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EXHIBIT 1.1
ORION POWER HOLDINGS, INC.
COMMON STOCK, $.01 PAR VALUE
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UNDERWRITING AGREEMENT
November___, 2000
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
As representatives of the several Underwriters
named in Schedule I hereto
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004
Morgan Stanley & Co. Incorporated
As Independent Underwriter
1585 Broadway
New York, New York 10004
Ladies and Gentlemen:
Orion Power Holdings, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 21,779,032 shares and, at the election of the Underwriters, up to 3,750,000
additional shares of common stock, $.01 par value ("Stock") of the Company and
the stockholders of the Company named in Schedule II hereto (the "Selling
Stockholders") propose, subject to the terms and conditions stated herein, to
sell to the Underwriters an aggregate of 3,220,968 shares of Stock, with each
Selling Stockholder selling the number of Shares indicated on Schedule II
hereto. The aggregate 25,000,000 of shares to be sold by the Company and the
Selling Stockholders is herein called the "Firm Shares" and the aggregate of
3,750,000 additional shares to be sold by the Company is herein called the
"Optional Shares". The Firm Shares and the Optional Shares that the Underwriters
elect to purchase pursuant to Section 2 hereof are herein collectively called
the "Shares".
The Company and the Underwriters, in accordance with the requirements
of Rule 2720 ("Rule 2720") of the National Association of Securities Dealers,
Inc. (the "NASD") and subject to the terms and conditions stated herein, also
hereby confirm the engagement of the services of Morgan Stanley & Co.
Incorporated (the "Independent Underwriter") as a "qualified independent
underwriter" within the meaning of Section (b)(15) of Rule 2720 in connection
with the offering and sale of the Shares.
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1. (a) The Company represents and warrants to, and agrees with,
each of the Underwriters and the Independent Underwriter that:
(i) A registration statement on Form S-1 (File No. 333-44118)
(the "Initial Registration Statement") in respect of the Shares has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered
to you, and, excluding exhibits thereto, to you for each of the other
Underwriters, have been declared effective by the Commission in such
form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended
(the "Act"), which became effective upon filing, no other document with
respect to the Initial Registration Statement has heretofore been filed
with the Commission; and no stop order suspending the effectiveness of
the Initial Registration Statement, any post-effective amendment
thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in
the Initial Registration Statement or filed with the Commission
pursuant to Rule 424(a) of the rules and regulations of the Commission
under the Act is hereinafter called a "Preliminary Prospectus"; the
various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and
including the information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 6(a) hereof and deemed by virtue of Rule 430A
under the Act to be part of the Initial Registration Statement at the
time it was declared effective, each as amended at the time such part
of the Initial Registration Statement became effective or such part of
the Rule 462(b) Registration Statement, if any, became or hereafter
becomes effective, are hereinafter collectively called the
"Registration Statement"; such form of final prospectus, in the form
first filed pursuant to Rule 424(b) under the Act, is hereinafter
called the "Prospectus");
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through Goldman, Sachs & Co. or by the Independent
Underwriter expressly for use therein or by a Selling Stockholder
expressly for use in the preparation of the answers therein to Items 7
and 11(m) of Form S-1;
(iii) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not
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misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through Goldman, Sachs & Co. or by the Independent
Underwriter expressly for use therein or by a Selling Stockholder
expressly for use in the preparation of the answers therein to Items 7
and 11(m) of Form S-1;
(iv) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest unaudited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any material change in the capital
stock, stockholders' equity or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect"), otherwise than as set forth or
contemplated in the Prospectus;
(v) The Company and its subsidiaries have good and marketable
title in fee simple to all material real property and good and
marketable title to all material personal property owned by them, in
each case free and clear of all liens, encumbrances and defects except
such as are described in the Prospectus or such as do not materially
affect the value of such property and do not materially interfere with
the use made and proposed to be made of such property by the Company
and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not materially interfere with the use made and proposed
to be made of such property and buildings by the Company and its
subsidiaries except as described in the Prospectus;
(vi) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, and each subsidiary of
the Company has been duly incorporated, organized or formed and is
validly existing as a corporation, partnership or limited liability
company, as the case may be, in good standing under the laws of its
jurisdiction of incorporation, organization and formation;
(vii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description of the Stock
contained in the Prospectus; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and (except
for directors' qualifying shares) are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities
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or claims, except for the security interests granted pursuant to the
New York Credit Facility and the Midwest Credit Facility, as set forth
in the Prospectus and for such liens, encumbrances, equities or claims
that would not have a Material Adverse Effect;
(viii)The unissued Shares to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized
and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued, fully paid and non-assessable
and free of pre-emptive or similar rights and will conform to the
description of the Stock contained in the Prospectus;
(ix) The issue and sale of the Shares to be sold by the Company
hereunder and the compliance by the Company with all of the provisions
of this Agreement and the consummation of the transactions herein
contemplated (i) will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of its
subsidiaries is subject, (ii) will not result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the
Company and (iii) will not result in any violation of any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or
any of their properties; except in the cases of clauses (i) and (iii)
as would not, singly or in the aggregate, have a Material Adverse
Effect; and no consent, approval, authorization, order, registration,
filing or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by this
Agreement, except as such have been obtained including the approval of
the Federal Energy Regulatory Commission ("FERC"), the registration
under the Act of the Shares and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(x) Neither the Company nor any of its subsidiaries (i) is in
violation of its Certificate of Incorporation or Certificate of
Formation, as applicable, or by-laws, partnership agreement or limited
liability company agreement, as applicable, or (ii) in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be bound,
except in the case of clause (ii) as would not, singularly or in the
aggregate, have a Material Adverse Effect;
(xi) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the Stock and under the captions
"Underwriting," "Risk Factors-Regulation," "Risk Factors-Risks of
Provider of Last Resort Contract," "Business" and "Certain
Relationships and Related Party Transactions" insofar as they purport
to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair;
(xii) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if
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determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect on the
current or future consolidated financial position, stockholders' equity
or results of operations of the Company and its subsidiaries; and, to
the best of the Company's knowledge, no such proceedings are threatened
by governmental authorities or threatened by others against the Company
or any of its subsidiaries;
(xiii)The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company",
as such term is defined in the United States Investment Company Act of
1940, as amended (the "Investment Company Act");
(xiv) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes;
(xv) Arthur Andersen LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(xvi) Neither the Company nor any of its subsidiaries
experienced any material problems in connection with the Year 2000
Issue. In addition, to the Company's knowledge, no third parties with
which the Company or any of its subsidiaries has a material
relationship experienced any material problem in connection with the
Year 2000 Issue. The "Year 2000 Issue" as used herein means any
significant issue or problem experienced or associated with computer
hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization
of data or in the operation of mechanical or electrical systems of any
kind with respect to dates or time periods occurring after December 31,
1999;
(xvii) The Company and its subsidiaries have complied in all
material respects with all laws, regulations and orders applicable to
it or its businesses the violation of which would have a Material
Adverse Effect;
(xviii) The Company and its subsidiaries own, license or possess
or have the right to use or acquire the patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names (collectively, the "Intellectual Property") presently
employed by them in connection with, and material to, collectively or
in the aggregate, the operation of the businesses now operated by them
taken as a whole, and neither the Company nor any of its subsidiaries
has received any written notice of infringement of or conflict with
asserted rights of others with respect to the foregoing which,
individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material Adverse Effect;
(xix) The Company and its subsidiaries possess all certificates,
authorizations, licenses or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by
them the lack of which would not result in a Material Adverse Effect
and have not received any written notice of proceedings relating to the
revocation or modification of any such certificate, authorization,
license or permit that, if determined adversely to the Company or any
of its subsidiaries, would individually
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or in the aggregate have a Material Adverse Effect other than as set
forth in the Prospectus;
(xx) No labor dispute with the employees of the Company or any
of its subsidiaries exists or, to the knowledge of the Company is
imminent that is reasonably likely to have a Material Adverse Effect;
(xxi) Other than as set forth in the Prospectus, neither the
Company nor any of its subsidiaries is in violation of any statute,
rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "Environmental Laws"). To the knowledge
of the Company, neither the Company nor any of its subsidiaries owns or
operates any real property contaminated with any substance that is
subject to any Environmental Laws, is liable for any off-site disposal
or contamination pursuant to any Environmental Laws, which violation,
contamination, liability or claim would individually or in the
aggregate have a Material Adverse Effect other than as set forth in the
Prospectus;
(xxii) All tax returns required to be filed by the Company and
its subsidiaries in all jurisdictions have been timely and duly filed
or legally extended, other than those filings being contested in good
faith and those where the failure to file would not have a Material
Adverse Effect. There are no tax returns of the Company or any of its
subsidiaries that are currently being audited by state, local, or
federal taxing authorities or agencies (and with respect to which the
Company or any of its subsidiaries has received written notice), where
the findings of such audit, if adversely determined, would result in a
Material Adverse Effect. All taxes, including withholding taxes,
penalties and interest, assessments, fees and other charges due or
claimed to be due from such entities have been paid, other than those
being contested in good faith and for which adequate reserves have been
provided or those currently payable without penalty or interest and
other than those that are not material or that would not result in a
Material Adverse Effect other than as set forth in the Prospectus;
(xxiii) The Company and its subsidiaries maintain insurance
covering their respective properties, operations, personnel and
businesses which insures against such losses and risks as are adequate
in accordance with its reasonable business judgment to protect the
Company, its subsidiaries and their respective businesses. Neither the
Company nor any of its subsidiaries has received notice from any
insurer or agent of such insurer that substantial capital improvements
or other material expenditures will have to be made in order to
continue such insurance. All such insurance is outstanding and duly in
force on the date hereof and will be outstanding and duly in force at
the Time of Delivery;
(xxiv) The Company has no reason to believe that the sources
from which the statistical data included in the "Business" section of
the Prospectus are based on or derived from are not reliable and
accurate;
(xxv) Neither the Company nor any of its subsidiaries is (i)
subject to regulation as a "holding company" or a "subsidiary company"
of a holding company or an "affiliate" of a subsidiary or holding
company or a "public utility company" under Section 2(a) of the Public
Utility Holding Company Act of 1935, (ii) subject to regulation under
the Federal
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Power Act, as amended, other than due to its subsidiaries' status as
power marketers and owners of certain electric transmission facilities
subject to the Federal Power Act, and its subsidiaries have all
exemptions and waivers from regulation as typically granted by FERC to
power marketers or entities with market based authority affiliated with
utilities, or (iii) subject to any state law or regulation with respect
to the rates or financial or organizational regulation of electric
utilities, other than due to its subsidiaries' status as "electric
corporations" under New York law subject to lightened regulation,
except as otherwise disclosed in the Prospectus;
(xxvi) Each of the power generation projects in which the
Company or its subsidiaries has an interest, which is subject to the
requirements under the Public Utility Regulatory Policies Act of 1978,
as amended, and the regulations of FERC promulgated thereunder, as
amended from time to time, necessary to be a "qualifying cogeneration
facility" and/or a "qualifying small power production facility" meets
such requirements or will meet such requirement; and
(xxvii) Each of the power generation projects in which the
Company or its subsidiaries has an interest, which is subject to the
requirements under the Federal Power Act discussed in Paragraph (xxv)
above, meets the requirements for, and has obtained from FERC, Exempt
Wholesale Generator Status, under Section 32 of the Public Utility
Holding Company Act of 1935, as amended, and FERC's regulations.
