EXHIBIT 10.3
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, dated as of September __, 2001 (this
"Administration Agreement"), is by and between RELIANT ENERGY TRANSITION BOND
COMPANY LLC, a Delaware limited liability company, as Issuer (the "Issuer"), and
RELIANT ENERGY, INCORPORATED, a Texas corporation, as Administrator (in such
capacity, the "Administrator"). Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in Appendix A to
the Indenture more fully described below.
W I T N E S S E T H:
WHEREAS, the Issuer is issuing Transition Bonds pursuant to the Indenture,
dated as of August __, 2001 and a First Supplement thereto, dated as of even
date herewith (the "First Supplement") (as amended, supplemented or otherwise
modified and in effect from time to time, the "Indenture"), between the Issuer
and Bankers Trust Company, as the Trustee and as Securities Intermediary;
WHEREAS, the Issuer has entered into certain agreements in connection with
the issuance of the Transition Bonds, including (i) the Indenture and the First
Supplement, (ii) the Transition Property Servicing Agreement, dated as of
September __, 2001 (the "Servicing Agreement"), between the Issuer and Reliant
Energy, Incorporated, as Servicer, (iii) the Transition Property Sale Agreement,
dated as of September __, 2001 (the "Sale Agreement"), between the Issuer and
Reliant Energy, Incorporated, as Seller, and (iv) the Letter of Representations,
dated as of September __, 2001 (the "Depository Agreement"), among the Issuer,
the Trustee and The Depository Trust Company relating to the Transition Bonds
(the Indenture, the First Supplement, the Servicing Agreement, the Sale
Agreement and the Depository Agreement being referred to hereinafter
collectively 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
Transition Bonds and the Trust Estate pledged to the Trustee pursuant to the
Indenture;
WHEREAS, the Issuer has no employees, other than its officers and does not
intend to hire any employees, and consequently desires to have the Administrator
perform certain of the duties of the Issuer referred to in the preceding 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
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;
1
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Duties of the Administrator: Management Services. The Administrator
hereby agrees to provide the following corporate management services to the
Issuer:
(i) furnish the Issuer with ordinary clerical and bookkeeping
services necessary and appropriate for the Issuer, including, without
limitation, the following services:
(A) maintain at the Premises (as defined below) general
accounting records of the Issuer (the "Account Records"), subject
to year-end audit, in accordance with generally accepted accounting
principles, separate and apart from its own accounting records,
prepare or cause to be prepared such quarterly and annual financial
statements as may be necessary or appropriate and arrange for year-
end audits of the Issuer's financial statements by the Issuer's
independent accountants;
(B) prepare and, after execution by the Issuer, file with the
Securities and Exchange Commission (the "Commission") and any
applicable state agencies documents required to be filed with the
Commission and any applicable state agencies, including, without
limitation, periodic reports required to be filed under the
Securities Exchange Act of 1934, as amended;
(C) prepare for execution by the Issuer and cause to be filed
such income, franchise or other tax returns of the Issuer as shall
be required to be filed by applicable law (the "Tax Returns") and
cause to be paid on behalf of the Issuer from the Issuer's funds
any taxes required to be paid by the Issuer under applicable law;
(D) prepare or cause to be prepared for execution by the
Issuer's Managers minutes of the meetings of the Issuer's Managers
and such other documents deemed appropriate by the Issuer to
maintain the separate limited liability company existence and good
standing of the Issuer (the "Company Minutes") or otherwise
required under the Related Agreements (together with the Account
Records, the Tax Returns, the Company Minutes, the Issuer's Amended
and Restated Limited Liability Company Agreement, and the Issuer's
Certificate of Formation, the "Issuer Documents"); and any other
documents deliverable by the Issuer thereunder or in connection
therewith; and
(E) hold, maintain and preserve at the Premises (or such other
place as shall be required by any of the Related Agreements)
executed copies (to the extent applicable) of the Issuer Documents
and other documents executed by the Issuer thereunder or in
connection therewith;
(ii) take such actions on behalf of the Issuer, as are necessary or
desirable for the Issuer to keep in full effect its existence, rights
and franchises as a limited liability
2
company under the laws of the state of Delaware and obtain and preserve
its qualification to do business in each jurisdiction in which it
becomes necessary to be so qualified;
(iii) provide for the issuance and delivery of the Transition
Bonds;
(iv) provide for the performance by the Issuer of its obligations
under each of the Related Agreements, and prepare, or cause to be
prepared, all documents, reports, filings, instruments, notices,
certificates and opinions that it shall be the duty of the Issuer to
prepare, file or deliver pursuant to the Related Agreements;
(v) enforce each of the rights of the Issuer under the related
Agreements, at the direction of the Trustee;
(vi) provide for the defense, at the direction of the Issuer's
Managers, of any action, suit or proceeding brought against the Issuer
or affecting the Issuer or any of its assets;
(vii) provide office space (the "Premises") for the Issuer and such
reasonable ancillary services as are necessary to carry out the
obligations of the Administrator hereunder, including telecopying,
duplicating and word processing services;
(viii) undertake such other administrative services as may be
appropriate, necessary or requested by the Issuer; and
(ix) provide such other services as are incidental to the foregoing
or as the Issuer and the Administrator may agree.
