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Exhibit 10.12
STRATEGIC ALLIANCE AGREEMENT
STRATEGIC ALLIANCE AGREEMENT, dated as of March 10, 1998, between ORION POWER
HOLDINGS, INC., a Delaware corporation (the "Company"), and CONSTELLATION POWER
SOURCE, INC., a Delaware corporation ("Constellation").
WITNESSETH
WHEREAS, GS CAPITAL PARTNERS II, L.P., a Delaware limited partnership
("GSCP"), and Constellation, on March 10, 1998, caused the formation of the
Company and entered into a Stockholders' Agreement relating thereto;
WHEREAS, the Company has been formed for the purpose of investing in and
managing the operations of electric generating assets in the United States and
Canada (the "Portfolio Assets");
WHEREAS, Constellation and the Company intend to establish a Strategic
Alliance (as defined herein) whereby Constellation will be the exclusive
provider of power marketing and risk management services for the Portfolio
Assets subject to the terms of this Agreement;
WHEREAS, to carry out the Strategic Alliance, Constellation and the
Company intend to enter into Power Sales and Brokering Agreements (as defined
herein) with respect to each Facility, each such Power Sales and Brokering
Agreement to be established in accordance with the terms of this Agreement; and
WHEREAS, the parties hereto desire to set forth the terms and conditions
of the Strategic Alliance between the Company and Constellation.
NOW, THEREFORE, in consideration of the promises and of the mutual
commitments and obligations hereinafter set forth, the parties hereto hereby
agree as follows:
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SECTION 1. Definitions. As used herein, the following terms shall
have the following meanings:
Brokering Services" means services pursuant to which Constellation, at
the Company's request, shall arrange with third parties (i) for the purchase of
the electrical output of a Facility or (ii) for Hedging Transactions, in each
case for the portion of a Facility's output or risk management needs for which
Constellation and the Company have not entered into Principal Transactions.
Facility" means each electric generating facility owned or controlled by
the Company.
Facility Event" means an event in which a Facility is (i) retired from
service or (ii) directly or indirectly sold, whether by means of a sale of stock
of the entity that owns the Facility or the sale or lease of all or
substantially all of the assets comprising the Facility, or by means of a
merger, consolidation, share exchange or otherwise with respect to the entity
that owns the Facility; provided, however, that a Facility Event shall not
include a sale-leaseback (or similar transaction) with respect to such Facility
for the purpose of financing such Facility. For purposes hereof, the term sale
or sold shall each mean the transfer of control of a Facility (i.e. the ultimate
decision-making authority with respect to a Facility or the entity that owns
such Facility) to an entity, including any affiliates of such entity, other than
GSCP, Constellation or an affiliate of either such person.
Hedging Transaction" means a Transaction entered into by the Company for
the purpose of managing price risk associated with a Facility's electrical
output and capacity value.
Inadequate Performance" means a circumstance in which, after notice (such
notice only to be delivered after the Company has made reasonable efforts to
communicate its dissatisfaction with Constellation's performance) and an
opportunity to
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cure as set forth herein, Constellation fails to perform services in a manner
that meets reasonable, professional power marketing and risk management
standards with respect to (i) a Facility, pursuant to a Power Sales and
Brokering Agreement (it being understood that if more specific standards are
applicable with respect to such Facility, such standards will be specified in
each Power Sales and Brokering Agreement) or (ii) a Particular Market Segment;
provided, however, that in either case Constellation shall have 30 days after
written notice (an "Inadequate Performance Notice") from the Company to cure the
Inadequate Performance set forth in such notice. In no event shall Inadequate
Performance apply to any Principal Transactions.
IPO" means an underwritten offering or series of underwritten offerings
pursuant to which the common stock, par value $.01 per share, of the Company
("Common Stock") becomes registered under Section 12 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (a) in which either (i) the Common
Stock issued in such IPO constitutes at least 20% of the Common Stock or (ii)
the gross proceeds to the Company and any selling stockholders, in the
aggregate, is at least $75 million before deducting underwriting discounts,
commissions and offering expenses and (b) which results in the Common Stock
being held by at least 500 holders of record within the meaning of Rule 12g5-1
under the Exchange Act.
Market Analysis" means Constellation's proposed risk management strategy
for a potential Facility acquisition by the Company for a period agreed upon by
Constellation and the Company, together with forecasted market views thereafter,
based upon Constellation's analysis of current and future market conditions.