(b) Each of the Selling Stockholders severally represents and warrants
to, and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary
for the execution and delivery by such Selling Stockholder of this
Agreement and for the sale and delivery of the Shares to be sold by
such Selling Stockholder hereunder, have been obtained; and such
Selling Stockholder has full right, power and authority to enter into
this Agreement and to sell, assign, transfer and deliver the Shares to
be sold by such Selling Stockholder hereunder;
(ii) The sale of the Shares to be sold by such Selling
Stockholder hereunder and the compliance by such Selling Stockholder
with all of the provisions of this Agreement and the consummation of
the transactions herein contemplated will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any statute, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder is
bound, or to which any of the property or assets of such Selling
Stockholder is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or By-laws of such
Selling Stockholder or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over such
Selling Stockholder or the property of such Selling Stockholder;
(iii) Such Selling Stockholder has, and immediately prior to the
Time of Delivery (as defined in Section 5 hereof) such Selling
Stockholder will have, good and valid title to the Shares to be sold by
such Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities or claims; and, upon delivery of such Shares and
payment therefor pursuant hereto and thereto, good and valid title to
such Shares, free and clear of all liens, encumbrances, equities or
claims, will pass to the several Underwriters, as the case may be;
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(iv) To the extent that any Selling Stockholder is not selling
all of their securities of the Company, such Selling Stockholder has
executed and delivered a letter restricting such Selling Stockholder's
ability to transfer their remaining securities of the Company after the
date of the Prospectus, in form and substance satisfactory to the
Underwriters and the Company and their respective counsel;
(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Stockholder expressly for use therein, such Preliminary
Prospectus and the Registration Statement did, and the Prospectus and
any further amendments or supplements to the Registration Statement and
the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform in all material respects
to the requirements of the Act and the rules and regulations of the
Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and
(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior to or
at the First Time of Delivery (as hereinafter defined) a properly
completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
2. Subject to the terms and conditions herein set forth, (a) the
Company and each of the Selling Stockholders agree, severally and not jointly,
to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company and each of the Selling
Stockholders, at a purchase price per share of $_______, the number of Firm
Shares (to be adjusted by you so as to eliminate fractional shares) determined
by multiplying the aggregate number of Firm Shares to be sold by the Company and
each of the Selling Stockholders as set forth opposite their respective names in
Schedule II hereto by a fraction, the numerator of which is the aggregate number
of Firm Shares to be purchased by such Underwriter as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the aggregate number of Firm Shares to be purchased by all of the Underwriters
from the Company and all of the Selling Stockholders hereunder and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Company agrees to sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
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The Company hereby grants to the Underwriters the right to purchase at
their election up to 3,750,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering sales of
shares in excess of the number of Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 5
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Company and each Selling Stockholder hereby confirm their
engagement of the services of the Independent Underwriter as, and the
Independent Underwriter hereby confirms its agreement with the Company and each
Selling Stockholder to render services as, a "qualified independent underwriter"
within the meaning of Section (b)(15) of Rule 2720 with respect to the offering
and sale of the Shares.
(b) The Independent Underwriter hereby represents and warrants to, and
agrees with, the Company, each Selling Stockholder and the Underwriters that
with respect to the offering and sale of the Shares as described in the
Prospectus:
(i) The Independent Underwriter constitutes a "qualified
independent underwriter" within the meaning of Section (b)(15) of Rule
2720;
(ii) The Independent Underwriter has participated in the
preparation of the Registration Statement and the Prospectus and has
exercised the usual standards of "due diligence" in respect thereto;
(iii) The Independent Underwriter has undertaken the legal
responsibilities and liabilities of an underwriter under the Act
specifically including those inherent in Section 11 thereof;
(iv) Based upon (A) a review of the Company, including an
examination of the Registration Statement, information regarding the
earnings, assets, capital structure and growth rate of the Company and
other pertinent financial and statistical data, (B) inquiries of and
conferences with the management of the Company and its counsel and
independent public accountants regarding the business and operations of
the Company, (C) consideration of the prospects for the industry in
which the Company competes, estimates of the business potential of the
Company, assessments of its management, the general condition of the
securities markets, market prices of the capital stock and debt
securities of, and financial and operating data concerning, companies
believed by the Independent Underwriter to be comparable to the Company
with [_____________] and the demand for securities of comparable
companies similar to the Securities, and (D) such other studies,
analysis and investigations as the Independent Underwriter has deemed
appropriate, and assuming that the offering and sale of the Securities
is made as contemplated herein and in the Prospectus, the Independent
Underwriter recommends, as of the date of the execution and delivery of
this Agreement, that based
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on [_____________], the initial public offering price for each share be
not more than $________; [modified as appropriate];
(v) Subject to the provisions of Section 8 hereof, the
Independent Underwriter will furnish to the Underwriters and the
Selling Stockholders at each Time of Delivery a letter, dated such Time
of Delivery, in form and substance satisfactory to the Underwriters and
the Selling Stockholders, to the effect of clauses (i) through (iv)
above.
(c) The Independent Underwriter hereby agrees with the Company, each
Selling Stockholder and the Underwriters that, as part of its services
hereunder, in the event of any amendment or supplement to the Prospectus, the
Independent Underwriter will render services as a "qualified independent
underwriter" within the meaning of Section (b)(15) of Rule 2720 with respect to
the offering and sale of the Shares as described in the Prospectus as so amended
or supplemented that a re substantially the same as those services being
rendered with respect to the offering and sale of the Shares as described in the
Prospectus (including those described in subsection (b) above).
(d) The Company, each Selling Stockholder, the Underwriters and the
Independent Underwriter agree to comply in all material respects with all of the
requirements of Rule 2720 applicable to them in connection with the offering and
sale of the Shares. The Company and each Selling Stockholder agree to cooperate
with the Underwriters and the Independent Underwriter to enable the Underwriters
to comply with Rule 2720 and the Independent Underwriter to perform the services
contemplated by this Agreement.
(e) The Company and each Selling Stockholder agree promptly to
reimburse the Independent Underwriter for all out-of-pocket expenses, including
fees and disbursements of counsel, reasonably incurred in connection with this
Agreement and the services to be rendered hereunder.
5. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in
such names as Goldman, Sachs & Co. may request upon at least
forty-eight hours' prior notice to the Company and the Selling
Stockholders shall be delivered by or on behalf of the Company and the
Selling Stockholders to Goldman, Sachs & Co., through the facilities of
The Depository Trust Company ("DTC"), for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to
the account specified by the Company and each of the Selling
Stockholders to Goldman, Sachs & Co. at least forty-eight hours in
advance. The Company will cause the certificates representing the
Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with
respect thereto at the office of DTC or its designated custodian (the
"Designated Office"). The time and date of such delivery and payment
shall be, with respect to the Firm Shares, 9:30 a.m., New York City
time, on ______, 2000 or on such other time and date as Goldman, Sachs
& Co. and the Company may agree upon in writing, and, with respect to
the Optional Shares, 9:30 a.m., New York City time, on the date
specified by Goldman, Sachs & Co. in the written notice given by
Goldman, Sachs & Co. of the Underwriters' election to purchase such
Optional Shares, or such other time and date as Goldman, Sachs & Co.