In providing the services under this Section 1 and as otherwise provided
under this Administration Agreement, the Administrator will not knowingly take
any actions on behalf of the Issuer which (i) the Issuer is prohibited from
taking under the Related Agreements, or (ii) would cause the Issuer to be in
violation of any federal, state or local law or the Issuer's Amended and
Restated Limited Liability Company Agreement.
2. Compensation. As compensation for the performance of the Administrator's
obligations under this Agreement and, as reimbursement for its expenses related
thereto, the Administrator shall be entitled to $______________ every six
months, payable in arrears on each Payment Date.
3. Third Party Services. Any third-party professional services required for
the performance of the above-referenced services by the Administrator (including
independent auditors' 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 Administrator and the
Issuer.
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 Trust Estate as the Issuer shall reasonably request.
3
5. Independence of the 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, and shall
not hold itself out as having the authority, to act for or represent the Issuer
in any way and shall not otherwise be deemed an agent of the Issuer.
6. No Joint Venture. Nothing contained in this Agreement (a) shall
constitute the Administrator and the Issuer as partners or co-members of any
partnership, joint venture, association, syndicate, unincorporated business or
other separate entity, (b) shall be construed to impose any liability as such on
either of them or (c) shall be deemed to confer on either of them any express,
implied or apparent authority to incur any obligation or liability on behalf of
the other.
7. Other Activities of Administrator. Nothing herein shall prevent the
Administrator or any of its shareholders, directors, officers, employees,
subsidiaries or affiliates from engaging in other businesses or, in its sole
discretion, from acting in a similar capacity as an Administrator for any other
person or entity even though such person or entity may engage in business
activities similar to those of the Issuer.
8. Term of Agreement; Resignation and Removal of Administrator. (a) This
Agreement shall continue in force until the payment in full of the Transition
Bonds and any other amount which may become due and payable under the Indenture,
upon which event this Agreement shall automatically terminate.
(b) Subject to Sections 8(e) and 8(f), the Administrator may resign its
duties hereunder by providing the Issuer with at least sixty (60) days' prior
written notice.
(c) Subject to Sections 8(e) and 8(f), the Issuer may remove the
Administrator without cause by providing the Administrator with at least sixty
(60) days' prior written notice.
(d) Subject to Sections 8(e) and 8(f), at the sole option of the Issuer,
the Administrator may be removed immediately upon written notice of termination
from the Issuer to the Administrator if any of the following events shall occur:
(i) The Administrator shall default in the performance of any of its
duties under this Agreement and, after notice of such default, shall fail
to cure such default within ten (10) days (or, if such default cannot be
cured in such time, shall (A) fail to give within ten (10) days such
assurance of cure as shall be reasonably satisfactory to the Issuer and (B)
fail to cure such default within 30 days thereafter);
(ii) a court of competent jurisdiction shall enter a decree or order
for relief, and such decree or order shall not have been vacated within
sixty (60) days, in respect of the Administrator in any involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or such court shall appoint a receiver, liquidator,
assignee, custodian, Trustee, sequestrator or similar official for the
Administrator or any substantial part of its property or order the winding-
up or liquidation of its affairs; or
4
(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 as soon as possible but in any event within seven (7)
days after the happening of such event.
