**Exhibit 10.10**

 

**POWERSALE, FUEL SUPPLY**

**ANDSERVICES AGREEMENT**

 

**THIS****POWER SALE,FUEL SUPPLY AND SERVICES AGREEMENT**(this “Agreement”), dated as of January 3,2006 (the “Agreement Date”), is by and between **MIRANTAMERICAS ENERGY MARKETING, LP**, a Delaware limited partnership (“MAEM”),****and**MIRANT POTOMAC RIVER, LLC**,a Delaware limited liability company (the “Project Company”).

 

**RECITALS**

 

WHEREAS, Project Company owns and operates a certainelectric generating facility as set forth on Exhibit A hereto (the “GeneratingStation”);

 

WHEREAS, Project Company may enter into contracts withthird parties to sell capacity, electricity, ancillary services and/or otherrelated products generated by, or available from, the Generating Station;

 

WHEREAS, in the absence of such third party contracts,Project Company desires to contract herein to sell all or a portion of thecapacity, electricity, ancillary services and/or other related productsgenerated by, or available from, the Generating Station to MAEM, and MAEMdesires to purchase such capacity, electricity, ancillary services and/or otherrelated products on the terms and conditions set forth herein; and

 

WHEREAS, Project Company desires that MAEM performcertain services related to the management and operation of the GeneratingStation, and MAEM desires to perform such services.

 

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

 

**ARTICLE 1.**

**DEFINITIONS**

 

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

 

“Agreement” has the meaning set forth in thefirst paragraph hereof.

 

“Agreement Date” has the meaning set forth inthe first paragraph of this Agreement.

 

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“Asset Companies” means any Affiliates of MAEMeither directly or indirectly owned by Mirant Corporation, other than MirantPotomac River, LLC, which own electric generating facilities in the UnitedStates.

 

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

 

“Collateral Costs” meansan amount determined on a monthly basis by MAEM, in good faith, as the costincurred by MAEM or Mirant North America, LLC to post collateral in the form ofcash and/or letters of credit to third parties as required under the terms ofthe transactions attributed to the Asset Book based on the weighted average ofthe borrowing rates under the senior credit facilities, senior notes and otherindebtedness for borrowed money of Mirant North America, LLC.

 

“Delivery Point” means, with respect toProducts generated by, or available from, the Generating Station, the high sideof the generation step-up transformer located at the Generating Station, whereit connects to the Transmission Provider’s transmission system; and, withrespect to Products generated by, or available from, sources other than theGenerating Station, such other point on the Transmission Provider’stransmission system as MAEM and Project Company may determine.

 

“Direct Contracts” has the meaning set forth inSection 4.1.

 

“Emission Allowances” means authorizations understate or federal (as applicable) air quality regulations to emit either one tonof nitrogen oxides (“NOx”) or sulfur dioxide (“SO2”) at any timeduring any applicable calendar year.

 

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

 

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

 

“Facility Lease Event of Default” shall havethe 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 theDickerson and Morgantown generating stations, Wilmington Trust Company andState Street Bank and Trust Company of Connecticut, National Association.

 

“FERC” means the Federal Energy RegulatoryCommission, or its successor.

 

“Force Majeure” means an event or circumstance which prevents one Party from performing itsobligations, which event or circumstance was not anticipated as of the date thetransaction was agreed to, which is not within the reasonable control of, orthe result of the

 

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negligenceof, the claiming Party, and which, by the exercise of due diligence, theclaiming Party is unable to overcome or avoid or cause to be avoided.  Force Majeure shall not be based on (i) theloss of MAEM’s markets; (ii) MAEM’s inability economically to use orresell the Product purchased hereunder; (iii) the loss or failure ofProject Company’s supply; or (iv) Project Company’s ability to sell theProduct at a price greater than the purchase price set forth in thisAgreement.  Neither Party may raise aclaim of Force Majeure based in whole or in part on curtailment by aTransmission Provider unless (i) such Party has contracted for firmtransmission with a transmission provider for the Product to be delivered to orreceived at the Delivery Point and (ii) such curtailment is due to “forcemajeure” or “uncontrollable force” or a similar term as defined under theTransmission Provider’s tariff; provided, however, that existence of theforegoing factors shall not be sufficient to conclusively or presumptivelyprove the existence of a Force Majeure absent a showing of other facts andcircumstances which in the aggregate with such factors establish that a ForceMajeure as defined in the first sentence hereof has occurred.

 

“Fuel” means coal.

 

“Fuel Delivery Point” means the physicallocation at the Generating Station where MAEM shall deliver coal to ProjectCompany.

