Registration of Securities Issued in a Business-Combination Transaction — Form S-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-4 Registration of Securities Issued in a HTML 1.90M
Business-Combination Transaction
2: EX-1.1 Purchase Agreement 29 130K
3: EX-3.1 Certificate of Incorporation 2 17K
4: EX-3.2 By-Laws 7 29K
5: EX-4.1 Indenture 75 343K
6: EX-4.2 First Supplemental Indenture 95 318K
7: EX-4.3 Form of Series A-1 Bond 10 34K
8: EX-4.4 Form of Series B-1 Bond 10 36K
9: EX-4.5 Registration Rights Agreement 24 107K
10: EX-5.1 Opinion re: Legality 2 16K
11: EX-10.1 Power Purchase and Sales Agreement 44 112K
23: EX-10.10 Interconnection Agreement With Wmeco 47 182K
24: EX-10.11 (800) 688 - 1933 59 249K
25: EX-10.12 Purchase and Sales Agreement Wmeco 57 239K
26: EX-10.13 Form of Exchange Agent Agreement 9 39K
12: EX-10.2 Guaranty 10 41K
13: EX-10.3 Consent and Agreement 8 39K
14: EX-10.4 Security Agreement 17 68K
15: EX-10.5 Form of Mortgage 22 87K
16: EX-10.6 Management and Operation Agreement 44 120K
17: EX-10.6(1) (800) 688 - 1933 2 16K
18: EX-10.7 Service Contract 9 36K
19: EX-10.7(1) Renewal of Service Contract 2 17K
20: EX-10.8 Tax Allocation Agreement 8 38K
21: EX-10.8-1 First Amendment to Tax Allocation Agreement 11 41K
22: EX-10.9 (800) 688 - 1933 47 181K
27: EX-12 Ratio of Earnings to Fixed Charges 1 13K
28: EX-23.1 Consent of Arthur Andersen 1 11K
29: EX-23.3 (800) 688 - 1933 2± 15K
30: EX-23.4 Consent of Pa Consulting Services 2± 14K
31: EX-25.1 Form T-1 7 26K
32: EX-99.1 Letter of Transmittal HTML 71K
33: EX-99.2 Notice of Guaranteed Delivery HTML 26K
34: EX-99.3 Brokers Letter HTML 16K
35: EX-99.4 Client Letter HTML 22K
EX-10.6 — Management and Operation Agreement
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EXHIBIT 10.6
NORTHEAST GENERATION COMPANY--NORTHEAST GENERATION SERVICES COMPANY
MANAGEMENT AND OPERATION AGREEMENT
MANAGEMENT AND OPERATION AGREEMENT ("Agreement") made and entered into as of the
1st day of February, 2000, by and between NORTHEAST GENERATION COMPANY, a
Connecticut corporation with its principal place of business in Berlin,
Connecticut ("NGC"), and NORTHEAST GENERATION SERVICES COMPANY, a Connecticut
corporation with its principal place of business in Rocky Hill, Connecticut
("NGS"). NGC and NGS shall be referred to individually as the "Party" and
collectively as the "Parties".
WHEREAS, NGC and NGS are wholly-owned subsidiaries of NU Enterprises, Inc.,
which in turn is wholly-owned by Northeast Utilities;
WHEREAS, NGC has acquired or will acquire through a public auction process
certain electric generation facilities listed on Exhibit 1 hereto (the
"Facilities") from The Connecticut Light and Power Company ("CL&P") and Western
Massachusetts Electric Company ("WMECO"), which NGC intends to own and operate
as exempt wholesale generators ("EWGs);
WHEREAS, NGC desires to have NGS manage and operate the Facilities on behalf of
and as agent for NGC on the terms and conditions stated in this Agreement and
NGS has agreed to do so; and
WHEREAS, pursuant to the NU Guaranty (as defined herein), Northeast Utilities
has guaranteed the obligations of NGS.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein, it is agreed as follows:
SECTION 1 - DEFINED TERMS
1.1 DEFINITIONS. For the purposes of this Agreement, the following terms shall
have the following meanings:
1
"Affiliate" means, with respect to any entity, any other entity that, directly
or indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with, such entity. For this purpose, "control"
means the direct or indirect ownership of fifty percent (50%) or more of the
outstanding capital stock or other equity interests having ordinary voting
power.
"Ancillary Services" means 10-Minute Spinning Reserve ("TMSR"), 10-Minute
Non-Spinning Reserve ("TMNSR"), 30-Minute Operating Reserves ("TMOR"), and
Automatic Generation Control ("AGC"), all having the meanings as defined in the
NEPOOL Agreement.
"Bankrupt" means with respect to a Party, such Party (i) files a petition or
otherwise commences a proceeding under any bankruptcy, insolvency,
reorganization or similar law, or has any such petition filed or commenced
against it, (ii) makes an assignment or any general arrangement (other than an
assignment undertaken in connection with a financing) for the benefit of
creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced),
(iv) has a liquidator, administrator, receiver, trustee, conservator or similar
official appointed with respect to it or any substantial portion of its property
or assets, or (v) is generally unable to pay its debts as they fall due.
"Business Day" means any day except Saturday, Sunday, a Federal Reserve Bank
holiday or a holiday according to the North American Electric Reliability
Council or any successor organization thereto; and a Business Day shall open at
8:00 a.m. and close at 5:00 p.m. Eastern Standard (or Daylight) time.
"Buyer" means the entity or entities (which may or may not be Affiliates of
NGC), which NGC designates and contracts, in each case from time to time, to
sell or broker Products from the Facilities.
"Credit Agreement" means the Credit Agreement dated as of January __, 2000 among
NGC, Citibank, N.A. as Administrative Agent and Collateral Agent and the
Lenders party thereto.
"Delivery Point" means the point(s) at which the Energy of the Facilities will
be delivered by NGS and received by NGC or its Designee. For the purposes of
this Agreement, the Delivery Point shall be Ownership Demarcation Points
described in the Asset Demarcation Agreements by and between NGC and CL&P, and
by and between NGC and WMECO, each dated as of _________, 2000.
2
"Designee" means the corporate entity (which may or may not be an Affiliate)
which NGC may designate in writing to NGS from time to time to exercise certain
specified rights and duties of NGC under this Agreement.
"Energy" means electric energy in the form of merchantable electricity expressed
in megawatt hours and shall be three-phase, 60-cycle alternating current as
delivered to the Delivery Points.
"FERC" means the Federal Energy Regulatory Commission or any successor
government agency.
"Fuel Delivery Point" means the inlet flange of the jet fuel tank at the Tunnel
Jet Facility site.
"Good Industry Practice" means any of the practices, methods, and acts engaged
in or approved by a significant portion of the electric generation facility
operation industry during the relevant time period, or any of the practices,
methods, and acts which, in the exercise of reasonable judgment in light of the
facts known or that should have been known at the time a decision was made,
could have been reasonably expected to accomplish the desired result at a
reasonable cost consistent with full compliance with applicable laws and
regulations, good practices, reliability, safety, environmental protection,
sound business practices and expedition. Good Industry Practice is not limited
to a single, optimum practice, method or act to the exclusion of others, but
rather is intended to include all acceptable practices, methods or acts
generally accepted in the industry. With respect to the Facilities, Good
Industry Practice includes but is not limited to taking reasonable steps to
ensure that:
(1) Adequate materials, resources and supplies are available to meet
each Facility's needs.
(2) Sufficient operating personnel are available and are adequately
experienced and trained to operate the Facilities properly and
efficiently and are capable of responding to emergency conditions.
(3) Preventative, routine and non-routine maintenance and repairs are
performed on a basis that ensures reliable long-term and safe
operation, and are performed by knowledgeable, trained and experience
personnel utilizing proper equipment and tools.
3
(4) Appropriate monitoring and testing is done to ensure equipment is
functioning as designed and to provide assurance that equipment will
function properly under both normal and emergency conditions.
(5) Equipment is not operated in a reckless manner, or in a manner
unsafe to workers or the general public or without regard to defined
limitations such as operating voltage, current, frequency, rotational
speed, synchronization and control system limits.
"Interconnection Agreement" means the Interconnection Agreements by and between
NGC and CL&P and, by and between NGC and WMECO, each dated as of July 2, 1999.
"Interest Rate" means, for any date, the per annum rate of interest equal to the
lesser of (a) prime lending rate as may from time to time be published in the
WALL STREET JOURNAL under "Money Rates"; (or if not published on such day on the
most recent preceding day when published) and (b) the maximum rate permitted by
applicable law.
"ISO-NE" means the New England Independent System Operator, or its successor.
"Lead Participant" shall have the meaning stated in the NEPOOL Market Rules.
"Lender" means any financial institution, other entity or individual or any duly
authorized agent thereof providing financing or refinancing to NGC for any or
all of the Facilities, whether on a senior or subordinated basis.
"NEPOOL" means the New England Power Pool or its successor in interest.
"NEPOOL Agreement" means the Restated NEPOOL Agreement, dated as of December 1,
1996 as amended from time to time.
"NEPOOL Standards" means all Criteria, Rules, Standards, NEPOOL Automated
Billing System Procedures, NEPOOL Operating Procedures and NEPOOL Market Rules
issued or adopted by NEPOOL, ISO-NE and their satellite agencies, or their
successors, as amended from time to time.
4
"NU Guaranty" shall mean the guaranty by Northeast Utilities of NGS's
obligations hereunder in the form contained in Appendix A.
"Operable Capability" shall have the meaning as stated in the NEPOOL Agreement.
"Participant" shall have the meaning stated in the NEPOOL Agreement.
"Product" means the various electrical products, services, and capabilities
(including, but not limited to, for example, energy-related products,
capacity-related products, and generation ancillary services related products)
recognized as market products that can be produced or offered by the Facilities.
For the purposes of this Agreement, at this time, Product shall include, but not
be limited to the Seasonal Claimed Capability, Operable Capability, Energy and
Ancillary Services bought and sold pursuant to the Purchase Agreement or in any
other purchase agreement entered into by NGC and a Buyer.
"Purchase Agreement" shall mean the Power Purchase and Sales Agreement dated as
of ___, 1999, between Select Energy, Inc. and NGC, as the same may be amended,
supplemented and otherwise modified from time to time.
"Schedule" or "Scheduling" means the acts of NGC, its Designee and/or their
designated representatives, if applicable, of notifying, requesting and
confirming to each other the quantity and type of Product to be provided from
each Facility on any given day or days.
"Seasonal Claimed Capability" of the Facilities shall have the meaning as set
forth in the NEPOOL Standards.
"Tunnel Jet Facility" means the approximately 20 MW internal combustion unit
located at the Tunnel hydroelectric station in Preston, Connecticut, and
including the gas turbine enclosure building, a gas turbine control building and
an above ground fuel oil storage tank.
5
SECTION 2 - TERM OF THE AGREEMENT
2.1 TERM. The term of this Agreement ("Term") shall commence on the date that
NGC first obtains ownership of any or all of the Facilities, shall remain in
effect for an initial period of six (6) years (the "Initial Period"), and shall
continue thereafter on a year-to-year basis from the end of the Initial Period
unless and until terminated by either Party by (i) one (1) year advance written
notice by that Party to the other Party, in the case of the Initial Period,
given prior to the commencement of the fifth (5th) year of the Initial Period,
and in the case of any other year, given prior to the commencement of such year,
or (ii) upon a sale by NGC of a particular Facility, this Agreement shall
terminate with respect to such Facility, in which case the fees payable by NGC
to NGS shall be adjusted accordingly to reflect such sales in accordance with
Exhibit 6, and NGC shall also pay NGS's reasonable demobilization costs.
Provided, however that the Parties' obligations under this Agreement with
respect to a particular Facility shall not commence until the date NGC obtains
full ownership of that Facility and the payment described in Section 4 shall be
prorated accordingly. In the event that a termination notice is given by one
Party to the other Party, the Parties shall reasonably cooperate to ensure a
smooth transition to a new manager and operator without adversely affecting the
physical condition, operations or costs of the Facilities.
2.2 MATERIAL CHANGES. In the event that any regulatory agency with jurisdiction
over this Agreement makes substantial changes or modifications to any of the
terms or conditions contained herein or a change in any statute, regulation or
regulatory order affecting the operation or maintenance of any Facility in a
manner that would cause material economic harm to either Party, the Parties
shall cooperate to make such changes as will keep the Parties on substantially
the same economic terms as contained herein. If the Parties cannot reach
agreement, either Party may terminate this Agreement, without further
obligation, upon sixty (60) days prior written notice. In the event of such
termination, NGC shall pay NGS its actual incremental demobilization costs, not
to exceed ten (10) percent of the average annual fixed fee described in Section
4.2.
2.3 TERMINATION RIGHTS. Termination by either Party in accordance with the terms
of this Agreement shall not affect or excuse the performance of either Party
under any provision of this Agreement that by its terms survives any such
termination, including, but not limited to billings, and indemnification and
liability.
SECTION 3 - SCOPE OF SERVICES
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3.1 GENERAL SCOPE OF SERVICES. For the Term of this Agreement, NGS will manage,
operate, and maintain the Facilities and provide the administrative services
required for the Facilities, on behalf of and as agent for NGC as more fully
described in Exhibit 2 hereto (the "Services") and any applicable operation and
maintenance requirements of the Purchase Agreement. The Services shall be
provided in accordance with Good Industry Practice and NEPOOL Standards. NGS's
obligations to NGC shall pertain solely to the Services provided under this
Agreement, and NGS shall not be deemed to be assuming any of the risks of
ownership of the Facilities.
3.2 SPECIFIC PURCHASE AND SALE AGREEMENT OBLIGATIONS. NGS recognizes that NGC in
its Purchase and Sales Agreements with CL&P and WMECO, each dated July 2, 1999
(the "PSAs") has agreed to certain continuing obligations to CL&P and WMECO. NGS
agrees to comply with, and assist NGC in complying with the obligations listed
on Exhibit 3 hereto in the course of providing the Services to NGC with respect
to the Facilities.
3.3 EXCLUDED COSTS. Exhibit 4 lists cost items ("Excluded Costs") which NGS will
not be responsible for paying or bearing, unless otherwise agreed by the
Parties. If NGS pays any such Excluded Cost as part of its Services, it shall
invoice NGC, which shall reimburse NGS within thirty (30) days of its receipt of
such invoice. In addition, NGS will not pay or bear the cost of (a) any
unanticipated major repairs requiring single occurrence cost of greater than
$100,000, or (b) any Approved Capital Expenditures set forth in Exhibit 5 hereto
or other capital expenditures.
3.4 ADDITIONAL CAPITAL EXPENDITURES. NGC, or its Designee with NGC's consent,
shall have the right to request NGS to incur additional capital expenditures
beyond the total capital expenditures included in the Approved Capital
Expenditures in Exhibit 5 for a particular year, as long as NGC pays the
associated capital cost.
3.5 ADDITIONAL OPERATION AND MAINTENANCE COSTS. NGC, or its Designee with NGC's
consent, shall have the right to request NGS to make changes in its operation or
maintenance practices for the Facilities or to undertake additional activities
not required by Section 3 of this Agreement or by Good Industry Practice. NGS
shall make such change, or undertake such additional activities, provided that
NGC fully compensates NGS for any incremental costs it incurs and that such
change is consistent with Good Industry Practice. Additionally, if NGC fails to
fund any Approved Capital Expenditures and such failure results in additional
operating and maintenance costs to NGS, NGC shall fully compensate NGS for any
resulting incremental costs NGS incurs.
7
3.6 MAINTENANCE SCHEDULES. The annual fixed fee and Approved Capital
Expenditures were developed based upon the Assumed Maintenance Schedule
contained in Exhibit 7 hereto and the scope of Services to be provided. Any
deviations from such schedule or scope are subject to the approval of NGC . The
Parties shall mutually agree to adjustments to the annual fixed fee to reflect
the economic impacts of any such change in schedule or scope. NGS shall use all
reasonable efforts to not schedule maintenance during peak production periods,
except with the consent of NGC or as required by Good Industry Practice.
SECTION 4 - PAYMENTS
4.1 PAYMENTS. The payments from NGC to NGS for the Services NGS provides under
Section 3 of this Agreement shall consist of two (2) components: an annual fixed
fee as described in Section 4.2 to be paid in monthly installments, and an
annual incentive payment or credit as described in Section 4.3.
4.2 ANNUAL FIXED FEE. NGC shall pay NGS the annual fixed fee stated on Exhibit 6
applicable for each Facility owned by NGC for each calendar year for the
Services NGS provides under Section 3 of this Agreement. The fixed fee for a
calendar year shall be paid by NGC in twelve (12) equal annual monthly
installments on the first Business Day of each month for that month, or in
amounts predetermined and agreed upon by the Parties based on scheduled
maintenance activity. The Annual Fee shall be readjusted based upon the formula
described in Exhibit 6 upon (i) the sale of a Facility by NGC, (ii) upon the
suspension of any portion or all of the Services at any Facility, or (iii) the
termination of Services at a particular Facility due to the closure by NGC of
such Facility. Except as otherwise specifically stated in this agreement, the
fixed fee will cover all Services rendered by NGS under this Agreement. No later
than eighteen (18) months prior to the end of the Term, the Parties will
negotiate in good faith the annual fixed fee(s) for any extension of the Term.
4.3 ANNUAL INCENTIVE PAYMENT OR CREDIT. In addition to the annual fixed fee, NGC
shall pay NGS an annual incentive payment for each calendar year of up to ten
(10) percent, but not exceeding $2.5 million, of the applicable year's fixed
fee, or receive an incentive credit from NGS of up to five (5) percent of the
applicable year's fixed fee, but not exceeding $1.25 million, based on the
formula described in Exhibit 6 or using such other incentive payment formula
agreed to by the Parties in writing. Any incentive payment shall be made within
sixty (60) days after the end of the calendar year. Any incentive credit shall
be applied as a reduction to the annual fixed fee within sixty (60) days
8
after the end of a calendar year. NGS will calculate the appropriate incentive
payment or credit as an invoice charge or credit to NGC.
4.4 BILLING AND PAYMENT.
4.4.1 All payments required under this Agreement shall be made no later than the
date required by this Agreement, or if no date is specifically required, within
thirty (30) days of receipt by the Party being charged of an invoice or bill
from the other Party. Each Party will make payments by wire transfer, or by
other mutually agreeable method(s), to the account designated by the other
Party. Any amounts, both principal and interest, not paid by the due date will
be deemed delinquent and will accrue interest at the Interest Rate, such
interest to be calculated from the due date to the date the unpaid amount is
paid in full.
4.5 DISPUTES AND ADJUSTMENTS OF INVOICES. NGC may, in good faith, challenge the
correctness of any invoice rendered by NGS under the Agreement, and NGS may
adjust any invoice rendered for any arithmetic, computational or other error,
within twelve (12) months of the date the invoice was rendered. In the event NGC
challenges an invoice or portion thereof, or any other claim or adjustment
arising hereunder, is challenged, or NGS adjusts any invoice, payment of the
invoice in full shall be made when due by NGC, with payment of the disputed
amount only to be made to an escrow account pending resolution of such good
faith dispute, and NGC shall give notice of the objection as to the disputed
portion to NGS at the same time. Any billing challenge or billing adjustment
shall be in writing and shall state the specific basis for the challenge or
adjustment. If it is determined that an adjustment to the invoice is
appropriate, then such payment shall be made within two (2) Business Days of
such determination along with interest accrued on such amount in the escrow
account from the due date until the date paid and any excess amount deposited in
the escrow account by NGC shall be returned to NGC together with any accrued
interest. An invoice rendered under the Agreement shall be binding on NGC and
NGS unless challenged by NGC or adjusted by NGS in accordance with this
subsection within twelve (12) months after the invoice is rendered.
SECTION 5 - COORDINATION WITH NGC, BUYER AND ISO-NE
5.1 CAPACITY AUDITS. NGC may request and NGS shall perform capacity audits of
the Facilities at least annually and NGS shall submit the result of such audits
to ISO-NE in accordance with NEPOOL procedures in effect from time to time. In
the event that any capacity audit results in a change in the capacity rating of
a Facility, NGS will promptly advise NGC and Buyer of the change.
9
5.2 GENERATION QUALIFICATION. NGS shall have sole responsibility for the
qualification of each of the Facilities with ISO-NE as a generation resource in
New England and compliance with applicable NEPOOL Standards.
5.3 DISPATCH. Subject to Good Industry Practice, NGC, or its Designee, shall
have sole discretion to request commitment and dispatch of the Products from
each Facility, up to the capacity available from the Facilities at the time.
5.4 BIDDING AND SCHEDULING AUTHORITY. NGC, or its Designee, shall be the Lead
Participant for the Facilities with ISO-NE. NGC, or its Designee, shall have
sole right and responsibility for bidding and scheduling of the Facilities with
ISO-NE in accordance with the NEPOOL Agreement. NGC, or its Designee, shall
communicate to NGS all scheduling and bidding information in a manner consistent
with the timing requirements of ISO-NE and NEPOOL. NGS shall provide such
support, as may be reasonably requested by NGC, or its Designee, in order to
enable them to perform such obligations. All bidding and scheduling set by NGC,
or its Designee, shall be based upon operating parameters set by NGS in
accordance with the operation and maintenance of each of the Facilities as
specified herein.
5.5 EMERGENCY CURTAILMENT. NGS may curtail, reduce or interrupt its delivery of
all or a portion of the Product of any of the Facilities whenever: (a) continued
operation of such Facility would result in damage to the Facility or to a
transmission or distribution system with which such Facility is directly
interconnected, or (b) if a transmission or distribution system with which such
Facility is directly interconnected experiences an emergency, as designated by
the affected utility, or (c) whenever it is necessary to aid in the restoration
of service on a system with which such Facility is directly or indirectly
interconnected, or (d) whenever requested by ISO-NE or a governmental authority
with applicable jurisdiction, or (e) as required by Good Industry Practice. NGS
shall notify NGC, or its Designee, as soon as reasonably practicable of any such
curtailment, reduction or interruption, it being understood that is may not be
reasonably practicable to provide such notice in advance of such an event. Such
notice may be either written or oral with length and content as mutually agreed
by the Parties depending on the nature of the incident. Any such curtailment,
reduction or interruption shall continue only for as long as reasonably
necessary.
10
5.6 COMMUNICATIONS WITH ISO-NE. NGS shall be responsible for direct
communications with ISO-NE or its satellite operator with regards to the hourly
actual operation of each of the Facilities. NGS shall be responsible for
communications with NGC, or its Designee, regarding any and all directions
received from the ISO-NE or its satellite operator. NGC, or its Designee, shall
have sole responsibility for direct communications with ISO-NE regarding bidding
and scheduling of each of the Facilities.
SECTION 6 - PUMPING POWER AND FUEL
6.1 NORTHFIELD AND ROCKY RIVER FACILITIES. NGC, or its Designee, shall bear the
cost of and make appropriate arrangements for supplying electrical energy for
pumping operation and for the associated pumping costs for the Northfield
Facility and the Rocky River Facility. NGC, or its Designee, shall communicate
to NGS all pumping scheduling information in a manner consistent with the timing
requirements of ISO-NE and NEPOOL.
6.2 TUNNEL JET FUEL. NGC, or its Designee, shall supply and deliver to the Fuel
Delivery Point the fuel required to operate the Tunnel Jet Facility. NGS will be
responsible for the safe and efficient handling of such fuel after the Fuel
Delivery Point. NGC, or its Designee, will coordinate the schedule of such fuel
deliveries with NGS to provide for the efficient and reliable acquisition and
delivery of fuel for the Tunnel Jet Facility.
SECTION 7 - BUDGETING
7.1 ANNUAL BUDGET. On or before October 1 of each year of this Agreement, NGS
will provide NGC and its Designee with an estimate of NGC's costs under Sections
3 and 4 of this Agreement, including the fees payable to NGS hereunder and any
additional operating and maintenance costs, capital costs, and other costs, if
any, of the Facilities to be paid by NGC on a Facility by Facility basis. The
budget for the first year of the Services is attached herein as Exhibit 8.
7.2 ADDITIONAL BUDGET AND PLANNING INFORMATION. To assist NGC and its Designee
with their financial planning and budget management, NGS shall respond to any
reasonable requests from NGC and its Designee for additional budget and
projected cost information such as five (5) year budget planning assumptions and
projections.
SECTION 8 - REPORTING
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8.1 GENERAL REPORTING. NGS will provide NGC and its Designee with any and all
reports reasonably necessary to fulfill Lender, ISO-NE, regulatory, legal or
other requirements.
8.2 INCIDENT REPORTS. NGS will promptly inform NGC and its Designee of any
existing or potential permit violations or incidents, or operating deficiencies
which may materially impede operation of any Facility, materially add to cost or
result in potential legal claims or actions. Such notification may be either
written or oral, with length and content as reasonably requested by NGC, or its
Designee.
8.3 REGULAR, PERIODIC REPORTS. NGS shall furnish to NGC in writing a report as
soon as available but in no event more than thirty (30) days after the end of
each calendar quarter of each fiscal year, in the form of Exhibit 9 attached
hereto, a summary of such quarter's operations and a summary of the calendar
year-to-date operations compared to the budget and forecasts delivered pursuant
to this Agreement, including information in reasonable detail concerning (i)
each Facility's production and availability during such period, (ii) revenues
received during such period, (iii) NGC operating costs during such period as
compared to the operating budget last delivered to NGC, (iv) capital
expenditures during such period as compared to the capital additions and
replacement budget last delivered to NGC and (v) any material developments
during such period in the operations of each of the Facilities, including
material technical problems, discovery of any material defects in the physical
plants and equipment of the Facilities, material interruptions to operation,
material disputes with any governmental body (including tax authorities) or
material labor difficulties. In the event of a material deviation of operating
results from budgets and forecasts delivered pursuant hereto, NGS shall promptly
notify NGC describing such deviation in reasonable detail, and together with
such notice or as soon thereafter as possible, a description of the action that
NGS proposes to take with respect thereto.
8.4 NOTICES OF MATERIAL EVENTS. NGS shall furnish to NGC, in writing, promptly
after NGS obtains knowledge thereof, notice of:
(a) all legal or arbitral proceedings, and of all proceedings by
or before any governmental or regulatory authority or agency,
and of any material development in such legal or other
proceedings, materially affecting any of the Facilities,
including without limitation, any pending or threatened
environmental claim.
12
(b) any other development that results in, or could reasonably be
expected to result in, a material adverse effect on any of the
Facilities.
(c) any Event of Default, together with a description of any
action being taken or proposed to be taken with respect
thereto.
(d) any casualty, damage or loss to the Facilities, whether or not
insured, through fire, theft, other hazard or casualty,
involving a probable loss of $500,000 or more (such amount to
be deemed increased annually consistent with increases in the
consumer price index on each anniversary of the execution
hereof).
(e) any cancellation, notice of threatened or potential
cancellation or material change in the terms, coverage or
amounts of any policy of insurance required to be maintained
by NGS hereunder.
(f) any event, occurrence or circumstance that reasonably could be
expected to render NGS incapable of or prevent NGS from
performing the Services hereunder.
(g) any fact, circumstance, condition or occurrence at, on, or
arising from, any Facility that results in noncompliance with
any environmental law that has resulted or could reasonably be
expected to result in a material adverse effect on the
operations of any Facility.
(h) any lien, except liens incurred in the ordinary course of
business such as mechanics liens.
Each notice delivered under this Section shall be accompanied by a statement
from NGS setting forth the details of the event or development requiring such
notice and any action taken or proposed to be taken with respect thereto.
8.5 OTHER REQUESTED INFORMATION. Throughout the period of this Agreement, the
Parties shall negotiate, discuss and work together in good faith, and exchange
and provide each other with such information as they can reasonably provide and
which would or might assist the other in performing its obligations under this
Agreement or NGC in satisfying any of its obligations under any of the
13
financing documents to which it is a party. In particular, NGS shall keep NGC
reasonably informed of matters relating to the Facilities and the business of
NGC relating to the Facilities and the Services, and shall provide NGC with the
relevant documentation to the extent that such information and documentation is
reasonably available to NGS and provision thereof may occur without material
additional work or cost to NGS.
SECTION 9 - SUBCONTRACTS
9.1 SUBCONTRACTS. NGS may not subcontract Services which aggregate $1.5 million
or greater per calendar year for any single non-Affiliate subcontractor or
vendor, or $5 million in total for all non-Affiliate subcontractors and vendors
in a calendar year, without prior written consent of NGC. In any case, NGS is
solely responsible to NGC for the management and operations of the Facilities,
and subcontracting the Services or any portion thereof to an affiliate (other
than Northeast Utilities Service Company ("NUSCO")) or a non-Affiliate shall not
relieve NGS of any of its duties, liabilities or obligations under this
Agreement. NGS shall remain directly liable to NGC for the performance of such
subcontracted Services as if such services had been performed directly by NGC
and not by an Affiliate or a non-Affiliate.
SECTION 10 - INSURANCE
10.1 INSURANCE. NGS shall obtain and maintain, at NGS's sole cost and expense,
Employer's Liability and/or Worker's Compensation insurance, in accordance with
applicable laws, in statutory amounts. NGS will obtain and maintain Automobile
Liability and Commercial General Liability insurance in such amounts and form as
NGC may reasonably require. Upon NGC's request, NGS will provide copies of
policies or other proof of insurance coverage as NGC may reasonably require.
With NGC's consent, NGS may self-insure such exposures.
All policies, other than Worker's Compensation, shall be endorsed to name NGC
and its Lenders as additional insureds with respect to any and all third party
bodily injury and/or property damage claims arising from NGS's performance
hereunder.
SECTION 11 - TITLE
11.1 TITLE. Title to all capitalized equipment and tools and to all materials
and supplies and fuel held in inventory, provided or procured by NGS pursuant to
this Agreement for the Facilities will pass to
14
NGC immediately upon delivery of the materials to NGS or the applicable Facility
site (whichever occurs first).
SECTION 12 - ENVIRONMENTAL
12.1 ENVIRONMENTAL LIABILITY. Subject to the limitations in Section 14, NGS
shall be liable to NGC for, hold NGC harmless against and indemnify NGC against
any on or off-site environmental liabilities attributable to negligence, gross
negligence or wanton or willful misconduct by NGS. NGS shall not be liable to
NGC, hold NGC harmless against or indemnify NGC with respect to any other
environmental liabilities.
SECTION 13 - EVENTS OF DEFAULT; REMEDIES
13.1 EVENTS OF DEFAULT. (a) An "Event of Default" shall mean, with respect to a
Party ("Defaulting Party"), the occurrence of any of the following:
(i) the failure to make, when due, any payment required pursuant
to this Agreement, except if such payment is being contested
in good faith pursuant to Sections 4.5 and 15, if such failure
to pay such uncontested amount is not remedied within one
hundred twenty (120) days after written notice of such
failure;
(ii) any representation or warranty made by the Defaulting Party
herein shall be false or misleading in any material respect
when made or when deemed to be repeated;
(iii) the willful contravention of any applicable law or regulation
relating to the operation of the Facilities;
(iv) the failure to perform any material obligation set forth in
this Agreement (other than the events that are otherwise
specifically covered as a separate Event of Default), and such
failure is not cured within sixty (60) days after written
notice of such failure; or
(b) An "Event of Default" shall mean, with respect to NGS (the "Defaulting
Party"), the occurrence of any of the following:
(i) NGS or NU shall be Bankrupt.
15
(ii) if at any time the outstanding liability of
NGS under this Agreement exceeds the
limitation on damages set forth in Section
14.2; PROVIDED, HOWEVER, exceeding the
limitation on damages set forth in Section
14.2 shall not constitute an Event of
Default if NGS waives its rights in writing
under Section 14.2 for such calendar year.
(iii) if NGS fails to comply with or hold any
permits required under any law or regulation
to perform its material obligations
hereunder, and such failure cannot be
remedied by NGS within sixty (60) days of
becoming aware of such issue.
(iv) Except as permitted by Section 6.01 of the
Credit Agreement, Northeast Utilities shall
fail to own 100% of the voting stock of NGS.
(v) Any provision of the NU Guaranty shall cease
to be valid and binding on or enforceable
against Northeast Utilities, or Northeast
Utilities shall so state in writing.
13.2 REMEDIES. Upon an Event of Default, the non-Defaulting Party has the right
to terminate this Agreement upon thirty (30) days written notice to the
Defaulting Party. This Agreement shall not be terminated if the default is cured
within the thirty (30) day notice period.
SECTION 14 - LIABILITY AND DAMAGES
14.1 LIMITATION OF LIABILITY. Notwithstanding anything to the contrary express
or implied in this Agreement neither Party shall be liable to the other Party
hereto in tort, contract, indemnity provision, under statute or otherwise in law
or equity or by contract for any indirect, consequential, incidental, punitive
or exemplary damages, lost profits or other business interruption damages.
14.2 LIMITATION OF DAMAGES. Notwithstanding anything to the contrary expressed
or implied in this Agreement, in no event shall either Party be liable to the
other Party for damages for all events and occurrences that occur in a calendar
year that exceed the sum of the annual amounts paid by NGC to NGS for that
calendar year pursuant to Section 4 plus any applicable insurance proceeds,
unless such occurrence is or was caused by the gross negligence or willful
misconduct of either Party , in which case such Party shall be responsible for
the full amount of the damages.
16
SECTION 15 - DISPUTE RESOLUTION
15.1 STEP NEGOTIATION. In the event of a dispute regarding this Agreement, the
Parties shall attempt, in good faith, to resolve the dispute amicably and
promptly by appointing a senior executive of each Party to attempt to mutually
agree upon a resolution. Either Party may give the other Party written notice of
any dispute or claim. Within ten (10) days after delivery of said notice, the
executives will meet at a mutually acceptable time and place and thereafter as
often as they reasonably deem necessary to exchange information and attempt to
resolve the dispute or claim within thirty (30) days. If the two senior
executives cannot reach a resolution, the dispute may be set for arbitration as
described herein.
15.2 ARBITRATION. If the senior executives of the Parties are unable to resolve
the dispute, and adjudication of the dispute is not within the exclusive
jurisdiction of the FERC, the dispute may be submitted upon request of either
Party to binding arbitration by one arbitrator who has not previously been
employed by either Party, and does not have a direct or indirect interest in
either Party or the subject matter of the arbitration. Such arbitrator shall
either be as mutually agreed by the Parties within thirty (30) days after
written notice from either Party requesting arbitration, or failing agreement,
shall be selected under the expedited rules of the American Arbitration
Association (the "AAA") unless otherwise agreed by the Parties. Such arbitration
shall be held in alternating locations of the home offices of the Parties or in
any other mutually agreed upon location. The rules of the AAA shall apply to the
extent not inconsistent with the rules herein specified. The judgment rendered
by the arbitrator may be enforced in any court having jurisdiction of the
subject matter and the Parties. All costs of the arbitration shall be paid
equally by the Parties, unless the award shall specify a different division of
the costs. Each Party shall be responsible for its own expenses, including
attorney's fees. Both Parties shall be afforded adequate opportunity to present
information in support of its position on the dispute being arbitrated. The
arbitrator may also request additional information from the Parties.
15.3 ARBITRATION RULES. The arbitrator shall be bound by the terms of this
Agreement and may not detract from or add to its terms. The Parties may by
mutual agreement specify the rules that are to govern the arbitration
proceedings and limit the matters to be considered. The findings and award of
the arbitrator shall be final and conclusive and shall be binding upon the
Parties, except as otherwise provided by law. Each Party agrees that it will not
bring a lawsuit concerning any dispute covered by this arbitration provision.
Any monetary award of the arbitrator may be enforced by the Party in whose favor
such monetary award is made in any court of competent jurisdiction.
17
SECTION 16 - FORCE MAJEURE
16.1 FORCE MAJEURE. As used in this Agreement, "Force Majeure" means an event or
circumstances which prevents one party from performing its obligations under
this Agreement, which event or circumstances was not anticipated as of the date
of the Agreement and is not within the reasonable control of, and without fault
or negligence of, the Party claiming Force Majeure (the "Claiming Party"), and
which, by the exercise of due diligence, the Claiming Party is unable to
overcome or avoid or cause to be avoided. Consistent with the above, Force
Majeure includes, without limitation, sabotage, strikes or other labor
difficulties, riots or civil disturbance, acts of God, act of public enemy,
drought, earthquake, flood, explosion, fire, lightning, landslide, or similarly
cataclysmic occurrence, or appropriation or diversion of electricity by sale or
binding order of any court or governmental authority having jurisdiction thereof
(so long as the Claiming Party has not applied for or assisted in the
application for such Court or government action or any other case, whether of
the kind herein enumerated or otherwise). In the event of a strike or other
labor difficulties, NGS will use all reasonable efforts to ensure that the
Facilities are operated as if there were no strike or other labor difficulties
during the time such events exist.
18
16.2 PROCEDURE ON FORCE MAJEURE CLAIM.
(a) If a Claiming Party wishes to claim relief by reason of Force
Majeure, it shall give written notice stating the date of
commencement of such Force Majeure event and the predicted
extent, estimated consequences and the cause thereof, to the
other Party as soon as reasonably possible and in any case
within five (5) days of it becoming aware of such event or
circumstances, time being of the essence.
(b) The Claiming Party shall keep the other Party fully informed
of any developments with respect to the Force Majeure.
(c) If either Party claims relief for Force Majeure pursuant to
Section 16.1 and the other Party disputes the existence,
nature, extent or condition of the event of circumstances
giving rise to such claim for relief, then:
(i) the Parties shall meet promptly in order to resolve
such dispute within such period as the Parties hereto
may agree (or, failing agreement, within thirty (30)
days); and
(ii) if such dispute is not resolved by the Parties
pursuant to paragraph (i) above, then such dispute
shall be resolved pursuant to Section 15.
(d) The Claiming Party shall give notice to the other Party of
the cessation of the relevant event or circumstances of Force
Majeure as soon as practicable after becoming aware of such
cessation.
(e) In the event that Force Majeure causes any Party to be unable
to serve any notice hereunder, the period for the serving of
such notice (if any) shall be extended for every day while
such event or circumstance of Force Majeure prevents the
service of such notice.
16.3 EFFECTS OF FORCE MAJEURE. If either Party to this Agreement is rendered
wholly or partly unable to perform its obligations hereunder because of Force
Majeure as defined above, that Party shall be
19
excused from whatever performance is affected by the Force Majeure to the extent
so affected, provided that:
(a) the non-performing Party promptly, but in no case longer than
five (5)days after the occurrence of the Force Majeure, gives
the other Party written notice describing the particulars of
the occurrence;
(b) the suspension of performance shall be of no greater scope and
of no longer duration than is reasonably required by the Force
Majeure; and
(c) the non-performing Party uses due diligence to remedy its
inability to perform.
In the event that the Force Majeure is of a duration greater than ninety (90)
days the performing Party may terminate this Agreement with respect to the
Facility or Facilities whose performance is affected by the Force Majeure upon
thirty (30) days prior written notice, unless the Force Majeure has been cured
within that later thirty (30) day period.
SECTION 17 DELIVERY
17.1 DELIVERY. (a) NGS shall deliver each Facility to NGC on the termination
date of this Agreement in the state and condition as shall be reasonably
expected, subject to ordinary wear and tear, on the assumption that each
Facility has been consistently operated and maintained in accordance with Good
Industry Practice and as otherwise provided in this Agreement.
(b) NGS shall deliver to, or relinquish custody to NGC or (at the direction of
NGC) to any person appointed by NGC to operate and/or maintain the Facilities in
succession to NGS (a "Successor Operator") all funds held by NGS as agent or
trustee for NGC as operator of the Facilities, all books, records and
inventories and all property of NGC relating to the operation and maintenance of
the Facilities, in such condition as reflects full compliance with NGS's
obligations under this Agreement.
(c) NGS shall, to the extent allowed by such contracts, transfer to any
Successor Operator, effective as of the termination date of this Agreement with
respect to any of the Facilities, the benefit of all contracts it has relating
to the performance of the Services. Pending such transfer, NGS shall hold it
rights and interests in relation to all such contracts for the Successor
Operator.
20
17.2 CONTINUITY OF OPERATION (a) NGS shall provide reasonable assistance to NGC
and any Successor Operator to transfer the operation and maintenance of the
Facilities to NGC or any Successor Operator, so as to prevent, limit or mitigate
any harm or disruption to the normal operation and maintenance of the Facilities
and the business of NGC.
(b) If this Agreement is terminated by NGC, NGS shall, if required by NGC,
continue to operate the Facility for a period specified by NGC but not exceeding
90 days from the date of such termination. During such period, NGS and NGC shall
both continue to comply with this Agreement as if it had not been terminated and
both Parties' obligations had continued during such period. NGC shall pay NGS
during such period the same amount as would have been due during such period if
the Agreement had not been terminated.
SECTION 18 - INSPECTION AND AUDIT RIGHTS
18.1 AUDIT RIGHTS. NGC shall have the right throughout the Term and for a period
of three (3) years following the end of the Term, upon reasonable prior notice,
to inspect the Facilities, to request copies of and review documents and to
examine the books and records of NGS to the extent reasonably necessary to
verify the accuracy and basis for any claim by NGS for payments from NGC or to
determine NGS's compliance with the terms of this Agreement. NGS shall make all
such records available as appropriate at each Facility or NGS's office in Rocky
Hill, Connecticut during normal business hours.
SECTION 19 - INDEMNIFICATION
19.1 INDEMNIFICATION. NGC and NGS shall each be liable to, indemnify, defend and
hold the other Party, its directors, officers, employees and agents (including
but not limited to affiliates and contractors and their employees), harmless
from and against all third party liabilities, damages, losses, penalties,
claims, demands, suits, expenses, attorneys' fees and proceedings of any nature
whatsoever for personal injury (including death) or property damage that arise
out of the performance of this Agreement or other actions or omissions by that
party, except to the extent that such injury or damage may be attributable to
the negligence, gross negligence or willful misconduct of the Party seeking to
be indemnified. The obligations of NGS and NGC in relation to bona fide,
independent third parties, under this Section 19 shall not be limited by Section
14.
19.2 EMPLOYEE OBLIGATIONS. NGS, either directly or through its Affiliate NUSCO,
shall be solely responsible for employing the employees who shall perform the
Services and other obligations
21
hereunder on behalf of NGS (the "EMPLOYEES") and shall maintain employment of
Employees with such qualifications and expertise as necessary for NGS to provide
the Services to NGC pursuant hereto. NGS, either directly or through NUSCO,
shall be responsible for the payment of all salaries and benefits, whether
contractual or statutory, associated with the employment of the Employees,
including but not limited to, expense reimbursements, health insurance, workers
compensation and social security, and NGS shall indemnify and hold harmless NGC
from and against all claims, demands, costs, expenses (including reasonable
attorneys' fees) as incurred, liabilities and losses which may result from the
failure of NGS to comply with such responsibilities in connection with its
employees.
19.3 NOTICE. The indemnifying Party shall be promptly notified of any claim made
against the indemnified Party arising out of the matters specified in this
Section 19.
19.4 PROCEEDINGS. (a) The indemnifying Party may at its own cost conduct
negotiations for the settlement of any claim made against the
indemnified Party arising out of the matters specified in this Section
19 and any litigation that may arise therefrom in such reasonable
manner as the indemnified Party shall from time to time approve (such
approval not to be unreasonably withheld).
19.4 (b) The indemnified Party shall not make any admission which might be
prejudicial to the indemnifying Party unless the indemnifying Party has
failed to take over the conduct of the negotiations or litigation or
provide security under this Section 19.4 within a reasonable time of
having been so requested.
SECTION 20 - INTELLECTUAL PROPERTY
20.1 DEFINITION. "Intellectual Property Rights" means: (a)
(i) patents, trade marks, service marks, rights
in designs, trade names, copyrights and
topography rights, in each case whether
registered or not;
(ii) applications for registration of any of the
above;
22
(iii) rights under licenses and consents in
relation to any of the above; and
(iv) all forms of protection of a similar nature
or having equivalent or similar effect to
any of them which may subsist anywhere in
the world.
(b) NGC INTELLECTUAL PROPERTY. Designs, drawings, specifications,
instructions, manuals and other documents created, produced or
commissioned by NGC and relating to the Facilities and to the
carrying out of the Services at the Facilities and copyright
therein and all Intellectual Property Rights relating thereto
("NGC INTELLECTUAL PROPERTY") are, shall be, and shall remain
the property of NGC. NGC hereby grants to NGS a revocable,
non-exclusive, royalty free, non-transferable license to use
NGC Intellectual Property in connection with the providing of
the Services to NGC only.
(c) OPERATOR INTELLECTUAL PROPERTY. NGS hereby grants to NGC an
irrevocable, non-exclusive, royalty-free, transferable license
to use solely with regard to the providing of Services to NGC
any Intellectual Property Rights owned by NGS required in
connection with the Services.
(d) THIRD PARTY INTELLECTUAL PROPERTY. Prior to concluding any
contract with any third parties relating to the supply of
materials or services specifically created by third parties
for the purposes of providing the Services, NGS shall use
reasonable efforts to provide that such third party grant
irrevocable non-exclusive, royalty-free licenses to each of
NGS and NGC to use all Intellectual Property Rights pertaining
to such contract with the right for NGC to assign such license
to, or grant a sub-license to, any person appointed operator
of the Facilities from time to time.
SECTION 21 - MISCELLANEOUS
21.1 AMENDMENTS. This Agreement may be amended only by a writing executed by the
Parties hereto.
21.2 GOVERNING LAW.
23
21.2.1. CHOICE OF LAW AND JURISDICTION. This Agreement and the rights and duties
of the Parties hereunder shall be governed by and construed, enforced and
performed in accordance with the laws of the State of Connecticut, without
regard to principles of conflicts of law. Each Party waives its respective right
to any jury trial with respect to any litigation arising under or in connection
with this Agreement.
21.2.2. APPLICABLE LAWS, REGULATIONS, ORDERS, APPROVALS AND PERMITS. This
Agreement is made subject to all existing or future applicable federal, state,
and local laws and to all existing or future duly promulgated orders or other
duly authorized actions of governmental authorities having jurisdiction over the
matters contained in this Agreement.
21.3 NOTICES. All notices, requests, statements, or payments required to be made
under this Agreement shall be made as specified below. Notices required to be in
writing shall be delivered in person, by letter, facsimile or other documentary
form. Notice by facsimile or hand delivery shall be deemed to have been received
by the close of the Business Day on which it was transmitted or hand delivered
(unless transmitted or hand delivered after close, in which case it shall be
deemed received by the close of the next Business Day). Notice by overnight mail
or courier shall be deemed to have been received the next Business Day after it
was sent. A Party may change its addresses by providing notice of same in
accordance herewith:
To NGC: Northeast Generation Company
107 Selden Street
Berlin, CT 06037
Attn: Asset Management Division,
Joseph J. Staszowski, Director
FAX: (860) 665-5798
To NGS: Northeast Generation Services Company
273 Dividend Road
Rocky Hill, CT 06067
Attn: William J. Nadeau
Vice President
FAX: (860) 665-6263
24
Either Party by written notice to the other Party may change the address or the
persons to whom notices or copies thereof shall be directed.
21.4 COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which together shall
constitute one and the same instrument.
21.5 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit
of the successors and assigns of each Party hereto. Neither Party shall assign
its obligations hereunder to any other Person without the prior written consent
of the other Party, which in the case of a proposed assignment by NGS may be
withheld by NGC in its sole discretion, and in the case of a proposed assignment
by NGC may not be unreasonably withheld by NGS; provided, however, that NGC may
assign its rights hereunder to an Affiliate or to a Lender in connection with
financing or refinancing of the Facilities without the consent of NGS.
21.6 WAIVERS. The failure of either Party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of a Party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.
21.7 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the Parties and their respective permitted
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to either Party, nor
to give any third persons any right of subrogation or action against either
Party.
21.8 SECTION HEADINGS. The section headings used in this Agreement are for
convenience only and shall not be deemed to be a binding portion of this
Agreement.
21.9 INDEPENDENT CONTRACTORS. The Parties are independent contractors. Except as
otherwise specified in this Agreement, nothing contained herein shall be deemed
to create association, joint venture, partnership or principal/agent
relationship between the Parties hereto or impose any partnership obligation or
liability on either Party, and neither Party shall have any right, power or
25
authority to enter into any agreement or commitment, act on behalf of or
otherwise bind the other Party in any way.
21.10 SUCCESSORS INCLUDED. Reference to any individual, corporation or other
entity shall be deemed a reference to such individual, corporation or other
entity, together with its successors and permitted assigns from time to time.
21.11 ENTIRE AGREEMENT. This Agreement (including the Schedules hereto)
constitute the entire agreement between the Parties relating to the subject
matter contemplated by this Agreement. This Agreement shall be considered for
all purposes as prepared through the joint efforts of the parties and shall not
be construed against one party or the other as a result of the preparation,
substitution, submission or other event of negotiation, drafting or execution
hereof.
21.12 PARTIAL INVALIDITY. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
and any provision declared or rendered unlawful by any applicable court of law
or regulatory agency or deemed unlawful because of a statutory change will not
otherwise affect the remaining lawful obligations that arise under this
Agreement, unless such a construction of the remainder of the Agreement would be
unreasonable or deprive a Party of a material benefit under this Agreement. In
such event, the Parties shall seek to amend this Agreement to remove the invalid
provision and otherwise provide the benefit unless prohibited by law.
21.13 SURVIVING RIGHTS. All indemnity and audit rights shall survive the
termination of this Agreement for three (3) years.
SECTION 22 - REPRESENTATIONS AND WARRANTIES
On the date of this Agreement, each Party represents and warrants to
the other Party that: (i) it is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation, (ii) it has all
regulatory authorizations necessary for it to legally perform its obligations
under this Agreement and any other documentation relating to this Agreement to
which it is a party, (iii) the execution, delivery and performance of this
Agreement and any other documentation relating to this Agreement to which it is
a party are within its powers, have been duly authorized by all necessary action
and do not violate any of the terms and conditions in its governing documents,
any
26
contracts to which it is a party or any law, rule, regulation, order or the like
applicable to it, (iv) this Agreement and each other document executed and
delivered in accordance with this Agreement constitutes its legally valid and
binding obligation enforceable against it in accordance with its terms, (v)
there are no bankruptcy proceedings pending or being contemplated by it or, to
its knowledge, threatened against it, (vi) there is not pending or, to its
knowledge, threatened against it or any of its affiliates any legal proceedings
that could materially adversely affect its ability to perform its obligations
under this Agreement or any other document relating to this Agreement to which
it is a party, (vii) no Event of Default or event which, absent a cure, with the
giving of notice or lapse of time, or both, would constitute an Event of Default
with respect to it has occurred and is continuing and no such event or
circumstance would occur as a result of its entering into or performing its
obligations under this Agreement or any other document relating to this
Agreement.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the day and
year first above written.
Northeast Generation Company
By: /s/ David R. McHale
-------------------------------
Name: David R. McHale
Title: Vice President and Treasurer
Northeast Generation Services Company
By: /s/ William J. Nadeau
-------------------------------
Name: William J. Nadeau
Title: Vice President and
Chief Operating Officer
27
EXHIBIT 1
ELECTRIC GENERATING FACILITIES
HOUSATONIC HYDROELECTRIC SYSTEM
Falls Village Station
Bulls Bridge Station
Rocky River Station
Shepaug Station
Stevenson Station
Robertsville Station
Bantam Station
EASTERN HYDROELECTRIC SYSTEM
Tunnel Station
Taftville Station
Scotland Station
Tunnel ICU
NORTHFIELD MOUNTAIN HYDROELECTRIC SYSTEM
Northfield Mountain Pumped Storage Station and Northfield Environmental
Recreation Center
Cabot Station
Turner Falls #1 Station
28
EXHIBIT 2
SCOPE OF SERVICES
The Services provided under Section 3 of the Agreement include management,
operations, maintenance, administrative, labor, consumable materials (except
station services for electrical needs and fuel for electric generation), water,
supervision and other goods and services necessary for the safe, efficient, and
reliable management, operation and maintenance of the Facilities on a daily
basis.
The scope of services includes, the following:
A. FACILITY MANAGEMENT
1. Recruiting, hiring and training of qualified personnel, vendors and
subcontractors;
2. Strategic planning to ensure that the Facilities' day-to-day and
long-term operational and maintenance needs are satisfied;
3. Compliance with and maintenance of standard operating procedures;
4. Preparation and maintenance of operating and maintenance records and
reports;
5. Preparation and processing of invoices to support payments by NGC of
items directly charged to NGC;
6. Procurement and payment for goods, services and supplies provided by
vendors, suppliers and contractors;
7. Development and implementation of policies and procedures relating to
safety, environmental and security practices;
8. Development and maintenance of an effective inventory management
system;
9. Supervision of all personnel, vendors and subcontractors;
10. Development of operating reports and budgets for NGC;
11. Development of recommendations for Facility capital improvements and
programs which may be of benefit to NGC;
12. Reasonable coordination with NGC and Buyer;
13. Development and implementation of an effective maintenance process
including all necessary procedures;
14. Utilization of predictive maintenance program;
15. Utilization of computer based maintenance management system;
16. Inspection of dams as required;
17. Operation and maintenance of all recreational facilities associated
with the Facilities;
18. Provision of hand tools and equipment determined to be less than units
of property under NGC's retirement catalogue;
19. Administration and assurance of compliance with and maintenance of all
licenses, permits, leases, and contracts associated with the
Facilities;
20. Coordinating with CL&P, WMECO, NGC and Buyer under the terms of the
Interconnection Agreements with NGC dated 7/2/99;
21. Community Relations.
22. Management and administrative support.
2
23. Technical and engineering support for operation and maintenance of the
Facilities in their current status.
B. OPERATIONS
NGS will provide all services necessary to operate the Facilities in strict
compliance with all legal requirements and government authorizations or licenses
and in accordance with Good Industry Practices, NEPOOL Standards and operation
and maintenance requirements of the Purchase Agreement. Operations shall
include, but not be limited to the following:
1. Operating the hydroelectric, pumped storage and jet plants ; this
includes all auxiliary systems, motor control centers and electrical
switchgear;
2. Scheduling of operations and personnel;
3. Coordinating with transmission/distribution tagging;
4. Removal of debris and ice from trash racks;
5. Operation of intakes, spillways, gateways and outlet works;
6. Public notification of draw down events;
7. Assuring compliance with applicable environmental safety and health
regulations;
8. Maintenance of NGC's spare parts inventory to enable performance of all
maintenance and continued operations;
9. Operation of lubrication and control systems;
10. Performance of equipment testing and adjustments;
11. Providing Facility security;
3
12. Caring for Facilities and grounds, including housekeeping.
C. MAINTENANCE
To ensure the long-term operability of systems and equipment, NGS will provide
services necessary to maintain the Facilities' equipment, including on-site
electrical interconnection Facilities owned by NGC, in proper working condition
under the current mode of operation as of the effective date of this Agreement.
Maintenance includes but not be limited to the following:
1. Ordinary Maintenance - daily repairs, maintenance and upkeep of the
Facilities to maintain plant capacity and uninterrupted, economical
production and delivery of electricity.
2. Scheduled Maintenance - overhauls, repairs, maintenance and upkeep to
the Facilities at scheduled intervals to preserve and maintain plant
capacity and uninterrupted and economical production and delivery of
electricity.
3. Forced Maintenance - repairs and maintenance of the Facilities not
reasonably anticipated which must be performed to preserve and maintain
plant capacity and uninterrupted economical production of electricity
and energy products.
4. Facility Maintenance - inspection, and minor maintenance and repair of
all buildings, structures, facilities and grounds.
4
EXHIBIT 3
ONGOING PURCHASE AND SALE AGREEMENT OBLIGATION
CL&P AND WMECO PSAS
Section 5.7 Employee Matters
Section 5.8 Access After Closing to Records and Employees
Section 5.13 Discharge of Environmental Liabilities
Section 7.0 Confidentiality
Section 11.1 Press Releases and Public Announcement
Exhibit E - Interconnection Agreements Dated 7/2/99
EXHIBIT 4
NGS EXCLUDED COSTS
NGS will not be responsible for paying or bearing the costs of the following
items, although NGS may process invoices or bills for such costs for payment by
NGC as part of the administrative service it provides:
1. Fuel, fuel testing, and emission fees for the Tunnel Jet Facility.
2. Pumping Costs for either the Rocky River facility or Northfield
Mountain facility
3. Property taxes for the Facilities
4. Insurance premiums for property, liability or business interruption
insurance for the Facilities
5. Costs associated with any headwater or backwater benefit agreements
entered into by NGC for the Facilities, including fees for FERC gauging
stations
6. Inventory carrying charges associated with the Facilities
7. Costs associated with Stand-By/Back-up Services for the Facilities and
those related for use of non-PTF or distribution Facilities.
8. FERC annual hydroelectric license fee.
9. FERC hydroelectric license related expenses beyond those required for
compliance on a daily basis with the FERC licenses which are not
included in the Annual Fee in Exhibit 6
10. Environmental fees for the Facilities which are not included in the
Annual Fee in Exhibit 6
11. Costs payable under contracts that are not included in the Annual Fee
in Exhibit 6.
12. Sales, gross receipts, value added and similar taxes.
2
EXHIBIT 5
APPROVED CAPITAL EXPENDITURES
($000)
[Enlarge/Download Table]
Facility 2000 2001 2002 2003 2004 2005
-------- ---- ---- ---- ---- ---- ----
HOUSATONIC HYDROELECTRIC SYSTEM
Falls Village Station 197.1 121.4 107.7 100.3 67.3 69.0
Bulls Bridge Station 192.7 126.5 126.7 130.6 78.5 80.5
Rocky River Station 113.8 60.8 158.4 162.7 387.3 1,252,3
Shepaug Station 595.7 1,460.6 297.1 304.9 201.9 206.9
Stevenson Station 216.0 165.2 265.1 272.1 168.2 197.1
Roberstville Station 7.2 7.3 7.5 7.7 7.9 8.0
Bantam Station 5.1 5.2 5.3 5.5 5.6 5.7
EASTERN HYDROELECTRIC SYSTEM
Tunnel Hydro Station 35.8 36.6 37.4 38.3 39.3 40.2
Taftville Station 35.8 36.6 37.4 38.3 39.3 40.2
Scotland Station 35.8 36.6 37.4 38.3 39.3 40.2
Tunnel ICU 0.0 0.0 182.0 19.0
NORTHFIELD MOUNTAIN HYDROELECTRIC
SYSTEM
Northfield Mountain Pumped Storage 1,509.2 754.6 772.8 792.1 578.5 593.0
Station
Cabot Station 518.2 7,620.3 7,455.8 11,226.0 198.3 203.3
Turners Falls # 1 Station 3.2 20.8 27.3 0.0
Total 3,465.3 10,452.3 9,518.2 13,136.2 1,811.3 2,736.4
EXHIBIT 6
a. ANNUAL FIXED FEE
($000)
[Enlarge/Download Table]
Facility 2000 2001 2002 2003 2004 2005
-------- ---- ---- ---- ---- ---- ----
HOUSATONIC HYDROELECTRIC SYSTEM
Falls Village Station 731.9 1019.1 611.5 627.2 643.3 754.7
Bulls Bridge Station 580.4 1,230.0 383.7 394.4 405.3 416.6
Rocky River Station 871.6 1,025.0 917.8 942.3 970.4 1,140.0
Shepaug Station 1,276.6 2,399.3 1,369.7 1,405.1 1,441.2 1,803.9
Stevenson Station 1,241.8 1,399.9 1,044.8 2,552.3 2,623.8 1,190.1
Roberstville Station 13.4 82.3 13.6 14.0 14.2 14.6
Bantam Station 6.4 75.2 6.4 6.5 6.6 6.8
EASTERN HYDROELECTRIC SYSTEM
Tunnel Hydro Station 170.7 173.4 176.3 180.8 185.3 190.0
Taftville Station 211.1 352.2 218.0 223.5 229.0 234.98
Scotland Station 180.6 252.4 186.6 191.5 196.4 201.5
Tunnel ICU 43.9 43.6 47.4 52.2 69.9 50.7
NORTHFIELD MOUNTAIN
HYDROELECTRIC SYSTEM
Northfield Mountain Pumped 10,614.9 11,103.3 9,309.1 7,687.4 7,964.6 8,036.3
Storage Station
Cabot Station 2,092.7 2,158.7 1,938.1 2,014.5 2,071.0 2,129.1
Turners Falls # 1 Station 210.1 216.4 166.5 176.5 184.2 192.3
TOTAL ALL FACILITIES 18,246.1 21,530.8 16,389.5 16,468.2 17,005.2 16,361.5
The fixed fee for a calendar year shall by paid by NGC in twelve (12)
equal annual monthly installments by month on the first Business Day of each
month for that month, or in amounts predetermined and agreed upon by the Parties
based on scheduled maintenance activity.
Payment for any partial month shall be prorated based on the number of
days in a month that NGS operates a Facility as a percentage of the total number
of days in that month.
With respect to year 2006 and subsequent years, NGS shall provide NGC
with its proposed annual fixed fee at least eighteen (18) months prior to the
beginning of such calendar year. The Parties shall negotiate in good faith to
agree on such fixed annual fee. If the Parties cannot agree, either Party may
terminate this Agreement in accordance with Section 2.
b. INCENTIVE PAYMENT/CREDIT COMPONENT
NGC will pay NGS an annual incentive payment of up to ten (10) percent or
receive an annual incentive credit of up to five (5) percent of the Fixed Fee
based on NGS's performance against performance goals such as:
1. Overall availability of the Facilities
2. Availability of the Facilities during peak periods
3. Northfield Mountain Facility only - availability during 200
annual highest price hours
4. Reductions or increases in scheduled overhaul periods or NGS
Excluded Costs in Exhibit 4.
NGC and NGS will work collaboratively to design and implement the specific
performance goals and incentive calculation.
The annual incentive payment shall not exceed $2.5 million, and the annual
incentive credit shall not exceed $1.25 million.
2
EXHIBIT 7
HYDRO MAINTENANCE SCHEDULE
[Enlarge/Download Table]
Station/unit MW Year 2000 Year 2001 Year 2002 Year 2003 Year 2004 Year 2005
------------ -- --------- --------- --------- --------- --------- ---------
Northfield 1 270 3 wks MI 18 wks 3 wks MI 3 wks MI
Maj. OH
Northfield 2 270 18 wks 3 wks MI 3 wks MI
Maj. OH
Northfield 3 270 3 wks MI 3 wks MI 3 wks MI
Northfield 4 270 18 wks 3 wks MI
Maj. OH
Northfield Sta.
Cabot 1 8.83 1 wk MI 20 wks 1 wk MI 1 wk MI 1wk MI 1wk MI
Maj. OH
Cabot 2 8.83 1 wk MI 20 wks 1 wk MI 1 wk MI 1wk MI 1wk MI
Maj. OH
Cabot 3 8.83 1 wk MI 1 wk MI 20 wks 1 wk MI 1wk MI 1wk MI
Maj. OH
Cabot 4 8.83 1 wk MI 1 wk MI 20 wks 1 wk MI 1wk MI 1wk MI
Maj. OH
Cabot 5 8.83 1 wk MI 1 wk MI 1 wk MI 20 wks 1wk MI 1wk MI
Maj. OH
Cabot 6 8.83 1 wk MI 1 wk MI 1 wk MI 20 wks 1wk MI 1wk MI
Maj. OH
Cabot Sta. 53 1 wk CI 1 wk CI 1 wk CI 1wk CI 1wk CI 1wk CI
Turners Falls 1 1.85 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1wk MI 1wk MI
Turners Falls 2 0.35 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1wk MI 1wk MI
Turners Falls 3 1.3 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1wk MI 1wk MI
Turners Falls 5 1.35 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1wk MI 1wk MI
Turners Falls 7 1.4 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1wk MI 1wk MI
Turners Falls 6.25 1 wk CI 1 wk CI 1 wk CI 1 wk CI 1wk CI 1wk CI
Sta.
Scotland 2.2 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1 wk MI
Taftville 1 0.41
Taftville 2 0.42
Taftville 3 0.44
Taftville 4 0.38
Taftville 5 0.38
Taftville Sta. 2.03 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1 wk MI
EXHIBIT 7
HYDRO MAINTENANCE SCHEDULE
[Enlarge/Download Table]
Station/unit MW Year 2000 Year 2001 Year 2002 Year 2003 Year 2004 Year 2005
------------ -- --------- --------- --------- --------- --------- ---------
Tunnel 1 1.05
Tunnel 2 1.05
Tunnel Sta. 2.1 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1 wk MI
Bantam S 0.3 3 dy MI 3 dy MI 3 dy MI 3 dy MI 3 dy MI 3 dy MI
Bulls Bridge 1 1.4 1 wk MI 1 wk MI 1 wk MI 1 wk MI
Bulls Bridge 2 1.4 1 wk MI 1 wk MI 1 wk MI 1 wk MI
Bulls Bridge 3 1.4 1 wk MI 1 wk MI 1 wk MI 1 wk MI
Bulls Bridge 4 1.4 1 wk MI 1 wk MI 1 wk MI 1 wk MI
Bulls Bridge 5 1.4 1 wk MI 1 wk MI 1 wk MI 1 wk MI
Bulls Bridge 6 1.4 1 wk MI 1 wk MI 1 wk MI 1 wk MI
Bulls Bridge S 8.4 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1 wk MI
Falls Village 1 3.67
Falls Village 2 3.67
Falls Village 3 3.67
Falls Village S 11 2wks MI/CI 2wks MI/CI 2wks MI/CI 2wks MI/CI 2wks MI/CI 2wks MI/CI
Robertsville 1 0.31
Robertsville 2 0.31
Robertsville S 0.62 3 dy MI 3 dy MI 3 dy MI 3 dy MI 3 dy MI 3 dy MI
Rocky River 1 3
Rocky River 2 3
Rocky River 3 25.35
Rocky River S 31.35 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1 wk MI 1 wk MI
Shepaug S 43.4 1wk MI 16 wk MI 1wk MI 1wk MI 1 wk MI 1 wk MI
Stevenson 1 7.11 1wk MI 1wk MI 1wk MI 1wk MI 1 wk MI 1 wk MI
Stevenson 2 7.11 1wk MI 1wk MI 1wk MI 1wk MI 1 wk MI 1 wk MI
Stevenson 3 7.11 1wk MI 1wk MI 1wk MI 1wk MI 1 wk MI 1 wk MI
Stevenson 4 7.57 1wk MI 1wk MI 1wk MI 1wk MI 1 wk MI 1 wk MI
Stevenson S 28.9
Legend:
MI = Maintenance Inspection
Maj. OH = Major Overhaul
CI = Canal Inspection
2
EXHIBIT 8
ESTIMATE OF TOTAL FIRST YEAR BUDGET
3
EXHIBIT 9
QUARTERLY REPORT
NGS MANAGE AND OPERATE SERVICES
QUARTERLY REPORT
NORTHEAST GENERATION COMPANY SITES
CURRENT QUARTER ENDING _______________
OPERATIONS SUMMARY:
QUARTERLY STATISTICS:
[Enlarge/Download Table]
Location EAF FOF CF Gross Station Net Comment
-------- --- --- -- ----- ------- --- -------
Generation Service Generation
---------- ------- ----------
------------------------------------------------------------------------------------------------------------------------------------
Falls Village
------------------------------------------------------------------------------------------------------------------------------------
Bulls Bridge
------------------------------------------------------------------------------------------------------------------------------------
Rocky River
------------------------------------------------------------------------------------------------------------------------------------
Shepaug
------------------------------------------------------------------------------------------------------------------------------------
Stevenson
------------------------------------------------------------------------------------------------------------------------------------
Robertsville
------------------------------------------------------------------------------------------------------------------------------------
Bantam
------------------------------------------------------------------------------------------------------------------------------------
Tunnel Hydro
------------------------------------------------------------------------------------------------------------------------------------
Tunnel ICU
------------------------------------------------------------------------------------------------------------------------------------
Taftville
------------------------------------------------------------------------------------------------------------------------------------
Scotland
------------------------------------------------------------------------------------------------------------------------------------
Northfield Mtn
------------------------------------------------------------------------------------------------------------------------------------
Cabot
------------------------------------------------------------------------------------------------------------------------------------
Turners Falls #1
------------------------------------------------------------------------------------------------------------------------------------
YEAR TO DATE STATISTICS
Location EAF FOF CF Gross Station Net Comment
-------- --- --- -- ----- ------- --- -------
Generation Service Generation
---------- ------- ----------
------------------------------------------------------------------------------------------------------------------------------------
Falls Village
------------------------------------------------------------------------------------------------------------------------------------
Bulls Bridge
------------------------------------------------------------------------------------------------------------------------------------
Rocky River
------------------------------------------------------------------------------------------------------------------------------------
Shepaug
------------------------------------------------------------------------------------------------------------------------------------
Stevenson
------------------------------------------------------------------------------------------------------------------------------------
Robertsville
------------------------------------------------------------------------------------------------------------------------------------
Bantam
------------------------------------------------------------------------------------------------------------------------------------
Tunnel Hydro
------------------------------------------------------------------------------------------------------------------------------------
Tunnel ICU
------------------------------------------------------------------------------------------------------------------------------------
Taftville
------------------------------------------------------------------------------------------------------------------------------------
Scotland
------------------------------------------------------------------------------------------------------------------------------------
Northfield Mtn
------------------------------------------------------------------------------------------------------------------------------------
Cabot
------------------------------------------------------------------------------------------------------------------------------------
Turners Falls #1
------------------------------------------------------------------------------------------------------------------------------------
2
[Enlarge/Download Table]
NGC Expenses This Quarter Year to Date Year End Comment
------------ ------------ ------------ -------- -------
------------------------------------------------------------------------------------------------------------------------------------
M&OS Fixed Fee
------------------------------------------------------------------------------------------------------------------------------------
Add'l O&M
------------------------------------------------------------------------------------------------------------------------------------
Approved Capital
------------------------------------------------------------------------------------------------------------------------------------
Add'l Captital
------------------------------------------------------------------------------------------------------------------------------------
Other
------------------------------------------------------------------------------------------------------------------------------------
COMMENTS
3
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘S-4’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 12/6/01 | | | | | | | None on these Dates |
| | 7/2/99 | | 4 | | 7 |
| | 12/1/96 | | 4 |
| List all Filings |
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