FORM OF NON-UTILITY MONEY POOL AGREEMENT
EXHIBIT J-2
FORM OF
NON-UTILITY MONEY POOL AGREEMENT
This Non-Utility Money Pool Agreement (the "Agreement"), dated as
of ___________, 2000, is made and entered into by and among Exelon Corporation
("Exelon"), a Pennsylvania corporation and a registered holding company under
the Public Utility Holding Company Act of 1935, as amended (the "Act"), Exelon
Service Company ("Exelon Service") (solely in the role as administrator of the
money pool), a subsidiary service company of Exelon, and each of the non-utility
subsidiaries of Exelon whose name appears on the signature pages hereof (each a
"Party" and collectively, the "Parties").
WITNESSETH:
WHEREAS, the Parties desire to establish a Money Pool (the "Non-
Utility Money Pool") to coordinate and provide for certain of their short-term
cash and working capital requirements; and
WHEREAS, the non-utility subsidiaries that will participate in
the Non-Utility Money Pool (each a "Subsidiary" and collectively, the
"Subsidiaries") will from time to time have need to borrow funds on a short-term
basis, and certain of the Parties will from time to time have funds available to
loan on a short-term basis;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants and provisions contained herein, and intending to be
legally bound hereby the Parties hereto agree as follows:
ARTICLE I.
CONTRIBUTIONS AND BORROWINGS
Section 1.01 Contributions to Non-Utility Money Pool.
Each Party will determine each day, on the basis of cash flow
projections and other relevant factors, in such Party's sole discretion, the
amount of funds it has available for contribution to the Non-Utility Money Pool,
and will contribute such funds to the Non-Utility Money Pool. The determination
of whether a Party at any time has surplus funds to lend to the Non-Utility
Money Pool or shall lend funds to the Non-Utility Money Pool will be made by an
appropriate officer of such Party, or by a designee thereof, on the basis of
cash flow projections and other relevant factors, in such Party's sole
discretion. Each Party may withdraw any of its funds at any time upon notice to
Exelon Service as administrative agent of the Non-Utility Money Pool.
Section 1.02 Rights to Borrow.
Subject to the provisions of Section 1.04(c) of this Agreement,
all short-term borrowing needs of the Parties, with the exception of Exelon,
will be met by funds in the Non-Utility Money Pool to the extent such funds are
available. Each Party (other than Exelon) shall have the right to make short-
term borrowings from the Non-Utility Money Pool from time to time, subject to
the availability of funds and the limitations and conditions set forth herein
and in the applicable orders of the Securities and Exchange Commission. Each
Party (other than Exelon) may request loans from the Non-Utility Money Pool from
time to time during the period from the date hereof until this Agreement is
terminated by written agreement of the Parties; provided, however, that the
aggregate amount of all loans requested by any Party hereunder shall not exceed
the applicable borrowing limits set forth in applicable orders of the Securities
and Exchange Commission and other regulatory authorities, resolutions of such
Party's Board of Directors or similar governing body, such Party's governing
corporate documents, and agreements binding upon such Party. No loans through
the Non- Utility Money Pool will be made to, and no borrowings through the Non-
Utility Money Pool will be made by, Exelon.
Section 1.03 Source of Funds.
(a) Funds will be available through the Non-Utility Money Pool
from the following sources for use by the Parties from time to time: (i) surplus
funds in the treasuries of Parties other than Exelon, (ii) surplus funds in the
treasury of Exelon, and (iii) proceeds from bank borrowings by Parties and the
sale by Exelon of commercial paper ("External Sources"). Funds will be made
available from such sources in such order as Exelon Service, as administrator of
the Non-Utility Money Pool, may determine will result in a lower cost of
borrowing to companies borrowing from the Non-Utility Money Pool, consistent
with the individual borrowing needs and financial standing of the Parties
providing funds to the Non- Utility Money Pool.
