Exhibit 10.6
[EXECUTION COPY]
AMENDMENT NO. 1
TO
CREDIT AGREEMENT
This AMENDMENT NO. 1, dated as of June 25, 2002 (this "AMENDMENT"), is
made by and among SIERRA PACIFIC POWER COMPANY, a Nevada corporation (the
"BORROWER"), the banks listed on the signature pages of this Amendment as
"Lenders" (such banks, together with their respective permitted assignees from
time to time, being referred to herein, collectively, as the "LENDERS"), and
UNION BANK OF CALIFORNIA, N.A. ("UNION BANK"), as administrative agent for the
Lenders (the "ADMINISTRATIVE AGENT").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, the Administrative Agent, Union
Bank, as Sole Bookrunner, Wells Fargo Bank, N.A., as Syndication Agent, and Bank
One, NA, BNP Paribas and Mellon Bank, N.A., as Co-Documentation Agents,
previously entered into that certain Credit Agreement, dated as of November 30,
2001 (the "EXISTING AGREEMENT", as further amended by this Amendment, the
"AMENDED AGREEMENT", and as the Amended Agreement may hereafter be amended,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT").
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned thereto in the Existing Agreement.
(2) As contemplated at the time of executing the Existing
Agreement, the Borrower plans to enter into a receivables purchase facility (the
"RECEIVABLES PURCHASE FACILITY") with certain financial institutions (the
"PURCHASERS"). Under the Receivables Purchase Facility, (a) the Borrower will
sell accounts receivable arising from the provision of electricity or natural
gas to a newly created, wholly-owned bankruptcy remote special purpose
subsidiary of the Borrower (the "SPV") and (b) either (i) the SPV (or a newly
created, wholly-owned bankruptcy remote special purpose subsidiary of Sierra
Pacific Resources (the "PARENT SPV") to which the SPV may first sell such
accounts receivable) will sell undivided percentage ownership interests in such
accounts receivable (the "PURCHASER INTERESTS") to the Purchasers, or (ii) the
Purchasers will make advances ("ADVANCES") to the SPV or the Parent SPV in
respect of and secured by such accounts receivable.
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(3) Although it was the parties' intention that the Existing
Agreement permit the establishment of the Receivables Purchase Facility to
enhance the Borrower's liquidity and overall financial position, during the
course of preparing the documentation for the Receivables Purchase Facility, it
has become apparent that certain provisions of the Existing Agreement restrict
the capacity of the Receivables Purchase Facility to achieve those objectives.
(4) Accordingly, the Borrower now wishes to amend the Existing
Agreement to clarify that the Borrower may enter into the transactions
contemplated by the Receivables Purchase Facility. The Borrower also wishes to
amend Section 6.02 and other provisions of the Existing Agreement in certain
particulars. The Required Lenders and the Administrative Agent have agreed to
such amendments, on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. AMENDMENTS TO EXISTING AGREEMENT. The Existing Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, hereby amended as follows:
(a) NEW DEFINITIONS. The following new definitions are hereby
added to Section 1.01 in the appropriate alphabetical order:
"ADVANCES" has the meaning assigned to such term in the
definition of "Receivables Purchase Facility" contained in this Section
1.01.
"DISPOSE" has the meaning assigned to such term in Section
6.04; and the terms "DISPOSITION" and "DISPOSED" shall have correlative
meanings.
"MINIMUM ADVANCE PERCENTAGE" means, in respect of any
Receivables Purchase Facility, a percentage equal to the greater of (i)
80% less the reserves (expressed as a percentage) established under
such Receivables Purchase Facility in respect of dilutive factors with
respect to the accounts receivable Disposed of to the Purchasers
thereunder or securing Advances thereunder, as the case may be, or (ii)
70%.
"PARENT SPV" has the meaning assigned to such term in the
definition of "Receivables Purchase Facility" contained in this Section
1.01.
"PURCHASE CONTRACT L/C" has the meaning assigned to such term
in Section 6.02(i).
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"PURCHASER INTERESTS" has the meaning assigned to such term in
the definition of "Receivables Purchase Facility" contained in this
Section 1.01.
"PURCHASERS" has the meaning assigned to such term in the
definition of "Receivables Purchase Facility" contained in this Section
1.01.
