**Exhibit 10.8**

 

**POWER SALE, FUEL SUPPLY AND SERVICES AGREEMENT**

 

**THIS****POWER SALE, FUEL SUPPLY AND SERVICES AGREEMENT**(this“Agreement”), dated as of January 3, 2006 (the “Agreement Date”), is byand between **MIRANT AMERICAS ENERGY MARKETING, LP**,a Delaware limited partnership (“MAEM”),****and**MIRANT CHALK POINT, LLC**, a Delaware limited liabilitycompany (the “Project Company”).

 

**RECITALS**

 

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

 

WHEREAS,Project Company may enter into contracts with third parties to sell capacity,electricity, ancillary services and/or other related products generated by, oravailable from, the Generating Station;

 

WHEREAS,in the absence of such third party contracts, Project Company desires tocontract herein to sell all or a portion of the capacity, electricity,ancillary services and/or other related products generated by, or availablefrom, the Generating Station to MAEM, and MAEM desires to purchase suchcapacity, electricity, ancillary services and/or other related products on theterms and conditions set forth herein; and

 

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

 

NOW,THEREFORE, in consideration of the foregoing and the mutual covenants containedherein, and other good and valuable consideration, the receipt and sufficiencyof which are hereby acknowledged by the Parties, the Parties hereby agree asfollows:

 

**ARTICLE 1.**

**DEFINITIONS**

 

Thefollowing capitalized terms, whether used in the singular or plural, shall bedefined as provided in this Article 1.

 

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

 

“AgreementDate” has the meaning set forth in the first paragraph of this Agreement.

 

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“AssetCompanies” means any affiliates of MAEM either directly or indirectly ownedby Mirant Corporation, other than Mirant Chalk Point, LLC, which own electricgenerating stations in the United States.

 

“Claims”means all claims or actions, threatened or filed, whether groundless, false orfraudulent, 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 actionsare threatened or filed prior to or after the termination of this Agreement.

 

“CoalDelivery Point” means the physical location at the Generating Station whereMAEM shall deliver coal to Project Company.

 

“Collateral Costs” means an amount determined ona monthly basis by MAEM, in good faith, as the cost incurred by MAEM or MirantNorth America, LLC to post collateral in the form of cash and/or letters ofcredit to third parties as required under the terms of the transactionsattributed to the Asset Book based on the weighted average of the borrowingrates under the senior credit facilities, senior notes and other indebtednessfor borrowed money of Mirant North America, LLC.

 

“DeliveryPoint” means, with respect to Products generated by, or available from, theGenerating Station, the high side of the generation step-up transformer locatedat the Generating Station, where it connects to the Transmission Provider’stransmission system; and, with respect to Products generated by, or availablefrom, sources other than the Generating Station, such other point on theTransmission Provider’s transmission system as MAEM and Project Company maydetermine.

 

“DirectContracts” has the meaning set forth in Section 4.1.

 

“EmissionsAllowances” means authorizations under state or federal (as applicable) airquality regulations to emit either one ton of nitrogen oxides (“NOx”) or sulfurdioxide (“SO2”) at any time during the applicable calendar year.

 

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

 

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

 

“FacilityLease Event of Default” shall have the meaning ascribed to such term in theParticipation Agreements dated as of December 18, 2000 among MirantMid-Atlantic, LLC and the owners of the leased assets at the Dickerson andMorgantown generating stations, Wilmington Trust Company and State Street Bankand Trust Company of Connecticut, National Association.

 

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

 

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“ForceMajeure” means an event or circumstancewhich prevents one Party from performing its obligations, which event orcircumstance 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 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 Oil and/or natural gas, as applicable.

 

“FuelDelivery Point(s)” means the Coal Delivery Point, Fuel Oil Delivery Pointand/or Natural Gas Delivery Point, as applicable.

 

“FuelOil” means residual fuel oil, No. 2 fuel oil and/or No. 6 fueloil, as applicable.

 

“FuelOil Delivery Point” means the physical location at the Generating Stationwhere MAEM shall deliver Fuel Oil to Project Company.

 

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

 

“FuelOil Specifications” has the meaning given in Section 3.4(d).

 

“GeneratingStation” has the meaning provided in the recitals.

 

“GoodUtility Practices” mean any of the practices, methods or acts engaged in orapproved by a significant portion of the electric energy industry with respectto similar facilities during the relevant time period which in each case, inthe exercise of reasonable judgment in light of the facts known or that shouldhave been known at the time a decision was made, could have been expected toaccomplish the desired result at reasonable cost consistent with good businesspractices, reliability, safety, law, regulation, environmental protection andexpedition.  Good Utility Practices arenot intended to be limited to the optimum practices, methods or acts to theexclusion of all others, but rather to delineate the acceptable practices,methods or acts generally accepted in such industry.

