Document:

Exhibit 10.6

 

POWER SALE, FUEL SUPPLY 

AND SERVICES AGREEMENT

 

THIS
POWER SALE, FUEL SUPPLY AND SERVICES AGREEMENT (this
“Agreement”), dated as of January 3, 2006 (the “Agreement Date”), is among
MIRANT AMERICAS ENERGY MARKETING, LP, a
Delaware limited partnership (“MAEM”), MIRANT BOWLINE, LLC (“Mirant
Bowline”), MIRANT LOVETT, LLC (“Mirant Lovett”),
and MIRANT NY-GEN, LLC (“Mirant NY-Gen”),
all Delaware limited liability companies (Mirant Bowline, Mirant Lovett and
Mirant NY-Gen are referred to individually as “Project Company” and
collectively as the “Project Companies”).

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 1.

DEFINITIONS

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

“Bowline Station”
means the Generating Station owned by Mirant Bowline.

 

“Bowline Unit 1”
means unit 1 at Bowline Station.

 

“Bowline Unit 2”
means unit 2 at Bowline Station.

 

“Chapter 11 Cases”
means the cases commenced under chapter 11 of the United States Bankruptcy Code
pending before the Bankruptcy Court with respect to Mirant Corporation and its
affiliated debtors, styled as In re Mirant Corporation,
et al., Chapter 11 Case No. 03-46590 (DML), Jointly
Administered.

 

“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 Lovett Station where MAEM shall deliver coal to
Mirant Lovett.

 

“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.

 

“Confirmation Date”
means December 9, 2005 which is the date on which the clerk of the
Bankruptcy Court entered the Confirmation Order on the docket of the Bankruptcy
Court.

 

“Confirmation Order”
means, with respect to the Chapter 11 Cases, the Order Confirming the Amended
and Restated Second Amended Joint Chapter 11 Plan of Reorganization for Mirant
Corporation and its Affiliated Debtors.

 

“Day Tanks” means
the day tank for Bowline Unit 1 and the day tank for Bowline Unit 2.

 

“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

 

2

 

Station, where it
connects to the Transmission Provider’s transmission system; and, with respect
to Products generated by, or available from, sources other than the Generating
Station, such other point on the Transmission Provider’s transmission system as
MAEM and Project Company may determine.

 

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

 

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

 

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

 

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

 

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

 

“Force Majeure”
means an event or circumstance which
prevents a 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 No. 6
fuel oil, No. 2 fuel oil and/or jet fuel, as applicable.

 

“Fuel Oil Delivery
Point” means the physical location at Bowline Station where MAEM shall
deliver Fuel Oil to Mirant Bowline.

 

3

 

“Fuel Oil Index Price”
is the mean published price (in $/barrel) for 0.3% sulfur high pour residual
oil (No. 6 Fuel Oil) for New York Harbor cargo delivery as published in
Platt’s Oilgram plus $0.50.

 

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

 

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

 

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

 

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

 

“Implementation Order”
means, with respect to the Chapter 11 Cases, 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.

 

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

 

“ISO” means the
New York Independent System Operator, Inc., a not-for-profit corporation
established pursuant to the Independent System Operator Agreement.

 

“ISO FERC Tariff”
means the ISO Market Administration and Control Area Services Tariff, as
amended from time to time, as on file with and approved by the FERC.

 

“Locational Marginal
Price” means the locational marginal price established in the day ahead
and/or real time energy markets administered by the ISO.

 

“Lovett Station”
means the Generating Station owned by Mirant Lovett.

 

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

 

“Massey Coal Agreement”
means the Restated Coal Purchase and Sale Agreement between Mirant Lovett and
Massey Coal Sales Company, Inc. effective July 1, 1998, as amended
from time to time.

 

4

 

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

 

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

 

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

 

“Mirant NY-Gen”
has the meaning set forth in the first paragraph of this Agreement.

 

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

 

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

 

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

 

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

 

“Plan” means, with
respect to the Chapter 11 Cases, the Amended and Restated Second Amended Joint
Chapter 11 Plan of Reorganization for Mirant Corporation and its Affiliated
Debtors dated September 30, 2005.

 

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

 

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

 

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

 

“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.

 

“Storage Tank”
means a storage tank at Bowline Station dedicated to the storage of Fuel Oil.

 

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

 

5

 

“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 Stations.  MAEM shall resell such Products as described
in Section 2.2.  MAEM shall pay Net
Market Revenues to Project Company, on a monthly basis, for all Products
purchased by MAEM hereunder.  In selling
Products generated by, or available from, the Generating Stations, MAEM shall
attempt to maximize Net Market Revenues for Project Companies.

