Document:

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                                                         Exhibit 10.12

                           PURCHASE AND SALE AGREEMENT

                                     BETWEEN

                          NORTHEAST GENERATION COMPANY

                                       AND

                     WESTERN MASSACHUSETTS ELECTRIC COMPANY

                                  JULY 2, 1999

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                                TABLE OF CONTENTS
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<S>                                                                                                             <C>
1.       DEFINITIONS..............................................................................................1

2.       ACQUISITION OF ASSETS BY BUYER..........................................................................12
         2.1.     PURCHASE AND SALE OF ASSETS....................................................................12
         2.2.     EXCLUDED ASSETS................................................................................13
         2.3.     ASSUMPTION OF LIABILITIES......................................................................14
         2.4.     EXCLUDED LIABILITIES. .........................................................................15
         2.5.     PURCHASE PRICE.................................................................................16
         2.6.     ADJUSTMENTS TO INITIAL PURCHASE PRICE..........................................................16
         2.7.     ALLOCATION OF PURCHASE PRICE...................................................................18
         2.8.     PRORATION......................................................................................18
         2.9.     THE CLOSING....................................................................................19
         2.10.    DELIVERIES BY THE SELLER AT THE CLOSING........................................................19
         2.11.    DELIVERIES BY THE BUYER AT THE CLOSING.........................................................20

3.       REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF THE SELLER...............................................21
         3.1.     ORGANIZATION OF THE SELLER.....................................................................21
         3.2.     AUTHORIZATION OF TRANSACTION...................................................................21
         3.3.     NONCONTRAVENTION...............................................................................22
         3.4.     BROKERS' FEES..................................................................................22
         3.5.     TITLE TO ACQUIRED ASSETS.......................................................................22
         3.6.     LEGAL AND OTHER COMPLIANCE; PERMITS............................................................22
         3.7.     TAXES..........................................................................................22
         3.8.     CONTRACTS AND LEASES...........................................................................23
         3.9.     INSURANCE......................................................................................23
         3.10.    LITIGATION.....................................................................................23
         3.11.    EMPLOYEES......................................................................................23
         3.12.    ENVIRONMENTAL MATTERS..........................................................................24
         3.13.    CONDEMNATION...................................................................................24
         3.14.    REGULATION AS A UTILITY........................................................................24
DISCLAIMERS REGARDING ACQUIRED ASSETS............................................................................25

4.       REPRESENTATIONS AND WARRANTIES OF THE BUYER.............................................................26
         4.1.     ORGANIZATION OF THE BUYER......................................................................26
         4.2.     AUTHORIZATION OF TRANSACTION...................................................................26
         4.3.     NONCONTRAVENTION...............................................................................27
         4.4.     BROKERS' FEES..................................................................................27
         4.5.     LITIGATION.....................................................................................27

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         4.6.     NO KNOWLEDGE OF THE SELLER'S BREACH............................................................27
         4.7.     AVAILABILITY OF FUNDS..........................................................................27
         4.8.     "AS IS" SALE...................................................................................27
         4.9.     AFFILIATE GUARANTY.............................................................................28
         4.10.    QUALIFIED BUYER................................................................................28
         4.11.    CANDLEWOOD LAKE BEACHES SALES AND LOVER'S LEAP LAND SALE DUE DILIGENCE.........................28

5.       COVENANTS...............................................................................................28
         5.1.     GENERAL........................................................................................28
         5.2.     NOTICES, CONSENTS AND APPROVALS................................................................29
         5.3.     OPERATION OF BUSINESS..........................................................................29
         5.4.     FULL ACCESS; YEAR 2000 COMPUTER PROBLEM........................................................31
         5.5.     INTERIM PERIOD NOTICE..........................................................................31
         5.6.     FURTHER ASSURANCES.............................................................................32
         5.7.     EMPLOYEE MATTERS...............................................................................33
         5.8.     ACCESS AFTER CLOSING...........................................................................36
                  (a)  RECORDS...................................................................................36
                  (b)  EMPLOYEES.................................................................................37
         5.9.     NEPOOL.........................................................................................37
         5.10.    RISK OF LOSS...................................................................................37
         5.11.    REGULATORY APPROVAL PROCESS....................................................................38
         5.12.    INTENTIONALLY OMITTED..........................................................................39
         5.13.    DISCHARGE OF ENVIRONMENTAL LIABILITIES.........................................................39

6.       CONDITIONS TO OBLIGATION TO CLOSE.......................................................................39
         6.1.     CONDITIONS TO OBLIGATION OF THE BUYER TO CLOSE.................................................39
                  (a)  REPRESENTATIONS AND WARRANTIES............................................................39
                  (b)  PERFORMANCE BY THE SELLER.................................................................39
                  (c)  BUYER'S REGULATORY APPROVALS..............................................................39
                  (e)  ABSENCE OF LITIGATION.....................................................................39
                  (f)  ANTITRUST MATTERS.........................................................................40
                  (h)  DELIVERIES................................................................................40
         6.2.     CONDITIONS TO OBLIGATION OF THE SELLER TO CLOSE................................................40
                  (a)  REPRESENTATIONS AND WARRANTIES............................................................40
                  (b)  PERFORMANCE BY BUYER......................................................................40
                  (c)  SELLER'S REGULATORY APPROVALS.............................................................40
                  (e)  ABSENCE OF LITIGATION.....................................................................40
                  (f)  ANTITRUST MATTERS.........................................................................40
                  (g)  DELIVERIES................................................................................40
                  (h)  NEPOOL....................................................................................41

7.       CONFIDENTIALITY.........................................................................................41

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8.       TAXES...................................................................................................42

9.       SURVIVAL OF REPRESENTATIONS AND WARRANTIES; EFFECT OF CLOSING AND INDEMNIFICATION.......................42

         9.1.     SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SURVIVAL OF COVENANTS AND AGREEMENTS...............42
         9.2.     EFFECT OF CLOSING..............................................................................43
         9.3.     INDEMNITY BY THE SELLER........................................................................43
         9.4.     INDEMNITY BY BUYER.............................................................................43
         9.5.     ...............................................................................................44
EXCLUSIVE REMEDY.................................................................................................44
         9.6.     MATTERS INVOLVING THIRD PARTIES................................................................44
         9.7.     NET OF TAXES AND INSURANCE.....................................................................45
         9.8.     NO RECOURSE....................................................................................45

10.      TERMINATION.............................................................................................45
         10.1.    TERMINATION OF AGREEMENT.......................................................................45
         10.2.    EFFECT OF TERMINATION..........................................................................46

11.      MISCELLANEOUS...........................................................................................47
         11.1.    PRESS RELEASES AND PUBLIC ANNOUNCEMENTS........................................................47
         11.2.    NO THIRD PARTY BENEFICIARIES...................................................................47
         11.3.    NO JOINT VENTURE...............................................................................47
         11.4.    ENTIRE AGREEMENT...............................................................................47
         11.5.    SUCCESSION AND ASSIGNMENT......................................................................47
         11.6.    COUNTERPARTS...................................................................................47
         11.7.    HEADINGS.......................................................................................48
         11.8.    NOTICES........................................................................................48
         11.9.    GOVERNING LAW..................................................................................49
         11.10.   CHANGE IN LAW..................................................................................49
         11.11.   CONSENT TO JURISDICTION........................................................................49
         11.12.   AMENDMENTS AND WAIVERS.........................................................................49
         11.13.   SEVERABILITY...................................................................................49
         11.14.   EXPENSES.......................................................................................49
         11.15.   CONSTRUCTION...................................................................................49
         11.16.   INCORPORATION OF EXHIBITS AND SCHEDULES........................................................50
         11.17.   SPECIFIC PERFORMANCE...........................................................................50
         11.18.   DISPUTE RESOLUTION.............................................................................50
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                                  EXHIBITS

Exhibit A-1                    -  Form of Deed
Exhibit A-2                    -  Form of Reserved Easement
Exhibit B                      -  Form of Bill of Sale
Exhibit C                      -  Form of Assignment and Assumption Agreement
Exhibit D                      -  Form of Property Tax Agreement
Exhibit E                      -  Form of Interconnection Agreement
Exhibit F                      -  Form of Guaranty
Exhibit G                      -  Form of Asset Demarcation Agreement
Exhibit H                      -  Form of Mortgage Indenture Release
Exhibit I                      -  Intentionally Omitted
Exhibit J                           -  Northfield Mountain Upper Reservoir
                                       Energy Storage Tables
Exhibit K                      -  Form of Environmental Consultant Reliance
                                  Letter

                                  SCHEDULES

Schedule 2.1(a)(i)             -  Real Property
Schedule 2.1(a)(ii)            -  Real Property Matters
Schedule 2.1(b)                -  Personal Property
Schedule 2.1(c)                -  Leases
Schedule 2.1(d)                -  Permits
Schedule 2.1(e)                -  Contracts
Schedule 2.1(g)                -  Names of Facilities
Schedule 2.2(a)                -  T&D and Associated Telecommunication Assets
Schedule 2.10(q)               -  Matters for Opinion from Counsel to the Seller
Schedule 2.11(j)               -  Matters for Opinion from Counsel to the Buyer
Schedule 3.3                   -  Matters of Contravention
Schedule 3.5                   -  Title Commitments/Policies, Defects In Title
Schedule 3.6                   -  Compliance
Schedule 3.8(b)                -  Exceptions to Contract Obligations
Schedule 3.9                   -  Insurance
Schedule 3.10                  -  Litigation
Schedule 3.11                  -  Collective Bargaining Agreements and Related
                                  Matters
Schedule 3.12                  -  Environmental
Schedule 3.13                  -  Condemnation
Schedule 3.15                  -  Benefit Plans
Schedule 3.16                  -  Material Asset Exception
Schedule 3.18                  -  Year 2000 Computer Problem Performance
Schedule 5.3                   -  Pre-Approved Capital Expenditures
Schedule 5.3(g)                -  Modifications to Employee Benefit Plans
Schedule 5.7(c)(iii)           -  Eligible Non-Represented Employee Benefits

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Schedule 5.7(g)                -  Station Personnel
Schedule 6.1(c)                -  Buyer's Regulatory Approvals
Schedule 6.2(c)                -  Seller's Regulatory Approvals

[Exhibits and Schedules will be provided to the Securities and Exchange
Commission by Northeast Generation Company upon request.]
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                           PURCHASE AND SALE AGREEMENT

         This Purchase and Sale Agreement (the "AGREEMENT") is entered into on
July 2, 1999, by and between Northeast Generation Company, a Connecticut
corporation (the "BUYER"), and Western Massachusetts Electric Company, a
Massachusetts corporation (the "SELLER"). The Buyer and the Seller are each
referred to herein as a "PARTY" or, collectively as the "PARTIES."

         This Agreement contemplates a transaction in which the Buyer will
purchase certain assets of the Seller (as defined in Section 2.1 below) in
consideration of the Purchase Price (as defined in Section 2.5 below).

         Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:

1.       DEFINITIONS.

         "ACQUIRED ASSETS" has the meaning set forth in Section 2.1.

         "ACQUIRED ASSETS EMPLOYEES" has the meaning set forth in Section
5.7(b).

         "ACQUIRED ASSETS EMPLOYEES' RECORDS" mean all personnel records
maintained by the Seller relating to the Acquired Assets Employees to the extent
such files contain (i) names, addresses, dates of birth, job titles and
descriptions; (ii) starting dates of employment; (iii) salary and benefits
information; (iv) resumes and job applications; and (v) any other documents that
the Seller is not prohibited by Law to deliver to the Buyer. To the extent the
consent of an Acquired Assets Employee is required in order for the Seller to
deliver a document which is part of the Acquired Assets Employees' Records to
the Buyer, the Seller agrees to use reasonable efforts to secure such consent.

         "AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.

         "AGREEMENT" has the meaning set forth in the preamble above.

         "ASSET DEMARCATION AGREEMENT" means the agreement between the Parties
evidencing their agreement as to the demarcation of ownership with respect to
certain assets not situated wholly on real property owned, or to be owned, by
either the Seller or the Buyer, in substantially the form attached hereto as
EXHIBIT G.

         "ASSIGNMENT AND ASSUMPTION AGREEMENT" means the agreement between the
Parties by which the Seller shall assign certain rights, liabilities and
obligations and the Buyer shall assume the Assumed Liabilities, in substantially
the form attached hereto as EXHIBIT C.

         "ASSUMED LIABILITIES" has the meaning set forth in Section 2.3.

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         "BILL OF SALE" means the form of bill of sale by which the title to
personal property shall be conveyed to the Buyer, substantially in the form
attached hereto as EXHIBIT B.

         "BUSINESS DAY" means any day other than a Saturday, Sunday or day on
which banks are legally closed for business in Hartford, Connecticut or New
York, New York.

         "BUYER" has the meaning set forth in the preamble above.

         "BUYER MATERIAL ADVERSE EFFECT" means any material adverse change in,
or effect on, the business, financial condition, operations, results of
operations or future prospects of the Buyer, including any change or effect that
is materially adverse to the Buyer's ability to own, operate or use the Acquired
Assets as so owned, operated and used by the Seller prior to the Effective Date,
taken as a whole; PROVIDED that any change or effect that is cured prior to
Closing shall not be considered a Buyer Material Adverse Effect; and PROVIDED,
FURTHER, that any change or effect having a value of five percent of the
Purchase Price or less shall not be deemed to be a Buyer Material Adverse
Effect.

         "BUYER'S REGULATORY APPROVALS" means those approvals identified on
SCHEDULE 6.1(C) attached hereto to be obtained by the Buyer as a condition to
the Buyer's obligations under this Agreement.

         "CAPITAL COMMITMENTS" means all binding contractual commitments to make
capital expenditures relating to the Acquired Assets, Facilities or Sites
incurred by the Seller during the Interim Period that extend beyond the Closing
Date, whether or not relating to the Pre-Approved Capital Expenditures.

         "CASH" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP.

         "CLOSING" has the meaning set forth in Section 2.9.

         "CLOSING ADJUSTMENT" has the meaning set forth in Section 2.6(c).

         "CLOSING DATE" has the meaning set forth in Section 2.9.

         "CLOSING PURCHASE PRICE" has the meaning set forth in Section 2.5.

         "CLOSING STATEMENT" has the meaning set forth in Section 2.6(d).

         "CMR" means Code of Massachusetts Regulations.

         "CODE" means the Internal Revenue Code of 1986, as amended.

         "COLLECTIVE BARGAINING AGREEMENT" has the meaning set forth in Section
5.7(a).

         "COMMERCIALLY REASONABLE EFFORTS" means efforts which are reasonably
within the contemplation of the Parties at the Effective Date and which do not
require the performing Party

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to expend any funds other than expenditures which are customary and reasonable
in transactions of the kind and nature contemplated by this Agreement in order
for the performing Party to satisfy its obligations hereunder.

         "CONTRACTS" has the meaning set forth in Section 2.1(e).

         "DEED" means the form of deed by which the Real Property shall be
conveyed to the Buyer, substantially in the form attached hereto as EXHIBIT A-1.

         "DISCLOSING PARTY" has the meaning set forth in the definition of
Proprietary Information.

         "DTE" means the Massachusetts Department of Telecommunications and
Energy.

         "DTE APPROVAL" means the order or orders of the DTE approving this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereby and thereby and all related matters, including without
limitation approval of the amount of the proceeds of the sale of the Acquired
Assets, such order or orders to be in a form which is final, unconditional and
unappealable by any Person, including exhaustion of all administrative and
judicial appeals or remedies and the running of time periods and statutes of
limitation for rehearing and judicial review.

         "EFFECTIVE DATE" means the date on which this Agreement has been duly
executed and validly delivered by the Parties.

         "EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program or (e) profit sharing, bonus, stock
option, stock purchase, equity, stock appreciation, deferred compensation,
incentive, severance plan or other benefit plan.

         "EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).

         "EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1).

         "ENVIRONMENT" means soil, land surface or subsurface strata, real
property, surface waters, groundwater, wetlands, sediments, drinking water
supply, ambient air (including indoor air) and any other environmental medium or
natural resource.

         "ENVIRONMENTAL CLAIM" means a claim by any Person based upon a breach
of Environmental Laws or an Environmental Liability alleging loss of life,
injury to persons, property or business, damage to natural resources or trespass
to property, whether or not such

                                      -3-
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loss, injury, damage or trespass arose or was made manifest before the Closing
Date or arises or becomes manifest after the Closing Date.

         "ENVIRONMENTAL LAWS" means all applicable Laws and any binding
administrative or judicial interpretations thereof relating to: (a) the
regulation, protection and use of the Environment; (b) the conservation,
management, development, control and/or use of land, natural resources and
wildlife; (c) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation, or handling of, or exposure to, any
Hazardous Substances; or (d) noise; and includes, without limitation, the
following federal statutes (and their implementing regulations): the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended; the Solid Waste Disposal Act, as amended, 42 U.S.C. Section 6901 et
seq.; the Federal Water Pollution Control Act of 1972, as amended, 33 U.S.C.
Section 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15
U.S.C. Section 2601 et. seq.; the Clean Air Act of 1966, as amended, 42 U.S.C.
Section 7401 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act,
as amended, 7 U.S.C. Section 136 et seq.; the Coastal Zone Management Act of
1972, as amended, 16 U.S.C. Section 1451 et seq.; the Oil Pollution Act of 1990,
as amended, 33 U.S.C. Section 2701 et. seq.; the Rivers and Harbors Act of 1899,
as amended, 33 U.S.C. Section 401 et seq.; the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Section 1801 et seq.; the Endangered
Species Act of 1973, as amended, 16 U.S.C. Section 1531 et. seq.; the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651 et
seq.; and the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. Section
300(f) et seq.; and all analogous or comparable state statutes and regulations,
including, without limitation, the Massachusetts Oil and Hazardous Release
Prevention and Response Act, as amended, M.G.L. c. 21E.

         "ENVIRONMENTAL LIABILITIES" means any Liability under or related to
Environmental Laws arising as a result of or in connection with (i) any
violation or alleged violation of Environmental Law, prior to, on or after the
Closing Date, with respect to the ownership, operation or use of the Acquired
Assets; (ii) any Environmental Claims caused (or allegedly caused) by the
presence or Release of Hazardous Substances at, on, in, under, adjacent to or
migrating from the Acquired Assets prior to, on or after the Closing Date,;
(iii) the investigation and/or Remediation (whether or not such investigation or
Remediation commenced before the Closing Date or commences after the Closing
Date) of Hazardous Substances that are present or have been Released prior to,
on or after the Closing Date at, on, in, under, adjacent to or migrating from
the Acquired Assets; (iv) compliance with Environmental Laws on or after the
Closing Date with respect to the ownership or operation or use of the Acquired
Assets; (v) any Environmental Claim arising from or relating to the off-site
disposal, treatment, storage, transportation, discharge, Release or recycling,
or the arrangement for such activities, of Hazardous Substances, on or after the
Closing Date, in connection with the ownership or operation of the Acquired
Assets; and (vi) the investigation and/or remediation of Hazardous Substances
that are generated, disposed, treated, stored, transported, discharged,
Released, recycled, or the arrangement of such activities, on or after the
Closing Date, in connection with the ownership or operation of the Acquired
Assets, at any Offsite Disposal Facility.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

         "ESTIMATED ADJUSTMENT" has the meaning set forth in Section 2.6(c).

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         "ESTIMATED CLOSING STATEMENT" has the meaning set forth in Section
2.6(c).

         "EVENT OF LOSS" has the meaning set forth in Section 5.10.

         "EXCLUDED ASSETS" has the meaning set forth in Section 2.2.

         "EXCLUDED LIABILITIES" has the meaning set forth in Section 2.4.

         "EXHIBITS" means the exhibits to this Agreement.

         "FACILITIES" means the generating facilities identified by name on
SCHEDULE 2.1(g) attached hereto.

