[COGENAMERICA LETTERHEAD]
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One Carlson Parkway, Suite 240
Minneapolis, MN 55447-4454
Telephone (612) 745-7900
Facsimile (612) 745-7901
NEWS RELEASE
FOR IMMEDIATE RELEASE
COGENAMERICA TO BE ACQUIRED BY CALPINE CORPORATION
AND NRG ENERGY
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MINNEAPOLIS, MN (AUGUST 27, 1999) - Cogeneration Corporation of America
("CogenAmerica") (Nasdaq: CGCA) and Calpine Corporation ("Calpine") (NYSE: CPN)
have announced today the execution of a definitive agreement pursuant to which
Calpine, through Calpine East Acquisition Corp. (the "Acquisition Corp."), a
subsidiary of Calpine, will acquire the outstanding common stock of
CogenAmerica, other than certain shares held by NRG Energy, Inc. ("NRG"), for
$25.00 per share.
NRG owns 3,106,612 common shares representing 45.3% of the outstanding common
stock of CogenAmerica. Pursuant to the transaction, NRG will contribute to
Acquisition Corp. approximately 1.5 million shares representing a 20% interest
in Acquisition Corp. and receive the merger consideration of $25.00 per share
for the remainder of its shares held. The transaction contemplates that NRG
will retain a 20% interest in CogenAmerica following completion of the
transaction.
The transaction is subject to various regulatory approvals and approval by
shareholders of CogenAmerica. NRG has agreed to vote its shares in favor of
the transaction. The transaction is anticipated to close during the fourth
quarter of 1999. Donaldson, Lufkin & Jenrette served as financial advisor to
CogenAmerica in this transaction.
CogenAmerica and its subsidiaries develop and own cogeneration projects that
produce electric and thermal energy for sale to industrial and commercial
users and public utilities. Calpine Corporation is a leading independent power
company dedicated to providing clean, competitively-priced electricity and
thermal energy.
Certain information contained in this press release contains statements that
are forward-looking. Such forward-looking information involves risks and
uncertainties that could significantly affect results in the future and,
accordingly, such results may differ from those expressed in any
forward-looking statement made by or on behalf of CogenAmerica.
For additional information contact Timothy P. Hunstad, vice president and chief
financial officer at (612) 745-3342 or e-mail at tim.hunstad@cogenamerica.com
or Frank N. Hawkins, Jr. or Julie Marshall at Hawk Associates, Inc. (305)
852-2383. Copies of CGCA press releases, SEC filings, current price quotes
and other valuable information for investors may be found on the website
http://www.hawkassociates.com
AGREEMENT AND PLAN OF MERGER
DATED AUGUST 26, 1999
AMONG
CALPINE CORPORATION,
CALPINE EAST ACQUISITION CORP.
AND
COGENERATION CORPORATION OF AMERICA
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
ARTICLE I THE MERGER.....................................................................................2
Section 1.1 The Merger.....................................................................................2
Section 1.2 Effective Time.................................................................................2
Section 1.3 Effects of the Merger..........................................................................2
Section 1.4 Charter and By-Laws; Directors and Officers....................................................2
Section 1.5 Conversion of Securities.......................................................................2
Section 1.6 Payment Agent..................................................................................4
Section 1.7 Transfer Taxes; Withholding....................................................................4
Section 1.8 Return of Payment Fund.........................................................................5
Section 1.9 No Further Ownership Rights in Company Common Stock............................................5
Section 1.10 Closing of Company Transfer Books..............................................................5
Section 1.11 Lost Certificates..............................................................................5
Section 1.12 Further Assurances.............................................................................5
Section 1.13 Closing........................................................................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB...............................................6
Section 2.1 Organization, Standing and Power...............................................................6
Section 2.2 Authority......................................................................................7
Section 2.3 Consents and Approvals; No Violation...........................................................7
Section 2.4 Information Supplied...........................................................................8
Section 2.5 Actions and Proceedings........................................................................8
Section 2.6 Operations of Sub..............................................................................9
Section 2.7 Brokers........................................................................................9
Section 2.8 Financing......................................................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................9
Section 3.1 Organization, Standing and Power...............................................................9
Section 3.2 Capital Structure.............................................................................10
Section 3.3 Authority.....................................................................................11
Section 3.4 Consents and Approvals; No Violation..........................................................11
Section 3.5 SEC Documents and Other Reports...............................................................12
Section 3.6 Information Supplied..........................................................................13
Section 3.7 Absence of Certain Changes or Events..........................................................13
Section 3.8 Permits and Compliance........................................................................13
Section 3.9 Tax Matters...................................................................................14
Section 3.10 Actions and Proceedings.......................................................................16
Section 3.11 Certain Agreements............................................................................16
Section 3.12 ERISA.........................................................................................17
Section 3.13 Compliance with Worker Safety and Environmental Laws..........................................18
Section 3.14 Labor Matters.................................................................................18
Section 3.15 State Takeover Statute........................................................................18
Section 3.16 Required Vote of Company Stockholders.........................................................19
Section 3.17 Brokers.......................................................................................19
Section 3.18 Opinion of Financial Advisor..................................................................19
Section 3.19 Utility Regulation............................................................................19
Section 3.20 Insurance.....................................................................................19
Section 3.21 Related Party Transactions....................................................................20
ARTICLE IV COVENANTS OF THE COMPANY......................................................................20
Section 4.1 Conduct of Business Pending the Merger........................................................20
Section 4.2 No Solicitation...............................................................................23
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ARTICLE V ADDITIONAL AGREEMENTS.........................................................................24
Section 5.1 Stockholder Meeting...........................................................................24
Section 5.2 Preparation of the Proxy Statement and Schedule 13e-3.........................................24
Section 5.3 Access to Information.........................................................................25
Section 5.4 Fees and Expenses.............................................................................25
Section 5.5 Best Efforts..................................................................................26
Section 5.6 Public Announcements..........................................................................27
Section 5.7 Real Estate Transfer and Gains Tax............................................................27
Section 5.8 Indemnification; Directors and Officers Insurance.............................................28
Section 5.9 Notification of Certain Matters...............................................................29
Section 5.10 Employee Benefit Plans and Agreements.........................................................29
Section 5.11 Performance by Sub............................................................................30
Section 5.12 Additional Consents and Approvals.............................................................30
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER............................................................30
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger....................................30
Section 6.2 Conditions to Obligation of the Company to Effect the Merger..................................31
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger..............................31
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.............................................................32
Section 7.1 Termination...................................................................................32
Section 7.2 Effect of Termination.........................................................................34
Section 7.3 Amendment.....................................................................................34
Section 7.4 Waiver........................................................................................34
ARTICLE VIII GENERAL PROVISIONS............................................................................34
Section 8.1 Non-Survival of Representations and Warranties................................................34
Section 8.2 Notices.......................................................................................34
Section 8.3 Interpretation................................................................................35
Section 8.4 Counterparts..................................................................................35
Section 8.5 Entire Agreement; No Third-Party Beneficiaries................................................35
Section 8.6 Governing Law.................................................................................36
Section 8.7 Assignment....................................................................................36
Section 8.8 Severability..................................................................................36
Section 8.9 Enforcement of this Agreement.................................................................36
Section 8.10 Consent to Jurisdiction.......................................................................36
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of August 26, 1999 (the
"Agreement"), is executed by and among CALPINE CORPORATION, a Delaware
corporation ("Parent"), CALPINE EAST ACQUISITION CORP., a Delaware
corporation and a subsidiary of Parent ("Sub"), and COGENERATION CORPORATION
OF AMERICA, a Delaware corporation (the "Company") (Sub and the Company being
hereinafter collectively referred to as the "Constituent Corporations").
RECITALS:
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the merger (the "Merger") of Sub with and into the
Company, on the terms and subject to the conditions set forth in this
Agreement, whereby each outstanding share of common stock, par value $.01 per
share, of the Company (the "Company Common Stock") not owned by Parent, Sub
or the Company will be converted into the right to receive $25.00 per share
(the "Merger Price") in cash pursuant to this Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Parent and NRG Energy, Inc., a Delaware corporation (the
"Principal Company Stockholder"), are entering into an agreement (the
"Company Stockholder Agreement" and together with this Agreement, the
"Transaction Documents") pursuant to which the Principal Company
Stockholder and Parent or Sub have agreed to take specified actions in
connection with the transactions contemplated by this Agreement;
WHEREAS, the Board of Directors of the Company has duly and
unanimously adopted resolutions approving the transactions contemplated by
the Transaction Documents in form and substance sufficient to render
Section 203 of the Delaware General Corporation Law (the "DGCL")
inapplicable to Parent and Sub; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the DGCL, Sub shall be merged with and into
the Company at the Effective Time (as hereinafter defined). Following the
Merger, the separate corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Sub in
accordance with the DGCL.
Section 1.2 EFFECTIVE TIME. The Merger shall become effective when a
Certificate of Merger (the "Certificate of Merger"), executed in accordance
with the relevant provisions of the DGCL, is filed with the Secretary of
State of the State of Delaware; PROVIDED, HOWEVER, that, upon the mutual
consent of the Constituent Corporations, the Certificate of Merger may
provide for a later date or time of effectiveness of the Merger. When used in
this Agreement, the term "Effective Time" shall mean the date and time at
which the Certificate of Merger is accepted for record or such later date or
time established by the Certificate of Merger. The filing of the Certificate
of Merger shall be made on the date of the Closing (as hereinafter defined).
Section 1.3 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 259 of the DGCL.
Section 1.4 CERTIFICATE OF INCORPORATION AND BY-LAWS; DIRECTORS AND
OFFICERS
(a) CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of
Incorporation of the Company shall be amended as set forth in Exhibit A to
this Agreement (the "Amendment"), which amendment shall be effective as soon
as practicable after the Company's shareholders have approved the amendment
and prior to the Effective Time. At the Effective Time, the Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be amended and restated to read as did the Certificate of
Incorporation of Sub immediately prior to the Effective Time. At the
Effective Time, the By-Laws of the Company, as in effect immediately prior to
the Effective Time, shall be amended and restated to read as did the By-Laws
of Sub immediately prior to the Effective Time. As so amended and restated,
such Certificate of Incorporation and By-Laws of the Company shall be the
Certificate of Incorporation and By-Laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
(b) DIRECTORS AND OFFICERS. From and after the Effective Time, the
directors of Sub at the Effective Time shall be the directors of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be. From and after the Effective Time, the officers of the Sub at the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
Section 1.5 CONVERSION OF SECURITIES. As of the Effective Time, by
virtue of the Merger and without any action on the part of Sub, the Company
or the holders of any securities of the Constituent Corporations:
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(a) Each issued and outstanding share of common stock, without par
value, of Sub shall be converted into one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation with the
same rights, powers and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
(b) All shares of Company Common Stock that are held in the treasury
of the Company or owned by Parent, Sub or any Subsidiary (as defined in
Section 2.1) of either of them shall be canceled and no cash or other
consideration shall be delivered in exchange therefor.
(c) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled in
accordance with Section 1.5(b) and Dissenting Shares (as defined in Section
1.5(e)) shall be converted into the right to receive an amount of cash equal
to the Merger Price without interest. All such shares of Company Common
Stock, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and each holder of a certificate (the
"Certificate") formerly representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the cash to be paid
to such holder pursuant to Article I hereof (the "Merger Consideration") upon
the surrender of a Certificate or Certificates in accordance with Section 1.6
hereof.
