Exhibit 10.3

Execution Version

ADMINISTRATION AGREEMENT

ADMINISTRATION AGREEMENT, dated as of November 25, 2009 (this “Administration
Agreement”), is by and between CENTERPOINT ENERGY RESTORATION BOND COMPANY, 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 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 Deutsche Bank Trust Company Americas, as the Trustee;

WHEREAS, the Issuer has entered into certain agreements in connection with the
issuance of the Bonds, including (i) the Indenture and the First Supplement,
(ii) the System Restoration Property Servicing Agreement, dated as of the date
hereof (the “Servicing Agreement”), between the Issuer and CenterPoint Houston,
as Servicer, (iii) the System Restoration Property Sale Agreement, dated as of
the date hereof (the “Sale Agreement”), between the Issuer and CenterPoint
Houston, as Seller, and (iv) the Letter of Representations, dated as of
November 20, 2009 (the “Depository Agreement”), among the Issuer, the Trustee
and The Depository Trust Company relating to the 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
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 (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 the 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 Administrator in connection with the performance of its
obligations under this Administration

 

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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”).

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 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 Trust Estate 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 members, managers, 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
Administration Agreement shall continue in force until the payment in full of
the 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.

 

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(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 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 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
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.

(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

 

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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
members, managers, 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).

11. INDEMNITY.

(A) SUBJECT TO THE PRIORITY OF PAYMENTS SET FORTH IN THE INDENTURE, THE ISSUER
SHALL INDEMNIFY THE ADMINISTRATOR, ITS MEMBERS, MANAGERS, 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 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:

CenterPoint Energy Restoration Bond Company, LLC

1111 Louisiana Street, Suite 4664B

Houston, Texas 77002

Attention: Manager

 

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  (b) if to the Administrator, to:

CenterPoint Energy Houston Electric, LLC

1111 Louisiana Street

Houston, Texas 77002

Attention: Treasurer

or to such other address as either party shall have provided to the other party
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, provided that (i) the Rating Agency Condition has been satisfied
in connection therewith, (ii) the Trustee shall have consented and (iii) in the
case of any amendment that increases ongoing qualified costs as defined in the
applicable financing order of the PUCT, the PUCT shall have consented thereto or
shall be conclusively deemed to have consented thereto. With respect to the
PUCT’s consent to any amendment to this Administration Agreement,

(a) the Administrator may request the consent of the PUCT by delivering to the
PUCT’s executive director and general counsel a written request for such
consent, which request shall contain:

(i) a reference to Docket No. 37200 and a statement as to the possible effect of
the amendment on ongoing qualified costs;

(ii) an Officer’s Certificate stating that the proposed amendment has been
approved by all parties to this Administration Agreement; and

(iii) a statement identifying the person to whom the PUCT or its staff is to
address its consent to the proposed amendment or request additional time;

(b) The PUCT shall, within 30 days of receiving the request for consent
complying with Section 13(a) above, either:

(i) provide notice of its consent or lack of consent to the person specified in
Section 13(a)(iii) above, or

(ii) be conclusively deemed to have consented to the proposed amendment,

unless, within 30 days of receiving the request for consent complying with
Section 13(a) above, the PUCT or its staff delivers to the office of the person
specified in Section 13(a)(iii) above a written statement requesting an
additional amount of time not to exceed 30 days in which to consider whether to
consent to the proposed amendment. If the PUCT or its staff requests an
extension of time in the manner set forth in the preceding sentence, then the
PUCT shall either provide notice of its consent or lack of consent to the person
specified in Section 13(a)(iii) above no later than the last day of such
extension of time or be conclusively deemed to have consented

 

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to the proposed amendment as of the last day of such extension of time.
Following delivery of a notice to the PUCT by the Administrator under
Section 13(a) above, the Administrator and Issuer may at any time withdraw from
the PUCT further consideration of any notification of a proposed amendment.

(c) Any amendment requiring the consent of the PUCT as provided in this
Section 13 shall become effective on the later of (i) the date proposed by the
parties to such amendment and (ii) the first day after the expiration of the 30
day period provided for in Section 13(b), or, if such period has been extended
pursuant thereto, the first day after the expiration of such period as so
extended.

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 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 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 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 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
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 covenants that it shall not, prior
to the date which is one year and one day after payment in full of the Bonds,
acquiesce, petition or otherwise

 

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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 have caused this Administration Agreement to be
duly executed and delivered as of the day and year first above written.

 

CENTERPOINT ENERGY RESTORATION BOND COMPANY, LLC,  

as Issuer

By:  

/s/ Marc Kilbride

  Marc Kilbride   Manager CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC,  

as Administrator

By:  

/s/ Marc Kilbride

  Marc Kilbride   Vice President and Treasurer

 

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