 

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

 

(c)                                  Title,
Risk of Loss and Indemnity. The following provision shall apply to all transactions
involving the Generating Station except for Direct Contracts as described in Section 4.1.  As between the Parties, Project Company shall
be deemed to be in exclusive possession and control (and be responsible for any
damages or injury caused thereby) of the Products prior to delivery thereof at
the Delivery Point, and MAEM shall be deemed to be in exclusive possession and
control (and be responsible for any damages or injury caused thereby) of the
Products at and after delivery thereof at the Delivery Point.  Project Company warrants that it will deliver
to MAEM all Products free and clear of all liens, claims and encumbrances
arising prior to delivery thereof at the Delivery Point.  Title to and risk of loss related to
delivered Products shall transfer from Project Company to MAEM at the Delivery
Point.  Each Party shall indemnify,
defend and hold harmless each other Party from any Claims arising from any act
or incident occurring during the period when possession, control and title to
Products is vested or deemed to be vested in the indemnifying Party, except to
the extent such Claims arise from such other Party’s breach of this Agreement
or its gross negligence or willful misconduct.

 

6

 

2.2                                 Resale
of Products by MAEM.

 

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

 

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

 

(c)                                  Costs
and Revenues. All costs and revenues associated with Offers and Third Party
Contracts will be charged, or paid, to Project Company as such costs and
revenues are actually incurred or received by MAEM, as further described in the
calculation of Net Market Revenues pursuant to Section 8.2.

 

(d)                                 Strategies.  MAEM’s strategies with respect to all Offers,
Third Party Contracts and all Scheduling activities shall be consistent with:

 

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

 

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

 

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

 

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

 

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

 

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

 

(vii)                           Fuel
availability;

 

(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.

 

7

 

ARTICLE 3.

FUEL SERVICES

 

 3.1                              All Requirements Fuel
Supply.  With the exception of any
Direct Contracts as described in Section 4.1, MAEM shall procure and
supply to Project Companies, on an exclusive basis, all Fuel required by the
Generating Stations in accordance with Good Utility Practices and the terms and
conditions of this Agreement.  The
Project Companies shall reimburse MAEM for such Fuel at MAEM’s actual cost with
the exception of Fuel Oil delivered to Bowline 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 Companies and all costs and
revenues associated with Fuel imbalances will be attributed to the Asset Book
and charged to, or paid to, Project Company as such costs and revenues are
actually incurred or received by MAEM.

 

3.3                                 Title,
Risk of Loss and Indemnity. As between the Parties, MAEM shall be deemed to
be in exclusive possession and control (and be responsible for any damages or
injury caused thereby) of the Fuel prior to delivery thereof at the Fuel
Delivery Point, and Project Company shall be deemed to be in exclusive possession
and control (and be responsible for any damages or injury caused thereby) of
the Fuel at and after delivery thereof at the Fuel Delivery Point.  MAEM warrants that it will deliver to Project
Company all Fuel free and clear of all liens, claims and encumbrances arising
prior to delivery thereof at the Fuel Delivery Point.  Title to and risk of loss related to
delivered Fuel shall transfer from MAEM to Project Company at the Fuel Delivery
Point. Each Party shall indemnify, defend and hold harmless each other Party
from any Claims arising from any act or incident occurring during the period
when possession, control and title to Products is vested or deemed to be vested
in the indemnifying Party, except to the extent 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 Bowline Station.

 

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

 

8

 

day preceding such
holiday.  The quantity of Fuel Oil
delivered to the Day Tanks shall be recorded by Mirant Bowline daily and
reported to MAEM.

 

(b)                                 Transfer
of Title to Fuel Oil at Termination.  Upon any termination of this Agreement
pursuant to Section 6.2 or Section 9.3(a), MAEM shall transfer and
sell to Mirant Bowline and Mirant Bowline shall purchase, take title to and pay
MAEM for Fuel Oil inventories at Bowline Station, as measured at midnight on
the date of transfer.  The purchase price
owed by Mirant Bowline 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.  Mirant Bowline 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 delivered after the date of termination.

 

(c)                                  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 Mirant
Bowline from time to time (“Fuel Oil Specifications”).  Mirant Bowline and MAEM shall each notify one
another of any material failure of Fuel Oil to comply with the Fuel Oil
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.  Mirant Bowline shall be responsible for
routine tests performed prior to transferring Fuel Oil between tanks and prior
to burning Fuel Oil.

 

(d)                                 Failure
of Fuel Oil to Materially Conform to Fuel Oil 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, Mirant Bowline 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 Mirant Bowline, Mirant Bowline may instruct MAEM to arrange at no
cost to Mirant Bowline for the reasonably expeditious removal of any such
non-compliant Fuel Oil from the Storage Tanks.

 

(e)                                  Fuel
Oil Loading, Unloading, Storage and Handling Facilities.

 

(i)                                     Mirant
Bowline shall, as soon as practical under the circumstances, provide MAEM with
notice of any applicable operating constraints affecting their Storage
Tanks.  Mirant Bowline 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, Mirant Bowline,

 

9

 

after each delivery of
Fuel Oil to the Storage Tanks, shall provide MAEM with a terminal port
log/discharge report and the current delivery analysis report.

 

(ii)                                  Mirant
Bowline, 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 Bowline Station. Mirant Bowline shall maintain in effect all
permits necessary for such operation. 
Mirant Bowline shall pay loading, unloading, storage and
handling expenses for Fuel Oil delivered to the Bowline Station.  Mirant Bowline 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 Mirant Bowline and MAEM.