and the Company may agree upon in writing. Such time and date for
delivery of the Firm Shares is herein called the "First Time of
Delivery", such time and date for delivery of the Optional Shares, if
not the First Time of Delivery, is
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herein called the "Second Time of Delivery", and each such time and
date for delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 8 hereof, including
the cross-receipt for the Shares and any additional documents requested
by the Underwriters pursuant to Section 8(m) hereof, will be delivered
at the offices of Latham & Watkins, 885 Third Avenue, New York, New
York, 10022 (the "Closing Location"), and the Shares will be delivered
at the Designated Office, all at each Time of Delivery. A meeting will
be held at the Closing Location at 2:00 p.m., New York City time, on
the New York Business Day next preceding each Time of Delivery, at
which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 5, "New York Business
Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
6. The Company agrees with each of the Underwriters and with the
Independent Underwriter:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus which shall be disapproved by you
promptly after reasonable notice thereof; to advise you and the
Independent Underwriter, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you and the
Independent Underwriter with copies thereof; to advise you and the
Independent Underwriter promptly after it receives notice thereof of
the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to
obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares; provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters
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<PAGE> 12
and the Independent Underwriter with copies of the Prospectus in New
York City in such quantities as you and the Independent Underwriter may
reasonably request, and, if the delivery of a prospectus is required at
any time prior to the expiration of nine months after the time of issue
of the Prospectus in connection with the offering or sale of the Shares
and if at such time any events shall have occurred as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus in
order to comply with the Act, to notify you and upon your request to
prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time
nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and
deliver to such Underwriter as many copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose
of, except as provided hereunder, any securities of the Company that
are substantially similar to the Shares, including but not limited to
any securities that are convertible into or exchangeable for, or that
represent the right to receive, Stock or any such substantially similar
securities (other than (i) pursuant to this agreement, (ii) pursuant to
employee stock option plans existing on, or upon the conversion,
exercise or exchange of convertible, exercisable or exchangeable
securities outstanding as of, the date of this Agreement or (iii)
Stock, warrants to purchase Stock, or securities convertible or
exchangeable into Stock issued in connection with acquisitions and
joint ventures that are used or useful for the Company's business,
provided that the recipients agree to similar restrictions for the
period beginning the date hereof and continuing to and including the
date 180 days after the date of this Prospectus), without your prior
written consent;
(f) To furnish to its stockholders or file with the Commission by
EDGAR as soon as practicable after the end of each fiscal year an
annual report (including a balance sheet and statements of income,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon
as practicable after the end of each of the first three quarters of
each fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), to make available to its
stockholders consolidated summary financial information of the Company
and its subsidiaries for such quarter in reasonable detail;
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<PAGE> 13
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to stockholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished
to its stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(i) To use its best efforts to list, subject to notice of
issuance, the Shares on the New York Stock Exchange (the "Exchange");
(j) To file with the Commission such information on Form 10-Q or
Form 10-K as may be required by Rule 463 under the Act; and
(k) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on
the date of this Agreement, and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act.
7. The Company, covenants and agrees with several Underwriters and
the Independent Underwriter that (a) the Company will pay or cause to be paid
the following: (i) the fees, disbursements and expenses of the Company's counsel
and accountants in connection with the registration of the Shares under the Act
and all other expenses in connection with the preparation, printing and filing
of the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters, the Independent Underwriter and dealers; (ii) the
cost of printing or producing any Agreement among Underwriters, this Agreement,
the Blue Sky Memorandum, closing documents (including any compilations thereof)
and any other documents in connection with the offering, purchase, sale and
delivery of the Shares; (iii) all expenses in connection with the qualification
of the Shares for offering and sale under state securities laws as provided in
Section 6(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky surveys; (iv) all fees and expenses in connection with listing the
Shares on the New York Stock Exchange; and (v) the filing fees incident to, and
the fees and disbursements of counsel for the Underwriters in connection with,
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Shares; and (b) the Company will pay or
cause to be paid: (i) the cost of preparing stock certificates; (ii) the cost
and charges of any transfer agent or registrar; and (iii) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. It is understood, however,
that, except as provided in this Section, and Sections 10 and 13 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, stock transfer taxes on resale of any of the Shares by them, and
any advertising
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<PAGE> 14
expenses connected with any offers they may make. The fees and disbursements of
counsel for the Underwriters referred to in clauses (iii) and (v) of this
section will be, in the aggregate, $7,500.
8. The respective obligations of the Underwriters and the Independent
Underwriter hereunder, as to the Shares to be delivered at each Time of
Delivery, shall be subject, in their discretion, to the condition that all
representations and warranties and other statements of the Company and of the
Selling Stockholders herein are, at and as of such Time of Delivery, true and
correct, the condition that the Company and the Selling Stockholders shall have
performed all of its and their obligations hereunder theretofore to be
performed, the condition (in the case of the Underwriters) that the Independent
Underwriter shall have furnished to the Underwriters the letter referred to in
clause (v) of Section 4(b) hereof and the following additional conditions:
(a) Latham & Watkins, counsel for the Underwriters, shall have
furnished to you such written opinion in the form attached as Annex I
hereto, dated such Time of Delivery, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters.
(b) Stroock & Stroock & Lavan LLP, counsel for the Company, shall
have furnished to you their written opinion in the form attached as
Annex II hereto, dated the Time of Delivery.
(c) Kirkland & Ellis, counsel for the Company, shall have
furnished to you their written opinion in the form attached as Annex
III hereto, dated the Time of Delivery.
(d) Thelen Reid & Priest LLP, counsel for the Company, shall have
furnished to you their written opinion, dated the Time of Delivery, in
form of Annex IV hereto.
(e) The respective counsel for each of the Selling Stockholders,
as indicated in Schedule II hereto, each shall have furnished to you
their written opinion with respect to each of the Selling Stockholders
for whom they are acting as counsel, dated the First Time of Delivery,
in form of Annex V and Annex VI hereto:
(f) On the date of the Prospectus at a time prior to the execution
of this Agreement, at 9:30 a.m., New York City time, on the effective
date of any post-effective amendment to the Registration Statement
filed subsequent to the date of this Agreement and also at each Time of
Delivery, Arthur Andersen LLP shall have furnished to you a letter or
letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, to the effect previously agreed and
attached hereto as Annex VII;
(g) (i) Neither the Company nor any of its subsidiaries, on a
consolidated basis, shall have sustained since the respective dates as
of which information is given in the Registration Statement and the
Prospectus any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus, and (ii) since the respective dates as of which information
is given in the Prospectus there shall not have been any change in the
capital stock, stockholders' equity or long-term debt of the Company or
any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries taken
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<PAGE> 15
as a whole, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause
(i) or (ii), is in the judgment of the Representatives so material and
adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares being delivered at such
Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(h) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Act, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities;
(i) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a suspension
or material limitation in trading in the Company's securities on the
New York Stock Exchange; (iii) a general moratorium on commercial
banking activities declared by either Federal or New York State
authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of
a national emergency or war, if the effect of any such event specified
in this clause (iv) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;
(j) The Shares to be sold by the Company and the Selling
Stockholders at such Time of Delivery shall have been duly listed,
subject to notice of issuance, on the New York Stock Exchange;
(k) The Company has obtained and delivered to the Underwriters
executed copies of a lock-up agreement attached hereto as Annex VIII
from each of the stockholders of the Company listed on Schedule IV
hereto;
(l) The Company shall have complied with the provisions of Section
6(c) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of this Agreement; and
(m) The Company and the Selling Stockholders shall have furnished
or caused to be furnished to you at such Time of Delivery certificates
of officers of the Company and of the Selling Stockholders,
respectively, satisfactory to you as to the accuracy of the
representations and warranties of the Company and the Selling
Stockholders, respectively, herein at and as of such Time of Delivery,
as to the performance by the Company and the Selling Stockholders of
all of their respective obligations hereunder to be performed at or
prior to such Time of Delivery.
9. The Independent Underwriter hereby consents to the references to
it as set forth under the caption "Underwriting" in the Prospectus and in any
amendment or supplement thereto made in accordance with Section 6(a) hereof.
10. (a) The Company will indemnify and hold harmless each Underwriter
and each Selling Stockholder, against any losses, claims, damages or
liabilities, joint or several, to which
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<PAGE> 16
such Underwriter or such Selling Stockholder, as the case may be, may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter and each Selling Stockholder, as the case may be, for
any reasonable legal or other expenses reasonably incurred by such Underwriter
or such Selling Stockholder, as the case may be, in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with either (1) written information furnished to the Company by any
Underwriter through Goldman, Sachs & Co. expressly for use therein, or (2)
written information furnished to the Company by any Selling Stockholder
expressly for use therein. The Company also agrees to indemnify and hold
harmless the Independent Underwriter and each person, if any, who controls the
Independent Underwriter within the meaning of either Section 15 of the Act, or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments incurred as a result of the Independent
Underwriter's participation as a "qualified independent underwriter" within the
meaning of Rule 2720 of the National Association of Securities Dealers' Conduct
Rules in connection with the offering of the Stock, except for any losses,
claims, damages, liabilities, and judgments resulting from the Independent
Underwriter's, or such controlling person's, gross negligence or willful
misconduct. Notwithstanding anything contained herein to the contrary, if
indemnity may be sought pursuant to this Section in respect of such action or
proceeding, then in addition to such separate firm for the indemnified parties,
the indemnifying party shall be liable for the reasonable fees and expenses of
not more than one separate firm (in addition to any local counsel) for Morgan
Stanley & Co. Incorporated in its capacity as a "qualified independent
underwriter" and all persons, if any, who control Morgan Stanley & Co.
Incorporated within the meaning of either Section 15 of the Act or Section 20 of
the Exchange Act.
(b) Each Selling Stockholder, severally but not jointly, will
indemnify and hold harmless each Underwriter and the Company against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter or
the Company, as the case may be, may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Underwriter and
the Company, as the case may be, for any reasonable legal or other expenses
reasonably incurred by such Underwriter or the Company, as the case may be, in
connection with investigating or defending any such action or claim as such
expenses are incurred, in each case to the extent, but only to the extent, that
such untrue statement or allegedly untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Selling
Stockholder expressly for use therein. Each Selling Stockholder also agrees,
severally but not jointly, to indemnify and hold harmless the Independent
Underwriter and each person, if any, who controls
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<PAGE> 17
the Independent Underwriter within the meaning of either Section 15 of the Act,
or Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments incurred as a result of the Independent
Underwriter's participation as a "qualified independent underwriter" within the
meaning of Rule 2720 of the National Association of Securities Dealers' Conduct
Rules in connection with the offering of the Stock, except for any losses,
claims, damages, liabilities, and judgments resulting from Morgan Stanley's, or
such controlling person's, gross negligence or willful misconduct.
Notwithstanding anything contained herein to the contrary, if indemnity may be
sought pursuant to this Section in respect of such action or proceeding, then in
addition to such separate firm for the indemnified parties, the indemnifying
party shall be liable for the reasonable fees and expenses of not more than one
separate firm (in addition to any local counsel) for Morgan Stanley & Co.