"RECEIVABLES PURCHASE FACILITY" means an accounts receivable
purchase facility pursuant to which (a) the Borrower will sell accounts
receivable arising from the provision of electricity or natural gas to
a newly created, wholly-owned bankruptcy remote special purpose
subsidiary of the Borrower (the "SPV") and (b) either (i) the SPV (or a
newly created, wholly-owned bankruptcy remote special purpose
subsidiary of Sierra Pacific Resources (the "PARENT SPV") to which the
SPV may first sell such accounts receivable) will sell undivided
percentage ownership interests in such accounts receivable (the
"PURCHASER INTERESTS") to the various financial institutions party to
such facility (the "PURCHASERS"), or (ii) the Purchasers will make
advances ("ADVANCES") to the SPV or the Parent SPV in respect of and
secured by such accounts receivable.
"RELATED SECURITY" means, with respect to any accounts
receivable of the Borrower, the SPV or the Parent SPV (as applicable),
(i) all Liens and property subject thereto from time to time, if any,
purporting to secure payment of such accounts receivable, whether
pursuant to the contract related to such accounts receivable or
otherwise, (ii) all guaranties, letters of credit, insurance and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such accounts receivable whether
pursuant to the contract related to such accounts receivable or
otherwise, (iii) all service contracts and other contracts and
agreements associated with such accounts receivable, (iv) all books and
records related to such accounts receivable, and (v) all proceeds of
any of the foregoing.
"SPV" has the meaning assigned to such term in the definition
of "Receivables Purchase Facility" contained in this Section 1.01.
(b) REPORTING REQUIREMENTS. Section 5.01 is hereby amended by
adding the following new subsections (k) and (l) at the end thereof:
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"(k) CASH RECEIPTS AND DISBURSEMENTS. The Borrower shall
deliver to the Administrative Agent, with a copy for each Lender, on
the first Wednesday of every two-calendar-week period, a statement of
projected weekly cash receipts and cash disbursements for at least the
immediately succeeding 12-calendar-week period, together with a
comparison of the projected cash receipts and disbursements to actual
cash receipts and disbursements for the immediately preceding
two-calendar-week period, in each case in substantially the form set
forth as Exhibit E, duly completed and signed by a Responsible Officer
of the Borrower.
(l) MONTHLY FINANCIAL REPORTS. As soon as practicable,
and in any event within three Business Days, after the Borrower issues
its monthly management-prepared financial statements, the Borrower
shall deliver such financial statements to the Administrative Agent,
with a copy for each Lender."
(c) LIENS. Section 6.02 is hereby amended by:
(i) deleting the word "and" after the semicolon at the
end of subsection (g) thereof;
(ii) deleting clause (iv) contained in the proviso to
subsection (h) thereof in its entirety and substituting therefor the
following new clause (iv):
"(iv) the aggregate amount secured by all Liens described in
this Section 6.02(h) shall not at any time exceed (A)
$50,000,000 minus (B) the aggregate amount of cash, cash
equivalents, marketable securities, instruments and other
investment property held in deposit accounts, investment
accounts or otherwise with any financial and/or depository
institutions and subject to a Lien permitted under subsection
(i) below;"
(iii) deleting the period at the end of subsection (h)
thereof;
(iv) adding the following new subsection (i) immediately
after subsection (h) thereof:
"(i) Liens, including pledges, rights of offset and
bankers' liens, on deposit accounts, instruments, investment
accounts and investment property (including cash, cash
equivalents and marketable securities) from time to time
maintained with or held by any financial and/or
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depository institutions, in each case solely to secure (1) any
and all obligations of the Borrower in respect of letters of
credit issued from time to time by any such financial and/or
depository institutions (or their Affiliates) for the account
of the Borrower or any of its Subsidiaries for purposes of
supporting the Borrower's or such Subsidiary's obligations now
or hereafter owing to gas or other energy suppliers (such
letters of credit, collectively, the "PURCHASE CONTRACT
L/C'S"), or (2) any and all obligations now or hereafter
existing of the Borrower or any of its Subsidiaries in
connection with any deposit account, investment account or
cash management service (including ACH, Fedwire, CHIPS,
concentration and zero balance accounts, and controlled
disbursement, lockbox or restricted accounts) now or hereafter
provided by any financial and/or depository institutions to or
for the benefit of the Borrower, any of its Subsidiaries or
any special purpose entity directly or indirectly providing
loans to or making receivables purchases from the Borrower or
any of its Subsidiaries; PROVIDED, HOWEVER, that the aggregate
amount of cash, cash equivalents, marketable securities,
instruments and other investment property held in deposit
accounts, investment accounts or otherwise with any financial
and/or depository institutions and subject to a Lien permitted
under this Section 6.02(i) shall not at any time exceed (A)
$50,000,000 minus (B) the aggregate amount secured by Liens
described in subsection (h) above; and"
and
(v) adding the following new subsection (j) immediately
after the new subsection (i) thereof:
"(j) Liens in the SPV's accounts receivable and
Related Security securing the obligations of the SPV under a
Receivables Purchase Facility permitted under Section 6.04(c)
(including, without limitation, the SPV's obligation to repay
Advances made thereunder)."
