Exhibit 10.1
CO-INVESTMENT AGREEMENT
between
NRG ENERGY, INC.
and
NRG GENERATING (U.S.) INC.
Dated as of April 30, 1996
TABLE OF CONTENTS
ARTICLE I
Definitions
Section 1.1 Certain Defined Terms 1
Section 1.2 Terminology 5
ARTICLE II
Purchase Right
Section 2.1 Pre-Offer Procedures 5
Section 2.2 Offer Procedures 6
Section 2.3 Offer Price 8
Section 2.4 Standards for Offers 8
Section 2.5 NRG Financing 8
Section 2.6 Due Diligence; Delivery of Information 9
Section 2.7 NRG Covenants 9
Section 2.8 Permissive Offers 10
Section 2.9 Independent Committee 10
ARTICLE III
Exempt Transactions and Interests
Section 3.1 Exempt Transactions 11
Section 3.2 Exempt Interests 11
ARTICLE IV
Events of Default; Remedies
Section 4.1 Events of Default 12
Section 4.2 Remedies; Exclusivity 12
ARTICLE V
Arbitration
Section 5.1 Submission of Disputes to Arbitration 13
Section 5.2 Conduct of Arbitration 14
ARTICLE VI
Miscellaneous
Section 6.1 Notices 15
Section 6.2 Costs and Expenses 15
Section 6.3 Amendments 15
Section 6.4 Assignment 16
Section 6.5 Successors and Assigns 16
Section 6.6 Invalidity 16
Section 6.7 Counterparts 16
Section 6.8 No Oral Agreements 16
Section 6.9 Governing Law and Submission to Jurisdiction 16
Section 6.10 Interpretation and Conflicts 16
Section 6.11 Term 16
CO-INVESTMENT AGREEMENT
THIS CO-INVESTMENT AGREEMENT is entered into on, and effective as of the
Effective Date (as hereinafter defined), between NRG Energy, Inc., a
Delaware corporation ("NRG Energy"), and NRG Generating (U.S.) Inc., a
Delaware corporation ("Generating").
RECITALS
1. Pursuant to the Plan of Reorganization (as hereinafter defined), NRG
Energy acquired 41.86% of the issued and outstanding shares of capital
stock of reorganized O'Brien Environmental Energy, Inc., which has been
renamed "NRG Generating (U.S.) Inc."
2. In connection with the Plan of Reorganization, NRG Energy has agreed
to offer to Generating ownership interests in certain power projects within
the Territory (as hereinafter defined) which were initially developed by
NRG (as hereinafter defined) or with respect to which NRG has entered into
a binding acquisition agreement with a third party.
AGREEMENT
In consideration of the premises and the covenants, conditions and
agreements contained herein and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, NRG Energy and
Generating hereby agree as follows:
ARTICLE I
Definitions
Section 1.1 Certain Defined Terms. As used herein, each of the following
terms shall have the meanings ascribed thereto below:
"Acceptance Period" -- As defined in Section 2.2(b) of this Agreement.
"Agreement" -- This Co-Investment Agreement between NRG and Generating.
"Assumptions" -- The assumptions of facts upon which the financial
projections relating to Eligible Projects and delivered pursuant to this
Agreement are predicated. All assumptions applicable to an Eligible
Project, unless otherwise indicated, will be deemed to include assumptions
(which assumptions, for all purposes of the Agreement, will be deemed
reasonable) that (a) the applicable laws, legal structure and taxes will
remain the same; (b) all parties will perform their obligations under the
Project Documents for such Eligible Project, in
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all material respects; and (c) the Project Documents for such Eligible
Project will continue in effect, and will be enforceable, in accordance
with their terms.
"Bankruptcy Code" -- Title 11 of the United States Code, 101, et seq, as
now or hereafter in effect, or any successor statute thereto.
"Bankruptcy Event" -- If, with respect to any Person, (a) such Person
generally is unable to pay such Person's debts as such debts become due, or
admits in writing such Person's inability to pay such Person's debts
generally, or makes a general assignment for the benefit of such Person's
creditors; or (b) any proceeding is instituted by or against such Person
under any Bankruptcy Law seeking to adjudicate such Person as bankrupt or
insolvent, or seeking liquidation, winding-up, reorganization,
rearrangement, adjustment, protection, relief or recomposition of such
Person or such Person's debts, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, or other similar official for
such Person or for all or substantially all of such Person's property and,
in the case of any such proceeding instituted against such Person (but not
instituted by or with the consent of such Person), is not controverted
within 20 days and is not dismissed or stayed for a period of 60 days after
such proceeding is filed.
"Bankruptcy Law" -- The Bankruptcy Code and any other applicable federal,
state, local or foreign insolvency, reorganization, moratorium, fraudulent
conveyance or similar Law now or hereafter in effect for the relief of
debtors.
"Book Value" -- With respect to an Ownership Interest in an Eligible
Project, the net asset value of such Ownership Interest as determined by
NRG in accordance with GAAP (as evidenced by a certificate executed by
NRG's Chief Accounting Officer setting forth such net asset value).
