<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
NRG Generating (U.S.) Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
NRG GENERATING (U.S.) INC.
1221 NICOLLET MALL
SUITE 610
MINNEAPOLIS, MINNESOTA 55403-2444
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 21, 1996
--------------
Notice is hereby given that the Annual Meeting of Stockholders of NRG
Generating (U.S.) Inc., a Delaware corporation (the "Company"), will be held on
Thursday, November 21, 1996, at 1:30 p.m., Eastern Standard Time, at the Bell
Atlantic Building, 1717 Arch Street, Philadelphia, Pennsylvania, for the
following purposes:
1. To elect seven directors for terms expiring at the 1997 annual
meeting of stockholders;
2. To approve the Company's 1996 Stock Option Plan (the "Stock Option
Plan") authorizing the Company to grant options to purchase up to
500,000 shares of the Company's Common Stock to members of the
Board of Directors, officers and key employees of the Company or
its subsidiaries.
3. To ratify the appointment of Price Waterhouse LLP as the Company's
independent public accountants; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 20,
1996, as the record date for determining the stockholders entitled to notice
of, and to vote at, the Annual Meeting or any adjournment thereof. A list of
such stockholders will be maintained at the Company's headquarters during the
ten-day period prior to the date of the Annual Meeting and will be available
for inspection by stockholders, for any purpose germane to the meeting, during
ordinary business hours.
We hope you will be represented at the meeting by signing and
returning the enclosed proxy card in the accompanying envelope as promptly as
possible, whether or not you expect to be present in person. Your vote is
important and the Board of Directors appreciates the cooperation of
stockholders in directing proxies to vote at the meeting.
By Order of the Board of Directors,
Karen A. Brennan
Secretary
Minneapolis, Minnesota
October 28, 1996
<PAGE> 3
NRG GENERATING (U.S.) INC.
1221 NICOLLET MALL
SUITE 610
MINNEAPOLIS, MINNESOTA 55403-2444
612-373-8834
-------------
PROXY STATEMENT
OCTOBER 28, 1996
-------------
GENERAL INFORMATION
This Proxy Statement is being furnished by the Board of Directors (the
"Board of Directors") of NRG Generating (U.S.) Inc., a Delaware corporation
(the "Company"), to the holders of common stock (the "Common Stock") of the
Company in connection with the solicitation of proxies for use at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held at 1:30 p.m., Eastern
Standard Time, on Thursday, November 21, 1996, and at any and all adjournments
thereof.
A proxy delivered pursuant to this solicitation is revocable at the
option of the person giving the same at any time before it is exercised. A
proxy may be revoked, prior to its exercise, by executing and delivering a
later dated proxy card, by delivering written notice of the revocation of the
proxy to the Secretary of the Company prior to the Annual Meeting, or by
attending and voting at the Annual Meeting. Attendance at the Annual Meeting,
in and of itself, will not constitute a revocation of a proxy. Unless
previously revoked, the shares represented by the enclosed proxy will be voted
in accordance with the stockholder's directions if the proxy is duly executed
and returned prior to the Annual Meeting. If no directions are specified, the
shares will be voted FOR the election of the director nominees recommended by
the Board of Directors, FOR approval of the Company's 1996 Stock Option Plan
(the "Stock Option Plan"), FOR the ratification of the appointment of Price
Waterhouse LLP as the Company's independent public accountants, and in
accordance with the discretion of the named proxies on other matters properly
brought before the Annual Meeting.
The expense of preparing, printing and mailing this Proxy Statement
and soliciting the proxies sought hereby will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by officers,
directors and regular employees of the Company, who will not receive additional
compensation therefor, in person, or by telephone, telegraph or facsimile
transmission. The Company also will request brokerage firms, banks, nominees,
custodians and fiduciaries to forward proxy materials to the beneficial owners
of shares of Common Stock as of the record date and will provide reimbursement
for the cost of forwarding the proxy materials in accordance with customary
practice. Your cooperation in promptly signing and returning the enclosed proxy
card will help to avoid additional expense.
At October 20, 1996, the Company had 6,475,062 shares of Common Stock
issued and outstanding. Each share of Common Stock entitles the holder to one
vote. Only stockholders of record at the close of business on October 20, 1996
will be entitled to notice of, and to vote at, the Annual Meeting.
This Proxy Statement and the enclosed proxy card are first being
mailed to stockholders on or about October 28, 1996.
<PAGE> 4
OUTSTANDING VOTING SECURITIES OF THE COMPANY
AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information with respect to the
beneficial ownership, as of October 10, 1996 (except as otherwise noted below),
of shares of Common Stock or shares of common stock of Northern States Power
Company (hereinafter referred to as "NSP"; the stock of NSP referred to as "NSP
Stock")(1) by persons believed by the Company to own beneficially more than
five percent of the outstanding shares of Common Stock and by the directors and
named executive officers set forth in the Summary Compensation Table herein and
the directors and executive officers of the Company as a group, and the
percentage of the outstanding shares of Common Stock represented thereby. Other
than as set forth below, no director or executive officer of the Company is
known to be the beneficial owner of any shares of Common Stock. Except as noted
below, the Company believes that each of the persons listed has sole investment
and voting power with respect to the shares included in the table.
(1) NSP is the parent of NRG Energy, Inc. ("NRG Energy"), which holds
41.86% of the Common Stock of the Company.
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<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER TITLE OF CLASS BENEFICIAL OWNERSHIP(1) CLASS(1)
------------------------ -------------- -------------------- -----
<S> <C> <C> <C>
FIVE PERCENT STOCKHOLDERS:
NRG Energy, Inc.(2) Common Stock 2,710,357 41.86%
1221 Nicollet Mall
Suite 700
Minneapolis, Minnesota 55403-
2445
Wexford Management LLC(3) Common Stock 443,976 6.9%
411 West Putnam Avenue
Greenwich, CT 06830
DIRECTORS AND
NAMED EXECUTIVE OFFICERS:
David H. Peterson Common Stock 1,000 *
NSP Stock 3,460 *
Leonard A. Bluhm(4) Common Stock 1,000 *
NSP Stock 4,727 *
Lawrence I. Littman Common Stock -0- *
Craig Mataczynski(5) Common Stock 500 *
NSP Stock 3,317 *
Spyros S. Skouras, Jr. Common Stock -0- *
Charles J. Thayer(6) Common Stock 10,000 *
Ronald J. Will(7) Common Stock 2,500 *
NSP Stock 7,189 *
DIRECTORS AND EXECUTIVE OFFICERS Common Stock 15,500 *
AS A GROUP (8 PERSONS)(8) NSP Stock 18,768 *
</TABLE>
- ---------------------------
* Represents less than one percent.
(1) The information contained in this table with respect to Common Stock
ownership reflects "beneficial ownership" as determined in accordance
with Rule 13-d under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(2) On April 30, 1996, NRG Energy, Inc. acquired 41.86% of the outstanding
shares of Common Stock of the Company and 100% of the common stock of
certain acquired subsidiaries for $107,418,000, as adjusted by
provisions set forth in the Stock Purchase Agreement.
(3) Consists of 348,672 shares of common stock owned directly by Wexford
Capital Partners II, LP and 95,304 shares of Common Stock owned
directly by Wexford Overseas Partners Fund I, LP. Through an
investment management agreement, Wexford Management LLC, which manages
the funds, has sole voting and investment power of the funds. Mr.
Skouras serves as Senior Vice President of Wexford Management LLC. The
information above was provided by Wexford Management LLC.
(4) The NSP Stock includes 2,750 shares of NSP Stock subject to options
which may be exercised within 60 days.
(5) The NSP Stock includes 2,887 shares of NSP Stock subject to options
which may be exercised within 60 days.
(6) The shares are owned by Chartwell Capital Ltd. of which Mr. Thayer is
the 100% owner.
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(7) The NSP Stock includes 2,636 shares of NSP Stock subject to options
which may be exercised within 60 days and 1,826 shares of NSP Stock
which are owned by Mr. Will's spouse but for which he shares
investment power and 96 shares which he owns jointly with his spouse
and for which he shares investment power.
(8) The NSP Stock includes 6,603 shares of NSP Stock subject to options
which may be exercisable within 60 days.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of seven
directors, each of whom will serve until the 1997 annual meeting of
stockholders and until his or her successor is elected and qualified.
The Company's Bylaws currently fix the number of members of the Board
of Directors at seven, provided that such number of directors may be increased
to eight if necessary or required by the terms of any series of preferred stock
that may be issued from time to time. The Bylaws also provide that no fewer
than two of the nominees of the Board of Directors must consist of independent
directors and must be nominated by the Independent Directors Committee. The
Independent Directors Committee has nominated Mr. Thayer and Mr. Littman as the
two independent directors who have met the Bylaw qualifications of an
independent director and has proposed that they and Mr. Skouras constitute the
Independent Directors Committee. Proxies cannot be voted for a greater number
of persons than the number of nominees named therein.
The Composite Fourth Amended and Restated Plan of Reorganization
("Reorganization Plan") for O'Brien Environmental Energy, Inc. ("O'Brien
Energy"),1 fixed the number of directors for the reconstituted Board at seven
directors, of whom (i) four were to be designated by NRG Energy, (ii) one was
to be designated by Wexford Management LLC ("Wexford"), (iii) one was to be
designated by the official committee of equity security holders of O'Brien
Energy ("Equity Committee") and (iv) one was to be jointly designated by
Wexford and each of the holders of Class A Common Stock and Class B Common
Stock of O'Brien Energy who are members of the Equity Committee. The seven
designated directors are the individuals who are nominated to serve until the
1997 Annual Meeting.
The Board of Directors has no reason to believe that any of the
nominees for director will not be available to stand for election as director.
