EXHIBIT 10.4
FORM OF
ADMINISTRATION
AGREEMENT
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT (this "Agreement"), dated as of
__________, 1998, is entered into among Commonwealth Edison Company, an Illinois
corporation, ("ComEd" or the "Administrator"), ComEd Funding, LLC, a Delaware
limited liability company ("CE Funding") and ComEd Transitional Funding Trust, a
Delaware business trust (the "Note Issuer").
WHEREAS, pursuant to Article XVIII of the Illinois Public Utilities
Act (the "Act"), the Administrator has formed CE Funding as a Delaware limited
liability company of which the Administrator is the sole member in order for CE
Funding to become a "grantee" of "intangible transition property" in accordance
with the Act; and
WHEREAS, the Note Issuer has been created in order to accept the
assignment of all of CE Funding's right, title and interest in and to the
intangible transition property and certain other property so that the Note
Issuer shall be an "assignee" as defined in Article XVIII of the Act and will
issue "transitional funding instruments" (the "Notes"), the net proceeds of
which will be paid by the Note Issuer to CE Funding and by CE Funding to ComEd;
and
WHEREAS, CE Funding and the Note Issuer each require certain
facilities, including, without limitation, office space, office furniture and
equipment, computer equipment and communications equipment, to carry on their
respective business activities; and
WHEREAS, CE Funding and the Note Issuer each require certain services,
including, without limitation, administrative, personnel, purchasing and
operational services, in order to carry on their respective business
activities; and
WHEREAS, each of CE Funding and the Note Issuer desire to engage ComEd
as Administrator hereunder in order to provide such facilities and services to
CE Funding and the Note Issuer and to administer the day to day operations of CE
Funding and the Note Issuer; and
WHEREAS, ComEd is willing to provide such facilities and services and
to act as Administrator hereunder; and
WHEREAS, the parties hereto believe that the Administrator's provision
of such facilities and services will be efficient and cost-effective for all
parties involved; and
WHEREAS, the parties hereto wish to incorporate certain terms and
provisions of that certain Affiliated Interests Agreement (the "AIA") dated as
of December 4, 1995 among
Unicom Corporation ("Unicom"), ComEd and certain other entities, as amended, a
copy of which agreement is attached hereto as EXHIBIT A;
NOW, THEREFORE, in consideration of the mutual promises set forth
below, the parties hereby agree as follows:
1. DEFINITIONS. Capitalized terms used in this Agreement without
definition shall have the meaning set forth in the AIA. Non-capitalized terms
used herein which are defined in Article XVIII of the Act shall have the
meanings as so defined therein.
2. PROVISIONS OF FACILITIES AND SERVICES. During the term of this
Agreement, ComEd hereby agrees to act as Administrator hereunder on behalf of CE
Funding and on behalf of the Note Issuer. The Administrator shall make
available or provide to CE Funding and the Note Issuer upon their request, such
facilities (collectively, "FACILITIES") as are described in Section 2.1 of the
AIA and such services (collectively, "SERVICES") as are described in Section 2.2
of the AIA; PROVIDED that (i) the Administrator shall have no obligation to
provide any such Facilities or Services to the extent that ComEd, as a Provider
under the AIA, would not be obligated to provide such Facilities or Services
thereunder and (ii) such Services shall be administrative and ministerial in
nature and are not intended to provide the Administrator with the right to
manage and control CE Funding or the Note Issuer, it being understood that the
management and control of CE Funding and the Note Issuer shall be governed by
separate agreements relating to such matters, including without limitation CE
Funding's certificate of formation and limited liability company agreement and
the declaration of trust of the Note Issuer. The parties hereto further
acknowledge that CE Funding and the Note Issuer have been formed as special
purpose entities whose business activities will be limited to the perfection and
maintenance of rights in the intangible transition property created under an
order from the Illinois Commerce Commission and under the assignment
transactions contemplated thereby, the issuance of the Notes, the entry into
such documents as may be required to evidence and consummate the foregoing
transactions and any other matters relating or incidental thereto. Accordingly,
the Administrator shall have no obligation hereunder to provide or perform
Facilities or Services to CE Funding or the Note Issuer if such Services or
Facilities are not reasonably related to the business activities recited above.
