AMENDMENT NO. 1 – CREDIT AGREEMENT (AYE/AESC)
Exhibit 10.2
AMENDMENT NO. 1 – CREDIT AGREEMENT (AYE/AESC)
AMENDMENT NO. 1, dated as of September 11, 2007 (this “Amendment”), in respect of the Credit
Agreement (the “Credit Agreement”), dated as of May 22, 2006, among Allegheny Energy, Inc. and
Allegheny Energy Supply Company, LLC (the “Borrowers”), the Initial Lenders and the Initial Issuing
Bank named therein, and Citicorp North America, Inc., as Administrative Agent. Capitalized terms
not otherwise defined herein shall have the same meanings as set forth in the Credit Agreement.
PRELIMINARY STATEMENTS
(1) AYE has established two wholly-owned Subsidiaries, Trans-Allegheny Interstate Line
Company, a Maryland and Virginia corporation (“TrAILCo”), and Allegheny Energy Transmission, LLC, a
Delaware limited liability company (“AET”), to develop, construct, own, operate and maintain an
approximately 000 xxxx 000-xX transmission line from a new substation in western Pennsylvania to a
point of interconnection with Dominion Virginia Power east of Middletown, Virginia.
(2) AYE has established Subsidiaries, including AET, AET PATH Company, LLC and
Potomac-Appalachian Transmission Highline, LLC, to develop, construct, own, operate and maintain,
currently expected to be as part of a joint venture with American Electric Power Company, Inc.
(“AEP”), an approximately 290 mile transmission line, which is currently proposed to include an
approximately 244 mile 765 kV transmission line to run from AEP’s existing Xxxx substation to
Allegheny Power’s Bedington substation and an approximately 46 mile twin circuit 500 kV
transmission line between the Bedington station and a new substation at Kemptown, Maryland.
SECTION 1. Amendment.
Subject to the satisfaction of the conditions precedent set
forth in Section 2, the Required Lenders and the Borrowers hereby agree as follows:
(a) To insert the following definitions in the appropriate alphabetical order in
Section 1.01 of the Credit Agreement:
“AEP” means American Electric Power Company, Inc. a New York corporation.
“AET” means Allegheny Energy Transmission, LLC, a Delaware limited liability company and a
direct wholly-owned Subsidiary of AYE.
“AYE Equity Contribution Agreement” means the capital contribution agreement to be entered
into by AYE in connection with the TrAILCo Project.
“Consolidated Net Income” means, for any period, the net income or loss before
cumulative effect in change of accounting principles of AYE and its Subsidiaries for
such period determined on a consolidated basis in accordance
with GAAP; provided that there shall be excluded (a) the income of any
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the AYE to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary of that income is not, as a result of any
Subsidiary Debt Default, at the time permitted by operation of the terms of the
agreement or other documents governing the Debt under which such Subsidiary Debt
Default shall have occurred; provided that such income of such Subsidiary shall only
be so excluded for that portion of such period during which the condition described
in this clause (a) shall so exist; (b) the income or loss of any Person accrued
prior to the date it becomes a Subsidiary or is merged or Consolidated with AYE or
any Subsidiary on the date such Person’s Assets are acquired by AYE or any
Subsidiary; (c) the income or loss of any Person (other than a Subsidiary) in which
any other Person (other than AYE or a wholly owned Subsidiary of AYE) has an
interest, except to the extent of the amount of dividends or other distributions
actually paid to AYE or a wholly owned Subsidiary by such Person during such period;
(d) any gain or loss in excess of $1,000,000 attributable to any individual sale of
an Asset, or series of related sales of Assets, out of the ordinary course of
business; and (e) any gains or losses attributable to interest rate Hedge Agreements
which are not included as interest expense in accordance with GAAP.
“PATH Companies” means (a) PATH Regulated Companies and (b) PATH Non-Regulated
Companies.
“PATH Non-Regulated Companies” means any direct or indirect Subsidiary of AYE
(including AET and AET PATH Company, LLC) established to undertake the development,
construction, operation, maintenance and finance of the PATH Project or the
ownership of any Subsidiary or any entity established to undertake the development,
construction, operation, maintenance or finance of the PATH Project and which is
not a PATH Regulated Company.
