EXECUTION COPY
AMENDED AND RESTATED
MASTER AGREEMENT
by and among
GRIDAMERICA LLC,
GRIDAMERICA HOLDINGS INC.
GRIDAMERICA COMPANIES
and
NATIONAL GRID USA
February 14, 2003
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 Definitions .....................................................2
Section 1.2 Rules of Construction...........................................13
ARTICLE II
CREATION OF GRIDAMERICA ITC, MANAGING MEMBER; TRANSMISSION SERVICE
DATE
Section 2.1 Creation of Grid America ITC....................................14
Section 2.2 The Intial Member; Term and Removal.............................17
ARTICLE III
PURCHASE OF UNITS BY NGUSA AFFILIATES
Section 3.1 Initial Purchase of Units and Purchase of Units to Fund
Capital Expenditures and Working Capital Needs................20
Section 3.2 Purchase of Units by Affiliated Investors Upon Contributions
of GridAmerica Transmission Facilities........................21
Section 3.3 Additional Limitations on Commitment............................22
Section 3.4 Failure to Achieve Transmission Service Date....................22
ARTICLE IV
EXCLUSIVITY
Section 4.1 Exclusivity Period..............................................23
ARTICLE V
PUT OF TRANSMISSION FACILITIES
Section 5.1 Put Right in Favor of GridAmerica Companies.....................24
Section 5.2 Put Rights of NGUSA Affiliates..................................26
Section 5.3 Put Closing.....................................................27
Section 5.4 Put Units Unregistered..........................................27
Section 5.5 Put Rights Transferable.........................................27
Section 5.6 Publicly Traded Partnership.....................................28
Section 5.7 Certain Resignation and Withdrawal Rights.......................28
ARTICLE VI
REGISTRATION RIGHTS
Section 6.1 Demand Registration Rights......................................29
Section 6.2 Incidental Registration.........................................31
Section 6.3 Cutback; Withdrawal Rights......................................32
Section 6.4 Blockage Periods................................................33
Section 6.5 Restrictions on Public Sale.....................................33
Section 6.6 Registration Procedures.........................................33
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Section 6.7 Registration Expenses...........................................38
Section 6.8 Indemnification.................................................38
Section 6.9 Preparation; Reasonable Investigation...........................41
Section 6.10 Rule 144 and Rule 144A..........................................42
Section 6.11 Other Registration Rights Agreements............................42
Section 6.12 Specific Performance for Registration Rights....................42
Section 6.13 Exchange of Units for Shares....................................42
ARTICLE VII
FAIR MARKET VALUE
Section 7.1 Fair Market Value...............................................43
Section 7.2 General Principles of Application...............................44
Section 7.3 General Principles of Application...............................45
ARTICLE VIII
ADMISSION REQUIREMENTS
Section 8.1 Admission Requirements..........................................45
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
Section 9.1 Representations and Warranties Concerning the Company...........45
Section 9.2 Representations and Warranties Concerning the Initial Member....47
Section 9.3 Representations and Warranties of GridAmerica Companies.........48
Section 9.4 Representations and Warranties of NGUSA.........................49
ARTICLE X
COVENANTS
Section 10.1 NGUSA Covenants.................................................50
Section 10.2 GridAmerica Company Covenants...................................52
Section 10.3 Rights of Transmission Owners Under the Operation Agreement.....52
Section 10.4 Party Covenants.................................................52
ARTICLE XI
TERMINATION, CERTAIN WITHDRAWAL RIGHTS
Section 11.1 Termination of Agreement; Effect of Termination.................53
ARTICLE XII
DISPUTE RESOLUTION
Section 12.1 Negotiations....................................................53
Section 12.2 Arbitration.....................................................53
Section 12.3 Arbitration of Certain Claims Regarding Removal of Managing
Member........................................................57
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ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices.........................................................59
Section 13.2 Entire Agreement; Amendments....................................59
Section 13.3 Effect of Waiver................................................59
Section 13.4 Not for the Benefit of Third Parties; No Partnership............59
Section 13.5 No Assignment; Binding Effect...................................60
Section 13.6 Severability....................................................60
Section 13.7 Governing Law; Waiver of Jury Trial.............................60
Section 13.8 Counterparts....................................................60
Section 13.9 Confidentiality.................................................62
Section 13.10 Attorneys' Fees.................................................62
Section 13.11 Time is of Essence..............................................62
Section 13.12 Further Assistances.............................................62
Section 13.13 Late Payments...................................................62
Section 13.14 Remedies........................................................62
SCHEDULES
A Certain Excluded Employees
B Addresses for Notices
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AMENDED AND RESTATED MASTER AGREEMENT
THIS AMENDED AND RESTATED MASTER AGREEMENT is made and entered into as of
February 14, 2002, by and among GridAmerica LLC, a Delaware limited liability
company (the "Company"), GridAmerica Holdings Inc., a Delaware corporation (the
"Initial Member"), the Persons signing this Agreement as the GridAmerica
Companies (the "Original GridAmerica Companies") and any other Person who may
become a party hereto as a GridAmerica Company pursuant to Section 8.1 hereof
(collectively, with the Original GridAmerica Companies, the "GridAmerica
Companies") and National Grid USA ("NGUSA").
RECITALS
The United States Federal Energy Regulatory Commission (together with any
successor agency, the "Commission") in Order No. 2000 called for the formation
of regional transmission organizations to promote the creation of large
electricity markets and to provide reliable, cost-efficient services to
customers;
The Midwest Transmission System Operator, Inc. (the "Midwest ISO") is a
Commission approved regional transmission organization.
On April 25, 2002, the Commission issued an order in Docket No. EL02-65 (99
FERC P. 61,105 (2002)) encouraging the formation of an independent transmission
company ("ITC") within the Midwest ISO.
The Midwest ISO has an open architecture that accommodates various forms of
ITC in its operation.
The GridAmerica Companies wish to comply with Order No. 2000 through the
formation of an ITC within the Midwest ISO.
NGUSA is involved in the ownership and operation of transmission and
distribution properties and seeks to further its overall business strategy by
acquiring, owning and operating transmission and distribution properties, and
divesting or otherwise disposing of electric generation businesses and assets or
obligations relating thereto.
On October 31, 2002, (i) the Original GridAmerica Companies and NGUSA
entered into a Master Agreement dated as of October 31, 2002 (the "Original
Master Agreement"), (ii) the predecessor to the Initial Member, GridAmerica
Holdings LLC, entered into the Limited Liability Company Agreement of the
Company dated as of October 31, 2002 (the "Original LLC Agreement"), (iii) the
Company and the Original GridAmerica Companies, or their applicable affiliates,
entered into the Operation Agreement dated as of October 31, 2002 (the "Original
Operation Agreement") and (iv) the Company and the Midwest ISO entered into the
Appendix I ITC Agreement dated as of October 31, 2002 (the "Original MISO ITC
Agreement") for a transaction that involves: (x) the formation of the Company as
a for-profit ITC under the Midwest ISO and thereby to achieve compliance with
Order No. 2000 and (y) NGUSA, through one or more of its affiliates, making an
investment in and, through the Initial Member, serving as managing member of,
the Company (collectively, the "Original Transaction");
On December 19, 2002, the Commission issued an order in Docket Nos.
ER02-2233-001 and EC03-14-000 (101 FERC P. 61,320 (2002)) (the "FERC Approving
Order") conditionally accepting for filing, suspending and making effective
subject to future refund, future filings and further orders the Original Master
Agreement, the Original LLC Agreement, the Original Operation Agreement and the
Original MISO ITC Agreement.
The GridAmerica Companies, NGUSA, the Initial Member and the Company now
desire to enter into this Agreement in order to set out certain terms of the
transaction as modified in compliance with the FERC Approving Order (the
Original Transaction as so modified is herein referred to as the "Transaction").
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties, and agreements contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree to amend and restate the Original Master
Agreement in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The following terms shall have the respective
meanings set forth below when used in this Agreement (and grammatical variations
of such terms shall have correlative meanings), unless otherwise expressly
specified herein to the contrary:
"AAA" shall have the meaning given in Section 12.2(a).
"Additional Arbitration Request" shall have the meaning given in Section
12.2(i).
"Additional Claim" shall have the meaning given in Section 12.2(i).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly Controlling, Controlled by or under common Control with
such Person. As used in this definition, "Control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise); provided,
however, that, in any event, any Person that owns directly or indirectly
securities having at least a majority of the voting power for the election of
directors or other members of the governing body of a corporation or at least a
majority of the partnership or other ownership interests (that carry voting
power) of any other Person will be deemed to Control such corporation or other
Person.
"Affiliated Investor" shall mean (i) NGUSA or any NGUSA Affiliate and (ii)
any Person in which NGUSA or any NGUSA Affiliate directly or indirectly owns at
least a majority of the total equity value of such Person.
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"Agreed Accounting Firm" shall mean PricewaterhouseCoopers LLP or another
accounting firm mutually acceptable to NGUSA and the Company that is nationally
recognized in the United States.
"Agreement" shall mean this Amended and Restated Master Agreement dated as
of February 14, 2003, as it may be amended, modified or otherwise supplemented
and in effect from time to time.
"Approval Order" shall mean one or more Final Orders that, collectively,
approve the Transaction Agreements as to which the approval of the Commission is
required under applicable Law, without modification or condition, other than any
such modifications and conditions as would not, in the aggregate, cause a Party
to fail to realize any material benefit which it reasonably anticipates from
participation in the transactions contemplated by the Transaction Agreements.
"Approved Underwriter" shall have the meaning given in Section 6.1 (h)
"Approved Uses" shall have the meaning given in Section 13.9(a)(2).
"Arbitration" shall have the meaning given in Section 12.2.
"Arbitration Notice" shall have the meaning given in Section 12.2(b).
"Arbitration Rules" shall have the meaning given in Section 12.2(a).
"Business Day" shall mean any day other than Saturday, Sunday or other day
on which banks are authorized or required to be closed in New York, New York.
"Capital Account" shall have the meaning given in the LLC Agreement.
"Capital Expenditures" shall mean any expenditures for fixed or capital
assets that would be classified, in accordance with GAAP, as a capital
expenditure.
"Cash Option" shall have the meaning given in Section 3.2(a)(3).
"Cause" shall have the meaning given in the LLC Agreement.
"Claimant Party" shall have the meaning given in Section 12.2(b).
"Claims" shall have the meaning given in Section 12.2(a).
"Class A Stock" and "Class B Stock" shall have the meanings given in
Section 6.13(a).
"Class A Units" and "Class B Units" shall have the meanings given in the
LLC Agreement.
"Clear Notification" shall have the meaning given in Section 6.4.
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"Commission" shall have the meaning given in the recitals hereof.
"Company" shall have the meaning given in the preamble hereof.
"Company's Notification of Readiness" shall have the meaning given in
Section 2.1(d).
"Confidential Information" means all confidential or trade secret
information of a Disclosing Party provided to a Recipient pursuant to or in
connection with any Transaction Agreement, including business information;
strategies, methods, technical information, pricing techniques and strategies;
customer information; investor information; price curves; positions, plans and
strategies for expansion or acquisitions, budgets, customer lists, studies of
information and data, electronic databases, computer programs, bids or
proposals, organizational structure, compensation of personnel and new product
information; provided, however, "Confidential Information" shall not include
information that (i) was already known by (as established by dated
documentation) a Recipient at the time of the receipt of such information by
such Recipient from the Disclosing Party, (ii) is in, or subsequently enters,
the public domain other than as a result of a disclosure by the Recipient in
breach of an obligation of confidence, (iii) is received by the Recipient from a
third party if such third party was not known to be subject to any
confidentiality obligation, (iv) is independently developed by a Person without
access to the Confidential Information provided by the Disclosing Party, (v) was
or is furnished by a Disclosing Party to another Person without written
confidentiality restrictions, or (vi) is approved for release by written
authorization of the Disclosing Party.
"Consent" shall mean any authorization, consent, opinion, order, approval,
license, franchise, ruling, permit, tariff, rate, certification, exemption,
filing or registration from, by, or with any Governmental Authority, any Person
or any governing body of any Person.
"Contributed Transmission Facilities" shall have the meaning given in
Section 5.1(a).
"Damages" shall have the meaning given in Section 6.8(a).
"Demand Registration" shall mean an IPO Demand Registration or a Secondary
Demand Registration.
"Disclosing Party" shall have the meaning given in Section 13.9.
"Dispute Parties" shall have the meaning given in Section 12.2(b).
"Distribution Rights" shall have the meaning given in Section 2.2(e).
"Effective Date" shall mean October 31, 2002.
"Encumbrance" shall mean (i) with respect to any Units or Shares, any
security interest, lien, pledge, mortgage or other encumbrance, whether such
encumbrance arises voluntarily, involuntarily or by operation of Law, other than
restrictions on the sale or transfer thereof arising out of any Securities Laws
or the Transaction Agreements and (ii) with respect to
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any other asset, any security interest, lien, pledge or mortgage or any other
material encumbrance, whether such encumbrance arises voluntarily, involuntarily
or by operation of Law.
"Entity" shall mean a corporation, limited liability company, partnership,
limited partnership, trust, firm, association or other organization which has a
legal existence under the Laws of its jurisdiction of formation which is
separate and apart from its owner or owners and any Governmental Authority.
"Equity Contribution Agreement" shall have the meaning given in Section
10.1(h).
"Equity Interests" shall mean, with respect to any Person, all capital
stock, membership interests, general or limited partnership interests or similar
interests in the equity of such Person.
"Excess Cash Amount" shall mean the sum of (i) the amount, if any, by which
the aggregate amount of cash paid or delivered to the First Divestor in
connection with the First Divestor Divestiture exceeds 20% of the total
consideration paid or delivered to the First Divestor in connection with the
First Divestor Divestiture plus (ii) the amount of aggregate purchases of Units
by an Affiliated Investor pursuant to Section 3.2, prior to the date which is
eighteen months after the Transmission Service Date, in connection with the
exercise of a Put Right by a GridAmerica Company that is not an Original
GridAmerica Company plus (iii) the amount, if any, by which the aggregate
purchases of Units by an Affiliated Investor pursuant to Section 3.2, on and
after the date which is eighteen months after the Transmission Service Date, in
connection with the exercise of a Put Right by a GridAmerica Company that is not
an Original GridAmerica Company exceeds $150,000,000.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder.
"Excluded Employees" shall mean (i) each of the individuals identified on
Schedule A hereto and any other individual (A) who was an employee of NGUSA or
any NGUSA Affiliate (other than the Initial Member, the Company or any of their
respective subsidiaries) for at least one (1) year prior to rendering services
for or on behalf of the Managing Member or the Company, (B) who, at no time
during the five (5) years prior to becoming employed by or providing services to
NGUSA or any NGUSA Affiliate, was an employee of any Original GridAmerica
Company or any Affiliate thereof and (C) who is transferred, seconded or
otherwise made available to the Managing Member or the Company to serve in a
senior executive or a senior or special technical position; provided, however,
that (x) NGUSA shall provide the Company and each GridAmerica Company with
notice of such Excluded Employee's status as such within 30 days of such
individual's commencement of service with the Managing Member or the Company and
(y) at no time shall there be more than ten (10) Persons designated as Excluded
Employees pursuant to this clause (i) and (ii) a reasonably limited number of
employees of NGUSA or any NGUSA Affiliate (other than the Initial Member, the
Company or any of their respective subsidiaries) that are seconded to the
Company or the Managing Member for less than ninety (90) days.
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"Exclusive Period" shall mean the period beginning on the Effective Date
and ending on the earliest of (i) the date of closing of an IPO, (ii) the date
on which the Initial Member ceases to be the Managing Member of the Company or
(iii) the fifth anniversary of the Transmission Service Date.
"Exclusivity Transaction" shall mean any transaction (including an asset
sale, stock sale, merger, consolidation, or other combination) by or in respect
of any GridAmerica Company pursuant to which ownership or control of all or any
material portion of such GridAmerica Company's Transmission Facilities which are
subject to the Functional Control of the Company pursuant to the Operation
Agreement are transferred to another Person, but excluding any transaction,
proposed transaction or negotiation (i) involving the transfer of such assets to
an Affiliate of such GridAmerica Company, (ii) involving the ultimate parent
entity of such GridAmerica Company and substantially all of its subsidiaries,
provided that the overall business of such ultimate parent entity and
subsidiaries is not the ownership and/or operation of GridAmerica Transmission
Facilities, (iii) involving a lower level operating company with respect to
which GridAmerica Transmission Facilities do not constitute all or substantially
all of its assets, (iv) in which the assets to be transferred are not all or
substantially all GridAmerica Transmission Facilities, (v) involving a transfer
of such Transmission Facilities as collateral for a loan or in a similar
financing transaction and any transfer thereof in lieu of foreclosure or (vi)
which is in progress as of the Effective Date; provided, however, that, in the
case of a transaction, proposed transaction or negotiation described in clause
(vi), (x) the GridAmerica Company has disclosed the transaction, proposed
transaction or negotiation to NGUSA in writing on or before the Effective Date
(without being required to disclose the identity of any other Person involved in
such transaction, proposed transaction or negotiation) and (y) a definitive
agreement in respect thereof is executed within six (6) months after the
Effective Date.
"Fair Market Value" shall have the meaning given in Section 7.1.
"Favorable Opinion of Counsel" shall mean one or more opinions of counsel
recognized as being competent to opine with respect to the matter as to which
the opinion is being delivered in form and substance reasonably acceptable to
the intended addressee(s) thereof covering such matters as may be reasonably
requested by the intended addressee(s) thereof and as are customary in the
context of similar transactions or situations, including, if applicable,
opinions confirming the satisfaction of applicable Securities Laws; provided,
however, such opinion may be subject to customary and reasonable qualifications
and assumptions.
"FERC Approving Order" shall have the meaning given in the recitals hereof.
"Final Order" shall mean an order issued by the Commission approving such of the
Transaction Agreements as to which approval of the Commission is required under
applicable Law.
"First Divestor" shall mean, collectively, the GridAmerica Company and any
of its Affiliates that transfers GridCo East Transmission Facilities in the
First Divestor Divestiture.
"First Divestor Divestiture" shall mean either (i) the acquisition by NGUSA
or any NGUSA Affiliate of any GridCo East Transmission Facilities from the First
Divestor under
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circumstances where the Company contemporaneously or subsequently issues Units
in exchange for some or all of such GridCo East Transmission Facilities or (ii)
the issuance by the Company of Units to any Affiliated Investor in exchange for
cash, which cash is used by the Company in connection with the acquisition of
any GridCo East Transmission Facilities from the First Divestor, in each case,
prior to the third anniversary of the Transmission Service Date but before any
other GridCo East Company exercises its Put Right.
"Form S-3" shall mean such form under the Securities Act or any successor
registration form under the Securities Act. subsequently adopted by the SEC
which permits inclusion or incorporation by reference of substantial information
by reference to other documents filed by GridAmerica HoldCo with the SEC.
"Functional Control" shall have the meaning given in the Operation
Agreement.
"GAAP" shall mean United States generally accepted accounting principles,
as in effect from time to time.
"Governmental Authority" or "Governmental" shall mean a federal, state,
local or foreign governmental authority; a state, province, commonwealth,
territory or district thereof; a county or parish; a city, town, township,
village or other municipality; a district, xxxx or other subdivision of any of
the foregoing; any executive, legislative or other governing body of any of the
foregoing; any agency, authority, board, department, system, service, office,
commission, committee, council or other administrative body of any of the
foregoing; any court or other judicial body and any officer, official or other
representative of any of the foregoing.
"GridAmerica HoldCo" shall have the meaning given in Section 6.13.
"GridAmerica ITC" shall mean the ITC created by the GridAmerica Companies
and NGUSA pursuant to this Agreement, the LLC Agreement and the Operation
Agreement.
"GridAmerica Transmission Facilities" shall mean those Transmission
Facilities owned by a GridAmerica Company, over which the Company exercises
Functional Control pursuant to the Operation Agreement.
"Gross Negligence" shall have the meaning given in the LLC Agreement.
"Incidental Registration" shall have the meaning given in Section 6.2.
"Indemnity Cap" shall have the meaning given in the Operation Agreement.
"Independent Transmission Company" or "ITC" shall have the meaning given in
the preamble hereof.
"Initial Member" shall have the meaning given in the preamble hereof.
"Initial Public Offering" or "IPO" shall mean the first underwritten
primary Public Offering of Shares under a registration statement filed by
GridAmerica HoldCo under the Securities Act.
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"Interested Parties" shall mean (i) in the case of the exercise of a Put
Right by NGUSA or any Affiliated Investor, NGUSA (acting on behalf of itself or
any affected Affiliated Investors) and the Company and (ii) in the case of the
exercise of a Put Right by any other Person, such Person and the Managing
Member; provided, however, that any determination by the Company in its capacity
as an "Interested Party" shall be made by the Members (other than NGUSA and any
Affiliated Investor), acting collectively on the basis of their Percentage
Interests.
"Interested Party Valuation Firm" shall have the meaning given in Section
7.1(a).
"ITC Agreements" means (i) the LLC Agreement, (ii) the Certificate of
Formation of the Company under the Delaware Limited Liability Company Act, (iii)
the Operation Agreement and (iv) this Agreement.
"IPO Demand Registration" shall have the meaning given in Section 6.1(a).
"IPO Notice" shall have the meaning given in Section 6.1(b).
"Law" shall mean any applicable constitutional provision, statute, act,
code, law, regulation, rule, ordinance, order, decree, ruling, proclamation,
resolution, judgment, decision, declaration or interpretive or advisory opinion
of a Governmental Authority.
"LLC Agreement" shall mean the Amended and Restated Limited Liability
Company Agreement of the Company dated as of February 14, 2003, as it may be
amended, modified or otherwise supplemented and in effect from time to time.
"Make-Ready Arrangements" shall mean the arrangements, contractual or
otherwise, made by or entered into by or between the Company and the Midwest ISO
pursuant to which each of the Company and the Midwest ISO acquires such
services, intellectual property and other assets as are required for the Company
to serve as an Independent Transmission Company within the Midwest ISO and for
each of the Company and the Midwest ISO to perform its respective obligations
under the Delineation of Functions (as defined in the MISO ITC Agreement).
"Managing Member" shall mean the managing member of the Company as
designated in accordance with Section 6.1 of the LLC Agreement.
"Market Participant" shall mean a Person that is a "Market Participant"
within the meaning of Order 2000, or any subsequent rule, regulation or order of
the Commission establishing the requirements of independence for a Person
managing an ITC exercising the functions and responsibilities that GridAmerica
ITC will exercise under the MISO ITC Agreement.
"Maximum Section 3.1(a) Commitment" shall have the meaning given in Section
3.1(a).
"Member" shall mean any Person who is a member of the Company, including
the Managing Member.
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"Midwest ISO" shall have the meaning given in the recitals hereof.
"Midwest ISO's Notification of Readiness" shall have the meaning given in
Section 2.1(e).
"MISO ITC Agreement" shall mean the Amended and Restated Appendix I ITC
Agreement by and between the Midwest ISO and the Company dated as of February
14, 2003, as the same may be amended, modified or otherwise supplemented and in
effect from time to time.
"Net Book Value" shall have the meaning given in Section 2.2(f)(2).
"Net Plant" or "net plant" shall mean, as of any date of determination
thereof and with respect to any Transmission Facilities, the net book value of
such Transmission Facilities as computed using the information shown in the then
most recent FERC Form 1 filed with the Commission with respect to such
Transmission Facilities. For the avoidance of doubt, for any and all purposes of
this Agreement and the other Transaction Agreements, (i) "Net Plant" shall be
calculated, and if required adjusted, annually on each anniversary of the
Effective Date and (ii) the calculation made and Form 1 information used shall
be the difference between (A) the information on page 207, Electric Plant in
Service (Account 101, 102, 103 and 106), line 53, Total Transmission Plant,
Column G, less (B) the information on page 219, Accumulated Provision for
Depreciation of Electric Utility Plant (Account 108), Section B. Balances at End
of Year According to Functional Classification, line 23, Transmission, Column C;
provided, however, that if FERC Form 1 is modified or changed such that the
foregoing designations no longer apply, the information used shall be that
information in the modified or changed form that provides, as nearly as
practicable, the same substantive result as the foregoing.
"Neutral Valuation Firm" shall have the meaning given in Section 7.1(c).
"NGUSA" shall have the meaning given in the preamble hereof.
"NGUSA Affiliate" shall mean an Affiliate of NGUSA.
"NGUSA Management Term" shall have the meaning given in Section 2.2(b).
"NGUSA Termination Notice" shall have the meaning given in Section 2.2(b).
"Non-Divesting GridAmerica Companies" shall have the meaning given in
Section 2.1(d).
"Non-Market Participant" shall mean a Person that is not a Market
Participant.
"Non-NGUSA Termination Notice" shall have the meaning given in Section
2.2(b).
"Notice of Removal Dispute" shall have the meaning given in Section
12.3(b).
"Operation Agreement" shall mean the Amended and Restated Operation
Agreement dated as of February 14, 2003, among the Company and each GridAmerica
Company
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or its applicable Affiliate, as the same may be amended, modified or otherwise
supplemented and in effect from time to time.
"Operational Segment" shall mean Transmission Facilities which are (i)
capable of being operated in the ordinary course of business as a coherent
transmission system and (ii) capable of having revenues that can be separately
accounted for under the then current revenue distribution methodology and
procedures of the Company after such facilities are acquired by the Company.
"Order" shall mean any writ, judgment, decree, injunction or similar order
of any Governmental Authority (in each such case, whether preliminary or final).
"Order 2000" shall mean the Commission's order identified as Regional
Transmission Organizations, Docket No. RM99-2-000, 89 FERC P. 61, 285 (1999),
all subsequent orders of the Commission in such Docket, and all other orders of
the Commission pertaining to the rights and obligations of a regional
transmission organization.
"Original GridAmerica Companies" shall have the meaning given in the
preamble hereof.
"Panel" shall have the meaning given in Section 12.2(d).
"Party" shall mean any party from time to time to this Agreement.
"Percentage Interest" shall mean, as at any time of determination and with
respect to any Member, the product of (i) the number of Units held by such
Member at such time divided by the total number of outstanding Units multiplied
by (ii) one hundred percent (100%).
"Person" shall mean any natural person or Entity.
"Pro-forma Number of Put Units" shall have the meaning given in Section
5.1(c).
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by any Registration Statement, and by all other amendments and
supplements to such prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Public Offering" shall mean an underwritten public offering registered
pursuant to the Securities Act of Shares of GridAmerica HoldCo as contemplated
by Article VI.
"Put Agreement" shall have the meaning given in Section 5.1(b).
"Put Closing" shall have the meaning given in Section 5.3.
"Put Notice" shall have the meaning given in Section 5.1(a).
"Put Right" shall have the meaning given in Section 5.1.
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"Putting GridAmerica Company" shall have the meaning given in Section
5.1(a).
"Qualifying Offer" shall have the meaning given in Section 2.2(f)(3).
"Recipient" shall have the meaning given in Section 13.9.
"Register," "registered" and "registration" shall mean and refers to a
registration effected by preparing and filing a Registration Statement and
taking all other actions that are necessary or appropriate in connection
therewith, and the declaration or ordering of effectiveness of such Registration
Statement by the SEC.
"Registrable Securities" shall mean, with respect to any Registration, all
Shares held by Selling Shareholders participating in such Registration, provided
that such term shall not include any such Shares after they are sold to the
public pursuant to a Registration Statement under the Securities Act or after
they are sold in a private transaction in which the registration rights granted
pursuant to Article VI were not assigned to the purchasers thereof or Shares
which are sold without restriction under Rule 144(k) of the Securities Act or
any successor rule thereto.
"Registration Expenses" shall have the meaning given in Section 6.7.
"Registration Statement" shall mean any registration statement of
GridAmerica HoldCo that complies with Section 5 of the Securities Act that
covers Registrable Securities or other Shares pursuant to the provisions of this
Agreement, including the Prospectus, all amendments and supplements to such
registration statement, including all post-effective amendments, all exhibits
and all material incorporated by reference in such registration statement.
"Related Proceeding" shall have the meaning given in Section 12.2(c).
"Removal Arbitration" shall have the meaning given in Section 12.3.
"Removal Claim" shall have the meaning given in Section 12.3.
"Removal Claimant" shall have the meaning given in Section 12.3(b).
"Removal Dispute Parties" shall have the meaning given in Section 12.3(b).
"Removal Notice" shall have the meaning given in Section 12.3(b).
"Removal Respondent Party" shall have the meaning given in Section 12.3(b).
"Representatives" shall have the meaning given in Section 13.9(a).
"Request Period" shall have the meaning given in Section 6.4.
"Required Consent" shall mean, collectively, each Consent that must be
obtained, satisfied or made to permit the consummation of the transactions
contemplated by this Agreement and the other Transaction Agreements and the
performance by each of the parties to the Transaction Agreements of their
respective obligations hereunder and thereunder, but
11
excluding any Consent which may be required to perform an obligation which, by
the terms of the Transaction Agreements, will not arise and is not required to
be performed except upon the happening of one or more contingencies specified in
the Transaction Agreements.
"Respondent Party" shall have the meaning given in Section 12.2(b).
"SEC" shall mean the United States Securities and Exchange Commission or
any successor agency.
"Secondary Demand Registration" shall have the meaning given in Section
6.1(c)(1).
"Section 3.1(a) Units" shall have the meaning given in Section 2.2(d).
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated thereunder.
"Securities Laws" shall mean the Securities Act, the Exchange Act, and any
other applicable securities Laws.
"Selling Shareholder" shall mean any holder of Shares who has exercised its
right to sell all or a portion of those Shares pursuant to the registration
rights granted pursuant to Article VI.
"SEOs" shall have the meaning given in Section 12.1.
"Shares" shall mean shares of Class A Stock or Class B Stock. "Super
Majority of Non-Managing Members" shall have the meaning given in the LLC
Agreement.
"Super Majority of Transmission Owners" shall mean (i) prior to the date on
which the Company first issues Units in exchange for Transmission Facilities,
two-thirds or more of the GridAmerica Companies and (ii) thereafter, one or more
"owners of transmission facilities" who, among them, own (through actual or
deemed ownership as provided below) Transmission Facilities that are subject to
the Functional Control of the Company pursuant to the Operation Agreement or are
owned by the Company with a Net Plant greater than 66.67% of the Net Plant of
all Transmission Facilities subject to such Functional Control of the Company
pursuant to the Operation Agreement or owned by the Company. For purposes of the
above vote, the "owner of transmission facilities" means (i) in the case of
Transmission Facilities subject to the Company's Functional Control pursuant to
the Operation Agreement, the Person that actually owns such Transmission
Facilities and (ii) in the case of Transmission Facilities actually owned by the
Company, the Members in accordance with their respective Percentage Interests.
In the event that an Initial Public Offering shall have occurred, the
independent board members of GridAmerica HoldCo shall vote the deemed ownership
interest of GridAmerica HoldCo.
"System-Wide Assets" shall mean the assets of the Company that (i) are
intended, or have the ability, to benefit primarily all or substantially all of
the GridAmerica Transmission
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Facilities owned by, or subject to the Functional Control of, the Company or
(ii) further the coordination, management and operation of all or substantially
all of the GridAmerica Transmission Facilities owned by, or subject to the
Functional Control, of the Company.
"System-Wide Capital Expenditures" shall mean Capital Expenditures by the
Company in respect of System-Wide Assets.
"Third Party Recipient" shall have the meaning given in Section 13.9(c).
"Transaction" shall have the meaning given in the Recitals hereof.
"Transaction Agreements" means the ITC Agreements and the MISO ITC
Agreement.
"Transmission Facilities" shall mean facilities used for the transmission
of electric power and energy of the kind subject to the jurisdiction of the
Commission.
"Transmission Service Date" shall have the meaning given in Section 2.1(e).
"Underwritten registration" or "underwritten offering" shall mean a
registration in which Shares of GridAmerica HoldCo are sold to an underwriter or
through an underwriter as agent for reoffering to the public.
"Unit Exchange" shall have the meaning given in Section 6.13.
"Unit Price" shall have the meaning given in Section 5.1(c).
"Unit" shall have the meaning given in the LLC Agreement.
"Willful Misconduct" shall have the meaning given in the LLC Agreement.
Section 1.2 Rules of Construction. The following provisions shall be
applied wherever appropriate herein:
(i) "herein," "hereby," "hereunder," "hereof," "hereto" and other
equivalent words shall refer to this Agreement as an entirety and not
solely to the particular portion of this Agreement in which any such word
is used;
(ii) "including" means "including without limitation" and is a term of
illustration and not of limitation;
(iii)all definitions set forth herein shall be deemed applicable
whether the words defined are used herein in the singular or the plural;
(iv) unless otherwise expressly provided, any term defined in this
Article I by reference to any other document shall be deemed to be amended
herein to the extent that such term is subsequently amended in such
document;
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(v) wherever used herein, any pronoun or pronouns shall be deemed to
include both the singular and plural and to cover all genders;
(vi) neither this Agreement nor any other agreement, document or
instrument referred to herein or executed and delivered in connection
herewith shall be construed against any Person as the principal
draftsperson hereof or thereof;
(vii)the section headings appearing in this Agreement are inserted
only as a matter of convenience and in no way define, limit, construe or
describe the scope or extent of such section, or in any way affect this
Agreement;
(viii) any references herein to a particular Section, Article, Exhibit
or Schedule means a Section or Article of, or an Exhibit or Schedule to,
this Agreement unless another agreement is specified; and
(ix) the Exhibits and Schedules attached hereto are incorporated
herein by reference and shall be considered part of this Agreement.
ARTICLE II
CREATION OF GRIDAMERICA ITC, MANAGING MEMBER; TRANSMISSION
SERVICE DATE
Section 2.1 Creation of Grid America ITC.
(a) Purpose of GridAmerica ITC. The Company shall, on the terms and
subject to the conditions set forth in this Agreement, the other ITC Agreements
and the MISO Agreements, serve as an Independent Transmission Company for the
GridAmerica Transmission Facilities.
(b) Required Consents. From and after the Effective Date and until the
Transmission Service Date, each Party shall: (1) take commercially reasonable
steps necessary and proceed diligently and in good faith to obtain all Required
Consents required to be obtained by it to consummate the transactions
contemplated hereby and by the other Transaction Agreements which are intended
to be consummated on the Transmission Service Date; (2) provide information
which may be requested by Governmental Authorities in connection therewith; and
(3) cooperate with each other Party in obtaining all Required Consents required
of such other Party to consummate the transactions contemplated hereby and by
the other Transaction Documents which are intended to be consummated on the
Transmission Service Date. Each Party shall provide prompt notification to each
other Party when any Required Consent referred to in clause (1) above is
obtained, taken, made or given, as applicable, and shall advise each other Party
of any material, written, non-confidential communications (and, upon request and
unless confidential or precluded by Law, provide copies of any such material
communications which are in writing) with any Governmental Authority regarding
such Required Consents.
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(c) Covenant. From and after the Effective Date and until the Transmission
Service Date, each Party shall exercise commercially reasonable efforts and
proceed diligently and in good faith to satisfy the conditions to the occurrence
of the Transmission Service Date set forth in Section 2.1(d).
(d) Conditions to Transmission Service Date. No later than the fifth
Business Day following the satisfaction or, in the case of clauses (1), (2) and
(3) below, waiver by the Party requiring the Required Consents referred to
therein, of each of the following conditions precedent, the Company shall notify
the Midwest ISO, in writing, of the satisfaction of all applicable legal
requirements, system readiness and systems integration necessary for the Midwest
ISO to assume its responsibilities under the Delineation of Functions (as
defined in the MISO ITC Agreement) as required by Section 4.1.3 of the MISO ITC
Agreement (the "Company's Notification of Readiness"):
(1) The Commission shall have issued one or more Final Orders which
are no longer subject to possible rehearing and which, collectively, are an
Approval Order.
(2) Each Party requiring the same shall have received any Required
Consent under the Public Utility Holding Company Act of 1935 and such
Required Consent shall: (i) be in form and substance which would not, in
the reasonable judgment of such Party, and when considered in light of the
Final Orders and all other Required Consents (A) cause such Party to fail
to realize any material benefit which it reasonably anticipates from the
transactions contemplated by the Transaction Agreements or (B) impose any
conditions or requirements which could reasonably be expected to have a
material and adverse effect on such Party's or any of its Affiliates'
current or planned operations or business activities or its or their
prospects; and (ii) be in full force and effect.
(3) Each Party requiring the same shall have received any Required
Consent under any other applicable federal or state Law and such Required
Consent shall: (i) be in form and substance which would not, in the
reasonable judgment of such Party, and when considered in light of the
Final Orders and all other Required Consents (A) cause such Party to fail
to realize any material benefit which it reasonably anticipates from the
transactions contemplated by the Transaction Agreements or (B) impose any
conditions or requirements which could reasonably be expected to have a
material and adverse effect on such Party's or any of its Affiliates'
current or planned operations or business activities or its or their
prospects; and (ii) be in full force and effect.
(4) The Make-Ready Arrangements shall be in place and shall be in
form and substance reasonably satisfactory to NGUSA and each GridAmerica
Company.
(5) The Midwest ISO and the Company shall have executed and delivered
the MISO ITC Agreement, which shall be reasonably satisfactory in form and
substance to each GridAmerica Company.
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(6) The Company shall have delivered evidence of a commitment from
one or more insurance companies to provide insurance of the types and in
the amounts as shall be agreed between NGUSA and the GridAmerica Companies,
such coverages to be effective on and as of the Transmission Service Date.
(7) Each Party shall have delivered to each other Party a certificate
of a senior officer, such certificate to be in form and substance
satisfactory to each other Party, certifying: (i) that the Final Order of
the Commission is acceptable as an Approval Order, (ii) that such Party has
received all Required Consents required of it and each such Required
Consent is in form and substance satisfactory to such Party, (iii) in the
case of each GridAmerica Company, (x) that each of the Make-Ready
Arrangements and the MISO ITC Agreement is in form and substance
satisfactory to such GridAmerica Company, (y) as to the satisfaction of all
applicable legal requirements, system readiness and systems integration
necessary for the transfer to the Company of Functional Control over the
Transmission Facilities of such GridAmerica Company and for the Midwest ISO
to assume its responsibilities under the Delineation of Functions (as
defined in the MISO ITC Agreement) as required by Section 4.1.3 of the MISO
ITC Agreement and (z) such other matters as the Company may reasonably
request to permit the Company, in reliance upon such certificate, to
deliver the Company's Notification of Readiness to the Midwest ISO and (iv)
in the case of the Company, that the Company and the Midwest ISO have
agreed on procedures for implementing the Delineation of Functions (as
defined in the MISO ITC Agreement).
(e) Occurrence of Transmission Service Date. On the first day of the month
following the receipt by the Midwest ISO of the Company's Notification of
Readiness and the receipt by the Company of written notice from the Midwest ISO
of the satisfaction of all applicable legal requirements, system readiness and
systems integration necessary for the Midwest ISO to assume its responsibilities
under the Delineation of Functions (as defined in the MISO ITC Agreement) as
required by Section 4.1.3 of the MISO ITC Agreement (the "Midwest ISO's
Notification of Readiness"), but no earlier than the fifth day following the
date of the Midwest ISO's Notification of Readiness (such day is herein referred
to as the "Transmission Service Date"), the GridAmerica Companies shall transfer
Functional Control over the GridAmerica Transmission Facilities to the Company
and the Company and the Midwest ISO shall assume their respective
responsibilities under the Delineation of Functions (as defined in the MISO ITC
Agreement) over the GridAmerica Transmission Facilities as contemplated by
Section 4.1.3 of the MISO ITC Agreement; provided, however, that the
Transmission Service Date shall be postponed and shall not occur (i) unless and
until the Midwest ISO shall, in consideration of the Make-Ready Arrangements,
have made (x) a one-time payment equal to the amount of the actual costs
(including appropriately allocated internal costs) incurred by NGUSA (and/or its
Affiliates) and the GridAmerica Companies to establish the Make-Ready
Arrangements and (y) a one-time payment to reimburse the GridAmerica Companies
for their actual costs (including appropriately allocated internal costs)
incurred in the development of Alliance RTO, such payments to be made as
directed by the Company, (ii) unless and until the Midwest ISO shall have
refunded to Ameren Services Company, with interest, the $18,000,000 payment made
by Ameren Services Company to leave the Midwest ISO pursuant to the terms of
settlement approved in Illinois Power Co., 95 FERC P. 61,183, order on reh'g.,
96 FERC P. 61,206 (2001) and (iii) if there shall then be in effect any Order or
Law restraining, enjoining
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or otherwise prohibiting or making illegal the consummation of the transactions
contemplated by the Transaction Agreements. Anything in this Section 2.1(e) to
the contrary notwithstanding, the aggregate amount required to be paid by the
Midwest ISO pursuant to clause (i) above shall not exceed $36,200,000.
Section 2.2. The Initial Member; Term and Removal.
(a) The Initial Member. The Parties acknowledge that the Initial Member
has been appointed Managing Member of the Company, and agree that the Initial
Member shall serve in such capacity pursuant to the terms of this Agreement and
the LLC Agreement.
(b) Term of Service. Subject to Sections 5.7 and 10.1(4), the Initial
Member shall serve as the Managing Member for the period beginning on the
Effective Date and ending on the fifth anniversary of the Transmission Service
Date (the "NGUSA Management Term"). The NGUSA Management Term automatically
shall be extended for successive two-year periods unless, at least six months
before the last day of the then-current NGUSA Management Term, either (i) the
Initial Member gives written notice to the Company and each of the GridAmerica
Companies (an "NGUSA Termination Notice") or (ii) Members holding at least a
majority of the outstanding Class A Units give written notice to the Initial
Member, such other Persons as may be required under the LLC Agreement and each
GridAmerica Company (a "Non-NGUSA Termination Notice"), to the effect that the
NGUSA Management Term shall not be so extended.
