PPA TRANSFER AGREEMENT
This PPA TRANSFER AGREEMENT ("Agreement") is dated as of August 5, 1997
and is made by and between NEW ENGLAND POWER COMPANY, a Massachusetts
corporation ("NEP"), and USGEN ACQUISITION CORPORATION, a Delaware corporation
("Asset Purchaser"). This Agreement sets forth the terms and conditions under
which NEP will transfer to Asset Purchaser the economic benefits and
performance obligations, subject to NEP's continuing obligations to make
certain payments, associated with certain Power Purchase Agreements between
NEP and third party power suppliers (the "Power Sellers") that NEP and Asset
Purchaser desire to be transferred concurrently with the sale of NEP's
generation business to Asset Purchaser pursuant to the Asset Purchase
Agreement, dated as of August 5, 1997 (the "APA"), by and among NEP, The
Narragansett Electric Company and Asset Purchaser.
1. The following Power Purchase Agreements (each, as amended or
supplemented, a "Commitment") are incorporated into this Agreement by
reference:
Doc.
No. Party Date
--- ----- ----
2076 Ocean State Power 5/14/86*
0000 Xxxxx Xxxxx Power II 6/15/88*
2068 Altresco Pittsfield, L.P. 12/9/87*
2071 Milford Power L.P. 4/24/96
2072 Pawtucket Power Associates L.P. 12/14/87*
2062 Xxxxx Haverhill Associates 12/30/85*
2065 SES Millbury Company, L.P. 12/17/85
2063 Massachusetts Refusetech, Inc. 1/6/81*
2064 Refuse Energy Systems Company 1/1/6
2075 L'Energia L.P. 2/26/91
2058 Xxxxxxxx Hydroelectric Associates 1/1/85
0000 Xxxxxxxxx Xxxxxxxxxx Power Partners, L.P. 11/6/87*
2060 Pontook Hydro L.P. 1/26/85
2102 Waste Management of New Hampshire, Inc. 5/20/91*
2067 Suncook Energy Corporation 9/7/94*
2059 Mascoma Hydro Corporation 11/14/86
2066 Phillip's Energy, Inc. 9/7/94*
0000 Xxxxxxxxxxxxx Xxxxx Resources Authority 9/21/95
2069 Xxxxx University 2/12/82*
2070 Xxxxx University 2/12/82*
2078 General Electric Xxxx River Works 7/7/92
2079 Refuse Fuels Associates 6/12/80*
2080 Xxxxxxx Paper 1/1/85
2074 Canal I 12/1/65*
2035 HydroQuebec Phase II 10/14/85
2033 HydroQuebec Phase I 3/21/83
2103 Connecticut Light & Power 1/4/89*
2592 Cambridge Electric Light Company,
Commonwealth Electric Light Company 7/3/93*
* Indicates agreement has been amended or supplemented.
A Commitment shall be automatically deleted from the above Commitment
list without further action by the parties: (i) on the effective date of
any Novation (as defined in Section 7, below), (ii) upon the expiration
of a Commitment pursuant to its terms, or (iii) upon the termination of
a Commitment pursuant to the written agreement of the parties thereto.
2. This Agreement shall become effective on the Effective Date (as defined
in Section 13) and shall remain in effect until Asset Purchaser has made
payment to NEP of amounts owed pursuant to Section 4(a), below, and NEP
has made payment to Asset Purchaser and/or the Power Sellers of amounts
owed pursuant to Sections 3, 4(b) and 8, below, for the last month in
which a Commitment is listed on the Section 1 Commitment list; provided
however that the provisions of Section 8 of this Agreement shall survive
until NEP has paid all amounts due thereunder.
3. Commencing as of the Effective Date, NEP agrees to provide to Asset
Purchaser all electric capacity, energy and any other benefits it
receives under each Commitment listed on the Section 1 Commitment list
as of the first day of the month simultaneously with NEP's receipt
thereof from each Power Seller. All electric energy shall be delivered
to Asset Purchaser at the point at which the Power Seller makes delivery
to NEP as established under the Commitment. Asset Purchaser shall be
responsible for making all arrangements necessary for the further
transmission of such energy. NEP shall, however, promptly reimburse
Asset Purchaser for all costs actually and reasonably incurred by Asset
Purchaser in transmitting such energy from such delivery points to the
NEPOOL Pool Transmission Facility system either pursuant to this Section
3 or pursuant to a Commitment which has been amended and assigned
pursuant to Section 7, provided that NEP shall not be responsible for an
increase in such cost attributable to any amendment to a Commitment by
the Asset Purchaser.
