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EXHIBIT 10.16
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED AGREEMENT made as of this ____ day of ____________
2000, (the "Agreement"), by and between Orion Power Holdings, Inc., a Delaware
corporation (the "Company") and ▇▇▇▇ ▇. ▇▇▇▇▇ (the "Employee").
WHEREAS, the Company has been formed by GS Capital Partners II, L.P. and
Constellation Power Source, Inc. for the purpose of investing in and managing
the operations of a portfolio of electric generating assets in the United States
and Canada;
WHEREAS, the Company and the Employee entered into an employment agreement
on June 1, 1998 (the "Original Agreement"), wherein the Company employed the
Employee as Chief Operating Officer, with the responsibilities and duties of an
executive officer of the Company; which the Company amended by unanimous written
consent of the Board of Directors of the Company (the "Board") approving
Amendment Number 1 thereto on February 26, 1999;
WHEREAS, effective November 5, 1999, the Employee was appointed President
and Chief Executive Officer of the Company; and
WHEREAS, the Employee and the Company wish to amend and restate the
Original Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. Employment. Subject to the terms and provisions of this Agreement,
the Company hereby employs the Employee and the Employee hereby accepts such
employment by the Company upon the terms and conditions hereinafter set forth.
2. Duties. During the Employment Term (as defined in Section 7 hereof),
the Employee shall serve as Chief Operating Officer of the Company, and
commencing November 5, 1999 until the last day of his Employment Term, the
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Employee shall also serve as Chief Executive Officer and President, and the
Employee shall perform such duties, services and responsibilities and have the
authority commensurate to such positions as determined from time to time by the
Board. The Employee shall report directly to the Board.
The Employee shall devote his full business time, attention and skill to
the performance of such duties, services and responsibilities, and will use his
best efforts to promote the interests of the Company. The Employee will not,
without the prior written approval of the Board, engage in any other business
activity which could interfere with the performance of his duties, services and
responsibilities hereunder or which is in violation of policies established from
time to time by the Company.
3. Monetary Remuneration.
(a) Base Salary. During the Employment Term, the Company shall pay
to the Employee in consideration of the performance by the Employee of the
Employee's obligations hereunder (including any services as an officer,
employee, or otherwise), a salary (the "Base Salary") at an annual rate of four
hundred and fifty thousand dollars ($450,000). The Base Salary shall be
reviewed, and may be increased (but not decreased), in accordance with the
Company's salary review program or practice applicable to senior executive
officers of the Company. Without limiting the generality of the foregoing, the
Base Salary shall be increased on or before March 1 of each calendar year,
beginning with calendar year 2001, by a percentage no less than the percentage
increase in the United States Consumer Price Index for the Washington-Baltimore
metropolitan area for the preceding calendar year.
The Base Salary shall be payable in accordance with the normal payroll
practices of the Company then in effect and subject to all applicable taxes
required to be withheld by the Company pursuant to federal, state or local law.
The Employee shall be solely responsible for taxes imposed on the Employee by
reason of any compensation and benefits provided hereunder.
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(b) Annual Bonus. The Company shall provide the Employee the
opportunity to earn an annual incentive bonus (the "Bonus"). Such Bonus shall be
variable based upon the attainment of performance criteria described below,
shall be payable in an amount equal to 75% of the Base Salary in effect on the
last day of the applicable fiscal year (upon attainment of targeted performance
criteria), may be payable at less than 75% of such Base Salary (at agreed-upon
levels of partial attainment of targeted performance criteria), may be payable
in amounts in excess of 75% of such Base Salary (upon exceeding targeted
performance criteria), but shall in no event exceed 150% of such Base Salary, in
respect of each of the Company's fiscal years ending during the Employment Term,
beginning with the 2000 fiscal year; provided, however, that the Bonus payable
in respect of fiscal year 2000 shall, in any event, not be less than four
hundred and fifty thousand dollars ($450,000). Each annual Bonus shall be
payable promptly following a determination by the Board (or a designated
committee thereof) that the applicable performance criteria have been satisfied,
but in no event later than thirty (30) days after the Company's receipt of the
report prepared by its regular independent certified public accountants with
respect to the Company's financial statements for such fiscal year.
For each fiscal year during the Employment Term, appropriate performance
criteria shall be developed jointly and in good faith by the Employee and the
Board (or designated committee thereof) in connection with the development and
approval of an annual strategic plan for the Company. Notwithstanding the
foregoing, the Company and the Employee acknowledge that such performance
criteria may consist of specific financial or nonfinancial objectives relating
to both the Company and the Employee that are established in accordance with the
foregoing procedures.
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4. Benefits.
(a) In addition to the payments described above, during the
Employment Term, the Employee shall be entitled to participate in, in accordance
with the terms and conditions of the applicable plan, program or arrangement,
all of the employee benefit plans or programs, and all of the fringe benefit and
executive perquisites, made available by the Company, to, or for the benefit of,
its senior executive officers or to its employees in general, as such plans,
programs or arrangements may be in effect from time to time. The Employee's
participation in any such plans, programs and arrangements shall be on a basis
no less favorable than that of other senior executive officers of the Company.
Nothing contained in this Agreement shall require the Company to establish any
plan, program or arrangement or shall preclude the Company from amending or
terminating any plan, program or arrangement which heretofore exists or may
hereinafter be established; provided, however, it is the Company's intention
that the general type and level of benefits provided by the Company to its
officers and employees shall be, in the aggregate, generally comparable to the
type and level of benefits offered by similar companies in the Company's general
industry, as determined in good faith by the Board.
(b) During the Employment Term, the Company shall reimburse the
Employee for all reasonable business expenses incurred by the Employee in
carrying out the Employee's duties, services and responsibilities under this
Agreement, provided that the Employee complies with the generally applicable
policies, practices and procedures of the Company for submission of expense
reports, receipts or similar documentation of such expenses.
5. Equity Awards.
(a) 1998 Stock Incentive Plan. Reference is hereby
made to the Company's 1998 Stock Incentive Plan, as amended from time to time
(the "Plan"). Defined terms used in this Section 5 but not defined herein shall
have the meanings set
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forth in the Plan.
(b) IPO Bonus Option. Upon the effective date of the Initial
Public Offering of the Company, the Company shall grant to the Employee a
nonqualified stock option to purchase one hundred and fifty thousand (150,000)
shares of Common Stock (the "IPO Bonus Option") with a per share exercise price
equal to the price per share of Common Stock offered to the public in the
Initial Public Offering. The IPO Bonus Option shall vest ratably on a daily
basis over the period beginning on the date the IPO Bonus Option is granted
pursuant to this Section 5(b) and ending on the fifth anniversary of such date.
(c) Initial Annual Option. Upon the effective date of an Initial
Public Offering of the Company, the Company shall grant to the Employee a
nonqualified option to purchase one hundred thousand (100,000) shares of Common
Stock (the "Initial Annual Option"), having a per share exercise price equal to
the price per share of Common Stock offered to the public in the Initial Public
Offering. The Initial Annual Option shall vest ratably on a daily basis over the
period beginning on the date the Initial Annual Option is granted pursuant to
this Section 5(c) and ending on the third anniversary of such date.
(d) Annual Options. On January 1, 2002 and on each January 1
thereafter during the Employment Term, the Company shall grant to the Employee a
nonqualified option to purchase a number of shares of Common Stock as determined
by the Board in its sole discretion (each an "Annual Option"); provided,
however, that each Annual Option shall entitle the Employee to purchase a
minimum of fifty thousand (50,000) shares of Common Stock. Each Annual Option
shall have a per share exercise price equal to the Fair Market Value of a share
of Common Stock on the date the Annual Option is granted and shall vest ratably
on a daily basis over the period beginning on the date the Annual Option is
granted pursuant to this Section 5(d) and ending on the third anniversary of
such date.
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(e) Accelerated Vesting and Other Conditions. Notwithstanding the
foregoing provisions of this Section 5, the IPO Bonus Option, the Initial Annual
Option, the Annual Options and any other stock options granted to the Employee
by the Company (collectively, "the Options") shall vest fully upon the
termination of the Employee's employment for circumstances described in clause
(i), (iv) or (v) of the definition of Good Reason. The Options granted pursuant
to Sections 5(b) through (d) shall be subject to such additional terms and
conditions as are set forth in an option agreement substantially in the form
attached as Exhibit A hereto.
(f) Company Representations. The Company represents to the
Employee that it does not presently intend to provide the Chief Financial
Officer of the Company with equity-based compensation that would provide more
favorable income tax treatment to such officer than the income tax treatment
applicable to the Options granted to the Employee pursuant to the Agreement
(unless such officer receives such favorable tax treatment in consideration of
foregoing some other benefit of value that has been made available to the
Employee). If after the date of this Agreement, the Company provides such
officer with options, capital stock, stock purchase rights or other equity-based
compensation arrangements that provide more favorable income tax treatment to
such officer than the income tax treatment that is applicable to the Options
granted to the Employee pursuant to this Agreement, the Company and the Employee
will make a joint, good faith determination, based on all the facts and
circumstances of the grant of such equity-based compensation to such officer, as
to whether a modification to the Employee's Option arrangement would be
necessary to ensure that the Employee is treated no less favorably than such
officer with respect to the income tax treatment of the equity-based
compensation provided to each, taking into account relative levels of benefit
provided to each and their respective levels of authority (and if the
determination is made that such an adjustment would be necessary, then the
Company shall modify this Agreement and any related agreements as necessary to
effect such modification).
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(g) Stock Growth Incentive Plan. After the date hereof, the
Company shall establish and adopt a stock growth incentive plan pursuant to
which a specified group of officers, including the Employee, and other key
employees of the Company, as determined in good faith by the Board, will be
eligible to receive additional stock options subject to such terms and
conditions as determined by the Board in good faith.
(h) Stock Purchase Agreement. The Employee and the Company have
entered into that certain Stock Purchase Agreement, substantially in the form
set forth as Exhibit B hereto (the "Stock Purchase Agreement"), and, the
Employee has entered into note agreements with the Company from time to time,
substantially in the form set forth as Annex A to the Stock Purchase Agreement
(the "Notes").
6. Vacations. During the Employment Term, the Employee shall be
entitled to vacation on a basis consistent with that of other senior executive
officers of the Company.
7. Employment Term.
The "Employment Term", as used in this Agreement, shall mean the
period commencing on June 1, 1998 and terminating on the earliest of the
following to occur:
(a) the death of the Employee ("Death");
(b) the termination of the Employee's employment by mutual
agreement of the Company and the Employee;
(c) the termination of the Employee's employment by the Company
for Cause (as defined in Section 8 hereof);
(d) the termination of the Employee's employment by the Employee
for Good Reason (as defined in Section 9 hereof);
(e) the Disability of the Employee (as determined in accordance
with Section 10 hereof);
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(f) the termination of the Employee's employment by the Company
other than a termination by the Company for Cause, Disability or Death; and
(g) the fifth anniversary of the day preceding the first day of
the Employment Term.
8. Cause. In the event of (i) any material breach of the provisions of
this Agreement by the Employee, (ii) the Employee's continued failure to perform
reasonably assigned duties after a demand for substantial performance is
delivered to the Employee by the Board (where such demand specifically
identifies the manner in which the Board believes that the Employee has not
substantially performed his duties) and the passage of a reasonable period of
time to comply with such demand, (iii) the Employee's willful misconduct or
gross negligence, (iv) conduct by the Employee involving dishonesty for personal
gain, fraud or unlawful activity which is injurious to the Company, (v) a
conviction of or plea of nolo contendere to a felony or any crime involving
moral turpitude, or (vi) the Employee shall breach any provision of Article I of
the Stock Purchase Agreement, the Company shall have the right to terminate the
Employee's employment for "Cause"; provided, however, that the Employee shall
not be terminated for Cause under any of clauses (i) through (iii) above unless
there shall have been delivered to the Employee a copy of a resolution duly
adopted by the Board, at a meeting of such Board (after reasonable notice to the
Employee and an opportunity for the Employee, together with his counsel, to be
heard at such meeting), finding that in the good faith opinion of the Board, the
Employee had engaged in conduct of the type described in any of clauses (i)
through (iii) above and specifying the particulars thereof.
9. Good Reason. In the event of (i) any material breach by the Company
of this Agreement any Option Agreement or other material agreement entered into
with, or provided to, the Employee, (ii) a material reduction in the Employee's
title, duties, responsibilities or status, (iii) the assignment to the Employee
of a material amount of different or additional duties that are significantly
inconsistent with the
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Employee's position, (iv) the relocation of the Employee, the Company's
principal executive offices or all or substantially all of the Company's
executive level employees without the Employee's consent, to any location
outside of the Baltimore, Maryland metropolitan region, or (v) a Change in
Control (as defined in the Plan, as in effect from time to time) shall occur,
the Employee shall have the right to terminate his employment for "Good Reason"
by giving the Company notice in writing of the reason for such termination and
the Employment Term shall terminate on the date of the Employee's termination of
employment; provided, however, that with respect to clause (v) above, the
Employee's right to terminate his employment for Good Reason shall lapse sixty
(60) days following the occurrence of the Change in Control. Anything in this
Agreement to the contrary notwithstanding, any termination of the Employee by
the Company without Cause at any time when the Employee has a basis to resign
under clause (i), (iv) or (v) of the definition of Good Reason shall be treated
for all purposes of this Agreement and all related agreements as a termination
by the Employee for Good Reason under such clause (i), (iv) or (v), as
appropriate.
10. Disability. In the event of a physical or mental infirmity which
renders the Employee unable to perform his duties, services and responsibilities
hereunder for a total of one hundred and twenty (120) calendar days in any
twelve (12)-month period (a "Disability"), the Employment Term shall
automatically terminate on such one hundred and twentieth calendar day, without
any further or additional action on the part of the Company.
11. Termination Payments.
(a) In the event that the Employment Term is terminated for any
reason other than by the Company without Cause or by the Employee with Good
Reason: (A) the Company shall pay to the Employee any Base Salary accrued
hereunder on or prior to the date of termination but not theretofore paid to the
Employee; and (B) the Employee shall be entitled, in accordance with the terms
and conditions of the applicable
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plan, program or arrangement, to all benefits accrued under any benefit plans,
programs or arrangements in which the Employee shall be a participant as of the
date of termination, including any Bonus earned, declared and payable (but not
yet paid) in accordance with Section 3(b) hereof in respect of the then current
fiscal year, or if the Bonus in respect of the then current fiscal year has not
yet been earned, declared and become payable, in respect of the fiscal year
ended immediately prior to the date of termination (the "Accrued Benefits").