 

(f)                                    Fuel
Oil Inventory Levels.  MAEM shall use
commercially reasonable efforts to maintain Fuel Oil inventory levels meeting
the Fuel Oil Specifications at the Bowline Station for the operation of the
Bowline Station in accordance with Good Utility Practices.

 

(g)                                 Failure
to Deliver Fuel Oil to Day Tanks.  If
MAEM fails to provide Fuel Oil meeting the Fuel Oil Specifications to the Day
Tanks such that Bowline Unit 1 or Bowline Unit 2 is not able to operate in
economic dispatch, MAEM shall pay Mirant Bowline’s lost opportunity costs.  Such lost opportunity costs shall be
calculated, on an hourly basis, as the (i) positive difference, if any,
obtained by subtracting Mirant Bowline’s marginal cost of generation (using the
Fuel Oil Index Price for the cost of Fuel Oil in such calculation) from the
Locational Marginal Price multiplied by (ii) the quantity of energy not
generated by Bowline Station.  The total
lost opportunity costs payable to Mirant Bowline shall be the summation of the
hourly calculation set forth above for each hour Bowline Station is not
available to operate due to MAEM’s failure to deliver Fuel Oil.

 

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

 

(i)                                     Metering.
Mirant Bowline shall be responsible for reading the Fuel Oil supply meters at
the Bowline Station in accordance with Good Utility Practices.  Mirant Bowline 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
Bowline Station.  Not less than once per
month, Mirant Bowline will manually sound the Storage Tanks and compare the
results to prior meter readings.  Mirant
Bowline shall arrange for a third party to manually sound the Storage Tanks on
at least a quarterly basis. Differences between actual tank levels and reported
meter indications will be settled between MAEM and Mirant Bowline at the

 

10

 

average Fuel Oil Index
Price for the calendar month immediately preceding the manual determination of
tank levels.

 

3.4                                 Fuel
Oil Supply to Lovett Station. 
Although Lovett Station has the capability to operate on Fuel Oil, it
currently operates solely on natural gas and/or coal.  If Mirant Lovett desires to recommence Fuel
Oil deliveries to Lovett Station, MAEM and Mirant Lovett agree to negotiate in
good faith to amend this Agreement as necessary to describe Fuel Oil supply to
Lovett Station including, but not limited to, inventory storage, transfer and
pricing.

 

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 the Massey Coal Agreement, and
Mirant Lovett shall have the right to continue to purchase coal pursuant to
such Direct Contract.

 

(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

 

11

 

be the sole
responsibility of Project Company. In an effort to maximize Net Market
Revenues, Project Company agrees that MAEM shall have the right to purchase
Products from third parties or the market, in lieu of the Generating Station
producing such Products, for the purpose of meeting the supply obligations of
Project Company or MAEM under any Direct Contract or Third Party Contract (“Purchased
Power”); provided, however, any such purchase should only occur when the
Project Company’s cost to generate the Products exceeds the prevailing market
price for such Products.  Project Company
and MAEM shall notify 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 the New York region (the “Asset Book”)
to track and measure the financial performance of all transactions with respect
to the Generating Stations including, but not limited to, (i) the sale of
Products, generated by the Generating Stations, pursuant to any Offers, Third
Party Contracts and/or Direct Contracts, (ii) Purchased Power, (iii) the
purchase of Fuel and any related Fuel hedges and trading activities, (iv) the
purchase of Emissions Allowances and any related emissions hedges and trading
activities and (v) the purchase of transmission and/or transportation
capacity.  The Asset Book shall be
separate from any MAEM trading book or any other asset book maintained by MAEM
for other Asset Companies.  Transactions
in the Asset Book shall be allocated to individual books that are established
for each Project Company.  Unless
otherwise designated in writing by Project Companies, transactions in the Asset
Book will be allocated proportionately to each Project Company based on the
actual dispatch of the Generating Stations, as provided by Project Companies to
MAEM (with the exception of sales of capacity, which shall be allocated
proportionately based on the actual capacity of the generating units).

 

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

 

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

 

12

 

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 9.3(a).

 

6.2                                 Early
Termination Event.

 

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

 

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

 

6.3                                 Obligations
upon Termination.

 

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

 

(b)                                 Upon
any termination of this Agreement pursuant to Section 9.3(a) hereof,
the Parties shall transfer or settle any outstanding transactions entered into
by MAEM in connection with this Agreement which extend beyond such termination
including, but not limited to, Third Party Contracts entered into pursuant to Section 2.2(b).  Any such transfer or settlement shall be
consummated in such a manner as to assign or convey to Project Companies the
full benefits and obligations of such transactions, and to fully release MAEM
from any liability or obligation thereunder. 
To the extent that MAEM’s rights or obligations under any such
transaction may not be assigned without the consent of a third party, and such
consent has not or cannot be obtained with the commercially reasonable efforts
of the Parties, this provision shall not constitute an agreement to assign the
same if an attempted assignment would constitute a breach thereof or be
unlawful, and the Parties, to the maximum extent permitted by law and the
applicable transaction, shall enter into such commercially reasonable
arrangements as are necessary to fulfill the intent of this Section 6.3(b).  The Parties further agree to take such
actions, and execute and

 

13

 

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. 
Each Project Company makes the following representations and warranties
as a basis for its undertakings contained herein:

 

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

 

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

 

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

 

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

 

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

 

14

 

Agreement.