 

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“GrossRevenues” has the meaning provided in Section 8.2.

 

“ImplementationOrder” means the Implementing Order Regarding Transfer of Letters ofCredit, Guarantees and Certain Collateral Securing Trading ObligationsTransferred Pursuant to the Plan, dated December 9, 2005, issued by theUnited States Bankruptcy Court for the Northern District of Texas, Forth WorthDivision in the chapter 11 cases of Mirant Corporation and its affiliateddebtors, styled as *In re Mirant Corporation,et al.*, Chapter 11 Case No. 03-46590 (DML) JointlyAdministered.

 

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

 

“ISO”means PJM Interconnection, LLC, or its successor.

 

“ISOFERC Tariff” means the Open Access Transmission and Energy Markets Tarifffor the Midwest Independent Transmission System Operator, Inc. dated March 1,2005, as amended from time to time, as on file with and approved by the FERC.

 

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

 

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

 

“NaturalGas Delivery Point” means the meter at the Generating Station where MAEMshall deliver natural gas to Project Company.

 

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

 

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

 

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

 

“Plan”means the Amended and Restated Second Amended Joint Chapter 11 Plan ofReorganization for Mirant Corporation and its Affiliated Debtors, dated September 30,2005, confirmed by the United States Bankruptcy Court for the Northern Districtof Texas, Forth Worth Division, on December 9, 2005, in the chapter 11cases of Mirant Corporation and its affiliated debtors, styled as *In re Mirant Corporation, et al.*,Chapter 11 Case No. 03-46590 (DML) Jointly Administered.

 

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“Products”means electric capacity, energy, ancillary services and/or any other relatedproducts which are or may become commercially recognized in the ISO marketsduring the term of this Agreement.

 

“ProjectCompany” has the meaning set forth in this first paragraph of thisAgreement.

 

“PurchasedPower” has the meaning set forth in Section 4.2.

 

“Scheduling”or “Schedule” means the acts of MAEM and/or its designatedrepresentatives of notifying, requesting and confirming to its counterpartiesand their designated representatives (including, but not limited to, the ISO orany Transmission Provider) the quantity and type of Products to be delivered onany given day or days during the period of delivery at a specified DeliveryPoint.

 

“ServiceFee” has the meaning set forth in Section 8.1.

 

“ThirdParty Contracts” has the meaning set forth in Section 2.2(b).

 

“TransmissionProviders” means the entity or entities transmitting Products on behalf ofProject Company or MAEM to or from the Delivery Point including, but notlimited to, the ISO or a regional transmission organization.

 

“TransportationProviders” means the entity or entities transporting Fuel on behalf ofProject Company or MAEM to or from the Generating Station.

 

**ARTICLE 2.**

**PRODUCT SALES**

 

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.

 

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(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”).

 

(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)                               Project Company’sscheduled 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;

 

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(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.**

**FUEL SERVICES**

 

3.1                                 AllRequirements Fuel Supply.  With theexception of any Direct Contract 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 actual costwith the exception of Fuel Oil delivered to the Generating Station as describedin Section 3.4 below.  MAEM hasentered into or will enter into Fuel hedges and trading activities (including,but not limited to, physical and financial hedges, swaps and options) inconnection with MAEM’s Fuel 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 Book andcharged to, or paid to, Project Company as such costs and revenues are actuallyincurred or received by MAEM, as further described in the calculation of NetMarket Revenues pursuant to Section 8.2.

 

3.2                                 Transportationand Scheduling.  MAEM shall schedule orarrange for scheduling services with its Transportation Providers to deliverFuel to the Fuel Delivery Point. MAEM shall manage Fuel imbalances on behalf ofProject Company and all costs and revenues associated with Fuel imbalances willbe attributed to the Asset Book and charged to, or paid to, Project Company assuch costs and revenues are actually 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 or injurycaused thereby) of the Fuel prior to delivery thereof at the Fuel DeliveryPoint, and Project Company shall be deemed to be in exclusive possession andcontrol (and be responsible for any damages or injury caused thereby) of theFuel at and after delivery thereof at the Fuel Delivery Point.  MAEM warrants that it will deliver to ProjectCompany all Fuel free and clear of all liens, claims and encumbrances arisingprior to delivery thereof at the Fuel Delivery Point.  With the exception of Fuel Oil as describedin Section 3.4(b) of this Agreement, title to and risk of loss

 

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related to delivered Fuelshall transfer from MAEM to Project Company at the Fuel Delivery Point. EachParty shall indemnify, defend and hold harmless each other Party from anyClaims arising from any act or incident occurring during the period whenpossession, control and title to Products is vested or deemed to be vested inthe indemnifying Party, except to the extent such Claims arise from such otherParty’s breach of this Agreement or its gross negligence or willful misconduct.

