EXECUTION COPY
ADMINISTRATION AGREEMENT
This Administration Agreement, dated as of December 19, 2002, is made by
and between Atlantic City Electric Transition Funding LLC, a Delaware limited
liability company (together with any successor thereto permitted under the
Indenture, as hereinafter defined, the "Issuer"), and PHI Service Company, a
Delaware corporation, as Administrator (together with its permitted successors
or assigns as administrator hereunder, the "Administrator").
RECITALS
A. WHEREAS, the Issuer is issuing the Transition Bonds pursuant to an
indenture dated as of the date hereof between the Issuer and The Bank of New
York, a New York banking corporation, as Trustee (the "Trustee") (as such
indenture is amended, modified or supplemented from time to time in accordance
with the provisions thereof, the "Indenture"; capitalized terms used herein and
not defined herein shall have the meanings assigned such terms in the
Indenture);
B. WHEREAS, the Issuer has entered into certain agreements in connection
with the issuance of the Transition Bonds, including (i) a Bondable Transition
Property Sale Agreement, dated as of the date hereof (as amended, modified or
supplemented from time to time in accordance with the provisions thereof, the
"Sale Agreement"), between the Issuer and Atlantic City Electric Company, a New
Jersey corporation ("ACE"), as Seller (in such capacity, the "Seller"), (ii) a
Bondable Transition Property Servicing Agreement, dated as of the date hereof
(as amended, modified or supplemented from time to time in accordance with the
provisions thereof, the "Servicing Agreement"), between the Issuer and ACE, as
Servicer (in such capacity, together with its successors and assigns permitted
under the Servicing Agreement, the "Servicer"), (iii) an Underwriting Agreement,
dated as of December 11, 2002 (as amended, modified or supplemented from time to
time in accordance with the provisions thereof, the "Underwriting Agreement"),
among the Issuer, ACE and the Underwriters named therein, and (iv) the Indenture
(together with the Sale Agreement and the Servicing Agreement, the "Related
Agreements");
C. WHEREAS, pursuant to the Related Agreements, the Issuer is required to
perform certain duties in connection with the Transition Bonds and the
collateral therefor pledged pursuant to the Indenture (the "Collateral") and to
maintain its existence and comply with applicable laws;
D. WHEREAS, the Issuer has no employees and does not intend to hire any
employees, and consequently desires to have the Administrator perform certain
duties of the Issuer referred to in the preceding clause, and to provide such
additional services consistent with the terms of this Agreement and the Related
Agreements as the Issuer may from time to time request; and
E. WHEREAS, the Administrator has the capacity to provide the services and
the facilities required hereby and is willing to perform such services and
provide such facilities for the Issuer on the terms set forth herein;
F. NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I.
Duties of Administrator
Section 1.01 Appointment of Administrator; Acceptance of Appointment. The
Issuer hereby appoints the Administrator, and the Administrator hereby accepts
such appointment, to perform the Administrator's obligations pursuant to this
Agreement on behalf of and for the benefit of the Issuer in accordance with the
terms of this Agreement and applicable law.
Section 1.02 Duties with Respect to the Related Agreements.