Incorporated in its capacity as a "qualified independent underwriter" and all
persons, if any, who control Morgan Stanley & Co. Incorporated within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act.
Provided, further, however, that the liability of each Selling Stockholder
pursuant to this subsection 10(b) shall not exceed the product of the number of
Shares sold by such Selling Stockholder and the initial public offering price of
the Shares as set forth in the Prospectus.
(c) Each Underwriter will indemnify and hold harmless the Company,
each Selling Stockholder and the Independent Underwriter, as the case may be,
against any losses, claims, damages or liabilities to which the Company, such
Selling Stockholder or the Independent Underwriter, as the case may be, may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Goldman, Sachs
& Co. expressly for use therein; and will reimburse the Company, each Selling
Stockholder and the Independent Underwriter, as the case may be, for any
reasonable legal or other expenses reasonably incurred by the Company, each
Selling Stockholder and the Independent Underwriter, as the case may be, in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(d) The Independent Underwriter will indemnify and hold harmless
the Company, each Selling Stockholder and each Underwriter against any losses,
claims, damages or liabilities to which the Company, such Selling Stockholder or
such Underwriter, as the case may be, may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by the
Independent Underwriter expressly for use therein or constitutes a reference to
the Independent Underwriter
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<PAGE> 18
consented to by it pursuant to Section 9 hereof; and will reimburse the Company,
each Selling Stockholder or each Underwriter, as the case may be, for any
reasonable legal or other expenses reasonably incurred by the Company, each
Selling Stockholder or each Underwriter, as the case may be, in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(e) Promptly after receipt by an indemnified party under
subsection (a), (b), (c) or (d) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such subsection. In
case any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (which
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(f) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b), (c) or (d) above in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by such indemnifying party(s) on the one hand and the
indemnified party(s) on the other from the offering of the Shares. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the notice required
under subsection (e) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of such indemnified party on the one hand and such indemnified party on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by each of the Company, each Selling Stockholder, each Underwriter and the
Independent Underwriter shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Company and the Selling
Stockholders bear to the total underwriting discounts and commissions received
by the Underwriters with respect to the Shares purchased under this Agreement,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by
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reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, a Selling Stockholder, an
Underwriter or the Independent Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Each of the Company, each Selling Stockholder, each
Underwriter, and the Independent Underwriter agrees that it would not be just
and equitable if contributions pursuant to this subsection (f) were determined
by pro rata allocation (even if the Underwriters and the Independent Underwriter
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (f). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (f) shall be deemed to
include any reasonable legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (f), no Underwriter
nor the Independent Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public, and the
Independent Underwriter shall not be required to contribute any amount in excess
of the amount by which the total price at which the Shares underwritten by the
Underwriters and distributed to the public were offered to the public exceeds
the amount of any damages which such Underwriter, or Independent Underwriter, as
the case may be, have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(f) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(g) The obligations of the Company and each Selling Stockholder
under this Section 10 shall be in addition to any liability which the Company
and such Selling Stockholder may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any Underwriter or
the Independent Underwriter within the meaning of the Act; and the obligations
of the Underwriters under this Section 10 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of, and to each person,
if any, who controls the Company, any Selling Stockholder or the Independent
Underwriter within the meaning of the Act; and the obligations of the
Independent Underwriter under this Section 10 shall be in addition to any
liability which the Independent Underwriter may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of, and to each
person, if any, who controls the Company, any Selling Stockholder or any
Underwriter within the meaning of the Act.
11. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company and the Selling Stockholders shall be entitled to
a further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Shares on such terms. In the
event that, within the respective prescribed periods, you notify the Company and
the Selling Stockholders that you have so arranged for the purchase of such
Shares, or the Company and the Selling Stockholders notify you that they have so
arranged for the purchase of such Shares, you or the Company and the Selling
19
<PAGE> 20
Stockholders shall have the right to postpone such Time of Delivery for a period
of not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all of the Shares to be purchased at such Time of
Delivery, then the Company and the Selling Stockholders shall have the right to
require each non-defaulting Underwriter to purchase the number of Shares which
such Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all of the Shares to be purchased at such Time of Delivery,
or if the Company and the Selling Stockholders shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Company to sell the Optional Shares) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company or the Selling Stockholders, except for the expenses
to be borne by the Company and the Selling Stockholders and the Underwriters as
provided in Section 7 hereof and the indemnity and contribution agreements in
Section 10 hereof; but nothing herein shall relieve a defaulting Underwriter
from liability for its default.
12. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Selling Stockholders and the
several Underwriters and the Independent Underwriter, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter, the Independent Underwriter or any controlling person of any
Underwriter, the Independent Underwriter or the Company, or any of the Selling
Stockholders, or any officer or director or controlling person of the Company,
or any controlling person of any Selling Stockholder, and shall survive delivery
of and payment for the Shares.
13. If this Agreement shall be terminated pursuant to Section 11
hereof, neither the Company nor the Selling Stockholders shall then be under any
liability to any Underwriter or the Independent Underwriter except as provided
in the second sentence on Section 4(e) hereof and in Sections 7 and 10 hereof;
but, if for any other reason any Shares are not delivered by or on behalf of the
Company and the Selling Stockholders as provided herein, the Company will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in
20
<PAGE> 21
making preparations for the purchase, sale and delivery of the Shares not so
delivered, but the Company and the Selling Stockholders shall then be under no
further liability to any Underwriter in respect of the Shares not so delivered
except as provided in the second sentence of Section 4(e) hereof and Sections 7
and 10 hereof.
14. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives; and in all dealings with any Selling Stockholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Stockholder made or given by any
or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 32 Old Slip, 21st Floor, New York, New York 10005, facsimile (212)
902-3000, Attention: Registration Department; if to the Independent Underwriter
shall be delivered or sent by mail, letter or facsimile transmission to Morgan
Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10004; facsimile
(212) 761-0086, if to any Selling Stockholder shall be delivered or sent by
mail, telex or facsimile transmission to counsel for such Selling Stockholder at
its address set forth in Schedule II hereto; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Secretary, with a
copy to Martin H. Neidell, Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New
York, NY 10038, facsimile (212) 806-6006; provided, however, that any notice to
an Underwriter pursuant to Section 10(e) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire or telex constituting such
Questionnaire, which address will be supplied to the Company or the Selling
Stockholders by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
15. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Independent Underwriter, the Company and the
Selling Stockholders and, to the extent provided in Sections 10 and 12 hereof,
the officers and directors of the Company and each person who controls the
Company, any Selling Stockholder or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Shares from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
16. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
17. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
18. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
21
<PAGE> 22
If the foregoing is in accordance with your understanding, please sign
and return to us eight counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters and the Independent Underwriter, this
letter and such acceptance hereof shall constitute a binding agreement among
each of the Underwriters, the Independent Underwriter, the Company and each of
the Selling Stockholders. It is understood that your acceptance of this letter
on behalf of each of the Underwriters is pursuant to the authority set forth in
a form of Agreement among Underwriters, the form of which shall be submitted to
the Company and the Selling Stockholders for examination upon request, but
without warranty on your part as to the authority of the signers thereof.
[Signature Pages Follow]
22
<PAGE> 23
Very truly yours,
Orion Power Holdings, Inc.
By:______________________________________
Name:
Title:
Underwriting Agreement Signature Page
<PAGE> 24
Very truly yours,
Constellation Operating Services, Inc.
By:______________________________________
Name:
Title:
Underwriting Agreement Signature Page
<PAGE> 25
Very truly yours,
Constellation Enterprises, Inc.
By:______________________________________
Name:
Title:
Underwriting Agreement Signature Page
<PAGE> 26
Accepted as of the date hereof at New York, New
York:
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
By:______________________________________________
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
Underwriting Agreement Signature Page
<PAGE> 27
Accepted as of the date hereof at New York, New
York:
Morgan Stanley & Co. Incorporated, as Independent Underwriter
By:______________________________________________
(Morgan Stanley & Co.)
Underwriting Agreement Signature Page
<PAGE> 28
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES TO BE MAXIMUM OPTION
UNDERWRITER PURCHASED EXERCISED
----------- ----------------- ------------------
<S> <C> <C>
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
[NAMES OF OTHER UNDERWRITERS] ........................
---------- ----------
Total .......................................
========== ==========
</TABLE>
Schedule I
<PAGE> 29
SCHEDULE II
<TABLE>
<CAPTION>
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF SOLD IF
FIRM SHARES TO MAXIMUM OPTION
BE SOLD EXERCISED
--------------- ------------------
<S> <C> <C>
The Company...........................................
The Selling Stockholder(s):
Constellation Operating Services, Inc. (a).....
Constellation Enterprises, Inc. (b)............
---------- ----------
Total .......................................
========== ==========
</TABLE>
(a) This Selling Stockholder is represented by [NAME AND ADDRESS OF
COUNSEL] and has appointed [NAMES OF ATTORNEYS-IN-FACT (NOT LESS THAN TWO)], and
each of them, as the Attorneys-in-Fact for such Selling Stockholder.
(b) This Selling Stockholder is represented by [NAME AND ADDRESS OF
COUNSEL] and has appointed [NAMES OF ATTORNEYS-IN-FACT (NOT LESS THAN TWO)], and
each of them, as the Attorneys-in-Fact for such Selling Stockholder.
Schedule II
<PAGE> 30
SCHEDULE III
STOCKHOLDERS SUBJECT TO SECTION 8(k) RESTRICTIONS
GS Capital Partners II, L.P.
GS Capital Partners II Offshore, L.P.
GS Capital Partners II Germany, C.L.P.
Stone Street Fund 1998, L.P.
Bridge Street Fund 1998, L.P.
GS Capital Partners III, L.P.
GS Capital Partners III Offshore, L.P.
GS Capital Partners III Germany, C.L.P.
Stone Street Fund 2000, L.P.
Bridge Special Opportunities Fund 2000, L.P.
Diamond Generating Corporation
Diamond Cayman, Inc.
