Exhibit 10.19(b)


 


POWER SALE, FUEL SUPPLY

AND SERVICES AGREEMENT


 


THIS  POWER SALE,
FUEL SUPPLY AND SERVICES AGREEMENT (this “Agreement”), dated as of January 1,
2004 (the “Effective Date”), is by and between MIRANT
AMERICAS ENERGY MARKETING, LP, a Delaware limited partnership (“MAEM”), and MIRANT MID-ATLANTIC, LLC,
a Delaware limited liability company (the “Project Company”).


 


RECITALS


 


WHEREAS, Project Company owns and/or leases and operates certain
electric generating facilities as set forth on Exhibit A hereto (the “Generating
Stations”); 


 


WHEREAS, Project Company desires to contract herein to sell capacity,
electricity and/or ancillary services to MAEM, and MAEM desires to purchase
such capacity, electricity and/or ancillary services 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 Stations,
and MAEM desires to perform such services.


 


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


 


ARTICLE 1.


DEFINITIONS


 


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


 


“Asset Companies” means any affiliates of MAEM either directly
or indirectly owned by Mirant Corporation, other than Mirant Mid-Atlantic, LLC,
which own electric generating facilities in the United States.


 


“Bankruptcy Court” means the United States Bankruptcy Court,
Northern District of Texas, Fort Worth Division.


 


“Chapter 11 Proceeding” means the jointly administered
bankruptcy cases under Chapter 11 of the United States Bankruptcy Code, 11
U.S.C., of Mirant Corporation and its affiliated debtors, Case No. 03-46590
(DML)11 in the Bankruptcy Court.


 


“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.


 


“Delivery Point” means either (i) the high side of the
generation step-up transformer located at the Generation Facility, where it
connects to the Transmission Provider’s transmission system; or (ii) such
other point on the Transmission Provider’s transmission system as MAEM and
Project Company may determine (for all Products delivered from sources other
than the Generating Stations).


 


“Effective Date” has the meaning set forth in the Preamble.


 


“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”).


 


“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.


 


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


 


“Fuel Oil” means No. 2 fuel oil or No. 6 fuel oil
(residual), as dictated by context.


 


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“Fuel Oil Delivery Point” means the physical location at which
MAEM shall arrange for its Fuel Oil supplier(s) to transfer possession of Fuel
Oil to Project Company for Morgantown Station.


 


“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.


 


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


 


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


 


“Gross Revenues” has the meaning 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.


 


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


 


“Morgantown Station” means the Morgantown Generating Station
located in Charles County, Maryland.


 


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


 


“Offer” or “Offering” means the nomination or offering to
sell the output of the Generating Stations.


 


“Other Fuel Agreements” means (i) that certain Solid
Synthetic Fuel Sales Agreement between Oak Mountain Products, LLC and Project
Company dated April 15, 2002, and (ii) any other Fuel supply or
transportation agreement entered into by Project Company with a third party
with the consent of MAEM.


 


“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 


 


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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.


 


“PJM” means market of PJM Interconnection, LLC, or its successor.


 


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


 


“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, PJM or any other applicable power pool, independent system operator,
Transmission Provider or Transportation Provider) the quantity and type of
Products and/or Fuel to be delivered on any given day or days during the period
of delivery at a specified Delivery Point or the Generating Stations, as
applicable.


 


“Transition Power Agreements” means (i) that certain
Transition Power Agreement for the District of Columbia by and between MAEM and
Potomac Electric Power Company, dated December 19, 2000, as amended by
Amendment No. 1 to Transition Power Agreement dated October, 2001, and by
Amendment No. 2 to Transition Power Agreement dated October 24, 2003,
(ii) that certain Transition Power Agreement for Maryland by and between
MAEM and Potomac Electric Power Company, dated December 19, 2000, as
amended by Amendment No. 1 to Transition Power Agreement dated October,
2001, and by Amendment No. 2 to Transition Power Agreement dated October 24,
2003, and (iii) agreements between MAEM and third parties to serve load
which has migrated from Potomac Electric Power Company and would otherwise have
been supplied under the foregoing Transition Power Agreements.


 


“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, an independent system operator
or regional transmission organization).


 


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


 


ARTICLE 2.