(a) The Administrator agrees to perform all its duties as Administrator
hereunder in accordance with the terms of this Agreement and applicable law. In
addition, the Administrator shall consult with the Issuer regarding the Issuer's
duties under the Related Agreements. Unless otherwise notified in writing by the
Issuer, the Administrator shall prepare for execution by the Issuer, or shall
cause the preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be the duty
of the Issuer to prepare, file, obtain or deliver pursuant to any Related
Agreement. In furtherance of the foregoing, the Administrator shall take all
appropriate action that it is the duty of the Issuer to take pursuant to the
Indenture including without limitation such of the foregoing as are required
with respect to the following matters under the Indenture (references
hereinafter in this Section 1.02(a) being to sections of the Indenture):
(1) the preparation of or obtaining of the Transition Bonds and or any
other Issuer documents and instruments required for authentication of the
Transition Bonds, if any, and delivery of the same to the Trustee or other
authenticating agent for authentication (Sections 2.02 and 2.10);
(2) the duty to cause the Transition Bond Register to be kept and,
during any period of time when the Trustee is not the Transition Bond
Registrar, to give the Trustee (and any transfer, paying or listing agent
of the Issuer appointed pursuant to Section 3.02(b)) prompt written notice
of any appointment of a new Transition Bond Registrar and the location, or
change in location, of the Register (Section 2.05);
(3) the fixing or causing to be fixed of any special record date and
the notification of each affected Holder of Transition Bonds with respect
to special record dates, payment dates, and the amount of defaulted
interest (plus interest on such defaulted interest) to be paid, if any
(Section 2.08(c));
(4) the duty to cause any newly appointed Paying Agent (other than the
Trustee, including without limitation any paying agent appointed pursuant
to Section 3.02(b)) to deliver to the Trustee the instrument specified in
the Indenture regarding its agreement with the Trustee (Section 3.03(b));
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(5) the direction to any Paying Agent to pay to the Trustee all sums
held in trust by such Paying Agent (Section 3.03(c));
(6) the preparation and filing of all documents and instruments
necessary to maintain the Issuer's existence, rights and franchises as a
limited liability company under the laws of the State of Delaware (unless
the Issuer becomes, or any successor Issuer under the Indenture is or
becomes, organized under the laws of any other state or of the United
States of America, in which case the Administrator shall prepare and file
all documents and instruments necessary to maintain such Issuer's
existence, rights and franchises under the laws of such other jurisdiction)
(Section 3.04);
(7) the obtaining and preservation of the Issuer's qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Transition Bonds, the Collateral and each other instrument or agreement
included in the Collateral (Section 3.04);
(8) the preparation of all supplements and amendments to the
Indenture, filings with the BPU pursuant to the Competition Act, financing
statements and continuation statements under the New Jersey UCC and
Delaware UCC, instruments of further assurance and other instruments, in
accordance with Section 3.05 of the Indenture, necessary to maintain and
preserve the Grant, Lien and security interest (and priority thereof) of
the Indenture and to protect the rights of the Transition Bondholders in
the Collateral (Section 3.05);
(9) the obtaining of Issuer Opinions of Counsel as to the Collateral
and the delivery thereof on or before March 31 of each year in which any
Transition Bonds are outstanding (Section 3.06);
(10) the identification to the Trustee in an Issuer Officer's
Certificate of any Person (other than the Administrator and the Servicer)
with whom the Issuer has contracted to perform its duties under the
Indenture (Section 3.07(b));
(11) the annual preparation and delivery of an Issuer Officer's
Certificate to the Trustee, within 120 days after the end of each fiscal
year of the Issuer (which will end December 31 of each year unless the
Issuer otherwise determines), as to compliance with conditions and
covenants under the Indenture (Section 3.09);
(12) the preparation or obtaining of any documents or instruments
required for the release of the Issuer from its obligations under the
Indenture (Sections 3.10 and 3.11);.
(13) written notice in the form of an Issuer Officer's Certificate of
any Default or Event of Default under the Indenture or any other Basic
Documents, its status and what action is being taken or proposed to be
taken with respect thereto within five Business Days after the occurrence
thereof, to the Trustee, the Rating Agencies and any agent appointed
pursuant to Section 3.02(b) (Section 3.17);
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(14) if the Administrator has actual knowledge of the occurrence of a
Servicer Default under the Servicing Agreement or an event of default,
termination event or downgrade event under any Hedge Agreement or Interest
Rate Swap Agreement, prompt written notice thereof to the Trustee and the
Rating Agencies, specifying what action, if any, is being taken with
respect to such default or other event (3.20(g)),
(15) in the case of a Servicer Default arising from the failure of the
Servicer to perform obligations under the Servicing Agreement, cause the
Issuer to take all reasonable steps available to it to remedy the failure
(3.20(h)),
(16) the preparation of or obtaining of an Issuer Officer's
Certificate, an Issuer Opinion of Counsel and an accountant's certificate
relating to the satisfaction and discharge of the Indenture (Section
4.01(a));
(17) the preparation of or obtaining of an Issuer Officer's
Certificate, an Issuer Opinion of Counsel and an accountant's certificate
relating to the exercise of the Legal Defeasance Option or the Covenant
Defeasance Option (Section 4.02);
(18) during any period when the Trustee is not the Transition Bond
Registrar, the furnishing to the Trustee of lists of the names and
addresses of Transition Bondholders (Section 7.01);
(19) to the extent not required to be performed by the Servicer, the
preparation and, after execution by the Issuer, the filing with the
Commission and the Trustee (and, if required, any listing agent appointed
pursuant to Section 3.02(b)) of annual reports and of the information,
documents and other reports, required to be filed on a periodic basis with,
and summaries thereof as may be required by rules and regulations
prescribed by, the Commission and the transmission of such summaries, as
necessary, to the Trustee (Section 7.03);
(20) the furnishing to the Trustee and to each stock exchange on which
the Transition Bonds are listed (if required by the rules of such exchange)
of a copy of each report mailed to Transition Bondholders, and notice to
the Trustee of any stock exchange on which the Transition Bonds are listed
(Section 7.04);
(21) the opening of one or more segregated trust accounts in the
Trustee's name, the preparation and furnishing of Issuer Orders, and the
obtaining of Issuer Opinions of Counsel and the taking of all other actions
necessary with respect to investment and reinvestment of funds in the
Collection Account (Section 8.02);
(22) the preparation or obtaining of any Issuer Orders and Issuer
Officer's Certificates and the obtaining of Issuer Opinions of Counsel and
Independent Certificates necessary for the release of the Collateral
(Sections 8.03 and 8.04);
(23) the preparation or obtaining of any Issuer Orders and Issuer
Officer's Certificates and the obtaining of any Issuer Opinions of Counsel
required with respect to the execution of supplemental indentures (Sections
9.01 and 9.02);
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(24) if requested by the Trustee or the Issuer, the preparation of new
Transition Bonds conforming to any supplemental indenture (Section 9.06);
(25) the preparation and delivery of notices required in connection
with any redemption of Transition Bonds (Sections 10.01 and 10.02);.
(26) the preparation or obtaining of all Issuer Officer's Certificates
and the obtaining of all Issuer Opinions of Counsel and Independent
Certificates, if necessary, with respect to any requests by the Issuer to
the Trustee to take any action under the Indenture (Section 11.01(a));
(27) the obtaining of evidence that the Rating Agency Condition shall
have been satisfied whenever and to the extent required under the Indenture
or any other Related Agreement; and
(28) for so long as any Transition Bonds are listed on the Luxembourg
Stock Exchange and the rules and regulations of such exchange so require,
the retention of a listing agent, a transfer agent and a paying agent in
Luxembourg (Section 3.02(b)).