4. (a) Commencing as of the month following the Effective Date, Asset
Purchaser agrees to pay to NEP each month all amounts properly due from
NEP to the Power Seller for the preceding month associated with
capacity, energy and any other benefits made available to NEP by the
Power Seller and accordingly by NEP to it from each Commitment listed on
the preceding month's Section 1 Commitment list, less the amount of
NEP's Monthly Payment Obligation specified in Section 8 below. For
purposes of the first monthly payment due from Asset Purchaser to NEP
under this Agreement in connection with each Commitment, energy payments
shall be based on meter readings taken on the first day for which Asset
Purchaser has a payment obligation under this Agreement and capacity
payments shall be based on the ratio of the number of days in the month
for which Asset Purchaser has a payment obligation under this Agreement
to the total number of days in the month. Asset Purchaser shall make
such payment sufficiently in advance of the time that such payment is
due by NEP to the Power Seller as to allow NEP to make timely payment
under such Commitment. In turn, each month NEP agrees to timely pay
each Power Seller all amounts due under each Commitment, which includes
the amount NEP receives from Asset Purchaser in connection with such
Commitment and the amount of NEP's payment obligation specified in
Section 8 below.
(b) Upon the Effective Date, NEP shall irrevocably and unconditionally
assign and thereafter hold for the benefit of and/or credit to Asset
Purchaser against payments due from it to NEP under Section 4(a) hereof
or at the termination of this Agreement pay to Asset Purchaser any and
all amounts which are then or thereafter received by NEP from the Power
Sellers under the Commitments, including, without limitation, any
aggregate differential balances under any Commitment and the benefit of
and proceeds from any security deposits, letters of credit or other
similar instruments or accounts established for the benefit of NEP by
the Power Seller, but excluding any credits or refunds received by NEP
after the Effective Date which relate to billing errors or
reconciliations of pre-Effective Date bills, and any amounts paid by the
Power Sellers to NEP with respect to disputes arising before the
Effective Date that are attributable to a period prior to the Effective
Date.
5. (a) Effective as of the Effective Date, NEP hereby irrevocably and
unconditionally appoints Asset Purchaser as its representative and agent
for all purposes under each Commitment. Asset Purchaser is hereby
authorized to take all actions that NEP may lawfully take under the
Commitment without further approval by NEP, including, without
limitation, the following: with respect to all matters arising under
the Commitments, deal directly with the Power Sellers, the New England
Power Pool ("NEPOOL"), the Independent System Operator (as designated
under the Restated NEPOOL Agreement as filed with the Federal Energy
Regulatory Commission on December 31, 1996, and as amended from time to
time), other transporters of electric energy, federal, state and local
governmental authorities, and any other persons; act on NEP's behalf in
the prosecution or defense, as the case may be, of any rights or
liabilities arising under the Commitments; monitor the Power Sellers'
performance under the Commitments; review and audit all bills and
related documentation rendered by the Power Sellers; and on NEP's behalf
enter into amendments to the Commitments of any nature; provided,
however Asset Purchaser shall not amend any Commitment with respect to
any of NEP's interconnection rights and obligations, or extend the term
thereof or increase NEP's obligations thereunder without NEP's consent,
which shall not be unreasonably withheld. Asset Purchaser shall have
the right to delegate to its affiliates or third parties any of its
responsibilities under this Section 5. NEP hereby agrees to provide and
deliver to Asset Purchaser all information which NEP now has or
hereafter acquires or to which it is entitled with respect to each
Commitment and Asset Purchaser hereby agrees to be subject to any
confidentiality provisions of such Commitment with respect to such
information. NEP also agrees to participate at Asset Purchaser's
request and under Asset Purchaser's direction in any governmental
proceeding with respect to the Commitments or this Agreement.
(b) NEP agrees not to agree to any amendment to or waiver of rights
under a Commitment without Asset Purchaser's consent, which Asset
Purchaser may grant or withhold in its sole discretion, and will not
take any actions inconsistent with the provisions of this Section 5.
