EXHIBIT E-3
FORM OF
U.S. NON-UTILITY MONEY POOL AGREEMENT
This U.S. Non-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"), E.ON North America Inc. ("E.ON NA"), a Delaware
corporation, Xxxxxxx Inc. ("Xxxxxxx"), a finance company organized under the
laws of Delaware, 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, and each of
LG&E Energy's non-utility subsidiaries whose name appears on the signature pages
hereof (each a "Party" and collectively, the "Parties"). Participants in the
money pool shall not include Louisville Gas and Electric Company, Kentucky
Utilities Company, or their subsidiaries. E.ON, E.ON NA, Xxxxxxx and LG&E Energy
shall participate in the money pool as lenders only (collectively, "Lenders").
WITNESSETH:
WHEREAS, the Parties desire to establish a Money Pool (the "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
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 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 Money Pool, and will
contribute such funds to the Money Pool. The determination of whether a Party at
any time has surplus funds to lend to the Money Pool or shall lend funds to the
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
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 Subsidiaries will be met by funds in the Money
Pool to the extent such funds are available. Each Subsidiary shall have the
right to make short-term borrowings from the 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 Subsidiary may request loans from the 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 Subsidiary hereunder shall not
exceed the applicable borrowing limits set forth in applicable orders of the SEC
and other regulatory authorities, resolutions of such Subsidiary's Board of
Directors, such Subsidiary's governing corporate documents, and agreements
binding upon such Subsidiary. No loans through the Money Pool will be made to,
and no borrowings through the Money Pool will be made by the Lenders.
Section 1.03 Source of Funds.
(a) Funds will be available through the Money Pool from the following
sources for use by the Parties from time to time: (1) surplus funds in the
treasuries of the Subsidiaries, (2) surplus funds in the treasuries of E.ON,
E.ON NA, Xxxxxxx 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 Money Pool, may determine will
result in a lower cost of borrowing to companies borrowing from the Money Pool,
consistent with the individual borrowing needs and financial standing of the
Parties providing funds to the Money Pool.
(b) Borrowing Subsidiaries 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 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 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 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 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 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 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 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 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 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 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 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 MONEY POOL
Section 2.01 Operation.
Operation of the 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 Money Pool
on an "at cost" basis. Separate records shall be kept by LG&E Services for the
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 Money Pool.
Funds not required for the Money Pool loans (with the exception of
funds required to satisfy the 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 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 Money Pool bears to the total amount of funds in the 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 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 Money Pool, may, by
notice to the Subsidiary, terminate the 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 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, 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.
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:_____________________
E.ON NORTH AMERICA INC.
By:___________________________
Name:______________________
Title:_____________________
XXXXXXX INC.
By:___________________________
Name:______________________
Title:_____________________
LG&E ENERGY CORP.
By:___________________________
Name:______________________
Title:_____________________
LG&E ENERGY SERVICES INC.
By:___________________________
Name:______________________
Title:_____________________
[__________________]
By:___________________________
Name:______________________
Title:_____________________