(d) (i) At the Effective Time, each outstanding option to purchase
Company Common Stock (each a "Company Stock Option") granted under the
Company Stock Plans (as defined herein), whether or not then exercisable,
shall be cancelled and each holder of a cancelled Company Stock Option shall
be entitled to receive at the Effective Time or as soon as practicable
thereafter from the Company, upon execution and delivery to the Payment Agent
(as defined in Section 1.6 below) of an option termination agreement, in form
and substance reasonably acceptable to Parent in consideration for the
cancellation of such Company Stock Option an amount in cash (the "Option
Consideration") equal to (x) the number of shares of Company Common Stock
previously subject to such Company Stock Option that but for the cancellation
thereof pursuant to the provisions of this Section 1.5(d) would have been
currently exercisable (after giving effect to any acceleration of vesting
pursuant to the terms of such Company Stock Option as a result of the
consummation of the Merger), multiplied by (y) the excess, if any, of the
Merger Price over the exercise price per share of Company Common Stock
previously subject to such Company Stock Option (such payment to be net of
applicable withholding taxes).
(ii) Except as provided herein or as otherwise agreed to by the
parties and to the extent permitted by the Company Stock Plans, (x) the
Company Stock Plans shall terminate as of the Effective Time and the
provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of
the Company or any of its Subsidiaries shall be deleted as of the Effective
Time and (y) the Company shall use all reasonable efforts to ensure that
following the Effective Time no holder of Company Stock Options or any
participant in the Company Stock Plans or any other plans, programs or
arrangements shall have any right thereunder to acquire any equity securities
of the Company, the Surviving Corporation or any subsidiary thereof.
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(e) Notwithstanding anything in this Agreement to the contrary,
shares ("Dissenting Shares") of Company Common Stock that are outstanding
immediately prior to the Effective Time and that are held by Persons who are
entitled to demand and have properly demanded dissention rights with respect
to such Dissenting Shares pursuant to, and who comply in all respects with,
Section 262 of the DGCL ("Section 262") shall not be converted into the
Merger Consideration as provided in Section 1.5(c), but rather the holders of
Dissenting Shares shall be entitled to payment of the fair market value of
such Dissenting Shares in accordance with Section 262; PROVIDED, HOWEVER,
that if any holder of Dissenting Shares shall fail to perfect or otherwise
shall waive, withdraw or lose the right to Dissenting under Section 262, then
the right of such holder to be paid the fair value of such holder's
Dissenting Shares shall cease and such Dissenting Shares shall be treated as
if they had been converted as of the Effective Time into the Merger
Consideration, as provided in Section 1.5(c). The Company shall serve prompt
notice to Parent of any demands received by the Company for dissenter's
rights with respect to any shares of Company Common Stock, and Parent shall
have the right to participate in and direct all negotiations and proceedings
with respect to such demands. The Company shall not, except with the prior
written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands, or agree to do any of the foregoing.
Section 1.6 PAYMENT AGENT.
(a) EXCHANGE OF CERTIFICATES. Parent shall authorize a commercial
bank or trust company (or such other Person or Persons as shall be reasonably
acceptable to Parent and the Company) to act as Payment Agent hereunder (the
"Payment Agent"). As soon as practicable after the Effective Time, Parent
shall deposit with the Payment Agent, in trust for the holders of shares of
Company Common Stock converted in the Merger and holders of Company Stock
Options, an amount of cash equal to or exceeding the aggregate Merger
Consideration to be paid to holders of Company Common Stock pursuant to
Article I hereof and any Option Consideration to be paid to holders of
Company Stock Options pursuant to the terms of Section 1.5(d) (such amount
hereinafter the "Payment Fund").
(b) EXCHANGE PROCEDURES. Parent shall instruct the Payment Agent, as
soon as practicable after the Effective Time, to mail to each record holder
of a Certificate or Certificates a letter of transmittal, which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual delivery of the Certificates to the
Payment Agent, and shall contain instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender for cancellation to the Payment Agent of all Certificates held by
any record holder of a Certificate, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a check representing the Merger Consideration, and any
Certificate so surrendered shall forthwith be canceled. Holders of Company
Stock Options shall receive payment, if any, for such Company Stock Options
pursuant to Section 1.5(d).
Section 1.7 TRANSFER TAXES; WITHHOLDING. If any Merger Consideration
is to be paid to any Person other than to the Person named in the Certificate
surrendered in exchange therefor, it shall be a condition of such exchange
that the Certificate so surrendered shall be properly endorsed and otherwise
in proper form for transfer and that the Person requesting such exchange
4
shall pay to the Payment Agent any transfer or other taxes required by reason
of the payment of the Merger Consideration to a Person other than to the
Person named in the Certificate surrendered, or shall establish to the
satisfaction of the Payment Agent that such tax has been paid or is not
applicable. Parent or the Payment Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of shares of Company Common Stock or holder of a Company Stock
Option such amounts as Parent or the Payment Agent is required to deduct and
withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code") or under any provision of
state, local or foreign tax law. To the extent that amounts are so withheld
by Parent or the Payment Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock or the holder of a Company Stock Option in
respect of which such deduction and withholding was made by Parent or the
Payment Agent. For purposes of this Agreement, "Person" shall mean an
individual, corporation, partnership, limited liability company, joint
venture, association, trust, unincorporated organization or other entity.
Section 1.8 RETURN OF PAYMENT FUND. Any portion of the Payment Fund
which remains undistributed for six months after the Effective Time shall be
delivered to Parent, upon demand of Parent, and any such former stockholders
who have not theretofore complied with this Article I and holders of Company
Stock Options who have not yet received the Option Consideration shall
thereafter look only to Parent for payment of their claim for any Merger
Consideration or Option Consideration, as the case may be. Neither Parent nor
the Surviving Corporation shall be liable to any former holder of Company
Common Stock or holder of a Company Stock Option for any cash held in the
Payment Fund which is delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
Section 1.9 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
payment of the Merger Consideration upon surrender of any Certificate shall
be deemed to constitute full satisfaction of all rights pertaining to the
shares of Company Common Stock represented by such Certificate.
Section 1.10 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer
of shares of Company Common Stock shall thereafter be made on the records of
the Company. If, after the Effective Time, Certificates are presented to the
Surviving Corporation, the Payment Agent or the Parent, such Certificates
shall be canceled and exchanged as provided in this Article I.
Section 1.11 LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent or the Payment Agent, the posting by such Person of a
bond, in such reasonable amount as Parent or the Payment Agent may direct as
indemnity against any claim that may be made against them with respect to
such Certificate, the Payment Agent will pay the Merger Consideration in
exchange for such lost, stolen or destroyed Certificate.
Section 1.12 FURTHER ASSURANCES. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to
or under
5
any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver,
in the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and
on behalf of either Constituent Corporation, all such other acts and things
as may be necessary, desirable or proper to vest, perfect or confirm the
Surviving Corporation's right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of such
Constituent Corporation and otherwise to carry out the purposes of this
Agreement.
Section 1.13 CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") and all actions specified in this Agreement to
occur at the Closing shall take place at the offices of Kaplan, Strangis and
Kaplan, P.A., 5500 Norwest Center, 90 South Seventh Street, Minneapolis,
Minnesota, at 10:00 a.m., local time, no later than the second business day
following the day on which the last of the conditions set forth in Article VI
shall have been fulfilled or waived (if permissible) or at such other time
and place as Parent and the Company shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 2.1 ORGANIZATION, STANDING AND POWER. Each of Parent and Sub
is a corporation duly organized, validly existing and in good standing under
the laws of its place of incorporation and has the requisite corporate power
and authority to carry on its business as now being conducted. Parent is duly
qualified to do business, and is in good standing in each jurisdiction where
the character of the properties owned or held under lease by it or the nature
of its activities makes such qualification necessary, except where the
failure to be so qualified would not, individually or in the aggregate, have
a Material Adverse Effect (as hereinafter defined) on Parent. For purposes of
this Agreement (a) "Material Adverse Change" or "Material Adverse Effect"
means, when used with respect to Parent or the Company, as the case may be,
any change or effect that is or could reasonably be expected (as far as can
be foreseen at the time) to be materially adverse to the business, assets,
liabilities, financial condition or results of operations of Parent and its
Subsidiaries, taken as a whole, or the Company and its Subsidiaries, taken as
a whole, as the case may be; PROVIDED, HOWEVER, that in determining whether a
Material Adverse Change or Material Adverse Effect has occurred with respect
to either referenced party, any change or effect, to the extent it is
attributable to changes in prevailing interest rates or to any change in
general economic conditions affecting companies in industries similar to the
industries in which the Company and its Subsidiaries or Parent and its
Subsidiaries, as the case may be, operate, shall not be considered when
determining if a Material Adverse Change or Material Adverse Effect has
occurred; and (b) "Subsidiary" means any corporation, partnership, limited
liability company, joint venture or other legal entity of which Parent or the
Company, as the case may be (either alone or through or together with any
other Subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests the
6
holders of which are generally entitled to vote for the election of the board
of directors or other governing body of such corporation, partnership,
limited liability company, joint venture or other legal entity.
Section 2.2 AUTHORITY. On or prior to the date of this Agreement,
Parent and Sub have each approved the Transactions and the Transaction
Documents. Each of Parent and Sub has the requisite corporate power and
authority to enter into the Transaction Documents and to consummate the
transactions contemplated hereby. The execution and delivery of the
Transaction Documents by Parent and Sub to which it is a party and the
consummation by Parent and Sub of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the
part of Parent or Sub, as the case may be, subject to the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware.
The Transaction Documents to which it is a party have been duly executed and
delivered by Parent and Sub and constitute the valid and binding obligations
of each of Parent or Sub, as the case may be, enforceable against them in
accordance with its terms, except as the enforceability hereof may be limited
by bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and to judicial limitations on the
enforcement of specific performance and other equitable remedies.
Section 2.3 CONSENTS AND APPROVALS; NO VIOLATION. Assuming that all
consents, approvals, authorizations and other actions described in this
Section 2.3 have been obtained and all filings and obligations described in
this Section 2.3 have been made, the execution and delivery of the
Transaction Documents and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof will not result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give to others a right of termination, cancellation or acceleration
of any obligation or the loss of a material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of
the properties or assets of Parent or any of its Subsidiaries under, any
provision of (i) the Certificate of Incorporation or the By-Laws of Parent or
the Certificate of Incorporation or By-Laws of Sub, (ii) any provision of the
comparable charter or organization documents of any of Parent's Subsidiaries,
(iii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license
applicable to Parent or any of its Subsidiaries or (iv) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Parent or
any of its Subsidiaries or any of their respective properties or assets,
other than, in the case of clauses (ii), (iii) or (iv), any such violations,
defaults, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent, materially impair the ability of Parent or Sub to perform their
respective obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state),
foreign or supranational court, commission, governmental body, regulatory
agency, authority or tribunal (a "Governmental Entity") is required by or
with respect to Parent or any of its Subsidiaries in connection with the
execution, delivery and performance of any Transaction Agreement by Parent or
Sub or is necessary for the consummation of the Transactions, except for (i)
in connection, or in compliance, with the provisions of the Hart-Scott-Rodino
AntiTrust Improvement Act of 1976 (the "HSR Act") and the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), (ii) the final order of the
Federal Energy Regulatory Commission ("FERC") approving the transfer of
jurisdictional facilities under Section 203 of the Federal Power Act in
connection with the power generating project of one of the Company's
7
subsidiaries in Parlin, New Jersey (the "Regulatory Approval"), (iii) in
connection, or in compliance, with the provisions of the New Jersey
Industrial Site Recovery Act and the New Jersey Environmental Cleanup
Responsibility Act (the "Applicable New Jersey Law"), (iv) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
and appropriate documents with the relevant authorities of other states in
which the Company or any of its Subsidiaries is qualified to do business, (v)
such filings, authorizations, orders, notices and approvals as may be
required by state takeover laws (the "State Takeover Approvals"), and (vi)
such consents, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not, individually
or in the aggregate, have a Material Adverse Effect on Parent, or materially
impair the ability of Parent or Sub to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby.