Market Based Terms" means pricing, terms, conditions and standards for
similar services which are based upon the marketplace, in the context of an
arm's length negotiation with unaffiliated parties, at the time such pricing,
terms, conditions and standards are to be determined, as they may be modified or
supplemented by a specific
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provision of this Agreement, it being understood that the level of Market Based
Terms may vary from Facility to Facility to reflect, among other things,
Facility and market specific characteristics.
Particular Market Segment" means a specific relevant market or
environment (which may be defined by geographic area, type of activity or
service, or otherwise) in which Constellation may provide Power Marketing and
Risk Management Services and all other related services provided under this
Agreement.
Power Marketing and Risk Management Services" means Principal
Transactions, Brokering Services and Scheduling Services (each as defined in
this Agreement) and all other related services provided by Constellation to the
Company with respect to a Facility.
Power Sales and Brokering Agreement" means the agreement by which
Constellation will provide exclusive Power Marketing and Risk Management
Services associated with the energy output and capacity of a Facility.
Principal Transaction" means:
(i) A transaction pursuant to which Constellation, at
the Company's request, purchases electrical output of a Facility
at market-based, negotiated prices, terms and conditions; or
(ii) A Hedging Transaction between Constellation and the
Company, at the Company's request, to provide risk management for
a Facility at market-based, negotiated prices, terms and
conditions.
Scheduling Services" means the scheduling by Constellation of the
electrical generation output and associated transmission services for a
Facility.
Strategic Alliance" means the exclusive provision of Power Marketing and
Risk Management Services by Constellation to the Company, as provided for in,
and subject to the terms of, this Agreement.
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Termination Event" means an event in which the Company (i) consummates an
IPO or (ii) is directly or indirectly sold, whether by means of a sale of its
stock or the sale or lease of all or substantially all of its assets, or by
means of a merger, consolidation, share exchange or otherwise. For purposes
hereof, the term sale or sold shall each mean the transfer of a greater than 50%
interest to an entity (including a group acting in concert) other than GSCP,
Constellation or an affiliate of either such person.
SECTION 2. Strategic Alliance.
Pursuant to the Strategic Alliance:
(a) Unless otherwise agreed by Constellation and the
Company with respect to a specific Facility, and subject to the other provisions
of this Agreement, Constellation shall be the exclusive provider of Power
Marketing and Risk Management Services for each Facility acquired by the
Company.
(b) Unless otherwise agreed by Constellation and the
Company with respect to a specific Facility, and subject to the other provisions
of this Agreement, the Company shall not procure Power Marketing and Risk
Management Services for any Facility from any entity other than from
Constellation.
(c) Unless otherwise agreed by Constellation and the
Company, and subject to the other provisions of this Agreement, all Power Sales
and Brokering Agreements and other arrangements to be negotiated and entered
into between Constellation and the Company shall be upon and conform to Market
Based Terms.
(d) Unless otherwise agreed by Constellation and the
Company, Constellation will not provide assistance to any entity in connection
with such entity's bidding for, or acquisition of, an ownership or controlling
position in any electric generating facility with respect to which the Company
notifies Constellation that the Company is bidding, or intending to bid, to
acquire, in whole or in part. Constellation shall not be precluded from
providing assistance to an entity seeking ownership or control
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of a facility at such time as (i) the Company ceases pursuing the acquisition,
in whole or in part, of such facility or (ii) such third party entity enters
into a definitive written purchase agreement to acquire control of such
facility.
SECTION 3. Power Sales and Brokering Agreements.
(a) In connection with the acquisition of each Facility
by the Company, Constellation and the Company shall negotiate in good faith to
enter into, on Market Based Terms, and subject to Section 3(c) hereof, a Power
Sales and Brokering Agreement pursuant to which Constellation shall have the
exclusive right to provide Power Marketing and Risk Management Services for such
Facility.
