**Exhibit 10.5**

 

**ADMINISTRATIVE SERVICES AGREEMENT**

 

**MIRANT AMERICAS GENERATION, LLC**

 

THISADMINISTRATIVE SERVICES AGREEMENT (this “Agreement”), dated January 3,2006 (the “Effective Date”), is made and entered into by and betweenMirant Services, LLC, a Delaware limited liability company (the “ServiceProvider”), and Mirant Americas Generation, LLC, a Delaware limitedliability company (the “Service Recipient”). Service Provider andService Recipient sometimes are referred to herein individually as a “Party”and collectively as the “Parties”.

 

W I T N E S S E T H:

 

WHEREAS,Service Provider provides such services, personnel and other resourcesdescribed herein to its affiliates; and

 

WHEREAS,Service Recipient is an affiliate of Service Provider and desires to procurecertain administrative, accounting and other similar services from ServiceProvider, and Service Provider is willing to render such services to ServiceRecipient in accordance with and subject to the terms and conditions of thisAgreement.

 

NOW,THEREFORE, in consideration of the premises and of the mutual agreementsherein, the Parties hereto hereby agree as follows:

 

ARTICLE I

 

TERMS AND CONDITIONS OF SERVICES

 

SECTION 1.01.Provision of Services. Subject to the limitations set forth in Section 1.10hereof, Service Provider hereby agrees to provide to Service Recipient thefollowing services if and to the extent applicable to Service Recipient’sbusiness (the “Services):

 

(a)                                  Executive management services and advice;

 

(b)                                 Operations, maintenance, engineering, andconstruction services relating to Service Recipient’s power generatingfacilities (“Power Facilities”), and/or power transmission or distributionassets (if any) (collectively with Power Facilities, “Energy Assets”);

 

(c)                                  Environmental, health and safety services andadvice in connection with Service Recipient’s Energy Assets;

 

(d)                                 Contract administration, risk management,credit, strategic planning, investment evaluation and, at Service Recipient’sdirection, trading, marketing, and scheduling, services and advice inconnection with Service Recipient’s business, including providing ServiceRecipient with advice and recommendations regarding Service Recipient’spurchases of fuel for and sales of electricity and related products from itsEnergy Assets;

 

(e)                                  Licensing services, which may includeholding certain licenses for and on behalf of Service Recipient, including,without limitation, licenses for radio equipment issued by the FederalCommunications Commission;

 

(f)                                    Bookkeeping, accounting and auditing servicesand advice, including the preparation and analyses of financial statements andoperating reports and the establishment of accounting systems and procedures;

 

(g)                                 Finance and treasury services and advice,including the preparation of short and long range financial plans and budgets,the issuance of securities, the negotiation and structuring of financingarrangements, and the banking and investment of surplus funds;

 

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(h)                                 Tax advice and assistance, including thepreparation of federal, state and local income and other tax returns and thepreparation of protests, claims and briefs and other matters in connection withany applicable taxes, governmental fees or assessments;

 

(i)                                     Insurance, bonding and risk management adviceand assistance, including negotiating contracts with insurers, trustees andactuaries and placing insurance policies;

 

(j)                                     Legal services and advice;

 

(k)                                  Procurement services and advice;

 

(l)                                     Information systems services, materials andadvice;

 

(m)                               Use of office space and resources;

 

(n)                                 Human resources services and advice;

 

(o)                                 Services relating to communications andpublic relations;

 

(p)                                 Investor relations services; and

 

(q)                                 Services and advice regarding government and regulatoryaffairs.

 

SECTION 1.02.Invoicing and Compensation.

