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Exhibit 10.3
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, dated as of December 16, 2005 (this
"Administration Agreement"), is by and
between CENTERPOINT ENERGY TRANSITION
BOND COMPANY II, LLC, a Delaware limited
liability company, as Issuer (the
"Issuer"), and CENTERPOINT ENERGY HOUSTON
ELECTRIC, LLC, a Texas limited
liability company ("CenterPoint Houston"),
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 the date hereof and a First
Supplemental Indenture thereto, also
dated as of the date hereof (the "First
Supplement") (as amended, supplemented
or otherwise modified and in effect from
time to time, the "Indenture"), between
the Issuer and Wilmington Trust Company, as
the Trustee, and Deutsche Bank Trust
Company Americas, 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 the
date hereof (the "Servicing Agreement"),
between the Issuer and CenterPoint
Energy Houston Electric, LLC, as Servicer,
(iii) the Transition Property Sale
Agreement, dated as of the date hereof (the
"Sale Agreement"), between the
Issuer and CenterPoint Energy Houston
Electric, LLC, as Seller, and (iv) the
Letter of Representations, dated as of
December 13, 2005 (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, as such
agreements may be amended and supplemented
from time to time, being referred to
hereinafter collectively as the "Initial
Related Agreements");
WHEREAS,
pursuant to the Initial Related Agreements, the Issuer is
required to perform certain duties in
connection with the Initial Related
Agreements, the Transition Bonds and the
Trust Estate pledged to the Trustee
pursuant to the Indenture;
WHEREAS,
the Issuer may from time to time enter into and be required to
perform certain duties under additional
agreements similar to the Initial
Related Agreements in connection with the
issuance of one or more additional
series of Transition Bonds (together with
the Initial Related Agreements, the
"Related Agreements");
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 clauses 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 and
the facilities required thereby and is
willing to perform such services and
provide such facilities for the Issuer on
the terms set forth herein;
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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 and
to cause third parties to provide professional
services
required for or contemplated by such services in accordance
with
the
provisions of this Administration Agreement:
(i) furnish the Issuer with ordinary clerical, bookkeeping and
other
corporate
administrative 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 LLC Agreement, and
the
Issuer 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;
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(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 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 one or more series
of
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) obtaining, maintaining or facilitating one or more letters
of
credit or
obtaining, maintaining or facilitating other credit support for
the
obligations of the Issuer contemplated by any Related
Agreement;
(ix) undertake such other administrative services as may be
appropriate, necessary or requested by the Issuer; and
(x) 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 LLC Agreement.
2.
Compensation. As compensation for the performance of the
Administrator's obligations under this
Administration Agreement (including the
compensation of Persons serving as
Managers, other than the independent
managers, and officers of the Issuer, but,
for the avoidance of doubt, excluding
the performance by CenterPoint Houston of
its obligations in its capacity as
Servicer), the Administrator shall be
entitled to $100,000 annually (the
"Administration Fee"), payable by the
Issuer in arrears proportionately on each
Payment Date. In addition, the
Administrator shall be entitled to be reimbursed
by the Issuer for all costs and expenses of
services performed by unaffiliated
third parties and actually incurred by
the
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Administrator in connection with the
performance of its obligations under this
Administration Agreement in accordance with
Section 3 (but, for the avoidance of
doubt, excluding any such costs and
expenses incurred by CenterPoint Houston in
its capacity as Servicer), to the extent
that such costs and expenses are
supported by invoices or other customary
documentation and reasonably allocated
to the Issuer ("Reimbursable Expenses").
The Administration Fee shall be
modified, and this Section 2 shall be
deemed to have been amended, without
further act or deed by any Person to
reflect any such modification or amendment,
to the extent provided in any financing
order issued by the PUCT providing for
the issuance of an additional series of
Transition Bonds.
3. Third
Party Services. Any services or fees required for or
contemplated
by the performance of the above-referenced
services by the Administrator to be
provided by unaffiliated third parties
(including independent auditors' fees and
counsel fees) may, if provided for or
otherwise contemplated by any related
financing order issued by the PUCT and if
the Issuer deems it necessary or
desirable, be arranged by the Issuer or by
the Administrator at the direction
(which may be general or specific) of the
Issuer. Costs and expenses associated
with the contracting for such third-party
services may be paid di