(b) In the event that the Company (i) acquires a
Facility that has a pre-existing power sales or risk management agreement (a
"Pre-Existing Agreement") which will remain an obligation of the Company upon
acquisition of such Facility and such Pre-Existing Agreement is not terminable
without monetary loss to the Company or (ii) must enter into or accept any
agreement relating to power sales or risk management imposed by the seller of
such Facility as a condition to consummating an acquisition of a Facility (an
"Obligatory Agreement"), in lieu of the Power Sales and Brokering Agreement
contemplated by Section 3(a) hereof, Constellation and the Company shall, to the
extent applicable, negotiate, on Market Based Terms, and subject to Section 3(c)
hereof, a Power Sales and Brokering Agreement, pursuant to which Constellation
shall provide Power Marketing and Risk Management Services with respect to such
Facility (i) in accordance with Section 3(a) hereof, except that such Power
Sales and Brokering Agreement shall be effective only upon termination of such
Pre-Existing Agreement or Obligatory Agreement, as the case may be, or (ii) to
the degree, if any, that such Pre-Existing Agreement or Obligatory Agreement, as
the case may be, does not satisfy all of the Power Marketing and Risk Management
Services required by the Facility; provided, that, any Power Sales and Brokering
Agreement entered into pursuant to this Section 3(b)
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shall in no case violate such Pre-Existing Agreement or Obligatory Agreement, as
the case may be.
(c) All Power Sales and Brokering Agreements to be
negotiated pursuant to this Agreement shall set forth the specific Power
Marketing and Risk Management Services, and any other services agreed to by
Constellation and the Company as contemplated by Section 7 hereof, to be
provided by Constellation together with the associated fees, terms and
conditions. Unless otherwise agreed by Constellation and the Company with
respect to a specific Facility, negotiations to enter into any Power Sales and
Brokering Agreement pursuant to this Agreement shall commence prior to the date
on which the Company formally enters a binding bid to acquire a Facility (the
date on which negotiations are to commence hereunder is referred to as the
"Commencement Date"). If the parties are unable to agree upon the Market Based
Terms, or any of them, to be contained in any Power Sales and Brokering
Agreement, then the provisions of Section 4 hereof shall apply.
SECTION 4. Dispute Resolution.
(a) Unless otherwise provided in a Power Sales and
Brokering Agreement, the resolution of any controversy, claim or dispute, other
than an Inadequate Performance Dispute, as defined in Section 4(b) hereof, or a
Material Breach Dispute, as defined in Section 4(c) hereof, (a "Dispute")
arising out of or relating to this Agreement or any Power Sales and Brokering
Agreement (including, without limitation, (i) the parties' inability to
negotiate and agree upon the Market Based Terms of a Power Sales and Brokering
Agreement in accordance with Section 3 hereof (a "Market Based Terms Dispute"),
(ii) whether an event permitting termination under Section 5 hereof has occurred
or (iii) any questions of interpretation of this Agreement or any Power Sales
and Brokering Agreement) shall be determined in the following manner: (A) to the
extent the Dispute is not a Market Based Terms Dispute (the initial negotiations
of which shall be
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governed by Section 3 hereof), the parties shall immediately commence
negotiations to settle any Dispute, (B) if the parties are unable to resolve the
Dispute within 30 days from the Commencement Date, or in the case of a Dispute
other than a Market Based Terms Dispute, the date on which the parties initially
commence negotiations with respect to such Dispute, upon the request (the "First
Trigger") of either the Company or Constellation at any time after such 30 day
period, the Chief Executive Officer of each of the Company and Constellation
shall meet in a good faith effort to reasonably resolve any such Dispute, (C) if
such Chief Executive Officers are unable to resolve the Dispute within 15 days
of the First Trigger (the "CEO Period"), or upon the request (such request or
the expiration of the CEO Period is referred to as the "Second Trigger") of
either Chief Executive Officer, the Chairman of the Board of each of the Company
and Constellation Energy Solutions, Inc., or an equivalent director or officer,
shall meet in a good faith effort to reasonably resolve any such Dispute, and
(D) if such Chairmen of the Board are unable to reach a resolution within 15
days of the Second Trigger, or upon the request of either Chairman of the Board,
the conflict shall be referred to and then settled by binding arbitration in
Delaware, administered by the American Arbitration Association in accordance
with the Expedited Procedures of its Commercial Arbitration Rules, and judgment
on the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction.