(b) The Administrator shall also take all appropriate action that it is the
duty of the Issuer to take pursuant to the Underwriting Agreement including
without limitation the following matters (references hereinafter in this Section
1.02(b) being to sections of the Underwriting Agreement):
(1) to the extent not already delivered, the delivery to the
Representatives (as defined in the Underwriting Agreement) and counsel for
the Underwriters under the Underwriting Agreement (the "Underwriters"), of
copies of the Registration Statement (as defined in the Underwriting
Agreement) (Section 5(a)(iv));
(2) so long as delivery of a prospectus by an Underwriter or dealer
may be required by the Act, the delivery to the Representatives and counsel
for the Underwriters of as many copies of any Preliminary Final Prospectus
and the Final Prospectus and any supplement thereto as the Representatives
may reasonably request (Section 5(a)(iv));
(3) to the extent not required to be performed by the Servicer, the
preparation and, after execution by the Issuer, the filing with the SEC of
reports on Form SR as required by Rule 463 under the Act, and the delivery
of such reports on Form SR, as filed with the SEC, to the Representatives
(Section 5(a)(iv));
(4) the preparation and, after execution by the Issuer, the filing of
all documents and instruments necessary to qualify the Transition Bonds for
sale under the laws of such jurisdictions as the Representatives may
designate, and the maintenance of such qualifications in effect so long as
required for the distribution of the Transition Bonds, subject to the
qualifications, limitations and exceptions set forth in the Underwriting
Agreement (Section 5(a)(v));
(5) the arrangement for the determination of the legality of the
Transition Bonds for purchase by institutional investors (Section 5(a)(v));
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(6) to the extent not already performed by the Servicer, the delivery
to the Representatives of the annual statements of compliance and the
annual independent auditor's servicing reports furnished to the Issuer or
the Trustee pursuant to the Servicing Agreement or the Indenture, subject
to the qualifications, limitations and exceptions set forth in the
Underwriting Agreement (Section 5(a)(vii));
(7) so long as any of the Transition Bonds are outstanding, and to the
extent not already performed by the Servicer, the delivery to the
Representatives of (i) a copy of any filings with the BPU or any other
governmental agency or instrumentality relating to the Transition Bonds and
(ii) from time to time, any information concerning the Issuer to the extent
readily available, that the Representatives may reasonably request (Section
5(a)(viii)); and
(8) to the extent, if any, that any rating necessary to satisfy the
condition set forth in Section 6(o) of the Underwriting Agreement is
conditioned upon the furnishing of documents or the taking of other actions
by the Issuer on or after the Closing Date (as defined in the Underwriting
Agreement), the delivery of such documents and the taking of such actions
(Section 5(a)(ix)).
Section 1.03 Additional Duties.
(a) In addition to the duties of the Administrator set forth above, the
Administrator shall perform such calculations and shall prepare for execution by
the Issuer or shall cause the preparation by other appropriate Persons of all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Issuer to prepare, file, obtain or deliver pursuant to
the Related Agreements, and at the request of the Issuer shall take all
appropriate action that it is the duty of the Issuer to take pursuant to the
Related Agreements. Subject to Section 5.01, and in accordance with the
directions of the Issuer, the Administrator shall administer, perform or
supervise the performance of such other activities in connection with the
Collateral and the Related Agreements as are not covered by any of the foregoing
provisions and as are expressly requested by the Issuer and are reasonably
within the capability of the Administrator.
(b) In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Administrator may enter into transactions with or
otherwise deal with any of its Affiliates; provided, however, that the terms of
any such transactions or dealings shall be, in the Administrator's reasonable
opinion, no less favorable to the Issuer than would be available from
unaffiliated parties.
Section 1.04 Non-Ministerial Matters.
(a) With respect to matters that in the reasonable judgment of the
Administrator are non-ministerial, the Administrator shall not take any action
unless the Administrator shall have notified the Issuer of the proposed action
and the Issuer shall have consented. For the purpose of the preceding sentence,
"non-ministerial matters" shall include, without limitation:
(1) the amendment of, or any supplement to, the Indenture;
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(2) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the Issuer
(other than in connection with the collection of the Transition Bond
Charge);
(3) the amendment, change or modification of any of the Related
Agreements;
(4) the appointment of successor Registrars, successor Paying Agents
and successor Trustees pursuant to the Indenture or the appointment of
successor Administrators or successor Servicers, or the consent to the
assignment by the Registrar, Paying Agent or Trustee of its obligations
under the Indenture; and
(5) the removal of the Trustee.
(b) Notwithstanding anything to the contrary in this Agreement, the
Administrator shall not be obligated to, and hereby agrees that it shall not,
take any action that the Issuer directs the Administrator not to take on its
behalf.
Section 1.05 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 Issuer and the
Trustee at any time during normal business hours.
ARTICLE II.
Facilities
Section 2.01 Facilities. During the term of this Agreement, the
Administrator shall make available to or provide the Issuer with such facilities
as are necessary to conduct the business of the Issuer and to comply with the
terms of the Related Agreements. Such facilities shall include office space to
serve as the principal place of business of the Issuer. Initially such office
space will be located at 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000. All
facilities provided to the Issuer hereunder shall be provided without warranty
of any kind.
ARTICLE III.
Compensation
Section 3.01 Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement, including the provision of
facilities pursuant to Section 2.01, the Administrator shall be entitled to an
annual fee of $80,000, payable monthly. In addition, the Issuer shall reimburse
the Administrator for all filing fees and expenses, legal fees, fees of outside
auditors and other out-of-pocket expenses incurred by the Administrator in the
course of performing its duties hereunder. The Administrator's compensation and
other expenses payable hereunder shall be paid from the Collection Account
pursuant to Section 8.02 of the Indenture, and the Administrator shall have no
recourse against the Issuer for payment of such amounts other than in accordance
with Section 8.02 of the Indenture.
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ARTICLE IV.
Additional Information
Section 4.01 Additional Information To Be Furnished to Issuer. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
ARTICLE V.
Miscellaneous Provisions
Section 5.01 Independence of Administrator. For all purposes of this
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 to act for
or represent the Issuer in any way and shall not otherwise be deemed an agent of
the Issuer.
Section 5.02 No Joint Venture. Nothing contained in this Agreement shall
(a) constitute the Administrator and the Issuer as members of any partnership,
joint venture, association, syndicate, unincorporated business or other separate
entity, (b) be construed to impose any liability as such on any of them or (c)
be deemed to confer on any of them any express, implied or apparent authority to
incur any obligation or liability on behalf of the others.
Section 5.03 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 even though such Person may engage in
business activities similar to those of the Issuer.
Section 5.04 Term of Agreement; Resignation and Removal of Administrator.
(a) This Agreement shall continue in force for one year and one day after
the retirement of all Transition Bonds issued pursuant to the Indenture.
(b) Subject to Sections 5.04(e) and 5.04(f), the Administrator may resign
its duties hereunder by providing the Issuer with at least 60 days prior written
notice.
(c) Subject to Sections 5.04(e) and 5.04(f), the Issuer may remove the
Administrator without cause by providing the Administrator with at least 60 days
prior written notice.
(d) Subject to Sections 5.04(e) and 5.04(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:
(1) the Administrator shall default in the performance of any of its
duties under this Agreement and, after notice of such default, shall not
cure such default within
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ten days (or, if such default is curable but cannot be cured in such time,
shall not give within ten days such assurance of cure as shall be
reasonably satisfactory to the Issuer);
(2) a court having jurisdiction in the premises shall enter a decree
or order for relief, and such decree or order shall not have been vacated
within 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 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
(3) 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, or 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 clause (2)
or (3) of this Section 5.04(d) shall occur, it shall give written notice thereof
to the Issuer and the Trustee within seven days after the happening of such
event.
(e) No resignation or removal of the Administrator pursuant to this Section
5.04 shall be effective until (1) a successor Administrator shall have been
appointed by the Issuer and (2) such successor Administrator shall have agreed
in writing to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
(f) The appointment of any successor Administrator shall be effective only
after satisfaction of the Rating Agency Condition with respect to the proposed
appointment.
Section 5.05 Action upon Termination, Resignation or Removal. Promptly upon
the effective date of the termination of this Agreement pursuant to Section
5.04(a) or the resignation or removal of the Administrator pursuant to Section
5.04(b) or 5.04(c), the Administrator shall be entitled to be paid all fees
accruing to it and expenses accrued by it in the performance of its duties
hereunder through the date of such termination, resignation or removal, to the
extent permitted under Article III. The Administrator shall forthwith upon such
termination pursuant to Section 5.04(a) deliver to the Issuer all property and
documents of or relating to the Collateral then in the custody of the
Administrator. In the event of the resignation or removal of the Administrator
pursuant to Section 5.04(b), 5.04(c), or 5.04(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.