"Business Day" -- Any day other than Saturday, Sunday and a day on which
commercial banks are authorized or required to close in the states of New
York or Minnesota.
"Certificate of Incorporation and Bylaws" -- The Certificate of
Incorporation and Bylaws of Generating, as amended from time to time.
"Designated Closing Conditions" -- With respect to any Purchase
Agreement for an Ownership Interest, the following conditions to the
closing of the sale of such Ownership Interest: (a) all consents,
approvals and permits required for such closing pursuant to an applicable
Law or contract affecting such Ownership Interest or the underlying
Eligible Project have been obtained, (b) the parties are not enjoined (or
otherwise prohibited) from consummating such sale under applicable Law, and
(c) the representations of the seller in the Purchase Agreement are true in
all material respects.
"Dispute" -- As defined in Section 5.1 of this Agreement.
"Effective Date" -- The effective date of the Plan of Reorganization.
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"Eligible Project" -- Any proposed or existing Power Plant within the
Territory which NRG initially developed or in which NRG proposes to acquire
an Ownership Interest.
"Equity Interests" -- Collectively, stock in corporations, shares in
limited liability companies and other partnership or equity interests that
participate in the profits of the underlying entity (after the holders of
indebtedness and other securities issued by such entity have been paid the
fixed payments owed to such holders).
"Event of Default" -- As defined in Section 4.1 of this Agreement.
"Exempt Interest" -- As defined in Section 3.2 of this Agreement.
"Exempt Transaction" -- As defined in Section 3.1 of this Agreement.
"Financial Projections" -- As defined in Section 2.1 of this Agreement.
"GAAP" -- Generally accepted accounting principles in the United States in
effect from time to time.
"Generating" -- NRG Generating (U.S.) Inc., a Delaware corporation.
"Independent Committee" -- The Independent Committee of the Board of
Directors of Generating, as described in the Certificate of Incorporation
and Bylaws.
"Law" -- Collectively, a law, rule, regulation or governmental requirement.
"Limited Recourse Financing" -- With respect to any Eligible Project, the
financing for such Eligible Project that is non-recourse to, and does not
create any liability upon, NRG or any other Person that owns any direct or
indirect Ownership Interest in such Eligible Project, except for (a)
Shareholder Commitments that are fully discharged on or before a sale of
the applicable Ownership Interest in the Eligible Project or (b) liability
for misapplication of proceeds, fraud or other similar intentional wrongful
acts committed by the owner of such Ownership Interest.
"Note" -- As defined in Section 2.5 of this Agreement.
"NRG" -- Collectively, NRG Energy and any corporation, partnership,
joint venture or other entity in which NRG Energy (directly or indirectly)
owns greater than 50% of the issued and outstanding Equity Interests.
"NRG Energy" -- NRG Energy, Inc., a Delaware corporation.
"Offer" -- As defined in Section 2.2(a) of this Agreement.
"Offer Price" -- With respect to any Ownership Interest, the price
initially offered by NRG for the sale of such Ownership Interest in the
Offer to Generating; provided, that, in the
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case of an assignment by NRG to Generating of a right to acquire an
Ownership Interest, the Offer Price shall also include the amount payable
to the Third Party seller to acquire such ownership Interest.
"Offer Terms" -- As defined in Section 2.1 of this Agreement.
"Ownership Interest" -- With respect to any Eligible Project, (a) a direct
or indirect Equity Interest in such Eligible Project, and (b) a direct or
indirect interest in the long-term indebtedness or other securities issued
for such Eligible Project, which indebtedness or other securities are
subordinate to the payment of debt service for such Eligible Project's
Limited Recourse Financing.
"Permissive Projects" -- As defined in Section 2.8 of this Agreement.
"Person" -- Any individual, corporation, company, voluntary association,
partnership, joint venture, trust, unincorporated organization,
governmental authority or any other form of entity.
"Plan of Reorganization" -- The Chapter 11 plan of reorganization for
O'Brien Environmental Energy, Inc., proposed by NRG and certain other
persons.
"Potential Ownership Interest" -- As of any time, an Ownership Interest
owned or proposed to be acquired by NRG which NRG believes is reasonably
likely to become the subject of an Offer under this Agreement.
"Power Plant" -- A facility the primary purpose of which is the generation
of electricity for sale through the combustion of natural gas, oil or any
other fossil fuel (other than biogas).
"Project Description" -- As defined in Section 2.1 of this Agreement.
"Project Document Violation" -- Any breach, violation or default (or event
that with notice or the lapse of time, or both, would constitute a breach,
violation or default) under a Project Document that could reasonably be
expected to have a material adverse effect on the related Ownership
Interest. Any such breach, violation or default that has given rise to a
right to terminate (or accelerate obligations under) a Project Document
will be deemed to have a material adverse effect on the related Ownership
Interest.
"Project Documents" -- With respect to an Ownership Interest in an Eligible
Project, the contracts, licenses, and permits that burden or benefit (in
any material respect) the Ownership Interest or the Eligible Project. The
Project Documents may include one or more Shareholder Commitments.
"Purchase Agreement" -- As defined in Section 2.2(c) of this Agreement.
"Shareholder Commitment" -- Any guarantee, indemnity, other liability,
undertaking or commitment of NRG entered into in connection with the
development, acquisition,
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financing or ownership of an Eligible Project or an Ownership Interest
therein, in favor of the Eligible Project entity or any lender, supplier,
customer or governmental entity for the primary purpose of providing
financial or other credit support with respect to the Eligible Project or
the Ownership Interest therein.
"Significant Contracts Milestone" -- With respect to an Eligible Project,
the execution and delivery of a binding power purchase agreement and fuel
supply agreement and the completion of an engineering and feasibility
study.
"Subsidiary" -- With respect to any Person, means any corporation,
partnership, joint venture or other entity that is consolidated with such
Person in accordance with GAAP.
"Territory" -- All geographic areas of the United States.
"Third Party" -- Any Person, other than NRG, Generating or a Subsidiary of
Generating.
"United States" -- All states, commonwealths, territories and possessions
of the United States of America, as of the date hereof.
Section 1.2 Terminology. Unless the context of this Agreement clearly
requires otherwise, (a) pronouns, wherever used herein, and of whatever
gender, will include natural persons and corporations and associations of
every kind and character, (b) the word "included" or "including" will mean
"including without limitation", (c) the word "or" will have the inclusive
meaning represented by the phrase "and/or", (d) the words hereof, herein,
hereunder, and similar terms in this Agreement will refer to this Agreement
as a whole and not any particular section or article in which such words
appear, (e) all terms defined in this Agreement in the singular will have
the same meaning when used in the plural and vice versa, and (f) each
reference to NRG in the singular with respect to an Ownership Interest in
an Eligible Project will refer collectively to all Persons within the
definition of "NRG" which hold an Ownership Interest in such Eligible
Project. The section, article and other headings in this Agreement and the
Table of Contents to this Agreement are for reference purposes and will not
control or affect the construction of this Agreement or the interpretation
hereof in any respect. Article, section and subsection references are to
this Agreement unless otherwise specified.
ARTICLE II
Purchase Right
Section 2.1 Pre-Offer Procedures. As soon as practicable, but in no event
less than 15 days prior to the date on which NRG expects to make an Offer
pursuant to Section 2.2, NRG will give Generating notice of its estimate of
the date on which such Offer is expected to be made. Such notice will
include the following information relating to the Offer:
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(a) The draft Purchase Agreement for the Offer, which will
describe the proposed terms and conditions of the Offer other than
price, including the Designated Closing Conditions and the
representations, warranties, covenants or indemnities, if any, that
NRG is required under Section 2.2(c) to offer or otherwise elects, in
its sole discretion, to offer (together with any revisions thereto
made in accordance with Section 2.2, the "Offer Terms");
(b) A description of the location and physical components of the
Eligible Project together with the Project Documents for the Eligible
Project (collectively, the "Project Description"); and
(c) One or more sets of the financial projections (including a
computer diskette thereof) for the Ownership Interest (the "Financial
Projections").
Section 2.2 Offer Procedures. If any Eligible Project reaches the
Significant Contracts Milestone prior to the expiration of the term of this
Agreement (or if, prior to the expiration of the term of this Agreement,
NRG enters a binding definitive agreement to acquire an Ownership Interest
in an Eligible Project which has previously reached its Significant
Contracts Milestone), then within 30 days NRG will offer to sell to
Generating all of NRG's Ownership Interest in such Eligible Project in
accordance with the following procedures:
(a) Offer. NRG will make a written offer to Generating to sell
all of NRG's Ownership Interest in such Eligible Project to Generating
(an "Offer"), which Offer will contain the Offer Price, the Offer
Terms presented by NRG, the terms of NRG's proposed financing in
accordance with Section 2.5 and the Project Description for such
Eligible Project.
(b) Delivery and Acceptance of Offer. Each Offer will be
delivered to the Chairman of the Independent Committee of Generating
(with a copy to the Chief Executive Officer of Generating).
Generating will have a period of 60 days after receipt of an Offer
(the "Acceptance Period") to accept the Offer by executing the
Purchase Agreement included with the Offer; provided that, in the case
of an Eligible Project with respect to which NRG proposes to acquire
an Ownership Interest, such Acceptance Period may be shortened (but
not to less than 30 days) if required by the selling party as a
condition to the agreement to sell such Ownership Interest to NRG.
NRG will deal exclusively with Generating with respect to an Ownership
Interest covered by an Offer during the Acceptance Period and may, but
shall not be required to, revise the Offer Terms based on negotiations
with the Independent Committee.
(c) Purchase Agreement. The "Purchase Agreement" for an
Ownership Interest means a binding purchase agreement, included in the
Offer Terms for such Ownership Interest (or thereafter agreed upon by
the parties), which evidences the rights and obligations of the
parties with respect to the sale of the applicable Ownership Interest.
In the Purchase Agreement for an Ownership Interest owned by
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NRG, NRG will represent to Generating that (as of the proposed closing
date): (i) the Ownership Interest will be conveyed free of material
liens or other material rights or material encumbrances (other than
those disclosed), (ii) it has provided copies to the Independent
Committee of all Project Documents for the Eligible Project and
disclosed in writing to the Independent Committee any Project Document
Violation by NRG (or, to its knowledge, any other party) under such
Project Documents, (iii) it has disclosed in writing to the
Independent Committee all pending (or, to its knowledge, threatened)
claims by Third Parties or for violations of Law that could reasonably
be expected to have a material adverse effect on the Ownership
Interest, (iv) it has all necessary corporate power and authority to
convey the Ownership Interest to Generating, and (v) the conveyance of
such Ownership Interest will not conflict with or result in a breach
of, or require any consent which has not been obtained (or disclosed
to Generating as having not yet been obtained) under, any Project
Document for the Eligible Project or applicable Law (to the extent the
failure to obtain same could be reasonably expected to have a material
adverse effect on the Ownership Interest); provided that any of the
foregoing representations may be omitted or modified upon the
agreement of the parties. In the event that NRG proposes to acquire
an Eligible Project with respect to which this Section 2.2 is
applicable, NRG may assign its rights under the acquisition agreement
between NRG and the Third Party seller to Generating and such
acquisition agreement together with the applicable assignment
documents will become the "Purchase Agreement." Unless the parties
otherwise agree, the Purchase Agreement will provide that upon the
closing of the purchase of an Ownership Interest, Generating will
assume (or indemnify NRG and its affiliates against) all Shareholder
Commitments. Unless the parties otherwise agree, the closing of the
purchase of an Ownership Interest owned by NRG will occur within 15
days after execution of the Purchase Agreement, and such closing will
be conditioned only upon satisfaction of the Designated Closing
Conditions agreed upon by the parties in the Purchase Agreement. If
such Designated Closing Conditions are not satisfied prior to the
scheduled closing, then Generating may (by notice to NRG) extend such
pre-closing period by up to an additional 30 days.
(d) Failure to Close. If, after Generating accepts an Offer and
the parties enter into the related Purchase Agreement, the Designated
Closing Conditions in the Purchase Agreement are not satisfied (or
waived), then, in the case of an Ownership Interest owned by NRG, NRG
will not be required to sell, and Generating will not be required to
purchase, the related Ownership Interest included in the Offer. In
such case, the rights of NRG to sell or dispose of such Ownership
Interest will thereafter be governed by Section 2.2(f). If Generating
fails to purchase an Ownership Interest in violation of a Purchase
Agreement, then this Agreement will no longer apply to such Ownership
Interest.
(e) Sale to Third Party. If Generating and NRG do not agree
upon the terms and conditions of the sale of an Ownership Interest
during the Acceptance Period, then NRG will have the right to sell
such Ownership Interest to a Third Party
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for a period of one year after the expiration of the Acceptance
Period, provided that (i) the purchase price for such Ownership
Interest equals or exceeds the Offer Price included in the Offer for
such Ownership Interest (with all consideration paid by the Third
Party measured at fair market value) and (ii) the terms and conditions
of the proposed sale are not materially more favorable to such Third
Party than those offered to Generating in the final Offer Terms.
(f) Continuity of Right. If an Ownership Interest is not sold
to a Third Party within one year after the expiration of the
Acceptance Period as described in Section 2.2(e), or if the Designated
Closing Conditions for the sale of an Ownership Interest are not
satisfied or waived as described in Section 2.2(d), then before
selling to any Third Party, NRG will offer to sell to Generating such
Ownership Interest by making a new Offer to Generating in accordance
with the provisions of this Article II.
Section 2.3 Offer PriceError! Bookmark not defined.. Any Offer Price will
be determined by NRG in compliance with the standards for Offers described
in Section 2.4. Notwithstanding the provisions of this Article II to the
contrary, NRG will not be required to make any Offer for an Ownership
Interest at an Offer Price payable to NRG that is below NRG's Book Value
for such Ownership Interest.
Section 2.4 Standards for Offers. NRG will be considered to have complied
(in all respects) with this Agreement with respect to an Offer if (a) the
Offer is made in accordance with the procedures described in Sections 2.1,
2.2 and 2.3, and (b) in NRG's sole judgment determined in good faith at the
time the Offer is made (and taking into consideration the Offer Terms, the
Project Description, the Offer Price and the work previously performed by
and on behalf of NRG in developing or acquiring the Eligible Project), the
Offer is commercially reasonable and within a range which a reasonable
offeree knowledgeable in the industry would reasonably be expected to
accept. Any Offer Terms required to be included in the Purchase Agreement
by Section 2.2(c) will be deemed to be commercially reasonable. Except as
otherwise specifically provided in this Agreement, NRG will be free to
establish the terms, conditions and price of any Offer it makes under this
Agreement.
