Exhibit 10.21(b)

 

POWER SALE, FUEL SUPPLY
AND SERVICES AGREEMENT

 

THIS POWER SALE, FUEL SUPPLY AND SERVICES AGREEMENT (this “Agreement”), dated as
of January 1, 2004 (the “Effective Date”), is by and between MIRANT AMERICAS
ENERGY MARKETING, LP, a Delaware limited partnership (“MAEM”), and MIRANT
PEAKER, LLC, a Delaware limited liability company (the “Project Company”).

 

RECITALS

 

WHEREAS, Project Company owns and operates certain of the electric generating
units at the Chalk Point Generating Station as set forth on Exhibit A hereto
(such units referred to here as the “Generating Station”);

 

WHEREAS, Project Company desires to contract herein to sell capacity,
electricity and/or ancillary services to MAEM, and MAEM desires to purchase such
capacity, electricity and/or ancillary services on the terms and conditions set
forth herein; and

 

WHEREAS, Project Company desires that MAEM perform certain services related to
the management and operation of the Generating Station, and MAEM desires to
perform such services.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Parties, the Parties hereby
agree as follows:

 

ARTICLE 1.

DEFINITIONS

 

The following capitalized terms, whether used in the singular or plural, shall
be defined as provided in this Article 1.

 

“Asset Companies” means any affiliates of MAEM either directly or indirectly
owned by Mirant Corporation, other than Mirant Peaker, LLC, which own electric
generating facilities in the United States.

 

“Bankruptcy Court” means the United States Bankruptcy Court, Northern District
of Texas, Fort Worth Division.

 

“Chapter 11 Proceeding” means the jointly administered bankruptcy cases under
Chapter 11 of the United States Bankruptcy Code, 11 U.S.C., of Mirant
Corporation and its affiliated debtors, Case No. 03-46590 (DML)11 in the
Bankruptcy Court.

 

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“Claims” means all claims or actions, threatened or filed, whether groundless,
false or fraudulent, that directly or indirectly relate to the subject matter of
an indemnity, and the resulting losses, damages, expenses, attorneys’ fees and
court costs, whether incurred by settlement or otherwise, and whether such
claims or actions are threatened or filed prior to or after the termination of
this Agreement.

 

“Delivery Point” means either (i) the high side of the generation step-up
transformer located at the Generation Facility, where it connects to the
Transmission Provider’s transmission system; or (ii) such other point on the
Transmission Provider’s transmission system as MAEM and the Project Company may
determine (for all Products delivered from sources other than the Generating
Station).

 

“Effective Date” has the meaning set forth in the Preamble.

 

“Emission Allowances” means authorizations under state or federal (as
applicable) air quality regulations to emit either one ton of nitrogen oxides
(“NOx”) or sulfur dioxide (“SO2”).

 

“Event of Default” has the meaning set forth in Section 9.1.

 

“Expenses” has the meaning set forth in Section 8.2.

 

“Facility Lease Event of Default” shall have the meaning ascribed to such term
in the Participation Agreements dated as of December 18, 2000 among Mirant
Mid-Atlantic, LLC and the owners of the leased assets at the Dickerson and
Morgantown generating stations, Wilmington Trust Company and State Street Bank
and Trust Company of Connecticut, National Association.

 

“Force Majeure” means an event or circumstance which prevents one Party from
performing its obligations, which event or circumstance was not anticipated as
of the date the transaction was agreed to, which is not within the reasonable
control of, or the result of the negligence of, the claiming Party, and which,
by the exercise of due diligence, the claiming Party is unable to overcome or
avoid or cause to be avoided.  Force Majeure shall not be based on (i) the loss
of MAEM’s markets; (ii) MAEM’s inability economically to use or resell the
Product purchased hereunder; (iii) the loss or failure of Project Company’s
supply; or (iv) Project Company’s ability to sell the Product at a price greater
than the purchase price set forth in this Agreement.  Neither Party may raise a
claim of Force Majeure based in whole or in part on curtailment by a
Transmission Provider unless (i) such Party has contracted for firm transmission
with a transmission provider for the Product to be delivered to or received at
the Delivery Point and (ii) such curtailment is due to “force majeure” or
“uncontrollable force” or a similar term as defined under the Transmission
Provider’s tariff; provided, however, that existence of the foregoing factors
shall not be sufficient to conclusively or presumptively prove the existence of
a Force Majeure absent a showing of other facts and circumstances which in the
aggregate with such factors establish that a Force Majeure as defined in the
first sentence hereof has occurred.

 

“Fuel” means fuel oil or natural gas, as dictated by context.

 

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“Generating Station” has the meaning provided in the recitals.