Notwithstanding the foregoing, the Administrator shall provide all Facilities
and Services which CE Funding or the Note Issuer, as applicable, have reasonably
demonstrated are necessary for one or both of them to comply with the terms of,
and perform their obligations under, all documents, agreements or instruments
entered into in connection with the issuance of the Notes, including, without
limitation, all obligations of the Note Issuer under the indenture (the "Note
Indenture") governing the issuance of such Notes. All Facilities and Services
shall, except as otherwise specifically set forth in this Agreement, be provided
without warranty of any kind as provided in Section 6.1 of the AIA.
3. INSTRUCTIONS TO EMPLOYEES. The Administrator shall advise all of
its employees and all of any other Provider's employees requested to perform
Services that each of CE Funding and the Note Issuer is a separate legal entity
from ComEd, ComEd's subsidiaries and affiliates other than CE Funding, and shall
instruct such employees not to represent ComEd or
-2-
its affiliates as having agreed to pay or as being liable for the debts of CE
Funding or the Note Issuer and not to represent CE Funding or the Note Issuer as
having agreed to pay or as being liable for the debts of ComEd or ComEd's
affiliates. The Administrator further agrees to advise all employees performing
Services on behalf of CE Funding or the Note Issuer that, in performing such
Services, such employees must follow any directions given them by the officers
of CE Funding or the designated representatives of the Note Issuer, as
applicable, and to act in the best interests of CE Funding and/or the Note
Issuer, as applicable.
4. EMPLOYEES. The Administrator shall at all times during the term
of this Agreement provide the following services to all of its personnel who
provide Services to CE Funding or the Note Issuer from time to time (such
personnel, the "Employees"), whether or not such Employees are also officers of
CE Funding or are authorized as officers of CE Funding to act on behalf of the
Note Issuer: (i) any and all compensation and benefits (including, but not
limited to, vacation, holiday and sick pay, life and health insurance, and
pension benefits) comparable to those maintained for the Administrator's
employees not engaged in rendering Services or as required by any applicable
employment practices, policies and contracts, and (ii) the payment of all
required federal, state, and local taxes, social security contributions and
federal and state unemployment compensation insurance taxes. The Administrator
shall also maintain workmen's compensation and liability insurance covering
Employees in compliance with applicable law on a basis comparable to such
insurance maintained for the Administrator's employees not engaged in rendering
Services.
5. CHARGES AND INVOICING. Charges for the use of Facilities and
Services shall be determined in accordance with Section 5.1(b) and other
applicable cost allocation provisions of the AIA and all invoicing and payment
for such Facilities and Services shall be in accordance with Section 4.3 of the
AIA; PROVIDED, however, that the Administrator acknowledges that payments owed
under this Agreement, to the extent paid out of collections of instrument
funding charges or other intangible transition property, shall be subject to the
priority of payment set forth in the Note Indenture. All charges owed hereunder
shall, unless otherwise expressly agreed by the parties, be deemed to be
operating expenses, and not fees, for purposes of the Note Indenture.
6. SERVICING AGREEMENT. Notwithstanding anything to the contrary in
this Agreement, so long as the Administrator is also acting as "Servicer" under
that certain Intangible Transition Property Servicing Agreement entered into as
of even date with the Note Indenture, the Administrator hereby acknowledges and
agrees that all out-of-pocket expenses and all other costs and expenses incurred
by the Administrator in performing its role as Servicer are being separately
compensated through payment of the "Servicing Fee" payable thereunder and shall
not constitute costs and expenses payable to the Administrator under this
Agreement.
7. TERM. The term of this Agreement shall begin as of the date of
issuance of the Notes, and, unless terminated earlier in accordance with the
provisions hereof, shall end on June 30, 2009; PROVIDED, that, if the Notes
issued by the Note Issuer have not been paid in full by such time, then the Note
Issuer shall have the option, by providing thirty days' prior written
-3-
notice, to renew this Agreement for successive one-year terms. Notwithstanding
the foregoing, any party hereunder may terminate this Agreement upon written
notice to the other parties hereto; PROVIDED that the Administrator shall not
cease to perform its obligations hereunder unless a successor administrator
reasonably acceptable to CE Funding and the Note Issuer shall have been
appointed.
