<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
(Rule 13d-101)
Information to be included in statements filed pursuant
to Rule 13d-1(a) and amendments thereto filed pursuant to
Rule 13d-2(a)
COGENERATION CORPORATION OF AMERICA
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
628950 10 7
(CUSIP Number)
Ann B. Curtis
Calpine Corporation
50 West San Fernando Street
San Jose, CA 95113
(408) 995-5115
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
With a copy to:
William R. Collins, Esq.
Howard, Smith & Levin LLP
1330 Avenue of the Americas
New York, NY 10019
(212) 841-1000
August 26, 1999
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
<PAGE> 2
SCHEDULE 13D
CUSIP No. 628950 10 7
1) Name of Reporting Persons: Calpine Corporation
I.R.S. Identification Nos. of Above Person: 77-0498817
2) Check the Appropriate Box if a Member of a Group.
[ ] (a)
[ ] (b)
3) SEC Use Only
4) Source of Funds. AF, WC, BK
5) [ ] Check if Disclosure of Legal Proceedings is Required
pursuant to Items 2(d) or 2(e).
6) Citizenship or Place of Organization.
Delaware
Number of Shares 7) sole voting power 0
beneficially
owned by each 8) shared voting power 3,106,612
reporting person
with 9) sole dispositive power 0
10) shared dispositive power 3,106,612
11) Aggregate amount beneficially owned by each reporting person
3,106,612
12) [ ] Check if the Aggregate Amount in Row (11) Excludes
Certain Shares.
13) Percent of Class Represented by Amount in Row (11).
45.30%
14) Type of Reporting Person.
CO
-2-
<PAGE> 3
SCHEDULE 13D
CUSIP No. 628950 10 7
1) Name of Reporting Persons: Calpine East Acquisition Corp.
I.R.S. Identification Nos. of Above Person: 77-0520358
2) Check the Appropriate Box if a Member of a Group.
[ ] (a)
[ ] (b)
3) SEC Use Only
4) Source of Funds. AF, WC
5) [ ] Check if Disclosure of Legal Proceedings is Required
pursuant to Items 2(d) or 2(e).
6) Citizenship or Place of Organization.
Delaware
Number of Shares 7) sole voting power 0
beneficially
owned by each 8) shared voting power 3,106,612
reporting person
with 9) sole dispositive power 0
10) shared dispositive power 3,106,612
11) Aggregate amount beneficially owned by each reporting person
3,106,612
12) [ ] Check if the Aggregate Amount in Row (11) Excludes
Certain Shares.
13) Percent of Class Represented by Amount in Row (11).
45.30%
14) Type of Reporting Person.
CO
-3-
<PAGE> 4
ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D (the "Statement") relates to
the common stock, par value $.01 per share (the "Common Stock"), of Cogeneration
Corporation of America (the "Company"). The principal executive offices of the
Issuer are located at One Carlson Parkway, Suite 240, Minneapolis, Minnesota
55447.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) and (f) This Statement is filed by Calpine East
Acquisition Corp., a Delaware corporation ("Merger Subsidiary"), and Calpine
Corporation, a Delaware corporation ("Calpine"). Merger Subsidiary, a
wholly-owned subsidiary of Calpine, was organized to acquire the Company and has
not conducted any unrelated activities since its organization on August 23,
1999. Calpine is a leading independent power company engaged in the development,
acquisition, ownership and operation of power generation facilities and the sale
of electricity predominantly in the United States. The principal executive
offices of Calpine and Merger Subsidiary are located at 50 West San Fernando
Street, San Jose, California 95113. The name, age, business address, present
principal occupation or employment, five-year employment history and citizenship
of each director and executive officer of Merger Subsidiary and Calpine are set
forth in Schedule I hereto.
(d) and (e) None of Merger Subsidiary, Calpine or, to the best
knowledge of such corporations, any of the persons listed on Schedule I, has
during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, Federal or state securities laws or finding any violation of such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The total amount of funds required by Merger Subsidiary to
consummate the Merger (as defined below) (including refinancing, if necessary,
certain indebtedness of the Company and its subsidiaries, and paying related
fees and expenses) is expected to be approximately $233 million. Merger
Subsidiary will obtain all funds needed for the Merger from Calpine by means of
a capital contribution, loan or a combination thereof. Calpine will obtain such
funds (i) from its general corporate funds and/or (ii) by borrowing under its
existing Credit Agreement, dated as of September 25, 1996, as amended as of May
15, 1998 (as amended, the "Credit Agreement"), among Calpine, as borrower, the
banks and other financial institutions party thereto, as lenders, and the Bank
of Nova Scotia, as agent. The Credit Agreement provides for borrowings of up to
an aggregate of $100,000,000 of loans on an unsecured basis. Borrowings under
the Credit Agreement bear interest at the Bank of Nova Scotia's base rate plus
an applicable margin or at LIBOR plus an applicable margin. The Credit Agreement
includes customary covenants including financial covenants.
-4-
<PAGE> 5
As of August 30, 1999, Calpine had (i) cash-on-hand (including
cash equivalents and marketable securities) of approximately $250 million and
(ii) availability to borrow up to an additional $79 million of loans under the
Credit Agreement.
The foregoing summary of the source and amount of funds is
qualified in its entirety by reference to the text of the Credit Agreement, a
copy of which is filed as an exhibit to Calpine's Current Report on Form 8-K,
dated May 1, 1996, filed with the Securities and Exchange Commission and is
incorporated in this Statement by reference.
Although no definitive plan or arrangement for repayment of
borrowings under the Credit Agreement have been made, Calpine anticipates such
borrowings will be repaid with internally generated funds (including, if the
Merger is accomplished, those of the Company) and from other sources which may
include the proceeds of future bank refinancings or the public or private sale
of debt or equity securities. No decision has been made concerning the method
Calpine will use to repay the borrowings under the Credit Agreement. Such
decision will be made based on Calpine's review from time to time of the
advisability of particular actions, as well as prevailing interest rates,
financial and other economic conditions and such other factors as Calpine may
deem appropriate.
ITEM 4. PURPOSE OF TRANSACTION.
On August 26, 1999, Calpine and Merger Subsidiary entered into
an Agreement and Plan of Merger (the "Merger Agreement") with the Company which
provides that, subject to the terms and conditions thereof, Merger Subsidiary
will merge with and into the Company with the Company continuing as the
surviving corporation (the "Merger"). Upon consummation of the Merger, all
outstanding shares of Common Stock (other than shares held by Calpine or Merger
Subsidiary) will be converted into the right to receive $25.00 per share in
cash.
Concurrently with the execution of the Merger Agreement,
Calpine, Merger Subsidiary and NRG Energy, Inc., a Delaware corporation ("NRG"),
have entered into a Contribution and Stockholders Agreement, dated as of August
26, 1999 (the "Stockholders Agreement"). The Stockholders Agreement provides
that, subject to the terms and conditions thereof, immediately prior to the
consummation of the Merger (i) NRG will contribute to Merger Subsidiary a number
of shares of Common Stock equal in value to (A) at least 20% of the total equity
value of the Company less (B) the value of certain stock options held by NRG
employees which are currently directors of the Company which have been or will
be cancelled prior to the Merger, for 20% of the ownership interest in Merger
Subsidiary and (ii) Calpine will contribute to Merger Subsidiary sufficient cash
equal to 80% of the total equity value of the Company. Upon consummation of the
Merger, NRG will own 20% and Calpine will own 80% of the outstanding shares of
Common Stock of the Company. The total equity value of the Company is defined as
the sum of (i) the total number of outstanding shares of Common Stock multiplied
by $25.00 (the "Merger Price") and (ii) the aggregate amount of the excess of
the Merger Price over the exercise price of each of the outstanding stock
options of the Company which are currently exercisable or will become
exercisable upon consummation of the Merger. Calpine has also agreed to
contribute cash, in the form of a loan, sufficient to satisfy certain
-5-
<PAGE> 6
obligations of the Company.
The Stockholders Agreement provides that the Board of
Directors of the Company following the Merger shall consist of no more than
seven directors with one director being appointed by NRG. In addition, the
consent of NRG is required for the Company or its subsidiaries to take certain
actions including, without limitation, actions relating to (i) the issuance of
securities, (ii) the sale or disposition of subsidiaries or assets, (iii)
amendments to its certificate of incorporation or by-laws, (iv) mergers or
consolidations with third parties and (v) certain agreements with affiliates.
The Stockholders Agreement prohibits Calpine and NRG from transferring their
respective shares of Common Stock of the Company following the Merger for a
period of three years without the prior written consent of the other
stockholder, which consent cannot be unreasonably withheld or delayed.
In addition, pursuant to the Stockholders Agreement, NRG has
granted Calpine an irrevocable proxy with respect to all of the shares of Common
Stock held by it (constituting 45.3% of the outstanding shares) to vote such
shares in favor of approval of the Merger Agreement at a duly convened meeting
of the Company's stockholders for such purpose. In the Merger Agreement, the
Company has represented that the affirmative vote of the holders of two-thirds
of the outstanding shares of the Company's Common Stock is required to approve
the Merger.
The Stockholders Agreement provides that following the Merger
Calpine shall have the right to acquire NRG's 20% interest in the Company during
the 365-day period commencing on the third anniversary of the closing of the
Merger for the fair market value of the interest as determined by an independent
investment bank. In addition, at the closing of the Merger, certain existing
operating and management and service agreements between NRG and its affiliates,
on the one hand, and the Company and its affiliates, on the other hand, will be
terminated at the effective time of the Merger and will be replaced by
agreements between the Company and Calpine.
The foregoing summary of the Stockholders Agreement is
qualified in its entirety by reference to the Stockholders Agreement which is
attached hereto as Exhibit 3. There can be no assurances that there will be any
transaction resulting from the foregoing.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
As a result of entering into the Stockholders Agreement,
Calpine and Merger Subsidiary beneficially own 3,106,612 shares of Common Stock
which represents 45.3% of the outstanding shares of Common Stock. See Item 4 of
this Statement for a description of the Stockholders Agreement. Except as
described in this Statement, neither Calpine, Merger Subsidiary nor, to their
knowledge, any of the persons listed in Schedule I or any associate or
majority-owned subsidiary of any of the foregoing, beneficially owns or has the
right to acquire any equity securities of the Company, nor has Calpine, Merger
Subsidiary or, to their knowledge, any of the persons or entities referred to
above or any of the respective executive officers, directors or subsidiaries of
any of the foregoing, effected any transaction in the equity securities
-6-
<PAGE> 7
of the Company during the past 60 days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
See Item 4 for a description of the Stockholders Agreement
among Calpine, Merger Subsidiary and NRG. Except as described in this Statement,
neither Calpine, Merger Subsidiary nor, to their knowledge, any of the persons
listed in Schedule I, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls, guaranties
of loans, guaranties against loss or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(1) Joint Filing Agreement, dated September 7, 1999, between Calpine and
Merger Subsidiary.
(2) Agreement and Plan of Merger, dated as of August 26, 1999, among the
Company, Calpine and Merger Subsidiary.
(3) Contribution and Stockholders Agreement, dated as of August 26, 1999,
among Calpine, Merger Subsidiary and NRG.
(4) Confidentiality Agreement, dated May 17, 1999, between Calpine and the
Company.
(5) Credit Agreement, dated September 25, 1996, among Calpine and the Bank
of Nova Scotia (previously filed as an exhibit to Calpine's Current
Report on Form 8-K dated May 1, 1996 and incorporated herein by
reference).
-7-
<PAGE> 8
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: September 7, 1999
CALPINE EAST ACQUISITION CORP.
By: /s/ Ann B. Curtis
-------------
Name: Ann B. Curtis
Title: Vice President, Chief Financial Officer and
Secretary
CALPINE CORPORATION
By: /s/ Ann B. Curtis
-------------
Name: Ann B. Curtis
Title: Executive Vice President
-8-
<PAGE> 9
EXHIBIT INDEX
(1) Joint Filing Agreement, dated September 7, 1999, between Calpine and
Merger Subsidiary.
(2) Agreement and Plan of Merger, dated as of August 26, 1999, among the
Company, Calpine and Merger Subsidiary.
(3) Contribution and Stockholders Agreement, dated as of August 26, 1999,
among Calpine, Merger Subsidiary and NRG.
(4) Confidentiality Agreement, dated May 17, 1999, between Calpine and the
Company.
(5) Credit Agreement, dated September 25, 1996, among Calpine and the Bank
of Nova Scotia (previously filed as an exhibit to Calpine's Current
Report on Form 8-K dated May 1, 1996 and incorporated herein by
reference).
-9-
<PAGE> 10
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF CALPINE AND MERGER SUBSIDIARY
1. DIRECTORS AND EXECUTIVE OFFICERS OF CALPINE. The following table sets forth
the name, age, business address and present principal occupation or employment,
and material occupations, positions, offices or employment for the past five
years of each director and executive officer of Calpine. Each such person is a
citizen of the United States of America. Unless otherwise indicated below, the
business address of each person is c/o Calpine Corporation, 50 West San Fernando
Street, San Jose, California, 95113. Unless otherwise indicated, each occupation
set forth opposite an individual's name refers to employment with Calpine.
<TABLE>
<CAPTION>
Present Principal Occupation
Name and or Employment; Material Positions
Business Address Age Held During Past Five Years
---------------- --- ---------------------------
<S> <C> <C>
Peter Cartwright..................... 69 Director of Calpine since 1984, Chairman of the Board
since September 1996, President and Chief Executive
Officer since 1984.
Ann B. Curtis........................ 48 Director of Calpine since September 1996 and Executive
Vice President since August 1998. From September 1992
until August 1998, Ms. Curtis was Senior Vice President.
Jeffrey E. Garten.................... 52 Director of Calpine since January 1997. Dean of the Yale
Dean, School of Management School of Management and William S. Beinecke Professor in
Yale University the Practice of International Trade and Finance since
Box 208200 November 1995. From November 1993 to October 1995, Mr.
New Haven, CT 06520-8200 Garten served as Undersecretary of Commerce of
International Trade.
Susan C. Schwab...................... 44 Director of Calpine since January 1997. Dean of the
Dean, School of Public Affairs School of Public Affairs at the University of Maryland
University of Maryland since August 1995. From July 1993 to August 1995, Dr.
Room 2101 Van Munching Hall Schwab served as Director, Corporate Business Development
College Park, MD 20742 at Motorola, Inc.
</TABLE>
I-1
<PAGE> 11
<TABLE>
<S> <C> <C>
George J. Stathakis.................. 68 Director of Calpine since September 1996 and Senior
Advisor since December 1994. Mr. Stathakis has been
providing financial, business and management advisory
services to numerous corporations since 1985. Chairman of
the Board and Chief Executive Officer of Ramtron
International Corporation, an advanced technology
semiconductor company, from 1990 to 1994.
John O. Wilson....................... 60 Director of Calpine since January 1997. Senior Research
Senior Research Fellow Fellow, Berkeley Roundtable on the International Economy
Berkeley Roundtable on the and Executive Vice President and Chief Economist, SDR
International Economy (BRIE) Capital Management, Inc. since January 1999. Mr. Wilson
2234 Piedmont Avenue served as Executive Vice President and Chief Economist at
University of California, Berkeley Bank of America from August 1984 to January 1999.
Berkeley, CA 94720
V. Orville Wright.................... 78 Director of Calpine since January 1997. Mr. Wright served
in various positions with MCI Communications Corp.,
including Vice Chairman and Co-Chief Executive Officer
from 1988 to 1991, Vice Chairman and Chief Executive
Officer from 1985 to 1987, and President and Chief
Operating Officer from 1975 to 1985.
Robert D. Kelly...................... 41 Senior Vice President - Finance of Calpine since January
1998 and Vice President - Finance from April 1994 to
January 1998.
</TABLE>
I-2
<PAGE> 12
2. DIRECTORS AND EXECUTIVE OFFICERS OF MERGER SUBSIDIARY. The following table
sets forth the name, age, business address and present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years of each director and executive officer of Calpine. Each such
person is a citizen of the United States of America. Unless otherwise indicated
below, the business address of each person is c/o Calpine Corporation, 50 West
San Fernando Street, San Jose, California, 95113. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to employment
with Calpine.
<TABLE>
<CAPTION>
Present Principal Occupation
Name and or Employment; Material Positions
Business Address Age Held During Past Five Years
---------------- --- ---------------------------
<S> <C> <C>
Peter Cartwright................ 69 Chairman of Board, President and Chief Executive Officer of
Merger Subsidiary since its incorporation on August 23,
1999. Director of Calpine since 1984, Chairman of the Board
of Calpine since September 1996, President and Chief
Executive Officer of Calpine since 1984.
Ann B. Curtis................... 48 Vice President, Chief Financial Officer and Secretary of
Merger Subsidiary since its incorporation on August 23,
1999. Director of Calpine since September 1996 and Executive
Vice President of Calpine since August 1998. From September
1992 until August 1998, Ms. Curtis was Senior Vice President
of Calpine.
Thomas R. Mason................. 55 Executive Vice President of Merger Subsidiary since its
incorporation on August 23, 1999. Executive Vice President
of Calpine since August 1998. From March 1998 until August
1998, Mr. Mason was Senior Vice President of Calpine. Prior
to joining Calpine, Mr. Mason was President and Chief
Operating Officer of CalEnergy Operating Services, Inc., a
wholly-owned subsidiary of MidAmerican Energy Holdings
Company.
John T. King.................... 34 Vice President of Merger Subsidiary since its incorporation
on August 23, 1999. Vice President-Business Development
since September 1997 and employee of Calpine since February
1995. From 1994 to February 1995, Mr. King was Chief
Operating Officer of Charter Media, Inc.
</TABLE>
I-3
<PAGE> 13
<TABLE>
<S> <C> <C>
Robert D. Kelly................. 41 Vice President of Merger Subsidiary since its incorporation
on August 23, 1999. Senior Vice President - Finance of
Calpine since January 1998 and Vice President-Finance from
April 1994 to January 1998.
Charles B. Clark, Jr............ 51 Controller of Merger Subsidiary since its incorporation on
August 23, 1999. Vice President and Corporate Controller of
Calpine since May 1999. From February 1999 to April 1999,
Director of Business Services for Geysers, Calpine
Corporation. From March 1998 to November 1998, Mr. Clark was
Chief Financial Officer of Hobbs Group, LLC. From February
1997 to February 1998, Mr. Clark was Senior Vice
President-Finance and Administration of CNF Industries, Inc.
and from May 1988 to January 1997, Mr. Clark was Vice
President and Chief Financial Officer of Century Contractors
West, Inc. (a predecessor of CNF Industries, Inc.)
Lisa M. Bodensteiner............ 37 Assistant Secretary of Merger Subsidiary since its
incorporation on August 23, 1999, Vice President and General
Counsel of Calpine since April 1999. From February 1998 to
March 1999, Ms. Bodensteiner was Calpine's Assistant General
Counsel and from February 1996 to February 1998 was Associate
Counsel. Prior to joining Calpine, Ms. Bodensteiner was an
attorney for Thelen, Marrin, Johnson & Bridges (now Thelen,
Reid & Priest).
</TABLE>
None of the executive officers and directors of Calpine or Merger
Subsidiary currently is a director of, or holds any position with, the Company
or any of its subsidiaries. To the knowledge of Calpine and Merger Subsidiary,
none of Calpine's or Merger Subsidiary's directors, executive officers,
affiliates or associates beneficially owns any equity securities, or rights to
acquire any equity securities, of the Company and none has been involved in any
transactions with the Company or any of its directors, executive officers,
affiliates or associates which are required to be disclosed pursuant to the
rules and regulations of the Commission.
I-4
<PAGE> 1
Exhibit (1)
Joint Filing Agreement
The undersigned acknowledge and agree that the foregoing
statement on Schedule 13D is filed on behalf of each of the undersigned and that
all subsequent amendments to this statement shall be filed on behalf of each of
the undersigned without the necessity of filing additional joint filing
agreements. The undersigned acknowledge that each shall be responsible for the
timely filing of such amendments, and for the completeness and accuracy of the
information concerning it contained therein, but shall not be responsible for
the completeness and accuracy of the information concerning the others, except
to the extent that it knows or has reason to believe that such information is
inaccurate.
This Agreement may be executed counterparts and each of such
counterparts taken together shall constitute one and the same instrument.
Dated: September 7, 1999
CALPINE EAST ACQUISITION CORP.
By: /s/ Ann B. Curtis
------------------
Name: Ann B. Curtis
Title: Vice President, Chief Financial Officer
and Secretary
CALPINE CORPORATION
By: /s/ Ann B. Curtis
------------------
Name: Ann B. Curtis
Title: Executive Vice President
<PAGE> 1
Exhibit (2)
AGREEMENT AND PLAN OF MERGER
DATED AUGUST 26, 1999
AMONG
CALPINE CORPORATION,
CALPINE EAST ACQUISITION CORP.
