<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
COGENERATION CORPORATION OF AMERICA
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
NRG ENERGY, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] 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 by written 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:
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<PAGE> 2
PRELIMINARY COPY SUBJECT TO COMPLETION, DATED SEPTEMBER 14, 1998
COGENERATION CORPORATION OF AMERICA
---------------------
PROXY STATEMENT
AND
CONSENT STATEMENT
OF
NRG ENERGY, INC.
(THE BENEFICIAL OWNER OF APPROXIMATELY [47.6%] OF THE OUTSTANDING COMMON STOCK
OF
COGENERATION CORPORATION OF AMERICA)
---------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 12, 1998
TO THE SHAREHOLDERS OF COGENERATION CORPORATION OF AMERICA:
This joint Proxy Statement and Consent Statement (the "Proxy Statement"),
the accompanying letter, the enclosed BLUE proxy card and the enclosed GOLD
consent card are furnished by and on behalf of NRG Energy, Inc. ("NRG"). The
BLUE proxy card is being furnished in connection with the solicitation of
proxies to be used at a Special Meeting of Shareholders (the "Special Meeting")
of Cogeneration Corporation of America, a Delaware corporation (the "Company"),
and at any and all adjournments or postponements thereof. The meeting is
scheduled to be held on November 12, 1998, at the Hyatt Regency Hotel, 1300
Nicollet Mall, Minneapolis, MN 55403 at 8:00 A.M., Local Time. The Company's
principal executive offices are located at One Carlson Parkway, Suite 240,
Minneapolis, MN 55447.
The GOLD consent card is being furnished in connection with the
solicitation of written consents which would be used to effect the same actions
contemplated to be voted on at the Special Meeting, but without the need for,
and the delay and expenses associated with, such a meeting. NRG requests that
all stockholders return the GOLD consent card as soon as practicable, but no
later than October , 1998.
As of the Record Date described below, NRG owned approximately [45.4%] of
the outstanding shares of the Company's Common Stock, par value $.01 per share
(the "Shares"), and had the power to vote approximately [47.6%] of the Shares.
NRG is soliciting proxies and consents pursuant to this Proxy Statement in favor
of a proposal (the "Proposal") to remove Robert Sherman from his position as a
member of the Company's Board of Directors (the "Board"). No other matters are
scheduled to be voted on at the Special Meeting or are covered by the consent
being solicited.
October , 1998 has been set as the record date for the Consent
Solicitation and for determination of shareholders entitled to notice of and to
vote at the Special Meeting (the "Record Date"). According to the Company's
transfer agent, on the Record Date there were outstanding and entitled to vote
at the Special Meeting or pursuant to the consent process a total of [6,836,769]
Shares. This Proxy Statement, the enclosed BLUE proxy card and the enclosed GOLD
consent card are first being furnished to shareholders of the Company on or
about October , 1998.
YOUR VOTE IS IMPORTANT. NRG URGES YOU TO MARK, SIGN, DATE AND RETURN THE
ENCLOSED BLUE PROXY CARD AND THE ENCLOSED GOLD CONSENT CARD TO VOTE IN FAVOR OF
THE PROPOSAL. NRG urges you NOT to sign any other proxy or consent card sent to
you by the Company. [If you have already voted on the Proposal using the
proxy card, you have every right to change your vote by signing
and returning the enclosed BLUE proxy card. ONLY YOUR LATEST DATED PROXY WILL
COUNT AT THE SPECIAL MEETING.]
<PAGE> 3
NRG urges you to execute BOTH the BLUE proxy card and the GOLD consent
card. This will allow NRG to proceed either by the consent process or by the
holding of the Special Meeting, depending on which process will permit an
expedited implementation of the Proposal.
Only holders of Shares of record (the "Record Holders") at the close of
business on the Record Date are entitled to vote at the Special Meeting and any
adjournment thereof or to execute a consent. Record Holders are urged to submit
a proxy and to execute a consent even if they have sold their Shares after the
Record Date. If your Shares are registered in more than one name, the BLUE proxy
card and the GOLD consent card must be signed by all such persons to ensure that
all Shares are voted in favor of the Proposal.
If your Shares are held in the name of a brokerage firm, bank or nominee,
only it can vote those shares and only upon receipt of your specific
instructions. Accordingly, please contact the person responsible for your
account and instruct him or her as to how your Shares are to be voted.
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN VOTING YOUR SHARES, PLEASE
CONTACT MACKENZIE PARTNERS:
MACKENZIE PARTNERS, INC.
PROXY SOLICITORS
156 FIFTH AVENUE
NEW YORK, NY 10010
CALL COLLECT (212) 929-5500
OR
CALL TOLL FREE (800) 322-2885
October , 1998
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<PAGE> 4
GENERAL
NRG is soliciting votes and consents in favor of the Proposal pursuant to
which Robert Sherman would be removed as a member of the Board of Directors of
the Company. If the Proposal is approved and Mr. Sherman is so removed, NRG
plans to propose to the Company's Board of Directors that the resulting vacancy
on such Board of Directors be filled by the election of Michael O'Sullivan, who
is a Vice President of NRG's North American division, as a Director of the
Company. Information concerning Mr. O'Sullivan is attached hereto in Schedule I.
As a result of the actions described above, five of the eight Directors of
the Company will be employees of NRG and the remaining three Directors will be
members of the Independent Directors Committee nominated and elected pursuant to
the terms of the Company's Certificate of Incorporation and By-laws. This will
be substantially equivalent to the structure of the Board of Directors which was
established when NRG made its initial investment in the Company (i.e., NRG
employees holding a majority of the seats on the Board of Directors).