6. (a) NEP will indemnify, defend and hold harmless the Asset Purchaser
from and against any and all claims, demands or suits (by any person),
losses, liabilities, damages (excluding consequential or special
damages), obligations, payments, costs and expenses (including, without
limitation, the costs and expenses of any and all actions, suits,
proceedings, assessments, judgments, settlements, and compromises
relating thereto and reasonable attorneys' fees and reasonable
disbursements in connection therewith) to the extent the foregoing are
not covered by insurance (each, an "Indemnifiable Loss"), asserted
against or suffered by Asset Purchaser relating to, resulting from or
arising out of any relationship or payment obligation of NEP resulting
from or contained in this Agreement or any obligation of NEP for any
acts or omissions under the Commitments incurred prior to the Effective
Date. For purposes hereof, any willful or negligent failure of NEP to
perform any act required to be performed by it under a Commitment which
increases the amounts payable by Asset Purchaser under Section 4(a)
hereof shall be an Indemnifiable Loss for which Asset Purchaser shall be
entitled to indemnification hereunder.
(b) Asset Purchaser will indemnify, defend and hold harmless NEP from
and against any and all Indemnifiable Losses asserted against or
suffered by NEP relating to, resulting from or arising out of any
relationship or payment obligation of Asset Purchaser resulting from or
contained in this Agreement. For purposes hereof, NEP's costs incurred
in administering the Commitments and performing its obligations under
this Agreement shall not be an Indemnifiable Loss.
(c) Any person entitled to receive indemnification under this Agreement
(an "Indemnitee") having a claim under these indemnification provisions
shall make a good faith effort to recover all losses, damages, costs and
expenses from insurers of such Indemnitee under applicable insurance
policies so as to reduce the amount of any Indemnifiable Loss hereunder.
The amount of any Indemnifiable Loss shall be reduced (i) to the extent
that Indemnitee receives any insurance proceeds with respect to an
Indemnifiable Loss and (ii) to take into account any net Tax benefit
recognized by the Indemnitee arising from the recognition of the
Indemnifiable Loss and any payment actually received with respect to an
Indemnifiable Loss.
(d) The expiration, termination or extinguishment of any covenant or
agreement shall not affect the parties' obligations under this Section 6
if the Indemnitee provided the person required to provide
indemnification under this Agreement (the "Indemnifying Party") with
proper notice of the claim or event for which indemnification is sought
prior to such expiration, termination or extinguishment.
(e) The rights and remedies of NEP and Asset Purchaser under this
Section 6 are exclusive and in lieu of any and all other rights and
remedies which NEP and Asset Purchaser may have under this Agreement or
otherwise for monetary relief with respect to any relationship or
payment obligation resulting from this Agreement.
(f) NEP and Asset Purchaser each agree that, notwithstanding any
provisions in this Agreement to the contrary, all parties to this
Agreement retain their remedies at law or in equity with respect to
willful or intentional breaches of this Agreement.
(g) If any Indemnitee receives notice of the assertion of any claim or
of the commencement of any claim, action, or proceeding made or brought
by any person who is not a party to this Agreement or any affiliate of a
party to this Agreement (a "Third Party Claim") with respect to which
indemnification is to be sought from an Indemnifying Party, the
Indemnitee will give such Indemnifying Party reasonably prompt written
notice thereof, but in any event not later than ten (10) calendar days
after the Indemnitee's receipt of notice of such Third Party Claim.
Such notice shall describe the nature of the Third Party Claim in
reasonable detail and will indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained
by the Indemnitee. The Indemnifying Party will have the right to
participate in or, by giving written notice to the Indemnitee, to elect
to assume the defense of any Third Party Claim at such Indemnifying
Party's own expense and by such Indemnifying Party's own counsel, and
the Indemnitee will cooperate in good faith in such defense at such
Indemnitee's own expense.
(h) If within ten (10) calendar days after an Indemnitee provides
written notice to the Indemnifying Party of any Third Party Claim the
Indemnitee receives written notice from the Indemnifying Party that such
Indemnifying Party has elected to assume the defense of such Third Party
Claim as provided in the last sentence of clause (g), the Indemnifying
Party will not be liable for any legal expenses subsequently incurred by
the Indemnitee in connection with the defense thereof; provided,
however, that if the Indemnifying Party fails to take reasonable steps
necessary to defend diligently such Third Party Claim within twenty (20)
calendar days after receiving notice from the Indemnitee that the
Indemnitee believes the Indemnifying Party has failed to take such
steps, the Indemnitee may assume its own defense, and the Indemnifying
Party will be liable for all reasonable expenses thereof. Without the
prior written consent of the Indemnitee, the Indemnifying Party will not
enter into any settlement of any Third Party Claim which would lead to
liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder. If a firm offer is made to settle a Third Party Claim
without leading to liability or the creation of a financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder and the Indemnifying Party desires
to accept and agree to such offer, the Indemnifying Party will give
written notice to the Indemnitee to that effect. If the Indemnitee
fails to consent to such firm offer within ten (10) calendar days after
its receipt of such notice, the Indemnitee may continue to contest or
defend such Third Party Claim and, in such event, the maximum liability
of the Indemnifying Party as to such Third Party Claim will be the
amount of such settlement offer, plus reasonable costs and expenses paid
or incurred by the Indemnitee up to the date of such notice.