 

3.4                                 FuelOil Supply to the Generating Station.

 

(a)                                  DailyFuel Oil Requirements.  MAEM shallsupply and deliver Fuel Oil to the Fuel Oil Delivery Point as required by theGenerating Station.  Project Companyshall purchase Fuel Oil from MAEM at the Fuel Oil Index Price on the day theFuel Oil is consumed by the Generating Station. For Fuel Oil consumed on Saturday, the applicable purchase price shallbe the Fuel Oil Index Price for the preceding Friday.  For Fuel Oil consumed on Sunday, theapplicable purchase price shall be the Fuel Oil Index Price for the followingMonday.  For Fuel Oil consumed on anyholiday, the applicable price shall be the Fuel Oil Index Price on the businessday preceding such holiday.

 

(b)                                 Measurementof and Title to Fuel Oil Inventory. Notwithstanding Section 3.3 of this Agreement, MAEM shall havetitle to all Fuel Oil inventory at the Generating Station until such Fuel Oilis delivered to the input flange of each unit at the Generating Station.

 

(c)                                  Transferof Title to Fuel Oil at Termination.             Upontermination of this Agreement, MAEM shall transfer and sell to Project Companyand Project Company shall purchase, take title to and pay MAEM for Fuel Oilinventories at the Generating Station, as measured at midnight on the date oftransfer.  The purchase price owed byProject Company to MAEM for the on-hand Fuel Oil inventories shall be based on theFuel Oil Index Price on the date of transfer and shall be payable within three (3) businessdays after such date of transfer. Project Company shall also pay the Fuel Oil Index Price as of thetransfer date for any Fuel scheduled for delivery in accordance with the termsand provisions of this Agreement prior to the date of termination and actuallydelivered after the date of termination.

 

(d)                                 FuelOil Specifications and Testing.

 

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

 

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

 

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(e)                                  Failureof Fuel Oil to Materially Conform to Fuel Specifications.

 

(i)                                     IfFuel Oil tendered for delivery under this Agreement to the Fuel Oil DeliveryPoint fails for any reason to materially conform to the Fuel OilSpecifications, Project Company may refuse all or any part of such Fuel Oil(giving MAEM the reasons for such refusal as soon as practical).

 

(ii)                                  Tothe extent Fuel Oil is delivered to the Fuel Oil Delivery Point and is not incompliance with the Fuel Oil Specifications, and such non-compliance is notapproved by Project Company, Project Company may instruct MAEM to arrange at nocost to Project Company for the reasonably expeditious removal of any suchnon-compliant Fuel Oil from the Fuel storage tanks.

 

(f)                                    FuelOil Loading, Unloading, Storage and Handling Facilities

 

(i)                                     ProjectCompany shall, as soon as practical under the circumstances, provide MAEM withnotice of any applicable operating constraints affecting their Fuel storagetanks. Project Company shall provide MAEM with a daily inventory, storage tankfarm analysis report, and the volume of Fuel Oil delivered to the Fuel OilDelivery Point.  Further, ProjectCompany, after each delivery of Fuel Oil to Fuel storage tanks, shall provideMAEM with a terminal port log/discharge report and the current deliveryanalysis report.

 

(ii)                                  ProjectCompany, at its own expense, and in accordance with Good Utility Practices,will maintain, operate and restore to operable condition, or contract withthird parties for such maintenance, operation and restoration of, the Fuel Oilterminals, loading, unloading, storage****and handlingfacilities at the Generating Station. Project Company shall maintain in effectall permits necessary for such operation. Project Company shall pay loading,unloading, storage****and handlingexpenses for Fuel Oil delivered to the Generating Station. Project Company andMAEM shall work together to coordinate in advance all vessel****deliveries to the Fuel Oil Delivery Point with theobjective of minimizing the expense of such deliveries. All operations at theFuel Oil terminal, including, without limitation, Fuel Oil loading, unloading,storage and handling operations, shall be performed in accordance with theoperating procedures mutually agreed upon by Project Company and MAEM.

 

(g)                                 FuelOil Loading, Unloading, Storage and Handling Procedures. Project Companymay maintain and provide to MAEM, from time to time, Fuel operations, safetyand handling standards and procedures to be followed by Project Company, MAEMand their contractors, agents, employees and suppliers to the GeneratingStation.  MAEM shall provide suchstandards to their contractors, agents and suppliers.

