ADMINISTRATION AGREEMENT
Exhibit
10(c)
ADMINISTRATION
AGREEMENT, dated as of ____________, 2006 (this “Administration Agreement”), is
by and between JCP&L TRANSITION FUNDING II LLC, a Delaware limited liability
company, as Issuer (the “Issuer”), and FIRSTENERGY
SERVICE COMPANY,
an Ohio
corporation, as administrator (in such capacity, the “Administrator”).
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in Appendix A to the Indenture dated as of ___________,
2006 between the Issuer and The Bank of New York, as Trustee (the
“Trustee”).
WITNESSETH:
WHEREAS,
the Issuer is issuing Transition Bonds pursuant to the Indenture;
WHEREAS,
the Issuer has entered into certain agreements in connection with the issuance
of the Transition Bonds, including (i) the 2006-A Series Supplement to the
Indenture, dated as of ____________, 2006 (the “2006-A Series Supplement”), (ii)
the Servicing Agreement, (iii) the Sale Agreement, and (iv) the DTC Agreement
(the Indenture, the 2006-A Series Supplement, the Servicing Agreement, the
Sale
Agreement and the DTC Agreement are hereinafter collectively referred to
as the
“Related Agreements”);
WHEREAS,
pursuant to the Related Agreements, the Issuer is required to perform certain
duties in connection with the Related Agreements, the Issuer LLC Agreement,
the
Transition Bonds, and the Collateral pledged to the Trustee pursuant to the
Indenture;
WHEREAS,
the Issuer desires to have the Administrator perform certain of the duties
of
the Issuer referred to in the preceding clause 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 required hereby
and
is willing to perform such services 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, subject to the directions of the Managers,
to:
(a) furnish
the Issuer with ordinary clerical and bookkeeping services required by the
Issuer, including, without limitation, the following services:
(i) maintenance
of general accounting records of the Issuer (the “Accounting Records”), in
accordance with generally accepted accounting principles, separate and apart
from its own accounting records, preparation of such quarterly and annual
financial statements as may be necessary or appropriate and arrangement for
annual audits of the Issuer’s financial statements by the Issuer’s Independent
accountants;
(ii) preparation
of, and, after execution by the Issuer, filing with the Commission and any
applicable state agencies, all documents required to be filed with such agencies
(the “Required Filings”), including, without limitation, periodic reports
required to be filed under the Exchange Act;
(iii) preparation
of and, after execution by the Issuer, filing with the applicable federal
or
state agency such income, franchise or other tax returns of the Issuer as
shall
be required to be filed by applicable law (the “Tax Returns”) and payment of, on
behalf of the Issuer from the Issuer’s funds, any taxes required to be paid by
the Issuer under applicable law;
(iv) preparation
for execution by the Managers of the minutes of the Managers’ meetings and such
other documents deemed necessary or appropriate by the Issuer to maintain
its
existence and good standing (the “Issuer Minutes,” and together with the
Accounting Records, the Tax Returns and the Issuer LLC Agreement, collectively
the “Issuer Documents”); and
(v) maintenance
and preservation of copies (executed or otherwise) of the Issuer Documents
at
the Premises (as defined below);
(b) take
such
actions on behalf of the Issuer as are necessary or appropriate for the Issuer
to remain organized and in good standing in the State of Delaware as a limited
liability company and qualified to do business in those foreign jurisdictions
in
which it becomes necessary to be so qualified, including the State of New
Jersey;
(c) provide
all management services necessary or appropriate for the issuance and delivery
of the Transition Bonds;
(d) provide
all management services necessary or appropriate for the performance by the
Issuer of its obligations under each of the Related Agreements;
(e) prepare
all documents, reports, filings, instruments, certificates and opinions that
the
Issuer must prepare, file or deliver pursuant to the Related
Agreements;
(f) enforce
each of the rights of the Issuer under the Related Agreements, at the direction
of the Managers;
(g) provide
the defense, at the direction of the Managers, of any action, suit or proceeding
brought against the Issuer or affecting the Issuer or any of its
assets;
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(h) provide
office space (the “Premises”) for the Issuer as may be necessary for the
Administrator to carry out its obligations hereunder, including telecopying,
duplicating, word processing services and any other reasonable ancillary
services;
(i) undertake
such other administrative services as may be necessary, appropriate or requested
by the Issuer; and
(j) provide
such other services as may be incidental to the foregoing or as the Issuer
and
the Administrator may agree.
In
providing the services described in this Section 1 and as otherwise provided
in
this Administration Agreement, the Administrator shall not knowingly take
any
actions on behalf of the Issuer which (i) the Issuer would be 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 Issuer LLC
Agreement.
2. Compensation.
All of the services rendered by the Administrator under this Administration
Agreement shall be reimbursed to the Administrator at the actual cost thereof.
All compensation hereunder shall be payable in arrears on each Payment
Date.
3. Third
Party Services.
(A) Any
third-party professional services required for the performance of the
above-referenced services by the Administrator (including Independent auditor
fees and counsel fees) may, if the Issuer deems it necessary or desirable,
be
arranged by the Issuer. Costs and expenses associated with the contracting
for
such third-party professional services shall be paid directly by the Issuer,
unless otherwise agreed by the Issuer and the Administrator.
(B) The
Administrator may delegate any or all of its duties hereunder to any of its
Affiliates without further consent of the Issuer. Notwithstanding such
delegation, the Administrator shall remain primarily liable for the performance
of such duties hereunder.