The three Independent Directors constitute the Independent Directors
Committee, which has the sole authority to make all decisions on behalf of the
Company under its two agreements with NRG, the Co-Investment Agreement and the
Management Services Agreement, described in Schedule IV hereto. NRG supports the
requirement that the Independent Directors Committee make all decisions on
behalf of the Company in any such dealings with NRG and NRG will act to assure
that the Independent Directors Committee continues to perform such role. Mr.
Sherman is not now and has never been an Independent Director or a member of the
Independent Directors Committee.
Mr. Sherman is currently the Company's President and Chief Executive
Officer. If the Proposal is approved, NRG also plans to propose to the Company's
Board of Directors that Mr. Sherman's employment contract with the Company be
terminated. See "Termination of Mr. Sherman's Employment Agreement."
Approval of the Proposal at the Special Meeting requires an affirmative
vote of at least a majority of the Shares outstanding on the Record Date, with
each Share entitled to one vote. Section 228 of the Delaware General Corporation
Law requires that, unless otherwise provided in a company's Certificate of
Incorporation, action may be taken by written consent with the same vote that
would be required at an annual or special meeting (in this case, a majority of
the outstanding Shares). The Company's Certificate of Incorporation does not
provide otherwise. Although the By-laws of the Company purport to require a
higher vote for actions by written consent, in the opinion of NRG's Delaware
counsel such a By-law provision is invalid under Delaware law. For further
information concerning voting and consent procedures, see "Voting, Proxy and
Consent Procedures."
TERMINATION OF MR. SHERMAN'S EMPLOYMENT CONTRACT
As discussed above, NRG plans to propose to the Company's Board of
Directors that Mr. Sherman's employment contract with the Company be terminated.
NRG also intends to recommend to the Board of Directors that a search for a
suitable replacement be commenced immediately following such termination.
Under the terms of Mr. Sherman's employment agreement (the "Employment
Agreement"), Mr. Sherman's annual base salary is $220,000. NRG estimates that
the maximum amount which could be payable to Mr. Sherman under his employment
agreement as a result of his termination would not exceed $350,000. NRG plans to
recommend to the Company's Board of Directors that following the termination of
the Employment Agreement a review be conducted to determine the amount that Mr.
Sherman is entitled to be paid under the Employment Agreement.
The Company and Mr. Sherman entered into the Employment Agreement pursuant
to which Mr. Sherman is employed as President and Chief Executive Officer of the
Company on March 28, 1997. Under the Employment Agreement, Mr. Sherman was
entitled during 1997 to receive an annual base salary of $210,000 (prorated for
the period of time he served during 1997) and a bonus of 60% of such annual base
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<PAGE> 5
salary. Mr. Sherman's annual base salary was increased to $220,000 during 1998.
In addition, pursuant to the Employment Agreement, the Company paid Mr. Sherman
a $40,000 signing bonus.
Pursuant to the Employment Agreement, the Company granted Mr. Sherman
options to purchase an aggregate of 205,000 shares of Common Stock as follows:
(i) an option to purchase 105,000 shares of Common Stock at $11.584 (the fair
market value of the Common Stock at the time of the option grant) with vesting
in three equal annual installments, and (ii) an option to purchase 100,000
shares of Common Stock, none of which has vested, with an exercise price of
$11.584 per share and vesting as follows: (a) options to purchase 50,000 shares
vest when the price of the Common Stock equals or exceeds $25.00 per share for
20 consecutive trading days before December 31, 1999 and (b) options to purchase
50,000 shares vest when the price of the Common Stock equals or exceeds $35.00
per share for 20 consecutive trading days before December 31, 2001. The price of
the Common Stock has never reached $25.00. Such options contain a change of
control provision which provides for the acceleration of such options, to the
extent not then vested, upon a "change in control." NRG believes that the
completion of the actions contemplated by the Proposal will not constitute such
a "change in control."
The Employment Agreement provides that Mr. Sherman is an employee "at will"
and may be terminated "at any time, for any reason, with or without cause." In
the event of a termination "without cause" (as defined in the Employment
Agreement), the Employment Agreement provides for a severance payment of the
portion of Mr. Sherman's base salary remaining from the termination date until
May 1, 2000.
"Cause" is defined in the Employment Agreement to mean either:
i. the commission of a felony or gross negligence in the conduct of
Mr. Sherman's duties; or
ii. Mr. Sherman engaging in conduct that is either outside of the
ordinary scope of his duties or a material breach of his obligations under
the Employment Agreement and that has a material adverse effect on the
business or financial condition of the Company.
In the circumstances of a termination "for Cause" pursuant to (ii) above,
Mr. Sherman is entitled to a 30-day period in which to attempt to cure the
conduct or circumstances constituting Cause and to repair the adverse effect on
the business or financial condition of the Company. If no cure is effected and
the termination is completed, no severance payment is required. The Employment
Agreement also contains covenants which restrict Mr. Sherman's ability to
compete with the Company and to appropriate certain business opportunities
during his employment and for one year following the date of termination of his
employment.
TRANSACTIONS BETWEEN NRG AND THE COMPANY -- THE ROLE
OF THE INDEPENDENT DIRECTORS COMMITTEE
NRG purchased the majority of its approximately [45.4%] interest in the
Company on April 30, 1996 in connection with the Company's emergence from
bankruptcy under Chapter 11 of the United States Bankruptcy Code. At that time,
the Company entered into the Co-Investment Agreement and the Management Services
Agreement described in Schedule IV hereto. Schedule IV also describes all
material past and pending transactions between NRG and the Company, which
consist solely of dealings under these two agreements.