Notwithstanding the foregoing, the Bonus amount in respect of fiscal year 2000
under Section 3(b) shall be deemed earned, declared and payable.
(b) Subject to paragraph (c) of this Section 11 below, in the
event that the Employment Term is terminated by the Company without Cause or by
the Employee for Good Reason: (A) the Company shall pay to the Employee any Base
Salary accrued hereunder on or prior to the date of termination but not
theretofore paid to the Employee; (B) the Company shall pay the Employee a lump
sum amount equal to two (2) times the Employee's annual Base Salary at the time
of the Employee's termination of employment; (C) the Company shall pay the
Employee an amount equal to two (2) times the Bonus paid (or to be paid) to the
Employee for the then current fiscal year, or if the Bonus in respect of the
then current fiscal year has not yet been earned, declared and become payable,
in respect of the fiscal year preceding the fiscal year in which such
termination occurs; and (D) the Employee shall be entitled to the Accrued
Benefits. For purposes of clause (C) of this paragraph, the Bonus amount in
respect of fiscal year 2000 under Section 3(b) shall be deemed earned, declared
and payable. Any obligation of the Company pursuant to clauses (B) and (C) of
this paragraph to the extent it exceeds four hundred and fifty thousand dollars
($450,000) is referred to herein as the "Excess Severance Payment."
(c) All payments required to be made by the Company pursuant to
Section 11(a) in connection with the termination of the Employee's employment
shall
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be payable within 15 days after the effective date of such termination;
provided, however, that if any indebtedness remains outstanding under any Note
as of the date of such termination, the Excess Severance Payment shall be
payable on the 91st day after the effective date of such termination, and the
Excess Severance Payment (less any applicable withholding taxes) will, in whole
or in part, first be applied in full or partial satisfaction of any indebtedness
under any Note that remains outstanding on such 91st day.
(d) The foregoing payments and benefits upon termination shall
constitute the exclusive payments and benefits which shall be due the Employee
upon a termination of the Employment Term and shall be in lieu of any such
benefits under any plan, program, policy or other arrangement which has
heretofore been or shall hereafter be established by the Company. The Employee
shall have no other rights (other than the Employee's rights to the Accrued
Benefits as provided herein) or remedies under this Agreement or any other plan,
program or arrangement which has heretofore been or shall hereafter be
established by the Company or otherwise in the event that the Employment Term is
terminated by the Company without Cause or by the Employee for Good Reason. The
Employee shall not be required to mitigate the foregoing payments by seeking
employment or otherwise.
(e) Notwithstanding anything contained in this Agreement to the
contrary, to the extent that any payment or distribution of any type to or for
the benefit of the Employee by the Company, any affiliate of the Company, any
person who acquires ownership or effective control of the Company or ownership
of a substantial portion of the Company's assets (within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations thereunder), or any affiliate of such person, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (the "Total Payments") is or will be subject to the excise tax
imposed under Section 4999 of the Code (the "Excise
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Tax"), then the Total Payments shall be reduced (but not below zero) if and to
the extent that a reduction in the Total Payments would result in the Employee
retaining a larger amount, on an after-tax basis (taking into account federal,
state and local income taxes and the Excise Tax), than if the Employee received
the entire amount of such Total Payments. Unless the Employee shall have given
prior written notice specifying a different order to the Company to effectuate
the foregoing, the Company shall reduce or eliminate the Total Payments, by
first reducing or eliminating the portion of the Total Payments which are not
payable in cash and then by reducing or eliminating cash payments, in each case
in reverse order beginning with payments or benefits which are to be paid the
latest in time. Any notice given by the Employee pursuant to the preceding
sentence shall take precedence over the provisions of any other plan,
arrangement or agreement governing the Employee's rights and entitlements to any
benefits or compensation. The determination of whether the Total Payments shall
be reduced pursuant to the foregoing and the amount of such reduction shall be
made, at the Company's expense, by an accounting firm selected by the Company
which is one of the five largest accounting firms in the United States (other
than the Company's regular independent auditor).
12. Employee's Representation and Acknowledgment. The Employee
represents to the Company that his execution and performance of this Agreement
shall not be in violation of any agreement or obligation (whether or not
written) that he may have with or to any person or entity, including without
limitation, any prior employer. The Employee hereby acknowledges and agrees that
this Agreement (and the Exhibits hereto and any other agreement or obligation
referred to herein) shall be an obligation solely of the Company, and the
Employee shall have no recourse whatsoever against any stockholder of the
Company or any of their respective affiliates.
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13. Employee Covenants.
(a) Unauthorized Disclosure. The Employee agrees and understands
that in the Employee's position with the Company, the Employee has been and will
be exposed to and receive information relating to the confidential affairs of
the Company, including but not limited to technical information, business and
marketing plans, strategies, customer information, other information concerning
the Company's products, promotions, development, financing, expansion plans,
business policies and practices, and other forms of information considered by
the Company to be confidential and in the nature of trade secrets. The Employee
agrees that during the Employment Term and thereafter, the Employee will keep
such information confidential and will not disclose such information, either
directly or indirectly, to any third person or entity without the prior written
consent of the Company; provided, however, that (i) the Employee shall have no
such obligation to the extent such information is or becomes publicly known
other than as a result of the Employee's breach of his obligations hereunder and
(ii) the Employee may, after giving prior notice to the Company to the extent
practicable under the circumstances, disclose such information to the extent
required by applicable laws or governmental regulations or judicial or
regulatory process. This confidentiality covenant has no temporal, geographical
or territorial restriction. Upon termination of the Employment Term, the
Employee will promptly supply to the Company all property, keys, notes,
memoranda, writings, lists, files, reports, customer lists, correspondence,
tapes, disks, cards, surveys, maps, logs, machines, technical data or any other
tangible product or document which has been produced by, received by or
otherwise submitted to the Employee in the course or otherwise as a result of
the Employee's employment with the Company during or prior to the Employment
Term.
(b) Non-competition. By and in consideration payments and benefits
to be provided to the Employee by the Company hereunder, the Employee's
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exposure to the proprietary information of the Company and as an inducement to
the Company to enter into this Agreement with the Employee, the Employee agrees
that while he is employed by the Company and for a period of one (1) year after
the Employee's termination of employment with the Company for any reason (the
"Noncompetition Term"), the Employee will not, directly or indirectly own,
manage, operate, join, control, be employed by, or participate in the ownership,
management, operation or control of, or be connected in any manner, including
but not limited to, holding the positions of shareholder, director, officer,
consultant, independent contractor, employee, partner, or investor, with any
Competing Enterprise; provided, however, Employee shall not be subject to the
covenants contained in this Section 13(b) or Section 13(c) following the
termination of the Employee by the Company without Cause following the
occurrence of a Change in Control (as defined in the Plan, as in effect from
time to time), or termination of the Employee's employment for circumstances
described in clause (v) of the definition of Good Reason. For purposes of this
paragraph, the term "Competing Enterprise" shall mean any person, corporation,
partnership or other entity (or any of their respective subsidiaries) which,
directly or indirectly, is principally engaged in the business of investing in
or managing the operations of electric generating assets for wholesale resale in
the United States and Canada at market-based rates. Following termination of the
Employment Term, the Employee shall promptly furnish in writing to the Company,
its subsidiaries or affiliates, any information reasonably requested by the
Company (including any third party confirmations) to the extent necessary to
confirm the Employee's compliance with the provisions of this Section 13(b).