(b) The resolution of any controversy, claim or dispute
as to whether there has been Inadequate Performance, or any cure thereof (an
"Inadequate Performance Dispute"), shall be determined in the following manner:
(A)(i) following the delivery of the Inadequate Performance Notice of
termination as a result of Inadequate Performance of a Power Sales and Brokering
Agreement or of this Agreement with respect to a Particular Market Segment in
accordance with Section 5 hereof, the Chief Executive Officer of each of the
Company and Constellation shall meet in a good
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faith effort to reasonably resolve any such Inadequate Performance Dispute, (ii)
if such Chief Executive Officers are unable to resolve the Inadequate
Performance Dispute within 15 days of the Inadequate Performance Notice, or upon
the request of either Chief Executive Officer, the Chairman of the Board of each
of the Company and Constellation Energy Solutions, Inc., or an equivalent
director or officer, shall meet in a good faith effort to reasonably resolve any
such Inadequate Performance Dispute, and (iii) if such Chairmen of the Board are
unable to reach a resolution of the Inadequate Performance Dispute within 30
days after the Inadequate Performance Notice (or within 40 days after the
Inadequate Performance Notice if Constellation has taken reasonable steps to
attempt to cure the Inadequate Performance set forth in the Inadequate
Performance Notice within such 30 day period and there is a dispute as to
whether, within such 30 day period, a cure has been accomplished) (the 30 day or
40 day period (as the case may be) referred to in this Section 4(b)(iii) is
hereinafter referred to as the "Initial Resolution Period"), upon the request of
either Chairman of the Board, the conflict shall be referred to and then settled
by binding arbitration in Delaware, administered by the American Arbitration
Association in accordance with the Expedited Procedures of its Commercial
Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction. Following the Initial Resolution
Period, nothing in this Section 4 shall require the Company to delay or forbear
from exercising, during the pendency of any Inadequate Performance Dispute
resolution process, its rights under Section 5 to terminate this Agreement with
respect to a Particular Market Segment or any Power Sales and Brokering
Agreement as a result of Inadequate Performance.
(c) The resolution of any controversy, claim or dispute
(a "Material Breach Dispute") as to whether a Material Breach (as defined in
Section 17 of the Agreement, dated March 10, 1998 (the "BGE/CPI Agreement"), by
and among the Company, Baltimore Gas and Electric Company ("BGE") and
Constellation Power, Inc.
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("CPI")) has occurred shall be resolved in accordance with Section 20(a) of the
BGE/CPI Agreement.
SECTION 5. Term and Termination.
(a) Strategic Alliance.
(i) This Agreement shall remain in force unless
terminated in accordance with its terms.
(ii) This Agreement shall be terminable by the
Company or Constellation upon at least thirty (30) days' prior written notice
due to a Termination Event, subject to the provisions of Section 5(a)(iv);
provided, however, that, unless otherwise specified in a specific Power Sales
and Brokering Agreement, no Principal Transaction may be terminated by the
Company or Constellation prior to the termination date for such transaction
previously agreed upon in such Power Sales and Brokering Agreement.
(iii) With respect to a Particular Market Segment,
this Agreement, and any Power Sales and Brokering Agreement with respect to a
Facility in such Particular Market Segment, shall be terminable by the Company
due to Inadequate Performance with respect to such Particular Market Segment;
provided, however, no Principal Transaction may be terminated by the Company
prior to the termination date for such transaction previously agreed upon in a
Power Sales and Brokering Agreement due to Inadequate Performance.
(iv) The period during which this Agreement may be
terminable by the Company or Constellation in accordance with Section 5(a)(ii)
hereof shall be the six (6) month period beginning from the closing date of the
transaction giving rise to such Termination Event; provided, however, notice of
any termination may be given prior to or after the closing date of such
Termination Event so long as such termination is not effective prior to the
closing date of such Termination Event.
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(b) Power Sales and Brokering Agreements.
(i) Each Power Sales and Brokering Agreement
shall remain in force unless terminated in accordance with its own terms or by
the terms of this Agreement.
(ii) A Power Sales and Brokering Agreement shall
be terminable by the Company due to: (a) Inadequate Performance or (b) upon
thirty (30) days' prior written notice, subject to the provisions of Section
5(b)(iv), due to the occurrence of either a Termination Event or a Facility
Event; provided, however, that, unless otherwise specified in a specific Power
Sales and Brokering Agreement, no Principal Transaction may be terminated by the
Company or Constellation prior to the termination date for such transaction
previously agreed upon in such Power Sales and Brokering Agreement.