Mitsubishi International Corporation
Tokyo Electric Power Company International B.V.
Jack A. Fusco
Scott B. Helm
W. Thaddeus Miller
E. Thomas Webb
Fredric V. Salerno
I-2
<PAGE> 31
ANNEX I
FORM OF LATHAM & WATKINS OPINION
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
as Representatives of the
Several Underwriters
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Re: Orion Power Holdings, Inc.
Ladies and Gentlemen:
We have acted as your special counsel in connection with the sale to
you and the other Underwriters on the date hereof by Orion Power Holdings, Inc.,
a Delaware corporation (the "Company"), and the Selling Stockholders (as defined
below) of [25,000,000] shares (the "Shares") of common stock of the Company, par
value $0.1 per share (the "Common Stock"), pursuant to a registration statement
on Form S-1 under the Securities Act of 1933, as amended (the "Act"), filed with
the Securities and Exchange Commission (the "Commission") on August 18, 2000
(File No. 33-44118), as amended by Amendment No. 1 filed with the Commission on
October 5, 2000, Amendment #2 filed with the Commission on October 26, 2000
[here list any subsequent amendments and filing dates] (collectively) the
"Registration Statement")], a Prospectus dated _________, 2000 [filed with the
Commission pursuant to Rule 424(b) under the Act] (the "Prospectus"), an
underwriting agreement dated _________ 2000 among you as Representatives of the
several Underwriters named in Schedule I to the underwriting agreement, the
selling stockholders named in Schedule II to the underwriting agreement (the
"Selling Stockholders") and the Company (the "Underwriting Agreement"). This
opinion is being rendered to you pursuant to Section 8(a) of the Underwriting
Agreement.
As such counsel, we have made such legal and factual examinations and
inquiries as we have deemed necessary or appropriate for purposes of this
opinion. In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted to us as
copies. As to facts material to the opinions, statements and assumptions
expressed herein, we have, with your consent, relied upon oral or written
statements and representations of officers and other representatives of the
Company and others. In addition, we have obtained and relied upon such
certificates and assurances from public officials as we have deemed necessary.
We are opining herein as to the effect on the subject transaction only
of the federal laws of the United States, the internal laws of the State of New
York and the General
I-1
<PAGE> 32
Corporation Law of the State of Delaware, and we express no opinion with respect
to the applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or, in the case of Delaware, any other laws, or as to any matters
of municipal law or the laws of any local agencies within any state.
Whenever a statement herein is qualified by "to the best of our
knowledge" or a similar phrase, it is intended to indicate that those attorneys
in this firm who have rendered legal services in connection with the above
transaction do not have current actual knowledge of the inaccuracy of such
statement. However, except as otherwise expressly indicated, we have not
undertaken any independent investigation to determine the accuracy of any such
statement, and no inference that we have any knowledge of any matters pertaining
to such statement should be drawn from our representation of you.
Capitalized terms used herein without definition have the meanings
assigned to them in the Underwriting Agreement.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that, as of the date hereof:
1. The Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of Delaware.
2. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
3. The Shares to be issued and sold by the Company pursuant to the
Underwriting Agreement have been duly authorized and, when issued to and paid
for by you [and the other Underwriters] in accordance with the terms of the
Underwriting Agreement will be validly issued, fully paid and non-assessable
and, to the best of our knowledge, free of preemptive rights; the Shares to be
sold by the Selling Stockholders pursuant to the Underwriting Agreement have
been duly authorized and validly issued and are fully paid and non-assessable.
4. The Registration Statement has become effective under the Act and,
to the best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Act and no proceedings therefor
have been initiated by the Commission [; and any required filing of the
Prospectus pursuant to Rule 424(b) under the Act has been made in accordance
with Rules 424(b) and 430A under the Act].
5. The Registration Statement and the Prospectus comply as to form in
all material respects with the requirements for registration statements on Form
S-1 under the Act and the rules and regulations of the Commission thereunder; it
being understood, however, that we express no opinion with respect to the
financial statements, schedules or other financial data included in, or omitted
from, the Registration Statement or the Prospectus. In passing upon the
compliance as to form of the Registration Statement and the Prospectus, we have
assumed that the statements made therein are correct and complete.
In addition, we have participated in conferences with officers and
other representatives of the Company, counsel to the Company, representatives of
the
I-2
<PAGE> 33
independent public accountants for the Company and your representatives, at
which the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although we are not passing upon, and do not assume
any responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus and have not made any
independent check or verification thereof, during the course of such
participation, no facts came to our attention that caused us to believe that the
Registration Statement, at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus, as of its date or as of the date hereof, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; it being understood
that we express no belief with respect to the financial statements, schedules or
other financial data included in, or omitted from, the Registration Statement or
the Prospectus.
This opinion is rendered only to you as Representatives of the several
Underwriters under the Underwriting Agreement and is solely for benefit the
benefit of the Underwriters in connection with the transactions covered hereby.
This opinion may not be relied upon by you for any other purpose, or furnished
to, quoted to, or relied upon by any other person, firm or corporation for any
purpose, without our prior written consent.
Very truly yours,
I-3
<PAGE> 34
ANNEX II
FORM OF STROOCK & STROOCK & LAVAN LLP OPINION
_________, ___, 2000
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
As representatives of the several Underwriters
named in Schedule I to the Underwriting Agreement
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Ladies and Gentlemen:
We have acted as counsel to Orion Power Holdings, Inc., a Delaware corporation
(the "Company"), in connection with (i) the Company's Registration Statement on
Form S-1 (Registration No. 333-44118), as amended by Amendments No. 1, 2, __ and
__ (the "Registration Statement"), filed by the Company with the Securities and
___ Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), and (ii) the sale by the Company of an aggregate of _____
shares of common stock, par value $.01 per share (the "Stock"), pursuant to the
Underwriting Agreement, dated as of , 2000 (the "Underwriting Agreement"), by
and among the Company, the selling stockholders named in Schedule II thereto
(the "Selling Stockholders") and you, as representatives of the several
Underwriters named in Schedule I thereto (the "Underwriters").
We are rendering this opinion to you pursuant to Section 8(b) of the
Underwriting Agreement. Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Underwriting Agreement.
We have examined copies of each of (i) the Underwriting Agreement, (ii) the
Registration Statement and the exhibits thereto, (iii) the Company's Prospectus
dated ______ __, 2000 (the "Prospectus") and (iv) the Certificate of
Incorporation (the "Certificate of Incorporation") and Bylaws (the "Bylaws") of
the Company, as in effect on the date hereof. We have also examined originals or
copies, certified or otherwise identified to our satisfaction, of such corporate
records of the Company, and such documents, records, agreements, instruments
II-1
<PAGE> 35
and certificates of officers and representatives of the Company and others, and
have made such examinations of law, as we have deemed necessary to form the
basis of the opinions hereinafter expressed. In such examinations, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity to originals of all documents
submitted to us as copies thereof. As to various questions of fact material to
the opinions expressed below, we have relied upon (i) the representations and
warranties of the Company contained in the Underwriting Agreement or made
pursuant thereto or in connection with the closing thereunder and (ii)
statements by and certificates of officers and representatives of the Company
and others.
Attorneys involved in the preparation of this opinion are admitted to practice
law in the State of New York and we do not purport to express any opinion herein
concerning any law other than the laws of the State of New York, the federal
laws of the United States of America (except for FCC matters as to which we do
not express any opinions), the General Corporation Law of the State of Delaware
and the Delaware Revised Uniform Limited Partnership Act.
For purposes of this letter, we have assumed that the Underwriting Agreement is
a valid and binding obligation of each of you and the other Underwriters and is
enforceable against each of you and the other Underwriters in accordance with
its terms.
When reference is made in this opinion to "our knowledge" or to what is "known
to us," it means, unless otherwise indicated, the actual knowledge attributable
to our representation of the Company of only those partners and associates who
have given substantive attention to the Underwriting Agreement, the Registration
Statement, the Prospectus and the sale of the Shares.
With respect to our opinion expressed in paragraphs 1, 3 and 4 below relating to
the good standing and valid existence of each of the Company and its
subsidiaries, we have relied, with your permission, solely upon good standing
certificates of public officials or upon confirmation via facsimile of good
standing as an existing corporation or partnership from such public officials,
copies of which are being delivered concurrently herewith.
With reference to our opinion in paragraphs 7 and 8 below, our opinion is
limited to (i) review of only those laws and regulation that, in our experience,
are normally applicable to transactions of the type contemplated by the
Underwriting Agreement, and (ii) does not include, and we express no opinion as
to the application of, any federal (including the FCC) or state laws or
regulations regarding the generation, transmission, marketing or sale of
electricity or the ownership or operation of power plants. In addition, we
express no opinion as to the statutes and ordinances, administrative decisions
and rules and regulations of counties, towns, municipalities and special
political subdivisions, or judicial decisions to the extent they deal therewith.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its
business as described in the Prospectus.
<PAGE> 36
2. The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
(including the Shares being delivered on the date hereof) have been duly
and validly authorized and issued and are fully paid and non-assessable;
and the Shares conform to the description of the Stock contained in the
Prospectus.
3. The Company and its subsidiaries have been duly qualified as a foreign
corporation or limited partnership, as the case may be, for the transaction
of business and are in good standing under the laws of the jurisdictions
set forth on Schedule (c).
4. Each subsidiary of the Company listed on Exhibit 21.1 to the Registration
Statement is validly existing as a corporation or limited partnership, as
the case may be, in good standing under the laws of its jurisdiction of
incorporation or organization with corporate or partnership power and
authority to own its properties and conduct its business as described in
the Prospectus.
5. To our knowledge and other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect; and, to our knowledge, no such proceedings
are threatened by governmental authorities or threatened by others against
the Company or any of its subsidiaries.
6. The Underwriting Agreement has been duly authorized, executed and delivered
by the Company.
