next regular payroll period following
the effective date of the release, but shall be retroactive to the Date of
Termination. Notwithstanding any provision of this Agreement, if the Company
shall be dissolved or its business and affairs wound up, the right of the
Executive to severance compensation and post-termination benefits shall be
limited to six months' Salary.
9.6 Post-Termination Obligations Generally. If the term of the
Executive's employment hereunder shall expire by reason of the occurrence of the
Expiration Date, the Company shall have no further obligations to the Executive
in respect of the compensation or benefits to be provided under this Agreement
following expiration of the term of the Executive's employment hereunder by
reason of the occurrence of the Expiration Date. If the term of the Executive's
employment hereunder shall expire other than by reason of the occurrence of the
Expiration Date, the Company shall have no obligation to the Executive except as
specifically provided in this Section 9, and performance by the Company of any
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obligation specifically provided in this Section 9 shall constitute full
settlement of any claim that the Executive may have on account of such
termination against the Company and its Affiliates and all of their respective
past and present officers, directors, stockholders, controlling Persons,
employees, agents, representatives, successors and assigns and all other others
connected with any of them, both individually and in their official capacities
in respect of the compensation or benefits to be provided under this Agreement.
10. WITHHOLDING. All payments made by the Company under this Agreement shall be
net of any tax or other amounts required to be withheld by the Company under any
applicable law or legal requirement.
11. NOTICES. All notices, requests and demands to or upon the parties hereto to
be effective shall be in writing, by facsimile, by overnight courier or by
registered or certified mail, postage prepaid and return receipt requested, and
shall be deemed to have been duly given or made upon: (i) delivery by hand, (ii)
one business day after being sent by overnight courier; or (iii) in the case of
transmission by facsimile, when confirmation of receipt is obtained from the
party to whom such notice is directed. Such communications shall be addressed
and directed to the parties as follows (or to such other address as either party
shall designate by giving like notice of such change to the other party):
If to the Executive:
[address of employee]
If to the Company:
Green Mountain Energy Resources L.L.C.
Box 2206
25 Green Mountain Drive
South Burlington, VT 05402-2206
Attention: Mr. Douglas G. Hyde
Telecopy: 802-865-9129
with a copy to:
Michael C. French
Suite 1000
300 Crescent Court
Dallas, Texas 75201
Telecopy: 214-880-4042
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12. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is approved by the
Management Committee of the Company and agreed to in writing signed by the
Executive and such officer as may be specifically authorized by the Management
Committee of the Company in connection with such approval. No waiver by either
party hereto at any time of compliance with or of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement and the legal relations created thereby shall be
governed by the domestic substantive laws of the State of Vermont without giving
effect to any choice or conflict of laws provision or rule that would cause the
application of the domestic substantive laws of any other jurisdiction. The
Executive acknowledges and agrees that, because the Company's legal remedies,
may be inadequate in the event of a breach of, or other failure to perform, by
the Executive, any of the covenants and agreements set forth in Sections 6 and 7
hereof, the Company may, in addition to obtaining any other remedy or relief
available to it (including without limitation damages at law), enforce the
provisions of said Sections 6 and 7 by injunction and other equitable relief.
13. VALIDITY. In the event that any provision hereof would, under applicable
law, be invalid or unenforceable, such provision shall, to the extent permitted
under applicable law, be construed by modifying or limiting it so as to be valid
and enforceable to the maximum extent possible under applicable law. The
provisions of this Agreement are severable, and in the event that any provision
hereof should be held invalid or unenforceable in any respect, it shall not
invalidate, render unenforceable or otherwise affect any other provision hereof.
14. COUNTERPARTS. This Agreement may be executed in any one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
15. ENTIRE AGREEMENT. This Agreement, along with the Interest Option Agreement
between the Executive and the Company of even date herewith, constitutes the
entire agreement between the parties hereto, and supersedes any and all prior
communications, agreements and understandings, written or oral, with respect to
the terms and conditions of the Executive's employment with the Company.
16. ASSIGNMENT. This Agreement shall inure to the benefit of and be binding
upon (i) the Executive, his or her personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees and (ii)
the Company and its successors (including, without limitation, by means of
reorganization, merger, consolidation or liquidation) and permitted assigns.
The Company may assign this Agreement to any Subsidiary or to any successor of
the Company by reorganization, merger, consolidation or liquidation and any
transferee of all or substantially all of the business or assets of the Company
or of any division or line of business of the Company with which the Executive
is at
11
<PAGE>
any time associated. The Company requires the personal services of the Executive
hereunder and the Executive may not assign this Agreement.
17. EFFECTIVENESS. This Agreement shall only become effective upon the Closing
Date.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands under
seal, as of the date first above written.
------------------------------
[name of employee]
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
By: /s/ Douglas G. Hyde
---------------------------
Name: Douglas G. Hyde
------------------
Title: President
-----------------
13
<PAGE>
EXHIBIT A
RELEASE OF CLAIMS
FOR AND IN CONSIDERATION OF the special payments and benefits to be
provided in connection with the termination of my employment in accordance with
the terms of the Employment Agreement between me and Green Mountain Energy
Resources L.L.C. (the "Company") dated as of August 6, 1997 (the "Employment
Agreement"), I, on my own behalf and on behalf of my personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees and all others connected with me, hereby release and
forever discharge the Company and its Affiliates (as that term is defined in the
Employment Agreement) and all of their respective past and present members,
officers, directors, stockholders, controlling persons, employees, agents,
representatives, successors and assigns and all others connected with any of
them (all collectively, the "Released"), both individually and in their official
capacities, from any and all rights, liabilities, claims, demands and causes of
action of any type (all collectively "Claims") which I have had in the past, now
have, or might now have, through the date of my signing of this release of
Claims, in any way resulting from, arising out of or connected with my
employment or its termination or pursuant to any federal, state, foreign or
local employment law, regulation or other requirement (including without
limitation Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, and the fair employment
practices laws of the state or states in which I have been employed by the
Company, each as amended from time to time); provided, however, that the
foregoing release shall not apply to any right explicitly set forth in the
Employment Agreement to special payments and benefits to be provided in
connection with the termination of my employment.
In signing this Release of Claims, I acknowledge that I have had at least
21 days from the date of notice of termination of my employment to consider the
terms of this Release of Claims and that such time has been sufficient; that I
am encouraged by the Company to seek the advice of an attorney prior to signing
this Release of Claims; and that I am signing this Release of Claims voluntarily
and with a full understanding of its terms.