         "FERC" means the Federal Energy Regulatory Commission, or its
regulatory successor, as applicable.

         "FERC APPLICATIONS" has the meaning set forth in Section 5.11.

         "FIRPTA AFFIDAVIT" means the affidavit to be delivered by the Parties
at Closing pursuant to Section 1445(b)(2) of the Code, to establish that each
Party is not a "foreign person" within the meaning of that Section.

         "GAAP" means United States generally accepted accounting principles as
in effect from time to time.

         "GENERATION SUPPORT SERVICES AGREEMENT" means an agreement between the
Buyer and Northeast Generation Services, Inc. under which the Buyer can
contract, at the Buyer's option, for the provision of certain services to the
Buyer after the Closing.

         "GOOD UTILITY PRACTICES" means any of the practices, methods and acts
engaged in or approved by a significant portion of the electric utility industry
during the relevant time period, or any of the practices, methods or acts which,
in the exercise of reasonable judgment in light of the facts known at the time
the decision was made, could have been expected to accomplish the desired result
at a reasonable cost consistent with good business practices, reliability,
safety and expedition. Good Utility Practices are not intended to be limited to
the optimum practice, method or act to the exclusion of all others, but rather
to be acceptable practices, methods or acts generally accepted in the region.

         "GOVERNMENTAL AUTHORITY" means any federal, state, local or other
governmental, regulatory or administrative agency, commission, department,
board, or other governmental subdivision, court, tribunal, arbitral body or
other governmental authority, but excluding the Buyer and any subsequent owner
of the Sites (if otherwise a Governmental Authority under this definition).

         "GROUP HEALTH PLAN" has the meaning set forth in Section 5000(b)(1)
of the Code.

         "GUARANTY" means the form of guaranty in substantially the form
attached hereto as Exhibit F.

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         "HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

         "HAZARDOUS SUBSTANCE" means (a) any petrochemical or petroleum
products, oil, waste oil, asbestos in any form that is or could become friable,
urea formaldehyde foam insulations, lead-based paint and polychlorinated
biphenyls; (b) any products, mixtures, compounds, materials or wastes, air
emissions, toxic substances, wastewater discharges and any chemical, material or
substance that may give rise to liability pursuant to, or is listed or regulated
under, or the human exposure to which or the Release of which is controlled or
limited by applicable Environmental Laws; and (c) any materials or substances
defined in Environmental Laws as "hazardous", "toxic", "pollutant", or
"contaminant", or words of similar meaning or regulatory effect.

         "IMPROVEMENTS" means all buildings, structures (including all fuel
handling and storage facilities), machinery and equipment, fixtures,
construction in progress, including all piping, cables and similar equipment
forming part of the mechanical, electrical, plumbing or HVAC infrastructure of
any building, structure or equipment, and including all generating units,
located on and affixed to the Sites.

         "INDEMNIFIED PARTY" has the meaning set forth in Section 9.6(a).

         "INDEMNIFYING PARTY" has the meaning set forth in Section 9.6(a).

         "INDEPENDENT APPRAISER" has the meaning set forth in Section 2.7.

         "INITIAL PURCHASE PRICE" has the meaning set forth in Section 2.5.

         "INSPECTIONS" means all tests, reviews, examinations, inspections,
investigations, verifications, samplings and similar activities conducted by any
Party or such Party's agents or representatives with respect to the Acquired
Assets prior to the Closing.

         "INTERCONNECTION AGREEMENT" means the agreement between the Parties in
substantially the form attached hereto as EXHIBIT E.

         "INTERIM PERIOD" means that period of time commencing on the Effective
Date and ending on the Closing Date.

         "INVENTORY" or "INVENTORIES" means fuel inventories, materials, spare
parts, consumable supplies and chemical and gas inventories located at the
Sites, in transit to the Sites or identified in any Schedule.

         "ISO NEW ENGLAND" means ISO New England, Inc., the independent system
operator as established or designated by NEPOOL.

         "KNOWLEDGE" means the actual, current knowledge, after due inquiry, of
the corporate officers charged with responsibility for the particular function
at the date of this Agreement, or, with respect to any certificate delivered
pursuant to this Agreement, the date of delivery of the certificate.

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         "LAWS" means all laws, rules, regulations, codes, injunctions,
judgments, orders, decrees, rulings, interpretations, constitution, ordinance,
common law, or treaty, of any federal, state, local municipal and foreign,
international, or multinational government or administration and related
agencies.

         "LEASES" has the meaning set forth in Section 2.1(c).

         "LIABILITY" or "LIABILITIES" means any liability or obligation (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
whether incurred or consequential and whether due or to become due), including
any liability for Taxes.

         "LIEN" means any mortgage, pledge, lien, security interest, charge,
claim, equitable interest, encumbrance, restriction on transfer, conditional
sale or other title retention device or arrangement (including, without
limitation, a capital lease), transfer for security for the payment of any
indebtedness, or restriction on the creation of any of the foregoing, whether
relating to any property or right or the income or profits therefrom; PROVIDED,
HOWEVER, that the term "LIEN" shall not include any of the following "PERMITTED
ENCUMBRANCES": (i) Liens for Taxes or other charges or assessments by any
Governmental Authority to the extent that the payment thereof is not in arrears
or otherwise due or is being contested in good faith; (ii) encumbrances in the
nature of zoning restrictions, building and land use laws, ordinances, orders,
decrees, restrictions or any other conditions imposed by any Governmental
Authority; (iii) easements (including without limitation, the Reserved Easements
and any other easement or like right granted by an instrument executed in
connection with this Agreement or the Related Agreements or the transactions
contemplated hereby or thereby, but excluding such encumbrances that secure
indebtedness), rights, restrictions, title imperfections and similar matters
including such matters as are set forth in any applicable FERC license or
exemption on the uses of property if the same do not materially detract from the
operation or use of such property in the business of the Seller as conducted on
the Effective Date; (iv) deposits or pledges made in connection with, or to
secure payment of, worker's compensation, unemployment insurance, old age
pension programs mandated under applicable laws or other social security
regulations; (v) statutory or common law liens in favor of carriers,
warehousemen, mechanics and materialmen, statutory or common law liens to secure
claims for labor, materials or supplies and other like liens, which, in the case
of clauses (i) through (v), inclusive, secure obligations to the extent that
payment thereof is not in arrears or otherwise due and which have been incurred
under Good Utility Practices; (vi) any Lien with respect to the Acquired Assets
that arises under Good Utility Practices and is not material to the operation or
use of the Acquired Assets in the business of the Seller as conducted on the
Effective Date; (vii) any Lien or title imperfection with respect to the
Acquired Assets created by or resulting from any act or omission of the Buyer;
(viii) all exceptions set forth in the "Title Commitments" or discoverable based
on a review of an accurate survey of the Sites or the land records of the
respective towns in which the Sites are located; and (ix) matters set forth on
Schedule 2.1(a)(ii).

                                      -7-
<Page>

         "LOCAL" means the International Brotherhood of Electrical Workers,
Local Union No. 455.

         "LOSSES" has the meaning set forth in Section 9.3.

         "MAJOR LOSS" has the meaning set forth in Section 5.10(b).

         "MATERIAL ADVERSE EFFECT" means any change in, or effect on, the
Acquired Assets that is materially adverse to the operations or condition of the
Acquired Assets as operated by the Seller on the Effective Date, taken as a
whole, other than any such change or effect resulting from (a) changes in the
international, national, regional or local wholesale or retail markets for
electric power or fuel used in connection with the Acquired Assets; (b) changes
in the North American, national, regional or local electric transmission systems
or the operation thereof or the costs imposed on generators of electricity in
connection with the use of such electric transmission systems; or (c) any order
of any Governmental Authority, or legislation applicable to providers of
generation, transmission or distribution of electricity generally that imposes
restrictions, regulations or other requirements thereon; PROVIDED that any
change or effect that is cured prior to Closing shall not be considered a
Material Adverse Effect.

         "MORTGAGE INDENTURE" means that certain First Mortgage Indenture and
Deed of Trust between the Seller and State Street Bank and Trust Company, as
Trustee, dated as of August 1, 1954, as supplemented and amended.

         "MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section
3(37).

         "NEPOOL" means the New England Power Pool, established by the NEPOOL
Agreement, or its successor.

         "NEPOOL AGREEMENT" means the New England Power Pool Agreement, dated
September 1, 1971, as amended by the Restated New England Power Pool Agreement
filed with FERC on July 22, 1998, as finally approved by FERC and as further
amended from time to time.

         "NON-REPRESENTED EMPLOYEES" has the meaning set forth in Section
5.7(b).

         "NORTHFIELD MOUNTAIN ADDER" means an amount to compensate the Seller at
the Closing for the costs incurred by the Seller in connection with the
reservoir level of the Northfield Mountain upper reservoir on the Closing Date.
The Northfield Mountain Adder shall be equal to: (i) Generating Energy Available
x (ii) 1.35 x (iii) the ECP, where

                  Generating Energy Available means the generating energy
                  available above elevation level 938 feet, measured in megawatt
                  hours, for the corresponding elevation of the Northfield
                  Mountain upper reservoir, as measured as of 11:59 p.m. on the
                  Closing Date, using the Northfield Mountain Upper Reservoir
                  Energy Storage Tables attached hereto as Exhibit J; and

                  ECP means the average off-peak energy clearing price reported
                  by ISO New England for the thirty day period preceding the
                  Closing Date, where the off-peak

                                      -8-
<Page>

                  period is the hours between 11:00 p.m. and 7:00 a.m. each day.

         "OFFSITE DISPOSAL FACILITY" means a location, other than a Facility or
a Site, which receives or received Hazardous Substances for disposal by the
Seller prior to the Closing Date or by the Buyer on or after the Closing Date.

         "PARTY" and "PARTIES" have the meanings set forth in the preamble
above.

         "PERMITS" means all certificates, licenses, permits, approvals,
consents, orders, decisions and other actions of a Governmental Authority
pertaining to a particular Acquired Asset, or the ownership, operation or use
thereof.

         "PERMITTED ENCUMBRANCES" has the meaning set forth in the definition of
Lien.

         "PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, a limited
liability company, an unincorporated organization, or a governmental entity (or
any department, agency, or political subdivision thereof).

         "PRE-APPROVED CAPITAL EXPENDITURES" means those capital expenditures
set forth on SCHEDULE 5.3.

         "PROPRIETARY INFORMATION" means all information about either Party (the
"DISCLOSING PARTY") or its properties or operations furnished to the other Party
(the "RECEIVING PARTY") or its Representatives by the Disclosing Party or its
Representatives, after the date hereof, regardless of the manner or medium in
which it is furnished. Proprietary Information does not include information that
(a) is or becomes generally available to the public, other than as a result of a
disclosure by the Receiving Party or its Representatives in violation of this
Agreement; (b) was available to the Receiving Party on a nonconfidential basis
prior to its disclosure by the Disclosing Party or its Representatives; (c)
becomes available to the Receiving Party on a nonconfidential basis from a
Person, other than the Disclosing Party or its Representatives, who, to the
Receiving Party's actual knowledge, is not otherwise bound by a confidentiality
agreement with the Disclosing Party or its Representatives, or is not otherwise
under any obligation to the Disclosing Party or any of its Representatives not
to transmit the information to the Receiving Party or its Representatives, or
(d) the Disclosing Party discloses to others on a non-confidential basis.

         "PURCHASE PRICE" has the meaning set forth in Section 2.5.

         "PURCHASE PRICE ADJUSTMENT" has the meaning set forth in Section 2.6.

         "REAL PROPERTY" has the meaning set forth in Section 2.1(a).

         "RECEIVING PARTY" has the meaning set forth in the definition of
Proprietary Information.

         "RELATED AGREEMENTS" means the Assignment and Assumption Agreement, the
Bill of Sale, the Deed, the Property Tax Agreement, the Interconnection
Agreement, the Guaranty, the Generation Support Services Agreement, the Release
of Mortgage Indenture, the Asset Demarcation Agreement, and the Reserved
Easement.

                                      -9-
<Page>

         "RELEASE" means any actual, threatened or alleged spilling, leaking,
pumping, pouring, emitting, dispersing, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing of any Hazardous Substance into the
Environment that may cause an Environmental Liability (including the disposal or
abandonment of barrels, containers, tanks or other receptacles containing or
previously containing any Hazardous Substance).

         "RELEASE OF MORTGAGE INDENTURE" means the form of release substantially
in the form attached hereto as Exhibit H.

         "REMEDIATION" means any or all of the following activities to the
extent required to address the presence or Release of Hazardous Substances: (a)
monitoring, investigation, assessment, treatment, cleanup containment, removal,
mitigation, response or restoration work as well as obtaining any permits,
consents, approvals or authorizations of any Governmental Authority necessary to
conduct any such activity; (b) preparing and implementing any plans or studies
for any such activity; (c) obtaining a written notice (or an oral notice which
is appropriately documented or memorialized) from a Governmental Authority with
competent jurisdiction under Environmental Laws or a written opinion of a
Licensed Site Professional (as defined in M.G.L. c21A ss.19 et seq.), as
contemplated by the relevant Environmental Laws and in lieu of a written notice
from a Governmental Authority, that no material additional work is required; and
(d) any other activities reasonably determined by a Party to be necessary or
appropriate or required under Environmental Laws.

         "REPRESENTATIVE" means, as to any Person, such Person's Affiliates and
its and their directors, officers, employees, agents, advisors (including,
without limitation, financial advisors, counsel and accountants).

         "REPRESENTED EMPLOYEES" has the meaning set forth in Section 5.7(a).

         "RESERVED EASEMENTS" means easements to be reserved by the Seller with
respect to certain T&D Assets and associated telecommunications facilities
located on the site of the Acquired Assets, as set forth in Schedule 2.1(a)(i)
hereto, to be reserved in the Deeds by language substantially in the form
attached hereto as Exhibit A-2.

         "SCHEDULE" means a schedule to this Agreement.

         "SEC" means the Securities and Exchange Commission.

         "SECURITIES ACT" means the Securities Act of 1933, as amended.

         "SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

         "SELLER" has the meaning set forth in the preamble.

         "SELLER'S REGULATORY APPROVALS" means those approvals identified on
SCHEDULE 6.2(c) hereto to be obtained by the Seller as a condition to the
Seller's obligation to close under this Agreement.

                                      -10-
<Page>

         "SITE" means the Real Property and Improvements forming a part of, or
used or usable in connection with, a Facility. Any reference to a Site shall
include, by definition, the surface and subsurface elements, including the soils
and groundwater present at such Site, and any reference to items "at the Site"
shall include all items "at, on, in, upon, over, across, under and within" the
Site.

         "T&D" means the transmission and distribution of electricity.

         "T&D ASSETS" means the transmission, distribution, communication,
substation and other assets necessary to current or future T&D Operations of the
Seller.

         "T&D OPERATIONS" means the process of conducting and supporting T&D.

         "TAKING" has the meaning set forth in Section 5.10.

         "TAX" or "TAXES" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar, including FICA), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.

         "TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

         "THIRD PARTY" means a Person who is not a Party, an Affiliate of a
Party, a Representative of a Party, a Representative of an Affiliate of a Party
or a shareholder of any of a Party, a Party's Affiliate or a Party's
Representative.

         "THIRD PARTY CLAIM" has the meaning set forth in Section 9.6(a).

         "TITLE COMMITMENTS" has the meaning set forth in Section 3.5.

         "TRADEMARKS" means any trademarks, service marks, trade dress, and
logos, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith.

         "TRANSFERABLE PERMITS" has the meaning set forth in Section 3.6(b).

         "WARN ACT" means the Federal Worker Adjustment Retraining and
Notification Act of 1988, as amended.

                                      -11-
<Page>

         "YEAR 2000 COMPUTER PROBLEM" means the failure or inability of any
hardware, software, or firmware product (including embedded microcontrollers in
non-computer equipment) to correctly differentiate between years, in different
centuries, which years end in the same two digits, or accurately process
date/time data (including, but not limited to, calculating, comparing, and
sequencing) from, into and between the twentieth and twenty-first centuries,
including leap year calculations.

2.       ACQUISITION OF ASSETS BY BUYER.

         2.1.     PURCHASE AND SALE OF ASSETS. The Seller agrees to sell, assign
and transfer to the Buyer, and the Buyer agrees to purchase from the Seller at
the Closing, subject to and upon the terms and conditions contained herein, free
and clear of any Lien, all of the right, title and interest of the Seller in and
to the following properties and assets owned by the Seller constituting, or used
in and necessary for the operation of, the Facilities (collectively, the
"ACQUIRED ASSETS"):

                  (a)      the real property, Improvements thereon, easements
         and other rights in real property described in SCHEDULE 2.1(a)(i), but
         subject to the exceptions and encumbrances set forth in the Title
         Commitments and subject to the Permitted Encumbrances, including the
         matters set forth in SCHEDULE 2.1(a)(ii)(the "REAL PROPERTY");

                  (b)      the machinery, equipment, furniture, boats, vehicles,
         intellectual property and other personal property owned by the Seller
         and located at the Facilities and Inventories (including without
         limitation the items of personal property described on SCHEDULE 2.1(b),
         all applicable warranties against manufacturers or vendors, to the
         extent that such warranties are transferable without further action by
         the Seller, and all items of personal property due under applicable
         warranties), in each case as in existence on the Effective Date, but
         excluding such items disposed of by the Seller in the ordinary course
         of business during the Interim Period, and including such additional
         items as may be acquired by the Seller for use in connection with the
         Acquired Assets in the ordinary course of business during the Interim
         Period;

                  (c)      all rights with respect to leasehold interests and
         subleases and rights thereunder relating to real property set forth on
         SCHEDULE 2.1(c) (the "LEASES");

                  (d)      all Permits relating to ownership or operation of the
         Facilities including, but not limited to, the Permits listed on
         Schedule 2.1(d);

                  (e)      those contracts, agreements and personal property
         leases which are related to the ownership, use or operation of the
         Facilities and which are set forth in SCHEDULE 2.1(e) (the
         "CONTRACTS"), and all other contracts which relate directly to the
         operation of the Facilities; PROVIDED that the Seller shall retain the
         rights and interests under any Contract to the extent such rights and
         interests provide for indemnity and exculpation rights for pre-Closing
         occurrences for which the Seller remains liable under this Agreement;

                  (f)      all books, operating records, engineering designs,
         blueprints, as-built plans, specifications, procedures, studies,
         reports and equipment repair, safety, maintenance or

                                      -12-
<Page>

         service records of the Seller relating specifically to the operation of
         the Facilities, including the Acquired Assets Employees' Records but
         expressly excluding financial records, employees records (other than
         the Acquired Assets Employees' Records) and books of account;

                  (g)      the rights of the Seller to the use of the names of
         the Facilities set forth in SCHEDULE 2.1(g);

                  (h)      Intentionally Omitted;

                  (i)      all rights of the Seller in and to any causes of
         action against a Third Party relating to any Assumed Liability, whether
         received as a payment or credit against future liabilities, including,
         without limitation, insurance proceeds, condemnation awards and cash
         payments under warranties covering the Acquired Assets to the extent
         such payments relate to Assumed Liabilities.

         2.2.     EXCLUDED ASSETS. Notwithstanding anything to the contrary in
this Agreement, there shall be excluded from the Acquired Assets to be sold,
assigned, transferred, conveyed or delivered to the Buyer hereunder, and to the
extent in existence on the Effective Date or on the Closing Date, there shall be
retained by the Seller, any and all right, title or interest to the following
assets, properties and rights (collectively, the "EXCLUDED ASSETS"):

                  (a)      as identified on SCHEDULE 2.2(a) or in the Asset
         Demarcation Agreement, or any document or exhibit referred to or
         incorporated in the Asset Demarcation Agreement, the property
         comprising or constituting any or all of the T&D Assets located at the
         Sites (whether or not regarded as a "transmission", "distribution" or
         "generation" asset for regulatory or accounting purposes), including
         all switchyard facilities, substation facilities and support equipment,
         as well as all Permits and contracts, to the extent they relate to the
         T&D Assets, and those certain assets and facilities identified for use
         or used by the Seller or others pursuant to an agreement or agreements
         with the Seller for telecommunications purposes;

                  (b)      Intentionally Omitted;

                  (c)      all Cash, accounts and notes receivable, checkbooks
         and canceled checks, bank deposits and property or income tax
         receivables or any other Tax refunds to the extent allocable to a
         period ending on or before the Closing Date;

                  (d)      all contracts, instruments or other agreements
         relating to the sale by the Seller of electric capacity or energy under
         wholesale rates, or otherwise subject to regulation by the FERC;

                  (e)      all rights of the Seller in and to any causes of
         action against a Third Party

                                      -13-
<Page>

         relating to any period through the Closing Date, whether received as a
         payment or credit against future liabilities, including, without
         limitation, any rights or interests in respect of any refunds relating
         to property Taxes paid by the Seller for any period prior to the
         Closing Date, insurance proceeds, condemnation awards and cash payments
         under warranties covering the Acquired Assets to the extent such
         payments relate to warranty claims made by the Seller prior to the
         Closing Date, but excluding any such rights of the Seller to the extent
         the associated Third Party claims relate to an Assumed Liability; and

                  (f)      all rights of the Seller to the words "WMECO" and
         "Western Massachusetts Electric Company" and any Trademark which is
         composed of or comprises any derivative.

         2.3.     ASSUMPTION OF LIABILITIES. On the terms and subject to the
conditions set forth herein, from and after the Closing, the Buyer will assume
and satisfy or perform all of the Liabilities of the Seller in respect of, or
otherwise arising from the operation or use of the Acquired Assets, other than
the Excluded Liabilities (as set forth in Section 2.4 below), including, without
limitation, the following Liabilities (the "ASSUMED LIABILITIES"):

                  (a)      all Environmental Liabilities, other than the
         Excluded Liabilities (as set forth in Section 2.4 below);

                  (b)      all Liabilities under (i) the Contracts, Leases, and
         the Transferable Permits in accordance with the terms thereof, (ii) the
         contracts, leases and other agreements entered into by the Seller with
         respect to the Acquired Assets which would be required to be disclosed
         on SCHEDULE 2.1(c) or 2.1(e) but for the exception provided in clause
         (iii) of Section 3.8(a), in accordance with the terms thereof, and
         (iii) the contracts, leases, commitments and other agreements entered
         into by the Seller with respect to the Acquired Assets during the
         Interim Period consistent with the terms of this Agreement (including,
         without limitation, Capital Commitments, agreements with respect to
         Liabilities for real or personal property Taxes on any of the Acquired
         Assets entered into in accordance with the provisions of Section 5.3(d)
         or, to the extent such agreements do not allocate such Tax liability
         between the Acquired Assets and the Excluded Assets, all Tax liability
         under such agreements entered into by the Seller and any local
         government); except (x) in each case, to the extent such Liabilities,
         but for a breach or default by the Seller, would have been paid,
         performed or otherwise discharged on or prior to the Closing Date, or
         to the extent the same arise out of any such breach or default, or to
         the extent the same relate to performance rendered to the Seller prior
         to the Closing Date and (y) as otherwise provided in Section 2.4(f);

                  (c)      all Liabilities under the Permitted Encumbrances
         other than under or with respect to the exercise of the Reserved
         Easements;

                  (d)      all Liabilities relating to Employees for which the
         Buyer is responsible under Section 5.7; and

                  (e)      all other Liabilities expressly allocated to the
         Buyer in this Agreement or in any of the Related Agreements.

                                      -14-
<Page>

         2.4.     EXCLUDED LIABILITIES. The Buyer shall not assume or be
responsible for the performance of any of the following Liabilities
(collectively, the "EXCLUDED LIABILITIES"):

                  (a)      any Liability of the Seller in respect of or
         otherwise arising from the operation or use of the Excluded Assets or
         any other assets of the Seller that are not Acquired Assets;

                  (b)      any Liability of the Seller including, without
         limitation, any Environmental Liability, in respect of or otherwise
         arising from the exercise of the Reserved Easements;

                  (c)      any Liability relating to the treatment, disposal,
         storage, discharge, Release, recycling or the arrangement for such
         activities at, or the transportation to, any Offsite Disposal Facility,
         by the Seller, prior to the Closing Date, of Hazardous Substances that
         were generated at the Sites, PROVIDED that for purposes of this
         Section, "Offsite Disposal Facility" does not include any location to
         which Hazardous Substances disposed of or Released at the Acquired
         Assets have migrated;

                  (d)      any Liability of the Seller arising from the making
         or performance of this Agreement or a Related Agreement or the
         transactions contemplated hereby or thereby;

                  (e)      any Liability of the Seller in respect of payment
         obligations for goods delivered or services rendered prior to the
         Closing Date or other Liabilities under contracts or leases which the
         Buyer has not assumed pursuant to Section 2.3(b);

                  (f)      any Liability which is or would be required to be
         accrued by the Seller on a balance sheet of the Seller as of the
         Closing Date prepared in accordance with GAAP, other than those
         Liabilities which are expressly set forth as Assumed Liabilities in
         Sections 2.3(a), (b) and (c) hereof;

                  (g)      any Liability of the Seller arising out of any
         Employee Benefit Plan established or maintained by the Seller or to
         which the Seller contributes or any Liability for the termination of
         any such Employee Benefit Plan;

                  (h)      any Liability of the Seller for any compensation or
         any benefits, including, without limitation, vacation pay, severance
         pay, post-retirement benefits and COBRA coverage, accruing on or prior
         to the Closing Date under the terms or provisions of any Seller
         Employee Benefit Plan, the Collective Bargaining Agreement or any other
         agreement, plan, practice, policy, instrument or document relating to
         any of the Acquired Assets Employees, other than the Liabilities
         expressly assumed by the Buyer under Section 5.7;

                  (i)      any Liability of the Seller relating to any cause of
         action against the Seller filed with or pending before any court or
         administrative agency on the Closing Date;

                  (j)      any Liability of the Seller for any fines or
         penalties imposed by a Governmental Authority resulting from (x) any
         investigation or proceeding pending on or prior to the Closing Date or
         (y) illegal acts or willful misconduct of the Seller on or prior to the
         Closing Date;

                                      -15-
<Page>

                  (k)      any Environmental Liability to the extent such
         Environmental Liability arises out of or relates to any Governmental
         Authority's allegation and investigation of any criminal violations of
         Environmental Laws by the Seller of which the Seller has received
         formal written notification from such Governmental Authority on or
         prior to the Closing Date;

                  (l)      any Environmental Liability to the extent such
         Environmental Liability derives from the same facts which form the
         basis of a conviction of, or plea of NOLO CONTENDERE by, the Seller for
         a violation of Environmental Laws which conviction or plea arises out
         of a Governmental Authority's investigation of criminal violations of
         Environmental Laws by the Seller of which the Seller receives formal
         written notification from such Governmental Authority on or before the
         sixth anniversary of the Effective Date; and

                  (m)      any Liability in respect of Taxes attributable to the
         Acquired Assets for taxable periods ending on or before the Closing
         Date as such Taxes are to be pro rated in accordance with Section 2.8,
         except those Taxes for which the Buyer is liable pursuant to Section 8.

         2.5.     PURCHASE PRICE. The Buyer agrees to assume the Assumed
Liabilities and pay to the Seller at the Closing an aggregate amount equal to
$184,150,000 (the "Initial Purchase Price") plus or minus amounts to account for
(i) the Estimated Adjustment to the Initial Purchase Price to be made as of the
Closing under Section 2.6(c), and (ii) the pro rations to be made as of the
Closing under Section 2.8(a), (the Initial Purchase Price, as so adjusted, shall
be referred to herein as the "Closing Purchase Price"). The Closing Purchase
Price shall be payable in cash by wire transfer to the Seller in accordance with
written instructions of the Seller given to the Buyer at least three (3)
Business Days prior to the Closing. Following the Closing, the Closing Purchase
Price shall be subject to adjustment pursuant to Sections 2.6(d) and 2.8(b), and
the Closing Purchase Price, as so adjusted pursuant to such Sections, shall be
herein referred to as the "Purchase Price."

         2.6.     ADJUSTMENTS TO INITIAL PURCHASE PRICE. The Initial Purchase
Price shall be increased or reduced as set forth in Sections 2.6(a), (b) and
(c), and the Closing Purchase Price shall be subject to adjustment as set forth
in Section 2.6(d). Such increases or reductions, as the case may be, shall be
referred to herein as the "PURCHASE PRICE ADJUSTMENT" and shall be determined
and paid as set forth below:

                  (a)      the Initial Purchase Price shall be increased to
         account for the following items: (i) the net book value of all
         Inventories held by the Seller as of the Closing Date; (ii) the amount
         paid by the Seller in purchasing the vehicles identified as leased
         vehicles on Schedule 2.1(b); (iii) any Pre-Approved Capital
         Expenditures paid by the Seller during the Interim Period; (iv) any
         other capital expenditures paid by the Seller during the Interim Period
         necessitated by Good Utility Practice and to which the Buyer shall have

                                      -16-
<Page>

         consented pursuant to Section 5.3(f); (v) any operations and
         maintenance expenses paid for by the Seller during the Interim Period
         that the Seller would not have actually paid but for the Buyer's
         written request; (vi) the Northfield Mountain Adder; (vii) the amounts
         paid by the Seller in having surveys of the Facilities and Real
         Property performed in connection with the transactions contemplated
         hereby;

                  (b)      the Initial Purchase Price shall be reduced to
         account for any Capital Commitments assumed by the Buyer that were not
         (i) Pre-Approved Capital Expenditures or (ii) capital expenditures
         necessitated by Good Utility Practice to which Buyer consented pursuant
         to Section 5.3(f);

                  (c)      at least twenty (20) Business Days prior to the
         Closing Date, the Seller shall prepare and deliver to the Buyer an
         Estimated Closing Statement (the "ESTIMATED CLOSING STATEMENT") that
         shall set forth the Seller's best estimate of all adjustments to the
         Initial Purchase Price required by Sections 2.6(a) and 2.6(b) (the
         "ESTIMATED ADJUSTMENT"). Within ten (10) Business Days following the
         delivery of the Estimated Closing Statement by the Seller to the Buyer,
         the Buyer may object in good faith to the Estimated Adjustment in
         writing. If the Buyer objects to the Estimated Adjustment, the Parties
         shall attempt to resolve such dispute by negotiation. If the Parties
         are unable to resolve such dispute before five (5) Business Days prior
         to the Closing Date (or if the Buyer fails to object to the Estimated
         Adjustment), the Initial Purchase Price shall be adjusted (the "CLOSING
         ADJUSTMENT") for the Closing by the amount of the Estimated Adjustment
         not in dispute; and

                  (d)      within thirty (30) days following the Closing Date,
         the Seller shall prepare and deliver to the Buyer a closing statement
         that shall set forth the Seller's computation of the final Purchase
         Price Adjustment based on Sections 2.6(a) and (b) and the components
         thereof taking into account actual data (the "CLOSING STATEMENT").
         Within twenty (20) days following the delivery of the Closing Statement
         by the Seller to the Buyer, the Buyer may object to the Closing
         Statement in writing. The Seller agrees to cooperate with the Buyer to
         provide to the Buyer or the Buyer's Representatives information used to
         prepare the Closing Statement and information relating thereto. If the
         Buyer objects to the Closing Statement, the Parties shall attempt to
         resolve such dispute by negotiation. If the Parties are unable to
         resolve such dispute within twenty (20) days of any objection by the
         Buyer, the Parties shall appoint Ernst & Young who shall, at the
         Seller's and the Buyer's joint expense, review the Closing Statement
         and determine the appropriate Purchase Price Adjustment under this
         Section 2.6. The agreed upon Closing Statement or the finding of such
         accounting firm, as the case may be, shall be the Purchase Price
         Adjustment and shall be binding on the Parties. Upon the determination
         of the Purchase Price Adjustment, the Party owing a balance on account
         of the Purchase Price Adjustment shall deliver the balance due to the
         other Party no later than two (2) Business Days after such
         determination in immediately available funds or in any other manner as
         reasonably requested by the payee. The balance due shall be determined
         by offsetting against each Party's credits and debits arising from the
         Purchase Price Adjustment the credits and debits accorded to each Party
         in the Closing Statement on account of the Estimated Adjustment. The
         acceptance by the Buyer and the Seller of the Purchase Price Adjustment
         shall not constitute or be deemed to constitute a waiver of the rights
         of such Party in respect of any other provision of this Agreement.

                                      -17-
<Page>

         2.7.     ALLOCATION OF PURCHASE PRICE. The Buyer and the Seller shall
use their good faith best efforts to agree upon an allocation among the Acquired
Assets of the sum of the Purchase Price and the Assumed Liabilities consistent
with Section 1060 of the Code and the Treasury Regulations thereunder within one
hundred and twenty (120) days of the Effective Date (or such later date as the
Parties may mutually agree) but in no event fewer than thirty (30) days prior to
the Closing. The Buyer and the Seller may jointly agree to obtain the services
of an independent engineer or appraiser (the "INDEPENDENT APPRAISER") to assist
the Parties in determining the fair value of the Acquired Assets solely for
purposes of such allocation under this Section 2.7. If such an appraisal is
made, both the Buyer and the Seller agree to accept the Independent Appraiser's
determination of the fair value of the Acquired Assets. The cost of the
appraisal shall be borne equally by the Buyer and the Seller. Each of the Buyer
and the Seller agrees to file Internal Revenue Service Form 8594 and all
federal, state, local and foreign Tax Returns in accordance with such agreed
allocation. Each of the Buyer and the Seller shall report the transactions
contemplated by this Agreement and the Related Agreements for federal Income Tax
and all other Tax purposes in a manner consistent with the allocation determined
pursuant to this Section 2.7. Each of the Buyer and the Seller agrees to provide
the other promptly with any other information required to complete Form 8594.
Each of the Buyer and the Seller shall notify and provide the other with
reasonable assistance in the event of an examination, audit or other proceeding
regarding the agreed upon allocation of the Purchase Price.

         2.8.     PRORATION.

                  (a)      The Buyer and the Seller agree that all of the items
         normally prorated in a sale of assets of the type contemplated by this
         Agreement, including those listed below, relating to the business and
         operations of the Acquired Assets, will be prorated as of the Closing
         Date, with the Seller liable to the extent such items relate to any
         period through the Closing Date, and the Buyer liable to the extent
         such items relate to periods after the Closing Date: (i) personal
         property, Real Property, occupancy and water Taxes, assessments and
         other charges, if any, on or associated with the Acquired Assets; (ii)
         rent, Taxes and other items payable by or to the Seller under any of
         the Contracts or Leases assigned to and assumed by the Buyer hereunder;
         (iii) any Permit, license, registration or fees with respect to any
         Transferable Permit associated with the Acquired Assets; and (iv) sewer
         rents and charges for water, telephone, electricity and other
         utilities. Subject to Section 2.8(b), below, not less than five (5)
         Business Days prior to the Closing Date, the Parties shall agree upon
         the sum of the net amount of the prorated amounts to which either the
         Seller or the Buyer shall be entitled pursuant to this Section 2.8(a)
         and the Initial Purchase Price shall be adjusted to reflect such net
         amount.

                  (b)      If the amount of one or more Taxes, fees or other
         liabilities to be prorated in accordance with Section 2.8(a) is not
         known or determinable on or prior to the Closing Date, the amounts to
         be prorated upon the Closing in accordance with Section 2.8(a) shall be
         based upon the actual Taxes, fees or other liabilities for the
         preceding year (or appropriate period) for which such actual Taxes,
         fees or liabilities are available. The amount of Taxes, fees or other
         liabilities prorated upon the Closing pursuant to Section 2.8(a) shall
         be adjusted upon the request of either the Seller, on the one hand, or
         the Buyer, on the other hand, made within sixty (60) days of the date
         the actual amounts become available. The Seller and the Buyer agree to
         furnish each other with such

                                      -18-
<Page>

         documents and other records that may be reasonably requested in order
         to confirm all adjustment and proration calculations made pursuant to
         this Section 2.8.

         2.9.     THE CLOSING. Unless otherwise agreed to by the Parties, the
closing of the transactions contemplated by this Agreement (the "CLOSING") shall
take place at the offices of LeBoeuf, Lamb, Greene & MacRae, L.L.P., 225 Asylum
Street, Hartford, CT, commencing at 9:00 a.m. Eastern time on the date that is
five (5) days (or, if the fifth day is not a Business Day, then the next
Business Day following such fifth day) following the date on which all of the
conditions set forth in Sections 6.1 and 6.2 have either been satisfied or
waived by the Party for whose benefit such condition exists, such satisfaction
or waiver to conform to Section 11.12. The date of Closing is hereinafter called
the "CLOSING DATE" and shall be effective for all purposes herein as of 11:59
p.m. Eastern time on the Closing Date.

         2.10.    DELIVERIES BY THE SELLER AT THE CLOSING. At the Closing, the
Seller shall deliver the following to the Buyer, duly executed and properly
acknowledged, if appropriate:

                  (a)      deeds for the Real Property and Improvements,
         substantially in the form attached hereto as EXHIBIT A-1 and otherwise
         in a form suitable for recording;

                  (b)      the Bill of Sale, substantially in the form attached
         hereto as EXHIBIT B, for the tangible personal property included in the
         Acquired Assets;

                  (c)      the Assignment and Assumption Agreement, in the form
         attached hereto as EXHIBIT C, in recordable form if necessary;

                  (d)      the Property Tax Agreement, substantially in the form
         attached hereto as EXHIBIT D;

                  (e) the Interconnection Agreement, in the form attached hereto
         as EXHIBIT E;

                  (f)      the Asset Demarcation Agreement, in the form attached
         hereto as EXHIBIT G;

                  (g)      if requested by the Buyer, the Generation Support
         Services Agreement, executed by Northeast Generation Services, Inc.;

                  (h)      the Release of Mortgage Indenture, substantially in
         the form attached hereto as EXHIBIT H;

                  (i)      a FIRPTA Affidavit executed by the Seller;

                  (j)      certificates of title for the vehicles and boats
         which are part of the Acquired Assets;

                  (k)      all attornment agreements, notices and other
         documents and instruments required for the assignment or other transfer
         of the Leases from the Seller to the Buyer, which agreements, notices,
         documents and instruments shall, upon the reasonable request of the
         Buyer, be in recordable form;

                  (l)      copies of all consents, waivers or approvals obtained
         by the Seller with respect

                                      -19-
<Page>

         to the Acquired Assets, the transfer of the Transferable Permits or the
         consummation of the transactions contemplated by this Agreement and the
         Related Agreements, to the extent specifically required under this
         Agreement or the Related Agreements;

                  (m)      the Environmental Consultant Reliance Letter in the
         form of Exhibit K hereto, duly executed and addressed to the Buyer;

                  (n)      a certificate from an authorized officer of the
         Seller, dated the Closing Date, to the effect that, to such officer's
         Knowledge, the conditions set forth in Sections 6.1(a), (b), (e) and
         (g) and Sections 6.2(c) and (d) have been satisfied;

                  (o)      a copy, certified by the Secretary or an Assistant
         Secretary of the Seller, of corporate resolutions authorizing the
         execution and delivery of this Agreement and the Related Agreements and
         instruments attached as exhibits hereto and thereto, and the
         consummation of the transactions contemplated hereby and thereby;

                  (p)      a certificate of the Secretary or an Assistant
         Secretary of the Seller which shall identify by name and title and bear
         the signature of the officers of the Seller authorized to execute and
         deliver this Agreement and the Related Agreements and instruments
         attached as exhibits hereto and thereto;

                  (q)      an opinion or opinions from one or more counsel to
         the Seller (any of whom may be an employee of the Seller), dated the
         Closing Date and reasonably satisfactory in form to the Buyer and its
         counsel, covering substantially the matters set forth in SCHEDULE
         2.10(q);

                  (r)      all such other instruments of sale, transfer,
         conveyance, assignment or assumption as the Buyer and its counsel may
         reasonably request in connection with the sale of the Acquired Assets,
         PROVIDED HOWEVER, that this Section 2.10(r) shall not require the
         Seller to prepare or obtain any surveys relating to the Real Property
         other than those previously provided to the Buyer; and

                  (s)      copies of the Title Commitments and surveys described
         in Schedule 2.1(a)(i).

         2.11.    DELIVERIES BY THE BUYER AT THE CLOSING. At the Closing, the
Buyer shall deliver to the Seller, properly executed and acknowledged, if
appropriate:

                  (a)      the Closing Purchase Price;

                  (b)      the Assignment and Assumption Agreement, in the form
         attached hereto as EXHIBIT C to this Agreement, duly executed by the
         Buyer, and if necessary or desirable to the Seller, in recordable form;

                  (c)      the Property Tax Agreement, substantially in the form
         attached hereto as EXHIBIT D;

                  (d)      the Interconnection Agreement, in the form attached
         hereto as EXHIBIT E;

                                      -20-
<Page>

                  (e)      the Asset Demarcation Agreement, in the form attached
         hereto as EXHIBIT G;

                  (f)      if requested by the Buyer, the Generation Support
         Services Agreement;

                  (g)      a certificate from an authorized officer of the
         Buyer, dated the Closing Date, to the effect that, to such officer's
         Knowledge, the conditions set forth in Sections 6.1(c) and (d) and
         Sections 6.2(a), (b), (e) and (g) have been satisfied;

                  (h)      a copy, certified by the Secretary or Assistant
         Secretary of the Buyer, of resolutions authorizing the execution and
         delivery of this Agreement and the Related Agreements and instruments
         attached as exhibits hereto and thereto, and the consummation of the
         transactions contemplated hereby and thereby;

                  (i)      a certificate of the Secretary or Assistant Secretary
         of the Buyer which shall identify by name and title and bear the
         signature of the officers of the Buyer authorized to execute and
         deliver this Agreement and the Related Agreements and instruments
         attached as exhibits hereto and thereto;

                  (j)      one or more opinions from counsel to the Buyer, dated
         the Closing Date and reasonably satisfactory in form to the Seller and
         its counsel, covering substantially the matters set forth in SCHEDULE
         2.11(j);

                  (k)      evidence of the Buyer's membership in NEPOOL; and

                  (l)      all such other instruments of purchase, sale,
         transfer, conveyance, delivery, receipt, assignment or assumption as
         the Seller and its counsel may reasonably request in connection with
         the sale or purchase of the Acquired Assets or assumption of the
         Assumed Liabilities.

3.       REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF THE SELLER. The Seller
represents and warrants to the Buyer that the statements contained in this
Section 3 are correct and complete as of the Effective Date.

         3.1.     ORGANIZATION OF THE SELLER. The Seller is duly organized,
validly existing and in good standing under the laws of the Commonealth of
Massachusetts. Copies of the charter and by-laws of the Seller, each as amended
to date, have been heretofore delivered to the Buyer and are accurate and
complete.

         3.2.     AUTHORIZATION OF TRANSACTION. The Seller has the power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and the Related Agreements and, subject to receipt of all the
Seller's Regulatory Approvals, to perform its obligations hereunder and
thereunder. All corporate actions or proceedings to be taken by or on the part
of the Seller to authorize and permit the due execution and valid delivery by
the Seller of this Agreement and the Related Agreements and the instruments
required to be duly executed and validly delivered by the Seller pursuant hereto
and thereto, the performance by the Seller of its obligations hereunder and
thereunder, and the consummation by the Seller of the transactions contemplated
herein and therein, have been duly and properly taken. This Agreement and the
Related Agreements have been duly executed and validly delivered by the Seller
and constitute

                                      -21-
<Page>

the legal, valid and binding obligation of Seller, enforceable in accordance
with their terms and conditions.

         3.3.     NONCONTRAVENTION. Subject to the Seller obtaining the Seller's
Regulatory Approvals, neither the execution and the delivery of this Agreement
or any of the Related Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and assumptions
referred to in Sections 2.10(r) and 2.11(l) above), will (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, license or other restriction of any Governmental Authority to
which the Seller or any of its property is subject or any provision of the
charter or by-laws of the Seller, or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Seller is bound or to which any of the Acquired Assets is subject
(or result in the imposition of any Lien upon any of the Acquired Assets),
except for matters that will not have a Material Adverse Effect or as disclosed
in SCHEDULE 3.3 or any other Schedule.

         3.4.     BROKERS' FEES. The Seller has no Liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.

         3.5.     TITLE TO ACQUIRED ASSETS. Except for Permitted Encumbrances,
the Seller has title to the Real Property to the extent, and only to the extent,
specified in the title policy commitments attached hereto on SCHEDULE 3.5 (the
"TITLE COMMITMENTS"). Except as set forth in SCHEDULE 3.5 and except for
Permitted Encumbrances, the Seller has good and valid title to the other
Acquired Assets.

         3.6.     LEGAL AND OTHER COMPLIANCE; PERMITS.

                  (a)      The Seller is in compliance with all current Laws
         applicable to the Acquired Assets or the Seller's operation of the
         Acquired Assets the violation of which could have a Material Adverse
         Effect, other than as disclosed in SCHEDULE 3.6 and other than with
         respect to matters covered by SECTION 3.12 below.

                  (b)      SCHEDULE 2.1(d) sets forth all Permits which are
         material to the ownership or operation of the Facilities, and also
         identifies those material Permits which are transferable or assignable
         by the Seller to the Buyer or which will pass to the Buyer as successor
         in title to the Facilities by operation of applicable Laws (the
         "TRANSFERABLE PERMITS").

         3.7.     TAXES. The Seller has filed all Tax Returns that it was
required to file, and has paid all Taxes that have become due as indicated
thereon, where the failure so to file or pay could have a Material Adverse
Effect, except where the Seller is contesting the same in good faith by

                                      -22-
<Page>

appropriate proceedings. There is no unpaid Tax due and payable that could have
a Material Adverse Effect on the Buyer's ownership, operation or use of the
Acquired Assets for which the Buyer could become liable.

         3.8.     CONTRACTS AND LEASES.

                  (a)      Except (i) as listed in SCHEDULE 2.1(c) or 2.1(e) or
         any other Schedule, (ii) for contracts, agreements, personal property
         leases, commitments, understandings or instruments which will expire
         prior to the Closing Date, and (iii) for agreements with suppliers
         entered into in the ordinary course of business that will not by their
         terms extend more than two years beyond the Closing Date and whose
         payment obligations do not exceed more than $50,000 individually and
         $500,000 in the aggregate, the Seller is not a party to any written
         contract, agreement, personal property lease, commitment, understanding
         or instrument which (x) is material to the business or operations of
         the Acquired Assets or (y) which provides for the sale of any amount of
         capacity or energy from any of the Acquired Assets (whether or not
         entered into in the ordinary course of business).

                  (b)      Except as disclosed in SCHEDULE 3.8(b) (i) each of
         the Contracts constitutes a valid and binding obligation of the Seller,
         (ii) the Seller is not in default in any material respect under any of
         the Contracts and, to the Seller's Knowledge, the other parties to the
         Contracts are not in default in any material respect under any thereof,
         and (iii) the Contracts may be transferred to the Buyer pursuant to
         this Agreement and will continue in full force and effect thereafter,
         in each case without breaching the terms thereof or resulting in the
         forfeiture or impairment of any material rights thereunder.

         3.9.     INSURANCE. Except as set forth in SCHEDULE 3.9, all material
policies of fire, liability, worker's compensation and other forms of insurance
owned or held by the Seller insuring the Acquired Assets are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the date as of which this representation is being made have been paid
(other than retroactive premiums which may be payable with respect to
comprehensive general liability and worker's compensation insurance policies),
and no written notice of cancellation or termination has been received with
respect to any such policy which was not replaced on substantially similar terms
prior to the date of such cancellation. Except as described in SCHEDULE 3.9, as
of the date of this Agreement, the Seller has not been refused any insurance
with respect to the Acquired Assets nor has its coverage been limited by any
insurance carrier to which it has applied for any such insurance or with which
it has carried insurance during the last twelve months.

         3.10.    LITIGATION. Except as disclosed in SCHEDULE 3.10, no action,
suit, claim, demand or other proceeding is pending or, to Seller's Knowledge,
threatened that would be reasonably likely to result in a Material Adverse
Effect or that questions the validity of this Agreement or the Related
Agreements or of any action taken or to be taken pursuant to or in connection
with the provisions of this Agreement or the Related Agreements.

         3.11.    EMPLOYEES. The Collective Bargaining Agreement referenced in
SCHEDULE 3.11 is the only collective bargaining agreement to which the Seller is
a party and which governs terms and conditions of employment of employees of the
Seller whose employment relates primarily to

                                      -23-
<Page>

the Acquired Assets. A true and correct copy of the Collective Bargaining
Agreement has heretofore been delivered to the Buyer. Except as described in
SCHEDULE 3.11, and except as to such matters as will not have a Material Adverse
Effect: (i) the Seller has not experienced any labor disputes, strikes or work
stoppages by such employees due to labor disagreements since 1971 and to the
Seller's Knowledge none is currently pending; (ii) to the Seller's Knowledge the
Seller is in compliance with all applicable Laws respecting employment and
employment practices, equal employment opportunity, occupational health and
safety and affirmative action, terms and conditions of employment and wages and
hours; (iii) the Seller has not received written notice from any Governmental
Authority of any unfair labor practice charge, complaint or proceeding against
the Seller pending or threatened before the National Labor Relations Board or
any other Governmental Authority with respect to such employees; (iv) no
arbitration proceeding arising out of or under any collective bargaining
agreement with respect to the Acquired Assets is pending against the Seller; and
(v) the Seller is in compliance in all material respects with the Collective
Bargaining Agreement.

         3.12.    ENVIRONMENTAL MATTERS. During the two-year period preceding
the Effective Date, except as disclosed in SCHEDULE 3.12, and except where such
matters, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect, (i) the Seller did not receive any written
notice from any Governmental Authority that it is not in compliance with
Environmental Laws or failed to obtain material Permits required for the
ownership or operation of any Acquired Asset under Environmental Laws; (ii) the
Seller did not receive any written notice from any Governmental Authority that
any Acquired Asset is listed under the Comprehensive Environmental Response,
Compensation Liability Information Systems or any similar state list; (iii) the
Seller did not receive any written notice from any Person alleging Liability for
any Environmental Claims; and (iv) the Seller was not required by any applicable
Environmental Laws to place any use or activities restrictions or any
institutional controls on any Acquired Assets. The Seller has no Knowledge of
any matters which could give rise to Environmental Liabilities which would
reasonably be expected to have a Material Adverse Effect which are not disclosed
or identified in the Phase I and Phase II Reports referred to in SCHEDULE 3.12.

         3.13.    CONDEMNATION. Except as set forth in SCHEDULE 3.13, the Seller
has received no written notice from any Governmental Authority of any pending or
threatened proceeding to condemn or take by power of eminent domain or
otherwise, by any Governmental Authority, all or any part of the Acquired
Assets, which would constitute a Major Loss.

         3.14.    REGULATION AS A UTILITY. The Seller is an "electric company"
within the meaning of Chapter 164 of the Massachusetts General Laws, and is a
"subsidiary company" of a "holding company" which is registered under (and as
those terms are defined in) the Public Utility Holding Company Act of 1935, as
amended.

         3.15.    BENEFIT PLANS. SCHEDULE 3.15 lists as of the Effective Date,
all Employee Benefit Plans established, sponsored, maintained or contributed to
by (or to which there is an obligation to contribute of) the Seller in respect
of the Acquired Assets Employees. Accurate and complete copies of all such
Employee Benefit Plans (excluding Multiemployer Plans) have been made available
to the Buyer. Except as disclosed on SCHEDULE 3.15, the Seller does not
contribute to, and has no obligation to contribute to, any Multiemployer Plan.
No liability under Title IV or Section 302 of ERISA or Section 412 of the Code
has been incurred by the Seller with respect to

                                      -24-
<Page>

the Acquired Assets Employees that has not been satisfied in full, and to the
Seller's Knowledge no condition exists that presents a material risk to the
Seller of incurring any such liability, other than liability for premiums due
the Pension Benefit Guaranty Corporation, which premiums have been paid.

         3.16.    ASSETS USED IN OPERATION OF THE FACILITIES. Except as set
forth in Schedule 3.16, the Acquired Assets include all material assets and
properties that are used by the Seller in the operation of the Facilities on the
Effective Date.

         3.17.    SURVEYS OF FACILITIES. The surveys of the Facilities provided
by the Seller to the Buyer show the locations of all of the material electric
generating buildings and related facilities located at such Facilities.

         3.18.    YEAR 2000 COMPUTER PROBLEM. The Seller has performed all of
the work regarding addressing the Year 2000 Computer Problem which the Seller
has advised ISO New England and NEPOOL has been performed, as more particularly
identified in SCHEDULE 3.18. The disclosures regarding the Year 2000 Computer
Problem set forth in the Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 of Northeast Utilities and in the subsequent reports filed by
Northeast Utilities under the Securities Exchange Act of 1934, as amended, prior
to the date of this Agreement, are true and correct in all material respects
insofar as such disclosures pertain to the Acquired Assets.

         3.19.    INTELLECTUAL PROPERTY. SCHEDULE 2.1(b) discloses all of the
material intellectual property owned or leased by the Seller and used for the
physical operation of the Acquired Assets. the Seller has all right, title and
interest in or valid, binding and irrevocable rights to use such intellectual
property without material limitation, Liens or royalty burdens. To the Knowledge
of the Seller, none of such intellectual property included in the Acquired
Assets is being infringed by any other Person, and the Seller, to its Knowledge,
is not infringing and has not received notice that it is infringing (or
allegedly infringing) any intellectual property of any other Person in
connection with the operation of the Acquired Assets, which in either case could
reasonably be expected to have a Material Adverse Effect. With respect to such
intellectual property, there are no restrictions on transfer by the Seller to
the Buyer of such intellectual property which restrictions would have a Material
Adverse Effect.

         3.20.    DISCLAIMERS REGARDING ACQUIRED ASSETS. EXCEPT FOR ANY
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS SECTION 3, THE ACQUIRED ASSETS
ARE SOLD "AS IS, WHERE IS," AND THE SELLER EXPRESSLY DISCLAIMS ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO
LIABILITIES, OPERATIONS OF THE FACILITIES, TITLE, CONDITION, VALUE OR QUALITY OF
THE ACQUIRED ASSETS OR THE PROSPECTS (FINANCIAL AND OTHERWISE), RISKS AND OTHER
INCIDENTS OF THE ACQUIRED ASSETS INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO
THE ACTUAL OR RATED GENERATING

                                      -25-
<Page>

CAPABILITY OF ANY OF THE FACILITIES OR THE ABILITY OF THE BUYER TO SELL FROM ANY
OF THE FACILITIES ELECTRIC ENERGY, CAPACITY OR OTHER PRODUCTS RECOGNIZED BY ISO
NEW ENGLAND FROM TIME TO TIME, AND THE SELLER SPECIFICALLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, OR SUITABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE ACQUIRED ASSETS, OR ANY PART
THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS
THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE WITH ENVIRONMENTAL
REQUIREMENTS, OR AS TO THE CONDITION OF THE ACQUIRED ASSETS, OR ANY PART
THEREOF, INCLUDING, WITHOUT LIMITATION, THE CONDITION OF THE ACQUIRED ASSETS
WITH RESPECT TO THE YEAR 2000 COMPUTER PROBLEM, OR WHETHER THE SELLER POSSESSES
SUFFICIENT REAL PROPERTY OR PERSONAL PROPERTY TO OPERATE THE ACQUIRED ASSETS.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE SELLER FURTHER SPECIFICALLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING THE ABSENCE OF HAZARDOUS
SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING UNDER ENVIRONMENTAL LAWS.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS EXPRESSLY PROVIDED
HEREIN, THE SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY
KIND REGARDING THE CONDITION OF THE ACQUIRED ASSETS OR THE SUITABILITY OF THE
FACILITIES FOR OPERATION AS POWER PLANTS OR AS SITES FOR THE DEVELOPMENT OF
ADDITIONAL OR REPLACEMENT GENERATION CAPACITY AND NO SCHEDULE OR EXHIBIT TO THIS
AGREEMENT OR ANY RELATED AGREEMENT, NOR ANY OTHER MATERIAL OR INFORMATION
PROVIDED BY OR COMMUNICATIONS MADE BY THE SELLER, OR BY ANY BROKER OR INVESTMENT
BANKER, INCLUDING WITHOUT LIMITATION ANY INFORMATION OR MATERIAL CONTAINED IN
THE DESCRIPTIVE MEMORANDUM DATED AS OF FEBRUARY 10, 1999 AND ANY ORAL, WRITTEN
OR ELECTRONIC RESPONSE TO ANY INFORMATION REQUEST PROVIDED TO THE BUYER, WILL
CAUSE OR CREATE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, CONDITION,
VALUE OR QUALITY OF THE ACQUIRED ASSETS. NOTHING IN THIS DISCLAIMER OR THIS
AGREEMENT SHALL BE DEEMED TO AFFECT THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER ANY RELATED AGREEMENT FOR A BREACH OF ANY REPRESENTATION, WARRANTY OR
COVENANT CONTAINED IN SUCH RELATED AGREEMENT.

4.       REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to the Seller that the statements contained in this Section 4 are
correct and complete as of the Effective Date.

         4.1.     ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Connecticut. Copies of the organizational documents and bylaws of the Buyer,
each as amended to date, have been heretofore delivered to the Seller and are
accurate and complete.

         4.2.     AUTHORIZATION OF TRANSACTION. The Buyer has the power and
authority (including

                                      -26-
<Page>

full corporate power and authority) to execute and deliver this Agreement and
the Related Agreements and, subject to receipt of all Buyer's Regulatory
Approvals, to perform its obligations hereunder and thereunder. All corporate
actions or proceedings to be taken by or on the part of the Buyer to authorize
and permit the due execution and valid delivery by the Buyer of this Agreement,
the Related Agreements and the instruments required to be duly executed and
validly delivered by the Buyer pursuant hereto and thereto, the performance by
the Buyer of its obligations hereunder and thereunder, and the consummation by
the Buyer of the transactions contemplated herein and therein, have been duly
and properly taken. This Agreement and the Related Agreements have been duly
executed and validly delivered by the Buyer and constitute the valid and legally
binding obligations of the Buyer, enforceable in accordance with their terms and
conditions.

         4.3.     NONCONTRAVENTION. Subject to the Buyer obtaining the Buyer's
Regulatory Approvals, neither the execution and the delivery of this Agreement
or any of the Related Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and assumptions
referred to in Sections 2.10(t) and 2.11(l) above), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any Governmental Authority to which the
Buyer is subject or any provision of the organizational documents or bylaws of
the Buyer or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Buyer is a party or by which it is bound or to which any of its assets is
subject, except for matters that will not have a Buyer Material Adverse Effect.

         4.4.     BROKERS' FEES. The Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.

         4.5.     LITIGATION. No action, suit, claim, demand or other proceeding
is pending or, to the Buyer's Knowledge, threatened that would be reasonably
likely to result in a Buyer Material Adverse Effect or that questions the
validity of this Agreement or the Related Agreements or of any action taken or
to be taken pursuant to or in connection with the provisions of this Agreement
or the Related Agreements. There are no judgments, orders, decrees, citations,
fines or penalties heretofore assessed against the Buyer that have a Buyer
Material Adverse Effect or impair, estop, impede, restrain, ban or otherwise
adversely affect the Buyer's ability to satisfy or perform any of the Assumed
Liabilities under any federal, state or local Law.

         4.6.     NO KNOWLEDGE OF THE SELLER'S BREACH. The Buyer has no
Knowledge of any breach by the Seller of any representation or warranty
contained in Section 3 hereof, or of any condition or circumstance that would
excuse the Buyer from performance of its obligations under this Agreement or the
Related Agreements.

         4.7.     AVAILABILITY OF FUNDS. The Buyer has sufficient funds
available to it to pay the Closing Purchase Price on the Closing Date.

         4.8.     "AS IS" SALE. The representations and warranties set forth in
Section 3 hereof constitute the sole and exclusive representations and
warranties of the Seller in connection with

                                      -27-
<Page>

the transactions contemplated hereby. There are no representations, warranties,
covenants, understandings or agreements among the Parties regarding the Acquired
Assets or their transfer other than those incorporated in this Agreement. Except
for the representations and warranties expressly set forth in Section 3, the
Buyer disclaims reliance on any representations, warranties or guarantees,
either express or implied, by the Seller including but not limited to any
representation or warranty expressed or implied in the Descriptive Memorandum
dated as of February 10, 1999 and any oral, written or electronic response to
any information request provided to the Buyer. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED HEREIN, THE BUYER ACKNOWLEDGES AND AGREES THAT THE ACQUIRED ASSETS ARE
BEING ACQUIRED "AS IS, WHERE IS" ON THE CLOSING DATE, AND IN THEIR CONDITION ON
THE CLOSING DATE, AND THAT PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE BUYER
HAS CONDUCTED TO ITS SATISFACTION ALL NECESSARY AND SUFFICIENT EXAMINATION OF
THE ACQUIRED ASSETS, AND THAT THE BUYER IS RELYING ON ITS OWN EXAMINATION OF THE
ACQUIRED ASSETS, AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY MADE BY
THE SELLER, OR ANY BROKER OR INVESTMENT BANKER. THE BUYER FURTHER ACKNOWLEDGES
AND AGREES THAT, EXCEPT AS SET FORTH IN SECTION 9.1, THE REPRESENTATIONS AND
WARRANTIES OF THE SELLER SET FORTH IN THIS AGREEMENT TERMINATE AS OF THE CLOSING
DATE OR TERMINATION OF THIS AGREEMENT PURSUANT TO SECTION 10.1, AND THAT
FOLLOWING THE CLOSING DATE OR SUCH TERMINATION, AS THE CASE MAY BE, THE BUYER
SHALL HAVE NO RECOURSE AGAINST THE SELLER WITH RESPECT TO ANY BREACH OF SUCH
REPRESENTATIONS AND WARRANTIES.

         4.9.     AFFILIATE GUARANTY. If the Buyer assigns its rights and
interests to an Affiliate or Affiliates pursuant to Section 11.5 hereof, the
Buyer shall be deemed to have made the representations and warranties in this
Section 4 on behalf of itself and any such Affiliate as if such Affiliate were a
signatory to this Agreement.

         4.10.    QUALIFIED BUYER. To the Knowledge of the Buyer, the Buyer is
qualified to obtain any Permits necessary for the Buyer to own and operate the
Acquired Assets as of the Closing, to the extent such operation is either
required by any Related Agreement or this Agreement, or is contemplated by the
Buyer.

5.       COVENANTS. The Parties agree as follows:

         5.1.     GENERAL. Prior to the Closing, each of the Parties will use
its best efforts to take all actions and to do all things necessary, proper or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement and the Related Agreements prior to January 1,
2000 (including satisfaction, but not waiver, of the closing conditions set
forth in Section 6 below).

                                      -28-
<Page>

         5.2.     NOTICES, CONSENTS AND APPROVALS.

                  (a)      The Seller and the Buyer shall each file or cause to
         be filed with the Federal Trade Commission and the United States
         Department of Justice any notifications required to be filed under the
         Hart-Scott-Rodino Act and the rules and regulations promulgated
         thereunder with respect to the transactions contemplated hereby. The
         Parties shall use Commercially Reasonable Efforts to make such filings,
         as promptly as possible after the Effective Date, to respond promptly
         to any requests for additional information made by either of such
         agencies, and to cause the waiting periods under the Hart-Scott-Rodino
         Act to terminate or expire at the earliest possible date after the date
         of filing. The Buyer will pay all filing fees under the
         Hart-Scott-Rodino Act, but each Party will bear its own costs for the
         preparation of any filing. Both Parties shall use Commercially
         Reasonable Efforts to cause any waiting period under the
         Hart-Scott-Rodino Act with respect to the transactions contemplated by
         this Agreement and the Related Agreements to expire or terminate at the
         earliest possible time.

                  (b)      Prior to the Closing, the Seller and the Buyer shall
         cooperate with each other and use all Commercially Reasonable Efforts
         to (i) promptly prepare and file all necessary documentation, (ii)
         effect all necessary applications, notices, petitions and filings and
         execute all agreements and documents, (iii) obtain the transfer or
         reissuance to the Buyer of all necessary Permits and (iv) obtain all
         necessary consents, approvals and authorizations of all other parties
         necessary or advisable to consummate the transactions contemplated by
         this Agreement or in any of the Related Agreements (including, without
         limitation, the Seller's Regulatory Approvals and the Buyer's
         Regulatory Approvals) or required by the terms of any note, bond,
         mortgage, indenture, deed of trust, license, franchise, permit,
         concession, contract, lease or other instrument to which the Seller or
         the Buyer is a party or by which any of them is bound. The Seller and
         the Buyer shall have the right to review in advance all
         characterizations of the information relating to the transactions
         contemplated by this Agreement or in any of the Related Agreements
         which appear in any filing made in connection with the transactions
         contemplated hereby or thereby. Notwithstanding the foregoing, the
         Seller is not obligated to assign or transfer any interest in any
         Transferable Permits, including, without limitation, those obtained
         pursuant to the applicable requirements of Environmental Laws, if the
         consent or approval of the third Person for such assignment or transfer
         cannot be obtained.

                  (c)      The Buyer shall have primary responsibility for
         securing the transfer or reissuance of the Permits (including the
         Transferable Permits) effective as of the Closing Date. The Seller
         shall cooperate with the Buyer's efforts in this regard and the Seller
         shall use each and every Commercially Reasonable Effort to assist in
         the transfer or reissuance when so requested by the Buyer. If Buyer is
         unable to secure the transfer or reissuance of one or more Permits
         effective on the Closing Date, the Seller shall continue to cooperate
         with the Buyer's efforts to secure such transfer or reissuance
         following the Closing Date.

         5.3.     OPERATION OF BUSINESS. During the Interim Period, the Seller
will operate and maintain the Acquired Assets in the ordinary course consistent
with Good Utility Practices (including the continued scheduling and performance
of regular and customary maintenance and maintenance overhauls), unless
otherwise contemplated by this Agreement or with the prior

                                      -29-
<Page>

written consent of the Buyer. Without limiting the generality of the foregoing,
the Seller shall not, without the prior written consent of the Buyer, which
Buyer shall not unreasonably withhold or delay, during the Interim Period, with
respect to the Acquired Assets, except as otherwise provided in Schedule 5.3(g):

                  (a)      sell, lease (as lessor), transfer or otherwise
         dispose of, any of the Acquired Assets, other than as used, consumed or
         replaced in the ordinary course of business consistent with Good
         Utility Practices, or encumber, pledge, mortgage or suffer to be
         imposed on any of the Acquired Assets any encumbrance other than
         Permitted Encumbrances, other than such additional financing under the
         Mortgage Indenture as shall not prevent the Seller from obtaining a
         Mortgage Indenture Release substantially in the form attached hereto as
         EXHIBIT H;

                  (b)      make any material change in the levels of Inventories
         customarily maintained by the Seller with respect to the Acquired
         Assets, except for such changes that are consistent with Good Utility
         Practices;

                  (c)      amend, terminate or otherwise modify any Contract,
         Lease or Permit other than in the ordinary course of business, or as
         may be required in connection with transferring the Seller's rights or
         obligations thereunder to the Buyer pursuant to this Agreement, or as
         may be required in connection with the renewal of FERC licenses with
         respect to certain of the Acquired Assets;

                  (d)      enter into, amend, or otherwise modify any real or
         personal property Tax agreement, treaty or settlement;

                  (e)      enter into any commitment for the purchase or sale of
         fuel (whether commodity or transportation) having a term greater than
         nine (9) months and not terminable either (i) automatically on the
         Closing Date; or (ii) by option of the Buyer in its sole discretion at
         any time after the Closing Date, where the aggregate payment under such
         fuel commitment and all other then outstanding fuel commitments would
         be expected to exceed $75 million;

                  (f)      make any capital expenditures that are not
         Pre-Approved Capital Expenditures or enter into a Capital Commitment
         with respect thereto, except for those capital expenditures or Capital
         Commitments necessitated by Good Utility Practice, with respect to
         which the Seller shall advise the Buyer of the proposed incurrence
         thereof not less than thirty days prior to the time the capital
         expenditures are to be made or a Capital Commitment with respect
         thereto undertaken (or such shorter period as may be necessitated by an
         emergency situation), and with respect to which the Buyer shall
         promptly deliver the written consent contemplated by this Section 5.3
         unless the Buyer reasonably objects thereto.

Notwithstanding anything in Section 5.3 to the contrary, the Seller may, in its
sole discretion, (i) make Pre-Approved Capital Expenditures or incur a Capital
Commitment with respect thereto and (ii) make Capital Commitments for which an
adjustment to the Initial Purchase Price will be made pursuant to Section
2.6(b).

                                      -30-
<Page>

         5.4.     FULL ACCESS; YEAR 2000 COMPUTER PROBLEM

                  (a)      During the Interim Period, the Seller will permit the
         Buyer and Representatives of the Buyer during normal business hours (i)
         to have access upon reasonable notice, in a manner so as not to
         interfere with the normal business operations of the Seller, to all
         premises, properties, management, personnel, books, records (including
         Tax records) and documents associated with the Acquired Assets; (ii)
         permit the Buyer to make such reasonable inspections thereof as the
         Buyer may reasonably request; and (iii) furnish the Buyer with a copy
         of each material report, schedule or other document filed or received
         by it with respect to the Acquired Assets with a Governmental
         Authority. Notwithstanding the foregoing, and without limiting the
         generality of the confidentiality provisions set forth in Section 7
         hereof, the Seller shall: (i) not provide any information that the
         Seller or the Seller's counsel believes constitutes or could be deemed
         to constitute a waiver of the attorney-client privilege, and (ii) not
         be required to supply the Buyer with any information or records that
         the Seller is under a legal obligation not to supply, including,
         without limitation, any Acquired Assets Employees' Records.

                  (b)      During the Interim Period, the Seller shall consult
         with the Buyer and cooperate with the Buyer's reasonable requests
         regarding modifications to any hardware, software or firmware
         (including embedded microcontrollers in non-computer equipment)
         included in the Acquired Assets so as to ensure to the extent
         practicable that on and following the Closing Date the operation of the
         Acquired Assets by the Buyer will not be interrupted or adversely
         affected due to the Year 2000 Computer Problem. Any amounts expended by
         the Seller at the request of the Buyer under this Section 5.4(b) shall
         constitute an adjustment to the Initial Purchase Price pursuant to
         Section 2.6(a) hereof.

                  (c)      During the Interim Period, at the sole cost and
         expense of the Buyer, the Seller will permit designated employees or
         Representatives of the Buyer (the "Buyer's Observers") to observe all
         operations of the Seller related to the Acquired Assets and such
         observation shall be permitted on a cooperative basis in the presence
         of personnel of the Seller during normal business hours of the Seller;
         provided, however, that the Buyer's Observers shall not unreasonably
         interfere with the operation of the Acquired Assets by the Seller.

         5.5.     INTERIM PERIOD NOTICE.

                  (a)      Each Party shall notify the other promptly if any
         information comes to its attention prior to the Closing that is likely
         (i) to excuse it from the performance of its obligations under this
         Agreement or the Related Agreements or (ii) cause any condition to
         close set forth in Sections 6.1 or 6.2 not to be satisfied.

                  (b)      The Seller shall notify the Buyer of the existence of
         any matter which would

                                      -31-
<Page>

         cause any of the representations or warranties in Section 3 above to be
         untrue or incorrect. Unless the Buyer has the right to terminate this
         Agreement pursuant to Section 10.1(b)(vi) below by reason of such
         notice and exercises that right within the period of 15 days referred
         to in Section 10.1(b)(vi) below, the written notice pursuant to this
         Section 5.5(b) shall be deemed to have amended the appropriate Schedule
         or Schedules as of the Effective Date, to have qualified the
         representations and warranties contained in Section 3 above as of the
         Effective Date, and to have cured any misrepresentation or breach of
         warranty that otherwise might have existed hereunder by reason of the
         existence of such matter.

                  (c)      The Buyer may elect at any time to notify the Seller
         of the existence of any matter, which if in existence on the Effective
         Date or the Closing Date would or might cause any of the
         representations or warranties in Section 4 above to be untrue or
         incorrect. Unless the Seller has the right to terminate this Agreement
         pursuant to Section 10.1(c)(vi) below by reason of such notice and
         exercises that right within the period of 15 days referred to in
         Section 10.1(c)(vi) below, the written notice pursuant to this Section
         5.5(c) shall be deemed to have amended the appropriate Schedule or
         Schedules as of the Effective Date, to have qualified the
         representations and warranties contained in Section 4 above as of the
         Effective Date, and to have cured any misrepresentation or breach of
         warranty that otherwise might have existed hereunder by reason of the
         existence of such matter.

         5.6.     FURTHER ASSURANCES.

                  (a)      At any time and from time to time after the Closing,
         at the request of a Party, the other Party will execute and deliver
         such instruments of sale, transfer, conveyance, assignment and
         confirmation and take such action as the Seller and the Buyer may both
         reasonably agree is necessary to transfer, convey and assign to the
         Buyer, and to confirm the Buyer's title to or interest in the Acquired
         Assets and Assumed Liabilities or to put the Buyer in actual possession
         and operating control of the Acquired Assets.

                  (b)      In the event that any asset that is an Acquired Asset
         shall not have been conveyed to the Buyer at the Closing, the Seller
         shall, subject to Sections 5.6(c), (d) and (e), use its best efforts to
         convey such asset to the Buyer as promptly as is practicable after the
         Closing.

                  (c)      To the extent that the Seller's rights under any
         Contract or Lease may not be assigned without the consent of another
         Person which consent has not been obtained by the Closing Date, this
         Agreement shall not constitute an agreement to assign the same if an
         attempted assignment would constitute a breach thereof or be unlawful,
         and the Seller, at its expense, shall use its Commercially Reasonable
         Efforts to obtain any such required consent(s) as promptly as possible.
         The Seller and the Buyer agree that if any consent to an assignment
         shall not be obtained, or if any attempted assignment would be
         ineffective or would impair the Buyer's rights and obligations under
         the Contract or Lease in question, so that the Buyer would not in
         effect acquire the benefit of all such rights and obligations, the
         Seller, to the maximum extent permitted by law and such Contract or
         Lease, shall, after the Closing, appoint the Buyer to be the Seller's
         agent with respect to such Contract or Lease, and the Seller shall, to
         the maximum extent permitted by law and

                                      -32-
<Page>

         such Contract or Lease, enter into such reasonable arrangements with
         the Buyer as are necessary to provide the Buyer with the benefits and
         obligations of such Contract or Lease. The Seller and the Buyer shall
         cooperate and shall each use their Commercially Reasonable Efforts
         after the Closing to obtain an assignment of such Contract or Lease to
         the Buyer; PROVIDED that neither the Seller nor the Buyer shall have
         any obligation to offer or pay any consideration in order to obtain any
         such consents.

                  (d)      To the extent that the Seller's rights under any
         warranty or guaranty described in Section 2.1(b) may not be assigned
         without the consent of another Person, which consent has not been
         obtained by the Closing Date, this Agreement shall not constitute an
         agreement to assign the same, if an attempted assignment would
         constitute a breach thereof, or be unlawful. The Seller and the Buyer
         agree that if any consent to an assignment of any such warranty or
         guaranty would be ineffective or would impair the Buyer's rights and
         obligations under the warranty or guaranty in question, so that the
         Buyer would not in effect acquire the benefit of all such rights and
         obligations, the Seller shall use Commercially Reasonable Efforts, at
         the Buyer's sole cost and expense, to the extent permitted by law and
         such warranty or guaranty, to enforce such warranty or guaranty for the
         benefit of the Buyer so as to the maximum extent possible to provide
         the Buyer with the benefits and obligations of such warranty or
         guaranty. Notwithstanding the foregoing, the Seller shall not be
         obligated to bring or file suit against any Third Party, PROVIDED that
         if the Seller shall determine not to bring or file suit after being
         requested by the Buyer to do so, the Seller shall assign, to the extent
         permitted by law or any applicable agreement or contract, its rights in
         respect of the claims so that the Buyer may bring or file such suit.

                  (e)      To the extent that any personal property lease cannot
         be assigned to the Buyer or is not subject to arrangements described in
         Section 5.6(c), upon the Buyer's request and at the Buyer's sole
         expense, the Seller will use Commercially Reasonable Efforts to acquire
         the assets relating to such lease and to include them in the Acquired
         Assets before the Closing Date.

         5.7.     EMPLOYEE MATTERS.

                  (a)      The Buyer shall offer employment, commencing as of
         midnight on the Closing Date, to all employees of the Seller who are
         represented by the Local and who were employed in the operation of the
         Acquired Assets at any time during the three-month period prior to the
         Closing Date, at levels of wages and overall compensation not lower
         than each such employee's level of wages and overall compensation as of
         the Effective Date; provided that the Buyer shall recognize all
         increases in wages made in the ordinary course of business and in
         accordance with the Collective Bargaining Agreement (as defined
         hereinbelow) between the Effective Date and the Closing Date. Those
         employees who accept such offer of employment are hereinafter referred
         to as the "Represented Employees". All such offers of employment shall
         be made in accordance with all applicable laws and regulations and the
         Collective Bargaining Agreement between the Seller and the Locals dated
         October 1, 1994, as amended by the Letter of Agreement dated February
         25, 1998, as amended between the Local and the Seller (the "MOU", and,
         together with the above-referenced Collective Bargaining Agreement,
         referred to herein as the "Collective Bargaining Agreement"). Effective
         as of the Closing Date, the Buyer

                                      -33-
<Page>

         shall agree to be bound by the terms of the Collective Bargaining
         Agreement and to thereafter comply with all applicable obligations
         thereunder, subject to changes negotiated with and acceptable to the
         Local.

                  (b)      The Buyer agrees to offer employment, commencing as
         of midnight on the Closing Date, for a period of at least twelve months
         (the "Minimum Employment Period") to all employees of the Seller who
         were employed in the operation of the Acquired Assets at any time
         during the three-month period prior to the Closing Date, other than
         Represented Employees, at levels of wages and overall compensation not
         lower than each such employee's level of wages and overall compensation
         as of the Effective Date; provided that the Buyer shall recognize all
         increases in wages made in the ordinary course of business between the
         Effective Date and the Closing Date; and provided, further, that
         nothing herein shall prevent the Buyer from terminating any
         Non-Represented Employee's employment for cause during the Minimum
         Employment Period. Those employees who accept such offer of employment
         are hereinafter referred to as the "Non-Represented Employees, and the
         Non-Represented Employees and the Represented Employees are hereafter
         referred to as the "Acquired Assets Employees". All such offers of
         employment shall be made in accordance with all applicable laws.
         Notwithstanding anything herein to the contrary, all Non-Represented
         Employees will be employed as at-will employees whose employment may be
         terminated at any time with or without cause or reason by either the
         employee or the Buyer. In addition, the Buyer shall provide to any
         Non-Represented Employee who is furloughed during the six months
         following the Minimum Employment Period out-placement assistance and
         tuition reimbursement consistent with that provided to the Represented
         Employees in the Local 455 MOU. For purposes of this Section 5.7, the
         term "furloughed" shall refer to the termination of employment with or
         without possibility of recall, made by the Buyer without cause.

                  (c)      As soon as practical after the Effective Date, Buyer
         shall take all action necessary and appropriate to establish and
         maintain a tax qualified pension plan for the Acquired Assets Employees
         (the "Buyer's Plan").

                  (i)      The Buyer shall provide a minimum level of pension
                           benefits calculated using the pension benefit formula
                           applicable to each Acquired Asset Employee under the
                           NUSCO Retirement Plan (the "Seller's Plan") as of the
                           Effective Date. The Buyer's minimum obligation with
                           regard to this pension benefit will be calculated as
                           the difference between (a) the Acquired Assets
                           Employee's total pension benefit as calculated as of
                           the employee's retirement date using (i) the pension
                           benefit formula under the Seller's Plan applicable to
                           the employee as of the Effective Date, (ii) such
                           employee's final average earnings (as defined in the
                           Seller's Plan) as of the employee's retirement date,
                           taking into account compensation earned from the
                           Seller and the Buyer, (iii) such employee's total
                           years of service

                                      -34-
<Page>

                           with the Seller and the Buyer as of the employee's
                           retirement date, and (iv) covered compensation as of
                           the employee's retirement date and (b) the pension
                           benefit payable to the employee by the Seller at
                           retirement as follows: the pension benefit payable to
                           each Acquired Assets Employee at age 65 by the Seller
                           shall be calculated by the Seller as of the Closing
                           Date, based upon (i) the pension benefit formula
                           under the Seller's Plan applicable to the employee as
                           of the Closing Date, (ii) years of credited service
                           with the Seller as of the Closing Date, (iii) final
                           average earnings (as defined in the Seller's Plan) as
                           of the Closing Date, and (iv) covered compensation as
                           of the Closing Date. This benefit shall be a vested
                           terminated benefit subject to the vested terminated
                           actuarial factors applied under the Seller's Plan.

                  (ii)     The Seller shall provide each Acquired Assets
                           Employee with a vested and non-forfeitable right to a
                           benefit equal to his accrued benefit under the
                           Seller's Plan determined as of the Closing Date as
                           described in Section 5.7(c)(i) above.

                  (iii)    If the Buyer terminates the employment of any
                           Eligible Non-Represented Employee (as defined below),
                           the Buyer will provide the benefits described in
                           Schedule 5.7(c)(iii). An Eligible Non-Represented
                           Employee is an employee whose age on the date of
                           announcement of the successful bidder(s) is between
                           50 and 54 years, inclusive, and whose age plus years
                           of credited service under the Seller's Plan on the
                           same date equals or exceeds 65 years.

                  (iv)     Effective September 30, 1999, the Seller's Plan will
                           permit employees age 55 and older to retire on or
                           after January 1, 2000 with full pension benefits if
                           the sum of the employee's age and years of credited
                           service equals 85 at such employee's termination date
                           (the "Rule of 85"). The Buyer shall apply the Rule of
                           85 to all Acquired Assets Employees.

                  (d)      The Buyer shall establish and maintain for the
         Non-Represented Employees group for a period of at least twelve months
         following the Closing Date plans and programs, which in the aggregate,
         shall be generally comparable to the existing plans and programs
         provided to such employees by the Seller as of the Effective Date as
         listed on Schedule 3.15.

                  (e)      The Buyer shall apply each Acquired Assets Employee's
         prior service with the Seller toward any eligibility, vesting or other
         waiting period requirements under the Buyer's Employee Benefit Plans
         (including the Buyer's Plan) to the extent such conditions were
         satisfied under the Seller's Employee Benefit Plans prior to the
         Closing Date. In addition, the Buyer shall waive all limitations with
         respect to preexisting conditions, exclusions and waiting periods with
         respect to participation and coverage requirements under the Buyer's
         Employee Benefit Plans and credit each Acquired Assets Employee for any
         co-payments and deductibles paid prior to the Closing Date under any
         such plans in which each Acquired Assets Employee participates. The
         Buyer shall vest each Acquired Assets Employee to the extent such
         employee is vested under the Seller's Employee

                                      -35-
<Page>

         Benefit Plans as of the Closing Date.

                  (f)      Within a reasonable time prior to the Closing Date,
         the Seller shall provide the Buyer with such pertinent data or
         information as the Buyer shall reasonably require to determine each
         Acquired Assets Employee's service, compensation and accrued benefits
         under the Seller's Plan before the Closing Date.

                  (g)      The authorized complement of employees (by position)
         for the Acquired Assets, as of the Effective Date, is set forth on
         Schedule 5.7(g).

                  (h)      The Seller shall provide and remain liable for any
         and all continuation of coverage under the Seller's Employee Benefit
         Plans as required under Sections 601 through 608 of ERISA and
         Section 4980B of the Code with respect to any person as to whom a
         "qualifying event" as defined in Section 4980 of the Code occurred
         on or prior to the Closing
         Date.

                  (i)      On or before the Closing Date, the Seller shall
         terminate the employment of the Acquired Assets Employees and shall be
         solely responsible for the payment of all wages and compensation
         thereupon legally owing to or with respect to the Acquired Assets
         Employees including, without limitation, accrued and payable vacation
         pay, bonuses, severance pay, overtime, and all benefits under any
         Employee Benefit Plan that became payable on account of such
         termination of employment or any other amounts to which the Acquired
         Assets Employees may be entitled for services rendered prior to their
         termination or by virtue of their termination. The Seller shall retain
         any and all liability under the Seller's Employee Benefit Plans for
         retirees of the Seller as of the Closing Date.

                  (j)      The Seller agrees to timely perform and discharge all
         requirements under the WARN Act and under applicable state and local
         Laws for the notification of its employees arising from the sale of the
         Acquired Assets to the Buyer up to and including the Closing Date,
         including those employees who will become Acquired Assets Employees
         effective as of the Closing Date. After the Closing Date, the Buyer
         shall be responsible for performing and discharging all requirements
         under the WARN Act and under applicable state and local laws and
         regulations for the notification of its employees, whether Acquired
         Assets Employees or otherwise. All severance and other costs associated
         with workforce restructuring activities associated with the Assets
         and/or the Acquired Assets Employees subsequent to the Closing Date
         shall be borne solely by the Buyer.

         5.8.     ACCESS AFTER CLOSING.

                  (a)      RECORDS. For a period of five (5) years after the
         Closing Date, each Party shall have reasonable access to all of the
         records, books and documents related to the Acquired Assets of the
         other Party to the extent that such access may reasonably be required
         in connection with matters relating to or affected by the operations of
         the Seller prior to the Closing Date or the operations of Buyer after
         the Closing Date. Such access shall be afforded upon receipt of
         reasonable advance notice and during normal business hours. The Party
         seeking such access shall be solely responsible for any costs or
         expenses incurred by it pursuant to this Section 5.8(a). If a Party
         shall desire to dispose of any records, books or documents that may
         relate to operation of the Acquired Assets before

                                      -36-
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         the Closing prior to the expiration of such five-year period, such
         Party shall, prior to such disposition, give to the other Party a
         reasonable opportunity, at the other Party's expense, to segregate and
         remove such records, books or documents as the requesting Party may
         select.

                  (b)      EMPLOYEES. For a period of five (5) years after the
         Closing Date, the Seller shall have reasonable access to the Acquired
         Assets Employees and the Buyer shall have reasonable access to the
         Seller's employees, for purposes of consultation or otherwise, to the
         extent that such access may reasonably be required by the Seller or the
         Buyer in connection with matters relating to or affected by the
         operations of the Seller prior to the Closing or the operations of the
         Buyer following the Closing, so long as the duration of any employee's
         time commitment with respect thereto is not extensive and does not
         materially impair said employee's performance of his or her duties.

         5.9.     NEPOOL. At the Closing, the Buyer shall be a member in good
standing in NEPOOL. Except as required to preserve system reliability and in
compliance with the requirements of the ISO or NEPOOL, and as may be otherwise
provided in any Related Agreement, the Seller shall not interfere with the
Buyer's efforts to expand or modify generation capacity at any of the Sites.

         5.10.    RISK OF LOSS. Except as otherwise provided in this Section
5.10, during the Interim Period all risk of loss or damage to the Acquired
Assets shall be borne by the Seller. If during the Interim Period the Acquired
Assets are damaged by fire or other casualty (each such event, an "EVENT OF
LOSS"), or are taken by a Governmental Authority by exercise of the power of
eminent domain (each, a "TAKING"), then the following provisions shall apply:

                  (a)      the occurrence of (i) any one or more Events of Loss,
         as a result of which the aggregate costs to restore, repair or replace,
         less any insurance proceeds received or payable to the Seller in
         connection with such Event or Events of Loss (provided that any
         insurance proceeds received or payable in connection with an Event or
         Events of Loss are either used to restore, repair or replace such Event
         or Events of Loss or made available to the Buyer), are reasonably
         estimated to be an amount less than or equal to two percent (2%) of the
         Initial Purchase Price, and/or (ii) any one or more Takings, as a
         result of which the aggregate condemnation proceeds equal an amount
         less than or equal to two percent (2%) of the Initial Purchase Price,
         shall have no effect on the transactions contemplated hereby;

                  (b)      upon the occurrence of (i) any one or more Events of
         Loss, as a result of which the aggregate costs to restore, repair or
         replace, less any insurance proceeds received or payable to the Seller
         in connection with such Event or Events of Loss (provided that any
         insurance proceeds received or payable in connection with an Event or
         Events of Loss are either used to restore, repair or replace such Event
         or Events of Loss or made available to the Buyer), are reasonably
         estimated to be an amount in excess of two

                                      -37-
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         percent (2%) of the Initial Purchase Price, or (ii) any one or more
         Takings, as a result of which the aggregate condemnation proceeds equal
         an amount in excess of two percent (2%) of the Initial Purchase Price
         (a "MAJOR LOSS"), the Seller shall have, in the case of a Major Loss
         relating to one or more Events of Loss, the option, exercised by notice
         to the Buyer, to restore, repair or replace the damaged Acquired Assets
         prior to Closing. If the Seller elects to restore, repair or replace
         the Acquired Assets relating to a Major Loss, which election shall be
         made by notice to the Buyer within fifteen (15) days following the
         occurrence of the Major Loss, the completion of the repair, replacement
         or restoration will be a condition to the Closing and the Closing Date
         shall be postponed at the election of the Seller for the amount of time
         reasonably necessary to complete the restoration, repair or
         replacement, not to exceed one hundred and eighty (180) days without
         the Buyer's consent. If the Seller elects not to restore, repair or
         replace the Acquired Assets affected by a Major Loss, or such Major
         Loss is the result of one or more Takings, the provisions of Section
         5.10(c) will apply;

                  (c)      in the event that the Seller elects not to restore,
         repair or replace a Major Loss, or in the event that the Seller, having
         elected to repair, replace or restore the Major Loss, fails to complete
         the repair, replacement or restoration within the one hundred eighty
         (180) days (or such longer period as the Buyer shall have consented
         to), or in the event that a Major Loss is the result of one or more
         Takings, then the Parties shall, within thirty (30) days following the
         Seller's election, failure to complete, or the occurrence of such
         Takings, as the case may be, negotiate in good faith an equitable
         adjustment in the Purchase Price to reflect the impact of the Major
         Loss, as mitigated by any repair, replacement or restoration work
         actually completed by the Seller, on the Acquired Assets being sold to
         the Buyer, and proceed to Closing. To assist the Buyer in its
         evaluation of any and all Events of Loss, the Seller shall provide the
         Buyer such access to the Acquired Assets and such information as the
         Buyer may reasonably request in connection therewith; and

                  (d)      in the event that the parties fail to reach agreement
         on an equitable adjustment of the Purchase Price within the thirty (30)
         days provided in Section 5.10(c), then the Buyer shall have the
         election, exercisable by notice to the Seller within fifteen (15) days
         immediately following the expiration of the thirty (30) day period, to
         either (a) proceed with the consummation of the transaction at Closing,
         with a reduction in the Purchase Price consistent with the Seller's
         last offer communicated to the Buyer, in which event the Seller shall
         assign over or deliver to the Buyer at Closing all condemnation
         proceeds or insurance proceeds which the Seller receives, or to which
         the Seller becomes entitled by virtue of the Events of Loss, less any
         costs and expenses reasonably incurred by the Seller in obtaining such
         condemnation proceeds or insurance proceeds, or (b) terminate this
         Agreement, in which event this Agreement shall terminate and neither
         Party shall thereafter have any obligation or liability to the other by
         reason of this Agreement. If the Buyer fails to make the election
         within the fifteen (15) day period, the Buyer will be deemed to have
         made the election to proceed with the Closing.

         5.11.    REGULATORY APPROVAL PROCESS. The Parties acknowledge and agree
that it is essential that the Closing occur prior to December 31, 1999, and that
the Seller may suffer certain adverse consequences if the Closing does not take
place by that time. Accordingly, the Buyer hereby covenants that it shall (x)
submit its portion of the draft applications, including all

                                      -38-
<Page>

required exhibits and attachments, under Sections 203 and 205 of the Federal
Power Act substantially in a form ready for filing with the FERC (the "FERC
Applications") to the Seller on or before August 2, 1999 for the Seller's review
and (y) cooperate with the Seller with a view to filing the FERC Applications
with the FERC in accordance with the rules and regulations of the FERC on or
before August 17, 1999 and shall not thereafter seek to amend or withdraw such
FERC Applications.

         5.12.    Intentionally Omitted.

         5.13.    DISCHARGE OF ENVIRONMENTAL LIABILITIES. In discharging its
Environmental Liabilities, if any, on or after the Closing Date, pursuant to
Section 2.3(a) hereof, the Buyer agrees and covenants that the Buyer will not
prejudice or impair the Seller's rights under the Environmental Laws or
interfere with the Seller's ability to contest in appropriate administrative,
judicial or other proceedings its liability, if any, for Environmental Claims or
Remediation. The Buyer further agrees to provide to the Seller draft copies of
all material plans and studies prepared in connection with any Site
investigation or Remediation associated with pre-Closing occurrences prior to
their submission to the Governmental Authority with jurisdiction under
Environmental Laws. The Seller shall have the right, without the obligation, to
attend all meetings between the Buyer, its agents or representatives, and such
Governmental Authorities. The Buyer shall promptly provide to the Seller copies
of all material written information, plans, documents and correspondence
submitted to or received from such Governmental Authorities relating to the
Buyer's discharge of any Environmental Liabilities assumed pursuant to this
Agreement associated with pre-Closing occurrences.

6.       CONDITIONS TO OBLIGATION TO CLOSE.

         6.1.     CONDITIONS TO OBLIGATION OF THE BUYER TO CLOSE. The obligation
of the Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:

                  (a)      REPRESENTATIONS AND WARRANTIES. The representations
         and warranties set forth in Section 3 above shall be true and correct
         in all material respects at and as of the Closing Date;

                  (b)      PERFORMANCE BY THE SELLER. The Seller shall have
         performed and complied in all material respects with all of its
         covenants, agreements and obligations hereunder through the Closing;

                  (c)      BUYER'S REGULATORY APPROVALS. The Buyer shall have
         received the Buyer's Regulatory Approvals specified in SCHEDULE 6.1(c),
         with such terms and conditions as may be included therein except for
         such terms and conditions that, either singly or in the aggregate, are
         reasonably likely to have a Material Adverse Effect;

                  (d)      SELLER'S REGULATORY APPROVALS. The Seller shall have
         received the Seller's Regulatory Approvals specified in SCHEDULE
         6.2(c), with such terms and conditions as may be included therein
         except for such terms and conditions that, either singly or in the
         aggregate, are reasonably likely to have a Material Adverse Effect;

                  (e)      ABSENCE OF LITIGATION. There shall not be any
         injunction, judgment, order,

                                      -39-
<Page>

         decree or ruling in effect or pending which would prevent or inhibit
         consummation of the transactions contemplated by this Agreement or the
         Related Agreements;

                  (f)      ANTITRUST MATTERS. All applicable waiting periods
         (and any extensions thereof) under the Hart-Scott-Rodino Act shall have
         expired or otherwise been terminated;

                  (g)      NO MATERIAL ADVERSE EFFECT. There shall not be any
         Material Adverse Effect; and

                  (h)      DELIVERIES. The Seller shall have complied in all
         material respects with the delivery requirements of Section 2.10.

The Buyer may waive any condition specified in this Section 6.1 if it executes a
writing so stating at or prior to the Closing and such waiver shall not be
considered a waiver of any other provision in this Agreement unless the writing
specifically so states.

         6.2.     CONDITIONS TO OBLIGATION OF THE SELLER TO CLOSE. The
obligation of the Seller to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:

                  (a)      REPRESENTATIONS AND WARRANTIES. The representations
         and warranties set forth in Section 4 above shall be true and correct
         in all material respects at and as of the Closing Date;

                  (b)      PERFORMANCE BY BUYER. The Buyer shall have performed
         and complied in all material respects with all of its covenants,
         agreements and obligations hereunder through the Closing;

                  (c)      SELLER'S REGULATORY APPROVALS. The Seller shall have
         received the Seller's Regulatory Approvals specified in SCHEDULE
         6.2(c), in each case without terms and conditions that are reasonably
         likely to have a material adverse effect on the Seller and in the case
         of the DTE Approval, with such terms and conditions as are acceptable
         to the Seller in its sole and absolute discretion;

                  (d)      BUYER'S REGULATORY APPROVALS. The Buyer shall have
         received the Buyer's Regulatory Approvals specified in SCHEDULE 6.1(c),
         in each case without terms and conditions that are reasonably likely to
         have a material adverse effect on the Seller;

                  (e)      ABSENCE OF LITIGATION. There shall not be any
         injunction, judgment, order, decree or ruling in effect or pending
         which would prevent or inhibit consummation of the transactions
         contemplated by this Agreement or the Related Agreements;

                  (f)      ANTITRUST MATTERS. All applicable waiting periods
         (and any extensions thereof) under the Hart-Scott-Rodino Act shall have
         expired or otherwise been terminated;

                  (g)      DELIVERIES. The Buyer shall have complied in all
         material respects with the delivery requirements of Section 2.11; and

                                      -40-
<Page>

                  (h)      NEPOOL. The Buyer shall be a member in good standing
         of NEPOOL

The Seller may waive any condition specified in this Section 6.2 if it executes
a writing so stating at or prior to the Closing and such waiver shall not be
considered a waiver of any other provision in this Agreement unless the writing
specifically so states.

7.       CONFIDENTIALITY.

                  (a)      Each Receiving Party and each Representative thereof
         will treat and hold as confidential all of the Proprietary Information,
         and refrain from using any of the Proprietary Information except in
         connection with this Agreement and the Related Agreements and
         transactions contemplated hereby and thereby. In the event that the
         Receiving Party or any Representative thereof is requested or required
         (including, without limitation, (i) pursuant to any rule or regulation
         of any stock exchange or other self-regulatory organization upon which
         any of the Receiving Party's securities are listed or (ii) by oral
         question or request for information or documents in any legal
         proceeding, including without limitation the Buyer's Regulatory
         Approval and the Seller's Regulatory Approval processes, interrogatory,
         subpoena, civil investigative demand, or similar process) to disclose
         any Proprietary Information, the Receiving Party will notify the
         Disclosing Party promptly of the request or requirement so that the
         Disclosing Party may seek an appropriate protective order or waive
         compliance with the provisions of this Section 7. If, in the absence of
         a protective order or the receipt of a waiver hereunder, the Receiving
         Party or any Representative thereof is, on the advice of counsel,
         compelled to disclose any Proprietary Information pursuant to any such
         request or requirement, then the Receiving Party or such Representative
         may disclose the Proprietary Information so requested or required to be
         disclosed; PROVIDED, HOWEVER, that the Receiving Party shall use its
         reasonable best efforts to obtain, at the request of the Disclosing
         Party, an order or other assurance that confidential treatment will be
         accorded to such portion of the Proprietary Information required to be
         disclosed as the Disclosing Party shall designate. If this Agreement is
         terminated pursuant to Section 10.1 hereof, then each Receiving Party
         shall deliver promptly to the Disclosing Party or destroy, at the
         request and option of the Disclosing Party, all tangible embodiments
         (and all copies) of the Proprietary Information which are in his or its
         possession

                  (b)      The obligations of the Parties contained in this
         Section 7 shall be in full force and effect for three years from the
         date hereof and will survive the termination of this Agreement, the
         discharge of all other obligations owed by the Parties to each other
         and any transfer of title to the Acquired Assets. Nothing in this
         Section 7 shall in any way alter the Buyer's obligations under the
         Confidentiality Agreement dated February 17, 1999 by and between the
         Buyer and J.P. Morgan Securities, Inc.

                  (c)      Upon the Disclosing Party's prior written approval
         (which will not be unreasonably withheld), the Receiving Party may
         provide Proprietary Information to the

                                      -41-
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         DTE, the FERC, the SEC, the United States Department of Justice, the
         United States Federal Trade Commission or any other Governmental
         Authority with jurisdiction, as necessary, to obtain any consents,
         waivers or approvals as may be required for the Receiving Party to
         undertake the transactions contemplated herein. The Receiving Party
         will seek confidential treatment for such Proprietary Information
         provided to any such Governmental Authority (if such confidential
         treatment is available from the appropriate Governmental Authority) and
         the Receiving Party will notify the Disclosing Party as far in advance
         as is practicable of its intention to release to any such Governmental
         Authority any such Proprietary Information.

8.       TAXES.

                  (a)      All transfer and sales Taxes incurred in connection
         with this Agreement and the transactions contemplated hereby shall be
         borne by the Buyer, including, without limitation, Massachusetts state
         sales tax, and the Buyer, at its own expense, will file, to the extent
         required by applicable Laws, all necessary Tax Returns and other
         documentation with respect to all such transfer or sales Taxes, and, if
         required by applicable Laws, the Seller will join in the execution of
         any such Tax Returns or other documentation. Prior to the Closing Date,
         the Buyer will provide to the Seller, to the extent possible, an
         appropriate certificate of no tax due from each applicable taxing
         authority.

                  (b)      With respect to Taxes to be prorated in accordance
         with Section 2.8 of this Agreement only, the Buyer shall prepare and
         timely file all Tax Returns required to be filed after the Closing with
         respect to the Acquired Assets, if any, and shall duly and timely pay
         all such Taxes shown to be due on such Tax Returns. The Buyer's
         preparation of any such Tax Returns shall be subject to the Seller's
         approval, which approval shall not be unreasonably withheld. No later
         than twenty-five (25) Business Days prior to the due date of any such
         Tax Return, the Buyer shall make such Tax Return available for the
         Seller's review and approval. The Seller shall respond no later than
         ten (10) Business Days prior to the due date for filing such Tax
         Return. With respect to such Tax Return, the Seller shall pay to the
         Buyer its appropriate share of the amount shown as due on the Tax
         Returns determined in accordance with Section 2.8 of this Agreement.

                  (c)      Each of the Buyer and the Seller shall provide the
         other with such assistance as may reasonably be requested by the other
         Party in connection with the preparation of any Tax Return, any audit
         or other examination by any taxing authority, or any judicial or
         administrative proceedings relating to liability for Taxes, and each
         will retain and provide the requesting Party with any records or
         information which may be relevant to such Tax Return, audit or
         examination, proceedings or determination. Any information obtained
         pursuant to this Section 8 or pursuant to any other Section hereof
         providing for the sharing of information or review of any Tax Return or
         other schedule relating to Taxes shall be deemed to be and shall be
         Proprietary Information.

9.       SURVIVAL OF REPRESENTATIONS AND WARRANTIES; EFFECT OF CLOSING AND
INDEMNIFICATION.

         9.1.     SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SURVIVAL OF
COVENANTS AND AGREEMENTS. The representations and warranties of the Seller set
forth in Sections 3.1, 3.2, 3.3,

                                      -42-
<Page>

3.4 and 3.16, and the representations and warranties of the Buyer set forth in
Sections 4.1, 4.2, 4.3 and 4.4, shall survive the Closing for a period of twelve
months; all other representations and warranties of the Parties contained in
this Agreement shall terminate at the Closing and all representations and
warranties of the Parties contained in this Agreement shall terminate upon a
termination of this Agreement pursuant to Section 10.1. The covenants of the
Parties contained in this Agreement, other than those which by their terms
survive the Closing and/or termination of this Agreement, shall terminate at the
Closing or the termination of this Agreement pursuant to Section 10.1.

         9.2.     EFFECT OF CLOSING. Upon the Closing, any condition to the
obligations of either Party hereunder that has not been satisfied, or any
representation, warranty or covenant that has been breached or left unsatisfied
by either Party will be deemed waived by the Parties, and each Party will be
deemed to fully release and forever discharge the other Party on account of any
and all claims, demands or charges, known or unknown, with respect to the same.
Nothing in this Section 9.2 shall be deemed to affect any provision herein which
expressly survives the Closing or pertains to matters which will occur after the
Closing.

         9.3.     INDEMNITY BY THE SELLER. The Seller shall indemnify, defend
and hold harmless the Buyer against and in respect of all Liabilities,
obligations, judgments, Liens, injunctions, charges, orders, decrees, rulings,
damages, assessments, Taxes, losses, fines, penalties, damages, expenses, fees,
costs, and amounts paid in settlement (including reasonable consultants',
attorneys' and expert witness fees and disbursements in connection with
investigating, defending or settling any action or threatened action), arising
out of any claim, complaint, demand, cause of action, audit, investigation,
hearing, action, suit or other proceeding asserted or initiated or otherwise
existing in respect of any matter (collectively, the "LOSSES"), that results
from:

                  (a)      any Liability of the Seller that becomes a Liability
         of the Buyer under any bulk transfer law of any jurisdiction;

                  (b)      any Excluded Liability;

                  (c)      any breach by the Seller of any representation or
         warranty which by its terms survives the Closing or the termination of
         this Agreement under Section 10.1, provided that the Losses associated
         therewith have a Buyer Material Adverse Effect; and

                  (d)      any breach by the Seller of any of its covenants
         contained in Article V hereof.

         9.4.     INDEMNITY BY BUYER. The Buyer hereby agrees to indemnify,
defend and hold harmless the Seller and its Affiliates against and in respect of
all Losses that result from:

                  (a)      any Third Party Claim against the Seller based on or
         relating to the Buyer's ownership, operation or use of the Acquired
         Assets on or after the Closing Date;

                                      -43-
<Page>

                  (b)      the Assumed Liabilities;

                  (c)      any breach by the Buyer of any of its covenants
         contained in Article V hereof; or

                  (d)      the failure of the Buyer to close the transactions
         contemplated hereby within the time provided in Section 2.9, other than
         because of a failure of the Seller to perform its obligations under
         this Agreement.

         9.5.     EXCLUSIVE REMEDY. Except as provided in Section 11.17, from
and after the Closing, the remedies set forth in this Section 9 shall constitute
the sole and exclusive remedies for any and all claims, damages, complaints,
demands, causes of action, investigations, hearings, actions, suits or other
proceedings relating to this Agreement and are in lieu of any and all other
rights and remedies which the Seller or the Buyer may have under this Agreement
or otherwise for monetary relief with respect to any breach or failure to
perform or with respect to the Assumed or Excluded Liabilities. Each Party
waives any provision of law to the extent that it would limit or restrict the
agreements contained in this Section 9. Nothing herein shall prevent either
Party from terminating this Agreement in accordance with Section 10.

         9.6.     MATTERS INVOLVING THIRD PARTIES.

                  (a)      If any Third Party shall notify any Party (the
         "INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM")
         which may give rise to a claim for indemnification against any other
         Party (the "INDEMNIFYING PARTY") under this Section 9, then the
         Indemnified Party shall promptly notify the Indemnifying Party thereof
         in writing; PROVIDED, HOWEVER, that no delay on the part of the
         Indemnified Party in notifying the Indemnifying Party shall relieve the
         Indemnifying Party from any obligation hereunder unless (and then
         solely to the extent) the Indemnifying Party thereby is prejudiced.

                  (b)      Any Indemnifying Party will have the right to defend
         the Indemnified Party against the Third Party Claim with counsel of its
         choice reasonably satisfactory to the Indemnified Party so long as (i)
         the Indemnifying Party notifies the Indemnified Party in writing within
         fifteen days after the Indemnified Party has given notice of the Third
         Party Claim that the Indemnifying Party will indemnify the Indemnified
         Party from and against the entirety of any Losses the Indemnified Party
         may suffer resulting from, arising out of, relating to, in the nature
         of, or caused by the Third Party Claim, (ii) the Indemnifying Party
         provides the Indemnified Party with evidence acceptable to the
         Indemnified Party that the Indemnifying Party will have the financial
         resources to defend against the Third Party Claim and fulfill its
         indemnification obligations hereunder, (iii) the Third Party Claim
         involves only money damages and does not seek an injunction or other
         equitable relief, settlement of, or an adverse judgment with respect
         to, the Third Party Claim is not, in the good faith judgment of the
         Indemnified Party, likely to establish a precedential custom or
         practice adverse to the continuing business interests of the
         Indemnified Party, and (iv) the Indemnifying Party conducts the defense
         of the Third Party Claim actively and diligently.

                  (c)      So long as the Indemnifying Party is conducting the
         defense of the Third Party

                                      -44-
<Page>

         Claim in accordance with Section 9.5(b) above, (i) the Indemnified
         Party may retain separate co-counsel at its sole cost and expense and
         participate in the defense of the Third Party Claim, (ii) the
         Indemnified Party will not consent to the entry of any judgment or
         enter into any settlement with respect to the Third Party Claim without
         the prior written consent of the Indemnifying Party (which consent
         shall not unreasonably be withheld), and (iii) the Indemnifying Party
         will not consent to the entry of any judgment or enter into any
         settlement with respect to the Third Party Claim unless written
         agreement is obtained releasing the Indemnified Party from all
         liability thereunder.

                  (d)      In the event any of the conditions in Section 9.5(b)
         above is or becomes unsatisfied, however, (i) the Indemnified Party may
         defend against, and consent to the entry of any judgment or enter into
         any settlement with respect to, the Third Party Claim in any manner it
         may deem appropriate (and the Indemnified Party need not consult with,
         or obtain any consent from, any Indemnifying Party in connection
         therewith), (ii) the Indemnifying Party will reimburse the Indemnified
         Party promptly and periodically for the costs of defending against the
         Third Party Claim (including attorneys' fees and expenses,
         notwithstanding Section 9.3), and (iii) the Indemnifying Party will
         remain responsible for any Losses the Indemnified Party may suffer
         resulting from, arising out of, relating to, in the nature of, or
         caused by the Third Party Claim to the fullest extent provided in this
         Section 9.

         9.7.     NET OF TAXES AND INSURANCE. Any calculation of a Loss under
this Section 9 shall, in each case, give full effect to (i) any and all income
Tax benefits to the Indemnified Party in respect of the Loss, and (ii) any and
all insurance proceeds received or payable to the Indemnified Party in respect
of the Loss.

         9.8.     NO RECOURSE. To the extent the transfer, conveyance,
assignment and delivery of the Acquired Assets to the Buyer as provided in this
Agreement is accomplished by deeds, assignments, easements, leases, licenses,
bills of sale, or other instruments of transfer and conveyance, whether executed
at the Closing or thereafter, these instruments are made without representation
or warranty by, or recourse against, the Seller, except as expressly provided in
this Agreement or in any such instrument.

10.      TERMINATION.

         10.1.    TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement as provided below:

                  (a)      the Parties may terminate this Agreement by mutual
         written consent at any time prior to the Closing;

                  (b)      the Buyer may terminate this Agreement by giving
         written notice to the Seller at any time prior to the Closing if any of
         the following has occurred: (i) the Seller has breached any
         representation, warranty or covenant contained in this Agreement in any
         material respect, the Buyer has notified the Seller of the breach, and
         the breach has continued without cure for a period of sixty (60) days
         after the notice of breach; (ii) the Closing shall not have occurred on
         or before June 30, 2000 by reason of the failure of any condition
         precedent under Section 6.1 hereof (unless the failure results
         primarily from the

                                      -45-
<Page>

         Buyer itself breaching any representation, warranty, or covenant
         contained in this Agreement); (iii) one or more courts of competent
         jurisdiction shall have issued an order, judgment or decree permanently
         restraining, enjoining or otherwise prohibiting the Closing, which
         order, judgment or decree shall not have been terminated, lifted,
         vacated or otherwise rendered irrelevant within ninety (90) days of the
         issuance thereof; (iv) any statute, rule or regulation shall have been
         enacted by any Governmental Authority which, directly or indirectly,
         prohibits the consummation of the transactions contemplated hereby; (v)
         in accordance with Section 5.10 hereof; or (vi) (W) the Seller has
         within the then previous fifteen (15) days given the Buyer any notice
         pursuant to Section 5.5(a) above and the matter that is the subject of
         such notice, if in existence on the Effective Date or the Closing Date,
         would cause the representations and warranties of the Seller set forth
         in Section 3 hereof not to be true and correct, (X) such matter would
         have a Material Adverse Effect, (Y) the Buyer has notified the Seller
         of its intent to terminate pursuant to this Section 10.1(b)(vi), and
         (Z) the matter that is the subject of such notice continues to exist
         for a period of sixty (60) consecutive days after such notice by the
         Buyer; and

                  (c)      the Seller may terminate this Agreement by giving
         written notice to the Buyer at any time prior to the Closing if any of
         the following has occurred: (i) the Buyer has breached any
         representation, warranty, or covenant contained in this Agreement in
         any material respect, the Seller has notified the Buyer of the breach,
         and the breach has continued without cure for a period of sixty (60)
         days after the notice of breach; (ii) the Closing shall not have
         occurred on or before June 30, 2000 by reason of the failure of any
         condition precedent under Section 6.2 hereof (unless the failure
         results primarily from the Seller itself breaching any representation,
         warranty, or covenant contained in this Agreement); (iii) one or more
         courts of competent jurisdiction shall have issued an order, judgment
         or decree permanently restraining, enjoining or otherwise prohibiting
         the Closing, which order, judgment or decree shall not have been
         terminated, lifted, vacated or otherwise rendered irrelevant within
         ninety (90) days of the issuance thereof; (iv) any statute, rule or
         regulation shall have been enacted by any Governmental Authority which,
         directly or indirectly, prohibits the consummation of the transactions
         contemplated hereby; (v) in accordance with Section 5.10 hereof; or
         (vi) (W) the Buyer has within the then previous fifteen (15) days given
         the Seller any notice pursuant to Section 5.5(a) above and the matter
         that is the subject of such notice, if in existence on the Effective
         Date or the Closing Date, would cause the representations and
         warranties of the Buyer set forth in Section 4 hereof not to be true
         and correct, (X) such matter would have a Material Adverse Effect, (Y)
         the Seller has notified the Buyer of its intent to terminate pursuant
         to this Section 10.1(c)(vi), and (Z) the matter that is the subject of
         such notice continues to exist for a period of sixty (60) consecutive
         days after such notice by the Seller.

         10.2.    EFFECT OF TERMINATION. If either Party terminates this
Agreement pursuant to Section 10.1 above, all rights and obligations of the
Parties hereunder shall terminate without any Liability of either Party to the
other Party (except for any Liability of any Party then in breach and except as
otherwise expressly provided herein).

                                      -46-
<Page>

11.      MISCELLANEOUS.

         11.1.    PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior approval of the other
Party; PROVIDED, HOWEVER, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will provide the other Party with the opportunity to review in
advance the disclosure).

         11.2.    NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Third Party.

         11.3.    NO JOINT VENTURE. Nothing in this Agreement creates or is
intended to create an association, trust, partnership, joint venture or other
entity or similar legal relationship between the Parties, or impose a trust,
partnership or fiduciary duty, obligation, or liability on or with respect to
either Party. Except as provided in Section 5.6, neither Party is or shall act
as or be the agent or representative of the other Party.

         11.4.    ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto), together with the Related Agreements and any other documents
referred to herein, constitute the entire agreement between the Parties and
supersede any prior understandings, agreements, or representations by or between
the Parties, written or oral, to the extent they relate in any way to the
subject matter hereof, PROVIDED HOWEVER, that the Confidentiality Agreement
dated as of February 17, 1999 shall remain in full force and effect without
regard to any provision of this Agreement. All conflicts or inconsistencies
between the terms hereof and the terms of any of the Related Agreements, if any,
shall be resolved in favor of this Agreement.

         11.5.    SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
the Related Agreements or any of its rights, interests, or obligations hereunder
or thereunder without the prior written approval of the other Party; PROVIDED,
HOWEVER, that the Seller's written approval shall not be unreasonably withheld
if the Buyer elects to assign any or all of its rights and interests hereunder
to one or more of its Affiliates, PROVIDED that the Buyer shall deliver the
following documents before such assignment: (i) a Guaranty substantially in the
form of EXHIBIT F that guarantees the full and timely performance of all
obligations of such Affiliate under this Agreement, all Related Agreements and
all other agreements and commitments contemplated hereby or thereby or in
connection with the Closing entered into for the benefit of the Seller, as so
assigned; (ii) a copy, certified by the Secretary of the Buyer, of resolutions
authorizing the execution and delivery of such Guaranty; (iii) a certificate of
the Secretary of the Buyer identifying by name and title and bearing the
signatures of the officers of the Buyer authorized to execute and deliver the
Guaranty; (iv) an opinion from counsel to the Buyer, dated as of the date of
such assignment and reasonably satisfactory in form to the Seller and its
counsel, substantially to the effect that the Guaranty is a valid and binding
obligation of the Buyer; (v) evidence that such Affiliate is a member of NEPOOL.

         11.6.    COUNTERPARTS. This Agreement may be executed in one or more
counterparts,

                                      -47-
<Page>

each of which shall be deemed an original but all of which together will
constitute one and the same instrument.

         11.7.    HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

         11.8.    NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given (i) upon
confirmation of facsimile, (ii) one Business Day following the date sent when
sent by overnight delivery and (iii) five Business Days following the date
mailed when mailed by registered or certified mail return receipt requested and
postage prepaid at the following address:

         If to the Seller:

                  Western Massachusetts Electric Company
                  107 Selden Street
                  Berlin, CT 06307
                  Attn: Vice President - Administration

         Copy to:

                  Vice President, Secretary and General Counsel
                  Northeast Utilities
                  107 Selden Street
                  Berlin, CT 06307

         If to the Buyer:

                  Northeast Generation Company
                  107 Selden Street
                  Berlin, CT 06307
                  Attn:  Vice President and Treasurer

         Copy to:

                  Select Energy, Inc.
                  107 Selden Street
                  Berlin, CT 06307
                  Attn:  Senior Vice President - Power Supply Marketing

Either Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Either
Party may

                                      -48-
<Page>

change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.

         11.9.    GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the Commonwealth of
Massachusetts without giving effect to any choice or conflict of law provision
or rule (whether of the Commonwealth of Massachusetts or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
Commonwealth of Massachusetts.

         11.10.   CHANGE IN LAW. If and to the extent that, during the Interim
Period, any laws or regulations that govern any aspect of this Agreement shall
change, so as to make any aspect of this transaction unlawful, then the Parties
agree to make such modifications to this Agreement as may be reasonably
necessary for this Agreement to accommodate any such legal or regulatory
changes.

         11.11.   CONSENT TO JURISDICTION. Each of the Seller and the Buyer
consents to the nonexclusive jurisdiction of any local, state or federal court
located within the City of Hartford, Connecticut, for adjudication of any suit,
claim, action or other proceeding at law or in equity relating to this
Agreement, or to any transaction contemplated hereby. The Seller and the Buyer
each accept, generally and unconditionally, the nonexclusive jurisdiction of the
aforesaid courts and waive any objection as to venue, and any defense of FORUM
NON CONVENIENS.

         11.12.   AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.

         11.13.   SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

         11.14.   EXPENSES. Each of the Buyer and the Seller will bear its own
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including legal and accounting fees and
expenses, except as otherwise provided in Section 9 above), except that the
Buyer shall bear the entire cost of (i) all filings by both the Seller and the
Buyer under the Hart-Scott- Rodino Act and (ii) the Joint Application for
authorization pursuant to Sections 203 and 205 of the Federal Power Act.

         11.15.   CONSTRUCTION. Ambiguities or uncertainties in the wording of
this Agreement will not be construed for or against any Party, but will be
construed in the manner that most

                                      -49-
<Page>

accurately reflects the Parties' intent as of the Effective Date. The Parties
acknowledge that they have been represented by counsel in connection with the
review and execution of this Agreement, and, accordingly, there shall be no
presumption that this Agreement or any provision hereof be construed against the
Party that drafted this Agreement.

         11.16.   INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.

         11.17.   SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter in addition to any other remedy to which it may be
entitled, at law or in equity.

         11.18.   DISPUTE RESOLUTION. Prior to instituting any litigation or
dispute resolution mechanism, the Parties will attempt in good faith to resolve
any dispute or claim promptly by referring any such matter to their respective
chief executive officers for 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 to attempt to resolve the dispute or claim within thirty (30)
days.

                            [SIGNATURE PAGE FOLLOWS]

                                      -50-
<Page>

         IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.

                                  NORTHEAST GENERATION COMPANY

                                  By: /s/ David R. McHale
                                     --------------------------------
                                  Title: Vice President and Treasurer

                                  WESTERN MASSACHUSETTS ELECTRIC
                                  COMPANY

                                  By: /s/ John B. Keane
                                     -------------------------------------------
                                  Title: Vice President - Generation Divestiture

                                      -51-<PAGE>

                                                               Exhibit 10.13

                                                               ___________, 20__

                                     FORM OF
                            EXCHANGE AGENT AGREEMENT

The Bank of New York
101 Barclay Street, Floor 21 West
         New York, New York 10286

         Attention:        Corporate Trust Administration

Ladies and Gentlemen:

                  Northeast Generation Company, a Connecticut corporation (the
"Company"), proposes to make an offer (the "Exchange Offer") to exchange (i) all
of its outstanding $120,000,000 aggregate principal amount 4.998% Series A
Senior Secured Bonds due 2005 (the "Series A Bonds") for up to $120,000,000
aggregate principal amount of its 4.998% Series A-1 Senior Secured Bonds due
2005 (the "Series A-1 Bonds") and (ii) all of its outstanding $320,000,000
aggregate principal amount 8.812% Series B Senior Secured Bonds due 2026 (the
"Series B Bonds") for up to $320,000,000 aggregate principal amount of its
8.812% Series B-1 Senior Secured Bonds due 2026 (the "Series B-1 Bonds"). The
Series A Bonds and the Series B Bonds are referred to herein as the "Old
Securities" and the Series A-1 Bonds and the Series B-1 Bonds are referred to
herein as the "New Securities." The terms and conditions of the Exchange Offer
as currently contemplated are set forth in a prospectus, dated ___________ (the
"Prospectus"), proposed to be distributed to all record holders of the Old
Securities. The Old Securities and the New Securities are collectively referred
to herein as the "Securities".

                  The Company hereby appoints The Bank of New York to act as
exchange agent (the "Exchange Agent") in connection with the Exchange Offer.
References hereinafter to "you" shall refer to The Bank of New York.

                  The Exchange Offer is expected to be commenced by the Company
on or about _____________. The Letter of Transmittal accompanying the Prospectus
(or in the case of book-entry securities, the Automated Tender Offer Program
("ATOP") of the Book-Entry Transfer Facility (as defined below)) is to be used
by the holders of the Old Securities to accept the Exchange Offer and contains
instructions with respect to the delivery of certificates for Old Securities
tendered in connection therewith.

<PAGE>

                  The Exchange Offer shall expire at 5:00 p.m., New York City
time, on _________ or on such subsequent date or time to which the Company may
extend the Exchange Offer (the "Expiration Date"). Subject to the terms and
conditions set forth in the Prospectus, the Company expressly reserves the right
to extend the Exchange Offer from time to time and may extend the Exchange Offer
by giving oral (promptly confirmed in writing) or written notice to you before
9:00 a.m., New York City time, on the business day following the previously
scheduled Expiration Date.

                  The Company expressly reserves the right to amend or terminate
the Exchange Offer, and not to accept for exchange any Old Securities not
theretofore accepted for exchange, upon the occurrence of any of the conditions
of the Exchange Offer specified in the Prospectus under the caption "The
Exchange Offer -- Conditions of the Exchange Offer." The Company will give oral
(promptly confirmed in writing) or written notice of any amendment, termination
or nonacceptance to you as promptly as practicable.

                  In carrying out your duties as Exchange Agent, you are to act
in accordance with the following instructions:

                  1. You will perform such duties and only such duties as are
specifically set forth in the section of the Prospectus captioned "The Exchange
Offer" or as specifically set forth herein; PROVIDED, HOWEVER, that in no way
will your general duty to act in good faith be discharged by the foregoing.

                  2. You will establish a book-entry account with respect to the
Old Securities at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Exchange Offer within two business days after the
date of the Prospectus, and any financial institution that is a participant in
the Book-Entry Transfer Facility's systems may make book-entry delivery of the
Old Securities by causing the Book-Entry Transfer Facility to transfer such Old
Securities into your account in accordance with the Book-Entry Transfer
Facility's procedure for such transfer.

                  3. You are to examine each of the Letters of Transmittal and
certificates for Old Securities (or confirmation of book-entry transfer into
your account at the Book-Entry Transfer Facility) and any other documents
delivered or mailed to you by or for holders of the Old Securities to ascertain
whether: (i) the Letters of Transmittal and any such other documents are duly
executed and properly completed in accordance with instructions set forth
therein; and (ii) the Old Securities have otherwise been properly tendered. In
each case where the Letter of Transmittal or any other document has been
improperly completed or executed or any of the certificates for Old Securities
are not in proper form for transfer or some other irregularity in connection
with the acceptance of the Exchange Offer exists, you will endeavor to inform
the presenters of the need for fulfillment of all requirements and to take any
other action as may be reasonably necessary or advisable to cause such
irregularity to be corrected.

                                      -2-
<PAGE>

                  4. With the approval of the President or any Vice President of
the Company or any officer of Northeast Utilities Service Company ("NUSCO") on
behalf of the Company (such approval, if given orally, to be promptly confirmed
in writing) or any other party designated in writing by such an officer, you are
authorized to waive any irregularities in connection with any tender of Old
Securities pursuant to the Exchange Offer.

                  5. Tenders of Old Securities may be made only as set forth in
the Letter of Transmittal and in the section of the Prospectus captioned "The
Exchange Offer -- Procedures for Tendering", and Old Securities shall be
considered properly tendered to you only when tendered in accordance with the
procedures set forth therein.

                  Notwithstanding the provisions of this Section 5, Old
Securities which the President or any Vice President of the Company or any
officer of NUSCO acting on behalf of the Company shall approve as having been
properly tendered shall be considered to be properly tendered (such approval, if
given orally, shall be promptly confirmed in writing).

                  6. You shall advise the Company with respect to any Old
Securities received subsequent to the Expiration Date and accept its
instructions with respect to disposition of such Old Securities.

                  7. You shall accept tenders:

                     (a) in cases where the Old Securities are registered in two
or more names only if signed by all named holders;

                     (b) in cases where the signing person (as indicated on the
Letter of Transmittal) is acting in a fiduciary or a representative capacity
only when proper evidence of his or her authority so to act is submitted; and

                     (c) from persons other than the registered holder of Old
Securities, provided that customary transfer requirements, including payment of
any applicable transfer taxes, are fulfilled.

                  You shall accept partial tenders of Old Securities where so
indicated and as permitted in the Letter of Transmittal and deliver certificates
for Old Securities to the registrar for split-up and return any untendered Old
Securities to the holder (or such other person as may be designated in the
Letter of Transmittal) as promptly as practicable after expiration or
termination of the Exchange Offer.

                  8. Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Company will notify you (such notice, if given orally, to be
promptly confirmed in writing) of its acceptance, promptly after the Expiration
Date, of all Old Securities properly tendered and you, on behalf of the Company,
will exchange

                                      -3-
<PAGE>

such Old Securities for New Securities and cause such Old Securities to be
cancelled. Delivery of New Securities will be made on behalf of the Company by
you at the rate of $1,000 principal amount of New Securities for each $1,000
principal amount of the corresponding series of Old Securities tendered promptly
after notice (such notice if given orally, to be promptly confirmed in writing)
of acceptance of said Old Securities by the Company; provided, however, that in
all cases, Old Securities tendered pursuant to the Exchange Offer will be
exchanged only after timely receipt by you of certificates for such Old
Securities (or confirmation of book-entry transfer into your account at the
Book-Entry Transfer Facility), a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) with any required signature
guarantees and any other required documents. You shall issue New Securities only
in denominations of $1,000 or any integral multiple thereof.

                  9. Tenders pursuant to the Exchange Offer are irrevocable,
except that, subject to the terms and upon the conditions set forth in the
Prospectus and the Letter of Transmittal, Old Securities tendered pursuant to
the Exchange Offer may be withdrawn at any time prior to the Expiration Date.

                  10. The Company shall not be required to exchange any Old
Securities tendered if any of the conditions set forth in the Exchange Offer are
not met. Notice of any decision by the Company not to exchange any Old
Securities tendered shall be given (if given orally, to be promptly confirmed in
writing) by the Company to you.

                  11. If, pursuant to the Exchange Offer, the Company does not
accept for exchange all or part of the Old Securities tendered because of an
invalid tender, the occurrence of certain other events set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions of the Exchange
Offer" or otherwise, you shall as soon as practicable after the expiration or
termination of the Exchange Offer return those certificates for unaccepted Old
Securities (or effect appropriate book-entry transfer), together with any
related required documents and the Letters of Transmittal relating thereto that
are in your possession, to the persons who deposited them.

                  12. All certificates for reissued Old Securities, unaccepted
Old Securities or for New Securities shall be forwarded by overnight courier.

                  13. You are not authorized to pay or offer to pay any
concessions, commissions or solicitation fees to any broker, dealer, bank or
other persons or to engage or utilize any person to solicit tenders.

                  14. As Exchange Agent hereunder you:

                     (a) shall not be liable for any action or omission to
act unless the same constitutes your own gross negligence, willful
misconduct or bad faith and in no event shall you be liable to a
securityholder, the

                                      -4-
<PAGE>

Company or any third party for special, indirect or consequential damages, or
lost profits, arising in connection with this Agreement.

                     (b) shall have no duties or obligations other than those
specifically set forth herein or as may be subsequently agreed to in writing
between you and the Company;

                     (c) will be regarded as making no representations and
having no responsibilities as to the validity, sufficiency, value or genuineness
of any of the certificates or the Old Securities represented thereby deposited
with you pursuant to the Exchange Offer, and will not be required to and will
make no representation as to the validity, value or genuineness of the Exchange
Offer;

                     (d) shall not be obligated to take any legal action
hereunder which might in your judgment involve any expense or liability, unless
you shall have been furnished with indemnity satisfactory to you;

                     (e) may conclusively rely on and shall be protected in
acting in reliance upon any certificate, instrument, opinion, notice, letter,
telegram or other document or security delivered to you and believed by you to
be genuine and to have been signed or presented by the proper person or persons;

                     (f) may act upon any tender, statement, request, document,
agreement, certificate or other instrument whatsoever not only as to its due
execution and validity and effectiveness of its provisions, but also as to the
truth and accuracy of any information contained therein, which you shall in good
faith believe to be genuine or to have been signed or presented by the proper
person or persons;

                     (g) may conclusively rely on and shall be protected in
acting upon written or oral instructions from any authorized officer of the
Company or NUSCO acting on behalf of the Company;

                     (h) may consult with counsel of your selection with respect
to any questions relating to your duties and responsibilities and the advice or
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by you hereunder
in good faith and in accordance with the advice or opinion of such counsel; and

                     (i) shall not advise any person tendering Old Securities
pursuant to the Exchange Offer as to the wisdom of making such tender or as to
the market value or decline or appreciation in market value of any Old
Securities.

                  15. You shall take such action as may from time to time be
requested by the Company (and such other action as you may deem appropriate) to
furnish copies of the Prospectus or the related Letter of Transmittal and Notice
of Guaranteed Delivery

                                      -5-
<PAGE>

or such other forms as may be approved from time to time by the Company, to all
persons requesting such documents and to accept and comply with telephone
requests for information relating to the Exchange Offer, provided that such
information shall relate only to the procedures for accepting (or withdrawing
from) the Exchange Offer. The Company will furnish you with copies of such
documents on your request. All other requests for information relating to the
Exchange Offer shall be directed to the Company, in care of NUSCO, Attention:
Jeffrey C. Miller.

                  16. You shall advise by facsimile transmission Jeffrey C.
Miller, the Assistant General Counsel of NUSCO (at the facsimile number
860-665-5504), and such other person or persons as the Company may request,
daily (and more frequently during the week immediately preceding the Expiration
Date if requested) up to and including the Expiration Date, as to the number of
Old Securities which have been tendered pursuant to the Exchange Offer and the
items received by you pursuant to this Agreement, separately reporting and
giving cumulative totals as to items properly received and items improperly
received. In addition, you will also inform, and cooperate in making available
to, the Company or any such other person or persons upon oral request made from
time to time prior to the Expiration Date of such other information as they may
reasonably request. Such cooperation shall include, without limitation, the
granting by you to the Company and such person as the Company may request of
access to those persons on your staff who are responsible for receiving tenders,
in order to ensure that immediately prior to the Expiration Date the Company
shall have received information in sufficient detail to enable it to decide
whether to extend the Exchange Offer. You shall prepare a final list of all
persons whose tenders were accepted, the aggregate principal amount of Old
Securities tendered, the aggregate principal amount of Old Securities accepted
and deliver said list to the Company.

                  17. Letters of Transmittal and Notices of Guaranteed Delivery
shall be stamped by you as to the date and, after the expiration of the Exchange
Offer, the time, of receipt thereof and shall be preserved by you for a period
of time at least equal to the period of time you preserve other records
pertaining to the transfer of securities. You shall dispose of unused Letters of
Transmittal and other surplus materials by returning them to the Company.

                  18. For services rendered as Exchange Agent hereunder, you
shall be entitled to such compensation as set forth on Schedule I attached
hereto. The provisions of this section shall survive the termination of this
Agreement.

                  19. You hereby acknowledge receipt of the Prospectus and the
Letter of Transmittal. Any inconsistency between this Agreement, on the one
hand, and the Prospectus and the Letter of Transmittal (as they may be amended
from time to time), on the other hand, shall be resolved in favor of the latter
two documents, except with respect to your duties, liabilities and
indemnification as Exchange Agent.

                                      -6-
<PAGE>

                  20. The Company covenants and agrees to fully indemnify and
hold you harmless against any and all loss, liability, cost or expense,
including attorneys' fees and expenses, incurred without gross negligence or
willful misconduct on your part, arising out of or in connection with any act,
omission, delay or refusal made by you in reliance upon any signature,
endorsement, assignment, certificate, order, request, notice, instruction or
other instrument or document believed by you to be valid, genuine and sufficient
and in accepting any tender or effecting any transfer of Old Securities believed
by you in good faith to be authorized, and in delaying or refusing in good faith
to accept any tenders or effect any transfer of Old Securities. In each case,
the Company shall be notified by you, by letter or facsimile transmission, of
the written assertion of a claim against you or of any other action commenced
against you, promptly after you shall have received any such written assertion
or shall have been served with a summons in connection therewith. The Company
shall be entitled to participate at its own expense in the defense of any such
claim or other action and, if the Company so elects, the Company shall assume
the defense of any suit brought to enforce any such claim. In the event that the
Company shall assume the defense of any such suit, the Company shall not be
liable for the fees and expenses of any additional counsel thereafter retained
by you, so long as the Company shall retain counsel reasonably satisfactory to
you to defend such suit, and so long as you have not determined, in your
reasonable judgment, that a conflict of interest exists between you and the
Company. The provisions of this section shall survive the termination of this
Agreement.

                  21. You shall arrange to comply with all requirements under
the tax laws of the United States, including those relating to missing Tax
Identification Numbers, and shall file any appropriate reports with the Internal
Revenue Service.

                  22. You shall deliver or cause to be delivered, in a timely
manner to each governmental authority to which any transfer taxes are payable in
respect of the exchange of Old Securities, the Company's check in the amount of
all transfer taxes so payable; provided, however, that you shall reimburse the
Company for amounts refunded to you in respect of your payment of any such
transfer taxes, at such time as such refund is received by you.

                  23. This Agreement and your appointment as Exchange Agent
         hereunder shall be construed and enforced in accordance with the laws
         of the State of New York applicable to agreements made and to be
         performed entirely within such state, and without regard to conflicts
         of law principles, and shall inure to the benefit of, and the
         obligations created hereby shall be binding upon, the successors and
         assigns of each of the parties hereto.

                  24. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same agreement.

                                      -7-
<PAGE>

                  25. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

                  26. This Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except
by a written instrument signed by a duly authorized representative of the party
to be charged. This Agreement may not be modified orally.

                  27. Unless otherwise provided herein, all notices, requests
and other communications to any party hereunder shall be in writing (including
facsimile or similar writing) and shall be given to such party, addressed to it,
at its address or telecopy number set forth below:

                  If to the Company:

                           c/o Northeast Utilities Service Company
                           107 Selden Street
                           Berlin, CT 06037

                           Facsimile:  860-665-5504
                           Attention:  Jeffrey C. Miller

                  If to the Exchange Agent:

                           The Bank of New York
                           101 Barclay Street
                           Floor 21 West
                           New York, New York  10286

                           Facsimile:  (212) 815-5915
                           Attention:  Corporate Trust
                                        Administration

                  28. Unless terminated earlier by the parties hereto, this
Agreement shall terminate 90 days following the Expiration Date. Notwithstanding
the foregoing, Sections 18 and 20 shall survive the termination of this
Agreement. Upon any termination of this Agreement, you shall promptly deliver to
the Company any certificates for Securities, funds or property then held by you
as Exchange Agent under this Agreement.

                  29. This Agreement shall be binding and effective as of the
date hereof.

                                      -8-
<PAGE>

                  Please acknowledge receipt of this Agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.

                                                 NORTHEAST GENERATION COMPANY

                                                 By:
                                                    ----------------------------
                                                     Name:
                                                     Title:

Accepted as of the date first above written:

THE BANK OF NEW YORK, as Exchange Agent

By:
   -----------------------------------------
     Name:
     Title:

                                      -9-

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