(iii) A Power Sales and Brokering Agreement shall
become terminable by Constellation upon thirty (30) days' prior written notice,
subject to the provisions of Section 5(b)(iv), due to: (a) a Termination Event
or (b) a Facility Event; provided, however, that, unless otherwise specified in
a specific Power Sales and Brokering Agreement, no Principal Transaction may be
terminated by the Company or Constellation prior to the termination date for
such transaction previously agreed upon in such Power Sales and Brokering
Agreement.
(iv) The period during which a Power Sales and Brokering
Agreement may be terminable by the Company or Constellation due to the
occurrence of a Termination Event or Facility Event as provided in Section
5(b)(ii) or (iii) shall be the six (6) month period beginning from the closing
date of the transaction giving rise to such Termination Event or Facility Event;
provided, however, notice of any termination may be given prior to or after the
closing date of such Termination Event or Facility Event so
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long as such termination is not effective prior to the closing date of such
Termination Event or Facility Event.
(c) Other Termination.
(i) This Agreement and any Power Sales and
Brokering Agreement shall be terminable by the Company within six months of the
occurrence of any of the following events, upon thirty (30) days' prior written
notice: (A) at any time, Constellation has sold or otherwise transferred in a
transaction or series of transactions to any person other than an affiliate of
Constellation, 50% or more, in the aggregate, of the shares of Common Stock
which Constellation, in the aggregate, had acquired prior to the date on which
termination shall be permitted hereby (a "Constellation Disposition"); (B) that
certain Power Business Services Agreement, dated February 24, 1997, (the
"Advisory Agreement"), by and among Constellation, Goldman Sachs Power LLC
("GSP"), BGE, Goldman, Sachs & Co. ("Goldman") and J. Aron & Company ("J.
Aron"), is terminated; (C) voting control of Constellation or Constellation
Energy Solutions, Inc. is acquired by a third party (including any affiliates of
such third party) which is not an affiliate of BGE or a transaction or series of
related transactions is consummated (including, without limitation, any tender
offer or merger transaction) pursuant to which BGE stockholders immediately
prior to the first of any such transactions, hold, immediately following such
transaction or series of related transactions, less than 50% of the voting stock
of BGE (or a holding company for BGE) or the surviving or resulting corporation
of such transaction or series of related transactions (a "BGE Change of
Control") and the Company, in its sole judgment to be reasonably exercised,
believes that it is no longer in the interest of the Company to continue the
Strategic Alliance as a result of such change of control; or (D) a Material
Breach, as defined in Section 17 of the BGE/CPI Agreement, shall have occurred
(a "CPI Group Breach Event"); provided, however, unless otherwise specified in a
specific Power Sales and Brokering Agreement,
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no Principal Transaction may be terminated by the Company or Constellation prior
to the termination date for such transaction previously agreed upon in such
Power Sales and Brokering Agreement; provided further that notice of any
termination may be given prior to or after the closing or effective date of any
of the events specified in this Section 5(c)(i) so long as such termination is
not effective prior to the closing or effective date of any such event.
(ii) This Agreement and any Power Sales and
Brokering Agreement shall be terminable by Constellation within six months of
the occurrence of any of the following events, upon thirty (30) days' prior
written notice: (A) at any time, GSCP has sold or otherwise transferred in a
transaction or series of transactions to any person other than an affiliate of
GSCP, 50% or more, in the aggregate, of the shares of Common Stock which GSCP,
in the aggregate, had acquired prior to the date on which termination shall be
permitted hereby (a "Goldman Disposition") or (B) 50% of the voting interest of
the General Partner of GSCP is acquired by a third party (including any
affiliates of such third party) which is not an affiliate of Goldman or a
transaction or series of related transactions is consummated pursuant to which
owners of the voting interests in the ultimate parent company of Goldman
immediately prior to the first of any such transactions, hold, immediately
following such transaction or series of related transactions, less than 50% of
the voting interest of such company (a "Goldman Change of Control") and
Constellation, in its sole judgment to be reasonably exercised, believes that it
is no longer in the interest of Constellation to continue the Strategic Alliance
as a result of such change of control; provided, however, unless otherwise
specified in a specific Power Sales and Brokering Agreement, no Principal
Transaction may be terminated by Constellation prior to the termination date for
such transaction previously agreed upon in such Power Sales and Brokering
Agreement; provided further that notice of any termination may be given prior to
or after the closing or effective date of any of the
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events specified in this Section 5(c)(ii) so long as such termination is not
effective prior to the closing or effective date of any such event.
