Exhibit 10.12


 


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 among
MIRANT AMERICAS ENERGY MARKETING, LP, a
Delaware limited partnership (“MAEM”), MIRANT DELTA, LLC (“Mirant
Delta”), a Delaware limited liability company and MIRANT
POTRERO, LLC (“Mirant Potrero”), a Delaware limited liability
company (Mirant Delta and Mirant Potrero are referred to individually as “Project
Company” and collectively as the “Project Companies”).


 


RECITALS


 


WHEREAS, Project
Companies own and operate certain electric generating stations as set forth on Exhibit A
hereto (collectively, the “Generating Stations”);


 


WHEREAS, Project
Companies may enter into contracts with third parties to sell capacity,
electricity, ancillary services and/or other related products generated by, or
available from, the Generation Stations;


 


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


 


WHEREAS, Project
Companies desire that MAEM perform certain services related to the management
and operation of their Generating Stations, and MAEM desires to perform such services.


 


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


 


ARTICLE 1.


DEFINITIONS


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Direct Contracts”
has the meaning set forth in Section 4.1.


 


“Emissions Allowances”
means authorizations under state or federal (as applicable) air quality
regulations to emit either one ton of nitrogen oxides (“NOx”) or sulfur dioxide
(“SO2”) at any time during any applicable calendar year.


 


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


 


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


 


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


 


“Force Majeure”
means an event or circumstance which
prevents one Party from performing its obligations, which event or circumstance
was not anticipated as of the date the transaction was agreed to, which is not
within the reasonable control of, or the result of the negligence of, the
claiming Party, and which, by the exercise of due diligence, the claiming Party
is unable to overcome or avoid or cause to be avoided.  Force Majeure shall not be based on (i) the
loss of MAEM’s markets; (ii) MAEM’s inability economically to use or
resell the Product purchased hereunder; (iii) the loss or failure of
Project Company’s supply; or (iv) Project Company’s ability to sell the
Product at a price greater than the Contract Price.  Neither Party may raise a claim of Force
Majeure based in whole or in part on curtailment by a Transmission


 


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Provider
unless (i) such Party has contracted for firm transmission with a
Transmission Provider for the Product to be delivered to or received at the
Delivery Point and (ii) such curtailment is due to “force majeure” or “uncontrollable
force” or a similar term as defined under the Transmission Provider’s tariff;
provided, however, that existence of the foregoing factors shall not be
sufficient to conclusively or presumptively prove the existence of a Force
Majeure absent a showing of other facts and circumstances which in the
aggregate with such factors establish that a Force Majeure as defined in the
first sentence hereof has occurred.


 


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


 


“Fuel Delivery Point”
means the Fuel Oil Delivery Point and/or the Natural Gas Delivery Point, as
applicable.


 


“Fuel Oil” means
distillate fuel.


 


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


 


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


 


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


 


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


 


“Implementation Order”
means the Implementing Order Regarding Transfer of Letters of Credit, Guarantees
and Certain Collateral Securing Trading Obligations Transferred Pursuant to the
Plan, dated December 9, 2005, issued by the United States Bankruptcy Court
for the Northern District of Texas, Forth Worth Division in the chapter 11
cases of Mirant Corporation and its affiliated debtors, styled as In re Mirant Corporation, et al.,
Chapter 11 Case No. 03-46590 (DML) Jointly Administered.


 


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


 


“ISO” means the
California Independent System Operator Corporation, or its successor.


 


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“ISO FERC Tariff”
means the California Independent System Operator Corporation Operating
Agreement and Tariff, 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).


 


“Natural Gas Delivery
Point” means the meter at the Generating Station where MAEM shall deliver
natural gas to Project Company.


 


“Net Market 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 the Project Companies.  In the
context where MAEM is referenced as a “Party,” a reference to the “other Party”
shall mean the Project Companies.  In the
context where the Project Companies are referenced as a “Party,” a reference to
the “other Party” shall mean MAEM. 
References to “either Party” or the “Parties” shall have comparable
meanings.