AND
COGENERATION CORPORATION OF AMERICA
<PAGE> 2
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
<TABLE>
<S> <C>
ARTICLE I THE MERGER 4
Section 1.1 The Merger 5
Section 1.2 Effective Time 5
Section 1.3 Effects of the Merger 5
Section 1.4 Charter and By-Laws; Directors and Officers 5
Section 1.5 Conversion of Securities 5
Section 1.6 Payment Agent 7
Section 1.7 Transfer Taxes; Withholding 7
Section 1.8 Return of Payment Fund 8
Section 1.9 No Further Ownership Rights in Company Common Stock 8
Section 1.10 Closing of Company Transfer Books 8
Section 1.11 Lost Certificates 8
Section 1.12 Further Assurances 8
Section 1.13 Closing 9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB 9
Section 2.1 Organization, Standing and Power 9
Section 2.2 Authority 9
Section 2.3 Consents and Approvals; No Violation 10
Section 2.4 Information Supplied 11
Section 2.5 Actions and Proceedings 11
Section 2.6 Operations of Sub 12
Section 2.7 Brokers 12
Section 2.8 Financing 12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 12
Section 3.1 Organization, Standing and Power 12
Section 3.2 Capital Structure 12
Section 3.3 Authority 13
Section 3.4 Consents and Approvals; No Violation 14
Section 3.5 SEC Documents and Other Reports 15
Section 3.6 Information Supplied 15
Section 3.7 Absence of Certain Changes or Events 16
Section 3.8 Permits and Compliance 16
Section 3.9 Tax Matters 17
Section 3.10 Actions and Proceedings 19
Section 3.11 Certain Agreements 19
Section 3.12 ERISA 19
Section 3.13 Compliance with Worker Safety and Environmental Laws 21
Section 3.14 Labor Matters 21
Section 3.15 State Takeover Statute 21
Section 3.16 Required Vote of Company Stockholders 21
Section 3.17 Brokers 22
Section 3.18 Opinion of Financial Advisor 22
Section 3.19 Utility Regulation 22
Section 3.20 Insurance 22
Section 3.21 Related Party Transactions 22
ARTICLE IV COVENANTS OF THE COMPANY 23
Section 4.1 Conduct of Business Pending the Merger 23
Section 4.2 No Solicitation 25
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V ADDITIONAL AGREEMENTS 27
Section 5.1 Stockholder Meeting 27
Section 5.2 Preparation of the Proxy Statement and Schedule 13e-3 27
Section 5.3 Access to Information 28
Section 5.4 Fees and Expenses 28
Section 5.5 Best Efforts 29
Section 5.6 Public Announcements 30
Section 5.7 Real Estate Transfer and Gains Tax 30
Section 5.8 Indemnification; Directors and Officers Insurance 30
Section 5.9 Notification of Certain Matters 31
Section 5.10 Employee Benefit Plans and Agreements 32
Section 5.11 Performance by Sub 32
Section 5.12 Additional Consents and Approvals 32
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER 33
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger 33
Section 6.2 Conditions to Obligation of the Company to Effect the Merger 34
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger 34
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER 35
Section 7.1 Termination 35
Section 7.2 Effect of Termination 36
Section 7.3 Amendment 36
Section 7.4 Waiver 37
ARTICLE VIII GENERAL PROVISIONS 37
Section 8.1 Non-Survival of Representations and Warranties 37
Section 8.2 Notices 37
Section 8.3 Interpretation 38
Section 8.4 Counterparts 38
Section 8.5 Entire Agreement; No Third-Party Beneficiaries 38
Section 8.6 Governing Law 38
Section 8.7 Assignment 38
Section 8.8 Severability 38
Section 8.9 Enforcement of this Agreement 38
Section 8.10 Consent to Jurisdiction 39
</TABLE>
3
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of August 26, 1999
(the "Agreement"), is executed by and among CALPINE CORPORATION, a Delaware
corporation ("Parent"), CALPINE EAST ACQUISITION CORP., a Delaware corporation
and a subsidiary of Parent ("Sub"), and COGENERATION CORPORATION OF AMERICA, a
Delaware corporation (the "Company") (Sub and the Company being hereinafter
collectively referred to as the "Constituent Corporations").
RECITALS:
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the merger (the "Merger") of Sub with and into the
Company, on the terms and subject to the conditions set forth in this
Agreement, whereby each outstanding share of common stock, par value $.01 per
share, of the Company (the "Company Common Stock") not owned by Parent, Sub or
the Company will be converted into the right to receive $25.00 per share (the
"Merger Price") in cash pursuant to this Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Parent and NRG Energy, Inc., a Delaware corporation (the "Principal
Company Stockholder"), are entering into an agreement (the "Company
Stockholder Agreement" and together with this Agreement, the "Transaction
Documents") pursuant to which the Principal Company Stockholder and Parent or
Sub have agreed to take specified actions in connection with the transactions
contemplated by this Agreement;
WHEREAS, the Board of Directors of the Company has duly and
unanimously adopted resolutions approving the transactions contemplated by the
Transaction Documents in form and substance sufficient to render Section 203
of the Delaware General Corporation Law (the "DGCL") inapplicable to Parent
and Sub; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER
4
<PAGE> 5
Section 1.1 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the DGCL, Sub shall be merged with and
into the Company at the Effective Time (as hereinafter defined). Following the
Merger, the separate corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Sub in accordance
with the DGCL.
Section 1.2 Effective Time. The Merger shall become effective
when a Certificate of Merger (the "Certificate of Merger"), executed in
accordance with the relevant provisions of the DGCL, is filed with the Secretary
of State of the State of Delaware; provided, however, that, upon the mutual
consent of the Constituent Corporations, the Certificate of Merger may provide
for a later date or time of effectiveness of the Merger. When used in this
Agreement, the term "Effective Time" shall mean the date and time at which the
Certificate of Merger is accepted for record or such later date or time
established by the Certificate of Merger. The filing of the Certificate of
Merger shall be made on the date of the Closing (as hereinafter defined).
Section 1.3 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
Section 1.4 Certificate of Incorporation and By-Laws;
Directors and Officers.
(a) Certificate of Incorporation and By-Laws. The Certificate
of Incorporation of the Company shall be amended as set forth in Exhibit A to
this Agreement (the "Amendment"), which amendment shall be effective as soon as
practicable after the Company's shareholders have approved the amendment and
prior to the Effective Time. At the Effective Time, the Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be amended and restated to read as did the Certificate of
Incorporation of Sub immediately prior to the Effective Time. At the Effective
Time, the By-Laws of the Company, as in effect immediately prior to the
Effective Time, shall be amended and restated to read as did the By-Laws of Sub
immediately prior to the Effective Time. As so amended and restated, such
Certificate of Incorporation and By-Laws of the Company shall be the Certificate
of Incorporation and By-Laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
(b) Directors and Officers. From and after the Effective Time,
the directors of Sub at the Effective Time shall be the directors of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be. From and after the Effective Time, the officers of the Sub at the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
Section 1.5 Conversion of Securities. As of the Effective
Time, by virtue of the Merger and without any action on the part of Sub, the
Company or the holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, without
par value, of Sub shall be converted into one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation with the same
rights, powers and privileges as the shares so converted
5
<PAGE> 6
and shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.
(b) All shares of Company Common Stock that are held in the
treasury of the Company or owned by Parent, Sub or any Subsidiary (as defined in
Section 2.1) of either of them shall be canceled and no cash or other
consideration shall be delivered in exchange therefor.
(c) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled in
accordance with Section 1.5(b) and Dissenting Shares (as defined in Section
1.5(e)) shall be converted into the right to receive an amount of cash equal to
the Merger Price without interest. All such shares of Company Common Stock, when
so converted, shall no longer be outstanding and shall automatically be canceled
and retired and each holder of a certificate (the "Certificate") formerly
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the cash to be paid to such holder pursuant
to Article I hereof (the "Merger Consideration") upon the surrender of a
Certificate or Certificates in accordance with Section 1.6 hereof.
(d) (i) At the Effective Time, each outstanding option to
purchase Company Common Stock (each a "Company Stock Option") granted under the
Company Stock Plans (as defined herein), whether or not then exercisable, shall
be cancelled and each holder of a cancelled Company Stock Option shall be
entitled to receive at the Effective Time or as soon as practicable thereafter
from the Company, upon execution and delivery to the Payment Agent (as defined
in Section 1.6 below) of an option termination agreement, in form and substance
reasonably acceptable to Parent in consideration for the cancellation of such
Company Stock Option an amount in cash (the "Option Consideration") equal to (x)
the number of shares of Company Common Stock previously subject to such Company
Stock Option that but for the cancellation thereof pursuant to the provisions of
this Section 1.5(d) would have been currently exercisable (after giving effect
to any acceleration of vesting pursuant to the terms of such Company Stock
Option as a result of the consummation of the Merger), multiplied by (y) the
excess, if any, of the Merger Price over the exercise price per share of Company
Common Stock previously subject to such Company Stock Option (such payment to be
net of applicable withholding taxes).
(ii) Except as provided herein or as otherwise agreed to
by the parties and to the extent permitted by the Company Stock Plans, (x) the
Company Stock Plans shall terminate as of the Effective Time and the provisions
in any other plan, program or arrangement providing for the issuance or grant of
any other interest in respect of the capital stock of the Company or any of its
Subsidiaries shall be deleted as of the Effective Time and (y) the Company shall
use all reasonable efforts to ensure that following the Effective Time no holder
of Company Stock Options or any participant in the Company Stock Plans or any
other plans, programs or arrangements shall have any right thereunder to acquire
any equity securities of the Company, the Surviving Corporation or any
subsidiary thereof.
(e) Notwithstanding anything in this Agreement to the
contrary, shares ("Dissenting Shares") of Company Common Stock that are
outstanding immediately prior to the Effective Time and that are held by Persons
who are entitled to demand and have properly demanded dissention rights with
respect to such Dissenting Shares pursuant to, and who comply in all respects
with, Section 262 of the DGCL ("Section 262") shall not be converted into the
Merger Consideration
6
<PAGE> 7
as provided in Section 1.5(c), but rather the holders of Dissenting Shares shall
be entitled to payment of the fair market value of such Dissenting Shares in
accordance with Section 262; provided, however, that if any holder of Dissenting
Shares shall fail to perfect or otherwise shall waive, withdraw or lose the
right to Dissenting under Section 262, then the right of such holder to be paid
the fair value of such holder's Dissenting Shares shall cease and such
Dissenting Shares shall be treated as if they had been converted as of the
Effective Time into the Merger Consideration, as provided in Section 1.5(c). The
Company shall serve prompt notice to Parent of any demands received by the
Company for dissenter's rights with respect to any shares of Company Common
Stock, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands, or agree to do any
of the foregoing.
Section 1.6 Payment Agent.
(a) Exchange of Certificates. Parent shall authorize a
commercial bank or trust company (or such other Person or Persons as shall be
reasonably acceptable to Parent and the Company) to act as Payment Agent
hereunder (the "Payment Agent"). As soon as practicable after the Effective
Time, Parent shall deposit with the Payment Agent, in trust for the holders of
shares of Company Common Stock converted in the Merger and holders of Company
Stock Options, an amount of cash equal to or exceeding the aggregate Merger
Consideration to be paid to holders of Company Common Stock pursuant to Article
I hereof and any Option Consideration to be paid to holders of Company Stock
Options pursuant to the terms of Section 1.5(d) (such amount hereinafter the
"Payment Fund").
(b) Exchange Procedures. Parent shall instruct the Payment
Agent, as soon as practicable after the Effective Time, to mail to each record
holder of a Certificate or Certificates a letter of transmittal, which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual delivery of the Certificates to the
Payment Agent, and shall contain instructions for use in effecting the surrender
of the Certificates in exchange for the Merger Consideration. Upon surrender for
cancellation to the Payment Agent of all Certificates held by any record holder
of a Certificate, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor a
check representing the Merger Consideration, and any Certificate so surrendered
shall forthwith be canceled. Holders of Company Stock Options shall receive
payment, if any, for such Company Stock Options pursuant to Section 1.5(d).
Section 1.7 Transfer Taxes; Withholding. If any Merger
Consideration is to be paid to any Person other than to the Person named in the
Certificate surrendered in exchange therefor, it shall be a condition of such
exchange that the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the Person requesting such
exchange shall pay to the Payment Agent any transfer or other taxes required by
reason of the payment of the Merger Consideration to a Person other than to the
Person named in the Certificate surrendered, or shall establish to the
satisfaction of the Payment Agent that such tax has been paid or is not
applicable. Parent or the Payment Agent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company
7
<PAGE> 8
Common Stock or holder of a Company Stock Option such amounts as Parent or the
Payment Agent is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "Code") or
under any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent or the Payment Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock or the holder of a Company Stock
Option in respect of which such deduction and withholding was made by Parent or
the Payment Agent. For purposes of this Agreement, "Person" shall mean an
individual, corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
Section 1.8 Return of Payment Fund. Any portion of the Payment
Fund which remains undistributed for six months after the Effective Time shall
be delivered to Parent, upon demand of Parent, and any such former stockholders
who have not theretofore complied with this Article I and holders of Company
Stock Options who have not yet received the Option Consideration shall
thereafter look only to Parent for payment of their claim for any Merger
Consideration or Option Consideration, as the case may be. Neither Parent nor
the Surviving Corporation shall be liable to any former holder of Company Common
Stock or holder of a Company Stock Option for any cash held in the Payment Fund
which is delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Section 1.9 No Further Ownership Rights in Company Common
Stock. The payment of the Merger Consideration upon surrender of any Certificate
shall be deemed to constitute full satisfaction of all rights pertaining to the
shares of Company Common Stock represented by such Certificate.
Section 1.10 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Common Stock shall thereafter be made on the
records of the Company. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, the Payment Agent or the Parent, such Certificates
shall be canceled and exchanged as provided in this Article I.
Section 1.11 Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent or the Payment Agent, the posting by such Person of a bond,
in such reasonable amount as Parent or the Payment Agent may direct as indemnity
against any claim that may be made against them with respect to such
Certificate, the Payment Agent will pay the Merger Consideration in exchange for
such lost, stolen or destroyed Certificate.
Section 1.12 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent
8
<PAGE> 9
Corporation, all such other acts and things as may be necessary, desirable or
proper to vest, perfect or confirm the Surviving Corporation's right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
Section 1.13 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") and all actions specified in this
Agreement to occur at the Closing shall take place at the offices of Kaplan,
Strangis and Kaplan, P.A., 5500 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota, at 10:00 a.m., local time, no later than the second
business day following the day on which the last of the conditions set forth in
Article VI shall have been fulfilled or waived (if permissible) or at such other
time and place as Parent and the Company shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
Section 2.1 Organization, Standing and Power. Each of Parent
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of its place of incorporation and has the requisite corporate
power and authority to carry on its business as now being conducted. Parent is
duly qualified to do business, and is in good standing in each jurisdiction
where the character of the properties owned or held under lease by it or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect (as hereinafter defined) on Parent. For purposes of this
Agreement (a) "Material Adverse Change" or "Material Adverse Effect" means, when
used with respect to Parent or the Company, as the case may be, any change or
effect that is or could reasonably be expected (as far as can be foreseen at the
time) to be materially adverse to the business, assets, liabilities, financial
condition or results of operations of Parent and its Subsidiaries, taken as a
whole, or the Company and its Subsidiaries, taken as a whole, as the case may
be; provided, however, that in determining whether a Material Adverse Change or
Material Adverse Effect has occurred with respect to either referenced party,
any change or effect, to the extent it is attributable to changes in prevailing
interest rates or to any change in general economic conditions affecting
companies in industries similar to the industries in which the Company and its
Subsidiaries or Parent and its Subsidiaries, as the case may be, operate, shall
not be considered when determining if a Material Adverse Change or Material
Adverse Effect has occurred; and (b) "Subsidiary" means any corporation,
partnership, limited liability company, joint venture or other legal entity of
which Parent or the Company, as the case may be (either alone or through or
together with any other Subsidiary), owns, directly or indirectly, 50% or more
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation, partnership, limited liability company, joint venture
or other legal entity.
Section 2.2 Authority. On or prior to the date of this
Agreement, Parent and Sub
9
<PAGE> 10
have each approved the Transactions and the Transaction Documents. Each of
Parent and Sub has the requisite corporate power and authority to enter into the
Transaction Documents and to consummate the transactions contemplated hereby.
The execution and delivery of the Transaction Documents by Parent and Sub to
which it is a party and the consummation by Parent and Sub of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Parent or Sub, as the case may be, subject to
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware. The Transaction Documents to which it is a party have been duly
executed and delivered by Parent and Sub and constitute the valid and binding
obligations of each of Parent or Sub, as the case may be, enforceable against
them in accordance with its terms, except as the enforceability hereof may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and to judicial limitations on
the enforcement of specific performance and other equitable remedies.
Section 2.3 Consents and Approvals; No Violation. Assuming
that all consents, approvals, authorizations and other actions described in this
Section 2.3 have been obtained and all filings and obligations described in this
Section 2.3 have been made, the execution and delivery of the Transaction
Documents and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give to
others a right of termination, cancellation or acceleration of any obligation or
the loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Parent or any of its Subsidiaries under, any provision of (i) the Certificate of
Incorporation or the By-Laws of Parent or the Certificate of Incorporation or
By-Laws of Sub, (ii) any provision of the comparable charter or organization
documents of any of Parent's Subsidiaries, (iii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent or any of its Subsidiaries
or (iv) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clauses (ii), (iii) or (iv),
any such violations, defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have a Material
Adverse Effect on Parent, materially impair the ability of Parent or Sub to
perform their respective obligations hereunder or prevent the consummation of
any of the transactions contemplated hereby. No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state), foreign
or supranational court, commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is required by or with respect
to Parent or any of its Subsidiaries in connection with the execution, delivery
and performance of any Transaction Agreement by Parent or Sub or is necessary
for the consummation of the Transactions, except for (i) in connection, or in
compliance, with the provisions of the Hart-Scott-Rodino AntiTrust Improvement
Act of 1976 (the "HSR Act") and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (ii) the final order of the Federal Energy Regulatory
Commission ("FERC") approving the transfer of jurisdictional facilities under
Section 203 of the Federal Power Act in connection with the power generating
project of one of the Company's subsidiaries in Parlin, New Jersey (the
"Regulatory Approval"), (iii) in connection, or in compliance, with the
provisions of the New Jersey Industrial Site Recovery Act and the New Jersey
Environmental Cleanup Responsibility Act (the "Applicable New Jersey Law"), (iv)
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware and appropriate documents with the relevant authorities of other
states in which the Company or any of its Subsidiaries is
10
<PAGE> 11
qualified to do business, (v) such filings, authorizations, orders, notices and
approvals as may be required by state takeover laws (the "State Takeover
Approvals"), and (vi) such consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on Parent, or
materially impair the ability of Parent or Sub to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby. Neither the Parent nor the Sub is an electric utility or an electric
utility holding company or companies, or any affiliate of either, in each case
as those terms are utilized by the FERC in regulations or orders implementing
the Public Utility Regulatory Policies Act of 1978, as amended, and its
successors ("PURPA"). Consummation of the Merger will not result in the loss of
the status of any project as a "Qualifying Facility" as defined under PURPA in
which the Company or any of its Subsidiaries, directly or indirectly, have an
equity interest.
Section 2.4 Information Supplied. None of the information to
be supplied by Parent or Sub for inclusion or incorporation by reference in the
Schedule 13e-3 to be filed pursuant to the Exchange Act in connection with the
transactions contemplated by the Transaction Documents (together with any
amendments or supplements thereto, the "Schedule 13e-3") or the proxy statement
relating to the Stockholder Meeting (as hereinafter defined) (together with any
amendments or supplements thereto, the "Proxy Statement") will, (i) in the case
of the Schedule 13e-3, at the time of its filing, at the time of the
dissemination of the Schedule 13e-3 and until the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading or (ii) in the case of the Proxy Statement and at the time of the
mailing of the Proxy Statement and at the time of the Stockholder Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent or Sub with respect
to statements made or incorporated by reference therein based on information
supplied by or on behalf of the Company or NRG Energy, Inc. for inclusion or
incorporation by reference therein.
Section 2.5 Actions and Proceedings. As of the date of this
Agreement, there are no outstanding orders, judgments, injunctions, awards or
decrees of any Governmental Entity against or involving Parent or any of its
Subsidiaries, or against or involving any of the present or former directors,
officers, employees, consultants, agents or stockholders of Parent or any of its
Subsidiaries, as such, or any of its or their properties, assets or business
that, individually or in the aggregate, would materially impair the ability of
Parent to perform its obligations hereunder. As of the date of this Agreement,
there are no actions, suits or claims or legal, administrative or arbitrative
proceedings or investigations pending or, to the Knowledge of Parent, threatened
against or involving Parent or any of its Subsidiaries or any of its or their
present or former directors, officers, employees, consultants, agents or
stockholders, as such, or any of its or their properties, assets or business
that, individually or in the aggregate, would materially impair the ability of
Parent to perform its obligations hereunder. As of the date hereof, there are no
actions, suits, labor disputes or other litigation, legal or administrative
proceedings or governmental investigations pending or, to the Knowledge of
Parent, threatened against or affecting Parent or any of its Subsidiaries or any
of its or their present or former officers, directors, employees, consultants,
agents or stockholders, as such, or any of its or their properties, assets or
business relating to the transactions contemplated by this Agreement. For
purposes of this Agreement, "Knowledge of Parent" means the actual knowledge of
11
<PAGE> 12
the executive officers of Parent after due inquiry.
Section 2.6 Operations of Sub. Sub is a direct subsidiary of
Parent, was formed solely for the purpose of engaging in the transactions
contemplated hereby, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
Section 2.7 Brokers. No broker, investment banker or other
Person is entitled to any broker's, finder's or other similar fee or commission
in connection with the transaction contemplated by this Agreement based upon the
arrangements made by or on behalf of Parent or Sub.
Section 2.8 Financing. Parent has sufficient capital resources
necessary to perform its obligations under the Transaction Documents, including
but not limited to the advances under Section 5.11.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub that,
subject to the disclosures set forth in the letter dated as of the date hereof
and delivered on the date hereof by Company to Parent (the "Company Letter"):
Section 3.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate (in the
case of a Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company and each of its Subsidiaries are duly qualified to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned or held under lease or the nature of their activities
makes such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. The Company has delivered or otherwise made available to Parent
true and complete and correct copies of the Company's Certificate of
Incorporation and By-laws and the certificate of incorporation, by-laws or other
constitutive documents of each of the Company's Subsidiaries, in each case as
amended to the date of this Agreement.
Section 3.2 Capital Structure. The authorized capital stock of
the Company consists of 50,000,000 shares of Company Common Stock and 20,000,000
shares of undesignated preferred stock, par value $.01 per share ("Company
Preferred Stock"). As of the date of this Agreement, (i) 6,857,269 shares of
Company Common Stock were issued and outstanding, all of which were duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
12
<PAGE> 13
rights, (ii) 39,800 shares of Company Common Stock were held in the treasury of
the Company or by Subsidiaries of the Company, (iii) 877,000 shares of Company
Common Stock were reserved for issuance pursuant to outstanding Company Stock
Options under the Company's stock plans described under Section 3.2 of the
Company Letter (collectively, the "Company Stock Plans"), and (iv) 797,000
Company Stock Options are currently exercisable or will become exercisable upon
consummation of the Transactions. A true and complete list of the options (and
their exercise prices) referred to in clause (iv) above that are entitled to
Option Consideration are set forth on Section 3.2 of the Company Letter. No
Company Stock Options have been granted since May 31, 1999. The Company Stock
Plans are the only benefit plans of the Company or its Subsidiaries under which
any securities of the Company or any of its Subsidiaries are issuable. No shares
of Company Preferred Stock are outstanding. As of the date of this Agreement,
except as set forth above no shares of capital stock or other voting securities
of the Company or any Subsidiary were issued, reserved for issuance or
outstanding. Except as set forth in this Section 3.2, there are no outstanding
equity equivalents or interests in the ownership or earnings of the Company or
any Subsidiary and there are no options, warrants, calls, rights or agreements
to which the Company or any of its Subsidiaries is a party or by which any of
them is bound obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or voting securities of the Company or any of its Subsidiaries or
obligating the Company or any of its Subsidiaries to grant, extend or enter into
any such option, warrant, call, right or agreement. Each outstanding share of
capital stock of each Subsidiary of the Company that is a corporation is duly
authorized, validly issued, fully paid and nonassessable and each such share is
owned by the Company or another Subsidiary of the Company, free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on voting rights, charges and other encumbrances of any
nature whatsoever ("Claims"). With respect to the Grays Ferry Cogeneration
Partnership, which is the only Subsidiary of the Company which is a partnership
(the "Partnership"), CogenAmerica Schuylkill, Inc. has good and valid title to
the partnership interests owned by it in the Partnership, free and clear of all
Claims. There are no outstanding (i) subscriptions or other rights to purchase
or otherwise acquire any partnership interest in the Partnership, (ii)
securities convertible into or exchangeable for any partnership interest in the
Partnership, or (iii) obligations of the Partnership to issue, deliver or sell
any partnership interest, voting securities or securities convertible into or
exchangeable for partnership interests in the Partnership. Except for the
Subsidiaries of the Company disclosed in the Company SEC Documents (as defined
in Section 3.5 below), the Company does not own or control, directly or
indirectly, any capital stock or other securities of, or have any ownership
interest in, any Person. The Company does not have any outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or convertible into or exercisable for securities having the right to
vote) with the stockholders of the Company on any matter. Exhibit 21 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1998 (the
"Company Annual Report"), as filed with the Securities and Exchange Commission
("SEC"), is a true, accurate and correct statement in all material respects of
all of the information as of December 31, 1998 required to be set forth therein
by the regulations of the SEC.