7. The issue and sale of the Stock and the compliance by the Company with all
of the provisions of the Underwriting Agreement and the consummation of the
transactions therein contemplated will not conflict with or result in a
material breach or violation of any of the terms or provisions of, or
constitute a default under the agreements listed on Exhibit 4.1 through
Exhibit 4.4 or Exhibit 10.1 through Exhibit 10.__ to the Registration
Statement, which have been identified to us in an officer's certificate as
being all of the agreements that are material to the Company and its
subsidiaries taken as a whole, nor will such actions result in any
violation of the provisions of the Certificate of Incorporation or By-laws
of the Company, or the Delaware General Corporation Law or any federal or
New York statute, order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties. We express no opinion with respect
to any such conflict, breach, violation or default not readily
ascertainable from the face of any such agreement, or arising under or
based upon any cross-default provisions insofar as it relates to a default
under an agreement not identified to us, or arising under or based upon any
covenant of a financial or numerical nature or requiring computation.
8. No consent, approval, authorization, order, registration, filing or
qualification of or with any such court or governmental agency or body is
required under federal or New York law or the Delaware General Corporation
Law for the issue and sale of the Shares or the consummation by the Company
of the transactions contemplated by the Underwriting Agreement, except as
such have been obtained (including the approval by the Federal Energy
Regulatory Commission), the registration under the Act of the Stock, and
such consents, approvals, authorizations, registrations or qualifications
as may be required
<PAGE> 37
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Stock by the Underwriters.
9. The statements set forth in the Prospectus under the caption "Description
of Capital Stock" insofar as they purport to constitute a summary of
certain of the terms of the Stock, and under the captions "Risk Factors-We
have agreed to provide all of the energy required by Duquesne Light Company
to satisfy its provider of last resort obligation, which could result in
significant losses to us," "Business" (other than the subheading
"Regulation") "Certain Relationships and Related Party Transactions,"
"Description of Indebtedness," "Certain Relationships and Related Party
Transactions," and "Underwriting" insofar as they purport to describe the
provisions of the laws and documents referred to therein accurately and
fairly summarize such terms and such provisions, respectively, in all
material respects.
10. The Company is not subject to registration as an "investment company," as
such term is defined in the Investment Company Act.
11. The Registration Statement has become effective under the Act and the
Prospectus was filed pursuant to Rule 424(b) of the rules and regulations
of the Commission under the Act and, to our knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued
or proceeding for that purpose has been instituted or threatened by the
Commission.
12. To our knowledge, there are no contracts or documents of a character
required by the Act or the rules and regulations thereunder to be described
in the Registration Statement or the Prospectus or to be filed as exhibits
to the Registration Statement which are not described or filed as required
by the Act or the rules and regulations thereunder.
The Registration Statement and the Prospectus and any further amendments and
supplements thereto made by the Company prior to the date hereof (other than the
financial statements and related schedules therein, as to which we express no
opinion) comply as to form in all material respects with the requirements of the
Act and the rules and regulations thereunder; and although we do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, except for those
referred to in paragraph 9 above, we have no reason to believe that, as of its
effective date, the Registration Statement or any further amendment thereto made
by the Company prior to the date hereof (other than the financial statements and
related schedules therein, as to which we express no opinion) contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, not misleading
or that, as of its date, the Prospectus or any further amendment or supplement
thereto made by the Company prior to the date hereof (other than the financial
statements and related schedules therein, as to which we express no opinion)
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading or that, as of the date hereof,
either the Registration Statement or the Prospectus or any further amendment or
supplement thereto made by the Company prior to the date hereof (other than the
financial statements and related schedules therein, as to which we express no
opinion) contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
<PAGE> 38
This opinion is furnished solely for your benefit and may not be used or relied
upon by any other person without our express written consent.
Very truly yours,
<PAGE> 39
SCHEDULE (c)
<TABLE>
<CAPTION>
NAME OF ENTITY: JURISDICTIONS IN WHICH QUALIFIED AND IN
GOOD STANDING:
<S> <C>
1. Orion Power Holdings, Inc. Maryland
2. Orion Power New York GP, Inc. New York
3. Orion Power New York LP, Inc. New York
4. Orion Power New York GP II, Inc. New York
5. Orion Power New York, L.P. New York
6. Astoria Generating Company, L.P. New York
7. Erie Boulevard Hydropower, L.P. New York
8. Carr Street Generating Station, L.P. New York
9. Orion Power Midwest, L.P. Pennsylvania
10. Orion Power Midwest GP, Inc. Pennsylvania
11. Orion Power Midwest LP, Inc. None
12. Orion Power Operating Services, Inc. None
13. Orion Power Operating Services MidWest, Inc. None
14. COSI Astoria, Inc. New York
15. COSI Coldwater, Inc. New York
16. COSI Carr Street, Inc. New York
17. COSI Great Lakes, Inc.
18. Orion Power New York LPII, Inc.
</TABLE>
<PAGE> 40
SCHEDULE (l)(ii)
None
II-7
<PAGE> 41
ANNEX III
KIRKLAND & ELLIS OPINION
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
As representatives of the several Underwriters
named in Schedule I hereto
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Ladies and Gentlemen:
We are issuing this opinion letter as special energy
regulatory counsel to Orion Power Holdings, Inc., a Delaware corporation (the
"Company"), in connection with the issuance and sale by the Company of an
aggregate of [ ] shares of Common Stock, par value $.01 per share (the
"Stock"), pursuant to the Underwriting Agreement, dated as of [ ], 2000
(the "Underwriting Agreement"), between the Company and the Underwriters named
in Schedule I thereto (the "Underwriters"). This opinion is being delivered to
you pursuant to Section 8(c) of the Underwriting Agreement.
Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Underwriting Agreement, provided
that references to any document means documents in the form executed and
delivered as of the date hereof.
The following is based exclusively on specific federal, New
York, Pennsylvania and Ohio energy regulatory statutes and orders, rules or
regulations regarding (a) the generation, transmission, marketing or sale of
electricity or (b) the ownership or operation of power plants. Subject to the
assumptions, qualifications, exclusions and other limitations which are
identified in this letter, we advise you that:
(a) The statements in the Prospectus under the captions "Risk
Factors - Differences in the market and regulatory structures in the
various regional power markets in which we operate will affect our
results of operations and profit margin," "Risk Factors - We are
subject to stringent governmental regulation, which may be burdensome
or lead to significant costs or liabilities," and "Business -
Regulation," insofar as such statements purport to describe the laws or
proceedings referred to therein, are fair and accurate summaries of
such laws and regulations and such proceedings in all material
respects. This opinion is based exclusively on specific federal, New
York, Pennsylvania and Ohio energy regulatory statutes and orders,
rules or regulations regarding (a) the generation, transmission,
marketing or sale of electricity or (b) the ownership or operation of
power plants.
III-1
<PAGE> 42
(b) To our knowledge, neither the Company nor any of its
subsidiaries is (i) subject to regulation as a "holding company" or a
"subsidiary company" of a holding company or an "affiliate" of a
subsidiary or holding company or a "public utility company" under
Section 2(a) of the Public Utility Holding Company Act of 1935, (ii)
subject to regulation under the Federal Power Act of 1920, as amended,
other than as contemplated by 18 C.F.R. Section 292.601(c) and other
than due to its subsidiaries' status as power marketers and owners of
certain electric transmission facilities subject to the Federal Power
Act, and its subsidiaries have all exemptions and waivers consistent
with those granted to entities owning generation with utility
affiliates and holding market based rates authority, or (iii) subject
to any state law or regulation with respect to the rates or financial
or organizational regulation of electric utilities, other than due to
its subsidiaries' status as "electric corporations" under New York law
subject to lightened regulation. This opinion is based exclusively on
specific federal, New York, Pennsylvania and Ohio energy regulatory
statutes and orders, rules or regulations regarding (a) the generation,
transmission, marketing or sale of electricity or (b) the ownership or
operation of power plants.
(c) The issue and sale of the Stock and the compliance by the
Company with all of the provisions of the Underwriting Agreement and
the consummation of the transactions contemplated therein will not
result in any violation of any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties. This
opinion is based exclusively on specific federal, New York,
Pennsylvania and Ohio energy regulatory statutes and orders, rules or
regulations regarding (a) the generation, transmission, marketing or
sale of electricity or (b) the ownership or operation of power plants.
(e) No consent, approval, authorization, order, or
registration of or with any court or governmental agency or body is
required for the issue and sale of the Stock or the consummation by the
Company of the transactions contemplated by the Underwriting Agreement,
except for consents, approvals, authorizations, orders, or regulations
associated with the issue and sale of the Stock, which have been
obtained. This opinion is based exclusively on specific federal, New
York, Pennsylvania and Ohio energy regulatory statutes and orders,
rules or regulations regarding (a) the generation, transmission,
marketing or sale of electricity or (b) the ownership or operation of
power plants.