Neither the Parent nor the Sub is an electric utility or an electric utility
holding company or companies, or any affiliate of either, in each case as
those terms are utilized by the FERC in regulations or orders implementing
the Public Utility Regulatory Policies Act of 1978, as amended, and its
successors ("PURPA"). Consummation of the Merger will not result in the loss
of the status of any project as a "Qualifying Facility" as defined under
PURPA in which the Company or any of its Subsidiaries, directly or
indirectly, have an equity interest.
Section 2.4 INFORMATION SUPPLIED. None of the information to be
supplied by Parent or Sub for inclusion or incorporation by reference in the
Schedule 13e-3 to be filed pursuant to the Exchange Act in connection with
the transactions contemplated by the Transaction Documents (together with any
amendments or supplements thereto, the "Schedule 13e-3") or the proxy
statement relating to the Stockholder Meeting (as hereinafter defined)
(together with any amendments or supplements thereto, the "Proxy Statement")
will, (i) in the case of the Schedule 13e-3, at the time of its filing, at
the time of the dissemination of the Schedule 13e-3 and until the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or (ii) in the case of the Proxy Statement
and at the time of the mailing of the Proxy Statement and at the time of the
Stockholder Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading, except that no representation is made by
Parent or Sub with respect to statements made or incorporated by reference
therein based on information supplied by or on behalf of the Company or NRG
Energy, Inc. for inclusion or incorporation by reference therein.
Section 2.5 ACTIONS AND PROCEEDINGS. As of the date of this
Agreement, there are no outstanding orders, judgments, injunctions, awards or
decrees of any Governmental Entity against or involving Parent or any of its
Subsidiaries, or against or involving any of the present or former directors,
officers, employees, consultants, agents or stockholders of Parent or any of
its Subsidiaries, as such, or any of its or their properties, assets or
business that, individually or in the aggregate, would materially impair the
ability of Parent to perform its obligations hereunder. As of the date of
this Agreement, there are no actions, suits or claims or legal,
administrative or arbitrative proceedings or investigations pending or, to
the Knowledge of Parent, threatened against or involving Parent or any of its
Subsidiaries or any of its or their present or former directors, officers,
employees, consultants, agents or stockholders, as such, or any of its or
their properties, assets or business that, individually or in the aggregate,
would materially impair the ability of Parent to perform its obligations
hereunder. As of the date hereof, there are no actions, suits, labor disputes
or
8
other litigation, legal or administrative proceedings or governmental
investigations pending or, to the Knowledge of Parent, threatened against or
affecting Parent or any of its Subsidiaries or any of its or their present or
former officers, directors, employees, consultants, agents or stockholders,
as such, or any of its or their properties, assets or business relating to
the transactions contemplated by this Agreement. For purposes of this
Agreement, "Knowledge of Parent" means the actual knowledge of the executive
officers of Parent after due inquiry.
Section 2.6 OPERATIONS OF SUB. Sub is a direct subsidiary of Parent,
was formed solely for the purpose of engaging in the transactions
contemplated hereby, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
Section 2.7 BROKERS. No broker, investment banker or other Person is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transaction contemplated by this Agreement based upon the
arrangements made by or on behalf of Parent or Sub.
Section 2.8 FINANCING. Parent has sufficient capital resources
necessary to perform its obligations under the Transaction Documents,
including but not limited to the advances under Section 5.11.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub that, subject
to the disclosures set forth in the letter dated as of the date hereof and
delivered on the date hereof by Company to Parent (the "Company Letter"):
Section 3.1 ORGANIZATION, STANDING AND POWER. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as now being conducted. Each Subsidiary of
the Company is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has the requisite
corporate (in the case of a Subsidiary that is a corporation) or other power
and authority to carry on its business as now being conducted, except where
the failure to be so organized, existing or in good standing or to have such
power or authority would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. The Company and each of its
Subsidiaries are duly qualified to do business, and are in good standing, in
each jurisdiction where the character of their properties owned or held under
lease or the nature of their activities makes such qualification necessary,
except where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. The Company has
delivered or otherwise made available to Parent true and complete and correct
copies of the Company's Certificate of Incorporation and By-laws and the
certificate of incorporation, by-laws or other constitutive documents of each
of the Company's Subsidiaries, in each case as amended to the date of this
Agreement.
9
Section 3.2 CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock and 20,000,000
shares of undesignated preferred stock, par value $.01 per share ("Company
Preferred Stock"). As of the date of this Agreement, (i) 6,857,269 shares of
Company Common Stock were issued and outstanding, all of which were duly
authorized, validly issued, fully paid and nonassessable and free of
preemptive rights, (ii) 39,800 shares of Company Common Stock were held in
the treasury of the Company or by Subsidiaries of the Company, (iii) 877,000
shares of Company Common Stock were reserved for issuance pursuant to
outstanding Company Stock Options under the Company's stock plans described
under Section 3.2 of the Company Letter (collectively, the "Company Stock
Plans"), and (iv) 797,000 Company Stock Options are currently exercisable or
will become exercisable upon consummation of the Transactions. A true and
complete list of the options (and their exercise prices) referred to in
clause (iv) above that are entitled to Option Consideration are set forth on
Section 3.2 of the Company Letter. No Company Stock Options have been granted
since May 31, 1999. The Company Stock Plans are the only benefit plans of the
Company or its Subsidiaries under which any securities of the Company or any
of its Subsidiaries are issuable. No shares of Company Preferred Stock are
outstanding. As of the date of this Agreement, except as set forth above no
shares of capital stock or other voting securities of the Company or any
Subsidiary were issued, reserved for issuance or outstanding. Except as set
forth in this Section 3.2, there are no outstanding equity equivalents or
interests in the ownership or earnings of the Company or any Subsidiary and
there are no options, warrants, calls, rights or agreements to which the
Company or any of its Subsidiaries is a party or by which any of them is
bound obligating the Company or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or voting securities of the Company or any of its Subsidiaries or
obligating the Company or any of its Subsidiaries to grant, extend or enter
into any such option, warrant, call, right or agreement. Each outstanding
share of capital stock of each Subsidiary of the Company that is a
corporation is duly authorized, validly issued, fully paid and nonassessable
and each such share is owned by the Company or another Subsidiary of the
Company, free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on voting rights,
charges and other encumbrances of any nature whatsoever ("Claims"). With
respect to the Grays Ferry Cogeneration Partnership, which is the only
Subsidiary of the Company which is a partnership (the "Partnership"),
CogenAmerica Schuylkill, Inc. has good and valid title to the partnership
interests owned by it in the Partnership, free and clear of all Claims. There
are no outstanding (i) subscriptions or other rights to purchase or otherwise
acquire any partnership interest in the Partnership, (ii) securities
convertible into or exchangeable for any partnership interest in the
Partnership, or (iii) obligations of the Partnership to issue, deliver or
sell any partnership interest, voting securities or securities convertible
into or exchangeable for partnership interests in the Partnership. Except for
the Subsidiaries of the Company disclosed in the Company SEC Documents (as
defined in Section 3.5 below), the Company does not own or control, directly
or indirectly, any capital stock or other securities of, or have any
ownership interest in, any Person. The Company does not have any outstanding
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter. Exhibit 21
to the Company's Annual Report on Form 10-K for the year ended December 31,
1998 (the "Company Annual Report"), as filed with the Securities and Exchange
Commission ("SEC"), is a true, accurate and correct statement in all material
respects of all of the information as of December 31, 1998 required to be set
forth therein by the regulations of the SEC.
10
Section 3.3 AUTHORITY. On or prior to the date of this Agreement, the
Board of Directors of the Company has approved this Agreement in accordance
with the DGCL, resolved to recommend the adoption of this Agreement by the
Company's stockholders and directed that this Agreement be submitted to the
Company's stockholders for adoption. The Company has all requisite corporate
power and authority to enter into each Transaction Document to which it is a
Party and, subject, in the case of the Merger, to approval by the
stockholders of the Company, to consummate the Merger. The execution and
delivery of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject to (x)
approval of this Agreement by the stockholders of the Company and (y) the
filing of the Certificate of Merger with the Secretary of State of the State
of Delaware. This Agreement has been duly executed and delivered by the
Company and (assuming the valid authorization, execution and delivery of this
Agreement by Parent and Sub and the validity and binding effect of the
Agreement on Parent and Sub) constitutes the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except as the enforceability hereof may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and to judicial limitations on the enforcement of specific
performance and other equitable remedies. The filing of the Proxy Statement
with the SEC has been duly authorized by the Company's Board of Directors.
Section 3.4 CONSENTS AND APPROVALS; NO VIOLATION. Assuming that all
consents, approvals, authorizations and other actions described in this
Section 3.4 have been obtained and all filings and obligations described in
this Section 3.4 have been made, the execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, result in any violation of,
or default (with or without notice or lapse of time, or both) under, or give
to others a right of termination, cancellation or acceleration of any
obligation or the loss of a material benefit under, or result in the creation
of any Claim upon any of the properties or assets of the Company or any of
its Subsidiaries under, any provision of (i) the Certificate of Incorporation
or By-Laws of the Company, (ii) any provision of the comparable charter or
organization documents of any of the Company's Subsidiaries, (iii) any loan
or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
the Company or any of its Subsidiaries or (iv) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any
of its Subsidiaries or any of their respective properties or assets, other
than, in the case of clauses (ii), (iii) or (iv), any such violations,
defaults, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company, materially impair the ability of the Company to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby or thereby. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by
or with respect to the Company or any of its Subsidiaries in connection with
the execution and delivery of any Transaction Document to which it is a party
or is necessary for the consummation of the Transactions, except for (i) in
connection, or in compliance, with the provisions of the HSR Act, the
Securities Act and the Exchange Act, (ii) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which the Company
or any of its Subsidiaries is qualified to do business, (iii) such filings,
11
authorizations, notices, orders and approvals as may be required to obtain
the Regulatory Approval, the State Takeover Approvals and in connection with
the Applicable New Jersey Laws (collectively, the "Governmental Approvals")
and (iv) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company, or materially impair the ability of the Company to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby.
Section 3.5 SEC DOCUMENTS AND OTHER REPORTS.
(a) The Company has filed all required documents with the SEC since
April 30, 1996 pursuant to Sections 13(a) and 15(d) of the Exchange Act (the
"Company SEC Documents"). As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and, at the
respective times they were filed, none of the Company SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements (including, in each case, any notes
thereto) of the Company included in the Company SEC Documents (the "Financial
Statements") complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, were prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes
thereto), are in accordance with the books and records of the Company and
fairly presented in all material respects the consolidated financial position
of the Company and its consolidated Subsidiaries as at the respective dates
thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the Company SEC
Documents or as required by generally accepted accounting principles, the
Company has not, since December 31, 1998, made any change in the accounting
practices or policies applied in the preparation of financial statements.
Except as and to the extent set forth in the Company Annual Report, neither
the Company nor any of its Subsidiaries had as of December 31, 1998 any
liabilities or obligations of any nature, whether or not accrued, contingent
or otherwise, that would be required by generally accepted accounting
principles to be reflected on the consolidated balance sheet of the Company
and its Subsidiaries (including the notes thereto) included in the Financial
Statements that are not so reflected.
(b) The Company has provided to Parent true and complete copies of
the financial statements for its Subsidiaries described in Section 3.5 of the
Company Letter (the "Project Financial Statements"). The Project Financial
Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto), are in
accordance with the books and records of the relevant Subsidiary, and fairly
present, in all material respects, the financial position of such Subsidiary
as at the respective dates thereof and the results of its operations and its
cash flows for the periods then ended.
12
Section 3.6 INFORMATION SUPPLIED. Each document required to be filed
by the Company with the SEC in connection with the transactions contemplated
by this Agreement, including, without limitation, the Proxy Statement and the
Schedule 13e-3, and any amendments or supplements thereto will comply in all
material respects with the provisions of the Exchange Act. Neither the Proxy
Statement (other than with respect to information contained in the Proxy
Statement provided to the Company by Parent for inclusion in the Proxy
Statement) nor any of the information supplied by the Company for inclusion
or incorporation by reference in the Schedule 13e-3, together with any
amendments or supplements thereto, will (i) in the case of the Proxy
Statement, at the time of the mailing of the Proxy Statement and at the time
of the Stockholder Meeting contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (ii) in the case of information
supplied by the Company for inclusion or incorporation by reference in the
Schedule 13e-3, at the time of its filing, at the time of the dissemination
of the Schedule 13e-3 and until the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading.
Section 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Company SEC Documents filed with the SEC prior to the date of this
Agreement, since December 31, 1998 to the date hereof, (A) the Company and
its Subsidiaries have not incurred any material liability or obligation
(indirect, direct or contingent), or entered into any material oral or
written agreement or other transaction, that is not in the ordinary course of
business or that would result in a Material Adverse Effect on the Company,
(B) there has been no change in the capital stock of the Company except for
the issuance of shares of the Company Common Stock pursuant to the exercise
of Company Stock Options and no dividend or distribution of any kind
declared, paid or made by the Company on any class of its stock, (C) there
has not been (x) any granting by the Company or any of its Subsidiaries to
any executive officer of the Company or any of its Subsidiaries of any
increase in compensation, except in the ordinary course of business
consistent with prior practice or as was required under employment agreements
in effect as of the date of the most recent audited financial statements
included in the Company SEC Documents, (y) any granting by the Company or any
of its Subsidiaries to any such executive officer of any increase in
severance or termination agreements in effect as of the date of the most
recent audited financial statements included in the Company SEC Documents or
(z) any entry by the Company or any of its Subsidiaries into any employment,
deferred compensation, severance or termination agreement with any such
executive officer, and (D) there has been no event causing a Material Adverse
Effect on the Company, nor any development that would, individually or in the
aggregate, result in a Material Adverse Effect on the Company.
Section 3.8 PERMITS AND COMPLIANCE. Each of the Company and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or
any of its Subsidiaries to own, lease and operate its properties or to carry
on its business as it is now being conducted (the "Company Permits"), except
where the failure to have any of the Company Permits would not, individually
or in
13
the aggregate, have a Material Adverse Effect on the Company, and as of the
date of this Agreement no suspension or cancellation of any of the Company
Permits is pending or, to the Knowledge of the Company (as hereinafter
defined), threatened, except where the suspension or cancellation of any of
the Company Permits would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries is in violation of (A) its Certificate of Incorporation, by-laws
or other organizational documents, (B) any applicable law, ordinance,
administrative or governmental rule or regulation or (C) any order, decree or
judgment of any Governmental Entity having jurisdiction over the Company or
any of its Subsidiaries, except, in the case of clauses (B) and (C), for any
violations that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Except as disclosed in the Company SEC
Documents filed prior to the date of this Agreement, as of the date of this
Agreement none of the Company or any of its Subsidiaries is a party to any
Material Contract. For purposes of this Agreement, "Material Contract" shall
mean any contract or agreement filed as an exhibit to the Company SEC
Documents or any other contract or agreement that is material to the
business, properties, assets, liabilities, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries, taken as a
whole. Except as set forth in the Company SEC Documents filed prior to the
date of this Agreement, no event of default or event that, but for the giving
of notice or the lapse of time or both, would constitute an event of default
exists or, upon the consummation by the Company of the transactions
contemplated by this Agreement, will exist under any indenture, mortgage,
loan agreement, note or other agreement or instrument for borrowed money, any
guarantee of any agreement or instrument for borrowed money, or any lease,
contractual license or other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any such
Subsidiary is bound or to which any of the properties, assets or operations
of the Company or any such Subsidiary is subject, other than any defaults
that, individually or in the aggregate, would not have a Material Adverse
Effect on the Company. All Material Contracts (other than the Affiliate
Arrangements (as defined in Section 3.21 below) which will be terminated at
the Effective Time) to which the Company or any of its Subsidiaries is a
party are in full force and effect and are the valid and binding obligations
of the Company or the applicable Subsidiary, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights generally
and to judicial limitations on the enforcement of specific performance and
other equitable remedies. The Company has made available or delivered to
Parent true and complete copies of the Material Contracts and all other
documents referred to in the Company Letter, in each case as amended to the
date of this Agreement. As of the date of this Agreement, set forth in
Section 3.8 of the Company Letter is a description of any material changes to
the amount and terms of the indebtedness of the Company and its Subsidiaries
as described in the Company Annual Report. For purposes of this Agreement,
"Knowledge of the Company" means the actual knowledge of the executive
officers of the Company after due inquiry.
Section 3.9 TAX MATTERS. (i) The Company and each of its Subsidiaries
have timely filed all federal, and all material state, local, foreign and
provincial, Tax Returns required to have been filed or appropriate extensions
therefor have been properly obtained, and such Tax Returns are correct and
complete, except to the extent that any failure to so file or any failure to
be correct and complete would not, individually or in the aggregate, have a
Material Adverse Effect on the Company; (ii) all Taxes shown to be due on
such Tax Returns have been timely paid, taking into account extensions for
payment that have been properly obtained, or such Taxes are being timely and
properly contested which contests as of the date of this Agreement have been
disclosed in Section 3.9 of the Company Letter; (iii) the Company and each of
its Subsidiaries have complied in all material respects with all rules and
regulations relating to the withholding of Taxes except to the extent that
any failure to comply with such rules and regulations would not, individually
or in the
14
aggregate, have a Material Adverse Effect on the Company; (iv) neither the
Company nor any of its Subsidiaries has waived any statute of limitations in
respect of its Taxes; (v) any Tax Returns referred to in clause (i) relating
to federal and state income Taxes have been examined by the IRS or the
appropriate state taxing authority or the period for assessment of the Taxes
in respect of which such Tax Returns were required to be filed has expired;
(vi) no material issues that have been raised in writing by the relevant
taxing authority in connection with the examination of the Tax Returns
referred to in clause (i) are currently pending and each such examination has
been completed; (vii) all deficiencies asserted or assessments made as a
result of any examination of such Tax Returns by any taxing authority have
been paid in full or are being timely and properly contested which contests
as of the date of this Agreement have been disclosed in Section 3.9 of the
Company Letter; and (viii) no withholding is required under Section 1445 of
the Code in connection with the Merger; (ix) neither the Company nor any of
its Subsidiaries is party to or bound by any tax-sharing agreement, tax
indemnity obligation or similar agreement, arrangement or practice with
respect to Taxes (including any advance pricing agreement, closing agreement
or other agreement relating to Taxes with any taxing authority); (x) neither
the Company nor any of its Subsidiaries nor any affiliated group that
includes any of them shall be required to include in a taxable period ending
after the Closing Date any material amount of taxable income attributable to
income that accrued in a prior taxable period but was not recognized in any
prior taxable period as a result of the installment method of accounting, the
long-term contract method of accounting, the cash method of accounting or
Section 481 of the Code or any comparable provision of state, local, or
foreign Tax law, or for any other reason; (xi) neither the Company nor any of
its Subsidiaries has made any consent under Section 341 of the Code, no
property of the Company or of any of its Subsidiaries is "tax exempt use
property" within the meaning of Section 168(h) of the Code, neither the
Company nor any of its Subsidiaries is a party to any lease made pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954 and none of the assets
of the Company or of any of its Subsidiaries is subject to a lease under
Section 7701(h) of the Code or under any predecessor section thereof; (xii)
neither the Company nor any of its Subsidiaries has requested any extension
of time within which to file any Tax return, which return has not yet been
filed; and (xiii) no power of attorney with respect to any Taxes has been
executed or filed with any taxing authority by or on behalf of the Company or
any of its Subsidiaries. The Company has delivered or made available to
Parent for inspection (A) true and complete copies of all material Tax
returns of the Company and any affiliated group of which the Company is a
member and of any of the Company's Subsidiaries relating to Taxes for all
taxable periods for which the applicable statute of limitations has not yet
expired and (B) complete and correct copies of all material private letter
rulings, revenue agent reports, information document requests, notices of
proposed deficiencies, deficiency notices, protests, petitions, closing
agreements, settlement agreements, pending ruling requests and any similar
documents, submitted by, received by or agreed to by or on behalf of the
Company or any such group or Subsidiary, or, to the extent related to the
income, business, assets, operations, activities or status of the Company or
any such group or Subsidiary, submitted by, received by or agreed to by or on
behalf of any affiliated group of which the Company is or has ever been a
member, and relating to Taxes for all taxable periods for which the statute
of limitations has not yet expired. No material liens exist for Taxes (other
than liens for Taxes not yet due and payable) with respect to any of the
assets or properties of the Company or any of its Subsidiaries. The Federal
income Tax returns of the Company and its Subsidiaries and any affiliated
group that includes any of them have expressly disclosed any Tax positions of
the Company, such Subsidiaries or such group that, if not disclosed, could
give rise to material penalties under Section 6662 of the Code. For purposes
of this Agreement: (i) "Taxes"
15
means any federal, state, local, foreign or provincial income, gross
receipts, property, sales, use, license, excise, franchise, employment,
payroll, withholding, alternative or added minimum, ad valorem, value-added,
transfer or excise tax, or other tax, custom, duty, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest
or penalty imposed by any Governmental Entity, and (ii) "Tax Return" means
any return, report or similar statement (including the attached schedules)
required to be filed with respect to any Tax, including, without limitation,
any information return, claim for refund, amended return or declaration of
estimated Tax.
Section 3.10 ACTIONS AND PROCEEDINGS. Except as set forth in the
Company SEC Documents filed prior to the date of this Agreement, there are,
as of the date of this Agreement, no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against or
involving (i) the Company or any of its Subsidiaries, (ii) to the Knowledge
of the Company, any of the present or former directors, officers, employees,
consultants, agents or stockholders of the Company or any of its
Subsidiaries, as such, (iii) any of the properties, assets or businesses of
the Company or any of its Subsidiaries or (iv) any Company Plan (as
hereinafter defined) that, individually or in the aggregate, would have a
Material Adverse Effect on the Company or materially impair the ability of
the Company to perform its obligations hereunder. As of the date of this
Agreement, there are no actions, suits or claims or legal, administrative or
arbitrative proceedings or investigations pending or, to the Knowledge of the
Company, threatened against or involving (i) the Company or any of its
Subsidiaries, (ii) to the Knowledge of the Company, any of its or their
present or former directors, officers, employees, consultants, agents or
stockholders, as such, (iii) any of the properties, assets or businesses of
the Company or any of its Subsidiaries or (iv) any Company Plan (as
hereinafter defined) that, individually or in the aggregate, would have a
Material Adverse Effect on the Company or materially impair the ability of
the Company to perform its obligations hereunder. As of the date hereof,
there are no actions, suits, labor disputes or other litigation, legal or
administrative proceedings or governmental investigations pending or, to the
Knowledge of the Company, threatened against or affecting (i) the Company or
any of its Subsidiaries, (ii) to the Knowledge of the Company, any of its or
their present or former officers, directors, employees, consultants, agents
or stockholders, as such, (iii) any of the properties, assets or businesses
of the Company or any of its Subsidiaries or (iv) any Company Plan, in each
case relating to the transactions contemplated by this Agreement. The Company
is not in default with respect to any material final judgment, order or
decree of any court or any governmental agency or instrumentality.