Section 3.3 Authority. On or prior to the date of this
Agreement, the Board of Directors of the Company has approved this Agreement in
accordance with the DGCL, resolved to recommend the adoption of this Agreement
by the Company's stockholders and directed that this Agreement be submitted to
the Company's stockholders for adoption. The Company has all
13
<PAGE> 14
requisite corporate power and authority to enter into each Transaction Document
to which it is a Party and, subject, in the case of the Merger, to approval by
the stockholders of the Company, to consummate the Merger. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to (x) approval of this
Agreement by the stockholders of the Company and (y) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware. This
Agreement has been duly executed and delivered by the Company and (assuming the
valid authorization, execution and delivery of this Agreement by Parent and Sub
and the validity and binding effect of the Agreement on Parent and Sub)
constitutes the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as the enforceability hereof
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and to judicial
limitations on the enforcement of specific performance and other equitable
remedies. The filing of the Proxy Statement with the SEC has been duly
authorized by the Company's Board of Directors.
Section 3.4 Consents and Approvals; No Violation. Assuming
that all consents, approvals, authorizations and other actions described in this
Section 3.4 have been obtained and all filings and obligations described in this
Section 3.4 have been made, the execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give to others a
right of termination, cancellation or acceleration of any obligation or the loss
of a material benefit under, or result in the creation of any Claim upon any of
the properties or assets of the Company or any of its Subsidiaries under, any
provision of (i) the Certificate of Incorporation or By-Laws of the Company,
(ii) any provision of the comparable charter or organization documents of any of
the Company's Subsidiaries, (iii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of its Subsidiaries or
(iv) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clauses (ii), (iii) or (iv),
any such violations, defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company, materially impair the ability of the Company to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby or thereby. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by or
with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of any Transaction Document to which it is a party or is
necessary for the consummation of the Transactions, except for (i) in
connection, or in compliance, with the provisions of the HSR Act, the Securities
Act and the Exchange Act, (ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business, (iii) such filings, authorizations,
notices, orders and approvals as may be required to obtain the Regulatory
Approval, the State Takeover Approvals and in connection with the Applicable New
Jersey Laws (collectively, the "Governmental Approvals") and (iv) such other
consents, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, or materially impair
the ability of the
14
<PAGE> 15
Company to perform its obligations hereunder or prevent the consummation of any
of the transactions contemplated hereby.
Section 3.5 SEC Documents and Other Reports.
(a) The Company has filed all required documents with the SEC
since April 30, 1996 pursuant to Sections 13(a) and 15(d) of the Exchange Act
(the "Company SEC Documents"). As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and, at the respective
times they were filed, none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements (including, in each case, any notes thereto) of the Company
included in the Company SEC Documents (the "Financial Statements") complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with generally accepted accounting principles (except, in the case
of the unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto), are in accordance with the books and records of the
Company and fairly presented in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as at the respective
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the Company SEC Documents
or as required by generally accepted accounting principles, the Company has not,
since December 31, 1998, made any change in the accounting practices or policies
applied in the preparation of financial statements. Except as and to the extent
set forth in the Company Annual Report, neither the Company nor any of its
Subsidiaries had as of December 31, 1998 any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be required
by generally accepted accounting principles to be reflected on the consolidated
balance sheet of the Company and its Subsidiaries (including the notes thereto)
included in the Financial Statements that are not so reflected.
(b) The Company has provided to Parent true and complete
copies of the financial statements for its Subsidiaries described in Section 3.5
of the Company Letter (the "Project Financial Statements"). The Project
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto), are in accordance
with the books and records of the relevant Subsidiary, and fairly present, in
all material respects, the financial position of such Subsidiary as at the
respective dates thereof and the results of its operations and its cash flows
for the periods then ended.
Section 3.6 Information Supplied. Each document required to be
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement, including, without limitation, the Proxy
Statement and the Schedule 13e-3, and any amendments or supplements thereto will
comply in all material respects with the provisions of the Exchange Act. Neither
the Proxy Statement (other than with respect to information contained in the
Proxy
15
<PAGE> 16
Statement provided to the Company by Parent for inclusion in the Proxy
Statement) nor any of the information supplied by the Company for inclusion or
incorporation by reference in the Schedule 13e-3, together with any amendments
or supplements thereto, will (i) in the case of the Proxy Statement, at the time
of the mailing of the Proxy Statement and at the time of the Stockholder Meeting
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, and (ii) in the case of information supplied by the Company for
inclusion or incorporation by reference in the Schedule 13e-3, at the time of
its filing, at the time of the dissemination of the Schedule 13e-3 and until the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading.
Section 3.7 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed with the SEC prior to the date of
this Agreement, since December 31, 1998 to the date hereof, (A) the Company and
its Subsidiaries have not incurred any material liability or obligation
(indirect, direct or contingent), or entered into any material oral or written
agreement or other transaction, that is not in the ordinary course of business
or that would result in a Material Adverse Effect on the Company, (B) there has
been no change in the capital stock of the Company except for the issuance of
shares of the Company Common Stock pursuant to the exercise of Company Stock
Options and no dividend or distribution of any kind declared, paid or made by
the Company on any class of its stock, (C) there has not been (x) any granting
by the Company or any of its Subsidiaries to any executive officer of the
Company or any of its Subsidiaries of any increase in compensation, except in
the ordinary course of business consistent with prior practice or as was
required under employment agreements in effect as of the date of the most recent
audited financial statements included in the Company SEC Documents, (y) any
granting by the Company or any of its Subsidiaries to any such executive officer
of any increase in severance or termination agreements in effect as of the date
of the most recent audited financial statements included in the Company SEC
Documents or (z) any entry by the Company or any of its Subsidiaries into any
employment, deferred compensation, severance or termination agreement with any
such executive officer, and (D) there has been no event causing a Material
Adverse Effect on the Company, nor any development that would, individually or
in the aggregate, result in a Material Adverse Effect on the Company.
Section 3.8 Permits and Compliance. Each of the Company and
its Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
of its Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where the
failure to have any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and as of the date of
this Agreement no suspension or cancellation of any of the Company Permits is
pending or, to the Knowledge of the Company (as hereinafter defined),
threatened, except where the suspension or cancellation of any of the Company
Permits would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. Neither the Company nor any of its Subsidiaries is in
violation of (A) its Certificate of Incorporation, by-laws or other
organizational documents, (B) any applicable law, ordinance, administrative or
governmental rule or regulation or (C) any order, decree or judgment of any
Governmental Entity having jurisdiction over the Company or any of its
Subsidiaries, except, in the case of clauses (B) and (C), for any violations
that,
16
<PAGE> 17
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. Except as disclosed in the Company SEC Documents filed prior to the
date of this Agreement, as of the date of this Agreement none of the Company or
any of its Subsidiaries is a party to any Material Contract. For purposes of
this Agreement, "Material Contract" shall mean any contract or agreement filed
as an exhibit to the Company SEC Documents or any other contract or agreement
that is material to the business, properties, assets, liabilities, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole. Except as set forth in the Company SEC Documents
filed prior to the date of this Agreement, no event of default or event that,
but for the giving of notice or the lapse of time or both, would constitute an
event of default exists or, upon the consummation by the Company of the
transactions contemplated by this Agreement, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument for borrowed
money, any guarantee of any agreement or instrument for borrowed money, or any
lease, contractual license or other agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any such
Subsidiary is bound or to which any of the properties, assets or operations of
the Company or any such Subsidiary is subject, other than any defaults that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. All Material Contracts (other than the Affiliate Arrangements (as
defined in Section 3.21 below) which will be terminated at the Effective Time)
to which the Company or any of its Subsidiaries is a party are in full force and
effect and are the valid and binding obligations of the Company or the
applicable Subsidiary, enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and to judicial limitations on
the enforcement of specific performance and other equitable remedies. The
Company has made available or delivered to Parent true and complete copies of
the Material Contracts and all other documents referred to in the Company
Letter, in each case as amended to the date of this Agreement. As of the date of
this Agreement, set forth in Section 3.8 of the Company Letter is a description
of any material changes to the amount and terms of the indebtedness of the
Company and its Subsidiaries as described in the Company Annual Report. For
purposes of this Agreement, "Knowledge of the Company" means the actual
knowledge of the executive officers of the Company after due inquiry.
Section 3.9 Tax Matters. (i) The Company and each of its
Subsidiaries have timely filed all federal, and all material state, local,
foreign and provincial, Tax Returns required to have been filed or appropriate
extensions therefor have been properly obtained, and such Tax Returns are
correct and complete, except to the extent that any failure to so file or any
failure to be correct and complete would not, individually or in the aggregate,
have a Material Adverse Effect on the Company; (ii) all Taxes shown to be due on
such Tax Returns have been timely paid, taking into account extensions for
payment that have been properly obtained, or such Taxes are being timely and
properly contested which contests as of the date of this Agreement have been
disclosed in Section 3.9 of the Company Letter; (iii) the Company and each of
its Subsidiaries have complied in all material respects with all rules and
regulations relating to the withholding of Taxes except to the extent that any
failure to comply with such rules and regulations would not, individually or in
the aggregate, have a Material Adverse Effect on the Company; (iv) neither the
Company nor any of its Subsidiaries has waived any statute of limitations in
respect of its Taxes; (v) any Tax Returns referred to in clause (i) relating to
federal and state income Taxes have been examined by the IRS or the appropriate
state taxing authority or the period for assessment of the Taxes in respect of
which such Tax Returns were required to be filed has expired; (vi) no material
issues that have been raised
17
<PAGE> 18
in writing by the relevant taxing authority in connection with the examination
of the Tax Returns referred to in clause (i) are currently pending and each such
examination has been completed; (vii) all deficiencies asserted or assessments
made as a result of any examination of such Tax Returns by any taxing authority
have been paid in full or are being timely and properly contested which contests
as of the date of this Agreement have been disclosed in Section 3.9 of the
Company Letter; and (viii) no withholding is required under Section 1445 of the
Code in connection with the Merger; (ix) neither the Company nor any of its
Subsidiaries is party to or bound by any tax-sharing agreement, tax indemnity
obligation or similar agreement, arrangement or practice with respect to Taxes
(including any advance pricing agreement, closing agreement or other agreement
relating to Taxes with any taxing authority); (x) neither the Company nor any of
its Subsidiaries nor any affiliated group that includes any of them shall be
required to include in a taxable period ending after the Closing Date any
material amount of taxable income attributable to income that accrued in a prior
taxable period but was not recognized in any prior taxable period as a result of
the installment method of accounting, the long-term contract method of
accounting, the cash method of accounting or Section 481 of the Code or any
comparable provision of state, local, or foreign Tax law, or for any other
reason; (xi) neither the Company nor any of its Subsidiaries has made any
consent under Section 341 of the Code, no property of the Company or of any of
its Subsidiaries is "tax exempt use property" within the meaning of Section
168(h) of the Code, neither the Company nor any of its Subsidiaries is a party
to any lease made pursuant to Section 168(f)(8) of the Internal Revenue Code of
1954 and none of the assets of the Company or of any of its Subsidiaries is
subject to a lease under Section 7701(h) of the Code or under any predecessor
section thereof; (xii) neither the Company nor any of its Subsidiaries has
requested any extension of time within which to file any Tax return, which
return has not yet been filed; and (xiii) no power of attorney with respect to
any Taxes has been executed or filed with any taxing authority by or on behalf
of the Company or any of its Subsidiaries. The Company has delivered or made
available to Parent for inspection (A) true and complete copies of all material
Tax returns of the Company and any affiliated group of which the Company is a
member and of any of the Company's Subsidiaries relating to Taxes for all
taxable periods for which the applicable statute of limitations has not yet
expired and (B) complete and correct copies of all material private letter
rulings, revenue agent reports, information document requests, notices of
proposed deficiencies, deficiency notices, protests, petitions, closing
agreements, settlement agreements, pending ruling requests and any similar
documents, submitted by, received by or agreed to by or on behalf of the Company
or any such group or Subsidiary, or, to the extent related to the income,
business, assets, operations, activities or status of the Company or any such
group or Subsidiary, submitted by, received by or agreed to by or on behalf of
any affiliated group of which the Company is or has ever been a member, and
relating to Taxes for all taxable periods for which the statute of limitations
has not yet expired. No material liens exist for Taxes (other than liens for
Taxes not yet due and payable) with respect to any of the assets or properties
of the Company or any of its Subsidiaries. The Federal income Tax returns of the
Company and its Subsidiaries and any affiliated group that includes any of them
have expressly disclosed any Tax positions of the Company, such Subsidiaries or
such group that, if not disclosed, could give rise to material penalties under
Section 6662 of the Code. For purposes of this Agreement: (i) "Taxes" means any
federal, state, local, foreign or provincial income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or added minimum, ad valorem, value-added, transfer or excise tax,
or other tax, custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty imposed by any
Governmental Entity, and (ii) "Tax Return" means any return, report or similar
statement
18
<PAGE> 19
(including the attached schedules) required to be filed with respect to any Tax,
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
Section 3.10 Actions and Proceedings. Except as set forth in
the Company SEC Documents filed prior to the date of this Agreement, there are,
as of the date of this Agreement, no outstanding orders, judgments, injunctions,
awards or decrees of any Governmental Entity against or involving (i) the
Company or any of its Subsidiaries, (ii) to the Knowledge of the Company, any of
the present or former directors, officers, employees, consultants, agents or
stockholders of the Company or any of its Subsidiaries, as such, (iii) any of
the properties, assets or businesses of the Company or any of its Subsidiaries
or (iv) any Company Plan (as hereinafter defined) that, individually or in the
aggregate, would have a Material Adverse Effect on the Company or materially
impair the ability of the Company to perform its obligations hereunder. As of
the date of this Agreement, there are no actions, suits or claims or legal,
administrative or arbitrative proceedings or investigations pending or, to the
Knowledge of the Company, threatened against or involving (i) the Company or any
of its Subsidiaries, (ii) to the Knowledge of the Company, any of its or their
present or former directors, officers, employees, consultants, agents or
stockholders, as such, (iii) any of the properties, assets or businesses of the
Company or any of its Subsidiaries or (iv) any Company Plan (as hereinafter
defined) that, individually or in the aggregate, would have a Material Adverse
Effect on the Company or materially impair the ability of the Company to perform
its obligations hereunder. As of the date hereof, there are no actions, suits,
labor disputes or other litigation, legal or administrative proceedings or
governmental investigations pending or, to the Knowledge of the Company,
threatened against or affecting (i) the Company or any of its Subsidiaries, (ii)
to the Knowledge of the Company, any of its or their present or former officers,
directors, employees, consultants, agents or stockholders, as such, (iii) any of
the properties, assets or businesses of the Company or any of its Subsidiaries
or (iv) any Company Plan, in each case relating to the transactions contemplated
by this Agreement. The Company is not in default with respect to any material
final judgment, order or decree of any court or any governmental agency or
instrumentality.
Section 3.11 Certain Agreements. Except as set forth in
Section 3.11 of the Company Letter or as provided pursuant to Section 1.7(d)
hereof, neither the Company nor any of its Subsidiaries is a party to any oral
or written agreement or plan, including any employment agreement, severance
agreement, stock option plan, stock appreciation rights plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. No holder of any option to purchase shares of
Company Common Stock, or shares of Company Common Stock granted in connection
with the performance of services for the Company or its Subsidiaries, is or will
be entitled to receive cash from the Company or any Subsidiary in lieu of or in
exchange for such option or shares as a result of the transactions contemplated
by this Agreement, other than as provided in Section 1.5(d).
Section 3.12 ERISA
(a) Company Plans. Each Company Plan (as hereinafter defined)
is listed in Section 3.12(a) of the Company Letter. Except as would not have a
Material Adverse Effect on the
19
<PAGE> 20
Company, each Company Plan complies in all respects with the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), the Code and all other
applicable statutes and governmental rules and regulations, and (i) no
"reportable event" (within the meaning of Section 4043 of ERISA) has occurred
with respect to any Company Plan that is likely to have individually or in the
aggregate, a Material Adverse Effect on the Company, and (ii) no action has been
taken, or is currently being considered, to terminate any Company Plan subject
to Title IV of ERISA. No Company Plan, nor any trust created thereunder, has
incurred any "accumulated funding deficiency" (as defined in Section 412 of the
Code or Section 302 of ERISA), whether or not waived.
(b) Plan Liabilities. With respect to the Company Plans, no
event has occurred and, to the Knowledge of the Company, there exists no
condition or set of circumstances in connection with which the Company or any
ERISA Affiliate or Company Plan fiduciary could be subject to any liability
under the terms of such Company Plans, ERISA, the Code or any other applicable
law, other than liabilities for benefits payable in the normal course, which
would have a Material Adverse Effect on the Company. All Company Plans that are
intended to be qualified under Section 401(a) of the Code have been determined
by the IRS to be so qualified, or a timely application for such determination is
now pending or a request for such a determination filed within the remedial
amendment period of Section 401(b) of the Code is pending, and the Company is
not aware of any reason why any such Company Plan is not so qualified in
operation. Neither the Company nor any entity which is treated as a single
employer along with the Company under Section 414(b), (c), (m) or (o) of the
Code maintains or contributes to, or has ever maintained or contributed to, or
been required to contribute to or has otherwise incurred any liability with
respect to a "multiemployer plan" within the meaning of Section 3(37) of ERISA
or any plan subject to Title IV of ERISA. Except as disclosed in Section 3.12(b)
of the Company Letter, neither the Company nor any of its ERISA Affiliates has
any liability or obligation under any welfare plan to provide benefits after
termination of employment to any employee or dependent other than as required by
Section 4980B of the Code.
(c) Definitions. As used herein, (i) "Company Plan" means a
"pension plan" (as defined in Section 3(2) of ERISA), a "welfare plan" (as
defined in Section 3(1) of ERISA), or any bonus, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, holiday pay, vacation, severance, death benefit, sick
leave, fringe benefit, personnel policy, insurance or other plan, arrangement or
understanding, in each case established or maintained by the Company or any of
its ERISA Affiliates or as to which the Company or any of its ERISA Affiliates
has contributed or otherwise may have any liability, and (iii) "ERISA Affiliate"
means any corporation or trade or business controlled by, controlling or under
common control with the Company within the meaning of Section 414 of the Code or
Section 4001(a)(14) or 4001(b) of ERISA.
(d) Employment Agreements. Section 3.12(d) of the Company
Letter contains a true and complete list of all (i) severance and employment
agreements with the current and former directors, officers, employees,
independent contractors and consultants of the Company and each ERISA Affiliate
containing any obligation or liability on or after the date of this Agreement,
(ii) severance programs and policies of the Company and each ERISA Affiliate
with or relating to its current and former directors, officers, employees,
independent contractors and consultants containing any obligation or liability
on or after the date of this Agreement, and (iii) plans,
20
<PAGE> 21
programs, agreements and other arrangements of the Company and each ERISA
Affiliate with or relating to its current and former directors, officers,
employees, independent contractors and consultants containing change of control,
acceleration of the time of payment or vesting of benefits or similar provisions
currently in effect (collectively, the "Employee Agreements").
Section 3.13 Compliance with Worker Safety and Environmental
Laws. The properties, assets and operations of the Company and its Subsidiaries
are in compliance with all applicable federal, state, local and foreign laws,
rules and regulations, orders, decrees, judgments, permits and licenses relating
to public and worker health and safety (collectively, "Worker Safety Laws") and
the protection and clean-up of the environment and activities or conditions
related thereto, including, without limitation, those relating to the
generation, handling, disposal, transportation or release of hazardous materials
(collectively, "Environmental Laws"), except for any violations that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. With respect to such properties, assets and operations, including
any previously owned, leased or operated properties, assets or operations, there
are no events, conditions, circumstances, activities, practices, incidents,
actions or plans of the Company or any of its Subsidiaries that may interfere
with or prevent compliance or continued compliance with applicable Worker Safety
Laws and Environmental Laws, other than any such interference or prevention as
would not, individually or in the aggregate with any such other interference or
prevention, have a Material Adverse Effect on the Company. None of the Company
or any of its Subsidiaries has received or is aware of any claim or notice of
violations of any applicable Environmental Laws or Worker Safety Laws other than
such claims or violations as would not individually or in the aggregate have a
Material Adverse Effect on the Company.
Section 3.14 Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or labor
contract. Neither the Company nor any of its Subsidiaries has engaged in any
unfair labor practice with respect to any Persons employed by or otherwise
performing services primarily for the Company or any of its Subsidiaries (the
"Company Business Personnel"), and there is no unfair labor practice complaint
or grievance against the Company or any of its Subsidiaries by the National
Labor Relations Board or any comparable state agency pending or threatened in
writing with respect to the Company Business Personnel, except where such unfair
labor practice, complaint or grievance would not have a Material Adverse Effect
on the Company. There is no labor strike, dispute, slowdown or stoppage pending
or, to the Knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries which may interfere with the respective business
activities of the Company or any of its Subsidiaries, except where such dispute,
strike or work stoppage would not have a Material Adverse Effect on the Company.
Section 3.15 State Takeover Statute. Section 203 of the DGCL
is not applicable to the Transactions.
Section 3.16 Required Vote of Company Stockholders. The
affirmative vote of the holders of two-thirds of the outstanding shares of
Company Common Stock is required to approve the Merger. No other vote of the
security holders of the Company is required by law, the Certificate of
Incorporation or By-laws of the Company or otherwise in order for the Company to
consummate the Transactions.