(i) Any claim by an Indemnitee on account of an Indemnifiable Loss which
does not result from a Third Party Claim (a "Direct Claim") will be
asserted by giving the Indemnifying Party reasonably prompt written
notice thereof, stating the nature of such claim in reasonable detail
and indicating the estimated amount, if practicable, but in any event
not later than ten (10) calendar days after the Indemnitee becomes aware
of such Direct Claim, and the Indemnifying Party will have a period of
thirty (30) calendar days within which to respond to such Direct Claim.
If the Indemnifying Party does not respond within such thirty (30)
calendar day period, the Indemnifying Party will be deemed to have
accepted such claim. If the Indemnifying Party rejects such claim, the
Indemnitee will be free to seek enforcement of its rights to
indemnification under this Agreement.
(j) If the amount of any Indemnifiable Loss, at any time subsequent to
the making of an indemnity payment in respect thereof, is reduced by
recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by
or against any other entity, the amount of such reduction, less any
costs, expenses or premiums incurred in connection therewith (together
with interest thereon from the date of payment thereof at the prime rate
then in effect of the Bank of Boston), will promptly be repaid by the
Indemnitee to the Indemnifying Party. Upon making any indemnity
payment, the Indemnifying Party will, to the extent of such indemnity
payment, be subrogated to all rights of the Indemnitee against any third
party in respect of the Indemnifiable Loss to which the indemnity
payment relates; provided, however, that (i) the Indemnifying Party will
then be in compliance with its obligations under this Agreement in
respect of such Indemnifiable Loss and (ii) until the Indemnitee
recovers full payment of its Indemnifiable Loss, any and all claims of
the Indemnifying Party against any such third party on account of said
indemnity payment is hereby made expressly subordinated and subjected in
right of payment to the Indemnitee's rights against such third party.
Without limiting the generality or effect of any other provision hereof,
each such Indemnitee and Indemnifying Party will duly execute upon
request all instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights, and otherwise
cooperate in the prosecution of such claims at the direction of the
Indemnifying Party. Nothing in this clause (j) shall be construed to
require any party hereto to obtain or maintain any insurance coverage.
(k) A failure to give timely notice as provided herein will not affect
the rights or obligations of any party hereunder except if, and only to
the extent that, as a result of such failure, the party which was
entitled to receive such notice was actually prejudiced as a result of
such failure.
7. NEP and Asset Purchaser agree to work cooperatively and use all
reasonable efforts to amend each Commitment and assign each such amended
Commitment to Asset Purchaser so that NEP will be released of all
further liabilities and obligations under the Commitment and Asset
Purchaser will be directly in contract with the Power Seller (a
"Novation"). Any such Novation shall include all modifications
necessary to reflect the substitution of Asset Purchaser for NEP as the
purchasing party under the Commitment (including modifications to
Commitment price indices, where appropriate) and to properly describe
interconnection, delivery point and transmission system references and
obligations in the Commitment. The provisions of Section 8(d) shall
apply to all such Novations. It is intended by the parties that all
such Novations preserve the economic benefit and other rights of the
Commitment to the Asset Purchaser without increasing the Asset
Purchaser's obligations under the Commitment while continuing to afford
to NEP the protections for its transmission system embodied in the
interconnection provisions of the Commitment; provided however that
nothing contained herein is intended to limit the ability of Asset
Purchaser to direct the availability, dispatch, quantity or timing of
the capacity or electrical output of a plant, facility or system which
is the subject of a Commitment, subject to the current terms of such
Commitment. NEP and Asset Purchaser agree to execute all agreements and
documents reasonably required by the other in connection with all such
Novations.