POWER SALES


 


2.1                                 Purchase
and Sale of Products.  Project Company
shall sell and deliver and MAEM shall purchase, pay for and receive, or cause
to be received, at the Delivery Point, all Products produced by the Generating
Stations.  The purchase price payable to
Project Company for any Product purchased or sold hereunder shall be the amount
actually received by MAEM from a third party for such Product.  For purposes of the foregoing sentence, MAEM
shall be deemed to supply the Transition Power Agreements from the PJM market and
shall not be deemed to supply Transition Power Agreements from Project Company’s
Generating Stations.  In selling Products



 


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produced
by the Generating Stations, MAEM shall attempt to maximize Net Market Revenues
for the Project Companies.


 


2.2                                 Scheduling
and Offering into PJM.  MAEM shall be
responsible for the Scheduling of the output of the Generating Stations.  MAEM may Offer the output of the Generating
Stations to any customer (including, but not limited to, PJM or any other
applicable control area operator, power pool, independent system operator or
Transmission Provider), and shall be responsible for any such Offering.  Without limitation, all such Scheduling and
Offering strategies shall in each case at all times be consistent with:


 


(a)                                  the operating parameters and limitations of the Generating
Stations, as provided by Project Company to MAEM;


 


(b)                                 the limitations imposed by any transmission service
reservations for the purpose of transmitting Power from the Generating
Stations;


 


(c)                                  Project
Company’s scheduled maintenance plans;


 


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


 


(e)                                  PJM
rules and procedures in effect from time to time;


 


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


 


(g)                                 Fuel
availability; 


 


(h)                                 Good
Utility Practices; and


 


(i)                                     Operating
protocols agreed to from time to time by the Parties.


 


2.3                                 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 and shall Schedule or
arrange for Scheduling services with its Transmission Providers to receive all
Products at the Delivery Point.  


 


2.4                                 Title,
Risk of Loss and Indemnity.  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


 


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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.


 


2.5                                 Regulatory
Reports.  MAEM will make all
quarterly filings to the Federal Energy Regulatory Commission required for
Products produced by the Generating Stations.


 


ARTICLE 3.


FUEL SERVICES


 


3.1                                 All
Requirements Fuel Supply and Delivery. 
MAEM shall procure and supply to Project Company on an exclusive basis
all Fuel required by the Generating Stations in accordance with Good Utility
Practices and the terms and conditions of this Agreement; provided, however,
Project Company may procure Fuel or Fuel transportation or services from third
parties to the extent provided in Other Fuel Agreements.


 


3.2                                 Reimbursement
for Fuel.  Project Company shall
reimburse MAEM for all Fuel delivered to the Generating Stations as follows:


 


(a)                                  Fuel
consisting of natural gas shall be reimbursed at the market price of such gas,
including transportation charges, on the delivery date.


 


(b)                                 Fuel
consisting of coal shall be reimbursed at MAEM’s cost plus delivery charges and
other fees and expenses incurred by MAEM in connection with the delivery of such
coal.


 


(c)                                  Residual
Fuel Oil delivered to Project Company shall be reimbursed at the Fuel Oil Index
Price on the day the Fuel Oil is consumed by the Generating Station.  No. 2 Fuel Oil delivered to Project
Company (including the costs of transportation) shall be reimbursed at MAEM’s
actual cost.


 


3.3                                 Transportation
and Scheduling.  Except as otherwise
provided in the Other Fuel Agreements, MAEM shall arrange and be responsible
for transportation service to deliver Fuel to the Generating Stations and shall
Schedule or arrange for Scheduling services with its Transportation
Providers to deliver Fuel to the Generating Stations. 


 


3.4                                 Fuel
Oil Supply to the Morgantown Station.


 


3.4.1                        Measurement of and Title to
Residual Fuel Oil Inventory.  MAEM
shall have title to all residual Fuel Oil inventory at the Morgantown Station
until such residual Fuel Oil is delivered to the input flange of each unit at
the Morgantown Station.   


 


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3.4.2                        Transfer of Title to Residual
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 residual
Fuel Oil inventories at the Morgantown Station, as measured at midnight on the
date of transfer.  The purchase price
owed by Project Company to MAEM for the on-hand residual 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 residual Fuel Oil 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. 