The Co-Investment Agreement and the Company's By-laws specify that the
Independent Directors Committee has sole authority and responsibility to make
all decisions and take all actions on behalf of the Company in connection with
the Co-Investment Agreement and Management Services Agreement. NRG supports the
requirement that the Independent Directors Committee make all decisions on
behalf of the Company in any such dealings with NRG and NRG will act to assure
that the Independent Directors Committee continues to perform such role.
Under the terms of the Co-Investment Agreement, NRG is obligated to offer
to the Company ownership interests in certain power projects initially developed
by NRG or with respect to which NRG has entered into
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<PAGE> 6
a binding acquisition agreement with a third party. As described in Schedule IV,
NRG is currently engaged in a dispute with the Company over the validity of the
Company's purported acceptance of a project NRG was required to offer to the
Company as a result of an arbitration proceeding initiated by the Company.
INFORMATION CONCERNING NRG ENERGY, INC.
NRG is an independent power company whose principal business is the
acquisition, development and operation of, and ownership of interests in,
independent power and cogeneration facilities worldwide. NRG is a wholly-owned
subsidiary of Northern States Power Company ("NSP"). NRG owns 3,106,612 Shares,
or approximately [45.4%] of the Shares outstanding as of the Record Date. NRG
also holds a proxy to vote an additional 147,676 Shares, or approximately [2.2%]
of the Shares outstanding as of the Record Date.
VOTING, PROXY AND CONSENT PROCEDURES
GENERAL. The accompanying BLUE proxy card and the GOLD consent card will be
voted in accordance with the shareholder's instructions on such cards. If the
enclosed BLUE proxy card and GOLD consent card are signed and returned and no
direction as to withholding of votes is given, they will be voted FOR the
Proposal.
Only holders of record as of the close of business on the Record Date,
October , 1998, will be entitled to vote at the Special Meeting or to execute
consents. If you sold your Shares before the Record Date (or acquired them
without voting rights attached after the Record Date), you may not vote those
Shares. If you were a shareholder of record on the Record Date, you will retain
the voting rights in connection with the Proposal even if you sell or sold your
Shares after the Record Date. Accordingly, it is important that you vote the
Shares held by you on the Record Date or grant a proxy to vote those Shares
whether or not you still own those Shares.
If your Shares are held in the name of a brokerage firm, bank or nominee on
the Record Date, only it can vote your Shares and only upon receipt of your
specific instructions. Accordingly, please contact the person responsible for
your account and instruct him or her as to how your Shares are to be voted. If
your Shares are registered in more than one name, the BLUE proxy card and the
GOLD consent card must be signed by all such persons to ensure that all Shares
are voted in favor of the Proposal.
According to the Company's transfer agent, [6,836,769] Shares were
outstanding and eligible to vote as of the Record Date.
PROXIES. If any other matters are properly brought before the Special
Meeting, BLUE proxy cards will be voted on such matters as NRG, in its sole
discretion, may determine. Unless voted or revoked in the manner provided below,
such proxy will expire twelve months from the date executed.
IN ORDER TO BE VOTED, THE ENCLOSED BLUE PROXY CARD MUST BE SIGNED, DATED
AND RETURNED IN THE ENCLOSED ENVELOPE OR TO MACKENZIE PARTNERS, INC. AT 156
FIFTH AVENUE, NEW YORK, NY 10010, IN TIME TO BE VOTED AT THE SPECIAL MEETING.
Execution of a BLUE proxy card will not affect your right to attend the Special
Meeting and to vote in person. Any proxy may be revoked at any time prior to the
Special Meeting by delivering written notice of revocation or a later dated
proxy either to NRG in care of MacKenzie Partners, Inc., 156 Fifth Avenue, New
York, New York 10010, or to the Secretary of the Company at Cogeneration
Corporation of America, One Carlson Parkway, Suite 240, Minneapolis, MN 55447,
(612) 745-7900 (or any other address provided by the Company), or by voting in
person at the Special Meeting. ONLY YOUR LATEST DATED PROXY WILL COUNT AT THE
SPECIAL MEETING.
CONSENTS. The Proposal will be adopted when properly completed, unrevoked
consents are signed by the holders of record on the Record Date of the required
percentage of the Shares outstanding and such consents are delivered to the
Company, provided that the requisite consents are so delivered within 60 days of
the earliest dated consent delivered to the Company. NRG plans to present the
results of a successful solicitation with respect to the Proposal proposed
herein to the Company as soon as possible.
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<PAGE> 7
IN ORDER TO BE EFFECTIVE, THE ENCLOSED GOLD CONSENT CARD MUST BE SIGNED,
DATED AND RETURNED IN THE ENCLOSED ENVELOPE OR TO MACKENZIE PARTNERS, INC. AT
156 FIFTH AVENUE, NEW YORK, NY 10010. An executed consent card may be revoked at
any time before expiration by marking, dating, signing and delivering a written
revocation before the time that the action authorized by the executed consent
becomes effective. A revocation may be in any written form validly signed by the
record holder as long as it clearly states that the consent previously given is
no longer effective. The delivery of a subsequently dated consent card which is
properly completed will constitute a revocation of any earlier consent. The
revocation may be delivered either to NRG in care of MacKenzie Partners, Inc.,
156 Fifth Avenue, New York, New York 10010, or to the Company at One Carlson
Parkway, Suite 240, Minneapolis, MN 55477 or any other address provided by the
Company. Although a revocation is effective if delivered to the Company, NRG
requests that either the original or photostatic copies of all revocations of
consents be mailed or delivered to NRG in care of MacKenzie Partners, Inc. at
the address set forth above, so that NRG will be aware of all revocations and
can more accurately determine if and when consents sufficient for the approval
of the Proposal have been received.
