EX-10.2 4 h98350exv10w2.txt 1ST AMEND. TO $1,800,000,000 CREDIT AGMT. EXHIBIT 10.2 FIRST AMENDMENT TO CREDIT AGREEMENT FIRST AMENDMENT (this "Amendment"), dated as of July 12, 2002, to the $1,800,000,000 Senior B Credit Agreement, dated as of July 13, 2001 (as heretofore amended, supplemented or otherwise modified, the "Credit Agreement"), among HOUSTON INDUSTRIES FINANCECO LP, a Delaware limited partnership (the "Borrower"), RELIANT ENERGY, INCORPORATED, a Texas corporation ("Reliant Energy"), the several banks and other financial institutions (the "Banks") and agents from time to time parties thereto and JPMORGAN CHASE BANK (f/k/a The Chase Manhattan Bank), as administrative agent for the Banks (in such capacity, the "Agent"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Borrower, Reliant Energy, the Banks and the Agent are parties to the Credit Agreement; and WHEREAS, the Borrower and Reliant Energy have requested that the Banks agree to extend the Termination Date and amend certain other provisions contained in the Credit Agreement, and the Banks and the Agent are agreeable to such request upon the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the premises herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein which are defined in the Credit Agreement are used herein as therein defined. 2. Amendment to Section 1.1 of the Credit Agreement (Certain Defined Terms). Section 1.1 of the Credit Agreement is hereby amended by deleting, in their entirety, the terms "Applicable Margin", "Consolidated Capitalization", "Designated Rating", "Rating Agencies", "Termination Date" and "Usage Fee" appearing therein and inserting the following new definitions in the appropriate alphabetical order: ""Applicable Margin" means the rate per annum set forth below opposite the Designated Rating from time to time in effect during the period for which payment is due, with respect to any Committed Loan:
===================================================================================== Applicable Margin for Applicable Margin for ABR Designated Rating LIBOR Rate Loans Loans ------------------------------------------------------------------------------------- BBB+/Baa1 and higher 1.500% 0.500% ------------------------------------------------------------------------------------- BBB/Baa2 1.650% 0.650% ------------------------------------------------------------------------------------- BBB-/Baa3 2.000% 1.000% ------------------------------------------------------------------------------------- BB+/Ba1 or lower or unrated 2.500% 1.500% =====================================================================================
In each row in the table set forth above, the first indicated rating corresponds to that assigned by S&P and the second indicated rating corresponds to that assigned by Moody's; the determination of which row of such table is applicable at any time is set forth in the definition of "Designated Rating". "Consolidated Capitalization" means, as of any date of determination, the sum of (a) Consolidated Shareholders' Equity, (b) Consolidated Indebtedness for Borrowed Money and, without duplication, (c) Mandatory Payment Preferred Stock; provided that for the purpose of calculating compliance with Section 8.4(b), Consolidated Capitalization shall be determined excluding any adjustment, non-cash charge to net income or other non-cash charges or writeoffs resulting thereto from application of SFAS No. 142. "Designated Rating" means (a) at any time that the Long Term Debt Rating is assigned by both S&P and Moody's and such ratings are equivalent, such rating shall be the Designated Rating, (b) if clause (a) does not apply, (i) at any time that the Long Term Debt Rating is issued by only one of S&P or Moody's, the rating of such debt issued by such Rating Agency shall be the Designated Rating, and (ii) at any time that such debt is rated by both S&P and Moody's, the lower of such ratings and (c) if neither (a) nor (b) apply, if the Long Term Debt Rating is not assigned by either S&P or Moody's, the rating assigned to the senior unsecured debt of Reliant Energy shall be the Designated Rating in accordance with clauses (a) and (b) above. Any change in the calculation of the Facility Fees or the Applicable Margin with respect to the Borrower that is caused by a change in the Designated Rating will become effective on the date of the change in the Designated Rating. If the rating system of any Rating Agency shall change, or if either S&P or Moody's shall cease to be in the business of rating corporate debt obligations, Borrower and the Agent shall negotiate in good faith if necessary to amend this definition to reflect such changed rating system or the unavailability of ratings from such Rating Agencies and, pending the effectiveness of any such amendment, the Designated Rating shall be determined by reference to the rating most recently in effect prior to such change