ADMINISTRATION AGREEMENT
Exhibit
10.3
EXECUTION
COPY
This
ADMINISTRATION AGREEMENT, dated as of June 29, 2007 (this “Administration
Agreement”), is entered into by and between BALTIMORE GAS AND ELECTRIC
COMPANY (“BGE”), as administrator (in such capacity, the
“Administrator”), and RSB BONDCO LLC, a Delaware limited liability
company (the “Issuer”). Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in Appendix
A to the Indenture (as defined below).
W
I T N E
S S E T H:
WHEREAS,
the Issuer is issuing Rate Stabilization Bonds pursuant to that certain
Indenture (including Appendix A thereto) dated as of the date hereof (the
“Indenture”), by and between the Issuer and Deutsche Bank Trust Company
Americas, a New York banking corporation, in its capacity as indenture trustee
(the “Indenture Trustee”) and in its separate capacity as a securities
intermediary (the “Securities Intermediary”), as the same may be amended,
restated, supplemented or otherwise modified from time to time, and each
Series
Supplement;
WHEREAS,
the Issuer has entered into certain agreements in connection with the issuance
of the Rate Stabilization Bonds, including (i) the Indenture, (ii) the Rate
Stabilization Property Servicing Agreement, dated as of June 29, 2007 (the
“Servicing Agreement”), by and between the Issuer and BGE, as Servicer,
(iii) the Rate Stabilization Property Purchase and Sale Agreement, dated
as of
June 29, 2007 (the “Sale Agreement”), by and between the Issuer and BGE,
as Seller, and (iv) the other Basic Documents to which the Issuer is a party,
relating to the Rate Stabilization Bonds (the Indenture, the Servicing
Agreement, the Sale Agreement and the other Basic Documents to which the
Issuer
is a party, as such agreements may be amended, restated, supplemented or
otherwise modified from time to time, being referred to hereinafter collectively
as the “Initial Related Agreements”);
WHEREAS,
pursuant to the Initial Related Agreements, the Issuer is required to perform
certain duties in connection with the Initial Related Agreements, the Rate
Stabilization Bonds and the Rate Stabilization Bond Collateral pledged to
the
Indenture Trustee pursuant to the Indenture;
WHEREAS,
the Issuer may from time to time enter into and be required to perform certain
duties under additional agreements similar to the Initial Related Agreements
in
connection with the issuance of one or more additional series of Rate
Stabilization Bonds (together with the Initial Related Agreements, the
“Related Agreements”);
WHEREAS,
the Issuer has no employees, other than its officers, and does
not intend to hire any employees, and consequently desires to have
the Administrator perform certain of the duties of the Issuer referred to
in the
preceding clauses and to provide such additional services consistent with
the
terms of this Administration Agreement and the Related Agreements as the
Issuer
may from time to time request; and
WHEREAS,
the Administrator has the capacity to provide the services and the facilities
required thereby and is willing to perform such services and provide such
facilities for the Issuer on the terms set forth herein;
NOW,
THEREFORE, in consideration of the mutual covenants contained herein, and
other
good and valuable consideration, the receipt and sufficiency of which are
hereby
acknowledged, the parties agree as follows:
1. Duties
of the Administrator – Management Services. The Administrator
hereby agrees to provide the following corporate management services to the
Issuer and to cause third parties to provide professional services required
for
or contemplated by such services in accordance with the provisions of this
Administration Agreement:
(a) furnish
the Issuer with ordinary clerical, bookkeeping and other corporate
administrative services necessary and appropriate for the Issuer, including,
without limitation, the following services:
(i) maintain
at the Premises (as defined below) general accounting records of the Issuer
(the
“Account Records”), subject to year-end audit, in accordance with
generally accepted accounting principles, separate and apart from its own
accounting records, prepare or cause to be prepared such quarterly and annual
financial statements as may be necessary or appropriate and arrange for year-end
audits of the Issuer's financial statements by the Issuer's independent
accountants;
(ii) prepare
and, after execution by the Issuer, file with the Securities and Exchange
Commission (the “Commission”) and any applicable state agencies documents
required to be filed by the Issuer with the Commission and any applicable
state
agencies, including, without limitation, periodic reports required to be
filed
under the Securities Exchange Act of 1934, as amended;
(iii) prepare
for execution by the Issuer and cause to be filed such income, franchise
or
other tax returns of the Issuer as shall be required to be filed by applicable
law (the “Tax Returns”) and cause to be paid on behalf of the Issuer from
the Issuer's funds any taxes required to be paid by the Issuer under applicable
law;
(iv) prepare
or cause to be prepared for execution by the Issuer’s Managers minutes of the
meetings of the Issuer’s Managers and such other documents deemed appropriate by
the Issuer to maintain the separate limited liability company existence and
good
standing of the Issuer (the “Company Minutes”) or otherwise required
under the Related Agreements (together with the Account Records, the Tax
Returns, the Company Minutes, the LLC Agreement, and the Certificate of
Formation, the “Issuer Documents”); and any other documents deliverable
by the Issuer thereunder or in connection therewith; and
(v) hold,
maintain and preserve at the Premises (or such other place as shall be required
by any of the Related Agreements) executed copies (to the extent applicable)
of
the Issuer Documents and other documents executed by the Issuer thereunder
or in
connection therewith;
2
(b) take
such actions on behalf of the Issuer, as are necessary or desirable for the
Issuer to keep in full force and effect its existence, rights and franchises
as
a limited liability company under the laws of the state of Delaware and obtain
and preserve its qualification to do business in each jurisdiction in which
it
becomes necessary to be so qualified;
(c) take
such actions on the behalf of the Issuer as are necessary for the issuance
and
delivery of one or more series of Rate Stabilization Bonds;
(d) provide
for the performance by the Issuer of its obligations under each of the Related
Agreements, and prepare, or cause to be prepared, all documents, reports,
filings, instruments, notices, certificates and opinions that it shall be
the
duty of the Issuer to prepare, file or deliver pursuant to the Related
Agreements;
(e) enforce
each of the rights of the Issuer under the Related Agreements, at the direction
of the Indenture Trustee;
(f) provide
for the defense, at the direction of the Issuer's Managers, of any action,
suit
or proceeding brought against the Issuer or affecting the Issuer or any of
its
assets;
(g) provide
office space (the “Premises”) for the Issuer and such reasonable
ancillary services as are necessary to carry out the obligations of the
Administrator hereunder, including telecopying, duplicating and word processing
services;
(h) undertake
such other administrative services as may be appropriate, necessary or requested
by the Issuer; and
(i) provide
such other services as are incidental to the foregoing or as the Issuer and
the
Administrator may agree.
In
providing the services under this Section 1 and as otherwise provided
under this Administration Agreement, the Administrator will not knowingly
take
any actions on behalf of the Issuer which (i) the Issuer is prohibited from
taking under the Related Agreements, or (ii) would cause the Issuer to be
in
violation of any federal, state or local law or the LLC Agreement.
2. Compensation. As
compensation for the performance of the Administrator’s obligations under this
Administration Agreement (including the compensation of Persons serving as
Managers, other than the independent managers, and officers of the Issuer,
but,
for the avoidance of doubt, excluding the performance by BGE of its obligations
in its capacity as Servicer), the Administrator shall be entitled to an annual
fee of $100,000 (the “Administration Fee”), payable by the Issuer in
arrears proportionately on each Payment Date. The Administration Fee
shall not exceed $100,000 in the aggregate annually, provided,
however, that BGE may seek approval from the PSC to recover from
Customers, through the Financing Credit Order in accordance with the Qualified
Rate Order, any incremental costs it incurs to provide administrative
support services to the Issuer to the extent such incremental costs exceed
$100,000, and furtherprovided that such excess amounts shall
neither be considered an Operating Expense nor be paid out of the Collection
Account or included in the calculation of True-Up Adjustments. In
addition, the Administrator shall be entitled to be reimbursed by the Issuer
for
all costs and expenses of services performed by unaffiliated third parties
and
actually
3
incurred
by the Administrator in connection with the performance of its obligations
under
this Administration Agreement in accordance with Section 3 (but, for the
avoidance of doubt, excluding any such costs and expenses incurred by BGE
in its
capacity as Servicer), to the extent that such costs and expenses are supported
by invoices or other customary documentation and are reasonably allocated
to the
Issuer (“Reimbursable Expenses”). The Administration Fee shall
be modified, and this Section 2 shall be deemed to have been amended,
without further act or deed by any Person to reflect any such modification
or
amendment, to the extent provided in any Qualified Rate Order issued by the
PSC
providing for the issuance of an additional series of Rate Stabilization
Bonds.
