Contract
Exhibit 10.14
EXECUTION COPY
This CONSULTING AGREEMENT, dated as of June 1, 2007 (this “Agreement”), is entered
into by and among US Power Generating Company, a Delaware corporation (the “Company”), and
K Road BG Management, LLC, a Delaware limited liability company (“Manager”).
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) the Company is acquiring, pursuant to the Merger Agreement, dated as of
February 28, 2007 (the “Merger Agreement”), among the Company, EBG Holdings LLC, a Delaware
limited liability company (“EBG LLC”), EBG Merger LLC, Astoria Merger LLC, Astoria
Generating Company Holdings, LLC (“Astoria”), ownership of all of the equity interests in
Astoria and EBG LLC, as the surviving entities of certain merger transactions provided for in the
Merger Agreement, (ii) all management agreements and any related fee letters entered into
between the Manager and EBG LLC or any subsidiary of EBG LLC are being terminated, and
(iii) the Company, its stockholders and certain other parties thereto are executing and
delivering an Investor Rights Agreement, dated as of the date hereof (the “Investor Rights
Agreement”);
WHEREAS, pursuant to the Investor Rights Agreement and subject to the terms and conditions
thereof, certain of the stockholders of the Company party thereto have been granted the right to
cause the Company to effect one or more underwritten public offerings of capital stock of the
Company owned by such stockholders (each, a “Secondary Offering”);
WHEREAS, consistent with the Investor Rights Agreement, the Company intends to effect an
underwritten initial public offering of its capital stock (whether as a Secondary Offering or as a
primary offering of shares of the Company for its own account, or any combination thereof),
pursuant to a registration statement in effect under the Securities Act of 1933, as amended (the
“Act”), led by at least one underwriter of nationally recognized standing (an “Initial
Public Offering”); and
WHEREAS, the Company desires that it and its subsidiaries (collectively, the “Company
Group”) receive advisory services from Manager in connection with an Initial Public Offering,
and Manager desires to provide such services to the members of the Company Group, in each case on
the terms and subject to the conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Engagement. The Company hereby engages Manager (on behalf of itself and the other
members of the Company Group) as a consultant, and Manager hereby agrees to provide Consulting
Services (as defined below) to the Company and the other
members of the Company Group on the terms and subject to the conditions set forth below.
2. Scope of Consulting Services. Manager hereby agrees to provide the members of the
Company Group with such advisory services in connection with an Initial Public Offering by the
Company, as may reasonably be requested from time to time by the IPO Committee of the board of
directors of the Company (collectively, the “Consulting Services”), including such
assistance as may be so requested (a) developing and implementing strategy and planning
with respect to the execution of an Initial Public Offering, (b) selecting and working with
underwriters and counsel in connection with an Initial Public Offering and (c) preparing a
registration statement for purposes of registering the capital stock of the Company in connection
with an Initial Public Offering.
3. Compensation; Reimbursement of Expenses.
(a) Compensation for Consulting Services. As compensation for the Consulting
Services, the Company shall pay (or shall cause one or more of its subsidiaries to pay) Manager, on
behalf of the Company Group, a one-time fee in the amount equal to one percent (1.0%) of the
aggregate gross proceeds of an Initial Public Offering (including the proceeds of any shares sold
pursuant to the underwriters’ option to purchase additional shares in connection with such
offering), prior to any underwriting discounts, provided that in no event shall such fee be
less than $3,000,000 (the “Consulting Fee”). Such Consulting Fee shall be payable by the
Company promptly upon the payment of such proceeds to the Company or any selling stockholders, as
the case may be. If, prior to an Initial Public Offering by the Company, any subsidiary of the
Company should effect an Initial Public Offering of its capital stock, the Consulting Fee shall be
due and payable in accordance with this Section 3(a) in the same manner and amount as would have
applied in the event such Initial Public Offering had been consummated by the Company. The
Consulting Fee shall be payable as provided in this Section 3(a) whether or not the Company
requests that Manager provide Consulting Services pursuant to Section 2.
(b) Reimbursement of Expenses. The Company shall reimburse Manager, or shall cause
one or more of its subsidiaries to reimburse Manager, on behalf of itself and the other members of
the Company Group, for such reasonable out-of-pocket expenses (“Expenses”) as may be
incurred by Manager and its subsidiaries and Affiliates and its and their respective employees and
agents in the course or on account of rendering any services requested to be performed by Manager
under this Agreement, including any applicable fees and expenses of any legal, accounting or other
professional advisors to Manager and its subsidiaries and Affiliates; provided that in no
event shall Expenses exceed $50,000 without the prior written consent of the Company. For purposes
of this Agreement, “Affiliate” shall mean, with respect to any person or entity, any other person
or entity directly or indirectly controlling, controlled by or under common control with, such
person or entity. Manager may submit monthly statements of Expenses, together with reasonable
back-up therefor, to the Company or any other such member of the
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Company Group, which statements shall be payable within thirty days after receipt thereof.