I understand that I may revoke this Release of Claims at any time within
seven days of the date of my signing by written notice to the Company and that
this Release of Claims will take effect only upon the expiration of such seven-
day revocation period and only if I have not timely revoked it.
Intending to be legally bound, I have signed this Release of Claims under
seal as of the date first written above.
Signature:
----------------------------------------
[Name of Executive]
Date Signed:
--------------------------------------
<PAGE>
EXHIBIT 10.10
FORM OF OPERATING MANAGEMENT OPTION
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
Operating Management Interest Option Agreement
This Operating Management Interest Option Agreement (the "Agreement") is
entered into by and between Green Mountain Energy Resources L.L.C., a Delaware
limited liability company (the "Company"), and _______________________________
(the "Participant"). The Company and the Participant agree as follows:
1. Grant of Interest Option. Pursuant to a duly adopted resolution of
the Management Committee on August 6, 1997 (the "Date of Grant"), the Company
hereby grants to the Participant, upon and subject to the terms and conditions
set forth below an option (the "Interest Option") to acquire from the Company an
Interest described on Exhibit A hereto at an exercise price equal to $450,000.00
per whole percentage point (1%) Interest (the "Option Price"). Any terms, when
used in this Agreement with initial capital letters but not defined herein, have
the same meanings as in the Operating Agreement of the Company dated as of
August 6, 1997 (the "Operating Agreement").
2. Time of Exercise. The Interest Option may be exercised, in whole or
in part, as set forth on Exhibit A, according to the following schedule:
Percentage
Exercisable Dates
----------- -----
20% Immediately
20% On the first anniversary of the Date of Grant
20% On the second anniversary of the Date of Grant
20% On the third anniversary of the Date of Grant
20% On the fourth anniversary of the Date of Grant
Notwithstanding the foregoing schedule, in the event of a Change of
Control or a threatened Change of Control, all of the unexercised portion of
this Interest Option will become immediately exercisable, and the right of the
Participant to exercise the Interest Option as to such unexercised portion will
continue for the entire term described in Section 3 below, regardless of whether
the Participant's employment with the Company terminates before the expiration
of such term. Whether a Change of Control is threatened will be determined
solely by the Management Committee. In addition, the dates set forth in the
foregoing schedule, shall be accelerated (with the next date to occur being
first accelerated), and this Interest Option will
<PAGE>
become immediately exercisable, to the extent necessary, taking into account any
portion hereof then exercisable and any Interest previously acquired upon the
exercise hereof, to enable the Participant to exercise its rights under Section
5.05 of the Operating Agreement.
The unexercised portion of the Interest Option from one annual period
may be carried over to a subsequent annual period or periods, and the right of
the Participant to exercise the Interest Option as to such unexercised portion
will continue for the entire term described in Section 3 below, subject to the
provisions of Sections 9 and 10 below.
All of the unexercised portion of this Interest Option will become
immediately exercisable on the date six months after consummation of an Initial
Public Offering, and the right of the Participant to exercise the Interest
Option as to the unexercised portion shall continue for the balance of the term
specified in Section 3 below subject to the provisions of Section 9 and 10
below.
In no event may the Interest Option be exercised in whole or in part,
however, after the expiration of such term.
3. Term. The Interest Option will expire and all rights under this
Agreement will terminate on the fifth anniversary of the Date of Grant.
4. Restrictions on Exercise. The Interest Option may not be exercised in
whole or in part if any requisite registration with, clearance by, or consent,
approval or authorization of, any governmental authority of any kind having
jurisdiction over the exercise of the Interest Option, has not been obtained or
secured.
5. Manner of Exercise. The Interest Option may be exercised by written
notice to the Company of the Interest being purchased and the Option Price to be
paid, accompanied by full payment of the Option Price in cash or by check
acceptable to the Company. Any federal, state or local taxes required to be
paid or withheld at the time of exercise will be paid or withheld in full prior
to any issuance of the Interest upon exercise.
6. Transferability of Interest Options. Except as contemplated by
Section 9, this Interest Option may not be transferred by the Participant
without the consent of the Company.
7. Rights as Member. Neither the Participant nor any of the
Participant's beneficiaries will be deemed to have any rights as a Member until
exercise of this Interest Option and payment of the Option Price.
8. Adjustments. The Interest covered by the Interest Option evidenced by
this Agreement, and the Option Price thereof, will be subject to adjustment as
provided in Exhibit A.
9. Rights in Event of Death or Termination of Employment as a Result of
Disability of Participant. If the Participant dies or terminates employment as
a result of disability prior to termination of the Participant's rights to
exercise the Interest Option, any
<PAGE>
unexercised portion of the Interest Option will become immediately exercisable
and may be exercised, subject to all conditions of this Agreement, until the
expiration of the term set forth in Section 3. In the event of the death of the
Participant, the Interest Option may be exercised by the Participant's estate or
a person who acquired the right to exercise the Interest Option as an heir,
legatee, devisee or distributee or by reason of the death of the Participant;
provided, however, that no such exercise shall be effective until the party
exercising the Interest Option shall have delivered to the Company a counterpart
signature page to the Operating Agreement. In the event of the death or
disability of the Participant, the Interest Option and any Interest previously
acquired upon the exercise thereof shall be subject to purchase by the Company
at the Company's option, for a purchase price equal to the fair market value
thereof, payable in cash. Any portion of the Participant's Interest Option not
purchased shall continue to be exercisable for the balance of the term specified
in Section 3. For purposes of this Interest Option, the Management Committee
will have sole discretion to determine whether termination of a Participant's
employment has occurred as a result of "disability" (as herein defined), and the
term "disability" shall have the meaning specified in any employment agreement
between the Participant and the Company, and in the absence of any such
employment agreement shall have the meaning specified by Company policy. In no
event may the Interest Option be exercised after the expiration date set forth
in Section 3. For purposes of this Interest Option, the term "fair market value"
of an Interest or Interest Option shall mean a value determined by agreement of
the Company and the Participant of such Interest or Interest Option, and in the
absence of such agreement a value determined by an independent appraiser chosen
by the Company and reasonably acceptable to the Participant as the price that
would be paid and accepted by a willing buyer and a willing seller,
respectively, each under no compulsion to purchase or sell, in an arm's-length
purchase and sale transaction without regard to any minority interest's lack of
control or similar discount.