Section 2.5 NRG Financing. To facilitate Generating's ability to acquire
an Ownership Interest offered by NRG pursuant to this Agreement, NRG shall
finance (on commercially competitive terms) the Offer Price to the extent
funds are unavailable to Generating on comparable terms from other sources.
Such financing shall be (i) secured by a first priority lien on the
Ownership Interest acquired or, to the extent a first priority lien is
unavailable because the relevant Eligible Project is the subject of Third
Party financing and the Third Party lender has a first priority lien, a
second priority lien, if available, (ii) recourse to Generating, (iii)
subordinated to principal and interest on the $45 million note or notes
(the "Note") issued by Generating in connection with the Plan of
Reorganization, and (iv) required to be repaid from the net proceeds
received by Generating from offerings of equity or debt securities of
Generating (when market conditions permit such offerings to be made on
favorable terms) after taking into account working capital and other cash
requirements of Generating as determined by its Board of Directors.
Notwithstanding the foregoing, NRG
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shall have no obligation to provide any Limited Recourse Financing with
respect to any Eligible Project.
Section 2.6 Due Diligence; Delivery of Information.
(a) The Independent Committee, on behalf of Generating, will
have the right to perform all due diligence reasonably necessary to
determine the value of any Ownership Interest offered under this Agreement
and NRG will make available, at NRG's corporate headquarters at all
reasonable times and upon reasonable notice, all reports, calculations,
books, records and other information available to NRG which is reasonably
necessary for the Independent Committee to perform such due diligence. NRG
will provide a periodic report (on a quarterly basis) to the Independent
Committee regarding the status of its development or acquisition of each
Potential Ownership Interest and the negotiation of the material contracts
for each Eligible Project .
(b) NRG may condition and restrict delivery to the Independent
Committee of the information described in this Section 2.6 and Section 2.1
upon execution of reasonable confidentiality and non-disclosure agreements
by Generating. NRG will not be required to disclose or deliver information
under this Agreement, if such disclosure or delivery would cause it to
violate a confidentiality or non-disclosure covenant to which it is bound;
provided that NRG will use reasonable efforts to obtain waivers or
modifications of any confidentiality or non-disclosure covenants that
prohibit it from providing the information described in this Section 2.6.
Section 2.7 NRG Covenants. NRG covenants and agrees with Generating as
follows:
(a) NRG will not sell all or any portion of any Ownership
Interest owned by it in any Eligible Project (other than an Exempt
Interest), except pursuant to Article II or pursuant to an Exempt
Transaction;
(b) NRG will use reasonable efforts to obtain all consents and
take other actions necessary to permit it to sell (and to satisfy the
Designated Closing Conditions for the sale of) Ownership Interests to
Generating in compliance with this Agreement;
(c) NRG will use reasonable efforts to avoid the occurrence of
any of the circumstances described in clauses (i) through (iii) below
to the extent such circumstances would excuse it from making an Offer
otherwise required under this Agreement;
(d) During the three year period following the Effective Date,
NRG will offer to Generating Ownership Interests in one or more
Eligible Projects or Permissive Projects described in Section 2.8
representing an aggregate equity value of at least $60,000,000 or a
minimum of 150 net megawatts;
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(e) NRG will not, directly or indirectly, take any action, and
will cause any affiliate not to take any action whether through the
exercise of its stockholder vote, through its nominees on the
Generating Board of Directors or otherwise, to remove, replace or vote
down the election of any director who constitutes a member of, or a
nominee named in accordance with Section 3.2 of the By-laws of
Generating for whom proxies are solicited for election to the Board of
Directors of Generating who will constitute a member of, the
Independent Directors' Committee of Generating;
(f) Notwithstanding any of the provisions of this Agreement to
the contrary, Generating and its common stockholders not affiliated
with NRG would not have an adequate remedy at law if NRG breaches its
obligations under Section 2.7(e), (f) and (g) and expressly agrees
that the Independent Directors' Committee, on behalf of Generating and
such stockholders shall, in addition to any other remedies at law or
in equity which it may have, be entitled to seek specific performance
of NRG's obligations thereunder, including by way of injunction,
restraining order, mandamus or otherwise, in any court of law or
equity of competent jurisdiction;
(g) The provisions of Section 2.7(e) shall survive through the
stated term of this Agreement, notwithstanding any breach of any other
provision hereof by any party hereto or any earlier termination
permitted under Section 4.2 of this Agreement.
Notwithstanding the provisions of this Article II to the contrary, NRG will
not have an obligation to Offer to Generating any Ownership Interest, if
the sale of such Ownership Interest (i) would cause Generating, NRG or
any of their respective Subsidiaries to be classified as an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended; (ii) would cause Generating, NRG or any of their respective
Subsidiaries to be classified as a "holding company", a "subsidiary
company" of a "holding company", an "affiliate" of a "holding company", or
an "affiliate" of a "subsidiary" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended; or
(iii) is prohibited by any Project Document.