(d) Termination Fees. In the event that this Agreement
or any Power Sales and Brokering Agreement is terminated by the Company pursuant
to this Section 5 due to (i) a Termination Event, (ii) a Facility Event, (iii) a
Goldman Disposition, (iv) a Goldman Change of Control, or (v) the cancellation
of the Advisory Agreement, the Company shall pay Constellation a termination fee
to reimburse Constellation for its demonstrable and actual out of pocket
expenses as a result of such termination.
SECTION 6. Market Analysis.
(a) From time to time, the Company may request
Constellation to conduct a Market Analysis with respect to a potential Facility
acquisition. Constellation shall provide such requested Market Analysis to the
Company within a reasonable period of time consistent with the Company's
obligations to meet the schedule required by the process, if any, by which the
potential Facility acquisition is being offered for sale. The Company and
Constellation shall treat the Market Analysis with the same confidential
treatment it treats its own confidential business materials. The parties
recognize and agree that the acquisition of any Facility will be the sole
decision of the Company based on its independent evaluation of all relevant
factors associated with such acquisition.
(b) A Market Analysis may become the basis for a Power
Sales and Brokering Agreement upon acquisition of the Facility by the Company.
Since the validity of a Market Analysis is dependent upon prevailing market
conditions at the time of the conduct of such analysis, the parties recognize
that, as a result of the anticipated time delay between the conduct of a Market
Analysis for a potential Facility acquisition and the closing of the acquisition
of such Facility, market movements may require a Market Analysis to be revised
in order for it to be the basis for a Power Sales and
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Brokering Agreement. Upon the request of the Company, Constellation shall
provide the Company, together with each Market Analysis, a proposal which will
permit the Company, upon an appropriate payment, to fix the prices for the risk
management strategy contained in the Market Analysis.
SECTION 7. Expenses. Unless otherwise agreed in writing, (i) in
connection with a potential Facility acquisition by the Company, Constellation
shall be responsible for all expenses relating to Constellation's preparation,
in accordance with normal business development practices, of any Market
Analysis, including the preparation of any proposal contemplated by Section 6,
and (ii) the Company shall not be subject to charges by Constellation that are
not provided for in a Power Sales and Brokering Agreement; provided, however,
that any additional services and charges may be agreed upon by Constellation
and the Company in writing prior to incurring the expense and shall be
established on an arms' length basis at market reflective levels.
SECTION 8. Invoices. Constellation will invoice the Company on a
monthly basis for all fees associated with Power Marketing and Risk Management
Services due under any Power Sales and Brokering Agreement. Constellation will
also reflect on such invoices any payments to be made to the Company by
Constellation or payments due from the Company to Constellation resulting from
Principal Transactions undertaken with respect to a Facility in accordance with
a Power Sales and Brokering Agreement as well as any other fees that may be due
to the Company or Constellation, as the case may be.
SECTION 9. Reports and Audit Rights.
(a) With respect to each Facility, Constellation shall
provide to the Company (i) on a daily basis, if applicable, reports and summary
updates of the power positions and respective transactions for such Facility
(the "Trading Book Reports") and (ii) within 90 days after the end of each
fiscal year, commencing with the first fiscal year ending after the date of the
applicable Power Sales and Brokering Agreement, annual
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Trading Book Reports, together with a statement certified by an appropriate
officer of Constellation, certifying that such Trading Book Reports are accurate
and fairly presented. No Trading Book Reports shall be provided for Principal
Transactions.
(b) Constellation and the Company shall provide each
other with their respective annual audited financial statements within 90 days
after the end of each fiscal year.
(c) From and after the date of this Agreement, each
party shall afford the other party, its employees, counsel and other authorized
representatives reasonable access, during normal business hours, upon reasonable
advance notice, with due regard to such party's ongoing operations, to all of
the books, records and accounts of such party, or its affiliates, to the extent
such books, records and accounts (i) relate to the operations of any Facility
and/or (ii) evidence the amount billed to the Company or to Constellation under
any Power Sales and Brokering Agreement or otherwise. Additionally, such party
shall furnish on a timely basis any other financial or other information
relating to a Facility reasonably available to management of such party as the
other party shall reasonably request.
SECTION 10. Limitation of Liability.