(c) Resignation. The Initial Member shall not resign as Managing Member
and NGUSA shall not permit the Initial Member to resign as Managing Member other
than (i) by causing the NGUSA Management Term to expire at the end of the
then-current term thereof through issuance of an NGUSA Termination Notice, (ii)
as may be required by Section 10.1(d), (iii) upon exercise of its resignation
rights pursuant to Section 5.7, (iv) upon thirty (30) days prior written notice,
if as the result of a change in applicable Law, NGUSA or any of its Affiliates
is no longer able to meet the requirements of the Commission for being a
Non-Market Participant or (v) upon sixty (60) days prior written notice, if, as
a result of a proposed transaction involving an acquisition of a company (or any
of its assets) which is not a member of the Midwest ISO or the Southwest Power
Pool on the date of this Agreement by NGUSA or any of its Affiliates in
furtherance of NGUSA's transmission and distribution business strategy described
in Section 9.4(e), NGUSA or the Initial Member is no longer able to meet the
requirements of the Commission for being a Non-Market Participant and the
Commission does not accept such mitigation measures as shall have been proposed
by NGUSA in connection with such transaction as is contemplated by Section
10.1(a), provided, however, in the case of any resignation pursuant to this
clause (v), that NGUSA shall have paid to the GridAmerica Companies a
resignation fee equal to (I) $7,000,000, if such resignation becomes effective
prior to the first anniversary of the Transmission Service Date, (II)
$5,250,000, if such resignation becomes effective on or after the first
anniversary of the Transmission Service Date but prior to the second anniversary
of the Transmission Service Date and (III) $3,500,000 thereafter.
(d) Redemption Rights Upon Expiration of NGUSA Management Term. Upon
expiration of the NGUSA Management Term following the delivery of a Non-NGUSA
Termination Notice with respect to which neither NGUSA or an Affiliated Investor
voted in favor, NGUSA shall have the right, but not the obligation, to require
the Company to redeem
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some or all of the Units which were purchased by Affiliated Investors pursuant
to Section 3.1(a) ("Section 3.1(a) Units") (to the extent still held by an
Affiliated Investor) at a price equal to the Fair Market Value of such Section
3.1(a) Units. Notwithstanding the foregoing, no Affiliated Investor shall have
the right to require the redemption of any 3.1(a) Units which were purchased
pursuant to Section 3.1(a) after the second anniversary of the Transmission
Service Date.
(e) Option In Respect of Indemnity Cap. If, in any calendar year, the
GridAmerica Companies that are and/or were parties to the Operation Agreement
(the "Non-Divesting GridAmerica Companies") have paid aggregate indemnity
payments pursuant to Section 4.2.4(c) of the Operation Agreement equal to or
greater than the Indemnity Cap, and one or more Non-Divesting GridAmerica
Companies who, among them, own Transmission Facilities that are subject to the
Functional Control of the Company pursuant to the Operation Agreement having
aggregate Net Plant of at least 66.67% of the aggregate Net Plant of all of the
Transmission Facilities owned by the Non-Divesting GridAmerica Companies that
are subject to the Functional Control of the Company do not, within twenty (20)
days of a written request from NGUSA, agree to waive in writing the application
of the Indemnity Cap, then NGUSA shall have the right, but not the obligation,
upon twenty (20) days prior written notice to the Non-Divesting GridAmerica
Companies to require the Non-Divesting GridAmerica Companies jointly and
severally to purchase from the holder thereof, the right to receive any
distributions in respect of the Section 3.1(a) Units, but not including any
voting or other rights associated with such Units (the "Distribution Rights"),
for an aggregate purchase price payable in cash equal to that portion of such
holder's Capital Account represented by such Section 3.1(a) Units; provided,
however, that, with respect to any Non-Divesting GridAmerica Company that is a
subsidiary of a registered holding company under the Public Utility Holding
Company Act of 1935, the transfer of Distribution Rights to such Non-Divesting
GridAmerica Company (but not the joint and several obligation to make the
payments as described above) shall be expressly conditioned upon the receipt of
all required consents and approvals of the SEC under that statute. The written
request from NGUSA shall specify the Capital Account of each holder of Section
3.1(a) Units and provide reasonable detail as to the changes in such Capital
Account since the purchase of the Section 3.1(a) Units. If any Non-Divesting
GridAmerica Company fails to purchase its share of the Distribution Rights, the
other Non-Divesting GridAmerica Companies shall be required to purchase such
share and shall be subrogated to rights of the holders of the Section 3.1(a)
Units against such non-performing Non-Divesting GridAmerica Company. The
Distribution Rights purchased by the Non-Divesting GridAmerica Companies shall
be assigned to the Non-Divesting GridAmerica Companies in proportion to their
payments therefor.
(f) Rights of the Company Upon Expiration of NGUSA Management Term.
(1) If the Initial Member ceases to be the Managing Member for
any reason, the Company shall have the right, but not the obligation,
to either (i) acquire 100% of the outstanding Equity Interests of the
Initial Member or 100% of the assets and liabilities of the Initial
Member for a price equal to the Net Book Value of the Initial Member
determined as of the date on which the Initial Member ceases to be the
Managing Member or (ii) may offer (or a designee of the Company may
offer) employment to any employee of the Initial Member, other than
Excluded Employees. The Company may exercise the rights granted by
this Section 2.2 (f) by delivering written
18
notice to NGUSA and the Initial Member within sixty (60) days after
the date on which the Initial Member ceases to be the Managing Member.
(2) If the Company elects to acquire the Equity Interests or
assets and liabilities of the Initial Member, NGUSA shall cause such
Equity Interests or assets and liabilities to be transferred to the
Company free and clear of all Encumbrances (except, in the case of the
assets of the Initial Member, Encumbrances that have been disclosed to
the Company), and NGUSA and the seller of such Equity Interests shall
be required to make customary representations and warranties in
respect of due authorization, title, enforceability, no conflicts with
agreements or applicable Laws, the need for any third party or
Governmental consents, and disclosing material assets, contracts and
liabilities. The "Net Book Value" of the Initial Member shall be the
difference, but not less than zero, between the aggregate assets of
the Initial Member less the aggregate liabilities of the Initial
Member, both determined in accordance with GAAP. If NGUSA and the
Company do not agree on the Net Book Value of the Initial Member, the
Net Book Value shall be finally determined by the Agreed Accounting
Firm. The acquisition of the Equity Interest of the Initial Member or
the assets and liabilities of the Initial Member by the Company or its
designee shall not include any Units or Shares or any indebtedness
incurred to acquire any Units or Shares, and (i) immediately prior to
the closing of such acquisition, the Initial Member shall distribute
or otherwise transfer any Units or Shares held by it to its member(s)
or shareholder(s) (as the case may be) and cause the Initial Member to
be released from any indebtedness incurred to acquire any Units or
Shares and shall cause any Encumbrances on assets of the Company
securing acquisition indebtedness for such Units or Shares to be
released and (ii) any such Units or Shares and any such indebtedness
shall not be included in determining the Net Book Value of the Initial
Member.
(3) If the Company or its designee elects to offer employment to
any employees of the Initial Member (or, in the case of a purchase of
the Equity Interest in the Initial Member, the Company or its designee
elects to retain the services of any such employees), it shall do so
on such terms and subject to such conditions as it may from time to
time elect; provided, however, that no such offer shall be deemed to
be a "Qualifying Offer" with respect to any such employee unless such
offer is made during the 60-day period referred to in Section
2.2(f)(1), and such offer offers employment in a position of
comparable authority with an overall compensation package which, taken
as a whole, is comparable to the overall compensation package then
provided by the Initial Member. During the sixty (60) day period
referred to in Section 2.2(f)(1), neither NGUSA nor any NGUSA
Affiliate (other than the Company) shall offer employment to or
otherwise directly or indirectly retain or seek to retain the services
of any employee of the Initial Member, other than any Excluded
Employee, and NGUSA shall not permit any NGUSA Affiliate to engage in
any such activities. After the expiration of such sixty (60) day
period, NGUSA and any NGUSA Affiliate may offer employment to any
employee of the Initial Member; provided, however, that neither of
NGUSA nor any NGUSA Affiliate (other than the Company) shall offer
employment to or otherwise directly or indirectly retain or seek to
retain the services of any employee of the Initial Member (other than
any Excluded Employees) who receives a Qualifying Offer for a period
of one year after the date such Qualifying Offer is made. The Company
shall provide NGUSA
19
with copies of all Qualifying Offers of employment made to employees
of the Initial Member. The Initial Member shall have no obligation to
retain any employee of the Initial Member as an employee after it
ceases to be Managing Member.
(4) In the event that there are holders of Class A Units other
than NGUSA and/or Affiliated Investors at the time the Initial Member
ceases to be the Managing Member, then such holders shall represent
the interests of the Company in connection with the exercise by the
Company of the rights contained in this Section 2.2(f). In the event
that there are no holders of Class A Units other than NGUSA and/or
Affiliated Investors, then (i) if the Company has issued at least
$250,000,000 in Class B Units to Persons other than the Initial Member
and/or its Affiliates, then the holders of such Units shall represent
the interests of the Company, and (ii) otherwise, a Super Majority of
Transmission Owners may, if they so elect, by giving notice to NGUSA
and the Initial Member delivered not later than fifteen (15) days
after the receipt by the GridAmerica Companies of an NGUSA Termination
Notice, a Non-NGUSA Termination Notice or the notice of removal
delivered pursuant to Section 6.1(b) of the LLC Agreement, represent
the interests of the Company in connection with the exercise by the
Company of the rights contained in this Section 2.2(f) to the extent
permitted by applicable Law.
ARTICLE III
PURCHASE OF UNITS BY NGUSA AFFILIATES
Section 3.1 Initial Purchase of Units and Purchase of Units to Fund Capital
Expenditures and Working Capital Needs. Subject to the limitations set forth in
Section 3.3, NGUSA shall (or in the case of Section 3.1(b), may at its election)
cause the Initial Member and/or one or more Affiliated Investors to purchase
Units in the Company as follows:
(a) On the Effective Date, NGUSA shall cause the Initial Member to
purchase 1,000 Units for a total purchase price of $50,000. Following the
Effective Date, when and as the Initial Member, in the performance of its duties
or obligations as Managing Member, determines that the Company is in need of
additional funds to pay for Capital Expenditures relating to System-Wide Capital
Expenditures or for additional working capital purposes, NGUSA shall cause one
or more Affiliated Investors to purchase additional Units in the amount so
determined by the Initial Member; provided, however, that the maximum commitment
of NGUSA and of any Affiliated Investors pursuant to this Section 3.1 (a) (the
"Maximum Section 3.1 (a) Commitment") shall be $25,000,000. If, at the time of
the purchase of any Units pursuant to this Section 3.1(a), the Initial Member is
the only Member of the Company, the purchase price for Units shall be $50.00 per
Unit and, otherwise, shall be equal to the Fair Market Value of a Unit
determined pursuant to Article VII.
(b) Following the Effective Date, when and as the Initial Member, in the
performance of its duties or obligations as Managing Member, determines that the
Company is in need of additional funds to pay for Capital Expenditures relating
to GridAmerica Transmission Facilities or to acquire GridAmerica Transmission
Facilities, NGUSA may, at its election cause one or more Affiliated Investors to
purchase additional Units in the amount so determined by the
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Initial Member. If at the time of purchase of any Units pursuant to this Section
3.1(b), the Initial Member is the only Member of the Company, the purchase price
for Units shall be $50.00 per Unit and, otherwise, shall be equal to the Fair
Market Value of a Unit determined pursuant to Article VII.
Section 3.2 Purchase of Units by Affiliated Investors Upon Contributions of
GridAmerica Transmission Facilities.
(a) Subject to the limitations set forth in Sections 3.2(c) and 3.3, NGUSA
shall cause one or more Affiliated Investors to purchase Units in the Company
upon the exercise by a GridAmerica Company of a Put Right or the purchase by the
Company of Transmission Facilities from a GridAmerica Company as follows:
(1) At each Put Closing, a number of Units equal to 5% of the
Pro-forma Number of Put Units at a purchase price per Unit equal to the
Unit Price;
(2) At the closing of each purchase of Transmission Facilities from a
GridAmerica Company other than NGUSA or an Affiliated Investor (whether for
cash or Units or both), Units having a purchase price equal to 5% of the
Fair Market Value of the Transmission Facilities so purchased by the
Company; and
(3) At the option of either NGUSA or the Putting GridAmerica Company
(such option being referred to as the "Cash Option"), a number of Units up
to an additional 15% (or such higher percentage as to which NGUSA and the
Putting GridAmerica Company may agree) of the Pro-forma Number of Put
Units, in which event (i) the number of Units received by the Putting
GridAmerica Company at the Put Closing shall be reduced by the number of
additional Units purchased by such Affiliated Investors and (ii) such
Putting GridAmerica Company shall, at the Put Closing, receive a cash
distribution in an amount equal to the aggregate amount paid to the Company
for such additional Units.
The per Unit price for any Units purchased pursuant this Section 3.2(a) shall be
equal to the Unit Price.
(b) If either the Putting GridAmerica Company or NGUSA desires to exercise
its Cash Option, it shall provide the other and the Company with written notice
of such exercise at least sixty (60) days prior to the Put Closing, which notice
shall specify the percentage of the Pro-forma Number of Put Units to which the
exercise relates. Notwithstanding anything to the contrary contained in this
Section 3.2(b), if NGUSA exercises the Cash Option and the Putting GridAmerica
Company determines in good faith that the corresponding distribution of cash by
the Company to such Putting GridAmerica Company in connection with the exercise
of the Cash Option would result in the Putting GridAmerica Company being
required to recognize income as a result of such distribution of cash in the
year in which such cash distribution is made in excess of the difference between
the amount of such cash payment and such Putting GridAmerica Company's pro rata
tax basis in the Transmission Facilities which are subject to the Put Notice
(determined by multiplying the aggregate tax basis of all such Transmission
Facilities by the percentage of the Pro-forma Number of Put Units to which the
Cash Option relates), the Putting
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GridAmerica Company may, at its election, upon written notice to NGUSA received
at least thirty (30) days prior to the Put Closing, require NGUSA to rescind the
exercise of the Cash Option. Such notice shall provide a detailed explanation of
the income effect of the exercise by NGUSA of the Cash Option.
(c) Notwithstanding anything in this Agreement to the contrary, no
Affiliated Investor shall have any obligation to purchase Units pursuant to
Section 3.2(a) (i) if (A) the sum of (x) the aggregate amount of all Units
purchased by any Affiliated Investor pursuant to Section 3.2(a) and (y) the Fair
Market Value (determined at the time the Transmission Facilities in question are
contributed to the Company pursuant to Article V of all capital contributions
comprising Transmission Facilities made by the Initial Member and any NGUSA
Affiliates would exceed (B) the difference between (x) $500,000,000 and (y) the
amount of the aggregate Capital Contributions of the Initial Member and any
Affiliated Investor made pursuant to Section 3.1; provided, however, that there
shall be excluded from such calculation the amount, if any, of the Excess Cash
Amount or (ii) if all Affiliated Investors would have, after giving effect to
the purchase of Units pursuant to Section 3.2(a) and the issuance of Units to a
Putting GridAmerica Company in connection with exercise of the Put Right, an
aggregate Percentage Interest in the Company in excess of twenty percent (20%);
provided, further, however, that there shall be excluded from such calculation
Section 3.1(a) Units and any Units issued in respect of the Excess Cash Amount.
(d) The provisions of this Section 3.2 shall not apply to the exercise of
a Put Right by any NGUSA Affiliate.
Section 3.3 Additional Limitations on Commitment. Notwithstanding anything
contained in Sections 3.1 or 3.2 to the contrary, but subject to Section 3.2(c):
(a) NGUSA shall have no obligation to cause any Affiliated Investor to
purchase Units pursuant to this Agreement having an aggregate purchase price in
excess of the sum of $500,000,000 and the Excess Cash Amount.
(b) NGUSA shall have no obligation to cause any Affiliated Investor to
purchase any Units in connection with the exercise of the Put Right (i) during
the final six (6) months of the initial NGUSA Management Term if a NGUSA
Termination Notice or a Non-NGUSA Termination Notice has been delivered pursuant
to Section 2.2(b), (ii) if NGUSA exercises its resignation rights pursuant to
Section 5.7, or (iii) at any time after the Initial Member ceases to be the
Managing Member; provided, however, that the obligation to purchase Units
pursuant to Section 3.2(a) shall continue with respect to the exercise of the
Put Right if the Put Notice relating thereto was delivered prior to (x) in the
case of clause (i) above, the final six months of the initial NGUSA Management
Term or (y) in the case of clause (iii) above, the date that the Initial Member
ceases to be the Managing Member.
Section 3.4 Failure to Achieve Transmission Service Date. If the Initial
Member resigns or is removed prior to the Transmission Service Date, each
GridAmerica Company shall, within thirty (30) days of receipt of notice from the
Initial Member, pay to the Company such GridAmerica Company's pro rata share of
all capital contributions made by the Initial Member or any Affiliated Investor
pursuant to Section 3.1(a). The obligation of each
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GridAmerica Company to pay its pro rata share of such amounts shall be several
and not joint and several, and no GridAmerica Company shall be obligated to pay
to the Company any portion of the pro rata share of another GridAmerica Company
of such amount. The Initial Member, as Managing Member of the Company, shall
cause the Company to redeem for their original purchase price, the number of
Units purchased by the Initial Member or any Affiliated Investor pursuant to
Section 3.1(a) (the proceeds from which were used for the purposes contemplated
by Section 3.1(a)), having an original purchase price equal to the aggregate
amount received by the Company from the GridAmerica Companies pursuant to this
Section 3.4. For purposes of this Section 3.4, the pro rata share of an
GridAmerica Company shall be equal to the product of the total amount of capital
contributions made pursuant to Section 3.1(a) multiplied by a fraction, the
numerator of which is the Net Plant of such GridAmerica Company's Transmission
Facilities which are to be subject to the Functional Control of the Company
pursuant to the Operation Agreement and the denominator of which is the
aggregate Net Plant of all GridAmerica Companies' Transmission Facilities which
are to be subject to the Functional Control of the Company pursuant to the
Operation Agreement.
ARTICLE IV
EXCLUSIVITY
Section 4.1 Exclusivity Period. If a GridAmerica Company proposes to
consider soliciting an Exclusivity Transaction or is approached by another
Person regarding an Exclusivity Transaction during the Exclusive Period, prior
to engaging in substantive negotiations with respect to such Exclusivity
Transaction with any other Person, such GridAmerica Company shall first notify
NGUSA of its intention to enter into substantive negotiations regarding such
transaction. Upon receipt of such notice, NGUSA shall have an exclusive right to
make a proposal to such GridAmerica Company for the purchase of the GridAmerica
Transmission Facilities which are the subject of such Exclusivity Transaction,
subject only to NGUSA's execution and delivery to such GridAmerica Company of a
commercially reasonable confidentiality agreement to be proposed by such
GridAmerica Company (which shall not contain standstill provisions). Promptly
upon execution of such a confidentiality agreement, such GridAmerica Company
will provide NGUSA with access to business, financial, and other information
relating to such GridAmerica Transmission Facilities in the same form and to the
extent it intends to provide such information to other prospective buyers. If
NGUSA does not execute or deliver such a confidentiality agreement within 10
days of receipt, it will be deemed to have waived its rights under this Section
4.1. During the 60-day period following the date on which NGUSA is first
provided access to such information, and in order to allow NGUSA the option to
make an offer to such GridAmerica Company to purchase such Transmission
Facilities, such GridAmerica Company shall not further discuss or negotiate
with, or otherwise provide information regarding any potential Exclusivity
Transaction to, any Person other than NGUSA. NGUSA shall have no obligation to
make an offer to purchase such Transmission Facilities and such GridAmerica
Company shall have no obligation to consider, negotiate or accept any such
offer, if made. If NGUSA and the GridAmerica Company do not agree to such an
acquisition by NGUSA or an NGUSA Affiliate during such 60-day period, such
GridAmerica Company shall have one (1) year thereafter to enter into definitive
agreements in respect of any Transfer of such Transmission Facilities. If such
GridAmerica Company has not
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so entered into definitive agreements, during such one (1) year period, NGUSA
shall have the rights provided under this Section 4.1 with respect to any
further Exclusivity Transaction.