 

(f)                                    Subject
to Section 9.2(c), 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.

 

(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

 

15

 

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 or any
other document relating to this Agreement.

 

ARTICLE 8.

BILLING AND PAYMENT

 

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

 

8.2                                 Billing
and Payment.  MAEM shall pay Project
Company the positive Net Market Revenues due for the prior month (or, if Net
Market Revenues for such month are negative, Project Company shall pay MAEM an
amount equal to such negative balance) by wire transfer to the payment address
provided by the recipient on or before the twentieth (20th) day of
each month, or if such day is not a business day, the immediately following
business day.  At the time of each
monthly payment, MAEM shall render to Project Company a statement detailing the
Net Market Revenues for the prior month, and shall provide Project Company with
supporting documentation for each such monthly statement, identifying
calculations underlying such Net Market Revenues.  If the ISO later adjusts amounts payable by
or paid to MAEM with respect to transactions in the Asset Book, such amounts
will be credited to, or paid by, Project Companies 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.

 

16

 

“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) 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 Mirant Bowline at the Fuel Oil
Index Price for Fuel Oil consumed by Bowline 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 depending on the resolution of the dispute.  Overpayments or underpayments identified by
the Parties shall be returned or credited, together with interest accrued at
the Interest Rate, to their rightful owners in the first following month.

 

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

 

ARTICLE 9.

DEFAULTS
AND REMEDIES

 

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

 

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

 

17

 

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

 

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

 

9.2                                 Confirmation
Date.

 

(a)                                  The
Project Companies will remain debtors-in-possession in the Chapter 11 Cases
until the New York Debtors Effective Date (as such term is defined in the
Plan).  Until the New York Debtors
Effective Date, this Agreement and the Parties’ rights and obligations
hereunder shall be subject to the jurisdiction of the Bankruptcy Court.  In the event this Agreement and/or the
Parties’ rights and/or obligations hereunder are deemed to be inconsistent with
any determination made by the Bankruptcy Court in the Chapter 11 Cases, the
Bankruptcy Court’s determination shall prevail.

 

(b)                                 Notwithstanding any other provisions contained in
this Agreement, the Project Companies acknowledge and agree that they will not
oppose administrative expense treatment under 11 U.S.C. § 503(b)(1)(A) for
any unpaid amounts owing by Project Companies under this Agreement, provided
that such unpaid amounts become due and owing prior to the New York Debtors
Effective Date.

 

(c)                                  Notwithstanding
any other provision of this Agreement, until the New York Debtors Effective
Date, the Chapter 11 Cases shall not constitute an Event of Default under this
Agreement with respect to the Project Companies; provided, however, in the
event that (a) Project Company files a motion or request to convert its
Chapter 11 Case to a Chapter 7 proceeding; or (b) the Bankruptcy Court
enters an order converting either Project Company’s case from a Chapter 11
proceeding to a Chapter 7 proceeding, either such event (a) or (b) shall
constitute an Event of Default under this Agreement with respect to such
Project Company.

 

(d)                                 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 Agreement and any pre-petition obligations;

  
	
  (iii)

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

  

 

 

18

 

	
  (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:

 

(a)                                  Upon
the occurrence of an Event of Default by a 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 with respect to such Party.  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

 

19

 

such Party’s obligations under this Agreement will be
honored fully and timely by any succeeding party.

 

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

 

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

 

	
  IF TO PROJECT

  	
   

  	
   

  
	
  COMPANIES:

  	
   

  	
  Mirant Bowline, LLC

  
	
   

  	
   

  	
  140 Samsondale Avenue

  
	
   

  	
   

  	
  West Haverstraw, NY
  10993

  
	
   

  	
   

  	
  Attention: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mirant Lovett, LLC

  
	
   

  	
   

  	
  37 Elm Street

  
	
   

  	
   

  	
  Tomkins Cove, NY 10986

  
	
   

  	
   

  	
  Attention: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mirant NY-Gen, LLC

  
	
   

  	
   

  	
  613 Plank Road

  
	
   

  	
   

  	
  Forest Burgh, NY 12777

  
	
   

  	
   

  	
  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

  

 

20

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

21

 

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]

 

22

 

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 Bowline, LLC

  
	
   

  	
   

  
	
  By:

  	
  /s/ J. William Holden
  III

  	
   

  
	
  Name:

  	
  J. William Holden III

  
	
  Title:

  	
  Senior Vice President &
  Treasurer

  
	
   

  	
   

  
	
  Mirant Lovett, LLC

  
	
   

  	
   

  
	
  By:

  	
  /s/ J. William Holden
  III

  	
   

  
	
  Name:

  	
  J. William Holden III

  
	
  Title:

  	
  Senior Vice President &
  Treasurer

  
	
   

  	
   

  
	
  Mirant NY-Gen, 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

  

 

23

 

EXHIBIT A

GENERATING
STATIONS

 

MIRANT
BOWLINE, LLC

 

	
  Unit

  	
   

  	
  Location

  	
   

  	
  Nameplate

  Capacity

  	
   

  	
  Commercial

  Operation Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bowline 1

  	
   