 

(a)                                  As full and complete compensation for theServices rendered pursuant to this Agreement, Service Recipient shall pay toService Provider, and Service Provider shall accept, a fee (the “Fee”)equal to an arm’s length cost to perform the Services, which shall becalculated based on an allocation methodology to be agreed upon from time totime by the parties, such agreement not to be unreasonably withheld by eitherof the Parties. In addition, Service Recipient shall reimburse Service Providerfor all Incidental Expenses and Third Party Expenses. “Incidental Expenses”mean all reasonable incidental expenses, including expenses for travel(business class air travel), meals, lodging, required businessentertainment, telephone calls, shipping and similar items, incurred by ServiceProvider in connection with its performance of the Services. “Third PartyExpenses” mean all amounts billed to Service Provider by third parties forservices, including professional services, rendered to or on behalf of ServiceRecipient in connection with the performance of the Services.

 

(b)                                 Unless otherwise agreed by the parties,Service Provider shall submit monthly invoices to Service Recipient settingforth the Fee, Incidental Expenses and Third Party Expenses associated with aparticular month on or before the fifteenth (15th) day of thesucceeding month. Service Recipient shall pay each such invoice by the end ofthe month in which the invoice is received. As a condition of Service Recipient’sobligation to make payments with respect to each invoice, each invoice shallset forth a reasonably detailed description of the nature of the Services,Incidental Expenses and Third Party Expenses.

 

SECTION 1.03.Cooperation and Access to Properties and Records. Service Recipientshall cooperate with Service Provider and the members, advisors, agents,affiliates, officers, directors, employees or representatives,****including subcontractors (the “Representatives”)of Service Provider as and when reasonably requested in their performance andfulfillment of the Services. Service Provider and its Representatives****shall have access to any and all real andpersonal property of Service Recipient, and to any and all books and records asService Provider or any of its Representatives****determines necessary, advisable or appropriate for or in connectionwith the provision of any or all of the Services.

 

SECTION 1.04.Standard of Conduct. Service Provider will use its reasonable bestefforts to perform or cause its Representatives****to perform the Services in accordance with Good BusinessPractices. “Good Business Practices” means the practices, methods andacts, as in effect from time to time, that are commonly used in the

 

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independent power industryto perform or fulfill the activities comprising the Services, or anypractices, methods or acts, which in the exercise of reasonable judgment inlight of the facts known at the time, that could have been expected toaccomplish the desired result at a reasonable cost consistent with goodbusiness practices, reliability, safety and expedition, including maintainingthe confidentiality of non-public information provided by Service Recipient orcreated by Service Provider in the context of providing the Services; provided,however, that Good Business Practices is not intended to be limited to optimumpractices, methods or acts to the exclusion of all others, but rather to be arange of possible practices, methods or acts taken or engaged in by entities inthe independent power industry. Whether any particular practice, method or actof Service Provider complies with Good Business Practices is to be judged inlight of the facts known at the time such particular practice, method or actwas performed or taken.

 

SECTION 1.05.Limitations on Liability.

 

(a)                                  Service Provider (or its Representatives**)** shall have no liability to ServiceRecipient for any loss, damage or expense suffered by Service Recipient arisingout of or resulting from any act or omission of Service Provider (or itsRepresentatives), provided that such act or omission conformed to thestandard of conduct set forth in Section 1.04 hereof.

 

(b)                                 Notwithstanding any other provision of thisAgreement, Service Provider’s total liability to Service Recipient and allthird parties for all acts and omissions of Service Provider (or itsRepresentatives) in any calendar year, including liability arising out ofcontract, tort (including negligence, gross negligence and intentionalmisconduct), strict liability or any other cause or form of actionwhatsoever, shall not exceed the total compensation paid to Service Recipientduring the previous twelve months under any provision of this Agreement for theparticular service at issue.

 

(c)                                  Pursuant to Sections 1.05(a), (b) and(d), each party (the “Indemnifying Party”) hereby indemnifies and holdsthe other Party, and such other Party’s Representatives, harmless from andagainst any and all claims against such other Party for personal injury, deathor property damage which may arise due to any negligent or willful acts oromissions of the Indemnifying Party.