ARTICLE V
PUT OF TRANSMISSION FACILITIES
Section 5.1 Put Right in Favor of GridAmerica Companies. Each GridAmerica
Company shall have the right, but not the obligation (a "Put Right"), to
contribute to the Company GridAmerica Transmission Facilities of such
GridAmerica Company in exchange for Units, and to the extent provided in Section
3.2(a)(2), for cash, with an aggregate Fair Market Value equal to the Fair
Market Value of the Transmission Facilities being so contributed (determined as
of the date set forth below) on the following terms and subject to the following
conditions:
(a) A GridAmerica Company desiring to exercise its Put Right (a "Putting
GridAmerica Company") shall do so by providing at least 270 days prior written
notice (the "Put Notice") to NGUSA, the Managing Member, the Company and each
other GridAmerica Company. Such notice shall designate the Transmission
Facilities which the Putting GridAmerica Company proposes to contribute to the
Company through exercise of its Put Right (the "Contributed Transmission
Facilities"). No Put Notice may be given, and no Put Right may be exercised,
before the date eighteen (18) months after the Transmission Service Date. The
exercise by a Putting GridAmerica Company of a Put Right (i) shall become
irrevocable on the thirtieth (30th) day after determination of the Unit Price
and the Fair Market Value of the Contributed Transmission Facilities and (ii) in
the case of the exercise of a Put Right following an IPO Notice, may be
conditioned upon the successful completion of the IPO to which such IPO Notice
relates.
(b) Promptly upon exercise by a Putting GridAmerica Company of a Put
Right, the Managing Member and such Putting GridAmerica Company shall negotiate
the terms and conditions upon which the Contributed Transmission Facilities will
be contributed to the Company, including the scope of any representations and
warranties that the Putting GridAmerica Company will make in respect of the
Contributed Transmission Facilities, the need for any third-party or
Governmental consents therefor, and the scope and limitations on any
indemnification obligations in respect thereof. In addition, if required by the
Public Utility Holding Company Act of 1935 and the rules of the SEC promulgated
thereunder, the obligation of such Putting GridAmerica Company to contribute its
Contributed Transmission Facilities to the Company in exchange for Units and the
obligation of the Company to issue Units in consideration therefor shall be
expressly conditioned on the receipt of all required consents and approvals of
the SEC under such Act. Such terms and conditions shall be set forth in an asset
contribution agreement (the "Put Agreement") which shall be executed by the
Putting GridAmerica Company and the Company. Although the terms and conditions
of each Put Agreement are subject to negotiation between the parties thereto,
the specific terms and conditions of each Put Agreement shall, pursuant to
Section 5.1(c), be taken into consideration for purposes of determining the Fair
Market Value of the Contributed Transmission Facilities. The Putting GridAmerica
Company shall be required to convey the Contributed Transmission Facilities free
and clear of all Encumbrances securing any indebtedness of the Putting
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GridAmerica Company or any Affiliate thereof, except as the Company and the
Putting GridAmerica Company may otherwise agree in the Put Agreement.
(c) Upon completion of the negotiations of the Put Agreement (or earlier
if the Company and the Putting GridAmerica Company agree), the Company and such
Putting GridAmerica Company immediately shall proceed to determine the per Unit
Fair Market Value of the outstanding Units (such per Unit Fair Market Value
being referred to as the "Unit Price") and the Fair Market Value of the
Contributed Transmission Facilities, both to be determined as of a common date
to be agreed to by the Company and such Putting GridAmerica Company. The number
of Units that the Putting GridAmerica Company shall be entitled to receive upon
exercise of its Put Right assuming that no Cash Option is exercised (the
"Pro-forma Number of Put Units") shall be equal to the Fair Market Value of the
Contributed Transmission Facilities divided by the Unit Price. In determining
the Fair Market Value of the Contributed Transmission Facilities, the terms and
conditions of the proposed Put Agreement, including the scope of any
representations and warranties contained therein, the scope of and any
limitations on any indemnity obligations, the presence of any Encumbrances on
the Contributed Transmission Facilities and matters described in Section 5.1(e)
shall be expressly taken into account. In determining the Unit Price and the
Pro-forma Number of Put Units, the Putting GridAmerica Company shall have
diligence rights with respect to the Company, and the Company shall have
diligence rights with respect to the Contributed Transmission Assets, customary
for merger and acquisition transactions; provided, however, that neither the
Putting GridAmerica Company nor the Company shall be obligated to disclose
information subject to confidentiality provisions in favor of third parties or
competitively sensitive commercial information of a kind not customarily
disclosed in due diligence in connection with merger and acquisition
transactions. The Company and the Putting GridAmerica Company shall use
commercially reasonable efforts to obtain a waiver of any applicable
confidentiality restrictions, and in any event, to the extent feasible, all
information described in the proviso to the immediately preceding sentence which
is not disclosed shall be disclosed in summary or redacted form.
(d) The Putting GridAmerica Company shall have the right to withdraw its
Put Notice without prejudice to its right to issue a subsequent Put Notice (i)
within thirty (30) days after determination of the Unit Price and the Pro-forma
Number of Put Units or (ii) in the case of the exercise of a Put Right following
an IPO Notice, if such IPO is not successfully completed. In the case of
withdrawal of a Put Notice pursuant to clause (i) of the immediately preceding
sentence, the Putting GridAmerica Company shall, within thirty (30) days of
receipt of a written request therefor from the Company, reimburse the Company
for its reasonable, out-of-pocket costs and expenses incurred in respect of the
withdrawn Put Notice, including, without limitation, the costs and expenses of
the Company's Interested Party Valuation Firm and the Company's share of the
costs and expenses of any Neutral Valuation Firm. Any request for reimbursement
pursuant to this Section 5.1(d) shall itemize in reasonable detail all amounts
for which reimbursement is requested, and any disputes as to such amounts shall
be resolved by the dispute resolution procedures set forth in Article XII.
(e) Notwithstanding anything contained in this Agreement to the contrary,
no Putting GridAmerica Company shall have any right to exercise a Put Right with
respect to, and the Company shall have no obligation to accept, Contributed
Transmission Facilities which do not meet the following requirements:
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(1) The Contributed Transmission Facilities either constitute all of
the Transmission Facilities of the Putting GridAmerica Company over which
the Company exercises Functional Control pursuant to the Operation
Agreement or constitute an Operational Segment thereof.
(2) The Contributed Transmission Facilities taken as a whole (and
taking into account any contractual arrangements between the Company and
the Putting GridAmerica Company), include all of the facilities, real
estate interests (including easements, rights of way and rights of access),
equipment, contract rights, intellectual property rights and other assets
(including access to services and personnel) reasonably necessary to
operate the Contributed Transmission Facilities as part of an integrated
system with the other GridAmerica Transmission Facilities. In furtherance
thereof, the Company and the Putting GridAmerica Company shall negotiate in
good faith as to (i) the identity of the Contributed Transmission
Facilities, (ii) the terms on which any necessary services provided on a
contractual basis will be made available, and (iii) the allocation of
employees of the Putting GridAmerica Company and/or the provision of
employees on a contract basis. In determining the assets and services to be
included in the Contributed Transmission Facilities, the long term business
and operational plans of the Company and the Putting GridAmerica Company
and the cost of providing replacement facilities and services shall be
considered. All services to be provided by contract shall be provided on
commercially reasonable terms, but the Putting GridAmerica Company shall
not be obligated to provide any services at less than cost.
(f) If the Company and the Putting GridAmerica Company are unable to agree
as to any matters relating to the exercise by a Putting GridAmerica Company of
its Put Right, including, without limitation, the Contributed Transmission
Facilities, the terms of the Put Agreement and the terms on which any services
are to be provided, such matters shall be resolved pursuant to the dispute
resolution procedures set out in Article XII; provided, however, that,
notwithstanding any determination of such matters pursuant to Article XII, a
Putting GridAmerica Company may, even though the Unit Price and Pro-forma Number
of Put Units have not been determined, withdraw its Put Notice, pursuant to
Section 5.1(d).
(g) All Put Rights shall terminate at 5:00 p.m. New York time on the
earlier of (i) the fourth (4th) anniversary of the Transmission Services Date,
or (ii) if the IPO Notice is given before the fourth (4th) anniversary of the
Transmission Service Date, the date which is 300 days after the date of such IPO
Notice; provided, however, that Put Rights shall be continued after the fourth
(4th) anniversary of the Transmission Services Date with respect to Transmission
Facilities as to which a Put Notice has been given on or prior to the fourth
(4th) anniversary of the Transmission Services Date. No Put Right may be
exercised unless, at the time of exercise, the Putting GridAmerica Company is
party to the Operation Agreement.
Section 5.2 Put Rights of NGUSA Affiliates. If any NGUSA Affiliate acquires
GridAmerica Transmission Facilities or, while the Initial Member is Managing
Member, acquires non-GridAmerica Transmission Facilities which are capable of
being operated as part of a single integrated transmission system with the
GridAmerica Transmission Facilities, such NGUSA Affiliate shall have a Put Right
with respect to such Transmission Facilities, which Put Right shall be subject
to all of the terms and conditions of Article V.
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Section 5.3 Put Closing. The closing of the contribution of Contributed
Transmission Facilities pursuant to the exercise of a Put Right (each such
closing, a "Put Closing"), shall occur on a Business Day, shall take place at a
location mutually agreed by the Putting GridAmerica Company and the Company and
shall be consistent with the requirements set forth in the applicable Put
Agreement, including any conditions precedent to closing contained in such Put
Agreement. No Put Closing shall occur less than 270 days after the date on which
the Put Right in respect thereof was exercised, unless the Company and the
Putting GridAmerica Company otherwise agree. The deliveries by the parties at
the Put Closing and the conditions precedent to the Put Closing, including
necessary consents and approvals of third parties and Governmental Authorities,
shall be set forth in the applicable Put Agreement; provided, however, that at a
minimum:
(a) At each Put Closing, the Putting GridAmerica Company shall execute and
deliver, or cause to be executed and delivered, to the Company, the following
documents and agreements:
(1) assignments, bills of sale, warranty deeds, and other documents
assigning the applicable Transmission Facilities to the Company, free and
clear of all Encumbrances securing any indebtedness of the Putting
GridAmerica Company or any Affiliate thereof, except as the Company and the
Putting GridAmerica Company may otherwise agree in the Put Agreement; and
(2) unless such Putting GridAmerica Company or its designee is
already a Member of the Company, such documentation as may be required by
the LLC Agreement to become a Member of the Company.
(b) At each Put Closing, the Company shall deliver to the Putting
GridAmerica Company the following documents:
(1) an assumption agreement;
(2) evidence of appropriate entry of the Units to be issued to the
Putting GridAmerica Company upon exercise on the Company's Unit Registry
(as defined in the LLC Agreement); and
(3) a Favorable Opinion of Counsel to the effect that such Units have
been duly and validly issued by the Company and are fully paid and
non-assessable.
Section 5.4 Put Units Unregistered. No Units delivered at the Put Closing
will have been registered under the Securities Act or under any state securities
laws, and such units will be offered and sold in reliance on federal and state
exemptions for transactions not involving a public offering of securities.
Section 5.5 Put Rights Transferable. The Put Rights provided in Section 5.1
shall be freely assignable to any Person that acquires all, or any Operational
Segment of, GridAmerica Transmission Facilities from any GridAmerica Company, so
long as such acquiring party executes this Agreement and the Operation
Agreement.
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Section 5.6 Publicly Traded Partnership. Notwithstanding anything to the
contrary herein, no issuance of Units may be made to any Person if as a result
of such transfer the Company would have more then 100 Members determined in
accordance with Treasury Regulation Section 1.7704-1(h)(1) and (3).
Section 5.7 Certain Resignation and Withdrawal Rights.
(a) Rights Upon Certain Exercises of Put Rights. If the first of the
GridAmerica Companies and any NGUSA Affiliates to exercise a Put Right delivers
its Put Notice prior to April 30, 2005, the Initial Member may resign as
Managing Member (and upon the effective date of such resignation, the NGUSA
Management Term shall expire), and each GridAmerica Company may withdraw from
the GridAmerica ITC and terminate its participation under this Agreement and the
Operation Agreement (as provided in Section 5.1(a) of the Operation Agreement)
by providing all of the other Parties written notice of such resignation or
withdrawal within thirty (30) days of receipt of such Put Notice.
(b) Rights Upon Failure to Exercise Put Rights. If no Put Notice has been
received prior to March 31, 2005, the Initial Member may resign as Managing
Member (and upon the effective date of such resignation, the NGUSA Management
Term shall expire), and each GridAmerica Company may withdraw from GridAmerica
ITC and terminate its participation under this Agreement and the Operation
Agreement (as provided in Section 5.1(b) of the Operation Agreement) by
providing all of the other Parties written notice of such resignation or
withdrawal within the thirtieth (30th) month following the Effective Date.
(c) Effect of Resignation or Withdrawal. Any resignation or withdrawal
pursuant to this Section 5.7 shall be effective on the first day of the seventh
month following the month in which notice thereof is delivered pursuant to
Section 13.1. Upon receipt of any notice of resignation or withdrawal pursuant
to this Section 5.7, the other Parties shall have the right, exercisable within
thirty (30) days of receipt of such notice, to resign or withdraw, as the case
may be. Without the prior written consent of NGUSA, no part of the GridAmerica
Transmission Facilities of any GridAmerica Company that withdraws from the
GridAmerica ITC shall be included in or be managed by an ITC that exercises
functions similar in scope to the function exercised by the Company with respect
to the GridAmerica Transmission Facilities (determined after taking into account
the functions exercised by the Midwest ISO under the MISO ITC Agreement) for a
period of one (1) year after the effective date of such GridAmerica Company's
withdrawal, provided, however, that the foregoing prohibition shall not apply,
if the Initial Member exercised its resignation rights pursuant to Section
5.7(a) or (b) prior to the date of any such withdrawal. Notwithstanding the
foregoing, unless the Commission shall otherwise approve, no withdrawal by any
GridAmerica Company from GridAmerica ITC pursuant to this Section 5.7 shall be
or become effective unless and until such GridAmerica Company becomes a member
of the Midwest ISO as contemplated by Section 2.3 of the MISO ITC Agreement.
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ARTICLE VI
REGISTRATION RIGHTS
Section 6.1 Demand Registration Rights.
(a) Demand for IPO. At any time after the third anniversary of the
Transmission Service Date, NGUSA (on behalf of itself and/or any Affiliated
Investor) or GridAmerica Companies holding not less than 30% of the outstanding
Units shall be entitled to request in writing, that the Company effect the Unit
Exchange and effect the registration under the Securities Act of Registrable
Securities of GridAmerica HoldCo in accordance with this Section 6.1 (an "IPO
Demand Registration"). Any such request for an IPO Demand Registration shall
specify the Members desiring to participate therein, the amount of Registrable
Securities proposed to be sold by each such Member, and the intended method of
disposition thereof. Upon receiving a request for an IPO Demand Registration,
the Company shall cause GridAmerica HoldCo to prepare and file as soon as
practicable the documents necessary to effect such IPO Demand Registration and
shall use commercially reasonable efforts to cause the same to be declared
effective by the SEC as soon as practicable. Notwithstanding anything in this
Section 6.1 to the contrary, (i) the Company shall not be obligated to effect a
registration under this Section 6.1(a) unless it is advised by a nationally
recognized investment banking firm that the anticipated aggregate gross offering
price with respect thereto is expected to be equal to or exceed $250,000,000, or
despite commercially reasonable efforts to do so, the Company is unable to
obtain the listing of the Shares to be sold in the IPO on the New York Stock
Exchange or another comparable national securities exchange on which securities
of major U.S. issuers engaged in the utility industry are traded, (ii) the
Company may delay the Unit Exchange and an IPO Demand Registration to a date not
later than the fifth anniversary of the Transmission Service Date if it is
advised by a nationally recognized investment banking firm that such delay would
be in the best interest of the Company and would contribute to a successful IPO
and (iii) if all the Persons requesting the IPO Demand Registration determine to
attempt to qualify the Unit Exchange as a tax-deferred exchange pursuant to
Section 351 of the Code, the Company and GridAmerica HoldCo may limit the number
of Shares to be sold by GridAmerica Companies participating in the IPO if the
Company determines such limitation to be necessary to preserve such
tax-treatment of the Unit Exchange.
(b) IPO Notice. Upon receipt of an IPO Demand Registration request or a
determination by the Company to effect an IPO, the Company promptly shall
provide NGUSA and all GridAmerica Companies with written notice of the request
or determination (the "IPO Notice") at least three hundred (300) days prior to
the filing of any Registration Statement in respect of the IPO, and each such
notice shall inform NGUSA and each GridAmerica Company that all outstanding Put
Rights will expire three hundred (300) days after the date of such notice unless
the IPO is not successfully completed.
(c) Demand Registration After IPO.
(1) At any time after the Initial Public Offering, NGUSA (on behalf
of itself and/or any Affiliated Investor) and GridAmerica Companies holding
among them not less than 15% of the aggregate Shares and Units outstanding
shall be entitled to
29
request in writing that GridAmerica HoldCo effect the registration under the
Securities Act of Registrable Securities in accordance with this Section 6.1
(each, a "Secondary Demand Registration"). Any such request for a Secondary
Demand Registration shall specify the GridAmerica Companies and/or NGUSA
Affiliates desiring to participate therein, the amount of Registrable Securities
proposed to be sold by each such Member, and the intended method of disposition
thereof. Upon receiving a request for a Secondary Demand Registration,
GridAmerica HoldCo shall prepare and file within forty-five (45) days the
documents necessary to effect Secondary Demand Registration and will use
commercially reasonable efforts to cause the same to be declared effective by
the SEC as soon thereafter as practicable. Notwithstanding anything in this
Section 6.1 to the contrary, GridAmerica HoldCo shall not be obligated to effect
a Secondary Demand Registration unless it is advised by a nationally recognized
investment banking firm that the anticipated aggregate gross offering price with
respect thereto would equal or exceed $75,000,000. Any such request for a
Secondary Demand Registration may be a request for a shelf registration, if
GridAmerica HoldCo is eligible to use a shelf registration at the time of such
request.
(2) Promptly after receipt of a request for a Secondary Demand
Registration, GridAmerica HoldCo shall provide NGUSA and each GridAmerica
Company with written notice of such demand.
(d) Limitation on Demand Registrations. Notwithstanding anything to the
contrary set forth in Section 6.1(c), GridAmerica HoldCo shall not be obligated
to file a Registration Statement with respect to a Secondary Demand Registration
upon a request by a Person under Section 6.1(c), if three Secondary Demand
Registrations have become effective as specified in Section 6.1(f) (unless
GridAmerica HoldCo is eligible to register the Registrable Securities on Form
S-3, in which case NGUSA and the GridAmerica Companies shall have an unlimited
right to require such registrations). If, in connection with any Secondary
Demand Registration, the Shares to be included by any Selling Shareholder in
such registration are reduced by the Approved Underwriter by one-third (1/3) or
more of the amount of Shares such Selling Shareholders requested to include in
such registration, such registration shall not constitute a Demand Registration.
(e) Participation in Demand. Each GridAmerica Company and each Affiliated
Investor shall have thirty 30 days after the receipt of notice of a Demand
Registration to elect to participate in the registration as a Selling
Shareholder by providing the Company and GridAmerica HoldCo with written notice
of such election, which notice shall indicate the number of Shares which such
Person desires to include in the registration. The right of such Person to
participate in the registration shall be subject to Section 6.3.
(f) Effective Demand Registration. A registration shall not constitute a
Demand Registration until the Registration Statement has become effective and
remains continuously effective for the lesser of (i) the period during which all
Registrable Securities registered in the Demand Registration are sold and (ii)
one hundred eighty (180) days; provided, however, that a registration shall not
constitute a Demand Registration if (x) after such Demand Registration has
become effective, such registration or the related offer, sale or distribution
of Registrable Securities thereunder is interfered with by any stop order,
injunction or other order or
30
requirement of the SEC or other Governmental Authority for any reason not
attributable to any Selling Shareholder and such interference is not thereafter
eliminated or (y) the conditions to closing specified in the underwriting
agreement, if any, entered into in connection with such Demand Registration are
not satisfied or waived, other than by reason of a failure by any Selling
Shareholder; provided, further, that if a registration constitutes a Demand
Registration, notwithstanding the operation of clause (x) of this Section
6.1(f), then the period of effectiveness provided for in the first sentence of
this Section 6.1(f) shall be extended for the same amount of time such stop
order, injunction or other order or requirement existed.
(g) Underwriting Procedures. If the Selling Shareholders demanding
registration so elect, the offering of Registrable Securities pursuant to up to
a maximum of three Demand Registrations shall be in the form of a firm
commitment underwritten offering, and the managing underwriter or underwriters
selected for such offering shall be the Approved Underwriter selected in
accordance with Section 6.1(h). With respect to any firm commitment underwritten
offering, GridAmerica HoldCo shall enter into a reasonable and customary
underwriting agreement with the Approved Underwriter. If the Approved
Underwriter advises GridAmerica HoldCo in writing that in its opinion the
aggregate amount of Shares requested to be included in such offering is
sufficiently large to have a material adverse effect on the success of such
offering, including the price, then GridAmerica HoldCo shall include in such
registration only the aggregate amount of Shares that in the opinion of the
Approved Underwriter may be sold without any such material adverse effect and
such Shares shall be allocated pro rata among the Selling Shareholders demanding
such registration on the basis of the number of Registrable Shares requested to
be included in such registration by each such Selling Shareholder, and
thereafter to the Company, and finally to the holders of other incidental or
piggy-back registration rights, if any.
(h) Selection of Underwriters. If any Demand Registration is in the form
of an underwritten offering, the Selling Shareholders shall select and engage
one or more investment banking firms of national reputation to act as the
managing underwriters of the offering (collectively, the "Approved
Underwriter"); provided, however, that the Approved Underwriter shall, in any
case, be acceptable to GridAmerica HoldCo in its reasonable judgment.
Section 6.2 Incidental Registration. If GridAmerica HoldCo shall determine
to register any Shares, or any securities convertible into or exchangeable or
exercisable for Shares, for its own account or for the account of any
stockholder (other than a registration on Forms S-4 or S-8 or any replacement or
successor form thereof), any GridAmerica Company or NGUSA Affiliate shall be
entitled to include Registrable Securities in such registration (and related
underwritten offering, if any) (each, an "Incidental Registration") on the terms
and conditions set forth in this Section 6.2.
(a) GridAmerica HoldCo promptly shall give written notice of such
determination to register such securities to NGUSA and each GridAmerica Company,
and NGUSA (on behalf of itself and any NGUSA Affiliate) and each GridAmerica
Company shall have the right to request, by written notice given to GridAmerica
HoldCo within thirty (30) days of the receipt by them of such notice of
determination, that a specific number of Registrable Securities held by an NGUSA
and/or an NGUSA Affiliate or such GridAmerica Company be included in such
Registration Statement.
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(b) If the proposed registration relates to an underwritten offering, the
notice required by Section 6.2(a) shall specify the name of the managing
underwriter for such offering, and if the proposed registration would constitute
an IPO, the notice required by Section 6.2(a) shall comply with the terms of
Section 6.1(b).
(c) If the proposed registration relates to an underwritten offering, any
Selling Shareholders desiring to participate in such offering must (i) sell all
or a portion of its Registrable Securities on the same basis provided in the
underwriting arrangements approved by GridAmerica HoldCo and (ii) complete and
execute all questionnaires, powers of attorney, underwriting agreements and
other documents on the same basis as other similarly situated Selling
Shareholders (or, if there are no other Selling Shareholders, on the same basis
as other selling stockholders or as would be customary in a transaction of this
type) reasonably required under the terms of such underwriting arrangements or
by the SEC.
(d) GridAmerica HoldCo shall have the right to terminate or withdraw any
registration statement filing under this Section 6.2 prior to the effective date
thereof for any reason without liability to any Member as a result thereof,
whether or not such Member has elected to become a Selling Shareholder. In such
event, GridAmerica HoldCo or any Selling Shareholder may elect to continue the
registration; provided, however, that if such termination or withdrawal occurs
prior to the filing of the initial registration statement with the SEC, but not
otherwise, then such election shall constitute a request for a Demand
Registration and shall be subject to the limits on Demand Registration requests
set forth in this Agreement.
Section 6.3 Cutback; Withdrawal Rights.
(a) If the managing underwriter for the underwritten offering under the
proposed registration to be made by GridAmerica HoldCo determines that inclusion
of all or any portion of the Shares intended to be included in such offering
would adversely affect the ability of the underwriter for such offering to sell
all of the securities requested to be included for sale or the price per share
in such offering, the number of Shares that may be included in such registration
GridAmerica HoldCo will be obligated to include in such offering, as to each
Person proposing to sell Shares in such offering, only a portion of the Shares
such Person has requested to be registered equal to the ratio which such
Person's requested Shares bears to the total number of Shares requested to be
included in such registration statement by all Persons (other than GridAmerica
HoldCo), who have requested that their Shares be included in such registration,
it being understood that the securities to be included in such registration
shall be allocated first to GridAmerica HoldCo and thereafter in accordance with
the foregoing ratio; provided, however, that, in the case of a Demand
Registration, prior to any reduction in the number of Shares to be registered by
the Selling Shareholders demanding the Demand Registration, the aggregate amount
of Shares to be included in the offering by any other Selling Shareholder shall
be reduced in its entirety.
(b) Each Selling Shareholder shall have the right to withdraw its
Registrable Securities from the Registration Statement at any time prior to the
effective date thereof, but if the same relates to an underwritten offering and
the initial filing thereof has been made, it may only withdraw its Registrable
Securities during the time period and on terms deemed appropriate by the
underwriters for such underwritten offering.
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Section 6.4 Blockage Periods. Notwithstanding any other provision of this
Agreement, GridAmerica HoldCo shall not be obligated to file (but shall be
obligated to continue the preparation of) any Registration Statement under
Section 6.1 at any time that GridAmerica HoldCo or any of its subsidiaries are
engaged in confidential negotiations or other confidential business activities,
disclosure of which would be required in such registration statement (but would
not be required if such registration statement were not filed), and the Board of
Directors of GridAmerica HoldCo determines in good faith (after consultation
with the Selling Shareholders participating in such offering) that such
disclosure would be materially detrimental to the Company and its Unit holders
or would have a material adverse effect on any such confidential negotiations or
other confidential business activities. GridAmerica HoldCo may decline to file
any Registration Statement for this reason only once in any 12-month period and
only for a maximum period of 90 days at any one time. If GridAmerica HoldCo
declines to file any Registration Statement pursuant to this Section 6.4, it
shall notify the affected Selling Shareholders (the "Clear Notification")
promptly after the circumstances preventing the filing of the Registration
Statement under Section 6.1 no longer apply. For a period of 20 Business Days
following receipt of a Clear Notification (the "Request Period") the Selling
Shareholders shall have the right to request a Demand Registration pursuant to
Section 6.1(a) or 6.1(c). GridAmerica HoldCo shall not be permitted to file a
registration statement to register Shares for offering by GridAmerica HoldCo or
any stockholder other than a Selling Shareholder (except on Form S-4 or Form
S-8) until:
(a) If the Selling Shareholders have not requested a Demand Registration
within the Request Period, the day after the end of the Request Period, and
(b) If the Selling Shareholders have requested a Demand Registration
within the Request Period, completion of the offering under such Demand
Registration pursuant to Section 6.1(f); provided, however, that GridAmerica
HoldCo may participate simultaneously in such Demand Registration pursuant to
Section 6.1(g).
Section 6.5 Restrictions on Public Sale. If Registrable Securities are
included (in whole or in part) in a Registration Statement filed by GridAmerica
HoldCo under Section 6.1 for sale in an underwritten offering, each Selling
Shareholder agrees, if requested by the managing underwriter(s) of such offering
and if each other Person participating in such offering also so agrees, not to
sell, make any short sale of, loan, grant any option for the purchase of,
dispose of or effect any public sale or distribution of common equity securities
of the same series and class as (or securities exchangeable or exercisable for
or convertible into common equity securities of the same series and class as)
its Registrable Securities, including a sale pursuant to Rule 144 under the
Securities Act (except as part of such underwritten registration), during the
five (5) day period prior to, and during the ninety (90) day period following,
any such registration (or during such shorter period as is requested or
consented to by the managing underwriter(s) with respect to GridAmerica HoldCo
or any other holder of common stock of GridAmerica HoldCo) beginning on the
closing date of such underwritten offering, to the extent timely notified in
writing by GridAmerica HoldCo or the managing underwriter(s).
Section 6.6 Registration Procedures. In connection with GridAmerica
HoldCo's registration obligations pursuant to Sections 6.1 and 6.2 hereof,
GridAmerica HoldCo promptly will prepare such registration statement and use its
commercially reasonable efforts to
33
cause to be effective such registration to permit the sale of the Registrable
Securities covered thereby in accordance with the intended method or methods of
disposition thereof, and pursuant thereto, GridAmerica HoldCo will as
expeditiously as possible:
(a) with respect to registrations made pursuant to Section 6.1 only,
prepare and file with the SEC a Registration Statement with respect to such
Registrable Securities and use its commercially reasonable efforts to cause such
Registration Statement to become effective as soon as practicable, and, upon the
request of the Selling Shareholders, keep such Registration Statement effective
for up to one hundred twenty (120) days or such lesser period as is necessary
for the underwriters in an underwritten offering to sell the Registrable
Securities registered thereby, provided, however, that, before filing any
Registration Statement or Prospectus or any amendments or supplements thereto,
the Company will furnish to the Selling Shareholders and their counsel for their
review and comments copies of all such documents proposed to be filed at least
five (5) days prior thereto and the Company shall not file any registration
statement or amendment or post-effective amendment or supplement to such
registration statement or Prospectus used in connection therewith to which such
counsel shall have reasonably objected in writing on the grounds that such
amendment or supplement does not comply (explaining why) in all material
respects with the requirements of the Securities Act or of the rules or
regulations thereunder;
(b) prepare and file with the SEC such amendments, post-effective
amendments and supplements to the Registration Statement and the Prospectus as
may be necessary to comply with the provisions of the Securities Act and the
rules and regulations thereunder with respect to the disposition of all
securities covered by such Registration Statement;
(c) promptly notify the Selling Shareholders (i) when the Prospectus or
any Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose, (iv) of the receipt by GridAmerica HoldCo of any notification
with respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose and (v) of the happening of any event which makes
any statement made in the Registration Statement, the Prospectus or any document
incorporated therein by reference untrue or which requires the making of any
changes in the Registration Statement, the Prospectus or any document
incorporated therein by reference so that such documents 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;
(d) make commercially reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the earliest
possible time;
(e) if requested by the Approved Underwriter or the Selling Shareholders,
promptly incorporate in a Prospectus supplement or post-effective amendment such
information
34
as the Approved Underwriter or such Selling Shareholders reasonably request to
be included therein as required by applicable Law and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment promptly
after GridAmerica HoldCo has received notification of the matters to be
incorporated in such Prospectus supplement or such post-effective amendment;
provided, however, that GridAmerica HoldCo shall not be required to take any of
the actions of this Section 6.6(e) which it determines are not, on the advice of
counsel for GridAmerica HoldCo, required under applicable Law;
(f) furnish to each Selling Shareholder, without charge, at least one copy
of the Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference);
(g) deliver to each Selling Shareholder, without charge, such reasonable
number of conformed copies of the Registration Statement (and any post-effective
amendment thereto) and such number of copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto (and any
documents incorporated by reference therein) as such Selling Shareholder may
reasonably request, all in full conformity with the Securities Act; and
GridAmerica HoldCo consents to the use of the Prospectus or any amendment or
supplement thereto by such Selling Shareholder in connection with the offer and
sale of the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(h) prior to any offering of Registrable Securities covered by a
Registration Statement, register or qualify or cooperate with each Selling
Shareholder in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as the managing underwriter, if applicable, or each such
Selling Shareholder reasonably requests, and use commercially reasonable efforts
to keep each such registration or qualification (or exemption therefrom)
effective, including through new filings, or amendments or renewals, during the
period such Registration Statement is required to be kept effective pursuant to
the terms of this Agreement; and do any and all other acts or things necessary
or advisable to enable the disposition in all such jurisdictions reasonably
requested by such Selling Shareholder; provided, however, that under no
circumstances shall GridAmerica HoldCo be required in connection therewith or as
a condition thereof to qualify to do business, to become subject to taxation or
to file a general consent to service of process in any such states or
jurisdictions;
(i) cooperate with the Selling Shareholders and the managing underwriter
or underwriters to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, free of any and all
restrictive legends, such certificates to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
such Selling Shareholders may request and make available to the Company's
transfer agent prior to the restrictions of the Registrable Securities a supply
of such certificates;
(j) upon the occurrence of any event contemplated by Section 6.6(c)(v)
above, prepare a supplement or post-effective amendment to the Registration
Statement or the Prospectus or any document incorporated therein by reference or
file any other required
35
document so that, as thereafter delivered to the purchasers of the Registrable
Securities, the 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 not misleading;
(k) make generally available to the holders of GridAmerica HoldCo's
outstanding securities earnings statements satisfying the provisions of Section
11(a) of the Securities Act, no later than forty-five (45) days after the end of
any twelve (12) month period (or ninety (90) days, 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 or best efforts underwritten
offering, or, if not sold to underwriters in such an offering (ii) beginning
with the first month of GridAmerica HoldCo's first fiscal quarter commencing
after the effective date of the Registration Statement, which statements shall
cover said twelve (12) month period;
(l) provide and cause to be maintained a transfer agent and registrar for
all Registrable Securities covered by each Registration Statement from and after
a date not later than the effective date of such Registration Statement;
(m) use commercially reasonable efforts to cause all Registrable
Securities covered by each Registration Statement to be listed, subject to
notice of issuance, prior to the date of the first sale of such Registrable
Securities pursuant to such Registration Statement, on each securities exchange
on which the Shares issued by GridAmerica HoldCo are then listed,
(n) enter into such agreements (including underwriting agreements in
customary form containing, among other things, reasonable and customary
indemnities) and take such other actions as the Selling Shareholders shall
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities;
(o) furnish, at the request of the Selling Shareholders, on the date that
Registrable Securities are delivered to an underwriter for sale in connection
with an underwritten registration, or, in connection with any other
registration, on the date that the Registration Statement with respect to such
registration becomes effective, (i) an opinion, dated such date, of the counsel
representing GridAmerica HoldCo for the purpose of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Selling
Shareholders, (ii) a letter dated such date, from the independent certified
public accountants of GridAmerica HoldCo, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
such Selling Shareholders, subject to such Selling Shareholders' provision of
information reasonably requested by such independent certified public
accountants to comply with the rules governing delivery of such letters and
(iii) cause the underwriting agreement to contain indemnification provisions and
procedures no less favorable than those set forth in Section 6.8 hereof (or such
other provisions and procedures acceptable to such Selling Shareholders) with
respect to all parties to be indemnified pursuant to such Section;
(p) with respect to not more than three Demand Registrations effected
pursuant to Section 6.1, cause its senior management to participate in road
shows and other customary marketing efforts in connection with the offering and
sale of Registrable Securities;
36
(q) as promptly as practicable after filing with the SEC of any document
which is incorporated by reference into a registration statement filed pursuant
hereto (in the form in which it was incorporated), deliver a copy of each such
document to each seller of Registrable Securities;
(r) promptly make available for inspection by any Selling Shareholder, any
underwriter participating in any disposition pursuant to any Registration
Statement filed pursuant hereto, and any attorney, accountant or other agent or
representative retained by any such seller or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of GridAmerica HoldCo and its subsidiaries (collectively, the
"Records"), as shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and cause the GridAmerica HoldCo's officers,
directors and employees to supply all information requested by any such
Inspector in connection with such registration statement; provided, however,
that unless the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement or the release of such
Records in ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, GridAmerica HoldCo shall not be required to provide any
information hereunder if (A) GridAmerica HoldCo believes, after consultation
with counsel for GridAmerica HoldCo, that to do so would cause GridAmerica
HoldCo to forfeit an attorney-client privilege that was applicable to such
information or (B) either (1) GridAmerica HoldCo has requested and been granted
from the SEC confidential treatment of such information contained in any filing
with the SEC or documents provided supplementally or otherwise or (2)
GridAmerica HoldCo reasonably determines in good faith that such Records are
confidential and so notifies that Inspectors in writing unless, prior to
furnishing any such information agrees with respect to (A) or (B), such holder
of Registrable Securities requesting such information agrees to enter into a
confidentiality agreement in customary form and subject to customary exceptions;
and provided, further that each holder of Registrable Securities agrees that it
will, upon learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to GridAmerica HoldCo and allow GridAmerica
HoldCo at its expense, to undertake appropriate action and to prevent disclosure
of the Records deemed confidential;
(s) provide a CUSIP number for Registrable Securities included in any
registration statement filed pursuant hereto not later than the effective date
of such registration statement;
(t) cooperate with each Selling Shareholder and each underwriter
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. ("NASD"); and
(u) use its commercially reasonable efforts to take all other steps
necessary to effect the registration of such Registrable Securities contemplated
hereby.
Each Selling Shareholder agrees that, upon receipt of any notice from
GridAmerica HoldCo of the happening of any event of the kind described in
Section 6.6(c)(v) hereof, such Selling Shareholder will forthwith discontinue
disposition of Registrable Securities under the Prospectus related to the
applicable Registration Statement until such Selling Shareholders' receipt of
the
37
copies of the supplemented or amended Prospectus contemplated by Section 6.6(j)
hereof, or until it is advised. in writing by GridAmerica HoldCo that the use of
the Prospectus may be resumed. It shall be a condition precedent to the
obligations of GridAmerica HoldCo to take any action pursuant to this Section
6.6 with respect to the Registrable Securities of Selling Shareholder that such
Selling Shareholder shall furnish to GridAmerica HoldCo such information
regarding itself and the Registrable Securities held by it as shall be required
by the Securities Act to effect the registration of such Selling Shareholder's
Registrable Securities and as typically provided by similarly situated selling
stockholders.
Section 6.7 Registration Expenses. All expenses incident to any
registration to be effected hereunder (whether or not the Registration Statement
is filed or declared effective) and incident to GridAmerica HoldCo's performance
of or compliance with this Agreement, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, fees of the
National Association of Securities Dealers, Inc., stock exchange and
qualification fees, fees and disbursements of GridAmerica HoldCo's counsel and
of independent certified public accountants of GridAmerica HoldCo (including the
expenses of any special audit required by or incident to such performance), the
expenses of the underwriters that are customarily requested in similar
circumstances by such underwriters (excluding discounts, commissions or fees of
underwriters, qualified independent underwriters, selling brokers, dealer
managers or similar securities industry professionals relating to the
distribution of the Registrable Securities), all such expenses being herein
called "Registration Expenses," will be borne by GridAmerica HoldCo. GridAmerica
HoldCo will also pay its internal expenses and the expense of any annual audit
and the fees and expenses of any person retained by GridAmerica HoldCo. Each
Selling Shareholder will pay its internal expenses, the fees and expenses of any
counsel, advisor or other person retained by such Selling Shareholder.
Notwithstanding the foregoing, GridAmerica HoldCo will not be obligated to pay
Registration Expenses for more than Demand Registrations effected by Selling
Shareholders pursuant to Section 6.1. Registration Expenses incurred in
connection with Registration Statements requested under Section 6.1 that are not
filed or declared effective by the SEC will be paid by GridAmerica HoldCo and
will not count against such limit; provided, however, if such Registration
Statement not being filed or declared effective is the result of the actions of
any Selling Shareholder, then such Selling Shareholder will bear the
Registration Expenses of such Demand Registration in which case such
registration shall not be counted as a Demand Registration under Section 6.1.
Section 6.8 Indemnification.
(a) Indemnification by GridAmerica HoldCo. GridAmerica HoldCo agrees, to
the fullest extent permitted by Law, to indemnify and hold harmless each Selling
Shareholder, its officers, directors, partners, employees and agents and each
person who controls such Selling Shareholder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, partners, employees and agents of any such controlling person from
and against any and all losses, claims, damages and liabilities (including any
investigation, legal or other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted) (collectively, "Damages") to which such Selling Shareholder may
become subject under the Securities Act, the Exchange Act or other federal or
state securities Law, at common Law or otherwise, insofar as
38
such Damages arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or preliminary prospectus or any amendment or supplement thereto,
(ii) the omission or alleged omission to state therein a 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 (iii) any
violation or alleged violation by GridAmerica HoldCo of the Securities Act, the
Exchange Act or any state securities or blue sky Laws in connection with the
Registration Statement, Prospectus or preliminary prospectus or any amendment or
supplement thereto; provided, however, that GridAmerica HoldCo will not be
liable to any Selling Shareholder to the extent that such Damages arise from or
are based upon any untrue statement or omission (x) made in reliance on and in
conformity with written information furnished to GridAmerica HoldCo by such
Selling Shareholder expressly for the inclusion in such Registration Statement,
(y) made in any preliminary prospectus if such Selling Shareholder failed to
deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale by such Selling Shareholder to the party asserting the
claim underlying such Damages and such Prospectus would have corrected such
untrue statement or omission and (z) made in any Prospectus if such untrue
statement or omission was corrected in an amendment or supplement to such
Prospectus, and a sufficient number of such amendment or supplement to such
Prospectus were delivered to such Selling Shareholder prior to the sale of
Registrable Securities and such Selling Shareholder failed to deliver such
amendment or supplement prior to or concurrently with the sale of Registrable
Securities to the party asserting the claim underlying such Damages. GridAmerica
HoldCo shall also indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution
customarily indemnified by issuers in underwritten public offerings, their
officers, directors, agents and employees and each Person who controls such
Persons (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) to the same extent as provided above with respect to the
indemnification of the Selling Shareholders.