 


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


 


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


 


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


 


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


 


“RMR Agreements”
means the Must-Run Service Agreement dated June 1, 1999 between Mirant
Delta and the ISO for the Pittsburg Power Plant, the Must-Run Service Agreement
dated June 1, 1999 between Mirant Delta and the ISO for the Contra Costa
Power Plant, and the Must-Run Service Agreement dated June 1, 1999 between
Mirant Potrero and the ISO for the Potrero Power Plant.


 


“Scheduling
Coordinator” means the entity designated to perform the responsibilities defined
for a Scheduling Coordinator in the ISO FERC Tariff including, but not limited
to, scheduling energy and ancillary services from the Generating Stations with
the ISO.


 


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


 


“Third Party Contract”
has the meaning set forth in Section 2.2(b).


 


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


 


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


 


“WECC” means the
Western Electricity Coordinating Council, or its successor.


 


“Wrap Agreement”
mean the Power Purchase and Sale Agreement (Second Wraparound Agreement), dated
January 13, 2005, between the Project Companies and Pacific Gas and
Electric Company.


 


ARTICLE 2.


PRODUCT
SALES


 


 2.1                              Intercompany Product
Sales.


 


(a)                                  Transactions.  With the exception of any Direct Contracts as
described in Section 4.1, Project Company shall sell and deliver, and MAEM
shall purchase and receive, or cause to be received, at the Delivery Point, all
Products generated by, and/or available from, the Generating Stations.  MAEM shall resell such Products as described
in Section 2.2.  MAEM shall pay Net
Market Revenues to Project Company, on a monthly basis, for all Products
purchased by MAEM hereunder.  In selling
Products generated by, or available from, the Generating Stations, MAEM shall
attempt to maximize Net Market Revenues for Project Companies.


 


(b)                                 Transmission
and Scheduling.  Project Company
shall be responsible for delivery of Products to the Delivery Point.  MAEM shall arrange and be responsible for
transmission service at and from the Delivery Point.  MAEM shall serve as Scheduling agent on
behalf of Project Company to Schedule and deliver Products with respect to
all transaction involving the Generating Station.


 


(c)                                  Title,
Risk of Loss and Indemnity. The following provision shall apply to all
transactions involving the Generating Station except for Direct Contracts as
described in Section 4.1.  As
between the Parties, Project Company shall be deemed to be in exclusive
possession and control (and be responsible for any damages or injury caused
thereby) of the Products prior to delivery thereof at the Delivery Point, and
MAEM shall be deemed to be in exclusive possession and control (and be
responsible for any damages or injury caused thereby) of the Products at and
after delivery thereof at the Delivery Point. 
Project Company warrants that it will deliver to MAEM all Products free
and clear of all liens, claims and encumbrances arising prior to delivery thereof
at the Delivery Point.  Title to and risk
of loss related to delivered Products shall transfer


 


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from Project Company to
MAEM at the Delivery Point.  Each Party
shall indemnify, defend and hold harmless each other Party from any Claims
arising from any act or incident occurring during the period when possession,
control and title to Products is vested or deemed to be vested in the
indemnifying Party, except to the extent such Claims arise from such other
Party’s breach of this Agreement or its gross negligence or willful misconduct.


 


2.2                                 Resale
of Products by MAEM.


 


(a)                                  Offers.
MAEM may resell the Products purchased from Project Companies by submitting
offers to sell such Products in the day-ahead and/or real-time markets
administered by the ISO (“Offers”).