8. (a) In the month in which the Effective Date occurs, NEP shall be
obligated to pay the Power Sellers an aggregate amount equal to (i) the
Monthly Payment Obligation (as defined in 8(d)(1) below), as adjusted in
accordance with Section 8(d)(4) below, multiplied by (ii) a fraction,
the numerator of which is the total number of days in the month in which
the Effective Date occurs, less the number of days in such month up to
the Effective Date, and the denominator of which is the total number of
days in the month in which the Effective Date occurs, and such adjusted
amount shall be deducted by Asset Purchaser from the amount due NEP
under Section 4 above for such month.
(b) Commencing as of the month following the Effective Date and
continuing for each succeeding month through and including January 2008,
NEP shall be obligated to pay the Power Sellers each month an aggregate
amount equal to the Monthly Payment Obligation, as adjusted in
accordance with Section 8(c) and Section 8(d)(4) below, and such
adjusted amount shall be deducted by Asset Purchaser from the amount due
NEP under Section 4 above.
(c) In the event that the amount of NEP's Monthly Payment Obligation set
forth in Section 8(b) (as adjusted to reflect any increases pursuant to
this Section 8(c)) shall in any month exceed the amount due NEP from
Asset Purchaser under Section 4, NEP shall increase the amount of its
obligation in the next month (in addition to its obligation set forth in
Section 8(b)) by the amount of such excess plus interest thereon at the
Applicable Discount Rate (as defined in Section 8(d)(3)) from the date
payment from Asset Purchaser for such month would have been due to the
date of the next payment by Asset Purchaser under Section 4 (the "Excess
Obligation") and Asset Purchaser shall also be allowed to deduct such
Excess Obligation from the amount due NEP under Section 4 for such
month. Should there be an Excess Obligation as of January 31, 2008, NEP
shall within thirty days thereafter pay at the direction of Asset
Purchaser the amount of such Excess Obligation.
(d) To the extent that a "Trigger Event" (as hereinafter defined) shall
occur with respect to any Commitment, NEP will, with the consent of
Asset Purchaser, make a full or a partial lump-sum payment ("Trigger
Payment") to the appropriate Power Seller or such other party as the
Asset Purchaser may direct, as the case may be. Subject to subsection
(6) below, Trigger Payments shall, unless otherwise agreed to by Asset
Purchaser, be made concurrently with the Trigger Event, or as soon
thereafter as is practicable (but not later than the later of (x) sixty
(60) days thereafter and (y) one hundred twenty (120) days after
reasonable notice was given by Asset Purchaser that a Trigger Event was
likely to occur) ("Trigger Payment Date").
(1) NEP's monthly payment obligations under Sections 8(a) and
(b) above, and before adjustment in accordance with subsection (5)
below, are detailed on Schedule B hereto ("Monthly Payment
Obligation"). For each Commitment, and for each year from 1998
through 2007, a corresponding percentage of the Monthly Payment
Obligation is set forth on Schedule A hereto (the "Applicable
Percentage").
(2) "Trigger Event" shall mean: (i) a Novation; (ii) a
termination of a Commitment; (iii) a negotiated modification of a
Commitment under which the obligations of NEP are reduced; or
(iv) a legislative, regulatory or court-ordered change in the
terms of a Commitment under which the obligations of NEP are
reduced; provided, however, that if at the time any one of the
events specified in (i), (ii), or (iii) above shall occur, Asset
Purchaser shall be in default with respect to indemnification as
to its payment obligations under Section 6(b) hereof, no Trigger
Event shall be deemed to have arisen from any such event unless
and until such default shall have been cured.
