Alright, I figured it out myself.
I figured I'd share the answer.
In the hack prc_spells.hak there is an overide script for nw_c2_default7 that handles behavior (such as giving out EXP) when creatures die.
Without the PRC that script has a line - ExecuteScript("sha_xpsystem", OBJECT_SELF); that is responsible for the EXP system. So I exported the nw_c2_default7 script, recompiled it with the added line of code (changed the name of course), and now it works perfect.