SOLICITATION EXPENSES AND PROCEDURES
The entire expense of preparing, assembling, printing and mailing this
Proxy Statement and the accompanying proxy and consent cards, and the cost of
soliciting proxies and consents, will be borne by NRG. NRG intends to seek
reimbursement from the Company for these expenses if the Proposal is approved,
and such reimbursement will not be submitted to a vote of the shareholders of
the Company.
In addition to the use of the mails, proxies and consents may be solicited
by certain employees or affiliates of NRG by telephone, telegram, personal
solicitation and live or prerecorded audio or video presentations, for which no
compensation will be paid to these individuals. Banks, brokerage houses and
other custodians, nominees and fiduciaries will be requested to forward the
solicitation material to the customers for whom they hold Shares, and NRG will
reimburse them for their reasonable out-of-pocket expenses.
NRG has retained MacKenzie Partners, Inc. ("MacKenzie") for information
agent and proxy solicitation services, for which MacKenzie will be paid a fee of
$ , and will be reimbursed for its expense charges, which are anticipated
to be approximately $ . NRG has also agreed to indemnify MacKenzie against
certain liabilities and expenses in connection with its engagement, including
certain liabilities under the federal securities laws. MacKenzie will solicit
proxies from individuals, brokers, bank nominees and other institutional
holders. Approximately persons will be utilized by MacKenzie in its
solicitation efforts, which may be made by telephone, telegram, facsimile and in
person.
NRG estimates that total expenditures relating to the solicitation of
proxies and consents will be approximately $ , including fees payable to
MacKenzie. To date, NRG has spent approximately $ of such total estimated
expenditures.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
The Company's 1999 Annual Meeting of Stockholders ("1999 Annual Meeting")
is anticipated to be held in May 1999. A notice of intent ("Notice of Intent")
of a stockholder of the Company to make a nomination or to bring any other
matter before the 1999 Annual Meeting must comply with the applicable
requirements set forth in the Company's By-laws and must be received not more
than 180 days and not less than 120 days in advance of the 1999 Annual Meeting
by the secretary of the Company at the Company's principal executive offices,
One Carlson Parkway, Suite 240, Minneapolis, Minnesota 55447; however, if the
1999 Annual Meeting is held on a date more than 30 days before or after May 21,
1999, any stockholder who wishes to have a proposal included in the Company's
proxy statement for the 1999 Annual Meeting must deliver a copy of the proposal
to the Company a reasonable time before the proxy solicitation is made. The
Company may exercise discretionary voting authority under proxies it solicits to
vote on a proposal made by a stockholder that the stockholder does not seek to
include in the Company's proxy statement pursuant to applicable rules, unless
the Company is notified about the proposal before the applicable deadline
described above.
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<PAGE> 8
VOTING YOUR SHARES
Whether or not you plan to attend the Special Meeting, we urge you to vote
FOR the Proposal by so indicating on the enclosed BLUE proxy card and the
enclosed GOLD consent card and immediately mailing them in the enclosed
envelope. You may do this even if you have already sent in a different proxy or
consent solicited by another party. It is the latest dated proxy or consent that
counts. Execution and delivery of a proxy or consent by a record holder of
Shares will be presumed to be a proxy or consent with respect to all Shares held
by such record holder unless the proxy or consent specifies otherwise.
YOUR VOTE IS IMPORTANT. PLEASE MARK, SIGN, DATE AND RETURN BOTH THE BLUE
PROXY CARD AND THE GOLD CONSENT CARD TODAY.
IF YOU HAVE ALREADY SENT A PROXY CARD THAT IS NOT BLUE, OR A CONSENT CARD
THAT IS NOT GOLD, TO THE COMPANY, YOU MAY REVOKE THAT PROXY OR CONSENT AND VOTE
IN FAVOR OF THE PROPOSAL BY MARKING, SIGNING, DATING AND MAILING THE ENCLOSED
BLUE PROXY CARD AND THE ENCLOSED GOLD CONSENT CARD.
---------------------
Except as otherwise noted, the information concerning the Company contained
in this Proxy Statement has been taken from or is based upon documents that are
publicly available. Although NRG does not have any knowledge that would indicate
that any statements contained herein based upon such documents are untrue, NRG
does not take any responsibility for the accuracy or completeness of the
information contained in such documents, or for any failure by the Company to
disclose events that may have occurred or facts that may exist that may affect
the significance or accuracy of any such information but that are unknown to
NRG.
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<PAGE> 9
SCHEDULE I
MICHAEL A. O'SULLIVAN, AGE 38
Michael A. O'Sullivan has been a Vice President of NRG's NorthAmerica
division since June 1998. Prior to that, Mr. O'Sullivan was Executive Director,
Business Development for NRG since May 1995. From 1991 until joining NRG, Mr.
O'Sullivan was Vice President of Business Development for Indeck Energy
Services, a privately held independent power company. From 1982 to 1991, Mr.
O'Sullivan held various real estate development and utility management positions
with Homart Development and Commonwealth Edison, a large utility based in
Chicago. Mr. O'Sullivan's educational background includes a B.S. in Civil
Engineering from the University of Notre Dame and an M.B.A. from the University
of Chicago (concentrating in finance and marketing).
