FORM OF UTILITY MONEY POOL AGREEMENT
EXHIBIT H-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 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 nonutility subsidiary of KeySpan (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.
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 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 KCS as
administrative agent of the Utility Money Pool.
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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 KeySpan, will be met by
funds in the Utility Money Pool to the extent such funds are available. Each
Party (other than KeySpan) 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 KeySpan) 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, KeySpan.
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 KeySpan, (2) surplus funds in the
treasury of KeySpan, and (3) proceeds from bank borrowings by Parties or the
sale of commercial paper by KeySpan 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 KCS, 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. On any day when
more than one fund source (e.g., surplus treasury funds of KeySpan 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.
(c) Borrowings will be made by Boston Gas, Colonial Gas, Essex
Gas and EnergyNorth Natural Gas to finance their fuel purchases through the
Utility Money Pool utilizing External Funds as permitted by their respective
state regulatory orders. Borrowings will be for a calendar month at the actual
applicable interest rate attributable to such External Funds and will be repaid
monthly upon which time a new borrowing amount will be determined as
required.
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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) KCS, 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, 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 balance 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. The interest rate applicable to External Funds
borrowed by a Subsidiary for fuel purchases shall be the actual applicable
interest rate attributable to such External Funds for a calendar month.
(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 and accounts by Parties lending External Funds to the Utility Money Pool
shall initially be paid
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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 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 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 UTILITY MONEY POOL
Section 2.01 - Operation.
Operation of the Utility 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 Utility Money Pool on an “at cost” basis. Separate
records shall be kept by KCS for the Utility Money Pool established by this
Agreement and any other money pool administered by KCS.
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;
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(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 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 KCS, 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.
This Agreement may be amended by the parties hereto at any time by
execution of an instrument in writing signed on behalf of each of the parties
hereto, subject to all applicable approvals by the SEC and any 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.
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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 Service, LLC
By:-----------------------------------
Name:
Title:
The Brooklyn Union Gas Company d/b/a KeySpan Energy Delivery New York
By:-----------------------------------
Name:
Title:
KeySpan Gas East Corporation d/b/a KeySpan Energy Delivery Long Island
By:-----------------------------------
Name:
Title:
KeySpan Generation, LLC
By:-----------------------------------
Name:
Title:
Boston Gas Company
By:-----------------------------------
Name:
Title:
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Essex Gas Company
By:-----------------------------------
Name:
Title:
Colonial Gas Company
By:-----------------------------------
Name:
Title:
EnergyNorth Natural Gas, Inc.
By:-----------------------------------
Name:
Title:
Date: _________, 2000
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