ADMINISTRATION AGREEMENT
EXHIBIT10.3
EXECUTION
COPY
ADMINISTRATION
AGREEMENT, dated as of August 10, 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 August 10, 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 August 10, 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;
(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.
NY
#569597
v10
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, 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 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
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
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 CONSTRUED 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.
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.
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:
Xxxxx
Xxxxxx
Title:
Assistant
Treasurer
FIRSTENERGY
SERVICE COMPANY,
as
Administrator
By:__________________________
Name:
Xxxxx
Xxxxxx
Title:
Assistant
Treasurer