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SCHEDULE II
PARTICIPANTS IN THE PROXY SOLICITATION
<TABLE>
<CAPTION>
PARTICIPANT'S NAME
AND BUSINESS ADDRESS DESCRIPTION OF BUSINESS OR PRESENT PRINCIPAL OCCUPATION
- -------------------- -------------------------------------------------------
<S> <C>
NRG Energy, Inc.............................. NRG is an independent power company whose principal
1221 Nicollet Mall, Suite 700 business is the acquisition, development and operation
Minneapolis, MN 55403 of, and ownership of interests in, independent power
and cogeneration facilities worldwide. NRG is a wholly
owned subsidiary of Northern States Power Company.
</TABLE>
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SCHEDULE III
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AS A GROUP
The following table sets forth the security ownership of certain persons
who have made a publicly available filing indicating that as of October ,
1998, each "beneficially" owned more than 5 percent of the outstanding Shares,
and the beneficial ownership of Shares by each director, and executive officer,
and by all such directors and executive officers of the Company as a group as of
October , 1998 (except for certain information which is based on information
contained in the Company's Proxy Statement dated April 27, 1998).
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP(1) PERCENTAGE OF CLASS
- ---------------- ----------------------- -------------------
<S> <C> <C>
NRG Energy, Inc.(2)..................................... 3,254,288 [47.60%]
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Wexford Capital Partners II, LP(3)...................... 443,976 [6.49]
411 West Putnam Avenue
Greenwich, CT 06830
David H. Peterson(4).................................... 11,000 *
Julie A. Jorgensen(5)................................... -- --
Lawrence I. Littman(6).................................. 10,070 *
Craig A. Mataczynski(7)................................. 10,500 *
Robert T. Sherman, Jr.(8)............................... 40,000 *
Spyros S. Skouras, Jr.(9)............................... 10,000 *
Charles J. Thayer(10)................................... 30,000 *
Ronald J. Will(11)...................................... 12,500 *
Timothy P. Hunstad(12).................................. 25,500 *
Directors and Executive Officers as a group (10
persons)(13).......................................... 149,570 [2.15]
</TABLE>
- ---------------
* Represents less than 1.0% of the outstanding shares of Common Stock
- ---------------
(1) Except as otherwise indicated, the persons listed as beneficial owners of
the Shares have the sole voting and investment power with respect to such
Shares. Under the rules of the Commission, a person is deemed to be a
beneficial owner of a security if he or she has or shares the power to vote
or to direct the voting of such security, or the power to dispose or to
direct the disposition of such security. A person is also deemed to be a
beneficial owner of any securities that such person has the right to
acquire beneficial ownership of within 60 days as well as any securities
owned by such person's spouse, children or relatives living in the same
household. Accordingly, more than one person may be deemed to be a
beneficial owner of the same securities.
(2) Includes 3,106,612 shares as to which NRG has sole voting and investment
power, and 147,676 shares as to which NRG has sole voting power only.
(3) Includes 348,672 shares owned by Wexford Capital Partners II, LP and 95,304
shares owned 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 over the funds. This information is as of
the date set forth in and based on the Schedule 13D filed May 8, 1997 and
other information furnished to the Company by Wexford Management LLC.
(4) Includes 10,000 shares issuable upon exercise of stock options that may be
exercised within 60 days of April 10, 1998. In addition, Mr. Peterson
beneficially owns approximately 25,912 shares of NSP Common Stock,
including approximately 7,708 shares of NSP Common Stock through an
employee
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stock ownership plan and 18,204 shares issuable upon exercise of NSP stock
options that may be exercised within 60 days of October , 1998.
(5) Ms. Jorgensen beneficially owns approximately 24,139 shares of NSP Common
Stock, including (i) approximately 372 shares of NSP Common Stock owned
through an employee stock ownership plan, (ii) approximately 221 shares of
NSP Common Stock held by Ms. Jorgensen's spouse through an employee stock
ownership plan, (iii) approximately 4,876 shares of NSP Common Stock owned
by Ms. Jorgensen's spouse, and (iv) 18,598 shares of NSP Common Stock
issuable upon exercise of NSP stock options owned by Ms. Jorgensen's spouse
that may be exercised within 60 days of October , 1998.
(6) Includes 10,000 shares issuable upon exercise of stock options that may be
exercised within 60 days of April 10, 1998.
(7) Includes 10,000 shares issuable upon exercise of stock options that may be
exercised within 60 days of April 10, 1998. In addition, Mr. Mataczynski
beneficially owns 2,502 shares of NSP Common Stock, including 1,006 shares
of NSP Common Stock through an employee stock ownership plan and 1,496
shares of NSP Common Stock issuable upon exercise of NSP stock options that
may be exercised within 60 days of October , 1998.
(8) Includes 35,000 shares issuable upon exercise of stock options that may be
exercised within 60 days of April 10, 1998. In addition, Mr. Sherman
beneficially owns 200 shares of NSP Common Stock.
(9) Includes 10,000 shares issuable upon exercise of stock options that may be
exercised within 60 days of April 10, 1998. Excludes shares held by Wexford
Management LLC, Mr. Skouras's former employer.
(10) Includes 10,000 shares issuable upon exercise of stock options that may be
exercised within 60 days of April 10, 1998 and 10,000 shares owned by
Chartwell Capital Ltd. Mr. Thayer is the principal and Managing Director of
Chartwell Capital Ltd.