“PATH Regulated Companies” means any direct or indirect Subsidiary of AYE, or a
Joint Venture, established to undertake the development, construction, operation,
maintenance and finance of the PATH Project (including Potomac-Appalachian
Transmission Highline, LLC) and which (a) directly owns the PATH Project and (b) is
subject to regulatory supervision by a federal or state Governmental Authority with
respect to incurrence of indebtedness.
“PATH Project” means development, construction, ownership, operation and
maintenance, currently expected to be as part of a joint venture with AEP, of an
approximately 290 mile transmission line, which is currently proposed to include an
approximately 244 mile 765 kV transmission line to run from AEP’s existing Xxxx
substation to Allegheny Power’s Bedington substation and an approximately 46 miles
of twin circuit 500 kV transmission line between the Bedington station and a new
substation at Kemptown, Maryland (provided that such route may be changed or
modified), and including transformers, substations, radial lines, and other
equipment and facilities, and the other related electric transmission projects.
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“Subsidiary Debt Default” means, with respect to any Subsidiary of AYE, the
failure of such Subsidiary to pay any principal or interest or other amounts due in
respect of Debt, when and as the same shall become due and payable, or the
occurrence of any other event or condition that results in any Debt of such
Subsidiary becoming due prior to its scheduled maturity or that enables or permits
(with or without the giving of notice, lapse of time or both) the holder or holders
of such Debt or any trustee or agent on its or their behalf to cause such Debt to
become due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity.
“TrAILCo” means Trans-Allegheny Interstate Line Company, a Maryland and
Virginia corporation, and a direct wholly-owned subsidiary of AET.
“TrAILCo Companies” means (a) TrAILCo Regulated Companies and TrAILCo
Non-Regulated Companies.
“TrAILCo Non-Regulated Companies” means any direct or indirect Subsidiary of
AYE (including AET) established to undertake the development, construction,
operation, maintenance and finance of the TrAILCo Project or the ownership of any
Subsidiary established to undertake the development, construction, operation,
maintenance or finance of the TrAILCo Project and which is not a TrAILCo Regulated
Company.
“TrAILCo Regulated Companies” means any direct or indirect Subsidiary of AYE
(including TrAILCo) established to undertake the development, construction,
operation, maintenance or finance of the TrAILCo Project and which (a) directly owns
the TrAILCo Project and (b) is subject to regulatory supervision by a federal or
state Governmental Authority with respect to incurrence of indebtedness.
“TrAILCo Project” means development, construction, ownership, operation and
maintenance of an approximately 000 xxxx 000-xX transmission line from a new
substation in western Pennsylvania to a point of interconnection with Dominion
Virginia Power east of Middletown, Virginia (provided that such route may be changed
or modified) (including transformers, substations, radial lines, and other equipment
and facilities) and the other related electric transmission projects.
(b) To amend the definition of “AYE Funds Flow” in Section 1.01 of the Credit Agreement
by inserting the text that appears below as bolded and underlined and deleting the text that
appears below as struck through:
“AYE Funds Flow” means, for any period, the sum for the related period of (a)
cash dividends received by AYE from the Regulated Subsidiaries, TrAILCo
Non-Regulated Companies, PATH Non-Regulated Companies and AESC, less (b) any
cash equity contributions made by AYE to any Subsidiaries, less (c) any cash
equity contributions or intercompany loans by AYE to any
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PATH
Company which is a Joint Venture, plus
(cd) Net Cash Proceeds
received by AYE from the sale or issuance of any Equity Interests,
plus (d
e) AYE’s interest income, less (ef) Capital Expenditures of AYE,
less (f g) operating expenses of AYE, excluding AYE Interest Expense and
income tax expense, plus (gh)Litigation Proceeds received by AYE, plus
(hi) AYE Sales Proceeds.
(c) To amend the definition of “Regulated Subsidiaries” in Section 1.01 of the Credit
Agreement by inserting “TrAILCo Regulated Companies, PATH Regulated Companies,” immediately
following “collectively,” in line 1.
(d) To amend Section 2.06(b) of the Credit Agreement by inserting “(other than any PATH
Regulated Company or TrAILCo Regulated Company)” immediately following “its Regulated
Subsidiaries” in line 2.