4. Continuing Obligation. Upon any conversion, consolidation or merger of the
Company, or any conveyance, transfer or lease of all or substantially all of the assets of the
Company, the entity formed by such conversion or consolidation, or into which the Company is merged
or to which such conveyance, transfer or lease is made (each, a “Successor Entity”), shall
succeed to and be substituted for the Company, as applicable, under this Agreement with the same
effect as if the Successor Entity had been a party hereto. No such conversion, consolidation,
merger, conveyance, transfer or lease shall have the effect of terminating this Agreement or of
releasing the Company or any Successor Entity from its obligations hereunder.
5. Information. The Company will, and will cause each member of the Company Group to,
use its reasonable best efforts to furnish, or to cause their respective subsidiaries and agents to
furnish, Manager with such information (the “Information”) as Manager reasonably believes
appropriate to its engagement hereunder; provided that Manager hereby agrees to keep all
non-public Information confidential and not to use such non-public Information for any purpose
other than the Consulting Services. The Company acknowledges and agrees that (a) Manager
will rely on the Information and on information available from generally recognized public sources
in performing the Consulting Services and (b) Manager does not assume responsibility for
the accuracy or completeness of the Information and such other information.
6. Independent Contractor Status. The parties acknowledge and agree that Manager
shall perform the Consulting Services as an independent contractor, retaining control over and
responsibility for its own operations and personnel and those of its subsidiaries and that Manager
shall be solely responsible for the payment of all income taxes arising from the payment of the
Consulting Fee and shall indemnify and hold harmless the Company Group for any failure to pay such
income taxes. The Company further acknowledges and agrees that Manager may, in its sole
discretion, remove or substitute any of the members of, or add members to, the team of professional
employees of Manager and its subsidiaries and Affiliates that will be providing services pursuant
to this Agreement, and that any such removal, substitution or addition shall not in any way modify
or affect any of the obligations of the Company hereunder, including, without limitation, its
obligation to pay the any fee or reimburse any Expenses. None of Manager and its subsidiaries and
Affiliates and its and their respective employees and agents shall, solely by virtue of this
Agreement or the arrangements hereunder, be considered employees or agents of any member of the
Company Group, nor shall any of them have authority hereunder to contract in the name of or bind
any member of the Company Group, except as expressly agreed to in writing by such member of the
Company Group.
Any duties of Manager arising out of its engagement to perform services hereunder shall be
owed solely to the members of the Company Group.
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7. Indemnification; Limitation on Liability. (a) The Company hereby agrees that
(i) it shall, and shall cause the other members of the Company Group to, indemnify, defend
and hold harmless Manager, their respective Affiliates, successors and assigns and each of the
respective directors, officers, partners, consultants, members, stockholders, employees, agents,
advisors, representatives and controlling persons (within the meaning of the Act) and their
respective successors and assigns (collectively, “Indemnitees”) from and against any and
all claims, obligations, liabilities, causes of action, actions, suits, proceedings,
investigations, judgments, decrees, losses, damages, fees, costs and expenses (including, without
limitation, interest, penalties and fees and disbursements of attorneys, accountants, investment
bankers and other professional advisors) (collectively, the “Obligations”), whether
incurred with respect to third parties or otherwise, in any way resulting from, arising out of or
in connection with, based upon or relating to, the performance of the Consulting Services, except
to the extent that any such Obligation is found in a final judgment by a court having jurisdiction
to have resulted from the gross negligence or willful misconduct of an Indemnitee, (ii) no
Indemnitee shall have any liability of any kind whatsoever (whether direct or indirect, in contract
or tort or otherwise) to the Company or any member of the Company Group or their respective
security holders or creditors with respect to any Obligation in any way resulting from, arising out
of or in connection with, based upon or relating to, the performance of the Consulting Services,
except to the extent that any such Obligation is found in a final judgment by a court having
jurisdiction to have resulted from the gross negligence or willful misconduct of an Indemnitee, and
(iii) the rights of each Indemnitee to be indemnified under this Agreement are independent
of and in addition to any rights of such Indemnitee under any other agreement, document,
certificate or instrument or applicable law.