(b) Borrowing Parties will borrow pro rata from each lending
Party in the proportion that the total amount loaned by such lending Party bears
to the total amount then loaned through the Non-Utility Money Pool. On any day
when more than one fund source (e.g., surplus treasury funds of Exelon and other
Non-Utility Money Pool participants ("Internal Sources") and funds from External
Sources), with different rates of interest, is used to fund loans through the
Non-Utility Money Pool, each borrowing Party will borrow pro rata from each such
fund source in the Non-Utility Money Pool in the same proportion that the amount
of funds provided by that fund source bears to the total amount of short-term
funds available to the Non-Utility Money Pool.
Section 1.04 Authorization.
(a) Each loan shall be authorized by the lending Party's chief
financial officer or treasurer, or by a designee thereof.
EXHIBIT J-2 Page 2
(b) Exelon Service, as administrator of the Non-Utility Money
Pool, will provide each Party with periodic activity and cash accounting reports
that include, among other things, reports of cash activity, the daily balance of
loans outstanding and the calculation of interest charged.
(c) All borrowings from the Non-Utility Money Pool shall be
authorized by the borrowing Party's chief financial officer or treasurer, or by
a designee thereof. No Party shall be required to effect a borrowing-through the
Non-Utility Money Pool if such Party determines that it can (and is authorized
to) effect such borrowing at lower cost directly from banks or through the sale
of its own commercial paper.
Section 1.05 Interest.
The daily outstanding balance of all loans to any Subsidiary
shall accrue interest as follows:
(a) If only Internal Funds comprise the daily outstanding
balance of all loans outstanding during a calendar month, the interest rate
applicable to such daily balances shall be the rates for high-grade unsecured
30-day commercial paper of major corporations sold through dealers as quoted in
The Wall Street Journal (the "Average Composite").
(b) If only External Funds comprise the daily outstanding
balance of all loans outstanding during a calendar month, the interest rate
applicable to such daily outstanding balances shall be the lender's cost for
such External Funds or, if more than one Party had made available External Funds
at any time during the month, the applicable interest rate shall be a composite
rate, equal to the weighted average of the costs incurred by the respective
Parties for such External Funds.
(c) In cases where the daily outstanding balances of all loans
outstanding at any time during the month include both Internal Funds and
External Funds, the interest rate applicable to the daily outstanding balances
for the month shall be equal to the weighted average of (i) the cost of all
Internal Funds contributed by Parties, as determined pursuant to Section 1.05(a)
of this Agreement, and (ii) the cost of all such External Funds, as determined
pursuant to Section 1.05(b) of this Agreement.
(d) The interest rate applicable to Loans made by a Subsidiary
to the Non-Utility Money Pool under Section 1.01 of this Agreement shall be the
Average Composite as determined pursuant to Section 1.05(a) of this Agreement.
Section 1.06 Certain Costs.
EXHIBIT J-2 Page 3
The cost of compensating balances and fees paid to banks to
maintain credit lines by Parties lending External Funds to the Non-Utility Money
Pool shall initially be paid by the Party maintaining such line. A portion of
such costs shall be retroactively allocated every month to the Subsidiaries
borrowing such External Funds through the Non-Utility Money Pool in proportion
to their respective daily outstanding borrowings of such External Funds.
Section 1.07 Repayment.
Each Subsidiary receiving a loan from the Non-Utility Money Pool
hereunder shall repay the principal amount of such loan, together with all
interest accrued thereon, on demand and in any event within 365 days of the date
on which such loan was made. All loans made through the Non-Utility Money Pool
may be prepaid by the borrower without premium or penalty.
Section 1.08 Form of Loans to Subsidiaries.
Loans to the Subsidiaries from the Non-Utility Money Pool shall
be made as open-account advances, pursuant to the terms of this Agreement. A
separate promissory note will not be required for each individual transaction.
Instead, a promissory grid note evidencing the terms of the transactions shall
be signed by the Parties to the transaction. Any such note shall: (a) be in
substantially the form filed as Exhibit J-4 to the Form U-1 Application-
Declaration in File No. 70-9533 of the Commission; (b) be dated as of the date
of the initial borrowing; (c) mature on demand or on a date agreed by the
Parties to the transaction, but in any event not later than one year after the
date of the applicable borrowing; and (d) be repayable in whole at any time or
in part from time to time, without premium or penalty.
