EXHIBIT 10.22

 

BELLINGHAM EXECUTION AGREEMENT

 

THIS BELLINGHAM EXECUTION AGREEMENT (the “ Agreement ” ) is entered into as of August 19, 2004 (the “ Contract Date ” ), between Boston Edison Company ( “BECo” ) and Commonwealth Electric Company ( “CECo” ) (BECo and CECo each, a “Utility” , jointly, the “Utilities” ) and Northeast Energy Associates, A Limited Partnership, a Massachusetts limited partnership ( “ NEA ” ). The Utilities and NEA are sometimes referred to individually in this Agreement as a “Party” and collectively as the “Parties.”

 

RECITALS

 

A. The Utilities and NEA are parties to certain Power Purchase Agreements, as amended, and as set forth in Schedule A hereof (individually, BECo A , BECo B , CECo 1 , CECo 2 , collectively, the “ Power Purchase Agreements ” ) pursuant to which the Utilities purchase from NEA contract capacity and the associated energy generated by NEA’s Bellingham power generation facility (the “ Facility ” ). On October 17, 2003, Utilities requested the submission of proposals regarding the transfer of entitlements to certain power purchase agreements. In response, on December 3, 2003, NEA proposed the restructuring of the Power Purchase Agreements. The implementation of the agreement of the Parties with respect to the Utilities’ request for proposals and NEA’s proposal for the restructuring of the Power Purchase Agreements is effectuated by the provisions of this Agreement, including the Interim Amount Adjustments (as hereinafter defined), and the Amended and Restated Power Purchase Agreements (as hereinafter defined).

 

B. In connection with a financing relating to the Facility and a nominal 300 MW natural gas-fired electrical and steam generating plant owned by North Jersey Energy Associates, A Limited Partnership ( “ NJEA ” ) in the town of Sayreville, New Jersey (the “ Sayreville Facility ” ), ESI Tractebel Funding Corp., a Delaware corporation (formerly IEC Funding Corporation) ( “ ESI Funding ” ) issued its senior secured securities (the “ Senior Secured Notes ” ) pursuant to that certain Trust Indenture, dated as of November 15, 1994, among ESI Funding, NEA, NJEA and State Street Bank and Trust Company, as trustee (the “ Senior Trustee ” ), as supplemented by that certain First Supplemental Indenture dated as of November 15, 1994, and that certain Second Supplemental Trust Indenture dated as of January 14, 1998, (collectively, the “ Senior Indenture ” ). As part of the security for the Senior Secured Notes, NEA collaterally assigned its right, title and interest in and to the Power Purchase Agreements to the Senior Trustee on behalf of the holders of the Senior Secured Notes (the “ Senior Note Holders ” ), and pledged all of the revenues received under, and granted a priority perfected security interest in, the Power Purchase Agreements to the Senior Trustee on behalf of the holders of the Senior Note Holders pursuant to the Senior Indenture and related security documents. The Senior Secured Notes are also secured by NEA’s interests in the Facility and its related revenue-generating agreements.

 

C. In connection with an additional financing to, among other purposes, acquire and provide additional capital for the Facility and the Sayreville Facility, ESI Tractebel Acquisition Corp., a Delaware corporation ( “ ESI Acquisition ,” and together with ESI Funding, the “ Issuers ” ) issued its secured securities (the “ Junior Secured Notes ” ) pursuant to that certain Indenture, dated as of February 19, 1998, among ESI Acquisition, Northeast Energy, LP, a Delaware limited partnership ( “ NELP ” ) and Northeast Energy, LLC, a Delaware limited liability company ( “ NELLC ” ) directly and wholly owned by NELP, and State Street

Bank and Trust Company, as trustee (the “ Junior Trustee ” ), as supplemented by that certain First Supplemental Indenture dated as of February 19, 1998, (collectively, the “ Junior Indenture ” ). The Junior Secured Notes are payable by NELP from distributions to it by NEA and NJEA.

 

D. Simultaneously with the execution of this Agreement, the Utilities and NEA have executed and delivered amended and restated power purchase agreements (attached hereto as Schedule D and, as amended by the New PPA Amendments (as hereinafter defined), if any, collectively, the “ Amended and Restated Power Purchase Agreements ” ) to provide, among other things, that NEA will sell and deliver and the Utilities will purchase and receive certain energy and a stated amount of capacity from the Facility and/or from sources other than the Facility. The Amended and Restated Power Purchase Agreements, the agreements and documents described in Section 2.2 hereof to which either or both of the Utilities is a party and the other certificates, instruments and documents to be delivered by the Utilities to consummate the Transactions (as hereinafter defined) and perform its obligations as contemplated hereby and thereby are collectively referred to as the “ NSTAR Documents ” .

 

E. NEA will collaterally assign all of its rights under the Amended and Restated Power Purchase Agreements to the Senior Trustee on behalf of the Senior Note Holders as collateral security for the Senior Secured Notes pursuant to the “ Assignment Agreement ” .

 

F. On the Closing Date (as hereinafter defined): (1) the Amended and Restated Power Purchase Agreements will become effective in accordance with their terms, superceding the Power Purchase Agreements and (2) the collateral assignment contemplated by the Assignment Agreement will occur. The foregoing (and any necessary transactions between NEA and the Utilities incident to any of them) shall collectively be referred to herein as the “ Transactions ” .

