Exhibit E-1
FORM OF
UTILITY MONEY POOL AGREEMENT
This Utility Money Pool Agreement (the "Agreement"), dated as of
_____________, 200_, is made and entered into by and among E.ON AG ("E.ON"), a
company organized under the laws of the Federal Republic of Germany and a
registered holding company under the Public Utility Holding Company Act of 1935,
as amended (the "Act"), LG&E Energy Corp, ("LG&E Energy"), a Kentucky
corporation and a holding company under the Act, LG&E Energy Services Inc.
("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 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 "Utility Subsidiary" and collectively, the "Utility
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 Utility Subsidiaries will be met by funds in the Utility
Money Pool to the extent such funds are available. Each Utility Subsidiary 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
Utility Subsidiary 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 Utility Subsidiary hereunder shall not
exceed the applicable borrowing limits set forth in applicable orders of the SEC
and other regulatory authorities, resolutions of such Utility Subsidiary's Board
of Directors, such Utility Subsidiary's governing corporate documents, and
agreements binding upon such Utility Subsidiary. No loans through the Utility
Money Pool will be made to, and no borrowings through the Utility Money Pool
will be made by, E.ON, LG&E Energy or LG&E Services.
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 the Utility Subsidiaries, (2) surplus funds in the treasuries
of E.ON and LG&E Energy, and (3) proceeds from bank borrowings and/or the sale
of commercial paper by each of the Parties (other than LG&E Services) ("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.
(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.
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.
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Section 1.05 Interest.
The daily outstanding balance of all loans to any Utility Subsidiary during
a calendar month shall accrue interest at 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") on the last business day of
the prior calendar month, plus an at-cost allocation of LG&E Services' cost of
managing the Utility Money Pool.
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 Utility 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 Utility 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 Utility Subsidiaries.
Loans to the Utility 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 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
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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.
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. 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 Utility 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 Utility Subsidiary, terminate the Utility Money Pool's
commitment to the Utility 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 Utility 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 Utility 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.
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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 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.
E.ON AG
By:___________________________
Name:______________________
Title:_____________________
LG&E ENERGY CORP.
By:___________________________
Name:______________________
Title:_____________________
LG&E ENERGY SERVICES INC.
By:___________________________
Name:______________________
Title:_____________________
LOUISVILLE GAS AND ELECTRIC COMPANY
By:___________________________
Name:______________________
Title:_____________________
KENTUCKY UTILITIES COMPANY
By: __________________________
Name:______________________
Title:_____________________
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