Section 3.11 CERTAIN AGREEMENTS. Except as set forth in Section 3.11
of the Company Letter or as provided pursuant to Section 1.7(d) hereof,
neither the Company nor any of its Subsidiaries is a party to any oral or
written agreement or plan, including any employment agreement, severance
agreement, stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of
any of the transactions contemplated by this Agreement. No holder of any
option to purchase shares of Company Common Stock, or shares of Company
Common Stock granted in connection with the performance of services for the
Company or its Subsidiaries, is or will be entitled to receive cash from the
Company or any Subsidiary in lieu of or in exchange for such option or shares
as a result of the transactions contemplated by this Agreement, other than as
provided in Section 1.5(d).
16
Section 3.12 ERISA
(a) COMPANY PLANS. Each Company Plan (as hereinafter defined) is
listed in Section 3.12(a) of the Company Letter. Except as would not have a
Material Adverse Effect on the Company, each Company Plan complies in all
respects with the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Code and all other applicable statutes and governmental rules
and regulations, and (i) no "reportable event" (within the meaning of Section
4043 of ERISA) has occurred with respect to any Company Plan that is likely
to have individually or in the aggregate, a Material Adverse Effect on the
Company, and (ii) no action has been taken, or is currently being considered,
to terminate any Company Plan subject to Title IV of ERISA. No Company Plan,
nor any trust created thereunder, has incurred any "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived.
(b) PLAN LIABILITIES. With respect to the Company Plans, no event has
occurred and, to the Knowledge of the Company, there exists no condition or
set of circumstances in connection with which the Company or any ERISA
Affiliate or Company Plan fiduciary could be subject to any liability under
the terms of such Company Plans, ERISA, the Code or any other applicable law,
other than liabilities for benefits payable in the normal course, which would
have a Material Adverse Effect on the Company. All Company Plans that are
intended to be qualified under Section 401(a) of the Code have been
determined by the IRS to be so qualified, or a timely application for such
determination is now pending or a request for such a determination filed
within the remedial amendment period of Section 401(b) of the Code is
pending, and the Company is not aware of any reason why any such Company Plan
is not so qualified in operation. Neither the Company nor any entity which is
treated as a single employer along with the Company under Section 414(b),
(c), (m) or (o) of the Code maintains or contributes to, or has ever
maintained or contributed to, or been required to contribute to or has
otherwise incurred any liability with respect to a "multiemployer plan"
within the meaning of Section 3(37) of ERISA or any plan subject to Title IV
of ERISA. Except as disclosed in Section 3.12(b) of the Company Letter,
neither the Company nor any of its ERISA Affiliates has any liability or
obligation under any welfare plan to provide benefits after termination of
employment to any employee or dependent other than as required by Section
4980B of the Code.
(c) DEFINITIONS. As used herein, (i) "Company Plan" means a "pension
plan" (as defined in Section 3(2) of ERISA), a "welfare plan" (as defined in
Section 3(1) of ERISA), or any bonus, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option,
phantom stock, holiday pay, vacation, severance, death benefit, sick leave,
fringe benefit, personnel policy, insurance or other plan, arrangement or
understanding, in each case established or maintained by the Company or any
of its ERISA Affiliates or as to which the Company or any of its ERISA
Affiliates has contributed or otherwise may have any liability, and (iii)
"ERISA Affiliate" means any corporation or trade or business controlled by,
controlling or under common control with the Company within the meaning of
Section 414 of the Code or Section 4001(a)(14) or 4001(b) of ERISA.
(d) EMPLOYMENT AGREEMENTS. Section 3.12(d) of the Company Letter
contains a true and complete list of all (i) severance and employment
agreements with the current and former
17
directors, officers, employees, independent contractors and consultants of
the Company and each ERISA Affiliate containing any obligation or liability
on or after the date of this Agreement, (ii) severance programs and policies
of the Company and each ERISA Affiliate with or relating to its current and
former directors, officers, employees, independent contractors and
consultants containing any obligation or liability on or after the date of
this Agreement, and (iii) plans, programs, agreements and other arrangements
of the Company and each ERISA Affiliate with or relating to its current and
former directors, officers, employees, independent contractors and
consultants containing change of control, acceleration of the time of payment
or vesting of benefits or similar provisions currently in effect
(collectively, the "Employee Agreements").
Section 3.13 COMPLIANCE WITH WORKER SAFETY AND ENVIRONMENTAL LAWS.
The properties, assets and operations of the Company and its Subsidiaries are
in compliance with all applicable federal, state, local and foreign laws,
rules and regulations, orders, decrees, judgments, permits and licenses
relating to public and worker health and safety (collectively, "Worker Safety
Laws") and the protection and clean-up of the environment and activities or
conditions related thereto, including, without limitation, those relating to
the generation, handling, disposal, transportation or release of hazardous
materials (collectively, "Environmental Laws"), except for any violations
that, individually or in the aggregate, would not have a Material Adverse
Effect on the Company. With respect to such properties, assets and
operations, including any previously owned, leased or operated properties,
assets or operations, there are no events, conditions, circumstances,
activities, practices, incidents, actions or plans of the Company or any of
its Subsidiaries that may interfere with or prevent compliance or continued
compliance with applicable Worker Safety Laws and Environmental Laws, other
than any such interference or prevention as would not, individually or in the
aggregate with any such other interference or prevention, have a Material
Adverse Effect on the Company. None of the Company or any of its Subsidiaries
has received or is aware of any claim or notice of violations of any
applicable Environmental Laws or Worker Safety Laws other than such claims or
violations as would not individually or in the aggregate have a Material
Adverse Effect on the Company.
Section 3.14 LABOR MATTERS. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or labor
contract. Neither the Company nor any of its Subsidiaries has engaged in any
unfair labor practice with respect to any Persons employed by or otherwise
performing services primarily for the Company or any of its Subsidiaries (the
"Company Business Personnel"), and there is no unfair labor practice
complaint or grievance against the Company or any of its Subsidiaries by the
National Labor Relations Board or any comparable state agency pending or
threatened in writing with respect to the Company Business Personnel, except
where such unfair labor practice, complaint or grievance would not have a
Material Adverse Effect on the Company. There is no labor strike, dispute,
slowdown or stoppage pending or, to the Knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries which may
interfere with the respective business activities of the Company or any of
its Subsidiaries, except where such dispute, strike or work stoppage would
not have a Material Adverse Effect on the Company.
Section 3.15 STATE TAKEOVER STATUTE. Section 203 of the DGCL is not
applicable to the Transactions.
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Section 3.16 REQUIRED VOTE OF COMPANY STOCKHOLDERS. The affirmative
vote of the holders of two-thirds of the outstanding shares of Company Common
Stock is required to approve the Merger. No other vote of the security
holders of the Company is required by law, the Certificate of Incorporation
or By-laws of the Company or otherwise in order for the Company to consummate
the Transactions.
Section 3.17 BROKERS. No broker, investment banker or other Person,
other than Donaldson, Lufkin & Jenerette Securities Corporation (the
"Financial Advisor"), is entitled to any broker's, finder's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
Company has furnished Parent a true and correct copy of the engagement
agreement with the Financial Advisor.
Section 3.18 OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of the Financial Advisor addressed to the Company's Board of
Directors, dated the date of this Agreement, to the effect that, as of such
date, the consideration to be received in the Merger by the holders of the
shares of Company Common Stock is fair from a financial point of view to the
Company's stockholders, other than NRG Energy, Inc. A signed copy of such
opinion has been delivered to Parent.
Section 3.19 UTILITY REGULATION. None of the Company or any of its
Subsidiaries is (i) subject to regulation under the Public Utility Holding
Company Act of 1935 ("PUHCA") (other than any such regulation contemplated by
Section 9(a)(2), 32 or 33 of PUHCA), (ii) subject to regulation as an
"electric utility" or a "public utility" as such terms are defined in the
Federal Power Act (other than as contemplated by 18 C.F.R. Sections
292.601(c) or Section 32 or 33 of PUHCA), or (iii) subject to regulation by
any state respecting the rates of electric utilities or the financial and
organizational regulation of electric utilities as those terms are used in
Section 210(e) of the Public Utility Regulatory Policies Act of 1978
("PURPA"), except with respect to participation in, or ownership of, an
"exempt wholesale generator" as such term is defined in Section 32 of PUHCA.
Not more than 50% of the ultimate ownership of the projects operated by the
Subsidiaries is held by Persons primarily engaged in the generation or sale
of electric power (other than electric power solely from qualifying
cogeneration facilities, qualifying small power production facilities, exempt
wholesale generators or foreign utilities companies (as defined in Section 33
of PUHCA)) within the meaning of the Federal Power Act. Each such project has
self-certified itself to be in compliance with such requirements without
objection by FERC or FERC has issued a final order stating that each such
project is a facility which complies with the definition of "cogeneration
facility" as set forth in 18 C.F.R. Sections 292.202(c) and which meets all
of the requirements for qualification set forth in 18 C.F.R. Sections
292.203(b).
Section 3.20 INSURANCE. Section 3.20 of the Company Letter contains a
true and complete list of all material insurance policies held by the Company
or any of its Subsidiaries. All such policies are in full force and effect
and all related premiums have been paid to date. As of the date of this
Agreement, there are no pending or, to the Knowledge of the Company,
threatened disputes or communications with or from any insurance carrier
denying or disputing any claim or regarding cancellation or non-renewal of
any such policy which if determined adversely to the Company, would have a
Material Adverse Effect on the Company.
19
Section 3.21 RELATED PARTY TRANSACTIONS. No director or officer of
the Company or any of its Subsidiaries or any Person which as of the date of
this Agreement has a Schedule 13D or 13G on file with the Securities and
Exchange Commission with respect to the Company Common Stock (each such
Person, a "Significant Holder"), or any member of the immediate family of any
such director, officer, Significant Holder or any Person in which any such
director, officer, Significant Holder, or any member of the immediate family
of any such director or officer, is an officer, director, trustee, partner or
holder of more than 50% of the outstanding capital stock or equity interests,
is a party to any material executory transaction with the Company or any of
its Subsidiaries. There are not loans, guarantees, letters of credit or other
forms of credit support provided by or on behalf of any director or officer
of the Company or any of its Subsidiaries to or in favor of the Company or
any of its Subsidiaries. For purposes of this Agreement, "Affiliate
Arrangements" shall mean the arrangements identified on Section 3.21 of the
Company Letter that will terminate at the Effective Time.
ARTICLE IV
COVENANTS OF THE COMPANY
Section 4.1 CONDUCT OF BUSINESS PENDING THE MERGER. Except as
expressly permitted by clauses (i) through (xvi) of this Section 4.1 or as
set forth in the Company Letter, during the period from the date of this
Agreement through the Effective Time, the Company shall, and shall cause each
of its Subsidiaries to carry on its business in the ordinary course of its
business as currently conducted and, to the extent consistent therewith, use
best efforts to preserve intact its current business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that its goodwill and ongoing business shall be unimpaired
at the Effective Time. Without limiting the generality of the foregoing, and
except as otherwise expressly contemplated by this Agreement or as set forth
in the Company Letter, the Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Parent (which consent
shall not be unreasonably withheld or delayed):
(i) (A) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect of,
any of its capital stock, or otherwise make any payments to its
stockholders in their capacity as such (other than dividends and other
distributions by Subsidiaries), (B) split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock or (C) purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its Subsidiaries or any
other interests or securities thereof or any rights, warrants or options
to acquire any such shares or other interests or securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock or partnership interests, any
other voting securities or equity equivalent or any securities
convertible into, or any rights, warrants or options to acquire any
such shares or interests, voting securities, equity equivalent or
convertible securities, other than the issuance
20
of shares of Company Common Stock upon the exercise of Company Stock
Options outstanding on the date of this Agreement in accordance with
their current terms.