21
<PAGE> 22
Section 3.17 Brokers. No broker, investment banker or other
Person, other than Donaldson, Lufkin & Jenrette Securities Corporation (the
"Financial Advisor"), is entitled to any broker's, finder's or other similar fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The Company has
furnished Parent a true and correct copy of the engagement agreement with the
Financial Advisor.
Section 3.18 Opinion of Financial Advisor. The Company has
received the opinion of the Financial Advisor addressed to the Company's Board
of Directors, dated the date of this Agreement, to the effect that, as of such
date, the consideration to be received in the Merger by the holders of the
shares of Company Common Stock is fair from a financial point of view to the
Company's stockholders, other than NRG Energy, Inc. A signed copy of such
opinion has been delivered to Parent.
Section 3.19 Utility Regulation. None of the Company or any of
its Subsidiaries is (i) subject to regulation under the Public Utility Holding
Company Act of 1935 ("PUHCA") (other than any such regulation contemplated by
Section 9(a)(2), 32 or 33 of PUHCA), (ii) subject to regulation as an "electric
utility" or a "public utility" as such terms are defined in the Federal Power
Act (other than as contemplated by 18 C.F.R. Section 292.601(c) or Section 32 or
33 of PUHCA), or (iii) subject to regulation by any state respecting the rates
of electric utilities or the financial and organizational regulation of electric
utilities as those terms are used in Section 210(e) of the Public Utility
Regulatory Policies Act of 1978 ("PURPA"), except with respect to participation
in, or ownership of, an "exempt wholesale generator" as such term is defined in
Section 32 of PUHCA. Not more than 50% of the ultimate ownership of the projects
operated by the Subsidiaries is held by Persons primarily engaged in the
generation or sale of electric power (other than electric power solely from
qualifying cogeneration facilities, qualifying small power production
facilities, exempt wholesale generators or foreign utilities companies (as
defined in Section 33 of PUHCA)) within the meaning of the Federal Power Act.
Each such project has self-certified itself to be in compliance with such
requirements without objection by FERC or FERC has issued a final order stating
that each such project is a facility which complies with the definition of
"cogeneration facility" as set forth in 18 C.F.R. Section 292.202(c) and which
meets all of the requirements for qualification set forth in 18 C.F.R. Section
292.203(b).
Section 3.20 Insurance. Section 3.20 of the Company Letter
contains a true and complete list of all material insurance policies held by the
Company or any of its Subsidiaries. All such policies are in full force and
effect and all related premiums have been paid to date. As of the date of this
Agreement, there are no pending or, to the Knowledge of the Company, threatened
disputes or communications with or from any insurance carrier denying or
disputing any claim or regarding cancellation or non-renewal of any such policy
which if determined adversely to the Company, would have a Material Adverse
Effect on the Company.
Section 3.21 Related Party Transactions. No director or
officer of the Company or any of its Subsidiaries or any Person which as of the
date of this Agreement has a Schedule 13D or 13G on file with the Securities and
Exchange Commission with respect to the Company Common Stock (each such Person,
a "Significant Holder"), or any member of the immediate family of any
22
<PAGE> 23
such director, officer, Significant Holder or any Person in which any such
director, officer, Significant Holder, or any member of the immediate family of
any such director or officer, is an officer, director, trustee, partner or
holder of more than 50% of the outstanding capital stock or equity interests, is
a party to any material executory transaction with the Company or any of its
Subsidiaries. There are not loans, guarantees, letters of credit or other forms
of credit support provided by or on behalf of any director or officer of the
Company or any of its Subsidiaries to or in favor of the Company or any of its
Subsidiaries. For purposes of this Agreement, "Affiliate Arrangements" shall
mean the arrangements identified on Section 3.21 of the Company Letter that will
terminate at the Effective Time.
ARTICLE IV
COVENANTS OF THE COMPANY
Section 4.1 Conduct of Business Pending the Merger. Except as
expressly permitted by clauses (i) through (xvi) of this Section 4.1 or as set
forth in the Company Letter, during the period from the date of this Agreement
through the Effective Time, the Company shall, and shall cause each of its
Subsidiaries to carry on its business in the ordinary course of its business as
currently conducted and, to the extent consistent therewith, use best efforts to
preserve intact its current business organizations, keep available the services
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end that
its goodwill and ongoing business shall be unimpaired at the Effective Time.
Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement or as set forth in the Company Letter,
the Company shall not, and shall not permit any of its Subsidiaries to, without
the prior written consent of Parent (which consent shall not be unreasonably
withheld or delayed):
(i) (A) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect of,
any of its capital stock, or otherwise make any payments to its
stockholders in their capacity as such (other than dividends and other
distributions by Subsidiaries), (B) split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock or (C) purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its Subsidiaries or
any other interests or securities thereof or any rights, warrants or
options to acquire any such shares or other interests or securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock or partnership interests, any
other voting securities or equity equivalent or any securities
convertible into, or any rights, warrants or options to acquire any
such shares or interests, voting securities, equity equivalent or
convertible securities, other than the issuance of shares of Company
Common Stock upon the exercise of Company Stock Options outstanding on
the date of this Agreement in accordance with their current terms.
(iii) amend its Certificate of Incorporation or charter or
By-Laws;
23
<PAGE> 24
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or equity
in, or by any other manner, any business or any corporation, limited
liability company, partnership, association or other business
organization or division thereof or otherwise acquire or agree to
acquire any assets, other than transactions that are in the ordinary
course of business consistent with past practice and that have a
transaction value less than $250,000 individually or $1,000,000 in the
aggregate and not material to the Company and its Subsidiaries taken as
a whole;
(v) sell, lease or otherwise dispose of, or agree to sell,
lease or otherwise dispose of, any of its assets, other than
transactions that are in the ordinary course of business consistent
with past practice and that have a transaction value less than $250,000
individually or $1,000,000 in the aggregate;
(vi) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital contributions
to, or other investments in, any other Person, other than (A) any such
obligations incurred in the ordinary course of business consistent with
past practices and that are less than $500,000 in the aggregate, and
(B) indebtedness, loans, advances, capital contributions and
investments between the Company and any of its Subsidiaries or between
any of such Subsidiaries;
(vii) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or
ownership of the Company or of any of its Subsidiaries;
(viii) enter into or adopt any, or amend any existing,
severance plan, agreement or arrangement or enter into or amend any
Company Plan or employment or consulting agreement, except in the case
of any amendments to any Company Plan, for any immaterial changes as
required by applicable law;
(ix) increase the compensation payable or to become payable to
its current or former directors, officers, employees, independent
contractors or consultants or grant any severance or termination pay
to, or enter into or amend any employment or severance agreement with,
any current or former director, officer, employee, independent
contractor or consultant of the Company or any of its Subsidiaries, or
establish, adopt, enter into, or, except in the case of any amendments
to any Company Plan, for any immaterial changes as may be required to
comply with applicable law, amend in any material respect or take
action to enhance in any material respect or accelerate the payment or
vesting of any rights or benefits under, any labor, collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any director, officer,
employee, consultant or independent contractor;
(x) violate or fail to perform any obligation or duty imposed
upon it or any of its Subsidiaries by any applicable material federal,
state or local law, rule, regulation, guideline or ordinance;
24
<PAGE> 25
(xi) make any change to accounting policies or procedures
(other than actions required to be taken by generally accepted
accounting principles);
(xii) prepare or file any Tax Return inconsistent with past
practice or, on any such Tax Return, take any position, make any
election, or adopt any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing similar
Tax Returns in prior periods;
(xiii) make any tax election or settle or compromise any
material federal, state, local or foreign income tax liability;
(xiv) enter into any contract which involves aggregate
payments in excess of $250,000 for individual contracts or $1,000,000
in the aggregate for all contracts or amend, terminate, renew or waive
any rights of material value under, any Material Contract of the
Company or any of its Subsidiaries; or other than as described in
Section 4.1(xiv) of the Company Letter, make or agree to make any new
capital expenditure or expenditures in excess of $250,000 individually
or $500,000 in the aggregate;
(xv) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than (a) the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent financial statements
(or the notes thereto) of the Company included in the Company SEC
Documents or incurred in the ordinary course of business consistent
with past practice or (b) payments of principal and interest and
related fees on indebtedness owed by the Company or any of its
Subsidiaries under existing revolving credit facilities and scheduled
payments of principal and interest and related fees on any other
indebtedness owed by the Company or any of its Subsidiaries under any
existing credit facility;
(xvi) take any write-down of the value of any asset or take
any write-off as uncollectible of any accounts or notes receivable or
any portion thereof, except to the extent such write-down or write-off
is required by generally accepted accounting principles or is
consistent with the historic accounting policies adhered to by the
Company or its Subsidiaries, as applicable; or
(xvii) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
Section 4.2 No Solicitation.
(a) Takeover Proposals. The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any officer,
director or employee of or any financial advisor, attorney or other advisor or
representative of, the Company or any of its Subsidiaries to, (i) solicit,
initiate or encourage the submission of, any Takeover Proposal (as hereafter
defined), (ii) enter into any agreement with respect to any Takeover Proposal or
(iii) participate in any discussions
25
<PAGE> 26
or negotiations regarding, or furnish to any Person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal; provided, however, that, if the Board of Directors of the
Company reasonably determines the Takeover Proposal constitutes a Superior
Proposal (as defined below), then, to the extent required by the fiduciary
obligations of the Board of Directors of the Company, as determined in good
faith by a majority of the disinterested members thereof after receiving the
advice of independent legal counsel, the Company may, in response to an
unsolicited request therefor, furnish information with respect to the Company
to, and enter into discussions with, any Person that has made such Takeover
Proposal pursuant to a customary confidentiality agreement. For purposes of this
Agreement, (i) "Takeover Proposal" means any proposal for, offer or indication
of interest in a merger or other business combination involving the Company or
any of its Subsidiaries or any proposal or offer to acquire in any manner,
directly or indirectly, a substantial equity interest in, a substantial portion
of the voting securities of, or a substantial portion of the assets of the
Company or any of its Subsidiaries, other than the transactions contemplated by
this Agreement, and (ii) "Superior Proposal" means a bona fide Takeover Proposal
made by a third party which a majority of the disinterested members of the Board
of Directors of the Company determines in its reasonable good faith judgment to
be more favorable to the Company's stockholders than the Merger (after receiving
the opinion, with only customary qualifications, of the Company's independent
financial advisor of nationally recognized reputation that the value of the
consideration provided for in such proposal exceeds the value of the
consideration provided for in the Merger) and for which financing, to the extent
required, is then committed or which, in the reasonable good faith judgment of a
majority of such disinterested members (after receiving the advice of the
Company's independent financial advisor), is highly likely to be financed by
such third party.
(b) Recommendation of the Board of Directors. Except as
expressly permitted by this Section 4.2, neither the Board of Directors of the
Company nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Sub, the approval or
recommendation by such Board of Directors or any such committee of the Merger or
(ii) approve or recommend, propose to approve or recommend, or cause the Company
to enter into any letter of intent, agreement in principle or legally binding
acquisition agreement (the "Company Acquisition Agreement") relating to any
Takeover Proposal. Notwithstanding the foregoing, if the Company has received a
Superior Proposal, the Board of Directors of the Company may (subject to this
and the following sentences) terminate this Agreement, but only at a time that
is more than four (4) business days following Parent's receipt of written notice
advising Parent that the Company's Board of Directors is prepared to accept such
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the Person making such Superior Proposal; provided,
however, that (x) at the time of such termination, such proposal continues to be
a Superior Proposal, taking into account any amendment of the terms of the
Merger by Parent or any proposal by Parent to amend the terms of this Agreement,
the Merger or any other Takeover Proposal made by Parent (a "New Parent
Proposal"), and (y) concurrently with or immediately after such termination, the
Company's Board of Directors shall cause the Company to enter into a definitive
agreement with respect to such Superior Proposal.
(c) Notice of Takeover Proposal. The Company shall advise
Parent orally (within one business day) and in writing (as promptly as
practicable) of (i) any Takeover Proposal or any inquiry with respect to or
which could lead to any Takeover Proposal, (ii) the material terms of
26
<PAGE> 27
such Takeover Proposal and (iii) the identity of the Person making any such
Takeover Proposal or inquiry. The Company will keep Parent fully informed of the
status and details of any such Takeover Proposal or inquiry.
(d) Permitted Actions or Disclosures by the Company. Nothing
contained in this Section 4.2 shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the Board of Directors
of the Company, after consultation with independent counsel, failure so to
disclose would be inconsistent with its obligations under applicable law;
provided, however, that, except as expressly provided in this Section 4.2,
neither the Company nor its Board nor any committee thereof shall withdraw or
modify, or propose publicly to withdraw or modify, its position with respect to
this Agreement or in connection with the Merger, or approve or recommend, or
propose publicly to approve or recommend, a Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meeting. The Company will, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold a stockholder meeting (the "Stockholder Meeting") for the
purpose of considering the approval of this Agreement and the transactions
contemplated hereby. The Company has, through its Board of Directors,
recommended to its stockholders the adoption or approval of this Agreement, the
Merger and the Amendment, shall use all reasonable efforts to solicit such
approvals by its stockholders and shall not withdraw such recommendation.
Without limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first sentence of this Section 5.1 shall not be
affected by the commencement, public proposal, public disclosure or
communication to the Company of a Takeover Proposal.
Section 5.2 Preparation of the Proxy Statement and Schedule
13e-3. The Company shall promptly prepare and, after consultation with Parent,
file with the SEC the Proxy Statement and shall use its reasonable best efforts
to obtain and furnish the information required to be included in the Proxy
Statement and, after consultation with Parent, respond promptly to any comments
made by the SEC. In connection with the Company consulting with Parent
concerning the Proxy Statement, the Company shall provide Parent a reasonable
opportunity to review and comment on the Proxy Statement and amendment or
modification thereto prior to filing with the SEC, shall reasonably consider the
comments and suggestions of Parent, shall not change without Parent's consent
any information provided by Parent for inclusion in the Proxy Statement that the
Company requests of Parent, shall promptly notify Parent of the receipt of any
comments or other communications from the SEC regarding the Proxy Statement and
shall provide Parent a reasonable opportunity to review and comment on any
response by the Company to any comments or other communications from the SEC
that requires a response. The Company shall mail the Proxy Statement to its
stockholders at the earliest practical date. Parent, Sub and (to the extent
required by law) their respective affiliates shall promptly prepare and file,
concurrent with the filing of the Proxy
27
<PAGE> 28
Statement and after consultation with the Company, with the SEC the Schedule
13e-3 and the Company shall reasonably cooperate with Parent in connection with
the preparation of the Schedule 13e-3. If at any time prior to the Effective
Time any event with respect to Parent, its officers and directors or Sub shall
occur, which is required to be described in the Schedule 13e-3 or the Proxy
Statement, such event shall be so described, and, in the case of the Schedule
13e-3, Parent will promptly give notice of such event to the Company and an
appropriate amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company. If at any time
prior to the Effective Time any event with respect to the Company, its officers
and directors or any of its Subsidiaries shall occur which is required at that
time to be described in the Proxy Statement or the Schedule 13e-3, such event
shall be so described, and, in the case of the Proxy Statement, the Company
shall promptly notify Parent of such event and an appropriate amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of the Company.
Section 5.3 Access to Information. Subject to currently
existing contractual and legal restrictions applicable to the Company or any of
its Subsidiaries, the Company shall, and shall cause each of its Subsidiaries
to, afford to the accountants, counsel, financial advisors and other
representatives of Parent hereto reasonable access to, and permit them to make
such inspections as they may reasonably require of, during normal business hours
during the period from the date of this Agreement through the Effective Time,
all their respective properties, books, contracts, commitments and records
(including, without limitation, the work papers of independent accountants, if
available and subject to the consent of such independent accountants) and,
during such period, the Company shall, and shall cause each of its Subsidiaries
to, furnish promptly to Parent (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (ii) all other information
concerning its business, properties and personnel as Parent may reasonably
request. No investigation pursuant to this Section 5.3 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto. All information obtained by
Parent pursuant to this Section 5.3 shall be kept confidential in accordance
with the Confidentiality Agreement, dated May 17, 1999, between Parent and the
Company (the "Confidentiality Agreement").
Section 5.4 Fees and Expenses.
(a) Expenses. Except as provided below, all fees and expenses
incurred in connection with the Transactions shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated.
(b) Termination Fee. The Company shall pay to Parent a
termination fee of $7,500,000 if:
(i) the Company terminates this Agreement pursuant to Section
7.1(d);
(ii) (A) after the date of this Agreement and prior to the
termination of this Agreement, any Person makes a Takeover Proposal,
(B) this Agreement is terminated pursuant to Section 7.1(b)(iii) or (c)
and (C) within 12 months of the date of termination of
28
<PAGE> 29
this Agreement, the Company executes a legally binding definitive
agreement or an agreement in principle pursuant to which any Person,
entity or group (other than Parent, Sub or any of their affiliates), in
one transaction or a series of transactions, will acquire more than 50%
of the outstanding Company Common Stock or assets of the Company
through any open market purchases, merger, consolidation, tender or
exchange offer, recapitalization, reorganization or other business
combination and such transaction or series of transactions have been
consummated (an "Third Party Acquisition Event"); or
(iii) (A) after the date of this Agreement and prior to the
termination of this Agreement, any Person makes a Takeover Proposal,
(B) this Agreement is terminated by Parent pursuant to Section 7.1(e)
or (f), and (C) a Third Party Acquisition Event occurs within 12 months
of the date of termination of this Agreement.
Any termination fee due under this Section 5.4(b) shall be paid by wire transfer
of same-day funds on the date of termination of this Agreement in the case of a
fee due under clause (i) of the preceding sentence, or on the date such Third
Party Acquisition Event is consummated in the case of a fee due under clause
(ii) or (iii) of the preceding sentence. The payment of the termination fee
pursuant to this Section 5.4(b) shall constitute liquidated damages and shall be
the sole and exclusive remedy of Parent and Sub if this Agreement is terminated
under the circumstances described above in this Section 5.4(b).
Section 5.5 Best Efforts.
(a) Consummation of the Merger. Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement,
including, but not limited to: (i) the obtaining of all necessary actions or
non-actions, waivers, consents and approvals from all Governmental Entities and
the making of all necessary registrations and filings (including filings with
Governmental Entities) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity (including those in connection with the
HSR Act, the Regulatory Approval, the Applicable New Jersey Laws, and State
Takeover Approvals), (ii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement and
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, (iii) the taking of all reasonable
actions to minimize the effects of any State Takeover Approval on the
transactions contemplated hereby, and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by
this Agreement. No party to this Agreement shall consent to any voluntary delay
of the consummation of the Merger at the behest of any Governmental Entity
without the consent of the other parties to this Agreement, which consent shall
not be unreasonably withheld.
(b) Representations and Warranties. Each party shall not take
any action, or enter into any transaction, which would cause any of its
representations or warranties contained in
29
<PAGE> 30
this Agreement to be untrue or result in a breach of any covenant made by it in
this Agreement.
(c) Divestiture. Notwithstanding anything to the contrary
contained in this Agreement, in connection with any filing or submission
required or action to be taken by either Parent or the Company to effect the
Merger and to consummate the other transactions contemplated hereby, the Company
shall not, without Parent's prior written consent, commit to any divestiture
transaction, and neither Parent nor any of its Affiliates shall be required to
divest or hold separate or otherwise take or commit to take any action that
limits its freedom of action with respect to, or its ability to retain, the
Company or any of the material businesses, product lines or assets of Parent or
any of its Subsidiaries or that otherwise would have a Material Adverse Effect
on Parent.
(d) Company Stock Option Termination Notices. At least sixty
(60) days prior to the Effective Time, the Company will give the "Acceleration
Notice" as defined in and contemplated by the Company Plans pursuant to which
Company Stock Options were granted, provided that the holders of the Company
Stock Options shall be entitled to the Option Consideration pursuant to Section
1.5(d) if such holder executes and delivers the option termination agreement as
contemplated by Section 1.5(d) above.
Section 5.6 Public Announcements. Parent and the Company will
not issue any press release with respect to the transactions contemplated by
this Agreement or otherwise issue any written public statements with respect to
such transactions without prior consultation with the other party, except as may
be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange or the Nasdaq National Market.
Section 5.7 Real Estate Transfer and Gains Tax. Parent and the
Company agree that either the Company or the Surviving Corporation will pay any
state or local tax which is attributable to the transfer of the beneficial
ownership of the Company's or its Subsidiaries' real property, if any
(collectively, the "Gains Taxes"), and any penalties or interest with respect to
the Gains Taxes, payable in connection with the consummation of the Merger. The
Company and Parent agree to cooperate with the other in the filing of any
returns with respect to the Gains Taxes, including supplying in a timely manner
a complete list of all real property interests held by the Company and its
Subsidiaries and any information with respect to such property that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the real property of the Company and its Subsidiaries shall be
determined by Parent in its reasonable discretion.
Section 5.8 Indemnification; Directors and Officers Insurance.
(a) For six years from and after the Effective Time, Parent
agrees to cause the Surviving Corporation to, and shall guarantee the obligation
of the Surviving Corporation to, indemnify and hold harmless all past and
present officers and directors of the Company and of its Subsidiaries to the
same extent such Persons are indemnified as of the date of this Agreement by the
Company pursuant to the Company's Certificate of Incorporation, By-Laws or
agreements in existence on the date hereof for acts or omissions occurring at or
prior to the Effective Time.
(b) Parent shall provide, or shall cause the Surviving
Corporation to provide, for an aggregate period of not less than six years from
the Effective Time, the Company's current
30
<PAGE> 31
directors and officers an insurance and indemnification policy that provides
coverage for events occurring prior to the Effective Time (the "D&O Insurance")
that is substantially similar (with respect to limits and deductibles) to the
Company's existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that the Surviving
Corporation shall not be required in any year to expend more than $360,000 for
such coverage (the "Maximum Premium"), and provided, further, that if the
Surviving Corporation is unable to obtain the amount of such insurance required
by this Section 5.8(b) for such aggregate premiums, the Surviving Corporation
shall purchase as much insurance as is obtainable for an aggregate annual
premium of $360,000.
