Document:

EX-10.1

 

Exhibit 10.1

AMENDMENT NO. 1 – CREDIT AGREEMENT (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 2, 2006, among Allegheny Energy Supply Company,
LLC (the “Borrower”), the Initial Lenders, the Swing Line Bank and the Initial Issuing Bank named
therein, and Citicorp USA, Inc., as Administrative Agent. Capitalized terms not otherwise defined
herein shall have the same meanings as set forth in the Credit Agreement.

PRELIMINARY STATEMENT

          The Borrower has requested that the Revolving Facility be increased in the amount of $200
million and the Borrower be permitted to make cash dividends from time to time to the Parent,
including with the proceeds of the Revolving Facility.

          SECTION 1. Amendment. Subject to the satisfaction of the conditions precedent set forth in
Section 2, the Required Lenders, the Borrower, and all of the Revolving Lenders listed on the
signature pages hereof as Increasing Revolving Lenders (each, an “Increasing Revolving Lender”)
hereby agree as follows:

     (a) Schedule I to the Credit Agreement is amended and replaced in its entirety with
Exhibit A attached hereto.

     (b) To amend Section 2.15 of the Credit Agreement by inserting the text that appears
below as bolded and underlined:

     The proceeds of the Advances and issuances of any Letter of Credit shall be available
(and the Borrower agrees that it shall use proceeds of Advances made to it and each Letter
of Credit issued at its request) solely (a) in the case of the Term Borrowing and, to the
extent proceeds of such Revolving Borrowing are not applied in accordance with clause (b)
below, each Revolving Borrowing on the Closing Date, to repay in full the Existing Debt, (b)
in the case of each subsequent Revolving Borrowing (and each Revolving Borrowing comprising
the Initial Borrowing that is not required to pay the Existing Debt) and Letter of Credit,
for working capital for the Borrower and its Subsidiaries and to make cash dividends
from time to time to the Parent to the extent permitted under Section 5.02(f)(i)(F) and
(c) in the case of any additional borrowing made pursuant to Section 2.16, for general
corporate purposes.

     (c) To amend Section 5.02(f)(i) 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:

     the Borrower may (A) declare and pay cash dividends and distributions with respect to
the ML Interests to the extent required under the Constituent Documents of the Borrower as
in effect on the Closing Date, (B) make payments to the Parent in respect of
reimbursement obligations under any drawn letter of credit posted by the Parent on
behalf of the Borrower or any of its Subsidiaries to support Obligations of the Borrower or
such

Amendment No.1

AESC Credit Agreement

 

Subsidiary undertaken in the ordinary course of business and not for speculative
purposes, (C) issue and sell shares of its Equity Interests, (D) commencing with the Fiscal
Year ending December 31, 2006, declare and pay cash dividends to the Parent in an aggregate
amount in any Fiscal Year not to exceed the greater of (1) $25,000,000 or (2) if the
Borrower’s Leverage Ratio as of the last day of the Fiscal Year immediately preceding the
Fiscal Year in which such dividend is paid was less than (I) 4.50:1.00, 25% of the
Borrower’s Consolidated Net Income for the Fiscal Year immediately preceding the Fiscal Year
in which such dividend is paid or (II) 3.50:1.00, 50% of the Borrower’s Consolidated Net
Income for the Fiscal Year immediately preceding the Fiscal Year in which such dividend is
paid, and (E) make any equity Investment in any of its Subsidiaries permitted under Section
5.02(e), and (F) declare and pay cash dividends from time to time to the Parent in an
aggregate amount not to exceed $300,000,000 to the extent the Borrower delivers, at the time
of each such payment, an Officer’s Certificate to the Administrative Agent certifying that
such dividend shall be applied directly or indirectly by the Parent to make Investments in a
Subsidiary of the Parent;

          SECTION 2. Conditions to Effectiveness. This Amendment shall become effective when, and only
when, the Administrative Agent shall have received (a) counterparts of this Amendment executed by
the Borrower, the Required Lenders and all of the Increasing Revolving Lenders or, as to any of
such Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this
Amendment and (b) to the extent requested, a Revolving Note of the Borrower for the account of each
Increasing Revolving Lender that has so requested, in an amount equal to the Revolving Commitment
of such Increasing Revolving Lender as set forth on Exhibit A hereto. 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. The Borrower hereby represents and
warrants as follows:

     (a) The Borrower 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 cases of clauses (i) through (iv), the 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

Amendment No.1

AESC Credit Agreement

2

 

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 Financing 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.