 


3.4.3                        Transfer of Title to No. 2
Fuel Oil.  MAEM shall be deemed to be
in possession of and have title to the No. 2 Fuel Oil prior to the Fuel
Oil Delivery Point.  Possession of and
title to No. 2 Fuel Oil will transfer to the Project Company at the Fuel
Oil Delivery Point.


 


3.4.4                        Fuel Oil Specifications and
Testing.


 


(a)                                  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. 


 


(b)                                 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.    


 


3.4.5                        Failure of Fuel Oil to
Materially Conform to Fuel Specifications.


 


(a)                                  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). 



 


(b)                                 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.


 


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3.4.6                        Fuel Oil Loading, Unloading,
Storage and Handling Facilities


 


(a)                                  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.  


 


(b)                                 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 Morgantown 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 Morgantown 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.


 


3.4.7                        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 Morgantown Station.  MAEM shall provide such standards to their
contractors, agents and suppliers.  


 


3.4.8                        Metering. Project Company
shall be responsible for reading the Fuel Oil supply meters at the Morgantown
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
Morgantown 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.


 


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ARTICLE 4.


ADDITIONAL SERVICES


 


4.1                                 Emissions
Planning and Related Responsibilities. 
Upon Project Company’s request, MAEM shall provide Project Company
emissions planning, in consultation with Project Company, to assist in the
compliance of the Generating Stations 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
Stations, and dispose of excess Emission Allowances, which are not needed for
the operation of the Generating Stations. 
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.


 


4.2                                 Insurance.  Upon Project Company’s request, MAEM will
procure or assist Project Company in procuring business interruption insurance
and forced outage insurance covering the Generating Stations.  The costs of such insurance will be charged
to Project Company.              


 


ARTICLE 5


ASSET BOOK


 


5.1                                 Asset
Book.  MAEM will maintain an asset
management book for Project Company and Mirant Chalk Point, 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 Stations and the
generating station owned by Mirant Chalk Point, LLC.  The 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 Chalk Point, LLC, all
transactions in the MIRMA Asset Book will be allocated solely to Project
Company. 


 


5.2                                 Power
and Fuel Trading and Power and Fuel Hedges. 
MAEM has entered or will enter into third party bilateral contracts,
forward sales, financial products (including but not limited to, hedges, swaps,
contracts for differences and options) and other transactions in connection
with the Products produced by the Generating Stations and Fuel required to
operate the Generating Stations.  The
costs of such transactions including, without limitation, purchased power
costs, transmission costs, Fuel transportation costs, third party broker costs,
transaction fees and incremental credit costs, and revenues related to such
activities will be charged to or paid to Project Company and included in the
Asset Book.  The costs and revenues
associated with the hedges and other transactions in the Asset Book will be
charged to or paid to Project Company, as such costs and revenues are actually
incurred or received by MAEM 
(as is further described in Section 8.2).


 


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ARTICLE 6.


TERM AND TERMINATION


 


6.1                                 Term.  The initial term of this Agreement shall
commence on the Effective Date and shall continue, unless earlier terminated
pursuant to its terms, until December 31, 2004. The Parties shall
negotiate in good faith to extend this Agreement.


 


6.2                                 Early
Termination Event.  


 


(a)                                  In
the event a Generating Station is no longer owned or leased by an affiliate of
MAEM, this Agreement shall automatically terminate with respect to such
Generating Station, 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 thirty (30) days written notice to the
other Party.


 


6.3                                 Obligations
upon Termination.


 


(a)                                  Upon
any termination of this Agreement pursuant to Sections 6.1 or 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, any agreements or transactions entered into
pursuant to Section 5.2 hereof, (ii) assign such agreements or
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 agreements 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 5.2.


 


(b)                                 Upon
any termination of this Agreement 
pursuant to Section 9.3(a)(ii) hereof, the Parties
shall transfer any outstanding hedges or otherwise settle any transactions
entered into by MAEM in connection with this Agreement which extend beyond such
termination, including but not limited to any agreement or transactions entered
into pursuant to Sections 5.1 and 5.2 hereof.  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


 


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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 such 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).


 


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.  


 


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(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)                                    Subject
to Section 9.2, 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.


 


(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.  