Section 5.06 Notices. Unless otherwise specifically provided herein, all
notices, directions, consents and waivers required under the terms and
provisions of this Administration Agreement shall be in English and in writing,
and any such notice, direction, consent or waiver may be given by United States
mail, courier service, facsimile transmission or electronic mail
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(confirmed by telephone, United States mail or courier service in the case of
notice by facsimile transmission or electronic mail) or any other customary
means of communication, and any such notice, direction, consent or waiver shall
be effective when delivered, or if mailed, three days after deposit in the
United States mail with proper postage for ordinary mail prepaid, except that
notices to the Trustee are effective only upon receipt:
(a) if to the Issuer, to
Atlantic City Electric Transition Funding LLC
X.X. Xxx 00000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Facsimile:
Telephone: (000) 000-0000
(b) if to the Administrator, to
PHI Service Company
000 Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Facsimile: (000) 000-0000
(c) if to the Trustee, to
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxxxx 0 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Asset Backed Securities
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
or to such other address as any party shall have provided to the other parties
in writing.
Section 5.07 Amendments. This Agreement may be amended in writing by the
Administrator and the Issuer upon compliance with the applicable terms of
Section 3.20 of the Indenture. In addition, and without limitation of any such
terms:
(a) promptly after the execution of any such amendment and obtaining of the
requisite consents, if any, the Administrator shall furnish written notification
of the substance of such amendment to the Trustee and each of the Rating
Agencies; and
(b) prior to its consent to any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
such amendment is authorized or permitted by this Agreement.
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The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
Section 5.08 Successors and Assigns. This Agreement may not be assigned by
the Administrator unless such assignment is previously consented to in writing
by the Issuer and the Trustee and is subject to the satisfaction of the Rating
Agency Condition in respect thereof. An 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 Agreement may be assigned by the Administrator without the
consent of the Issuer and the Trustee to a corporation or other organization
that is a successor (by merger, consolidation or purchase of assets) to the
Administrator, provided that such successor organization executes and delivers
to the Issuer and the Trustee 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 and the Rating Agency
Condition is satisfied. Subject to the foregoing, this Agreement shall bind any
successors or assigns of the parties hereto.
Section 5.09 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Administrator, the Issuer, the
Trustee and the Transition Bondholders. The Transition Bondholders shall be
entitled to enforce their rights and remedies against the Administrator under
this agreement solely in accordance with and subject to the provisions of
Section 5.06 of the Indenture. Nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Bondable Transition Property or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein, except for the indemnities specifically provided in Section 5.15. The
Persons listed in this Section 5.09 as having the benefit of this Agreement and
the Indemnified Persons listed in Section 5.15 shall have rights of enforcement
with respect to their respective rights in, to and under this Agreement.
Section 5.10 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW JERSEY, 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.
Section 5.11 Headings; References. 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 Agreement. Other than in Section
1.02, references herein to sections or articles are to the sections or articles
of this Agreement.
Section 5.12 Counterparts. This Agreement may be executed in counterparts,
each of which when so executed shall together constitute but one and the same
agreement.
Section 5.13 Severability. Any provision of this 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
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or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 5.14 Nonpetition Covenants. Notwithstanding any prior termination
of this Agreement or the Indenture, the Administrator hereby covenants and
agrees that it shall not, prior to the date which is one year and one day after
the termination of the Indenture and the payment in full of all of the
outstanding Transition Bonds, all other amounts owed under the Indenture
(including without limitation any amounts owed to third-party credit enhancers)
and all amounts owed by the Issuer under all Hedge Agreements and Interest Rate
Swap Agreements, acquiesce in, petition or otherwise invoke or, to the fullest
extent permitted by law, cause the Issuer to invoke the process of any court or
governmental authority for the purpose of commencing or sustaining a 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 winding up or liquidation of the
affairs of the Issuer; provided, however, that nothing in this Section 5.14
shall constitute a waiver of any right to indemnification, reimbursement or
other payment from the Issuer pursuant to this Agreement.