          (a) 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.

          (b) 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 Financing Documents, nor constitute a waiver of any provision
of any of the Financing Documents.

          SECTION 5. Costs and Expenses. The Borrower 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.

Amendment No.1

AESC Credit Agreement

3

 

     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 SUPPLY COMPANY, LLC,	 	 
	 	 	as Borrower	 	 
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Barry E. Pakenham
 

Barry E. Pakenham
	 	 
	 

	 	Title:
	 	Treasurer	 	 

Amendment No.1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	CITICORP USA, INC.,	 	 
	 	 	as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Maureen Maroney
 

Maureen Maroney
	 	 
	 

	 	Title:
	 	Vice President	 	 

Amendment No.1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	CITICORP USA, INC.,	 	 
	 	 	as Increasing Revolving Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Maureen Maroney
 

Maureen Maroney
	 	 
	 

	 	Title:
	 	Vice President	 	 

Amendment No.1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	The Bank of Nova Scotia

as Increasing Revolving Lender
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Thane Rattew
 

Thane Rattew
	 	 
	 

	 	Title:
	 	Managing Director	 	 

Amendment No. 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION

as Increasing Revolving Lender
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Thomas A. Majeski
 

Thomas A. Majeski
	 	 
	 

	 	Title:
	 	Vice President	 	 

Amendment No. 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	Wells Fargo Bank, National Association,

as Increasing Revolving Lender
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Patrick McCue
 

Patrick McCue
	 	 
	 

	 	Title:
	 	Vice President & Senior Relationship
Manager	 	 

Amendment No. 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	Sovereign Bank,

as Increasing Revolving Lender
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Dexter Freeman
 

Dexter Freeman
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 

Amendment No. 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Increasing Revolving Lender
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Mark Walton
 

MARK WALTON
	 	 
	 

	 	Title:
	 	AUTHORIZED SIGNATORY	 	 

Amendment No. 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	JPMorgan Chase Bank, N.A.,

as Increasing Revolving Lender
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Michael DeForge
 

Michael DeForge
	 	 
	 

	 	Title:
	 	Executive Director	 	 

Amendment No. 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	CREDIT SUISSE, Cayman Islands Branch

as Increasing Revolving Lender
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Thomas Cantello
 

Thomas Cantello
	 	 
	 

	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Shaheen Malik
 

Shaheen Malik
	 	 
	 

	 	Title:
	 	Associate	 	 

Amendment No. 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,

as Increasing Revolving Lender
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Kevin Bertelsen
 

Kevin Bertelsen
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 

Amendment No. 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	BNP PARIBAS,

as Increasing Revolving Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Denis O’Meara
 

DENIS O’MEARA
	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Francis J. Delaney
 

FRANCIS J. DELANEY
	 	 
	 

	 	Title:
	 	Managing Director	 	 

Amendment No 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	UNION BANK OF CALIFORNIA, N.A.,

as Increasing Revolving Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Susan K. Johnson
 

Susan K. Johnson
	 	 
	 

	 	Title:
	 	Vice President	 	 

Amendment No 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	MORGAN STANLEY BANK,

as Increasing Revolving Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Daniel Twenge
 

Daniel Twenge
	 	 
	 

	 	Title:
	 	Authorized Signatory	 	 

Amendment No 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	Bear Steams Corporate Lending Inc

as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Victor Bulzacchelli
 

Victor Bulzacchelli
	 	 
	 

	 	Title:
	 	Vice President	 	 

Amendment No 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	Bayerische Landesbank,

as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Christopher Dowd
 

Christopher Dowd
	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Donna M. Quilty
 

Donna M. Quilty
	 	 
	 

	 	 	 	Vice President	 	 

Amendment No 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	BARCLAYS BANK PLC,

as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Nicholas Bell
	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Nicholas Bell	 	 
	 	 	Title: Director	 	 

Amendment No 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	National City Bank

as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Susan J. Dimmick
 

Susan J. Dimmick
	 	 
	 