For purposes of this opinion letter, we have relied, without
investigation, upon each of the following assumptions: (i) Each document
submitted to us for review is accurate and complete, each such document that is
an original is authentic, each such document that is a copy conforms to an
authentic original, and all signatures on each such document are genuine; (ii)
there are no agreements or understandings among the parties, written or oral,
and there is no usage of trade or course of prior dealing among the parties that
would, in either case, define, supplement or qualify the terms of the
Underwriting Agreement; (iii) the constitutionality or validity of a relevant
statute, rule, regulation or agency action is not in issue; (iv) all parties to
the Underwriting Agreement will act in accordance with, and will refrain from
taking any action that is forbidden by, the terms and conditions of the
Underwriting Agreement; (v) all agreements other than the Underwriting Agreement
(if any) with respect to which we have provided advice in our letter or reviewed
in connection with our letter would be enforced as written; (vi) the Company and
its subsidiaries will not in the future take any discretionary action (including
a decision not to act) permitted under the Underwriting Agreement that would
result in a violation
III-2
<PAGE> 43
of law or constitute a breach or default under any other agreements or court
orders to which the Company or its subsidiaries may be subject; (vii) except for
those governmental and regulatory approvals that we have specifically opined
upon herein, the Company and its subsidiaries have obtained (and will in the
future obtain) all permits and governmental approvals required, and have taken
(and will in the future take) all actions required, relevant to the consummation
of the transactions or performance of the Underwriting Agreement; and (viii)
each person who has taken any action relevant to any of our opinions in the
capacity of director or officer was duly elected to that director or officer
position and held that position when such action was taken. In addition, we have
relied without any independent verification upon: (i) information contained in
certificates and approvals obtained from governmental authorities; (ii) factual
information contained in applications to governmental authorities, the
Underwriting Agreement; and (iii) factual information we have obtained from such
other sources as we have deemed reasonable. We have assumed without
investigation that there has been no relevant change or development between the
dates as of which the information cited in the preceding sentence was given and
the date of this letter and that the information upon which we have relied is
accurate and does not omit disclosures necessary to prevent such information
from being misleading. For purposes of each opinion, we have relied upon
decisions issued by governmental authorities in each relevant jurisdiction, and
such opinion is not intended to provide any conclusion or assurance beyond that
conveyed by that decision.
While we have not conducted any independent investigation to determine
facts upon which our opinions are based or to obtain information about which
this letter advises you, we confirm that we do not have any actual knowledge
which has caused us to conclude that our reliance and assumptions cited in the
preceding paragraph are unwarranted or that any information supplied in this
letter is wrong. The term "knowledge" whenever it is used in this letter with
respect to our firm means conscious awareness at the time this letter is
delivered on the date it bears by the following Kirkland & Ellis lawyers who
have reviewed the Underwriting Agreement (herein called "our Designated
Transaction Lawyers"): Mitchell F. Hertz and Katharine M. Costenbader.
Our advice on every legal issue addressed in this letter is based
exclusively on the specific federal or New York, Pennsylvania and Ohio energy
regulatory statutes and orders, rules or regulations regarding (a) the
generation, transmission, marketing or sale of electricity or (b) the ownership
or operation of power plants. We advise you that issues addressed by this letter
may be governed in whole or in part by other laws, but we express no opinion as
to whether any relevant difference exists between the laws upon which our
opinions are based and any other laws which may actually govern. We also advice
you that we are members of the bars of the District of Columbia and New York
State and are not members of the bars of Pennsylvania or Ohio. We are not
providing this opinion letter except in our capacity as special energy
regulatory legal counsel to the Company on issues relating to the Federal Energy
Regulatory Commission ("FERC"), the New York Public Service Commission
("NYPSC"), the Pennsylvania Public Utilities Commission ("PPUC") and the Public
Utilities Commission of Ohio ("PUCO") and offer no opinions on environmental or
other matters relating to (a) the generation, transmission, marketing or sale of
electricity or (b) the ownership or operation of power plants, whether or not
addressed in the Prospectus or the Underwriting Agreement.
Our advice on each legal issue addressed in this letter represents our
opinion as to how that issue would be resolved were it to be considered by the
highest court of the jurisdiction upon whose law our opinion on that issue is
based. The manner in which any particular issue would be treated in any actual
court case would depend in part on facts and circumstances
III-3
<PAGE> 44
particular to the case, and this letter is not intended to guarantee the outcome
of any legal dispute which may arise in the future.
This letter speaks as of the time of its delivery on the date it bears.
We do not assume any obligation to provide you with any subsequent opinion or
advice by reason of any fact about which our Designated Transaction Lawyers did
not have actual knowledge at that time, by reason of any change subsequent to
that time in any law covered by any of our opinions, or for any other reason.
You may rely upon this letter only for the purpose served by the
provisions in the Underwriting Agreement cited in the initial paragraph of this
letter in response to which it has been delivered. Without our written consent:
(i) no person other than you may rely on this letter for any purpose; (ii) this
letter may not be cited or quoted in any financial statement, prospectus,
private placement memorandum or other similar document; (iii) this letter may
not be cited or quoted in any other document or communication which might
encourage reliance upon this letter by any person or for any purpose excluded by
the restrictions in this paragraph; and (iv) except as required by law, copies
of this letter may not be furnished to anyone (except to the Underwriters) for
purposes of encouraging such reliance; provided that any Person who becomes an
Underwriter on or after the date hereof may rely on this opinion as if it were
addressed to such Person on and as of the Time of Delivery, subject to the
limitations contained in this paragraph.
SINCERELY,
-------------------------------
III-4
<PAGE> 45
ANNEX IV
FORM OF THELEN REID & PRIEST LLP OPINION
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
This firm has acted as special environmental counsel to Orion Power
Holdings, Inc., a Delaware corporation (the "Company") on certain limited
matters with regard to the issuance and sale by the Company of Common Stock, par
value $.01 per share (the "Stock") pursuant to the Underwriting Agreement, dated
as of [ ], 2000 (the "Underwriting Agreement") between the Company and
the Underwriters named in Schedule I thereto (the "Underwriters"). This opinion
is being delivered to you pursuant to Section 8(d) of the Underwriting
Agreement. In our review, we have assumed the accuracy and completeness of all
statements of fact relating to the Company and its operations and products and
have made no independent investigation for purposes of rendering this opinion.
This opinion relates solely to matters of environmental law.
We are licensed and authorized to practice law under the laws of the
United States and the states of New York and California. This opinion relates
solely to environmental laws and legal documents or proceedings promulgated
under the laws of the United States and the state of New York and we do not
offer any opinions regarding laws or legal proceedings outside those
jurisdictions.
Based on and subject to the foregoing, we are of the opinion that the
statements in the Prospectus under the captions "Risk Factors-Environmental
Regulation," and "Business-Regulation-Environmental Regulation," solely insofar
as such statements purport to describe the laws or legal documents or legal
proceedings referred to therein, are fair and accurate summaries of such laws
and regulations and such legal documents and proceedings in all material
respects.
This opinion speaks only as of the date hereof and not to any prior or
subsequent date, and we assume no obligation to advise you of any changes in the
foregoing subsequent to the delivery of this opinion. This opinion has been
prepared solely for your use in connection with the offering of the securities
and may not be used, quoted or otherwise referred to or relied upon by any
person or entity without the prior written consent of this firm.
Very truly yours,
THELEN REID & PRIEST LLP
-------------------------------
IV-1
<PAGE> 46
ANNEX V
________________, 2000
Goldman, Sachs & Co
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
As representatives of the several Underwriters named in
Schedule I to the Underwriting Agreement
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Ladies and Gentlemen:
I am Associate General Counsel of Constellation Power Source Holdings,
Inc. and certain of its affiliates, including Constellation Operating Services,
Inc., a Maryland corporation ("COSI"). I and lawyers assisting me have acted as
counsel to COSI, in connection with the sale by COSI of an aggregate of
______shares of common stock, par value $.01 per share of Orion Power Holdings,
Inc. (the "Stock"), pursuant to the Underwriting Agreement, dated as of ______,
2000 (the "Underwriting Agreement"), by and among Orion Power Holdings, Inc.,
the selling stockholders named in Schedule II thereto including COSI (the
"Selling Stockholders") and you, as representatives of the several Underwriters
named in Schedule I thereto (the "Underwriters).
We are rendering this opinion to you pursuant to Section 8(e) of the
Underwriting Agreement. Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Underwriting Agreement.
We have examined copies of each of (i) the Underwriting Agreement, (ii)
the Registration Statement and exhibits thereto, (iii) Orion Power Holding,
Inc.'s Prospectus, and (vi) the Articles of Incorporation (the "Articles of
Incorporation") and Bylaws (the "Bylaws") of COSI, as in effect on the date
hereof. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate records of COSI, and such
documents, records, agreements, instruments and certificates of officers and
representatives of COSI and others, and have made such examinations of law, as
we have deemed necessary to form the basis of the opinion hereinafter expressed.
In such examinations, we have assumed the genuineness of all signatures of
parties other than COSI, the authenticity of all documents submitted to us as
originals and the conformity to originals of all documents submitted to us as
copies thereof, in each case as submitted by any person other than COSI. As to
various questions of fact material to the opinions expressed below, we have
relied upon (i) the representations and warranties of COSI contained in the
Underwriting Agreement or made pursuant thereto or in connection with the
closing thereunder and (ii) statements by and certificates of officers and
representatives of COSI and others. In particular, in rendering subparagraph (v)
we have relied upon a certificate of COSI in respect of matters of fact as to
ownership of, and liens,
V-1
<PAGE> 47
encumbrances, equities or claims on the Shares sold by COSI which we believe
that we are justified in relying upon.
For purposes of this letter, we have assumed that the Underwriting
Agreement is a valid and binding obligation of each of you, the other
Underwriters and Orion Power Holdings, Inc. and is enforceable against each of
you, Orion Power Holdings, Inc. and the other Underwriters in accordance with
its terms.
When reference is made in this opinion to "our knowledge" or to what is
"known to us," it means, unless otherwise indicated, the actual knowledge
attributable to my representation of COSI and that of in-house attorneys who
have given substantive attention to the Underwriting Agreement and the sale of
the Shares in coordination with me.
Based on the foregoing, we are of the opinion that:
(i) COSI has been duly incorporated and is validly existing and in
good standing under the laws of the State of Maryland.
