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EXHIBIT 99.2
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, dated as of [_____], 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 [______], 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 [______], 2001 (the "2001-1 Series
Supplement"), (ii) the Securitization Property Servicing Agreement, dated as of
[______], 2001 (the "Servicing Agreement"), between the Issuer and Detroit
Edison, as Servicer, (iii) the Securitization Property Sale Agreement, dated as
of [______], 2001 (the "Sale Agreement"), between the Issuer and Detroit Edison,
as Seller, and (iv) the Letter of Representations, dated as of [______], 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.
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.
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
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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.
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
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(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 (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,
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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 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
0000 0xx Xxxxxx, 000 XXX
Xxxxxxx, Xxxxxxxx 00000-0000
(000) 000-0000
(b) if to the Administrator, to:
The Detroit Edison Company
0000 0xx Xxxxxx, 000 XXX
Xxxxxxx, Xxxxxxxx 00000-0000
(000) 000-0000
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
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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.
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:
--------------------------------
Name:
Title:
THE DETROIT EDISON COMPANY
as Administrator
By:
--------------------------------
Name:
Title:
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