(iii) amend its Certificate of Incorporation or charter or
By-Laws;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or equity
in, or by any other manner, any business or any corporation, limited
liability company, partnership, association or other business
organization or division thereof or otherwise acquire or agree to
acquire any assets, other than transactions that are in the ordinary
course of business consistent with past practice and that have a
transaction value less than $250,000 individually or $1,000,000 in the
aggregate and not material to the Company and its Subsidiaries taken as
a whole;
(v) sell, lease or otherwise dispose of, or agree to sell,
lease or otherwise dispose of, any of its assets, other than
transactions that are in the ordinary course of business consistent
with past practice and that have a transaction value less than $250,000
individually or $1,000,000 in the aggregate;
(vi) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital contributions
to, or other investments in, any other Person, other than (A) any such
obligations incurred in the ordinary course of business consistent with
past practices and that are less than $500,000 in the aggregate, and
(B) indebtedness, loans, advances, capital contributions and
investments between the Company and any of its Subsidiaries or between
any of such Subsidiaries;
(vii) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or
ownership of the Company or of any of its Subsidiaries;
(viii) enter into or adopt any, or amend any existing,
severance plan, agreement or arrangement or enter into or amend any
Company Plan or employment or consulting agreement, except in the case
of any amendments to any Company Plan, for any immaterial changes as
required by applicable law;
(ix) increase the compensation payable or to become payable to
its current or former directors, officers, employees, independent
contractors or consultants or grant any severance or termination pay
to, or enter into or amend any employment or severance agreement with,
any current or former director, officer, employee, independent
contractor or consultant of the Company or any of its Subsidiaries, or
establish, adopt, enter into, or, except in the case of any amendments
to any Company Plan, for any immaterial changes as may be required to
comply with applicable law, amend in any material respect or take
action to enhance in any material respect or accelerate the payment or
vesting of any rights or benefits under, any labor, collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any director, officer,
employee, consultant or independent contractor;
21
(x) violate or fail to perform any obligation or duty imposed
upon it or any of its Subsidiaries by any applicable material federal,
state or local law, rule, regulation, guideline or ordinance;
(xi) make any change to accounting policies or procedures
(other than actions required to be taken by generally accepted
accounting principles);
(xii) prepare or file any Tax Return inconsistent with past
practice or, on any such Tax Return, take any position, make any
election, or adopt any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing similar
Tax Returns in prior periods;
(xiii) make any tax election or settle or compromise any
material federal, state, local or foreign income tax liability;
(xiv) enter into any contract which involves aggregate
payments in excess of $250,000 for individual contracts or $1,000,000
in the aggregate for all contracts or amend, terminate, renew or waive
any rights of material value under, any Material Contract of the
Company or any of its Subsidiaries; or other than as described in
Section 4.1(xiv) of the Company Letter, make or agree to make any new
capital expenditure or expenditures in excess of $250,000 individually
or $500,000 in the aggregate;
(xv) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than (a) the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent financial statements
(or the notes thereto) of the Company included in the Company SEC
Documents or incurred in the ordinary course of business consistent
with past practice or (b) payments of principal and interest and
related fees on indebtedness owed by the Company or any of its
Subsidiaries under existing revolving credit facilities and scheduled
payments of principal and interest and related fees on any other
indebtedness owed by the Company or any of its Subsidiaries under any
existing credit facility;
(xvi) take any write-down of the value of any asset or take
any write-off as uncollectible of any accounts or notes receivable or
any portion thereof, except to the extent such write-down or write-off
is required by generally accepted accounting principles or is
consistent with the historic accounting policies adhered to by the
Company or its Subsidiaries, as applicable; or
(xvii) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
22
Section 4.2 NO SOLICITATION
(a) TAKEOVER PROPOSALS. The Company shall not, nor shall it permit
any of its Subsidiaries to, nor shall it authorize or permit any officer,
director or employee of or any financial advisor, attorney or other advisor
or representative of, the Company or any of its Subsidiaries to, (i) solicit,
initiate or encourage the submission of, any Takeover Proposal (as hereafter
defined), (ii) enter into any agreement with respect to any Takeover Proposal
or (iii) participate in any discussions or negotiations regarding, or furnish
to any Person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal; PROVIDED,
HOWEVER, that, if the Board of Directors of the Company reasonably determines
the Takeover Proposal constitutes a Superior Proposal (as defined below),
then, to the extent required by the fiduciary obligations of the Board of
Directors of the Company, as determined in good faith by a majority of the
disinterested members thereof after receiving the advice of independent legal
counsel, the Company may, in response to an unsolicited request therefor,
furnish information with respect to the Company to, and enter into
discussions with, any Person that has made such Takeover Proposal pursuant to
a customary confidentiality agreement. For purposes of this Agreement, (i)
"Takeover Proposal" means any proposal for, offer or indication of interest
in a merger or other business combination involving the Company or any of its
Subsidiaries or any proposal or offer to acquire in any manner, directly or
indirectly, a substantial equity interest in, a substantial portion of the
voting securities of, or a substantial portion of the assets of the Company
or any of its Subsidiaries, other than the transactions contemplated by this
Agreement, and (ii) "Superior Proposal" means a bona fide Takeover Proposal
made by a third party which a majority of the disinterested members of the
Board of Directors of the Company determines in its reasonable good faith
judgment to be more favorable to the Company's stockholders than the Merger
(after receiving the opinion, with only customary qualifications, of the
Company's independent financial advisor of nationally recognized reputation
that the value of the consideration provided for in such proposal exceeds the
value of the consideration provided for in the Merger) and for which
financing, to the extent required, is then committed or which, in the
reasonable good faith judgment of a majority of such disinterested members
(after receiving the advice of the Company's independent financial advisor),
is highly likely to be financed by such third party.
(b) RECOMMENDATION OF THE BOARD OF DIRECTORS. Except as expressly
permitted by this Section 4.2, neither the Board of Directors of the Company
nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Sub, the approval or
recommendation by such Board of Directors or any such committee of the Merger
or (ii) approve or recommend, propose to approve or recommend, or cause the
Company to enter into any letter of intent, agreement in principle or legally
binding acquisition agreement (the "Company Acquisition Agreement") relating
to any Takeover Proposal. Notwithstanding the foregoing, if the Company has
received a Superior Proposal, the Board of Directors of the Company may
(subject to this and the following sentences) terminate this Agreement, but
only at a time that is more than four (4) business days following Parent's
receipt of written notice advising Parent that the Company's Board of
Directors is prepared to accept such Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
Person making such Superior Proposal; PROVIDED, HOWEVER, that (x) at the time
of such termination, such proposal continues to be a Superior Proposal,
taking into account any amendment of the terms of the Merger by Parent or any
proposal by Parent to amend the terms of this Agreement, the Merger or any
other Takeover Proposal made
23
by Parent (a "New Parent Proposal"), and (y) concurrently with or immediately
after such termination, the Company's Board of Directors shall cause the
Company to enter into a definitive agreement with respect to such Superior
Proposal.
(c) NOTICE OF TAKEOVER PROPOSAL. The Company shall advise Parent
orally (within one business day) and in writing (as promptly as practicable)
of (i) any Takeover Proposal or any inquiry with respect to or which could
lead to any Takeover Proposal, (ii) the material terms of such Takeover
Proposal and (iii) the identity of the Person making any such Takeover
Proposal or inquiry. The Company will keep Parent fully informed of the
status and details of any such Takeover Proposal or inquiry.
(d) PERMITTED ACTIONS OR DISCLOSURES BY THE COMPANY. Nothing
contained in this Section 4.2 shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the Board of
Directors of the Company, after consultation with independent counsel,
failure so to disclose would be inconsistent with its obligations under
applicable law; PROVIDED, HOWEVER, that, except as expressly provided in this
Section 4.2, neither the Company nor its Board nor any committee thereof
shall withdraw or modify, or propose publicly to withdraw or modify, its
position with respect to this Agreement or in connection with the Merger, or
approve or recommend, or propose publicly to approve or recommend, a Takeover
Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 STOCKHOLDER MEETING. The Company will, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold a stockholder meeting (the "Stockholder Meeting") for the
purpose of considering the approval of this Agreement and the transactions
contemplated hereby. The Company has, through its Board of Directors,
recommended to its stockholders the adoption or approval of this Agreement,
the Merger and the Amendment, shall use all reasonable efforts to solicit
such approvals by its stockholders and shall not withdraw such
recommendation. Without limiting the generality of the foregoing, the Company
agrees that its obligations pursuant to the first sentence of this Section
5.1 shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company of a Takeover Proposal.
Section 5.2 PREPARATION OF THE PROXY STATEMENT AND SCHEDULE 13e-3.
The Company shall promptly prepare and, after consultation with Parent, file
with the SEC the Proxy Statement and shall use its reasonable best efforts to
obtain and furnish the information required to be included in the Proxy
Statement and, after consultation with Parent, respond promptly to any
comments made by the SEC. In connection with the Company consulting with
Parent concerning the Proxy Statement, the Company shall provide Parent a
reasonable opportunity to review and comment on the Proxy Statement and
amendment or modification thereto prior to filing with the SEC, shall
reasonably consider the comments and suggestions of Parent, shall not change
without
24
Parent's consent any information provided by Parent for inclusion in the
Proxy Statement that the Company requests of Parent, shall promptly notify
Parent of the receipt of any comments or other communications from the SEC
regarding the Proxy Statement and shall provide Parent a reasonable
opportunity to review and comment on any response by the Company to any
comments or other communications from the SEC that requires a response. The
Company shall mail the Proxy Statement to its stockholders at the earliest
practical date. Parent, Sub and (to the extent required by law) their
respective affiliates shall promptly prepare and file, concurrent with the
filing of the Proxy Statement and after consultation with the Company, with
the SEC the Schedule 13e-3 and the Company shall reasonably cooperate with
Parent in connection with the preparation of the Schedule 13e-3. If at any
time prior to the Effective Time any event with respect to Parent, its
officers and directors or Sub shall occur, which is required to be described
in the Schedule 13e-3 or the Proxy Statement, such event shall be so
described, and, in the case of the Schedule 13e-3, Parent will promptly give
notice of such event to the Company and an appropriate amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of the Company. If at any time prior to the
Effective Time any event with respect to the Company, its officers and
directors or any of its Subsidiaries shall occur which is required at that
time to be described in the Proxy Statement or the Schedule 13e-3, such event
shall be so described, and, in the case of the Proxy Statement, the Company
shall promptly notify Parent of such event and an appropriate amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of the Company.
Section 5.3 ACCESS TO INFORMATION. Subject to currently existing
contractual and legal restrictions applicable to the Company or any of its
Subsidiaries, the Company shall, and shall cause each of its Subsidiaries to,
afford to the accountants, counsel, financial advisors and other
representatives of Parent hereto reasonable access to, and permit them to
make such inspections as they may reasonably require of, during normal
business hours during the period from the date of this Agreement through the
Effective Time, all their respective properties, books, contracts,
commitments and records (including, without limitation, the work papers of
independent accountants, if available and subject to the consent of such
independent accountants) and, during such period, the Company shall, and
shall cause each of its Subsidiaries to, furnish promptly to Parent (i) a
copy of each report, schedule, registration statement and other document
filed by it during such period pursuant to the requirements of federal or
state securities laws and (ii) all other information concerning its business,
properties and personnel as Parent may reasonably request. No investigation
pursuant to this Section 5.3 shall affect any representation or warranty in
this Agreement of any party hereto or any condition to the obligations of the
parties hereto. All information obtained by Parent pursuant to this Section
5.3 shall be kept confidential in accordance with the Confidentiality
Agreement, dated May 17, 1999, between Parent and the Company (the
"Confidentiality Agreement").
Section 5.4 FEES AND EXPENSES
(a) EXPENSES. Except as provided below, all fees and expenses
incurred in connection with the Transactions shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated.
25
(b) TERMINATION FEE. The Company shall pay to Parent a termination
fee of $7,500,000 if:
(i) the Company terminates this Agreement pursuant to Section 7.1(d);
(ii) (A) after the date of this Agreement and prior to the termination
of this Agreement, any Person makes a Takeover Proposal, (B) this Agreement
is terminated pursuant to Section 7.1(b)(iii) or (c) and (C) within 12 months
of the date of termination of this Agreement, the Company executes a legally
binding definitive agreement or an agreement in principle pursuant to which
any Person, entity or group (other than Parent, Sub or any of their
affiliates), in one transaction or a series of transactions, will acquire
more than 50% of the outstanding Company Common Stock or assets of the
Company through any open market purchases, merger, consolidation, tender or
exchange offer, recapitalization, reorganization or other business
combination and such transaction or series of transactions have been
consummated (an "Third Party Acquisition Event"); or
(iii)(A) after the date of this Agreement and prior to the termination
of this Agreement, any Person makes a Takeover Proposal, (B) this Agreement
is terminated by Parent pursuant to Section 7.1(e) or (f), and (C) a Third
Party Acquisition Event occurs within 12 months of the date of termination
of this Agreement.
Any termination fee due under this Section 5.4(b) shall be paid by wire
transfer of same-day funds on the date of termination of this Agreement in
the case of a fee due under clause (i) of the preceding sentence, or on the
date such Third Party Acquisition Event is consummated in the case of a fee
due under clause (ii) or (iii) of the preceding sentence. The payment of the
termination fee pursuant to this Section 5.4(b) shall constitute liquidated
damages and shall be the sole and exclusive remedy of Parent and Sub if this
Agreement is terminated under the circumstances described above in this
Section 5.4(b).
Section 5.5 BEST EFFORTS
(a) CONSUMMATION OF THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use
best efforts to take, or cause to be taken, all actions, and to do, or cause
to be done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by
this Agreement, including, but not limited to: (i) the obtaining of all
necessary actions or non-actions, waivers, consents and approvals from all
Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or
to avoid an action or proceeding by, any Governmental Entity (including those
in connection with the HSR Act, the Regulatory Approval, the Applicable New
Jersey Laws, and State Takeover Approvals), (ii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement and the consummation of the transactions
contemplated hereby, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated
or reversed, (iii) the taking of all reasonable actions to minimize the
effects of any State Takeover Approval on the transactions
26
contemplated hereby, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by this
Agreement. No party to this Agreement shall consent to any voluntary delay of
the consummation of the Merger at the behest of any Governmental Entity
without the consent of the other parties to this Agreement, which consent
shall not be unreasonably withheld.
(b) REPRESENTATIONS AND WARRANTIES. Each party shall not take any
action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or
result in a breach of any covenant made by it in this Agreement.
(c) DIVESTITURE. Notwithstanding anything to the contrary contained
in this Agreement, in connection with any filing or submission required or
action to be taken by either Parent or the Company to effect the Merger and
to consummate the other transactions contemplated hereby, the Company shall
not, without Parent's prior written consent, commit to any divestiture
transaction, and neither Parent nor any of its Affiliates shall be required
to divest or hold separate or otherwise take or commit to take any action
that limits its freedom of action with respect to, or its ability to retain,
the Company or any of the material businesses, product lines or assets of
Parent or any of its Subsidiaries or that otherwise would have a Material
Adverse Effect on Parent.
(d) COMPANY STOCK OPTION TERMINATION NOTICES. At least sixty (60)
days prior to the Effective Time, the Company will give the "Acceleration
Notice" as defined in and contemplated by the Company Plans pursuant to which
Company Stock Options were granted, provided that the holders of the Company
Stock Options shall be entitled to the Option Consideration pursuant to
Section 1.5(d) if such holder executes and delivers the option termination
agreement as contemplated by Section 1.5(d) above.
Section 5.6 PUBLIC ANNOUNCEMENTS. Parent and the Company will not
issue any press release with respect to the transactions contemplated by this
Agreement or otherwise issue any written public statements with respect to
such transactions without prior consultation with the other party, except as
may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange or the Nasdaq National Market.
Section 5.7 REAL ESTATE TRANSFER AND GAINS TAX. Parent and the
Company agree that either the Company or the Surviving Corporation will pay
any state or local tax which is attributable to the transfer of the
beneficial ownership of the Company's or its Subsidiaries' real property, if
any (collectively, the "Gains Taxes"), and any penalties or interest with
respect to the Gains Taxes, payable in connection with the consummation of
the Merger. The Company and Parent agree to cooperate with the other in the
filing of any returns with respect to the Gains Taxes, including supplying in
a timely manner a complete list of all real property interests held by the
Company and its Subsidiaries and any information with respect to such
property that is reasonably necessary to complete such returns. The portion
of the consideration allocable to the real property of the Company and its
Subsidiaries shall be determined by Parent in its reasonable discretion.
27
Section 5.8 INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE.
(a) For six years from and after the Effective Time, Parent agrees to
cause the Surviving Corporation to, and shall guarantee the obligation of the
Surviving Corporation to, indemnify and hold harmless all past and present
officers and directors of the Company and of its Subsidiaries to the same
extent such Persons are indemnified as of the date of this Agreement by the
Company pursuant to the Company's Certificate of Incorporation, By-Laws or
agreements in existence on the date hereof for acts or omissions occurring at
or prior to the Effective Time.
(b) Parent shall provide, or shall cause the Surviving Corporation to
provide, for an aggregate period of not less than six years from the
Effective Time, the Company's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring prior to
the Effective Time (the "D&O Insurance") that is substantially similar (with
respect to limits and deductibles) to the Company's existing policy or, if
substantially equivalent insurance coverage is unavailable, the best
available coverage; PROVIDED, HOWEVER, that the Surviving Corporation shall
not be required in any year to expend more than $360,000 for such coverage
(the "Maximum Premium"), and provided, further, that if the Surviving
Corporation is unable to obtain the amount of such insurance required by this
Section 5.8(b) for such aggregate premiums, the Surviving Corporation shall
purchase as much insurance as is obtainable for an aggregate annual premium
of $360,000.
(c) From and after the Effective Time, to the full extent permitted
by the law, Parent shall, and shall cause the Company (or any successor to
the Company) to, indemnify, defend and hold harmless the present officers and
directors of the Company and its Subsidiaries (each an "Indemnified Party")
against all losses, claims, damages, liabilities, fees and expenses
(including reasonable attorneys' fees and disbursements), judgments, fines
and amounts paid in settlement (collectively, "Losses") arising out of
actions or omissions occurring at or prior to the Effective Time in
connection with this Agreement, the Company Stockholder Agreement and the
Transactions; PROVIDED, HOWEVER, that an Indemnified Party shall not be
entitled to indemnification under this Section 5.8(c) for Losses arising out
of actions or omissions by the Indemnified Party constituting (i) a breach of
this Agreement or the Company Stockholder Agreement, (ii) grossly negligent
or criminal conduct or fraud, or (iii) any violation of federal, state or
foreign securities laws. In order to be entitled to indemnification under
this Section 5.8(c), an Indemnified Party must give Parent and the Company
prompt written notice of any third party claim which may give rise to any
indemnify obligation under this Section 5.8(c), and Parent and the Company
shall have the right to assume the defense of any such claim through counsel
of their own choosing, subject to such counsel's reasonable judgment that
separate defenses that would create a conflict of interest on the part of
such counsel are not available. If Parent and the Company do not assume any
such defense, they shall be liable for all reasonable costs and expenses of
defending such claim incurred by the Indemnified Party, including reasonable
fees and disbursements of counsel, and shall advance such reasonable costs
and expenses to the Indemnified Party; PROVIDED, HOWEVER, that such advance
shall be made only after receiving an undertaking from the Indemnified Party
that such advance shall be repaid if it is determined that such Indemnified
Party is not entitled to indemnification therefor. Neither Parent nor the
Company shall be liable under this Section 5.8(c) for any Losses resulting
from any settlement, compromise or offer to settle or compromise any such
claim or litigation or other action, without the prior written consent of
Parent and the Company.
28
(d) In the event the Surviving Corporation or any successor to the
Surviving Corporation (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successors of the Surviving Corporation honor the
obligations of the Company set forth in this Section 5.8.
Section 5.9 NOTIFICATION OF CERTAIN MATTERS. Parent shall use its
best efforts to give prompt notice to the Company, and the Company shall use
its best efforts to give prompt notice to Parent, of: (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which it
is aware and which would be reasonably likely to cause (x) any representation
or warranty by it contained in this Agreement to be untrue or inaccurate in
any material respect or (y) any covenant, condition or agreement contained in
this Agreement not to be complied with or satisfied in all material respects
by it, (ii) any failure of Parent or the Company, as the case may be, to
comply in a timely manner with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder or (iii) any
change or event which would be reasonably likely to have a Material Adverse
Effect on the Company; PROVIDED, HOWEVER, that the delivery of any notice
pursuant to this Section 5.9 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 5.10 EMPLOYEE BENEFIT PLANS AND AGREEMENTS
(a) COMPANY PLANS. Parent shall cause the Surviving Corporation to
perform the obligations of the Company under, and comply with, the Employee
Agreements and to maintain through December 31, 1999 the Company Plans (other
than plans providing for the issuance of Company Common Stock or based on the
value of Company Common Stock) in effect on the date of this Agreement;
PROVIDED, HOWEVER, that Parent shall have no obligation to continue or renew
any Employee Agreement or Company Plan that may be terminated in accordance
with its terms; and PROVIDED, FURTHER, HOWEVER, that nothing in this
Agreement shall confer on any individual any right to employment,
compensation for employment, or employee benefits. Notwithstanding the
foregoing, Parent shall have the right, at its option, to replace the Company
Plans with its own benefit plans provided such plans are in the aggregate
comparable (taking into account all relevant factors) with the Company Plans.
(b) CREDIT FOR PRIOR SERVICE; WAIVER OF PRE-EXISTING CONDITIONS. In
the event that Parent shall merge any Company Plan with any benefit plan of
Parent or otherwise modify any Company Plan, prior service with the Company
or any of its Subsidiaries will be counted for purposes of employee
eligibility, seniority and vesting under such benefit plan, and any
pre-existing condition shall be waived for each employee so long as such
employee has had medical coverage under the Company Plans for at least six
months immediately prior to the Effective Time.
(c) CHANGE OF CONTROL. Parent agrees that for purposes of any of the
Company Plans conferring rights on a current or former employee, officer or
director as a result of a change of control of the Company, the consummation
of the Merger shall be deemed to constitute a "Change of Control" (as that
term is defined in such Company Plans).