  	
  West Haverstraw, NY

  	
   

  	
  572

  	
   

  	
  1972

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bowline 2

  	
   

  	
  West Haverstraw, NY

  	
   

  	
  567

  	
   

  	
  1974

  	
   

  

 

MIRANT LOVETT, LLC

 

	
  Unit

  	
   

  	
  Location

  	
   

  	
  Nameplate

  Capacity

  	
   

  	
  Commercial

  Operation Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lovett 3

  	
   

  	
  Stony Point, NY

  	
   

  	
  63

  	
   

  	
  1955

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lovett 4

  	
   

  	
  Stony Point, NY

  	
   

  	
  165

  	
   

  	
  1966

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lovett 5

  	
   

  	
  Stony Point, NY

  	
   

  	
  183

  	
   

  	
  1968

  	
   

  

 

MIRANT NY-GEN, LLC

 

	
  Unit

  	
   

  	
  Location

  	
   

  	
  Nameplate

  Capacity

  	
   

  	
  Commercial

  Operation Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mongaup 1-4

  	
   

  	
  Mongaup Falls, NY

  	
   

  	
  4

  	
   

  	
  1923-1926

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Swinging Bridge 1-2

  	
   

  	
  Mongaup Falls, NY

  	
   

  	
  12

  	
   

  	
  1930-1939

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rio 1-2

  	
   

  	
  Mongaup Falls, NY

  	
   

  	
  9

  	
   

  	
  1927

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Grahamsville

  	
   

  	
  Grahamsville, NY

  	
   

  	
  18

  	
   

  	
  1956

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Shoemaker Turbine

  	
   

  	
  Middletown, NY

  	
   

  	
  33

  	
   

  	
  1971

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hillburn Turbine

  	
   

  	
  Ramapo, NY

  	
   

  	
  33

  	
   

  	
  1971

  	
   

  

 

24Exhibit 10.7

 

POWER
SALE, FUEL SUPPLY 

AND SERVICES AGREEMENT

 

THIS
POWER SALE, FUEL SUPPLY AND SERVICES AGREEMENT (this
“Agreement”), dated as of January 3, 2006 (the “Agreement Date”), is among
MIRANT AMERICAS ENERGY MARKETING, LP, a
Delaware limited partnership (“MAEM”) and MIRANT CANAL, LLC (“Mirant
Canal”) and MIRANT KENDALL, LLC (“Mirant
Kendall”), each a Delaware limited liability
company (Mirant Canal and Mirant Kendall are referred to individually as “Project
Company” and collectively as the “Project Companies”).

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 1.

DEFINITIONS

 

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

 

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

 

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

 

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

 

1

 

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

 

“Canal Station”
means the Generating Station owned by Mirant Canal.

 

“Canal Unit 1”
means unit 1 at Canal Station.

 

“Canal Unit 2”
means unit 2 at Canal Station.

 

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

 

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

 

“Day Tanks” means
the day tank for Canal Unit 1 and the day tank for Canal Unit 2.

 

“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 the Project Company may
determine.

 

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

 

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

 

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

 

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

 

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

 

2

 

“Force Majeure”
means an event or circumstance which
prevents a 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 or natural gas, as dictated by context.

 

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

 

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

 

“Fuel Oil Delivery
Point” means the physical location at Canal Station where MAEM shall
deliver Fuel Oil to Mirant Canal.

 

“Fuel Oil Index Price”
is the mean published price (in $/barrel) for 1% sulfur high pour residual oil
(No. 6 Fuel Oil) for New York Harbor cargo delivery as published in Platt’s
Oilgram plus $0.12 for normal specifications or plus $0.80 for Sweet Oil.

 

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

 

“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.

 

3

 

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

 

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

 

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

 

“ISO” means ISO
New England Inc., or its successor.

 

“ISO FERC Tariff”
means the ISO New England Inc. Tariff for Transmission Dispatch and Power
Administration Services, as amended from time to time, as on file with and
approved by the FERC.

 

“Locational Marginal
Price” means the locational marginal price established in the day ahead
and/or real time energy markets administered by the ISO.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Plan” means the
Amended and Restated Second Amended Joint Chapter 11 Plan of Reorganization for
Mirant Corporation and its Affiliated Debtors, dated September 30, 2005,
confirmed by the United States Bankruptcy Court for the Northern District of
Texas, Forth Worth Division, on December 9, 2005, in the chapter 11 cases
of Mirant Corporation and its affiliated

 

4

 

debtors, styled as In re Mirant Corporation, et al.,
Chapter 11 Case No. 03-46590 (DML) Jointly Administered.

 

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

 

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

 

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

 

“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.

 

“Storage Tank”
means a storage tank at Canal Station dedicated to the storage of Fuel Oil.

 

“Sweet Oil” is
fuel oil with the same specifications for Fuel Oil except for asphaltines is
< 4, viscosity is < 250 and nitrogen is < .4.

 

“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 Stations.  MAEM shall resell such Products as described
in Section 2.2.  MAEM shall pay Net
Market Revenues to Project Company, on a monthly basis, for all Products
purchased by MAEM hereunder.  In selling
Products generated by, or available from, the Generating Stations, MAEM shall
attempt to maximize Net Market Revenues for Project Companies.