8. INDEPENDENT CONTRACTOR. The relationship of the Administrator to
the other parties under this Agreement shall be solely that of an independent
contractor entering into a services agreement. No representations or assertions
shall be made or actions taken by either party which could imply or establish
any agency, joint venture, partnership, employment or trust relationship between
the parties with respect to the subject matter of this Agreement. The
Administrator shall have no authority or power whatsoever to enter into any
agreement, contract or commitment on behalf of the other parties hereto or
create any liability or obligation whatsoever on behalf of such other parties to
any person or entity. Conversely, neither CE Funding nor the Note Issuer shall
have any authority or power whatsoever to enter into any agreement, contract or
commitment on behalf of the Administrator or create any liability or obligation
whatsoever on behalf of the Administrator to any person or entity.
9. CONFIDENTIALITY. The parties hereto agree to abide by the
confidentiality provisions set forth in Article VIII of the AIA.
10. TAX MATTERS. Each of CE Funding and the Note Issuer has been
established so as not to be an association taxable as a corporation for federal
income tax purposes; accordingly, the parties hereto agree that the provisions
of the Tax Sharing Agreement do not apply to the parties hereto.
11. RECORDS. The Administrator shall maintain appropriate books of
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Note Issuer at any
time during normal business hours.
12. ADDITIONAL INFORMATION TO BE FURNISHED TO THE NOTE ISSUER. The
Administrator shall furnish to the Note Issuer from time to time such additional
information regarding the collateral for the Notes as the Note Issuer shall
reasonably request.
13. OTHER ACTIVITIES OF ADMINISTRATOR. Nothing herein shall prevent
the Administrator or its 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 Note Issuer.
14. NOT APPLICABLE TO COMED IN OTHER CAPACITIES. Nothing in this
Agreement shall affect any obligation ComEd may have in any other capacity.
15. NO PETITION. Administrator hereby covenants and agrees that,
prior to the date which is one year and one day after the payment in full of all
Notes, it will not institute
-4-
against, or join any other person in instituting against, CE Funding or the Note
Issuer any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.
16. MISCELLANEOUS.
(a) All provisions of this Agreement shall be binding upon the
parties hereto, their respective successors, legal representatives and assigns.
Neither party shall have the right to assign all or any portion of its
obligations under or interest in this Agreement, except monies which may be due
pursuant hereto, without the prior written consent of the other party; PROVIDED,
HOWEVER, that Administrator may subcontract or assign all or any portion of its
obligations under or interest in this Agreement to any affiliate of
Administrator upon written notice to CE Funding and the Note Issuer so long as
any subcontracting will not relieve the Administrator from liability for its
duties hereunder.
(b) No waiver by any party hereto of any of its rights under this
Agreement shall be effective unless in writing and signed by an officer of the
party waiving such right. No waiver of any breach of this Agreement shall
constitute a waiver of any subsequent breach, whether or not of the same nature.
This Agreement may not be modified except by a writing signed by officers or
other duly authorized representatives of each of the parties hereto.
(c) This Agreement constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof, and cancels and supersedes any
and all prior written or oral contracts or negotiations between the parties
hereto with respect to the subject matter hereof. All exhibits referenced
herein are hereby incorporated into this Agreement and made an integral part
hereof.
(d) This Agreement and the rights and obligations of the parties
under this Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Illinois.
(e) The descriptive headings of the several sections hereof are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
(f) Wherever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
(g) In the event of any conflict between the terms of this Agreement
and the terms of the AIA, the terms of the AIA shall control.
-5-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their respective names by their duly authorized representatives
as of the day and year first above written.
COMMONWEALTH EDISON COMPANY
By:
-------------------------
Title:
----------------------
COMED FUNDING, LLC
By:
-------------------------
Title:
----------------------
COMED TRANSITIONAL FUNDING TRUST
By: First Union Trust Company, National
Association, as Delaware Trustee and not in
its individual or corporate capacity
By:
-------------------------
Title:
----------------------
-6-
