EXHIBIT H-2
FORM OF
NONUTILITY MONEY POOL AGREEMENT
This Nonutility Money Pool Agreement (the "Agreement"), dated as of
___________, 2000, is made and entered into by and among KeySpan Corporation
("KeySpan"), a New York corporation and a registered holding company under the
Public Utility Holding Company Act of 1935, as amended (the "Act"), KeySpan
Corporate Services, LLC ("KCS"), a New York limited liability corporation and a
subsidiary service company of KeySpan (solely in the role as administrator of
the money pool), and each of the nonutility subsidiaries of KeySpan 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 "Nonutility
Money Pool") to coordinate and provide for certain of their short-term cash and
working capital requirements; and
WHEREAS, the Nonutility subsidiaries that will participate in the
Nonutility 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 Nonutility Money Pool
Subject to applicable regulatory restrictions, if any, 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 Nonutility Money Pool, and will contribute such funds to
the Nonutility Money Pool. The determination of whether a Party at any time has
surplus funds to lend to the Nonutility Money Pool or shall lend funds to the
Nonutility 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 KCS as
administrative agent of the Nonutility Money Pool.
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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 KeySpan and the
Intermediate Holding Companies, will be met by funds in the Nonutility Money
Pool to the extent such funds are available. Each Party (other than KeySpan and
the Intermediate Holding Companies) shall have the right to make short-term
borrowings from the Nonutility 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 KeySpan and the Intermediate Holding Companies) may request loans
from the Nonutility 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 Nonutility Money Pool will be made to, and no
borrowings through the Nonutility Money Pool will be made by, KeySpan and the
Intermediate Holding Companies.
Section 1.03 - Source of Funds
(a) Funds will be available through the Nonutility 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 KeySpan, (ii) surplus funds in the
treasuries of KeySpan and the Intermediate Holding Companies, and (iii) proceeds
from bank borrowings by Parties or the sale by KeySpan of commercial paper
("External Sources"). Funds will be made available from such sources in such
order as KCS, as administrator of the Nonutility Money Pool, may determine will
result in a lower cost of borrowing to companies borrowing from the Nonutility
Money Pool, consistent with the individual borrowing needs and financial
standing of the Parties providing funds to the Nonutility 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 Nonutility Money Pool. On any day when more than
one fund source (e.g., surplus treasury funds of KeySpan and other Nonutility
Money Pool participants ("Internal Sources") and funds from External Sources),
with different rates of interest, is used to fund loans through the Nonutility
Money Pool, each borrowing Party will borrow pro rata from each such fund source
in the Nonutility 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 Nonutility Money Xxxx.
0
Xxxxxxx 0.00 - Xxxxxxxxxxxxx
(x) Each loan shall be authorized by the lending Party's chief financial
officer or treasurer, or by a designee thereof.
(b) KCS, as administrator of the Nonutility 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 Nonutility 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 Nonutility
Money Pool if such Party determines that it can (and is authorized to) effect
such borrowing at lower cost directly from banks, through the sale of its own
commercial paper, or otherwise.
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
Nonutility 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.
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Section 1.06 - Certain Costs
The cost of compensating balances and fees paid to banks to maintain credit
lines and accounts by Parties lending External Funds to the Nonutility 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 Nonutility 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 Nonutility 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 Nonutility 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 Nonutility 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 dated as of the date
of the initial borrowing; (b) 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 (c) be repayable in whole at any time or
in part from time to time, without premium or penalty.
ARTICLE II
OPERATION OF NONUTILITY MONEY POOL
Section 2.01 - Operation
Operation of the Nonutility Money Pool, including record keeping and
coordination of loans, will be handled by KCS under the authority of the
appropriate officers of the Parties. KCS 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. KCS
will administer the Nonutility Money Pool on an "at cost" basis. Separate
records shall be kept by KCS for the Nonutility Money Pool established by this
Agreement and any other money pool administered by KCS.
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Section 2.02 - Investment of Surplus Funds in the Nonutility Money Pool
Funds not required for the Nonutility Money Pool loans (with the exception
of funds required to satisfy the Nonutility 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 Nonutility
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 Nonutility Money Pool bears to the total amount of funds in the
Nonutility Money Pool and the cost of any External Sources provided to the
Nonutility 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 KCS, on behalf of the Nonutility Money Pool, may, by notice to
the Subsidiary, terminate the Nonutility 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 Nonutility
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.
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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 State of New York.
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.
KeySpan Corporation
By:
-----------------------------------
Name:
Title:
KeySpan Corporate Services, LLC
By:
-----------------------------------
Name:
Title:
KeySpan Utility Services, LLC
By:
-----------------------------------
Name:
Title:
KeySpan Operating Services, LLC
By:
-----------------------------------
Name:
Title:
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KeySpan Engineering and Survey, Inc.
By:
-----------------------------------
Name:
Title:
KeySpan Ravenswood, Inc.
By:
-----------------------------------
Name:
Title:
KeySpan Ravenswood Services Corporation
By:
-----------------------------------
Name:
Title:
KeySpan Services, Inc. and its subsidiaries
By:
-----------------------------------
Name:
Title:
KeySpan Exploration and Production, LLC
By:
-----------------------------------
Name:
Title:
KeySpan Energy Development Corporation and its subsidiaries
By:
-----------------------------------
Name:
Title:
North East Transmission Co, Inc.
By:
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Name:
Title:
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Alberta Northeast Gas, Ltd.
By:
-----------------------------------
Name:
Title:
Boundary Gas, Inc.
By:
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Name:
Title:
KeySpan Natural Fuels, LLC
By:
-----------------------------------
Name:
Title:
KeySpan Northeast Ventures, Inc.
By:
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Name:
Title:
THEC Holdings Corp.
By:
-----------------------------------
Name:
Title:
GEI Development Corp.
By:
-----------------------------------
Name:
Title:
KeySpan Electric Services, LLC.
By:
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Name:
Title:
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KeySpan Energy Trading Services, LLC.
By:
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Name:
Title:
Xxxxxxx Development Corp.
By:
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Name:
Title:
Island Energy Services Company, Inc.
By:
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Name:
Title:
LILCO Energy Systems, Inc.
By:
-----------------------------------
Name:
Title:
KeySpan Energy Supply, LLC.
By:
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Name:
Title:
KeySpan Technologies, Inc.
By:
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Name:
Title:
Honeoye Storage Corp.
By:
-----------------------------------
Name:
Title:
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KeySpan MHK, Inc.
By:
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Name:
Title:
ACJ Acquisition, LLC.
By:
-----------------------------------
Name:
Title:
AMR Data Corporation
By:
-----------------------------------
Name:
Title:
Boston Gas Services, Inc.
By:
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Name:
Title:
EE-AEM Company, Inc.
By:
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Name:
Title:
EE Acquisition Company, Inc.
By:
-----------------------------------
Name:
Title:
EEG Acquisition Company, Inc.
By:
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Name:
Title:
10
Eastern Associated Capital Corp.
By:
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Name:
Title:
Eastern Associated Securities Corp.
By:
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Name:
Title:
Eastern Energy Systems Corp.
By:
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Name:
Title:
Eastern Enterprises Foundation
By:
-----------------------------------
Name:
Title:
Eastern Rivermoor Company, Inc.
By:
-----------------------------------
Name:
Title:
Eastern Urban Services, Inc.
By:
-----------------------------------
Name:
Title:
LNG Storage, Inc.
By:
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Name:
Title:
Massachusetts LNG Incorporated
By:
-----------------------------------
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Name:
Title:
Midland Enterprises, Inc. and its subsidiaries
By:
-----------------------------------
Name:
Title:
Mystic Steamship Corporation
By:
-----------------------------------
Name:
Title:
Northern Energy Company, Inc.
By:
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Name:
Title:
PCC Land Company, Inc.
By:
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Name:
Title:
Philadelphia Coke Co., Inc.
By:
-----------------------------------
Name:
Title:
ServicEdge Partners, Inc.
By:
-----------------------------------
Name:
Title:
Transgas, Inc.
By:
-----------------------------------
Name:
Title:
Water Products Group Incorporated
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By:
-----------------------------------
Name:
Title:
Western Associated Energy Corp.
By:
-----------------------------------
Name:
Title:
Broken Bridge Corporation
By:
-----------------------------------
Name:
Title:
EnergyNorth Propane, Inc.
By:
-----------------------------------
Name:
Title:
EnergyNorth Realty, Inc.
By:
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Name:
Title:
EnergyNorth Mechanicals, Inc.
By:
-----------------------------------
Name:
Title:
Date:
-----------------, 2000
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