or cessation. "Master Separation Agreement" means the master separation agreement, dated as of December 31, 2000, entered into between Reliant Energy and Unregco providing for, among other things, the Spin-off, as amended, modified or supplemented from time to time. "Rating Agencies" means S&P and Moody's. "Termination Date" means (a) initially October 10, 2002, unless the Majority Banks direct in writing on or prior to September 5, 2002 that such Termination Date shall be September 10, 2002, in which case the Termination Date shall automatically be deemed to be September 10, 2002, or (b) any earlier date on which (i) the Commitments have been terminated in accordance with this Agreement or (ii) all unpaid principal amounts of Loans hereunder have become due and payable in accordance with this Agreement.". 3. Amendment to Section 2.1 of the Credit Agreement (The Committed Loans). Section 2.1 of the Credit Agreement is hereby amended by adding at the end of paragraph (b) thereof the following: "At a reasonable time at least one week prior to September 5, 2002, the Agent shall inquire as to whether requisite Banks intend to send the written direction referred to in the definition of Termination Date and shall notify the Borrower and the Banks if the requisite number of such directives have been received.". 4. Amendment to Section 4.2 of the Credit Agreement (Fees). Section 4.2 of the Credit Agreement is hereby amended by: (a) deleting the table in paragraph (a) thereof in its entirety, and inserting in lieu thereof the following table:
"Designated Rating Facility Fee Rate ------------------ ----------------- BBB+/Baa1 or higher 0.250% BBB/Baa2 0.350% BBB-/Baa3 0.500% BB+/Ba1 or lower or unrated 0.500%"; and
2 (b) deleting paragraph (b) thereof in its entirety and substituting in lieu thereof the following: "(b) [INTENTIONALLY OMITTED.]"; and (c) amending paragraph (c) thereof by (i) deleting the phrase "and Usage Fees" and (ii) deleting the reference to "Sections 4.2(a) and 4.2(b)" and substituting in lieu thereof "Section 4.2(a)". 5. Amendment to Section 4.4(a) of the Credit Agreement (ABR Loans). Section 4.4(a) of the Credit Agreement is hereby amended by adding immediately after "ABR" in clause (i) therein "plus the Applicable Margin". 6. Amendment to Section 8.4(b) of the Credit Agreement (Financial Ratios). Section 8.4(b) of the Credit Agreement is hereby amended by deleting the ratio "0.65:1.00" and substituting in lieu thereof "0.68:1.00". 7. Amendment to Section 8.4(g) of the Credit Agreement (Certain Investments, Loans, Advances, Guarantees and Acquisitions). Section 8.4(g) of the Credit Agreement is hereby amended by adding at the end thereof the following: "Notwithstanding the foregoing, Reliant Energy and its Subsidiaries shall not (x) make any future investments in, loans to, advances to and Guarantees of any obligations in Unregco or any of its Subsidiaries, (y) purchase or otherwise acquire (in one transaction or a series of related transactions) any assets of Unregco or any of its Subsidiaries other than, in the case of this clause (y), any such transactions contemplated by the Master Separation Agreement and other agreements and arrangements in respect of the relationship between Reliant Energy and Unregco described in Reliant Energy's filings with the SEC or (z) enter into any other transaction constituting a Reliant Energy Investment with Unregco and its Subsidiaries other than, in the case of this clause (z), the transactions contemplated by the Master Separation Agreement and other agreements and arrangements in respect of the relationship between Reliant Energy and Unregco described in Reliant Energy's filings with the SEC or other arrangements among Reliant Energy, Unregco and their respective Subsidiaries in the ordinary course of business consistent with recent past practices or otherwise at prices and on terms and conditions not less favorable to Reliant Energy or its Subsidiaries (other than Unregco and its Subsidiaries) than could be obtained on an arm's length basis from unrelated third parties.". 8. Amendment to Section 11.1 of the Credit Agreement (Amendments and Waivers). Section 11.1 of the Credit Agreement is hereby amended by (a) deleting "or" at the end of clause (iii) thereof and substituting in lieu thereof a semicolon, (b) deleting the period at the end of clause (iv) thereof and substituting in lieu thereof ", or" and (c) adding at the end thereof immediately after clause (iv) a new clause (v) as follows: "(v) amend, modify or waive the last paragraph of Section 8.4(g) without the written consent of the Supermajority Banks.". 