 

“Generating Station” has the meaning providedin the recitals.

 

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

 

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

 

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

 

“ISO” means PJM Interconnection, LLC, or itssuccessor.

 

“ISO FERC Tariff” means the Open AccessTransmission and Energy Markets Tariff for the Midwest Independent TransmissionSystem Operator, Inc., as amended from time to time, as on file with andapproved by the FERC.

 

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“MAEM” has the meaning set forth in the firstparagraph of this Agreement.

 

“MET” has the meaning set forth in Section 11.1(b).

 

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

 

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

 

“Offer” has the meaning set forth in Section 2.2(a).

 

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

 

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

 

“Project Company” has the meaning set forth inthis first paragraph of this Agreement.

 

“Purchased Power” has the meaning set forth in Section 4.2.

 

“Scheduling” or “Schedule” means theacts of MAEM and/or its designated representatives of notifying, requesting andconfirming to its counterparties and their designated representatives(including, but not limited to, the ISO or any Transmission Provider) thequantity and type of Products to be delivered on any given day or days during theperiod of delivery at a specified Delivery Point.

 

“Service Fee” has the meaning set forth in Section 8.1.

 

“Third Party Contracts” has the meaning setforth in Section 2.2(b).

 

“Transmission Providers” means the entity orentities transmitting Products on behalf of Project Company or MAEM to or fromthe Delivery Point including, but not limited to, the ISO or a regionaltransmission organization.

 

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

 

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**ARTICLE 2.**

**PRODUCTSALES**

 

2.1                                 IntercompanyProduct Sales.

 

(a)                                  Transactions.  With the exception of any Direct Contracts asdescribed in Section 4.1, Project Company shall sell and deliver, and MAEMshall purchase and receive, or cause to be received, at the Delivery Point, allProducts generated by, and/or available from, the Generating Station.  MAEM shall resell such Products as describedin Section 2.2.  MAEM shall pay NetMarket Revenues to Project Company, on a monthly basis, for all Productspurchased by MAEM hereunder.  In sellingProducts generated by, or available from, the Generating Station, MAEM shallattempt to maximize Net Market Revenues for Project Company.

 

(b)                                 Transmissionand Scheduling.  Project Companyshall be responsible for delivery of Products to the Delivery Point.  MAEM shall arrange and be responsible fortransmission service at and from the Delivery Point.  MAEM shall serve as Scheduling agent onbehalf of Project Company to Schedule and deliver Products with respect toall transaction involving the Generating Station.

 

(c)                                  Title,Risk of Loss and Indemnity. The following provision shall apply to alltransactions involving the Generating Station except for Direct Contracts asdescribed in Section 4.1.  Asbetween the Parties, Project Company shall be deemed to be in exclusivepossession and control (and be responsible for any damages or injury causedthereby) of the Products prior to delivery thereof at the Delivery Point, andMAEM shall be deemed to be in exclusive possession and control (and beresponsible for any damages or injury caused thereby) of the Products at andafter delivery thereof at the Delivery Point. Project Company warrants that it will deliver to MAEM all Products freeand clear of all liens, claims and encumbrances arising prior to deliverythereof at the Delivery Point.  Title toand risk of loss related to delivered Products shall transfer from ProjectCompany to MAEM at the Delivery Point. Each Party shall indemnify, defend and hold harmless each other Partyfrom any Claims arising from any act or incident occurring during the periodwhen possession, control and title to Products is vested or deemed to be vestedin the indemnifying Party, except to the extent such Claims arise from suchother Party’s breach of this Agreement or its gross negligence or willfulmisconduct.

 

2.2                                 Resaleof Products by MAEM.

 

(a)                                  Offers.  MAEM may re-sell the Products purchased fromProject Company by submitting offers to sell the Products in the day-aheadand/or real-time markets administered by the ISO (“Offers”).

 

(b)                                 ThirdParty Contracts.  In addition tosubmitting Offers, MAEM may resell the Products purchased from Project Companyby entering into bilateral contracts, forward sales, financial transactions(including but not limited to, hedges, swaps, contracts for differences andoptions), tolling agreements, power purchase agreements and other transactions(“Third Party Contracts”).

 

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(c)                                  Costsand Revenues.  All costs and revenuesassociated with Offers and Third Party Contracts will be charged, or paid, toProject Company as such costs and revenues are actually incurred or received byMAEM, as further described in the calculation of Net Market Revenues pursuantto Section 8.2.