29
Section 5.11 PERFORMANCE BY SUB. Parent shall cause Sub to comply
with each of its obligations hereunder and pursuant to the Company
Stockholder Agreement, including, without limitation, causing Sub to
consummate the Merger as contemplated herein, and Parent hereby guarantees
the performance by Sub of such obligations. Parent shall cause Sub to vote
any shares of Common Stock owned by the Sub on the record date for the
Stockholder Meeting to be voted for approval of this Agreement and the Merger.
Section 5.12 ADDITIONAL CONSENTS AND APPROVALS. The Company and
Parent agree that they will cooperate and use their commercially reasonable
efforts to seek any waiver and/or consent required such that consummation of
the Transactions will not constitute a default under the terms of (1) that
certain Credit Agreement, by and among NRG Generating (Newark) Cogeneration
Inc. and NRG Generating (Parlin) Cogeneration Inc., Credit Suisse, Greenwich
Funding Corporation and any Purchasing Lender as Lender and Credit Suisse as
Agent, dated as of May 17, 1996, as amended by Amendment Number 1, dated June
28, 1996 and (2) that certain Construction and Term Loan Agreement, by and
among NRG (Morris) Cogen, L.L.C., The Chase Manhattan Bank and other Banks as
Lenders, The Chase Manhattan Bank as Agent and The Chase Manhattan Bank as
Collateral Agent, dated September 15, 1997, as amended by the Amendment and
Consent, dated December 10, 1997.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been duly
approved by the requisite vote of stockholders of the Company in accordance
with applicable law and the Certificate of Incorporation and By-laws of the
Company.
(b) HSR AND OTHER APPROVALS. (i) The waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or
approvals of, or filings with, or terminations or expirations of waiting
periods imposed by, any Governmental Entity, which the failure to obtain,
make or occur would have the effect of making the Merger or any of the
transactions contemplated hereby illegal or would have, individually or in
the aggregate, a Material Adverse Effect on Parent (assuming the Merger had
taken place), shall have been obtained, shall have been made or shall have
occurred.
(c) GOVERNMENTAL ACTIONS. No statute, rule, regulation, legislation,
interpretation, judgment, order or injunction shall be enacted, entered,
enforced, promulgated, amended or become applicable to this Agreement or the
Merger and no other action shall have been taken by any court or
30
other Governmental Entity other than the application to the Merger of the
waiting period under the HSR Act, that, in each case, would be reasonably
expected to result in any of the following effects: (i) challenging the
acquisition by Parent or Sub of any Company Common Stock, seeking to restrain
or prohibit the making or consummation of the Merger or any other
Transaction, (ii) seeking to prohibit or limit the ownership or operation by
the Company, Parent or any of their respective Subsidiaries of any material
portion of the business or assets of the Company, Parent or any of their
respective Subsidiaries, or to compel the Company, Parent or any of their
respective Subsidiaries to dispose of or hold separate any material portion
of the business or assets of the Company, Parent or any of their respective
Subsidiaries, (iii) seeking to impose limitations on the ability of Parent or
Sub to acquire or hold, or exercise full rights of ownership of, any shares
of Company Common Stock, including the right to vote the Company Common Stock
purchased by it on all matters properly presented to the stockholders of the
Company, (iv) seeking to prohibit Parent or any of its Subsidiaries from
effectively controlling in any material respect the business or operations of
the Company and its Subsidiaries in connection with the Offer, the Merger or
the Agreement, or (v) which otherwise is reasonably likely to have a Material
Adverse Effect on the Company.
Section 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) PERFORMANCE OF OBLIGATIONS. Each of Parent and Sub shall have
performed in all material respects each of its agreements contained in this
Agreement required to be performed on or prior to the Effective Time.
(b) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Parent and Sub contained in this Agreement shall be true and
correct, provided that such representations and warranties shall be deemed to
be true and correct unless the failure of such representations and warranties
to be so true and correct would have a Material Adverse Effect on Parent or
would prevent Parent from consummating the transactions contemplated by the
Agreement, in each case as if such representations and warranties were made
at the time of such termination (except to the extent such representations or
warranties expressly relate to an earlier date).
(c) CERTAIN CONSENTS. In obtaining any approval or consent required
to consummate any of the transactions contemplated herein, no Governmental
Entity shall have imposed or shall have sought to impose any condition,
penalty or requirement which, in the reasonable opinion of the Company,
individually or in the aggregate, would have a Material Adverse Effect on
Parent (assuming the consummation of the Merger).
Section 6.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE
MERGER. The obligations of Parent and Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) PERFORMANCE OF OBLIGATIONS. The Company shall have complied with
the provisions of Section 4.1 of the Agreement, and the Company shall have
complied with any agreement or covenant in any material respect of the
Company to be performed or complied with by it under the Agreement.
31
(b) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company contained in this Agreement shall be true and
correct, provided that such representations and warranties shall be deemed to
be true and correct unless the failure of such representations and warranties
to be so true and correct would have a Material Adverse Effect on the Company
or would prevent the Company from consummating the transactions contemplated
by the Agreement, in each case as if such representations and warranties were
made at the time of such termination (except to the extent such
representations or warranties expressly relate to an earlier date).
(c) LITIGATION. There shall not be instituted or pending any suit,
action or proceeding by any Governmental Entity or by any other Person
initiated as a result of this Agreement or any transactions contemplated
hereby (i) challenging the acquisition by Parent or Sub of any Company Common
Stock, seeking to restrain or prohibit the making or consummation of the
Merger or any other Transaction, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent or any of their respective
Subsidiaries of any material portion of the business or assets of the
Company, Parent or any of their respective Subsidiaries, or to compel the
Company, Parent or any of their respective Subsidiaries to dispose of or hold
separate any material portion of the business or assets of the Company,
Parent or any of their respective Subsidiaries, (iii) seeking to impose
limitations on the ability of Parent or Sub to acquire or hold, or exercise
full rights of ownership of, any shares of Company Common Stock, including
the right to vote the Company Common Stock purchased by it on all matters
properly presented to the stockholders of the Company, (iv) seeking to
prohibit Parent or any of its Subsidiaries from effectively controlling in
any material respect the business or operations of the Company and its
Subsidiaries in connection with the Merger or the Agreement, or (v) which
otherwise is reasonably likely to have a Material Adverse Effect on the
Company.
(d) MATERIAL ADVERSE EFFECT. Since the date of the Agreement, there
shall not have occurred any event, change, effect or development that,
individually or in the aggregate, has had or would be reasonably expected to
have a Material Adverse Effect on the Company.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after any approval of the
matters presented in connection with the Merger by the stockholders of the
Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger has not been effected on or prior to the
close of business on February 28, 2000 (the "Outside Date"); PROVIDED,
HOWEVER, that the right to terminate this Agreement pursuant to this
Section 7.1(b)(i) shall not be available to any party whose material
and willful failure to fulfill any of its obligations contained in this
Agreement has
32
been the cause of, or resulted in, the failure of the Merger to have
occurred on or prior to the Outside Date; PROVIDED; HOWEVER that if the
sole reason that the Merger shall not have been consummated by the
Outside Date is the failure to hold the Stockholder Meeting by February
28, 2000, the Outside Date shall be extended to March 31, 2000;
(ii) if any court or other Governmental Entity having jurisdiction
over a party hereto shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and nonappealable; or
(iii) if the stockholders of the Company fail to approve this
Agreement and the Merger at the Stockholder Meeting or any adjournment
or postponement thereof;
(c) by Parent if prior to the Effective Time, the Company's Board of
Directors or any committee thereof shall have withdrawn or modified in a
manner adverse to Sub or Parent its approval or recommendation of the
Transactions or shall have recommended or approved a Company Superior
Proposal, or shall have resolved to do any of the foregoing;
(d) by the Company, upon approval of its Board of Directors in
accordance with Section 4.2(b); PROVIDED, HOWEVER, that any termination of
this Agreement pursuant to this Section 7.1(d) shall not be effective until
the Company has made full payment of all amounts provided under Section
5.4(b);
(e) by either Parent or the Company if the other party shall have
breached or failed to comply in any material respect with any of its
covenants or agreements other than Section 4.1 contained in this Agreement
required to be performed or complied with prior to the date of such
termination, which failure to comply has not been cured within thirty
business days following receipt by such other party of written notice from
the non-breaching party of such failure to comply or by Parent if the Company
shall have breached or failed to comply with Section 4.1; or
(f) by either Parent or the Company if there has been a breach by the
other party (in the case of Parent, including any material breach by Sub) of
any representation or warranty that individually or in the aggregate has a
Material Adverse Effect on the breaching party or would prevent such
breaching party from consummating the transactions contemplated by this
Agreement.
The right of any party hereto to terminate this Agreement pursuant to
this Section 7.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Person controlling any such party or any of their respective officers or
directors, whether prior to or after the execution of this Agreement.
33
Section 7.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by either Parent or the Company, as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent, Sub or their respective
officers or directors (except for the last sentence of Section 5.3 and the
entirety of Sections 5.4, 8.6, 8.7, 8.9 and 8.10, which shall survive the
termination); PROVIDED, HOWEVER, that nothing contained in this Section 7.2
shall relieve any party hereto from any liability for any willful breach of a
representation or warranty contained in this Agreement or the breach of any
covenant contained in this Agreement.
Section 7.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company, but, after any
such approval, no amendment shall be made which by law requires further
approval by such stockholders without such further approval. This Agreement
may not be amended except by an instrument in writing signed on behalf of
each of the parties hereto.
Section 7.4 WAIVER. At any time prior to the Effective Time, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein which
may legally be waived. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall terminate at the Effective Time.
Section 8.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, one
day after being delivered to an overnight courier or when sent via facsimile
(with a confirmatory copy sent by overnight courier) to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Sub, to
Calpine Corporation
50 West San Fernando Street
San Jose, CA 95113
Attention: John T. King, Vice President
Fax: (408) 995-0505
34
with a copy to:
Howard, Smith & Levin LLP
1330 Avenue of the Americas
New York, NY 10019
Attention: William R. Collins
Fax: (212) 841-1010
(b) if to the Company, to
Cogeneration Corporation of America.
One Carlson Parkway, Suite 240
Minneapolis, Minnesota 55447-4454
Attention: Julie A. Jorgensen
President and Chief Executive Officer
Facsimile No.: (612) 745-7901
with a copy to:
Kaplan, Strangis and Kaplan, P.A.
5500 Norwest Center
Minneapolis, Minnesota 55402
Attention: Bruce J. Parker
Facsimile No.: (612) 375-1143
Section 8.3 INTERPRETATION. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation."
Section 8.4 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement, except and as provided in the last sentence of Section 5.3,
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. Except as provided pursuant to Section 5.8 and 5.10,
this Agreement is not intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
35
Section 8.6 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
Section 8.7 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties.
Section 8.8 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other terms, conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic and legal substance of the transactions contemplated hereby are not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
Section 8.9 ENFORCEMENT OF THIS AGREEMENT. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions
of this Agreement were not performed in accordance with their specific
wording or were otherwise breached. It is accordingly agreed that the parties
hereto shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, such remedy being in addition to any other remedy to which any
party is entitled at law or in equity.
Section 8.10 CONSENT TO JURISDICTION. Each of the parties hereto (a)
consents to submit itself to the non-exclusive personal jurisdiction of any
Federal court located in the State of Delaware or any Delaware state court in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, and (b) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
COGENERATION CORPORATION OF AMERICA
By: /s/ Julie A. Jorgensen
---------------------------------------
Julie A. Jorgensen
President and Chief Executive Officer
CALPINE CORPORATION
By: /s/ John T. King
---------------------------------------
John T. King
Vice President
CALPINE EAST ACQUISITION CORP.
By: /s/ John T. King
---------------------------------------
John T. King
Vice President
37