9. Amendment to Exhibit L to the Credit Agreement (Form of Regco $1.8 Billion Credit Agreement). Exhibit L to the Credit Agreement (the "Regco Credit Agreement") is hereby amended in the manner set forth on Exhibit A. 10. Confirmation and Reaffirmation of Loan Documents. Each Loan Party does hereby (a) consent and acknowledge and agree to the transactions described in this Amendment and (b) after giving effect to this Amendment, (i) confirms, reaffirms and restates the representations and warranties (except for those representations or warranties or parts thereof that, by their terms, expressly relate solely to a specific date) made by it in each Loan Document to which it is a party, (ii) ratifies and confirms each Loan Document to which it is a party and (iii) confirms and agrees that each such Loan Document is, and shall continue to be in full force and effect, with 3 (to the extent applicable) the collateral described therein securing and continuing to secure, the payment of all obligations of such Loan Party referred to therein; provided that each reference to the Credit Agreement therein and in each of the other Loan Documents shall be deemed to be a reference to the Credit Agreement after giving effect to this Amendment. 11. Conditions to Effectiveness. This Amendment shall become effective as of the date set forth above upon satisfaction of the following conditions precedent: (a) The Agent shall have received counterparts of this Amendment executed by the Borrower, Reliant Energy and each of the Banks; (b) The Agent shall have received an amendment fee for the account of each Bank in an amount equal to 0.125% of such Bank's Commitment; (c) All corporate and other proceedings, and all documents, instruments and other legal matters in connection with this Amendment shall be in form and substance reasonably satisfactory to the Agent; (d) The Agent shall have received all fees and expenses required to be paid in connection with the Credit Agreement; and (e) The Agent shall have received satisfactory legal opinions and other documents and certificates reasonably requested by the Agent. 12. Reference to and Effect on the Loan Documents; Limited Effect. On and after the date hereof and the satisfaction of the conditions contained in Section 11 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 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 hereby. 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 Bank or the Agent under any of the Loan Documents, nor constitute a waiver of any provisions of any of the Loan Documents. Except as expressly amended herein, all of the provisions and covenants of the Credit Agreement and the other Loan Documents are and shall continue to remain in full force and effect in accordance with the terms thereof and are hereby in all respects ratified and confirmed. 13. Representations and Warranties. Each of the Borrower and Reliant Energy, as of the date hereof and after giving effect to the amendment contained herein, hereby confirms, reaffirms and restates the representations and warranties (except for those representations or warranties or parts thereof that, by their terms, expressly relate solely to a specific date) made by it in Article VII of the Credit Agreement and otherwise in the Loan Documents to which it is a party; provided that each reference to the Credit Agreement therein shall be deemed to be a reference to the Credit Agreement after giving effect to this Amendment. 14. Counterparts. This Amendment may be executed by one or more of the parties hereto in any number of separate counterparts (which may include counterparts delivered by facsimile transmission) and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Any executed counterpart delivered by facsimile transmission shall be effective as an original for all purposes hereof. The execution and delivery of this Amendment by any Bank shall be binding upon each of its successors and assigns (including Transferees of its Commitments and Loans in whole or in part prior to effectiveness hereof) and binding in respect of all of its Commitments and Loans, including any acquired subsequent to its execution and delivery hereof and prior to the effectiveness hereof. 15. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first written above. HOUSTON INDUSTRIES FINANCECO LP By: HOUSTON INDUSTRIES FINANCECO GP, LLC, its General Partner By: /s/ MARC KILBRIDE ----------------------------------- Name: Marc Kilbride Title: Treasurer RELIANT ENERGY, INCORPORATED By: /s/ MARC KILBRIDE ----------------------------------- Name: Marc Kilbride Title: Treasurer JPMORGAN CHASE BANK, as Agent and as a Bank By: /s/ ROBERT TRABAND ----------------------------------- Name: Robert Traband Title: Vice President Signature Page Senior B Credit Agreement Amendment ABN AMRO BANK N.V. By: /s/ THOMAS J. STARR ----------------------------------- Name: Thomas J. Starr Title: Vice President By: /s/ KRIS A. GROSSHANS ----------------------------------- Name: Kris A. Grosshans Title: Senior Vice President Signature Page Senior B Credit Agreement Amendment BANK OF AMERICA, N.A. By: /s/ RICHARD L. STEIN ----------------------------------- Name: Richard L. Stein Title: Principal Signature Page