(3) The amount of any Trigger Payment (i) if in respect of a
Trigger Event listed in subsection (2)(i) or (ii) above, shall,
except as otherwise approved by Asset Purchaser, be the discounted
amount as of the Trigger Payment Date (using as the discount rate
a percentage equal to the sum of (x) the yield reported on page
PX1 of the Bloomberg Financial Market Services Screen (or, if not
available, any other nationally recognized trading screen
reporting on-line intraday trading in United States government
securities) at 4:00 p.m. (New York time) on the day prior to the
Trigger Payment Date for the off-the-run 5-year Treasury Note plus
(y).50% (the "Applicable Discount Rate")) of (A) NEP's remaining
Monthly Payment Obligations as of the Trigger Payment Date
multiplied by (B) the Commitment's Applicable Percentage for the
year in which the Trigger Payment Date occurs, and (ii) if in
respect of a Trigger Event listed in subsection (2)(iii) or (iv)
above, shall, except as otherwise approved by Asset Purchaser,
equal (x) the amount calculated under clause (i) above multiplied
by (y) a fraction (but in no event less than zero nor greater than
one (1)) calculated by mutual agreement in accordance with the
following sentence (the "Reduction Factor"). The parties shall
mutually agree to a Reduction Factor for each applicable Trigger
Event that represents the proportion by which the discounted
present value, using the Applicable Discount Rate, of the
projected costs under the affected Commitment minus $.032 per kWh
(as adjusted to be held constant in 1998 dollars using the
Consumer Price Index), has been reduced as a result of such
Trigger Event. Any controversy in connection with the calculation
of the Reduction Factor shall be determined and settled by
arbitration in New York, New York, by a person or persons mutually
agreed upon, or in the event of a disagreement as to the selection
of the arbitrator or arbitrators, in accordance with the rules of
the American Arbitration Association. Any award rendered therein
shall specify the findings of fact of the arbitrator or
arbitrators and the reasons for such award, with the reference to
and reliance on relevant law. Any such award shall be final and
binding on each and all of the parties thereto and their personal
representatives, and judgment may be entered thereon in any court
having jurisdiction thereof and the fees of such arbitrators in
connection with the determination shall be paid by the party
against whom the award was made, or if a compromise was made,
shared equally.
(4) Upon the making of any such Trigger Payment, except as
otherwise agreed to by Asset Purchaser, the amounts thereafter
payable in accordance with Section 8(a) or Section 8(b) shall be
reduced by the sum of (i) the reductions arising under this
subsection (4) from all previous Trigger Payments made by NEP plus
(ii)(x) in the case of a Trigger Payment made under Section
8(d)(4)(i), by an amount equal to (A) the Applicable Percentage
used in calculating such Trigger Payment multiplied by (B) the
Monthly Payment Obligation and (y) in the case of a Trigger
Payment made under Section 8(d)(4)(ii), by an amount equal to (A)
the Applicable Percentage used in calculating such Trigger Payment
multiplied by (B) the Monthly Payment Obligation multiplied by (C)
the Reduction Factor.
(5) Notwithstanding the foregoing, NEP's obligation to make any
Trigger Payment shall, at the option of NEP, be deferred, in whole
or in part, pending satisfaction of the following conditions:
(i) NEP shall be reasonably satisfied that the full amount of such
Trigger Payment will be currently deductible for Federal and state
income tax purposes and that such deduction shall be fully
utilized in its Federal and state tax returns and (ii) NEP shall
have received approval from all necessary regulatory authorities
for any financing that NEP reasonably requires in order to fund
such Trigger Payment. NEP shall use reasonable efforts to obtain
and maintain, from all regulatory authorities having jurisdiction,
approvals for the issuance of up to $100,000,000 in long-term
securities for the purpose of funding Trigger Payments.
(6) If NEP shall elect to defer making a Trigger Payment
pursuant to subsection (5) above, then not later than the date
that such Trigger Payment is otherwise due, NEP will grant a first
priority, perfected security interest to Asset Purchaser in such
portion of NEP's Contract Termination Charge revenues and related
Service Agreements (the "CTCs") with Massachusetts Electric
Company ("MECO") and The Narragansett Electric Company ("NECO") as
is equal to the amount by which each Monthly Payment Obligation
would be reduced pursuant to subsection (4) above had the Trigger
Payment not been deferred. Such security interest shall be
granted pursuant to a duly executed security agreement in form and
substance reasonably satisfactory to Asset Purchaser, and shall
provide that proceeds of the collateral shall be assigned to Asset
Purchaser and paid by MECO and NECO to Asset Purchaser or as
otherwise directed by Asset Purchaser; provided, however, that
unless and until there shall occur an event of default under such
security agreement, the Asset Purchaser will waive its right to
receive proceeds directly from MECO and NECO pursuant to such
assignment. Further, NEP shall not be permitted to exercise its
election under subsection (5) unless the granting of the security
interest contemplated in this subsection (6) and the assignment of
proceeds in connection therewith shall be consented to by MECO and
NECO.
(7) During the term of this Agreement, NEP shall not grant,
permit or suffer to exist any encumbrance, pledge, security
interest, assignment, lien or other disposition of its rights to
such portion of the CTCs referred to in subsection (7) above as is
sufficient at all times to cover NEP's then remaining aggregate
Monthly Payment Obligations and will at its sole expense take all
actions required to remove and/or defend against any claim or
encumbrance that may be created or asserted by any other party
thereon.