(b) Indemnification by Selling Shareholders. If Registrable Securities are
sold under a Prospectus which is a part of a Registration Statement, each
Selling Shareholder agrees to indemnify and hold harmless GridAmerica HoldCo,
its directors and each officer who signed such Registration Statement and each
person who controls GridAmerica HoldCo (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
partners, employees and agents of any such controlling person under the same
circumstances as the foregoing indemnity from GridAmerica HoldCo to Selling
Shareholders, to the extent that such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue statement of a material fact
or omission of a material fact that was made in the Prospectus, the Registration
Statement, or any amendment or supplement thereto, in reliance upon and in
conformity with information relating to any Selling Shareholder, furnished in
writing to GridAmerica HoldCo by such Selling Shareholder, expressly for use
therein, provided that in no event shall the aggregate liability of any Selling
Shareholder exceed the amount of the net proceeds received by such Selling
Shareholder upon the sale of the Registrable Securities giving rise to such
indemnification obligation. Each Selling Shareholder shall indemnify the
underwriters under terms customary to such underwritten offerings as reasonably
requested by such underwriters. GridAmerica HoldCo and each Selling Shareholder
shall be entitled to receive indemnities from underwriters, selling brokers,
dealer managers and similar securities
39
industry professionals participating in the distribution, to the same extent as
customarily furnished by such persons in similar circumstances.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party, provided, however, that any person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such person and not of the
indemnifying party unless (A) the indemnifying party has agreed to pay such fees
or expenses, (B) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to such person within
thirty (30) days of receipt of notice of such claim or (C) in the reasonable
judgment of such indemnified person based on advice of counsel, a conflict of
interest may exist between such person and the indemnifying party with respect
to such claims (in which case, if the person notifies the indemnifying party in
writing that such person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such person). No settlement in respect of
any third party claim may be effected by the indemnifying party without the
indemnified party's prior written consent (which consent shall not be
unreasonably withheld) unless the settlement involves only the payment of money
by the indemnifying party, provides for a full and unconditional release of the
indemnified party and does not include a statement as to, or any admission of,
fault, culpability or a failure to act by, or on behalf of, the indemnified
party. Any indemnifying party who is not entitled to, or elects not to, assume
the defense of a claim will not be obligated to pay the fees and expenses of
more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim, unless, in the reasonable judgment of an indemnified
party based on advice of counsel, a conflict of interest exists between such
indemnified party and one or more other indemnified parties with respect to such
claim, in which case the indemnifying party shall be obligated to pay the
reasonable fees and disbursement, of such additional counsel or counsels. As
used in this Section 6.8(c), the terms "indemnifying party," "indemnified party"
and other terms of similar import are intended to include only GridAmerica
HoldCo (and its officers, directors and control persons and the officers,
directors, partners, employees and agents of such control persons as set forth
above) on the one hand, and one or more Selling Shareholders (and its or their
officers, directors, partners, employees, agents and control persons and the
officers, directors, partners, employees and agents of such control persons as
set forth above) on the other hand, as applicable.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or indemnifying parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions which resulted in such losses, claims, demands, liabilities or
expenses as well as any other relevant equitable considerations. With respect to
contribution required pursuant to this Section 6.8(d), 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 the indemnifying party or
indemnifying parties
40
on the one hand or the indemnified party on the other, and the parties'
relative, intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. Notwithstanding the provisions of
this Section 6.8(d), an indemnified holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount by which the net
proceeds to such holder of Registrable Securities from the sale thereof exceed
the amount of damages which such indemnified holder has otherwise been required
to pay pursuant to Section 6.8(b) by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11 of the Securities Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Timing of Payments. An indemnifying party shall make payments of all
amounts required to be made pursuant to the foregoing provisions of this Section
6.8 to or for the account of the indemnified party from time to time promptly
upon receipt of bills or invoices relating thereto or when otherwise due or
payable.
(f) Survival. The indemnity and contribution agreements contained in this
Section 6.8 shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Selling Shareholder, its officers,
directors, partners, attorneys, agents or any person, if any, who controls any
Selling Shareholder as aforesaid, and shall survive the transfer of such
Registrable Securities by any Selling Shareholder.
Section 6.9 Preparation; Reasonable Investigation. In connection with the
preparation and filing of a Registration Statement pursuant to the terms of this
Agreement:
(a) GridAmerica HoldCo shall, with respect to a Registration Statement
filed by GridAmerica HoldCo, give each Selling Shareholder, the underwriters, if
any, and their respective counsel and accountants the opportunity to participate
in the preparation of such Registration Statement (other than reports and proxy
statements incorporated therein by reference and lawfully and properly filed
with the SEC) and each Prospectus included therein or filed with the SEC, and
each amendment thereof or supplement thereto;
(b) GridAmerica HoldCo shall give the participating GridAmerica Companies,
the underwriters, if any, and their respective counsel and accountants such
reasonable access to its books and records and such opportunities to discuss the
business of GridAmerica HoldCo with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of the Selling Shareholders or such underwriters, to conduct a
reasonable investigation within the meaning of Section 11(b)(3) of the
Securities Act; and
(c) the Selling Shareholders shall, to the fullest extent reasonably
necessary, cooperate with GridAmerica HoldCo, the underwriters, if any, and
their respective counsel and accountants in order to complete the preparation of
a Registration Statement (other than reports and proxy statements incorporated
therein by reference) and each Prospectus included therein or filed with the
SEC, and each amendment thereof or supplement thereto.
41
Section 6.10 Rule 144 and Rule 144A. At all times during which GridAmerica
HoldCo is subject to the periodic reporting requirements of the Exchange Act,
GridAmerica HoldCo covenants that it will file, on a timely basis, the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder, and it will take such
further action as NGUSA or the GridAmerica Companies may reasonably request
(including, without limitation, compliance with the current public information
requirements of Rule 144(c) and Rule 144A under the Securities Act), all to the
extent required from time to time to enable such GridAmerica Companies to sell
Registrable Securities without registration under the Securities Act within the
limitation of the conditions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, (b) Rule 144A under the
Securities Act, as such rule may be amended from time to time, or (c) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
NGUSA or any GridAmerica Company, GridAmerica HoldCo will provide reasonable and
customary assistance to facilitate such Person's sale of Registrable Securities
in block trades or other similar transactions. Notwithstanding the foregoing,
nothing in this Section 6.10 shall be deemed to require GridAmerica HoldCo to
register any of its securities pursuant to the Exchange Act.
Section 6.11 Other Registration Rights Agreements. Neither the Company nor
GridAmerica HoldCo will enter into any agreement offering registration rights to
any person which are more favorable than those granted to NGUSA and the
GridAmerica Companies under this Agreement unless, prior to entering into such
agreement, it shall offer registration rights on substantially similar terms to
the GridAmerica Companies.
Section 6.12 Specific Performance for Registration Rights. Each party
hereto shall be entitled to enforce its rights under this Article VI
specifically to recover damages by reason of any breach of any provision of this
Article VI and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Article VI and that each party may in
its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Article VI.
Section 6.13 Exchange of Units for Shares. In order to effectuate the IPO,
NGUSA and the GridAmerica Companies have determined that it is desirable to
create a Delaware corporation ("GridAmerica HoldCo") and, to the extent desired
by any Member, to exchange issued and outstanding Units of Members desiring to
participate in such an exchange for Shares of GridAmerica HoldCo in accordance
with this Section 6.13 (the "Unit Exchange").
(a) In connection with any IPO, the Company shall cause GridAmerica HoldCo
to be incorporated as a Delaware corporation. The Certificate of Incorporation
and Bylaws of GridAmerica HoldCo shall be in such form as the Company determines
shall best facilitate the IPO; provided, however, that the charter shall provide
for two classes of common stock of GridAmerica HoldCo which shall have identical
rights and privileges, except that "Class A Stock" shall have voting rights and
"Class B Stock" shall have no voting rights, and shall further provide that
Class A Stock may be held only by a Person who is a Non-Market Participant and
Class A Shares shall be convertible to Class B Shares and Class B Shares shall
be
42
convertible to Class A Shares in the same manner as is provided in the LLC
Agreement with respect to Class A Units and Class B Units.
(b) In connection with any IPO, (i) Shares issued by GridAmerica HoldCo
may be issued for cash, in which case the cash proceeds of the IPO may be used
to acquire Units of the Company or (ii) Shares may be issued in exchange for all
or any portion of the issued and outstanding Units held by any GridAmerica
Company that is a Member that desires to participate in the Unit Exchange
occurring in connection with the IPO. Following an IPO (whether or not in
connection with a Secondary Demand Registration), an GridAmerica Company that is
a Member may request that Shares be issued to it in exchange for all or any
portion of the issued and outstanding Units held by such GridAmerica Company,
and, upon such a request, GridAmerica HoldCo will effectuate a Unit Exchange in
accordance with such request within thirty (30) days.
(c) Immediately prior to the closing of the IPO, the Company shall cause
GridAmerica HoldCo to become a party to this Agreement for purposes of
effectuating the provisions of this Article VI and to exchange each Class A Unit
held by an GridAmerica Company desiring to participate in the Unit Exchange and
offered for exchange for one share of Class A Stock and to exchange each Class B
Unit held by such GridAmerica Company desiring to participate in the Unit
Exchange and offered for exchange for one share of Class B Stock. After the
initial Unit Exchange, any GridAmerica Company shall have the right, but not the
obligation, to exchange Units for Shares upon ten (10) days prior written
request.
(d) The Company and each GridAmerica Company shall use commercially
reasonable efforts to obtain all approvals of Governmental Authorities necessary
to effectuate the Unit Exchange, the IPO and any subsequent Public Offering.
ARTICLE VII
FAIR MARKET VALUE
Section 7.1 Fair Market Value. Whenever used in this Agreement, "Fair
Market Value" means, with respect to the valuation of any property, the value of
such property at the time in question as determined in good faith by the
Interested Parties; provided, however, that if such parties fail to agree in
writing upon the value of such property before the earlier of (i) twenty (20)
days after the first request to make such a determination or (ii) the date sixty
(60) days prior to the transaction in question, then the following shall apply:
(a) Each Interested Party shall select a nationally recognized investment
banking firm to make such determination on such Interested Party's behalf in
accordance with the standards, procedures, and assumptions set forth in Section
7.2. Each Interested Party shall pay all of the fees and expenses of the
investment banking firm selected by it (each such firm being referred to as an
"Interested Party Valuation Firm"). Subject to Section 13.9, each Interested
Party promptly shall make available to each other and any investment banking
firms involved in such process such information as is reasonably necessary to
reach a Fair Market Value determination. Each Interested Party Valuation Firm
shall determine its proposed fair market value of the property being valued.
43
(b) If the proposed fair market values determined by the Interested Party
Valuation Firms are within 10% of each other, then "Fair Market Value" shall
mean the average of such proposed fair market values.
(c) If the proposed fair market values determined by the Interested Party
Valuation Firms are not within 10% of each other, then the Interested Party
Valuation Firms shall select a third nationally recognized investment banking
firm (the "Neutral Valuation Firm"), which shall be paid for equally by both
Interested Parties. (If the Interested Party Valuation Firms fail to appoint a
Neutral Valuation Firm within twenty (20) days of the date the last of the
Interested Party Valuation Firms rendered its opinion of fair market value, then
either Interested Party may apply to any court or arbitration panel having
jurisdiction to make such appointment). The Neutral Valuation Firm shall also
propose a fair market value for the property being valued. If:
(1) the fair market value proposed by the Neutral Valuation Firm is
higher than the fair market values proposed by both Interested Party
Valuation Firms, then "Fair Market Value" shall mean the higher of the two
fair market values proposed by the Interested Party Valuation Firms;
(2) the proposed fair market value determined by the Neutral
Valuation Firm is lower than the fair market values proposed by both
Interested Party Valuation Firms, then "Fair Market Value" shall mean the
lower of the two fair market values proposed by the Interested Party
Valuation Firms; and
(3) the fair market value proposed by the Neutral Valuation Firm is
between the fair market values proposed by both Interested Party Valuation
Firms, then "Fair Market Value" shall mean the fair market value proposed
by the Neutral Valuation Firm.
(d) In any case where an investment banking firm is required to render an
opinion of fair market value, such opinion shall be rendered within 30 days of
being engaged.
Section 7.2 General Principles of Application. The following principles
shall apply generally to any determination of "fair market value" under Section
7.1, whether such determination is made by the Interested Parties or by an
investment banking firm:
(a) "Fair market value" shall mean the price at which the property in
question would change hands between a willing buyer and a willing seller,
neither being under any compulsion and both having reasonable knowledge of the
relevant facts, including the relevant regulatory policies and, where the item
in question is an interest, or a group of assets used, in a business, such item
shall be valued based on its going-concern value.
(b) Any expected tax benefits of either Interested Party shall be
considered in determining "fair market value."
(c) In computing the "fair market value" of a Unit or group of Units, such
values shall be determined by reference to the "fair market value" of the
Company and the presence or absence of voting or control rights shall be
ignored.
44
(d) Except as otherwise expressly provided in this Agreement, all property
will be valued on a stand-alone basis without regard to any expected cost
savings or other synergies resulting from any proposed transaction.
Notwithstanding the foregoing, (i) if as a result of the failure of a Putting
GridAmerica Company to include in its Contributed Transmission Facilities all
Transmission Facilities necessary or reasonably appropriate to operate the
Contributed Transmission Facilities in the manner in which such Transmission
Facilities were operated immediately prior to the determination of the "fair
market value" of such Transmission Facilities, the cost to the Company of
replacing those omitted Transmission Facilities shall be taken into account in
determining "Fair Market Value" and (ii) the economic and operational effect of
any assets or contractual arrangements for the provision of services offered by
a Putting GridAmerica Company in connection with the exercise of any Put Right
shall be taken into account in determining the "fair market value" of any
Contributed Transmission Facilities.
Section 7.3 General Principles of Application. When the "Fair Market Value"
to be determined is in connection with a contribution of assets to the Company
by the Managing Member or one of its Affiliates, the Members other than the
Managing Member and its Affiliates acting collectively will represent the
interests of the Company in such valuation process.
ARTICLE VIII
ADMISSION REQUIREMENTS
Section 8.1 Admission Requirements. Any successor owner (other than the
Company and its subsidiaries) of any of the GridAmerica Transmission Facilities
(whether by assignment, operation of law or otherwise) shall be entitled to
become a GridAmerica Company by becoming a party to the Operation Agreement in
accordance with its terms and by agreeing to be bound by the terms of this
Agreement. Any Person that acquires any Units from a GridAmerica Company
(whether by assignment, operation of law or otherwise) shall be entitled to
become a GridAmerica Company by agreeing to be bound by the terms of this
Agreement. The Company may permit, in its discretion, any owner of other
Transmission Facilities that becomes party to the Operation Agreement in
accordance therewith to become a GridAmerica Company, and the Company shall, and
the Initial Member, in its capacity as the Managing Member shall, in any event,
cause each such Person, as a condition to becoming a party to the Operation
Agreement, to agree to be bound by the terms of Section 2.2(e) of this
Agreement, in each case, by complying with any terms and conditions for becoming
a participant in the GridAmerica ITC approved by Commission and by agreeing to
be bound by the terms of this Agreement and such Section 2.2(e). For the
avoidance of doubt, a Person that becomes an GridAmerica Company pursuant hereto
that is not also a party to the Operation Agreement shall have no rights or
obligations under Section 2.2(e).
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
Section 9.1 Representations and Warranties Concerning the Company. In order
to induce the GridAmerica Companies to enter into this Agreement, the Company,
the Initial
45
Member and NGUSA hereby jointly and severally represent and warrant that the
statements contained in this Section 9.1 are true and correct.
(a) Organization and Standing. The Company is a Delaware limited liability
company, duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, with full power and authority to own,
lease, use and operate its properties and to conduct its business as and where
owned, leased, used, operated and conducted.
(b) Corporate Power and Authority. Subject to the receipt by the Company,
the Initial Member and NGUSA of any Required Consents required by it, the
Company has all requisite power and authority to enter into this Agreement and
to consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Company. This Agreement has been duly executed and delivered by the Company and,
subject to the receipt by the Company, the Initial Member and NGUSA of any
Required Consents required by it, constitutes the legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law).
(c) Conflicts; Consents. Neither the execution and delivery of this
Agreement by the Company nor the consummation of the transactions contemplated
hereby:
(1) will violate, conflict with, or result in a breach of any
provision of its certificate of organization or the LLC Agreement; or
(2) will violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the giving
of notice, the passage of time or otherwise, would constitute a default)
under, require any consent under, or entitle any Person (with the giving of
notice, the passage of time or otherwise) to terminate, accelerate, modify
or call a default under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company, under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, contract, undertaking,
agreement, lease or other instrument or obligation to which the Company is
a party, the effect of which will have or is reasonably likely to have, a
material adverse effect on the business, properties, condition (financial
or otherwise) or results of operations of the Company.
(d) Approvals. Subject to the receipt by the Company, the Initial Member
and NGUSA of any Required Consents required by it, all authorizations of and
exemptions, actions or approvals by, and all notices to or filings with, any
federal Governmental Authority that are required to have been obtained or made
by the Company, the Initial Member and/or NGUSA, as the case may be, in
connection with the execution and delivery of this Agreement have been obtained
or made and are in full force and effect, and all conditions of any such
authorizations, exemptions, actions or approvals have been complied with.
46
Section 9.2 Representations and Warranties Concerning the Initial Member.
In order to induce the GridAmerica Companies to enter into this Agreement, NGUSA
and the Initial Member hereby jointly and severally represent and warrant that
the statements contained in this Section 9.2 are true and correct.
(a) Organization and Standing. The Initial Member is a limited liability
company, duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, with full power and authority to own,
lease, use and operate its properties and to conduct its business as and where
owned, leased, used, operated and conducted.
(b) Corporate Power and Authority. Subject to the receipt by the Company,
the Initial Member and NGUSA of any Required Consents required by it, the
Initial Member has all requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Initial Member. This Agreement has been duly executed
and delivered by the Initial Member and, subject to the receipt by the Company,
the Initial Member and NGUSA of any Required Consents required by it,
constitutes the legal, valid and binding obligation of the Initial Member,
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).
(c) Conflicts; Consents. Neither the execution and delivery of this
Agreement by the Initial Member nor the consummation of the transactions
contemplated hereby:
(1) will violate, conflict with, or result in a breach of any
provision of its organizational documents; or
(2) will violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the giving
of notice, the passage of time or otherwise, would constitute a default)
under, require any consent under, or entitle any Person (with the giving of
notice, the passage of time or otherwise) to terminate, accelerate, modify
or call a default under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Initial Member, under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, contract,
undertaking, agreement, lease or other instrument or obligation to which
the Initial Member is a party, the effect of which will have or is
reasonably likely to have, a material adverse effect on the business,
properties, condition (financial or otherwise) or results of operations of
the Initial Member.
(d) Approvals. Subject to the receipt by the Company, the Initial Member
and NGUSA of any Required Consents required by it, all authorizations of and
exemptions, actions or approvals by, and all notices to or filings with, any
federal Governmental Authority that are required to have been obtained or made
by the Company, the Initial Member and/or NGUSA, as the case may be, in
connection with the execution and delivery of this Agreement have been
47
obtained or made and are in full force and effect, and all conditions of any
such authorizations, exemptions, actions or approvals have been complied with.
Section 9.3 Representations and Warranties of GridAmerica Companies. In
order to induce the Company, the Initial Member and NGUSA to enter into this
Agreement, each GridAmerica Company hereby represents and warrants severally as
to itself, and not jointly and severally as to any other GridAmerica Company,
that the statements contained in this Section 9.3 are true and correct.
(a) Organization and Standing. Such GridAmerica Company is a corporation,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with full power and authority to own, lease,
use and operate its properties and to conduct its business as and where owned,
leased, used, operated and conducted.
(b) Corporate Power and Authority. Subject to the receipt by such
GridAmerica Company of any Required Consents required by it, such GridAmerica
Company has all requisite power and authority to enter into this Agreement and
to consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of such
GridAmerica Company. This Agreement has been duly executed and delivered by such
GridAmerica Company and, subject to the receipt by such GridAmerica Company of
any Required Consents required by it, constitutes the legal, valid and binding
obligation of such GridAmerica Company, enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether considered
in a proceeding in equity or at law).
(c) Conflicts; Consents. Neither the execution and delivery of this
Agreement by such GridAmerica Company nor the consummation of the transactions
contemplated hereby:
(1) will violate, conflict with, or result in a breach of any
provision of its organizational documents; or
(2) will violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the giving
of notice, the passage of time or otherwise, would constitute a default)
under, require any consent under, or entitle any Person (with the giving of
notice, the passage of time or otherwise) to terminate, accelerate, modify
or call a default under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
such GridAmerica Company, under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, contract,
undertaking, agreement, lease or other instrument or obligation to which
such GridAmerica Company is a party, the effect of which will have or is
reasonably likely to have, a material adverse effect on the business,
properties, condition (financial or otherwise) or results of operations of
such GridAmerica Company.
48
(d) Approvals. Subject to the receipt by such GridAmerica Company of any
Required Consents required by it, all authorizations of and exemptions, actions
or approvals by, and all notices to or filings with, any federal Governmental
Authority that are required to have been obtained or made by such GridAmerica
Company in connection with the execution and delivery of this Agreement have
been obtained or made and are in full force and effect, and all conditions of
any such authorizations, exemptions, actions or approvals have been complied
with.
Section 9.4 Representations and Warranties of NGUSA. In order to induce the
GridAmerica Companies to enter into this Agreement, NGUSA hereby represents and
warrants that the statements contained in this Section 9.4 are true and correct.
(a) Organization and Standing. NGUSA is a corporation, duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, with full power and authority to own, lease, use and operate its
properties and to conduct its business as and where owned, leased, used,
operated and conducted.