 

(h)                                 Metering.Project Company shall be responsible for reading the Fuel Oil supply meters atthe Generating Station in accordance with Good Utility****Practices.  Project Company shall provide the data fromsuch daily Fuel Oil supply meter readings to MAEM on a daily basis.  Either Party shall have the right, at its ownexpense and upon reasonable notice to the other Party, to have a meter proverperform the test and, if necessary, recalibrate the Fuel Oil meters at theGenerating

 

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Station.  Not less than once per month, Project Companywill manually sound the Fuel Oil storage tanks and compare the results to priormeter readings.  Differences betweenactual tank levels and reported meter indications will be settled between MAEMand Project Company at the average Fuel Oil Index Price for the calendar monthimmediately preceding the manual determination of tank levels.

 

**ARTICLE 4.**

**DIRECT CONTRACTS**

 

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.

 

(b)                                 ExistingDirect Contracts.  As of theAgreement Date hereof, Direct Contracts include none.

 

(c)                                  Costsand Revenues.  The calculation of NetMarket Revenues shall exclude any costs or revenues associated with a DirectContract.  All such costs and revenuesshall be paid and received by Project Company. If a third party customer or other entity pays MAEM any amounts dueProject Company under a Direct Contract, MAEM shall hold such amounts in trustfor the applicable Project Company and remit such funds to Project Company onor before the twentieth (20th) day of each month, or if such day isnot a business day, 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 any 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 ofProject Company or MAEM under any Direct Contract or Third Party

 

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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 each other 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.**

**ASSET BOOK; ADDITIONAL SERVICES**

 

5.1                                 AssetBook.  MAEM will maintain an assetmanagement book for Project Company and Mirant Mid-Atlantic, LLC (the “MIRMAAsset Book”) to track and measure the financial performance of all hedges andother transactions entered into with respect to the Generating Station and thegenerating stations owed by Mirant Mid-Atlantic, LLC.  The MIRMA Asset Book shall be separate fromany MAEM trading book or any other asset book maintained by MAEM for otherAsset Companies.  Unless otherwisedesignated in writing by Project Company and Mirant Mid-Atlantic, LLC, alltransactions in the MIRMA Asset Book will be allocated solely to MirantMid-Atlantic, LLC.

 

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 GeneratingStation.  MAEM will charge ProjectCompany MAEM’s actual cost of acquiring the Emission Allowances and remit theactual proceeds of any Emission Allowances sales to Project Company, asadjusted for any gains or losses on emission hedges and trading activities.

 

5.3                                 RegulatoryReports.  MAEM will make allquarterly filings to the FERC required for Products generated by, or availablefrom, the Generating Station.

 

**ARTICLE 6.**

**TERM AND TERMINATION**

 

6.1                                 Term.  This Agreement shall become effective on theAgreement Date and shall continue in effect unless terminated pursuant to Section 6.2or 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

 

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action required by eitherParty, as of the effective date of the transfer of ownership or termination ofthe lease of the Generating Station.

 

(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 agreements and/or transactions to the new owner of theGenerating Station and/or (iii) enter into an agreement with the new ownerto allow MAEM to continue to fulfill its obligations under any existingagreements and/or transactions.  Any suchterminations and/or assignments shall be consummated in such a manner as tofully release MAEM and Project Company from any liability or obligationthereunder as of the termination date and/or the assignment effective date ofthe applicable agreements or transactions. Any costs or revenues associated with termination payments or settlementamounts as a result of liquidating and terminating any agreements ortransactions shall be charged to or paid to Project Company as described under Section 2.2(c).

 

(b)                                 Uponany termination of this Agreement pursuant to Section 9.2(a) hereof,the Parties shall transfer or settle any outstanding hedges or transactionsentered into by MAEM in connection with this Agreement which extend beyond suchtermination including, but not limited to, any Third Party Contracts enteredinto pursuant to Sections 2.2(b).  Anysuch transfer or settlement shall be consummated in such a manner as to assignor convey to Project Company the full benefits and obligations of such agreementsor transactions, and to fully release MAEM from any liability or obligationthereunder.  To the extent that MAEM’srights or obligations under any such agreement or transaction may not beassigned without the consent of a third party, and such consent has not orcannot be obtained with the commercially reasonable efforts of the Parties,this provision shall not constitute an agreement to assign the same if anattempted assignment would constitute a breach thereof or be unlawful, and theParties, to the maximum extent permitted by law and the applicable agreement ortransaction, 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 suchactions, and execute and deliver such agreements, documents, instruments andcertificates, as are necessary to consummate the transactions contemplated bythis Section 6.3(b).