 

(d)                                 Strategies.  MAEM’s strategies with respect to all Offers,Third Party Contracts and all Scheduling activities shall be consistent with:

 

(i)                                     theoperating parameters and limitations of the Generating Station, as provided byProject Company to MAEM;

 

(ii)                                  thelimitations imposed by any transmission service reservations for the purpose oftransmitting Power from the Generating Station;

 

(iii)                               ProjectCompany’s scheduled maintenance plans, as agreed to between the Parties;

 

(iv)                              theavailability of the Generating Station (including Fuel handling and storagefacilities), as communicated by Project Company to MAEM;

 

(v)                                 theISO FERC Tariff and other ISO rules and procedures in effect from time totime;

 

(vi)                              applicablerequirements of any Transmission Provider and/or Transportation Provider;

 

(vii)                           Fuelavailability;

 

(viii)                        GoodUtility Practices;

 

(ix)                                anyenvironmental limitations applicable to the Generating Station; and

 

(x)                                   operatingprotocols agreed to from time to time by the Parties.

 

**ARTICLE 3.**

**FUELSERVICES**

 

3.1                                 AllRequirements Fuel Supply.  With theexception of any Direct Contracts as described in Section 4.1, MAEM shallprocure and supply to Project Company, on an exclusive basis, all Fuel requiredby the Generating Station in accordance with Good Utility Practices and theterms and conditions of this Agreement. Project Company shall reimburse MAEM for such Fuel at MAEM’s actualcost.  MAEM has entered into or willenter into Fuel hedges and trading activities (including, but not limited to,physical and financial hedges, swaps and options) in connection with MAEM’sFuel supply obligations pursuant to this Section 3.1.  The costs and revenues associated with suchFuel hedging and trading activities will be attributed to the Asset

 

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Book and charged to, orpaid to, Project Company as such costs and revenues are actually incurred orreceived by MAEM, as further described in the calculation of Net MarketRevenues pursuant to Section 8.2.

 

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3.2                                 Transportationand Scheduling.  MAEM shall schedule orarrange for scheduling services with its Transportation Providers to deliverFuel to the Fuel Delivery Point.  MAEMshall manage Fuel imbalances on behalf of Project Company and all costs andrevenues associated with Fuel imbalances will be attributed to the Asset Bookand charged to, or paid to, Project Company as such costs and revenues areactually incurred or received by MAEM.

 

3.3                                 Title,Risk of Loss and Indemnity. As between the Parties, MAEM shall be deemed tobe in exclusive possession and control (and be responsible for any damages orinjury caused thereby) of the Fuel prior to delivery thereof at the FuelDelivery Point, and Project Company shall be deemed to be in exclusivepossession and control (and be responsible for any damages or injury causedthereby) of the Fuel at and after delivery thereof at the Fuel DeliveryPoint.  MAEM warrants that it willdeliver to Project Company all Fuel free and clear of all liens, claims andencumbrances arising prior to delivery thereof at the Fuel Delivery Point.  Title to and risk of loss related todelivered Fuel shall transfer from MAEM to Project Company at the Fuel DeliveryPoint. Each Party shall indemnify, defend and hold harmless each other Partyfrom any Claims arising from any act or incident occurring during the periodwhen possession, control and title to Products is vested or deemed to be vestedin the indemnifying Party, except to the extent such Claims arise from suchother Party’s breach of this Agreement or its gross negligence or willfulmisconduct.

 

**ARTICLE 4.**

**DIRECTCONTRACTS**

 

4.1                                 DirectContracts.

 

(a)                                  AgencyServices.  Notwithstanding anythingto the contrary in Sections 2.1 or 3.1 of this Agreement, Project Company mayenter into contracts to (i) sell the Products available from theGenerating Station directly to a third party rather than selling such Productsto MAEM and/or (ii) purchase Fuel required by the Generating Stationdirectly from a third party rather than purchasing such Fuel from MAEM(collectively “Direct Contracts”). Project Company hereby appoints MAEM as its agent in administering anyDirect Contract including, but not limited to, Scheduling, billing, settlementswith the ISO (if applicable) and other services required by Project Companypursuant to the terms of such Direct Contract. Project Company shall continue to pay MAEM the Service Fee for theagency services provided by MAEM during the term of a Direct Contract.  As agent, MAEM shall neither directlypurchase or sell, or contract for the purchase or sale, nor take title to orpossession and control of any Products or Fuel. Rather, as between MAEM and Project Company, when MAEM is acting asagent under any Direct Contract, Project Company shall be deemed to have titleand exclusive possession and control of all Products sold to, and all Fuelpurchased from, third parties, and Project Company shall bear the risk of lossassociated with such Products and Fuel.