(e) To amend clauses (G) and (H) of Section 5.01(j) of the Credit Agreement by
inserting the text that appears below as bolded and underlined, deleting the text that
appears below as struck through and to add clause (I) below:
(G) any sales, leases, transfers, swaps, assignments, exchanges or other
distributions of Assets related to the Buffalo Reserve Project, the TrAILCo
Project or the PATH Project, as the case may be, (whether in one transaction or
a series of related transactions) to a wholly owned direct or indirect Subsidiary of
AYE or any PATH Companies, and (H) any issuances, sales, leases, transfers,
distributions, assignments or other dispositions of any Equity Interests in any
Buffalo Creek SPV, any TrAILCo Company or any PATH Company, as the case may
be, (in each case, whether in one transaction of a series of related
transactions, and whether by way of merger, consolidation or otherwise) to a wholly
owned direct or indirect Subsidiary of AYE or any PATH Companies and (I)
the AYE Equity Contribution Agreement or any equity contribution arrangement under
any other financing or project documents relating to the PATH Project and any other
transactions related to the TrAILCo Project or the PATH Project that are otherwise
required by any Governmental Authority.
(f) To amend Section 5.02(b)(xvi) of the Credit Agreement by inserting the text that
appears below as bolded and underlined and deleting the text that appears below as struck
through:
(xvi) Permitted Refinancing Debt incurred in respect of any Debt permitted
under clauses (i), (iii), (vi), (vii), (viii), and
(xiv) above, or this
clause (xvi) or clauses (xxii) and (xxiii) below;
(g) To amend Section 5.02(b)(xx) of the Credit Agreement by deleting the word “and”.
(h) To amend Section 5.02(b) of the Credit Agreement by inserting clauses (xxii),
(xxiii) and (xiv) as follows:
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(xxii) Debt of the TrAILCo Companies in an aggregate principal amount not to exceed
$550,000,000;
(xxiii) Debt of the PATH Companies in an aggregate principal amount not to exceed
$600,000,000; and
(xxiv) (A) the obligations of AYE under the AYE Equity Contribution Agreement or any
equity contribution arrangement under any other financing or project documents relating to
the PATH Project to the extent they constitute Debt described in clause (h) or (j) of the
definition of “Debt,” and (B) any other obligations of AYE and its Subsidiaries under any
other financing or project documents relating to the TrAILCo Project or the PATH Project to
the extent they constitute Debt (other than Debt for Borrowed Money).
(i) To amend Section 5.02(e)(xii) of the Credit Agreement by deleting “and” in line 2.
(j) To amend Section 5.02(e)(xiii) of the Credit Agreement by inserting “and”
immediately following “Section 2.06(b);” in line 10.
(k) To amend Section 5.02(e) of the Credit Agreement by inserting clause (xiv) as
follows:
(xiv) sales, transfers, leases or other dispositions of rights of way and other
property interests to TrAILCo Companies or PATH Companies with a book value not to exceed
$20,000,000 in the aggregate for all such sales, transfers, leases or other dispositions
under this clause (xiv).
(l) To amend Section 5.02(f) of the Credit Agreement by inserting “, any TrAILCo
Non-Regulated Company, any PATH Non-Regulated Company” immediately following “other than any
Regulated Subsidiary” in line 2.
(m) To amend Section 5.02(f) of the Credit Agreement by inserting clause (xi) as
follows:
(xi) (A) cash equity contributions or intercompany loans by AYE to a PATH Company which
is a Joint Venture and (B) the obligations of AYE under the AYE Equity Contribution
Agreement to the extent they constitute an Investment, or any other obligations of AYE or
any of its Subsidiaries under any equity contribution arrangement under any other financing
or project documents relating to the PATH Project to the extent they constitute an
Investment.
(n) To amend clause (i) of Section 5.02(g) of the Credit Agreement by inserting the
text that appears below as bolded and underlined:
(i) Declare or pay any Restricted Payments except (A) cash distributions to
holders of Preferred Interests issued by AYE or interest payments, in cash, to holders of
securities convertible into or exchangeable for shares of capital stock of (or other
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ownership or profit interests in) AYE and (B) cash dividends (I) (x) in the Fiscal Year
ending on December 31, 2007 and (y) in the fiscal quarter ending on March 31, 2008, in the
aggregate amount in respect of clauses (x) and (y) above not to exceed $75 million and (II)
other than under clause (I) above, not to exceed in any fiscal quarter (1) 10% of the
Consolidated Net Income for the four fiscal quarters ended with the fiscal quarter
immediately preceding the fiscal quarter in which the dividend is paid; provided that the
Leverage Ratio as of the last day of the fiscal quarter immediately preceding the fiscal
quarter in which the dividend is paid is equal to or less than 3.50:1.00 or (2) 6.25% of the
Consolidated Net Income for the four fiscal quarters immediately preceding the fiscal
quarter in which such dividend is paid; provided that the Leverage Ratio as of the last day
of the fiscal quarter immediately preceding the fiscal quarter in which the dividend is paid
is more than 3.50:1.00, but equal to or less than 4.50:1.00.
(o) To amend Section 5.02(g) of the Credit Agreement by inserting “TrAILCo
Non-Regulated Companies, PATH Non-Regulated Companies,” immediately following “Regulated
Subsidiaries,” in line 8.
(p) To amend Section 5.02(g) of the Credit Agreement by (i) deleting “and” in line 9
and (ii) inserting “and” and clause (C) below immediately following “AESC Loan Documents” in
line 10.
(C) for clauses (ii) and (iii) only, any PATH Company may purchase, redeem, retire,
defease or otherwise acquire for value any Equity Interests in it, or issue or sell any
Equity Interests, if done ratably (unless, and only to the extent, otherwise required by its
Constituent Documents), to or by, as the case may be, holders of its Equity Interests (as
determined immediately preceding such purchase, redemption, retirement, defeasance,
acquisition, issuance or sale)
(q) To amend Section 5.02(h) of the Credit Agreement by inserting “or any PATH
Non-Regulated Company or any TrAILCo Non-Regulated Company, and in the case of clause (ii),
any TrAILCo Company or PATH Company” immediately following “any Regulated Subsidiary or
Services Corp” in line 4.
SECTION 2. Conditions to Effectiveness. This Amendment shall become effective when,
and only when, the Administrative Agent shall have received counterparts of this Amendment executed
by the Borrowers, the Required Lenders or, as to any of the Lenders, advice satisfactory to the
Administrative Agent that such Lender has executed this Amendment. The effectiveness of this
Amendment is further conditioned upon the accuracy of the factual matters described herein. This
Amendment is subject to the provisions of Section 8.01 of the Credit Agreement.
SECTION 3. Representations and Warranties of the Borrower. Each Borrower hereby
represents and warrants as follows:
(a) In the case of (i) AYE, it is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland, and (ii) AESC, it
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is a limited
liability company, duly organized, validly existing and in good standing under the laws of
the State of Delaware.
(b) Its execution, delivery and performance of this Amendment, are within its powers,
have been duly authorized by all necessary corporate action, and do not and will not (i)
contravene its Constituent Documents, (ii) violate any law, rule, regulation (including
Regulation X of the Board of Governors of the Federal Reserve System), order, writ,
judgment, injunction, decree, determination or award, (iii) conflict with or result in the
breach of, or constitute a default or require any payment to be made under, any material
contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument
binding on or affecting it or any of its properties or (iv) result in or require the
creation or imposition of any Lien upon or with respect to any of its Assets, except where,
in the case of clauses (i) through (iv), violation of any such Constituent Documents, law,
rule, regulation, order, writ, judgment, injunction, decree, determination or award or in
breach of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or
other instrument, or creation or imposition of such Lien, could not be reasonably expected
to have a Material Adverse Effect.
(c) No authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority is required for the due execution, delivery or performance by it
of this Amendment.
(d) This Amendment has been duly executed and delivered by it. This Amendment is its
legal, valid and binding obligations, enforceable against it in accordance with its terms,
except to the extent limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(e) No Default has occurred and is continuing.
SECTION 4. Reference to and Effect on the Credit Agreement. (a) On and after the
effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”,
“hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference
in each of the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of
like import referring to the Credit Agreement, shall mean and be a reference to the Credit
Agreement as amended by this Amendment.
