QUEBEC INTERCONNECTION TRANSFER AGREEMENT
WHEREAS, NEW ENGLAND POWER COMPANY, a Massachusetts corporation ("NEP"),
and USGEN NEW ENGLAND, INC., a Delaware corporation ("Asset Purchaser"), along
with The Narragansett Electric Company, are parties to an Asset Purchase
Agreement, dated August 5, 1997; and
WHEREAS, under section 2.3(a)(i) of the Asset Purchase Agreement, Asset
Purchaser has agreed to assume NEP's rights and obligations under certain
contracts associated with the purchase of energy from Hydro-Quebec, a Canadian
utility, and the support and use of the HVDC interconnection
("Interconnection") between Hydro-Quebec, a Canadian utility, and the New
England Power Pool ("NEPOOL"); and
WHEREAS the respective rights and obligations of Hydro-Quebec and
certain members of NEPOOL collectively regarding the Interconnection are set
forth in the Interconnection Agreement between Hydro-Quebec and NEPOOL, dated
March 21, 1983, and the Energy Banking Agreement between Hydro-Quebec, NEPOOL,
New England Electric Transmission Company, and Vermont Electric Transmission
Company, dated March 21, 1983; and
WHEREAS Asset Purchaser intends to become a member of NEPOOL, and as
such will enjoy the rights and undertake the obligations of NEPOOL members
under the Interconnection Agreement, pursuant to section 15.3 thereof, and
under the Energy Banking Agreement, under section 12.3 thereof; and
WHEREAS, under the PPA Transfer Agreement (an agreement between NEP and
Asset Purchaser transferring to Asset Purchaser NEP's rights and obligations
under specified power purchase agreements) dated August 5, 1997, NEP has
transferred to Asset Purchaser NEP's rights and obligations under the Energy
Contract, an agreement between Hydro Quebec and NEPOOL dated March 21, 1983,
and the Firm Energy Contract, an agreement between Hydro Quebec and 37 NEPOOL
participants dated October 14, 1985; and
WHEREAS the respective rights and obligations of NEPOOL members among
themselves and of NEP with respect to Hydro-Quebec with respect to the
Interconnection are set forth in, inter alia, the following agreements (each,
as amended, supplemented, or restated, a "Commitment"):
Agreement with Respect to Use of the Quebec Interconnection, dated
December 1, 1981, as amended and restated as of September 1, 1985, and
as further amended and restated as of November 19, 1997, and as further
amended as of April 8, 1998 ("Use Agreement");
Phase I Vermont Transmission Line Support Agreement, dated December 1,
1981, as amended on June 1, 1982, November 1, 1982, and January 1, 1986;
Phase I Terminal Facility Support Agreement, dated December 1, 1981, as
amended June 1, 1982, November 1, 1982 and January 1, 1986.
Phase II Boston Edison AC Facilities Support Agreement, dated June 1,
1985, as amended May 1, 1986, February 1, 1987, June 1, 1987, September
1, 1987, and August 1, 1988;
Phase II New England Power AC Facilities Support Agreement, dated June
1, 1985, as amended May 1, 1986, February 1, 1987, June 1, 1987,
September 1, 1987, and August 1, 1988 ("NEP Facilities Support
Agreement");
Phase II Massachusetts Transmission Facilities Support Agreement, dated
June 1, 1985, as amended May 1, 1986, February 1, 1987, June 1, 1987,
September 1, 1987, October 1, 1987, August 1, 1988, and January 1, 1989;
and
Phase II New Hampshire Transmission Facilities Support Agreement, dated
June 1, 1985, as amended May 1, 1986, February 1, 1987, June 1, 1987,
September 1, 1987, October 1, 1987, August 1, 1988, January 1, 1989, and
January 1, 1990; and
NEP/Hydro-Quebec Interconnection Agreement dated as of December 19,
1996.
WHEREAS, it is the intention of NEP and Asset Purchaser hereby to enter
into an agreement to fulfil the commitment of section 2.3(a)(i) of the Asset
Purchase Agreement;
NOW THEREFORE, this QUEBEC INTERCONNECTION TRANSFER AGREEMENT
("Agreement") is dated as of September 1, 1998, and is made by and between NEP
and Asset Purchaser. This Agreement sets forth the terms and conditions under
which NEP will transfer to Asset Purchaser the benefits, rights, and
privileges associated with the Commitments and Asset Purchaser will undertake
the payment obligations associated with the Commitments, except for NEP's
rights and obligations under the NEP Facilities Support Agreement and except
that regarding NEP's right to designate a representative to serve on the
Advisory Committee provided for in Section 6 of the Massachusetts Facilities
Support Agreement and Section 6 of the New Hampshire Facilities Support
Agreement (hereinafter "the Section 6 Right"), the Asset Purchaser shall have
an option to exercise the Section 6 Right. With regard to the NEP Facilities
Support Agreement NEP will transfer to Asset Purchaser such benefits, rights,
and privileges, and only such benefits, rights, and privileges, as NEP enjoys
as a Supporter under said Commitment, and Asset Purchaser will undertake such
obligations, and only such obligations, as NEP has undertaken as a Supporter
under said Commitment. NEP will retain all of its rights and obligations
under the NEP Facilities Support Agreement as owner and operator of the
facilities that are the subject of said agreement. NEP and Asset Purchaser
desire said transfer and undertaking to occur concurrently with the sale of
NEP's generation business to Asset Purchaser pursuant to the Asset Purchase
Agreement.
1. The Commitments are incorporated into this Agreement by reference. A
Commitment shall be automatically deleted from the Commitments
incorporated in this Agreement without further action by the parties
(I) on the effective date of any Novation (defined in Section as 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 12) and shall remain in effect until Asset Purchaser has made
payment to NEP of amounts owed pursuant to Section 4 of this Agreement
and NEP has made payment to Asset Purchaser of any amounts owed pursuant
to Section 3 or 4 of this Agreement for the last month in which a
Commitment remains incorporated in this Agreement.
(a) Commencing as of the Effective Date, and terminating upon the
termination of the Use Agreement, pursuant to section 6 of said
Agreement, NEP transfers to Asset Purchaser the right to use all
of NEP's Percentage Interest in the Transfer Capability of the
Interconnection. Such transfer shall be subject to the conditions
set forth in section 6 of said Agreement.
(b) Asset Purchaser agrees that, to the extent it elects not to use a
portion of the Transfer Capability transferred under subsection
(a) of this section, Asset Purchase shall so notify NEP in
writing, and NEP may make such Transfer Capability available under
NEP's open access transmission tariff on file with the Federal
Energy Regulatory Commission, and Asset Purchaser agrees to
provide NEP with all information that NEP reasonably requests for
the purpose of calculating the Annual Opportunity Cost Charge in
Attachment Q, Exhibit 2 of the tariff to each Customer that uses a
portion of the Transfer Capability.
(c) Commencing as of the Effective Date, NEP agrees that it will
provide to Asset Purchaser all benefits accruing to NEP under each
of the Commitments, except for the NEP Facilities Support
Agreement, and that Asset Purchaser may exercise all rights and
privileges of NEP under each of the Commitments; provided,
however, that NEP shall retain the Section 6 Right subject to
Asset Purchaser's option, exercisable in Asset Purchaser's sole
discretion, to direct NEP to transfer to it the Section 6 Right.
Commencing as of the Effective Date, NEP agrees that, if and to
the extent Asset Purchaser does not enjoy the rights of NEPOOL
members under the Interconnection Agreement, NEP will provide to
Asset Purchaser all benefits accruing to NEP under the
Interconnection Agreement, and that Asset Purchaser may exercise
all rights and privileges of NEP under the Interconnection
Agreement, and that Asset Purchaser may exercise all rights and
privileges of NEP under the Interconnection Agreement and the
Interconnection Agreement shall be deemed to be a "Commitment"
under this Agreement. Commencing as of the Effective Date, NEP
agrees that, if and to the extent Asset Purchaser does not enjoy
the rights of NEPOOL members under the Energy Banking Agreement,
NEP will provide to Asset Purchaser all benefits accruing to NEP
under the Energy Banking Agreement, and that Asset Purchaser may
exercise all rights and privileges of NEP under the Energy Banking
Agreement and the Energy Banking Agreement shall be deemed to be a
"Commitment" under this Agreement.
(d) Commencing as of the Effective Date, NEP agrees that it will
provide Asset Purchaser such benefits accruing to NEP under the
NEP Facilities Support Agreement, and only such benefits, as NEP
enjoys jointly with the other Supporters of the NEP Facilities
Support Agreement and that Asset Purchaser may exercise such
rights and privileges of NEP under the NEP Facilities Support
Agreement, and only such rights and privileges, as NEP enjoys
jointly with the other Supporters of the NEP Facilities Support
Agreement.
(e) Commencing as of the Effective Date, Asset Purchaser agrees to
maintain a billing settlement account at NEPOOL. The benefits and
obligations relating to the NEPOOL settlement process that are
being transferred under this Agreement, including but not limited
to capability responsibility, shall be reflected in the Asset
Purchaser's settlement account.
4. Commencing as of the month following the Effective Date, Asset Purchaser
agrees to pay to NEP (unless mutually agreeable arrangements are in
place for Asset Purchaser to make direct payments under a Commitment)
each month all amounts properly due for the preceding month, under each
Commitment that remained incorporated in the Agreement during the
previous month, from NEP to any party to such Commitment, including such
amounts for which NEP is responsible solely as a Supporter, and not as
owner and/or operator, under the NEP Facilities Support Agreement,
except that during the first month following the Effective Date, Asset
Purchaser shall pay to NEP the amount described in subsection (b) of
this section. The amounts properly due for the preceding month shall
include any charges to NEP associated with goods or services provided
pursuant to the Commitments in months prior to the preceding month but
subsequent to the Effective Date, including billing adjustments and
true-ups, any charges or costs resulting from regulatory or court
orders, and any associated interest, but specifically excluding any
general and administrative costs incurred by NEP in administering
Attachment Q of NEP's open access transmission tariff, and shall be
increased by any costs incurred by NEP or reduced by any revenues
received by NEP, both associated with the sale of Transfer Capability
under section 3(b). Asset Purchaser's rights to audit NEP's bills shall
be governed by NEP's open access transmission tariff. Asset Purchaser
shall make payment under this section by wire transfer of immediately
available funds at least one business day before such payment is due by
NEP under each Commitment as to allow NEP to make timely payment under
such Commitment. In turn, each month NEP agrees to timely pay all
amounts due under each Commitment, which includes the amount NEP
receives from Asset Purchaser in connection with such Commitment.
(a) During the first month following the Effective Date, Asset
Purchaser agrees to pay to NEP a portion of all amounts properly
due for the preceding month, under each Commitment that remained
incorporated in the Agreement during the previous month, from NEP
to any party to such Commitment, including such amounts for which
NEP is responsible as a Supporter under the NEP Facilities Support
Agreement. Such portion shall be determined according to 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.
(b) Upon and after the Effective Date, NEP shall notify Asset
Purchaser within a reasonable time of any and all amounts which
are then or thereafter received, under each Commitment, by NEP
from any other party to such Commitments, except for payments
received by NEP as owner and operator of the facilities that are
the subject of the NEP Facilities Support Agreement. Such amounts
shall include, 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 such
other party. At Asset Purchaser's direction, NEP shall pay such
amount to Asset Purchaser or 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 hereof or at the termination of this Agreement. Such amount
shall exclude 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 such other
party to NEP with respect to disputes arising before the Effective
Date that are attributable to a period prior to the Effective
Date.
5. 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 except for the NEP Facilities
Support Agreement and except for NEP's Section 6 Right, subject to the
Asset Purchaser's exercise of the option described in Section 3(c).
Effective as of the Effective Date, NEP hereby further irrevocably and
unconditionally appoints Asset Purchaser as its representative and agent
for any actions, and only such actions, that might be taken by NEP as a
Supporter under the NEP Facilities Support Agreement. Asset Purchaser
is hereby authorized under such appointments to take all actions that
NEP may lawfully take under such Commitments without further approval by
NEP, including, without limitation, the following: with respect to all
matters arising under such Commitments, deal directly with the other
parties to such Commitment, 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
such Commitments; monitor the parties' performance under the
Commitments; review and audit all bills and related documentation
rendered pursuant to the Commitments; and on NEP's behalf enter into
amendments to such Commitments of any nature; provided, however Asset
Purchaser shall not (i) amend any Commitment in a manner that affects
NEP's rights or obligations under such Commitment prior to the Effective
Date; (ii) amend any Commitment to extend the term thereof or increase
NEP's obligations thereunder without NEP's consent, which shall not be
unreasonably withheld and provided, further, that Asset Purchaser need
not seek NEP's consent for amendments, extensions, or increases in NEP
obligations if (i) the net present value of any increase on NEP
obligations created thereby is less than five million dollars
($5,000,000) and (ii) Asset Purchaser shall have attained and maintained
(A) "net worth," or "consolidated net worth," if applicable, as
determined in accordance with U.S. generally accepted accounting
principles and reflected in an audited balance sheet (or consolidated
balance sheet, if applicable) ("Net Worth") at least equal to
$500,000,000, and (B) an Investment Grade Rating, as defined below. For
purposes hereof, "Investment Grade Rating" means either (i) and S&P
Credit Rating (as defined below) of BBB or above or (ii) a Moody's
Credit Rating (as defined below) of Baa2 or above. "S&P Credit Rating"
shall mean the rating assigned by Standard & Poor's Ratings Group
("S&P") to the senior unsecured long-term debt of the Asset Purchaser
(or, in the event that none of the Asset Purchaser's senior unsecured
debt is rated by S&P, the Asset Purchaser's implied senior unsecured
debt rating), and "Moody's Credit Rating" shall mean the rating level
assigned by Moody's Investor Service, Inc. ("Moody's") to the senior
unsecured long-term debt of the Asset Purchaser (or, in the event that
none of the Asset Purchaser's senior unsecured debt is rated by Moody's,
the Asset Purchaser's implied senior unsecured debt rating). 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 with
respect to such information to be subject to any confidentiality
provisions of such Commitment and any restrictions on the dissemination
of such information as are required by the Federal Energy Regulatory
Commission. 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. Notwithstanding any
provision to the contrary in this section, NEP shall have the right, and
nothing in this Agreement shall limit NEP's right, to take a position on
its own behalf and to submit testimony, make filings, and otherwise
assert and defend such position in connection with any matter or
proceeding concerning the recovery of costs associated with any
Commitment in NEP's transmission rates. Neither of the parties shall
institute proceedings concerning this Agreement under sections 205 or
206 of the Federal Power Act without the consent of the other party,
which consent shall not be unreasonably withheld.
(a) NEP agrees not to agree to any amendment to, termination of, or
waiver of rights under a Commitment other than the NEP Facilities
Support Agreement without Asset Purchaser's consent, which Asset
Purchaser may grant or withhold in its sole discretion. NEP will
not take any actions inconsistent with the provisions of Section
5.
6. 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 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 purpose
hereof NEP's and Asset Purchaser's administrative costs incurred in
administering the Commitments and performing their obligations under
this Agreement shall not be an Indemnifiable Loss. For purposes hereof,
any failure of NEP to perform any act required to be performed by it
under a Commitment (other than as owner/operator under the NEP
Facilities Support Agreement) which increases the amounts payable by
Asset Purchaser under Section 4(a) hereof shall be entitled to
indemnification hereunder.
(a) 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
payment obligation of, or exercise of rights as NEP's agent by,
Asset Purchaser resulting from or contained in this Agreement.
(b) 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.
(c) The expiration, termination or extinguishment of any covenant or
agreement shall not affect the parties' obligations under this
Section 6 if the Indemnitee provided to the person who is 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.
(d) 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
payment obligation resulting from this Agreement.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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 Lose 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.
(j) 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 other parties to the
Commitment (a "Novation"), except that, with regard to the NEP
Facilities Support Agreement, such assignment will be limited to the
rights and obligations of NEP as a Supporter under the NEP Facilities
Support Agreement and except that NEP shall retain its Section 6 Right,
subject to Asset Purchaser's option, exercisable in Asset Purchaser's
sole discretion, to direct NEP to assign its Section 6 Right, in which
event there shall be a Novation of the Section 6 Right. Any such
Novation shall include all modifications necessary to reflect the
substitution of Asset Purchaser for NEP as the party under the
Commitment and to properly describe interconnection, delivery point and
transmission system references and obligations in the Commitment. 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 Commitment. NEP and Asset Purchaser
agree to execute all agreements and documents reasonably required by the
other in connection with all such Novations.
8. 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.
9. 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, not to be unreasonably withheld, 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 August 5, 1997,
executed by PG&E Corporation for the purpose of financing or refinancing
the Purchased Assets (as defined in the Asset Purchase Agreement); 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 Asset Purchase
Agreement), 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.
10. This Agreement, the Asset Purchase Agreement and any other agreement
entered into by the parties pursuant to the Asset Purchase Agreement
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 except the parties hereto any rights or
remedies. The interpretation and performance of this Agreement shall be
according to and controlled by the Federal Power Act and the laws of The
Commonwealth of Massachusetts (regardless of the laws that might
otherwise govern under applicable Massachusetts principles of conflicts
of laws).
11. 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.
12. This Agreement shall be of no force and effect until the Effective Date.
If the Asset Purchase Agreement shall have been terminated before the
occurrence of the Closing Date (as defined in the Asset Purchase
Agreement), this Agreement shall, without any action of the parties
hereto, terminate as of the time of the termination of the Asset
Purchase Agreement. As used in this Agreement, "Effective Date" shall
mean the Closing Date (as defined in the Asset Purchase Agreement).
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: /s/ Michael E. Jesanis
Name: Michael E. Jesanis
Title: Vice President
USGEN NEW ENGLAND, INC.
By: /s/ James V. Mahoney
Name: James V. Mahoney
Title: Senior Vice President