Exhibit 10.19


 


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 by and between MIRANT
AMERICAS ENERGY MARKETING, LP, a Delaware limited partnership
(“MAEM”), and MIRANT
POTOMAC RIVER, LLC, a Delaware limited liability company (the
“Project Company”).


 


RECITALS


 


WHEREAS, Project Company owns and operates a certain
electric generating facility as set forth on Exhibit A hereto (the “Generating
Station”);


 


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


 


WHEREAS, in the absence of such third party contracts,
Project Company desires to contract herein to sell all or a portion of the
capacity, electricity, ancillary services and/or other related products
generated by, or available from, the Generating Station 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 Company desires that MAEM perform
certain services related to the management and operation of the Generating
Station, and MAEM desires to perform such services.


 


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


 


ARTICLE 1.


DEFINITIONS


 


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


 


“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 Companies” means any Affiliates of MAEM
either directly or indirectly owned by Mirant Corporation, other than Mirant
Potomac River, LLC, which own electric generating facilities 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.


 


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


 


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


 


“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


 


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


 


“Fuel” means coal.


 


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


 


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


 


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


 


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


 


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


 


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


 


“ISO FERC Tariff” means the Open Access
Transmission and Energy Markets Tariff for the Midwest Independent Transmission
System Operator, Inc., as amended from time to time, as on file with and
approved by the FERC.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Third Party Contracts” 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.


 


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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 Station. 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 Station, MAEM
shall attempt to maximize Net Market Revenues for Project Company.


 


(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 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 re-sell the Products purchased from Project Company by submitting
offers to sell the 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 Company 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”).


 


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(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 Power from the Generating Station;


 


(iii)                               Project
Company’s scheduled maintenance plans, 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;


 


(viii)        Good
Utility Practices;


 


(ix)           any
environmental limitations applicable to the Generating Station; and


 


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


 


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 Company, on
an exclusive basis, all Fuel required by the Generating Station in accordance
with Good Utility Practices and the terms and conditions of this Agreement. Project
Company 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


 


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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.


 


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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 Company 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 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.


 


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


 


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 Emission Allowances necessary for the
operation of the Generating Station, and dispose of excess Emission Allowances,
which are not needed for the operation of the Generating 


 


9

















 


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


 


5.3           Regulatory
Reports. MAEM will make all quarterly filings to the FERC required for
Products produced by the Generating Stations.


 


ARTICLE 6.


TERM AND TERMINATION


 


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


 


6.2           Early
Termination Event.


 


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


 


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


 


(c)           Either
Party may terminate this Agreement upon sixty (60) days written notice to the
other Party.


 


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 Company 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).


 


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(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 Company 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).


 


ARTICLE
7.


REPRESENTATIONS
AND WARRANTIES


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


ARTICLE 8.


BILLING AND PAYMENT


 


8.1           Cost
Allocation. For services rendered by MAEM to Project Company under this
Agreement and/or any Direct Contract, Project Company shall pay MAEM its
monthly share of allocated costs for fulfilling its responsibilities to Project
Company under this Agreement and/or any Direct Contract including, but not
limited to, personnel costs (“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. Each month, MAEM shall pay Project Company the positive Net
Market Revenues due for the prior month (or, if Net Market Revenues for such
month are negative, Project Company shall pay MAEM an amount equal to such
negative balance) by wire transfer to the payment address provided by the
recipient on or before the twentieth (20th) day of each month, or if
such day is not a business day, the immediately following business day. At the
time of each monthly payment, MAEM shall render to Project Company a statement
detailing the Net Market Revenues for the prior month, and shall provide
Project Company with supporting documentation for each such monthly statement,
identifying calculations underlying such Net Market Revenues. If PJM later
adjusts amounts payable by or paid to MAEM with respect to transactions in the
Asset Book, such amounts will be credited to, or paid by, Project Company in
the month in which MAEM receives notice of the adjustment. The preceding
sentence shall survive termination of this Agreement. 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


 


13

















 


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.


 


“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


 


14

















 


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


 


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


 


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


 


9.2           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


 


15

















 


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.


 


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

  	
   

  
	
  COMPANY:

  	
  Mirant Potomac River, LLC

  
	
   

  	
  1155 Perimeter Center West

  
	
   

  	
  Atlanta, Georgia 30338

  
	
   

  	
  Attention: President

  
	
   

  	
   

  
	
  IF TO MAEM:

  	
  Mirant Americas Energy Marketing, LP

  
	
   

  	
  1155 Perimeter Center West

  
	
   

  	
  Atlanta, Georgia 30338

  



 


16

















 


	
   

  	
  Attention: Legal Department

  
	
   

  	
   

  
	
  IF TO MET:

  	
  Mirant Energy Trading, LLC

  
	
   

  	
  1155 Perimeter Center West

  
	
   

  	
  Atlanta, Georgia 30338

  
	
   

  	
  Attention: Legal Department

  



 


 


The date of delivery of any such notice, request 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.


 


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


 


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


 


17

















 


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


 


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

  
	
   

  	
   

  
	
  By:

  	
  /s/ J. William Holden
  III

  	
   

  
	
  Name:

  	
  J. William Holden III

  
	
  Title:

  	
  Senior Vice President
  & Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
  As of the MAEM/MET
  Effective Date:

  
	
   

  	
   

  
	
  Mirant Energy Trading,
  LLC

  
	
   

  	
   

  
	
  By:

  	
  /s/ J. William Holden
  III

  	
   

  
	
  Name:

  	
  J. William Holden III

  
	
  Title:

  	
  Senior Vice President, Chief Financial Officer &
  Treasurer

  



 


19

















 


EXHIBIT A


 


Potomac
River Generating Station


 


	
  Unit

  	
   

  	
  Location

  	
   

  	
  Nameplate

  Capacity

  	
   

  	
  Commercial

  Operation Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C1

  	
   

  	
  Alexandria, VA

  	
   

  	
  88

  	
   

  	
  1949

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C2

  	
   

  	
  Alexandria, VA

  	
   

  	
  88

  	
   

  	
  1950

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C3

  	
   

  	
  Alexandria, VA

  	
   

  	
  102

  	
   

  	
  1954

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C4

  	
   

  	
  Alexandria, VA

  	
   

  	
  102

  	
   

  	
  1956

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C5

  	
   

  	
  Alexandria, VA

  	
   

  	
  102

  	
   

  	
  1957

  	
   

  



 


20