 

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(b)                                 Costsand Revenues.  The calculation of NetMarket Revenues shall exclude any costs or revenues associated with a Direct Contract.  All such costs and revenues shall be paid andreceived by Project Company.  If a thirdparty customer or other entity pays MAEM any amounts due Project Company undera Direct Contract, MAEM shall hold such amounts in trust for the applicableProject Company and remit such funds to Project Company on or before thetwentieth (20th) day of each month, or if such day is not a businessday, the immediately following business day.

 

4.2                                 Cooperation.The Parties shall cooperate to fulfill the obligations of Project Companyand/or MAEM as set forth in the Direct Contract and/or Third Party Contract, asapplicable.  Notwithstanding theforegoing, all payment obligations under any Direct Contract shall be the soleresponsibility of Project Company. In an effort to maximize Net MarketRevenues, Project Company agrees that MAEM shall have the right to purchaseProducts from third parties or the market, in lieu of the Generating Stationproducing such Products, for the purpose of meeting the supply obligations of ProjectCompany or MAEM under any Direct Contract or Third Party Contract (“PurchasedPower”); provided, however, any such purchase should only occur when theProject Company’s cost to generate the Products exceeds the prevailing marketprice for such Products.  Project Companyand MAEM shall notify the others promptly if it becomes aware of any disputeunder, or any proposed amendment to, a Direct Contract or Third PartyContract.  Project Company and MAEMacknowledge and agree that certain provisions of this Agreement including,without limitation, MAEM’s scheduling and fuel supply obligations, may not beconsistent with the provisions of a Direct Contract or a Third Party Contract(such as a tolling agreement for example). In the event of such inconsistency, the provisions of the DirectContract or Third Party Contract shall control.

 

**ARTICLE 5.**

**ASSETBOOK; ADDITIONAL SERVICES**

 

5.1                                 AssetBook.  MAEM will maintain an assetmanagement book for Project Company and Mirant Peaker, LLC (the “Non-MIRMAAsset Book”) to track and measure the financial performance of all hedges andother transactions entered into with respect to the Generating Station, thegenerating station owned by Mirant Peaker, LLC, and, unless otherwise agreed bythe Parties, transactions entered into related to the Makewhole ReimbursementAgreement dated September 1, 2001 between Mirant Americas, Inc. andMAEM.  The Non-MIRMA Asset Book shall beseparate from any MAEM trading book or any other asset book maintained by MAEMfor power resources managed by MAEM. Unless otherwise designated in writing by Project Company and MirantPeaker, LLC, transactions in the Non-MIRMA Asset Book will be allocated solelyto Mirant Americas, Inc.

 

5.2                                 EmissionsPlanning and Related Responsibilities. MAEM shall provide Project Company emissions planning, in consultationwith Project Company, to assist in the compliance of the Generating Station atall times and on an ongoing basis with all currently effective emissionsrequirements, permits and regulations. Upon Project Company’s request, MAEM will procure Emission Allowancesnecessary for the operation of the Generating Station, and dispose of excessEmission Allowances, which are not needed for the operation of the Generating

 

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Station.  MAEM will charge Project Company MAEM’sactual cost of acquiring the Emission Allowances and remit the actual proceedsof any Emission Allowances sales to Project Company, as adjusted for any gainsor losses on emission hedges and trading activities.

 

5.3                                 RegulatoryReports.  MAEM will make allquarterly filings to the FERC required for Products produced by the GeneratingStations.

 

**ARTICLE 6.**

**TERM ANDTERMINATION**

 

6.1                                 Term.  The initial term of this Agreement shallcommence on the Agreement Date and shall continue in effect unless terminatedpursuant to Section 6.2 or Section 9.2(a).

 

6.2                                 EarlyTermination Event.

 

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

 

(b)                                 Inthe event lenders or lessors exercise remedies following a Facility Lease Eventof Default, Project Company may terminate this Agreement, without penalty, uponwritten notice to MAEM.

 

(c)                                  EitherParty may terminate this Agreement upon sixty (60) days written notice to theother Party.

