EXHIBIT 10.3
FIRST AMENDMENT TO CREDIT AGREEMENT
FIRST AMENDMENT, dated as of July 12, 2002 (this "Amendment"),
to the $400,000,000 Amended and Restated Revolving Credit and Competitive
Advance Facilities Agreement, dated as of July 13, 2001 (as heretofore amended,
supplemented or otherwise modified, the "Credit Agreement"), among, RELIANT
ENERGY, INCORPORATED, a Texas corporation ("Borrower"), 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, Borrower, the Banks and the Agent are parties to the
Credit Agreement; and
WHEREAS, Borrower has 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 1.01 of the Credit Agreement (Certain
Defined Terms). Section 1.01 of the Credit Agreement is hereby amended by
deleting, in their entirety, the terms "Applicable Margin", "Consolidated
Capitalization", "Consolidated Indebtedness", "Designated Rating", "Long-Term
Debt 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:
<Table>
<Caption>
=====================================================================================
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%
=====================================================================================
</Table>
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 8.02(a), 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.
"Consolidated Indebtedness" means, as of any date of
determination, the sum of (i) the total Indebtedness as shown on the
consolidated balance sheet of Borrower and its Consolidated
Subsidiaries, determined without duplication of any Guarantee of
Indebtedness of Borrower by any of its Consolidated Subsidiaries or of
any Guarantee of Indebtedness of any such Consolidated Subsidiary by
Borrower or any other Consolidated Subsidiary of Borrower, plus any
Mandatory Payment Preferred Stock, less (ii) such amount of
Indebtedness attributable to amounts then outstanding under receivables
facilities or arrangements to the extent that such amounts would not
have been shown as Indebtedness on a balance sheet prepared in
accordance with GAAP prior to January 1, 1997, less (iii) if any
Indexed Debt Securities the liabilities in respect of which as shown on
the consolidated balance sheet of Borrower and its Consolidated
Subsidiaries have increased from the amount of liabilities in respect
thereof at the time of their issuance by reason of an increase in the
price of the Indexed Asset relating thereto, the excess of (a) the
aggregate amount of liabilities in respect of such Indexed Debt
Securities at the time of determination over (b) the initial amount of
liabilities in respect of such Indexed Debt Securities at the time of
their issuance.
"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 long-term debt of Borrower shall be deemed to be
the rating that is one level below the then current rating of the
senior secured long-term debt of Borrower 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.
"Long-Term Debt Rating" means the rating assigned by a Rating
Agency to the senior unsecured long-term debt of Borrower (it being
understood that a change in outlook status (e.g., watch status,
negative outlook status) is not a change in rating as contemplated
hereby).
"Master Separation Agreement" means the master separation
agreement, dated as of December 31, 2000, entered into between Borrower
and Unregco providing for, among other things, the Spin-off, as
amended, modified or supplemented from time to time.
"Moody's" means Moody's Investors Service, Inc., and any
successor rating agency.
"Rating Agencies" means S&P and Moody's.
"S&P" means Standard & Poor's Ratings Group, and any successor
rating agency.
"Spin-off" shall have the meaning specified in Schedule 8.04
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.
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"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 2.01 of the Credit Agreement (The
Committed Loans). Section 2.01 of the Credit Agreement is hereby amended by
adding at the end 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 Credit Agreement (Fees).
Section 4.02 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:
<Table>
<Caption>
"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
</Table>
(b) amending paragraph (b) thereof by (i) deleting the phrase
"and the fees payable under Section 4.02(e)" and (ii) deleting the phrase ", as
the case may be,"; and
(c) deleting paragraph (e) thereof in its entirety.
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 of the Credit Agreement
(Financial Ratios). Section 8.02 of the Credit Agreement is hereby amended by
(a) amending paragraph (a) thereof by deleting the ratio "0.65:1.00" and
substituting in lieu thereof "0.68:1.00"; and
(b) by adding at the end thereof immediately after paragraph
(d) thereof a new paragraph (e) as follows:
"(e) Certain Investments, Loans, Advances, Guarantees
and Acquisitions. Borrower will not purchase, or acquire
(including pursuant to any merger) any capital stock,
evidences of indebtedness or other securities of or other
interest in (including any option, warrant or other right to
acquire any of the foregoing), make any loans or advances to,
Guarantee any obligations of, or make any investment in or
capital contribution to, any Subsidiary or any other Person
(any of the foregoing, an "Investment"), in each case after
the Effective Date, except pursuant to the Loan Documents and
except that, notwithstanding the foregoing Borrower and its
Subsidiaries may make Investments if, after giving effect
thereto, Borrower would be in compliance with its covenant
contained in Section 8.02(a) on a pro forma basis.
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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, (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 Borrower and Unregco described in
Borrower'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 Borrower and Unregco described in
Borrower'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.".
7. 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(e) without the written consent of the
Supermajority Banks.".
8. Conditions to Effectiveness. This Amendment shall become
effective as of the date set orth above upon satisfaction of the following
conditions precedent:
(a) The Agent shall have received counterparts of this
Amendment executed by Borrower 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.
9. 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 8 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.
4
10. Representations and Warranties. Borrower, 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.
11. 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.
12. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
5
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.
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
REI Credit Agreement Amendment
BANK ONE, N.A.
By:/s/ GEORGE SCHANZ
-----------------------------------
Name: George Schanz
Title: Managing Director
Signature Page
REI Credit Agreement Amendment
BANK OF AMERICA, N.A.
By:/s/ RICHARD L. STEIN
-----------------------------------
Name: Richard L. Stein
Title: Principal
Signature Page
REI Credit Agreement Amendment
BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN ISLANDS BRANCH
By:/s/ HEREWARD DRUMMOND By:/s/ SEAN O'SULLIVAN
------------------------- ---------------------
Name: Hereward Drummond Name: Sean O'Sullivan
Title: Senior Vice President Title: Vice President
Signature Page
REI Credit Agreement Amendment
CITIBANK, N.A.
By: /s/ SANDIP SEN
-----------------------------------
Name: Sandip Sen
Title: Managing Director
Signature Page
REI 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
REI Credit Agreement Amendment
CREDIT AGRICOLE INDOSUEZ
By: /s/ GERARD M. RUSSELL
-----------------------------------
Name: Gerard M. Russell
Title: Vice President, Manager
By: /s/ LAURENCE F. GRANT
-----------------------------------
Name: Laurence F. Grant
Title: Senior Relationship Manager
Signature Page
REI Credit Agreement Amendment
CREDIT SUISSE FIRST BOSTON
By: /s/ JAMES P. MORAN
-----------------------------------
Name: James P. Moran
Title: Director
By: /s/ DAVID M. KOCZAN
-----------------------------------
Name: David M. Koczan
Title: Associate
Signature Page
REI Credit Agreement Amendment
KBC BANK N.V.
By: /s/ ROBERT SNAUFFER
-----------------------------------
Name: Robert Snauffer
Title: First Vice President
By: /s/ ERIC RASKIN
-----------------------------------
Name: Eric Raskin
Title: Vice President
Signature Page
REI Credit Agreement Amendment
MELLON BANK, N.A.
By: RICHARD A. MATTHEWS
-----------------------------------
Name: Richard A. Matthews
Title: First Vice President
Signature Page
REI Credit Agreement Amendment
MIZUHO CORPORATE GROUP, LTD.
By: /s/ TORU MAEDA
-----------------------------------
Name: Toru Maeda
Title: General Manager
Signature Page
REI Credit Agreement Amendment
SUMITOMO MITSUI BANKING CORPORATION
By: /s/ DAVID A BUCK
-----------------------------------
Name: David A. Buck
Title: Senior Vice President
Signature Page
REI Credit Agreement Amendment
TORONTO DOMINION (TEXAS) INC.
By: /s/ MARK A. BAIRD
-----------------------------------
Name: Mark A. Baird
Title: Vice President
Signature Page
REI Credit Agreement Amendment
UBS AG, STAMFORD BRANCH
By: /s/ DAVID J. KEITEL
-----------------------------------
Name: David J. Keitel
Title: Executive Director
Recovery Management
By: /s/ WILFRED V. SAINT
-----------------------------------
Name: Wilfred V. Saint
Title: Associate Director
Banking Products Services, US
Signature Page
REI Credit Agreement Amendment
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, New York Branch
By: /s/ SALVATORE BATTINELLI
-----------------------------------
Name: Salvatore Battinelli
Title: Managing Director
Credit Department
By: /s/ ANTHONY ALESSANDRO
-----------------------------------
Name: Anthony Alessandro
Title: Associate Director