Exhibit 10.5


 


ADMINISTRATIVE SERVICES AGREEMENT


 


MIRANT AMERICAS GENERATION, LLC


 


THIS
ADMINISTRATIVE SERVICES AGREEMENT (this “Agreement”), dated January 3,
2006 (the “Effective Date”), is made and entered into by and between
Mirant Services, LLC, a Delaware limited liability company (the “Service
Provider”), and Mirant Americas Generation, LLC, a Delaware limited
liability company (the “Service Recipient”). Service Provider and
Service 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 resources
described herein to its affiliates; and


 


WHEREAS,
Service Recipient is an affiliate of Service Provider and desires to procure
certain administrative, accounting and other similar services from Service
Provider, and Service Provider is willing to render such services to Service
Recipient in accordance with and subject to the terms and conditions of this
Agreement.


 


NOW,
THEREFORE, in consideration of the premises and of the mutual agreements
herein, 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 1.10
hereof, Service Provider hereby agrees to provide to Service Recipient the
following services if and to the extent applicable to Service Recipient’s
business (the “Services):


 


(a)                                  Executive management services and advice;


 


(b)                                 Operations, maintenance, engineering, and
construction services relating to Service Recipient’s power generating
facilities (“Power Facilities”), and/or power transmission or distribution
assets (if any) (collectively with Power Facilities, “Energy Assets”);


 


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


 


(d)                                 Contract administration, risk management,
credit, strategic planning, investment evaluation and, at Service Recipient’s
direction, trading, marketing, and scheduling, services and advice in
connection with Service Recipient’s business, including providing Service
Recipient with advice and recommendations regarding Service Recipient’s
purchases of fuel for and sales of electricity and related products from its
Energy Assets;


 


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


 


(f)                                    Bookkeeping, accounting and auditing services
and advice, including the preparation and analyses of financial statements and
operating 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 financing
arrangements, and the banking and investment of surplus funds;


 


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


 


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


 


(j)                                     Legal services and advice;


 


(k)                                  Procurement services and advice;


 


(l)                                     Information systems services, materials and
advice;


 


(m)                               Use of office space and resources;


 


(n)                                 Human resources services and advice;


 


(o)                                 Services relating to communications and
public relations;


 


(p)                                 Investor relations services; and


 


(q)                                 Services and advice regarding government and regulatory
affairs.


 


SECTION 1.02.
Invoicing and Compensation.


 


(a)                                  As full and complete compensation for the
Services rendered pursuant to this Agreement, Service Recipient shall pay to
Service Provider, and Service Provider shall accept, a fee (the “Fee”)
equal to an arm’s length cost to perform the Services, which shall be
calculated based on an allocation methodology to be agreed upon from time to
time by the parties, such agreement not to be unreasonably withheld by either
of the Parties. In addition, Service Recipient shall reimburse Service Provider
for 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 business
entertainment, telephone calls, shipping and similar items, incurred by Service
Provider in connection with its performance of the Services. “Third Party
Expenses” mean all amounts billed to Service Provider by third parties for
services, including professional services, rendered to or on behalf of Service
Recipient in connection with the performance of the Services.


 


(b)                                 Unless otherwise agreed by the parties,
Service Provider shall submit monthly invoices to Service Recipient setting
forth the Fee, Incidental Expenses and Third Party Expenses associated with a
particular month on or before the fifteenth (15th) day of the
succeeding month. Service Recipient shall pay each such invoice by the end of
the month in which the invoice is received. As a condition of Service Recipient’s
obligation to make payments with respect to each invoice, each invoice shall
set 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 Recipient
shall 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 and
fulfillment of the Services. Service Provider and its Representatives shall have access to any and all real and
personal property of Service Recipient, and to any and all books and records as
Service Provider or any of its Representatives determines necessary, advisable or appropriate for or in connection
with the provision of any or all of the Services.


 


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


 


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independent power industry
to perform or fulfill the activities comprising the Services, or any
practices, methods or acts, which in the exercise of reasonable judgment in
light of the facts known at the time, that could have been expected to
accomplish the desired result at a reasonable cost consistent with good
business practices, reliability, safety and expedition, including maintaining
the confidentiality of non-public information provided by Service Recipient or
created by Service Provider in the context of providing the Services; provided,
however, that Good Business Practices is not intended to be limited to optimum
practices, methods or acts to the exclusion of all others, but rather to be a
range of possible practices, methods or acts taken or engaged in by entities in
the independent power industry. Whether any particular practice, method or act
of Service Provider complies with Good Business Practices is to be judged in
light of the facts known at the time such particular practice, method or act
was performed or taken.