 

(d)                                 Notwithstanding any other provision of thisAgreement, neither Party shall be liable to the other Party for any lostprofits, or indirect, incidental or consequential damages under, arising outof, due to or in connection with this Agreement.

 

SECTION 1.06.Decisions. Service Recipient reserves the right to make all decisions withregard to any matter upon which Service Provider has rendered its advice andconsultation, and Service Provider shall not be liable for any such adviceaccepted by Service Recipient pursuant to the provisions of this Agreement.

 

SECTION 1.07.Authority. In its capacity as an advisor under this Agreement, (i) ServiceProvider shall have authority only to act as a consultant and advisor toService Recipient and (ii) Service Provider shall have no authority toenter into any agreement or to make any representation, commitment or warrantybinding upon Service Recipient or to obtain or incur any right, obligation orliability on behalf of Service Recipient. Nothing contained in this Section 1.07shall be interpreted as restricting, modifying or waiving the rights,privileges or obligations of Service Provider or any of its affiliates as aRepresentative of Service Recipient.

 

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SECTION 1.08.Independent Contractor.

 

(a)                                  Service Provider, in the performance of thisAgreement, will be acting in its own separate capacity and will not, nor willit hold itself out to be, a partner, joint venturer, associate or agent ofService Recipient. Service Provider does not have the authority to bind ServiceRecipient and no joint venture or partnership is intended or created by thisAgreement. In performing its duties under this Agreement, Service Providershall provide and complete the Services required according to its own means andmethods of work, which shall be in the exclusive charge and control of ServiceProvider and not subject to the control or supervision of Service Recipient.

 

(b)                                 Service Provider shall be solely responsiblefor its and its Representatives’ acts and omissions with respect to theperformance of the Services. Neither Party shall maintain, hold out, represent,state or imply to any other individual or entity that an employer/employeerelationship exists between it and the other Party or such other Party’sRepresentatives.

 

(c)                                  Neither Service Provider nor its employeesshall be eligible to participate in any employee benefit plan sponsored byService Recipient, including any retirement plan, insurance program, disabilityplan, medical benefits plan or any other fringe benefit program sponsored andmaintained by Service Recipient for its employees.

 

(d)                                 Service Provider shall be solely responsiblefor all taxes imposed on Service Provider as a result of the transactionscontemplated by this Agreement.

 

SECTION 1.09.Subcontractors. Service Provider may in its sole discretionsubcontract with other persons or entities, to perform any or all of theServices on such terms and conditions as Service Provider determines to benecessary, advisable or appropriate under the circumstances of the subcontract.

 

SECTION 1.10.Power Facilities; Wholesale Power Sales. Notwithstanding anything to thecontrary in this Agreement, to the extent that Service Recipient owns oroperates any Power Facilities and/or engages in wholesale sales from PowerFacilities (1) this Agreement does not confer upon the Service Providerultimate decision-making authority or control over the Power Facilities ownedand operated by the Service Recipient; (2) this Agreement does not providethe Service Provider with the authority to engage in (or refrain from engagingin) wholesale sales from the Service Recipient’s generating facilities (“WholesalePower Sales”), except subject to the direction and oversight of the ServiceRecipient; and (3) the Service Recipient retains ultimate authority andcontrol over Wholesale Power Sales and the sale of related products from theService Recipient’s Power Facilities, the dispatch of the facilities, and theability of the Power Facilities to produce power. To the extent that employeesof the Service Provider have any responsibility for day-to-day operation of theService Recipient’s Power Facilities (if any), such employees (1) areacting on behalf of their employer in its sole capacity as service provider tothe Service Recipient; and (2) remain subject to the terms of thisAgreement including the limitations as described in the preceding sentence.

 

SECTION.1.11. Term and Termination.

 

(a)                                  Unless sooner terminated in accordance withthe provisions of this Agreement, the term of this Agreement shall commence asof the Effective Date and shall continue until Service Recipient’s next fiscalyear end (the “Initial Term”). At the end of the Initial Term and eachsubsequent Renewal Term (hereinafter defined), as the case may be, theterm of this Agreement shall be automatically renewed for a period of one (1) year(each a “Renewal Term”) unless either Party delivers a writtentermination notice to the other Party at least sixty (60) days prior to the endof the Initial Term or the then current Renewal Term, as the case may be.

 

(b)                                 After sixty (60) days prior written notice,Service Recipient may immediately terminate this Agreement if ServiceProvider has failed to fulfill its obligations under Section 1.01 hereofand failed to cure any such failure during such notice period. After sixty (60)days prior written notice, Service Provider may immediately terminate thisAgreement if Service Recipient has failed to fulfill its obligations under Section 1.02hereof and failed to cure any such failure during such notice period.

 

(c)                                  Either party may terminate this Agreementfor any reason whatsoever upon thirty (30) calendar days prior written noticeto the other party.

 

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(d)                                 Upon termination of this agreement for anyreason, Service Provider shall return to Service Recipient all real andpersonal property of Service Recipient, all books and records provided toService Provider and all information and reports created by Service Provider inconnection with the provision of any or all of the Services.

 

ARTICLE II

 

MISCELLANEOUS

 

SECTION 2.01.Governing Law. This Agreement and the rights of the Parties hereundershall be governed by and interpreted in accordance with the law of the State ofDelaware (without giving effect to principles of conflicts of laws which wouldlead to the application of the laws of another jurisdiction).

 

SECTION 2.02.Successors and Assignability. Except as otherwise provided for in Section 1.09,neither Service Provider nor Service Recipient may assign any of itsrights or delegate any of its duties under this Agreement, in whole or in part,without the prior written consent of the other, which consent shall not beunreasonably withheld. This Agreement shall be binding upon each of the Partiesand their respective successors and permitted assigns.

 

SECTION 2.03.Severability. If any provision of this Agreement shall be determined byany court of competent jurisdiction to be invalid or unenforceable, theremainder of this Agreement, other than that portion determined to be invalidor unenforceable, shall not be affected thereby, and each valid provisionhereof shall be enforced to the fullest extent permitted by law.

 

SECTION 2.04.Modifications. No change, amendment or modification of this Agreementshall be valid or binding upon the Parties unless such change, amendment ormodification is in writing and duly executed by both Parties.

 

SECTION 2.05.Waivers. No provision of this Agreement shall be deemed waived and nobreach shall be deemed excused or consented to unless such waiver or consent isin writing and signed by the Party claimed to have waived or consented. Noconsent by either Party to, or waiver of, a breach by the other, whetherexpress or implied, shall constitute a consent to, waiver of, or excuse for anydifferent or subsequent breach.

 

SECTION 2.06.Entire Agreement. This Agreement constitutes the Parties’ entireagreement as to the subject matter hereof and supersedes any and all otherprior understandings, correspondence and agreements, oral or written, betweenthem.

 

SECTION 2.07.Counterparts. This Agreement may be executed in counterparts, eachof which shall be deemed an original hereof but all of which together shallconstitute one and the same instrument. Delivery of execution pages hereofby facsimile shall constitute valid delivery of this Agreement.

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

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INWITNESS WHEREOF, the parties have executed this Agreement as of the day andyear first above written.

 
|   | Mirant Services, LLC                 |
|--------|--------------------------------------|
|   |                                 |
|   |                                 |
|   | By:                                  | /s/ Elizabeth B. Chandler |   |
|   | Name: Elizabeth B.  Chandler         |
|   | Title: Vice President and  Secretary |
|   |                                 |
|   |                                 |
|   | Mirant Americas  Generation, LLC     |
|   |                                 |
|   |                                 |
|   | By:                                  | /s/ Steven B. Nickerson |   |
|   | Name: Steven B. Nickerson            |
|   | Title: Vice President                |

 

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