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:
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 Xxxxx'x 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
(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
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 Xxxx-Xxxxx-Xxxxxx 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.
"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
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).
"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 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.
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 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 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 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 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
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 Xxxxx X. Xxxxxxxx, Xxxxxx X. Will and Xxxxx X.
Xxxxxxxxxxx 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 Xxxxx X. Xxxxxxxx, Xxxxxx X. Will
and Xxxxx X. Xxxxxxxxxxx, 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
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
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 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 Xxxxx 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.
(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
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 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 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.
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.
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 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 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
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 (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 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.
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
00 Xxxx Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
(ii) If to NRG, addressed to
NRG Energy, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
with a copy to
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx XX
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Matte, Esq.
Telecopy No.: (000) 000-0000
(iii) If to the Company, addressed to
Cogeneration Corporation of America
c/o Calpine Corporation
00 Xxxx Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Telecopy No.: (000) 000-0000
with a copy to
Xxxxxx, Xxxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
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 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]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
CALPINE CORPORATION
By: /s/ Xxxx X. Xxxx
-----------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President - Business Development
NRG ENERGY, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chairman, President and
Chief Executive Officer
CALPINE EAST ACQUISITION CORP.
By: /s/ Xxxx X. Xxxx
-----------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