Senior B Credit Agreement Amendment BARCLAYS BANK PLC By: /s/ ERIC CHILTON ----------------------------------- Name: Eric Chilton Title: Managing Director Signature Page Senior B Credit Agreement Amendment CITIBANK, N.A. By: /s/ SANDIP SEN ----------------------------------- Name: Sandip Sen Title: Managing Director Signature Page Senior B Credit Agreement Amendment COMMERZBANK AG New York and Grand Cayman Branches By: /s/ HARRY P. YERGEY ----------------------------------- Name: Harry P. Yergey Title: Senior Vice President and Manager By: /s/ W. DAVID SUTTLES ----------------------------------- Name: W. David Suttles Title: Vice President Signature Page Senior B Credit Agreement Amendment CREDIT SUISSE FIRST BOSTON By: /s/ JAMES P. MORAN /s/ DAVID M. KOCZAN ---------------------------------------- Name: James P. Moran David M. Koczan Title: Director Associate Signature Page Senior B Credit Agreement Amendment DEUTSCHE BANK AG NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCH By: /s/ HANS C. NARBERHAUS ----------------------------------- Name: Hans C. Narberhaus Title: Vice President By: /s/ JOEL MAKOWSKY ----------------------------------- Name: Joel Makowsky Title: Vice President Signature Page Senior B Credit Agreement Amendment WACHOVIA BANK, NATIONAL ASSOCIATION (f/k/a First Union National Bank) By: /s/ ROTCHER WATKINS ----------------------------------- Name: Rotcher Watkins Title: Managing Director Signature Page Senior B Credit Agreement Amendment ROYAL BANK OF CANADA By: /s/ DAVID A. MCCLUSKEY ----------------------------------- Name: David A. McCluskey Title: Manager EXHIBIT A 1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein which are defined in the Regco Credit Agreement are used herein as therein defined. 2. Amendment to Section 1.01 of the Regco Credit Agreement (Certain Defined Terms). Section 1.01 of the Regco Credit Agreement is hereby amended by (a) deleting, in their entirety, the terms "Applicable Margin", "Designated Rating", "Termination Date" and "Usage Fee" appearing therein and inserting the following new definitions in the appropriate alphabetical order: ""Applicable Margin" means the rate per annum set forth below opposite the Designated Rating from time to time in effect during the period for which payment is due, with respect to any Committed Loan:
================================================================================================= Applicable Margin for Applicable Margin for Designated Rating Facility Fees LIBOR Rate Loans ABR Loans ------------------------------------------------------------------------------------------------- BBB+/Baa1 and higher 0.250% 1.500% 0.500% ------------------------------------------------------------------------------------------------- BBB/Baa2 0.350% 1.650% 0.650% ------------------------------------------------------------------------------------------------- BBB-/Baa3 0.500% 2.000% 1.000% ------------------------------------------------------------------------------------------------- BB+/Ba1 or lower or unrated 0.500% 2.500% 1.500% =================================================================================================
In each row in the table set forth above, the first indicated rating corresponds to that assigned by S&P and the second indicated rating corresponds to that assigned by Moody's; the determination of which row of such table is applicable at any time is set forth in the definition of "Designated Rating". "Designated Rating" means (a) at any time that the Long Term Debt Rating is assigned by both S&P and Moody's and such ratings are equivalent, such rating shall be the Designated Rating, (b) if clause (a) does not apply, (i) at any time that the Long Term Debt Rating is issued by only one of S&P or Moody's, the rating of such debt issued by such Rating Agency shall be the Designated Rating, and (ii) at any time that such debt is rated by S&P and Moody's, the lower of such ratings and (c) if neither (a) nor (b) apply, if the Long Term Debt Rating is not assigned by either S&P or Moody's, the rating assigned to the senior unsecured debt of Reliant Energy shall be the Designated Rating in accordance with clauses (a) and (b) above. Any change in the calculation of the Facility Fees or the Applicable Margin with respect to Borrower that is caused by a change in the Designated Rating will become effective on the date of the change in the Designated Rating. If the rating system of any Rating Agency shall change, or if either S&P or Moody's shall cease to be in the business of rating corporate debt obligations, Borrower and the Agent shall negotiate in good faith if necessary to amend this definition to reflect such changed rating system or the unavailability of ratings from such Rating Agencies and, pending the effectiveness of any such amendment, the Designated Rating shall be determined by reference to the rating most recently in effect prior to such change