 

6.3                                 Obligationsupon Termination.

 

(a)                                  Uponany termination of this Agreement pursuant to Section 6.2 hereof, MAEMshall endeavor to (i) terminate any transactions entered into by MAEM inconnection with this Agreement which extend beyond such termination including,but not limited to, Third Party Contracts entered into pursuant to Section 2.2(b),(ii) assign such transactions to the new owner of the GeneratingStation(s) and/or (iii) enter into an agreement with the new owner toallow MAEM to continue to fulfill its obligations under any existingtransactions.  Any such terminationsand/or assignments shall be consummated in such a manner as to fully releaseMAEM and Project Company from any liability or obligation thereunder as of thetermination date and/or the assignment effective date of the applicabletransactions.  Any costs or revenuesassociated with termination payments or settlement amounts as a result ofliquidating and terminating any transactions shall be charged to or paid toProject Company as described under Section 2.2(c).

 

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(b)                                 Uponany termination of this Agreement pursuant to Section 9.2(a) hereof,the Parties shall transfer or settle any outstanding transactions entered intoby MAEM in connection with this Agreement which extend beyond such terminationincluding, but not limited to, Third Party Contracts entered into pursuant to Section 2.2(b).  Any such transfer or settlement shall beconsummated in such a manner as to assign or convey to Project Company the fullbenefits and obligations of such transactions, and to fully release MAEM fromany liability or obligation thereunder. To the extent that MAEM’s rights or obligations under any suchtransaction may not be assigned without the consent of a third party, and suchconsent has not or cannot be obtained with the commercially reasonable effortsof the Parties, this provision shall not constitute an agreement to assign thesame if an attempted assignment would constitute a breach thereof or be unlawful,and the Parties, to the maximum extent permitted by law and the applicabletransaction, shall enter into such commercially reasonable arrangements as arenecessary 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 andcertificates, as are necessary to consummate the transactions contemplated bythis Section 6.3(b).

 

**ARTICLE 7.**

**REPRESENTATIONSAND WARRANTIES**

 

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

 

(a)                                  ProjectCompany is a limited liability company duly organized and validly existingunder the laws of the State of Delaware, is qualified to do business in eachforeign jurisdiction in which it transacts business, and is in good standingunder its certificate of formation and the laws of the State of Delaware, hasthe requisite power and authority to own its properties, and to carry on itsbusiness as now being conducted.

 

(b)                                 ProjectCompany has full power and authority to enter this Agreement and perform itsobligations hereunder.  The execution,delivery and performance of this Agreement and the consummation of the transactionscontemplated hereby have been duly authorized by all necessary limitedliability company action and do not and will not contravene its organizationaldocuments or conflict with, result in a breach of, or entitle any party (withdue notice or lapse of time or both) to terminate, accelerate or declare adefault under, any agreement or instrument to which Project Company is a partyor by which Project Company is bound. The execution, delivery and performance by Project Company of thisAgreement will not result in any violation by Project Company of any law, rule orregulation applicable to it.  ProjectCompany is not a party to, nor subject to or bound by, any judgment, injunctionor decree of any court or other governmental entity which may restrict orinterfere with the performance of this Agreement by it.  This Agreement is Project Company’s legal,valid and binding obligation, enforceable against Project Company in accordancewith its terms, except as (i) such enforcement may be subject to bankruptcy,insolvency, reorganization, moratorium or other similar laws now or hereafterin effect relating to creditors’ rights generally, and (ii) the remedy ofspecific performance and injunctive relief may be subject to equitable defensesand to the discretion of the court before which any proceeding therefor may bebrought.

 

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(c)                                  Noconsent, waiver, order, approval, authorization, permit or order of, orregistration, qualification or filing with, any court or other governmentalagency or authority is required for the execution, delivery and performance byProject Company of this Agreement and the consummation by Project Company ofthe transactions contemplated hereby.

 

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

 

(e)                                  Thereis not pending or, to its knowledge, threatened against it, any legalproceedings that could materially adversely affect its ability to perform itsobligations under this Agreement.

 

(f)                                    NoEvent of Default or event which, with the giving of notice or lapse of time, orboth, would constitute an Event of Default with respect to Project Company hasoccurred and is continuing and no such event or circumstance would occur as aresult of its entering into or performing its obligations under this Agreementor any other document relating to this Agreement.

 

7.2                                 MAEM’sRepresentations and Warranties.  MAEMmakes the following representations and warranties as a basis for itsundertakings contained herein:

 

(a)                                  MAEMis a limited partnership duly organized and validly existing under the laws ofthe State of Delaware, is in good standing under its certificate of limitedpartnership and the laws of the State of Delaware, is qualified to do businessin each foreign jurisdiction in which it transacts business, has the requisitepower and authority to own its properties, and to carry on its business as nowbeing conducted.

