EXHIBIT N-1.1
FORM OF
UTILITY MONEY POOL AGREEMENT
This Utility Money Pool Agreement (the "Agreement"), dated as of ______,
2000, is made and entered into by and among LG&E Energy Corp, ("LG&E Energy"), a
Kentucky corporation and a holding company under the Public Utility Holding
Company Act of 1935, as amended (the "Act"), LG&E Services Company ("LG&E
Services"), a Kentucky corporation and a non-utility subsidiary of LG&E Energy
(in its role as administrator of the money pool and as a participant in the
money pool), and each of the utility subsidiaries 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 "Utility Money
Pool") to coordinate and provide for certain of their short-term cash and
working capital requirements; and
WHEREAS, the utility subsidiaries that will participate in the 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, the Parties hereto agree as follows:
ARTICLE I
CONTRIBUTIONS AND BORROWINGS
Section 1.01 Contributions to 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 Utility Money Pool, and will contribute
such funds to the Utility Money Pool. The determination of whether a Party at
any time has surplus funds to lend to the Utility Money Pool or shall lend funds
to the Utility Money Pool will be made
by such Party's chief financial officer or treasurer, 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 LG&E Services as administrative agent of the Utility Money Pool.
Section 1.02 Rights to Borrow.
Subject to the provisions of Section 1.04(c) of this Agreement, short-term
borrowing needs of the Parties, with the exception of LG&E Energy, will be met
by funds in the Utility Money Pool to the extent such funds are available. Each
Party (other than LG&E Energy) shall have the right to make short-term
borrowings from the 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 ("SEC"). Each
Party (other than LG&E Energy) may request loans from the 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 SEC and
other regulatory authorities, resolutions of such Party's Board of Directors,
such Party's governing corporate documents, and agreements binding upon such
Party. No loans through the Utility Money Pool will be made to, and no
borrowings through the Utility Money Pool will be made by, LG&E Energy.
Section 1.03 Source of Funds.
(a) Funds will be available through the Utility Money Pool from the
following sources for use by the Parties from time to time: (1) surplus funds in
the treasuries of Parties other than LG&E Energy, (2) surplus funds in the
treasury of LG&E Energy, and (3) proceeds from bank borrowings by Parties and
the sale of commercial paper by LG&E Energy and each other Party ("External
Funds"), in each case to the extent permitted by applicable laws and regulatory
orders. Funds will be made available from such sources in such other order as
LG&E Services, as administrator of the Utility Money Pool, may determine will
result in a lower cost of borrowing to companies borrowing from the Utility
Money Pool, consistent with the individual borrowing needs and financial
standing of the Parties providing funds to the Utility Money Pool.
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(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 Utility Money Pool. On any day when more than one
fund source (e.g., surplus treasury funds of LG&E Energy and other Utility Money
Pool participants ("Internal Funds") and External Funds), with different rates
of interest, is used to fund loans through the Utility Money Pool, each
borrowing Party will borrow pro rata from each fund source 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 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.
(b) LG&E Services, as administrator of the 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 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 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 balance shall
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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 the (i) 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
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.
The cost of compensating balances and fees paid to banks to maintain
credit lines by Parties lending External Funds to the 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 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 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 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 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
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each individual transaction. Instead, a promissory 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 attached hereto as Exhibit A; (b)
be dated as of the date of the initial borrowing; (c) be payable on demand; and
(d) be repayable in whole at any time or in part from time to time, without
premium or penalty.
ARTICLE II
OPERATION OF UTILITY MONEY POOL
Section 2.01 Operation.
Operation of the Utility Money Pool, including record keeping and
coordination of loans, will be handled by LG&E Services under the authority of
the appropriate officers of the Parties. LG&E Services 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.
LG&E Services will administer the Utility Money Pool on an "at cost" basis.
Separate records shall be kept by LG&E Services for the Utility Money Pool
established by this Agreement and any other money pool administered by LG&E
Services.
Section 2.02 Investment of Surplus Funds in the Utility Money Pool.
Funds not required for the Utility Money Pool loans (with the exception
of funds required to satisfy the 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.
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Section 2.03 Allocation of Interest Income and Investment Earnings.
The interest income and other investment income earned by the Utility
Money Pool on loans and investment of surplus funds will be allocated among the
Parties in accordance with the proportion each Party's contribution of funds in
the Utility Money Pool bears to the total amount of funds in the Utility Money
Pool and the cost of any External Funds provided to the 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 LG&E Services, on behalf of the Utility Money Pool, may, by
notice to the Subsidiary, terminate the 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 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 of the Parties hereto and subject
to all applicable approvals by the SEC and the applicable state utility
regulatory commission.
Section 3.02 Legal Responsibility.
Nothing herein contained shall render any Party liable for the
obligations of any other Party hereunder and the rights,
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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 Kentucky.
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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.
LG&E ENERGY CORP.
By:___________________________
Name:______________________
Title:_____________________
LG&E SERVICES COMPANY
By:___________________________
Name:______________________
Title:_____________________
LOUISVILLE GAS AND ELECTRIC COMPANY
By:___________________________
Name:______________________
Title:_____________________
KENTUCKY UTILITIES COMPANY
By: __________________________
Name:__________________
Title:_________________
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EXHIBIT A
To Utility Money Pool Agreement
FORM OF NOTE
FOR VALUE RECEIVED, the undersigned, __________ 9the "Borrower"), hereby
promises to pay to the order of LG&E Services Company, as administrator of the
Utility Money Pool as defined in the Money Pool Agreement (as defined below), at
its principal office in Louisville, Kentucky, on demand, the principal amount
outstanding from time to time under that certain Utility Money Pool Agreement
dated as of _________, 2000 by and among LG&E Energy Corp., LG&E Services
Company, as administrator, the undersigned, and each of the other utility
subsidiaries whose name appears on the signature pages thereof (the "Money Pool
Agreement"). The principal amount outstanding under this note shall bear
interest, calculated daily, at a rate determined in accordance with the Money
Pool Agreement. The undersigned hereby authorizes the administrator to record
on the grid on the reverse side hereof or attached hereto the date and amount of
each advance under the Money Pool Agreement and each payment made on account of
the principal thereof. The principal amount outstanding as set forth on the
grid on the reverse side hereof or attached hereto shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on this note.
This note may be prepaid in full at any time or in part from time to time,
without premium or penalty.
Date: ______________________
By: ______________________
Name: _____________________
Title: ____________________
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Amount of Loan Principal
Date Loan Repayment Amount
Outstanding
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