 

5

 

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

 

(c)                                  Title,
Risk of Loss and Indemnity. The following provision shall apply to all
transactions involving the Generating Station except for Direct Contracts as
described in Section 4.1.  As
between the Parties, Project Company shall be deemed to be in exclusive
possession and control (and be responsible for any damages or injury caused
thereby) of the Products prior to delivery thereof at the Delivery Point, and
MAEM shall be deemed to be in exclusive possession and control (and be responsible
for any damages or injury caused thereby) of the Products at and after delivery
thereof at the Delivery Point.  Project
Company warrants that it will deliver to MAEM all Products free and clear of
all liens, claims and encumbrances arising prior to delivery thereof at the
Delivery Point.  Title to and risk of
loss related to delivered Products shall transfer from Project Company to MAEM
at the Delivery Point.  Each Party shall indemnify,
defend and hold harmless each other Party from any Claims arising from any act
or incident occurring during the period when possession, control and title to
Products is vested or deemed to be vested in the indemnifying Party, except to
the extent such Claims arise from such other Party’s breach of this Agreement
or its gross negligence or willful misconduct.

 

2.2                                 Resale
of Products by MAEM.

 

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

 

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

 

(c)                                  Costs
and Revenues. All costs and revenues associated with Offers and Third Party
Contracts will be charged, or paid, to Project Company as such costs and
revenues are actually incurred or received by MAEM, as further described in the
calculation of Net Market Revenues pursuant to Section 8.2.

 

(d)                                 Strategies.  MAEM’s strategies with respect to all Offers,
Third Party Contracts and all Scheduling activities shall be consistent with:

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

(vii)                           Fuel
availability;

 

(viii)                        Good
Utility Practices;

 

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

 

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

 

ARTICLE 3.

FUEL
SERVICES

 

3.1                                 All
Requirements Fuel Supply.  With the
exception of any Direct Contracts as described in Section 4.1, MAEM shall
procure and supply to Project Companies, on an exclusive basis, all Fuel
required by the Generating Stations in accordance with Good Utility Practices
and the terms and conditions of this Agreement. 
The Project Companies shall reimburse MAEM for such Fuel at MAEM’s
actual cost with the exception of Fuel Oil delivered to Canal 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 Companies and all costs and
revenues associated with Fuel imbalances will be attributed to the Asset Book
and charged to, or paid to, Project Company, as such costs and revenues are
actually incurred or received by MAEM.

 

7

 

3.3                                 Title,
Risk of Loss and Indemnity. As between the Parties, MAEM shall be deemed to
be in exclusive possession and control (and be responsible for any damages or
injury caused thereby) of the Fuel prior to delivery thereof at the Fuel
Delivery Point, and Project Company shall be deemed to be in exclusive
possession and control (and be responsible for any damages or injury caused
thereby) of the Fuel at and after delivery thereof at the Fuel Delivery Point.  MAEM warrants that it will deliver to Project
Company all Fuel free and clear of all liens, claims and encumbrances arising
prior to delivery thereof at the Fuel Delivery Point.  Title to and risk of loss related to
delivered Fuel shall transfer from MAEM to Project Company at the Fuel Delivery
Point. Each Party shall indemnify, defend and hold harmless each other Party
from any Claims arising from any act or incident occurring during the period
when possession, control and title to Products is vested or deemed to be vested
in the indemnifying Party, except to the extent such Claims arise from such
other Party’s breach of this Agreement or its gross negligence or willful
misconduct.

 

3.4                                 Fuel
Oil Supply to the Canal Station.

 

(a)                                  Daily
Fuel Oil Requirements.  MAEM shall
supply and deliver Fuel Oil to the Fuel Oil Delivery Point as required by Canal
Station.  Mirant Canal shall purchase
Fuel Oil from MAEM at the Fuel Oil Index Price as such Fuel Oil is transferred
from the Storage Tanks to the Day Tanks. 
For Fuel Oil transferred on Saturday, the applicable purchase price
shall be the Fuel Oil Index Price for the preceding Friday.  For Fuel Oil transferred on Sunday, the
applicable purchase price shall be the Fuel Oil Index Price for the following
Monday.  For Fuel Oil transferred on any
holiday, the applicable price shall be the Fuel Oil Index Price on the business
day preceding such holiday.  The quantity
of Fuel Oil delivered to the Day Tanks shall be recorded by Mirant Canal daily
and reported to MAEM.

 

(b)                                 Transfer
of Title to Fuel Oil at Termination. 
Upon any termination of this Agreement pursuant to Section 6.2 or Section 9.2(a),
MAEM shall transfer and sell to Mirant Canal and Mirant Canal shall purchase,
take title to and pay MAEM for Fuel Oil inventories at Canal Station, as
measured at midnight on the date of transfer. 
The purchase price owed by Mirant Canal 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.  Mirant Canal 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 delivered after the date of termination.

 

(c)                                  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 Mirant Canal
from time to time (“Fuel Oil Specifications”). 
Mirant Canal 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

 

8

 

water and testing
associated with any blending activities initiated by MAEM.  Mirant Canal shall be responsible for routine
tests performed prior to transferring Fuel Oil between tanks and prior to
burning Fuel Oil.

 

(d)                                 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, Mirant Canal 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 Mirant Canal, Mirant Canal may instruct MAEM to arrange at no cost
to Mirant Canal for the reasonably expeditious removal of any such
non-compliant Fuel Oil from the Storage Tanks.

 

(e)                                  Fuel
Oil Loading, Unloading, Storage and Handling Facilities.

 

(i)                                     Mirant
Canal shall, as soon as practical under the circumstances, provide MAEM with
notice of any applicable operating constraints affecting the Storage
Tanks.  Mirant Canal 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, Mirant Canal, after each delivery of
Fuel Oil to the Storage Tanks, shall provide MAEM with a terminal port log/discharge
report and the current delivery analysis report.

 

(ii)                                  Mirant
Canal, 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 Canal Station. Mirant Canal shall maintain in effect all
permits necessary for such operation. 
Mirant Canal shall pay loading, unloading, storage and
handling expenses for Fuel Oil delivered to the Canal Station.  Mirant Canal 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 Mirant Canal and MAEM.

 

(f)                                    Fuel
Oil Inventory Levels.  MAEM shall use
commercially reasonable efforts to maintain Fuel Oil inventory levels meeting
the Fuel Oil Specifications at the Canal Station for the operation of the Canal
Station in accordance with Good Utility Practices.

 

(g)                                 Failure
to Deliver Fuel Oil to Day Tanks.  If
MAEM fails to provide Fuel Oil meeting the Fuel Oil Specifications to the Day
Tanks such that Canal Unit 1 or Canal Unit 2 is not able to operate in economic
dispatch, MAEM shall pay Mirant Canal’s lost opportunity costs.  Such lost opportunity costs shall be
calculated, on an hourly basis, as the (i) positive difference,

 

9

 

if any, obtained by
subtracting Mirant Canal’s marginal cost of generation (using the Fuel Oil Index
Price for the cost of Fuel Oil in such calculation) from the Locational
Marginal Price multiplied by (ii) the quantity of energy not generated by
Canal Station.  The total lost
opportunity costs payable to Mirant Canal shall be the summation of the hourly
calculation set forth above for each hour Canal Station is not available to
operate due to MAEM’s failure to deliver Fuel Oil.

 

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

 

(i)                                     Metering.
Mirant Canal shall be responsible for reading the Fuel Oil supply meters at the
Canal Station in accordance with Good Utility Practices.  Mirant Canal 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 Canal
Station.  Not less than once per month,
Mirant Canal will manually sound the Storage Tanks and compare the results to
prior meter readings.  Mirant Canal shall
arrange for a third party to manually sound the Storage Tanks on at least a
quarterly basis.  Differences between
actual tank levels and reported meter indications will be settled between MAEM
and Mirant Canal 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.

 

10

 

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

 

4.2                                 Cooperation.
The Parties shall cooperate to fulfill the obligations of Project Company
and/or MAEM as set forth in the Direct Contract and/or Third Party Contract, as
applicable.  Notwithstanding the
foregoing, all payment obligations under any Direct Contract shall be the sole responsibility
of Project Company. In an effort to maximize Net Market Revenues, Project
Company agrees that MAEM shall have the right to purchase Products from third
parties or the market, in lieu of the Generating Station producing such
Products, for the purpose of meeting the supply obligations of Project Company
or MAEM under any Direct Contract or Third Party Contract (“Purchased Power”);
provided, however, any such purchase should only occur when the Project Company’s
cost to generate the Products exceeds the prevailing market price for such
Products.  Project Company and MAEM shall
notify the others promptly if it becomes aware of any dispute under, or any
proposed amendment to, a Direct Contract or Third Party Contract.  Project Company and MAEM acknowledge and
agree that certain provisions of this Agreement including, without limitation,
MAEM’s scheduling and fuel supply obligations, may not be consistent with the
provisions of a Direct Contract or a Third Party Contract (such as a tolling
agreement for example).  In the event of
such inconsistency, the provisions of the Direct Contract or Third Party
Contract shall control.

 

ARTICLE 5.

ASSET
BOOK; ADDITIONAL SERVICES

 

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

 

5.2                                 Emissions
Planning and Related Responsibilities. 
MAEM shall provide Project

 

11

 

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

 

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

 

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

 

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

 

6.3                                 Obligations
upon Termination.

 

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

 

(b)                                 Upon
any termination of this Agreement pursuant to Section 9.2(a) hereof,
the Parties shall transfer or settle any outstanding transactions entered into
by MAEM in connection

 

12

 

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

 

ARTICLE 7.

REPRESENTATIONS
AND WARRANTIES

 

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

 

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

 

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

 

13

 

(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 their obligations
under this Agreement.

 

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

 

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

 

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

 

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

 

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

 

(c)                                  No
consent, waiver, order, approval, authorization, permit or order of, or

 

14

 

registration,
qualification or filing with, any court or other governmental agency or
authority is required for the execution, delivery and performance by MAEM of
this Agreement and the consummation by MAEM of the transactions contemplated
hereby.

 

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

 

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

 

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

 

ARTICLE 8.

BILLING AND PAYMENT

 

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

 

8.2                                 Billing
and Payment.  MAEM shall pay Project
Company the positive Net Market Revenues due for the prior month (or, if Net
Market Revenues for such month are negative, Project Company shall pay MAEM an
amount equal to such negative balance) by wire transfer to the payment address
provided by the recipient on or before the twentieth (20th) day of
each month, or if such day is not a business day, the immediately following
business day.  At the time of each
monthly payment, MAEM shall render to Project Company a statement detailing the
Net Market Revenues for the prior month, and shall provide Project Company with
supporting documentation for each such monthly statement, identifying
calculations underlying such Net Market Revenues.  If the ISO later adjusts amounts payable by
or paid to MAEM with respect to transactions in the Asset Book, such amounts
will be credited to, or paid by, Project Companies 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.

 

15

 

“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) transmission and/or transportation costs related to delivery
of the Products and/or Fuel, (viii) Purchased Power and (x) other actual
costs in connection with the services described in Articles 2, 3 and 4 hereof,
and (b) costs reimbursed to MAEM by Mirant Canal at the Fuel Oil Index
Price for Fuel Oil consumed by Canal 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 any Party
fails to make any payment on or before the applicable payment due date, such
overdue amounts shall accrue interest at the Interest Rate from, and including,
the applicable payment due date to, but excluding, the date of payment.  Any disputed invoiced amounts, except amounts
which are manifestly inaccurate, shall be paid in full on the applicable
payment due date, subject to later return together with interest accrued at the
Interest Rate depending on the resolution of the dispute.  Overpayments or underpayments identified by
the Parties shall be returned or credited, together with interest accrued at
the Interest Rate, to their rightful owners in the first following month.

 

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

 

16

 

ARTICLE 9.

DEFAULTS
AND REMEDIES

 

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

 

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

 

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

 

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

 

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

 

(a)                                  Upon
the occurrence of an Event of Default by a 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 Parties, to terminate this Agreement at any time during the
continuation of such Event of Default with respect to such Party.  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 a
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

 

17

 

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 a 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 a Party shall be in such form as to
assure that such Party’s obligations under this Agreement will be honored fully
and timely by any succeeding party.

 

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

 

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

 

	
  IF TO PROJECT

  	
   

  	
   

  
	
  COMPANIES:

  	
   

  	
  Mirant Canal, LLC

  
	
   

  	
   

  	
  1099 Hingham Street

  
	
   

  	
   

  	
  Rockland, MA 02370

  
	
   

  	
   

  	
  Attention: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mirant Kendall, LLC

  
	
   

  	
   

  	
  1099 Hingham Street

  
	
   

  	
   

  	
  Rockland, MA 02370

  
	
   

  	
   

  	
  Attention: President

  

 

18

 

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

 

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

 

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

 

11.7                           Severability.  The invalidity or unenforceability of any
provisions of this Agreement shall not affect the other provisions hereof.  If any provision of this Agreement is held to
be invalid, such provisions shall not be severed from this Agreement; instead,
the scope of the rights and duties created thereby shall be reduced by the
smallest extent necessary to conform such provision to the applicable law,
preserving to the greatest extent the intent of the Parties to create such
rights and duties as set out herein.  If
necessary to preserve the intent of the Parties hereto, the Parties shall
negotiate in good faith to amend this Agreement, adopting a substitute

 

19

 

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.  NO 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]

 

20

 

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 Canal, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ J. William Holden
  III

  	
   

  
	
  Name:

  	
  J. William Holden III

  	
   

  
	
  Title:

  	
  Senior Vice President &
  Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Mirant Kendall, 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:

  	
  Name: J. William Holden
  III

  	
   

  
	
  Title:

  	
  Senior Vice President,
  Chief Financial Officer & Treasurer

  

 

21

 

EXHIBIT A

GENERATING
STATIONS

 

MIRANT
CANAL, LLC

 

	
  Unit

  	
   

  	
  Location

  	
   

  	
  Nameplate

  Capacity

  	
   

  	
  Commercial

  Operation Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canal 1

  	
   

  	
  Sandwich, MA

  	
   

  	
  556

  	
   

  	
  1968

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canal 2

  	
   

  	
  Sandwich, MA

  	
   

  	
  553

  	
   

  	
  1976

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Martha’s Vineyard
  Diesels

  	
   

  	
  Martha’s Vineyard, MA

  	
   

  	
  12

  	
   

  	
  1969 - 1975

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wyman 4

  	
   

  	
  Yarmouth, ME

  	
   

  	
  9

  	
   

  	
  1976

  	
   

  

 

MIRANT KENDALL, LLC

 

	
  Unit

  	
   

  	
  Location

  	
   

  	
  Nameplate

  Capacity

  	
   

  	
  Commercial

  Operation Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kendall Units

  	
   

  	
  Cambridge, MA

  	
   

  	
  250

  	
   

  	
  1949, 1951, 1958, 2002

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kendall Jets

  	
   

  	
  Cambridge, MA

  	
   

  	
  38

  	
   

  	
  1970, 1972

  	
   

  

 

22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}]]