 

“Good Utility Practices” mean any of the practices, methods or acts engaged in
or approved by a significant portion of the electric energy industry with
respect to similar facilities during the relevant time period which in each
case, in the exercise of reasonable judgment in light of the facts known or that
should have been known at the time a decision was made, could have been expected
to accomplish the desired result at reasonable cost consistent with good
business practices, reliability, safety, law, regulation, environmental
protection and expedition.  Good Utility Practices are not intended to be
limited to the optimum practices, methods or acts to the exclusion of all
others, but rather to delineate the acceptable practices, methods or acts
generally accepted in such industry.

 

“Gross Revenues” has the meaning provided in Section 8.2.

 

“Interest Rate” means, for any date, two percent (2%) over the per annum rate of
interest equal to the prime lending rate as may from time to time be published
in the Wall Street Journal under “Money Rates”; provided that the Interest Rate
shall never exceed the maximum interest rate permitted by applicable law.

 

“Net Market Revenues” has the meaning set forth in Section 8.2.

 

“Non-MIRMA Asset Book” has the meaning set forth in Section 5.1.

 

“Offer” or “Offering” means the nomination or offering to sell the output of the
Generating Station.

 

“Party” means any of MAEM or Project Company.  In the context where MAEM is
referenced as a “Party,” a reference to the “other Party” shall mean Project
Company.  In the context where Project Company is referenced as a “Party,” a
reference to the “other Party” shall mean MAEM.  References to “either Party” or
the “Parties” shall have comparable meanings.

 

“PJM” means the market of PJM Interconnection, LLC, or its successor.

 

“Products” means electric capacity, energy and/or ancillary services or other
related products which are or which may become commercially recognized in PJM
during the term of this Agreement.

 

“Scheduling” or “Schedule” means the acts of MAEM and/or its designated
representatives of notifying, requesting and confirming to its counterparties
and their designated representatives (including, but not limited to, PJM or any
applicable power pool, independent system operator, Transmission Provider or
Transportation Provider) the quantity and type of Products and/or Fuel to be
delivered on any given day or days during the period of delivery at a specified
Delivery Point or the Generating Station, as applicable.

 

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“Transition Power Agreements” means (i) that certain Transition Power Agreement
for the District of Columbia by and between MAEM and Potomac Electric Power
Company, dated December 19, 2000, as amended by Amendment No. 1 to Transition
Power Agreement dated October, 2001, and by Amendment No. 2 to Transition Power
Agreement dated October 24, 2003, (ii) that certain Transition Power Agreement
for Maryland by and between MAEM and Potomac Electric Power Company, dated
December 19, 2000, as amended by Amendment No. 1 to Transition Power Agreement
dated October, 2001, and by Amendment No. 2 to Transition Power Agreement dated
October 24, 2003, and (iii) agreements between MAEM and third parties to serve
load which has migrated from Potomac Electric Power Company and would otherwise
have been supplied under the foregoing Transition Power Agreements.

 

“Transmission Providers” means the entity or entities transmitting Products on
behalf of Project Company or MAEM to or from the Delivery Point (including, but
not limited to, an independent system operator or regional transmission
organization).

 

“Transportation Providers” means the entity or entities transporting Fuel on
behalf of Project Company or MAEM to or from the Generating Station.

 

ARTICLE 2.

POWER SALES

 

2.1           Purchase and Sale of Products.  Project Company shall sell and
deliver and MAEM shall purchase, pay for and receive, or cause to be received,
at the Delivery Point, all Products produced by the Generating Station.  The
purchase price payable to Project Company for any Product purchased or sold
hereunder shall be the amount actually received by MAEM from a third party for
such Product.  For purposes of the foregoing sentence, MAEM shall be deemed to
supply the Transition Power Agreements from the PJM market and shall not be
deemed to supply Transition Power Agreements from Project Company’s Generating
Station.  In selling Products produced by the Generating Station, MAEM shall
attempt to maximize Net Market Revenues for Project Company.

 

2.2           Scheduling and Offering into PJM.  MAEM shall be responsible for
the Scheduling of the output of the Generating Station.  MAEM may Offer the
output of the Generating Station to any customer (including, but not limited to,
PJM or any applicable control area operator, power pool, independent system
operator or Transmission Provider), and shall be responsible for any such
Offering.  Without limitation, all such Scheduling and Offering strategies shall
in each case at all times be consistent with:

 

(a)                                  the operating parameters and limitations of
the Generating Station, as provided by Project Company to MAEM;

 

(b)                                 the limitations imposed by any transmission
service reservations for the purpose of transmitting Power from the Generating
Station;

 

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(c)                                  Project Company’s scheduled maintenance
plans;

 

(d)                                 the availability of the Generating Station
(including Fuel handling and storage facilities), as communicated by Project
Company to MAEM;

 

(e)                                  PJM rules and procedures in effect from
time to time;

 

(f)                                    other applicable requirements of any
Transmission Provider and/or Transportation Provider;

 

(g)           Fuel availability;

 

(h)           Good Utility Practices; and

 

(i)            Operating protocols agreed to from time to time by the Parties.

 

2.3           Transmission and Scheduling.  Project Company shall be responsible
for delivery of Products to the Delivery Point.  MAEM shall arrange and be
responsible for transmission service at and from the Delivery Point and shall
Schedule or arrange for Scheduling services with its Transmission Providers to
receive all Products at the Delivery Point.

 

2.4           Title, Risk of Loss and Indemnity.  As between the Parties,
Project Company shall be deemed to be in exclusive possession and control (and
be responsible for any damages or injury caused thereby) of the Products prior
to delivery thereof at the Delivery Point, and MAEM shall be deemed to be in
exclusive possession and control (and be responsible for any damages or injury
caused thereby) of the Products at and after delivery thereof at the Delivery
Point. Project Company warrants that it will deliver to MAEM all Products free
and clear of all liens, claims and encumbrances arising prior to delivery
thereof at the Delivery Point.  Title to and risk of loss related to delivered
Products shall transfer from Project Company to MAEM at the Delivery Point. 
Each Party shall indemnify, defend and hold harmless each other Party from any
Claims arising from any act or incident occurring during the period when
possession, control and title to Products is vested or deemed to be vested in
the indemnifying Party, except to the extent such Claims arise from such other
Party’s breach of this Agreement or its gross negligence or willful misconduct.

 

2.5           Regulatory Reports.  MAEM will make all quarterly filings to the
Federal Energy Regulatory Commission required for Products produced by the
Generating Station.

 

ARTICLE 3.

FUEL SERVICES

 

3.1           All Requirements Fuel Supply and Delivery.  MAEM shall procure and
supply to Project Company on an exclusive basis all Fuel required by the
Generating Station in accordance with Good Utility Practices and the terms and
conditions of this Agreement.

 

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3.2           Reimbursement for Fuel.  Project Company shall reimburse MAEM for
all Fuel delivered to the Generating Station as follows:

 

(a)           Fuel consisting of natural gas shall be reimbursed at the market
price of such gas, including transportation charges, on the delivery date.

 

(b)           Fuel consisting of fuel oil shall be reimbursed at MAEM’s cost
plus transportation charges incurred by MAEM.

 

3.3           Transportation and Scheduling.  Except as otherwise provided in
the Other Fuel Agreements, MAEM shall arrange and be responsible for
transportation service to deliver Fuel to the Generating Station and shall
Schedule or arrange for Scheduling services with its Transportation Providers to
deliver Fuel to the Generating Station.

 

ARTICLE 4.

ADDITIONAL SERVICES

 

4.1           Emissions Planning and Related Responsibilities.  Upon Project
Company’s request, MAEM shall provide Project Company emissions planning, in
consultation with Project Company, to assist in the compliance of the Generating
Station at all times and on an ongoing basis with all currently effective
emissions requirements, permits and regulations.  Upon Project Company’s
request, MAEM will procure Emission Allowances necessary for the operation of
the Generating Station, and dispose of excess Emission Allowances, which are not
needed for the operation of the Generating Station.  MAEM will charge Project
Company MAEM’s actual cost of acquiring the Emission Allowances and remit the
actual proceeds of any Emission Allowances sales to Project Company, as adjusted
for any gains or losses on emission hedges and trading activities.

 

4.2           Insurance.  Upon Project Company’s request, MAEM will procure or
assist Project Company in procuring business interruption insurance and forced
outage insurance covering the Generating Station.  The costs of such insurance
will be charged to Project Company.

 

ARTICLE 5

ASSET BOOK

 

5.1           Asset Book.  MAEM will maintain an asset management book for
Project Company and Mirant Potomac River, LLC (the “Non-MIRMA Asset Book”) to
track and measure the financial performance of all hedges and other transactions
entered into with respect to the Generating Station, the generating station
owned by Mirant Potomac River, LLC, and, unless otherwise agreed by the Parties,
transactions entered into related to the Makewhole Reimbursement Agreement dated
September 1, 2001 between Mirant Americas, Inc. and MAEM.  The Non-MIRMA Asset
Book shall be separate from any MAEM trading book or any other asset book
maintained by MAEM for power resources managed by MAEM.  Unless otherwise
designated in writing by Project Company and Mirant Potomac River, LLC,
transactions in the Non-MIRMA Asset Book will be allocated solely to Mirant
Americas, Inc.

 

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The Parties may agree to establish one or more separate asset management books
to track and measure the financial performance of hedges and other transactions
for each of Project Company and Mirant Potomac River, LLC.

 

5.2           Power and Fuel Trading, Power and Fuel Hedges and Other
Transactions.  MAEM has entered or will enter into third party bilateral
contracts, forward sales, financial products (including but not limited to,
hedges, swaps, contracts for differences and options) and other transactions in
connection with the Products produced by the Generating Station and Fuel
required to operate the Generating Station.  The costs of such transactions
including, without limitation, purchased power costs, transmission costs, Fuel
transportation costs, third party broker costs, transaction fees and incremental
credit costs, and revenues related to such activities will be charged to or paid
to Project Company and included in the Asset Book.  The costs and revenues
associated with the hedges and other transactions in the Asset Book will be
charged to or paid to Project Company, as such costs and revenues are actually
incurred or received by MAEM (as is further described in Section 8.2).

 

ARTICLE 6.

TERM AND TERMINATION

 

6.1           Term.  The initial term of this Agreement shall commence on the
Effective Date and shall continue, unless earlier terminated pursuant to its
terms, until December 31, 2004. The Parties shall negotiate in good faith to
extend this Agreement.

 

6.2           Early Termination Event.

 

(a)           In the event the Generating Station is no longer owned or leased
by an affiliate of MAEM, this Agreement shall automatically terminate, without
penalty and without any further action required by either Party, as of the
effective date of the transfer of ownership or termination of the lease of the
Generating Station.

 

(b)           In the event lenders or lessors exercise remedies following a
Facility Lease Event of Default, Project Company may terminate this Agreement,
without penalty, upon written notice to MAEM.

 

(c)           Either Party may terminate this Agreement upon thirty (30) days
written notice to the other Party.

 

6.3           Obligations upon Termination.

 

(a)           Upon any termination of this Agreement pursuant to Sections 6.1 or
6.2 hereof, MAEM shall endeavor to (i) terminate any transactions entered into
by MAEM in connection with this Agreement which extend beyond such termination
including, but not limited to, any agreements or transactions entered into
pursuant to Section 5.2 hereof, (ii) assign such agreements or transactions to
the new owner of the Generating Station and/or (iii) enter into an agreement
with the new owner to allow MAEM to continue to fulfill its obligations under
any

 

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existing agreements or transactions.  Any such terminations and/or assignments
shall be consummated in such a manner as to fully release MAEM and Project
Company from any liability or obligation thereunder as of the termination date
and/or the assignment effective date of the applicable agreements or
transactions.  Any costs or revenues associated with termination payments or
settlement amounts as a result of liquidating and terminating any agreements or
transactions shall be charged to or paid to Project Company as described under
Section 5.2.

 

(b)           Upon any termination of this Agreement pursuant to Section
9.3(a)(ii) hereof, the Parties shall transfer any outstanding hedges or
otherwise settle any transactions entered into by MAEM in connection with this
Agreement which extend beyond such termination, including but not limited to any
agreement or transactions entered into pursuant to Sections 5.1 and 5.2 hereof. 
Any such transfer or settlement shall be consummated in such a manner as to
assign or convey to Project Company the full benefits and obligations of such
agreements or transactions, and to fully release MAEM from any liability or
obligation thereunder.  To the extent that MAEM’s rights or obligations under
any such agreement or transaction may not be assigned without the consent of a
third party, and such consent has not or cannot be obtained with the
commercially reasonable efforts of the Parties, this provision shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and the Parties, to the maximum
extent permitted by law and such agreement or transaction, shall enter into such
commercially reasonable arrangements as are necessary to fulfill the intent of
this Section 6.3(b).  The Parties further agree to take such actions, and
execute and deliver such agreements, documents, instruments and certificates, as
are necessary to consummate the transactions contemplated by this Section
6.3(b).

 

ARTICLE 7.

REPRESENTATIONS AND WARRANTIES

 

7.1           Project Company’s Representations and Warranties.  Project Company
makes the following representations and warranties as a basis for its
undertakings contained herein:

 

(a)           Project Company is a limited liability company duly organized and
validly existing under the laws of the State of Delaware, is qualified to do
business in each foreign jurisdiction in which it transacts business, and is in
good standing under its certificate of formation and the laws of the State of
Delaware, has the requisite power and authority to own its properties, and to
carry on its business as now being conducted.