(11) Represents 2,500 shares of Common Stock held jointly with his spouse and
10,000 shares issuable upon exercise of stock options that may be exercised
within 60 days of October , 1998. In addition, Mr. Will beneficially owns
15,330 shares of NSP Common Stock, including (i) 5,272 shares issuable upon
exercise of NSP stock options that may be exercised within 60 days of
October , 1998, (ii) 3,980 shares of NSP Common Stock which are owned by
Mr. Will's spouse and for which he shares investment power, and (iii) 198
shares of NSP Common Stock which he owns jointly with his spouse and for
which he shares investment power.
(12) Includes 25,000 shares issuable upon exercise of stock options that may be
exercised within 60 days of April 10, 1998.
(13) Includes 110,000 shares issuable upon exercise of stock options that may be
exercised within 60 days of April 10, 1998.
11
<PAGE> 13
SCHEDULE IV
CERTAIN BUSINESS RELATIONSHIPS BETWEEN
NRG AND THE COMPANY
In connection with the Composite Fourth Amended and Restated Plan of
Reorganization for O'Brien Environmental Energy, Inc. (the "Reorganization
Plan"), confirmed by order of the United States Bankruptcy Court for the
District of New Jersey under Chapter 11 of the United States Bankruptcy Code on
February 22, 1996, the Company entered into a Management Services Agreement and
a Co-Investment Agreement with NRG, each dated as of April 30, 1996. The
Management Services Agreement provides that NRG 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 Management Services
Agreement with NRG, the Company expensed approximately $562,000 (including
amounts expensed under the Leased Employee Agreement described below) during the
year ended December 31, 1997.
During the year ended December 31, 1997, NRG provided approximately
$285,000 in project and construction management services rendered in connection
with Gray's Ferry Project partnership, of which the Company is one-third owner.
The Company entered into a Leased Employee Agreement with NRG, whereby NRG
agreed to lease its employee, Leonard A. Bluhm, to the Company to perform the
duties of Chief Executive Officer of the Company. During the year ended December
31, 1997, the Company expensed approximately $248,000 pursuant to the Leased
Employee Agreement, which included the salary paid to Mr. Bluhm and other
amounts necessary to reimburse NRG for expenditures associated with or resulting
from Mr. Bluhm's employment.
Pursuant to the Co-Investment Agreement, NRG agreed to offer to the Company
ownership interests in certain power projects which were initially developed by
NRG or with respect to which NRG has entered into a binding acquisition
agreement with a third party. If any eligible project reaches certain contract
milestones (which include the execution of a binding power purchase agreement
and fuel supply agreement and the completion of a feasibility and engineering
study) by April 30, 2003, NRG has agreed to offer to sell to the Company all of
NRG's ownership interest in such project. As described in the disclosure
statement prepared in connection with the Reorganization Plan, eligible projects
include, with certain limited exceptions, any proposed or existing electric
power plant within the United States that NRG initially develops or in which NRG
proposes to acquire an ownership interest and "with respect to which NRG's
ownership level is restricted by federal or state regulatory restrictions on
NRG's ownership." NRG is obligated under the Co-Investment Agreement to offer to
the Company, during the three year period ending on April 30, 1999, projects
with an aggregate equity value of at least $60,000,000 or a minimum of 150 net
MW. As of August 4, 1998, NRG had met such minimum obligation under the
Co-Investment Agreement by offering projects to the Company having an aggregate
of 244 net MW.
Effective May 23, 1996, NRG guaranteed payment of pre-existing liabilities
of NRG Generating (Newark) Cogeneration, Inc. ("Newark") and NRG Generating
(Parlin) Cogeneration, Inc. ("Parlin"), wholly owned subsidiaries of the
Company, of up to $5 million, which amount is to be reduced as certain defined
milestones are reached and to be eliminated no later than May 23, 2001. On June
28, 1996, NRG advanced Parlin approximately $56 million to pay off Parlin's
nonrecourse financing, which included a $3.1 million cost to terminate an
interest rate swap agreement. As of December 31, 1997, loans to Newark and
Parlin aggregating approximately $2,539,000 remained outstanding to NRG. The
terms of this transaction were approved by the Independent Directors Committee
of the Company's Board of Directors as required by the Company's By-laws.
Power Operations, Inc., a wholly owned subsidiary of the Company ("Power
Operations"), assumed operations and maintenance responsibilities for the
Company's Newark facility and the Company's Parlin facility, in each case
replacing the former operator, on November 8, 1996, and December 31, 1996,
respectively. Effective January 1, 1997, Power Operations was sold by the
Company to NRG for $10.00 plus the amount of Power Operations' outstanding
accounts receivable and an indemnification by NRG to the
12
<PAGE> 14
Company for certain potential losses or other liabilities that might occur with
respect to the termination of the prior operator of the Newark and Parlin
facilities and the assumption by Power Operations of operations and maintenance
responsibilities for such facilities. The terms of this transaction were
approved by the Independent Directors Committee of the Company's Board of
Directors as required by the Company's By-laws.
In March 1996, NRG and O'Brien (Schuylkill) Cogeneration Inc.
("Schuylkill"), a wholly owned subsidiary of the Company, entered into a $10
million loan agreement (the "Loan Agreement") to provide a means of funding a
Schuylkill capital contribution obligation to the Gray's Ferry Partnership. In
connection with NRG's assistance with the Gray's Ferry project, its financing
and the note, the Company entered into an option agreement dated March 8, 1996
(the "Option Agreement") with NRG. The terms of the Loan Agreement and the
Option Agreement were approved by the Bankruptcy Court in connection with the
confirmation of the Reorganization Plan. Pursuant to the Option Agreement, the
Company agreed that, on the date on which NRG made a loan to Schuylkill pursuant
to the Loan Agreement, NRG would have the right, upon 15 business days' notice,
to reduce the outstanding principal amount of the note payable to NRG by
Schuylkill (the "Note") by $3 million in exchange for 396,255 shares of Common
Stock (the "Conversion Shares").
