Unassociated Document


    EXHIBIT10.3

    
 

    
      EXECUTION
        COPY

       

      


      ADMINISTRATION
        AGREEMENT

       

      ADMINISTRATION
        AGREEMENT, dated as of August 10, 2006 (this “Administration Agreement”), is by
        and between JCP&L TRANSITION FUNDING II LLC, a Delaware limited liability
        company, as Issuer (the “Issuer”), and FIRSTENERGY
        SERVICE
        COMPANY,
        an Ohio
        corporation, as administrator (in such capacity, the “Administrator”).
        Capitalized terms used and not otherwise defined herein shall have the meanings
        assigned to them in Appendix A to the Indenture dated as of August 10, 2006
        between the Issuer and The Bank of New York, as Trustee (the
“Trustee”).

       

      WITNESSETH:

       

      WHEREAS,
        the Issuer
        is issuing Transition Bonds pursuant to the Indenture;

       

      WHEREAS,
        the Issuer
        has entered into certain agreements in connection with the issuance of the
        Transition Bonds, including (i) the 2006-A Series Supplement to the Indenture,
        dated as of August 10, 2006 (the “2006-A Series Supplement”), (ii) the Servicing
        Agreement, (iii) the Sale Agreement, and (iv) the DTC Agreement (the Indenture,
        the 2006-A Series Supplement, the Servicing Agreement, the Sale Agreement
        and
        the DTC Agreement are hereinafter collectively referred to 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 Transition
        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 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 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, the parties agree as follows:

       

      1.
  Duties
        of the
        Administrator; Management Services.
        The Administrator
        hereby agrees, subject to the directions of the Managers, to:

       

      (a)  furnish
        the Issuer
        with ordinary clerical and bookkeeping services required by the Issuer,
        including, without limitation, the following services:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (i)  maintenance
        of
        general accounting records of the Issuer (the “Accounting Records”), in
        accordance with generally accepted accounting principles, separate and apart
        from its own accounting records, preparation of such quarterly and annual
        financial statements as may be necessary or appropriate and arrangement for
        annual audits of the Issuer’s financial statements by the Issuer’s Independent
        accountants;

       

      (ii)  preparation
        of, and,
        after execution by the Issuer, filing with the Commission and any applicable
        state agencies, all documents required to be filed with such agencies (the
        “Required Filings”), including, without limitation, periodic reports required to
        be filed under the Exchange Act;

       

      (iii)  preparation
        of and,
        after execution by the Issuer, filing with the applicable federal or state
        agency such income, franchise or other tax returns of the Issuer as shall
        be
        required to be filed by applicable law (the “Tax Returns”) and payment of, on
        behalf of the Issuer from the Issuer’s funds, any taxes required to be paid by
        the Issuer under applicable law;

       

      (iv)  preparation
        for
        execution by the Managers of the minutes of the Managers’ meetings and such
        other documents deemed necessary or appropriate by the Issuer to maintain
        its
        existence and good standing (the “Issuer Minutes,” and together with the
        Accounting Records, the Tax Returns and the Issuer LLC Agreement, collectively
        the “Issuer Documents”); and 

       

      (v)  maintenance
        and
        preservation of copies (executed or otherwise) of the Issuer Documents at
        the
        Premises (as defined below);

       

      (b)  take
        such actions on
        behalf of the Issuer as are necessary or appropriate for the Issuer to remain
        organized and in good standing in the State of Delaware as a limited liability
        company and qualified to do business in those foreign jurisdictions in which
        it
        becomes necessary to be so qualified, including the State of New
        Jersey;

       

      (c)  provide
        all
        management services necessary or appropriate for the issuance and delivery
        of
        the Transition Bonds;

       

      (d)  provide
        all
        management services necessary or appropriate for the performance by the Issuer
        of its obligations under each of the Related Agreements; 

       

      (e)  prepare
        all
        documents, reports, filings, instruments, certificates and opinions that
        the
        Issuer must prepare, file or deliver pursuant to the Related
        Agreements;

       

      (f)  enforce
        each of the
        rights of the Issuer under the Related Agreements, at the direction of the
        Managers;

       

      (g)  provide
        the defense,
        at the direction of the Managers, of any action, suit or proceeding brought
        against the Issuer or affecting the Issuer or any of its assets;

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (h)  provide
        office space
        (the “Premises”) for the Issuer as may be necessary for the Administrator to
        carry out its obligations hereunder, including telecopying, duplicating,
        word
        processing services and any other reasonable ancillary services;

       

      (i)  undertake
        such other
        administrative services as may be necessary, appropriate or requested by
        the
        Issuer; and

       

      (j)  provide
        such other
        services as may be incidental to the foregoing or as the Issuer and the
        Administrator may agree.

       

      In
        providing the services described in this Section 1 and as otherwise provided
        in
        this Administration Agreement, the Administrator shall not knowingly take
        any
        actions on behalf of the Issuer which (i) the Issuer would be 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.
        All of the
        services rendered by the Administrator under this Administration Agreement
        shall
        be reimbursed to the Administrator at the actual cost thereof. All compensation
        hereunder shall be payable in arrears on each Payment Date.

       

      3.
  Third
        Party
        Services.


       

      (A)
  Any
        third-party
        professional services required for the performance of the above-referenced
        services by the Administrator (including Independent auditor 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 and the Administrator.

       

      (B)
  The
        Administrator
        may delegate any or all of its duties hereunder to any of its Affiliates
        without
        further consent of the Issuer. Notwithstanding such delegation, the
        Administrator shall remain primarily liable for the performance of such duties
        hereunder.

       

      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 may reasonably request.