(c) From and after the Effective Time, to the full extent
permitted by the law, Parent shall, and shall cause the Company (or any
successor to the Company) to, indemnify, defend and hold harmless the present
officers and directors of the Company and its Subsidiaries (each an "Indemnified
Party") against all losses, claims, damages, liabilities, fees and expenses
(including reasonable attorneys' fees and disbursements), judgments, fines and
amounts paid in settlement (collectively, "Losses") arising out of actions or
omissions occurring at or prior to the Effective Time in connection with this
Agreement, the Company Stockholder Agreement and the Transactions; provided,
however, that an Indemnified Party shall not be entitled to indemnification
under this Section 5.8(c) for Losses arising out of actions or omissions by the
Indemnified Party constituting (i) a breach of this Agreement or the Company
Stockholder Agreement, (ii) grossly negligent or criminal conduct or fraud, or
(iii) any violation of federal, state or foreign securities laws. In order to be
entitled to indemnification under this Section 5.8(c), an Indemnified Party must
give Parent and the Company prompt written notice of any third party claim which
may give rise to any indemnify obligation under this Section 5.8(c), and Parent
and the Company shall have the right to assume the defense of any such claim
through counsel of their own choosing, subject to such counsel's reasonable
judgment that separate defenses that would create a conflict of interest on the
part of such counsel are not available. If Parent and the Company do not assume
any such defense, they shall be liable for all reasonable costs and expenses of
defending such claim incurred by the Indemnified Party, including reasonable
fees and disbursements of counsel, and shall advance such reasonable costs and
expenses to the Indemnified Party; provided, however, that such advance shall be
made only after receiving an undertaking from the Indemnified Party that such
advance shall be repaid if it is determined that such Indemnified Party is not
entitled to indemnification therefor. Neither Parent nor the Company shall be
liable under this Section 5.8(c) for any Losses resulting from any settlement,
compromise or offer to settle or compromise any such claim or litigation or
other action, without the prior written consent of Parent and the Company.
(d) In the event the Surviving Corporation or any successor to
the Surviving Corporation (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successors of the Surviving Corporation honor the
obligations of the Company set forth in this Section 5.8.
Section 5.9 Notification of Certain Matters. Parent shall use
its best efforts to give prompt notice to the Company, and the Company shall use
its best efforts to give prompt notice to Parent, of: (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence,
31
<PAGE> 32
of which it is aware and which would be reasonably likely to cause (x) any
representation or warranty by it contained in this Agreement to be untrue or
inaccurate in any material respect or (y) any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied in all material
respects by it, (ii) any failure of Parent or the Company, as the case may be,
to comply in a timely manner with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder or (iii) any change
or event which would be reasonably likely to have a Material Adverse Effect on
the Company; provided, however, that the delivery of any notice pursuant to this
Section 5.9 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
Section 5.10 Employee Benefit Plans and Agreements
(a) Company Plans. Parent shall cause the Surviving
Corporation to perform the obligations of the Company under, and comply with,
the Employee Agreements and to maintain through December 31, 1999 the Company
Plans (other than plans providing for the issuance of Company Common Stock or
based on the value of Company Common Stock) in effect on the date of this
Agreement; provided, however, that Parent shall have no obligation to continue
or renew any Employee Agreement or Company Plan that may be terminated in
accordance with its terms; and provided, further, however, that nothing in this
Agreement shall confer on any individual any right to employment, compensation
for employment, or employee benefits. Notwithstanding the foregoing, Parent
shall have the right, at its option, to replace the Company Plans with its own
benefit plans provided such plans are in the aggregate comparable (taking into
account all relevant factors) with the Company Plans.
(b) Credit for Prior Service; Waiver of Pre-existing
Conditions. In the event that Parent shall merge any Company Plan with any
benefit plan of Parent or otherwise modify any Company Plan, prior service with
the Company or any of its Subsidiaries will be counted for purposes of employee
eligibility, seniority and vesting under such benefit plan, and any pre-existing
condition shall be waived for each employee so long as such employee has had
medical coverage under the Company Plans for at least six months immediately
prior to the Effective Time.
(c) Change of Control. Parent agrees that for purposes of any
of the Company Plans conferring rights on a current or former employee, officer
or director as a result of a change of control of the Company, the consummation
of the Merger shall be deemed to constitute a "Change of Control" (as that term
is defined in such Company Plans).
Section 5.11 Performance by Sub. Parent shall cause Sub to
comply with each of its obligations hereunder and pursuant to the Company
Stockholder Agreement, including, without limitation, causing Sub to consummate
the Merger as contemplated herein, and Parent hereby guarantees the performance
by Sub of such obligations. Parent shall cause Sub to vote any shares of Common
Stock owned by the Sub on the record date for the Stockholder Meeting to be
voted for approval of this Agreement and the Merger.
Section 5.12 Additional Consents and Approvals. The Company
and Parent agree that they will cooperate and use their commercially reasonable
efforts to seek any waiver and/or consent required such that consummation of the
Transactions will not constitute a default under the
32
<PAGE> 33
terms of (1) that certain Credit Agreement, by and among NRG Generating (Newark)
Cogeneration Inc. and NRG Generating (Parlin) Cogeneration Inc., Credit Suisse,
Greenwich Funding Corporation and any Purchasing Lender as Lender and Credit
Suisse as Agent, dated as of May 17, 1996, as amended by Amendment Number 1,
dated June 28, 1996 and (2) that certain Construction and Term Loan Agreement,
by and among NRG (Morris) Cogen, L.L.C., The Chase Manhattan Bank and other
Banks as Lenders, The Chase Manhattan Bank as Agent and The Chase Manhattan Bank
as Collateral Agent, dated September 15, 1997, as amended by the Amendment and
Consent, dated December 10, 1997.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been duly
approved by the requisite vote of stockholders of the Company in accordance with
applicable law and the Certificate of Incorporation and By-laws of the Company.
(b) HSR and Other Approvals. (i) The waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
(ii) All authorizations, consents, orders,
declarations or approvals of, or filings with, or terminations or expirations of
waiting periods imposed by, any Governmental Entity, which the failure to
obtain, make or occur would have the effect of making the Merger or any of the
transactions contemplated hereby illegal or would have, individually or in the
aggregate, a Material Adverse Effect on Parent (assuming the Merger had taken
place), shall have been obtained, shall have been made or shall have occurred.
(c) Governmental Actions. No statute, rule, regulation,
legislation, interpretation, judgment, order or injunction shall be enacted,
entered, enforced, promulgated, amended or become applicable to this Agreement
or the Merger and no other action shall have been taken by any court or other
Governmental Entity other than the application to the Merger of the waiting
period under the HSR Act, that, in each case, would be reasonably expected to
result in any of the following effects: (i) challenging the acquisition by
Parent or Sub of any Company Common Stock, seeking to restrain or prohibit the
making or consummation of the Merger or any other Transaction, (ii) seeking to
prohibit or limit the ownership or operation by the Company, Parent or any of
their respective Subsidiaries of any material portion of the business or assets
of the Company, Parent or any of their respective Subsidiaries, or to compel the
Company, Parent or any of their respective Subsidiaries to dispose of or hold
separate any material portion of the business or assets of the Company, Parent
or any of their respective Subsidiaries, (iii) seeking to impose limitations on
the ability of Parent or Sub to acquire or hold, or exercise full rights of
ownership of, any shares of Company Common Stock, including the right to vote
the Company Common Stock purchased by it on all matters properly
33
<PAGE> 34
presented to the stockholders of the Company, (iv) seeking to prohibit Parent or
any of its Subsidiaries from effectively controlling in any material respect the
business or operations of the Company and its Subsidiaries in connection with
the Offer, the Merger or the Agreement, or (v) which otherwise is reasonably
likely to have a Material Adverse Effect on the Company.
Section 6.2 Conditions to Obligation of the Company to Effect
the Merger. The obligation of the Company to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Performance of Obligations. Each of Parent and Sub shall
have performed in all material respects each of its agreements contained in this
Agreement required to be performed on or prior to the Effective Time.
(b) Representations and Warranties. Each of the
representations and warranties of Parent and Sub contained in this Agreement
shall be true and correct, provided that such representations and warranties
shall be deemed to be true and correct unless the failure of such
representations and warranties to be so true and correct would have a Material
Adverse Effect on Parent or would prevent Parent from consummating the
transactions contemplated by the Agreement, in each case as if such
representations and warranties were made at the time of such termination (except
to the extent such representations or warranties expressly relate to an earlier
date).
(c) Certain Consents. In obtaining any approval or consent
required to consummate any of the transactions contemplated herein, no
Governmental Entity shall have imposed or shall have sought to impose any
condition, penalty or requirement which, in the reasonable opinion of the
Company, individually or in the aggregate, would have a Material Adverse Effect
on Parent (assuming the consummation of the Merger).
Section 6.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) Performance of Obligations. The Company shall have
complied with the provisions of Section 4.1 of the Agreement, and the Company
shall have complied with any agreement or covenant in any material respect of
the Company to be performed or complied with by it under the Agreement.
(b) Representations and Warranties. Each of the
representations and warranties of the Company contained in this Agreement shall
be true and correct, provided that such representations and warranties shall be
deemed to be true and correct unless the failure of such representations and
warranties to be so true and correct would have a Material Adverse Effect on the
Company or would prevent the Company from consummating the transactions
contemplated by the Agreement, in each case as if such representations and
warranties were made at the time of such termination (except to the extent such
representations or warranties expressly relate to an earlier date).
(c) Litigation. There shall not be instituted or pending any
suit, action or proceeding by any Governmental Entity or by any other Person
initiated as a result of this Agreement
34
<PAGE> 35
or any transactions contemplated hereby (i) challenging the acquisition by
Parent or Sub of any Company Common Stock, seeking to restrain or prohibit the
making or consummation of the Merger or any other Transaction, (ii) seeking to
prohibit or limit the ownership or operation by the Company, Parent or any of
their respective Subsidiaries of any material portion of the business or assets
of the Company, Parent or any of their respective Subsidiaries, or to compel the
Company, Parent or any of their respective Subsidiaries to dispose of or hold
separate any material portion of the business or assets of the Company, Parent
or any of their respective Subsidiaries, (iii) seeking to impose limitations on
the ability of Parent or Sub to acquire or hold, or exercise full rights of
ownership of, any shares of Company Common Stock, including the right to vote
the Company Common Stock purchased by it on all matters properly presented to
the stockholders of the Company, (iv) seeking to prohibit Parent or any of its
Subsidiaries from effectively controlling in any material respect the business
or operations of the Company and its Subsidiaries in connection with the Merger
or the Agreement, or (v) which otherwise is reasonably likely to have a Material
Adverse Effect on the Company.
(d) Material Adverse Effect. Since the date of the Agreement,
there shall not have occurred any event, change, effect or development that,
individually or in the aggregate, has had or would be reasonably expected to
have a Material Adverse Effect on the Company.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after any approval of
the matters presented in connection with the Merger by the stockholders of the
Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger has not been effected on or prior to the
close of business on February 28, 2000 (the "Outside Date"); provided,
however, that the right to terminate this Agreement pursuant to this
Section 7.1(b)(i) shall not be available to any party whose material
and willful failure to fulfill any of its obligations contained in this
Agreement has been the cause of, or resulted in, the failure of the
Merger to have occurred on or prior to the Outside Date; provided;
however that if the sole reason that the Merger shall not have been
consummated by the Outside Date is the failure to hold the Stockholder
Meeting by February 28, 2000, the Outside Date shall be extended to
March 31, 2000;
(ii) if any court or other Governmental Entity having
jurisdiction over a party hereto shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the transactions contemplated by this Agreement
and such order, decree, ruling or other action shall have become final
and nonappealable; or
35
<PAGE> 36
(iii) if the stockholders of the Company fail to approve this
Agreement and the Merger at the Stockholder Meeting or any adjournment
or postponement thereof;
(c) by Parent if prior to the Effective Time, the Company's
Board of Directors or any committee thereof shall have withdrawn or modified in
a manner adverse to Sub or Parent its approval or recommendation of the
Transactions or shall have recommended or approved a Company Superior Proposal,
or shall have resolved to do any of the foregoing;
(d) by the Company, upon approval of its Board of Directors in
accordance with Section 4.2(b); provided, however, that any termination of this
Agreement pursuant to this Section 7.1(d) shall not be effective until the
Company has made full payment of all amounts provided under Section 5.4(b);
(e) by either Parent or the Company if the other party shall
have breached or failed to comply in any material respect with any of its
covenants or agreements other than Section 4.1 contained in this Agreement
required to be performed or complied with prior to the date of such termination,
which failure to comply has not been cured within thirty business days following
receipt by such other party of written notice from the non-breaching party of
such failure to comply or by Parent if the Company shall have breached or failed
to comply with Section 4.1; or
(f) by either Parent or the Company if there has been a breach
by the other party (in the case of Parent, including any material breach by Sub)
of any representation or warranty that individually or in the aggregate has a
Material Adverse Effect on the breaching party or would prevent such breaching
party from consummating the transactions contemplated by this Agreement.
The right of any party hereto to terminate this Agreement
pursuant to this Section 7.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Person controlling any such party or any of their respective officers or
directors, whether prior to or after the execution of this Agreement.
Section 7.2 Effect of Termination. In the event of termination
of this Agreement by either Parent or the Company, as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent, Sub or their respective officers
or directors (except for the last sentence of Section 5.3 and the entirety of
Sections 5.4, 8.6, 8.7, 8.9 and 8.10, which shall survive the termination);
provided, however, that nothing contained in this Section 7.2 shall relieve any
party hereto from any liability for any willful breach of a representation or
warranty contained in this Agreement or the breach of any covenant contained in
this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company, but, after any
such approval, no amendment shall be made which by law requires further approval
by such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
36
<PAGE> 37
Section 7.4 Waiver. At any time prior to the Effective Time,
the parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein which may
legally be waived. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties.
The representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall terminate at the Effective Time.
Section 8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, one day after being delivered to an overnight courier or when sent
via facsimile (with a confirmatory copy sent by overnight courier) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Sub, to
Calpine Corporation
50 West San Fernando Street
San Jose, CA 95113
Attention: John T. King, Vice President
Fax: (408) 995-0505
with a copy to:
Howard, Smith & Levin LLP
1330 Avenue of the Americas
New York, NY 10019
Attention: William R. Collins
Fax: (212) 841-1010
(b) if to the Company, to
Cogeneration Corporation of America.
One Carlson Parkway, Suite 240
Minneapolis, Minnesota 55447-4454
Attention: Julie A. Jorgensen
President and Chief Executive Officer
Facsimile No.: (612) 745-7901
37
<PAGE> 38
with a copy to:
Kaplan, Strangis and Kaplan, P.A.
5500 Norwest Center
Minneapolis, Minnesota 55402
Attention: Bruce J. Parker
Facsimile No.: (612) 375-1143
Section 8.3 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
Section 8.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, except and as provided in the last sentence of Section 5.3,
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. Except as provided pursuant to Section 5.8 and 5.10, this
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
Section 8.6 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 8.7 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties.
Section 8.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other terms, conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic and legal substance of the transactions contemplated hereby are not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated by this
Agreement may be consummated as originally contemplated to the fullest extent
possible.
Section 8.9 Enforcement of this Agreement. The parties hereto
agree that
38
<PAGE> 39
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific wording or were
otherwise breached. It is accordingly agreed that the parties hereto shall be
entitled to seek an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, such remedy being
in addition to any other remedy to which any party is entitled at law or in
equity.
Section 8.10 Consent to Jurisdiction. Each of the parties
hereto (a) consents to submit itself to the non-exclusive personal jurisdiction
of any Federal court located in the State of Delaware or any Delaware state
court in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, and (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
39
<PAGE> 40
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
COGENERATION CORPORATION OF AMERICA
By: /s/ Julie A. Jorgensen
------------------------------------------
Julie A. Jorgensen
President and Chief Executive Officer
CALPINE CORPORATION
By: /s/ John T. King
------------------------------------------
John T. King
Vice President
CALPINE EAST ACQUISITION CORP.
By: /s/ John T. King
------------------------------------------
John T. King
Vice President
40
<PAGE> 41
EXHIBIT A
Form of Certificate of Incorporation
The following sentence shall be added at the end of Article Seventh of
the Company's Amended and Restated Certificate of Incorporation:
The provisions of this Article Seventh shall not apply to the transfer
of shares of the Corporation's common stock by NRG Energy, Inc. to
Calpine East Acquisition Corp. in contemplation of closing the merger
contemplated by the agreement and plan of merger dated August __, 1999
among the Corporation, Calpine Corporation and Calpine East Acquisition
Corp.
<PAGE> 1
Exhibit (3)
CONTRIBUTION AND STOCKHOLDERS AGREEMENT
CONTRIBUTION AND STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of
August 26, 1999, among CALPINE EAST ACQUISITION CORP., a Delaware corporation
(the "Company"), CALPINE CORPORATION, a Delaware corporation ("Buyer"), and NRG
ENERGY, INC., a Delaware corporation ("NRG", and together with the Buyer, the
"Stockholders").
W I T N E S S E T H:
WHEREAS, on the date hereof, the Company is authorized by its
Certificate of Incorporation to issue Capital Stock consisting of 1,000 shares
of common stock, without par value (the "Common Stock");
WHEREAS, the Company has been formed for the purpose of entering into
an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), and, subject to satisfaction or waiver of the conditions set forth
in the Merger Agreement, consummating a merger (the "Merger") with and into
Cogeneration Corporation of America, a Delaware corporation ("Cogen"), with
Cogen continuing as the surviving corporation;
WHEREAS, it is contemplated that immediately prior to and following the
consummation of the Merger, NRG will own 20% of the issued and outstanding
shares of Capital Stock of the Company and the Buyer will own 80% of the issued
and outstanding shares of Capital Stock of the Company; and
WHEREAS, the parties hereto deem it in their best interests and in the
best interests of the Company to provide consistent and uniform management for
the Company and desire to enter into this Agreement in order to effectuate that
purpose and to set forth their respective rights and obligations in connection
with their proposed investment in the Company.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
Section 1.1. Certain Definitions. As used in this Agreement,
the following terms shall have the following respective meanings:
"Actual Adjusted Net Income" has the meaning specified in
Section 9.3(a).
"Adjustment Amount" has the meaning specified in Section
5.1(a).
"Affiliate" has the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
"Agreement" means this Contribution and Stockholders Agreement
as in effect on the date hereof and as hereafter from time to time amended,
modified or supplemented in accordance with the terms hereof.
"Bankruptcy Code" means the United States Bankruptcy Code, 11
U.S.C. Sec. 101 et seq., as now in effect and as from time to time hereafter
amended, and any successor or similar statute.
"Board of Directors" means the Board of Directors of the
Company as from time to time hereafter constituted.
"Buyer Directors" has the meaning specified in Section 2.3(b).
"By-Laws" means the Amended and Restated By-Laws of the
Company in the form set forth as Exhibit D hereto, and as hereafter from time to
time amended, modified, supplemented or restated in accordance with the terms
hereof and pursuant to applicable law.
"Cancelled Options" has the meaning specified in Section
5.1(a).
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in (however
designated) corporate stock of any Person, including, without limitation, shares
of preferred or preference stock, (ii) all partnership interests (whether
general or limited) in any Person which is a partnership, (iii) all membership
interests or limited liability company interests in any Person which is a
limited liability company, and (iv) all equity or ownership interests in any
Person of any other type.
"Cash Equivalents" means
(a) marketable obligations maturing within 180 days after
acquisition thereof issued or fully guaranteed by the United States of America
or an instrumentality or agency thereof,
(b) open market commercial paper, maturing within 180 days
after acquisition thereof, which has the highest credit rating of either
Standard & Poor's Corporation or Moody's Investors Service, Inc., issued by a
corporation (other than the Company or any of its Subsidiaries or Affiliates)
organized under the laws of any State of the United States of America or of the
District of Columbia, and
<PAGE> 3
(c) certificates of deposit or bankers acceptances or other
obligations maturing within 180 days after acquisition thereof issued by a
domestic commercial bank which is a member of the Federal Reserve System and has
capital, surplus and undivided profits in excess of $500,000,000.
"Certificate of Incorporation" means the Amended and Restated
Certificate of Incorporation of the Company in the form set forth as Exhibit C
hereto, and as hereafter from time to time amended, modified, supplemented or
restated in accordance with the terms hereof and pursuant to applicable law.
"Cogen" has the meaning specified in the Recitals.
"Commission" means the Securities and Exchange Commission and
any successor commission or agency having similar powers.
"Common Stock" means the common stock, without par value, of
the Company and any Capital Stock of the Company that is not limited to a fixed
sum or percentage of par or stated value in respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company.
"Company" has the meaning specified in the first paragraph of
this Agreement, together with any of its successors or assigns (including,
without limitation, Cogen following the consummation of the Merger).
"Company Sale" has the meaning specified in Section 8.2(a).
"Contribution Date" has the meaning specified in Section 5.1.
"Drag-Along Notice" has the meaning specified in Section
8.2(a).
"Drag Along Right" has the meaning specified in Section
8.2(b).
"Disposing Stockholder" has the meaning specified in Section
8.3(b).
"Effective Date" means the date on which the Effective Time
(as such term is defined in the Merger Agreement) occurs.
"Exchange Act" means, as of any date, the Securities Exchange
Act of 1934, as amended.
"Fully Diluted Common Stock" means at any time all shares of
Common
<PAGE> 4
Stock then issued and outstanding and all shares of Common Stock issuable upon
the exercise of any then outstanding warrants, options, conversion rights or
other rights to subscribe for, purchase or acquire shares of Common Stock that
are at the time exercisable.
"GAAP" means generally accepted accounting principles in the
United States of America in effect from time to time, applied on a consistent
basis both as to classification of items and amounts.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Independent Third Party" has the meaning specified in Section
8.2(a).
"Management Fee" has the meaning specified in Section 9.3(a).
"Merger" has the meaning specified in the Recitals.
"Merger Agreement" has the meaning specified in the Recitals.
"Merger Price" has the meaning specified in Section 5.1(a).
"NASD" means the National Association of Securities Dealers,
Inc. and its successors and assigns.
"Notice of Exercise" has the meaning specified in Section
8.1(a).
"NRG Director" has the meaning specified in Section 2.3(b).
"Offered Securities" has the meaning specified in Section
8.1(a).
"Option" has the meaning specified in Section 8.4(a).
"Option Period" has the meaning specified in Section 8.4(a).
"Option Price" has the meaning specified in Section 8.4(b).
"Permitted Transferee" has the meaning specified in Section
7.2.
"Person" means an individual or a corporation, association,
partnership, limited liability company, joint venture, organization, business,
trust or any other entity or organization, including a government or any
subdivision or agency thereof.
<PAGE> 5
"Pro Rata Portion" means, with reference to any Stockholder at
any time, a fraction, the numerator of which is the number of shares of Common
Stock then issued and outstanding and held by such Stockholder, and the
denominator of which is the aggregate number of shares of Common Stock then
issued and outstanding and held by the Stockholders taken together.
"Projected Adjusted Net Income" has the meaning set forth in
Section 9.3(a).
"Proposed Purchaser" has the meaning specified in Section
8.3(b).
"Public Offering" means a public offering and sale of equity
securities of the Company pursuant to an effective registration statement under
the Securities Act.
"Purchase Offer" has the meaning specified in Section 8.3(b).
"Quorum of the Board" has the meaning specified in Section
2.3(d).
"Registrable Securities" means the following: (a) all shares
of Common Stock issued or issuable now or hereafter owned of record or
beneficially by any Stockholder and (b) any shares of Capital Stock issued or
issuable by the Company in respect of any shares of Common Stock referred to in
the foregoing clause (a) by way of a stock dividend or stock split or in
connection with a combination or subdivision of shares, reclassification,
recapitalization, merger, consolidation or other reorganization of the Company.
As to any particular Registrable Securities that have been
issued, such securities shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of under such registration statement, (ii) they shall have been
distributed to the public pursuant to Rule 144 under the Exchange Act, (iii)
they shall have been otherwise transferred or disposed of, and new certificates
therefor not bearing a legend restricting further transfer shall have been
delivered by the Company, and subsequent transfer or disposition of them shall
not require their registration or qualification under the Securities Act or any
similar state law then in force, (iv) they shall have ceased to be outstanding,
or (v) with respect to the Registrable Securities held by any Person, when such
Registrable Securities, when aggregated with the Registrable Securities held by
such Person's Affiliates, constitute 1% or less of the shares of Common Stock at
the time outstanding.
"Registration Expenses" means any and all out-of-pocket
expenses
<PAGE> 6
incident to the Company's performance of or compliance with Section 10 hereof,
including, without limitation, all Commission, stock exchange and NASD
registration and filing fees, all fees and expenses of complying with securities
and blue sky laws (including the reasonable fees and disbursements of
underwriters' counsel in connection with blue sky qualifications and NASD
filings), all fees and expenses of the transfer agent and registrar for the
Registrable Securities, all printing expenses, the fees and disbursements of
counsel for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, but excluding underwriting discounts and
commissions and applicable transfer and documentary stamp taxes, if any, which
shall be borne by the seller of the securities in all cases.
"Restricted Period" means the three-year period commencing on
the Effective Date.
"Securities Act" means, as of any date, the Securities Act of
1933, as amended.
"Stockholder" means (i) the Buyer, (ii) NRG or (iii) each
Permitted Transferee of any such Person who becomes a party to or bound by the
provisions of this Agreement in accordance with the terms hereof.
"Subsidiary" means as to any Person a corporation of which
outstanding shares of Common Stock having the power to elect a majority of the
Board of Directors of such corporation are at the time owned, directly or
indirectly through one or more intermediaries, or both, by such Person.
"Total Equity Value of the Company" has the meaning specified
in Section 5.1(a).
"Transfer" has the meaning specified in Section 7.1.
"Transfer Notice" has the meaning specified in Section 8.1(a).
"Transfer Offer" has the meaning specified in Section 8.1(a).
"Transfer Offer Price Per Security" shall have the meaning
specified in Section 8.1(a).
"Valuation Notice" has the meaning specified in Section
8.4(b).
"Valuing Investment Bank" has the meaning specified in Section
8.4(b).
<PAGE> 7
"Wholly-Owned Subsidiary" means, with respect to any Person, any
Subsidiary of such Person all of the Capital Stock (and all options, warrants,
conversion rights and other rights to subscribe for, purchase or acquire such
Capital Stock) of which, other than directors' qualifying shares, are owned,
beneficially and of record, by such Person or one or more Wholly-Owned
Subsidiaries of such Person.
ARTICLE II
THE COMPANY
Section 2.1 Organizational Documents. Attached hereto as Exhibits A and
B, respectively, are the current certificate of incorporation and by-laws of the
Company. On the Contribution Date but prior to the making of the contributions
referred to in Section 5.1 hereof, the Buyer and the Company shall cause the
Amended and Restated Certificate of Incorporation of the Company in the form set
forth as Exhibit C hereto to be filed with the Secretary of State of the State
of Delaware, and the Amended and Restated By-Laws of the Company in the form set
forth as Exhibit D hereto shall be approved by the Board of Directors.
Section 2.2 Capitalization. Prior to the Contribution Date, the
capitalization of the Company shall be 1,000 shares of Common Stock, all of
which shall be held by the Buyer.
Section 2.3 Board of Directors. The following provisions shall apply
with respect to the Board of Directors of the Company commencing on the
Contribution Date:
(a) Conduct of Business. The parties hereto confirm
that it is their intention that the business and affairs of
the Company shall be managed by its Board of Directors in
the best interests of the Company.
(b) Board of Directors. The Board of Directors shall be
composed of no more than seven directors. Each Stockholder
agrees to vote its shares of Common Stock, whether at a
duly-convened meeting or by written consent, to elect no
more than seven directors, one of whom shall be nominated by
NRG (the "NRG Director") and the remainder of whom shall be
nominated by the Buyer (the "Buyer Directors").
(c) Removal; Vacancies. Any director may be removed
from the Board of Directors, with or without cause, only
upon the affirmative vote of the Stockholders and in
accordance with the terms of this Section 2.3(c). The NRG
Director shall not be removed, with or without cause,
without the prior written consent of NRG. NRG agrees to vote
all of its shares of Common Stock for the removal of a Buyer
Director upon the request of the Buyer, and agrees not to
vote any of its shares of Common Stock for the removal of
any Buyer Director under any other circumstance. The Buyer
agrees to vote all of its shares of Common Stock for the
removal of the NRG Director upon the request of NRG, and
agrees not to vote any of its shares of Common Stock of the
Company for the removal of the NRG Director under any other
circumstance. In the event that any Director is unwilling or
unable (by reason of death, resignation or
<PAGE> 8
otherwise) to serve as such or is removed in accordance with
the terms of this Section 2.3(c), then the Stockholders
shall promptly elect the successor or replacement to such
Director upon the nomination of the Stockholder which
appointed such Director.
(d) Quorum of the Board of Directors. A quorum for any
meeting of the Board of Directors shall be at least a
majority of the directors (a "Quorum of the Board");
provided, that at least 48 hours prior written notice of
such meeting is duly given to the NRG Director. No action
may be taken by the Board of Directors at any meeting unless
a Quorum of the Board is present at the time such action is
taken.
(e) Committees of the Board of Directors. The Board of
Directors shall not have any committees, unless approved by
the unanimous consent of all members of the Board of
Directors or unless the NRG Director is a member of such
committee.
Section 2.4 No Conflict with Agreement. Each Stockholder
shall vote its shares of Common Stock, and shall take all actions necessary, to
ensure that the Certificate of Incorporation and By-Laws do not, at any time,
conflict with the provisions of this Agreement. In the event of any conflict
between this Agreement and the Certificate of Incorporation or the By-Laws, the
provisions of this Agreement shall govern and the Company and the Stockholders
shall take action as is required to ensure that the Certificate of Incorporation
and the By-Laws do not conflict with this Agreement.
<PAGE> 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of NRG.
(a) Organization. NRG is a corporation duly
incorporated, validly existing and in good standing under
the laws of the State of Delaware and is duly licensed or
qualified to transact business as a foreign corporation and
is in good standing in each jurisdiction in which the nature
of the business transacted by it or the character of the
properties owned or leased by it requires such licensing or
qualification.
(b) Due Authorization; Non-Contravention. The execution
and delivery by NRG of this Agreement and the performance by
NRG of its obligations hereunder have been duly authorized
by all requisite corporate action and will not violate any
provision (x) of the Certificate of Incorporation of NRG, as
amended, or the By-laws of NRG, as amended, (y) of law, any
order of any court or other agency of government, or (z) of
any indenture, agreement or other instrument to which NRG or
any of its properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such indenture,
agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or
encumbrance of any nature whatsoever upon any of the
properties or assets of NRG, it being understood that, in
connection with the transactions contemplated by this
Agreement and the Merger Agreement, the parties will make
all requisite filings and otherwise comply with the
applicable requirements of (i) the HSR Act, (ii) the
Exchange Act and the Securities Act, (iii) state securities,
takeover or blue sky laws, and (iv) any other laws or
regulations.
(c) Binding Agreement. This Agreement has been duly
executed and delivered by NRG and, assuming the due
execution and delivery by the other parties hereto,
constitutes the legal, valid and binding obligation of NRG
enforceable in accordance with its terms.
(d) Ownership of Shares. NRG (or accounts controlled or
beneficially owned by NRG) is the lawful owner of 3,106,612
shares of common stock of Cogen, and has the power to vote
and dispose of such shares. To NRG's knowledge, such shares
of common stock are validly issued, fully paid and
nonassessable, with no personal liability attaching to the
ownership thereof. NRG has good title to its shares of
common stock, free and clear of any liens, adverse claims or
encumbrances whatsoever with respect to the ownership of or
the right to vote such shares. Such shares constitute all of
the shares of common stock of Cogen owned of record or
beneficially by NRG. NRG does not own any options to
purchase or rights to subscribe for or otherwise acquire any
securities of Cogen. Except as otherwise provided in this
<PAGE> 10
Agreement, NRG has the sole voting power and sole power to
issue instructions with respect to the matters set forth in
this Agreement, sole power of disposition, sole power to
demand appraisal rights and sole power to agree to all of
the matters set forth in this Agreement, in each case with
respect to all of the shares of common stock of Cogen owned
by NRG with no limitations, qualifications or restrictions
on such rights, subject to applicable securities laws and
the terms of this Agreement. The terms "beneficially own" or
"beneficial ownership" with respect to any securities shall
mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Exchange Act.
Section 3.2 Representations and Warranties of the Buyer.
(a) Organization. The Buyer is a corporation duly
incorporated, validly existing and in good standing under
the laws of the State of Delaware and is duly licensed or
qualified to transact business as a foreign corporation and
is in good standing in each jurisdiction in which the nature
of the business transacted by it or the character of the
properties owned or leased by it requires such licensing or
qualification.
(b) Due Authorization; Non Contravention. The execution
and delivery by the Buyer of this Agreement and the
performance by the Buyer of its obligations hereunder have
been duly authorized by all requisite corporate action and
will not violate any provision (x) of the Certificate of
Incorporation of the Buyer, as amended or the By-laws of the
Buyer, as amended, (y) of law, any order of any court or
other agency of government, or (z) of any indenture,
agreement or other instrument to which the Buyer or any of
its properties or assets is bound, or conflict with, result
in a breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement
or other instrument, or result in the creation or imposition
of any lien, charge, restriction, claim or encumbrance of
any nature whatsoever upon any of the properties or assets
of the Buyer, it being understood that, in connection with
the transactions contemplated by this Agreement and the
Merger Agreement, the parties will make all requisite
filings and otherwise comply with the applicable
requirements of (i) the HSR Act, (ii) the Exchange Act and
the Securities Act, (iii) state securities, takeover or blue
sky laws, and (iv) any other laws or regulations.
(c) Binding Agreement. This Agreement has been duly
executed and delivered by the Buyer and, assuming the due
execution and delivery by the other parties hereto,
constitutes the legal, valid and binding obligation of the
Buyer enforceable in accordance with its terms.
ARTICLE IV
COVENANTS
Section 4.1 Irrevocable Proxy. NRG hereby irrevocably appoints the
Buyer, or any
<PAGE> 11
designee of the Buyer, with full power of substitution the lawful agent,
attorney and proxy of NRG, from the date hereof until the Effective Date or
unless this Agreement is terminated pursuant to Article XI hereof, at any
meeting of the stockholders of Cogen, however called, or in connection with
any written consent of the stockholders of Cogen (including the right to
sign its name (as a stockholder) to any consent, certificate or other
document relating to Cogen that the law of the State of Delaware may permit
or require), to vote (or cause to be voted) the shares of common stock of
Cogen held of record or beneficially by NRG (i) in favor of the Merger, the
execution and delivery by Cogen of the Merger Agreement and any amendments
thereto (so long as any such amendment does not materially adversely affect
NRG) and the approval of the terms thereof, the amendment of the Cogen
certificate of incorporation as provided in the Merger Agreement, and each
of the other actions contemplated by this Agreement and the Merger
Agreement, and any amendments hereto or thereto, with NRG's consent
pursuant to the terms of this Agreement, and any actions required in
furtherance hereof and thereof, (ii) against any proposal for any
recapitalization, merger, sale of assets or other business combination
between Cogen and any Person (other than the Merger) or any other action or
agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of Cogen under the Merger
Agreement or this Agreement, (iii) against any of the following actions
(other than the transactions contemplated by the Merger Agreement): (1) any
extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving Cogen or any of its Subsidiaries; (2)
a sale, lease or transfer of a material amount of assets of Cogen or any of
its Subsidiaries or a reorganization, recapitalization, dissolution or
liquidation of Cogen of any of its Subsidiaries; (3) (a) any change in the
majority of Cogen's board of directors; (b) any material change in the
present capitalization of Cogen or any amendment to Cogen's certificate of
incorporation (other than such amendment contemplated in connection with
the Merger); or (c) any other change in Cogen's corporate structure or
business; or (4) any other action which, is intended, or could reasonably
be expected, to impede, interfere with, delay, postpone, discourage or
adversely affect the Merger or the transactions contemplated by this
Agreement or the contemplated economic benefits of any of the foregoing, or
impede, interfere with, delay, postpone, discourage or adversely affect the
Merger or the transactions contemplated by this Agreement. NRG further
agrees to cause its shares of common stock of Cogen that are outstanding
and owned by it beneficially to be voted in accordance with the foregoing.
NRG agrees that it shall not enter into any agreement, arrangement or
understanding with any Person the effect of which would be inconsistent
with or violate the provisions of this Section 4.1. NRG intends this proxy
to be irrevocable and coupled with an interest and will take such further
action or execute such other instruments as may be necessary to effectuate
the intent of this proxy and hereby revokes any proxy previously granted by
it with respect to its shares of common stock of Cogen. NRG shall not,
hereafter, unless and until this Agreement terminates pursuant to the terms
hereof, purport to vote (or execute a consent with respect to) its shares
of common stock of Cogen (other than through this irrevocable proxy) or
grant any other proxy or power of attorney with respect to any such shares,
deposit such shares into a voting trust or enter into any agreement (other
than this Agreement), arrangement or understanding with any Person,
directly or indirectly, to vote, grant any proxy or give instructions with
respect to the voting of such shares.
Section 4.2 Additional Covenants.
(a) Cooperation. Prior to the Effective Date, each of
the Stockholders shall use its reasonable efforts to take
all actions and to do all things necessary, proper or
advisable in order to permit the consummation of the Merger.
The Buyer shall not cause the Merger Agreement to be amended
or consent to any proposed amendment of the Merger
Agreement, or waive any of its rights thereunder, in any way
that would be materially adverse to NRG, without NRG's prior
written consent.
(b) Operation of Business. Each of the Stockholders
<PAGE> 12
acknowledges that the Company is formed solely for the
purpose of effectuating the transactions contemplated by
this Agreement and the Merger Agreement. The Company shall
not transact any business whatsoever during the period
commencing on the date hereof and continuing through the
Effective Date other than in furtherance of the transactions
contemplated by this Agreement or the Merger Agreement.
(c) Dividend Policy. Beginning on the fourth
anniversary of the Effective Date, the Stockholders will
cause the Company to adopt appropriate policies of declaring
dividends at the highest level permitted by applicable law,
consistent with prudent business practices and having due
regard for relevant business, taxation, working capital,
financial covenant and operational requirements.
(d) Securities Filings. Each of the Buyer, the Company
and NRG shall promptly provide to any other party any
information requested for the purpose of preparing any
filings required to be filed with the Commission pursuant to
Sections 13d and 13e of the Exchange Act, and the rules and
regulations promulgated thereunder, in connection with this
Agreement or the Merger Agreement and the transactions
contemplated hereby and thereby.
(e) No Solicitation. Neither NRG nor any officer,
director, employee, representative or agent of NRG shall,
directly or indirectly, solicit, encourage, facilitate,
participate in or initiate any discussions or negotiations
regarding, or furnish to any Person any information with
respect to, or take any other action to facilitate any
inquiries or the making of any submission or proposal by any
Person (other than the Buyer) which constitutes, or may
reasonably be expected to lead to, (a) any sale of shares of
common stock of Cogen owned by NRG or (b) any Takeover
Proposal or Superior Proposal (as such terms are defined in
the Merger Agreement) or any agreement with respect thereto.
If NRG, or any officer, director, employee, representative
or agent of NRG, receives an inquiry or proposal with
respect to the sale of shares of common stock of Cogen, any
Takeover Proposal or any inquiry with respect to or which
could lead to any sale of shares of its common stock of
Cogen or any Takeover Proposal, then NRG shall advise the
Buyer orally (within one business day) and in writing (as
promptly as practicable) of the terms and conditions, if
any, of such inquiry or proposal and the identity of the
Person making it. NRG shall, and shall cause its officers,
directors, employees, representatives and agents to,
immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing.
This Section 4.2(e) will bind or apply to any Person except
in his or her capacity as a director of Cogen (or as an
officer of Cogen acting at the direction of Cogen's board of
directors) under applicable law and fiduciary duties, in
which case his or her actions shall be restricted solely by
the terms of the Merger Agreement.
(f) Restrictions on Transfer, Proxies and
NonInterference. Prior to the Effective Date, NRG hereby
agrees, except as contemplated hereby, not to (i) acquire,
sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the
acquisition, sale, transfer, pledge, encumbrance, assignment
or
<PAGE> 13
other disposition of, any shares of common stock of Cogen,
(ii) grant any proxies, deposit any of its shares of common
stock of Cogen into a voting trust or enter into a voting
agreement with respect to any of its shares of common stock
of Cogen, or (iii) take any action that would make any
representation or warranty of NRG contained herein untrue or
incorrect or have the effect of preventing or disabling NRG
from performing its obligations under this Agreement. NRG
agrees to notify the Buyer promptly and to provide all
details requested by the Buyer if NRG shall be approached or
solicited, directly or indirectly, by any Person with
respect to any of the foregoing.
(g) Stop Transfer Order. In furtherance of this
Agreement, concurrently with the execution of this
Agreement, NRG shall and hereby does authorize Cogen's
counsel to notify Cogen's transfer agent that there is a
stop transfer order with respect to all of NRG's shares of
common stock of Cogen (and that this Agreement places limits
on the voting and transfer of such shares).
(h) Cooperation on Regulatory Matters. If so requested
by the Buyer, promptly after the date hereof, NRG will use
its reasonable best efforts to cause it and Cogen (if
required) to make all filings which are required under the
HSR Act and applicable requirements and to seek all
regulatory approvals required in connection with the
transactions contemplated hereby and by the Merger
Agreement. The parties shall furnish to each other such
necessary information and reasonable assistance as may be
requested in connection with the preparation of filings and
submissions to any governmental agency, including, without
limitation, filings under the provisions of the HSR Act. NRG
shall also use its reasonable efforts to cause Cogen to
supply the Buyer with copies of all correspondence, filings
or communications (or memoranda setting forth the substance
thereof) between Cogen and its representatives and the
Federal Trade Commission, the Department of Justice and any
other governmental agency or authority and members of their
respective staffs with respect to this Agreement and the
transactions contemplated hereby.
ARTICLE V
ADDITIONAL CONTRIBUTIONS
<PAGE> 14
Section 5.1. Additional Capital Contributions. Immediately prior to the
Effective Date, but after an affirmative vote of Cogen's stockholders approving
the Merger Agreement has been duly taken and recorded, the Buyer and NRG shall
make contributions of capital to the Company as set forth below, it being
understood that all such contributions shall be made simultaneously (the date of
such contributions being referred to herein as the "Contribution Date"):
(a) Obligations of NRG. NRG shall contribute to the
Company that number of shares of common stock of Cogen that
have, in the aggregate, a value (based on a $25.00 per share
value) equal to (i) 20% of the Total Equity Value of the
Company, as hereinafter defined, less (ii) the Adjustment
Amount, as hereinafter defined, in exchange for such number
of shares of Common Stock as would result in NRG holding 20%
of the issued and outstanding shares of Common Stock. "Total
Equity Value of the Company" means the sum of (i) an amount
determined by multiplying (A) the total number of issued and
outstanding shares of common stock of Cogen by (B) $25.00
(the "Merger Price") and (ii) the aggregate amount of the
excess of the Merger Price over the exercise price of each
of the outstanding options set forth on Schedule 1 hereto
which are currently exercisable or will become exercisable
upon consummation of the Transactions (as defined in the
Merger Agreement). "Adjustment Amount" means an amount
determined by multiplying (i) the total number of shares
underlying the Cancelled Options, as hereinafter defined, by
(ii) the excess of the Merger Price over the exercise price
for each Cancelled Option. "Cancelled Options" means those
options owned by David H. Peterson, Ronald J. Will and Craig
A. Mataczynski listed on Schedule 1 to this Agreement,
which, on or before the Merger Date, have been cancelled for
no consideration and a termination agreement as contemplated
in the Merger Agreement has been signed and provided to the
Buyer. NRG represents that if such contribution were made on
the date hereof and assuming that Cancelled Options includes
all options held by David H. Peterson, Ronald J. Will and
Craig A. Mataczynski, it would be obligated to contribute to
the Company 1,394,973 shares of common stock of Cogen to the
Company. NRG may, at its sole option, contribute to the
Company additional shares of common stock of Cogen; provided
that it shall own 20% of the Common Stock and shall receive
no additional consideration in respect of any additional
capital contribution of shares of common stock of Cogen to
the Company.
(b) Obligations of the Buyer. The Buyer shall
contribute to the Company cash in an amount equal to 80% of
the Total Equity Value of the Company in exchange for such
number of shares of Common Stock as would result in the
Buyer holding 80% of the issued and outstanding shares of
Common Stock. The Buyer represents that if such contribution
were made on the date hereof, it would be obligated to
contribute $146,539,730, as appropriately adjusted to the
extent of any contribution by NRG under the last sentence of
Section 5.1(a) above. The requisite cash contribution by the
Buyer shall be made in immediately available funds.
Additionally, the Buyer will contribute to the Company, in
the form a loan pursuant to a Promissory Note in the form
attached hereto as Exhibit E, in an original principal
amount not less than (i) the amount necessary to repay in
full the debt of Cogen listed on Schedule 2 hereto, (ii) the
amount necessary to
<PAGE> 15
satisfy all other obligations of the Company under this
Agreement and the Merger Agreement or any other document
related hereto or thereto, and (iii) transaction costs of
the Company associated with the transactions contemplated by
this Agreement and the Merger Agreement. The Buyer agrees
that it shall not consummate the Merger without either (i)
causing the outstanding indebtedness of Cogen's Subsidiaries
to be refinanced on the substantially the same terms as the
Promissory Note in the form attached hereto as Exhibit E;
provided, however, that NRG shall have the option to
participate in any such refinancing pro rata according to
its ownership of the Company or (ii) obtaining consent of
the lenders of Cogen's Subsidiaries to the transactions
contemplated by the Merger Agreement or this Agreement.