(b) The Company shall, or shall cause another member of the Company Group to, advance costs
and expenses, including attorneys’ fees, incurred by Manager (acting on its own behalf or, if
requested by any such Indemnitee other than itself, on behalf of such Indemnitee) or any Indemnitee
in defending any claim relating to any Obligation in advance of the final disposition of such claim
within 30 days of receipt from Manager of (i) a notice setting forth the amount of such
costs and expenses (a “Payment Notice”) and (ii) an undertaking by or on behalf of
Manager or such Indemnitee to repay amounts so advanced if it shall ultimately be determined that
Manager or such Indemnitee is not entitled to be indemnified by the Company as authorized by this
Agreement. Manager may submit Payment Notices to the Company monthly.
(c) If for any reason the indemnity specifically provided for in this Section 7 is unavailable
or is insufficient to hold harmless any Indemnitee from any of the Obligations covered by such
indemnity, then the Company, shall, or shall cause the
other members of the Company Group to, contribute to the amount paid or payable by such
Indemnitee as a result of such Obligation in such proportion as is appropriate to reflect the
relative benefit of each member of the Company Group and its stockholders, on the one hand, and
such Indemnitee, on the other, in connection with any Initial Public Offering or, if no Initial
Public
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Offering is consummated, the state of facts giving rise to such Obligation, and, if required by
applicable law, any other relevant equitable considerations.
8. Entire Agreement; No Representations or Warranties. This Agreement (a)
contains the complete and entire understanding and agreement between Manager and the Company with
respect to the subject matter hereof and (b) supersedes all prior and contemporaneous
understandings, conditions and agreements, whether written or oral, express or implied, in respect
of the subject matter hereof. The parties acknowledges and agree that the other party makes no
representations or warranties in connection with this Agreement, including in the case of the
Manager, in connection with its provision of the Consulting Services. The Company agrees that any
acknowledgment or agreement made by the Company in this Agreement is made on behalf of itself and
the other members of the Company Group.
9. Counterparts; Amendments and Waivers. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original and which together shall constitute one
agreement. This Agreement may not be amended, restated, supplemented or otherwise modified, and no
provision of this Agreement may be waived, other than in a writing duly executed by the parties
hereto.
10. Binding Effect; Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective successors and assigns;
provided, that (a) neither this Agreement nor any right, interest or obligation
hereunder may be assigned by either party, whether by operation of law or otherwise, without the
express written consent of the other party hereto and (b) any assignment by Manager of its
rights but not the obligations under this Agreement to any entity directly or indirectly
controlling, controlled by or under common control with Manager shall be expressly permitted
hereunder and shall not require the prior written consent of the Company. This Agreement is not
intended to confer any right or remedy hereunder upon any person or entity other than the parties
to this Agreement and their respective successors and assigns.
11. Governing Law; Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT SUCH PRINCIPLES WOULD REQUIRE
OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. Each of the parties hereto
irrevocably and unconditionally (a) agrees that any legal suit, action or proceeding
brought by any party hereto arising out of or based upon this Agreement or the transactions
contemplated
hereby may be brought in any court of the State of New York or Federal District Court for the
Southern District of New York located in the City, County and State of New York (each, a “New
York Court”), (b) waives, to the fullest extent that it may effectively do so, any
objection that it may now or hereafter have to the laying of venue of any such
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proceeding brought in a New York Court, and any claim that any such action or proceeding brought in
a New York Court has been brought in an inconvenient forum, (c) submits to the
non-exclusive jurisdiction of any New York Court in any suit, action or proceeding and (d)
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE HEREBY WAIVES ANY RIGHT THAT SUCH PARTY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT. With respect
to clause (d) of the immediately preceding sentence, each of the parties hereto acknowledges and
certifies that (i) no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of litigation, seek to
enforce the waiver contained therein, (ii) it understands and has considered the
implications of such waiver, (iii) it makes such waiver voluntarily and (iv) it has
been induced to enter into this Agreement by, among other things, the mutual waivers and
certifications contained in this Section 11.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above
written.
| US POWER GENERATING COMPANY | ||||
| By: | /s/ Xxxx Sudbex | |||
| Name: Xxxx Sudbex | ||||
| Title: President & COO | ||||
| K ROAD BG MANAGEMENT, LLC | ||||
| By: | /s/ Xxxxxxx Xxxxxxx | |||
| Name: Xxxxxxx Xxxxxxx | ||||
| Title: CEO | ||||
Signature Page to Consulting Agreement