 


12





















 


(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)                                    Subject
to Section 9.2, 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 hereunder, Project Company shall pay MAEM its monthly
share of allocated costs for fulfilling its responsibilities to the Project
Company under this agreement, including, but not limited to, personnel costs.  For purposes of determining the 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 the Project Company
acknowledges that the monthly allocations may be adjusted from time to
time.  


 


8.2                                 Netting.
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.


 


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


 


“Gross Revenues” means all
revenues for a given period attributed to the Asset Book, including, without
limitation, revenues from (a) sales of all Products from the Generating
Stations, (b) other sales of Products, (c) Fuel sales, (d) sales
or trades of excess Emissions Allowances from the Generating Stations, (e) financial
products (including, but not limited to, swaps, contracts for differences,
options and weather derivatives) purchased


 


13





















 


for the Asset Book, and (f) forced outage
insurance and business interruption insurance proceeds (to the extent received
by MAEM).


 


“Expenses” means
all costs attributed to the Asset Book for such period, including costs
reimbursable to MAEM pursuant to this Agreement for performing the services
including, but not limited to, costs for (i) Fuel, (ii) Emissions
Allowances, (iii) financial products (including, but not limited to,
swaps, contracts for differences and options) purchased for the Asset Book, (iv) broker
and/or transaction fees, (v) transmission congestion contracts for sales
from the Generating Stations, (vi) forced outage insurance  costs (to the extent paid by MAEM), (vii) incremental
credit costs for transactions in the Asset Book consistent with the Collateral
Allocation Policy, (viii) transmission and/or transportation costs for
Fuel or energy deliveries; and (ix) other 
costs in connection with the services described in Articles 2, 3
and 4 hereof.   


 


8.3                                 Reports.  Project Company and MAEM will cooperate to
provide monthly reports 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. 


 


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


 


14





















 


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                                 BANKRUPTCY.


 


(A)                              EACH
PARTY ACKNOWLEDGES AND AGREES THAT THE OTHER PARTY IS A DEBTOR IN THE CHAPTER
11 PROCEEDING.  EACH PARTY FURTHER
ACKNOWLEDGES AND AGREES THAT DURING THE PENDENCY OF SUCH PROCEEDING, THIS
AGREEMENT AND THE PARTIES RIGHTS HEREUNDER SHALL BE SUBJECT TO THE JURISDICTION
OF THE BANKRUPTCY COURT.  IN THE EVENT
THIS AGREEMENT AND/OR THE PARTIES’ RIGHTS HEREUNDER ARE DEEMED TO BE
INCONSISTENT WITH ANY DETERMINATION MADE BY THE BANKRUPTCY COURT IN THE CHAPTER
11 PROCEEDING, THE BANKRUPTCY COURT’S DETERMINATION SHALL PREVAIL.


 


(B)                                NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT, UNTIL SUCH TIME AS EACH PARTY EMERGES FROM THE CHAPTER 11 PROCEEDING
THROUGH THE CONFIRMATION OF A PLAN OF REORGANIZATION, THE CHAPTER 11 PROCEEDING
SHALL NOT CONSTITUTE AN EVENT OF DEFAULT UNDER THIS AGREEMENT; PROVIDED,
HOWEVER, THAT IN THE EVENT THAT (A) EITHER PARTY FILES A MOTION OR
REQUEST TO CONVERT ITS CHAPTER 11 CASE TO A CHAPTER 7 PROCEEDING; (B) THE
BANKRUPTCY COURT ENTERS AN ORDER CONVERTING EITHER PARTY’S CASE FROM A CHAPTER
11 PROCEEDING TO A CHAPTER 7 PROCEEDING; OR (C) THE BANKRUPTCY COURT
ENTERS AN ORDER APPOINTING A TRUSTEE OR EXAMINER (WITH EXPANDED POWERS) IN
EITHER PARTY’S BANKRUPTCY CASE, ANY SUCH EVENT (A) THROUGH (C) SHALL
CONSTITUTE AN EVENT OF DEFAULT UNDER THIS AGREEMENT WITH RESPECT TO SUCH PARTY
OR PARTIES.