However if some unexpected occurrence should require the substitution of some
other person or persons for any one or more of the nominees, the proxies may be
voted FOR such substitute nominees, as the Board of Directors may designate.
The following table sets forth the principal occupations for at least
the last five years and the current directorships of the seven nominees for
director to be elected pursuant to Proposal No. 1.
David H. Peterson, Age 55.
- ------------------------------
(1) In September of 1994, O Brien Energy filed for protection under Chapter 11
of the U.S. Bankruptcy Code. Pursuant to the Reorganization Plan, O Brien
Environmental Energy Inc. was renamed NRG Generating (U.S.) Inc.
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Chairman of the Board
Mr. Peterson has served as Chairman of the Board of NRG Energy since
1995. He has also served as President of NRG Energy since July 1989 and Chief
Executive Officer of NRG Energy since 1994. Mr. Peterson was appointed Director
of the Company on April 30, 1996 pursuant to the Reorganization Plan. The Board
of Directors elected Mr. Peterson Chairman of the Board April 30, 1996.
LEONARD A. BLUHM, Age 51.
Director
Mr. Bluhm is President and Chief Executive Officer of the Company. Mr.
Bluhm is also President of all of the Company's subsidiaries. Prior to April
1996, Mr. Bluhm served as Vice President and Chief Financial Officer of NRG
Energy from 1993 to 1996, Chief Financial Officer of Cypress Energy Partners
from April 1992 to January 1993 and as Director of international operations and
mergers, acquisition and special projects from 1991 to 1992. Mr. Bluhm remains
an employee of NRG Energy and provides services to the Company under a lease
agreement with NRG Energy. Mr. Bluhm was appointed a Director of the Company on
September 20, 1996.
LAWRENCE I. LITTMAN, Age 65.
Director
Mr. Littman was General Manager of Liberty Cab & Limousine Company
from January 1, 1992 to May 1, 1996 and served as Chief Executive Officer of
that company from January 1, 1967 until January 1, 1992. From June 1984 to June
1993, he served as Chief Executive Officer for Lil Stable, Inc. Mr. Littman was
appointed an independent Director of the Company on April 30, 1996, pursuant to
the Reorganization Plan.
CRAIG A. MATACZYNSKI, Age 36.
Director
Mr. Mataczynski is Vice President of U.S. Business Development for NRG
Energy. From May 1993 to December 1994, Mr. Mataczynski was President of NEO
Corporation ("NEO"), a wholly owned subsidiary of NRG Energy. Prior to joining
NEO, Mr. Mataczynski served in various managerial capacities at NSP in the
Power Generation Business Unit and Corporate Strategy. Mr. Mataczynski was
appointed a Director of the Company pursuant to the Reorganization Plan and
Assistant Secretary of the Company on April 30, 1996.
SPYROS S. SKOURAS, JR., Age 43.
Director
Mr. Skouras is Senior Vice President of Wexford Management LLC. Prior
to joining Wexford in April of 1995, Mr. Skouras served as President of
Skouras Capital from 1991 to 1994 and as Chief Operating Officer of
Prudential-Grace Lines, Inc. from 1976 to 1989. Mr. Skouras served as a
Director
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of O'Brien Energy from 1995 until 1996 and was appointed a Director of the
Company on April 30, 1996 pursuant to the Reorganization Plan.
CHARLES THAYER, Age 52.
Director
Mr. Thayer has served as Managing Director of Chartwell Capital Ltd.,
a private investment firm, since 1989. From June 1993 until August 1993, he
was Chairman and Interim Chief Executive Officer of Sunbeam Corporation and was
Vice Chairman of that company from April 1996 until August 1996. Mr. Thayer is
a Director of Sunbeam Corporation and Digital Wireless Corporation. Mr. Thayer
was appointed an independent Director of the Company on April 30, 1996 pursuant
to the Reorganization Plan.
RONALD J. WILL, Age 56.
Mr. Will has served as Vice President, operations and engineering, of
NRG Energy since 1991. From September of 1989 until February of 1991, he served
as President and Chief Executive Officer of NRG Thermal. Mr. Will was appointed
a Director of the Company on April 30, 1996 pursuant to the Reorganization
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED IN PROPOSAL
NO. 1.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are elected annually and serve
at the pleasure of the Board of Directors. The following sets forth certain
information with respect to the executive officers of the Company.
LEONARD A. BLUHM, Age 51.
President and Chief Executive Officer.
See "Proposal No. 1: Election of Directors" for biographical information
concerning Mr. Bluhm.
TIMOTHY P. HUNSTAD, Age 39.
Vice President and Chief Financial Officer.
Mr. Hunstad has served as Vice President and Chief Financial Officer
of the Company since September 1, 1996. Prior to joining the Company, he was
President of NEO Corporation from January 1, 1995 until September 1, 1996 and
Managing Director, finance, of NRG Energy from July 1, 1994 until December 31,
1994. Mr. Hunstad served as Treasurer of NRG Australia, Ltd. from March 1993
until June 30, 1994 and Director, project finance, of NRG Energy from September
1, 1992 until March 1993. Previously, he was employed with E.F. Johnson Company
as Director of corporate development from January 1991 until July 1992.
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COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The following discussion of meetings of the Board of Directors and the
committees thereof includes meetings occurring during the Company's 1996 fiscal
year beginning on July 1, 1995 and ending June 30, 1996.
From July 1, 1995 through April 30, 1996, the Board of Directors of
O'Brien Energy met two times. From April 30, 1996 through June 30, 1996, a
reconstituted Board of Directors of the Company, which was appointed April 30,
1996 pursuant to the Reorganization Plan, met two times. No member of the Board
of Directors attended fewer than 75% of the total number of meetings held by
the Board of Directors and the committees on which such director served during
that period except for Mr. Skouras who attended 50% of the Board of Directors
meetings.
From July 1, 1995 through December 31, 1995, the only standing
committee of O'Brien Energy was the Audit Committee, which met once. The
members of the Audit Committee were Messrs. George Bernstein, Chairman, Robert
Smallacombe, Sanders Newman, Frank Wells and George Wells.
The standing committees of the Board of Directors of the Company,
which were formed April 30, 1996 pursuant to the Reorganization Plan, are the
Audit, Compensation and Independent Directors Committees. Their principal
functions and the names of the directors currently serving as members of those
committees are set forth below.
Audit Committee - The members of the Audit Committee are Messrs. Charles J.
Thayer, Spyros S. Skouras, Jr. and Ronald J. Will. The Audit Committee has
such powers, authority and responsibilities as are normally incident to the
functions of an Audit Committee. Typical Audit Committee functions are to
initiate or review the results of all audits or investigations into the
business affairs of the Company and its subsidiaries, conduct pre- and post-
audit reviews with the Company's management, financial employees and
independent auditors, and review the Company's quarterly and annual financial
statements and reports. The Audit Committee met one time during the period from
April 30, 1996 to June 30, 1996.
Compensation Committee - The members of the Compensation Committee are Messrs.
Charles J. Thayer, Lawrence I. Littman and David H. Peterson, Chairman. The
Compensation Committee administers the Company's Stock Option Plan and has the
powers and authority granted to it by any incentive compensation plan for
employees of the corporation or any of its subsidiaries and such other powers,
authority and responsibilities as may be determined by the Board. The
Compensation Committee determines the compensation of (a) employees of the
corporation who are directors of the corporation; and (b) after receiving and
considering the recommendation of the chief executive officer and the president
of the corporation, all other employees of the corporation who are officers of
the corporation or who occupy such other positions as may be designated by the
Compensation Committee. The Compensation Committee met twice during the period
from April 30, 1996 to June 30, 1996.
Independent Directors Committee - The members of the Independent Directors
Committee are Messrs. Charles J. Thayer, Spyros S. Skouras, Jr. and Lawrence I.
Littman. The Independent Directors Committee has three members, two of whom
must be Independent Directors. Prior to the annual meeting, the Independent
Directors Committee nominates those individuals who will serve as Independent
Directors on the Board as well as constitute the three members of the
Independent Directors Committee. It designates the individuals to fill any
vacancies on the Board that are to be filled by a member of the Independent
Directors Committee and that arise between annual meetings of shareholders. The
Independent Directors Committee also has the sole authority and responsibility
to make all decisions and
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<PAGE> 10
take all actions on behalf of the Company under certain agreements between NRG
Energy and the Company, including the Co- Investment Agreement. The Independent
Directors Committee met three times during the period from April 30, 1996 to
June 30, 1996.
PROPOSAL NO. 2:
APPROVAL OF THE NRG GENERATING (U.S.) INC. 1996 STOCK OPTION PLAN
On September 20, 1996, the Board of Directors of the Company adopted
the NRG Generating (U.S.) Inc. 1996 Stock Option Plan (the "Stock Option Plan")
which authorizes the Company to grant options to purchase up to 500,000 shares
of the Company's Common Stock. Under the Stock Option Plan, the Company is
authorized to grant its officers, directors and key employees either
nonqualified stock options ("NQSOs") or incentive stock options ("ISOs") within
the meaning of Section 422 of the Internal Revenue Code of 1996, as amended
(the "Code"). Nonemployee directors may only receive NQSOs under the Stock
Option Plan.
In order for the Company to issue ISOs, shareholder approval of the
plan is required under both the Code and the Stock Option Plan. Accordingly, at
the Annual Meeting, the Stock Option Plan is being submitted to the
shareholders for their approval so that the Company may issue such ISOs.
The following summary outlined below is qualified in its entirety by
reference to the full text of the Stock Option Plan, which is set forth in the
attached Appendix A.
PURPOSE OF THE STOCK OPTION PLAN
The purpose of the Stock Option Plan is to maximize the long-term
success of the Company, to ensure a balanced emphasis on both current and
long-term performance, to enhance participant's identification with
shareholders' interests and to facilitate the attraction and retention of key
individuals with outstanding ability. The Stock Option Plan provides for the
grant to members of the Board of Directors, officers and key employees of the
Company and its subsidiaries of options to purchase shares of the Common Stock
of the Company.
MAJOR PROVISIONS OF THE PLAN
The major provisions of the Stock Option Plan are as follows:
Eligibility. The persons who are eligible to receive awards pursuant
to the Stock Option Plan are members of the Board of Directors, officers and
key employees of the Company or its subsidiaries, as the Board of Directors
selects from time to time, who occupy responsible managerial, professional or
advisory positions and who have the capability of making a substantial
contribution to the success of the Company. Directors who are not employees or
officers of the Company are ineligible to receive ISOs under the Plan. The
Company estimates that at the present time approximately three of its
approximately 150 employees are eligible to participate in the Stock Option
Plan.
Administration. The Board of Directors has delegated its authority to
administer the Stock Option Plan to the Compensation Committee, subject to the
reservation of its authority to grant awards under the Stock Option Plan to
executive officers and directors of the Company and to take such other action
in respect of such awards as it shall determine to be necessary or appropriate.
References in this discussion of the Stock Option Plan to the Board of
Directors shall be deemed to include the Compensation
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<PAGE> 11
Committee or any other committee or person to whom the Board of Directors shall
have delegated its authority to administer the Stock Option Plan.
Option Types. The Stock Option Plan permits the Board of Directors to
grant, in its discretion, ISOs and NQSOs. Stock options designated as ISOs
will comply with Section 422 of the Code, including the requirement that the
aggregate Fair Market Value, as defined in the Stock Option Plan, of Common
Stock determined at the time of each grant that a holder may exercise for the
first time in any calendar year shall not exceed $100,000. NQSOs, which are
options that are not ISOs, entitle the holder to purchase up to the number of
shares of Common Stock of the Company specified in the grant.
Option Price. The exercise price per share of the options is
determined by the Board of Directors but, in the case of ISOs, will in no event
be less than the Fair Market Value of a share of Common Stock on the date the
ISO is granted. Payment for shares of Common Stock purchased upon exercise of
an option shall be made in cash or by optionee's personal check, certified
check or bank draft or, in the Board's discretion: (i) in shares of Common
Stock owned by the optionee or with shares of Common Stock withheld from the
shares otherwise deliverable to the optionee upon exercise of an option; (ii)
by delivery of an irrevocable direction to a securities broker to sell shares
of Common Stock and deliver all or a portion of the proceeds to the Company in
payment for the Common Stock; (iii) by delivery of the optionee's promissory
note while granting options or other Incentive Awards pursuant to the Stock
Option Plan; or (iv) in any combination of the foregoing.
Nontransferability. During the lifetime of the participant, options
awarded under the Stock Option Plan may be exercised only by such person or by
such person's guardian or legal representative.
Time and Manner of Exercise. Options may be exercised in whole at any
time, or in part from time to time, with respect to whole shares only, within
the period permitted for exercise and shall be exercised by written notice to
the Company. In addition to the payment of the option price, the participant
shall pay to the Company in cash or in Common Stock the amount the Company is
required to withhold or pay under federal or state law with respect to the
exercise of the option or, alternatively, the number of shares delivered by the
Company upon exercise of the option shall be appropriately reduced to reimburse
the Company for such payment. Except as otherwise provided in the Stock Option
Plan, an ISO may not be exercised at any time unless the holder is then an
employee of the Company, its parent or subsidiary.
Amendment or Termination of Plan. The Board of Directors may terminate
and in any respect amend or modify the Stock Option Plan, except that
shareholder approval is required in order to (i) increase the total number of
shares of Common Stock available under the Stock Option Plan (unless such
increase is a result of changes in capitalization as described in the Stock
Option Plan), (ii) materially increase the benefits accruing to participants
under the Stock Option Plan; (iii) materially modify the requirements as to
eligibility for participation in the Stock Option Plan; (iv) extend the period
during which any option may be granted or exercised; or (v) extend the term of
the Stock Option Plan. Except as otherwise provided in the Stock Option Plan,
no amendment, modification, or termination of the Stock Option Plan shall in
any manner adversely affect the rights of any participant under the Stock
Option Plan without the consent of such participant.
FEDERAL INCOME TAX CONSEQUENCES OF THE STOCK OPTION PLAN
Incentive Stock Options. If an option under the Stock Option Plan is
treated as an ISO, the optionee generally recognizes no regular taxable income
as the result of the grant or exercise of the option. However, an amount equal
to the difference between the Fair Market Value of the stock on the
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date of exercise and the exercise price will be treated as an item of
adjustment in the year of exercise for purposes of the alternative minimum tax.
The Company will not be allowed a deduction for federal income tax
purposes in connection with the grant or exercise of an ISO, regardless of the
applicability of the alternative minimum tax to the optionee. The Company will
be entitled to a deduction, however, to the extent that ordinary income is
recognized by the optionee upon a disqualifying disposition (see below).
Upon a sale or exchange of the shares at least two years after the
grant of an ISO and one year after exercise of the option, gain or loss will be
recognized by the optionee equal to the difference between the sale price and
the exercise price. Such gain or loss will be characterized for federal income
tax purposes as long-term capital gain or loss. The Company is not entitled to
any deduction under these circumstances.
If an optionee disposes of shares acquired upon issuance of an ISO
prior to completion of either of the above holding periods, the optionee will
have made a "disqualifying disposition" of the shares. In such event, the
optionee will recognize ordinary income at the time of disposition equal to the
difference between the exercise price and the lower of the Fair Market Value of
the stock at the date of the option exercise or the sale price of the stock.
The Company generally will be entitled to a deduction in the same amount as the
ordinary income recognized by the optionee on a disqualifying disposition if
the optionee's total compensation is deemed reasonable in amount. The Company's
deduction will also be limited by the $1 million cap on deductions for
compensation paid to certain employees under Section 162(m) of the Code.
The optionee also will recognize capital gain or loss on such
disqualifying disposition in an amount equal to the difference between (i) the
amount realized by the optionee upon such disqualifying disposition of the
stock and (ii) the exercise price, increased by the total amount of ordinary
income, if any, recognized by the optionee upon such disqualifying disposition
(as described in the second sentence of the preceding paragraph). Any such
capital gain or loss resulting from a disqualifying disposition of shares
acquired upon exercise of an ISO will be long-term capital gain or loss if the
shares with respect to which such gain or loss is realized have been held for
more than twelve months.
NQSOs. An optionee generally recognizes no taxable income as the
result of the grant of an NQSO, assuming that the option does not have a
readily ascertainable fair market value at the time it is granted (which is
usually the case with plans of this type). Upon exercise of an NQSO, an
optionee will normally recognize ordinary compensation income for federal tax
purposes equal to the excess, if any, of the then Fair Market Value of the
shares over the exercise price. Optionees who are employees will be subject to
withholding with respect to income recognized upon exercise of an NQSO.
The Company will be entitled to a tax deduction to the extent and in
the year that ordinary income is recognized by the exercising optionee, so long
as the optionee's total compensation is deemed reasonable in amount. The
Company's deduction will also be limited by the $1 million cap on deductions
for compensation paid to certain employees under Section 162(m) of the Code.
Upon a sale of shares acquired pursuant to the exercise of an NQSO,
any difference between the sale price and the Fair Market Value of the shares
on the date of exercise will be treated as capital gain or loss, and will
qualify for long-term capital gain or loss treatment if the shares have been
held for more than twelve months.
10
<PAGE> 13
MARKET PRICE OF THE COMMON STOCK
The closing price of the Common Stock as reported by the NASDAQ News
Service was $5.625 per share on October 21, 1996. As of such date the aggregate
market value of the shares of Common Stock available for issuance under the
Stock Option Plan was $2.8 million.
On October 24, 1996 grants of NQSOs were made to the following
director nominees: David H. Peterson -- 30,000, Leonard A. Bluhm - 105,000,
Lawrence I. Littman - 30,000, Craig Mataczynski - 30,000, Spyros S. Skouras,
Jr. - 30,000, Charles J. Thayer - 30,000 and Ronald J. Will - 30,000. The total
number of shares subject to options held by all executive officers as a group,
all current directors who are not executive officers as a group, and all
employees, including all current officers who are not executive officers, are
180,000 shares, 180,000 shares and 30,000 shares, respectively.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE STOCK OTPION
PLAN.
PROPOSAL NO. 3:
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Price Waterhouse LLP ("Price Waterhouse") has served as the Company's
independent public accountants since April 30, 1996, and has been reappointed
by the Board of Directors to serve in that capacity for the period ended
December 31, 1996. A representative of Price Waterhouse will be available at
the Annual Meeting to respond to appropriate questions and will be given an
opportunity to make a statement on behalf of Price Waterhouse, if desired.
By board resolution approved on April 30, 1996, the Board of
Directors dismissed Coopers & Lybrand L.L.P. (Coopers & Lybrand) who had
served as the Company's independent public accountants prior to that time. The
accountant's report issued by Coopers & Lybrand on the Company's financial
statements for the 1994 consolidated financial statement did not contain an
adverse opinion or a disclaimer of opinion and was not qualified or modified as
to uncertainty, audit scope, or accounting principles, except with respect to:
(1) certain litigation for which the ultimate outcome could not be determined
at the time; and (2) the Company's ability to continue as a going concern. The
Company believes that during its 1994 and 1995 fiscal years and the portion of
t& Lybrand would have caused Coopers & Lybrand to make reference to the subject
matter of the disagreements in connection with its report. During its 1994 and
1995 fiscal year and up to the date of the engagement, the Company did not
consult with Price Waterhouse he 1996 fiscal year up to the date of the
dismissal, there were no disagreements between the Company and Coopers &
Lybrand on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which disagreements, if
not resolved to the satisfaction Coopers regarding the application of
accounting principles, the type of audit opinion or other information
considered by the Company in reaching a decision as to an accounting, auditing
or financial reporting issue.
Although not formally required, the appointment of the independent
auditors of the Company has been directed by the Board of Directors to be
submitted to the stockholders for ratification as a matter of sound corporate
practice. If the stockholders do not ratify the appointment of Price
Waterhouse, the appointment of the independent auditors will be reconsidered by
the Board of Directors. If the stockholders ratify the appointment, the Board
of Directors, in its sole discretion, may still direct the appointment of new
independent auditors at any time during the 1997 fiscal year if the Board of
Directors believes that such a change would be in the best interests of the
Company.
11
<PAGE> 14
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE AS THE COMPANY'S
INDEPENDNENT PUBLIC ACCOUNTANTS.
EXECUTIVE AND DIRECTOR COMPENSATION
The following tables set forth all compensation, including bonuses and
other payments, paid or accrued by the Company during the fiscal years ended
June 30, 1996, 1995 and 1994 to the Company's current chief executive officer
and the two individuals who served as president during the fiscal year. In
addition, compensation information is provided concerning two former officers
of the Company who received compensation in excess of $100,000 for services
rendered to the Company during the 1996 fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
All Other
Salary Compensation
Name and Principal Position Year ($) Bonus($) ($) (1)
---- --- -------- ---------
<S> <C> <C> <C> <C>
Leonard A. Bluhm, Chief 1996 18,608
Executive Officer & President(2)
Frank O'Brien, III, President(3) 1996 60,576 1,048
1995 280,961 6,360
1994 317,307 6,923
Robert Smallacombe, President(4) 1996 144, 712 2,733
1995 188,197 1,960
John P. Kelly, Chief 1996 399,523
Administrative Officer(5)
Reed Wills, Vice President(6) 1996 135,084 75,000 4,638
1995 157,039 6,360
1994 144,846 6,923
</TABLE>
- ------------------------
(1) Includes amounts paid by the Company for term life insurance premiums.
(2) Mr. Bluhm became Chief Executive Officer on April 30, 1996. He is an
employee of NRG Energy and his services are leased to the Company
pursuant to a Leased Employee Agreement with NRG Energy. Mr. Bluhm's
compensation is paid by NRG Energy who is reimbursed by the Company.
See "Related Party Transactions."
(3) Mr. O'Brien III resigned as President of the Company September 1,
1995.
(4) Mr. Smallacombe served as President from September 1, 1995 until his
resignation April 30, 1996.
(5) Mr. Kelly served as a court-appointed Chief Administrative Officer
from January 4, 1995 to April 30, 1996. Mr. Kelly's compensation was
paid to Glass Associates pursuant to an agreement with that company
to provide certain management services to the Company. See "Related
Party Transactions."
(6) Mr. Wills resigned from the Company February 29, 1996. Mr. Wills
received a one-time bonus of $75,000 to remain with the Company until
after January 1, 1996.
12
<PAGE> 15
DIRECTOR COMPENSATION
Each non-employee director of the Company receives an annual retainer
fee of $14,000, and is entitled to a $1,000 fee paid quarterly for each meeting
attended in person ($500 for telephonic attendance) and $500 for each scheduled
committee meeting attended in person ($250 for telephonic attendance) and
reimbursement of reasonable expenses incurred in attending meetings of the
Board and its Committees. Directors may also receive grants of nonqualified
options to purchase Common Stock under the Stock Option Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Interlocks. The members of the Compensation Committee are Messrs. Charles J.
Thayer, chairman, Lawrence I. Littman and David H. Peterson. Mr. Peterson is
Chairman of the Board, President and Chief Executive Officer of NRG Energy,
which holds 41.86% of the Common Stock of the Company.
Certain Transactions. On April 30, 1996, NRG Energy acquired 41.86% of the
outstanding shares of Common Stock of the Company and 100% of the common stock
of certain acquired subsidiaries for $107,418,000, as adjusted by provisions
set forth in the Stock Purchase Agreement.
During the 1996 fiscal year, the Company entered into a Management
Services Agreement and a Co-Investment Agreement with NRG Energy. The
Management Services Agreement, pursuant to which the Company paid NRG Energy
$98,733 during the 1996 fiscal year, provides that NRG Energy will provide
management, administrative and certain other services to the Company in
connection with the day to day business of the Company. Pursuant to the
Co-Investment Agreement, NRG Energy agreed to offer to the Company ownership
interests in certain power projects which were initially developed by NRG
Energy or with respect to which NRG Energy has entered into a binding
acquisition agreement with a third party. No offers were made to the Company in
fiscal 1996 pursuant to the Co-Investment Agreement.
During the 1996 fiscal year, NRG Energy provided $254,945 in project
and construction management services rendered in connection with Gray's Ferry
Project partnership of which the Company is one-third owner.
In accordance with the Reorganization Plan, the Company and NRG Energy
executed three loan agreements ("NRG Energy Loans') on April 30, 1996 with
commitments of $45 million, $24 million and $15.8 million at annual interest
rates of 9.5%, 9.5% and 9%, respectively. On April 30, 1996, the funding
included $71.2 million drawn under these loans. There remains $13.6 million
available to the Company under one of the loans which obligates NRG Energy to
fund, if needed, a court-established reserve to adequately cover the
anticipated administrative, priority and tax claims that are contingent,
unliquidated or unmatured or for allowed claim amounts which were undetermined
on the April 30, 1996 closing date.
Under the terms of the Reorganization Plan, NRG Energy purchased the
stock of 10 wholly-owned subsidiaries from the Company for $7.5 million on
April 30, 1996. The subsidiaries sold include all of the Company's landfill
projects, the general partner holding a 3% equity interest in the Artesia
Cogeneration partnership and a standby power project placed in service on
December 31, 1995.
13
<PAGE> 16
On August 30, 1995, the Company and NRG Energy entered into a Chapter
11 financing agreement ("DIP financing") which provided for a $3 million
commitment with interest at 2% over prime. The loan commitment was increased on
February 22, 1996 by an additional $500,000. The Company made periodic
drawdowns totaling $3.4 million through the April 30, 1996 closing date. The
principal balance was repaid to NRG Energy from the project refinancing in May
1996.
Effective May 23, 1996, NRG Energy guaranteed payment of pre-existing
liabilities of O'Brien (Newark) Cogeneration, Inc. ("Newark") and O'Brien
(Parlin) Cogeneration, Inc. ("Parlin"), wholly-owned subsidiaries of the
Company, of up to $5 million, which amount will be reduced as certain defined
milestones are reached and will be eliminated no later than May 23, 2001. On
June 28, 1996, NRG Energy advanced Parlin approximately $56 million to pay off
the Parlin nonrecourse financing which included a $3.1 million cost to
terminate an interest rate swap agreement.
Effective June 28, 1996, the Company guaranteed up to $25 million of
obligations in connection with the financing of a $155 million loan made by
Credit Suisse to Parlin and Newark.
In March 1996, NRG Energy and O'Brien (Schuylkill) Cogeneration Inc.
("OSC"), a wholly-owned subsidiary of the Company, entered into a $10 million
loan agreement to provide a means of funding an OSC capital contribution
obligation to the Grays Ferry Partnership. No amounts have yet been borrowed
under the note.
In connection with NRG Energy's assistance with the Gray's Ferry
project, its financing and the note, the Company granted NRG Energy the right
to convert a portion of borrowings under the note to Common Stock of the
Company. The option agreement provides that the Company can convert $3 million
of borrowings under the note for common stock of the reorganized Company which
would equal, on a fully diluted basis, 5.6% of the shares of the Common Stock
of the Company as of April 30, 1996.
RELATED PARTY TRANSACTIONS
The Company entered into an asset liquidation agreement with Wexford
Management LLC ("Wexford") whereby certain assets that are to be liquidated
pursuant to the Reorganization Plan for which Wexford is to receive an asset
liquidation fee. The maximum fee available to Wexford is $1,500,000. During the
1996 fiscal year, Wexford earned $50,000 for the sale of unused equipment. Mr
Skouras is Senior Vice President of Wexford.
The Company entered into an agreement with Glass Associates under
which the Company paid Glass Associates $619,548.87 for management services
during the 1996 fiscal year. Of the $619,548.87, $399,523.98 was paid for the
services of John P. Kelly who was acting as the Company's Chief Administrative
Officer from January 4, 1995 to April 30, 1996 pursuant to a court order in the
connection with the Reorganization Plan.
The Company entered into a Leased Employee Agreement with NRG Energy,
whereby NRG Energy agreed to lease its employee, Leonard A. Bluhm, to the
Company to perform the duties of President and Chief Executive Officer of the
Company. For the 1996 fiscal year, the Company paid NRG Energy $35,885, which
included the salary paid to Mr. Bluhm and other amounts necessary to reimburse
NRG Energy for expenditures associated with or resulting from Mr. Bluhm's
employment.
14
<PAGE> 17
See "Compensation Committee Interlocks and Insider Participation -
Certain Transactions' above for a description of certain transactions and
relationships between the Company and NRG Energy. Mr. Peterson is Chairman of
the Board, President and Chief Executive Officer of NRG Energy and Messrs.
Mataczynski and Will are Vice Presidents of NRG Energy. Until September 1,
1996, Mr. Timothy P. Hunstad, who is the Vice President and Chief Financial
Officer of the Company, was President of NEO Corporation, a wholly-owned
subsidiary of NRG Energy.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The following report of the Compensation Committee discusses generally
the Committee's executive compensation objectives following reorganization on
April 30, 1996. Prior to April 30, 1996, the Company was managed by a
bankruptcy court appointed administrator and compensation for this individual
was per agreement with the court.
EXECUTIVE COMPENSATION OBJECTIVES
The Committee's objective is to provide a competitive compensation
program that will attract and retain the expertise required for managing in the
fast-changing power industry sector. Further, the objective is to provide the
appropriate incentives to match compensation with performance in both the short
term as well as long term. The components of the compensation program as
described below clearly link the interest of management with those of the
shareholders.
Total executive compensation (base salary plus incentive compensation)
is compared with similar companies in the Independent Power Producer (IPP)
industry. Generally, the committee will target total pay levels that are near
the median of the group although a larger portion of the Company's pay will be
targeted to incentive compensation as compared with the comparison group.
EXECUTIVE COMPENSATION COMPONENTS
Total executive compensation since April 30, 1996 consists of two
primary components: base salary and long-term incentive compensation. The
compensation components of the President and Chief Executive Officer from April
30, 1996 through June 30, 1996 are described separately since during this
period of time the President and Chief Executive Officer was also an employee
of NRG Energy, Inc. and his services were provided to the Company under an
employee lease agreement.
BASE SALARY: Base salary levels are largely determined by
comparison with the salaries of similar positions in the IPP industry sector
through surveys collected by the Human Resources group of member IPPs. The
Company's compensation program does not include a short-term bonus component
whereas many IPPs utilize substantial short-term bonus payments as a part of
their compensation package. Instead, the Company relies solely on the long-term
component to provide the rewards and linkage to shareholder concerns.
LONG-TERM INCENTIVE COMPENSATION: Long-term incentives for
executive officers and the operations manager are provided through annual
grants of stock options under the Stock Option Plan. Stock options provide
gains to executives only if, in the long term, the Company's common stock price
improves over the fair market value of the stock (as determined under the plan)
on the date options are granted. Additionally, long-term performance is
encouraged since the options vest annually at a rate of 33
15
<PAGE> 18
1/3 percent on the anniversary date of the grant. The Stock Option Plan permits
the use of NQSOs or ISOs. As discussed elsewhere, the following NQSOs were
granted on October 23, 1996:
President & Chief Executive Officer 105,000 shares
Vice President & Chief Financial Officer 75,000 shares
Operations Manager 30,000 shares
It is anticipated that ISO's may be granted in 1997 or 1998 based on specific
annual performance targets which would likely include achievement of earnings
targets and progress towards growth objectives.
PRESIDENT & CHIEF EXECUTIVE OFFICER: From April 30, 1996 through
June 30, 1996, the President and Chief Executive Officer has performed under an
employee lease agreement with NRG Energy. During this period of time, the
President and Chief Executive Officer remains an employee of the NRG Energy and
is eligible for the NRG Energy's benefits. In addition, he is eligible for the
long-term incentive provided through the Company's stock options provided he
remains in his capacity through the vesting periods.
SUMMARY
The committee's objective in setting executive compensation and in
establishing the appropriate balance between fixed and long-term compensation
is designed to clearly link pay and performance. Very simply, executives are
rewarded when and to the extent shareholders are rewarded. To achieve these
goals, the committee annually reviews pay programs and makes modifications as
it deems necessary to continue to attract, retain and motivate talented,
experienced executives.
David H. Peterson, Chairman
Charles J. Thayer
Lawrence I. Littman
SECTION 16(a) REPORTING
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who beneficially own more than 10% of any class
of the Company's equity securities, to file with the Commission initial reports
("Form 3") of beneficial ownership and reports of changes ("Form 4") in
beneficial ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than 10% beneficial owners are
required by Commission regulation to furnish the Company with copies of all
Section 16(a) reports they file. To the Company's knowledge, based solely on a
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with for the fiscal year ended June 30, 1996.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before
the Annual Meeting. However, if any other matters are properly brought before
the Annual Meeting, it is the intention of the named proxies in the
accompanying proxy to vote in accordance with their judgment on such matters.
16
<PAGE> 19
VOTING REQUIREMENTS
With regard to Proposal No. 1, the election of directors, votes may be
cast for or votes may be withheld from each nominee. Directors will be elected
by plurality vote. Therefore, votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may not be specified with
respect to the election of directors and, under applicable Delaware law, broker
non-votes will have no effect on the outcome of the election of directors.
With regard to Proposal No. 2, approval of the Stock Option Plan, and
Proposal No. 3, the ratification of independent public accountants, votes may
be cast for or against the matter, or stockholders may abstain from voting on
the matter. Approval of each such matter requires the affirmative vote of at
least a majority of the shares of Common Stock present or represented by proxy
at the meeting and entitled to vote. Therefore, abstentions will have the
effect of votes against the approval of the matter. However, under applicable
Delaware law, a broker non-vote will have no effect on the outcome of either
proposal.
If no directions are specified in any duly signed and dated proxy card
received by the Company, the shares represented by that proxy card will be
counted as present for quorum purposes and will be voted by the named proxies
FOR the election of the director nominees recommended by the Board of
Directors, FOR approval of the Stock Option Plan, FOR the ratification of the
appointment of Price Waterhouse as the Company's independent public
accountants, and in accordance with the discretion of the named proxies on
other matters properly brought before the Annual Meeting.
STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES
The Bylaws of the Company provide that any stockholder of record who
is entitled to vote for the election of directors at a meeting called for that
purpose may nominate persons for election to the Board of Directors subject to
the following notice requirements.
As described more fully in the Company's Bylaws, a stockholder
desiring to nominate a person for election to the Board of Directors must send
a written notice to the Secretary of the Company setting forth (i) the name and
residence address of the stockholder of the Company who intends to make a
nomination or bring up any other matter; (ii) a representation that the
stockholder is a holder of the Company's voting stock and intends to appear in
person or by proxy at the meeting to make the nomination or bring up the matter
specified in the notice; (iii) with respect to notice of an intent to make a
nomination, (A) a description of all arrangements or any other person or
persons (naming such person) pursuant to which the nomination or nominations
are to be made by the stockholder; and (B) such other information regarding
each nominee proposed by such stockholder as would have been required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had each nominee been nominated by the Board
of Directors; and (iv) with respect to notice of an intent to bring up any
other matter, a description of the matter and any material interest of the
stockholder in the matter.
Pursuant to the Company's Bylaws, to be timely, notice of persons to
be nominated by a stockholder as a director at a meeting of stockholders must
be delivered to or mailed and received by the Secretary of the Company not less
than 120 days nor more than 180 days prior to the annual meeting. The
obligation of stockholders to comply with the forgoing Bylaw provision is in
addition to the requirements of the proxy rules if the stockholder intends to
solicit proxies in favor of the election of its nominee(s).
17
<PAGE> 20
STOCKHOLDER PROPOSALS
The 1997 Annual Meeting of Stockholders ("1997 Annual Meeting") is
anticipated to be held in May of 1997. Stockholder proposals to be included in
the Company's Proxy Statement relating to the 1997 Annual Meeting must be
received within a reasonable time prior to the meeting at the Company's
principal executive offices, 1221 Nicollet Mall, Suite 610, Minneapolis,
Minnesota 55403-2444, Attention: Mr. Leonard A. Bluhm. Stockholders of the
Company who intend to nominate candidates for election as a director or to
bring business before the meeting must also comply with the applicable
procedures set forth in the Company's Bylaws. See "Stockholder Nomination of
Director Candidates." The Company will furnish copies of such Bylaw provisions
upon written request to the Secretary of the Company at the aforementioned
address.
AVAILABILITY OF FORM 10-K
A copy of the Annual Report on Form 10-K for the fiscal year ended
June 30, 1996, as filed with the Commission, is being mailed with this Proxy
Statement.
The foregoing Notice and Proxy Statement are sent by order of the
Board of Directors.
Karen A. Brennan
Secretary
October 28, 1996
18
<PAGE> 21
APPENDIX A
NRG GENERATING (U.S.) INC.
1996 STOCK OPTION PLAN
Effective as of the 20th day of
September, 1996.
1
<PAGE> 22
NRG GENERATING (U.S.) INC.
1996 STOCK OPTION PLAN
ARTICLE I
1.1 Name and Purpose. The name of this Plan is the "NRG Generating
(U.S.) Inc. 1996 Stock Option Plan" (the "Plan"). Its purpose
is (a) to maximize the long-term success of NRG Generating
(U.S.) Inc. (the "Company"), (b) to ensure a balanced emphasis
on both current and long-term performance, (c) to enhance
Participants' identification with shareholders' interests, and
(d) to facilitate the attraction and retention of key
individuals with outstanding ability.
1.2 Definitions. Whenever used in the Plan, the following terms
shall have the meaning set forth below:
(a) "Board of Directors" or "Board" shall mean the Board
of Directors of NRG Generating (U.S.) Inc. as
constituted from time to time.
(b) "Change of Control" shall have the meaning ascribed
by Section 5.5 hereof.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
(d) "Common Stock" shall mean the common voting shares of
the Company.
(e) "Company" shall mean NRG Generating (U.S.) Inc. or
any successor thereto.
(f) "Control Transaction" shall have the meaning ascribed
by Section 5.5 hereof.
(g) "Disability" shall mean total and permanent
disability as defined in Code Section 22(e).
(h) "Employee" shall mean any person who is currently a
common law employee of the Company or any of its
Subsidiaries.
(i) "Effective Date" shall mean the date the Plan is
adopted by the Board, subject to approval by the
shareholders of the Company at a meeting held within
twelve (12) months following the date of adoption by
the Board.
(j) "Fair Market Value" or "FMV" shall mean the fair
market value of the Common Stock, which shall be
determined as follows:
(i) if the Common Stock is listed on any
established stock exchange or a national market
system, including, without limitation, the NASDAQ
National Market, its fair market value shall be the
closing selling price for such stock on the principal
securities exchange or national market system on
which the Common Stock is at the time listed for
trading. If there are no sales of Common Stock on
that date, then the closing selling price for the
Common Stock on the next preceding day for which such
closing selling price is quoted shall be
determinative of fair market value; or
(ii) if the Common Stock is not traded on
an exchange or a national market system, its Fair
Market Value shall be determined in good faith by the
Board, possibly based upon, but not limited to, a
fair market value concept averaged over the twenty
(20) trading days preceding the date of the grant of
an option or other relevant date, and such
<PAGE> 23
determination shall be conclusive and binding on all
persons.
In no event shall the Fair Market Value equal less
than the par value of the Common Stock.
(k) "Incentive Stock Option" shall mean a stock option
within the meaning of Section 422 of the Code granted
pursuant to Section 4.1 hereof.
(l) "Nonqualified Stock Option" shall mean an Option,
other than an Incentive Stock Option, granted
pursuant to Section 4.1 hereof.
(m) "Option" shall mean, individually and collectively,
an Incentive Stock Option and a Nonqualified Stock
Option to purchase Common Stock.
(n) "Option Price" shall mean the price per share of
Common Stock set by the Board upon the grant of an
Option.
(o) "Parent" shall mean any corporation which qualifies
as a parent of the Company under the definition of
"parent corporation" under Code Section 424(e).
(p) "Participant" shall mean any person who satisfies the
criteria set forth in Article III hereof.
(q)) "Separation Date" shall mean, as determined by the
Board, the date on which a Participant's Service as a
member of the Board terminates or employment with the
Company or a Subsidiary terminates for reasons other
than transfer of employment to a Parent or
Subsidiary. Whether any leave of absence shall
constitute termination of employment for purposes of
this Plan shall be determined in each case by the
Board at its sole discretion.
(r) "Subsidiary" shall mean a subsidiary corporation of
the Company as defined in Code Section 424(f).
(s) "Termination for Cause" shall mean the termination of
the Participant's employment with the Company for any
of the following reasons: (i) any act of malfeasance
or wrongdoing affecting the company, its Parent or
Subsidiaries, (ii) the breach on any covenant not to
compete, or employment contact, with the Company, its
Parent or Subsidiaries, or (iii) engaging in any
other conduct which would warrant Participant's
discharge for cause, excluding general
dissatisfaction with the performance of Participant's
duties, but including any act of disloyalty or
conduct clearly tending to bring discredit upon the
Company, its Parent or Subsidiaries.
Where the context requires, words in the masculine gender
shall include the feminine and neuter genders, words in the singular
shall include the plural, and words in the plural shall include the
singular.
1.3 Plan Duration. The Plan shall remain in effect for ten (10)
years from the Effective Date or until terminated by the
Board, whichever comes first.
ARTICLE II
2.1 Plan Administration.
(a) The Plan shall be administered by the Board. The
Board is authorized to establish such rules and to
appoint such agents as it deems appropriate for the
proper administration of the Plan, and to make such
determinations (which shall be sufficiently evidenced
if set forth in any
2
<PAGE> 24
written action of the Board or in any written stock
option agreement) and to take such steps in
connection with the Plan or the benefits provided
hereunder as it deems necessary or advisable. The
Board also is authorized to delegate to a committee
of its members or to any officer of the Company any
or all of its authority under this Plan, including
any or all of its rights or obligations hereunder.
(b) The Board shall have the authority, in its sole
discretion and from time to time to take the
following actions:
(i) select those individuals who meet the
participation requirements of the Plan;
(ii) grant Options provided by the Plan in such
form and amount as the Board shall determine;
(iii) impose such limitations, restrictions and
conditions upon any such Options as the Board shall
deem appropriate; and
(iv) interpret the Plan, adopt, amend and rescind
rules and regulations related to the Plan, and make
all other determinations and take all other action
necessary or advisable for the implementation and
administration of the Plan.
(c) The decision of the Board with respect to any
question arising as to the grant of an Option to a
Participant in the Plan, the term, form and amount of
Options under the Plan, or any other matter
concerning the Plan shall be final, conclusive, and
binding on both the Company and the Participants.
ARTICLE III
3.1 Eligibility. The Participants in the Plan shall be selected by
the Board from the directors of the Company and the officers
and key Employees of the Company or its Subsidiaries who
occupy responsible managerial, professional or advisory
positions and who have the capability of making a substantial
contribution to the success of the Company. In making this
selection and in determining the form and amount of Options,
the Board shall consider any factors deemed relevant,
including the individual's functions, responsibilities, value
of services to the Company or its Subsidiaries and past and
potential contributions to the Company's profitability and
sound growth. Participants who are not otherwise Employees may
receive Nonqualified Stock Options but may not receive
Incentive Stock Options under the Plan.
3
<PAGE> 25
ARTICLE IV
4.1 Options. The Board shall determine the forms and amounts of
Options for Participants. All Options shall be subject to the
terms and conditions of the Plan and to such other terms and
conditions consistent with the Plan as the Board deems
appropriate. Options under the Plan need not be uniform and
Incentive Stock Options and Nonqualified Stock Options may be
granted in one agreement. Options may take the following
forms, in the Board's sole discretion:
(a) Incentive Stock Options.
(i) The Board may grant Incentive Stock Options
within the meaning of Code Section 422 to purchase
Common Stock. In addition to other restrictions
contained in the Plan, an Incentive Stock Option (1)
shall not be exercised more than ten (10) years
following the date of grant, (2) shall not have an
Option Price less than the FMV of Common Stock on the
date the Incentive Stock Option is granted, (3) shall
otherwise comply with Code Section 422, and (4) shall
be designated in writing as an "Incentive Stock
Option" by the Board. The aggregate FMV of Common
Stock determined at the time of each grant for which
any Participant may exercise Incentive Stock Options
under this Plan for any calendar year shall not
exceed $100,000. The date an Incentive Stock Option
is granted shall mean the date selected by the Board
as of which the Board allots a specific number of
shares to a Participant pursuant to the Plan.
Notwithstanding the foregoing, the Option Price of an
Incentive Stock Option granted to any owner of 10% or
more of the total combined voting power of the
Company, its Parent or Subsidiaries shall be no less
than 110% of FMV and such Option shall be not
exercisable after the expiration of five years from
the date of its grant. No Incentive Stock Option
shall be granted to any Participant who is not
otherwise an Employee.
(ii) The grant of an Incentive Stock Option shall
be evidenced by a written Incentive Stock Option
Agreement, executed by the Company and the holder of
an Incentive Stock Option, stating the number of
shares of Common Stock subject to the Incentive Stock
Option evidenced thereby, and in such form as the
Board may from time to time determine.
(b) Nonqualified Stock Options.
(i) The Board may grant Nonqualified Stock
Options to purchase Common Stock which are not
intended to qualify as Incentive Stock Options under
Code Section 422 and which are designated in writing
by the Board as "Nonqualified Stock Options." At the
time of the grant, the Board shall determine the
Option exercise period, the Option Price, and such
other conditions or restrictions on the exercise of
the Nonqualified Stock Option as the Board deems
appropriate.
(ii) The Board shall cause the Company to enter
into a written Nonqualified Stock Option Agreement
with the Participant stating that the Options are
Nonqualified Stock Options, the number of shares of
Common Stock subject to the Nonqualified Stock
Option, any conditions and restrictions on the
exercise of the Option imposed by the Plan and the
Board, and in such form as the Board shall from time
to time determine.
4.2 Option Exercise. Except as otherwise provided in Article V
hereof, an Incentive Stock Option may not be exercised at any
time unless the holder thereof is then an Employee of the
Company, its Parent or Subsidiary. Options may be exercised in
whole at any time, or in part from time to time, with respect
to whole shares only, within the period permitted for the
exercise thereof, and shall be exercised by written notice of
intent to exercise the Option with respect to a specified
number of
4
<PAGE> 26
shares delivered to the Company's Secretary at the Company's
principal office, and payment in full to the Company at said
office of the amount of the Option Price for the number of
shares of Common Stock with respect to which the Option is
then being exercised. In addition to and at the time of
payment of the Option Price, the Participant shall pay to the
Company in cash or in Common Stock, the full amount, if any,
that the Company is required to withhold or pay under federal
or state law with respect to the exercise of the Option.
Alternatively, the number of shares delivered by the Company
upon exercise of the Option shall be appropriately reduced to
reimburse the Company for such payment.
4.3 Payment. Payment of the purchase price upon exercise of any
Option granted under this Plan shall be made in cash or by
optionee's personal check, certified check or bank draft,
payable to the order of the Company in lawful money of the
United States; provided, however, that the Board, in its sole
discretion, may permit an optionee to pay the Option Price in
whole or in part (a) with shares of Common Stock owned by the
optionee or with shares of Common Stock withheld from the
shares otherwise deliverable to the optionee upon exercise of
an Option (in each case only to the extent that such an
exercise of the Option would not result in an accounting
compensation charge with respect to the shares used to pay the
Option Price); (b) by delivery on a form prescribed by the
Board of an irrevocable direction to a securities broker
approved by the Board to sell shares of Common Stock and
deliver all or a portion of the proceeds to the Company in
payment for the Common Stock; (c) by delivery of the
optionee's promissory note with such recourse, interest,
security, and redemption provisions as the Board in its
discretion determines appropriate; or (d) in any combination
of the foregoing. Any such alternative permissible methods of
exercise of any Incentive Stock Option shall be set forth in
the stock option agreement relating to such Incentive Stock
Option. In the event the Option Price is paid in whole or in
part with shares of Common Stock such shares shall be valued
at their FMV as of the date of exercise of the Option. Such
shares shall be delivered along with any portion to be paid in
cash or by promissory note within five (5) days after the date
of exercise. If the Participant fails to pay the Option Price
within such five (5) day period, the Board shall have the
right to take whatever action it deems appropriate, including
terminating the Option or voiding the exercise of the Option.
The Company shall not issue or transfer Common Stock upon the
exercise of an Option until the Option Price is paid in full.
ARTICLE V
5.1 Termination of Employment or Service as a Director. Except as
provided in this Article V or except as otherwise determined
by the Board, all Options under the Plan shall terminate upon
the termination of the Participant's employment or service as
a director of the Company as of the Participant's Separation
Date.
5.2 Death of a Participant. In the event of the death of a
Participant prior to the exercise of all Options granted to
such Participant, all unexercised Options shall become
immediately exercisable and the administrator of the deceased
Participant's estate, the executor under his or her will, or
the person(s) to whom the Options shall have been validly
transferred by such executor or administrator pursuant to the
will or laws of intestate succession shall have the right,
within one year from the date of such Participant's death, but
not beyond the expiration date of the Options, to exercise
such Options.
5.3 Retirement or Termination.
(a) In the event of termination of a Participant's
employment or service as a director of the Company
prior to the exercise of all Incentive Stock Options
granted to the Participant, such Participant shall
have the right, within three (3) months of his
Separation Date, but not
5
<PAGE> 27
beyond the expiration date of such Options, to
exercise such Incentive Stock Options to the extent
exercisable on his Separation Date.
(b) In the event of the termination of a Participant's
employment prior to the exercise of all Nonqualified
Stock Options granted to the Participant, such
Participant shall have the right, within three (3)
months of his Separation Date, but not beyond the
expiration date of such Nonqualified Stock Options,
to exercise such Nonqualified Stock Options, to the
extent exercisable on his Separation Date.
5.4 Disability.
(a) In the event of the termination of a Participant's
employment by Disability prior to the exercise of all
Incentive Stock Options granted to the Participant,
all unexercised Incentive Stock Options shall become
immediately exercisable and such Participant or his
legal representative shall have the right, within
twelve (12) months of his Separation Date, but not
beyond the expiration date of such Incentive Stock
Options, to exercise such Incentive Stock Options.
(b) In the event of the termination of a Participant's
employment by Disability prior to the exercise of all
Nonqualified Stock Options granted to the
Participant, all unexercised Nonqualified Stock
Options shall become immediately exercisable and such
Participant or his legal representative shall have
the right, within twelve (12) months of his
Separation Date, but not beyond the expiration date
of such Nonqualified Stock Options, to exercise such
Nonqualified Stock Options.
5.5 Change of Control.
(a) For purposes of this Section 5.5, a "Change in
Control" shall be deemed to occur upon:
(i) the direct or indirect acquisition by any
person or related group of persons (other
than an acquisition by NRG Energy, Inc. or an
acquisition from or by the Company or by a
Company-sponsored employee benefit plan) of
beneficial ownership (within the meaning of
Rule 13d-3 of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of
securities possessing more than fifty (50%)
of the total combined voting power of the
Company's outstanding Common Stock;
(ii) a change in the composition of the Board over
a period of thirty-six (36) months or less
such that a majority of the Board members
(rounded up to the next whole number) ceases,
by reason of one or more contested elections
for Board membership or by one or more
actions by written consent of shareholders,
to be comprised of individuals who either (1)
have been Board members continuously since
the beginning of such period or (2) have been
elected or nominated for election as Board
members during such period by at least a
majority of the Board members described in
clause (1) who were still in office at the
time such election or nomination was approved
by the Board.
(b) For purposes of this Section 5.5, a "Corporate
Transaction" shall be deemed to occur upon any of the
following transactions to which the Company is a
party:
(i) approval by the Company's shareholders of a
merger or consolidation in which the Company
is not the surviving entity, except for a
transaction the principal purpose
6
<PAGE> 28
of which is to change the state in which the
Company is incorporated;
(ii) approval by the Company's shareholders of the
sale, transfer or other disposition of all or
substantially all of the assets of the
Company (including the capital stock of the
Company's subsidiary corporations) in
connection with a complete liquidation or
dissolution of the Company; or
(iii) approval by the Company's shareholders of any
reverse merger in which the Company is the
surviving entity but in which securities
possessing more than fifty (50%) of the total
combined voting power of the Company's
outstanding securities are transferred to a
person or persons different from those who
held such securities immediately prior to
such merger.
(c) In its discretion, the Board may provide in any stock
option agreement (or in an amendment thereto)
evidencing an Option hereunder that, in the event of
any Corporate Transaction or an event giving rise to
a Change in Control, any outstanding options covered
by such an agreement shall be fully vested,
nonforfeitable and become exercisable as of the date
of the Change in Control or Corporate Transaction or
as otherwise determined in accordance with this
Section 5.5(c). However, the Board may provide in any
such agreement that, in the case of a Corporate
Transaction, the Board may determine that an
outstanding Option will not be so accelerated if and
to the extent (i) such Option is either to be assumed
by the successor or parent thereof or to be replaced
with a comparable Option to purchase shares of the
capital stock of the successor corporation or parent
thereof, or (ii) such Option is to be replaced with a
cash incentive program of the successor corporation
that preserves the option spread existing at the time
of the Corporate Transaction and provides for
subsequent payment in accordance with the same
vesting schedule applicable to such Option. Any stock
option agreement incorporating a Change in Control or
Corporate Transaction acceleration provision shall
provide that, with respect to any Corporate
Transaction described in clauses (i) or (ii) of
Section 5.5(b) above, the Board may, upon no less
than 60 days notice to the optionee (an "Acceleration
Notice") determine that such optionee's Options will
terminate as of the effective date of such Corporate
Transaction, in which event such Options shall be
fully vested, nonforfeitable and become exercisable
immediately as of the date of such Acceleration
Notice.
(d) If the Board determines to incorporate a Change in
Control or Corporate Transaction acceleration
provision in any option agreement hereunder, the
agreement shall provide that, (i) in the event of a
Change in Control or Corporate Transaction described
in clauses (a)(i), (a)(ii) and (b)(iii) of Section
5.5 above or in the event the Acceleration Notice is
not timely given, the Option shall remain exercisable
for the remaining term of the Option notwithstanding
the provisions of Article V hereof or any
corresponding provisions of the stock option
agreement, subject to any limitations thereto which
may be applicable to Incentive Stock Options and (ii)
in the event of a Corporate Transaction described in
clauses (i) or (ii) of Section 5.5(b) above, which is
preceded by a timely Acceleration Notice, the Option
shall terminate as of the effective date of the
Corporate Transaction described therein. In no event
shall any Option under the Plan be exercised after
the expiration of the term provided for in the
related stock option agreement.