Section 5.15 Indemnification. The Administrator shall indemnify the Issuer
and the Trustee and their respective officials, officers, directors, managers,
employees, consultants, counsel and agents (each an "Indemnified Person") for,
and defend and hold harmless each such Person from and against, any and all
liabilities, obligations, actions, suits, claims, losses, damages, payments,
costs or expenses of any kind whatsoever ("Losses") that may be imposed on,
incurred by or asserted against any such Person as a result of the
Administrator's willful misconduct or negligence in the performance of its
duties or observance of its covenants under this Agreement; provided, however,
that the Administrator shall not be liable for any Losses resulting from the
willful misconduct or gross negligence of such Indemnified Person. The
Transition Bondholders shall be entitled to enforce their rights and remedies
against the Administrator under this indemnification solely in accordance with
and subject to the provisions of Section 5.06 of the Indenture. The
Administrator shall not be required to indemnify an Indemnified Person for any
amount paid or payable by such Indemnified Person in the settlement of any
action, proceeding or investigation without the written consent of the
Administrator, which consent shall not be unreasonably withheld. Promptly after
receipt by an Indemnified Person of notice of its involvement in any action,
proceeding or investigation, such Indemnified Person shall, if a claim for
indemnification in respect thereof is to be made against the Administrator under
this Section 5.15, notify the Administrator in writing of such involvement.
Failure by an Indemnified Person to so notify the Administrator shall relieve
the Administrator from the obligation to indemnify and hold harmless such
Indemnified Person under this Section 5.15 only to the extent that the
Administrator suffers actual prejudice as a result of such failure. With respect
to any action, proceeding or investigation brought by a third party for which
indemnification may be sought under this Section 5.15, the Administrator shall
be entitled to assume the defense of any such action, proceeding or
investigation. Upon assumption by the Administrator of the defense of any such
action, proceeding or investigation, the Indemnified Person shall have the right
to participate in such action or proceeding and to retain its own counsel. The
Administrator shall be entitled to appoint counsel of the Administrator's choice
at the Administrator's expense to represent the Indemnified Person in any
action, proceeding or investigation for which a claim of indemnification is made
against the Administrator under this
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Section 5.15 (in which case the Administrator shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by the
Indemnified Person except as set forth below); provided, however, that such
counsel shall be reasonably satisfactory to the Indemnified Person.
Notwithstanding the Administrator's election to appoint counsel to represent the
Indemnified Person in an action, proceeding or investigation, the Indemnified
Person shall have the right to employ separate counsel (including local
counsel), and the Administrator shall bear the reasonable fees, costs and
expenses of such separate counsel if (i) the use of counsel chosen by the
Administrator to represent the Indemnified Person would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the Indemnified Person and the
Administrator and the Indemnified Person shall have reasonably concluded that
there may be legal defenses available to it that are different from or
additional to those available to the Administrator, (iii) the Administrator
shall not have employed counsel reasonably satisfactory to the Indemnified
Person to represent the Indemnified Person within a reasonable time after notice
of the institution of such action or (iv) the Administrator shall authorize the
Indemnified Person to employ separate counsel at the expense of the
Administrator. Notwithstanding the foregoing, the Administrator shall not be
obligated to pay for the fees, costs and expenses of more than one separate
counsel for the Indemnified Persons (in addition to local counsel). The
Administrator shall not, without the prior written consent of the Indemnified
Person, settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought under this Section 5.15 (whether
or not the Indemnified Person is an actual or potential party to such claim or
action) unless such settlement, compromise or consent includes an unconditional
release of the Indemnified Person from all liability arising out of such claim,
action, suit or proceeding. The indemnities contained in this Section 5.15 shall
survive the resignation of the Trustee and the termination of this Agreement.
Each of the parties hereto acknowledges and agrees that the Trustee shall be a
third party beneficiary of the obligations of the Administrator under this
Section 5.15 and shall be entitled to enforce such obligations directly against
the Administrator as if the Trustee was a party hereto.
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IN WITNESS WHEREOF, the parties have caused this Administration Agreement
to be duly executed and delivered under seal as of the day and year first above
written.
ATLANTIC CITY ELECTRIC TRANSITION
FUNDING LLC, as Issuer
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
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Title: President & COO
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PHI SERVICE COMPANY, as Administrator
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
-------------------------------
Title: Senior VP
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