Notwithstanding anything contained in this Section 13(b) to the contrary, the
Employee shall not be prohibited from acquiring less than three percent (3%) of
any class of securities of a publicly traded corporation.
(c) Non-solicitation. During the Noncompetition Term, if
applicable, the Employee shall not interfere with the Company's relationship
with,
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employ or endeavor to entice away from the Company, any person who, on the date
of the termination of the Employment Term, was an employee or customer of the
Company or otherwise had a material business relationship with the Company.
(d) Remedies. The Employee agrees that any breach of the terms of
this Section 13 would result in irreparable injury and damage to the Company for
which the Company would have no adequate remedy at law; the Employee therefore
also agrees that in the event of said breach or any threat of breach, the
Company shall be entitled to an immediate injunction and restraining order to
prevent such breach and/or threatened breach and/or continued breach by the
Employee and/or any and all entities acting for and/or with the Employee,
without having to prove damages, in addition to any other remedies to which the
Company may be entitled at law or in equity. The terms of this paragraph shall
not prevent the Company from pursuing any other available remedies for any
breach or threatened breach hereof, including but not limited to the recovery of
damages from the Employee. The Employee acknowledges that the Company would not
have entered into this Agreement had the Employee not agreed to the provisions
of this Section 13. The Employee and the Company agree that the provisions of
the covenant not to compete set forth in this Section 13 are reasonable. Should
a court or arbitrator determine, however, that any provision of the covenant not
to compete is unreasonable or unenforceable, either in period of time,
geographical area, or otherwise, the parties hereto agree that the covenant
should be interpreted and enforced to the maximum extent possible in accordance
with law.
The provisions of this Section 13 shall survive any termination of
the Employment Term, and the existence of any claim or cause of action by the
Employee against the Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of the
covenants and agreements of this Section 13.
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14. Non-Waiver of Rights. The failure to enforce at any time the
provisions of this Agreement or to require at any time performance by the other
party of any of the provisions hereof shall in no way be construed to be a
waiver of such provisions or to affect either the validity of this Agreement or
any part hereof, or the right of either party to enforce each and every
provision in accordance with its terms. No waiver by either party hereto of any
breach by the other party hereto of any provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions at that time or at any prior or subsequent time.
15. Notices. Every notice relating to this Agreement shall be in
writing and shall be given by personal delivery or by registered or certified
mail, postage prepaid, return receipt requested; to:
If to the Company: Orion Power Holdings, Inc.
▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to the Employee: ▇▇▇▇ ▇. ▇▇▇▇▇
c/o Orion Power Holdings, Inc.
▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Either of the parties hereto may change their address for purposes
of notice hereunder by giving notice in writing to such other party pursuant to
this Section 15.
16. Indemnification. During the Employment Term and thereafter, the
Company shall indemnify the Employee to the fullest extent permitted by law
against any judgments, fines, amounts paid in settlement and reasonable expenses
(including attorneys' fees) in connection with any claim, action or proceeding
(whether civil or criminal) against the Employee as a result of the Employee
serving as an officer of the Company or in any capacity at the request of the
Company, in or with regard to any other entity, employee benefit plan or
enterprise (other than arising out of the Employee's act of willful misconduct,
gross negligence, misappropriation of funds, fraud or breach of this Agreement).
This indemnification shall be in addition to, and not in lieu of, any other
indemnification the Employee shall be entitled to pursuant to the Company's
Certificate of Incorporation or By-laws or otherwise. Following the Employee's
termination of employment, the Company shall continue to cover the Employee
under the Company's directors and officer's insurance, if any, for the period
during which the Employee may be subject to potential liability for any claim,
action or proceeding (whether civil or criminal) as a result of his service as
an officer of the Company or in any capacity at the request of the Company, in
or with regard to any other entity, employee benefit plan or enterprise on the
same terms such coverage was provided during the Employment Term, at the highest
level then maintained for any then current or former officer.
17. Binding Effect/Assignment. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, executors,
personal representatives, estates, successors (including, without limitation, by
way of merger) and assigns. Notwithstanding the provisions of the immediately
preceding
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sentence, the Employee shall not assign all or any portion of this Agreement
without the prior written consent of the Company.
18. Stockholder Approval. This Agreement is subject to the requisite
approval of the stockholders of the Company as contemplated under proposed
Treasury Regulation Section 1.280G-1, Q/A-6(a)(2)(ii), promulgated under the
Internal Revenue Code of 1986, as amended.
19. Entire Agreement. This Agreement (together with the Exhibits hereto
and the other agreements referred to herein) sets forth the entire understanding
of the parties hereto with respect to the subject matter hereof and supersedes
all prior agreements, written or oral, between them as to such subject matter.
20. Severability. If any provision of this Agreement, or any application
thereof to any circumstances, is invalid, in whole or in part, such provision or
application shall to that extent be severable and shall not affect other
provisions or applications of this Agreement.
21. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without reference to
the principles of conflict of laws. All actions and proceedings arising out of
or relating to this Agreement shall be heard and determined in any Maryland
state or federal court sitting in The City of Baltimore, and the parties hereto
hereby consent to the jurisdiction of such courts in any such action or
proceeding; provided, however, that neither party shall commence any such action
or proceeding unless prior thereto the parties have in good faith attempted to
resolve the claim, dispute or cause of action which is the subject of such
action or proceeding through mediation by an independent third party.
22. Modifications. Neither this Agreement nor any provision hereof may
be modified, altered, amended or waived except by an instrument in writing duly
signed by the party to be charged.
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19
23. Gender, Tense and Headings. Whenever any words are used herein in
the masculine gender, they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply. Whenever any words
used herein are in the singular form, they shall be construed as though they
were also used in the plural form in all cases where they would so apply.
The headings contained herein are solely for the purposes of
reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
24. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
25. Registration Rights. Other than in connection with an Initial
Public Offering, as defined in the Plan, the Employee shall have the right,
subject to cut-back arrangements in favor of other non-management stockholders,
to include in any registration statement filed by the Company to register shares
of its Common Stock (whether for its own account or for the account of other
stockholders), shares of Common Stock issued or issuable upon the exercise of
any Options awarded to the Employee and to have the Company pay all expenses
incurred (other than underwriting discounts and commissions) in connection with
the registration of such shares of Common Stock; provided, that the managing
underwriter in connection with such registration shall have reasonably
determined, in its sole discretion, that such inclusion shall not adversely
affect, in any manner, the public offering of such shares.
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20
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by authority of its Board of Directors, and the Employee has hereunto
set his hand, on the day and year first above written.
ORION POWER HOLDINGS, INC.
By:
----------------------------------------
Name:
Title:
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
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EXHIBIT A
(PUBLIC COMPANY AGREEMENT)
ORION POWER HOLDINGS, INC.
FORM OF
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of the ____ day of ____________,
200__, (the "Grant Date") by and between Orion Power Holdings, Inc. (the
"Company"), and _________________________________ (the "Optionee").