 

G. The Closing Date will not occur until the Massachusetts Department of Telecommunications and Energy (the “ MDTE ” ) has approved this Agreement, the Amended and Restated Power Purchase Agreements, and the Transactions, in each case, by a written decision (herein, the “ MDTE Order ” ) that: (1) is reasonably acceptable in form and substance to the Utilities and NEA; (2) is final and non-appealable, unless such condition is waived in writing by the Parties (the “ Final Decision ” ): and (3) includes the findings set forth in Schedule G hereof (the “ Required Findings ” ). The date on which the MDTE Order containing the Required Findings becomes the Final Decision is referred to herein as the “ Final Order Date .” The date on which the Utilities shall cause the Petition (as hereinafter defined) to be filed with the MDTE is referred to herein as the “ Filing Date ” .

 

H. The Parties believe that the consummation of the Transactions on the terms set forth herein and in the Execution Documents (as hereinafter defined) is in their respective best interests.

 

NOW, THEREFORE, in consideration of the foregoing and of the agreements contained herein, the Parties agree as follows:

 

ARTICLE 1

DEFINITIONS

 

In addition to terms defined in the introductory paragraph to this Agreement, the following terms shall have the meanings set forth below:

 

- 2 -

“Adjusted Bid Price Amount” shall mean the Initial NEA Bid Price Amount plus the Bid Date On-Peak Energy Cost, minus the Calculation Date On-Peak Energy Cost. The Adjusted Bid Price Amount will be calculated and agreed to by the Parties on the Calculation Date.

 

(i)

Schedule 1 to this Agreement sets forth specific numerical values used to calculate various components of the Bid Date On-Peak Energy Cost and the Calculation Date On-Peak Energy Cost as well as sample numerical values used to calculate a sample Bid Date On-Peak Energy Cost and a sample Calculation Date On-Peak Energy Cost, which sample values shall be replaced with actual values for the Bid Date On-Peak Energy Cost and the Calculation Date On-Peak Energy Cost as of the Calculation Date in order to calculate the actual Adjusted Bid Price Amount, which shall be calculated and set forth on Schedule 1.5. The Parties acknowledge and agree that the mathematical operations (addition, subtraction, multiplication and division) performed on the numerical values contained or to be contained in Schedules 1 and 1.5 in order to calculate the Adjusted Bid Price Amount are embedded as functions in a Microsoft Excel spreadsheet, a copy of which has been provided to each Party.

 

(ii)

It is the intent of the Parties that the provisions of this Agreement shall be construed consistently with Schedules 1 and 1.5 and the sample calculations contained therein, and that together such provisions and schedules shall embody the agreement of the Parties with respect to the calculation of the Adjusted Bid Price Amount.

 

“Affiliate” shall mean, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries’ controls, is controlled by, or is under common control with, such first Person. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Amended and Restated Power Purchase Agreements” shall have the meaning set forth in the Recitals.

 

“Assignment Agreement” shall have the meaning set forth in the Recitals.

 

“Audit” shall have the meaning set forth in Section 5.2(c).

 

“BECo A” shall have the meaning set forth in Schedule A.

 

“BECo B” shall have the meaning set forth in Schedule A.

 

“Bid Date Gas Price” shall mean, for any month during the Term, the price of natural gas for such months as set forth in Schedule 1.

 

“Bid Date On-Peak Energy Cost” shall mean the present value of the monthly Bid Date On-Peak Energy Cost for each month in the Term, which shall be calculated on the Calculation Date, pursuant to which (a) for each month during the Term, the monthly Bid Date On-Peak Energy Cost, expressed in

 

- 3 -

dollars, will equal the product of (i) the applicable monthly Bid Date Gas Price, expressed in $/MMBtu, (ii) 8.6 MMBtu/MWh, and (iii) the applicable aggregate monthly volume of On-Peak MWh as set forth in Schedule 1 and (b) the present value of the monthly Bid Date On-Peak Energy Cost will be discounted to April 1, 2004, at an annual discount factor of 8.1%.

 

“Business Day” shall mean any day that is not a Saturday, Sunday, or NERC Holiday.

 

“Calculation Date” shall mean the Business Day immediately prior to the Closing Date.

 

“Calculation Date On-Peak Energy Cost” shall mean the present value of the monthly Calculation Date On-Peak Energy Cost for each month in the Term, which shall be calculated on the Calculation Date, pursuant to which (a) for each month during the Term, the monthly Calculation Date On-Peak Energy Cost, expressed in dollars, will equal the product of (i) the applicable monthly Forward NYMEX Gas Price, expressed in $/MMBtu, (ii) 8.6 MMBtu/MWh, and (iii) the applicable aggregate monthly volume of On-Peak MWh as set forth in Schedule 1 and (b) the present value of the monthly Calculation Date On-Peak Energy Cost will be discounted to April 1, 2004, at an annual discount factor of 8.1%.

 

“CECo 1” shall have the meaning set forth in Schedule A.

 

“CECo 2” shall have the meaning set forth in Schedule A.

 

“Closing Date” shall have the meaning set forth in Section 2.2.

 

“Closing Date Amount” shall mean the sum of (a) through (g) below. The amounts in (b) through (g) result from the calculations described therein and performed on the Calculation Date for each calendar month (or portion of a calendar month) during the Interim Period:

 

(a) $27,747,383.90, plus

 

(b) the product of (i) the Net Delivered MWhs delivered from the Facility in that month plus any Interim Period Make Up Delivery, but in no event an energy quantity greater than the aggregate of the Interim Period On-Peak Delivery Quantities and Interim Period Off-Peak Delivery Quantities and (ii) the Interim Period Support Payment Rate, plus

 

(c) the product of (i) the Net Delivered MWhs delivered from the Facility during On-Peak Hours at the applicable Interim Period Delivery Points up to the Interim Period On-Peak Delivery Quantities, and (ii) the Interim Period On-Peak Energy Price at the applicable Interim Period Delivery Point, expressed as a $/MWh, plus

 

(d) the product of (i) the Net Delivered MWhs delivered from the Facility during On-Peak Hours at the applicable Interim Period Delivery Points in excess of the Interim Period On-Peak Delivery Quantities and (ii) the applicable hourly DAM LMP Prices at the applicable Interim Period Delivery Points, expressed as a $/MWh, plus

 

(e) the product of (i) the Net Delivered MWhs delivered from the Facility during Off-Peak Hours at the applicable Interim Period Delivery Points and (ii) the applicable hourly DAM LMP Prices at the applicable Interim Period Delivery Points, plus

 

- 4 -

(f) the product of (i) a price, expressed in dollars per MW-month and determined in accordance with the procedure set forth in Section 4.1(b) of the Amended and Restated Power Purchase Agreements and (ii) the quantity of capacity, expressed in units of MW, delivered under the Power Purchase Agreements during such month, minus

 

(g) any amounts actually paid by the Utilities to NEA under the Power Purchase Agreements during such month;

 

provided, that where applicable, a good faith estimate will be made of the amounts under clauses (a) through (g), above, which amounts will be adjusted in the next billing cycle to reflect actual calculations performed promptly after the Contract Date in the case of (a) above or after the Closing Date in the case of (b) through (g) above. Prior to the Closing Date, the Utilities and NEA shall, at the request of either Party, exchange sample calculations of the Closing Date Amount.

 

“Closing Payment” shall have the meaning set forth in Section 5.5.

 

“Consent to Collateral Assignment” shall have the meaning set forth in Section 2.2(b)(iii).

 

“Contract Date” shall have the meaning set forth in the Preamble.

 

“DAM LMP Prices” in any hour for any node in NEPOOL shall mean the LMP prices resulting from the Day-Ahead Energy Market.

 

“Day-Ahead Energy Market” or “DAM” shall have the meaning as set forth in that certain Manual for Definitions and Abbreviations prepared by ISO, as may be amended from time to time.

 

“Data” shall have the meaning set forth in Section 5.4(b).

 

“Deadline” shall mean March 31, 2005.

 

“Effective Time” shall mean 11:59 PM EPT on the Closing Date.

 

“EPT” shall mean either Eastern Standard Time or Eastern Daylight Savings Time, as in effect from time to time.

 

“ESI Acquisition” shall have the meaning set forth in the Recitals.

 

“ESI Funding” shall have the meaning set forth in the Recitals.

 

“Execution Documents” shall mean, collectively, this Agreement, together with the Schedules hereto, the Amended and Restated Power Purchase Agreements, that certain Stipulation of Agreement of Non-Disclosure of Confidential or Protected Information entered into between the Parties, and any amendments to any of these documents made after the Contract Date.

 

“Existing Prices” shall mean the prices for energy and capacity set forth in the Power Purchase Agreements, as applicable.

 

- 5 -

“Facility” shall have the meaning set forth in the Recitals.

 

“FERC” shall mean the United States Federal Energy Regulatory Commission and shall include its successors.

 

“Filing Date” shall have the meaning set forth in the Recitals.

 

“Final Decision” shall have the meaning set forth in the Recitals.

 

“Final Order Date” shall have the meaning set forth in the Recitals.

 

“Forward NYMEX Gas Price” shall mean, for any month during the Term, the forward price for natural gas delivered to the Henry Hub for such month as posted by NYMEX as of the close of trading on the trading day immediately preceding the Calculation Date. With respect to any calendar month during the Term for which no such price is posted by NYMEX, the Forward NYMEX Gas Price will be such price posted by NYMEX for the same calendar month of the latest year for which such a forward price is posted by NYMEX.

 

“Gas Transactions” shall mean natural gas wholesale transactions.

 

“Initial NEA Bid Price Amount” shall mean negative $12,566,453.

 

“Interim Amount Adjustments” shall mean the Closing Date Amount paid pursuant to Section 5.4.

 

“Interim Period” shall mean the period commencing with the hour ending 0100 EPT on the day immediately following the Contract Date and ending on, and including, the earlier of (a) the Closing Date and (b) the Deadline.

 

“Interim Period Delivery Points” shall mean the delivery points for the delivery of energy by NEA to the Utilities during the Interim Period, which shall be the same delivery points as the delivery points under the applicable Power Purchase Agreement, as shown on attached Schedule 5.3 hereto.

 

“Interim Period Delivery Rate” shall mean the hourly rates during each month of the Interim Period at which NEA is projected to deliver energy to the Utilities at each of the Interim Period Delivery Points, expressed in MW and as set forth on Schedule 5.3.

 

“Interim Period Make Up Delivery” shall have the meaning set forth in Section 5.4(a).

 

“Interim Period Off-Peak Delivery Quantities” shall mean the monthly aggregate quantities of Off-Peak Hours energy that NEA is projected to deliver to the Utilities at each of the Interim Period Delivery Points during the Interim Period, expressed in MWh and as set forth on Schedule 5.3.

 

“Interim Period On-Peak Delivery Quantities” shall mean the monthly aggregate quantities of On-Peak Hours energy that NEA is projected to deliver to the Utilities at each of the Interim Period Delivery Points during the Interim Period, expressed in MWh and as set forth on Schedule 5.3.

 

- 6 -

“Interim Period On-Peak Energy Price” shall mean, during the Interim Period, a monthly scheduled price the Utilities will pay NEA for energy delivered from the Facility during On-Peak Hours at each of the Interim Period Delivery Points, expressed in $/MWh and as set forth on Schedule 5.3.

 

“Interim Period Support Payment Rate” shall mean, during the Interim Period, a scheduled dollar amount the Utilities will pay NEA for delivered energy in each month at each of the Interim Delivery Points, expressed in $/MWh and as set forth on Schedule 5.3.

 

“ISO” shall mean ISO New England, Inc., or its successors.

 

“Issuers” shall have the meaning set forth in the Recitals.

 

“Junior Indenture” shall have the meaning set forth in the Recitals.

 

“Junior Secured Notes” shall have the meaning set forth in the Recitals.

 

“Junior Trustee” shall have the meaning set forth in the Recitals.

 

“LMP” shall mean, for any ISO nodal point for any hour on any day, the “Day Ahead LMP” or “Real Time LMP” ($/MWh) at such ISO nodal point calculated in accordance with Section 2 of Market Rule 1, as reported on the ISO website at www.iso-ne.com on the “Data & Reports” page, “Hourly Markets Data” subpage and “Selectable Hourly LMP Data” category, for such nodal point on such date and time. If such price should ever cease to be published, then the LMP shall be a regularly published comparable substitute price, as agreed to by the Parties in writing.

 

“Material Adverse Change” shall mean an event, matter or circumstance (including any omission to act) arising after the Contract Date (but not an event, matter or circumstance which is reasonably likely to arise as of the date hereof) that has a detrimental economic impact of $10,000,000 or more to the party claiming such event, including, without limitation, a change in applicable law or in the interpretation of any applicable law by any court of competent jurisdiction or any other governmental entity, including, without limitation, a change in tax law or a change to the Public Utility Regulatory Policies Act of 1978, as amended, or a change in applicable accounting standards. A Materiel Adverse Change shall not include: (a) any act or omission expressly contemplated by this Agreement, (b) the execution or announcement of this Agreement or compliance with the terms hereof, or (c) any payment of the Interim Amount Adjustments or the Adjusted Bid Price Amount.

 

“MDTE” shall have the meaning set forth in the Recitals.

 

“MDTE Order” shall have the meaning set forth in the Recitals.

 

“Mutual Release” shall have the meaning set forth in Section 2.2(b)(iv).

 

“NEA Documents” shall mean, collectively, the agreements and documents described in Section 2.2 hereof to which NEA is a party (including, without limitation, the Amended and Restated Power Purchase Agreements) and the other certificates, instruments and documents to be delivered by NEA to consummate the Transactions and perform its obligations as contemplated hereby and thereby.

 

“NELP” shall have the meaning set forth in the Recitals.

 

- 7 -

“NELLC” shall have the meaning set forth in the Recitals.

 

“Net Delivered MWhs” shall mean, in any hour at any Interim Period Delivery Point during the Interim Period, the applicable net generation from the Facility allocated to the Power Purchase Agreements as follows: the gross generation from the Facility as reported by the Utilities to the ISO (and to NEA as Data pursuant to Section 5.4) shall be allocated to the Power Purchase Agreements according to the following percentages: BECO A - 46.5517%. BECO B - 28.9655%, CECo 1 - 8.6207% and CECo 2 - 7.2414%, with each such allocated amount then multiplied by the following applicable percentage: BECO A - 99.9711%, BECO B - 100%, CECo 1 - 99% and CECo 2 - 99%.

 

“NEPOOL” shall mean the New England Power Pool, or its successor.

 

“NERC” shall mean the North American Electric Reliability Council, or its successor.

 

“NERC Holiday” shall mean New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day, and any other day declared a holiday by NERC.

 

“New PPA Amendments” shall mean any amendments to the Amended and Restated Power Purchase Agreements which are entered into after the Contract Date and before the Closing Date, which such amendments shall not impair the validity or effectiveness of the Final Decision.

 

“NJEA” shall have the meaning set forth in the Recitals.

 

“NSTAR” shall mean NSTAR Electric & Gas Corporation.

 

“NSTAR Documents” shall have the meaning set forth in the Recitals.

 

“NYMEX” shall mean the New York Mercantile Exchange.

 

“Off-Peak Hours” shall mean all hours that are not On-Peak Hours.

 

“On-Peak Hours” shall mean, on any Business Day, the sixteen (16)-hour period beginning at the hour ending 0800 EPT and ending with the end of the hour ending 2300 EPT.

 

“Petition” shall have the meaning set forth in section 5.2(a).

 

“Power Purchase Agreements” shall have the meaning set forth in the Recitals.

 

“Real-Time Energy Market” or “RTM” shall have the meaning as set forth in that certain Manual for Definitions and Abbreviations prepared by ISO, as may be amended from time to time.

 

“RTM LMP Prices” in any hour for any node in NEPOOL shall mean the LMP prices resulting from the Real-Time Energy Market.

 

“Required Finding” shall have the meaning set forth in the Recitals.

 

“Sayreville Facility” shall have the meaning set forth in the Recitals.

 

- 8 -

“Senior Indenture” shall have the meaning set forth in the Recitals.

 

“Senior Note Holders” shall have the meaning set forth in the Recitals.

 

“Senior Secured Notes” shall have the meaning set forth in the Recitals.

 

“Senior Trustee” shall have the meaning set forth in the Recitals.

 

“Term” shall mean the period from and including the first day of the month immediately following the month in which the Closing Date occurs through and including September 30, 2016.

 

“Transactions” shall have the meaning set forth in the Recitals.

 

ARTICLE 2

TRANSACTION DELIVERABLES

 

2.1. Amended and Restated Power Purchase Agreements .

 

(a) On the Closing Date each Party shall deliver a certificate stating that all of the applicable conditions precedent set forth herein and in the Amended and Restated Power Purchase Agreements have been satisfied or waived by the Party entitled to the benefit thereof and that the “Effective Date” under the Amended and Restated Power Purchase Agreements and the New PPA Amendments has occurred. The Amended and Restated Power Purchase Agreements shall, among other things, provide: (i) that NEA will sell and deliver, and the Utilities will purchase and receive, certain energy and capacity from the Facility and/or from sources other than the Facility and (ii) that the Utilities shall purchase and receive such energy and capacity for the “Energy Payment” and at the “Capacity Price” specified therein.

 

(b) Subject to the terms and conditions set forth herein (including, without limitation, the satisfaction or waiver of the applicable conditions precedent set forth in Article 6 hereof), on the Closing Date, the Utilities and NEA agree to commence performance under the Amended and Restated Power Purchase Agreements and any New PPA Amendments in accordance with their terms and cause to be executed and delivered such other instruments and documents as are contemplated hereby and thereby.

 

2.2 Closing .

 

(a) Closing Date and Effective Time. Unless this Agreement is earlier terminated pursuant to the terms hereof, the Transactions shall be consummated at a closing to be held at approximately 10:00 a.m. EPT, at a location to be agreed upon by the Parties, on or as soon as reasonably practicable after the date that the conditions described in Article 6 hereof have been satisfied or waived by the Party entitled to the benefit thereof (the “Closing Date”), provided that the Closing Date shall not be earlier than January 2, 2005.

 

(b) Deliverables by the Utilities. On the Closing Date and subject to the terms and conditions set forth herein, the Utilities (as appropriate) shall deliver, or cause to be delivered, to NEA or its designee:

 

(i)

the closing certificate described in the first sentence of Section 2.1(a) hereof;

 

- 9 -

(ii)

any New PPA Amendments duly executed by the appropriate Utility;

 

(iii)

the Affirmation of Consent to Collateral Assignment (“Consent to Collateral Assignment”) between the appropriate Utility and the Senior Trustee (on behalf of the Senior Note Holders), in form and substance reasonably acceptable to the Utility, NEA and the Senior Trustee, the form of which is attached hereto as Schedule 2.2(b)(iii), duly executed by the Utility, in which the Utility consents to the collateral assignment by NEA of the Amended and Restated Power Purchase Agreements to the Senior Trustee (on behalf of the Senior Note Holders) contemplated by the Assignment Agreement and provides certain rights and benefits to the Senior Trustee on behalf of the Senior Note Holders with respect to the Amended and Restated Power Purchase Agreements;

 

(iv)

the Mutual Release between the appropriate Utility and NEA duly executed by the Utility which provides for a mutual release between the Utility and NEA of all of their respective obligations and liabilities under the Power Purchase Agreement arising prior to the Effective Time (the “Mutual Release” ) the form of which is attached as Schedule 2.2(b)(iv);

 

(v)

a certificate, executed by a duly authorized representative of the Utility (as appropriate), stating that the representations and warranties of the Utilities set forth in this Agreement and the Amended and Restated Power Purchase Agreements are true and correct as of the Closing Date; and

 

(vi)

such other instruments and documents executed or provided by the appropriate Utility as may reasonably be required by NEA, the Senior Trustee or their respective legal counsel to evidence the consummation of the Transactions, including, without limitation, those items to be delivered by the Utilities pursuant to Article 6 hereof.

 

(c) Deliverables by NEA . On the Closing Date and subject to the terms and conditions set forth herein, NEA shall deliver, or cause to be delivered, to the Utilities or their designee:

 

(i)

the closing certificate described in the first sentence of Section 2.1(a) hereof;

 

(ii)

any New PPA Amendments duly executed by NEA;

 

(iii)

the Mutual Release between the appropriate Utility and NEA duly executed by NEA;

 

(iv)

a certificate, executed by a duly authorized representative of NEA, stating that the representations and warranties of NEA set forth in this Agreement and the Amended and Restated Power Purchase Agreements are true and correct as of the Closing Date; and

 

- 10 -

(v)

such other instruments and documents executed or provided by NEA as may reasonably be required by the Utilities to evidence the consummation of the Transactions, including, without limitation, those items to be delivered by NEA pursuant to Article 6 hereof.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE UTILITIES

 

Each Utility represents and warrants to NEA as of the Contract Date and as of the Closing Date (except in the event such representation or warranty by its terms is made only as of a certain date) as follows:

 

3.1. Authority .

 

The Utility is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has all requisite corporate power and authority to enter into and be bound by the terms of this Agreement and, subject to the satisfaction or waiver by the Utility of the conditions set forth in Section 6.1 hereof, the NSTAR Documents. The execution and delivery of, and the performance by the Utility of its obligations under, this Agreement have been duly and validly authorized by all necessary corporate action of the Utility. This Agreement has been duly and validly executed and delivered by the Utility and constitutes a valid and binding obligation of the Utility, enforceable against the Utility in accordance with its terms, except as such enforceability may be limited by law or principles of equity. On the Closing Date and subject to the satisfaction or waiver by the Utility of the conditions set forth in Section 6.1 hereof, the NSTAR Documents, when executed and delivered by the Utility in accordance with this Agreement, shall constitute the valid and binding obligations of the Utility enforceable against the Utility in accordance with their respective terms, except as such enforceability may be limited by law or principles of equity.

 

3.2 No Conflicts .

 

Subject to the satisfaction or waiver by the Utility of the conditions set forth in Section 6.1 hereof, neither the execution and delivery of this Agreement and the NSTAR Documents by the Utility, nor the consummation or performance of the Transactions by the Utility, will (a) violate or conflict with any provisions of the Utility’s articles of organization or bylaws, (b) violate, conflict with or result in the breach or termination of any material agreement or instrument to which the Utility is a party or (c) violate or conflict with (or require any filing, consent, or similar action under) any law, rule, regulation, judgment, order, injunction, decree or award that applies to or binds the Utility or its property.

 

3.3 Litigation .

 

There is no action, claim, demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity, pending or, to the knowledge of the Utility, threatened against or relating to the Utility or the Transactions which could reasonably be expected to (a) have a material adverse effect on the Transactions or (b) prevent the performance by the Utility of its obligations under the NSTAR Documents.

 

- 11 -

3.4 No Additional Conditions .

 

Except for the satisfaction of the conditions specifically identified in this Agreement (which may be waived by the applicable Utility), there are no other conditions precedent to (a) the Utility’s execution, delivery or performance of this Agreement and the NSTAR Documents or (b) the Utility’s implementation of the Transactions.

 

3.5 No Brokers .

 

Except as set forth on Schedule 3.5 hereto, no finder, broker or agent has been employed, appointed or authorized to act on behalf of the Utility in connection with the Transactions.

 

3.6 No Assignment; Amendment .

 

BECo and CECo are the sole owners of all right, title and interest of the power purchaser in, to and under the Power Purchase Agreements and have not assigned or otherwise transferred their rights or obligations under the Power Purchase Agreements to any third party. As of the Closing Date no amendment or modification of the Power Purchase Agreements is effective, except as identified in Schedule A hereof. As of the Closing Date no further amendment or modification of the Power Purchase Agreements will be effective or pending nor shall the Utility have assigned or otherwise transferred its rights or obligations under the Power Purchase Agreements, except pursuant to the Amended and Restated Power Purchase Agreements and the New PPA Amendments, if any.

 

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF NEA

 

NEA represents and warrants to the Utilities as of the Contract Date and as of the Closing Date (except in the event such representation or warranty by its terms is made only as of a certain date) as follows:

 

4.1 Authority .

 

NEA is a limited partnership validly formed and validly existing under the laws of the Commonwealth of Massachusetts and has all requisite partnership power and authority to be bound by the terms of this Agreement and, subject to the satisfaction or waiver by NEA of the conditions set forth in Section 6.2 hereof, the NEA Documents. The execution and delivery of, and the performance by NEA of its obligations under, this Agreement have been duly and validly authorized by all necessary partnership action of NEA. This Agreement has been duly and validly executed and delivered by NEA and constitutes a valid and binding obligation of NEA, enforceable against NEA in accordance with its terms, except as such enforceability may be limited by law or principles of equity. On the Closing Date and subject to the satisfaction or waiver by NEA of the conditions set forth in Section 6.2 hereof, the NEA Documents, when executed and delivered by NEA in accordance with this Agreement, shall constitute the valid and binding obligations of NEA enforceable against it in accordance with their respective terms, except as such enforceability may be limited by law or principles of equity.

 

- 12 -

4.2 No Conflicts .

 

Subject to the satisfaction or waiver by NEA of the conditions set forth in Section 6.2 hereof, neither the execution and delivery of this Agreement and the NEA Documents by NEA, nor the consummation or performance of the Transactions by NEA, will (a) violate or conflict with any provisions of NEA’s formation or governance documents, (b) violate, conflict with or result in the breach or termination of any material agreement or instrument to which NEA is a party or (c) violate or conflict with (or require any filing, consent, or similar action under) any law, rule, regulation, judgment, order, injunction, decree or award that applies to or binds NEA or its property.

 

4.3 Litigation .

 

There is no action, claim, demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity, pending or, to the knowledge of NEA, threatened against or relating to NEA or the Transactions which could reasonably be expected to (a) have a material adverse effect on the Transactions or (b) prevent the performance by NEA of its obligations under the NEA Documents.

 

4.4 No Additional Conditions .

 

Except for the satisfaction of the conditions specifically identified in this Agreement (which may be waived by NEA), there are no other conditions precedent to (a) NEA’s execution, delivery or performance of this Agreement and the NEA Documents or (b) NEA’s implementation of the Transactions.

 

4.5 No Brokers .

 

Except as set forth in Schedule 4.5, no finder, broker or agent has been employed, appointed or authorized to act on behalf of NEA in connection with the Transactions.

 

ARTICLE 5

COVENANTS

 

5.1 Satisfaction of Conditions .

 

The Parties agree to cooperate in good faith and to take all commercially reasonable actions and devote resources reasonably necessary to comply with their obligations under this Article 5 and to obtain satisfaction of the conditions set forth in Article 6 hereof as soon as reasonably practicable, including using diligent efforts to secure the execution and delivery of the agreements and other instruments to be executed and delivered pursuant to Article 2 and Article 6 hereof. Each Party entitled to the benefit of conditions set forth in Article 6 hereof shall have the right to waive such conditions.

 

- 13 -

5.2 MDTE Approval .

 

(a) At any time after the Contract Date and no later than forty-five (45) days after NEA provides the Utilities with notice of waiver or satisfaction of the condition set forth in Section 6.2(k) hereof, the Utilities shall file, or cause to be filed, an initial petition (a “Petition” ) with the MDTE requesting that the MDTE cause the Final Order Date to occur as soon as reasonably practicable, but in no event later than January 1, 2005. As and to the extent permitted by applicable law, the applicable Utility and NEA intend that certain provisions of this Agreement and related documents shall be “Confidential Information” and the applicable Utility and NEA shall seek confidential treatment by the MDTE of all confidential materials included in such Petition, or otherwise provided to the MDTE in support of the Petition. Prior to the Filing Date, the applicable Utility and NEA will reasonably cooperate with respect to identifying their respective confidential material in such agreements and related documents for which the Utility shall seek confidential treatment and any other materials to be submitted to the MDTE in support of the Petition. Upon filing of the Petition with the MDTE, the Parties will support the Petition and the data contained therein and shall use commercially reasonable efforts to obtain the Final Decision; provided that if the Final Order Date has not occurred by January 1, 2005, the Parties shall continue to use diligent efforts to secure the Final Decision, subject to their respective rights of termination under Section 7.1 hereof.

 

(b) Each party shall promptly provide to the other (whether in writing or orally) any information relating to any material event or development relating to the MDTE review and approval process referenced in Section 5.2(a) above. In addition, each Party shall respond promptly and fully to any reasonable inquiries that a requesting Party may make at any other time relating to such process.

 

(c) From the Contract Date through the Closing Date, neither Party shall enter into Gas Transactions outside of its ordinary course of business where such transactions are designed to manipulate the Adjusted Bid Price Amount. If a Party has cause to believe that such Gas Transactions have been executed by the other Party, the first Party may request an audit of the other Party’s records (an “Audit” ). The Audit shall be conducted by a nationally recognized accounting firm reasonably acceptable to the audited Party and shall be confined to relevant Gas Transactions executed thirty (30) days prior to the Calculation Date. The Party requesting the Audit shall bear all costs of the Audit; provided, however, if the Audit reveals that there is a reasonable basis to conclude that the audited Party, acting outside of its ordinary course of business, has manipulated the Adjusted Bid Price Amount, then the auditor shall recalculate the Adjusted Bid Price Amount and the audited Party will pay the difference between the Adjusted Bid Price Amount originally paid and the corrected amount, plus the cost of the Audit. To the extent the audited Party disputes the Audit’s findings, the audited Party may submit the dispute to the dispute resolution process set forth at Article 10 of the Amended and Restated Power Purchase Agreements.

 

5.3 Status Pending Closing .

 

(a) Continued Effectiveness . The Power Purchase Agreements will remain in force and effect during the Interim Period and nothing herein shall constitute or be considered as an amendment or modification to the Power Purchase Agreements.

 

(b) Facility Scheduling . NEA shall continue to use the Facility to satisfy all capacity and energy obligations under the Power Purchase Agreements during the Interim Period. The Utilities will schedule NEA’s energy deliveries on a day-ahead basis at the Interim Period Delivery Points according to

 

- 14 -

the market rules, manuals and procedures adopted by ISO and/or the members of NEPOOL. In addition, the bidding, scheduling and operation of the Facility during the Interim Period shall be conducted in the same manner and on the same basis as was conducted during the period preceding the Contract Date, and shall be based on information customarily and routinely provided by NEA to the Utilities.

 

(c) Energy and Capacity Pricing . During the Interim Period, NEA will deliver energy and capacity from the Facility and the Utilities will purchase and receive such energy and capacity from the Facility. Energy generated by the Facility, and capacity attributable to the Facility, will be delivered by NEA to the Utilities at the Interim Period Delivery Points and will be purchased by the Utilities at the Existing Prices and paid for by the Utilities in accordance with the terms of the Power Purchase Agreements.

 

(d) Termination of Interim Period . Upon the earlier to occur of (i) the Closing Date or (ii) the Deadline, the Interim Period shall terminate and the provisions set forth in Sections 5.3 and 5.4 shall have no effect and will become void. If the Closing Date occurs prior to the Deadline, then from and after the termination of the Interim Period the Amended and Restated Power Purchase Agreements will govern the relationship between the Parties. If the Deadline occurs prior to the Closing Date, then from and after the termination of the Interim Period the terms and conditions of the Power Purchase Agreements will continue to govern the relationship between the Parties.

 

5.4 Deliveries of Energy Outside of the Power Purchase Agreements During the Interim Period .

 

(a) Interim Period Make Up Delivery . For any hour that the Facility is not capable of generating energy in a quantity sufficient for NEA to deliver energy at the Interim Period On-Peak Delivery Quantities and Interim Period Off-Peak Delivery Quantities, NEA, or a third party acting on behalf of NEA, shall deliver at the Interim Period Delivery Points, electric energy in a quantity equal to the difference between the Net Delivered MWhs delivered from the Facility and the sum of the Interim Period On-Peak Delivery Quantities and Interim Period Off-Peak Delivery Quantities ( “Interim Period Make Up Delivery” ). An Interim Period Make Up Delivery will not be subject to a loss adjustment factor.

 

(b) Interim Period Facility Meter Data . During the Interim Period, the Utilities will use commercially reasonable efforts to provide NEA with the prior day’s hourly net generator values in ISO upload format applicable to the Facility ( “Data” ) by no later than 1:00 PM EPT on the next NSTAR regular working day. NEA will schedule an Interim Period Make Up Delivery pursuant to Manual 28, Section 9.1.1 in the RTM upon receipt of such Data. Any errors will be corrected in the RTM pursuant to Manual 28, Section 9.1.1. In the event that a Utility fails to confirm a scheduled Interim Period Make Up Delivery in accordance with NEPOOL scheduling procedures for the RTM, then the Interim Period Make Up Delivery scheduled by NEA (whether or not confirmed by the Utility) plus the Net Delivered MWhs delivered by the Facility during the relevant period will be deemed to be the relevant Interim Period On-Peak Delivery Quantities and Interim Period Off-Peak Delivery Quantities.

 

(c) Interim Period Pricing . Energy delivered by or on behalf of NEA and received by the Utilities pursuant to an Interim Period Make Up Delivery will be purchased and sold at the RTM LMP Prices at the applicable Interim Period Delivery Points. Interim Period Make Up energy will be paid for by the Utilities directly to NEA or directly to the party providing energy on behalf of NEA within twenty (20) days of the receipt by the applicable Utility of an invoice for such energy.

 

- 15 -

5.5 Closing Payment .

 

(a) Payment Amount . The Closing Payment (equal to the sum of the Closing Date Amount and the revised Adjusted Bid Price Amount, as calculated pursuant to Section 5.5(b)), shall be paid on the Closing Date. If the Closing Payment is a positive amount, the Utilities shall cause NSTAR to make payment to NEA of such amount. If the Closing Payment is a negative amount, NEA shall pay NSTAR, on behalf of the Utilities, the absolute value of such amount.

 

(b) Revised Adjusted Bid Price Amount . For purposes of calculating the Closing Payment components, the revised Adjusted Bid Price Amount shall be determined as provided below:

 

(i)

If, on the Calculation Date, the Adjusted Bid Price Amount is less than negative then (A) NEA may elect to have the revised Adjusted Bid Price Amount be the calculated Adjusted Bid Price Amount, in which event the Closing Date will occur as scheduled or (B) the Utilities may elect to have the revised Adjusted Bid Price Amount be negative in which event the Closing Date will occur as scheduled.

 

(ii)

If, On the Calculation Date, the Adjusted Bid Price Amount is greater than negative and less than positive the revised Adjusted Bid Price Amount will be the Adjusted Bid Price Amount.

 

(iii)

If, on the Calculation Date, the Adjusted Bid Price Amount is greater than positive then (A) the Utilities may elect to have the revised Adjusted Bid Price Amount be the calculated Adjusted Bid Price Amount, in which event the Closing Date will occur as scheduled or (B) NEA may elect to have the revised Adjusted Bid Price Amount equ