 


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


 


(c)                                  Costs
and Revenues. All costs and revenues associated with Offers and Third Party
Contracts will be charged, or paid, to Project Company as such costs and
revenues are actually incurred or received by MAEM, as further described in the
calculation of Net Market Revenues pursuant to 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)                                     the
operating parameters and limitations of the Generating Station, as provided by
Project Company to MAEM;


 


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


 


(iii)                               Project
Company’s scheduled maintenance plans with respect to the Generating Station,
as agreed to between the Parties;


 


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


 


(v)                                 the
ISO FERC Tariff and other ISO rules and procedures in effect from time to
time;


 


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


 


(vii)                           Fuel
availability;


 


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(viii)                        Good
Utility Practices;


 


(ix)                                environmental
limitations applicable to the Generating Stations;


 


(x)                                   operating
protocols agreed to from time to time by the Parties;


 


(xi)                                WECC
rules and procedures in effect from time to time;


 


(xii)                             the
requirements of the Generating Station pursuant to an RMR Agreement; and


 


(xiii)                          any FERC
imposed must offer obligation.


 


ARTICLE 3.


FUEL SERVICES


 


3.1                                 All
Requirements Fuel Supply.  With the
exception of any Direct Contracts as described in Section 4.1, MAEM shall
procure and supply to Project Companies, on an exclusive basis, all Fuel
required by the Generating Stations in accordance with Good Utility Practices
and the terms and conditions of this Agreement. 
The Project Companies shall reimburse MAEM for such Fuel at MAEM’s
actual cost.  MAEM has entered into or
will enter into Fuel hedges and trading activities (including, but not limited
to, physical and financial hedges, swaps and options) in connection with MAEM’s
Fuel supply obligations pursuant to this Section 3.1.  The costs and revenues associated with such
Fuel hedging and trading activities will be attributed to the Asset Book and
charged to, or paid to, Project Company as such costs and revenues are actually
incurred or received by MAEM, as further described in the calculation of Net
Market Revenues pursuant to Section 8.2.


 


3.2                                 Transportation
and Scheduling.  MAEM shall schedule or
arrange for scheduling services with its Transportation Providers to deliver
Fuel to the Fuel Delivery Point.  MAEM
shall manage Fuel imbalances on behalf of Project Companies and all costs and
revenues associated with Fuel imbalances will be attributed to the Asset Book
and charged to, or paid to, Project Company, as such 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 to
be in exclusive possession and control (and be responsible for any damages or
injury caused thereby) of the Fuel prior to delivery thereof at the Fuel
Delivery Point, and Project Company shall be deemed to be in exclusive
possession and control (and be responsible for any damages or injury caused
thereby) of the Fuel at and after delivery thereof at the Fuel Delivery
Point.  MAEM warrants that it will
deliver to Project Company all Fuel free and clear of all liens, claims and
encumbrances arising prior to delivery thereof at the Fuel Delivery Point.  Title to and risk of loss related to
delivered Fuel shall transfer from MAEM to Project Company at the Fuel Delivery
Point. Each Party shall indemnify, defend and hold harmless each other Party
from any Claims arising from any act or incident occurring during the period
when possession, control and title to Products is vested or deemed to be vested
in the indemnifying Party, except to the extent 


 


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such Claims arise from
such other Party’s breach of this Agreement or its gross negligence or willful
misconduct.


 


ARTICLE 4.


DIRECT
CONTRACTS


 


4.1                                 Direct
Contracts.


 


(a)                                  Agency
Services.  Notwithstanding anything
to the contrary in Sections 2.1 or 3.1 of this Agreement, Project Company may
enter into contracts to (i) sell the Products available from the
Generating Station directly to a third party rather than selling such Products
to MAEM and/or (ii) purchase Fuel required by the Generating Station
directly from a third party rather than purchasing such Fuel from MAEM
(collectively “Direct Contracts”). 
Project Company hereby appoints MAEM as its agent in administering any
Direct Contract including, but not limited to, Scheduling, billing, settlements
with the ISO (if applicable) and other services required by Project Company
pursuant to the terms of such Direct Contract. 
Project Company shall continue to pay MAEM the Service Fee for the
agency services provided by MAEM during the term of a Direct Contract.  As agent, MAEM shall neither directly
purchase or sell, or contract for the purchase or sale, nor take title to or
possession and control of any Products or Fuel. 
Rather, as between MAEM and Project Company, when MAEM is acting as
agent under any Direct Contract, Project Company shall be deemed to have title
and exclusive possession and control of all Products sold to, and all Fuel
purchased from, third parties, and Project Company shall bear the risk of loss
associated with such Products and Fuel.


