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EXHIBIT 99.2
CONFORMED COPY
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, dated as of March 9, 2001 (as the
same may be amended, supplemented or otherwise modified and in effect from time
to time, this "Administration Agreement"), by and between THE DETROIT EDISON
SECURITIZATION FUNDING LLC, a Michigan limited liability company, as issuer (the
"Issuer"), and THE DETROIT EDISON COMPANY ("Detroit Edison"), a Michigan
corporation, as administrator hereunder (in such capacity, the "Administrator").
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to such terms in Appendix A hereto.
W I T N E S S E T H:
WHEREAS, the Issuer is issuing Securitization Bonds pursuant
to the Indenture, dated as of March 9, 2001 (as amended, supplemented or
otherwise modified and in effect from time to time, the "Indenture"), between
the Issuer and the Trustee;
WHEREAS, the Issuer has entered into certain agreements in
connection with the issuance of the Securitization Bonds, including (i) the
2001-1 Series Supplement to the Indenture, dated as of March 9, 2001 (the
"2001-1 Series Supplement"), (ii) the Securitization Property Servicing
Agreement, dated as of March 9, 2001 (the "Servicing Agreement"), between the
Issuer and Detroit Edison, as Servicer, (iii) the Securitization Property Sale
Agreement, dated as of March 9, 2001 (the "Sale Agreement"), between the Issuer
and Detroit Edison, as Seller, and (iv) the Letter of Representations, dated as
of March 9, 2001 (the "Depository Agreement"), among the Issuer, the Trustee and
The Depository Trust Company relating to the Securitization Bonds (the
Indenture, the 2001-1 Series 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 Issuer LLC Agreement, the Securitization 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 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, and intending to be legally bound
hereby, the parties hereto agree as follows:
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SECTION 1. DUTIES OF THE ADMINISTRATOR: MANAGEMENT SERVICES.
The Administrator hereby agrees, subject to the directions of the Managers of
the Issuer, to provide the following corporate management services to the
Issuer:
(a) furnish the Issuer with ordinary clerical and bookkeeping
services necessary and appropriate for the Issuer, including, without
limitation, the following services:
(i) 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;
(ii) 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;
(iii) 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 by applicable law;
(iv) 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 and the Issuer LLC Agreement,
the "Issuer Documents"); and any other documents deliverable
by the Issuer thereunder or in connection therewith; and
(v) hold, maintain and preserve at the Premises
executed copies (to the extent applicable) of the Issuer
Documents and other documents executed by the Issuer
thereunder or in connection therewith;
(b) take such actions on behalf of the Issuer as are necessary
or desirable for the Issuer to remain organized and in good standing in the
State of Michigan as a limited liability company and qualified to do business in
those foreign jurisdictions in which it becomes necessary to be so qualified;
(c) provide for the issuance and delivery of the
Securitization Bonds;
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(d) 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, certificates and opinions
that it shall be the duty of the Issuer to prepare, file or deliver pursuant to
the Related Agreements;
(e) enforce each of the rights of the Issuer under the Related
Agreements, at the direction of the Issuer's Managers;
(f) 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;
(g) provide office space (the "Premises") for the Issuer and
such reasonable ancillary services as may be necessary to carry out the
obligations of the Administrator hereunder, including telecopying, duplicating
and word processing services;
(h) undertake such other administrative services as may be
appropriate, necessary or requested by the Issuer;
(i) provide the Trustee with copies of the filings by the
Issuer under the Securities Exchange Act of 1934, as amended; and
(j) provide such other services as are incidental to the
foregoing or as the Issuer and the Administrator may agree.
The Administrator further agrees:
A. to provide Moody's with notice of the following:
1. any change of Independent Managers under
Section 4.3 of the Issuer LLC Agreement;
2. any resignation or removal under Section 4.4
of the Issuer LLC Agreement;
3. any distribution under Section 5.2 of the
Issuer LLC Agreement, including the amount
thereof;
4. the opening of any account under Section 5.8
of the Issuer LLC Agreement;
5. any Event of Investment Ineligibility or
Event of Termination;
6. so long as any amounts are outstanding
thereunder, notice of the calculations
performed to determine compliance with
Section 7.01(h) and (i) of the Trade
Receivables Purchase and Sale Agreement
dated (the "RPA") as of February 28, 1989,
as amended and restated, among The Detroit
Edison Company, Corporate Asset Funding
Company, Inc., Citibank, N.A.
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("Citibank") and Citicorp North America,
Inc. ("CNAI"), individually and as agent,
or, as the case may be Section 7.01(f) and
(g) of the Trade Receivables Purchase and
Sale Agreement (the "Citibank RPA") dated as
of February 28, 1989 as amended, among The
Detroit Edison Company, Citibank and CNAI;
and
7. amendment of The Detroit Edison Company's
special contracts to reflect the SB Charge.
B. to provide Moody's with copies of any amendment to
the RPA, the Citibank RPA or that certain
Inter-Creditor Agreement dated as of March 9, 2001
among The Detroit Edison Company, the Issuer,
Citibank, CNAI, individually and as agent, and the
Trustee.
C. to provide Moody's with copies of the Issuer's
financial statements promptly following the filing
thereof with the Commission.
D. whenever The Detroit Edison Company in any capacity
is to pay any sum to the Issuer, any amounts the
Issuer owes to The Detroit Edison Company shall not
be deductible from such sum.
In providing the services under this Section 1.01 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.
SECTION 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 an
administrative fee of $250,000 per annum, plus expenses, payable monthly in
arrears on the first Business Day of each month. The Administrator shall provide
the Rating Agencies prior written notice of any change to such administrative
fee.
SECTION 3. THIRD PARTY SERVICES. Any third-party professional
services required for the performance of the above-referenced services by the
Administrator (including independent audited 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.
SECTION 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 shall reasonably
request.
SECTION 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 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
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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 6. NO JOINT VENTURE. Nothing contained in this
Agreement (a) shall constitute the Administrator and the Issuer as 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.
SECTION 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.
SECTION 8. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF
ADMINISTRATOR.
(a) This Agreement shall continue in force until the payment
in full of the Securitization Bonds, 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 not cure such default
within thirty (30) days (or, if such default cannot be cured
in such time, shall not give within thirty (30) days such
assurance of cure as shall be reasonably satisfactory to the
Issuer);
(ii) 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 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 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
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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 (7) days after the happening of such
event.
(e) No resignation or removal of the Administrator pursuant to
this Section 8 shall be effective until (i) a successor Administrator shall have
been appointed by the Issuer, and (ii) 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 notice to the Rating Agencies of the proposed appointment.
SECTION 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 (d), the
Administrator shall be entitled to be paid all fees and reimbursable expenses
accruing to it to 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
Collateral 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 (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 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 Member, Special Members, Managers, employees, subsidiaries or
Affiliates of the Issuer. 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 Member, Special
Members, Managers, employees, subsidiaries or Affiliates of the Issuer.
SECTION 11. INDEMNITY.
(a) Subject to Section 19, 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
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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 gross negligence or wilful misconduct in the
performance of its obligations hereunder.
(b) The Administrator shall indemnify the Issuer, its Member,
Managers 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 gross
negligence or wilful misconduct in the performance of its obligations hereunder.
SECTION 12. NOTICES. Any notice, report or other communication
given hereunder shall be in writing and addressed as follows:
(a) if to the Issuer, to:
The Detroit Edison Securitization Funding LLC
2000 2nd Avenue, 937 WCB
Detroit, Michigan 48226-1279
(313) 235-3642
(b) if to the Administrator, to:
The Detroit Edison Company
2000 2nd Avenue, 937 WCB
Detroit, Michigan 48226-1279
(313) 235-3642
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 by reputable
overnight courier, or hand-delivered to the address of such party as provided
above.
SECTION 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, subject to prior notice thereof to the Rating
Agencies.
SECTION 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 notice to the Rating
Agencies in respect thereof. 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. 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 or purchase of assets) to the Administrator; provided
that such successor organization executes and delivers to the Issuer a written
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
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is bound hereunder. Subject to the foregoing, this Agreement shall bind any
successors or assigns of the parties hereto.
SECTION 15. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN, WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 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.
SECTION 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.
SECTION 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.
SECTION 19. NONPETITION COVENANT. 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 termination of the Indenture and the payment in full of the
Securitization Bonds, any other amounts owed under the Indenture, including,
without limitation, any amounts owed to third-party credit enhancers, and any
amounts owed under any Hedge Agreement or Interest Rate Swap Agreement,
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.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the date and year first above written.
DETROIT EDISON SECURITIZATION
FUNDING LLC,
as Issuer
By: /s/ Kathleen Hier
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Name: Kathleen Hier
Title: Treasurer
THE DETROIT EDISON COMPANY
as Administrator
By: /s/ N.A. Khouri
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Name: N.A. Khouri
Title: Vice President and Treasurer
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