 


SECTION 1.05.
Limitations on Liability.


 


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


 


(b)                                 Notwithstanding any other provision of this
Agreement, Service Provider’s total liability to Service Recipient and all
third parties for all acts and omissions of Service Provider (or its
Representatives) in any calendar year, including liability arising out of
contract, tort (including negligence, gross negligence and intentional
misconduct), strict liability or any other cause or form of action
whatsoever, shall not exceed the total compensation paid to Service Recipient
during the previous twelve months under any provision of this Agreement for the
particular service at issue.


 


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


 


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


 


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


 


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


 


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SECTION 1.08.
Independent Contractor.


 


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


 


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


 


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


 


(d)                                 Service Provider shall be solely responsible
for all taxes imposed on Service Provider as a result of the transactions
contemplated by this Agreement.


 


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


 


SECTION 1.10.
Power Facilities; Wholesale Power Sales. Notwithstanding anything to the
contrary in this Agreement, to the extent that Service Recipient owns or
operates any Power Facilities and/or engages in wholesale sales from Power
Facilities (1) this Agreement does not confer upon the Service Provider
ultimate decision-making authority or control over the Power Facilities owned
and operated by the Service Recipient; (2) this Agreement does not provide
the Service Provider with the authority to engage in (or refrain from engaging
in) wholesale sales from the Service Recipient’s generating facilities (“Wholesale
Power Sales”), except subject to the direction and oversight of the Service
Recipient; and (3) the Service Recipient retains ultimate authority and
control over Wholesale Power Sales and the sale of related products from the
Service Recipient’s Power Facilities, the dispatch of the facilities, and the
ability of the Power Facilities to produce power. To the extent that employees
of the Service Provider have any responsibility for day-to-day operation of the
Service Recipient’s Power Facilities (if any), such employees (1) are
acting on behalf of their employer in its sole capacity as service provider to
the Service Recipient; and (2) remain subject to the terms of this
Agreement including the limitations as described in the preceding sentence.


 


SECTION.
1.11. Term and Termination.


 


(a)                                  Unless sooner terminated in accordance with
the provisions of this Agreement, the term of this Agreement shall commence as
of the Effective Date and shall continue until Service Recipient’s next fiscal
year end (the “Initial Term”). At the end of the Initial Term and each
subsequent Renewal Term (hereinafter defined), as the case may be, the
term of this Agreement shall be automatically renewed for a period of one (1) year
(each a “Renewal Term”) unless either Party delivers a written
termination notice to the other Party at least sixty (60) days prior to the end
of 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 Service
Provider has failed to fulfill its obligations under Section 1.01 hereof
and failed to cure any such failure during such notice period. After sixty (60)
days prior written notice, Service Provider may immediately terminate this
Agreement if Service Recipient has failed to fulfill its obligations under Section 1.02
hereof and failed to cure any such failure during such notice period.


 


(c)                                  Either party may terminate this Agreement
for any reason whatsoever upon thirty (30) calendar days prior written notice
to the other party.


 


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(d)                                 Upon termination of this agreement for any
reason, Service Provider shall return to Service Recipient all real and
personal property of Service Recipient, all books and records provided to
Service Provider and all information and reports created by Service Provider in
connection 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 hereunder
shall be governed by and interpreted in accordance with the law of the State of
Delaware (without giving effect to principles of conflicts of laws which would
lead 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 its
rights 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 be
unreasonably withheld. This Agreement shall be binding upon each of the Parties
and their respective successors and permitted assigns.


 


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


 


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


 


SECTION 2.05.
Waivers. No provision of this Agreement shall be deemed waived and no
breach shall be deemed excused or consented to unless such waiver or consent is
in writing and signed by the Party claimed to have waived or consented. No
consent by either Party to, or waiver of, a breach by the other, whether
express or implied, shall constitute a consent to, waiver of, or excuse for any
different or subsequent breach.


 


SECTION 2.06.
Entire Agreement. This Agreement constitutes the Parties’ entire
agreement as to the subject matter hereof and supersedes any and all other
prior understandings, correspondence and agreements, oral or written, between
them.


 


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


 


[SIGNATURES APPEAR ON THE FOLLOWING PAGE]


 


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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year 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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