 

(b)                                 MAEMhas full power and authority to enter this Agreement and perform itsobligations hereunder.  The execution,delivery and performance of this Agreement and the consummation of theTransactions contemplated hereby have been duly authorized by all necessarylimited partnership action by MAEM and do not and will not contravene itsorganizational documents or conflict with, result in a breach of, or entitleany party (with due notice or lapse of time or both) to terminate, accelerateor declare a default under, any agreement or instrument to which MAEM is aparty or by which MAEM is bound.  Theexecution, delivery and performance by MAEM of this Agreement will not resultin 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 ordecree of any court or other governmental entity which may restrict orinterfere with the performance of this Agreement by it.  This Agreement is MAEM’s legal, valid andbinding 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 effectrelating to creditors’ rights generally and (ii) the remedy of specificperformance and injunctive relief may be subject to equitable defenses and tothe discretion of the court before which any proceeding therefor may bebrought.

 

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(c)                                  Noconsent, waiver, order, approval, authorization, permit or order of, orregistration, qualification or filing with, any court or other governmentalagency or authority is required for the execution, delivery and performance byMAEM of this Agreement and the consummation by MAEM of the transactionscontemplated hereby.

 

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

 

(e)                                  Thereis not pending or, to its knowledge, threatened against it, any legalproceedings that could materially adversely affect its ability to perform itsobligations under this Agreement.

 

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

 

**ARTICLE 8.**

#### **BILLING AND PAYMENT**

#### ** **

8.1                                 CostAllocation.  For services rendered byMAEM to Project Company under this Agreement and/or any Direct Contract,Project Company shall pay MAEM its monthly share of allocated costs forfulfilling its responsibilities to Project Company under this Agreement and/orany Direct Contract including, but not limited to, personnel costs (“ServiceFee”).  For purposes of determiningProject Company’s share of allocated costs, MAEM shall apply an industrystandard methodology which is applied uniformly across the AssetCompanies.  Each of MAEM and ProjectCompany acknowledges that the monthly allocations may be adjusted from time totime.

 

8.2                                 Billingand Payment. Each month, MAEM shall pay Project Company the positive NetMarket Revenues due for the prior month (or, if Net Market Revenues for suchmonth are negative, Project Company shall pay MAEM an amount equal to suchnegative balance) by wire transfer to the payment address provided by therecipient on or before the twentieth (20th) day of each month, or ifsuch day is not a business day, the immediately following business day.  At the time of each monthly payment, MAEMshall render to Project Company a statement detailing the Net Market Revenuesfor the prior month, and shall provide Project Company with supportingdocumentation for each such monthly statement, identifying calculationsunderlying such Net Market Revenues.  IfPJM later adjusts amounts payable by or paid to MAEM with respect totransactions in the Asset Book, such amounts will be credited to, or paid by,Project Company in the month in which MAEM receives notice of theadjustment.  The preceding sentence shallsurvive termination of this Agreement. If a third party fails to pay MAEM any amount due for Products sold tosuch party, MAEM shall only be required to pay the Asset Company the amountreceived by MAEM from the third party. In other words, MAEM shall not be responsible for

 

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non-payment by a thirdparty customer, and any Gross Revenues shall not be adjusted upward to accountfor any such non-payment.

 

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

 

**“GrossRevenues” means all revenues attributed to the Asset Book for a certainmonth including, without limitation, the actual revenues received by MAEM from (a) salesof all Products generated by, or available from, the Generating Station, (b) salesof Purchased Power, (c) excess Fuel sales, (d) sales or trades ofexcess Emissions Allowances from the Generating Station and (e) gainsassociated with physical and/or financial products (including, but not limitedto, swaps, contracts for differences and options) purchased for the Asset Bookrelated to hedges and trading activities.**

** **

“Expenses”means all costs attributed to the Asset Book for a certain month, includingcosts reimbursed to MAEM for actual costs in performing the services including,but not limited to, costs for (a) purchases of Fuel, (b) purchases ofEmissions Allowances, (c) losses associated with physical and/or financialproducts (including, but not limited to, swaps, contracts for differences andoptions) purchased for the Asset Book related to hedges and trading activities,(d) broker and/or transaction fees, (e) transmission congestioncontracts for sales from the Generating Station, (f) Collateral Costs, (g) transmissionand/or transportation costs related to delivery of the Products and/or Fuel, (h) PurchasedPower and (i) other actual costs in connection with the services describedin Articles 2, 3 and 4 hereof.

 

8.3                                 MonthlyStatements.  Project Company and MAEMwill cooperate to provide monthly statements in reasonable detail showing thecalculation of the Net Market Revenues, to enable Project Company to track NetMarket Revenues.  Project Company shallhave the right, upon reasonable notice, to examine and/or audit the Asset Bookfrom time to time.