(8) Asset Purchaser shall release any security interest granted
hereunder with respect to any Trigger Payment if: (a) NEP has
provided Asset Purchaser with a letter of credit, collateral or
other security in substitution for, and replacement of, the
collateral referred to in Section 8(d)(6) which shall be at least
equivalent in value to the security represented by such collateral
as agreed between NEP and the Asset Purchaser, in the exercise of
by each of its reasonable commercial judgment, or (b) NEP has paid
Asset Purchaser the present value of the remaining security, using
the Applicable Discount Rate applied in calculating the related
deferred Trigger Payment.
9. This Agreement and all rights, obligations, and performances of the
parties hereunder, are subject to all applicable Federal and state laws,
and to all duly promulgated orders and other duly authorized action of
governmental authority having jurisdiction.
10. Except as otherwise set forth in Section 5 hereof, this Agreement and
all of the provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party
hereto, including by operation of law without the prior written consent
of the other party, nor is this Agreement intended to confer upon any
other person except the parties hereto any rights or remedies hereunder.
Notwithstanding the foregoing, (i) the Asset Purchaser may assign all of
its rights and obligations hereunder to any wholly owned Subsidiary
(direct or indirect) of PG&E Corporation and upon NEP's receipt of
notice from Asset Purchaser of any such assignment, the Asset Purchaser
will be released from all liabilities and obligations hereunder, accrued
and unaccrued, such assignee will be deemed to have assumed, ratified,
agreed to be bound by and perform all such liabilities and obligations,
and all references herein to Asset Purchaser shall thereafter be deemed
references to such assignee, in each case without the necessity for
further act or evidence by the parties hereto or such assignee;
provided, however, that no such assignment and assumption shall release
the Asset Purchaser from its liabilities and obligations hereunder
unless the assignee shall have acquired all or substantially all of the
Asset Purchaser's assets; provided, further, however, that no such
assignment and assumption shall relieve or in any way discharge PG&E
Corporation from the performance of its duties and obligations under the
Guaranty dated as of the date of this Agreement executed by PG&E
Corporation for the purpose of financing or refinancing the Purchased
Assets (as defined in the APA); and (ii) the Asset Purchaser or its
permitted assignee may assign, transfer, pledge or otherwise dispose of
its rights and interests hereunder to a trustee or lending
institution(s) for the purpose of financing or refinancing the Purchased
Assets (as defined in the APA), including upon or pursuant to the
exercise of remedies under a financing or refinancing, or by way of
assignments, transfers, conveyances or dispositions in lieu thereof;
provided, however, that no such assignment or disposition shall relieve
or in any way discharge the Asset Purchaser or such assignee from the
performance of its duties and obligations under this Agreement. NEP
agrees to execute and deliver such documents as may be reasonably
necessary to accomplish any such assignment, transfer, conveyance,
pledge or disposition of rights hereunder so long as NEP's rights under
this Agreement are not thereby altered, amended, diminished or otherwise
impaired.
11. This Agreement, the APA and any other agreement entered into by the
parties pursuant to the APA constitute the entire agreement between the
parties and supersede all previous offers, negotiations, discussions,
communications and correspondence. This Agreement may be amended only
by a written agreement signed by the parties. This Agreement is not
intended to confer upon any other person (including, without limitation,
the Power Sellers) except the parties hereto any rights or remedies.
The interpretation and performance of this Agreement shall be according
to and controlled by the laws of The Commonwealth of Massachusetts
(regardless of the laws that might otherwise govern under applicable
Massachusetts principles of conflicts of laws).
12. All payments required under this Agreement shall be paid in cash by
federal or other wire transfer of immediately available funds to an
account designated by the party to receive such payment.
13. This Agreement shall be of no force and effect until the Effective Date.
If the APA shall have been terminated before the occurrence of the
Closing Date (as defined in the APA), this Agreement shall, without any
action of the parties hereto, terminate as of the time of the
termination of the APA. As used in this Agreement, "Effective Date"
shall mean the Closing Date (as defined in the APA).
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement on their behalf as of the date first
above written.
NEW ENGLAND POWER COMPANY
By:
Name:
Title:
USGEN ACQUISITION CORPORATION
By:
Name:
Title:
