Exhibit 10.20(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 CHALK
POINT, 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
(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 Chalk Point, 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.

 

--------------------------------------------------------------------------------

 

“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, natural gas or coal, as dictated by context.

 

2

--------------------------------------------------------------------------------

 

“Fuel Oil” means No. 2 or No. 6 Fuel Oil, as dictated by context.

 

“Fuel Oil Delivery Point” means the physical location at which MAEM shall
arrange for its Fuel Oil supplier(s) to transfer possession of Fuel Oil to
Project Company.

 

“Fuel Oil Index Price” is the mean published price (in $/barrel) for 0.3%, 0.7%
or 1% sulfur, as applicable, high pour Fuel Oil (No. 6 Fuel Oil) for New York
Harbor cargo delivery as published in Platt’s Oilgram plus $0.25.

 

“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.

 

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

 

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

 

“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.

 

3

--------------------------------------------------------------------------------

 

“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.

 

“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 the
Project Companies.

 

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:

 

4

--------------------------------------------------------------------------------

 

(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;

 

(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.

 

5

--------------------------------------------------------------------------------

 

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.

 

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 coal shall be reimbursed
at MAEM’s cost plus delivery charges and other fees and expenses incurred by
MAEM in connection with the delivery of such coal.

 

(c)                                  Residual Fuel Oil delivered to Project
Company shall be reimbursed at the Fuel Oil Index Price on the day the Fuel Oil
is consumed by the Generating Station.  No. 2 Fuel Oil delivered to Project
Company (including the costs of transportation) shall be reimbursed at MAEM’s
actual cost.

 

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.

 

3.4                                 Fuel Oil Supply to the Generating Station.

 

3.4.1                        Measurement of and Title to Fuel Oil Inventory. 
MAEM shall have title to all Fuel Oil inventory at the Generating Station until
such Fuel Oil is delivered to the input flange of each unit at the Generating
Station.

 

3.4.2                        Transfer of Title to Fuel Oil at
Termination.             Upon termination of this Agreement, MAEM shall transfer
and sell to Project Company and Project Company shall purchase, take title to
and pay MAEM for Fuel Oil inventories at the Generating Station, as measured at
midnight on the date of transfer.  The purchase price owed by Project Company to
MAEM for the on-hand Fuel Oil inventories shall be based on the Fuel Oil Index
Price on the date of transfer and shall be payable within three (3) business
days after such date of transfer.  Project Company shall also pay the Fuel Oil
Index Price as of the transfer date for any Fuel scheduled for delivery in
accordance with the terms and provisions of this Agreement prior to the date of
termination and actually delivered after the date of termination.

 

3.4.3                        Fuel Oil Specifications and Testing.

 

6

--------------------------------------------------------------------------------

 

(a)                                  Fuel Oil supplied by MAEM to the Fuel Oil
Delivery Point shall be of a quality meeting or better than the specifications
for Fuel Oil provided by Project Company from time to time (“Fuel Oil
Specifications”).  Project Company and MAEM shall each notify one another of any
material failure of Fuel Oil to comply with the Fuel Specifications as soon as
any Party becomes aware of same.

 

(b)                                 MAEM, at its own expense, shall arrange for
testing of Fuel Oil on the water and testing associated with any blending
activities initiated by MAEM.  Project Company shall be responsible for routine
tests performed prior to transferring Fuel Oil between tanks and prior to
burning Fuel Oil.

 

3.4.4                        Failure of Fuel Oil to Materially Conform to Fuel
Specifications.

 

(a)                                  If Fuel Oil tendered for delivery under
this Agreement to the Fuel Oil Delivery Point fails for any reason to materially
conform to the Fuel Oil Specifications, Project Company may refuse all or any
part of such Fuel Oil (giving MAEM the reasons for such refusal as soon as
practical).

 

(b)                                 To the extent Fuel Oil is delivered to the
Fuel Oil Delivery Point and is not in compliance with the Fuel Oil
Specifications, and such non-compliance is not approved by Project Company,
Project Company may instruct MAEM to arrange at no cost to Project Company for
the reasonably expeditious removal of any such non-compliant Fuel Oil from the
Fuel storage tanks.

 

3.4.5                        Fuel Oil Loading, Unloading, Storage and Handling
Facilities

 

(a)                                  Project Company shall, as soon as practical
under the circumstances, provide MAEM with notice of any applicable operating
constraints affecting their Fuel storage tanks. Project Company shall provide
MAEM with a daily inventory, storage tank farm analysis report, and the volume
of Fuel Oil delivered to the Fuel Oil Delivery Point.  Further, Project Company,
after each delivery of Fuel Oil to Fuel storage tanks, shall provide MAEM with a
terminal port log/discharge report and the current delivery analysis report.

 

(b)                                 Project Company, at its own expense, and in
accordance with Good Utility Practices, will maintain, operate and restore to
operable condition, or contract with third parties for such maintenance,
operation and restoration of, the Fuel Oil terminals, loading, unloading,
storage and handling facilities at the Generating Station. Project Company shall
maintain in effect all permits necessary for such operation. Project Company
shall pay loading, unloading, storage and handling expenses for Fuel Oil
delivered to the Generating Station. Project Company and MAEM shall work
together to coordinate in advance all vessel deliveries to the Fuel Oil Delivery
Point with the objective of minimizing the expense of such deliveries. All
operations at the Fuel Oil terminal, including, without limitation, Fuel Oil
loading, unloading, storage and handling

 

7

--------------------------------------------------------------------------------

 

operations, shall be performed in accordance with the operating procedures
mutually agreed upon by Project Company and MAEM.

 

3.4.6                        Fuel Oil Loading, Unloading, Storage and Handling
Procedures. Project Company may maintain and provide to MAEM, from time to time,
Fuel operations, safety and handling standards and procedures to be followed by
Project Company, MAEM and their contractors, agents, employees and suppliers to
the Generating Station.  MAEM shall provide such standards to their contractors,
agents and suppliers.

 

3.4.7                        Metering. Project Company shall be responsible for
reading the Fuel Oil supply meters at the Generating Station in accordance with
Good Utility Practices.  Project Company shall provide the data from such daily
Fuel Oil supply meter readings to MAEM on a daily basis.  Either Party shall
have the right, at its own expense and upon reasonable notice to the other
Party, to have a meter prover perform the test and, if necessary, recalibrate
the Fuel Oil meters at the Generating Station.  Not less than once per month,
Project Company will manually sound the Fuel Oil storage tanks and compare the
results to prior meter readings.  Differences between actual tank levels and
reported meter indications will be settled between MAEM and Project Company at
the average Fuel Oil Index Price for the calendar month immediately preceding
the manual determination of tank levels.

 

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 Mid-Atlantic, LLC (the “MIRMA
Asset Book”) to track and measure the financial performance of all hedges and
other transactions entered into with respect to the Generating Station and the
generating stations owed by Mirant Mid-Atlantic, LLC.  The MIRMA

 

8

--------------------------------------------------------------------------------

 

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 Mid-Atlantic, LLC, all
transactions in the MIRMA Asset Book will be allocated solely to Mirant
Mid-Atlantic, LLC.

 

5.2                                 Power and Fuel Trading and 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

 

9

--------------------------------------------------------------------------------

 

agreement with the new owner to allow MAEM to continue to fulfill its
obligations under any 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

 

10

--------------------------------------------------------------------------------

 

by Project Company of any law, rule or regulation applicable to it.  Project
Company 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
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

 

11

--------------------------------------------------------------------------------

 

and performance by MAEM of this Agreement will not result in any violation by
MAEM of any 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

 

12

--------------------------------------------------------------------------------

 

Net Market Revenues for the prior month, and shall provide Project Company with
supporting 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.

 

13

--------------------------------------------------------------------------------

 

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

 

14

--------------------------------------------------------------------------------

 

CONSTITUTE AN EVENT OF DEFAULT UNDER THIS AGREEMENT WITH RESPECT TO SUCH PARTY
OR PARTIES.

 

(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

 

15

--------------------------------------------------------------------------------

 

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.

 

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 Chalk Point, 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

 

16

--------------------------------------------------------------------------------

 

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 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.

 

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 CHALK POINT, LLC

MARKETING, LP

 

 

By MIRANT AMERICAS

DEVELOPMENT, INC.,

its General Partner

 

17

--------------------------------------------------------------------------------

 

By:

 

 

 

By:

 

 

Name:

John L. O’Neal

Name:

Lisa Johnson

Title:

Chief Commercial Officer

Title:

President

 

and Vice President

 

 

 

18

--------------------------------------------------------------------------------

 

EXHIBIT A

 

Chalk Point Generating Station

 

Unit

 

Location

 

Nameplate
Capacity

 

Commercial Operation
Date

 

EI

 

Prince Georges County, MD

 

341

 

1964

 

E2

 

Prince Georges County, MD

 

342

 

1965

 

E3

 

Prince Georges County, MD

 

612

 

1975

 

E4

 

Prince Georges County, MD

 

612

 

1981

 

 

19

--------------------------------------------------------------------------------