(d) DISPOSITIONS OF PROPERTIES. Section 6.04 is hereby amended in
its entirety to read as follows:
"SECTION 6.04 Dispositions of Properties.
The Borrower shall not, and shall not permit any of its
Subsidiaries to, sell, convey, assign, lease, sale-leaseback, transfer,
abandon or
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otherwise dispose of, voluntarily or involuntarily (collectively,
"DISPOSE"), any of its Properties, or agree, become or remain liable
contingently or otherwise to do any of the foregoing, except that, so
long as no Default or Event of Default shall have occurred and be
continuing or shall exist at such time or after giving effect to such
transaction, the Borrower and its Subsidiaries may Dispose of Property
(a) in transactions in the ordinary course of business consistent with
past practice, (b) that is obsolete, (c) comprising accounts receivable
and Related Security transferred from time to time on a revolving basis
to the SPV, the Parent SPV, a commercial paper conduit or other
purchaser pursuant to a Receivables Purchase Facility; PROVIDED that
(i) the outstanding amount of capital associated with the Purchaser
Interests that are Disposed of, or the outstanding amount of Advances
made in respect of such Disposed accounts receivable, as the case may
be, pursuant to all Receivables Purchase Facilities does not exceed
$125,000,000 in the aggregate as of any date of determination, and (ii)
the aggregate net cash proceeds received by the Borrower for all
Dispositions of accounts receivable and Related Security made pursuant
to, or in connection with, Receivables Purchase Facilities are not less
than the Minimum Advance Percentage of the aggregate amount of accounts
receivable Disposed of in all such Dispositions; PROVIDED, HOWEVER,
that, notwithstanding the foregoing, upon the occurrence and during the
continuance of a Default or an Event of Default, the Borrower and its
Subsidiaries may continue to Dispose of accounts receivable and Related
Security pursuant to this clause (c) if (and only if) (A) the
conditions set forth in clauses (i) and (ii) above are satisfied at the
time of each such Disposition and (B) the cash proceeds received by the
Borrower for each such Disposition are applied immediately as a
prepayment of the Loans pursuant to Section 2.08(b); PROVIDED, FURTHER,
that each Disposition made by the Borrower in reliance on this clause
(c) shall constitute a representation and warranty of the Borrower,
made at the time of such Disposition, that the conditions set forth in
clauses (i) and (ii) above are satisfied at such time, and (d) in
transactions other than as provided in Section 6.04(a), (b) and (c);
PROVIDED that the aggregate book value of all Property Disposed of
pursuant to this Section 6.04(d) from and after the date hereof shall
not exceed $50,000,000."
(e) DIVIDENDS AND STOCK REPURCHASES. Section 6.06 is hereby
amended in its entirety to read as follows:
"SECTION 6.06 DIVIDENDS AND STOCK REPURCHASES.
The Borrower shall not declare or pay, directly or indirectly,
any dividend, payment or other distribution of assets, properties,
cash, rights, obligations or securities on account of any share of any
class of capital stock of the Borrower (except for dividends in the
form of capital stock), or make any distribution of
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assets to any of its shareholders, in each case if a Default or Event
of Default shall have occurred and be continuing or shall exist at such
time or after giving effect to such transaction. The Borrower shall not
purchase, redeem, retire, or otherwise acquire for value any shares of
any class of capital stock of the Borrower or any warrants, rights, or
options to acquire any such shares, now or hereafter outstanding."
(f) EQUAL AND RATABLE LIEN. Section 6.09(a) is hereby amended by
deleting the period at the end of the first sentence thereof and inserting in
lieu thereof the following:
"; PROVIDED, HOWEVER, that, subject to Section 2.15(d), no issuer of a
Purchase Contract L/C shall be required to share with the Lenders any
collateral granted to such issuer pursuant to Section 6.02(i)(1) if (i)
such issuer received from the Borrower at the time of the issuance of
such Purchase Contract L/C a written representation and warranty
confirming the Borrower's compliance with the provisions of Section
6.02(i) in connection therewith and (ii) such issuer had no actual
knowledge at the time of such issuance that the Lien granted by the
Borrower or any of its Subsidiaries (as the case may be) in such
collateral constituted a violation of Section 6.02."