or cessation. "Master Separation Agreement" means the master separation agreement, dated as of December 31, 2000, entered into between Reliant Energy and Unregco providing for, among other things, the Spin-off, as amended, modified or supplemented from time to time. "Spin-off" shall have the meaning specified in Schedule 2 attached hereto. "Supermajority Banks" means, at any time, Banks having at least 65% of the aggregate Commitments or, if the Commitments have been terminated, 65% of the aggregate Commitments in effect immediately prior to such termination. "Termination Date" means (a) initially October 10, 2002, unless the Majority Banks direct in writing on or prior to September 5, 2002 that such Termination Date shall be September 10, 2002, in which case the Termination Date shall automatically be deemed to be September 10, 2002, or (b) any earlier date on which (i) the Commitments have been terminated in accordance with this Agreement or (ii) all unpaid principal amounts of Loans hereunder have become due and payable in accordance with this Agreement."; and (b) amending the definition of "Consolidated EBITDA" by deleting "for any period" and substituting in lieu thereof "means, for any twelve-month period ending on the date of determination". 3. Amendment to Section 2.01 of the Credit Agreement (The Committed Loans). Section 2.01 of the Credit Agreement is hereby amended by adding at the end of paragraph (a) thereof the following: "At a reasonable time at least one week prior to September 5, 2002, the Agent shall inquire as to whether requisite Banks intend to send the written direction referred to in the definition of Termination Date and shall notify the Borrower and the Banks if the requisite number of such directives have been received.". 4. Amendment to Section 4.02 of the Regco Credit Agreement (Fees). Section 4.02 of the Regco Credit Agreement is hereby amended by: (a) deleting paragraph (b) thereof in its entirety and substituting in lieu thereof the following: "(b) [INTENTIONALLY OMITTED.]"; and (b) amending paragraph (c) thereof by (i) deleting the phrase "and Usage Fees"; and (ii) by deleting "Sections 4.02(a) and 4.02(b)" and substituting in lieu thereof "Section 4.02(a)". 5. Amendment to Section 4.04(a) of the Credit Agreement (ABR Loans). Section 4.04(a) of the Credit Agreement is hereby amended by adding immediately after "ABR" in clause (i) therein "plus the Applicable Margin". 6. Amendment to Section 8.02(a) of the Regco Credit Agreement (Financial Ratio). Section 8.02(a) of the Regco Credit Agreement is hereby amended by deleting the ratio "4.50:1.00" and substituting in lieu thereof the ratio "4.75:1.00". 7. Amendment to Section 8.02(g) of the Credit Agreement (Certain Investments, Loans, Advances, Guarantees and Acquisitions). Section 8.02(g) of the Regco Credit Agreement is hereby amended by adding at the end thereof the following: "Notwithstanding the foregoing, Borrower and its Subsidiaries shall not (x) make any future investments in, loans to, advances to and Guarantees of any obligations in Unregco or any of its Subsidiaries or purchase or otherwise acquire (in one transaction or a series of related transactions) any assets of Unregco or any of its Subsidiaries, (y) purchase or otherwise acquire (in one transaction or a series of related transactions) any assets of Unregco or any of its Subsidiaries other than, in the case of this clause (y), any such transactions contemplated by the Master Separation Agreement and other agreements and arrangements in respect of the relationship between Reliant Energy and Unregco described in Reliant Energy's filings with the SEC or (z) enter into any other transaction constituting an Investment with Unregco and its Subsidiaries other than, in the case of this clause (z), the transactions contemplated by the Master Separation Agreement and other agreements and arrangements in respect of the relationship between Reliant Energy and Unregco described in Reliant Energy's filings with the SEC or other arrangements among Borrower, Unregco and their respective Subsidiaries in the ordinary course of business consistent with recent past practices or otherwise at prices and on terms and conditions not less favorable to Borrower or its Subsidiaries (other than Unregco and its Subsidiaries) than could be obtained on an arm's length basis from unrelated third parties.". 8. Amendment to Section 11.01 of the Credit Agreement (Amendments and Waivers). Section 11.01 of the Credit Agreement is hereby amended by (a) deleting "or" at the end of clause (ii) thereof and substituting in lieu thereof a comma, (b) deleting the period at the end of clause (iii) thereof and substituting in lieu thereof ", or" and (c) adding at the end thereof immediately after clause (iii) a new clause (iv) as follows: "(iv) amend, modify or waive the last paragraph of Section 8.02(g) without the written consent of the Supermajority Banks.".