 


(b)                                 Existing
Direct Contracts.  As of the
Agreement Date, Direct Contracts include the RMR Agreements and the Wrap
Agreement.  Project Company shall have
the right to designate whether the Generating Station shall be run under “Condition
1” or “Condition 2” in the RMR Agreements.


 


(c)                                  Costs
and Revenues.  The calculation of Net
Market Revenues shall exclude any costs or revenues associated with a Direct
Contract.  All such costs and revenues
shall be paid and received by Project Company. 
If a third party customer or other entity pays MAEM any amounts due
Project Company under a Direct Contract, MAEM shall hold such amounts in trust
for the applicable Project Company and remit such funds to Project Company on
or before the twentieth (20th) day of each month, or if such day is
not a business day, the immediately following business day.


 


4.2                                 Cooperation.
The Parties shall cooperate to fulfill the obligations of Project Company
and/or MAEM as set forth in the Direct Contract and/or Third Party Contract, as
applicable.  Notwithstanding the
foregoing, all payment obligations under any Direct Contract shall be the sole
responsibility of Project Company. In an effort to maximize Net Market
Revenues, Project Company agrees that MAEM shall have the right to purchase
Products from third parties or the market, in lieu of the Generating Station
producing such Products, for the purpose of meeting the supply obligations of
Project Company or MAEM under any Direct Contract or Third Party Contract (“Purchased
Power”); provided, however, any such purchase should only occur when the


 


8

















 


Project Company’s cost to
generate the Products exceeds the prevailing market price for such
Products.  Project Company and MAEM shall
notify the others promptly if it becomes aware of any dispute under, or any
proposed amendment to, a Direct Contract or Third Party Contract.  Project Company and MAEM acknowledge and
agree that certain provisions of this Agreement including, without limitation,
MAEM’s scheduling and fuel supply obligations, may not be consistent 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 Direct Contract or Third Party
Contract shall control.


 


ARTICLE 5.


ASSET
BOOK; ADDITIONAL SERVICES


 


5.1                                 Asset
Book. MAEM will maintain an asset management book for the New York region
(the “Asset Book”) to track and measure the financial performance of all
transactions with respect to the Generating Stations including, but not limited
to, (i) the sale of Products generated by, or available from, the
Generating Stations pursuant to any Offers, Third Party Contracts and/or Direct
Contracts, (ii) Purchased Power, (iii) the purchase of Fuel and any
related Fuel hedges and trading activities, (iv) the purchase of Emissions
Allowances and any related emissions hedges and trading activities and (v) the
purchase of transmission and/or transportation capacity.  The Asset Book shall be separate from any
MAEM trading book or any other asset book maintained by MAEM for other Asset
Companies.  Transactions in the Asset
Book shall be allocated to individual books that are established for each
Project Company.  Unless otherwise
designated in writing by Project Companies, transactions in the Asset Book will
be allocated proportionately to each Project Company based on the actual
dispatch of the Generating Stations, as provided by Project Companies to MAEM
(with the exception of sales of capacity, which shall be allocated
proportionately based on the actual capacity of the generating units).


 


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


 


5.3                                 Regulatory
Reports.  MAEM will make all
quarterly filings to the FERC required for Products generated by, or available
from, the Generating Station.


 


ARTICLE 6.


TERM AND
TERMINATION


 


6.1                                 Term.
This Agreement shall become effective on the Agreement Date and shall continue
in effect unless terminated pursuant to Section 6.2 or Section 9.2(a).


 


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6.2                                 Early
Termination Event.


 


(a)                                  In
the event a Generating Station is no longer partially owned by an affiliate of
MAEM, this Agreement shall automatically terminate with respect to such
Generating Station, without any further action required by any Party, as of the
effective date of the transfer of ownership of the Generating Station.


 


(b)                                 Any
Party may terminate this Agreement as it relates to such Party upon sixty (60)
days written notice to the other Parties.


 


6.3                                 Obligations
upon Termination.


 


(a)                                  Upon
any termination of this Agreement pursuant to Section 6.2 hereof, MAEM
shall endeavor to (i) terminate any transactions entered into by MAEM in
connection with this Agreement which extend beyond such termination including,
but not limited to, Third Party Contracts entered into pursuant to Section 2.2(b),
(ii) assign such transactions to the new owner of the Generating
Station(s) and/or (iii) enter into an agreement with the new owner to
allow MAEM to continue to fulfill its obligations under any existing
transactions.  Any such terminations
and/or assignments shall be consummated in such a manner as to fully release
MAEM and Project Companies from any liability or obligation thereunder as of
the termination date and/or the assignment effective date of the applicable
transactions.  Any costs or revenues
associated with termination payments or settlement amounts as a result of
liquidating and terminating any transactions shall be charged to or paid to
Project Company as described under Section 2.2(c).


 


(b)                                 Upon
any termination of this Agreement pursuant to Section 9.2(a) hereof,
the Parties shall transfer or settle any outstanding transactions entered into
by MAEM in connection with this Agreement which extend beyond such termination
including, but not limited to, Third Party Contracts entered into pursuant to Section 2.2(b).  Any such transfer or settlement shall be
consummated in such a manner as to assign or convey to Project Companies the
full benefits and obligations of such transactions, and to fully release MAEM
from any liability or obligation thereunder. 
To the extent that MAEM’s rights or obligations under any such
transaction may not be assigned without the consent of a third party, and such
consent has not or cannot be obtained with the commercially reasonable efforts
of the Parties, this provision shall not constitute an agreement to assign the
same if an attempted assignment would constitute a breach thereof or be
unlawful, and the Parties, to the maximum extent permitted by law and the
applicable transaction, shall enter into such commercially reasonable
arrangements as are necessary to fulfill the intent of this Section 6.3(b).  The Parties further agree to take such
actions, and execute and deliver such agreements, documents, instruments and
certificates, as are necessary to consummate the transactions contemplated by
this Section 6.3(b).


 


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ARTICLE 7.


REPRESENTATIONS
AND WARRANTIES


 


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


 


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


 


(b)                                 Project
Company has full power and authority to enter this Agreement and perform its
obligations hereunder.  The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
limited liability company action and do not and will not contravene its
organizational documents or conflict with, result in a breach of, or entitle
any party (with due notice or lapse of time or both) to terminate, accelerate
or declare a default under, any agreement or instrument to which Project
Company is a party or by which Project Company is bound.  The execution, delivery and performance by
Project Company of this Agreement will not result in any violation by Project
Company of any law, rule or regulation applicable to it.  Project Company is not a party to, nor
subject to or bound by, any judgment, injunction or decree of any court or
other governmental entity which may restrict or interfere with the performance
of this Agreement by it.  This Agreement
is Project Company’s legal, valid and binding obligation, enforceable against
Project Company in accordance with its terms, except as (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors’ rights generally, and (ii) the remedy of specific performance
and injunctive relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.


 


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


 


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


 


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


 


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Agreement.


 


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


 


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


 


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


 


(b)                                 MAEM
has full power and authority to enter this Agreement and perform its
obligations hereunder.  The execution,
delivery and performance of this Agreement and the consummation of the
Transactions contemplated hereby have been duly authorized by all necessary
limited partnership action by MAEM and do not and will not contravene its
organizational documents or conflict with, result in a breach of, or entitle
any party (with due notice or lapse of time or both) to terminate, accelerate
or declare a default under, any agreement or instrument to which MAEM is a
party or by which MAEM is bound.  The
execution, delivery and performance by MAEM of this Agreement will not result
in any violation by MAEM of any law, rule or regulation applicable to it.
MAEM is not a party to, nor subject to or bound by, any judgment, injunction or
decree of any court or other governmental entity which may restrict or
interfere with the performance of this Agreement by it.  This Agreement is MAEM’s legal, valid and
binding obligation, enforceable against MAEM in accordance with its terms,
except as (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors’ rights generally and (ii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought.


 


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


 


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


 


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


 


12

















 


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


 


ARTICLE 8.


BILLING AND PAYMENT


 


8.1                                 Cost
Allocation. For services rendered by MAEM to Project Companies under this
Agreement and/or any Direct Contract, each Project Company shall pay MAEM, on a
monthly basis, its share of allocated costs including, but not limited to,
personnel costs (the “Service Fee”).  For
purposes of determining Project Company’s share of allocated costs, MAEM shall
apply an industry standard methodology which is applied uniformly across the
Asset Companies.  Each of MAEM and
Project Company acknowledges that the monthly allocations may be adjusted from
time to time.


 


8.2                                 Billing
and Payment.  MAEM shall pay Project
Company the positive Net Market Revenues due for the prior month (or, if Net
Market Revenues for such month are negative, Project Company shall pay MAEM an
amount equal to such negative balance) by wire transfer to the payment address
provided by the recipient on or before the twentieth (20th) day of
each month, or if such day is not a business day, the immediately following
business day.  At the time of each
monthly payment, MAEM shall render to Project Company a statement detailing the
Net Market Revenues for the prior month, and shall provide Project Company with
supporting documentation for each such monthly statement, identifying
calculations underlying such Net Market Revenues.  If the ISO later adjusts amounts payable by
or paid to MAEM with respect to transactions in the Asset Book, such amounts
will be credited to, or paid by, Project Company in the month in which MAEM
receives notice of the adjustment.  The
preceding sentence shall survive termination of this Agreement.  If a third party fails to pay MAEM any amount
due for Products sold to such party, MAEM shall only be required to pay the
Asset Company the amount received by MAEM from the third party.  In other words, MAEM shall not be responsible
for non-payment by a third party customer, and any Gross Revenues shall not be
adjusted upward to account for any such non-payment.


 


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


 


“Gross
Revenues” means all revenues attributed to the Asset Book for a certain
month including, without limitation, the actual revenues received by MAEM from (a) sales
of all Products generated by, or available from, the Generating Station, (b) sales
of Purchased Power, (c) excess Fuel sales, (d) sales or trades of
excess Emissions Allowances from the Generating Station and (e) gains
associated with physical and/or financial products (including, but not limited
to, swaps, contracts for differences and options) purchased for the Asset Book
related to hedges and trading activities.


 


13

















 


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


 


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


 


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


 


8.5                                 FERC
Refunds.  In the event MAEM is
ordered by FERC to refund any payments received by MAEM from third parties
related 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 third
party.  The Project Company’s obligation
to pay FERC or a third party, or reimburse MAEM, any refund amount shall be
without regard to the cause or causes related thereto including, without
limitation, the negligence of MAEM.  Any
such payment to FERC or a third party shall be made within the time period
ordered by FERC.


 


ARTICLE 9.


DEFAULTS
AND REMEDIES


 


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


 


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


 


(b)                                 other
than as provided in Section 9.1(a) above, default shall occur in the
performance of any covenant or condition to be performed by such Party under
this Agreement


 


14

















 


and such default shall
continue unremedied for a period of thirty (30) days after written notice from
the other Party specifying the nature of such default; or


 


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


 


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


 


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


 


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


 


ARTICLE 10.


FORCE
MAJEURE


 


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


 


15

















 


ARTICLE 11.