(g) RESTRICTIVE AGREEMENTS. Section 6.10(a) is hereby amended by
deleting the phrase "the Borrower or any of its Subsidiaries to create" in its
entirety and substituting therefor the new phrase "the Borrower or any of its
Subsidiaries (other than the SPV and/or the Parent SPV in connection with a
Receivables Purchase Facility) to create".
(h) PREPAYMENTS AND REDEMPTION OF INDEBTEDNESS. Article VI is
hereby amended by adding the following new Section 6.11 at the end thereof:
"SECTION 6.11 PREPAYMENTS AND REDEMPTION OF INDEBTEDNESS.
The Borrower shall not purchase, redeem, retire or otherwise
acquire for value, or set apart any money for a sinking, defeasance or
other analogous fund for the purchase, redemption, retirement or other
acquisition of, or make any voluntary payment or prepayment of the
principal of or interest on, or any other amount owing in respect of,
any of its Indebtedness (other than Indebtedness hereunder and under
the other Loan Documents), except that (i) the Borrower may make
payments on the regularly-scheduled payment dates with respect to the
principal of and interest on its Indebtedness and (ii) the Borrower may
reimburse the issuer of any letter of credit or similar instrument
issued for the
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account of the Borrower (in each case to the extent such letter of
credit or similar instrument is permitted to be issued for the account
of the Borrower pursuant to the terms of this Agreement) for any
drawings made thereunder, together with any interest and fees related
thereto, at the times required under any reimbursement agreement or
similar agreement to which the Borrower is a party, and (iii) for the
avoidance of doubt, this Section 6.11 shall not prohibit any payments
or prepayments of amounts payable (including, without limitation,
deferred amounts payable) (other than for borrowed money) to the
Borrower's gas and power suppliers arising in the ordinary course of
business."
(i) NEW EXHIBIT. Exhibit E attached hereto is hereby deemed to
constitute Exhibit E to the Credit Agreement.
SECTION 2. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective (a) with respect Sections 1(c)(v), 1(d) and 1(g) hereof, as of July 8,
2002, and (b) with respect to all other provisions contained in Section 1
hereof, as of the date first above written, when, and only when, the
Administrative Agent shall have received: (i) counterparts of this Amendment
executed by the Borrower, the Administrative Agent and the Required Lenders,
(ii) for the account of each Lender that delivers an executed counterpart of
this Amendment on or before June 25, 2002, a nonrefundable amendment fee of
0.30% of such Lender's Commitment, in immediately available funds, and (iii) all
of the following documents, each document being dated the date of receipt
thereof by the Administrative Agent (which date shall be the same for all such
documents), in form and substance satisfactory to the Administrative Agent:
(A) A certificate of the Secretary or an Assistant
Secretary of the Borrower certifying the names, true signatures and
incumbency of the officers of the Borrower authorized to sign this
Amendment and any other documents to be delivered hereunder.
(B) A certificate of a Responsible Officer of the
Borrower (the statements in which shall be true) stating that (1)
except as disclosed by Sierra Pacific Resources in its press release
issued on June 11, 2002, the representations and warranties set forth
in Article III of the Existing Agreement are true and correct on and as
of the date hereof, both before and after giving effect to this
Amendment, as though made on and as of such date, and (2) after giving
effect to this Amendment, no event has occurred and is continuing that
constitutes a Default or an Event of Default, and no Default or Event
of Default would result from the execution, delivery or performance of
this Amendment or the transactions contemplated hereby.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants as follows:
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(a) The execution and delivery by the Borrower of this Amendment,
and the performance by the Borrower of this Amendment and the Amended Agreement,
(i) are within the Borrower's corporate powers, (ii) have been duly authorized
by all necessary corporate action, and (iii) do not and will not (A) require any
consent or approval of the shareholder of the Borrower (other than any such
consent or approval that has been duly obtained and is in full force and
effect), (B) violate any provision of the articles of incorporation or by-laws
of the Borrower or of law, (C) violate any legal restriction binding on or
affecting the Borrower, (D) result in a breach of, or constitute a default
under, any indenture or loan or credit agreement or any other agreement, lease
or instrument to which the Borrower is a party or by which it or its properties
may be bound or affected, or (E) result in or require the creation of any Lien
(other than pursuant to the Loan Documents) upon or with respect to any of its
properties. This Amendment has been duly executed and delivered by the Borrower.