WHEREAS, the Company has adopted the Orion Power Holdings,
Inc. 1998 Stock Incentive Plan (the "Plan") in order to provide additional
incentive to certain employees, officers and directors of the Company and its
Subsidiaries;
WHEREAS, the Committee responsible for administration of the
Plan determined to grant an option to the Optionee as provided herein; and
WHEREAS, the Optionee entered into an Employment Agreement
with the Company (the "Employment Agreement").
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
1.1 The Company hereby grants to the Optionee the right and
option (the "Option") to purchase all or any part of an aggregate of _______
Shares, subject to, and in accordance with, the terms and conditions set forth
in this Agreement.
1.2 The Option is not intended to qualify as an Incentive
Stock Option within the meaning of Section 422 of the Code.
1.3 This Agreement shall be construed in accordance and
consistent with, and subject to, the provisions of the Plan (the provisions of
which are incorporated herein by reference) and, except as otherwise expressly
set forth herein, the capitalized terms used in this Agreement shall have the
same definitions as set forth in the Plan.
2. Exercise Price.
The price at which the Optionee shall be entitled to purchase
Shares upon the exercise of the Option shall be $_____ per Share.
22
3. Duration of Option.
The Option shall be exercisable to the extent and in the
manner provided herein for a period beginning on the Grant Date and ending on
the date preceding the tenth anniversary of the Grant Date (the "Exercise
Term"); provided, however, that the Option may be earlier terminated as provided
in Section 6 hereof.
4. Exercisability of Option.
The Option shall vest and become exercisable as provided in
Section [5(b)] [5(c)] [5(d)]1 of the Employment Agreement. Subject to the
provisions of Section 5 of the Employment Agreement and Section 6 hereof, any
portion of the Option that is unvested at the time of Optionee's termination of
employment with the Company for any reason shall terminate immediately upon the
Optionee's termination of employment with the Company.
5. Manner of Exercise and Payment.
5.1 Subject to the terms and conditions of this Agreement and
the Plan, the Option may be exercised by written notice delivered in person or
by mail to the Secretary of the Company, at its principal executive office. Such
notice shall state that the Optionee is electing to exercise the Option and the
number of Shares in respect of which the Option is being exercised and shall be
signed by the person or persons exercising the Option. If requested by the
Committee, such person or persons shall (i) deliver this Agreement to the
Secretary of the Company who shall endorse thereon a notation of such exercise
and (ii) provide satisfactory proof as to the right of such person or persons to
exercise the Option. The Option may not be exercised for less than 100 Shares at
a time, unless the number of Shares subject to the Option is not evenly
divisible by 100, in which case the final exercise may be for the remaining
number of Shares. Notwithstanding the preceding, the Option may be exercised
pursuant to such other procedures as may be permitted by the Committee from time
to time (including, without limitation, electronic exercise methods).
5.2 The notice (or other method) of exercise described in
Section 5.1 hereof shall be accompanied by the full exercise price for the
Shares in respect of which the Option is being exercised.
5.3 Upon receipt of notice (or other method) of exercise and
full payment for the Shares in respect of which the Option is being exercised,
the Company shall, subject to Section 12 of the Plan and further subject to the
terms of any note or loan agreement entered into by and between the Optionee and
the Company (a "Note"), take such action as may be necessary to effect the
transfer to the Optionee of the number of Shares as to which such exercise was
effective.
------------------
(1) The IPO Bonus Option vests over five years, pursuant to Section 5(b) of the
Employment Agreement; the Initial Annual Option, and subsequent Annual
Options, vest over three years pursuant to Sections 5(c) and 5(d),
respectively.
23
5.4 The Optionee shall not be deemed to be the holder of, or
to have any of the rights of a holder with respect to any Shares subject to the
Option until (i) the Option shall have been exercised pursuant to the terms of
this Agreement and the Optionee shall have paid the full exercise price for the
number of Shares in respect of which the Option was exercised, (ii) the Company
shall have issued and delivered the Shares to the Optionee, and (iii) the
Optionee's name shall have been entered as a shareholder of record on the books
of the Company, whereupon the Optionee shall have full voting and other
ownership rights with respect to such Shares.
5.5 Payment of the purchase price for the Shares being
purchased pursuant to the exercise of the Option may be made by cash or check,
by a transfer, either actually or by attestation, to the Company of Shares which
the Optionee has held for at least six (6) months and which have a Fair Market
Value on the date of such exercise equal to such purchase price and, if elected
by the Optionee, all applicable Withholding Taxes (as defined in Section 12
hereof), by a cashless exercise method through a registered broker-dealer
pursuant to procedures which are permitted by the Committee from time to time,
by any combination of the foregoing methods, or by such other method as may be
approved by the Committee.
6. Termination of Employment. Subject to Section 5.8 of the Plan and
Section 7 hereof, each Option shall terminate prior to the time set forth in
Section 3 hereof as follows:
6.1 If the employment of the Optionee is terminated by the
Company for any reason other than Disability, death or Cause, or by the Optionee
for Good Reason (as defined in the Employment Agreement), the Optionee may, for
a period ending ninety (90) days after such termination, but in no event beyond
the expiration date of the Option as set forth in Section 3 hereof, exercise the
Option to the extent, and only to the extent, that such Option or portion
thereof was vested and exercisable as of the date of such termination (including
any portion of the Option as to which the vesting is accelerated pursuant to the
Employment Agreement), after which time the Option shall automatically terminate
in full.
6.2 If the employment of the Optionee is terminated
voluntarily by the Optionee, the Optionee may, for a period of ninety (90) days
after such termination, exercise the Option to the extent, and only to the
extent, that such Option or portion thereof was vested and exercisable as of the
date of such termination, after which time the Option shall automatically
terminate in full.
6.3 If the employment of the Optionee is terminated by reason
of Disability, the Optionee may, for a period ending one (1) year after such
termination, but in no event beyond the expiration date of the Option as set
forth in Section 3 hereof, exercise the Option in full, after which time the
Option shall automatically terminate in full.
6.4 If the employment of the Optionee is terminated for Cause,
the Option granted to the Optionee hereunder shall immediately terminate in full
and no rights thereunder may be exercised.
6.5 If the employment of the Optionee is terminated by reason
of death, the Option may, for a period ending one (1) year after the Optionee's
death, but in no event beyond
24
the expiration date of the Option as set forth in Section 3 hereof, be exercised
by the person or persons to whom such rights under the Option shall pass by
will, or by the laws of descent or distribution, in full, after which time the
Option shall terminate in full.
6.6 The Option, to the extent not yet vested and exercisable
(after the application of the acceleration provisions of Sections 6.1, 6.3, 6.5
and 7), shall terminate immediately upon the Optionee's termination of
employment with the Company for any reason.
7. Effect of Change of Control.
Notwithstanding anything contained in this Agreement to the
contrary, in the event of a Change of Control, the Option shall become
immediately and fully vested and exercisable.
8. Non-Transferability.
The Option shall not be transferable other than by will or by
the laws of descent and distribution, except that (i) the Option may be
transferred, assigned or pledged to the Company as security in respect of any
Note and (ii) if approved by the Company in writing, the Option may be
transferred to Permitted Transferees of the Optionee.
9. No Right to Continued Employment.
Nothing in this Agreement or the Plan shall be interpreted or
construed to confer upon the Optionee any right with respect to continuance of
employment by the Company, nor shall this Agreement or the Plan interfere in any
way with the right of the Company to terminate the Optionee's employment at any
time.