(e) The Board may provide in any option agreement
hereunder that, should the Company dispose of its
equity holding in any subsidiary corporation effected
by (i) merger or consolidation involving that
subsidiary; (ii) the sale of all or distribution of
substantially all of the assets of that subsidiary;
or (iii) the Company's sale of or distribution to
shareholders of substantially all of the outstanding
capital stock of such subsidiary ("Subsidiary
7
<PAGE> 29
Disposition") while a holder of the Option is engaged
in the performance of services for the affected
subsidiary corporation, then such Option shall,
immediately prior to the effective date of such
Subsidiary Disposition, become fully exercisable with
respect to all of such shares at the time represented
by such Option and may be exercised with respect to
any or all of such shares. Any such Option shall
remain so exercisable until the expiration or sooner
termination of the term of the Option.
ARTICLE VI
6.1 Limitation of Shares of Common Stock Available under the Plan.
(a) Shares of stock which may be issued under the Plan
shall be authorized and unissued or treasury shares
of Common Stock. The total number of shares of Common
Stock available to be granted by the Board as Options
to the Participants under the Plan shall not exceed
500,000 shares (which number may be increased by the
Board, without shareholder approval, to reflect
adjustments pursuant to Section 7.1 below).
(b) The grant of Incentive Stock Options and Nonqualified
Stock Options shall reduce the available shares by
the number of shares subject to such Options.
(c) The lapse or cancellation of an Incentive Stock
Option or Nonqualified Stock Option shall increase
the available shares by the number of shares released
from such Option.
ARTICLE VII
7.1 Adjustment Upon Changes in Capitalization. In the event of any
change in the outstanding Common Stock by reason of a stock
dividend or distribution, recapitalization, merger,
consolidation, split-up, combination, exchange of shares or
the like, the Board may appropriately adjust the number and
kind of shares which may be issued under the Plan, the number
and kind of shares subject to Options theretofore granted
under the Plan, the Option Price of Options theretofore
granted under the Plan, and any and all other matters deemed
appropriate by the Board.
ARTICLE VIII
8.1 Employment. The establishment of the Plan and Options
hereunder shall not be construed as conferring on any
Participant any right to continued employment, and the
employment of any Participant may be terminated without regard
to the effect which such action might have upon him as a
Participant.
8.2 Rights as a Shareholder. The recipient of any Option under the
Plan shall have no rights as a shareholder with respect
thereto unless and until certificates for shares of Common
Stock are issued to him.
8.3 Non-Assignability. During the life of the Participant, Options
awarded under this Plan shall be exercisable only by such
person or by such person's guardian or legal representative.
8.4 Shareholder Approval. Continuance of the Plan for purposes of
granting Incentive Stock Options shall be subject to approval
by the shareholders of the Company within twelve (12) months
after the
8
<PAGE> 30
date the Plan is adopted by the Board. Any Incentive Stock
Options granted hereunder shall become effective only upon such
shareholder approval. The Board may grant Incentive Stock
Options under the Plan prior to such shareholder approval, but
until shareholder approval is obtained, no such Option shall
be exercisable. In the event that such shareholder approval is
not obtained within the period provided above, all Options
previously granted pursuant to the Plan shall terminate. If
such shareholder approval is obtained at a meeting of
shareholders, the Plan must be approved by a majority of the
votes cast at such meeting at which a quorum representing a
majority of all outstanding voting stock of the Company is,
either in person or by proxy, present and voting on the Plan.
If such shareholder approval is obtained by written consent,
it must be obtained by the written consent of the holders of a
majority of all outstanding voting stock of the Company.
8.5 Amendment, Modification, and Termination of the Plan. The
Board, at any time, may terminate and in any respect amend or
modify the Plan; provided, however, that no such action,
without approval of the Company's shareholders, may:
(a) increase the total number of shares of Common Stock
available under the Plan, other than increases
pursuant to Section 7.1 hereof;
(b) materially increase the benefits accruing to
Participants under the Plan;
(c) materially modify the requirements as to eligibility
for participation in the Plan;
(d) extend the period during which any Option may be
granted or exercised; or
(e) extend the term of the Plan.
Except as provided in Section 7.1 hereof, no amendment,
modification, or termination of the Plan shall in any manner
adversely affect the rights of any Participant under the Plan
without the consent of such Participant.
8.6 Indemnification. Each person who is or shall have been a
member of the Board shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by him
in connection with or resulting from any claim, action, suit,
or proceeding to which he may be a party or in which he may be
involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by him in
satisfaction of judgment in any such action, suit, or
proceeding against him. Such person shall give the Company an
opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such
persons may be entitled under the Company's Articles of
Incorporation or Bylaws, as a matter of law, or otherwise, or
any power that the Company may have to indemnify them or hold
them harmless.
8.7 Reliance on Reports. Each member of the Board shall be fully
justified in relying or acting in good faith upon any report
made by the independent public accountants of the Company and
upon any other information furnished in connection with the
Plan by any person or persons other than himself. In no event
shall any person who is or shall have been a member of the
Board be liable for any determination made or other action
taken or any omission to act in reliance upon any such report
or information or for any action taken, including the
furnishing of information, or failure to act, if in good
faith.
8.8 Governing Law. To the extent that federal law shall not be
held to have preempted local law, this Plan shall be governed
by the laws of the State of Delaware. If any provision of the
Plan shall be
9
<PAGE> 31
held invalid or unenforceable, the remaining provisions
hereof shall continue in full force and effect.
IN WITNESS WHEREOF, the Company has caused the NRG Generating
(U.S.) Inc. 1996 Stock Option Plan to be executed by its duly authorized
officer pursuant to resolutions of the Board to be effective as of the 20th day
of September, 1996.
NRG Generating (U.S.) Inc.
By:
------------------------------------
Leonard A. Bluhm
President and Chief Executive Officer
10
<PAGE> 32
EXHIBIT A
NRG GENERATING (U.S.) INC.
1221 NICOLLET MALL, SUITE 610
MINNEAPOLIS, MN 55403-2444
PROXY OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 21, 1996
TO THE SHAREHOLDERS OF NRG GENERATING (U.S.) INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of NRG Generating (U.S.) Inc., a Delaware corporation
(hereinafter "Company"), will be held at the Bell Atlantic Building, 50th
Floor, located at 1717 Arch Street, Philadelphia, PA on Thursday, November 21,
1996, at 1:30 p.m., for the following purposes:
THE BOARD OF DIRECTORS HAS FIXED THE CLOSE OF BUSINESS ON OCTOBER 21,
1996 AS THE RECORD DATE FOR THE DETERMINATION OF SHAREHOLDERS ENTITLED TO
NOTICE OF, AND TO VOTE AT, THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.
REPRESENTATION OF AT LEAST A MAJORITY OF ALL OUTSTANDING SHARES OF COMMON STOCK
IS REQUIRED TO CONSTITUTE A QUORUM. ACCORDINGLY, IT IS IMPORTANT THAT YOUR
STOCK BE REPRESENTED AT THE MEETING. THE LIST OF SHAREHOLDERS ENTITLED TO VOTE
AT THE ANNUAL MEETING WILL BE AVAILABLE FOR EXAMINATION BY ANY SHAREHOLDER AT
THE COMPANY'S OFFICES AT 1221 NICOLLET MALL, SUITE 610, MINNEAPOLIS, MN
55403-2444, FOR TEN (10) DAYS PRIOR TO NOVEMBER 21, 1996.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE> 33
A [x] Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF ALL THE DIRECTOR NOMINEES.
<TABLE>
<CAPTION>
<S> <C> <C>
FOR WITHHELD Nominees: Leonard A. Bluhm FOR AGAINST ABSTAIN
1. To elect [ ] [ ] Lawrence I. Littman 2. To approve [ ] [ ] [ ]
directors of Craig A.Mataczynski the Company's
the Company to hold office until David H. Peterson 1996 Stock Option Plan.
the next Annual Meeting or until their Spyros S. Skouras, Jr.
respective successors are duly elected Charles J. Thayer 3. To ratify the [ ] [ ] [ ]
and qualified. Ronald J. Will appointment of
Price Waterhouse, Certified Public
FOR all nominees listed at right, expect Accountants, as independent auditors of the
authority to vote withheld for the Company for 1997.
following nominees (if any):
4. To transact such other business as may
properly come before the meeting or any
adjournments thereof.
- ------------------------------------------
Whether or not you plan to attend the
Annual Meeting, please complete, date
and sign the enclosed proxy card and
mail it promptly in the self-addressed
envelope enclosed for your
convenience. You may revoke your proxy
at any time before it is voted.
YOUR VOTE IS IMPORTANT. ACCORDINGLY,
WE URGE YOU TO DATE, SIGN AND RETURN
THE ENCLOSED PROXY CARD REGARDLESS OF
WHETHER YOU PLAN TO ATTEND THE
MEETING.
Please indicate if you will be
attending the Company's Annual Meeting
in Philadelphia on Thursday, November
21, 1996.
_____ Yes, I will be attending
_____ No, I will not be attending
</TABLE>
Signature(s) Date
---------------------------------- ----------------------
(NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC. SHOULD SO INDICATE WHEN SIGNING, GIVING FULL
TITLE AS SUCH. IF SIGNER IS A CORPORATION, EXECUTE IN FULL CORPORATE NAME BY
AUTHORIZED OFFICER. IF MORE PERSONS ALL SHOULD SIGN)