In June 1997, NRG agreed to allow Schuylkill to borrow funds under the Loan
Agreement on an "as needed" basis rather than requiring that Schuylkill borrow
the full $10 million on the funding date. On August 22, 1997, NRG made a loan of
$2.7 million to Schuylkill pursuant to the Loan Agreement, bringing the total
outstanding principal amount under the Loan Agreement to $4.5 million and
thereby vesting in NRG an option, exercisable on 15 days' notice to the Company,
to acquire the Conversion Shares. On August 28, 1997, NRG notified the Company
of its intention to exercise its option to acquire the Conversion Shares (the
"Exercise Notice"). On November 25, 1997, NRG acquired the Conversion Shares
and, as a result, now is the record owner of an aggregate of 3,106,612 shares of
Common Stock.
Through its subsidiary, NRG (Morris) Cogen, LLC ("Morris Cogen"), NRG had
the exclusive right to build and operate a cogeneration plant to be located
within the Millennium Petrochemicals, Inc. petrochemical manufacturing facility
in Morris, Illinois. NRG commenced construction of the 117 megawatt steam and
electricity cogeneration plant in September 1997. Pursuant to a Membership
Interest Purchase Agreement, NRGG Funding Inc. ("NRGG Funding"), a Delaware
corporation and a wholly owned subsidiary of the Company, acquired from NRG 100%
of the membership interests in Morris Cogen.
On December 30, 1997, NRGG Funding completed its acquisition from NRG of
all NRG's interest in its Millennium Petrochemicals project in Illinois.
Pursuant to the Membership Interest Purchase Agreement, NRGG Funding agreed
to assume all of the obligations of NRG under that certain Equity Commitment
Agreement among NRG, Morris Cogen and The Chase Manhattan Bank ("Chase"),
including the obligation to provide future equity contributions to Morris Cogen,
which are limited to the lesser of 20% of the total project cost or $22.0
million. NRG has guaranteed to Chase that NRGG Funding will make these future
equity contributions. In addition, the Company has guaranteed to NRG the
obligation of NRGG Funding to make these future equity contributions. NRGG
Funding and NRG Morris have also pledged their membership interests in Morris
Cogen to Chase as collateral support for Chase's loan to Morris Cogen and to NRG
to support the Company's guaranty to NRG. In addition, Morris Cogen is obligated
to pay NRG $1.0 million as and when permitted under a Construction and Term Loan
Agreement, dated as of September 15, 1997, between Morris Cogen, Chase and the
Banks (as defined therein). Prior to the sale of Morris Cogen to the Company,
Morris Cogen had paid $4.0 million to NRG in connection with the financial
closing of the construction financing of the Millennium Petrochemicals project.
NRG entered into a Supplemental Loan Agreement with the Company and NRGG
Funding to loan NRGG Funding and the Company (as co-borrowers) the full amount
of such equity contributions by NRGG Funding, all at NRGG Funding's option. The
terms of the Membership Interest Purchase Agreement, including the consideration
paid thereunder, were determined on the basis of arms-length negotiations
between the parties. The terms of the Millennium transaction were approved by
the Independent Directors
13
<PAGE> 15
Committee of the Company's Board of Directors as required by the Company's
By-laws. NRG is not obligated to make advances to the borrowers if defaults
exist under certain of the Company's other loan agreements.
On August 4, 1998, NRG offered its interest in the Mid-Continent Power
Company ("MCPC") facility to the Company. The offer was made pursuant to an
arbitration panel's ruling on July 31, 1998 enjoining NRG's pending sale of the
MCPC facility to OGE Energy Corp. ("OGE Energy") and requiring that NRG offer
the facility to the Company. In accordance with the arbitration panel's order,
the offer to the Company was made on the same terms and conditions as those
agreed with OGE Energy. Specifically, NRG has offered to sell the MCPC facility
to the Company for a purchase price of $25.35 million, subject to certain
purchase price adjustments, without representations or warranties regarding the
condition of the facility or its ability to meet the obligations under the power
purchase agreement with OGE Energy. If the Company accepts the offer, NRG will
be required to finance the purchase price in the event that other financing is
not commercially available to the Company.
Under the order, the Independent Directors Committee on behalf of the
Company had 30 days from August 4 in which to accept NRG's offer. The
Independent Directors Committee sent a letter purporting to accept the offer on
September 2, 1998, but did not execute the Stock Purchase Agreement which
reflected the offer and did not tender the $2.5 million earnest money deposit
required by that agreement. Instead, on September 10, 1998, the Company
unilaterally revised the Stock Purchase Agreement offered pursuant to the order
and executed and delivered a counter offer in the form of a modified stock
purchase agreement. NRG and the Company have a dispute whether this modified
stock purchase agreement constitutes a rejection of NRG's offer. NRG has
requested, in a letter dated September 11, 1998, that the arbitration panel lift
the injunction and allow NRG to sell the MCPC facility to OGE Energy.