 

8.4                                 Interestand Disputed Amounts.  If eitherParty fails to make any payment on or before the applicable payment due date,such overdue amounts shall accrue interest at the Interest Rate from, andincluding, the applicable payment due date to, but excluding, the date ofpayment.  Any disputed invoiced amounts,except amounts which are manifestly inaccurate, shall be paid in full on theapplicable payment due date, subject to later return together with interest accruedat the Interest Rate depending on the resolution of the dispute.  Overpayments or underpayments identified bythe Parties shall be returned or credited, together with interest accrued atthe Interest Rate, to their rightful owners in the first following month.

 

8.5                                 FERCRefunds.  In the event MAEM isordered by FERC to refund any payments received by MAEM from third partiesrelated to any transactions in the Asset Book, Project Company agrees to pay,or reimburse MAEM if MAEM has paid, the refund amount to FERC or a thirdparty.  The Project Company’s obligationto pay FERC or a third party, or reimburse MAEM, any refund amount shall bewithout regard to the cause or causes related thereto

 

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including, withoutlimitation, the negligence of MAEM.  Anysuch payment to FERC or a third party shall be made within the time periodordered by FERC.

 

**ARTICLE 9.**

#### **DEFAULTS AND REMEDIES**

#### ** **

9.1                                 Eventsof Default.  Any one or more of thefollowing shall constitute an “Event of Default” hereunder with respect to aParty:

 

(a)                                  defaultshall occur in the payment of any amounts due from such Party hereunder whichshall continue for more than ten (10) days after written notice from theother Party;

 

(b)                                 otherthan as provided in Section 9.1(a) above, default shall occur in theperformance of any covenant or condition to be performed by such Party underthis Agreement and such default shall continue unremedied for a period ofthirty (30) days after written notice from the other Party specifying thenature of such default;                                       or

 

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

 

9.2                                 Remedies.  The Parties shall have the following remediesavailable to them hereunder:

 

(a)                                  Uponthe occurrence of an Event of Default by either Party hereunder, thenon-defaulting Party shall have the right (i) to collect all amounts thenor thereafter due to it from the defaulting Party hereunder, and (ii) uponwritten notice to the other Party, to terminate this Agreement at any timeduring the continuation of such Event of Default.  The terminating Party shall have all rightsand remedies available to it under applicable law, subject to the limitationsset forth in Section 11.8.

 

(b)                                 Withoutlimiting the foregoing, any unexcused breach of this Agreement or failure ofeither Party to perform its obligations hereunder shall subject such Party to thepayment of actual damages to the other Party, regardless of any cure period.

 

**ARTICLE 10.**

**FORCEMAJEURE**

 

10.1                           ForceMajeure.  If either Party is renderedwholly or partly unable to perform its obligations under this Agreement becauseof a Force Majeure event, that Party will be excused from whatever performanceis 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 theoccurrence of the Force Majeure event, gives the other Party written noticedescribing the particulars of the

 

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occurrence; (b) thesuspension of performance is of no greater scope and of no longer duration thanis reasonably required by the Force Majeure event; (c) the non-performingParty uses commercially reasonable efforts to overcome or mitigate the effectsof such occurrence, provided, however, that this provision shall not requireProject Company to deliver, or MAEM to receive, any Products at points otherthan the Delivery Point; and (d) when the non-performing Party is able toresume performance of its obligations hereunder, that Party shall give theother Party written notice to that effect and shall promptly resume suchperformance.

 

**ARTICLE 11.**

**MISCELLANEOUS PROVISIONS**

 

11.1                           Assignment;Successors and Assigns.

 

(a)                                  Noassignment or delegation by either Party (or any successor or assignee thereof)of this Agreement, in whole or in part, shall be made or become effectivewithout 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 asto assure that such Party’s obligations under this Agreement will be honored fullyand timely by any succeeding party.

 

(b)                                 NotwithstandingSection 11.1(a), this Agreement shall be assigned from MAEM to MirantEnergy Trading, LLC (“MET”) without any action required by the Parties pursuantto the terms of the Plan and the Implementation Order.  The assignment shall occur on the MAEM/METEffective Date (as such term is defined in the Plan) and thereafter, allreferences to MAEM in this Agreement shall be references to MET.  As of the MAEM/MET Effective Date, Section 7.2(a) shallbe amended to delete “limited partnership” and replace it with “limitedliability company”.