Section 2.8 Permissive Offers. NRG may, in its sole discretion, offer to
Generating Ownership Interests in projects ("Permissive Projects") other
than Eligible Projects or Ownership Interests which otherwise NRG would not
be required to offer at such time to Generating under this Agreement, but
NRG will have no obligation to do so. Any such permissive offers made by
NRG will not otherwise be subject to the provisions of this Agreement, and
shall not constitute, replace or affect in any way the obligations of NRG
to make an Offer in compliance with this Agreement.
Section 2.9 Independent Committee. The Independent Committee will have
the sole authority and responsibility to make all decisions and take all
actions on behalf of Generating under this Agreement. Accordingly, all
notices, reports, books, records or other information required or permitted
to be given to Generating under this Agreement will be delivered to the
Chairman of the Independent Committee, with a copy to the Chief Executive
Officer of Generating. The Independent Committee will be free to take such
action as it determines in
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its sole discretion to be reasonably necessary to evaluate fully and fairly
the terms of any Offer, including engaging independent financial, technical
and other advisors for the purpose of evaluating Offers, determining
whether the projections on which such Offers may be based are reasonable
and other matters under this Agreement.
ARTICLE III
Exempt Transactions and Interests
Section 3.1 Exempt Transactions. Notwithstanding the provisions of
Article II to the contrary, NRG will have the right to sell its Ownership
Interest in an Eligible Project without offering such Ownership Interest to
Generating in connection with any one or more of the following transactions
(each, an "Exempt Transaction"):
(a) Any sale or disposition of all or a portion of an Ownership
Interest that is consummated as a result of a foreclosure or
conveyance in lieu of foreclosure of liens or security interests
(other than by NRG) encumbering the Eligible Project or such Ownership
Interest;
(b) Any sale or disposition of an Ownership Interest to a Third
Party that is or will become a participant in the Eligible Project
(such as a local or industry investor, a financial institution or a
fuel or equipment supplier), provided that the obligation to sell is
created prior to the Significant Contracts Milestone for the Eligible
Project and is incidental to the provision of services or the
contribution of assets to the Eligible Project; and
(c) Any sale or disposition of an Ownership Interest to another
Person as a part of a larger transaction involving the sale of all or
substantially all of the assets of NRG Energy or the sale of an Equity
Interest in NRG Energy, provided that the Person acquiring such
Ownership Interest agrees to be bound by this Agreement with respect
to such Ownership Interest (if such Ownership Interest has not
previously been offered for sale to Generating pursuant to this
Agreement).
Section 3.2 Exempt Interests. Notwithstanding the provisions of
Article II to the contrary, NRG will have the right to retain its
Ownership Interest in an Eligible Project or sell such Ownership Interest
to Third Parties without offering such Ownership Interest to Generating, if
such Ownership Interest is an Exempt Interest. As referenced in this
Agreement, an "Exempt Interest" means any of the following:
(a) An Ownership Interest in an Eligible Project which is below
a level that would cause the Eligible Project (or its owners) to be in
violation of the relevant power purchase agreement or applicable state
or federal law upon the generation of electricity for sale by such
Eligible Project;
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(b) An indirect Ownership Interest held by NRG in an Eligible
Project arising from NRG's direct or indirect ownership of Equity
Interests in Generating;
(c) An Ownership Interest that is retained in order to later be
sold in an Exempt Transaction contemplated by Section 3.1(b); and
(d) An Ownership Interest in a Power Plant below 25 megawatts in
capacity.
ARTICLE IV
Events of Default; Remedies
Section 4.1 Events of Default. If one or more of the following events
occurs with respect to a party hereto, it will constitute an "Event of
Default" with respect to such party:
(a) Failure to Perform Obligations. Such party fails to perform
or observe any material obligation under this Agreement and such
failure continues for more than 30 days after the non-defaulting party
has given notice thereof to such party (or if the nature of such
default is such that it is not capable of being cured within 30 days,
then the failure of such party to commence to cure such default within
30 days and to diligently and continuously pursue the cure of such
default thereafter, but in no event may such extended cure period
exceed 180 days);
(b) Bankruptcy Event. Such party becomes subject to a
Bankruptcy Event.