The MCPC facility is a 110 megawatt gas-fired power generation facility
near Pryor, Oklahoma which sells a portion of its output to OGE Energy's
wholly-owned subsidiary, Oklahoma Gas & Electric Company, pursuant to a power
purchase agreement. NRG had agreed in December 1997 to sell the MCPC facility to
OGE Energy in settlement of disputes under the power purchase agreement.
14
<PAGE> 16
If your Shares are held in the name of a brokerage firm, bank or bank
nominee, only it can vote your Shares and only upon your specific instructions.
Accordingly, please contact the persons responsible for your account and
instruct him or her to execute the BLUE proxy card and the GOLD consent card.
---------------------
WE URGE YOU TO VOTE IN FAVOR OF THE PROPOSAL
BY MARKING, SIGNING, DATING AND RETURNING THE ENCLOSED BLUE PROXY CARD
AND THE ENCLOSED GOLD CONSENT CARD.
---------------------
If you have any questions or require any additional information concerning
the vote of your Shares at the Special Meeting, please contact MacKenzie
Partners:
MACKENZIE PARTNERS, INC.
PROXY SOLICITORS
156 FIFTH AVENUE
NEW YORK, NY 10010
CALL COLLECT (212) 929-5500
OR
CALL TOLL-FREE (800) 322-2885
15
<PAGE> 17
BLUE CARD
COGENERATION CORPORATION OF AMERICA
THIS PROXY IS SOLICITED BY NRG ENERGY, INC. ("NRG") FOR THE
SPECIAL MEETING OF STOCKHOLDERS OF COGENERATION CORPORATION OF
AMERICA (THE "COMPANY") THAT IS SCHEDULED FOR NOVEMBER 12, 1998,
AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF (THE "SPECIAL
MEETING").
Each of the undersigned, revoking all other proxies heretofore
given, hereby constitutes and appoints , and each of
them, with full power of substitution, as proxy or proxies to
represent and vote all shares of Common Stock, par value $0.01 per
share (the "Common Stock") of the Company owned by the undersigned
at the Special Meeting and any adjournments or postponements
thereof, as instructed below with regard to the propositions set
forth herein, as more fully set forth in the Proxy Statement and
Consent Statement of NRG Energy, Inc., dated , 1998
(receipt of which is hereby acknowledged), and in their sole
discretion upon any other matters as may properly come before the
Special Meeting.
THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH
THE DIRECTIONS GIVEN IN THIS PROXY AT THE SPECIAL MEETING
REGARDLESS OF WHEN THE SPECIAL MEETING IS HELD. IF NOT OTHERWISE
DIRECTED HEREIN, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED FOR THE PROPOSAL TO REMOVE ROBERT SHERMAN FROM THE COMPANY'S
BOARD OF DIRECTORS. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT
BEFORE THE SPECIAL MEETING, SUCH SHARES WILL BE VOTED ON SUCH
MATTERS AS THE PROXIES NAMED HEREIN, IN THEIR SOLE DISCRETION, MAY
DETERMINE.
NRG RECOMMENDS A VOTE FOR THE PROPOSAL TO REMOVE ROBERT SHERMAN
FROM THE COMPANY'S BOARD OF DIRECTORS.
1. REMOVAL OF DIRECTOR: To remove Robert Sherman from the Company's
Board of Directors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Date
--------------------, 1998.
Signature
---------------------------
Title
---------------------------
---------------------------
(Signature, if Held
Jointly)
Please sign exactly as name
appears hereon. PLEASE
MANUALLY DATE THIS CARD.
When signing as an
attorney, executor,
administrator, trustee or
guardian, give full title
as such. If a corporation,
sign in full corporate name
by President or other
authorized officer. If a
partnership, sign in
partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE ALSO MARK, SIGN, DATE AND MAIL THE ENCLOSED GOLD CONSENT CARD.
<PAGE> 18
GOLD CARD
COGENERATION CORPORATION OF AMERICA
THIS CONSENT OF STOCKHOLDERS TO ACTION WITHOUT A MEETING IS
SOLICITED BY NRG ENERGY, INC. ("NRG").
Each of the undersigned hereby consents, pursuant to Section
228 of the Delaware General Corporation Law, with respect to all
shares of Common Stock, par value $0.01 per share (the "Common
Stock") of Cogeneration Company of America (the "Company") owned
by the undersigned, to the following action without a meeting,
without prior notice and without a vote, as more fully described
in the Proxy Statement and Consent Statement of NRG Energy, Inc.,
dated , 1998, receipt of which is hereby acknowledged.
IF NOT OTHERWISE DIRECTED HEREIN, THE UNDERSIGNED WILL BE
DEEMED TO CONSENT TO THE PROPOSAL TO REMOVE ROBERT SHERMAN FROM
THE COMPANY'S BOARD OF DIRECTORS.
NRG RECOMMENDS A VOTE FOR THE PROPOSAL TO REMOVE ROBERT SHERMAN
FROM THE COMPANY'S BOARD OF DIRECTORS.
1. REMOVAL OF DIRECTOR: To remove Robert Sherman from the Company's
Board of Directors.
CONSENT [ ] CONSENT WITHHELD [ ]
Date
--------------------, 1998.
Signature
---------------------------
Title
---------------------------
---------------------------
(Signature, if Held
Jointly)
Please sign exactly as name
appears hereon. PLEASE
MANUALLY DATE THIS CARD.
When signing as an
attorney, executor,
administrator, trustee or
guardian, give full title
as such. If a corporation,
sign in full corporate name
by President or other
authorized officer. If a
partnership, sign in
partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE ALSO MARK, SIGN, DATE AND MAIL THE ENCLOSED BLUE PROXY CARD.