	 	 	 	Senior Vice President	 	 

Amendment No 1

AESC Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	Commerzbank, AG, New
York and Grand Cayman Branches.,

as Lender
	 
	 	 	 	 	 	 
	 

	 	By

Name:
	 	/s/ Andrew R. Campbell
 

Andrew R. Campbell
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 

/s/ Janet Serry

Janet Serry

Assistant Treasurer

Amendment No 1

AESC Credit Agreement

 

 

Exhibit A

Schedule I to the Credit Agreement

Amendment No 1

AESC Credit AgreementEX-10.2

 

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 210 mile 500-kV 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 Amos 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

Amendment No. 1

AYE Credit Agreement

 

 

Subsidiary of
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 Amos
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.

Amendment No. 1

AYE Credit Agreement

2

 

     “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 210 mile 500-kV 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 

Amendment No. 1

AYE Credit Agreement

3

 

     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:

Amendment No. 1

AYE Credit Agreement

4

 

          (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

Amendment No. 1

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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

Amendment No. 1

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6

 

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.

Amendment No. 1

AYE Credit Agreement

7

 

          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.

Amendment No. 1

AYE Credit Agreement

8

 

     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

 	 
	 	By:  	/s/ Barry E. Pakenham
 	 
	 	Name:  	Barry E. Pakenham 	 
	 	Title:  	Vice President and Treasurer 	 
	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 
	 	ALLEGHENY ENERGY SUPPLY COMPANY, LLC

as Borrower

 	 
	 	By:  	/s/ Barry E. Pakenham
 	 
	 	Name:  	Barry E. Pakenham 	 
	 	Title:  	Vice President and Treasurer 	 
	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 
	 	CITICORP NORTH AMERICA, INC.,

as Administrative Agent

 	 
	 	By:  	/s/ Maureen Maroney
 	 
	 	Name:  	Maureen Maroney 	 
	 	Title:  	Vice President 	 
	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 
	 	CITICORP
NORTH AMERICA, INC.,

as Lender

 	 
	 	By:  	/s/ Maureen Maroney
 	 
	 	Name:  	Maureen Maroney 	 
	 	Title:  	Vice president 	 
	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	The Bank of Nova Scotia
	 	 	as Lender
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Thane Rattew	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Thane Rattew	 	 
	 

	 	Title:
	 	Managing Director	 	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION 
as Lender
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Thomas A. Majeski	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Thomas A. Majeski	 	 
	 

	 	Title:
	 	Vice President	 	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	Bear Stearns Corporate
Lending Inc.,

as Lender
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Victor Bulzacchelli	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Victor Bulzacchelli	 	 
	 

	 	Title:
	 	Vice President	 	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	GOLDMAN SACHS CREDIT PARTNERS L.P.,
 as Lender
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Mark Walton	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	MARK WALTON	 	 
	 

	 	Title:
	 	AUTHORIZED SIGNATORY	 	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	JPMorgan Chase Bank, N.A.,

as Lender
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Michael DeForge	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Michael DeForge	 	 
	 

	 	Title:
	 	Executive Director	 	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	CREDIT SUISSE, Cayman Islands Branch
 as Lender
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Thomas Cantello	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Thomas Cantello	 	 
	 

	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Shaheen Malik	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Shaheen Malik	 	 
	 

	 	Title:
	 	Associate	 	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	BARCLAYS BANK PLC,

as Lender
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Nicholas Bell	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Nicholas Bell	 	 
	 

	 	Title:
	 	Director	 	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,
 as Lender
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Kevin Bertelsen	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Kevin Bertelsen	 	 
	 

	 	Title:
	 	Senior Vice President	 	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	BNP PARIBAS, 

as Lender
	 
	 	 	 	 	 	 
	 

	 	By	 	/s/ Denis O’Meara	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	DENIS O’MEARA	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Francis J. Dolaney	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	FRANCIS J. DELANEY	 	 
	 

	 	Title:
	 	Managing Director	 	 

Amendment No. 1

AYE Credit Agreement

 

 

	 	 	 	 	 	 	 
	 	 	UNION BANK OF
CALIFORNIA, N.A., 

as Lender
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Susan K. Johnson	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Susan K. Johnson	 	 
	 

	 	Title:
	 	Vice President	 	 

Amendment No. 1

AYE Credit Agreement

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