10. Adjustments.
In the event of a Change in Capitalization, the Committee may
make appropriate adjustments to the number and class of Shares or other stock or
securities subject to the Option and the exercise price for such Shares or other
stock or securities. The Committee's adjustment shall be made in accordance with
the provisions of Section 11 of the Plan and shall be effective and final,
binding and conclusive for all purposes of the Plan and this Agreement.
11. Effect of a Merger, Consolidation or Liquidation.
Subject to Section 7 hereof, upon the effective date of (i)
the liquidation or dissolution of the Company or (ii) a merger or consolidation
of the Company (a "Transaction"), the Option shall continue in effect in
accordance with its terms and the Optionee shall be entitled to receive in
respect of all Shares subject to the Option, upon exercise of the Option, the
same number and kind of stock, securities, cash, property or other consideration
that each holder of Shares was entitled to receive in the Transaction.
25
12. Withholding of Taxes.
The Company shall have the right to deduct from any
distribution of cash to the Optionee an amount equal to the federal, state and
local income taxes and other amounts as may be required by law to be withheld
(the "Withholding Taxes") with respect to the Option. If the Optionee is
entitled to receive Shares upon exercise of the Option, the Optionee shall pay
the Withholding Taxes to the Company in cash, or otherwise provide or make
available to the Company sufficient funds to pay the Withholding Taxes
(including by a transfer of Shares which have been held for at least six (6)
months, if elected by the Optionee), prior to the issuance of such Shares.
13. Optionee Bound by the Plan.
The Optionee hereby acknowledges receipt of a copy of the Plan
and agrees to be bound by all the terms and provisions thereof.
14. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only by a written
instrument executed by the parties hereto.
15. Severability.
Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
16. Governing Law.
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws principles thereof.
17. Successors in Interest.
This Agreement shall inure to the benefit of and be binding
upon any successor to the Company. This Agreement shall inure to the benefit of
the Optionee's legal representatives. All obligations imposed upon the Optionee
and all rights granted to the Company under this Agreement shall be final,
binding and conclusive upon the Optionee's heirs, executors, administrators and
successors.
26
ORION POWER HOLDINGS, INC.
Attest: By: ______________________________
______________________________
Secretary
___________________________________
Optionee
27
EXHIBIT B
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (the "Agreement"),
dated as of this ____ day of _______ 2000 (the "Agreement") by and between Orion
Power Holdings Inc., a Delaware corporation (the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇
(the "Purchaser").
RECITALS
WHEREAS, the Company and the Purchaser entered into a Stock
Purchase Agreement on November 1, 1998 (the "Original Agreement") in connection
with the employment of the Purchaser by the Company, the Company provided the
Purchaser with an opportunity to purchase shares of common stock of the Company,
par value $.01 per share (the "Common Stock") at the same time and at the same
price as the parties to the Stockholders' Agreement, by and among the Company,
GS Capital Partners II, L.P. ("GSCP"), and Constellation Power Source Inc.
("Constellation") (the "Original Stockholders' Agreement");
WHEREAS, the Original Stockholders' Agreement was recently
amended and restated as the Amended and Restated Stockholders' Agreement, dated
as of June 25, 1999, by and among the Company, GSCP, Constellation and the other
parties named therein, which may be amended from time to time (the
"Stockholders' Agreement"); and
WHEREAS, the parties hereto wish to amend and restate the
Original Agreement.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
Section 1.1. Commitment to Purchase Shares. On the terms and subject to
the conditions of this Agreement, the Purchaser hereby commits to purchase 200
shares of Common Stock (or such lesser amount as is required pursuant to the
Purchaser Capital Calls, as defined below) (the "Shares") at $1,000 per share
(the "Purchase Price Per Share"), for an aggregate commitment of $200,000 (the
"Commitment Amount"). The Purchaser shall be required to purchase such Shares
(or such lesser amount as is required pursuant to the Purchaser Capital Calls)
at any time GSCP and Constellation are required to purchase shares of Common
Stock (a "GSCP/Constellation Purchase") as set forth in Section 3(a) of the
Stockholders' Agreement. Written notice of any Purchaser Capital Call shall be
given to the Purchaser at the same time and in the same manner as notice of a
Capital Call (as defined in the Stockholders Agreement) is
28
given to GSCP and Constellation pursuant to Section 3(a) of the Stockholders'
Agreement. Upon each GSCP/Constellation Purchase, the Purchaser will be required
to purchase Shares, at the Purchase Price Per Share, for that portion of the
Commitment Amount that is equal to the product of (a) the Commitment Amount
times (b) a fraction, the numerator of which is the amount to be paid by GSCP to
purchase shares of Common Stock in accordance with Section 3(a)(iv) of the
Stockholders' Agreement pursuant to the Capital Call being made simultaneously
with the Purchaser Capital Call and the denominator of which is GSCP's total
commitment to purchase shares of Common Stock pursuant to Section 3(a)(i) of the
Stockholders' Agreement (such product referred to as the "Purchaser Capital
Call"). In the event that the Purchaser's employment with the Company is
terminated for any reason, the Purchaser's remaining Commitment Amount shall be
reduced to zero. Purchaser's commitment shall be subject to compliance with
applicable federal and state securities laws.
Section 1.2. Consideration. On the terms and subject to the conditions
of this Agreement, in consideration for the sale of the Shares, on the date of
such sale, the Purchaser will (a) pay to the Company 33 1/3% of the purchase
price for such Shares in cash ("Cash Payment") and (b) issue a note in the form
attached hereto as Annex A payable to the order of the Company in the principal
amount of 66 2/3% of the Purchaser's Capital Call (the "Note"), (collectively,
the Purchase Price").
Section 1.3. Delivery of Shares and Payment. On the date of the closing
of the purchase of the Shares (which closing shall be the same as that of the
closing of the GSCP/Constellation Purchase) (the "Closing"), (i) the Company
shall issue certificates representing the Shares, together with duly executed
stock powers, free and clear of all liens and restrictions of any kind (except
for those imposed by applicable securities laws, this Agreement and the Note)
and (ii) the Purchaser shall deliver or cause to be delivered to the Company (x)
the Cash Payment by wire transfer of immediately available funds, to an account
or accounts designated by the Company in a written notice to the Purchaser and
(y) the Note, duly authorized and executed.
ARTICLE 2
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser as
follows:
Section 2.1. Organization and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company has all requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. All necessary action, corporate or otherwise, required to
have been taken by or on behalf of the Company by applicable law, its charter
documents or otherwise to authorize (i) the approval, execution and delivery on
behalf of the Company of this Agreement and (ii) the performance by the Company
of its obligations under this Agreement and the consummation of the transactions
contemplated hereby has been taken.
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This Agreement constitutes a valid and binding agreement of the Company,
enforceable against each respectively in accordance with its terms, except (x)
as the same may be limited by applicable bankruptcy, insolvency, moratorium or
similar laws of general application relating to or affecting creditors' rights,
including without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers, and (y) for the limitations
imposed by general principles of equity. The foregoing exceptions are
hereinafter referred to as the "Enforceability Exceptions."