       

      5.
  Independence
        of
        the Administrator.
        For all purposes
        of this Administration Agreement, the Administrator shall be treated as an
        independent contractor and shall not be subject to the supervision of the
        Issuer, its Managers 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 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.

       


      
        
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            #569597
            v10

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


       

      6.
  No
        Joint
        Venture.
        Nothing contained
        in this Agreement (a) shall be deemed to make the Administrator and the Issuer
        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 outside the terms of this
        Administration Agreement.

       

      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.

       

      8.
  Term
        of
        Administration Agreement, Resignation and Removal of
        Administrator.


       

      (a)  This
        Administration
        Agreement shall continue in force until the satisfaction and discharge of
        the
        Indenture, upon which event this Administration Agreement shall automatically
        terminate.

       

      (b)  Subject
        to Sections
        8(e) and 8(f), the Administrator may resign from its duties hereunder by
        providing the Issuer with at least sixty 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 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 not cure such default
        within
        ten days (or, if such default cannot be cured in such time, shall not give
        within ten days such assurance of cure as shall be reasonably satisfactory
        to
        the Issuer);

       

      (ii)  a
        court having
        jurisdiction over the Administrator shall enter a decree or order for relief,
        and such decree or order shall not have been vacated within sixty 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 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 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 on such date as the resignation
        or removal of the Administrator is effected 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 not be effective unless prior notice of
        such
        appointment has been given to each Rating Agency.

       

      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 (d), the
        Administrator shall be entitled to be paid all of its properly allocated
        costs
        accruing to it to the date of such termination, resignation or removal. The
        Administrator shall upon such termination pursuant to Section 8(a) deliver
        to
        the Issuer all property and documents of or relating to the Collateral or
        the
        Issuer 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
        Administra-tor 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.

       

      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 members, Managers, 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, 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, agents 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 (or its
        shareholders’, directors’, officers’, employees’, agents’ or Affiliates’) gross
        negligence or willful misconduct in the performance of its or their obligations
        hereunder.

       

      (b)  The
        Administrator
        shall indemnify each of the Issuer and the Trustee, and its respective members,
        Managers, employees, subsidiaries, agents 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 Issuer is a party thereto) which any of them may incur as a result
        of
        the Administrator’s (or its shareholders’, directors’, officers’, employees’,
        agents’ or Affiliates’) gross negligence or willful misconduct in the
        performance of its or their obligations hereunder. Each of the parties hereto
        acknowledges and agrees that the Trustee shall be a third party beneficiary
        of
        the obligations of the Administrator under this Section 11(b) and shall be
        entitled to enforce such obligations directly against the Administrator as
        if
        the Trustee were a party hereto.

       

      12.
  Notices.
        Any notice, report
        or other communication given hereunder shall be in writing and addressed
        as
        follows:

       

      (a)  if
        to the Issuer,
        to:

       

      JCP&L
        Transition
        Funding II LLC

      103
        Foulk Road,
        Suite 202

      Wilmington,
        Delaware
        19803

       

      with
        a copy
        to:

       

      JCP&L
        Transition
        Funding II LLC

      c/o
        FirstEnergy
        Service Company

      76
        South Main
        Street

      Akron,
        Ohio
        44308

       

      (b)  if
        to the Rating
        Agencies, to:

       

      Standard
&
        Poor’s 

      Structured
        Finance
        ABS Surveillance Group

      55
        Water Street;
        41st
        Floor

      New
        York, New York
        10041-0003

      Fax:
        212-438-2664

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Moody’s
        Investors
        Services, Inc.

      99
        Church
        Street

      New
        York, New York
        10007

       

      Fitch,
        Inc.

      One
        State Street
        Plaza

      New
        York, New York
        10004

      Attn:
        ABS
        Surveillance

      


      (c)  if
        to the Trustee,
        to:

       

      The
        Bank of New
        York

      101
        Barclay Street,
        8 West

      New
        York, New York
        10286

      Attn:
        Asset Backed
        Securities

      


      (d)  if
        to the
        Administrator, to:

       

      FirstEnergy
        Service
        Company

      76
        South Main
        Street

      Akron,
        Ohio
        44308

       

      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, telecopied, faxed,
        hand-delivered, or sent by overnight courier 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 prior notice of such amendment has been given to each Rating
        Agency.

       

      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,
        which consent shall not be unreasonably withheld, and prior notice of such
        assignment has been given to each Rating Agency. Any assignment with such
        consent and notice, 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 any
        Affiliate of the Administrator and/or FirstEnergy Corp. or a corporation
        or
        other organization that is a successor (by merger, consolidation or purchase
        of
        assets) to the Administrator, provided that such Affiliate or successor
        organization executes and delivers to the Issuer an agreement in which such
        Affiliate or successor 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
        AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
        NEW
        JERSEY 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 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 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 the satisfaction and discharge of the
        Indenture, including, without limitation, any amounts owed to third party
        credit
        enhancers, 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.

       

      20.
  Action
        By the
        Managers.
        For purposes of
        this Administration Agreement, reference to any action of the Managers mean
        the
        action of three or more Managers, unless otherwise indicated or unless the
        Issuer LLC Agreement requires that the Managers act unanimously, or otherwise,
        with respect to any particular action.

       

      


       


      
        
          
          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      



      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.

       

      


       

      JCP&L
        TRANSITION FUNDING II LLC,

      as
        Issuer

      


      By:_______________________________

      Name:
        Randy
        Scilla

      Title:
        Assistant
        Treasurer

      


       

      FIRSTENERGY
        SERVICE COMPANY,

      as
        Administrator

      


      By:__________________________

      Name:
        Randy
        Scilla

      Title:
        Assistant
        Treasurer