3. Third
Party Services. Any services required for or contemplated by the
performance of the above-referenced services by the Administrator to be provided
by unaffiliated third parties (including independent auditors' fees and counsel
fees) may, if provided for or otherwise contemplated by any related Qualified
Rate Order issued by the PSC and if the Issuer deems it necessary or desirable,
be arranged by the Issuer or by the Administrator at the direction (which
may be
general or specific) of the Issuer. Costs and expenses associated
with the contracting for such third-party services may be paid directly by
the
Issuer or paid by the Administrator and reimbursed by the Issuer in accordance
with Section 2, or otherwise as the Administrator and the Issuer may
mutually arrange.
4. Additional
Information to be Furnished to the Issuer. The Administrator
shall furnish to the Issuer from time to time such additional information
regarding the Rate Stabilization Bond Collateral as the Issuer shall reasonably
request.
5. Independence
of the Administrator. For all purposes of this Administration
Agreement, the Administrator shall be an independent contractor and shall
not be
subject to the supervision of the Issuer with respect to the manner in which
it
accomplishes the performance of its obligations hereunder. Unless
expressly authorized by the Issuer, the Administrator shall have no authority,
and shall not hold itself out as having the authority, to act for or represent
the Issuer in any way and shall not otherwise be deemed an agent of the
Issuer.
6. No
Joint Venture. Nothing contained in this Administration Agreement
(a) shall constitute the Administrator and the Issuer as partners or co-members
of any partnership, joint venture, association, syndicate, unincorporated
business or other separate entity, (b) shall be construed to impose any
liability as such on either of them or (c) shall be deemed to confer on either
of them any express, implied or apparent authority to incur any obligation
or
liability on behalf of the other.
7. Other
Activities of Administrator. Nothing herein shall prevent the
Administrator or any of its shareholders, directors, officers, employees,
subsidiaries or affiliates from engaging in other businesses or, in its sole
discretion, from acting in a similar capacity as an Administrator for any
other
person or entity even though such person or entity may engage in business
activities similar to those of the Issuer.
4
8. Term
of Agreement; Resignation and Removal of Administrator.
(a) This
Administration Agreement shall continue in force until the payment in full
of
the Rate Stabilization Bonds and any other amount which may become due and
payable under the Indenture, upon which event this Administration Agreement
shall automatically terminate.
(b) Subject
to Sections 8(e) and 8(f), the Administrator may resign its duties
hereunder by providing the Issuer with at least sixty (60) days’ prior written
notice.
(c) Subject
to Sections 8(e) and 8(f), the Issuer may remove the Administrator
without cause by providing the Administrator with at least sixty (60) days’
prior written notice.
(d) Subject
to Sections 8(e) and 8(f), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of termination
from
the Issuer to the Administrator if any of the following events shall
occur:
(i) the
Administrator shall default in the performance of any of its duties under
this
Administration Agreement and, after notice of such default, shall fail to
cure
such default within ten (10) days (or, if such default cannot be cured in
such
time, shall (A) fail to give within ten (10) days such assurance of cure
as
shall be reasonably satisfactory to the Issuer and (B) fail to cure such
default
within thirty (30) days thereafter);
(ii) a
court of competent jurisdiction shall enter a decree or order for relief,
and
such decree or order shall not have been vacated within sixty (60) days,
in
respect of the Administrator in any involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
such
court shall appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for the Administrator or any substantial
part
of its property or order the winding-up or liquidation of its affairs;
or
(iii) the
Administrator shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, shall consent
to the
entry of an order for relief in an involuntary case under any such law, shall
consent to the appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator or similar official for the Administrator or any
substantial part of its property, shall consent to the taking of possession
by
any such official of any substantial part of its property, shall make any
general assignment for the benefit of creditors or shall fail generally to
pay
its debts as they become due.
The
Administrator agrees that if any of the events specified in clauses (ii)
or (iii) of this Section 8(d) shall occur, it shall give written
notice thereof to the Issuer and the Indenture Trustee as soon as practicable
but in any event within seven (7) days after the happening of such
event.
(e) No
resignation or removal of the Administrator pursuant to this Section 8
shall be effective until a successor Administrator has been appointed by
the
Issuer, and such successor Administrator has agreed in writing to be bound
by
the terms of this Administration Agreement in the same manner as the
Administrator is bound hereunder.
5
(f) The
appointment of any successor Administrator shall be effective only after
satisfaction of the Rating Agency Condition with respect to the proposed
appointment.
9. Action
upon Termination, Resignation or Removal. Promptly upon the
effective date of termination of this Administration Agreement pursuant to
Section 8(a), the resignation of the Administrator pursuant to Section
8(b) or the removal of the Administrator pursuant to Section 8(c) or
8(d), the Administrator shall be entitled to be paid a pro-rated
portion
of the annual fee described in Section 2 hereof through the date of
termination and all Reimbursable Expenses incurred by it through the date
of
such termination, resignation or removal. The Administrator shall
forthwith upon such termination pursuant to Section 8(a) deliver to the
Issuer all property and documents of or relating to the Rate Stabilization
Bond
Collateral then in the custody of the Administrator. In the event of
the resignation of the Administrator pursuant to Section 8(b) or the
removal of the Administrator pursuant to Section 8(c) or 8(d), the
Administrator shall cooperate with the Issuer and take all reasonable steps
requested to assist the Issuer in making an orderly transfer of the duties
of
the Administrator.
10. Administrator’s
Liability. Except as otherwise provided herein, the Administrator
assumes no liability other than to render or stand ready to render the services
called for herein, and neither the Administrator nor any of its members,
managers, officers, employees, subsidiaries or affiliates shall be responsible
for any action of the Issuer or any of the shareholders, directors, officers,
employees, subsidiaries or affiliates of the Issuer (other than the
Administrator itself). The Administrator shall not be liable for nor
shall it have any obligation with regard to any of the liabilities, whether
direct or indirect, absolute or contingent of the Issuer or any of the members,
managers, officers, employees, subsidiaries or affiliates of the Issuer (other
than the Administrator itself).
11. INDEMNITY.
(a) SUBJECT
TO THE PRIORITY OF PAYMENTS SET FORTH IN THE INDENTURE, THE ISSUER SHALL
INDEMNIFY THE ADMINISTRATOR, ITS SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES
AND AFFILIATES AGAINST ALL LOSSES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
LIABILITIES AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL EXPENSES OF
LITIGATION OR PREPARATION THEREFOR WHETHER OR NOT THE ADMINISTRATOR IS A
PARTY
THERETO) WHICH ANY OF THEM MAY PAY OR INCUR ARISING OUT OF OR RELATING TO
THIS
ADMINISTRATION AGREEMENT AND THE SERVICES CALLED FOR HEREIN; PROVIDED,
HOWEVER, THAT SUCH INDEMNITY SHALL NOT APPLY TO ANY SUCH LOSS, CLAIM,
DAMAGE, PENALTY, JUDGMENT, LIABILITY OR EXPENSE RESULTING FROM THE
ADMINISTRATOR’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IN THE PERFORMANCE OF ITS
OBLIGATIONS HEREUNDER.
(b) THE
ADMINISTRATOR SHALL INDEMNIFY THE ISSUER, ITS MEMBERS, MANAGERS, OFFICERS
AND
EMPLOYEES AGAINST ALL LOSSES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, LIABILITIES
AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL EXPENSES OF LITIGATION OR
PREPARATION THEREFOR WHETHER OR NOT THE ISSUER IS A PARTY THERETO)
6
WHICH
ANY
OF THEM MAY INCUR AS A RESULT OF THE ADMINISTRATOR’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER.
12. Notices. Any
notice, report or other communication given hereunder shall be in writing
and
addressed as follows:
(a) if
to the Issuer, to:
Xxxxx
000
000
Xxxxx
Xxxx
Xxxxxxxxxx,
Xxxxxxxx 00000
Attention:
Manager
Telephone:
(000) 000-0000
Facsimile: (000)
000-0000
(b) if
to the Administrator, to:
000
X.