ARTICLE II.
OPERATION OF NON-UTILITY MONEY POOL
Section 2.01 Operation.
Operation of the Non-Utility Money Pool, including record keeping
and coordination of loans, will be handled by Exelon Service under the authority
of the appropriate officers of the Parties. Exelon Service shall be responsible
for the determination of all applicable interest rates and charges to be applied
to advances outstanding at any time hereunder, shall maintain records of all
advances, interest charges and accruals and interest and principal payments for
purposes hereof, and shall prepare periodic reports thereof for the Parties.
Exelon Service will administer the Non-Utility Money Pool on either an "at cost"
basis or, in its sole discretion, on a different basis. Separate records shall
be kept by Exelon Service for the Non-Utility Money Pool established by this
Agreement and any other money pool administered by Exelon Service.
EXHIBIT J-2 Page 4
Section 2.02 Investment of Surplus Funds in the Non-Utility Money
Pool.
Funds not required for the Non-Utility Money Pool loans (with the
exception of funds required to satisfy the Non-Utility Money Pool's liquidity
requirements) will ordinarily be invested in one or more short-term investments,
including (i) interest-bearing accounts with banks; (ii) obligations issued or
guaranteed by the U.S. government and/or its agencies and instrumentalities,
including obligations under repurchase agreements; (iii) obligations issued or
guaranteed by any state or political subdivision thereof, provided that such
obligations are rated not less than A by a nationally recognized rating agency;
(iv) commercial paper rated not less than A-1 by S&P or P-1 by Moody's, or their
equivalent by a nationally recognized rating agency; (v) money market funds;
(vi) bank certificates of deposit; (vii) Eurodollar funds; and (viii) such other
investments as are permitted by Section 9(c) of the Act and Rule 40 thereunder.
Section 2.03 Allocation of Investment Earnings.
The interest income and other investment income earned by the
Non-Utility Money Pool on loans and on investment of surplus funds will be
allocated among the Parties in accordance with the proportion each Party's
contribution of funds in the Non-Utility Money Pool bears to the total amount of
funds in the Non-Utility Money Pool and the cost of any External Sources
provided to the Non-Utility Money Pool by such Party. Interest and other
investment earnings will be computed on a daily basis and settled once per
month.
Section 2.04 Event of Default.
If any Subsidiary shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts generally,
or shall make a general assignment for the benefit of creditors, or any
proceeding shall be instituted by or against any Party seeking to adjudicate it
bankrupt or insolvent, then Exelon Service, on behalf of the Non-Utility Money
Pool, may, by notice to the Subsidiary, terminate the Non-Utility Money Pool's
commitment to the Subsidiary and/or declare the principal amount then
outstanding of, and the accrued interest on, the loans and all other amounts
payable to the Non-Utility Money Pool by the Subsidiary hereunder to be
forthwith due and payable, whereupon such amounts shall be immediately due and
payable without presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by each Subsidiary.
ARTICLE III.
MISCELLANEOUS
Section 3.01 Amendments.
No amendment to this Agreement shall be adopted except in a
writing executed by a duly authorized officer of each Party.
EXHIBIT J-2 Page 5
Section 3.02 Legal Responsibility.
Nothing herein contained shall render any Party liable for the
obligations of any other Party hereunder and the rights, obligations and
liabilities of the Parties are several in accordance with their respective
obligations, and not joint.
Section 3.03 Rules for Implementation.
The Parties may develop a set of guidelines for implementing the
provisions of this Agreement, provided that the guidelines are consistent with
all of the provisions of this Agreement.
Section 3.04 Governing Law.
This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Pennsylvania.
EXHIBIT J-2 Page 6
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each Party hereto as of the date
first above written.
Exelon Corporation
By:________________________________________
Name:
Title:
Exelon Services Company
By:________________________________________
Name:
Title:
Exelon Ventures Holding
By:________________________________________
Name:
Title:
Exelon Enterprises, Inc.
By:________________________________________
Name:
Title:
Date: _________, 2000
EXHIBIT J-2 Page 7