Section 4.2 Remedies; Exclusivity. Subject to the provisions of
Article V, at any time during the continuance of an Event of Default, the
non-defaulting party will have the right to (a) elect, by giving notice to
the defaulting party, not to be bound in any respect by the provisions of
this Agreement during such continuance, in which case such party will have
no obligations or liabilities hereunder during such period, (b) terminate
the Agreement upon giving notice of termination to the defaulting party, if
the Event of Default is a Bankruptcy Event or otherwise has continued
without cure for 180 days following notice pursuant to Section 4.1(a), and
(c) seek the enforcement of an arbitrators award (including an award for
damages or specific performance) pursuant to Article V. No failure on the
part of either NRG or Generating to exercise and no delay in exercising,
and no course of dealing with respect to, any right, power or privilege
under this Agreement will operate as a waiver thereof, nor will any single
or partial exercise of any right, power or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
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ARTICLE V
Arbitration
Section 5.1 Submission of Disputes to ArbitrationError! Bookmark not
defined.. This Article V applies to any dispute (each a "Dispute") arising
under this Agreement or under any Purchase Agreement between NRG and
Generating, including any dispute regarding: (i) whether NRG is obligated
to make an Offer, (ii) whether the terms of an Offer comply with the
requirements of this Agreement, (iii) whether any party has failed to
perform its obligations under a Purchase Agreement, and (iv) any other
matter under this Agreement or a Purchase Agreement. If the parties are
unable to resolve a Dispute, then either party may submit such Dispute to
binding arbitration under this Article V as follows:
(a) The party may give the other party a notice stating that
such party desires to have the Dispute arbitrated pursuant to this
Article V. Within 15 days after receipt of the arbitration notice,
NRG and Generating will use their reasonable efforts to designate a
single Person to act as arbitrator.
(b) If the parties are unable to agree upon the joint selection
of a single arbitrator within such 15-day period, each of NRG and
Generating will select a single arbitrator within 10 days after the
end of the 15-day period (and will notify the other party of its
selection). If either party fails to designate an arbitrator within
such 10-day period, then the arbitrator designated by the other will
act as the sole arbitrator and will be deemed to be the unanimously
approved arbitrator to resolve the Dispute.
(c) If the two arbitrators selected by the parties are unable to
reach a unanimous decision, the arbitrators will unanimously select a
third qualified arbitrator. If the two arbitrators are unable to
select a third arbitrator, either party may apply to the branch of the
American Arbitration Association nearest to Minneapolis, Minnesota to
designate and appoint the third arbitrator.
(d) If the two arbitrators appointed pursuant to Section 5.1(b)
reach a unanimous decision and award, such decision and award will be
binding upon the parties. If a third arbitrator is appointed pursuant
to Section 5.1(c), then the decision and award of two of the three
arbitrators will be binding upon the parties. If two of the three
arbitrators are unable to reach a unanimous decision, then the
decision and award of the third arbitrator appointed pursuant to
Section 5.1(c) will be binding upon the parties.
(e) Each arbitrator appointed pursuant to this Section 5.1 will
be a natural person with expertise in the issues involved in the
subject Dispute. Additionally, each arbitrator will be competent and
knowledgeable in the area of legal and contractual disputes. Each
proposed arbitrator will disclose to the parties any business or other
relationship or affiliation that may exist with either party; and any
party may disqualify
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an arbitrator on the basis that any existing relationship or
affiliation could reasonably be expected to materially affect the
decisions and objectivity of such arbitrator.
Section 5.2 Conduct of Arbitration. Within 20 days after the commencement
of an arbitration under this Article V, each party will submit to the other
and to the arbitrators their written position concerning the Dispute.
Within 20 days after the receipt by a party of the position of the other
party in the Dispute, such receiving party will submit its written response
to the other party and the arbitrators. The arbitrators will expeditiously
(and, if possible, within 60 days after receipt of the initial positions
and responses of the parties) hear and decide all matters concerning the
Dispute. Any arbitration hearing will be held in Minneapolis, Minnesota.
The arbitration will be conducted in accordance with the then-current
Commercial Arbitration Rules of the American Arbitration Association
(excluding rules governing the payment of arbitration, administrative or
other fees or expenses to the arbitrator or such Association). The
arbitrators will have the power to (a) gather such materials, information,
testimony and evidence as they consider relevant to the Dispute (and each
party will provide such materials, information, testimony and evidence
required by the arbitrators, except to the extent any information so
requested is proprietary, subject to a Third Party confidentiality
restrictions or to an attorney-client or other privilege); and (b) grant
such relief (including injunctive relief and the enforcement of specific
performance) as may be consistent with the provisions of this Agreement and
considered appropriate by the arbitrators. The arbitrators may propose
that one or more experts be retained to assist in resolving the Dispute.
The parties will have the right to approve such experts, which approval
will not be unreasonably withheld; provided that a business or other
relationship or affiliation between such expert and the arbitrators or
either party will be deemed a reasonable basis for a party to withhold its
approval of such expert. The responsibility for paying the costs and
expenses of the arbitration (including compensation to the arbitrators and
any experts retained by the arbitrators) will be allocated between the
parties in a manner determined by the arbitrators to be fair and reasonable
under the circumstances. Each party will be responsible for the fees and
expenses of its respective counsel, consultants and witnesses, unless the
arbitrators determine that compelling reasons exist for allocating all or a
portion of such costs and expenses to the other party. The decision of the
arbitrators (which will be rendered in writing) will be final, non-
appealable and binding upon the parties and may be enforced in any court of
competent jurisdiction. Any judicial proceedings relating to an
arbitration under this Article V (including proceedings to compel
arbitration or to confirm or enforce an arbitration award) will be
maintained in the state or federal courts situated in Hennepin County,
Minnesota (or any court having appellate jurisdiction therefrom) and will
not be held or maintained in any other court or jurisdiction. Each
Purchase Agreement will contain a provision stating that Disputes
thereunder will be subject to arbitration, as set forth in this Article V.
UNDER NO CIRCUMSTANCES WHATSOEVER, NOTWITHSTANDING ANY STATUTORY OR OTHER
AUTHORITY TO THE CONTRARY, WILL THE ARBITRATOR OR ARBITRATORS ACTING UNDER
THIS AGREEMENT OR A PURCHASE AGREEMENT HAVE AUTHORITY, JURISDICTION OR
POWER TO MAKE ANY AWARD FOR CONSEQUENTIAL, PUNITIVE, EXEMPLARY,
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PENAL, TREBLE, OR OTHER MULTIPLE DAMAGES, AND NO AWARD CONTAINING ANY SUCH
DAMAGES WILL BE CONFIRMED OR ENFORCED.
ARTICLE VI
Miscellaneous
Section 6.1 Notices. All notices, offers, extensions of time or
descriptions, and all other communications provided for herein (including
any modifications of, or waivers or consents under, this Agreement) will be
given or made in writing and delivered by hand, telecopy, courier or U.S.
mail to the intended recipient at the "Address for Notices" specified below
(or, as to any party, at such other address as will be designated for
notice by such party in a notice to the other party). Any notice given
pursuant to this Agreement will be deemed effective when such notice is
received (or upon refusal of receipt) by the addressee; provided that
notices received by any party after its normal business hours (or on a day
other than a Business Day) will be effective on the next Business Day.
Addresses For Notices:
To NRG Energy: NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Attn: Vice President of U.S. Business Development
To Generating: Chairman -- Independent Committee
c/o NRG Generating (U.S.) Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
with a copy to: Leonard A. Bluhm, Chief Executive Officer
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403
Section 6.2 Costs and Expenses. Each party
will bear its own review costs, attorneys, accountants and other
professional fees and other expenses incurred by it in connection with
negotiating and entering into this Agreement and in negotiating and
entering into any of the subsequent transactions contemplated by this
Agreement.
Section 6.3 Amendments. No amendment, modification, waiver, consent,
approval, direction or other action under this Agreement will be effective
unless in writing and signed by the party to be bound (and in the case of
Generating, approved by the Independent Committee).
Section 6.4 Assignment. Except as otherwise provided in this Section 6.4,
neither party will have the right to assign any of its rights or delegate
any of its duties or obligations
15
under this Agreement to any other Person without the prior written consent
of the other party to this Agreement, which consent may be withheld in the
consenting party's sole discretion. Any such assignment or delegation
without such consent will be void ab initio. Notwithstanding the foregoing
provisions of this Section 6.4 to the contrary, either party hereto will be
entitled to assign all of its rights and delegate all of its duties and
obligations under this Agreement to any successor of such party by merger
or to any purchaser of all or substantially all of the assets of such
party.
Section 6.5 Successors and Assigns. Subject to Section 6.4, this
Agreement will be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
Section 6.6 Invalidity. In the event that any one or more of the
provisions contained in this Agreement will, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability will not affect any other provision of this
Agreement.
Section 6.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together will constitute one and the same
instrument and the parties hereto may execute this Agreement by signing any
such counterpart.
Section 6.8 No Oral Agreements. This Agreement embodies the entire
agreement and understanding between the parties and supersedes all other
agreements and understandings between such parties relating to the subject
matter hereof and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties. There are
no unwritten oral agreements among the parties.
Section 6.9 Governing Law and Submission to Jurisdiction. This Agreement
will be governed by, and construed in accordance with, the laws of the
State of Minnesota, without regard to conflicts of laws principles provided
that Sections 2.7(e), (f) and (g) shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to
conflicts of law principles.
Section 6.10 Interpretation and Conflicts. No presumption will apply in
favor of any party hereto in the interpretation of this Agreement or in the
resolution of any ambiguity of any provision hereof.
Section 6.11 Term. Subject to the rights of the parties to terminate this
Agreement pursuant to Section 4.2, this Agreement will terminate on the
seventh anniversary of the Effective Date. The parties hereto will have no
further rights or obligations hereunder following such termination (other
than with respect to any defaults by either party hereunder prior to such
termination and any matter subject to an arbitration being conducted as of
such termination).
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EXECUTED as of the date first above written.
NRG ENERGY, INC.
By: /s/ Craig Mataczynski
Name: Craig Mataczynski
Title: Vice President Domestic Business
Development
NRG GENERATING (U.S.) INC.
By: /s/ Leonard Bluhm
Name: Leonard Bluhm
Title: President and Chief Executive Officer
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