Xxxxx Xxxxxx
00xx
Xxxxx
Xxxxxxxxx,
Xxxxxxxx
00000
Attention:
Treasurer
Telephone:
(000) 000-0000
Facsimile: (000)
000-0000
|
|
(c)
|
if
to the Indenture Trustee, to the Corporate Trust
Office;
|
or
to
such other address as any party shall have provided to the other parties
in
writing. Any notice required to be in writing hereunder shall be deemed given
if
such notice is mailed by certified mail, postage prepaid, or hand-delivered
to
the address of such party as provided above.
13. Amendments. This
Administration Agreement may be amended from time to time by a written amendment
duly executed and delivered by each of the Issuer and the Administrator,
with
the prior written consent of the Indenture Trustee and the satisfaction of
the
Rating Agency Condition. Promptly after the execution of any such
amendment or consent, the Issuer shall furnish written notification of the
substance of such amendment or consent to each of the Rating
Agencies.
14. Successors
and Assigns. This Administration Agreement may not be assigned by
the Administrator unless such assignment is previously consented to in writing
by the Issuer and the Indenture Trustee and subject to the satisfaction of
the
Rating Agency Condition in connection therewith. Any assignment with
such consent and satisfaction, if accepted by the assignee, shall bind the
assignee hereunder in the same manner as the Administrator is bound hereunder.
Notwithstanding the foregoing, this Administration Agreement may be assigned
by
the Administrator without the consent of the Issuer or the Indenture Trustee
to
a corporation or other organization that is a successor (by merger,
consolidation or purchase of assets) to the
7
Administrator;
provided that such successor organization executes and delivers to the
Issuer an Agreement in which such corporation or other organization agrees
to be
bound hereunder by the terms of said assignment in the same manner as the
Administrator is bound hereunder. Subject to the foregoing, this
Administration Agreement shall bind any successors or assigns of the parties
hereto.
15. Governing
Law. This Administration Agreement shall be construed in
accordance with the laws of the State of Maryland, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
16. Headings. The
Section headings hereof have been inserted for convenience of reference only
and
shall not be construed to affect the meaning, construction or effect of this
Administration Agreement.
17. Counterparts. This
Administration Agreement may be executed in counterparts, each of which when
so
executed shall be an original, but all of which together shall constitute
but
one and the same Administration Agreement.
18. Severability. Any
provision of this Administration Agreement that is prohibited or unenforceable
in any jurisdiction shall be ineffective to the extent of such prohibition
or
unenforceability without invalidating the remaining provisions hereof and
any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or
render unenforceable such provision in any other jurisdiction.
19. Nonpetition
Covenant. Notwithstanding any prior termination of this
Administration Agreement, the Administrator, solely in its capacity as a
creditor of the Issuer, covenants that it shall not, prior to the date which
is
one year and one day after payment in full of the Rate Stabilization Bonds,
acquiesce, petition or otherwise invoke or cause the Issuer to invoke or
join
with any Person in invoking the process of any court or Governmental Authority
for the purpose of commencing or sustaining an involuntary case against the
Issuer under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or
other similar official of the Issuer or any substantial part of the property
of
the Issuer, or ordering the dissolution, winding up or liquidation of the
affairs of the Issuer.
20. Assignment
to Indenture Trustee. BGE hereby acknowledges and consents to any
mortgage, pledge, assignment and grant of a security interest by the Issuer
to
the Indenture Trustee pursuant to the Indenture for the benefit of the Secured
Parties of all right, title and interest of the Issuer in, to and under this
Administration Agreement, and the assignment of any or all of the Issuer’s
rights hereunder to the Indenture Trustee for the benefit of the Secured
Parties.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
8
IN
WITNESS WHEREOF, the parties have caused this Administration Agreement to
be
duly executed and delivered as of the day and year first above
written.
|
RSB
BONDCO LLC, as Issuer
|
||
|
By:
|
/s/ Xxxxxxx X. Xxxxxxxxxx | |
|
Name:
Xxxxxxx X. Xxxxxxxxxx
Title:
Secretary
|
||
|
|
||
|
BALTIMORE
GAS AND ELECTRIC COMPANY, as Administrator
|
||
|
By:
|
/s/ Xxxxxxx X. Xxxxxxxxxx | |
|
Name:
Xxxxxxx X. Xxxxxxxxxx
Title:
Secretary
|
||
Signature
Page to Administration Agreement