(e) No resignation or removal of the Administrator pursuant to this Section
shall be effective until a successor Administrator has been appointed by the
Issuer, and such successor Administrator has agreed in writing to be bound by
the terms of this 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.
9. Action upon Termination, Resignation or Removal. Promptly upon the
effective date of termination of this Agreement pursuant to Section 8(a), the
resignation of the Administrator pursuant to Section 8(b) or the removal of the
Administrator pursuant to Section 8(c) or 8(d), the Administrator shall be
entitled to be paid a pro-rated portion of the semi-annual fee described in
Section 2 hereof through the date of termination and all reimbursable expenses
accruing to it through the date of such termination, resignation or removal. The
Administrator shall forthwith upon such termination pursuant to Section 8(a)
deliver to the Issuer all property and documents of or relating to the Trust
Estate then in the custody of the Administrator. In the event of the resignation
of the Administrator pursuant to Section 8(b) or the removal of the
Administrator pursuant to Section 8(c) or 8(d), the Administrator shall
cooperate with the Issuer and take all reasonable steps requested to assist the
Issuer in making an orderly transfer of the duties of the Administrator.
10. Administrator's Liability. Except as otherwise provided herein, the
Administrator assumes no liability other than to render or stand ready to render
the services called for herein, and neither the Administrator nor any of its
shareholders, directors, officers, employees, subsidiaries or affiliates shall
be responsible for any action of the Issuer or any of the members, managers,
officers, employees, subsidiaries or affiliates of the Issuer (other than the
Administrator itself). The Administrator shall not be liable for nor shall it
have any obligation with regard to any of the liabilities, whether direct or
indirect, absolute or contingent of the Issuer or any of the members, managers,
officers, employees, subsidiaries or affiliates of the Issuer (other than the
Administrator itself).
5
11. Indemnity.
(a) Subject to the priority of payments set forth in the indenture, the
Issuer shall indemnify the Administrator, its shareholders, directors, officers,
employees and Affiliates against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not the Administrator is a
party thereto) which any of them may pay or incur arising out of or relating to
this 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 negligence or willful
misconduct in the performance of its obligations hereunder.
(b) the Administrator shall indemnify the Issuer, its members, Managers,
officers and employees against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not the Issuer is a party
thereto) which any of them may incur as a result of the Administrator's
negligence or willful misconduct in the performance of its obligations
hereunder.
12. Notices. Any notice, report or other communication given hereunder
shall be in writing and addressed as follows:
(a) if to the Issuer, to:
Reliant Energy Transition Bond Company LLC
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Manager
(b) if to the Administrator, to:
Reliant Energy, Incorporated
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Treasurer
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed
given if such notice is mailed by certified mail, postage prepaid, or hand-
delivered to the address of such party as provided above.
13. Amendments. This 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 (i) the Rating Agency Condition has been satisfied
in connection therewith and (ii) the Trustee and the Texas Commission shall have
consented thereto.
14. 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 subject to the satisfaction of the Rating Agency
Condition in connection therewith. Any assignment with such consent and
satisfaction, if accepted by the assignee, shall bind the assignee hereunder in
the same manner as the Administrator is bound hereunder.
6
Notwithstanding the foregoing, this Agreement may be assigned by the
Administrator without the consent of the Issuer or the Trustee to a corporation
or other organization that is a successor (by merger, consolidation, conversion
or purchase of assets) to the Administrator; provided that such successor
organization executes and delivers to the Issuer an Agreement in which such
corporation or other organization agrees to be bound hereunder by the terms of
said assignment in the same manner as the Administrator is bound hereunder.
Subject to the foregoing, this 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 Texas, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
16. Headings. The Section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or affect of this Agreement.
17. Counterparts. This 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 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
Agreement, the Administrator covenants that it shall not, prior to the date
which is one year and one day after payment in full of the Transition Bonds,
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.
7
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
RELIANT ENERGY TRANSITION BOND COMPANY LLC,
as Issuer
By:
--------------------------------------
Name:
Title:
RELIANT ENERGY, INCORPORATED, as Administrator
By:
--------------------------------------
Name:
Title:
8
