Exhibit
10.18


 


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 CHALK POINT, LLC, a Delaware limited liability
company (the “Project Company”).


 


RECITALS


 


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


 


WHEREAS, Project Company
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 Chalk Point, LLC, 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.


 


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


 


“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 the 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.


 


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


 


“Fuel” means coal,
Fuel Oil and/or natural gas, as applicable.


 


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


 


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


 


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


 


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


 


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


 


“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.


 


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“Gross Revenues”
has the meaning provided 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 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. dated March 1, 2005, as amended
from time to time, as on file with and approved by the FERC.


 


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


 


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


 


“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 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.


 


“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.


 


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“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.


 


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.


 


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(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”).


 


(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;


 


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(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 Contract 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 with the exception
of Fuel Oil delivered to the Generating Station as described in Section 3.4
below. 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 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. With the exception of Fuel Oil as described in Section 3.4(b)
of this Agreement, title to and risk of loss


 


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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.


 


3.4                                 Fuel
Oil Supply to the Generating Station.


 


(a)                                  Daily
Fuel Oil Requirements. MAEM shall supply and deliver Fuel Oil to the Fuel
Oil Delivery Point as required by the Generating Station. Project Company shall
purchase Fuel Oil from MAEM at the Fuel Oil Index Price on the day the Fuel Oil
is consumed by the Generating Station. For Fuel Oil consumed on Saturday, the
applicable purchase price shall be the Fuel Oil Index Price for the preceding
Friday. For Fuel Oil consumed on Sunday, the applicable purchase price shall be
the Fuel Oil Index Price for the following Monday. For Fuel Oil consumed on any
holiday, the applicable price shall be the Fuel Oil Index Price on the business
day preceding such holiday.


 


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


 


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


 


(d)                                 Fuel
Oil Specifications and Testing.


 


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


 


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


 


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(e)                                  Failure
of Fuel Oil to Materially Conform to Fuel Specifications.


 


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


 


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


 


(f)                                    Fuel
Oil Loading, Unloading, Storage and Handling Facilities


 


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


 


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


 


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


 


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


 


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


 


ARTICLE
4.


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 hereof, Direct Contracts include
none.


 


(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 any 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


 


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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 each other 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 Mid-Atlantic, LLC (the “MIRMA Asset Book”) to track and measure the
financial performance of all hedges and other transactions entered into with
respect to the Generating Station and the generating stations owed by Mirant
Mid-Atlantic, LLC. The MIRMA Asset Book shall be separate from any MAEM trading
book or any other asset book maintained by MAEM for other Asset Companies. Unless
otherwise designated in writing by Project Company and Mirant Mid-Atlantic,
LLC, all transactions in the MIRMA Asset Book will be allocated solely to
Mirant Mid-Atlantic, LLC.


 


5.2                                 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 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 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).


 


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


 


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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 agreements and/or transactions to the new owner of the Generating
Station and/or (iii) enter into an agreement with the new owner to allow MAEM
to continue to fulfill its obligations under any existing agreements and/or
transactions. Any such terminations and/or assignments shall be consummated in
such a manner as to fully release MAEM and Project Company from any liability
or obligation thereunder as of the termination date and/or the assignment
effective date of the applicable agreements or transactions. Any costs or
revenues associated with termination payments or settlement amounts as a result
of liquidating and terminating any agreements or transactions shall be charged
to or paid to Project Company as described under Section 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 hedges or transactions entered
into by MAEM in connection with this Agreement which extend beyond such
termination including, but not limited to, any Third Party Contracts entered
into pursuant to Sections 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 agreements or transactions, and to fully
release MAEM from any liability or obligation thereunder. To the extent that
MAEM’s rights or obligations under any such agreement or transaction may not be
assigned without the consent of a third party, and such consent has not or
cannot be obtained with the commercially reasonable efforts of the Parties,
this provision shall not constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof or be unlawful, and the
Parties, to the maximum extent permitted by law and the applicable agreement or
transaction, shall enter into such commercially reasonable arrangements as are
necessary to fulfill the intent of this Section 6.3(b). The Parties further
agree to take such actions, and execute and deliver such agreements, documents,
instruments and certificates, as are necessary to consummate the transactions
contemplated by this Section 6.3(b).


 


12

















 


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.


 


(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.


 


13

















 


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.


 


(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.


 


14

















 


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, 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. 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 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 (a) costs
reimbursed to MAEM for actual costs in performing the services including, but
not limited to, costs for (i) purchases of Fuel, (ii) purchases of Emissions
Allowances, (iii) 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, (iv)
broker and/or transaction fees, (v) transmission congestion contracts for sales
from the Generating Station, (vi) Collateral Costs, (vii)


 


15

















 


transmission and/or
transportation costs related to delivery of the Products and/or Fuel, (viii)
Purchased Power and (ix) other actual costs in connection with the services
described in Articles 2, 3 and 4 hereof, and (b) costs reimbursed to MAEM by
Project Company at the Fuel Oil Index Price for Fuel Oil consumed by the
Generating Station in accordance with Section 3.4.


 


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. 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 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


 


16

















 


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.


 


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.


 


17

















 


(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 11.2.


 


	
  IF TO PROJECT

  	
   

  
	
  COMPANY:

  	
  Mirant Chalk Point, LLC

  
	
   

  	
  1155 Perimeter Center
  West

  
	
   

  	
  Atlanta, Georgia 30338

  
	
   

  	
  Attention: President

  
	
   

  	
   

  
	
  IF TO MAEM:

  	
  Mirant Americas Energy
  Marketing, LP

  
	
   

  	
  1155 Perimeter Center
  West

  
	
   

  	
  Atlanta, Georgia 30338

  
	
   

  	
  Attention: Legal
  Department

  
	
   

  	
   

  
	
  IF TO MET:

  	
  Mirant Energy Trading,
  LLC

  
	
   

  	
  1155 Perimeter Center
  West

  
	
   

  	
  Atlanta, Georgia 30338

  
	
   

  	
  Attention: Legal
  Department

  



 


The date of delivery 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


 


18

















 


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 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
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]


 


19

















 


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 Chalk
  Point, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ J. William
  Holden III

  	
   

  
	
  Name:

  	
  J. William
  Holden III

  
	
  Title:

  	
  Senior
  Vice President & Treasurer

  
	
   

  	
   

  
	
  As of the
  MAEM/MET Effective Date:

  
	
   

  	
   

  
	
  Mirant Energy
  Trading, LLC

  
	
   

  	
   

  
	
  By:

  	
  /s/ J. William
  Holden III

  	
   

  
	
  Name:

  	
  J. William
  Holden III

  
	
  Title:

  	
  Senior Vice
  President, Chief Financial Officer & Treasurer

  



 


20

















 


EXHIBIT A


Chalk Point Generating Station


 


	
  Unit

  	
   

  	
  Location

  	
   

  	
  Nameplate

  Capacity

  	
   

  	
  Commercial Operation

  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EI

  	
   

  	
  Prince
  Georges County, MD

  	
   

  	
  341

  	
   

  	
  1964

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E2

  	
   

  	
  Prince
  Georges County, MD

  	
   

  	
  342

  	
   

  	
  1965

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E3

  	
   

  	
  Prince
  Georges County, MD

  	
   

  	
  612

  	
   

  	
  1975

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E4

  	
   

  	
  Prince
  Georges County, MD

  	
   

  	
  612

  	
   

  	
  1981

  	
   

  



 


21