(b) No Governmental Action is required for (i) the due execution
and delivery by the Borrower of this Amendment or (ii) the performance by the
Borrower of this Amendment and the Amended Agreement, other than any such
Governmental Actions that have been duly obtained or made and are in full force
and effect on the date hereof.
(c) Each of this Amendment and the Amended Agreement is the legal,
valid and binding obligation of the Borrower enforceable against the Borrower in
accordance with its respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(d) Except as disclosed by the Borrower in its reports filed with
the Securities and Exchange Commission prior to the date hereof, there is no
pending or, to the knowledge of the Borrower, threatened action, suit,
investigation, litigation or proceeding affecting the Borrower or any of its
properties before any court, governmental agency or arbitrator, that would
reasonably be expected to materially adversely affect the legality, validity, or
enforceability of, or the ability of the Borrower to perform its obligations
under, this Amendment or the Amended Agreement.
SECTION 4. REFERENCE TO AND EFFECT ON THE EXISTING AGREEMENT. (a) Upon
the effectiveness of this Amendment: (i) each reference in the Existing
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Existing Agreement shall mean and be a reference to the Amended
Agreement; and (ii) each reference in any other Loan Document to "the Credit
Agreement", "thereunder", "thereof" or words of like import referring to the
Existing Agreement shall mean and be a reference to the Amended Agreement.
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(b) Except as specifically amended above, the Existing Agreement
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 the Lenders or the Administrative Agent under the
Existing Agreement or any other Loan Document, nor constitute a waiver of any
provision of the Existing Agreement or any other Loan Document.
SECTION 5. COSTS AND EXPENSES. The Borrower agrees to pay on demand (i)
all reasonable costs and expenses of the Administrative Agent in connection with
the preparation, negotiation, syndication, execution, delivery, administration
and performance of this Amendment, the Amended Agreement, the other Loan
Documents and the other instruments and documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses of
(A) counsel to the Administrative Agent with respect thereto and with respect to
advising the Administrative Agent as to its rights and responsibilities
hereunder and thereunder, and (B) any other consultants or experts that the
Administrative Agent reasonably deems necessary or advisable in connection with
the foregoing, and (ii) all costs and expenses of the Administrative Agent and
each Lender (including, without limitation, reasonable fees and expenses of (A)
counsel to the Administrative Agent and counsel for each Lender and (B) any
other consultants or experts deemed necessary or advisable by the Administrative
Agent) in connection with the enforcement or preservation of rights (whether
through negotiations, legal proceedings or otherwise) under this Amendment, the
Amended Agreement or any other Loan Document.
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 and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument. In furtherance of the foregoing, it is understood and agreed
that signatures hereto submitted by facsimile transmission shall be deemed to
be, and shall constitute, original signatures.
SECTION 7. GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of the New York.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
S-1
IN WITNESS WHEREOF, the parties hereto have caused Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
SIERRA PACIFIC POWER COMPANY
By
-----------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A., as
Administrative Agent
By
-----------------------------------
Name:
Title:
Signature Page to Amendment No. 1 to SPPC Credit Agreement
S-2
LENDERS
-------
UNION BANK OF CALIFORNIA, N.A.
By
-----------------------------------
Name:
Title:
WELLS FARGO BANK, N.A.
By
-----------------------------------
Name:
Title:
BANK ONE, NA
By
-----------------------------------
Name:
Title:
BNP PARIBAS
By
-----------------------------------
Name:
Title:
By
-----------------------------------
Name:
Title:
MELLON BANK, N.A.
By
-----------------------------------
Name:
Title:
Signature Page to Amendment No. 1 to SPPC Credit Agreement
S-3
BAYERISCHE LANDESBANK
GIROZENTRALE
By
-----------------------------------
Name:
Title:
By
-----------------------------------
Name:
Title:
MIZUHO CORPORATE BANK, LTD., formerly
known as The Industrial Bank of Japan,
Limited
By
-----------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER INC.
By
-----------------------------------
Name:
Title:
WACHOVIA BANK, NATIONAL ASSOCIATION,
formerly known as First Union National
Bank
By
-----------------------------------
Name:
Title:
Signature Page to Amendment No. 1 to SPPC Credit Agreement
S-4
MERRILL LYNCH BANK USA
By
-----------------------------------
Name:
Title:
Signature Page to Amendment No. 1 to SPPC Credit Agreement
EXHIBIT E
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PROJECTED/ACTUAL CASH FLOWS
[ table ]