(a) Unless otherwise provided in a Power Sales and
Brokering Agreement, neither the Company or its affiliates, nor Constellation or
its affiliates, shall be liable to the other with respect to the performance of
its obligations hereunder or under any Power Sales and Brokering Agreement
unless due to gross negligence or willful misconduct of employees or other
agents of the Company or Constellation, as the case may be.
(b) Unless otherwise provided in a Power Sales and
Brokering Agreement, neither the Company or its affiliates, nor Constellation or
its affiliates, shall be liable to the other with respect to the performance of
its obligations hereunder or under
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any Power Sales and Brokering Agreement for consequential, indirect, punitive or
special damages.
SECTION 11. Representations and Warranties. Each party represents and
warrants to the other parties that: (i) it is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its formation, (ii)
it has all regulatory authorizations necessary for it to legally perform its
obligations under this Agreement and any other documentation relating to this
Agreement, (iii) the execution, delivery and performance of this Agreement and
any other documentation relating to this Agreement are within its powers, have
been duly authorized by all necessary action and do not violate any of the
terms and conditions in its governing documents, any material contracts to
which it is a party or any law, rule or regulation material to it or order or
the like applicable to it, (iv) this Agreement and each other document executed
and delivered in accordance with this Agreement constitutes its legally valid
and binding obligation enforceable against it in accordance with its terms, (v)
there are no bankruptcy proceedings pending or being contemplated by it or, to
its knowledge, threatened against it, and (vi) there is not pending or, to its
knowledge, threatened against it or any of its affiliates, any legal
proceedings that could materially adversely affect its ability to perform its
obligations under this Agreement or any other document relating to this
Agreement to which it is a party.
SECTION 12. Assignment. No party shall assign this Agreement or its
rights or obligations hereunder to any party without the prior written consent
of the other party. This Section 12 shall not preclude the parties from
entering into Power Sales and Marketing Agreements and carrying out their
obligations thereunder through wholly-owned subsidiaries.
SECTION 13. Amendment and Waiver. No modification, amendment or waiver
of any provision of this Agreement shall be effective against the Company or
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Constellation unless such modification, amendment or waiver is approved in
writing by the Company and Constellation. The failure of any party to enforce
any of the provisions of this Agreement shall in no way be construed as a
waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
SECTION 14. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
SECTION 15. Entire Agreement. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof
contain the entire agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
SECTION 16. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
SECTION 17. Notices. Any notice provided for in this Agreement shall be
in writing and shall be either personally delivered or sent by facsimile or
reputable overnight courier service (charges prepaid) to the Company and
Constellation at the addresses set forth below, or at such address or to the
attention of such other person as the recipient
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party has specified by prior written notice to the sending party. Notices will
be deemed to have been given hereunder when delivered personally or on receipt.
The Company's address is: c/o John Bu
GS Capital Partners II, L.P.
85 Broad Street, 19th Floor
New York, New York 10004
Facsimile: (212) 357-5505
Attention: Jack Fusco
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Facsimile: (212) 859-8000
Attention: Paul M. Reinstein, Esq.
and a copy to:
GS Capital Partners II, L.P.
85 Broad Street
New York, New York 10004
Facsimile: (212) 902-3000
Attention: David J. Greenwald, Esq.
Constellation's address is: 39 W. Lexington Street
Baltimore, Maryland 21201
Facsimile: (410) 234-7866
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Attention: David M. Perlman, Esq.
SECTION 18. Governing Law and Jurisdiction. THIS AGREEMENT AND THE
RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED,
ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 19. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
SECTION 20. Construction. Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express
their mutual intent, and no rule of strict construction shall be applied
against any party.
SECTION 21. Advisor. GSP is the exclusive advisor to Constellation and
not a principal of Constellation. From time to time, Constellation may
designate one or more employees of GSP as Constellation's agent for purposes of
entering into transactions with regard to a Power Sales and Brokering
Agreement. Constellation shall be solely responsible for any and all
obligations and liabilities associated with such transactions. Neither GSP,
Goldman nor J. Aron, nor any of their affiliates, has any responsibility for,
or liability to any person with respect to any such transactions or liabilities
of Constellation under this Agreement.
[INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ORION POWER HOLDINGS, INC.
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By:
--------------------------------------
Name: Jack Fusco
Title: Chief Operating Officer
CONSTELLATION POWER SOURCE, INC.
By:
--------------------------------------
Name: C. W. Shivery
Title: President and Chief Executive Officer