(b) Corporate Power and Authority. Subject to the receipt by the Company,
the Initial Member and NGUSA of any Required Consents required by it, NGUSA has
all requisite power and authority to enter into this Agreement and to consummate
the transactions contemplated by this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of NGUSA. This
Agreement has been duly executed and delivered by NGUSA and, subject to the
receipt by the Company, the Initial Member and NGUSA of any Required Consents
required by it, constitutes the legal, valid and binding obligation of NGUSA,
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).
(c) Conflicts; Consents. Neither the execution and delivery of this
Agreement by NGUSA nor the consummation of the transactions contemplated hereby:
(1) will violate, conflict with, or result in a breach of any
provision of its organizational documents; or
(2) will violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with the giving
of notice, the passage of time or otherwise, would constitute a default)
under, require any consent under, or entitle any Person (with the giving of
notice, the passage of time or otherwise) to terminate, accelerate, modify
or call a default under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
NGUSA, under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, contract, undertaking,
agreement, lease or other instrument or obligation to which NGUSA is a
party, the effect of which will have or is reasonably likely to have, a
material adverse effect on the business, properties, condition (financial
or otherwise) or results of operations of NGUSA.
49
(d) Approvals. Subject to the receipt by the Company, the Initial Member
and NGUSA of any Required Consents required by it, all authorizations of and
exemptions, actions or approvals by, and all notices to or filings with, any
federal Governmental Authority that are required to have been obtained or made
by the Company, the Initial Member and/or NGUSA, as the case may be, NGUSA in
connection with the execution and delivery of this Agreement have been obtained
or made and are in full force and effect, and all conditions of any such
authorizations, exemptions, actions or approvals have been complied with.
(e) NGUSA Business Strategy. NGUSA is involved in the ownership and
operation of transmission and distribution properties and seeks to further its
overall business strategy by acquiring, owning and operating transmission and
distribution properties, and divesting or otherwise disposing of electric
generation businesses and assets or obligations relating thereto.
ARTICLE X
COVENANTS
Section 10.1 NGUSA Covenants. NGUSA hereby agrees for the benefit of the
GridAmerica Companies, that for so long as the Initial Member is the Managing
Member, NGUSA will:
(a) Maintain, and cause the Initial Member to maintain, Non-Market
Participant status except to the extent that the failure of NGUSA or the Initial
Member to maintain Non-Market Participant status occurs as a result of a change
in applicable Law, in which case NGUSA shall take or shall cause the Initial
Member to take commercially reasonable steps to regain Non-Market Participant
status so long as the cost thereof is not material. To the extent that the
pursuit by NGUSA of its transmission and distribution strategy could reasonably
be expected to result in the loss by NGUSA or the Initial Member of Non-Market
Participant status, NGUSA shall (i) propose to the Commission to take, or cause
to be taken, commercially reasonable mitigation measures to maintain Non-Market
Participant status, (ii) if NGUSA reasonably believes that the Commission is not
likely to accept such mitigation measures, so notify the GridAmerica Companies,
such notice to be given at least one hundred and fifty (150) days prior to the
date that NGUSA or the Initial Member expects NGUSA and/or the Initial Member,
as the case may be, to lose Non-Market Participant status and, if after delivery
of such notice, the GridAmerica Companies so request, undertake, at its expense,
to identify a new Managing Member which is willing to replace the Initial Member
on substantially the same terms as are set forth in the ITC Agreements or
otherwise propose alternate means of maintaining the independent management of
GridAmerica ITC and (iii) shall not deliver any notice of resignation pursuant
to Section 2.2(c)(v) prior to the date that is ninety (90) days after the date
of the delivery of any notice given as required by the foregoing clause (ii).
Anything in this Section 10.1(a) to the contrary notwithstanding, nothing in
this Section 10.1(a) shall be deemed to prohibit the right of the Initial Member
to resign as permitted by Section 2.2(c).
(b) Neither (i) permit the Initial Member, legally or beneficially, to own
any assets or incur any liabilities, or to engage in any business, other than as
may relate to or arise out of the ownership of Units, the business of the
Company and the fulfillment by the Initial
50
Member of its obligations as Managing Member nor (ii) permit any Affiliate of
the Initial Member (other than the Company or any subsidiary of the Company) to
own any assets necessary or desirable for, or otherwise appropriate to, the
operation of the Company, including any System-Wide Assets. Except as
contemplated by the proviso in the immediately preceding sentence, if the
Initial Member or any NGUSA Affiliate (other than the Company or any subsidiary
of the Company) acquires any assets of the type referred to in clause (ii) of
the proceeding sentence, NGUSA shall cause such Person to promptly transfer such
assets to the Company.
(c) Not enter into, or permit any NGUSA Affiliate or the Company to enter
into any agreement which prohibits or restricts the right to remove the Initial
Member for Cause pursuant to Section 6.1 (b) of the LLC Agreement or the
purchase of the Equity Interests or asset and liabilities of the Initial Member
pursuant to Section 2.1(e), except in compliance with Section 6.2(g) of the LLC
Agreement.
(c) Promptly cause the Initial Member to resign as Managing Member, such
resignation to be deemed "removal" for all purposes of the Transaction
Agreements, if (i) a Super Majority of Transmission Owners delivers to the
Initial Member and NGUSA written notice for the removal of the Managing Member
in accordance with Section 6.1(b)(ii) of the LLC Agreement or Section 4.4.3 of
the Operation Agreement and (ii) either NGUSA does not contest such removal
within thirty (30) days or a binding determination that grounds for such removal
exist has been made pursuant to Article XII, Article X of the LLC Agreement or
Article VI of the Operation Agreement.
(e) Cause (i) the Initial Member to be a direct or indirect wholly-owned
subsidiary of NGUSA, (ii) all Units purchased pursuant to Section 3.1(a) to be
held by one or more NGUSA Affiliates which are directly or indirectly
wholly-owned by NGUSA, and (iii) all Units purchased, pursuant to Section 3.2 to
be held by an Affiliated Investor until the date two years after the date of
purchase thereof, or the date of the IPO, whichever is earlier.
(f) Prior to the Transmission Service Date, use commercially reasonable
efforts to cause the Initial Member to satisfy all of the conditions necessary
to allow the Transmission Service Date to occur as soon as is practicable, but
in all events prior to June 30, 2003; and in furtherance thereof, each
GridAmerica Company, severally as to itself and not jointly and severally,
agrees to use commercially reasonable efforts to cause the Transmission Service
Date to occur as soon as practicable, but in all events, prior to such date.
(g) Not amend, or permit the Initial Member or any Affiliated Investor to
amend, the LLC Agreement to amend the definitions of Transaction Agreements,
Cause, Gross Negligence, Super Majority of Non-Managing Members or Willful
Misconduct or Sections 11.8(e) through (h) of the LLC Agreement without the
approval of a Super Majority of Transmission Owners, and until such time as a
Super Majority of Non-Managing Members shall have the approval rights contained
in Section 6.6(b) of the LLC Agreement, not permit any Affiliated Investor to
amend, modify or otherwise supplement or waive any provision of the LLC
Agreement in a manner that would alter or change the powers, preferences or
rights of a Member (other than the Initial Member) or any other Person that has
the right to become a Member pursuant to this Agreement (assuming for purposes
of this Subsection 10.1(8) that such other
51
Person has become a Member) so as to adversely affect such Member's or such
other Person's powers, preferences or rights as a Member thereunder or the
effect of which is (A) that the Company is able to enter into or engage in a
transaction, contract, agreement or arrangement that would have contravened the
LLC Agreement prior to such amendment or (B) would impair the ability of the
Company to carry out its Permitted Purposes.
(h) Not permit the Initial Member to make any distribution to the holders
of, or redemption of, the Equity Interests of the Initial Member or make any
loans to NGUSA or any Affiliated Investor unless, prior to such distributions,
redemptions or loans, NGUSA notifies each GridAmerica Company and each Member of
such distribution, redemption or loan and agrees in an agreement reasonably
satisfactory to a Super Majority of Transmission Owners (the "Equity
Contribution Agreement") to cause the Person(s) who own the Initial Member to
make, at the written request of the Company, any GridAmerica Company or any
Member, a capital contribution or other equity contribution to the Initial
Member in an amount equal to the lesser of (i) $25,000,000, (ii) the aggregate
amount of such distributions, redemptions and loans and (iii) any unsatisfied
liability of the Initial Member to the Company or any GridAmerica Company
incurred as a result of the indemnity obligation of the Initial Member pursuant
to Section 11.8(e) of the LLC Agreement or as a result of the Gross Negligence
or Willful Misconduct of the Initial Member. The Equity Contribution Agreement
shall provide that NGUSA shall cause such capital contribution or other equity
contribution to be (A) made to the Initial Member and (B) used by the Initial
Member solely for purposes of satisfying such liabilities of the Initial Member.
Section 10.2 GridAmerica Company Covenants. Each GridAmerica Company,
severally as to itself and not jointly and severally, hereby covenants for the
benefit of NGUSA that: (a) it will not, and will not permit any of its majority
owned subsidiaries to, purchase or hold any securities of The National Grid
Group, PLC for so long as any Affiliate of NGUSA is the Managing Member and (b)
no later than 35 days after the Commission issues one or more Final Orders, it
shall notify the Company in writing whether or not such Final Orders constitute
an Approval Order.
Section 10.3 Rights of Transmission Owners Under the Operation Agreement.
The Parties agree that the Non-Divesting GridAmerica Companies (i) shall be
parties in interest in respect of any dispute concerning the removal of the
Managing Member pursuant to Sections 6.1(b)(ii) and 10.3 of the LLC Agreement
and (ii) shall have the right to cause the Company to enforce the indemnity
obligation of the Initial Member pursuant to Section 11.8(e) of the LLC
Agreement or the liability of the Initial Member based on its Gross Negligence
or Willful Misconduct to the extent necessary to allow the Non-Divesting
GridAmerica Companies to enforce and collect on their indemnity claims against
the Company under the Operation Agreement and to enforce the rights of the
Company in any Equity Contribution Agreement (including the right to require
National Grid USA to cause the Persons who own the Initial Member to make
capital or equity contributions to the Initial Member pursuant to such Section
10.1(h)).
Section 10.4 Party Covenants. Each Party that is or becomes a Member shall
not, and shall cause its Affiliates that are Members not to, amend the LLC
Agreement to amend the definitions of ITC Agreements, Cause, Gross Negligence,
Super Majority of Non-Managing
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Members or Willful Misconduct or Sections 11.8(e) through (h) of the LLC
Agreement without the approval of a Super Majority of Transmission Owners.
ARTICLE XI
TERMINATION, CERTAIN WITHDRAWAL RIGHTS
Section 11.1 Termination of Agreement; Effect of Termination.
(a) If the Transmission Service Date has not occurred on or before June
30, 2003, any Party may, upon thirty (30) days prior written notice to the other
Parties, cause the GridAmerica ITC to terminate.
(b) This Agreement may be terminated as to any GridAmerica Company (i)
pursuant to Section 5.7 or (ii) at any time by mutual consent of such
GridAmerica Company and the Initial Member. In the event of the termination of
this Agreement as to any GridAmerica Company pursuant to this Section 11.1(b),
this Agreement shall become void as to such GridAmerica Company and have no
further effect, without any liability on the part of any party or its directors,
officers or stockholders; provided, however, that no such termination shall
release any GridAmerica Company from any liabilities pursuant to Section 2.2(d)
or Section 3.4.
(c) Notwithstanding the foregoing, nothing contained in this Section 11.1
shall relieve any party to this Agreement of liability for a breach of any
provision of this Agreement.
ARTICLE XII
DISPUTE RESOLUTION
Section 12.1 Negotiations. If a dispute between any two or more Parties
arises out of or relates to this Agreement, any such Party may notify each other
Party that it intends to initiate the dispute resolution procedures set forth
herein. Immediately upon the receipt of such notice, the Party sending the
notice and each other Party receiving the notice shall refer such dispute to a
senior executive officer (the "SEOs") of each such Party for consultation and
advice prior to the commencement of the arbitration proceedings. The SEOs shall
meet in person or by teleconference as soon as mutually practicable to consider
such matters. If the SEOs fail to resolve such dispute within thirty (30) days
of such notice being sent, any Party to the dispute or controversy may declare
the consultation procedure set forth in this Section 12.1 terminated and refer
the dispute to arbitration pursuant to Section 12.2.
Section 12.2 Arbitration. If a dispute between any two or more Parties
arises out of or relates to this Agreement or to the relationship between the
Parties created by this Agreement, and such Parties have not successfully
resolved such dispute through negotiation on or before the thirtieth (30th) day
following the notice referred to in Section 12.1, then such dispute shall be
resolved according to this Section 12.2. If such dispute is subject to the
jurisdiction of the Commission, then any Party to the dispute may, within sixty
(60) days of the notice referred to in
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Section 12.1, bring such dispute before the Commission for resolution. If no
Party brings the dispute before the Commission within sixty (60) days of the
notice referred to in Section 12.1, or if the dispute is not subject to the
jurisdiction of the Commission, then such dispute shall be resolved by binding
arbitration ("Arbitration") under the following provisions.
(a) All Claims To Be Arbitrated. Except as provided in the immediately
preceding sentence and in Section 7.1 and 12.2(1), any and all claims,
counterclaims, demands, causes of action, disputes, controversies and other
matters in question arising out of or relating to this Agreement, any provision
hereof, the alleged breach hereof, or in any way relating to the subject matter
hereof or the relationship between the Parties created hereby, involving the
Parties ("Claims") shall be finally resolved by binding arbitration by a panel
of arbitrators under the Commercial Arbitration Rules (the "Arbitration Rules")
of the American Arbitration Association (the "AAA") to the extent not
inconsistent with the provisions of this Agreement, regardless of whether some
or all of such Claims allegedly (i) are extra-contractual in nature, (ii) sound
in contract, tort, or otherwise, (iii) are provided by federal or state statute,
common law or otherwise or (iv) seek damages or any other relief, whether at
law, in equity or otherwise.
(b) Referral of Claims to Arbitration. Subject to Section 12.1, one or
more Parties may refer a Claim to arbitration (the "Claimant Party") by
providing notice (an "Arbitration Notice") to each other Party or Parties
against which the Claim is asserted (whether one or more parties, the
"Respondent Party") in the manner set forth in the Arbitration Rules. The
Arbitration Notice must include a general description of the Claim and shall
identify all Respondent Parties and the reasons for asserting the Claim against
each Respondent Party. The Arbitration is commenced between the Claimant Party
and the Respondent Party ("Dispute Parties") by sending the Arbitration Notice
to the Respondent Party.
(c) Stay for Commission Proceedings; Effect of Commission Orders.
Following commencement of the Arbitration, if a Party other than a Dispute Party
institutes a proceeding before the Commission that involves one or more of the
Dispute Parties and the relief sought in that proceeding would require the
Commission to resolve one or more issues presented in the Arbitration (a
"Related Proceeding"), then the Dispute Parties agree that the Arbitration shall
be stayed during the pendency of such Related Proceedings. The Dispute Parties
further agree that the Commission's resolution in Related Proceedings of any
issue that is also presented in the Arbitration shall be and is final and
binding as to that issue in the Arbitration.
(d) Number and Qualification of Arbitrators. The panel of arbitrators (the
"Panel") shall consist of three arbitrators appointed in accordance with this
Section 12.2 and the Arbitration Rules. Arbitrators shall meet the
qualifications for arbitrators established by the AAA and, in addition, shall
have significant experience in the electric industry and/or significant
experience as an arbitrator in complex commercial matters. The arbitrators shall
each take an oath of neutrality.
(e) Appointment of Arbitrators. By the fifteenth (15th) day following the
day on which the Arbitration Notice is sent to the Respondent Party, the
Claimant Party shall submit its appointment of the first arbitrator to the
Respondent Party and the AAA. If the Claimant Party consists of more than one
Party, then those Parties shall jointly appoint the first arbitrator. By the
fifteenth (15th) day following the appointment of the first arbitrator, the
Respondent Party shall submit its appointment of the second arbitrator to the
Claimant Party and the AAA. If the Respondent Party consists of more than one
Party, then those Parties shall jointly appoint the
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second arbitrator. The two arbitrators appointed by the Dispute Parties shall
appoint a third arbitrator, who shall be the chairperson of the Panel, by the
fifteenth (15th) day following the appointment of the second arbitrator. If the
second arbitrator has not been appointed by the fifteenth (15th) day following
the appointment of the first arbitrator, or if the first two arbitrators have
not appointed the third arbitrator by the fifteenth (15th) day following the
appointment of the second arbitrator, any Dispute Party may request the AAA to
appoint the arbitrator(s) in question. If any arbitrator resigns, becomes
incapacitated, or otherwise refuses or fails to serve or to continue to serve as
an arbitrator, the Dispute Party or arbitrators entitled to designate that
arbitrator shall promptly designate a successor. In the event that either of the
Claimant Party or the Respondent Party consist of more than one Party and those
Parties are unable to agree on the appointment of an arbitrator, then all three
arbitrators shall be appointed by the AAA; provided, however, that the
arbitrators so appointed shall meet the qualifications set forth in Section
12.2(d).
(f) Governing Law. In deciding the substance of the Parties' Claims, the
arbitrators shall first rely upon the provisions of this Agreement and shall
then apply the substantive laws governing this Agreement pursuant to Section
13.7.
(g) Powers of the Arbitrators; Limitations On Remedies. The validity,
construction and interpretation of this agreement to arbitrate, and all
procedural aspects of the arbitration conducted pursuant to this agreement to
arbitrate, including the determination of the issues that are subject to
arbitration (i.e., arbitrability), the scope of the arbitrable issues,
allegations of "fraud in the inducement" to enter into this Agreement or this
arbitration provision, allegations of waiver, laches, delay or other defenses to
arbitrability, and the rules governing the conduct of the arbitration (including
the time for filing an answer, the time for the filing of counterclaims, the
times for amending the pleadings, the specificity of the pleadings, the extent
and scope of discovery, the issuance of subpoenas, the times for the designation
of experts, whether the arbitration is to be stayed pending resolution of
related litigation involving third parties not bound by this arbitration
agreement, the receipt of evidence and the like), shall be decided by the
arbitrators to the extent not provided for in this Article XII. The arbitrators
shall decide the Claims based on this Agreement, the Arbitration Rules, and the
governing law, and not ex aqueo et xxxx, as amiable compositeurs, or in equity.
The arbitrators shall not have the power to award any of those remedies which
are precluded by Section 13.14(b). The arbitrators shall have the power to enter
such interim orders as they deem necessary, including orders to preserve the
subject matter of the Claim or to preserve or adjust the status of the Parties
pending resolution of the Claim in the Arbitration. The chairperson is empowered
to issue interim orders on his own authority in emergency situations and where
necessary to ensure the efficient administration of the Arbitration on
application from a Dispute Party, which orders shall remain in effect until a
meeting of all arbitrators may be convened to consider the application. The
arbitrators shall have the power to assess the attorneys' fees, costs and
expenses of the Arbitration (including the arbitrators' fees and expenses)
against one or more of the Parties in whatever manner or allocation the
arbitrators deem appropriate.
(h) Venue; Procedural Issues. The seat of the Arbitration shall be New
York, New York, or such other place as the Dispute Parties may agree. The
arbitrators shall set the date, the time and the place of the hearing, which
must commence on or before the one hundred twentieth (120th) day following the
designation of the third arbitrator. All decisions of the three
55
arbitrators shall be made by majority vote. In determining the extent of
discovery, the number and length of depositions and all other pre-hearing
matters, the arbitrators shall endeavor, to the extent possible, to streamline
the proceedings and minimize the time and cost of the proceedings. There shall
be no transcript of the hearing. The final hearing shall not exceed ten (10)
business days, with the Claimant Party and Respondent Party each granted
one-half of the allocated time to present its case to the arbitrators. All
proceedings conducted hereunder and the decision of the arbitrators shall be
kept confidential by the arbitrators, the AAA and any Persons participating in
the Arbitration, except that the confidentiality obligations of the Parties
shall be governed by Section 13.9.
(i) Additional Claims. After the Arbitration has commenced and the Panel
has been appointed, if a further Claim arises under this Agreement that is not
successfully settled pursuant to Section 12.1, and the further Claim (an
"Additional Claim") is related to the Claim in the Arbitration or involves the
same Dispute Parties, then any Party to the Additional Claim may ask the Panel
to accept jurisdiction over the Additional Claim and include it in the
Arbitration by submitting an Arbitration Notice in the manner set forth in
Section 12.2(b) (an "Additional Arbitration Request") and submitting a
concurrent request to the Panel to accept the Additional Claim. The Parties
agree that the Panel should accept jurisdiction over an Additional Claim if the
resolution of the Claim before the Panel will involve some or all of the same
legal and factual issues presented by the Additional Claim or if accepting
jurisdiction over the Additional Claim would facilitate or help minimize the
costs of resolving the disputes at issue and not unduly delay the Arbitration.