Section 2.2. The Shares. Upon delivery to Purchaser from time to time of
certificates representing the Shares, and upon receipt by Company of the payment
in full therefor, (i) good and valid title to the Shares will pass to Purchaser,
free and clear of all liens and restrictions of any kind (except for those
imposed by applicable securities laws and the Note) and (ii) the Shares will be
validly issued, fully paid and nonassessable.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Company as
follows:
Section 3.1. Natural Person; Authorization. The Purchaser is a natural
person and competent to execute this Agreement and has taken all action required
by law to authorize the execution and delivery of this Agreement and the
transactions contemplated hereby. Upon execution, this Agreement is the valid
and binding obligation of the Purchaser enforceable in accordance with its
terms, except that such enforcement may be subject to the Enforceability
Exceptions.
Section 3.2. Purchase Entirely for Own Account; Disclosure of
Information. This Agreement is made with the Purchaser in reliance upon the
Purchaser's representations to the Company which by the Purchaser's execution of
this Agreement it hereby confirms, that the Shares to be received by the
Purchaser will be acquired for investment for the Purchaser's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that the Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same. The Purchaser
does not have any contract, undertaking, agreement or arrangement (except as set
forth in this Agreement) with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Shares. The Purchaser acknowledges that it has received all the information it
has requested or considers necessary or appropriate for deciding whether to
purchase the Shares. The Purchaser further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
Company and the terms and conditions of the offering of the Shares and to obtain
any additional information necessary to verify the accuracy of the information
given to the Purchaser.
Section 3.3. Restricted Securities; Accredited Investor. (a) The
Purchaser understands that the Shares are "restricted securities" under the
Securities Act of 1933, as amended ("Act"), as
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30
they are being acquired from the Company in a transaction not involving a public
offering and that under the Act and the rules and regulations thereunder such
securities may be resold without registration under the Act, only in certain
limited circumstances. In this connection, the Purchaser represents that it is
familiar with Rule 144 promulgates under the Act, as presently in effect, and
understands the resale limitations imposed thereby and by the Act. The Purchaser
is an "accredited investor" within the meaning of paragraph (a) of Rule 501 of
Regulation D promulgated under the Act. The Purchaser has sufficient knowledge
and experience to analyze the Company so as to be able to evaluate the risks and
merits of its investments in the Company and is financially able to bear the
risks thereof.
ARTICLE 4
MISCELLANEOUS
Section 4.1. Right of First Refusal. (a) Subject to subsection (d)
hereof, any Shares acquired pursuant to Article I hereof shall be subject to a
right of first refusal in favor of the Company with respect to any proposed sale
by the Purchaser or any subsequent holder (the "Holder") of the Shares. If the
Holder receives and intends to accept an offer to sell or transfer such Shares,
the Holder shall deliver written notice (the "Proposed Sale Notice") by
certified mail, return receipt requested to the Secretary of the Company, at its
principal executive office. The Proposed Sale Notice shall state that the Holder
intends to sell such Shares and the name of the proposed purchaser (the
"Proposed Purchaser") and shall state the number of Shares, the price per Share
and the terms and conditions for the payment of such price (the "Terms of
Sale"). The foregoing right of first refusal shall not apply to any gift (or
transfer without consideration) of any Shares to any Permitted Transferee (as
such term is defined in the Orion Power Holdings, Inc., 1998 Stock Incentive
Plan, as amended from time to time (the "Plan")), so long as such Permitted
Transferee agrees in writing, in such form reasonably acceptable to the Company,
that such Shares shall continue to be subject to the same conditions,
restrictions and covenants in effect immediately prior to such gift or transfer.
(b) The Company shall have thirty (30) days from the date of
receipt of the Proposed Sale Notice to purchase the Shares on the Terms of Sale.
The Company shall exercise its right of first refusal by giving written notice
(the "Purchase Notice") to the Holder. The Purchase Notice shall set forth a
date not more than thirty (30) days after the date of such notice by which the
Holder should deliver the certificate(s) representing such Shares to the
Company's principal executive office.
(c) If the Company elects not to exercise its right of first
refusal within thirty (30) days, the Holder may dispose of the Shares; provided,
however, that such sale (i) is to the Proposed Purchaser, (ii) on the Terms of
Sale, and (iii) occurs within thirty (30) days after the expiration of the
Company's right of first refusal.
(d) The Company's right of first refusal as provided herein
shall expire at the time of an Initial Public Offering.
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Section 4.2. Right of Repurchase.
(a) Subject to subsection (b) hereof, in the event that the
Purchaser's employment with the Company is terminated for any reason, the
Company, or such other party as the Company may designate, shall have the right
(as described below) to purchase from the Holder any and all Shares issued
pursuant to Article I hereof. This repurchase right shall be exercisable by the
Company, or such other party as the Company may designate, by delivery of a
repurchase notice to the Holder prior to the date which is six (6) months after
the later of (i) the date of termination of the Purchaser's employment with the
Company for any reason or (ii) the date of issuance of any Share(s) pursuant to
Article I hereof. The price payable to the Holder by the Company in connection
with the Company's purchase of any Share pursuant to this Section 4.2 shall be
determined as follows:
(i) The purchase price per Share shall be the Fair
Market Value (as such term is defined in the Plan) of a Share on the
date preceding the date of purchase in the event that the Purchaser's
employment is terminated at any time for any reason, other than a
termination by the Company for Cause (as such term is defined in the
amended and restated Employment Agreement, dated __________, by and
between the Company and ▇▇▇▇ ▇. ▇▇▇▇▇).
(ii) The purchase price per Share shall be equal to
the lesser of (a) the price paid by the Purchaser, and (b) the Fair
Market Value of a Share on the date preceding the date of purchase, in
the event that the Purchaser's employment is terminated by the Company
for Cause.
(b) The Company's right of repurchase as provided herein
shall expire at the time of an Initial Public Offering.
Section 4.3. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware applicable to
agreements made and to be performed wholly within such jurisdiction.
Section 4.4. Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto. No party hereto shall have the
right to assign its rights and obligations under this Agreement, without the
prior written consent of the other party.
Section 4.5. Notices. Every notice relating to this Agreement shall be
in writing and shall be given by personal delivery or by registered or certified
mail, postage prepaid, return receipt requested; to:
(a) If to the Company: Orion Power Holdings, Inc.
▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(b) If to the Employee: ▇▇▇▇ ▇. ▇▇▇▇▇
c/o Orion Power Holdings, Inc.
▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Section 4.6. Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf as of the day and year
first written above.
ORION POWER HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
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ANNEX A
FORM OF (1)
ORION POWER HOLDINGS, INC.
NON-RECOURSE SECURED PROMISSORY NOTE AND SECURITY
AGREEMENT
("NOTE")
$ [Date]
---------------------------
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇ ▇. ▇▇▇▇▇ (the
"Borrower"), hereby promises to pay to Orion Power Holdings, Inc., a Delaware
corporation (the "Company"), or to the legal holder of this Note at the time of
payment, the principal sum (the "Principal Sum") of [ ] ($ )(2)
in lawful money of the United States of America. The Borrower also agrees to pay
interest (computed on the basis of a 365 day year) on any portion of the
Principal Sum that remains outstanding from and after the effective date of this
Note until the entire Principal Sum has been paid in full, at an annual rate of
7% simple interest; provided, however, that interest on the unpaid Principal Sum
shall be payable annually, with the first interest payment due and payable on
[____________], and with subsequent payments due and payable on each anniversary
of such date; and further, provided, that in no event shall such interest be
charged to the extent it would violate any applicable usury law. Other than with
respect to the Pledged Collateral (as defined below) to the extent set forth
hereunder, the obligations represented by this Note shall be without recourse to
the Borrower.
