Exhibit 10.3
 
EXECUTION COPY
 
ADMINISTRATION AGREEMENT
 
This ADMINISTRATION AGREEMENT, dated as of June 29, 2007 (this “Administration
Agreement”), is entered into by and between BALTIMORE GAS AND ELECTRIC COMPANY
(“BGE”), as administrator (in such capacity, the “Administrator”), and RSB
BONDCO LLC, a Delaware limited liability company (the “Issuer”). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in Appendix A to the Indenture (as defined below).
 
W I T N E S S E T H:
 
WHEREAS, the Issuer is issuing Rate Stabilization Bonds pursuant to that certain
Indenture (including Appendix A thereto) dated as of the date hereof (the
“Indenture”), by and between the Issuer and Deutsche Bank Trust Company
Americas, a New York banking corporation, in its capacity as indenture trustee
(the “Indenture Trustee”) and in its separate capacity as a securities
intermediary (the “Securities Intermediary”), as the same may be amended,
restated, supplemented or otherwise modified from time to time, and each Series
Supplement;
 
WHEREAS, the Issuer has entered into certain agreements in connection with the
issuance of the Rate Stabilization Bonds, including (i) the Indenture, (ii) the
Rate Stabilization Property Servicing Agreement, dated as of June 29, 2007 (the
“Servicing Agreement”), by and between the Issuer and BGE, as Servicer, (iii)
the Rate Stabilization Property Purchase and Sale Agreement, dated as of June
29, 2007 (the “Sale Agreement”), by and between the Issuer and BGE, as Seller,
and (iv) the other Basic Documents to which the Issuer is a party, relating to
the Rate Stabilization Bonds (the Indenture, the Servicing Agreement, the Sale
Agreement and the other Basic Documents to which the Issuer is a party, as such
agreements may be amended, restated, supplemented or otherwise modified 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
Rate Stabilization Bonds and the Rate Stabilization Bond Collateral pledged to
the Indenture 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
Rate Stabilization 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
 

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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;
 
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:
 
(a)           furnish the Issuer with ordinary clerical, bookkeeping and other
corporate administrative 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 by the Issuer 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
under 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, the LLC Agreement, and
the Certificate of Formation, 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 (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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(b)           take such actions on behalf of the Issuer, as are necessary or
desirable for the Issuer to keep in full force and 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;
 
(c)           take such actions on the behalf of the Issuer as are necessary for
the issuance and delivery of one or more series of Rate Stabilization Bonds;
 
(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, notices, 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 Indenture Trustee;
 
(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 are 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; and
 
(i)           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 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 BGE of its obligations in its capacity as Servicer), the
Administrator shall be entitled to an annual fee of $100,000 (the
“Administration Fee”), payable by the Issuer in arrears proportionately on each
Payment Date.  The Administration Fee shall not exceed $100,000 in the aggregate
annually, provided, however, that BGE may seek approval from the PSC to recover
from Customers, through the Financing Credit Order in accordance with the
Qualified Rate Order, any  incremental costs it incurs to provide administrative
support services to the Issuer to the extent such incremental costs exceed
$100,000, and furtherprovided that such excess amounts shall neither be
considered an Operating Expense nor be paid out of the Collection Account or
included in the calculation of True-Up Adjustments.  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
 
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incurred by the 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 BGE in its capacity as Servicer), to the extent that such costs and expenses
are supported by invoices or other customary documentation and are 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 Qualified Rate Order issued by the PSC providing
for the issuance of an additional series of Rate Stabilization Bonds.
 
3.           Third Party Services.  Any services 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
Qualified Rate Order issued by the PSC 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 directly by the
Issuer or paid by the Administrator and reimbursed by the Issuer in accordance
with Section 2, or otherwise as the Administrator and the Issuer may mutually
arrange.
 
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 Rate Stabilization Bond Collateral as the Issuer shall
reasonably request.
 
5.           Independence of the Administrator.  For all purposes of this
Administration 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 Administration
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.
 
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8.           Term of Agreement; Resignation and Removal of Administrator.
 
(a)           This Administration Agreement shall continue in force until the
payment in full of the Rate Stabilization Bonds and any other amount which may
become due and payable under the Indenture, upon which event this Administration
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 Administration 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 thirty (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
 
(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 Indenture Trustee as soon as practicable 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 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 by the terms of this Administration Agreement in the same manner as the
Administrator is bound hereunder.
 
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(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 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 8(d), the
Administrator shall be entitled to be paid a pro-rated portion of the annual fee
described in Section 2 hereof through the date of termination and all
Reimbursable Expenses incurred by 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 Rate Stabilization Bond 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
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 members, managers, officers, employees, subsidiaries or affiliates shall be
responsible for any action of the Issuer or any of the shareholders, directors,
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).
 
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 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 GROSS 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)
 
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WHICH ANY OF THEM MAY INCUR AS A RESULT OF THE ADMINISTRATOR’S GROSS 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:
 
RSB BondCo LLC
Suite 202
103 Foulk Road
Wilmington, Delaware 19803
Attention: Manager
Telephone: (302) 691-0123
Facsimile:  (302) 652-8667

(b)           if to the Administrator, to:
 
740 E. Pratt Street
16th Floor
Baltimore, Maryland
21202                                                                
Attention: Treasurer
Telephone: (410) 783-3620
Facsimile:  (410) 783-3619

 
(c)
if to the Indenture Trustee, to the Corporate Trust Office;

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 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, with the prior written consent of the Indenture
Trustee and the satisfaction of the Rating Agency Condition.  Promptly after the
execution of any such amendment or consent, the Issuer shall furnish written
notification of the substance of such amendment or consent to each of the Rating
Agencies.
 
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 Indenture 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. Notwithstanding the foregoing, this Administration Agreement
may be assigned by the Administrator without the consent of the Issuer or the
Indenture Trustee to a corporation or other organization that is a successor (by
merger, consolidation or purchase of assets) to the
 
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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
Administration Agreement shall bind any successors or assigns of the parties
hereto.
 
15.           Governing Law.  This Administration Agreement shall be construed
in accordance with the laws of the State of Maryland, 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 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 Administration 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, the Administrator, solely in its capacity as a
creditor of the Issuer, covenants that it shall not, prior to the date which is
one year and one day after payment in full of the Rate Stabilization Bonds,
acquiesce, petition or otherwise invoke or cause the Issuer to invoke or join
with any Person in invoking the process of any court or Governmental Authority
for the purpose of commencing or sustaining an involuntary 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 the property of
the Issuer, or ordering the dissolution, winding up or liquidation of the
affairs of the Issuer.
 
20.           Assignment to Indenture Trustee.  BGE hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of
the Secured Parties of all right, title and interest of the Issuer in, to and
under this Administration Agreement, and the assignment of any or all of the
Issuer’s rights hereunder to the Indenture Trustee for the benefit of the
Secured Parties.
 
 
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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.
 
 

 
RSB BONDCO LLC, as Issuer
 
 
 
By:
/s/ Charles A. Berardesco     
Name:  Charles A. Berardesco
Title:    Secretary
   
 
 
 
BALTIMORE GAS AND ELECTRIC COMPANY, as Administrator
 
 
 
By:
/s/ Charles A. Berardesco    
Name:  Charles A. Berardesco
Title:    Secretary

 
 
Signature Page to Administration Agreement

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