 

(b)           Project Company has full power and authority to enter this
Agreement and perform its obligations hereunder.  The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary limited liability
company action and do not and will not contravene its organizational documents
or conflict with, result in a breach of, or entitle any party (with due notice
or lapse of time or both) to terminate, accelerate or declare a default under,
any agreement or instrument to which Project Company is a party or by which
Project Company is bound.  The execution, delivery and performance by Project
Company of this Agreement will not result in any violation by Project Company of
any law, rule or regulation applicable to it.  Project Company is not a

 

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party to, nor subject to or bound by, any judgment, injunction or decree of any
court or other governmental entity which may restrict or interfere with the
performance of this Agreement by it.  This Agreement is Project Company’s legal,
valid and binding obligation, enforceable against Project Company in accordance
with its terms, except as (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors’ rights generally, and (ii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.

 

(c)           No consent, waiver, order, approval, authorization, permit or
order of, or registration, qualification or filing with, any court or other
governmental agency or authority is required for the execution, delivery and
performance by Project Company of this Agreement and the consummation by Project
Company of the transactions contemplated hereby.

 

(d)           Project Company has obtained all necessary governmental
authorizations, approvals, consents, waivers, exceptions, licenses, filings,
registrations, rulings, permits, tariffs, certifications and exemptions to
perform its obligations under this Agreement.

 

(e)           There is not pending or, to its knowledge, threatened against it,
any legal proceedings that could materially adversely affect its ability to
perform its obligations under this Agreement.

 

(f)            Subject to Section 9.2, no Event of Default or event which, with
the giving of notice or lapse of time, or both, would constitute an Event of
Default with respect to Project Company has occurred and is continuing and no
such event or circumstance would occur as a result of its entering into or
performing its obligations under this Agreement or any other document relating
to this Agreement.

 

7.2           MAEM’s Representations and Warranties.  MAEM makes the following
representations and warranties as a basis for its undertakings contained herein:

 

(a)           MAEM is a limited partnership duly organized and validly existing
under the laws of the State of Delaware, is in good standing under its
certificate of limited partnership and the laws of the State of Delaware, is
qualified to do business in each foreign jurisdiction in which it transacts
business, has the requisite power and authority to own its properties, and to
carry on its business as now being conducted.

 

(b)           MAEM has full power and authority to enter this Agreement and
perform its obligations hereunder.  The execution, delivery and performance of
this Agreement and the consummation of the Transactions contemplated hereby have
been duly authorized by all necessary limited partnership action by MAEM and do
not and will not contravene its organizational documents or conflict with,
result in a breach of, or entitle any party (with due notice or lapse of time or
both) to terminate, accelerate or declare a default under, any agreement or
instrument to which MAEM is a party or by which MAEM is bound.  The execution,
delivery and performance by MAEM of this Agreement will not result in any
violation by MAEM of any

 

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law, rule or regulation applicable to it. MAEM is not a party to, nor subject to
or bound by, any judgment, injunction or decree of any court or other
governmental entity which may restrict or interfere with the performance of this
Agreement by it.  This Agreement is MAEM’s legal, valid and binding obligation,
enforceable against MAEM in accordance with its terms, except as (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors’ rights
generally and (ii) the remedy of specific performance and injunctive relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.

 

(c)           No consent, waiver, order, approval, authorization, permit or
order of, or registration, qualification or filing with, any court or other
governmental agency or authority is required for the execution, delivery and
performance by MAEM of this Agreement and the consummation by MAEM of the
transactions contemplated hereby.

 

(d)           MAEM has obtained all necessary governmental authorizations,
approvals, consents, waivers, exceptions, licenses, filings, registrations,
rulings, permits, tariffs, certifications and exemptions to perform its
obligations under this Agreement.

 

(e)           There is not pending or, to its knowledge, threatened against it,
any legal proceedings that could materially adversely affect its ability to
perform its obligations under this Agreement.

 

(f)            Subject to Section 9.2, no Event of Default or event which, with
the giving of notice or lapse of time, or both, would constitute an Event of
Default with respect to MAEM has occurred and is continuing and no such event or
circumstance would occur as a result of its entering into or performing its
obligations under this Agreement.

 

ARTICLE 8.

BILLING AND PAYMENT

 

8.1           Cost Allocation.  For services rendered by MAEM to Project Company
hereunder, Project Company shall pay MAEM its monthly share of allocated costs
for fulfilling its responsibilities to Project Company under this agreement,
including, but not limited to, personnel costs.  For purposes of determining
Project Company’s share of allocated costs, MAEM shall apply an industry
standard methodology which is applied uniformly across the Asset Companies. 
Each of MAEM and Project Company acknowledges that the monthly allocations may
be adjusted from time to time.

 

8.2           Billing and Payment. Each month, MAEM shall pay Project Company
the positive Net Market Revenues due for the prior month (or, if Net Market
Revenues for such month are negative, Project Company shall pay MAEM an amount
equal to such negative balance) by wire transfer to the payment address provided
by the recipient on or before the twentieth (20th) day of each month, or if such
day is not a business day, the immediately following business day.  At the time
of each monthly payment, MAEM shall render to Project Company a statement
detailing the Net Market Revenues for the prior month, and shall provide Project
Company with supporting

 

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documentation for each such monthly statement, identifying calculations
underlying such Net Market Revenues. If PJM later adjusts amounts payable by or
paid to MAEM with respect to transactions in the Asset Book, such amounts will
be credited to, or paid by, Project Company in the month in which MAEM receives
notice of the adjustment.  The preceding sentence shall survive termination of
this Agreement.

 

“Net Market Revenues” means Gross Revenues minus Expenses. Net Market Revenues
shall be calculated in accordance with GAAP.

 

“Gross Revenues” means all revenues for a given period attributed to the Asset
Book, including, without limitation, revenues from (a) sales of all Products
from the Generating Station, (b) other sales of Products, (c) Fuel sales, (d)
sales or trades of excess Emissions Allowances from the Generating Station, (e)
financial products (including, but not limited to, swaps, contracts for
differences and options) purchased for the Asset Book, and (f) forced outage
insurance and business interruption insurance proceeds (to the extent received
by MAEM).

 

“Expenses” means all costs attributed to the Asset Book for such period,
including costs reimbursable to MAEM pursuant to this Agreement for performing
the services including, but not limited to, costs for (i) Fuel, (ii) Emissions
Allowances, (iii) financial products (including, but not limited to, swaps,
contracts for differences and options) purchased for the Asset Book, (iv) broker
and/or transaction fees, (v) transmission congestion contracts for sales from
the Generating Station, (vi) forced outage insurance  costs (to the extent paid
by MAEM), (vii) incremental credit costs for transactions in the Asset Book
consistent with the Collateral Allocation Policy, (viii) transmission and/or
transportation costs for Fuel or energy deliveries; and (ix) other  costs in
connection with the services described in Articles 2, 3 and 4 hereof.

 

8.3           Reports.  Project Company and MAEM will cooperate to provide
monthly reports in reasonable detail showing the calculation of the Net Market
Revenues, to enable Project Company to track Net Market Revenues.  Project
Company shall have the right, upon reasonable notice, to examine and/or audit
the Asset Book from time to time.

 

8.4           Interest and Disputed Amounts.  If either Party fails to make any
payment on or before the applicable payment due date, such overdue amounts shall
accrue interest at the Interest Rate from, and including, the applicable payment
due date to, but excluding, the date of payment.  Any disputed invoiced amounts,
except amounts which are manifestly inaccurate, shall be paid in full on the
applicable payment due date, subject to later return together with interest
accrued at the Interest Rate.  Overpayments or underpayments identified by the
Parties shall be returned or credited, together with interest accrued at the
Interest Rate, to their rightful owners in the first following month.

 

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ARTICLE 9.

DEFAULTS AND REMEDIES

 

9.1           Events of Default  Any one or more of the following shall
constitute an “Event of Default” hereunder with respect to a Party:

 

(a)           default shall occur in the payment of any amounts due from such
Party hereunder which shall continue for more than ten (10) days after written
notice from the other Party;

 

(b)           other than as provided in Section 9.1(a) above, default shall
occur in the performance of any covenant or condition to be performed by such
Party under this Agreement and such default shall continue unremedied for a
period of thirty (30) days after written notice from the other Party specifying
the nature of such default; or

 

(c)           a representation or warranty made by such Party herein shall have
been false or misleading in any material respect when made; provided, however,
if such representation or warranty is capable of being corrected, no Event of
Default shall have occurred if such Party is diligently pursuing such correction
and such representation or warranty is corrected within thirty (30) days of such
Party obtaining knowledge of the false and misleading nature of the statement.

 

9.2           BANKRUPTCY.

 

(A)          EACH PARTY ACKNOWLEDGES AND AGREES THAT THE OTHER PARTY IS A DEBTOR
IN THE CHAPTER 11 PROCEEDING.  EACH PARTY FURTHER ACKNOWLEDGES AND AGREES THAT
DURING THE PENDENCY OF SUCH PROCEEDING, THIS AGREEMENT AND THE PARTIES RIGHTS
HEREUNDER SHALL BE SUBJECT TO THE JURISDICTION OF THE BANKRUPTCY COURT.  IN THE
EVENT THIS AGREEMENT AND/OR THE PARTIES’ RIGHTS HEREUNDER ARE DEEMED TO BE
INCONSISTENT WITH ANY DETERMINATION MADE BY THE BANKRUPTCY COURT IN THE CHAPTER
11 PROCEEDING, THE BANKRUPTCY COURT’S DETERMINATION SHALL PREVAIL.

 

(B)           NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, UNTIL SUCH
TIME AS EACH PARTY EMERGES FROM THE CHAPTER 11 PROCEEDING THROUGH THE
CONFIRMATION OF A PLAN OF REORGANIZATION, THE CHAPTER 11 PROCEEDING SHALL NOT
CONSTITUTE AN EVENT OF DEFAULT UNDER THIS AGREEMENT; PROVIDED, HOWEVER, THAT IN
THE EVENT THAT (A) EITHER PARTY FILES A MOTION OR REQUEST TO CONVERT ITS CHAPTER
11 CASE TO A CHAPTER 7 PROCEEDING; (B) THE BANKRUPTCY COURT ENTERS AN ORDER
CONVERTING EITHER PARTY’S CASE FROM A CHAPTER 11 PROCEEDING TO A CHAPTER 7
PROCEEDING; OR (C) THE BANKRUPTCY COURT ENTERS AN ORDER APPOINTING A TRUSTEE OR
EXAMINER (WITH EXPANDED POWERS) IN EITHER PARTY’S BANKRUPTCY CASE, ANY SUCH
EVENT (A) THROUGH (C) SHALL CONSTITUTE AN EVENT OF DEFAULT UNDER THIS AGREEMENT
WITH RESPECT TO SUCH PARTY OR PARTIES.

 

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(c)           Each Party represents, warrants and covenants that:

 

(i)                                     The Parties have negotiated and entered
into this post-petition Agreement in the ordinary courses of their respective
businesses, in good faith, for fair consideration and on an arm’s length basis;

(ii)                                  Neither Party shall attempt to effect any
right of set-off with respect to this such post-petition transaction and any
pre-petition obligations;

(iii)                               One of the purposes of this Agreement is to
preserve, maintain and enhance its business; and

(iv)                              The terms and conditions of this Agreement are
fair and reasonable and reflect its exercise of prudent business judgment
consistent with its fiduciary duties as a debtor-in-possession and are supported
by fair consideration and reasonably equivalent value in money or money’s worth.

 

9.3           Remedies.  The Parties shall have the following remedies available
to them hereunder:

 

(a)           Upon the occurrence of an Event of Default by either Party
hereunder, the non-defaulting Party shall have the right (i) to collect all
amounts then or thereafter due to it from the defaulting Party hereunder, and
(ii) upon written notice to the other Party, to terminate this Agreement at any
time during the continuation of such Event of Default.  The terminating Party
shall have all rights and remedies available to it under applicable law, subject
to the limitations set forth in Section 11.8.

 

(b)           Without limiting the foregoing, any unexcused breach of this
Agreement or failure of either Party to perform its obligations hereunder shall
subject such Party to the payment of actual damages to the other Party,
regardless of any cure period.

 

ARTICLE 10.

FORCE MAJEURE

 

10.1         Force Majeure.  If either Party is rendered wholly or partly unable
to perform its obligations under this Agreement because of a Force Majeure
event, that Party will be excused from whatever performance is affected by the
Force Majeure event to the extent so affected, provided that (a) the
non-performing Party, as soon as practical after knowing of the occurrence of
the Force Majeure event, gives the other Party written notice describing the
particulars of the occurrence; (b) the suspension of performance is of no
greater scope and of no longer duration than is reasonably required by the Force
Majeure event; (c) the non-performing Party uses commercially reasonable efforts
to overcome or mitigate the effects of such occurrence, provided, however, that
this provision shall not require Project Company to deliver, or MAEM to receive,
any Products at points other than the Delivery Point; and (d) when the
non-performing Party is able to resume performance of its obligations hereunder,
that Party shall give the other Party written notice to that effect and shall
promptly resume such performance.

 

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ARTICLE 11.

MISCELLANEOUS PROVISIONS

 

11.1         Assignment; Successors and Assigns.  No assignment or delegation by
either Party (or any successor or assignee thereof) of this Agreement, in whole
or in part, shall be made or become effective without the prior written consent
of the other Party in each case obtained, which consent may not be unreasonably
withheld.  Any assignments or delegations by either Party shall be in such form
as to assure that such Party’s obligations under this Agreement will be honored
fully and timely by any succeeding party.

 

11.2         Notices.  All notices, requests and other communications hereunder
(herein collectively a “notice” or “notices”) shall be deemed to have been duly
delivered, given or made to or upon any Party hereto if in writing and delivered
by hand against receipt, or by certified or registered mail, postage pre-paid,
return receipt requested, or to a courier who guarantees next business day
delivery or sent by telecopy (with confirmation) to such Party at its address
set forth below or to such other address as such Party may at any time, or from
time to time, direct by notice given in accordance with this Section 11.2.

 

IF TO PROJECT COMPANY:

Mirant Peaker, LLC

 

1155 Perimeter Center West

 

Atlanta, Georgia 30338

 

Attention: President

 

 

IF TO MAEM:

Mirant Americas Energy Marketing, LP

 

1155 Perimeter Center West

 

Atlanta, Georgia 30338

 

Attention: Legal Department

 

The date of delivery of any such notice, request or other communication shall be
the earlier of (i) the date of actual receipt or (ii) three (3) business days
after such notice, request or other communication is sent by certified or
registered mail, (iii) if sent by courier who guarantees next business day
delivery, the business day next following the day of such notice, request or
other communication is actually delivered to the courier or (iv) the day
actually telecopied.

 

11.3         GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW THAT WOULD OTHERWISE CAUSE THE LAW OF ANY STATE OTHER THAN NEW
YORK TO APPLY.

 

11.4         Compliance With Laws.  At all times during the term of this
Agreement, the Parties shall comply with all laws, rules, regulations, and codes
of all governmental authorities having jurisdiction over each of their
respective businesses which are now applicable, or may be applicable hereafter,
including without limitation, all special laws, policies, ordinances, or
regulations now in force, as amended or hereafter enacted.  The Parties hereto
shall maintain all

 

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licenses, permits and other consents from all governmental authorities having
jurisdiction for the necessary use and operation of their respective business. 
Nothing herein shall be deemed a waiver of the Parties’ right to challenge the
validity of any such law, rule or regulation.

 

11.5         Entire Agreement.  This Agreement sets forth the entire agreement
of the Parties with respect to the subject matter herein and takes precedence
over all prior understandings.

 

11.6         Amendments.  This Agreement may not be amended except by a writing
signed by the Parties.

 

11.7         Severability.  The invalidity or unenforceability of any provisions
of this Agreement shall not affect the other provisions hereof.  If any
provision of this Agreement is held to be invalid, such provisions shall not be
severed from this Agreement; instead, the scope of the rights and duties created
thereby shall be reduced by the smallest extent necessary to conform such
provision to the applicable law, preserving to the greatest extent the intent of
the Parties to create such rights and duties as set out herein.  If necessary to
preserve the intent of the Parties hereto, the Parties shall negotiate in good
faith to amend this Agreement, adopting a substitute provision for the one
deemed invalid or unenforceable that is legally binding and enforceable and
which restores to the two Parties to the greatest extent possible the benefit of
their respective bargains on the Effective Date.

 

11.8         Limitation on Damages.  NEITHER PARTY SHALL BE ENTITLED TO RECOVER
SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES HEREUNDER.

 

11.9         Risk Management Policy.  The Parties acknowledge and agree that
this Agreement is subject to the Risk Management Policy approved by the Parties’
Board of Directors and the Bankruptcy Court.  In the event of a conflict between
the provisions of this Agreement and the terms of the Risk Management Policy,
the terms of the Risk Management shall govern and control.

 

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IN WITNESS WHEREOF, and intending to be legally bound hereby, the Parties hereto
have caused this Agreement to be duly executed as an instrument under seal by
their respective duly authorized officers as of the date and year first above
written.

 

MIRANT AMERICAS ENERGY

MIRANT PEAKER, LLC

 

 

MARKETING, LP

 

 

 

 

 

 

 

By MIRANT AMERICAS

 

 

 

DEVELOPMENT, INC.,

 

 

 

its General Partner

 

 

 

 

 

 

 

By:

 

 

By:

 

 

Name:

John L. O’Neal

 

Name: Lisa D. Johnson

 

 

Title:

Chief Commercial Officer

 

Title:   President

 

 

 

and Vice President

 

 

 

 

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EXHIBIT A

Chalk Point Generating Station

 

Unit

 

Location

 

Nameplate
Capacity

 

Commercial Operation
Date

 

ECT1

 

Prince Georges County, MD

 

18

 

1967

 

ECT2

 

Prince Georges County, MD

 

30

 

1974

 

ECT3

 

Prince Georges County, MD

 

86

 

1991

 

ECT4

 

Prince Georges County, MD

 

86

 

1991

 

ECT5

 

Prince Georges County, MD

 

109

 

1991

 

ECT6

 

Prince Georges County, MD

 

109

 

1991

 

SMECO CT1

 

Prince Georges County, MD

 

84

 

1990

 

 

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