 

11.2                           Notices.  All notices, requests and othercommunications hereunder (herein collectively a “notice” or “notices”) shall bedeemed to have been duly delivered, given or made to or upon any Party heretoif in writing and delivered by hand against receipt, or by certified orregistered mail, postage pre-paid, return receipt requested, or to a courierwho 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 suchParty may at any time, or from time to time, direct by notice given inaccordance with this Section 10.2.

 
| **IF TO  PROJECT** |   |                                  |
|--------------------|--------|---------------------------------------|
| **COMPANY:**       |   | Mirant Potomac River,  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                |

 

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|            |   | Attention: Legal Department  |
|-----------------|--------|------------------------------|
|            |   |                         |
| **IF TO  MET:** |   | Mirant Energy Trading,  LLC  |
| ** **      |   | 1155 Perimeter Center  West  |
|            |   | Atlanta, Georgia 30338       |
|            |   | Attention: Legal  Department |

 

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

 

11.3                           GOVERNINGLAW.  THIS AGREEMENT SHALL BEGOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK WITHOUTGIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW THAT WOULD OTHERWISE CAUSE THELAW OF ANY STATE OTHER THAN NEW YORK TO APPLY.

 

11.4                           ComplianceWith Laws.  At all times during theterm of this Agreement, the Parties shall comply with all laws, rules,regulations, and codes of all governmental authorities having jurisdiction overeach of their respective businesses which are now applicable, or may beapplicable hereafter, including without limitation, all special laws, policies,ordinances, or regulations now in force, as amended or hereafter enacted.  The Parties hereto shall maintain alllicenses, permits and other consents from all governmental authorities havingjurisdiction for the necessary use and operation of their respective business.  Nothing herein shall be deemed a waiver ofthe Parties’ right to challenge the validity of any such law, rule orregulation.

 

11.5                           EntireAgreement.  This Agreement sets forththe entire agreement of the Parties with respect to the subject matter hereinand takes precedence over all prior understandings.

 

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

 

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

 

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11.8                           Limitationon Damages.  NEITHER PARTY SHALL BEENTITLED TO RECOVER SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVEDAMAGES HEREUNDER.

 

11.9                           RiskManagement Policy.  The Partiesacknowledge and agree that this Agreement is subject to the Risk ManagementPolicy approved by the Parties’ Board of Directors.  In the event of a conflict between theprovisions of this Agreement and the terms of the Risk Management Policy, theterms of the Risk Management Policy shall govern and control.

 

 

SIGNATURES APPEAR ON THEFOLLOWING PAGE]

 

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

 
| Mirant Americas Energy  Marketing, LP |
|---------------------------------------|
| By:                                   | Mirant Americas  Development, LLC |
|                                  | Its General Partner |
|                                  |   |
| By:                                   | New MAEM Holdco, LLC |
| Its:                                  | Sole Member |
|                                  |   |
| By:                                   | /s/ J. William Holden  III |   |
| Name:                                 | J. William Holden III |
| Title:                                | Senior Vice President &  Treasurer |
|                                  |   |
| Mirant Potomac River,  LLC            |
|                                  |   |
| By:                                   | /s/ J. William Holden  III |   |
| Name:                                 | J. William Holden III |
| Title:                                | Senior Vice President &  Treasurer |
|                                  |   |
|                                  |   |
| As of the MAEM/MET  Effective Date:   |
|                                  |   |
| Mirant Energy Trading,  LLC           |
|                                  |   |
| By:                                   | /s/ J. William Holden  III |   |
| Name:                                 | J. William Holden III |
| Title:                                | Senior Vice President,  Chief Financial Officer & Treasurer |

 

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**EXHIBIT A**

 

**PotomacRiver Generating Station**

 
| **Unit** | ** ** | **Location**   | ** ** | **Nameplate  Capacity** | ** ** | **Commercial  Operation Date** | ** ** |
|----------|------------|----------------|------------|-------------------------|------------|--------------------------------|------------|
|     |       |           |       |                    |       |                           |       |
| C1       |       | Alexandria, VA |       | 88                      |       | 1949                           |       |
|     |       |           |       |                    |       |                           |       |
| C2       |       | Alexandria, VA |       | 88                      |       | 1950                           |       |
|     |       |           |       |                    |       |                           |       |
| C3       |       | Alexandria, VA |       | 102                     |       | 1954                           |       |
|     |       |           |       |                    |       |                           |       |
| C4       |       | Alexandria, VA |       | 102                     |       | 1956                           |       |
|     |       |           |       |                    |       |                           |       |
| C5       |       | Alexandria, VA |       | 102                     |       | 1957                           |       |

 

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