10. Rights in Event of Termination of Employment Other Than as a Result of
Death or Disability. With respect to a Participant who is an employee of the
Company on the Date of Grant, if the Participant ceases to be employed by the
Company, other than as a result of death or disability, such Participant's
rights in respect of the Interest Option and any Interest acquired upon the
exercise thereof shall be as follows:
a. Termination for Cause. If a Participant's employment with the
Company is terminated by the Company for "cause" (which in the case of a
Participant party to an employment agreement with the Company shall have
the meaning specified therein), the Interest Option shall thereupon
terminate automatically, and any Interest previously acquired upon the
exercise thereof shall be subject to purchase by the Company at the
Company's option, for a purchase price equal to the lesser of the exercise
price paid by the Participant to acquire such Interest and the fair market
value of such Interest, payable in cash.
b. Voluntary Termination. If a Participant terminates his or her
employment voluntarily under circumstances not covered by Section 10.d.,
the portion of the Interest Option not then exercisable shall terminate
automatically, and the portion of the Interest Option then exercisable and
any Interest previously acquired upon the exercise thereof shall be subject
to purchase by the Company at the Company's option,
<PAGE>
for a purchase price equal to the fair market value thereof, payable in
cash; provided, however, that for purposes of this Section 10.b., if a
Participant terminates his or her employment prior to the first anniversary
of the Date of Grant, no portion of the Interest Option shall be considered
then exercisable, and any Interest previously acquired upon the exercise
thereof shall be subject to purchase by the Company at the Company's
option, for a purchase price equal to the lesser of the exercise price paid
by the Participant to acquire such Interest and the fair market value of
such Interest, payable in cash.
c. Termination Without Cause. If a Participant's employment with the
Company is terminated by the Company other than for "cause" (as described
above), the portion of the Interest Option not then exercisable shall
terminate automatically, and the portion of the Interest Option then
exercisable and any Interest previously acquired upon the exercise thereof
shall be subject to purchase by the Company at the Company's option for a
purchase price equal to the fair market value thereof, payable in cash;
provided, however, that for purposes of this Section 10.c., if a
Participant's employment with the Company is terminated by the Company
without cause prior to the first anniversary of the Date of Grant, the
portion of the Interest that would have become exercisable on the first
anniversary of the Date of Grant shall be considered then exercisable. Any
portion of the Participant's Interest Option not forfeited or purchased
shall continue to be exercisable for the balance of the term specified in
Section 3.
d. Voluntary Termination with Good Reason. If a Participant who is
party to an employment agreement with the Company terminates his or her
employment with good reason (as such term shall be defined in such
employment agreement), such termination will be treated as a termination
without cause and governed by the provisions of Section 10.c. Any portion
of the Participant's Interest Option not forfeited or purchased by the
Company under Section 9 or under subsections (c) or (d) of this Section 10
shall continue to be exercisable for the balance of the term specified in
Section 3. The Company's right to purchase a Participant's Interest or
Interest Option under Section 9 or subsections (c) or (d) of this Section
10 shall terminate, as to any Interest transferred by the Participant on
the exercise of such Participant's rights provided for in Section 5.05 of
the Operating Agreement ("5.05 Rights"), on the date of the transaction
entitling the Participant to such 5.05 Rights.
e. Notices, etc. Any purchase right described in Section 9 or this
Section 10 may be exercised by the Company by delivery of written notice
thereof (the "Option Notice") within 90 days of the effectiveness of such
right (the "Option Exercise Period"). Any such right not duly exercised
within the applicable Option Exercise Period shall thereafter terminate.
The Option Notice shall state that the Company has elected to exercise such
purchase right and the Interests with respect which the right is being
exercised. The Company may assign its purchase rights (in whole or in
part) to any third party, who shall to the extent of the assignment perform
all obligations of the Company under this Section 10. Notwithstanding such
assignment, the Company shall remain liable for all obligations of the
Company under this Section 10.
<PAGE>
f. Closing. The closing of any purchase and sale of Interests
pursuant to the exercise of any right granted pursuant to Section 9 or this
Section 10 shall take place at the principal office of the Company as soon
as reasonably practicable and in no event later than 30 days after
termination of the applicable Option Exercise Period, or at such other time
and location as the parties to such purchase may mutually determine. In the
event the price of any Interest to be purchased is specified to be fair
market value, such fair market value shall be determined as of the date
such right becomes effective. At the closing of any purchase and sale of
Interests pursuant to this Section 10, the owner of the Interest to be sold
shall deliver to the Company an instrument of assignment assigning the
Interest to be purchased by the Company free and clear of any lien or
encumbrance, and the Company shall pay to such holder the purchase price
therefor by certified or bank check or wire transfer of immediately
available funds. The delivery of such an instrument of assignment by any
Person selling an Interest pursuant to Section 9 or this Section 10 shall
be deemed a representation and warranty by such Person that: (i) such
Person has full right, title and interest in and to such Interest; (ii)
such Person has all necessary power and authority and has taken all
necessary action to sell such Interest as contemplated; and (iii) such
Interest is free and clear of any and all liens or encumbrances.
g. Time Period. Any right of the Company to purchase any Interest or
Interest Option which is only exercisable at fair market value shall expire
upon consummation of an Initial Public Offering.
11. Registration. Promptly after the consummation of an Initial Public
Offering, the Company will take all reasonable steps to register the Interest
Option, and the Interests issued or issuable upon exercise thereof, pursuant to
the Securities Act of 1933, as amended (the "Securities Act").
12. Interest Purchased for Investment. The Participant, by accepting the
Interest Option, represents, warrants, covenants and agrees on behalf of the
Participant and the Participant's heirs, legatees, devisees or distributees that
the Interest acquired upon the exercise of the Interest Option will be acquired
for investment and not for resale or distribution, and that upon each exercise
of any portion of the Interest Option, the person entitled to exercise the same
will furnish evidence satisfactory to the Company (including a written and
signed representation) to the effect that the Interest is being acquired in good
faith for investment and not for resale or distribution. The Participant shall
furnish or execute such documents as the Company in its discretion deems
necessary to (a) evidence such exercise of the Interest Option, (b) determine
whether registration is then required under the Securities Act, as then in
effect, and (c) comply with or satisfy the requirements of the Securities Act,
or any other federal, state or local law, as then in effect.
13. Notices. Each notice relating to this Agreement will be in writing
and delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, Box 2206, 25 Green
Mountain Drive, South Burlington, Vermont 05402-2206, attention of the
Secretary. Each notice to the Participant or other person or persons then
<PAGE>
entitled to exercise the Interest Option will be addressed to the Participant or
such other person or persons at the Participant's address specified below.
Anyone to whom a notice may be given under this Agreement may designate a new
address by notice to that effect.
14. Employment. This Agreement does not confer upon the Participant any
right to be employed or to continue in the employ of the Company, nor does it in
any way interfere with the right of the Company to terminate the employment of
the Participant at any time.
15. No Obligation to Exercise Interest Option. This Agreement does not
impose any obligation upon the Participant to exercise the Interest Option.
16. Amendments. The Management Committee may, without the consent of the
Participant, amend this Agreement, or otherwise take action, to accelerate the
time or times at which the Interest Option may be exercised, to extend the term
described in Section 3 above, to waive any other condition or restriction
applicable to the Interest Option or to the exercise of the Interest Option, to
reduce the Option Price and to make any other change not adverse to the
interests of the Participant without the consent of the Participant; and may
amend the Agreement in any other respect with the consent of the Participant.
17. Governing Law. This Agreement will be construed and enforced in
accordance with and governed by the laws of Vermont, except as to matters of
corporate law, which will be governed by the laws of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the Company and the Participant have executed this
Agreement as of the 6th day of August, 1997.
GREEN MOUNTAIN ENERGY RESOURCES
L.L.C.
By:
---------------------------------------------
---------------------------------------------
---------------------------------------------
PARTICIPANT:
------------------------------------------------
Signature
------------------------------------------------
Print Name
Social Security Number
--------------------------
Address for Notice:
------------------------------------------------
------------------------------------------------
<PAGE>
EXHIBIT A
---------
1. Description of Interest to be Acquired Upon Exercise. A ___ % Interest,
the holder of which shall have the rights and obligations of a Member other
than the Investor.
2. Exercise in Part. The Interest Option shall be exercisable from time to
time and in whole or in part, provided that any partial exercise shall be
for an Interest having a purchase price of at least $50,000.00.
3. Adjustments. The Exercise Price and the Interests purchasable upon
exercise of the Interest Option shall be subject to adjustment, as
determined in good faith by the Management Committee, from time to time as
set forth in this Section.
A. Creation of Interests. In the event that at any time or from time
to time the Company shall create additional Interests, then the percentage
Interest purchasable upon exercise of the Interest Option shall be adjusted
appropriately to reflect the dilutive effect of the creation of the
additional Interest.
B. Reorganization. If the Company shall consolidate or merge with or
into another company or corporation, then the holder hereof shall have the
right to receive upon exercise of the Interest Option such Interest and
other assets, properties or securities which such holder would have been
entitled to receive upon or as a result of such consolidation or merger had
the Interest Option been exercised immediately prior to such event, at an
Exercise Price adjusted proportionately.
C. Other Events. If any event occurs as to which the foregoing
provisions of this Section 3 are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Management
Committee, fairly and adequately protect the purchase rights of the
Interest Option in accordance with the essential intent and principles of
the provisions hereof, then the Management Committee shall make such
adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of such Management Committee, to protect such purchase
rights.
<PAGE>
EXHIBIT 10.11
FORM OF SUPERVISORY MANAGEMENT OPTION
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
Supervisory Management Interest Option Agreement
This Supervisory Management Interest Option Agreement (the "Agreement") is
entered into by and between Green Mountain Energy Resources L.L.C., a Delaware
limited liability company (the "Company"), and _______________________________
(the "Participant"). The Company and the Participant agree as follows:
1. Grant of Interest Option. Pursuant to a duly adopted resolution of
the Management Committee on August 6, 1997 (the "Date of Grant"), the Company
hereby grants to the Participant, upon and subject to the terms and conditions
set forth below an option (the "Interest Option") to acquire from the Company an
Interest described on Exhibit A hereto at an exercise price equal to $450,000.00
per whole percentage point (1%) Interest (the "Option Price"). Any terms, when
used in this Agreement with initial capital letters but not defined herein, have
the same meanings as in the Operating Agreement of the Company dated as of
August 6, 1997 (the "Operating Agreement").
2. Time of Exercise. The Interest Option may be exercised, in whole or
in part, by the Participant on the date six months after consummation of an
Initial Public Offering, and the right of the Participant to exercise the
Interest Option as to the unexercised portion shall continue for the balance of
the term specified in Section 3 below.
Notwithstanding the foregoing, in the event of a Change of Control or
a threatened Change of Control, this Interest Option will become immediately
exercisable, and the right of the Participant to exercise the Interest Option
will continue for the entire term described in Section 3 below. Whether a
Change of Control is threatened will be determined solely by the Management
Committee. In addition, this Interest Option will become immediately
exercisable, to the extent necessary, to enable the Participant to exercise its
rights under Section 5.05 of the Operating Agreement.
In no event may the Interest Option be exercised in whole or in part,
however, after the expiration of the term specified in Section 3 below.
3. Term. The Interest Option will expire and all rights under this
Agreement will terminate on the fifth anniversary of the Date of Grant.
4. Restrictions on Exercise. The Interest Option may not be exercised in
whole or in part if any requisite registration with, clearance by, or consent,
approval or authorization of, any governmental authority of any kind having
jurisdiction over the exercise of the Interest Option, has not been obtained or
secured.
<PAGE>
5. Manner of Exercise. The Interest Option may be exercised by written
notice to the Company of the Interest being purchased and the Option Price to be
paid, accompanied by full payment of the Option Price in cash or by check
acceptable to the Company. Any federal, state or local taxes required to be
paid or withheld at the time of exercise will be paid or withheld in full prior
to any issuance of the Interest upon exercise.
6. Transferability of Interest Options. This Interest Option may be
transferred by the Participant.
7. Rights as Member. Neither the Participant nor any of the
Participant's successors or assigns will be deemed to have any rights as a
Member until exercise of this Interest Option and payment of the Option Price.
8. Adjustments. The Interest covered by the Interest Option evidenced by
this Agreement, and the Option Price thereof, will be subject to adjustment as
provided in Exhibit A.
9. Registration. Promptly after the consummation of an Initial Public
Offering, the Company will take all reasonable steps to register the Interest
Option, and the shares of common stock of the Company issued or issuable upon
exercise thereof, pursuant to the Securities Act of 1933, as amended (the
"Securities Act").
10. Interest Purchased for Investment. The Participant, by accepting the
Interest Option, represents, warrants, covenants and agrees on behalf of the
Participant and the Participant's heirs, legatees, devisees or distributees that
the Interest acquired upon the exercise of the Interest Option will be acquired
for investment and not for resale or distribution, and that upon each exercise
of any portion of the Interest Option, the person entitled to exercise the same
will furnish evidence satisfactory to the Company (including a written and
signed representation) to the effect that the Interest is being acquired in good
faith for investment and not for resale or distribution. The Participant shall
furnish or execute such documents as the Company in its discretion deems
necessary to (a) evidence such exercise of the Interest Option, (b) determine
whether registration is then required under the Securities Act, as then in
effect, and (c) comply with or satisfy the requirements of the Securities Act,
or any other federal, state or local law, as then in effect.
11. Notices. Each notice relating to this Agreement will be in writing
and delivered in person or by certified mail to the proper address. Each notice
will be deemed to have been given on the date it is received. Each notice to
the Company will be addressed to it at its principal office, Box 2206, 25 Green
Mountain Drive, South Burlington, VT 05402-2206, attention of the Secretary.
Each notice to the Participant or other person or persons then entitled to
exercise the Interest Option will be addressed to the Participant or such other
person or persons at the Participant's address specified below. Anyone to whom
a notice may be given under this Agreement may designate a new address by notice
to that effect.
12. No Obligation to Exercise Interest Option. This Agreement does not
impose any obligation upon the Participant to exercise the Interest Option.
<PAGE>
13. Amendments. The Management Committee (with the concurrence of the
Independent Member) may, without the consent of the Participant, amend this
Agreement, or otherwise take action, to accelerate the time or times at which
the Interest Option may be exercised, to extend the term described in Section 3
above, to waive any other condition or restriction applicable to the Interest
Option or to the exercise of the Interest Option, to reduce the Option Price and
to make any other change not adverse to the interests of the Participant without
the consent of the Participant; and may amend the Agreement in any other respect
with the consent of the Participant.
14. Governing Law. This Agreement is intended to be performed in the
State of Texas and will be construed and enforced in accordance with and
governed by the laws of such State, except as to matters of corporate law, which
will be governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company and the Participant have executed this
Agreement as of the 6th day of August, 1997.
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
By:
---------------------------------------
---------------------------------------
---------------------------------------
PARTICIPANT:
------------------------------------------
Signature
------------------------------------------
Print Name
Social Security Number
--------------------
Address for Notice:
------------------------------------------
------------------------------------------
<PAGE>
EXHIBIT A
---------
1. Description of Interest to be Acquired Upon Exercise. A ___ % Interest,
the holder of which shall have the rights and obligations of a Member other
than the Investor.
2. Exercise in Part. The Interest Option shall be exercisable from time to
time and in whole or in part, provided that any partial exercise shall be
for an Interest having a purchase price of at least $50,000.00.
3. Adjustments. The Exercise Price and the Interests purchasable upon
exercise of the Interest Option shall be subject to adjustment, as
determined in good faith by the Management Committee, from time to time as
set forth in this Section.
A. Creation of Interests. In the event that at any time or from time
to time the Company shall create additional Interests, then the percentage
Interest purchasable upon exercise of the Interest Option shall be adjusted
appropriately to reflect the dilutive effect of the creation of the
additional Interest.
B. Reorganization. If the Company shall consolidate or merge with or
into another company or corporation, then the holder hereof shall have the
right to receive upon exercise of the Interest Option such Interest and
other assets, properties or securities which such holder would have been
entitled to receive upon or as a result of such consolidation or merger had
the Interest Option been exercised immediately prior to such event, at an
Exercise Price adjusted proportionately.
C. Other Events. If any event occurs as to which the foregoing
provisions of this Section 3 are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Management
Committee, fairly and adequately protect the purchase rights of the
Interest Option in accordance with the essential intent and principles of
the provisions hereof, then the Management Committee shall make such
adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of such Management Committee, to protect such purchase
rights.
<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>
EXHIBIT 10.13
FORM
OF
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement"), dated as of
______________, 1999, is made by and between GreenMountain.com Company, a
Delaware corporation (the "Corporation"), and ______________________________
("Indemnitee").
RECITALS
--------
A. It is essential to the Corporation to retain and attract as directors
and officers the most capable persons available.
B. Indemnitee is a director and/or officer of the Corporation.
C. Both the Corporation and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and officers of
companies in today's environment.
D. The Corporation's certificate of incorporation (the "Certificate") and
bylaws (the "Bylaws") provide that the Corporation will indemnify its directors
and officers to the full extent permitted by law and will advance expenses in
connection therewith, and Indemnitee's willingness to serve as a director and/or
officer of the Corporation is based in part on Indemnitee's reliance on such
provisions.
E. In recognition of Indemnitee's need for substantial protection against
personal liability in order to enhance Indemnitee's continued service to the
Corporation in an effective manner, and Indemnitee's reliance on the aforesaid
provisions of the Certificate and Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such provisions
will be available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such provisions or any change in the composition
of the Corporation's Board of Directors or any acquisition or business
combination transaction relating to the Corporation), the Corporation wishes to
provide in this Agreement for the indemnification of and the advancement of
expenses to Indemnitee as set forth in this Agreement, and, to the extent
insurance is maintained, for the continued coverage of Indemnitee under the
Corporation's directors' and officers' liability insurance policies.
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:
1. Certain Definitions.
-------------------
1.1. "Claim" means any threatened, pending or completed action, suit
-----
or proceeding, or any inquiry or investigation, whether instituted, made or
conducted by the
<PAGE>
Corporation or any other party, that Indemnitee in good faith believes might
lead to the institution of any such action, suit or proceeding, whether civil,
criminal, administrative, investigative or other.
1.2. "Expenses" includes attorneys' fees and all other costs,
--------
expenses and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in, any Claim relating to
any Indemnifiable Event.
1.3. "Indemnifiable Event" means any actual or asserted event or
-------------------
occurrence related to the fact that Indemnitee is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other entity,
whether or not for profit (including the heirs, executors, administrators or
estate of such person), or anything done or not done by Indemnitee in any such
capacity.
2. Basic Indemnification Arrangement. In the event Indemnitee was, is or
---------------------------------
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, a Claim by reason of (or
arising in whole or in part out of) an Indemnifiable Event, the Corporation will
indemnify Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 60 calendar days after written demand
is presented to the Corporation, against any and all Expenses, judgments, fines,
penalties and amounts paid in settlement (including all interest, assessments
and other charges paid or payable in connection with or in respect of such
Expenses, judgments, fines, penalties or amounts paid in settlement) of such
Claims. Notwithstanding anything in this Agreement to the contrary, Indemnitee
will not be entitled to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Corporation or any director
or officer of the Corporation unless the Corporation has joined in or consented
to the initiation of such Claim. If so requested by Indemnitee, the Corporation
will advance (within two business days of such request) any and all Expenses to
Indemnitee.
3. Indemnification for Additional Expenses. The Corporation will
---------------------------------------
indemnify Indemnitee against, and, if requested by Indemnitee, will (within two
business days of such request) advance to Indemnitee, any and all attorneys'
fees and other costs, expenses and obligations paid or incurred by Indemnitee in
connection with any claim, action, suit or proceeding asserted or brought by
Indemnitee for (i) indemnification or advance payment of Expenses by the
Corporation under this Agreement or any other agreement or under any provision
of the Certificate or Bylaws now or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under any directors' and officers'
liability insurance policies maintained by the Corporation, regardless of
whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be.
4. Partial Indemnity, Etc. If Indemnitee is entitled under any provision
-----------------------
of this Agreement to indemnification by the Corporation for some or a portion of
the Expenses, judgments, fines, penalties and amounts paid in settlement of a
Claim but not, however, for all of the total amount thereof, the Corporation
will nevertheless indemnify Indemnitee for the portion
2
<PAGE>
thereof to which Indemnitee is entitled. Moreover, notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been successful
on the merits or otherwise in defense of any or all Claims relating in whole or
in part to an Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee will be indemnified against
all Expenses incurred in connection therewith. In connection with any
determination as to whether Indemnitee is entitled to be indemnified hereunder,
the burden of proof will be on the Corporation to establish that Indemnitee is
not so entitled.
5. No Presumption. For purposes of this Agreement, the termination of
--------------
any claim, action, suit or proceeding, by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo contendere
---- ----------
or its equivalent, will not create a presumption that Indemnitee did not meet
any particular standard of conduct or have any particular belief or that a court
has determined that indemnification is not permitted by applicable law.
6. Non-Exclusivity, Etc. The rights of Indemnitee hereunder will be in
---------------------
addition to any other rights Indemnitee may have under the Certificate, the
Bylaws or the Delaware General Corporation Law or otherwise; provided, however,
-------- -------
that to the extent that Indemnitee otherwise would have any greater right to
indemnification under any provision of the Certificate or Bylaws as in effect on
the date hereof, Indemnitee will be deemed to have such greater right hereunder;
and provided further that to the extent that any change is made to the Delaware
-------- -------
General Corporation Law (whether by legislative action or judicial decision),
the Certificate and/or the Bylaws which permits any greater right to
indemnification than that provided under this Agreement as of the date hereof,
Indemnitee will be deemed to have such greater right hereunder. The Corporation
will not adopt any amendment to the Certificate or the Bylaws the effect of
which would be to deny, diminish or encumber Indemnitee's right to
indemnification under the Certificate, the Bylaws or the Delaware General
Corporation Law or otherwise as applied to any act or failure to act occurring
in whole or in part prior to the date upon which the amendment was approved by
the Corporation's Board of Directors and/or its stockholders, as the case may
be.
7. Liability Insurance and Funding. To the extent the Corporation
-------------------------------
maintains an insurance policy or policies providing directors' and officers'
liability insurance, Indemnitee will be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Corporation director or officer. The Corporation may, but
will not be required to, 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 satisfy its obligations to
indemnify and advance expenses pursuant to this Agreement.
8. Period of Limitations. No legal action will be brought and no cause
---------------------
of action will be asserted by or on behalf of the Corporation or any affiliate
of the Corporation against Indemnitee or Indemnitee's spouse, personal or legal
representatives, executors, administrators, successors, heirs, distributees or
legatees after the expiration of two years from the date of accrual of such
cause of action, and any claim or cause of action of the Corporation or its
affiliates will be extinguished and deemed released unless asserted by the
timely filing of a legal action within such two-year period; provided, however,
-------- -------
that if any shorter period of limitations is otherwise applicable to any such
cause of action, such shorter period will govern.
3
<PAGE>
9. Subrogation. In the event of payment under this Agreement, the
-----------
Corporation will be subrogated to the extent of such payment to all of the
related rights of recovery of Indemnitee against other persons or entities. The
Indemnitee will execute all papers reasonably required and will do everything
that may be reasonably necessary to secure such rights and enable the
Corporation effectively to bring suit to enforce such rights (all of
Indemnitee's reasonable costs and expenses, including attorneys' fees and
disbursements, to be reimbursed by or, at the option of Indemnitee, advanced by
the Corporation).
10. No Duplication of Payments. The Corporation will not be liable under
--------------------------
this Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, the Certificate or the Bylaws or otherwise) of the
amounts otherwise indemnifiable hereunder.
11. Joint Defense. Notwithstanding anything to the contrary herein
-------------
contained, if (a) Indemnitee elects to retain counsel in connection with any
Claim in respect of which indemnification may be sought by Indemnitee against
the Corporation pursuant to this Agreement and (b) any other director or officer
of the Corporation may also be subject to liability arising out of such Claim
and in connection with such Claim may seek indemnification against the
Corporation pursuant to an agreement similar to this Agreement, Indemnitee,
together with such other persons, will employ counsel to represent jointly
Indemnitee and such other persons unless the Board of Directors of the
Corporation, upon the written request of Indemnitee delivered to the Corporation
(to the attention of the Secretary) setting forth in reasonable detail the basis
for such request, determines that such joint representation would be precluded
under the applicable standards of professional conduct then prevailing under the
law of the State of Delaware, in which case Indemnitee will be entitled to be
represented by separate counsel. In the event that the Board of Directors of
the Corporation fails to act on such request within 30 calendar days after
receipt thereof by the Corporation, Indemnitee will be deemed to be entitled to
be represented by separate counsel in connection with such Claim.
12. Successors and Binding Agreement. (a) The Corporation will require
--------------------------------
any successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Corporation, by agreement in form and substance satisfactory to
Indemnitee, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent the Corporation would be required to perform if no
such succession had taken place. This Agreement will be binding upon and inure
to the benefit of the Corporation and any successor to the Corporation,
including without limitation any person acquiring directly or indirectly all or
substantially all of the business or assets of the Corporation whether by
purchase, merger, consolidation, reorganization or otherwise (and such successor
will thereafter be deemed the "Corporation" for purposes of this Agreement), but
will not otherwise be assignable, transferable or delegatable by the
Corporation.
(b) This Agreement will inure to the benefit of and be enforceable by
the Indemnitee's personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto will, without the consent of the other, assign, transfer or delegate this
Agreement or any rights or
4
<PAGE>
obligations hereunder except as expressly provided in Sections 12(a) and 12(b).