Section 5.2 NRG's Obligation to Contribute Shares. In no event
shall NRG be obligated to contribute its shares of common stock of Cogen
pursuant to Section 5.1(a) unless (i) Cogen's stockholders have duly approved
the Merger Agreement and (ii) all of the conditions to closing set forth in the
Merger Agreement have been satisfied or waived.
Section 5.3 The Buyer's Obligation to Contribute Cash. In no
event shall the Buyer be obligated to contribute cash pursuant to Section 5.1(b)
above unless all of the conditions to closing set forth in the Merger Agreement
have been satisfied or waived.
ARTICLE VI
MANAGEMENT OF THE COMPANY FOLLOWING THE MERGER
Section 6.1 Conduct of Business. (a) Notwithstanding the fact
that no vote may be required or that a lesser percentage vote may be specified
by law, by the Certificate of Incorporation or the By-Laws, each as amended, by
any agreement with any national securities exchange or otherwise, except as
hereinafter provided in this paragraph (a) or otherwise in this Agreement, as of
the date hereof, neither the Company nor its Subsidiaries shall take or permit
any of the following actions to be taken without the specific prior written
consent of NRG (which, at the direction of NRG, may be effectuated by the NRG
Director), except as otherwise contemplated by Article VIII or in any other
provision of this Agreement:
(i) The issuance, repurchase, exchange or
redemption of any Shares of any Capital Stock (including
any Common Stock), or the grant of the right or option
to acquire any shares of such Capital Stock, of the
Company.
(ii) Any sale or disposition of any of the
Company's Subsidiaries and, other than in the ordinary
course of business, the sale or disposition of property
or assets of the Company or its Subsidiaries in excess
of 20% of the fair market value of the total assets of
the Company.
(iii) Any amendment, modification or
supplement to, or repeal of, or adoption of any policy
or procedures inconsistent with, any provision of the
Certificate of Incorporation or By-Laws; provided, that,
the Company may amend the Certificate of Incorporation
to effect a change of name or a change of registered
agent for service of process
<PAGE> 16
without NRG's prior written consent.
(iv) Any merger, consolidation or other
business combination of the Company with any other
Person except for any merger or consolidation involving
any direct or indirect Wholly-Owned Subsidiary of the
Company and except for the Merger.
(v) The authorization or entering into by
the Company or any of its Subsidiaries of any contract,
agreement, transaction or other arrangement or any
modification, waiver or amendment to any of the
foregoing, with any of the Buyer or its Affiliates with
a value (or obligation on the part of the Company or
such Subsidiary) in excess of $2,000,000; provided that
the Company or its Subsidiaries may enter into (x)
contracts, agreements, transactions or other
arrangements or modifications, waivers or amendments to
the foregoing with any of the Buyer or its Affiliates
with a value (or obligation on the part of the Company
or such Subsidiary) in excess of $2,000,000 if the terms
and provisions thereof are no less favorable to the
Company or such Subsidiary than those that would be
available in a comparable arms-length transaction and
the Buyer shall have certified the same to the Board of
Directors prior to the entry into or execution of the
same, and (y) the Merger Agreement and any of the
transactions or documents contemplated by the Merger
Agreement.
(vi) The appointment or renewal of the
Company's independent auditor if such auditor is not the
Buyer's independent auditor, or any change in accounting
periods or the accounting principles under which the
Company's financial statements are presented except as
may be required by GAAP or as are consistent with
accounting principles used by the Buyer as of the date
of this Agreement.
(vii) (a) the dissolution of the Company or
any of its Subsidiaries, or the commencing of the
process of dissolution; (b) the adoption of a plan of
liquidation of the Company or any of its Subsidiaries;
and (c) any action by the Company or any of its
Subsidiaries to commence any suit, case, proceeding or
other action (1) under the Bankruptcy Code or any other
existing or future law of any jurisdiction relating to
bankruptcy, insolvency, reorganization or relief of
debtors seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it bankrupt or
insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it, or (2)
seeking appointment of a receiver, trustee, custodian,
or other similar official for it or for all or any
substantial part of its assets or making a general
assignment
<PAGE> 17
for the benefit of its creditors.
(viii) The issuance of any liquidating
distributions to the Stockholders.
(b) The Stockholders shall take no action that would have
the effect of causing the Company to contravene any provision of
this Section 6.1.
(c) Notwithstanding any provision in Section 6.1(a)(v), the
parties agree that the Buyer and/or its designated Affiliates
shall be permitted to enter into (i) Operating and Maintenance
Agreements with the Company or its Subsidiaries in substantially
the respective forms of such agreements existing on the date
hereof between NRG and its Affiliates, on one hand, and Cogen's
Subsidiaries, on the other hand, (ii) a Management
Services Agreement, an Operating and Maintenance Agreement for
the Pryor project and Energy Services Agreements in substantially
the respective forms agreed to by the parties on the date hereof,
and (iii) a Tax Sharing Agreement in substantially the form
agreed to by the parties on the date hereof.
ARTICLE VII
TRANSFERS OF CAPITAL STOCK
Section 7.1 Restrictions on Transfer. Each Stockholder agrees that
during the Restricted Period, such Stockholder will not offer, sell, transfer,
assign or otherwise dispose of (or make any exchange, gift, assignment or pledge
of or impose any lien or encumbrance on) (collectively, for purposes of Sections
7 and 8 hereof only, a "Transfer") any of its shares of Common Stock, or
options, warrants or rights to subscribe for or purchase shares of Common Stock,
without the prior written consent of all the Stockholders, which consent shall
not be unreasonably withheld or delayed. For purposes of this Section 7.1, a
merger or consolidation or other business combination or any change in control
of the Buyer or the ultimate parent company of NRG will not be deemed to be a
Transfer.
Section 7.2 Exceptions to Restrictions. The provisions of Section 7.1
and Section 8 shall not apply to any of the following transfers:
(a) From any Stockholder to any Wholly-Owned Subsidiary of
any Stockholder or any Person which owns 100% of the Capital
Stock of any Stockholder (each a "Permitted Transferee"),
provided that each such Permitted Transferee shall execute a
counterpart of and become a party to this Agreement and shall
agree in a writing in form and substance satisfactory to the
Company to be bound and becomes bound by the terms of this
Agreement.
(b) Pursuant to a permitted merger or consolidation
involving the Company or any of its Subsidiaries.
Section 7.3 Applicability. The provisions of this Agreement shall be
applied to the shares of Common Stock acquired by any Permitted Transferee of a
Stockholder in the same manner and to the same extent as such provisions were
applicable to such Common Stock in the hands of such Stockholder.
Section 7.4 Endorsement of Certificates.
<PAGE> 18
(a) Upon the execution of this Agreement, in addition
to any other legend that the Company may deem advisable
under the Securities Act and certain state securities laws
or required pursuant to the Company's Certificate of
Incorporation or By-Laws, all certificates representing
issued and outstanding shares of Common Stock that are
subject to any of the provisions of this Agreement shall be
endorsed as follows:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO,
AND ARE TRANSFERABLE ONLY UPON COMPLIANCE WITH, THE
PROVISIONS OF A STOCKHOLDERS AGREEMENT DATED AS OF AUGUST
26, 1999, AMONG THE COMPANY AND ITS STOCKHOLDERS. A COPY OF
THE ABOVE-REFERENCED AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY. NO REGISTRATION OF TRANSFER OF SUCH
SECURITIES WILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS
AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT,
OR AN EXEMPTION FROM REGISTRATION, UNDER SAID ACT.
(b) Except as otherwise expressly provided in this
Agreement, all certificates representing shares of Common
Stock hereafter issued to or acquired by any of the
Stockholders or their successors or assigns (including,
without limitation, all certificates representing shares of
Common Stock hereafter issued upon conversion of shares of
Common Stock of any other class) shall bear the legends set
forth above, and the shares of stock represented by such
certificates shall be subject to the applicable provisions
of this Agreement. The obligations of each party hereto
shall be binding upon each transferee to whom shares of
Common Stock are Transferred by any party hereto, whether or
not such Transfer is permitted under the terms of this
Agreement. Prior to consummation of any Transfer, such
Stockholder shall cause the Transferee to execute an
agreement in form and substance reasonably satisfactory to
the other Stockholders hereto, providing that such
Transferee shall fully comply with the terms of this
Agreement. Prompt notice shall be given to the Company and
each Stockholder by the transferor of any Transfer (whether
or not to a Permitted Transferee) of any Common Stock.
Section 7.5 Improper Transfer. Any attempt to Transfer or encumber any
shares of Common Stock other than in accordance with the terms of this Agreement
shall be null and void and neither the Company nor any transfer agent of such
securities shall give any effect to such attempted Transfer or encumbrance in
its stock records.
ARTICLE VIII
RIGHTS OF FIRST REFUSAL; DRAG-ALONG RIGHTS;
TAG-ALONG RIGHTS; PURCHASE OPTION
<PAGE> 19
Section 8.1. Right of First Refusal.
(a) Except for (i) Transfers to a Permitted Transferee,
and (ii) transactions subject to Sections 8.2, 8.3, and 8.4,
if at any time after the Restricted Period NRG receives a
bona fide offer which NRG desires to accept (a "Transfer
Offer") to sell any shares of Common Stock (or options,
warrants or rights to subscribe for or purchase shares of
Common Stock) owned by it, then NRG shall cause the Transfer
Offer to be reduced to writing and shall deliver written
notice of such Transfer Offer (a "Transfer Notice"),
accompanied by a copy of such Transfer Offer to the Buyer
and the Company, setting forth the identity of the offeror,
the number and class of shares of Common Stock (or options,
warrants or rights) proposed to be transferred (the "Offered
Securities"), the price per security contained in the
Transfer Offer (the "Transfer Offer Price Per Security"),
and all other terms applicable thereto. The Transfer Notice
shall also contain an irrevocable offer to sell the Offered
Securities to the Buyer at a price equal to the Transfer
Offer Price Per Security and upon substantially the same
terms as contained in the Transfer Offer. In the event that
the form of consideration specified in the Transfer Offer is
other than cash, NRG shall use its best efforts to cause the
consideration of such Transfer Offer to be reduced to cash.
In the event that NRG is unsuccessful in obtaining a
Transfer Offer with cash consideration, NRG shall not accept
such Transfer Offer.
(i) Upon receipt of the Transfer
Notice, the Buyer shall then have the right
to accept such offer at the Transfer Offer
Price Per Security and on the other terms
specified in the Transfer Offer with respect
to all, but not less than all, of the
Offered Securities. The rights of the Buyer
pursuant to this clause (ii) shall be
exercisable by the delivery of notice to NRG
(the "Notice of Exercise") (a copy of which
shall also be delivered to the Company)
within 30 business days from the date of
delivery of the Transfer Notice, which
Notice of Exercise shall be deemed an
irrevocable acceptance of the Transfer
Offer.
(ii) In the event that the Buyer
exercises its rights to purchase all the
Offered Securities in accordance with clause
(i) above, then NRG must sell such Offered
Securities to the Buyer, at the Transfer
Offer Price Per Security and on the
<PAGE> 20
other terms specified in the Transfer Offer.
(b) If all notices required to be given pursuant to
Section 8.1(a) have been duly given and the Buyer does not
purchase the Offered Securities pursuant to the provisions
hereof, then NRG shall have the right, subject to compliance
by NRG with the provisions of Section 7.4(b) hereof, from
the date which is the earlier of (i) the expiration of the
option period pursuant to Section 8.1(a) or (ii) the date on
which NRG receives notice from the Buyer that it will not
exercise the option granted pursuant to Section 8.1(a), to
sell to such Person which originally made the Transfer Offer
the Offered Securities at a price per Offered Security equal
to or greater than 100% of the Transfer Offer Price Per
Security and on the other terms specified in the Transfer
Offer.
(c) The consummation of any purchase and sale pursuant
to Section 8.1(a) shall take place on such date, not later
than 60 calendar days after the expiration of the option
period pursuant to Section 8.1(a), as the purchaser shall
select. Upon the consummation of any such purchase and sale,
NRG shall deliver certificates representing the Offered
Securities sold duly endorsed, or accompanied by written
instruments of transfer in form satisfactory to the
purchaser duly executed by NRG free and clear of any liens,
against delivery of the Transfer Offer Price Per Security
for each of the Offered Securities purchased by federal
funds wired to such bank or financial institution specified
in writing by NRG. If the purchase and sale is not
consummated within the 60 calendar day period referred to in
this subsection (c), then the provisions of Section 8.1
shall again apply to such shares.
Section 8.2. Drag-Along.
(a) Subject to any approval or other rights in this
Agreement, if after the expiration of the Restricted Period,
the Buyer sells all or substantially all the Fully Diluted
Common Stock owned by it (whether pursuant to a sale, merger
or other consolidation, a "Company Sale") in a bona fide
arm's-length transaction to a third party that is not an
Affiliate of the Buyer or of the Company (an "Independent
Third Party"), then the Buyer shall have the right, subject
to all the provisions of this Section 8.2 ("Drag-Along
Right"), to require NRG to (i) if such Company Sale is
structured as a sale of stock, sell, transfer and deliver or
cause to be sold, transferred and delivered to such
Independent Third Party all shares of Fully Diluted Common
Stock, owned or held by it or (ii) if such Company Sale
requires the consent or approval of the Company's
stockholders, vote NRG's shares of Common Stock in favor
thereof, and, in any such event, except to the extent
otherwise provided in subsection (c) of this Section 8.2,
NRG shall agree to and shall be bound by the same terms,
provisions and conditions in respect of the Company Sale as
are applicable to the Buyer. The provisions of Section 8.1
shall not apply to any transactions to which this Section
8.2
<PAGE> 21
applies.
(b) If the Buyer desires to exercise its Drag-Along Rights,
it shall give written notice to the other Stockholder
("Drag-Along Notice") of the Company Sale, setting forth the name
and address of the transferee, the date on which such transaction
is proposed to be consummated (which shall be not less than 30
days after the date such Drag-Along Notice is given), and the
proposed amount of cash consideration and terms and conditions of
payment offered by such transferee.
(c) The obligations of the Stockholders in respect of a
Company Sale under this Section 8.2 are subject to the
satisfaction of the following conditions: (i) subject to (v)
below, upon the consummation of the Company Sale, consideration
of equivalent value in cash or Cash Equivalents realized upon
such Company Sale shall be paid or distributed in respect of each
share of Common Stock then issued and outstanding; (ii) each
holder of then currently exercisable rights to acquire shares of
Common Stock will be given a reasonable opportunity to exercise
such rights prior to the consummation of the Company Sale and
thereby to participate in such sale as a holder of such Common
Stock; (iii) there shall be no liability of NRG for
indemnification in respect of any matters arising pursuant to or
in connection with the Company Sale, other than with respect to
NRG's ownership of its shares of Common Stock; (iv) NRG shall not
be required to make general representations or warranties
regarding the financial condition, business, assets or affairs of
the Company and its Subsidiaries; (v) the valuation of NRG's
shares of Common Stock shall take into account not only the
consideration received by the Buyer for its Common Stock but also
any consideration received by the Buyer or its for the sale,
transfer or disposition of any ownership or other interests,
contract rights, permits or any other asset of the Buyer or its
Affiliates with respect to its investment in the Company related
to or contemplated by the sale of the Buyer's Common Stock; and
(vi) NRG shall be given a reasonable opportunity to review and
provide comments to the agreements or documents relating to the
Company Sale.
<PAGE> 22
Section 8.3 Tag-Along Rights.
(a) Notwithstanding anything in this Agreement to the
contrary, except in the case of (i) transfers to a Permitted
Transferee referred to in Section 7.2 and (ii) transactions
subject to Section 8.2, the Buyer shall not sell, dispose of
or otherwise transfer any shares of Common Stock, options,
warrants or rights to subscribe for or purchase shares of
Common Stock, unless, prior to the consummation thereof, NRG
shall have been afforded the opportunity to join in such sale
with respect to all of the shares of Common Stock owned by
NRG, as hereinafter provided in this Section 8.3.
(b) Prior to consummation of any proposed sale,
disposition or transfer of shares of Common Stock (or options,
warrants or rights) described in Section 8.3(a), the Buyer
(the "Disposing Stockholder") shall cause the person or group
that proposes to acquire such shares (the "Proposed
Purchaser") to offer NRG in writing ("Purchase Offer") the
right to sell all of the shares of Common Stock (or options,
warrants or rights) owned by NRG. The Purchase Offer shall be
accompanied by a copy of the Proposed Purchaser's final offer
to the Disposing Stockholder. If the Purchase Offer is
accepted by NRG, then the number of shares of Common Stock (or
options, warrants or rights) to be sold to the Proposed
Purchaser by the Disposing Stockholder shall be reduced by the
aggregate number of shares of Common Stock (or options,
warrants or rights) to be purchased by the Proposed Purchaser
from NRG pursuant thereto. Such purchase shall be made on the
same terms and conditions as the Proposed Purchaser shall have
offered to purchase shares of Common Stock to be sold by the
Disposing Stockholder (net, in the case of any options,
warrants or rights, of any amounts required to be paid by the
holder upon exercise thereof); provided, however, that the
valuation of NRG's Common Stock shall take into account not
only the consideration received by the Buyer for its Common
Stock but also only consideration received by the Buyer or its
Affiliates for the sale, transfer or disposition of any
ownership or other interests, contract rights, permits or any
other asset of the Buyer or its Affiliates with respect to its
investment in the Company related to or contemplated by the
sale of the Buyer's Common Stock. NRG shall have 30 days from
the date of receipt of the Purchase Offer during which to
accept such Purchase Offer, and the closing of such purchase
shall occur within 30 days after such acceptance or at such
other time as NRG and the Proposed Purchaser may agree.
<PAGE> 23
Section 8.4 Purchase Option.
(a) The Buyer shall, for a period of 365 days
commencing on the day after the expiration of the
Restricted Period (the "Option Period"), have the option
to acquire from NRG all, but not less than all, of the
shares of Common Stock held by NRG (the "Option").
(b) In the event that the Buyer determines that it
may exercise the Option, it shall, at any time during
the Option Period or within the 60 days prior to the
commencement of the Option Period, give notice to NRG
that it intends to obtain a fair market value
determination pursuant to this Section 8.4 (the
"Valuation Notice"). The fair market value of the
Company shall be determined by one nationally recognized
and independent investment bank mutually acceptable to
NRG and the Buyer (the "Valuing Investment Bank"), it
being understood that for the purpose of this Section
8.4 an independent investment bank shall be one which is
neither affiliated with nor employed as the primary
investment banking firm of NRG, the Buyer or the
Company. The Buyer shall include in its Valuation Notice
a list of at least three (3) investment banks acceptable
to the Buyer as the Valuing Investment Bank and
satisfying the criteria set forth in the preceding
sentence. Upon receipt of such list, NRG shall promptly
notify the Buyer which of such investment banks, if any,
is acceptable to it. If NRG rejects each such investment
bank as unacceptable to it, NRG shall promptly notify
the Buyer of the identity of at least three investment
banks acceptable to NRG and satisfying the criteria set
forth in the second sentence of this paragraph. Upon
receipt of such notice, the Buyer shall promptly notify
NRG which of such investment banks, if any, is
acceptable to it. NRG and the Buyer shall each act with
such promptness and diligence that the procedures
described in the foregoing sentences will result in the
selection of a Valuing Investment Bank in as short a
period of time as practicable. NRG and the Buyer shall
each be responsible for 50% of the total fees and
expenses charged by the Valuing Investment Bank;
provided, however, in the event that the Buyer does not
exercise the Option, the Buyer shall be responsible for
100% percent of the total fees and expenses charged by
the Valuing Investment Bank.
(c) The Valuing Investment Bank may use, among
other methodologies, discounted cash flow, comparable
transaction and traded company analyses to determine the
fair market value of the Company. In determining the
fair market value of the Company, the Valuing Investment
Bank shall evaluate the Company (i) without any
consideration of the
<PAGE> 24
management fee to be paid to the Buyer under Section
9.3, (ii) without factoring in any discount arising from
NRG's minority ownership position and limited
representation on the Company's Board of Directors, and
(iii) without any consideration of any discount
applicable to an initial Public Offering. Moreover, to
the extent that, as of the time of the valuation
determination, financing for the Company or its
Subsidiaries or their generation assets is available
under terms more favorable than those terms in place,
the more favorable financing terms shall be utilized by
the Valuing Investment Bank in its fair market value
determination; provided, however, that to the extent the
financing for any of the Subsidiaries at the time of
such valuation is on substantially the same material
economic terms as the financing for such Subsidiary on
the date hereof, such financing terms shall be utilized
by the Valuing Investment Bank in its fair market value
determination.
(d) In the event that the Buyer wishes to exercise
the Option, the aggregate price payable to NRG for its
Common Stock (the "Option Price") shall be equal to
NRG's Pro Rata Portion of the fair market value of the
Company (on a consolidated basis) as determined by the
Valuing Investment Bank pursuant to Section 8.4(c)
above. The Buyer shall exercise the Option by providing
written notice to NRG prior to the expiration of the
Option Period, which notice shall be irrevocable.
Section 8.5 Waiver. For purposes of this Article VIII, any
Person who has failed to give notice of the election of an option hereunder
within the specified time period will be deemed to have waived its rights with
respect thereto on the day immediately following the last day of such period.
ARTICLE IX
CERTAIN AGREEMENTS
Section 9.1. Access to Information Regarding Subsidiaries. The
Buyer and the Company shall cause the NRG Director to be provided with all
material information regarding the Company's Subsidiaries, including without
limitation their respective business, operations, property, assets, condition
(financial or otherwise) or prospects thereof, and such other information
regarding the Company's Subsidiaries as the NRG Director, may reasonably
request. NRG shall at all times preserve in strict confidence all information of
a proprietary or confidential nature relating to the business of the Company and
which is acquired by virtue of this Agreement and shall use all such information
solely in connection with the monitoring of NRG's investment in the Company;
provided, that NRG shall be entitled to disclose any such information in
confidence to any of its professional advisors or publicly disclose such
information to the extent required by law, regulation or Commission filing.
Section 9.2. Financial Statements; Inspections.
(a) The Company and the Buyer shall provide NRG
with (i) the unaudited consolidated and consolidating
quarterly financial statements of the
<PAGE> 25
Company and each of its Subsidiaries for each calendar
quarter within 35 days of the end of such calendar
quarter, and (ii) the audited consolidated and
consolidating financial statements of the Company and
each of its Subsidiaries for each calendar year within
70 days after the end of each calendar year.
(b) NRG's independent auditors shall, for purposes
of certifying the financial statements of NRG and its
direct and indirect parents, have the right, upon
reasonable prior notice to the Company, to visit and
inspect the properties of the Company and its
Subsidiaries and to examine and copy (at NRG's own
expense) their books of record and accounts, and to
discuss their affairs, finances, and accounts with their
officers and their current and prior independent public
accountants, all at such times (during normal business
hours) as NRG may reasonably request. The foregoing
rights are in addition, and are not intended to limit,
any rights that NRG may have under the law of the State
of Delaware, including Sections 219 and 220 of the
Delaware General Corporation Law.
Section 9.3 Management Fee.
(a) The Company shall pay to the Buyer a
management fee (the "Management Fee") determined in
accordance with the provisions of this Section 9.3(a).
The Management Fee shall be determined in arrears
following each calendar year and shall be equal to the
amount, if any, by which Actual Adjusted Net Income for
the immediately preceding calendar year exceeds the
Projected Adjusted Net Income for such calendar year. No
Management Fee shall be payable with respect to the year
ending December 31, 1999.
"Actual Adjusted Net Income" shall mean, for any
period, the consolidated net income of the Company for
such period determined in accordance with GAAP
consistently applied, except that such amount shall be
(i) increased by the taxes that were deducted from
operating income to arrive at net income for such
period, (ii) adjusted to exclude any accrual made for
estimated management fees for such period, and (iii)
calculated without regard to any extraordinary items of
income or expense in such period or other transactions
not in the ordinary course of the Company's business in
such period.
"Projected Adjusted Net Income" shall mean, for
any period, the projected pre-tax net income for such
period set forth on Schedule 3 hereto, as amended with
respect to the line items indicated on Schedule 3, to
take account of the adjusted book basis amount and
depreciation amount for the applicable period set forth
on a schedule approved by the parties as soon as
reasonably practicable following the Effective Date.
Projected Adjusted Net Income with respect to the year
ending December 31, 2000 shall be pro-rated to the
extent the Effective Date occurs after December 31, 1999
(such pro-ration to be calculated on the basis of the
number of days after the Effective Date remaining in the
year divided by 365).
(b) Notwithstanding the foregoing, the obligations
of the Company to pay the Management Fee shall be null
and void and shall no longer apply to any calendar year
after the fourth anniversary of the Effective Date.
ARTICLE X
<PAGE> 26
REGISTRATION RIGHTS
Section 10.1 Piggyback Registrations.
(a) In no event shall the Company register any of
its equity securities during the Restricted Period. If,
at any time after the fourth anniversary of the
Effective Date, the Company at any time proposes to
register any of its equity securities under the
Securities Act, whether or not for sale for its own
account, on a form and in a manner that would permit
registration of Registrable Securities for sale to the
public under the Securities Act, it will give written
notice to all the holders of Registrable Securities
promptly of its intention to do so, describing such
securities and specifying the form and manner and the
other relevant facts involved in such proposed
registration, including, without limitation, (x) the
intended method of disposition of the securities
offered, including whether or not such registration will
be effected through an underwriter in an underwritten
offering or on a "best efforts" basis, and, in any case,
the identity of the managing underwriter, if any, and
(y) the price at which the Registrable Securities are
reasonably expected to be sold. Upon the written request
of any holder of Registrable Securities delivered to the
Company within 30 calendar days after the receipt of any
such notice
<PAGE> 27
(which request shall specify the Registrable Securities
intended to be disposed of by such holder), the Company
will effect the registration under the Securities Act of
all the Registrable Securities that the Company has been
so requested to register; provided, however, that:
(i) if, at any time after
giving such written notice of its
intention to register any securities
and prior to the effective date of
the registration statement filed in
connection with such registration,
the Company shall reasonably
determine not to register such
securities, the Company may, at its
election, give written notice of
such determination to each holder of
Registrable Securities who shall
have made a request for registration
as hereinabove provided and
thereupon the Company shall be
relieved of its obligation to
register any Registrable Securities
in connection with such registration
(but not from its obligation to pay
the Registration Expenses in
connection therewith), without
prejudice, however, to the right of
any Person to request that such
registration be effected as a
registration under this Section
10.1; and
(ii) if such registration
involves an Underwritten Offering,
all holders of Registrable
Securities requesting to be included
in the Company's registration must
sell their Registrable Securities to
the underwriters selected by the
Company on the same terms and
conditions as apply to the Company.
(b) The Company shall not be obligated to effect
any registration of Registrable Securities under this
Section 10.1 incidental to the registration of any of
its securities in connection with mergers, acquisitions,
exchange offers, dividend reinvestment plans or stock
option or other employee benefit plans.
(c) If a registration pursuant to this Section
10.1 involves an underwritten offering and the managing
underwriter advises the issuer that, in its opinion, the
number of securities proposed to be included in such
registration should be limited due to market conditions,
the Company will so advise each holder of Registrable
Securities that has requested registration pursuant to
Section 10.1(a), and shares shall be excluded from such
offering in the following order until such limitation
has been met: First, the Registrable Securities
requested to be included in such offering by a
Stockholder other than a NRG or any Permitted Transferee
of NRG
<PAGE> 28
shall be excluded pro rata, based on the respective
number of Registrable Securities as to which
registration has been so requested by such Stockholders,
until all such Registrable Securities shall have been so
excluded; second, the Registrable Securities requested
to be included in such offering by NRG or any Permitted
Transferee of NRG shall be excluded pro rata, based on
the respective number of Registrable Securities as to
which registration has been so requested by NRG or any
Permitted Transferee of NRG, until all such Registrable
Securities shall have been so excluded; and thereafter,
the securities requested to be registered by the Company
shall be excluded.
(d) In connection with any underwritten offering
with respect to which holders of Registrable Securities
shall have requested registration pursuant to this
Section 10.1, the Company shall have the right to select
the managing underwriter with respect to the offering;
provided that such managing underwriter shall be a
nationally recognized investment banking firm.
(e) The Company will pay all Registration Expenses
incurred in connection with each of the registrations of
Registrable Securities effected by it pursuant to this
Section 10.1.
ARTICLE XI
TERMINATION
Section 11.1. Termination.
(a) The provisions of this Agreement shall
terminate on the date on which any of the following
events first occurs: (i) an initial Public Offering or,
(ii) the Merger Agreement is terminated in accordance
with its terms.
(b) Notwithstanding the foregoing, this Agreement
shall in any event terminate with respect to any
Stockholder when such Stockholder no longer owns any
shares of Common Stock, or other warrants, options or
rights to subscribe for or purchase Common Stock.
<PAGE> 29
ARTICLE XII
MISCELLANEOUS
Section 12.1. Successors and Assigns. Except as otherwise provided
herein, all the terms and provisions of this Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the respective
successors and assigns of the parties hereto. No Stockholder may assign any of
its rights or obligations hereunder to any Person other than in accordance with
this Agreement to a transferee that has complied in all respects with the
requirements of this Agreement. The Company may not assign any of its rights or
obligations hereunder to any other Person. If any transferee of any Stockholder
shall acquire any shares of Common Stock in any manner, whether by operation of
law or otherwise, such shares shall be held subject to all of the terms of this
Agreement, and by taking and holding such shares such Person shall be entitled
to receive the benefits of and be conclusively deemed to have agreed to be bound
by and to comply with all of the terms and provisions of this Agreement.
Section 12.2. Amendment and Modification; Waiver of Compliances;
Conflicts.
(a) This Agreement may be amended only by a written
instrument duly executed by each of the Stockholders party
hereto. In the event of the amendment or modification of this
Agreement in accordance with its terms, the Stockholders shall
cause the Board of Directors to meet within 30 calendar days
following such amendment or modification or as soon thereafter
as is practicable for the purpose of adopting any amendment to
the Certificate of Incorporation and By-Laws that may be
required as a result of such amendment or modification to this
Agreement, and, if required, proposing such amendments to the
Stockholders entitled to vote thereon, and the Stockholders
agree to vote in favor of such amendments.
(b) Except as otherwise provided in this Agreement, any
failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the
party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate
as a waiver of, or estoppel with respect to, any subsequent or
other failure.
(c) In the event of any conflict between the provisions
of this Agreement and the provisions of any other agreement,
the provisions of this Agreement shall govern and prevail.
Section 12.3. Notices. All notices and other communications provided
for hereunder shall be in writing and delivered by hand or sent by first class
mail or sent by telecopy (with such telecopy to be confirmed promptly in writing
sent by first class mail), sent as follows:
(i) If to the Buyer, addressed to
Calpine Corporation
50 West San Fernando Street
San Jose, California 95113
<PAGE> 30
Attention: John T. King
Telecopy: (408) 995-0505
with a copy to:
Howard, Smith & Levin LLP
1330 Avenue of the Americas
New York, New York 10019
Attention: William R. Collins, Esq.
Telecopy No.: (212) 841-1010
(ii) If to NRG, addressed to
NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, Minneapolis 55403-2445
Attention: James J. Bender, Esq.
Telecopy No.: (612) 373-5392
with a copy to
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue NW
Washington, D.C. 20005
Attention: Jeanine L. Matte, Esq.
Telecopy No.: (202) 393-5760
<PAGE> 31
(iii) If to the Company, addressed to
Cogeneration Corporation of America
c/o Calpine Corporation
50 West San Fernando Street
San Jose, California 95113
Attention: John T. King
Telecopy No.: (408) 995-0505
with a copy to
Howard, Smith & Levin LLP
1330 Avenue of the Americas
New York, New York 10019
Attention: William R. Collins, Esq.
Telecopy No.: (212) 841-1010
or to such other address or addresses or telecopy number or numbers as any of
the parties hereto may most recently have designated in writing to the other
parties hereto by such notice. All such communications shall be deemed to have
been given or made when so delivered by hand or sent by telecopy, or three
business days after being so mailed.
Section 12.4 Entire Agreement: Governing Law; Consent to
Jurisdiction
(a) This Agreement and the other writings referred to
herein or delivered pursuant hereto which form a part hereof
contain the entire agreement among the parties hereto with
respect to the subject transactions contemplated hereby and
supersede all prior oral and written agreements and memoranda
and undertakings among the parties hereto with regard to this
subject matter. The Company represents to the Stockholders
that the rights granted to the holders hereunder do not in any
way conflict with and are not inconsistent with the rights
granted or obligations accepted under any other agreement
(including the Certificate of Incorporation) to which the
Company is a party. Neither the Company nor any Subsidiary of
the Company will hereafter enter into any agreement with
respect to its equity or debt securities which is inconsistent
with the rights granted to any Stockholder under this
Agreement without obtaining the prior written consent of the
Stockholder whose rights would be thereby affected.
(b) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (without
giving effect to the choice of law principles thereof).
(c) Each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any federal court
located in the State of Delaware or any Delaware state court
in the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, (b) agrees
that it will not
<PAGE> 32
attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees
that it will not bring any action relating to this Agreement
or any of the transactions contemplated by this Agreement in
any court other than a federal or state court sitting in the
State of Delaware.
Section 12.5. Severability. The validity or unenforceability
of any provisions of this Agreement in any jurisdiction shall not affect the
validity, legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
Section 12.6. Injunctive Relief. The Stockholders acknowledge
and agree that a violation of any of the terms of this Agreement will cause the
Stockholders irreparable injury for which an adequate remedy at law is not
available. Therefore, the Stockholders agree that each Stockholder shall be
entitled, in addition to any other remedy to which they may be entitled at law
or in equity, (i) to an injunction, restraining order or other equitable relief
from any court of competent jurisdiction, restraining any Stockholder from
committing any violations of the provisions of this Agreement, and (ii) to
compel specific performance of the terms of this Agreement.
Section 12.7. Availability of Agreement. For so long as this
Agreement shall be in effect, this Agreement shall be made available for
inspection by any Stockholder upon request at the principal executive offices of
the Company.
Section 12.8. Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 12.9. Expenses. Except as otherwise expressly provided
in Section 5.1(b) or any other provision of this Agreement, each of the Buyer,
the Company and NRG will bear its own costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby and the Merger.
This Section 12.9 shall survive the termination of this Agreement.
Section 12.10. Adjustments to Prevent Dilution, Etc. In the
event of a stock dividend or distribution, or any change in the common stock of
Cogen by reason of any stock dividend, split-up, reclassification,
recapitalization, combination or the exchange of shares, the term "shares" used
herein shall be deemed to refer to and include the shares of common stock of
Cogen owned by NRG as well as such stock dividends and distributions and any
shares into which or for which any or all of the shares of common stock of Cogen
may be changed or exchanged. In such event, the amount to be paid per share by
the Buyer shall be proportionately reduced.
Section 12.11. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[The next page is the signature page]
<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
CALPINE CORPORATION
By: __________________________
Name: John T. King
Title: Vice President - Business Development
NRG ENERGY, INC.
By: __________________________
Name: David H. Peterson
Title: Chairman, President and
Chief Executive Officer
CALPINE EAST ACQUISITION CORP.
By: _________________________
Name: John T. King
Title: Vice President
33
<PAGE> 1
Exhibit (4)
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement (this "Agreement"), effective May 17,
1999, relates to the proposed exchange of confidential information between
Calpine Corporation, a corporation organized under the laws of the State of
Delaware ("Calpine"), and Cogeneration Corporation of America, a corporation
organized under the laws of the State of Delaware ("CogenAmerica") in connection
with the consideration by Calpine of a possible transaction with CogenAmerica or
any of CogenAmerica's principal shareholders (each a "Possible Transaction").
CogenAmerica and Calpine agree as follows with respect to (i)
confidential information (whether in the form of documents, oral communications
or otherwise) disclosed by CogenAmerica to Calpine in connection with a Possible
Transaction (the "CogenAmerica Information"), and (ii) confidential information
(whether in the form of documents, oral communications or otherwise) disclosed
by Calpine to CogenAmerica in connection with a possible Transaction (the
"Calpine Information"):
1. (a) Subject to the exceptions set forth in Paragraph 3 Calpine
agrees (i) to treat all CogenAmerica Information as the strictly
confidential and proprietary information of CogenAmerica and to not
use the CogenAmerica Information for any purpose other than the
evaluation and performance of a Possible Transaction by Calpine or
disclose CogenAmerica Information to third parties other than to
Calpine's directors, officers, affiliates, agents advisors
(including, without limitation, financial advisors, attorneys and
accountants) and employees (collectively, "Calpine Representatives")
without the prior written permission of CogenAmerica; and (ii) to
not disclose to any person other than to Calpine Representatives
that the CogenAmerica Information has been made available, that
discussions or negotiations are taking place or have taken place
concerning a Possible Transaction, or any of the terms or other
facts with respect to a Possible Transaction, including the status
thereof and the previous discussions and exchange of correspondence
between Calpine and NRG Energy, Inc. ("NRG") relating to
CogenAmerica and NRG's ownership interest in CogenAmerica, without
the prior written permission of CogenAmerica.
(b) Subject to the exceptions set forth in Paragraph 3, CogenAmerica
agrees (i) to treat all Calpine Information as the strictly
confidential and proprietary information of Calpine and to not use
the Calpine Information for any purpose other than the evaluation
and performance of a Possible Transaction by CogenAmerica or
disclose Calpine Information to third parties other than to
CogenAmerica's directors, officers, affiliates, agents advisors
(including, without limitation, financial advisors, attorneys and
accountants) and employees (collectively, "CogenAmerica
Representatives") without the prior written permission of Calpine;
and (ii) to not disclose to any person other than to CogenAmerica
Representatives that the Calpine Information has been made
available, that discussions or negotiations are taking place or have
taken place concerning a Possible Transaction, or any of the terms
or other facts with respect to a
<PAGE> 2
Possible Transaction, including the status thereof and the previous
discussions and exchange of correspondence between Calpine and NRG
Energy, Inc. ("NRG") relating to CogenAmerica and NRG's ownership
interest in CogenAmerica, without the prior written permission of
Calpine.
2. Subject to the exceptions set forth in Paragraph 3, Calpine will not
disclose any CogenAmerica Information, and CogenAmerica will not
disclose any Calpine Information, to any Calpine Representatives or
CogenAmerica Representatives, respectively, to whom disclosure is
necessary in connection with the evaluation and performance of a
Possible Transaction. All Calpine Representatives to whom
CogenAmerica Information and other information relating to a
Possible Transaction is made available by Calpine shall be under
confidentiality obligations with Calpine for the benefit of
CogenAmerica consistent with this Agreement. All CogenAmerica
Representatives to whom Calpine Information and other information
relating to a Possible Transaction is made available by CogenAmerica
shall be under confidentiality obligations with CogenAmerica for the
benefit of Calpine consistent with this Agreement.
3. (a) The provisions of Paragraphs 1 and 2 shall not apply to any
CogenAmerica Information which (i) is or becomes publicly known
through no fault of Calpine, (ii) is disclosed to Calpine on a
non-confidential basis by a third party whom Calpine believes after
due inquiry is entitled to disclose it, (iii) Calpine can
demonstrate on the basis of written records was already known to it
on a non-confidential basis prior to receipt from CogenAmerica, or
(iv) subject to Paragraph 3(c), is required to be disclosed by law
or legal process.
(b) The provisions of Paragraphs 1 and 2 shall not apply to any
Calpine Information which (i) is or becomes publicly known through
no fault of CogenAmerica, (ii) is disclosed to CogenAmerica on a
non-confidential basis by a third party whom CogenAmerica believes
after due inquiry is entitled to disclose it, (iii) CogenAmerica can
demonstrate on the basis of written records was already known to it
on a nonconfidential basis prior to receipt from Calpine, or (iv)
subject to Paragraph 3(c), is required to be disclosed by law or
legal process.
(c) In the event that Calpine or any of its representatives, or
CogenAmerica or any of its representatives receive a request or are
required (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process) to disclose
all or any part of the information protected by this Agreement (the
said party being herein designated as a "Compelled Disclosure
Party"), the Compelled Disclosure Party or its representative as the
case may be, agrees to (i) immediately notify the other party to
this Agreement (the "Protected Party") of the existence, terms and
circumstances surrounding such a request or requirement, (ii)
consult with the Protected Party on the advisability of taking
legally available steps to resist or narrow such request or
requirement, and (iii) assist the Protected Party in seeking a
protective order or other appropriate remedy. In the event that such
protective order or other remedy is not obtained or that the
Protected Party waives compliance with the provisions hereof, (1)
the Compelled Disclosure Party or its representative, as the case
2
<PAGE> 3
may be, may disclose to any tribunal only that portion of the
information protected hereunder which it is advised by counsel is
legally required to be disclosed and shall exercise reasonable
efforts to obtain assurance that confidential treatment will be
accorded such and (2) said party shall not be liable for such
disclosure unless disclosure to any such tribunal was caused by or
resulted from a previous disclosure by said party, or any of its
representatives, not permitted by this Agreement.
4. (a) Upon the written request at any time of CogenAmerica, Calpine
agrees that all copies of CogenAmerica Information will be promptly
returned to CogenAmerica and that all copies of any analyses,
compilations, forecasts, studies or other documents based upon or
containing CogenAmerica Information prepared by Calpine, or its
directors, officers, affiliates, agents or employees, will be
promptly destroyed and such destruction will be promptly confirmed
in writing to CogenAmerica.
(b) Upon the written request at any time of Calpine, CogenAmerica
agrees that all copies of Calpine Information will be promptly
returned to Calpine and that all copies of any analyses,
compilations, forecasts. studies or other documents based upon or
containing Calpine Information prepared by CogenAmerica, or its
directors, officers, affiliates, agents or employees, will be
promptly destroyed and such destruction will be promptly confirmed
in writing to Calpine.
5. Calpine and CogenAmerica agree that Calpine Information and
CogenAmerica Information include confidential and proprietary
information and trade secrets. Calpine and CogenAmerica acknowledge
that remedies at law may be inadequate to protect against breach of
this Agreement, and each party hereby agrees that the other party
may seek injunctive relief to prevent disclosure of Calpine
Information and CogenAmerica Information.
6. It is understood that this Agreement does not obligate either
Calpine or CogenAmerica to enter into any further agreement or to
consummate in any way a Possible Transaction. Until the execution by
both parties of a binding written agreement setting forth the terms
and conditions of a Possible Transaction, each party agrees that
either party may withdraw from the negotiations concerning a
Possible Transaction at any time for any reason without any
liability to the other party of any kind whatsoever with respect to
a Possible Transaction.
7. Calpine agrees that, until the earlier of eighteen (18) months from
the date hereof or the closing of a Possible Transaction, unless
such shall have been specifically agreed to in advance by
CogenAmerica, Calpine will not, in any manner, directly or
indirectly, (a) effect or seek, offer or propose (whether publicly
or otherwise) to effect, or cause or participate in or in any way
assist any other person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in, (i) any
acquisition of any securities (or beneficial ownership thereof) or
any material portion of the assets of CogenAmerica or any of its
subsidiaries, (ii) any tender or exchange offer or merger or other
business combination involving CogenAmerica or any of its
subsidiaries, (iii) any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction with
respect to CogenAmerica or any of its
3
<PAGE> 4
subsidiaries, or (iv) any "Solicitation" of "proxies" (as such terms
are used in the proxy rules of the Securities and Exchange
Commission) or consents to vote any voting securities of
CogenAmerica, (b) form, join or in any way participate in a "group"
(as defined under the Securities Exchange Act of 1934, as amended)
for any of the purposes referred to in Section 7(a), (c) otherwise
act, alone or in concert with others, to seek to control or
influence the management, Board of Directors or policies of
CogenAmerica, (d) take any action which might force CogenAmerica to
make a public announcement regarding any of the types of matters set
forth in (a) above, or (e) enter into any discussions or
arrangements with any third party (other than Calpine
Representatives) with respect to any of the foregoing; provided,
however, that Calpine shall be entitled to make nonpublic proposals
relating to NRG Energy's shareholdings in CogenAmerica and to
discuss the terms thereof with CogenAmerica and CogenAmerica
Representatives and with NRG Energy, Inc. and its directors,
officers, affiliates, agents advisors (including, without
limitation, financial advisors, attorneys and accountants) and
employees. Calpine also agrees during any such period not to request
that CogenAmerica (or its directors, officers, employees or agents),
directly or indirectly, amend or waive any provision of this
paragraph.
8. This Agreement shall be in force and effect for a period of two (2)
years from the date hereof and shall be governed by the laws of the
State of New York, excluding its conflicts of laws rules. This
Agreement may be executed in counterparts which together will
constitute the same instrument. This Agreement may be executed by
manual signature transmitted electronically and any such signature
will be deemed to be a manual execution.
9. EACH OF CALPINE AND COGENAMERICA HEREBY IRREVOCABLY WAIVES ANY
RIGHTS THAT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF ANY
OF THEM RELATING HERETO.
ACCEPTED AND AGREED AS OF THE DATE FIRST WRITTEN ABOVE:
Cogeneration Corporation of America Calpine Corporation
By: /s/ Julie A. Jorgensen By: /s/ Robert D. Kelly
---------------------- -------------------
Title: President and Chief Executive Officer Title: Senior Vice President
Date: May 17, 1999 Date: May 17, 1999
4