MISCELLANEOUS PROVISIONS


 


11.1                           Assignment;
Successors and Assigns.


 


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


 


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


 


11.2                           Notices.  All notices, requests and other communications
hereunder (herein collectively a “notice” or “notices”) shall be deemed to have
been duly delivered, given or made to or upon any Party hereto if in writing
and delivered by hand against receipt, or by certified or registered mail,
postage pre-paid, return receipt requested, or to a courier who guarantees next
business day delivery or sent by telecopy (with confirmation) to such Party at
its address set forth below or to such other address as such Party may at any
time, or from time to time, direct by notice given in accordance with this Section 10.2.


 


	
  IF TO PROJECT

  	
   

  	
   

  
	
  COMPANIES:

  	
   

  	
  Mirant Delta, LLC

  
	
   

  	
   

  	
  3201 Wilbur Avenue

  
	
   

  	
   

  	
  Antioch, California
  94509

  
	
   

  	
   

  	
  Attention: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mirant Potrero, LLC

  
	
   

  	
   

  	
  1201-A Illinois Street

  
	
   

  	
   

  	
  San Franciso, California
  94107

  
	
   

  	
   

  	
  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

  



 


16

















 


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


 


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


 


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


 


11.5                           Entire
Agreement.  This Agreement sets forth
the entire agreement of the Parties with respect to the subject matter herein
and takes precedence over all prior understandings.  This Agreement supersedes and terminates all
previously executed agreements between the Project Companies and MAEM.


 


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


 


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


 


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


 


11.9                           Risk
Management Policy.  The Parties acknowledge
and agree that this Agreement is subject to the Risk Management Policy approved
by the Parties’ Board of


 


17

















 


Directors.  In the event of a conflict between the
provisions of this Agreement and the terms of the Risk Management Policy, the
terms of the Risk Management Policy shall govern and control.


 


 


[SIGNATURES APPEAR
ON THE FOLLOWING PAGE]


 


18

















 


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


 


	
  Mirant Americas Energy
  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 Delta, LLC

  
	
   

  	
   

  
	
  By:

  	
  /s/ J. William Holden
  III

  	
   

  
	
  Name:

  	
  J. William Holden III

  
	
  Title:

  	
  Senior Vice President &
  Treasurer

  
	
   

  	
   

  
	
  Mirant Potrero, 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

  



 


19

















 


EXHIBIT A


GENERATING STATIONS


 


MIRANT
DELTA, LLC


 


	
  Unit

  	
   

  	
  Location

  	
   

  	
  Nameplate

  Capacity

  	
   

  	
  Commercial

  Operation Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pittsburg 1- 4

  	
   

  	
  Pittsburg, CA

  	
   

  	
  595 MW

  	
   

  	
  1954

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pittsburg 5

  	
   

  	
  Pittsburg, CA

  	
   

  	
  312 MW

  	
   

  	
  1960

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pittsburg 6

  	
   

  	
  Pittsburg, CA

  	
   

  	
  317 MW

  	
   

  	
  1961

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pittsburg 7

  	
   

  	
  Pittsburg, CA

  	
   

  	
  682 MW

  	
   

  	
  1972

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Contra Costa 6

  	
   

  	
  Antioch, CA

  	
   

  	
  337 MW

  	
   

  	
  1964

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Contra Costa 7

  	
   

  	
  Antioch, CA

  	
   

  	
  337 MW

  	
   

  	
  1964

  	
   

  



 


MIRANT POTRERO, LLC


 


	
  Unit

  	
   

  	
  Location

  	
   

  	
  Nameplate

  Capacity

  	
   

  	
  Commercial

  Operation Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Potrero 3

  	
   

  	
  San Francisco, CA

  	
   

  	
  206 MW

  	
   

  	
  1965

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Potrero 4-6

  	
   

  	
  San Francisco, CA

  	
   

  	
  156 MW

  	
   

  	
  1976

  	
   

  



 


20