Without limiting the generality or effect of the foregoing, Indemnitee's right
to receive payments hereunder will not be assignable, transferable or
delegatable, whether by pledge, creation of a security interest or otherwise,
other than by a transfer by the Indemnitee's will or by the laws of descent and
distribution and, in the event of any attempted assignment or transfer contrary
to this Section 12(c), the Corporation will have no liability to pay any amount
so attempted to be assigned, transferred or delegated.
13. Notices. For all purposes of this Agreement, all communications,
-------
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five calendar days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or one business day after having been sent
for next-day delivery by a nationally recognized overnight courier service,
addressed to the Corporation (to the attention of the Secretary of the
Corporation) at its principal executive office and to the Indemnitee at the
Indemnitee's principal residence as shown in the Corporation's most current
records, or to such other address as any party may have furnished to the other
in writing and in accordance herewith, except that notices of changes of address
will be effective only upon receipt.
14. Governing Law. The validity, interpretation, construction and
-------------
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Delaware, without giving effect to the
principles of conflict of laws of such State.
15. Validity. If any provision of this Agreement or the application of
--------
any provision hereof to any person or circumstance is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstance will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
16. Miscellaneous. No provision of this Agreement may be waived, modified
-------------
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by Indemnitee and the Corporation. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations, oral
or otherwise, expressed or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. References to Sections are to references to Sections of this
Agreement.
17. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same agreement.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
GREENMOUNTAIN.COM COMPANY
By:
-----------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
--------------------------------------------
6
<PAGE>
EXHIBIT 10.14
AGREEMENT
THIS AGREEMENT dated as of December 23, 1998 ("Agreement") among
Green Mountain Energy Resources L.L.C., a Delaware limited liability company
(the "Company"), Green Mountain Power Corporation, a Vermont corporation
("GMP"), Green Mountain Resources, Inc., a Delaware corporation ("GMR"), and
Green Funding I, L.L.C., a Delaware limited liability company ("GFI" and,
together with the Company, GMP, and GMR, the "Parties").
WITNESSETH
WHEREAS, GMR and GFI are the sole Members of the Company; and
WHEREAS, GMR is a wholly-owned subsidiary of GMP; and
WHEREAS, the Parties desire to terminate an Agreement dated as of August 6,
1997 among GMP, the Company and GFI ("1997 Agreement") and replace it in its
entirety with this Agreement; and
WHEREAS, GMR desires to sell, and the Company desires to purchase, GMR's
Interest in the Company in the manner set forth herein.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Operating Agreement
of the Company dated as of August 6, 1997 between GMR and GFI (the "Operating
Agreement"); provided, however, that references to GMP, GMR and GFI shall
include the respective Affiliates of each (other than the Company).
2. Unregulated Energy Business. For seven years from the Effective Date, GMP
may not engage outside Vermont in any unregulated marketing or sale for
consumption by the ultimate purchaser of electricity or gas. GMP may engage in
any activity not prohibited in the immediately preceding sentence, including the
sale or leasing of hot water heaters and power quality equipment, the design,
manufacture and sale of wastewater treatment facilities, equipment and services
and investment in and management of energy efficient installations and wind
generation, hydro-power and gas-fired electricity generation projects.
3. Use of Name "Green Mountain." From and after the date hereof, GMP shall
not use any name that includes the words "Green" and "Mountain" in connection
with any activity carried on by GMP; provided that nothing herein shall preclude
GMP from using (i) any name that includes the word "Green" or "Mountain" in
connection with any activity carried on by GMP within or outside Vermont, (ii)
the name "Green Mountain Power Corporation", or the name "Green Mountain Power",
or a name that includes "Green Mountain Power" but does not include "Energy" or
"Resources", in connection with any activity carried on by GMP solely within
<PAGE>
Vermont or (iii) "GMP" or a name that includes "GMP" in connection with any
activity carried on by GMP within or outside Vermont.
4. Transfer of Interest/Resignation. Upon GMR's receipt of Five Hundred
Thousand ($500,000) Dollars pursuant to paragraph 5 of this Agreement, GMR shall
transfer to the Company its Interest in the Company and, notwithstanding Section
7.01 of the Operating Agreement, shall withdraw as, and shall thereafter cease
to be, a Member of the Company. GMP and GMR shall cause Christopher L. Dutton
to tender his resignation as a member of the Management Committee of the Company
on the date of execution of this Agreement, effective as of the date of GMR' s
receipt of Five Hundred Thousand ($500,000) Dollars pursuant to paragraph 5 of
this Agreement.
5. Payment. The Company shall pay GMR One Million ($1,000,000) Dollars, as
follows: (1) Five Hundred Thousand ($500,000) Dollars shall be paid on January
4, 1999, and (2) Five Hundred Thousand ($500,000) Dollars shall be paid on or
before February 15, 1999. The Parties agree that if for any reason the Company
fails to pay One Million ($1,000,000) Dollars to GMR by February 28, 1999, this
Agreement and the 1997 Agreement shall be terminated and no longer of any force
or effect.
6. Releases. (a) The Company and GFI. In consideration for the mutual
-------------------
agreements contained herein, the receipt and adequacy of which is hereby
acknowledged, each of the Company and GFI, on behalf of itself and each of its
respective Affiliates, intending to be legally bound, having been represented by
counsel and having been fully and adequately informed as to the facts,
consequences and circumstances surrounding this Agreement, does hereby release
and forever discharge GMP, GMR, and all Affiliates, stockholders, partners,
members, directors, officers, representatives, employees, agents, successors and
assigns of GMP or GMR (each, a "Released GMP Party") from any and all claims,
actions, causes of action, suits, obligations, agreements, debts and other
liabilities, contingent or fixed, known or unknown, against any such person, in
any and all capacities, arising out of or in connection with, directly or
indirectly, the business and affairs of, or any transactions or proposed
transactions by or involving, or the purchase or ownership of membership
interests in, or the Operating Agreement, or any direct or indirect lending
relationships with, the Company, in any case from the beginning of time through
the date hereof; provided, however, in no event will this Release discharge,
waive or release any liability of or claim against any Released GMP Party
arising out of or in connection with a breach by such Released GMP Party of any
representation, warranty or covenant or other obligation of such Released GMP
Party contained in this Agreement. Each of the Company and GFI hereby
irrevocably covenants to refrain from, directly or indirectly, asserting any
claim or demand, or commencing, instituting or causing to be commenced, any
proceeding of any kind against any Released GMP Party, based upon any matter
purported to be released hereby. Without in any way limiting any of the rights
and remedies otherwise available to any Released GMP Party, each of the Company
and GFI will indemnify, defend and hold each Released GMP Party harmless from
and against all liabilities resulting or arising from, relating to or incurred
in connection with the assertion by or on behalf of the Company or GFI or any of
their respective Affiliates of (i) any claim or other matter purported to be
released pursuant hereto and (ii) the assertion by any third party of any claim
or demand against any Released GMP Party which claim or demand arises
2
<PAGE>
directly or indirectly from, or in connection with, any assertion by or on
behalf of the Company or GFI or any of their respective Affiliates against such
third party of any claims or other matters purported to be released pursuant
hereto.
(b) GMP and GMR. In consideration for the mutual agreements contained herein,
-----------
the receipt and adequacy of which is hereby acknowledged, each of GMP and GMR,
on behalf of itself and each of its respective Affiliates, intending to be
legally bound, having been represented by counsel and having been fully and
adequately informed as to the facts, consequences and circumstances surrounding
this Agreement, does hereby release and forever discharge the Company, GFI, and
all Affiliates, stockholders, partners, members, directors, officers,
representatives, employees, agents, successors and assigns of the Company or GFI
(each, a "Released Company Party") from any and all claims, actions, causes of
action, suits, obligations, agreements, debts and other liabilities, contingent
or fixed, known or unknown, against any such person, in any and all capacities,
arising out of or in connection with, directly or indirectly, the business and
affairs of, or any transactions or proposed transactions by or involving, or the
purchase or ownership of membership interests in, or the Operating Agreement, or
any direct or indirect lending relationships with, the Company, in any case from
the beginning of time through the date hereof; provided, however, in no event
will this Release discharge, waive or release any liability of or claim against
any Released Company Party arising out of or in connection with a breach by such
Released Company Party of any representation, warranty or covenant or other
obligation of such Released Company Party contained in this Agreement. Each of
the GMP and GMR hereby irrevocably covenants to refrain from, directly or
indirectly, asserting any claim or demand, or commencing, instituting or causing
to be commenced, any proceeding of any kind against any Released Company Party,
based upon any matter purported to be released hereby. Without in any way
limiting any of the rights and remedies otherwise available to any Released
Company Party, each of the GMP and GMR will indemnify, defend and hold each
Released Company Party harmless from and against all liabilities resulting or
arising from, relating to or incurred in connection with the assertion by or on
behalf of GMP or GMR or their respective Affiliates of (i) any claim or other
matter purported to be released pursuant hereto and (ii) the assertion by any
third party of any claim or demand against any Released Company Party which
claim or demand arises directly or indirectly from, or in connection with, any
assertion by or on behalf of GMP or GMR or any of their respective Affiliates
against such third party of any claims or other matters purported to be released
pursuant hereto.
(c) Effective Date. The provisions of this paragraph 6 shall not become
--------------
effective until the date the entire sum referenced in paragraph 5 shall be
paid by the Company to GMR.
7. Miscellaneous. (a) Governing Law. THIS AGREEMENT AND (UNLESS
-------------
OTHERWISE EXPRESSLY PROVIDED) ALL AMENDMENTS AND SUPPLEMENTS TO, AND ALL
CONSENTS AND WAIVERS PURSUANT TO, THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
3
<PAGE>
(b) Severability. If any provision of this Agreement shall be held to be
------------
invalid, illegal, or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
(c) Entire Agreement. This instrument contains the entire agreement of the
----------------
parties relating to the rights granted and obligations assumed in this Agreement
and supercedes all prior agreements and understandings, including the 1997
Agreement, relating to the subject matter hereof, which prior agreements and
understandings shall be of no further force and effect; provided that this
Agreement shall not nullify any agreement pursuant to which GMP or GMR
transferred or assigned any tangible or intangible property or contract rights
or consented to the employment by the Company of any personnel necessary to the
conduct of the Company's business.
(d) Modification. No change or amendment or modification of this Agreement
------------
shall be of any force and effect unless such change or modification is in
writing and has been signed by each of the Parties hereto.
(e) Limitation of Rights of Others: Successors and Assigns. No person other
------------------------------------------------------
than a Party hereto, its successors and assigns, a Released GMP Party or a
Released Company Party, shall have any legal or equitable right, remedy or claim
under or in respect of this Agreement. This Agreement shall be binding on and
inure to the benefit of the Parties hereto and their respective successors and
assigns.
(f) Termination. The provisions of paragraphs 2 and 3 shall terminate and be
-----------
of no force and effect if the Company is no longer engaged in any meaningful
activities that are intended to produce, directly or indirectly, business
revenues, or grow and develop the Company's assets, and no successor or assignee
of the Company is engaged in such activities, nor is the Company or any
successor seeking to assign or transfer any substantial portion of its assets to
any successor or assignee who can be expected to conduct such activities.
(g) Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned have set their hands this ____ day of
December, 1998.
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
By: /s/ M. David White
----------------------------------------------------
M. David White, President
GREEN MOUNTAIN POWER CORPORATION
By: /s/ Christopher L. Dutton
----------------------------------------------------
Christopher L. Dutton, President
GREEN MOUNTAIN RESOURCES, INC.
By: /s/ Christopher L. Dutton
----------------------------------------------------
Christopher L. Dutton, President
GREEN FUNDING I, L.L.C.
By: /s/ Evan Wyly
----------------------------------------------------
Evan Wyly, Manager
5
<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, together with the Combination
----------------
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:
----------------------------------
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
-2-
<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
----------------------------------
-3-
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
----------------------------------
Amount of Unpaid
Amount of Principal Principal
Date Advance Payment Balance
- ---- --------- --------- ---------
-4-
<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
April 26, 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> 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> 150,000
<OTHER-SE> (698,479)
<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-PRIMARY> (7.27)<F1>
<EPS-DILUTED> (7.27)<F2>
<FN>
<F1>EPS - PRIMARY IN 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> 6,000
<OTHER-SE> 924,596
<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-PRIMARY> (4.72)
<EPS-DILUTED> (4.72)
</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> 29,733,132
<CURRENT-LIABILITIES> 12,312,650
<BONDS> 0
0
0
<COMMON> 212,888
<OTHER-SE> 17,207,594
<TOTAL-LIABILITY-AND-EQUITY> 29,733,132
<SALES> 4,149,941
<TOTAL-REVENUES> 4,149,941
<CGS> 3,096,161
<TOTAL-COSTS> 3,096,161
<OTHER-EXPENSES> 21,079,960
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (214,690)
<INCOME-PRETAX> (19,811,490)
<INCOME-TAX> 0
<INCOME-CONTINUING> (19,811,490)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,811,490)
<EPS-PRIMARY> (1.06)
<EPS-DILUTED> (1.02)
</TABLE>