(b) The Credit Agreement, as specifically amended by this Amendment, is and shall continue to
be in full force and effect and is hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of any
Lender Party or the Administrative Agent under any of the Loan Documents, nor constitute a
waiver of any provision of any of the Loan Documents.
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SECTION 5. Costs and Expenses. AYE agrees to pay on demand all costs and expenses of
the Administrative Agent in connection with the preparation, execution, delivery and
administration, modification and amendment of this Amendment and the other instruments and
documents to be delivered hereunder (including, without limitation, the reasonable fees and
expenses of counsel for the Administrative Agent) in accordance with the terms of section 8.04 of
the Credit Agreement.
SECTION 6. Execution in Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute but one
and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment
by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.
SECTION 7. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective officers thereunto duly authorized, as of the date first above written.
| ALLEGHENY ENERGY, INC., as Borrower |
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| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | Vice President and Treasurer | |||
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| ALLEGHENY ENERGY SUPPLY COMPANY, LLC as Borrower |
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| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | Vice President and Treasurer | |||
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| CITICORP NORTH AMERICA, INC., as Administrative Agent |
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| By: | /s/ Xxxxxxx Xxxxxxx | |||
| Name: | Xxxxxxx Xxxxxxx | |||
| Title: | Vice President | |||
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| CITICORP
NORTH AMERICA, INC., as Lender |
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| By: | /s/ Xxxxxxx Xxxxxxx | |||
| Name: | Xxxxxxx Xxxxxxx | |||
| Title: | Vice president | |||
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XXX Xxxxxx Xxxxxxxxx
XXX Xxxxxx Xxxxxxxxx
| Xxx Xxxx xx Xxxx Xxxxxx | ||||||
| as Lender | ||||||
| By | /s/ Xxxxx Xxxxxx | |||||
| Name: | Xxxxx Xxxxxx | |||||
| Title: | Managing Director | |||||
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| PNC BANK, NATIONAL ASSOCIATION as Lender |
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| By | /s/ Xxxxxx X. Xxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxx | |||||
| Title: | Vice President | |||||
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| Bear Xxxxxxx Corporate
Lending Inc., as Lender |
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| By | /s/ Xxxxxx Xxxxxxxxxxxx | |||||
| Name: | Xxxxxx Xxxxxxxxxxxx | |||||
| Title: | Vice President | |||||
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| XXXXXXX SACHS CREDIT PARTNERS L.P., as Lender |
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| By | /s/ Xxxx Xxxxxx | |||||
| Name: | XXXX XXXXXX | |||||
| Title: | AUTHORIZED SIGNATORY | |||||
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| JPMorgan Chase Bank, N.A., as Lender |
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| By | /s/ Xxxxxxx XxXxxxx | |||||
| Name: | Xxxxxxx XxXxxxx | |||||
| Title: | Executive Director | |||||
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| CREDIT SUISSE, Cayman Islands Branch as Lender |
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| By | /s/ Xxxxxx Xxxxxxxx | |||||
| Name: | Xxxxxx Xxxxxxxx | |||||
| Title: | Director | |||||
| By | /s/ Xxxxxxx Xxxxx | |||||
| Name: | Xxxxxxx Xxxxx | |||||
| Title: | Associate | |||||
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| BARCLAYS BANK PLC, as Lender |
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| By | /s/ Xxxxxxxx Xxxx | |||||
| Name: | Xxxxxxxx Xxxx | |||||
| Title: | Director | |||||
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| BANK OF AMERICA, N.A., as Lender |
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| By | /s/ Xxxxx Xxxxxxxxx | |||||
| Name: | Xxxxx Xxxxxxxxx | |||||
| Title: | Senior Vice President | |||||
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| BNP PARIBAS, as Lender |
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| By | /s/ Xxxxx X’Xxxxx | |||||
| Name: | XXXXX X’XXXXX | |||||
| Title: | Managing Director | |||||
| By | /s/ Xxxxxxx X. Dolaney | |||||
| Name: | XXXXXXX X. XXXXXXX | |||||
| Title: | Managing Director | |||||
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| UNION BANK OF
CALIFORNIA, N.A., as Lender |
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| By | /s/ Xxxxx X. Xxxxxxx | |||||
| Name: | Xxxxx X. Xxxxxxx | |||||
| Title: | Vice President | |||||
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