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
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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
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
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,
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.
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, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, 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.
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.
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:
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PARTICIPANT:
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Signature
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Print Name
Social Security Number
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Address for Notice:
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EXHIBIT A
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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.