The proceeds received by the Borrower shall be used solely to
acquire shares of common stock, par value $.01 per share, of the Company (the
"Common Stock") pursuant to the terms set forth in that certain Stock Purchase
Agreement, dated as of ____________________, by and among the Company and the
Borrower (the "Stock Purchase Agreement").
This Note is subject to the following further terms and
conditions:
1. Payment Upon Maturity. The Principal Sum then outstanding and
all accrued interest thereon shall become due and payable on the first to occur
of (i) the fifth
--------
(1) To be executed in connection with each stock purchase, upon the
occurrence of each Purchaser Capital Call.
(2) To be equal to two-thirds of the total stock purchased in connection
with each Purchaser Capital Call.
35
anniversary of the date hereof, (ii) the ninetieth (90th) day immediately
following Borrower's termination of employment with the Company for any reason
whatsoever and (iii) a Change in Control (as such term is defined in the Orion
Power Holdings, Inc. 1998 Stock Incentive Plan, as amended from time to time
(the "Plan")).
2. Payment and Prepayment. All payments and prepayments of
the Principal Sum of and the accrued interest on this Note shall be made to the
Company or its order, or to the legal holder of this Note or such holder's
order, in lawful money of the United States of America at the principal offices
of the Company (or at such other place as the holder hereof shall notify the
Borrower in writing). The Borrower may, at his option, prepay this Note in whole
or in part at any time or from time to time without penalty or premium. Any
prepayments of any portion of the Principal Sum of this Note shall be
accompanied by payment of all interest accrued but unpaid on the portion of
Principal Sum so repaid. Upon full and final payment of the Principal Sum of and
interest accrued on this Note, it shall be surrendered to the Borrower and the
Pledged Collateral (as defined below) shall be released, subject to the terms of
any other note or similar agreement entered into by and between the Company and
the Borrower from time to time.
3. Grant of Security Interest.
(a) As security for the full and punctual payment of the
Principal Sum and accrued interest on this Note when due and payable (whether
upon stated maturity, or otherwise), the Borrower hereby grants and pledges a
continuing lien on and security interest in, and, as a part of such grant and
pledge, hereby pledges, assigns, transfers and conveys to the Company as
collateral security, the following assets, together with any and all dividends
and other distributions made in respect of such assets and any and all
securities issued in substitution or exchange for such assets (the "Pledged
Collateral"):
(i) any and all shares of Common Stock beneficially
owned by the Borrower as of the date hereof and
any shares purchased with the proceeds of this
Note (the "Pledged Stock");
(ii) any and all options (the "Options") to purchase
Common Stock granted to the Borrower on or prior
to the date hereof or hereafter, pursuant to the
Plan; and
(iii) any and all shares of Common Stock acquired by
the Borrower after the date hereof in connection
with the exercise of Options or pursuant to the
terms of the Stock Purchase Agreement
(collectively, the "Additional Pledged Stock").
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36
(b) The Borrower will defend the Company's right, title and
interest in and to the Pledged Collateral against the claims and demands of all
other persons.
(c) Concurrently with making this Note, the Borrower has
delivered to the Company the certificates representing the Pledged Stock,
together with appropriate undated stock powers duly executed in blank for the
Pledged Stock and the Borrower agrees that he shall deliver to the Company
certificates representing the Additional Pledged Stock upon his acquiring such
shares from time to time. The Borrower agrees to deliver, if necessary or
appropriate, additional undated stock powers duly executed in blank for the
Pledged Stock and to take such additional action as is required from time to
time to perfect the Company's security interest in the Pledged Stock, the
Additional Pledged Stock and the Options.
(d) So long as the Borrower has not defaulted in the timely
payment of principal and interest hereunder, or such default shall not have been
cured within (30) days following the due date of any such payment (a "Default"),
the Borrower shall be entitled to vote the Pledged Stock and the Additional
Pledged Stock and to give all consents, waivers and ratifications in respect of
the Pledged Stock and the Additional Pledged Stock. Upon the occurrence of a
Default, all voting and other consensual rights of the Borrower in the Pledged
Stock and the Additional Pledged Stock shall cease and may be exercised by the
Company.
(e) Upon the occurrence of a Default, the Company shall have
and may exercise all rights and remedies afforded to a secured party under the
Delaware Uniform Commercial Code applicable thereto, and shall have the right to
retain the Pledged Collateral in partial or full satisfaction of the Borrower's
obligations under this Note in accordance with the provisions of, and to the
extent permitted under, the Delaware Uniform Commercial Code. With respect to
the preceding sentence, the Company shall, in its sole discretion, determine the
order in which all or any portion of the assets comprising the Pledged
Collateral shall be applied in satisfaction of the Borrower's obligations under
this Note; provided, however, that the value of any such assets so applied shall
be determined in accordance with paragraph (f) of this Section 3. Borrower
hereby agrees to indemnify the Company and hold it harmless from and against any
and all costs and expenses, including without limitation attorneys fees,
reasonably incurred by the Company in connection with any Default.
(f) In the event of a Default, for purposes of this Note (i)
the value of a share of Common Stock as of any date shall be equal to the Fair
Market Value (as defined in the Plan) of a share of Common Stock as of such
date, except that if the value of a share of Common Stock is determined
following the Borrower's termination of employment by the Company for "Cause"
(as such term is defined in that certain Employment Agreement, dated as of
_____________ [date], by and among the Borrower
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37
and the Company), then for purposes of this Note the value of a share of Common
Stock shall be deemed to equal the lesser of (A) the price paid by the Borrower
for such share and (B) the Fair Market Value of such share and (ii) the value of
an Option as of any date shall be equal to the Fair Market Value of the shares
of Common Stock subject to the Option as of such date, less (A) the aggregate
exercise price of such Option and (B) all applicable withholding taxes payable
in respect of such Option.
(g) The Borrower agrees that at any time and from time to
time upon the written request of the Company, the Borrower will execute and
deliver such further documents and do or cause to be done such further acts and
things as the Company may reasonably request in order to effect the purposes of
this Note and the grant of the security interest hereunder.
4. Notice. For the purposes of this Note, notices, demands
and all other communications provided for herein shall be in writing and shall
be deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Borrower:
▇▇▇▇ ▇. ▇▇▇▇▇
c/o Orion Power Holdings, Inc.
▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Orion Power Holdings, Inc.
▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
5. Miscellaneous.
(a) No delay or failure by the Company or the holder of
this Note in the exercise of any right or remedy shall constitute a waiver
thereof, and no single or partial
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38
exercise by the holder hereof of any right or remedy shall preclude other or
future exercise thereof or the exercise of any other right or remedy.
(b) The headings contained in this Note are for reference
purposes only and shall not affect in any way the meaning or interpretation of
the provisions hereof.
(c) The provisions of this Note shall be governed by and
construed in accordance with laws of the State of Delaware, without giving
effect to the choice of law principles thereof.
IN WITNESS WHEREOF, this Note has been duly executed and
delivered to the Company by the Borrower on the date first above written.
---------------------
Borrower
Witness:
---------------------
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