 


(c)                                  Each
Party represents, warrants and covenants that:


 


(i)                                     The
Parties have negotiated and entered into this post-petition Agreement in the
ordinary courses of their respective businesses, in good faith, for fair
consideration and on an arm’s length basis;


 


(ii)                                  Neither
Party shall attempt to effect any right of set-off
with respect to this such post-petition transaction and any pre-petition
obligations;


 


(iii)                               One
of the purposes of this Agreement is to preserve, maintain and enhance its
business; and


 


(iv)                              The
terms and conditions of this Agreement are fair and reasonable and reflect its
exercise of prudent business judgment consistent with its fiduciary duties as a
debtor-in-possession and are supported by fair consideration and reasonably
equivalent value in money or money’s worth.


 


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


 


15





















 


(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.


 


SECTION 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.  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.


 


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.


 


16





















 


	
  IF TO PROJECT

  	
   

  
	
  COMPANY:

  	
  Mirant Mid-Atlantic, 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

  



 


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


 


17





















 


which
restores to the two Parties to the greatest extent possible the benefit of
their respective bargains on the Effective 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 and the Bankruptcy
Court.  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 shall govern and control.


 


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

  	
  MIRANT MID-ATLANTIC, LLC

  	
   

  	
   

  
	
  MARKETING, LP

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By MIRANT AMERICAS

  	
   

  	
   

  	
   

  
	
  DEVELOPMENT, INC.,

  	
   

  	
   

  	
   

  
	
  its General Partner

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  John L. O’Neal

  	
   

  	
  Name:

  	
  Lisa D. Johnson

  	
   

  	
   

  
	
  Title:

  	
  Chief Commercial Officer

  	
   

  	
  Title:

  	
  President

  	
   

  	
   

  
	
   

  	
  and Vice President

  	
   

  	
   

  	
   

  
											



 


18





















 


EXHIBIT A


Morgantown Generating Station


 


	
  Unit

  	
   

  	
  Location

  	
   

  	
  Nameplate

  Capacity

  	
   

  	
  Commercial

  Operation Date

  	
   

  
	
  F1

  	
   

  	
  Charles County, MD

  	
   

  	
  624

  	
   

  	
   

  	
  1970

  	
   

  
	
  F2

  	
   

  	
  Charles County, MD

  	
   

  	
  620

  	
   

  	
   

  	
  1970

  	
   

  
	
  FCT1

  	
   

  	
  Charles County, MD

  	
   

  	
  16

  	
   

  	
   

  	
  1971

  	
   

  
	
  FCT2

  	
   

  	
  Charles County, MD

  	
   

  	
  16

  	
   

  	
   

  	
  1970

  	
   

  
	
  FCT3

  	
   

  	
  Charles County, MD

  	
   

  	
  54

  	
   

  	
   

  	
  1971

  	
   

  
	
  FCT4

  	
   

  	
  Charles County, MD

  	
   

  	
  54

  	
   

  	
   

  	
  1973

  	
   

  
	
  FCT5

  	
   

  	
  Charles County, MD

  	
   

  	
  54

  	
   

  	
   

  	
  1973

  	
   

  
	
  FCT6

  	
   

  	
  Charles County, MD

  	
   

  	
  54

  	
   

  	
   

  	
  1973

  	
   

  



 


Dickerson Generating Station


 


	
  Unit

  	
   

  	
  Location

  	
   

  	
  Nameplate

  Capacity

  	
   

  	
  Commercial

  Operation Date

  	
   

  
	
  D1

  	
   

  	
  Montgomery County, MD

  	
   

  	
  182

  	
   

  	
   

  	
  1959

  	
   

  
	
  D2

  	
   

  	
  Montgomery County, MD

  	
   

  	
  182

  	
   

  	
   

  	
  1960

  	
   

  
	
  D3

  	
   

  	
  Montgomery County, MD

  	
   

  	
  182

  	
   

  	
   

  	
  1962

  	
   

  
	
  DCT1

  	
   

  	
  Montgomery County, MD

  	
   

  	
  13

  	
   

  	
   

  	
  1967

  	
   

  
	
  HCT1

  	
   

  	
  Montgomery County, MD

  	
   

  	
  147

  	
   

  	
   

  	
  1992

  	
   

  
	
  HCT2

  	
   

  	
  Montgomery County, MD

  	
   

  	
  147

  	
   

  	
   

  	
  1993

  	
   

  



 


19