The Parties agree, however, that the Panel alone shall determine whether it
should accept jurisdiction over an Additional Claim and that its determination
shall be final and unappealable. If the Panel refuses jurisdiction over the
Additional Claim, then the Additional Arbitration Request shall constitute a
separate request for arbitration, which shall proceed independently and under
this Section 12.2 as if filed on the date the Panel denied the request to accept
jurisdiction. So long as there is no pending Additional Arbitration Request to
the Panel to accept jurisdiction, any Party to an Additional Claim may commence
a separate arbitration proceeding in the manner set forth in this Section 12.2.
(j) Arbitration Awards. The arbitrators shall render their award on or
before the thirtieth (30th) day following the last session of the hearing fully
resolving all Claims that are the subject of the Arbitration. The award shall be
in writing, shall give reasons for the decision(s) reached by the arbitrators
and shall be signed and dated by the arbitrators, and a copy of the award shall
be delivered to each of the Dispute Parties. A Party against which the award
assesses a monetary obligation or enters an injunctive order shall pay that
obligation or comply with that order on or before the thirtieth (30th) calendar
day following the receipt of the award or by such other date as the award may
provide. Any award of the arbitrators shall be consistent with the limitations
and terms of this Agreement. The arbitrators' award may be confirmed in, and
judgment upon the award entered by, any court having jurisdiction over the
Parties.
(k) Binding Nature. The decisions of the arbitrators shall be final and
binding on the Parties and non-appealable to the maximum extent permitted by
Law.
(l) Assistance of Courts. It is the intent of the Parties that the
Arbitration shall be conducted expeditiously, without initial recourse to the
courts and without interlocutory appeals of the arbitrators' decisions to the
courts. Notwithstanding any other provision of this
56
Agreement, however, a Party may seek court assistance in the following
circumstances: (i) if a Party refuses to honor its obligations under this
agreement to arbitrate, any other Party may obtain appropriate relief compelling
arbitration in any court having jurisdiction over the refusing Party, and the
order compelling arbitration shall require that the arbitration proceedings take
place in Washington, D.C., and in the manner specified herein, (ii) a Dispute
Party may apply to any state or federal court having relevant jurisdiction for
orders requiring witnesses to obey subpoenas issued by the arbitrators,
including requests for documents, and (iii) a Party may apply at any time before
or during the Arbitration to any court having relevant jurisdiction for an order
preserving the status quo ante and/or evidence in anticipation of arbitration
(for avoidance of doubt, preservation of the status quo ante includes an order
compelling a Party to continue to fulfill an obligation under this Agreement or
to refrain from taking an action that would constitute a default under this
Agreement; for further avoidance of doubt, such an application to the courts is
not intended to and does not constitute waiver of the right to arbitrate Claims,
nor does it refer any Claim to court for decision). The Parties agree to comply
with any interim order issued by the arbitrators or by the chairperson. Any and
all of the arbitrators' orders and decisions, including interim orders, may be
enforced by any state or federal court having jurisdiction. Each Party agrees
that arbitration pursuant to this Section 12.2 shall be the exclusive method for
resolving all Claims and that it will not commence an action or proceeding,
except as provided in this Section 12.2.
Section 12.3 Arbitration of Certain Claims Regarding Removal of Managing
Member. If a Super Majority of Transmission Owners shall have attempted to
remove the Managing Member for Cause pursuant to Section 6.1(b)(ii) of the LLC
Agreement, and the Managing Member disputes whether Cause for removal exists (a
"Removal Claim"), Section 10.1(d) of this Agreement or Section 4.4.3 of the
Operation Agreement, then the issue of whether Cause exists immediately shall be
referred to and resolved by binding arbitration ("Removal Arbitration")
according to this Section 12.3. The Removal Claim shall be finally resolved by
one arbitrator appointed in accordance with this Section 12.3 and the
Arbitration Rules to the extent not inconsistent with the provisions of this
Agreement. The Expedited Procedures of the Arbitration Rules shall be used
unless the arbitrator determines that they would be inappropriate. The
arbitrator shall take an oath of neutrality.
(a) Application to Removal Claim; Relation to Other Claims. Any dispute
other than a Removal Claim must be resolved in a separate Arbitration pursuant
to Section 12.2. A Removal Arbitration may not be joined to or consolidated with
an Arbitration without the consent of all parties in the Removal Arbitration and
the Arbitration(s). The decision of the arbitrator on a Removal Claim shall be
final and conclusive and bind any arbitrators in an Arbitration commenced under
Section 12.2.
(b) Referral of Claims to Arbitration. A Managing Member who receives a
written notice of removal as contemplated in Section 6.1(b)(ii) of the LLC
Agreement, Section 10.1(d) of this Agreement or Section 4.4.3 of the Operation
Agreement (a "Removal Notice"), and who disputes that Cause for removal exists
or a Member or NDTO upon receipt of notice from the Managing Member that it
disputes that Cause exists (the "Removal Claimant"), may refer a Removal Claim
to Removal Arbitration by providing notice (a "Notice of Removal Dispute") to
the Managing Member, all Members and all NDTOs that are not the Removal Claimant
(whether one or more parties, the "Removal Respondent Party"), in the manner set
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forth in the Arbitration Rules. The Notice of Removal Dispute also must contain
a list of five (5) proposed arbitrators. The Removal Arbitration is commenced
between the Removal Claimant and the Removal Respondent Party ("Removal Dispute
Parties") by sending the Notice of Removal Dispute to the Removal Respondent
Party.
(c) Appointment of Arbitrator. Within ten (10) days of delivery of the
Notice of Removal Dispute, the Removal Respondent Party shall deliver to the
Removal Claimant and the AAA a list of five (5) proposed arbitrators. If the
lists provided by the Removal Claimant and the Removal Respondent Party both
contain a common proposed arbitrator, such person shall be selected as
arbitrator; otherwise, the AAA shall appoint the arbitrator according to the
procedures contained in the Arbitration Rules. If the arbitrator resigns,
becomes incapacitated, or otherwise refuses or fails to serve or to continue to
serve as an arbitrator, the Removal Dispute Parties shall promptly designate a
successor using the procedures established in this Section 12.3. An arbitrator
appointed pursuant to this Section 12.3(c) may not also be appointed as an
arbitrator pursuant to Section 12.2.
(d) Governing Law. In deciding the substance of the Removal Claims, the
arbitrator shall first rely upon the provisions of this Agreement and shall then
apply the substantive laws governing this Agreement pursuant to Section 13.7.
(e) Powers of the Arbitrators; Limitations On Remedies. The arbitrator in
a Removal Arbitration shall decide solely the Removal Claim, and shall have no
power to decide any other Claim. The arbitrator shall decide the Removal Claim
based on this Agreement, the Arbitration Rules, and the governing law, and not
ex aqueo et xxxx, as amiable compositeur, or in equity. The arbitrator shall
have the power to assess the attorneys' fees (in accordance with Section 13.10),
costs and expenses of the Removal Arbitration (including the arbitrators' fees
and expenses) against one or more of the Parties in whatever manner or
allocation the arbitrator deems appropriate.
(f) Venue; Procedural Issues. The seat of the Removal Arbitration shall be
New York, New York, or such other place as the Removal Dispute Parties may
agree. The arbitrator shall set the date, the time and the place of the hearing,
which must commence on or before the thirtieth (30th) day following the
appointment of the arbitrator. There shall be no transcript of the hearing. The
final hearing shall not exceed ten (10) business days, with the Removal Claimant
and Removal Respondent Party each granted one-half of the allocated time to
present its case to the arbitrator. All proceedings conducted hereunder and the
decision of the arbitrator shall be kept confidential by the arbitrator, the AAA
and any Persons participating in the Removal Arbitration.
(g) Arbitration Awards. The arbitrator shall render his award on or before
the tenth (10th) day following the hearing(s) on the Removal Claim. The award
shall be in writing, shall give a reasonably detailed description of the reasons
for the decision(s) reached by the arbitrator and shall be signed and dated by
the arbitrator, and a copy of the award shall be delivered to each of the
Removal Dispute Parties. Any award of the arbitrator shall be consistent with
the limitations and terms of this Agreement. The arbitrator's award may be
confirmed in, and judgment upon the award entered by, any court having
jurisdiction over the Parties.
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ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices. Every notice, request, or other statement to be made
or delivered to a Party pursuant to this Agreement shall be directed to such
Party's representative at the address or facsimile number for such Party set
forth on Schedule B or to such other address or facsimile number as the Party
may designate by written notice to each other Party from time to time. All
notices or other communications required or permitted to be given pursuant to
this Agreement must be in writing and will be considered as properly given if
sent by facsimile transmission (with confirmation notice sent by first class
mail, postage prepaid), by reputable nationwide overnight delivery service that
guarantees next business day delivery, by personal delivery, or, if mailed from
within the United States, by first class United States mail, postage prepaid,
registered or certified with return receipt requested. Any notice hereunder will
be deemed to have been duly given (i) on the date personally delivered, (ii)
when received, if sent by certified or registered mail, postage prepaid, return
receipt requested or if sent by overnight delivery service; and (iii) if sent by
facsimile transmission, on the date sent, provided confirmation notice is sent
by first-class mail, postage prepaid promptly thereafter.
Section 13.2 Entire Agreement; Amendments. This Agreement constitutes the
entire agreement among the Parties pertaining to the subject matter hereof and
supersedes all prior agreements, representations and understandings, written or
oral, pertaining thereto, including that certain letter of intent dated as of
June 20, 2002 among NGUSA and the Original GridAmerica Companies. No amendment
to or modification, termination or waiver of or under any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Company, NGUSA, the Initial Member and one or more GridAmerica Companies owning
Transmission Facilities subject to the Functional Control of the Company with a
Net Plant of at least 66.67% of the aggregate Net Plant of all GridAmerica
Companies' Transmission Facilities subject to the Functional Control of the
Company (for purposes of this Section 13.2, an GridAmerica Company that is a
Member shall be deemed to own Transmission Facilities equal to the Transmission
Facilities owned by the Company multiplied by such Member's Percentage
Interest); provided, however, that (i) any amendment, modification, termination
or waiver that adversely affects a specific Party must also be approved in
writing by such Party and (ii) a waiver by a Party as to only its rights may be
granted by such Party; provided, further, that any amendment to Section 6.13
which does not deprive a Party of the essential benefits of Article VI shall not
be deemed to adversely affect such Party.
Section 13.3 Effect of Waiver. No waiver by a Party of any one or more
defaults by another Party in the performance of this Agreement shall operate or
be construed as a waiver of any future default or defaults, whether of alike or
different character.
Section 13.4 Not for the Benefit of Third Parties; No Partnership. This
Agreement is intended to be solely for the benefit of the Parties, their
successors and permitted assignees and is not intended to and shall not confer
any rights or benefits on any Person not a signatory hereto. This Agreement is
not intended, and shall not be construed, interpreted or applied, to create a
partnership or joint venture, among the Parties.
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Section 13.5 No Assignment; Binding Effect. Except as provided in Sections
5.5 and 8.1 or in connection with an assignment to lenders, neither this
Agreement nor any right, interest or obligation hereunder may be assigned by any
Party hereto without the prior written consent of each other Party hereto and
any attempt to do so will be void, except for assignments and transfers by
operation of law. Subject to the preceding sentence, this Agreement is binding
upon, inures to the benefit of and is enforceable by the Parties hereto and
their respective successors and assigns.
Section 13.6 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of that prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of that provision in any other jurisdiction.
Section 13.7 Governing Law; Waiver of Jury Trial. THE VALIDITY AND
INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THAT WOULD REQUIRE
THE LAW OF ANOTHER JURISDICTION TO APPLY. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTEND PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 13.8 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument, notwithstanding that all of the Parties
are not signatories to the original or to the same counterpart.
Section 13.9 Confidentiality. The following provisions set forth the
obligations arising out of the disclosure of Confidential Information by a Party
(the "Disclosing Party") to another Party (the "Recipient" or "Recipients")
under this Agreement.
(a) Agreement of Non Disclosure and Non-Use. In consideration of the
disclosure by a Disclosing Party to a Recipient of Confidential Information, the
Recipient and its officers, directors, partners, employees, Affiliates, agents,
representatives, outside auditors, attorneys, and any Third Party Recipient who
have access to the Confidential Information (collectively, "Representatives"):
(1) shall keep Confidential information confidential and will not,
without the prior written consent of such Disclosing Party or as allowed by
this Agreement, disclose Confidential Information to other Persons; and
(2) shall not use Confidential Information other than for purposes
legitimately related to the operation of the business of the Company and/or
GridAmerica ITC, including ("Approved Uses"); provided, however, that
subject to any applicable copyright rights of the Company, nothing
contained herein shall limit the right of the Managing Member or any of its
Representatives from using any Confidential Information of the Company or
disclosed to the Company by any GridAmerica Company consisting
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of methods, techniques, rate design and other similar Confidential
Information that relates to the electric transmission industry generally,
and not to the business of a particular GridAmerica Company (but excluding
any software developed by the Company or any GridAmerica Company, and
excluding any Confidential Information of an GridAmerica Company marked
"proprietary" by such GridAmerica Company), for other than Approved Users
which are not in competition with the Company. Each Recipient agrees to
transmit the Confidential Information of a Disclosing Party only to such of
the Recipient's Representatives who need to know the Confidential
Information for the purpose of assisting the Recipient in Approved Uses,
and who are informed of the provisions of this Section 13.9. A Recipient
shall be fully liable for any breach of this Agreement by its
Representatives and agrees, at its sole expense, to take reasonable
measures to restrain its Representatives from prohibited or unauthorized
disclosure or use of the Confidential Information.
(b) Disclosure Required by Subpoena, Law, Litigation or Legal Process. If
any portion of Confidential Information is required to be disclosed by subpoena,
Law, litigation, arbitration or similar legal process, or to a Governmental
Authority, the Recipient will promptly inform the Disclosing Party of the
existence, terms and circumstances surrounding such request before any such
disclosure is required so as to allow the Disclosing Party to protect the
Confidential Information. The Recipient will consult with the Disclosing Party
on the advisability of taking legally-available steps to resist or narrow such
request. The Disclosing Party may thereafter seek to obtain a protective order,
and the Recipient shall cooperate with the Disclosing Party in its efforts to
obtain a protective order, to restrict access to, and any use or disclosure of,
the Confidential Information, at the expense of the Disclosing Party.
Notwithstanding anything else to the contrary contained herein, Confidential
Information that is required to be disclosed in the ordinary course of the
Company's business to MISO or to the Commission or other Governmental Authority
pursuant to Law or the MISO Agreement may be so disclosed without compliance
with this Section 13.9(b).
(c) Disclosure In Connection with Financing Transactions or Transfer of
Units. In the event that a Recipient desires to disclose Confidential
Information in connection with a financing or other similar transaction,
including as part of the due diligence requested by a proposed counterparty (a
"Third Party Recipient"), such Recipient may disclose such Confidential
Information to such Third Party Recipient only after receipt by such Recipient
from such Third-Party Recipient of a confidentiality agreement containing
substantially the terms and conditions set forth in this Section 13.9; provided,
however, that no competitively sensitive Confidential Information concerning an
GridAmerica Company may be disclosed to any Person that is a direct competitor
of such GridAmerica Company without such GridAmerica Company's prior written
consent.
(d) Disclosure in Connection with Dispute. A Recipient may disclose
Confidential Information to (i) the Panel in connection with an Arbitration
pursuant to Section 12.2, (ii) to the Commission in connection with a Claim
being heard by the Commission and (iii) to a court in connection with a dispute
being heard by such court; provided, however, that the Recipient shall take
reasonable steps to protect the confidentiality of such Confidential Information
and, where the Recipient would not be materially adversely affected by its
disclosure to the Disclosing Party of its intent to disclose such Confidential
Information in
61
connection with a dispute as provided above, the Recipient shall so disclose to
the Disclosing Party the Recipient's intent to so disclose such Confidential
Information so as to allow the Disclosing Party the opportunity to protect such
Confidential Information. In such case, the Recipient shall cooperate with the
Disclosing Party in its efforts to obtain a protective order, to restrict access
to, and any other use or disclosure of, the Confidential Information.
(e) Survival of Obligations. The obligations with respect to Confidential
Information set forth herein shall survive the termination of this Agreement for
five (5) years. Upon the termination of the obligations of this Agreement with
respect to an item of Confidential Information, the Recipient shall be free to
use and disclose such item of information freely and without any obligation to
the Disclosing Party.
(f) Ownership of Confidential Information. Each Disclosing Party reserves
its (and, if applicable, its licensor's) ownership rights in and to its
Confidential Information disclosed to a Recipient and only grants a license to
use such Confidential Information for the Approved Uses. In addition, each
Recipient agrees that it does not acquire any ownership interest in the
Confidential Information of any Disclosing Party by virtue of the combination of
such Confidential Information with other Confidential Information, including
that of the Company.
Section 13.10 Attorneys' Fees. In any dispute arising hereunder, the party
prevailing at final judgment shall be entitled to recover from the other party
all of its reasonable attorneys' fees and costs incurred in such a proceeding,
in addition to any affirmative or injunctive relief that it may receive.
Section 13.11 Time is of the Essence. Time is of the essence of each
provision of this Agreement.
Section 13.12 Further Assurances. Each Party agrees that it shall hereafter
execute and deliver such further instruments, provide all information, and take
or forbear such further acts and things as may be reasonably required and useful
to carry out the intent and purpose of this Agreement and as are not
inconsistent with the provisions of this Agreement.
Section 13.13 Late Payments. If a Party does not pay within ten (10) days
of the date required hereunder, all or any portion of an amount such Party is
required to pay as provided in this Agreement then (i) the amount such owing
Party is required to pay shall bear interest at (A) the sum of (I) a varying
rate per annum that is equal to the interest rate publicly quoted by The Wall
Street Journal, from time to time as the prime commercial or similar reference
interest rate with adjustments in that varying rate to be made on the same date
as any change in that rate plus (II) 2% per annum or (B) such lower rate
required under applicable Law, compounded annually and (ii) a Party to which
payment is due may take any action, at the cost and expense of the owing Party
to obtain payment by such owing Party of the portion of such owing Party's
payment that is in default, together with interest thereon as provided above.
Section 13.14 Remedies.
(a) The Parties agree that a breach of this Agreement by any Party will
result in irreparable damage to the other Parties for which no money damages
could adequately compensate. In addition to all other remedies to which such
other Parties may be entitled at law
62
or in equity, any Party shall be entitled to seek injunctive relief or specific
performance to restrain or compel the breaching Party, and each Party expressly
waives any claim that an adequate remedy at law exists for such a breach.
(b) Notwithstanding anything contained in this Agreement to the contrary,
no Party shall be liable to any other Party for indirect, consequential, special
or punitive damages on account of any action or proceeding brought hereunder or
related hereto.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each party as of the date first above written.
GRIDAMERICA LLC
BY GRIDAMERICA HOLDINGS INC., ITS
MANAGING MEMBER
By: \s\Xxxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chief Executive Officer
Date: February 14, 2003
GRIDAMERICA HOLDINGS, INC.
By: \s\Xxxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chief Executive Officer
Date: February 14, 2003
64
AMEREN SERVICES COMPANY as agent for
Union Electric Company d/b/a AmerenUE and
Central Illinois Public Service Company
d/b/a AmerenCIPS
By: \s\Xxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President
Date: February 14, 2003
AMERICAN TRANSMISSION SYSTEMS,
INCORPORATED
By: \s\Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
Date: February 14, 2003
NORTHERN INDIANA PUBLIC SERVICE
COMPANY
By: \s\ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Operating Officer
Date: February 14, 2003
NATIONAL GRID USA
By: \s\ Xxxxxxx X. Xxxxxx by Xxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and CEO
Date: February 14, 2003
65
Schedule A to Master Agreement
CERTAIN EXCLUDED EMPLOYEES
Xxxx Xxxxx
Xxxxxx Xxxxxxx
Xxxxx Xxxxxx
Xxxxx Xxxxxxxx
Xxxx Xxxxxx
66
Schedule B to Master Agreement
ADDRESSES FOR NOTICE
GridAmerica LLC
GridAmerica LLC
c/o National Grid USA
00 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Senior Vice President
Fax: 000-000-0000
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Senior Vice President and General Counsel
Fax: 000-000-0000
GridAmerica Holdings Inc.
c/o National Grid USA
00 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Senior Vice President
Fax: 000-000-0000
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Senior Vice President and General Counsel
Fax: 000-000-0000
Ameren Services Company
Ameren Services Company
One Ameren Plaza
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Senior Vice President
Fax: 000-000-0000
67
Ameren Services Company
One Ameren Plaza
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
General Counsel
Fax: 000-000-0000
American Transmission Systems, Incorporated
c/o FirstEnergy Service Company
00 Xxxxx Xxxx Xxxxxx
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Fax: 000-000-0000
Northern Indiana Public Service Company
Northern Indiana Public Service Company
000 X. 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx
Fax: 000-000-0000
National Grid USA
National Grid USA
00 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Senior Vice President
Fax: 000-000-0000
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Senior Vice President and General Counsel
Fax: 000-000-0000
68