(ii) The Underwriting Agreement has been duly authorized, executed
and delivered by or on behalf of COSI and the sale of the
Shares to be sold by COSI thereunder and the compliance by
COSI with all of the provisions of the Underwriting Agreement
and the consummation of the transactions therein contemplated
will not conflict with or result in any breach or violation of
any terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to us to which COSI is a
party or by which COSI is bound, or to which any of the
property or assets of COSI is subject, nor will such action
result in any violation of the provisions of the Articles of
Incorporation or By-laws of COSI, or any order, rule or
regulation known to us of any court or governmental agency or
body having jurisdiction over COSI or the property of COSI;
(iii) No consent, approval, authorization or order of any court or
governmental agency or body is required under federal or
Maryland law for the sale of COSI's Shares contemplated by the
Underwriting Agreement. We express no opinion regarding any
approval (a) of the FERC under the Federal Power Act with
respect to the transactions contemplated by the Underwriting
Agreement or (b) required under the Act, state securities laws
or Blue Sky Laws;
(iv) Immediately prior to the First Time of Delivery COSI had good
and valid title to the Shares to be sold at the First Time of
Delivery by COSI under the Underwriting Agreement, free and
clear of all liens, encumbrances, equities or claims, and full
right power and authority to sell, assign, transfer and
deliver the Shares to be sold by COSI under the Underwriting
Agreement; and
(v) Good and valid title to COSI's Shares, free and clear of all
liens, encumbrances, equities or claims, has been transferred
to each of the several Underwriters, as the case may be, who
have purchased such Shares in good faith and without notice of
any such lien, encumbrance, equity or claim or any other
adverse claim within the meaning of the Uniform Commercial
Code.
V-2
<PAGE> 48
This opinion is limited to the law of the State of Maryland (without
regard to the application of any principles of conflict of laws) and the Federal
law of the United States, all as in effect as of the date hereof.
The opinions in this letter are being furnished to you for your benefit
and may not be relied upon by any other Person.
Very truly yours,
Dan R. Skowronski
DRS/jlm
V-3
<PAGE> 49
ANNEX VI
________________, 2000
Goldman, Sachs & Co
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
As representatives of the several Underwriters named in
Schedule I to the Underwriting Agreement
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Ladies and Gentlemen:
I am Associate General Counsel of Constellation Power Source Holdings,
Inc. a Maryland corporation and certain of its affiliates ("CPS"). I and lawyers
assisting me have acted as counsel to CPS, in connection with the sale by CPS of
an aggregate of ______shares of common stock, par value $.01 per share of Orion
Power Holdings, Inc. (the "Stock"), pursuant to the Underwriting Agreement,
dated as of ______, 2000 (the "Underwriting Agreement"), by and among Orion
Power Holdings, Inc., the selling stockholders named in Schedule II thereto
including CPS (the "Selling Stockholders") and you, as representatives of the
several Underwriters named in Schedule I thereto (the "Underwriters).
We are rendering this opinion to you pursuant to Section 8(e) of the
Underwriting Agreement. Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Underwriting Agreement.
We have examined copies of each of (i) the Underwriting Agreement, (ii)
the Registration Statement and exhibits thereto, (iii) Orion Power Holding,
Inc.'s Prospectus, and (vi) the Articles of Incorporation (the "Articles of
Incorporation") and Bylaws (the "Bylaws") of CPS, as in effect on the date
hereof. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate records of CPS, and such
documents, records, agreements, instruments and certificates of officers and
representatives of CPS and others, and have made such examinations of law, as we
have deemed necessary to form the basis of the opinion hereinafter expressed. In
such examinations, we have assumed the genuineness of all signatures of parties
other than CPS, the authenticity of all documents submitted to us as originals
and the conformity to originals of all documents submitted to us as copies
thereof, in each case as submitted by any person other than CPS. As to various
questions of fact material to the opinions expressed below, we have relied upon
(i) the representations and warranties of CPS contained in the Underwriting
Agreement or made pursuant thereto or in connection with the closing thereunder
and (ii) statements by and certificates of officers and representatives of CPS
and others. In particular, in rendering subparagraph (v) we have relied upon a
certificate of CPS in respect of matters of fact as to ownership of, and liens,
encumbrances, equities or claims on the Shares sold by CPS which we believe that
we are justified in relying upon.
VI-1
<PAGE> 50
For purposes of this letter, we have assumed that the Underwriting
Agreement is a valid and binding obligation of each of you, the other
Underwriters and Orion Power Holdings, Inc. and is enforceable against each of
you, Orion Power Holdings, Inc. and the other Underwriters in accordance with
its terms.
When reference is made in this opinion to "our knowledge" or to what is
"known to us," it means, unless otherwise indicated, the actual knowledge
attributable to my representation of CPS and that of in-house attorneys who have
given substantive attention to the Underwriting Agreement and the sale of the
Shares in coordination with me.
Based on the foregoing, we are of the opinion that:
(vi) CPS has been duly incorporated and is validly existing and in
good standing under the laws of the State of Maryland.
(vii) The Underwriting Agreement has been duly authorized, executed
and delivered by or on behalf of CPS and the sale of the
Shares to be sold by CPS thereunder and the compliance by CPS
with all of the provisions of the Underwriting Agreement and
the consummation of the transactions therein contemplated will
not conflict with or result in any breach or violation of any
terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to us to which CPS is a
party or by which CPS is bound, or to which any of the
property or assets of CPS is subject, nor will such action
result in any violation of the provisions of the Articles of
Incorporation or By-laws of CPS, or any order, rule or
regulation known to us of any court or governmental agency or
body having jurisdiction over CPS or the property of CPS;
(viii) No consent, approval, authorization or order of any court or
governmental agency or body is required under federal or
Maryland law for the sale of CPS's Shares contemplated by the
Underwriting Agreement. We express no opinion regarding any
approval (a) of the FERC under the Federal Power Act with
respect to the transactions contemplated by the Underwriting
Agreement or (b) required under the Act, state securities laws
or Blue Sky Laws;
(ix) Immediately prior to the First Time of Delivery CPS had good
and valid title to the Shares to be sold at the First Time of
Delivery by CPS under the Underwriting Agreement, free and
clear of all liens, encumbrances, equities or claims, and full
right power and authority to sell, assign, transfer and
deliver the Shares to be sold by CPS under the Underwriting
Agreement; and
(x) Good and valid title to CPS's Shares, free and clear of all
liens, encumbrances, equities or claims, has been transferred
to each of the several Underwriters, as the case may be, who
have purchased such Shares in good faith and without notice of
any such lien, encumbrance, equity or claim or any other
adverse claim within the meaning of the Uniform Commercial
Code.
This opinion is limited to the law of the State of Maryland (without
regard to the application of any principles of conflict of laws) and the Federal
law of the United States, all as in effect as of the date hereof.
VI-2
<PAGE> 51
The opinions in this letter are being furnished to you for your benefit
and may not be relied upon by any other Person.
Very truly yours,
Donna M. Levy
DRS/jlm
VI-3
<PAGE> 52
ANNEX VII
FORM OF ARTHUR ANDERSEN LLP COMFORT LETTER
[INSERT TEXT OF A.A. LETTER]
VII-1
<PAGE> 53
ANNEX VIII
FORM OF STOCKHOLDERS' LOCK-UP AGREEMENT
Orion Power Holdings, Inc.
7 East Redwood Street
10th Floor
Baltimore, Maryland 21202
November __, 2000
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Re: Orion Power Holdings, Inc. - Lock-Up Agreement
Ladies and Gentlemen:
The undersigned understands that Goldman, Sachs & Co., Credit Suisse
First Boston Corporation, Deutsche Bank Securities Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated, as
representatives (the "Representatives"), propose to enter into an underwriting
agreement (the "Underwriting Agreement") on behalf of the several Underwriters
named in Schedule I to such agreement (collectively, the "Underwriters"), with
Orion Power Holdings, Inc., a Delaware corporation (the "Company"), providing
for a public offering of the Common Stock of the Company (the "Shares") pursuant
to a Registration Statement on Form S-1 to be filed with the Securities and
Exchange Commission (the "SEC").
In consideration of the agreement by the Underwriters to offer and sell
the Shares, and of other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the undersigned agrees that, during
the period beginning from the date of the final Prospectus covering the public
offering of the Shares and continuing to and including the date 180 days after
the date of such final Prospectus, the undersigned will not offer, sell,
contract to sell, pledge, grant any option to purchase, make any short sale or
otherwise dispose of any shares of Common Stock of the Company, or any options
or warrants to purchase any shares of Common Stock of the Company, or any
securities convertible into, exchangeable for or that represent the right to
receive shares of Common Stock of the Company, whether now owned or hereinafter
acquired, owned directly by the undersigned (including holding as a custodian)
or with respect to which the undersigned has beneficial ownership within the
rules and regulations of the SEC (collectively the "Undersigned's Shares").
The foregoing restriction is expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or which reasonably could be expected to lead to or result in a sale or
disposition of the Undersigned's Shares even if such Shares would be disposed of
by someone other than the undersigned. Such prohibited hedging or other
VIII-1
<PAGE> 54
transactions would include without limitation any short sale or any purchase,
sale or grant of any right (including without limitation any put or call option)
with respect to any of the Undersigned's Shares or with respect to any security
that includes, relates to, or derives any significant part of its value from
such Shares.
Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the undersigned
or the immediate family of the undersigned, provided that the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value, or (iii) with the prior written consent of Goldman, Sachs & Co. on behalf
of the Underwriters. For purposes of this Lock-Up Agreement, "immediate family"
shall mean any relationship by blood, marriage or adoption, not more remote than
first cousin. In addition, notwithstanding the foregoing, if the undersigned is
a corporation, the corporation may transfer the capital stock of the Company to
any wholly-owned subsidiary of such corporation; provided, however, that in any
such case, it shall be a condition to the transfer that the transferee execute
an agreement stating that the transferee is receiving and holding such capital
stock subject to the provisions of this Agreement and there shall be no further
transfer of such capital stock except in accordance with this Agreement, and
provided further that any such transfer shall not involve a disposition for
value. The undersigned now has, and, except as contemplated by clause (i), (ii),
or (iii) above, for the duration of this Lock-Up Agreement will have, good and
marketable title to the Undersigned's Shares, free and clear of all liens,
encumbrances, and claims whatsoever. The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of the Undersigned's Shares except in compliance
with the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.
[signature page attached]
VIII-2
<PAGE> 55
Very truly yours,
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[Exact Name of Shareholder]
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Authorized Signature
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Title
VIII-3