 

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**ARTICLE 7.**

**REPRESENTATIONS AND 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.

 

(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 obligations under thisAgreement.

 

(e)                                  Thereis not pending or, to its knowledge, threatened against it, any legal proceedingsthat could materially adversely affect its ability to perform its obligationsunder 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.

 

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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 be brought.

 

(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.

 

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**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, on a monthly basis, its share of allocatedcosts including, but not limited to, personnel costs (the “Service Fee”).  For purposes of determining Project Company’sshare of allocated costs, MAEM shall apply an industry standard methodologywhich is applied uniformly across the Asset Companies.  Each of MAEM and Project Company acknowledgesthat the monthly allocations may be adjusted from time to time.

 

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 the recipienton or before the twentieth (20th) day of each month, or if such dayis 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. If PJM later adjusts amounts payable by orpaid to MAEM with respect to transactions in the Asset Book, such amounts willbe credited to, or paid by, Project Company in the month in which MAEM receivesnotice of the adjustment.  The precedingsentence shall survive termination of this Agreement.  If a third party fails to pay MAEM any amountdue for Products sold to such party, MAEM shall only be required to pay theAsset Company the amount received by MAEM from the third party.  In other words, MAEM shall not be responsiblefor non-payment by a third party customer, and any Gross Revenues shall not beadjusted upward to account for any such non-payment.

 

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

 

**“Gross Revenues” means all revenues attributed tothe Asset Book for a certain month including, without limitation, the actualrevenues received by MAEM from (a) sales of all Products generated by, oravailable from, the Generating Station, (b) sales of Purchased Power, (c) excessFuel sales, (d) sales or trades of excess Emissions Allowances from theGenerating Station and (e) gains 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.**

** **

“Expenses”means all costs attributed to the Asset Book for a certain month, including (a) costsreimbursed to MAEM for actual costs in performing the services including, butnot limited to, costs for (i) purchases of Fuel, (ii) purchases ofEmissions Allowances, (iii) losses associated with physical and/orfinancial products (including, but not limited to, swaps, contracts fordifferences and options) purchased for the Asset Book related to hedges andtrading activities, (iv) broker and/or transaction fees, (v) transmissioncongestion contracts for sales from the Generating Station, (vi) CollateralCosts, (vii)

 

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transmissionand/or transportation costs related to delivery of the Products and/or Fuel, (viii) PurchasedPower and (ix) other actual costs in connection with the servicesdescribed in Articles 2, 3 and 4 hereof, and (b) costs reimbursed to MAEMby Project Company at the Fuel Oil Index Price for Fuel Oil consumed by theGenerating Station in accordance with Section 3.4.

 

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 interestaccrued at the Interest Rate. Overpayments or underpayments identified by the Parties shall bereturned or credited, together with interest accrued at the Interest Rate, totheir 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, orreimburse 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 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

 

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diligently pursuing suchcorrection and such representation or warranty is corrected within thirty (30)days of such Party obtaining knowledge of the false and misleading nature ofthe 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 tothe payment of actual damages to the other Party, regardless of any cureperiod.

 

**ARTICLE 10.**

**FORCE MAJEURE**

 

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 occurrence; (b) the suspension ofperformance is of no greater scope and of no longer duration than is reasonablyrequired by the Force Majeure event; (c) the non-performing Party usescommercially reasonable efforts to overcome or mitigate the effects of suchoccurrence, provided, however, that this provision shall not require ProjectCompany to deliver, or MAEM to receive, any Products at points other than theDelivery Point; and (d) when the non-performing Party is able to resumeperformance of its obligations hereunder, that Party shall give the other Partywritten notice to that effect and shall promptly resume such performance.

 

**ARTICLE 11.**

**MISCELLANEOUSPROVISIONS**

 

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 honoredfully and timely by any succeeding party.

 

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(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 (withconfirmation) to such Party at its address set forth below or to such otheraddress as such Party may at any time, or from time to time, direct by noticegiven 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          |
|               |   |                                  |
| **IF TO  MET:**    |   | Mirant Energy  Trading, LLC           |
|               |   | 1155 Perimeter  Center West           |
|               |   | Atlanta, Georgia  30338               |
|               |   | Attention: Legal  Department          |

 

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

 

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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 Agreement Date.

 

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 THE FOLLOWING PAGE]

 

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INWITNESS WHEREOF, and intending to be legally bound hereby, the Parties heretohave caused this Agreement to be duly executed as an instrument under seal bytheir respective duly authorized officers as of the date and year first abovewritten.

 
| 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 Chalk  Point, 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**

**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                           |       |

 

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