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 Collateral as the Issuer may reasonably
request.
5. Independence
of the Administrator.
For all purposes of this Administration Agreement, the Administrator shall
be
treated as an independent contractor and shall not be subject to the supervision
of the Issuer, its Managers or the Trustee 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.
6. No
Joint Venture.
Nothing contained in this Agreement (a) shall be deemed to make the
Administrator and the Issuer members of any partnership, joint venture,
association,
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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 outside the terms of this
Administration Agreement.
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.
8. Term
of Administration Agreement, Resignation and Removal of
Administrator.
(a) This
Administration Agreement shall continue in force until the satisfaction and
discharge of the Indenture, upon which event this Administration Agreement
shall
automatically terminate.
(b) Subject
to Sections 8(e) and 8(f), the Administrator may resign from its duties
hereunder by providing the Issuer with at least sixty 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 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 not cure
such
default within ten days (or, if such default cannot be cured in such time,
shall
not give within ten days such assurance of cure as shall be reasonably
satisfactory to the Issuer);
(ii) a
court
having jurisdiction over the Administrator shall enter a decree or order
for
relief, and such decree or order shall not have been vacated within sixty
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
(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
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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 Trustee within seven 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 on such date
as
the resignation or removal of the Administrator is effected by the terms
of this
Administration Agreement in the same manner as the Administrator is bound
hereunder.
(f) The
appointment of any successor Administrator shall not be effective unless
prior
notice of such appointment has been given to each Rating Agency.
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 (d), the Administrator shall be entitled to be paid all of its properly
allocated costs accruing to it to the date of such termination, resignation
or
removal. The Administrator shall upon such termination pursuant to Section
8(a)
deliver to the Issuer all property and documents of or relating to the
Collateral or the Issuer 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 Administra-tor pursuant to Section 8(c) or (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 shareholders, directors, officers,
employees, subsidiaries or Affiliates shall be responsible for any action
of the
Issuer or any of the members, Managers, 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, 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,
agents 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
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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 (or its
shareholders’, directors’, officers’, employees’, agents’ or Affiliates’) gross
negligence or willful misconduct in the performance of its or their obligations
hereunder.
(b) The
Administrator shall indemnify each of the Issuer and the Trustee, and its
respective members, Managers, employees, subsidiaries, agents 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 Issuer is a party thereto) which
any of
them may incur as a result of the Administrator’s (or its shareholders’,
directors’, officers’, employees’, agents’ or Affiliates’) gross negligence or
willful misconduct in the performance of its or their obligations hereunder.
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 11(b) and shall be entitled to enforce such obligations directly
against
the Administrator as if the Trustee were a party hereto.
12. Notices.
Any
notice, report or other communication given hereunder shall be in writing
and
addressed as follows:
(a) if
to the
Issuer, to:
JCP&L
Transition Funding II LLC
000
Xxxxx
Xxxx, Xxxxx 000
Xxxxxxxxxx,
Xxxxxxxx 00000
with
a
copy to:
JCP&L
Transition Funding II LLC
c/o
FirstEnergy Service Company
00
Xxxxx
Xxxx Xxxxxx
Xxxxx,
Xxxx 00000
(b) if
to the
Rating Agencies, to:
Standard
& Poor’s
Structured
Finance ABS Surveillance Group
00
Xxxxx
Xxxxxx; 00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Fax:
000-000-0000
Xxxxx’x
Investors Services, Inc.
00
Xxxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
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Fitch,
Inc.
Xxx
Xxxxx
Xxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
ABS
Surveillance
(c) if
to the
Trustee, to:
The
Bank
of New York
000
Xxxxxxx Xxxxxx, 0 Xxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Asset Backed Securities
(d) if
to the
Administrator, to:
FirstEnergy
Service Company
00
Xxxxx
Xxxx Xxxxxx
Xxxxx,
Xxxx 00000
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, telecopied, faxed,
hand-delivered, or sent by overnight courier 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, provided that prior notice of such amendment has been given
to
each Rating Agency.
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
Trustee, which consent shall not be unreasonably withheld, and prior notice
of
such assignment has been given to each Rating Agency. Any assignment with
such
consent and notice, 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 Trustee to any
Affiliate of the Administrator and/or FirstEnergy Corp. or a corporation
or
other organization that is a successor (by merger, consolidation or purchase
of
assets) to the Administrator, provided that such Affiliate or successor
organization executes and delivers to the Issuer an agreement in which such
Affiliate or successor 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 AGREEMENT SHALL BE CON-STRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF
NEW JERSEY AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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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 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 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 satisfaction and
discharge of the Indenture, including, without limitation, any amounts owed
to
third party credit enhancers, acquiesce, petition or otherwise invoke or
cause
the Issuer to invoke the process of any court or government 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 its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
20. Action
By the Managers.
For purposes of this Administration Agreement, reference to any action of
the
Managers mean the action of three or more Managers, unless otherwise indicated
or unless the Issuer LLC Agreement requires that the Managers act unanimously,
or otherwise, with respect to any particular action.
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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.
JCP&L
TRANSITION FUNDING II LLC,
as
Issuer
By:_______________________________
Name:
Title:
FIRSTENERGY
SERVICE COMPANY
as
Administrator
By:__________________________
Name:
Title:
