EXHIBIT 10.3
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$50,000,000
CREDIT AGREEMENT
AMONG
SIERRA PACIFIC POWER COMPANY,
AS BORROWER,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
MERRILL LYNCH CAPITAL CORPORATION,
AS DOCUMENTATION AGENT,
LEHMAN COMMERCIAL PAPER INC.,
AS SYNDICATION AGENT,
AND
MERRILL LYNCH CAPITAL CORPORATION,
AS ADMINISTRATIVE AGENT
DATED AS OF MAY 4, 2004
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MERRILL LYNCH & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED AND
LEHMAN BROTHERS INC.,
AS JOINT LEAD ARRANGERS AND JOINT BOOKRUNNERS
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.......................................................................................... 1
1.1 Defined Terms................................................................................. 1
1.2 Other Definitional Provisions................................................................. 19
SECTION 2. AMOUNT AND TERMS OF LOANS............................................................................ 20
2.1 Making of Loans; Evidence of Loans............................................................ 20
2.2 Credit-Linked Account......................................................................... 21
2.3 Procedure for Borrowings...................................................................... 24
2.4 Termination or Reduction of Total Credit-Linked Deposit Amount................................ 24
2.5 Repayment..................................................................................... 24
2.6 Optional Prepayments.......................................................................... 25
2.7 Interest Rates, Fees and Payment Dates........................................................ 25
2.8 Computation of Interest and Fees.............................................................. 25
2.9 Inability to Determine Interest Rate.......................................................... 26
2.10 Pro Rata Treatment and Payments............................................................... 26
2.11 Requirements of Law........................................................................... 27
2.12 Taxes......................................................................................... 28
2.13 Indemnity..................................................................................... 30
2.14 Illegality.................................................................................... 30
2.15 Change of Lending Office...................................................................... 30
2.16 Replacement of Lenders under Certain Circumstances............................................ 31
SECTION 3. REPRESENTATIONS AND WARRANTIES....................................................................... 31
3.1 Financial Condition........................................................................... 31
3.2 No Change..................................................................................... 32
3.3 Corporate Existence; Compliance with Law...................................................... 32
3.4 Corporate Power; Authorization; Enforceable Obligations....................................... 32
3.5 No Legal Bar.................................................................................. 32
3.6 No Material Litigation........................................................................ 32
3.7 No Default.................................................................................... 33
3.8 Ownership of Property; Liens.................................................................. 33
3.9 Intellectual Property......................................................................... 33
3.10 Taxes......................................................................................... 33
3.11 Federal Regulations........................................................................... 33
3.12 Government Approval and Filings............................................................... 33
3.13 Labor Matters................................................................................. 34
3.14 ERISA......................................................................................... 34
3.15 Investment Company Act; Other Regulations..................................................... 34
3.16 Subsidiaries.................................................................................. 34
3.17 Use of Proceeds............................................................................... 35
3.18 Environmental Matters......................................................................... 35
3.19 Accuracy of Information, etc.................................................................. 36
3.20 G&R Series K Mortgage Bond.................................................................... 36
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3.21 Solvency...................................................................................... 37
SECTION 4. CONDITIONS PRECEDENT................................................................................. 37
4.1 Conditions to Initial Loans................................................................... 37
4.2 Condition to Each Loan........................................................................ 38
SECTION 5. AFFIRMATIVE COVENANTS................................................................................ 38
5.1 Financial Statements.......................................................................... 39
5.2 Certificates; Other Information............................................................... 39
5.3 Payment of Obligations........................................................................ 39
5.4 Conduct of Business and Maintenance of Existence, etc......................................... 40
5.5 Maintenance of Property; Insurance............................................................ 40
5.6 Inspection of Property; Books and Records; Discussions........................................ 40
5.7 Notices....................................................................................... 40
5.8 Environmental Laws............................................................................ 41
SECTION 6. NEGATIVE COVENANTS................................................................................... 41
6.1 Limitation on Indebtedness and Preferred Stock................................................ 41
6.2 Limitation on Liens........................................................................... 44
6.3 Limitation on Fundamental Changes............................................................. 46
6.4 Limitation on Disposition of Property......................................................... 46
6.5 Limitation on Restricted Payments............................................................. 46
6.6 Modifications of Instruments, etc............................................................. 49
6.7 Limitation on Transactions with Affiliates.................................................... 49
6.8 Limitation on Sales and Leasebacks............................................................ 49
6.9 Limitation on Changes in Fiscal Periods....................................................... 49
6.10 Limitation on Negative Pledge Clauses......................................................... 50
6.11 Limitation on Restrictions on Subsidiary Distributions........................................ 50
6.12 Limitation on Modifications to Subordinated Debt.............................................. 51
6.13 Limitation on Lines of Business............................................................... 51
6.14 Limitation on Release from Liens.............................................................. 51
6.15 Limitation on Subsidiary Guarantees........................................................... 51
SECTION 7. EVENTS OF DEFAULT.................................................................................... 52
SECTION 8. THE AGENTS........................................................................................... 55
8.1 Appointment................................................................................... 55
8.2 Delegation of Duties.......................................................................... 55
8.3 Exculpatory Provisions........................................................................ 56
8.4 Reliance by the Administrative Agent.......................................................... 56
8.5 Notice of Default............................................................................. 56
8.6 Non-Reliance on Administrative Agent and Other Lenders........................................ 57
8.7 Indemnification............................................................................... 57
8.8 Agent in Its Individual Capacity.............................................................. 58
8.9 Successor Administrative Agent................................................................ 58
8.10 The Joint Lead Arrangers and Agents........................................................... 58
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SECTION 9. MISCELLANEOUS........................................................................................ 58
9.1 Amendments and Waivers........................................................................ 58
9.2 Notices....................................................................................... 60
9.3 No Waiver; Cumulative Remedies................................................................ 61
9.4 Survival of Representations and Warranties.................................................... 61
9.5 Payment of Expenses........................................................................... 61
9.6 Successors and Assigns; Participations and Assignments........................................ 62
9.7 Adjustments; Set-off.......................................................................... 65
9.8 Counterparts.................................................................................. 65
9.9 Severability.................................................................................. 66
9.10 Integration................................................................................... 66
9.11 GOVERNING LAW................................................................................. 66
9.12 Submission To Jurisdiction; Waivers........................................................... 66
9.13 Acknowledgments............................................................................... 67
9.14 Confidentiality............................................................................... 67
9.15 USA Patriot Act............................................................................... 67
9.16 Accounting Changes............................................................................ 68
9.17 WAIVERS OF JURY TRIAL......................................................................... 68
9.18 Covenant of the Lenders....................................................................... 68
SCHEDULES:
2.1 Credit-Linked Deposit Amounts
3.2 Disclosed Matters
3.4 Consents, Authorizations, Filings and Notices
3.6 Material Litigation
3.7 Contractual Obligations
3.16 Subsidiaries
6.1(b)(iii) Existing Indebtedness
6.2(g) Existing Liens
6.4 Scheduled Asset Sales
7(e)(ii) Certain Hedge Agreements
EXHIBITS:
A Form of Exemption Certificate
B-1 Form of Officer Certificate
B-2 Form of Secretary Certificate
C-1 Form of Legal Opinion of Choate, Hall & Stewart
C-2 Form of Legal Opinion of Woodburn and Wedge
D Form of Assignment and Acceptance
E Form of Borrowing Notice
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CREDIT AGREEMENT, dated as of May 4, 2004, among SIERRA PACIFIC
POWER COMPANY, a Nevada corporation (the "Borrower"), the several banks and
other financial institutions or entities from time to time parties to this
Agreement (the "Lenders"), MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED, and LEHMAN BROTHERS INC., as joint lead arrangers and joint
bookrunners (in such capacities, the "Joint Lead Arrangers"), LEHMAN COMMERCIAL
PAPER INC., as syndication agent (in such capacity, the "Syndication Agent"),
and MERRILL LYNCH CAPITAL CORPORATION, as documentation agent (in such capacity,
the "Documentation Agent") and administrative agent (in such capacity, the
"Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available
to the Borrower a credit facility on the terms set forth herein; and
WHEREAS, the Lenders are willing to make such credit facility
available upon and subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"ABR Conversion Notice": a notice delivered by the Administrative
Agent, acting at the request of the Required Lenders, during the continuation of
an Event of Default stating that the Loans shall become Base Rate Loans on the
last day of the then current Interest Period.
"ABR Conversion Period": any period beginning on the last day of the
then current Interest Period for Loans following any date on which an ABR
Conversion Notice is delivered to the Borrower and ending on first day of the
calendar month following the date that such notice is withdrawn or an Event of
Default no longer exists.
"Acquired Debt": with respect to any specified Person, (a)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, whether or
not such Indebtedness is incurred in connection with, or in contemplation of,
such other Person merging with or into, or becoming a Subsidiary of, such
specified Person, and (2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Actual Return": as defined in Section 2.2(h).
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agents": the collective reference to the Syndication Agent, the
Documentation Agent and the Administrative Agent.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Applicable Margin": (a) with respect to Base Rate Loans, 1.50%, and
(b) with respect to Eurodollar Loans, 2.50%.
"Applicable Percentage": as to any Lender at any time, the
percentage which such Lender's Credit-Linked Deposit Amount constitutes of the
Total Credit-Linked Deposit Amount.
"Asset Sale": (a) the sale, lease, conveyance or other disposition
of any assets or rights, other than sales of inventory in the ordinary course of
business consistent with past practices and (b) the issuance of Equity Interests
in any of the Borrower's Subsidiaries or the sale of Equity Interests in any of
its Subsidiaries. Notwithstanding the preceding sentence, the following items
will not be deemed to be Asset Sales:
(i) any single transaction or series of related transactions that
involves assets having a fair market value of less than $1,000,000;
(ii) a transfer of assets between or among the Borrower and its
Subsidiaries;
(iii) an issuance of Equity Interests by a Subsidiary to the
Borrower or to another Subsidiary;
(iv) a Restricted Payment or Permitted Investment that is permitted
by Section 6.5;
(v) sales, transfers or other dispositions of assets, including
Capital Stock of Subsidiaries, for consideration at least equal to the
fair market value of the assets sold or disposed of, but only if the
consideration received consists of Capital Stock of a Person that becomes
a Subsidiary engaged in, or property or assets (other than cash, except to
extent used as a bona fide means of equalizing the value of the property
or assets involved in the swap transaction) of a nature or type or that
are used in, a business of the Borrower and its Subsidiaries existing on
the date of such sale or other disposition; provided, however, that the
fair market value of the assets sold or disposed of is determined as
provided in the final paragraph of Section 6.5; and
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(vi) transfers of assets by the Borrower and its Subsidiaries
required under statute or regulation in connection with renewable energy
contracts.
"Assignee": as defined in Section 9.6(c).
"Assignor": as defined in Section 9.6(c).
"Attributable Debt": with respect to any Sale and Leaseback
Transaction, at the time of determination, the present value of the obligation
of the lessee for net rental payments during the remaining term of the lease
included in such Sale and Leaseback Transaction including any period for which
such lease has been extended or may, at the option of the lessor, be extended.
Such present value shall be calculated using a discount rate equal to the rate
of interest implicit in such transaction, determined in accordance with GAAP.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the prime
lending rate as set forth on the British Banking Association Telerate Page 5 (or
such other comparable page as may, in the opinion of the Administrative Agent,
replace such page for the purpose of displaying such rate), as in effect from
time to time. Any change in the Base Rate due to a change in the Prime Rate or
the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
"Base Rate Loans": Loans for which the applicable rate of interest
is based upon the Base Rate.
"Benefitted Lender": as defined in Section 9.7.
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Board of Directors": (a) with respect to a corporation, the board
of directors of the corporation, (b) with respect to a partnership, the Board of
Directors of the general partner of the partnership and (c) with respect to any
other Person, the board or committee of such Person serving a similar function.
"Borrower": as defined in the preamble hereto.
"Borrowing": the making of any Loan.
"Borrowing Date": any Business Day specified by the Borrower as a
date on which the Borrower requests the Lenders to make Loans hereunder.
"Business Day": (a) for all purposes other than as covered by clause
(b) below, a day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to close and (b) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which
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is a Business Day described in clause (a) and which is also a day for trading by
and between banks in Dollar deposits in the interbank eurodollar market.
"Capital Lease Obligations": with respect to any Person, the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP;
for the purposes of this Agreement, the amount of such obligations at any time
shall be the capitalized amount thereof at such time determined in accordance
with GAAP.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Cash Equivalents": (a) United States dollars, (b) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality of the United States government (provided that the
full faith and credit of the United States is pledged in support of those
securities) having maturities of not more than one year from the date of
acquisition, (c) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any domestic commercial bank having capital and
surplus in excess of $500,000,000 and a Thomson Bank Watch Rating of "B" or
better, (d) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (b) and (c) above
entered into with any financial institution meeting the qualifications specified
in clause (c) above, (e) commercial paper having the highest rating obtainable
from Moody's Investors Service, Inc. or Standard & Poor's Ratings Services and
in each case maturing within 270 days after the date of acquisition and (f)
money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (e) of this
definition.
"Change of Control": the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) shall
become, or obtain rights (whether by means or warrants, options or otherwise) to
become, the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under
the Exchange Act), directly or indirectly, of more than 20% of the outstanding
common stock of Sierra Pacific Resources; (b) Sierra Pacific Resources shall
cease to own and control, of record and beneficially, directly, 100% of each
class of outstanding Capital Stock of the Borrower (other than shares of the
Borrower's Class A Series 1 preferred stock) free and clear of all Liens or (c)
for any period of 12 consecutive calendar months, a majority of the Board of
Directors of Sierra Pacific Resources shall no longer be composed of individuals
(i) who were members of said Board on the first day of such period, (ii) whose
election or nomination to said Board was approved by individuals referred to in
clause (i) above constituting at the time of such election or nomination at
least a majority of said Board or (iii) whose election or nomination to said
Board was approved by individuals referred to in clauses (i) and (ii) above
constituting at the time of such election or nomination at least a majority of
said Board.
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"Closing Date": the date on which the conditions precedent set forth
in Section 4.1 shall have been satisfied, which date shall be not later than May
15, 2004.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Commonly Controlled Entity": an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"Consolidated Cash Flow": with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus:
(a) an amount equal to any extraordinary loss plus any net loss
realized by such Person or any of its Subsidiaries in connection with an Asset
Sale, to the extent such losses were deducted in computing such Consolidated Net
Income; plus
(b) provision for taxes based on income or profits of such Person
and its Subsidiaries for such period, to the extent that such provision for
taxes was deducted in computing such Consolidated Net Income; plus
(c) consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income; plus
(d) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or reserve for
cash expenses in any future period of such Person and its Subsidiaries) for such
period to the extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income; plus
(e) all extraordinary, unusual or non-recurring items of loss or
expense, to the extent that any such loss or expense was deducted in computing
such Consolidated Net Income; minus
(f) all extraordinary, unusual or non-recurring items of gain or
revenue, to the extent that any such gain or revenue was included in computing
such Consolidated Net Income; minus
(g) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of business,
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in each case, on a consolidated basis and determined in accordance with GAAP;
provided that non-cash expenses recorded as a result of deferred energy
accounting will not be added to Consolidated Net Income.
"Consolidated Net Income": with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (a) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting will be
included only to the extent of the amount of dividends or distributions paid in
cash to such Person or a Subsidiary of such Person, (b) the Net Income of any
Subsidiary will be excluded to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary of such Net Income is not
at the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary or its
stockholders, (c) the cumulative effect of a change in accounting principles
will be excluded and (d) any equity in earnings or losses of Sierra Pacific
Resources will be excluded.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"Control Investment Affiliate": as to any Person, any other Person
that (a) directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person and (b) is organized by such Person primarily
for the purpose of making equity or debt investments in one or more companies.
For purposes of this definition, "control" of a Person means the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise.
"Credit Facilities": one or more debt facilities or commercial paper
facilities (excluding the facilities provided under this Agreement), in each
case with banks or other institutional lenders providing for revolving credit
loans, term loans or letters of credit, in each case, as amended, restated,
modified, renewed, refunded, replaced or refinanced in whole or in part from
time to time, including any securities issued pursuant to the General and
Refunding Mortgage Indenture in order to secure any amounts outstanding under a
Credit Facility from time to time; provided that the obligation of the Borrower
to make any payment on any such securities shall be:
(i) no greater than the amount required to be paid under such Credit
Facility that is secured by such payment obligation;
(ii) payable no earlier than such amount is required to be paid
under such Credit Facility; and
(iii) deemed to have been paid or otherwise satisfied and discharged
to the extent that the Borrower has paid such amount under such Credit
Facility;
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provided further that any amounts the Borrower is obligated to pay under such
securities will not be included for purposes of determining the aggregate amount
outstanding under Credit Facilities that is permitted under clause (i) of
Section 6.1(b).
"Credit-Linked Account": the collective reference to one or more
operating and/or investment accounts of, and established by, the Administrative
Agent under its sole and exclusive control and maintained at Deutsche Bank AG,
Cayman Islands Branch pursuant to Section 2.2(a).
"Credit-Linked Deposit Amount": with respect to each Lender, an
amount equal to the amount set forth opposite its name on Schedule 2.1, or as
may subsequently be set forth in the Register from time to time, as the same may
be reduced from time to time pursuant to this Agreement. For the avoidance of
doubt, the Credit-Linked Deposit Amount of each Lender shall not be reduced by
the making of any Loans as a result of the withdrawal of any amounts then on
deposit in the Credit-Linked Account.
"Default": any of the events specified in Section 7, whether or not
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Deposit Return Date": the date that the Credit-Linked Account is
closed pursuant to Section 2.2(c)(iv).
"Disposition": with respect to any Property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition thereof;
and the terms "Dispose" and "Disposed of" shall have correlative meanings.
"Disqualified Stock": any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event (other than as a result of an optional
redemption by the issuer thereof), matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder of the Capital Stock, in whole or in part, on or prior to the date
that is 91 days after the Final Maturity Date. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders of the Capital Stock have the right to require the Borrower
to repurchase such Capital Stock upon the occurrence of a change of control or
an asset sale will not constitute Disqualified Stock if the terms of such
Capital Stock provide that the Borrower may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with Section 6.5.
"Dollars" and "$": lawful currency of the United States of America.
"Domestic Subsidiary": any Subsidiary of the Borrower organized
under the laws of any jurisdiction within the United States of America.
"Environmental Laws": any and all laws, rules, orders, regulations,
statutes, ordinances, guidelines, codes, decrees, or other legally enforceable
requirements (including, without limitation, common law) of any international
authority, foreign government, the United States, or any state, local, municipal
or other governmental authority, regulating, relating to or
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imposing liability or standards of conduct concerning protection of the
environment or of human health, or employee health and safety, as has been, is
now, or may at any time hereafter be, in effect.
"Environmental Permits": any and all permits, licenses, approvals,
registrations, notifications, exemptions and other authorizations required under
any Environmental Law.
"Equity Interests": Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day, the aggregate
(without duplication) of the maximum rates (expressed as a decimal fraction) of
reserve requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves) under any regulations of
the Board or other Governmental Authority having jurisdiction with respect
thereto dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on Page 3750 of the Telerate screen
as of 11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750 of the
Telerate screen (or otherwise on such screen), the "Eurodollar Base Rate" for
purposes of this definition shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as may be
selected by the Administrative Agent.
"Eurodollar Loans": Loans for which the applicable rate of interest
is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period, a rate per annum determined for such day in accordance with the
following formula:
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 7,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Existing Indebtedness": all Indebtedness of the Borrower and its
Subsidiaries (other than Indebtedness under the Loan Documents) in existence on
the Closing Date and listed on Schedule 6.1(b)(iii), until such amounts are
repaid.
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"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three federal funds brokers of recognized standing selected by it.
"Final Maturity Date": May 4, 2008.
"First Mortgage Indenture": the Indenture of Mortgage dated as of
December 1, 1940, from the Borrower to U.S. Bank National Association (successor
to The New England Trust Company), as trustee, and Gerald R. Wheeler (successor
to Leo W. Huegle), as co-Trustee, as modified, amended or supplemented at any or
from time to time by supplemental indentures.
"Fixed Charge Coverage Ratio": with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Subsidiaries for such period to the Fixed Charges of such Person and its
Subsidiaries for such period. In the event that such Person or any of its
Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio will be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or
such issuance, repurchase or redemption of preferred stock, and the use of the
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period. In addition, for purposes of
calculating the Fixed Charge Coverage Ratio:
(a) acquisitions that have been made by such Person or any of its
Subsidiaries, including through mergers, consolidations or otherwise (including
acquisitions of assets used in a Permitted Business) and including any related
financing transactions, during the four-quarter reference period or subsequent
to such reference period and on or prior to the Calculation Date will be given
pro forma effect as if they had occurred on the first day of the four-quarter
reference period, including any pro forma expense and cost reductions that have
occurred or are reasonably expected to occur, in the reasonable judgment of the
chief financial officer of the Borrower (regardless of whether those cost
savings or operating improvements could then be reflected in pro forma financial
statements in accordance with Regulation S-X promulgated under the Securities
Act of 1933, as amended, or any other regulation or policy of the Securities and
Exchange Commission, or any successor agency, related thereto);
(b) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, will be excluded; and
(c) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date,
9
will be excluded, but only to the extent that the obligations giving rise to
such Fixed Charges will not be obligations of such Person or any of its
Subsidiaries following the Calculation Date.
"Fixed Charges": with respect to any Person for any period, the sum,
without duplication, of:
(a) the consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued, including, without
limitation, amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations; plus
(b) the consolidated interest of such Person and its Subsidiaries
that was capitalized during such period; plus
(c) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Subsidiaries or secured by a Lien on
assets of such Person or one of its Subsidiaries, whether or not such Guarantee
or Lien is called upon; plus
(d) the product of (i) all dividends, whether paid or accrued and
whether or not in cash, on any series of preferred stock of such Person or any
of its Subsidiaries, other than dividends on Equity Interests payable solely in
Equity Interests of the Borrower (other than Disqualified Stock) or to the
Borrower or a Subsidiary of the Borrower, times (ii) a fraction, the numerator
of which is one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of such Person, expressed
as a decimal, in each case, on a consolidated basis and in accordance with GAAP;
plus
(e) all distributions by a Trust Preferred Vehicle to persons other
than the Borrower of amounts received as interest by such trust on the
Subordinated Debt of the Borrower held by such trust.
"Fixed Return": as defined as set forth in Section 2.2(h).
"Funding Office": the office specified from time to time by the
Administrative Agent as its funding office by notice to the Borrower and the
Lenders.
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time, except that, for purposes of
determining the Fixed Charge Coverage Ratio and for purposes of the related
definitions, GAAP shall be determined on the basis of such principles in effect
on the date hereof.
"G&R Series K Mortgage Bond": the Borrower's General and Refunding
Mortgage Bond, Series K, due the Final Maturity Date, issued to the
Administrative Agent under the General and Refunding Mortgage Indenture, in the
principal amount of $50,000,000.
10
"General and Refunding Mortgage Indenture": the General and
Refunding Mortgage Indenture, dated as of May 1, 2001, between the Borrower and
The Bank of New York, as trustee, as the same may be amended, modified or
supplemented from time to time.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Granting Lender": as defined in Section 9.6(g).
"Guarantee": a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner, including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Hedge Agreements": with respect to any Person, the collective
reference to any of the following: (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements designed to protect such
Person against fluctuations in interest rates with respect to Indebtedness
incurred and not for purposes of speculation, (b) foreign exchange contracts and
currency protection agreements entered into with one of more financial
institutions designed to protect such Person against fluctuations in currency
exchange rates with respect to Indebtedness incurred and not for purposes of
speculation, (c) any commodity futures contract, commodity option or other
similar agreement or arrangement designed to protect against fluctuations in the
price of commodities used by such Person at the time and (d) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates. The term "Hedge Agreements" shall in any event
include any forward energy purchase or sale contracts or similar arrangements
entered into by the Borrower or its Subsidiaries.
"Hedging Obligations": with respect to any Person, the obligations
of such Person incurred in the normal course of business and consistent with
past practices and not for speculative purposes under any Hedge Agreement.
"Indebtedness": with respect to any Person, any indebtedness of such
Person, whether or not contingent (a) in respect of borrowed money, (b)
evidenced by notes, bonds, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof), (c) in respect of
banker's acceptances, (d) representing Capital Lease Obligations, (e)
representing the balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued expense or trade
payable or (f) representing any Hedging Obligations, if and to the extent any of
the preceding items (other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
Indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date will be (x) the
accreted value of the Indebtedness, in the case of any Indebtedness issued with
original issue discount and (y) the principal amount of the
11
Indebtedness, together with any interest on the Indebtedness that is more than
30 days past due, in the case of any other Indebtedness.
"Indemnified Liabilities": as defined in Section 9.5.
"Indemnitee": as defined in Section 9.5.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
"Interest Payment Date": as to any Loan, the first Business Day of
each calendar month to occur while such Loan is outstanding and the Final
Maturity Date.
"Interest Period": (a) initially, the period commencing on the
Closing Date and ending on the last day of the calendar month in which the
Closing Date occurs, and (b) thereafter, each period commencing on the first day
of the next succeeding calendar month and ending on the last day of such next
succeeding calendar month; provided that the foregoing provisions are subject to
the following:
(i) if any Interest Period would otherwise end on a day that is not
a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day; and
(ii) any Interest Period that would otherwise extend beyond the date
final payment is due on the Loans shall end on such due date.
"Investments": with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Borrower
or any Subsidiary of the Borrower sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Borrower such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Borrower, the Borrower will be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in
12
an amount determined as provided in the final paragraph of Section 6.5. The
acquisition by the Borrower or any Subsidiary of the Borrower of a Person that
holds an Investment in a third Person will be deemed to be an Investment by the
Borrower or such Subsidiary in such third Person in an amount equal to the fair
market value of the Investment held by the acquired Person in such third Person
in an amount determined as provided in the final paragraph of Section 6.5.
"Joint Lead Arrangers": as defined in the preamble hereto.
"Lenders": as defined in the preamble hereto.
"Lien": with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Loan": as defined in Section 2.1(a). Loans may be Base Rate Loans
to the extent provided in Section 2.2(f).
"Loan Documents": this Agreement, the Officer's Certificate and the
G&R Series K Mortgage Bond and any amendment, waiver, supplement or other
modification to any of the foregoing.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, property, condition (financial or otherwise) or prospects of
the Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.
"Material Environmental Amount": an amount or amounts payable by the
Borrower and/or any of its Subsidiaries, in the aggregate in excess of
$5,000,000, for: costs to comply with any Environmental Law; costs of any
investigation, and any remediation, of any Material of Environmental Concern;
and compensatory damages (including, without limitation damages to natural
resources), punitive damages, fines, and penalties pursuant to any Environmental
Law.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants,
contaminants, radioactivity, and any other substances or forces of any kind,
whether or not any such substance or force is defined as hazardous or toxic
under any Environmental Law, that is regulated pursuant to or could give rise to
liability under any Environmental Law.
"Merrill Lynch Entity": any of Merrill Lynch Capital Corporation or
any of its Affiliates.
13
"Multiemployer Plan": a Plan that is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Income": with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (a) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (i) any Asset Sale or (ii) the disposition of
any securities by such Person or any of its Subsidiaries or the extinguishment
of any Indebtedness of such Person or any of its Subsidiaries and (b) any
extraordinary gain (but not loss), together with any related provision for taxes
on such extraordinary gain (but not loss).
"Non-Excluded Taxes": as defined in Section 2.12(a).
"Non-U.S. Lender": as defined in Section 2.12(d).
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document or any other document made,
delivered or given in connection herewith or therewith, whether on account of
principal, interest, fees, indemnities, costs, expenses (including, without
limitation, all fees, charges and disbursements of counsel to the Administrative
Agent or to any Lender that are required to be paid by the Borrower pursuant
hereto) or otherwise.
"Officer's Certificate": an "Officer's Certificate" (as defined in
the General and Refunding Mortgage Indenture) setting forth the terms of the G&R
Series K Mortgage Bond, executed by duly authorized officer of the Borrower and
authenticated by the trustee under the General and Refunding Mortgage Indenture.
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.
"Participant": as defined in Section 9.6(b).
"Payment Amounts": as defined in Section 7(e).
"Payment Office": the office of the Administrative Agent specified
in Section 9.2 and any other office of the Administrative Agent specified by it
from time to time as its payment office by notice to the Borrower and the
Lenders.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
14
"Permitted Business": any business that derives a majority of its
revenues from the business engaged in by the Borrower and its Subsidiaries on
the Closing Date and/or activities that are reasonably similar, ancillary,
incidental, complementary or related to, or a reasonable extension, development
or expansion of, the businesses in which the Borrower and its Subsidiaries are
engaged on the Closing Date, as determined in good faith by the Board of
Directors of the Borrower.
"Permitted Debt": as defined in Section 6.1(b).
"Permitted Investments": any of the following Investments:
(a) any Investment in the Borrower or in a Subsidiary of the
Borrower;
(b) any Investment in Cash Equivalents;
(c) any Investment by the Borrower or any Subsidiary of the Borrower
in a Person, if as a result of such Investment, (i) such Person becomes a
Subsidiary of the Borrower or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Borrower or a Subsidiary of the Borrower;
(d) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made in compliance with Section 6.4;
(e) any acquisition of assets to the extent it is in exchange for
the issuance of Equity Interests (other than Disqualified Stock) of the
Borrower;
(f) any Investments received in compromise of obligations of such
persons incurred in the ordinary course of trade creditors or customers that
were incurred in the ordinary course of business, including pursuant to any plan
of reorganization or similar arrangement upon the bankruptcy or insolvency of
any trade creditor or customer;
(g) Hedging Obligations;
(h) any Investments made in accordance with clause (v) of the
definition of "Asset Sales"; and
(i) other Investments in any Person that is not also a Subsidiary of
the Borrower having an aggregate fair market value (measured on the date each
such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to this
clause (i) since the Closing Date, not to exceed $20,000,000.
"Permitted Liens": as defined in Section 6.2.
"Permitted Refinancing Indebtedness": any Indebtedness of the
Borrower or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend,
15
refinance, renew, replace, defease or refund other Indebtedness of the Borrower
or any of its Subsidiaries (other than intercompany Indebtedness); provided
that:
(a) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness extended, refinanced,
renewed, replaced, defeased or refunded (plus all accrued and unpaid interest on
the Indebtedness and the amount of all expenses and premiums incurred in
connection therewith);
(b) if such Permitted Refinancing Indebtedness is issued on or after
the first anniversary of the Closing Date, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded;
(c) if such Permitted Refinancing Indebtedness is issued on or after
the first anniversary of the Closing Date, and the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is Subordinated Debt, such
Permitted Refinancing Indebtedness has a final maturity date later than the
Final Maturity Date of, and is subordinated in right of payment to, the Loans
and other Obligations on terms at least as favorable to the Lenders as those
contained in the documentation governing the Subordinated Debt being extended,
refinanced, renewed, replaced, defeased or refunded; and
(d) such Indebtedness is incurred either by the Borrower or by the
Subsidiary which is the obligor on the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan that is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Property": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
including, without limitation, Capital Stock.
"PUCN": the Public Utilities Commission of Nevada, or any successor
agency.
"Receivables Sale Documentation": collectively, (i) the Receivables
Purchase Agreement, dated as of October 29, 2002, among Sierra Pacific Power
Company, as Seller, and SPPC Receivables Finance Corporation, (ii) the Sale and
Servicing Agreement, dated as of October 29, 2002, among SRP Receivables Finance
Corporation, as Issuer, SPPC Receivables Finance Corporation, as Seller, and
Sierra Pacific Power Company, as Servicer, (iii) the Base Indenture, dated as of
October 29, 2002, among SRP Receivables Finance Corporation, as Issuer,
16
and Deutsche Bank Trust Company Americas, as Indenture Trustee, (iv) the Series
2002-1 Indenture Supplement, dated as of October 29, 2002, among SRP Receivables
Finance Corporation, as Issuer, Sierra Pacific Resources, as Administrator,
certain conduit purchasers, certain committed purchasers, certain program
managers, Lehman Commercial Paper Inc., as Master Administrator, and Deutsche
Bank Trust Company Americas, as Indenture Trustee, (v) the Administration
Agreement, between SRP Receivables Finance Corporation and Sierra Pacific
Resources, as Administrator, (vi) the Performance Guaranty, dated as of October
29, 2002, made by Sierra Pacific Resources in favor of the Indenture Trustee,
(vii) the Collection Account Control Agreement, dated as of October 29, 2002,
between the SRP Receivables Finance Corporation, Deutsche Bank Trust Company
Americas, as Indenture Trustee and Deutsche Bank Trust Company Americas, as
Collection Account Securities Intermediary, (viii) the Lock-Box Agreement, dated
as of October 29, 2002, among Nevada Power Company, SRP Receivables Finance
Corporation, Deutsche Bank Trust Company Americas, as Indenture Trustee,
Deutsche Bank Trust Company Americas, as Lock-Box Bank and EDS Information
Services L.L.C., as Lock-Box Processor, (ix) the Lock-Box Agreement, dated as of
October 29, 2002, among Sierra Pacific Power Company, SRP Receivables Finance
Corporation, Deutsche Bank Trust Company Americas, as Indenture Trustee,
Deutsche Bank Trust Company Americas, as Lock-Box Bank and EDS Information
Services L.L.C., as Lock-Box Processor, (x) the Remittance Account Agreement,
dated at or about October 30, 2002, among the Bank, SRP Receivables Finance
Corporation, as Issuer, Nevada Power Company, as Servicer and Deutsche Bank
Trust Company Americas, as Indenture Trustee and (xi) the Remittance Account
Agreement, dated at or about October 30, 2002, among the Bank, SRP Receivables
Finance Corporation, as Issuer, Sierra Pacific Power Company, as Servicer and
Deutsche Bank Trust Company Americas, as Indenture Trustee.
"Register": as defined in Section 9.6(d).
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Related Fund": with respect to any Lender, any fund that (x)
invests in commercial loans and (y) is managed or advised by the same investment
advisor as such Lender or an affiliate of such investment advisor, by such
Lender or an Affiliate of such Lender.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC
Reg. Section 4043.
"Required Lenders": at any time, the holders of more than 50% of the
Total Credit-Linked Deposit Amount then in effect or, if the Total Credit-Linked
Deposit Amount has been terminated, the aggregate principal amount of all Loans
then outstanding.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in
17
each case applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Responsible Officer": the chief executive officer, president,
senior vice-president, vice-president, chief financial officer, treasurer or
assistant treasurer of the Borrower, but in any event, with respect to financial
matters, the chief financial officer or the treasurer of the Borrower.
"Restricted Investment": an Investment other than a Permitted
Investment.
"Restricted Payments": as defined in Section 6.5.
"Sale and Leaseback Transaction": as defined in Section 6.8.
"SEC": the Securities and Exchange Commission (or successors thereto
or an analogous Governmental Authority).
"Settlement Date": the earlier to occur of (a) the Final Maturity
Date and (b) the date of an acceleration of payment of all Obligations pursuant
to Section 7.
"Sierra Pacific Resources": Sierra Pacific Resources, a Nevada
corporation.
"Single Employer Plan": any Plan that is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": with respect to any Person, as of any date of
determination, (a) the amount of the "present fair saleable value" of the assets
of such Person will, as of such date, exceed the amount of all "liabilities of
such Person, contingent or otherwise", as of such date, as such quoted terms are
determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair saleable value
of the assets of such Person will, as of such date, be greater than the amount
that will be required to pay the liability of such Person on its debts as such
debts become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they mature. For
purposes of this definition, (i) "debt" means liability on a "claim", and (ii)
"claim" means any (x) right to payment, whether or not such a right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
"SPC": as defined in Section 9.6(g).
"Stated Maturity": with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
18
"Sub-agent": Deutsche Bank Trust Company Americas, or any affiliate
thereof, or any replacement thereof appointed by the Administrative Agent upon
notice to the Borrower and the Lenders.
"Subordinated Debt": any debt that is subordinated to the prior
payment of the Loans and other Obligations.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the Board of Directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantee": any Guarantee of the Loans and other
Obligations to be executed by any Subsidiary of the Borrower pursuant to Section
6.15.
"Subsidiary Guarantors": any Subsidiary of the Borrower that
executes a Subsidiary Guarantee, and its successors and assigns.
"Total Credit-Linked Deposit Amount": at any time, the sum of all
the Credit-Linked Deposit Amounts at such time. The initial amount of the Total
Credit-Linked Deposit Amount is $50,000,000.
"Transferee": as defined in Section 9.14.
"Trust Preferred Vehicle": any statutory business trust the only
assets of which are Subordinated Debt of the Borrower.
"Weighted Average Life to Maturity": when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect of the Indebtedness,
by (ii) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment; by (b) the then
outstanding principal amount of such Indebtedness.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
19
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) References to agreements or other Contractual Obligations shall,
unless otherwise specified, be deemed to refer to such agreements or Contractual
Obligations as amended, supplemented, restated or otherwise modified from time
to time.
SECTION 2. AMOUNT AND TERMS OF LOANS
2.1 Making of Loans; Evidence of Loans. (a) Upon the terms and
subject to the conditions herein set forth (including the provisions of Section
4), each Lender, severally and not jointly with the other Lenders, agrees to
make loans (each a "Loan" and, collectively, the "Loans") to the Borrower at any
time and from time to time during the period commencing on the Closing Date and
ending on the Settlement Date; provided that, after giving effect to any such
Loan, (i) the aggregate outstanding principal amount of the Loans of such Lender
does not exceed such Lender's Credit-Linked Deposit Amount, and (ii) the
aggregate outstanding principal amount of the Loans of all Lenders does not
exceed the Total Credit-Linked Deposit Amount. Loans made pursuant to this
Section 2.1(a) may be repaid and reborrowed in accordance with the provisions of
this Agreement.
(b) Each Loan shall be funded by the Lenders pro rata in accordance
with their respective Applicable Percentages, solely from amounts on deposit in
the Credit-Linked Account.
(c) The Loans shall be evidenced by a G&R Series K Mortgage Bond
issued and delivered by the Borrower to the Administrative Agent, for the
benefit of the Lenders. Each Loan shall promptly be evidenced on the G&R Series
K Mortgage Bond by the Administrative Agent by notation as an increase on the
Schedule of Increases and Decreases attached to the G&R Series K Mortgage Bond,
and each payment of principal of the Loans shall promptly be evidenced on the
G&R Series K Mortgage Bond by the Administrative Agent by notation as a decrease
on the Schedule of Increases and Decreases. The entries made on the Schedule of
Increases and Decreases shall be prima facie evidence of the outstanding
principal amount of the G&R Series K Mortgage Bond; provided, however, that the
Administrative Agent's failure to maintain the Schedule of Increases and
Decreases shall not affect the actual principal amount outstanding under the G&R
Series K Mortgage Bond or the obligations of the Borrower to pay,
20
as provided herein, the principal amount outstanding under the G&R Series K
Mortgage Bond and interest thereon.
2.2 Credit-Linked Account. (a) Establishment of the Credit-Linked
Account. On or prior to the Closing Date, the Administrative Agent shall
establish a Credit-Linked Account at Deutsche Bank AG, Cayman Islands Branch in
the name of the Administrative Agent, for the benefit of the Lenders. Amounts on
deposit in the Credit-Linked Account shall be invested, or caused to be
invested, by the Administrative Agent as set forth in paragraph (d) below, and
no Person (other than the Administrative Agent or any of its sub-agents) shall
have the right to make any withdrawals from the Credit-Linked Account or
exercise any other right or power with respect thereto, except as expressly
provided in paragraph (c) below or Section 8.9 or 9.6(c). Without limiting the
generality of the foregoing, each party hereto acknowledges and agrees that no
amount on deposit at any time in the Credit-Linked Account shall be the property
of the Borrower, shall constitute "collateral" under the Loan Documents, or
shall otherwise be available in any manner to satisfy any Obligation of the
Borrower under the Loan Documents. The deposit of the Credit-Linked Deposit
Amounts into the Credit-Linked Account, the application thereof and the
arrangements with respect thereto set forth in this Agreement constitute
agreements among the Administrative Agent and each Lender with respect to the
funding obligations of the Lenders under this Agreement and do not constitute
any loan or extension of credit to the Borrower. The sole funding obligation of
each Lender shall be satisfied upon the funding of its Credit-Linked Deposit
Amount. Each Lender irrevocably and unconditionally agrees that its Applicable
Percentage of the amount on deposit in the Credit-Linked Account may be applied
from time to time as set forth in this Agreement. The Borrower shall not have
any responsibility or liability to the Lenders, the Administrative Agent or any
other Person in respect of the establishment, maintenance, administration or
misappropriation of the Credit-Linked Account (or any sub-accounts thereof) or
with respect to the investment of amounts held therein pursuant to Section
2.2(d) or the duties and responsibilities of the Administrative Agent (or any of
its sub-agents or Affiliates) with respect to the foregoing contemplated by
Section 2.2(d).
(b) Deposits in the Credit-Linked Account. The following amounts
will be deposited in the Credit-Linked Account (or transferred, in the case of
clause (iii) below) at the following times:
(i) on or prior to the Closing Date, each Lender shall deposit in
the Credit-Linked Account an amount in Dollars equal to such Lender's
Credit-Linked Deposit Amount. All funding obligations with respect to any
Loan, in the case of each Lender, shall be satisfied upon such Lender's
making such deposit in the Credit-Linked Account;
(ii) on any date on which the Administrative Agent receives any
payment for the account of any Lender with respect to the principal amount
of any of its Loans (whether pursuant to Section 2.4, 2.5 or 2.6 or
Section 7 or otherwise) prior to the Deposit Return Date, the
Administrative Agent shall deposit such amount in the Credit-Linked
Account on behalf of such Lender; and
(iii) concurrently with the effectiveness of any assignment by any
Lender of all or any portion of its Credit-Linked Deposit Amount, the
corresponding portion of the
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assignor Lender's Applicable Percentage of the amount on deposit in the
Credit-Linked Account shall be deemed to have been transferred to the
assignee.
(c) Withdrawals from and Closing of the Credit-Linked Account.
Amounts on deposit in the Credit-Linked Account shall be withdrawn and
distributed (or transferred, in the case of clause (iii) below) as follows:
(i) on the date of any Borrowing of Loans, subject to satisfaction
of the conditions applicable thereto set forth in Section 4, the
Administrative Agent shall withdraw from the Credit-Linked Account on
behalf of each Lender an amount equal to such Lender's Applicable
Percentage of such Borrowing, and make such amount available to the
Borrower, as contemplated by Section 2.1(b) and in accordance with Section
2.3;
(ii) concurrently with each optional reduction or termination of the
Total Credit-Linked Deposit Amount pursuant to Section 2.4, the
Administrative Agent shall withdraw from the Credit-Linked Account, and
pay to each Lender, an amount equal to such Lender's Applicable Percentage
of the amount of the optional reduction of the Total Credit-Linked Deposit
Amount, in accordance with such Section;
(iii) concurrently with the effectiveness of any assignment by any
Lender of all or any portion of its Credit-Linked Deposit Amount, the
corresponding portion of the assignor Lender's Applicable Percentage of
the amount on deposit in the Credit-Linked Account shall be deemed to have
been transferred to the assignee; and
(iv) upon the reduction of the Total Credit-Linked Deposit Amount to
$0, the Administrative Agent shall withdraw from the Credit-Linked
Account, and pay to each Lender, such Lender's Applicable Percentage of
the aggregate amount then on deposit therein (which percentage shall be
calculated immediately before giving effect to such reduction of the Total
Credit-Linked Deposit Amount) and shall close the Credit-Linked Account.
(d) Investment of Amounts in the Credit-Linked Account. The
Administrative Agent shall invest, or cause to be invested, the amount on
deposit in the Credit-Linked Account so as to earn for the account of each
Lender for each day during each calendar month a return on such amount
calculated at a rate per annum equal to (i) the Eurodollar Rate with respect to
an Interest Period commencing on the first day of such calendar month and ending
at the end of such calendar month (or, if the Administrative Agent is unable to
determine the Eurodollar Rate for such day, a rate per annum for such day
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation) minus (ii) 0.15% (based on a 360 day year). Such
return will be paid by the Administrative Agent to each Lender for any calendar
month (or portion thereof) monthly in arrears on the first Business Day of the
following calendar month and the Settlement Date, as applicable, as well as on
the Deposit Return Date. The Borrower shall not have any obligation under or in
respect of the provisions of this Section 2.2(d).
22
(e) Fixed Return Fee. The Borrower shall pay a fee to the
Administrative Agent, for the account of each Lender, monthly in arrears for
each calendar month (or portion thereof), an amount equal to the excess, if any,
of (i) the Fixed Return over (ii) the Actual Return, in each case with respect
to each Lender for such calendar month (or portion thereof). Each such amount
for any calendar month (or portion thereof) will be paid by the Borrower to the
Administrative Agent, for the account of each Lender, on the first Business Day
of the following calendar month, on the Settlement Date and on the Deposit
Return Date. In the event that the Actual Return with respect to any Lender for
any calendar month exceeds the Fixed Return with respect to such Lender for such
calendar month, such excess amount shall be held in a separate sub-account of
the Credit-Linked Account. Amounts on deposit in any such sub-account shall be
withdrawn by the Administrative Agent and paid to the relevant Lender in
satisfaction of any amount subsequently payable by the Borrower to such Lender
pursuant to this paragraph (e), and the Borrower shall not be required to make
any payment to such Lender pursuant to this paragraph (e) until the amounts on
deposit in such sub-account of such Lender shall be $0. Upon the Settlement
Date, assuming the repayment by the Borrower of all amounts outstanding
hereunder, any excess payments referred to in this paragraph (e) shall be
returned to, and become the property of, the Borrower.
(f) Loans During ABR Conversion Period. Notwithstanding any other
provisions of this Agreement, Loans shall be deemed to be Base Rate Loans during
any ABR Conversion Period.
(g) Sub-agents. The Administrative Agent may perform any and all its
duties and exercise its rights and powers contemplated by this Section 2.2 and
the other provisions of this Agreement by or through one or more sub-agents
appointed by it (which may include any of its Affiliates), and any such
sub-agent shall be entitled to the benefit of all the provisions of Section 8 of
this Agreement (including Section 8.7). The parties hereto acknowledge that the
Administrative Agent has engaged the Sub-agent to act as its sub-agent for
purposes of this Section 2.2 and the Agreement and that in such capacity the
Sub-agent shall be entitled to the benefit of all the provisions of Section 8 of
this Agreement (including Section 8.7).
(h) Definitions. For purposes of this Section 2.2 (or any other
Section of this Agreement that refers to any of the following terms), the
following defined terms shall have the following meanings:
"Actual Return": for any calendar month (or portion thereof)
referred to in paragraph (e) above with respect to which the Actual Return is
determined, with respect to any Lender, an amount equal to (i) the aggregate
amount of return due to such Lender from the Administrative Agent pursuant to
Section 2.2(d) plus (ii) the aggregate amount of interest payments received by
such Lender from the Borrower pursuant to Section 2.7, in each case with respect
to such calendar month (or portion thereof).
"Fixed Return": for any calendar month (or portion thereof) referred
to in paragraph (e) above with respect to which the Fixed Return is determined,
with respect to any Lender, an amount equal to the interest that would have
accrued on the Credit-Linked Deposit Amount of such Lender (irrespective of such
Lender's Applicable Percentage of the amount then on deposit in the
Credit-Linked Account) during such monthly period (or portion thereof) if such
23
interest were calculated at a rate per annum equal to (i) the Eurodollar Rate
with respect to such calendar month (or portion thereof) plus (ii) the
Applicable Margin for Eurodollar Loans (on the basis of the actual number of
days elapsed over a year of 360 days).
2.3 Procedure for Borrowings. The Borrower may borrow the Loans
pursuant to Section 2.1 on any Business Day prior to the earlier of the
Settlement Date and the Deposit Return Date, provided that the Borrower shall
give the Administrative Agent irrevocable notice in the form of Exhibit E hereto
(which notice must be received by the Administrative Agent prior to 10:00 A.M.,
New York City time, one Business Day prior to the requested Borrowing Date),
specifying (i) the amount of Loans to be borrowed and (ii) the requested
Borrowing Date. Each borrowing shall be in an amount equal to $1,000,000 or a
whole multiple thereof (or, if the then aggregate amount on deposit in the
Credit-Linked Account is less than $1,000,000, such lesser amount). Each Lender
hereby irrevocably authorizes the Administrative Agent to make available to the
Borrower an amount on deposit in the Credit-Linked Account equal to such
Lender's Applicable Percentage of such Loan borrowing (it being understood that
the funding obligations of each Lender with respect to such borrowing shall be
required to be satisfied solely by depositing its Credit-Linked Deposit Amount
into the Credit-Linked Account, and the Borrower shall have no other recourse
against such Lender with respect to the satisfaction of such funding
obligation). Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account of the Borrower on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Lenders and in like funds as received by the Administrative Agent.
2.4 Termination or Reduction of Total Credit-Linked Deposit Amount.
The Borrower may at any time or from time to time upon not less than three
Business Days' prior notice direct the Administrative Agent to reduce the Total
Credit-Linked Deposit Amount in whole or in part; provided that each partial
reduction of the Total Credit-Linked Deposit Amount shall be in an amount that
is an integral multiple of $1,000,000 and not less than $5,000,000; provided,
further, that no such reduction shall be permitted if, after giving effect to
such reduction, the aggregate then outstanding principal amount of the Loans
would exceed the Total Credit-Linked Deposit Amount as so reduced. In the event
the Total Credit-Linked Deposit Amount shall be reduced as provided in the
preceding sentence, the Administrative Agent will return all amounts in the
Credit-Linked Account in excess of the reduced Total Credit-Linked Deposit
Amount to the Lenders, ratably in accordance with their Applicable Percentages.
2.5 Repayment(a) . (a) The entire outstanding principal amount of
the G&R Series K Mortgage Bond and any unpaid interest due thereon shall be due
and payable by the Borrower on the Final Maturity Date or on such other date as
the Total Credit-Linked Deposit Amount may be reduced to $0 hereunder, and the
Borrower hereby unconditionally promises to pay to the Administrative Agent the
outstanding principal amount of the G&R Series K Mortgage Bond and any unpaid
interest due thereon on such date.
(b) The Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in Section 2.7.
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(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 9.6(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Lender hereunder and (iii) both
the amount of any sum received by the Administrative Agent hereunder from the
Borrower and each Lender's share thereof.
2.6 Optional Prepayments. The Borrower may at any time and from time
to time prepay the Loans, in whole or in part, without premium or penalty except
as otherwise provided herein, upon irrevocable notice delivered to the
Administrative Agent at least one Business Day prior thereto, which notice shall
specify the date and amount of such prepayment. If any such notice is given, the
amount specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to such date on the amount prepaid and
any amounts payable pursuant to Section 2.13. Partial prepayments of Loans shall
be in an aggregate principal amount of $1,000,000 or a whole multiple thereof.
2.7 Interest Rates, Fees and Payment Dates. (a) Each Loan shall bear
interest for each day during each calendar month in which such Loan is
outstanding at a rate per annum equal to the Eurodollar Rate in effect for such
month plus the Applicable Margin, subject to Section 2.2(f).
(b) Each Base Rate Loan shall bear interest for each day on which it
is outstanding at a rate per annum equal to the Base Rate in effect for such day
plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), all outstanding Loans (whether or not overdue) shall bear interest
(to the extent legally permitted) at a rate per annum that is equal to the rate
that would otherwise be applicable thereto pursuant to the foregoing provisions
of this Section plus 2% and (ii) if all or a portion of any interest payable on
any Loan or any fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum equal to the rate then applicable
to Base Rate Loans plus 2%, in each case, with respect to clauses (i) and (ii)
above, from the date of such non-payment until such amount is paid in full
(after as well as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.
(e) In addition to the fees provided for in Section 2.2, the
Borrower agrees to pay to the Administrative Agent the fees in the amounts and
on the dates set forth in any fee or other agreements with the Administrative
Agent and to perform any other obligation contained therein.
2.8 Computation of Interest and Fees. (a) Subject to Section 2.2,
interest and fees payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days
25
elapsed, except that, with respect to Base Rate Loans on which interest is
calculated on the basis of the Prime Rate, the interest thereon shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year for the
actual days elapsed. The Administrative Agent shall as soon as practicable
notify the Borrower and the relevant Lenders of each determination of the
Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.8(a).
2.9 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified in writing by such Lenders with a copy to the
Borrower) of making or maintaining their affected Loans during such Interest
Period or their Credit-Linked Deposit Amounts for such day,
the Administrative Agent shall give telecopy or telephonic notice
thereof to the Borrower and the relevant Lenders as soon as practicable
thereafter. If such notice is given (x) in the case the affected rate is the
Eurodollar Rate, any Eurodollar Loans requested to be made on the first day of
such Interest Period shall be made as Base Rate Loans, (y) any Loans that were
to have been converted on the first day of such Interest Period to Eurodollar
Loans shall be continued as Base Rate Loans and (z) any outstanding Eurodollar
Loans shall be converted, on the last day of the then current Interest Period
with respect thereto, to Base Rate Loans. Until such notice has been withdrawn
by the Administrative Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the Borrower have the right to convert Loans to
Eurodollar Loans.
2.10 Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower from the Lenders hereunder and any reduction of the Total Credit-Linked
Deposit Amount shall be made pro rata according to the respective Applicable
Percentages of the Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Loans shall be made pro rata
according to the respective outstanding principal amounts of the Loans then held
by the Lenders.
26
(c) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the relevant Lenders, at the Payment Office, in Dollars and in
immediately available funds. Any payment made by the Borrower after 12:00 Noon,
New York City time, on any Business Day shall be deemed to have been on the next
following Business Day. Subject to Section 2.2, the Administrative Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day. If any payment on a Eurodollar
Loan becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day unless the result
of such extension would be to extend such payment into another calendar month,
in which event such payment shall be made on the immediately preceding Business
Day. In the case of any extension of any payment of principal pursuant to the
preceding two sentences, interest thereon shall be payable at the then
applicable rate during such extension.
(d) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment due to be made by the
Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective pro rata shares of a corresponding amount. If such payment is not
made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.
2.11 Requirements of Law. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, its Credit-Linked Deposit Amount or any Loan
made by it, or change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes covered by Section 2.12 and
changes in the rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender that is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
27
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender reasonably deems to be material, of making,
converting into, continuing or maintaining Loans or maintaining any
Credit-Linked Deposit Amount, or to reduce any amount receivable hereunder in
respect thereof, then, in any such case, the Borrower shall promptly pay such
Lender, upon its written demand, any additional amounts necessary to compensate
such Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim any additional amounts pursuant to this Section, it
shall promptly notify the Borrower in writing (with a copy to the Administrative
Agent) of the event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount reasonably deemed by
such Lender to be material, then from time to time, after submission by such
Lender to the Borrower (with a copy to the Administrative Agent) of a written
request therefor, the Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender or such corporation for such reduced
rate of return relating to its obligations hereunder.
(c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.12 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent's or such Lender's
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") or any Other Taxes are required to be
withheld from any amounts payable to the Administrative Agent or any Lender
hereunder, the amounts so payable to the Administrative Agent or such Lender
shall be increased to the extent necessary to yield to the Administrative Agent
or such
28
Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement; provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
such Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to this paragraph (a).
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the relevant Agent or Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes or Other Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(d) Each Lender (or Transferee) that is not a citizen or resident of
the United States of America, a corporation, partnership or other entity created
or organized in or under the laws of the United States of America (or any
jurisdiction thereof), or any estate or trust that is subject to federal income
taxation regardless of the source of its income (a "Non-U.S. Lender") shall
deliver to the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or
Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest" a statement substantially in the form of
Exhibit A and a Form W-8BEN, or any subsequent versions thereof or successors
thereto properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
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(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender's reasonable judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.
2.13 Indemnity. The Borrower agrees to indemnify each Lender for,
and to hold each Lender harmless from, any loss or expense that such Lender may
sustain or incur as a consequence of the return of all or any portion of a
Credit-Linked Deposit Amount to such Lender on a day other than the last day of
an Interest Period for which the applicable Eurodollar Rate has been
established. Such indemnification may include an amount equal to the excess, if
any, of (i) the amount of interest that would have accrued on the amount so
returned, for the period from the date of such return to the last day of such
Interest Period, at the applicable rate of interest for such Loans provided for
herein (excluding, however, the Applicable Margin included therein, if any) over
(ii) the amount of interest (as reasonably determined by such Lender) that would
have accrued to such Lender on such amount by placing such amount on deposit for
a comparable period with leading banks in the interbank Eurodollar market. A
certificate as to any amounts payable pursuant to this Section submitted to the
Borrower by any Lender shall be conclusive in the absence of manifest error.
This covenant shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
2.14 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans or any Credit-Linked Deposit Amount as contemplated by this
Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans
shall forthwith be canceled, (b) such Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law and (c) such Lender
may require that its funding obligations with respect to its Credit-Linked
Deposit Amount be amended or converted in a manner directed by the
Administrative Agent so as to comply with law. If any such conversion of a
Eurodollar Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 2.13.
2.15 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.11, 2.12(a) or
2.14 with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided,
30
further, that nothing in this Section shall affect or postpone any of the
obligations of any Borrower or the rights of any Lender pursuant to Section
2.11, 2.12(a) or 2.14.
2.16 Replacement of Lenders under Certain Circumstances. The
Borrower shall be permitted to replace any Lender that (a) requests
reimbursement for amounts owing pursuant to Section 2.11 or 2.12 or gives a
notice of illegality pursuant to Section 2.14 or (b) defaults in its obligation
to fund its Credit-Linked Deposit Amount hereunder, with a replacement financial
institution; provided that (i) such replacement does not conflict with any
Requirement of Law, (ii) no Event of Default shall have occurred and be
continuing at the time of such replacement, (iii) prior to any such replacement,
such Lender shall have taken no action under Section 2.15 so as to eliminate the
continued need for payment of amounts owing pursuant to Section 2.11 or 2.12 or
to eliminate the illegality referred to in such notice of illegality given
pursuant to Section 2.14, (iv) the replacement financial institution shall
purchase, at par, all Loans and other amounts owing to such replaced Lender on
or prior to the date of replacement and its Credit-Linked Deposit Amount, (v)
the Borrower shall be liable to such replaced Lender under Section 2.13 (as
though Section 2.13 were applicable) if any Credit-Linked Deposit Amount is
transferred by such Lender on a day other than the last day of any Interest
Period for which the applicable Eurodollar Rate has been established, (vi) the
replacement financial institution, if not already a Lender, shall be reasonably
satisfactory to the Administrative Agent, (vii) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of Section
9.6 (provided that the Borrower shall be obligated to pay the registration and
processing fee referred to therein), (viii) the Borrower shall pay all
additional amounts (if any) required pursuant to Section 2.11 or 2.12, as the
case may be, in respect of any period prior to the date on which such
replacement shall be consummated, and (ix) any such replacement shall not be
deemed to be a waiver of any rights that the Borrower, the Administrative Agent
or any other Lender shall have against the replaced Lender.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into
this Agreement and to make the Loans, the Borrower hereby represents and
warrants to the Administrative Agent and each Lender that:
3.1 Financial Condition. The audited consolidated balance sheets of
the Borrower as at December 31, 2002 and December 31, 2003 and the related
consolidated statements of income and of cash flows for the fiscal years ended
on such dates, reported on by and accompanied by an unqualified report from
Deloitte & Touche LLP, present fairly the consolidated financial condition of
the Borrower as at such dates, and the consolidated results of its operations
and its consolidated cash flows for the respective fiscal years then ended. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firm of accountants
and disclosed therein). The Borrower and its Subsidiaries do not have any
material Guarantees, contingent liabilities and liabilities for taxes, or any
long-term leases or unusual forward or long-term commitments, including, without
limitation, any interest rate or foreign currency swap or exchange transaction
or other obligation in respect of derivatives, that are not reflected in the
most recent financial statements referred to in this paragraph. During the
period from December 31, 2003 to and including the date hereof
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there has been no Disposition by the Borrower or any of its Subsidiaries of any
material part of its business or Property.
3.2 No Change. Since December 31, 2003, there has been no
development or event that has had or could reasonably be expected to have a
Material Adverse Effect, except as set forth on Schedule 3.2.
3.3 Corporate Existence; Compliance with Law. Each of the Borrower
and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law, except to the extent that, in the case of (b), (c) and (d) above, the
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations. The
Borrower has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents and to borrow hereunder. The Borrower has
taken all necessary corporate action to authorize the execution, delivery and
performance of the Loan Documents, to authorize the issuance and delivery of the
G&R Series K Mortgage Bond on the terms and conditions of this Agreement and to
authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or the execution, delivery,
performance, validity or enforceability of this Agreement or any of the other
Loan Documents, except consents, authorizations, filings and notices described
in Schedule 3.4, which consents, authorizations, filings and notices have been
obtained or made and are in full force and effect. Each Loan Document has been
duly executed and delivered on behalf of the Borrower. This Agreement
constitutes, and each other Loan Document upon execution will constitute, a
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
3.5 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the borrowings hereunder and the use of
the proceeds thereof will not violate any Requirement of Law or any Contractual
Obligation of the Borrower or any of its Subsidiaries and will not result in, or
require, the creation or imposition of any Lien on any of their respective
properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation. No Requirement of Law or Contractual Obligation
applicable to the Borrower or any of its Subsidiaries could reasonably be
expected to have a Material Adverse Effect.
3.6 No Material Litigation. No litigation, investigation or
proceeding of or
32
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of their respective properties or revenues (a) with
respect to any of the Loan Documents or any of the transactions contemplated
hereby or thereby, or (b) that could reasonably be expected to have a Material
Adverse Effect, except as set forth on Schedule 3.6.
3.7 No Default. Neither the Borrower nor any of its Subsidiaries is
in default under or with respect to any of its Contractual Obligations in any
respect that could reasonably be expected to have a Material Adverse Effect,
except as set forth on Schedule 3.7. No Default or Event of Default has occurred
and is continuing.
3.8 Ownership of Property; Liens. Each of the Borrower and its
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other Property, and none of such Property is subject to any Lien except for
Permitted Liens.
3.9 Intellectual Property. The Borrower and each of its Subsidiaries
owns, or is licensed to use, all Intellectual Property necessary for the conduct
of its business as currently conducted. No material claim has been asserted and
is pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does
the Borrower know of any valid basis for any such claim. The use of Intellectual
Property by the Borrower and its Subsidiaries does not infringe on the rights of
any Person in any material respect.
3.10 Taxes. Each of the Borrower and each of its Subsidiaries has
filed or caused to be filed all Federal, state and other material tax returns
that are required to be filed and has paid all taxes shown to be due and payable
on said returns or on any assessments made against it or any of its Property and
all other taxes, fees or other charges imposed on it or any of its Property by
any Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); and no tax Lien
has been filed, and, to the knowledge of the Borrower, no claim is being
asserted, with respect to any such tax, fee or other charge.
3.11 Federal Regulations. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect or for any purpose that violates the provisions of the
Regulations of the Board. If requested by any Lender or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-3 or FR Form U-1 referred to in Regulation U.
3.12 Government Approval and Filings. The Public Utilities
Commission of Nevada has duly and validly issued an order authorizing the
Borrower to enter into this Agreement and the other Loan Documents and to take
all actions contemplated hereby or thereby or in connection herewith or
therewith, and such order remains in full force and effect in the form issued,
and the Company has available authority under such order to issue the maximum
33
amount of indebtedness provided for in this Agreement and the other Loan
Documents. The California Public Utilities Commission has issued an order, which
remains in full force and effect, exempting the Company from any requirement to
obtain the consent of the California Public Utilities Commission in connection
with any financing transaction or granting of a security interest. No other
authorization, approval, order, decree, ruling or other action by, or notice to
or filing with, any Governmental Authority is required for the due execution,
delivery and performance by the Borrower of this Agreement or any of the other
Loan Documents.
3.13 Labor Matters. There are no strikes or other labor disputes
against the Borrower or any of its Subsidiaries pending or, to the knowledge of
the Borrower, threatened that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. Hours worked by and
payment made to employees of the Borrower and its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Requirement of
Law dealing with such matters that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. All payments due from
the Borrower or any of its Subsidiaries on account of employee health and
welfare insurance that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect if not paid have been paid or accrued
as a liability on the books of the Borrower or the relevant Subsidiary.
3.14 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or could reasonably be expected to result in a material liability
under ERISA, and neither the Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
3.15 Investment Company Act; Other Regulations. The Borrower is not
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness (other
than public utility laws and regulations of Nevada and California administered
by the Public Utilities Commission of Nevada and the California Public Utilities
Commission, respectively).
3.16 Subsidiaries. (a) The Subsidiaries listed on Schedule 3.16
constitute all the Subsidiaries of the Borrower at the date hereof. Schedule
3.16 sets forth as of the Closing
34
Date the name and jurisdiction of incorporation of each Subsidiary and, as to
each Subsidiary, the percentage of each class of Capital Stock owned by the
Borrower.
(b) There are no outstanding subscriptions, options, warrants,
calls, rights or other agreements or commitments of any nature relating to any
Capital Stock of the Borrower or any Subsidiary.
3.17 Use of Proceeds. The proceeds of the Loans shall be used for
general corporate purposes.
3.18 Environmental Matters. Other than exceptions to any of the
following that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect:
(a) The Borrower and its Subsidiaries: (i) are, and within the
period of all applicable statutes of limitation have been, in compliance with
all applicable Environmental Laws; (ii) hold all Environmental Permits (each of
which is in full force and effect) required for any of their current or intended
operations or for any property owned, leased, or otherwise operated by any of
them; (iii) are, and within the period of all applicable statutes of limitation
have been, in compliance with all of their Environmental Permits; and (iv)
reasonably believe that: each of their Environmental Permits will be timely
renewed and complied with, without material expense; any additional
Environmental Permits that may be required of any of them will be timely
obtained and complied with, without material expense; and compliance with any
Environmental Law that is or is expected to become applicable to any of them
will be timely attained and maintained, without material expense.
(b) Materials of Environmental Concern are present at, on, under,
in, or about any real property now or formerly owned, leased or operated by the
Borrower or any of its Subsidiaries, or at any other location (including,
without limitation, any location to which Materials of Environmental Concern
have been sent for re-use or recycling or for treatment, storage, or disposal)
which could not reasonably be expected, individually or in the aggregate, to (i)
give rise to liability of the Borrower or any of its Subsidiaries under any
applicable Environmental Law or otherwise result in costs to the Borrower or any
of its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect, or (ii) interfere with the Borrower's or any of its
Subsidiaries' continued operations, or (iii) materially adversely affect the
fair saleable value of any real property owned or leased by the Borrower or any
of its Subsidiaries.
(c) There is no judicial, administrative, or arbitral proceeding
(including any notice of violation or alleged violation) under or relating to
any Environmental Law to which the Borrower or any of its Subsidiaries is, or to
the knowledge of the Borrower or any of its Subsidiaries will be, named as a
party that is pending or, to the knowledge of the Borrower or any of its
Subsidiaries, threatened.
(d) Neither the Borrower nor any of its Subsidiaries has received
any written request for information, or been notified that it is a potentially
responsible party under or relating
35
to the federal Comprehensive Environmental Response, Compensation, and Liability
Act or any similar Environmental Law, or with respect to any Materials of
Environmental Concern.
(e) Neither the Borrower nor any of its Subsidiaries has entered
into or agreed to any consent decree, order, or settlement or other agreement,
or is subject to any judgment, decree, or order or other agreement, in any
judicial, administrative, arbitral, or other forum for dispute resolution,
relating to compliance with or liability under any Environmental Law.
(f) Neither the Borrower nor any of its Subsidiaries has assumed or
retained, by contract or operation of law, any liabilities of any kind, fixed or
contingent, known or unknown, under any Environmental Law or with respect to any
Material of Environmental Concern.
3.19 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document or any other document,
certificate or statement furnished to the Administrative Agent or the Lenders or
any of them, by or on behalf of the Borrower for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished, any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. The projections and pro forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. There is no
fact known to the Borrower that could reasonably be expected to have a Material
Adverse Effect that has not been expressly disclosed herein, in the other Loan
Documents or in any other documents, certificates and statements furnished to
the Administrative Agent and the Lenders for use in connection with the
transactions contemplated hereby and by the other Loan Documents.
3.20 G&R Series K Mortgage Bond. (a) The G&R Series K Mortgage Bond,
when executed by the Borrower and authenticated by the trustee under the General
and Refunding Mortgage Indenture in accordance with the General and Refunding
Mortgage Indenture and delivered to the Administrative Agent in accordance with
the terms hereof, will constitute a valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally. The
Borrower has all requisite corporate power and authority to issue and deliver
the G&R Series K Mortgage Bond in accordance with and upon the terms and
conditions set forth herein.
(b) The G&R Series K Mortgage Bond has been duly and validly issued
and is entitled to the security and benefits of the General and Refunding
Mortgage Indenture; is secured equally and ratably with, and only with, all
other securities issued and outstanding under the General and Refunding Mortgage
Indenture; and is secured by direct and valid, duly perfected Liens on and
security interests in the Mortgaged Property (as defined in the General and
Refunding Mortgage Indenture), subject only to the prior Lien of the First
Mortgage
36
Indenture and to Permitted Liens (as such term is defined in the General and
Refunding Mortgage Indenture).
3.21 Solvency. The Borrower is, and after giving effect to the
incurrence of all Indebtedness and obligations being incurred in connection
herewith and therewith will be and will continue to be, Solvent.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loans. The agreement of each Lender to
make the initial Loan requested to be made by it hereunder is subject to the
satisfaction, prior to or concurrently with the making of such initial Loan, of
the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of the
Borrower and each Person listed on Schedule 2.1 and (ii) the G&R Series K
Mortgage Bond, duly issued and delivered by a duly authorized officer of the
Borrower and duly authenticated by the trustee under the General and Refunding
Mortgage Indenture.
(b) Approvals. All governmental and third party approvals
(including, without limitation, any required approvals of the Public Utilities
Commission of Nevada, the California Public Utilities Commission and any
relevant Federal regulatory bodies) necessary in connection with the
transactions contemplated herein, the issuance and delivery to the
Administrative Agent of the G&R Series K Mortgage Bond and the continuing
operations of the Borrower and its Subsidiaries shall have been obtained and be
in full force and effect; and the Administrative Agent shall have received
evidence satisfactory to it that the foregoing have been accomplished.
(c) Related Agreements. The Administrative Agent shall have received
(in a form reasonably satisfactory to the Administrative Agent), true and
correct copies, certified as to authenticity by the Borrower, such documents or
instruments as may be reasonably requested by the Administrative Agent,
including, without limitation, a copy of any debt instrument, security agreement
or other material contract to which the Borrower may be a party.
(d) Fees. The Lenders, the Administrative Agent and the Joint Lead
Arrangers shall have received all fees required to be paid, and all expenses for
which invoices have been presented (including reasonable fees, disbursements and
other charges of counsel to the Administrative Agent), on or before the Closing
Date. All such amounts will be paid with proceeds of Loans made on the Closing
Date and will be reflected in the funding instructions given by the Borrower to
the Administrative Agent on or before the Closing Date.
(e) Closing Certificates. The Administrative Agent shall have
received an officer certificate of the Borrower, dated the Closing Date,
substantially in the form of Exhibit B-1 and a secretary certificate of the
Borrower, dated the Closing Date, substantially in the form of Exhibit B-2, with
appropriate insertions and attachments.
(f) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:
37
(i) the legal opinion of Choate, Hall & Stewart, special counsel to
the Borrower, substantially in the form of Exhibit C-1; and
(ii) the legal opinion of Woodburn and Wedge, Nevada counsel to the
Borrower, substantially in the form of Exhibit C-2.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(g) G&R Series K Mortgage Bond Documents. The Administrative Agent
shall have received copies of the following documents (all as defined in the
General and Refunding Mortgage Indenture): either a supplemental indenture or an
"Officer's Certificate" setting forth the terms of the G&R Series K Mortgage
Bond; a "Company Order" requesting authentication of the G&R Series K Mortgage
Bond by the trustee under the General and Refunding Mortgage Indenture; and all
legal opinions provided in connection with the issuance of the G&R Series K
Mortgage Bond.
(h) Termination of Receivables Purchase and Sale Arrangement. The
Borrower shall have delivered to the Administrative Agent satisfactory evidence
of the termination of the Borrower's currently existing receivables purchase and
sale arrangements provided for in the Receivables Sale Documentation, and the
Borrower shall have satisfied all of its obligations thereunder
(i) Financial Statements and Projections. The Lenders and the
Administrative Agent shall have received and be satisfied with (i) the financial
statements referred to in Section 3.1 and (ii) projections for the Borrower
through the fiscal year ending December 31, 2007.
(j) Ratings. The Borrower shall have delivered satisfactory evidence
to the Administrative Agent that each of Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group has rated the Indebtedness under this Agreement.
4.2 Condition to Each Loan(a) . The agreement of each Lender to make
any Loan requested to be made by it on any date (including, without limitation,
the initial Loan) is subject to the receipt by the Administrative Agent of a
certificate of the Borrower, dated the date of such Loans, certifying that (i)
each of the representations and warranties made by the Borrower in or pursuant
to the Loan Documents (other than the representations and warranties set forth
in Sections 3.2 and 3.6 of this Agreement) is true and correct on and as of the
date of such Loans as if made on such date and (ii) no Default or Event of
Default has occurred and is continuing on the date of such Loans or after giving
effect to the Loans requested to be made on such date. The Administrative Agent
shall be conclusively entitled to rely on the accuracy of the statements
contained in each certificate delivered by the Borrower pursuant to this Section
4.2.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as this Agreement remains
in effect or any Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, the Borrower shall and shall cause each of its
Subsidiaries to:
38
5.1 Financial Statements. Furnish to the Administrative Agent and
each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related audited
consolidated statements of income and of cash flows for such year, setting
forth in each case in comparative form the figures for the previous year,
reported on without a "going concern" or like qualification or exception,
or qualification arising out of the scope of the audit, by independent
certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied (except as approved by such accountants or officer, as the case may be,
and disclosed in reasonable detail therein) consistently throughout the periods
reflected therein and with prior periods.
5.2 Certificates; Other Information. Furnish to the Administrative
Agent and each Lender, or, in the case of clause (c), to the relevant Lender:
(a) concurrently with the delivery of any financial statements
pursuant to Section 5.1, a certificate of a Responsible Officer stating
that, to the best of such Responsible Officer's knowledge, each Loan Party
during such period has observed or performed all of its covenants and
other agreements, and satisfied every condition contained in this
Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate;
(b) within five days after the same are sent, copies of all
financial statements and reports that the Borrower sends to the holders of
any class of its debt securities or public equity securities and, within
five days after the same are filed, copies of all financial statements and
reports that the Borrower may make to, or file with, the SEC; and
(c) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
material obligations of
39
whatever nature, except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto have been provided on the books of the Borrower
or its Subsidiaries, as the case may be.
5.4 Conduct of Business and Maintenance of Existence, etc. (a) (i)
Preserve, renew and keep in full force and effect its corporate existence and
(ii) take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except,
in each case, as otherwise permitted by Section 6.3 and except, in the case of
clause (ii) above, to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law, except (x) to the extent that failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect and (y) as described on Schedule 3.7.
5.5 Maintenance of Property; Insurance. (a) Keep all Property and
systems useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted and (b) maintain with financially
sound and reputable insurance companies insurance on all its Property in at
least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same or a
similar business.
5.6 Inspection of Property; Books and Records; Discussions. (a) Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and (b) permit
representatives of any Lender (at such Lender's expenses, except during the
continuation of an Event of Default) to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of the
Borrower and its Subsidiaries with officers and employees of the Borrower and
its Subsidiaries and with its independent certified public accountants.
5.7 Notices. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Authority, that in either case, if
not cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of
its Subsidiaries in which the amount involved is $5,000,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation
40
of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or the
Borrower or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the termination, Reorganization or Insolvency
of, any Plan; and
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower or the relevant Subsidiary proposes to take
with respect thereto.
5.8 Environmental Laws. (a) Comply in all material respects with,
and ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as this Agreement remains
in effect or any Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, the Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly:
6.1 Limitation on Indebtedness and Preferred Stock. (a) Create,
incur, issue, assume, Guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt), or issue any Disqualified Stock or, in
the case of any Subsidiary of the Borrower, issue any shares of preferred stock;
provided, however, that the Borrower may incur Indebtedness (including Acquired
Debt) or issue Disqualified Stock, and the Subsidiary Guarantors may incur
Indebtedness (including Acquired Debt) or issue Disqualified Stock if the Fixed
Charge Coverage Ratio for the Borrower's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued would have been at least 2.0 to 1, determined on a
pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred or Disqualified
Stock had been issued, as the case may be, at the beginning of such four-quarter
period.
(b) Section 6.1(a) will not prohibit the incurrence of any of the
following items of Indebtedness (collectively, "Permitted Debt"):
41
(i) the incurrence by the Borrower of additional Indebtedness and
letters of credit under one or more Credit Facilities (with letters of
credit being deemed to have a principal amount equal to the maximum
potential liability of the Borrower thereunder) in an aggregate amount up
to $50,000,000 at any time outstanding;
(ii) the incurrence by the Borrower of Indebtedness pursuant to any
Loan Document, the aggregate principal amount of which is evidenced by the
G&R Series K Mortgage Bond, and the incurrence by any Subsidiary Guarantor
of a Subsidiary Guarantee of such Indebtedness pursuant to Section 6.15;
(iii) the incurrence by the Borrower and its Subsidiaries of the
Existing Indebtedness;
(iv) the incurrence by the Borrower of $100,000,000 aggregate
principal amount of Indebtedness represented by the 6-1/4% General and
Refunding Mortgage Notes, Series H, due 2012 issued under the General and
Refunding Mortgage Indenture (and the related exchange notes to be issued
pursuant to the registration rights agreement) and the incurrence by any
Subsidiary Guarantor of a Subsidiary Guarantee of such Indebtedness
(including, without limitation, the related exchange notes to be issued
pursuant to the registration rights agreement entered into in connection
therewith);
(v) the incurrence by the Borrower or any of the Subsidiary
Guarantors of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case, incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Borrower or such Subsidiary Guarantor, in an aggregate
principal amount, including all Permitted Refinancing Indebtedness
incurred to refund, refinance or replace any Indebtedness incurred
pursuant to this clause (v), not to exceed $20,000,000 at any time
outstanding;
(vi) the incurrence by the Borrower or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was incurred under Section 6.1(a) or
clauses (iii), (iv) (vi) or (xii) of this Section 6.1(b);
(vii) the incurrence by the Borrower or any of its Subsidiaries of
intercompany Indebtedness between or among the Borrower or any of its
Subsidiaries; provided, however, that:
(A) if the Borrower is the obligor on such Indebtedness, such
Indebtedness must be expressly subordinated to the prior
payment in full in cash of all Loans and other Obligations;
(B) if a Subsidiary Guarantor is the obligor on such Indebtedness,
such Indebtedness is expressly subordinated to the prior
payment in full in cash of such Subsidiary Guarantor's
Subsidiary Guarantee;
(C) (x) any subsequent issuance or transfer of Equity Interests
that results in
42
any such Indebtedness being held by a Person other than the
Borrower or a Subsidiary of the Borrower and (y) any sale or
other transfer of any such Indebtedness to a Person that is
not either the Borrower or a Subsidiary of the Borrower shall
be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Borrower or such Subsidiary, as the case
may be, that was not permitted by this clause (vii); and
(D) any Indebtedness issued by the Borrower or a Subsidiary to a
Trust Preferred Vehicle shall not be treated as intercompany
Indebtedness for purposes of this clause (vii) to the extent
of the face amount of the beneficial interests of the Trust
Preferred Vehicle that are not held by the Borrower or any of
its Subsidiaries;
(viii) the incurrence by the Borrower or any of its Subsidiaries of
Hedging Obligations;
(ix) the Guarantee by the Borrower or any of its Subsidiaries of
Indebtedness of the Borrower or any Subsidiary of the Borrower that was
permitted to be incurred by another provision of this Section 6.1;
provided that in the event the Indebtedness that is being Guaranteed is
Subordinated Debt, then the Guarantee of that Indebtedness shall be
subordinated in right of payment to the Loans and other Obligations on
substantially identical terms;
(x) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in
the form of additional Indebtedness with the same terms, and the payment
of dividends on Disqualified Stock in the form of additional shares of
such Disqualified Stock, each of which will not be deemed to be an
incurrence of Indebtedness or an issuance of Disqualified Stock for
purposes of this Section 6.1; provided, in each such case, that the amount
thereof is included in the Fixed Charges of the Borrower as accrued;
(xi) Indebtedness in respect of bid, performance or surety bonds
issued for the account of the Borrower or any Subsidiary of the Borrower
in the ordinary course of business, including Guarantees or obligations of
the Borrower or any Subsidiary of the Borrower with respect to letters of
credit supporting such bid, performance or surety obligations (in each
case other than for an obligation for money borrowed);
(xii) the incurrence by the Borrower of additional Indebtedness
consisting of securities issued pursuant to the General and Refunding
Mortgage Indenture in respect of claims relating to the Borrower's
obligations pursuant to agreements with gas, electric power and other
energy suppliers that have been terminated as of Closing Date;
(xiii) the incurrence by the Borrower or any of its Subsidiaries of
additional Indebtedness consisting of letters of credit for purposes of
supporting the Borrower's or any such Subsidiary's obligations now or
hereafter owing to gas, electric power or other energy suppliers, not to
exceed $20,000,000 at any time outstanding;
43
(xiv) the incurrence by the Borrower of additional Indebtedness to
finance capital expenditures incurred pursuant to the Borrower's 2004
Resource Plan as approved or amended under order by the PUCN or mandated
by statute or by one or more federal or state regulatory authorities,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause
(xiv); and
(xv) the incurrence by the Borrower or any Subsidiary of additional
Indebtedness in an aggregate principal amount (or accreted value, as
applicable), including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this
clause (xv), not to exceed $25,000,000 at any time outstanding.
(c) Notwithstanding anything to the contrary in this Agreement, the
Borrower will not issue any additional notes or bonds under its First Mortgage
Indenture.
(d) The Borrower will not incur any Indebtedness (including
Permitted Debt) that is contractually subordinated in right of payment to any
other Indebtedness of the Borrower unless such Indebtedness is also
contractually subordinated in right of payment to the Loans and other
Obligations on substantially identical terms; provided, however, that no
Indebtedness of the Borrower will be deemed to be contractually subordinated in
right of payment to any other Indebtedness of the Borrower solely by virtue of
being secured on a junior basis or by virtue of being unsecured.
(e) For purposes of determining compliance with this Section 6.1:
(i) in the event that an item of proposed Indebtedness, including
Acquired Debt, meets the criteria of more than one of the categories of
Permitted Debt described in clauses (i) through (xv) of Section 6.1(b), or
is entitled to be incurred pursuant to Section 6.1(a), the Borrower will
be permitted to classify (or later classify or reclassify such
Indebtedness, in whole or in part in its sole discretion) such item of
Indebtedness in any manner that complies with this Section 6.1; and
(ii) for the purposes of determining compliance with any
dollar-denominated restriction on the incurrence of Indebtedness
denominated in a foreign currency, the dollar-equivalent principal amount
of such Indebtedness incurred pursuant thereto shall be calculated based
on the relevant currency exchange rate in effect on the date that such
Indebtedness was incurred.
6.2 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien of any kind securing Indebtedness, Attributable Debt or trade payables
on any of its Property, whether now owned or hereafter acquired, except for the
following (the "Permitted Liens"):
(a) Liens securing the liabilities and obligations of the Borrower
under the Loan Documents and Liens securing any Hedging Obligations relating to
such liabilities and obligations;
(b) Liens in favor of the Borrower or any Subsidiary Guarantors;
44
(c) Liens on property of a Person existing at the time such Person
is merged with or into or consolidated with the Borrower or any Subsidiary of
the Borrower; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with the Borrower or
such Subsidiary;
(d) Liens on property existing at the time of acquisition of the
property by the Borrower or any Subsidiary of the Borrower; provided that such
Liens were in existence prior to the contemplation of such acquisition;
(e) Liens to secure the performance of statutory or regulatory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business;
(f) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by Section 6.1(b)(v) covering only the assets acquired
with such Indebtedness;
(g) Liens existing on the Closing Date listed on Schedule 6.2(g)
(including the Lien of the First Mortgage Indenture and the Lien of the General
and Refunding Mortgage Indenture);
(h) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded; provided
that any reserve or other appropriate provision as is required in conformity
with GAAP has been made therefor;
(i) Liens incurred in the ordinary course of business of the
Borrower or any of its Subsidiaries with respect to obligations (including
Hedging Obligations) that do not exceed $15,000,000 at any one time outstanding;
(j) Liens to secure Indebtedness permitted by clauses (viii),
(xiii), (xiv) or (xv) of Section 6.1(b);
(k) Liens securing any other Indebtedness issued or to be issued
under the General and Refunding Mortgage Indenture that was permitted to be
incurred under Section 6.1;
(l) Liens securing Permitted Refinancing Indebtedness incurred to
refinance Indebtedness that was previously so secured; provided that any such
Lien is limited to all or part of the same property or assets (plus
improvements, accessions, proceeds or dividends or distributions in respect
thereof) that secured (or, under the written arrangements under which the
original Lien arose, could secure) the Indebtedness being refinanced or is in
respect of property that is the security for a Permitted Lien hereunder; and
(m) 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 depository institutions, in each
case solely to secure any and all obligations now or hereafter existing of the
Borrower or any of its Subsidiaries in connection with any deposit
45
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 or any of
its Subsidiaries.
6.3 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, except that:
(a) any Subsidiary of the Borrower may be merged or consolidated
with or into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation); and
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower.
6.4 Limitation on Disposition of Property. Dispose of any of its
Property (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's Capital Stock to any Person,
except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) the sale of inventory in the ordinary course of business;
(c) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower;
(d) the Disposition of other assets having a fair market value not
to exceed $10,000,000 in the aggregate for any fiscal year of the Borrower; and
(e) the Disposition of certain parcels of land listed on Schedule
6.4.
6.5 Limitation on Restricted Payments. (a) Declare or pay any
dividend or make any other payment or distribution on account of the Borrower's
or any of its Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Borrower or
any of its Subsidiaries) or to the direct or indirect holders of the Borrower's
or any of its Subsidiaries' Equity Interests in their capacity as such (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Borrower) or to the Borrower or a Subsidiary of the
Borrower; (b) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Borrower) any Equity Interests of the Borrower or any direct or
indirect parent of the Borrower; (c) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Subordinated Debt, except a payment of interest or principal at the Stated
Maturity thereof; or (d) make any Restricted Investment (all such payments and
other actions set forth in these clauses (a) through (d) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
46
(i) no Default or Event of Default has occurred and is continuing or
would occur as a consequence of such Restricted Payment;
(ii) the Borrower would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1.00 of additional Indebtedness pursuant
to Section 6.1(a); and
(iii) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Borrower and its Subsidiaries
after the Closing Date (excluding Restricted Payments permitted by clauses
(2), (3), (4), (6) and (8) of the next succeeding paragraph), is less than
the sum, without duplication, of:
(A) 50% of the Consolidated Net Income of the Borrower for the
period (taken as one accounting period) from the beginning of
the first fiscal quarter commencing after the Closing Date to
the end of the Borrower's most recently ended fiscal quarter
for which internal financial statements are available at the
time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such
deficit), plus
(B) 100% of the aggregate net cash proceeds received by the
Borrower (including the fair market value of any Permitted
Business or assets used or useful in a Permitted Business to
the extent acquired in consideration of Equity Interests
(other than Disqualified Stock) of the Borrower) since the
Closing Date as a contribution to its common equity capital or
from the issue or sale of Equity Interests of the Borrower
(other than Disqualified Stock and other than sales to a
Subsidiary of the Borrower) or from the issue or sale of
convertible or exchangeable Disqualified Stock or convertible
or exchangeable debt securities of the Borrower that have been
converted into or exchanged for such Equity Interests (other
than Disqualified Stock or debt securities sold to a
Subsidiary of the Borrower), plus
(C) to the extent that any Restricted Investment that was made
after the Closing Date is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (x) the cash
return of capital with respect to such Restricted Investment
(less the cost of disposition, if any) and (y) the initial
amount of such Restricted Investment.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of the dividend, if at the date of declaration the dividend
payment would have complied with the provisions of this Agreement;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any Subordinated Debt of the Borrower or any Subsidiary
Guarantor or of any Equity Interests of the Borrower or any of its
Subsidiaries in exchange for, or out of the net cash
47
proceeds of the substantially concurrent sale (other than to a Subsidiary
of the Borrower) of, Equity Interests of the Borrower (other than
Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition will be excluded from clause
(iii)(B) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
Subordinated Debt of the Borrower with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Subsidiary of the Borrower to
the holders of its Equity Interests on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Borrower or any Subsidiary of the
Borrower held by any member of the Borrower's (or any of its
Subsidiaries') management pursuant to any management equity subscription
agreement, stock option agreement or similar agreement; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests may not exceed $1,500,000 in any twelve-month
period;
(6) the payment of any distribution by a Trust Preferred Vehicle to
holders of such trust's preferred beneficial interests, to the extent such
distribution does not exceed the amount that is contemporaneously received
by such trust as a payment of interest at its Stated Maturity on the
Subordinated Debt of the Borrower held by such trust;
(7) payments to Sierra Pacific Resources to enable Sierra Pacific
Resources to pay its reasonable expenses (including, but not limited to,
principal, premium, if any, and interest on Sierra Pacific Resources'
Indebtedness and payment obligations on account of Sierra Pacific
Resource's Premium Income Equity Securities) incurred in the ordinary
course of business, which expenses shall not be greater than $50,000,000
for any one calendar year; provided that (x) any such payment complies
with any regulatory restrictions then applicable to the Borrower and (b)
the Fixed Charge Coverage Ratio for the Borrower's most recently ended
four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which any such payment is made
was at least 1.75 to 1;
(8) the payment of any dividend by Sierra Pacific on the Sierra
Pacific Class A Series 1 preferred stock outstanding on the date hereof at
a rate not exceeding the dividend rate in effect on the date hereof; and
(9) other Restricted Payments in an aggregate amount since the
Closing Date not to exceed $25,000,000;
provided that, with respect to clauses (2), (3), (5), (7) and (9) above, no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction.
The amount of all Restricted Payments (other than cash) will be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or
48
issued by the Borrower or such Subsidiary, as the case may be, pursuant to the
Restricted Payment. The fair market value of any assets or securities that are
required to be valued by this covenant will be determined by the Board of
Directors of the Borrower whose resolution with respect thereto will be
delivered to the trustee. The Board of Directors' determination must be based
upon an opinion or appraisal issued by an accounting, appraisal or investment
banking firm of national standing if the fair market value exceeds $25,000,000.
Not later than the date of making any Restricted Payment, the Borrower will
deliver to the Administrative Agent an officer's certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 6.5 were computed, together with a copy of
any fairness opinion or appraisal required under this Agreement.
6.6 Modifications of Instruments, etc. Amend or modify (a) its
certificate of incorporation, (b) the General and Refunding Mortgage Indenture
or (c) the First Mortgage Indenture, in each case in any manner determined by
the Administrative Agent to be adverse to the Lenders.
6.7 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than the
Borrower or any Subsidiary) unless such transaction is (a) otherwise permitted
under this Agreement, (b) in the ordinary course of business or consistent with
past practice of the Borrower or such Subsidiary, as the case may be, and (c)
upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person that is not an Affiliate.
6.8 Limitation on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any of its
Subsidiaries of real or personal property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or such
Subsidiary (a "Sale and Leaseback Transaction"); provided that the Borrower or
any of its Subsidiaries may enter into a Sale and Leaseback Transaction if:
(a) the Borrower or such Subsidiary, as applicable, could have
incurred Indebtedness in an amount equal to the Attributable Debt relating to
such Sale and Leaseback Transaction under Section 6.1(a);
(b) the gross cash proceeds of such Sale and Leaseback Transaction
are at least equal to the fair market value, as determined in good faith by the
Board of Directors of the Borrower and set forth in an officer's certificate
delivered to the Administrative Agent, of the property that is the subject of
such Sale and Leaseback Transaction; and
(c) the transfer of assets in such Sale and Leaseback Transaction is
permitted by Section 6.4.
6.9 Limitation on Changes in Fiscal Periods. Permit the fiscal year
of the Borrower to end on a day other than December 31 or change the Borrower's
method of determining fiscal quarters.
49
6.10 Limitation on Negative Pledge Clauses. Enter into or suffer to
exist or become effective any agreement that (a) prohibits or limits the ability
of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, to secure the Obligations, other than (i) this Agreement and
the other Loan Documents, (ii) any agreements governing any purchase money Liens
or Capital Lease Obligations otherwise permitted hereby (in which case, any
prohibition or limitation shall only be effective against the assets financed
thereby) and (iii) any restriction in effect on the date hereof or (b) contains
covenants more restrictive than the covenants in this Section 6, unless the
Borrower offers to amend this Agreement, concurrently with the effectiveness of
such other agreement, to provide covenants under this Agreement equivalent to
the more restrictive covenants under such other agreement.
6.11 Limitation on Restrictions on Subsidiary Distributions. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (a) pay dividends or make other
distributions on its Capital Stock to the Borrower or any of its Subsidiaries,
or with respect to any other interest or participation in, or measured by, its
profits, or pay any Indebtedness owed to the Borrower or any of its
Subsidiaries, (b) make loans or advances to the Borrower or any other Subsidiary
or (c) transfer any of its properties or assets to the Borrower or any other
Subsidiary, except for such dividend and other payment restrictions existing
under or by reason of:
(i) any restrictions existing under Loan Documents;
(ii) any restrictions existing under the Existing Indebtedness as in
effect on the Closing Date and other customary encumbrances and
restrictions existing on or after the Closing Date that are not more
restrictive, taken as a whole, with respect to such dividend and other
payment restrictions than those contained in those agreements on the
Closing Date; provided that the application of such restrictions or
encumbrances to additional Subsidiaries not subject thereto on the Closing
Date shall not be deemed to make such restrictions more restrictive;
(iii) the General and Refunding Mortgage Indenture and other
customary encumbrances and restrictions existing in indentures after the
Closing Date that are not more restrictive, in any material respect, taken
as a whole, with respect to such dividend and other payment restrictions
than those contained in the General and Refunding Mortgage Indenture;
(iv) applicable law (including without limitation, rules,
regulations and agreements with regulatory authorities) or any order
issued pursuant to a federal or state statute or any order by or agreement
with any court or governmental agency or body having jurisdiction over the
Borrower or any of its Subsidiaries or any of their respective properties;
(v) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Borrower or any of its Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness or
Capital Stock was incurred in connection with or in contemplation of such
acquisition), which encumbrance or
50
restriction is not applicable to any Person, or the properties or assets
of any Person, other than the Person, or the property or assets of the
Person, so acquired; provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of Section 6.1 to be incurred;
(vi) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices;
(vii) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on such property of
the nature described in clause (c) above;
(viii) any agreement for the sale or other disposition of a
Subsidiary that restricts distributions or dispositions of assets by such
Subsidiary pending its sale or other disposition;
(ix) Permitted Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are not more restrictive, taken as a whole, than
those contained in the agreements governing the Indebtedness being
refinanced;
(x) Liens securing Indebtedness otherwise permitted to be incurred
under Section 6.2 that limit the right of the debtor to dispose of the
assets subject to such Liens; and
(xi) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, asset sale agreements,
stock sale agreements and other similar agreements entered into in the
ordinary course of business.
6.12 Limitation on Modifications to Subordinated Debt. Amend,
supplement or otherwise modify any documentation governing any Subordinated Debt
(other than (a) amendments to such Subordinated Debt which reduce the interest
rate or extend the maturity thereof and (b) waivers of compliance by the
Borrower with any of the terms or conditions of such Subordinated Debt (except
those terms or conditions which by their terms are for the benefit of the
Lenders)).
6.13 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Borrower and its Subsidiaries are engaged on the date of this Agreement or
that are reasonably related thereto.
6.14 Limitation on Release from Liens. Cause the Liens of the
General and Refunding Mortgage Indenture and related security documents, upon
any assets, to be released, except in connection with the Disposition of such
assets; provided that within 180 days after any such release, the Borrower will
either (a) Dispose of such assets or (b) subject such assets again to the Lien
of the General and Refunding Mortgage Indenture.
6.15 Limitation on Subsidiary Guarantees. Permit any Subsidiary to
Guarantee the payment of any Indebtedness of the Borrower unless:
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(a) such Subsidiary simultaneously executes and delivers to the
Administrative Agent a Subsidiary Guarantee of such Subsidiary except that, with
respect to a Guarantee of Indebtedness of the Borrower if such Indebtedness is
by its express terms subordinated in right of payment to the Loans and other
Obligations, any such Guarantee of such Subsidiary with respect to such
Indebtedness shall be subordinated in right of payment to such Subsidiary's
Subsidiary Guarantee with respect to the Loans and such other obligations
substantially to the same extent as such Indebtedness is subordinated to the
Loans and such other obligations;
(b) such Subsidiary waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any rights or reimbursement,
indemnity or subrogation or any other rights against the Borrower or any other
Subsidiary of the Borrower as a result of any payment by such Subsidiary under
its Subsidiary Guarantee of the Loans and other Obligations; and
(c) such Subsidiary shall deliver to the Administrative Agent an
opinion of counsel to the effect that (i) such Subsidiary Guarantee has been
duly executed and authorized and (ii) such Subsidiary Guarantee constitutes a
valid, binding and enforceable obligation of such Subsidiary, except insofar as
enforcement thereof may be limited by bankruptcy, insolvency or similar laws
(including, without limitation, all laws relating to fraudulent transfers) and
except insofar as enforcement thereof is subject to general principles of
equity;
provided that this Section shall not be applicable to any Guarantee of any
Subsidiary that (A) existed at the time such Person became a Subsidiary of the
Borrower and (B) was not incurred in connection with, or in contemplation of,
such Person becoming a Subsidiary of the Borrower.
Notwithstanding the foregoing and the other provisions of this
Agreement, in the event a Subsidiary Guarantor is sold or Disposed of (whether
by merger, consolidation, the sale of its Capital Stock or the sale of all or
substantially all of its assets (other than by lease) and whether or not the
Subsidiary Guarantor is the surviving corporation in such transaction) to a
Person which is not the Borrower or a Subsidiary of the Borrower, such
Subsidiary Guarantor will be released from its obligations under its Subsidiary
Guarantee if (1) the sale or other Disposition is in compliance with Section 6.4
and (2) the Subsidiary Guarantor is also released or discharged from its
obligations under the Guarantee, which resulted in the creation of such
Subsidiary Guarantee, except by or as a result of payment under such Guarantee.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when
due in accordance with the terms hereof; or the Borrower shall fail to pay any
interest on any Loan, or any other amount payable hereunder or under any other
Loan Document, within five days after any such interest or other amount becomes
due in accordance with the terms hereof or thereof; or
(b) Any representation or warranty made or deemed made by the
Borrower herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this
52
Agreement or any such other Loan Document shall prove to have been inaccurate in
any material respect on or as of the date made or deemed made or furnished; or
(c) The Borrower shall default in the observance or performance of
any agreement contained in clause (i) or (ii) of Section 5.4(a), Section 5.7(a)
or Section 6; or
(d) The Borrower shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and such
default shall continue unremedied for a period of 30 days; or
(e) (i) The Borrower or any of its Subsidiaries shall (A) default in
making any payment of any principal of any Indebtedness (including, without
limitation, any Guarantees, but excluding the Loans) on the scheduled or
original due date with respect thereto; or (B) default in making any payment of
any interest on any such Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created; or (C) default in the observance or performance of any other agreement
or condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or to become subject to a mandatory offer to
purchase by the obligor thereunder or (in the case of any such Indebtedness
constituting a Guarantee) to become payable; or (ii) the Borrower or any of its
Subsidiaries shall, other than in respect of those Hedge Agreements listed on
Schedule 7(e)(ii) (A) default in making any payment of any amount owing to a
counterparty under any Hedge Agreement beyond the period of grace, if any,
provided in such Hedge Agreement; or (B) default in the observance or
performance of any other agreement or condition relating to any such Hedge
Agreement or contained in such Hedge Agreement or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the counterparty under such Hedge Agreement to cause, with
the giving of notice if required, the Borrower or such Subsidiary to make a
termination payment, payment of liquidated damages or similar payment under such
Hedge Agreement (collectively, "Payment Amounts"); provided, that a default,
event or condition described in clause (i) or (ii) of this paragraph (e) shall
not at any time constitute an Event of Default unless, at such time, one or more
defaults, events or conditions of the type described in clauses (i) and (ii) of
this paragraph (e) shall have occurred and be continuing with respect to
Indebtedness and/or Payment Amounts the outstanding principal amount of which
exceeds in the aggregate $15,000,000; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the
Borrower or any of its Subsidiaries shall make a general assignment for
53
the benefit of its creditors; or (ii) there shall be commenced against the
Borrower or any of its Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above that (A) results in the entry of an order
for relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against the Borrower or any of its Subsidiaries any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
that results in the entry of an order for any such relief that shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) the Borrower or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(g) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan, or any Lien in
favor of the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Required Lenders shall be likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could, in
the sole judgment of the Required Lenders, reasonably be expected to have a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving for the Borrower and its
Subsidiaries taken as a whole a liability (not paid or fully covered by
insurance as to which the relevant insurance company has acknowledged coverage)
of $15,000,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed, paid or bonded pending appeal within 60 days from
the entry thereof; or
(i) Any of the Loan Documents or the General and Refunding Mortgage
Indenture (or any security documents executed in connection therewith) shall
cease for any reason to be in full force and effect, or the Borrower or any
Affiliate of the Borrower shall so assert; or any Lien created by any of the
Loan Documents or the General and Refunding Mortgage Indenture (or any security
documents executed in connection therewith) shall cease to be enforceable and of
the same effect and priority purported to be created thereby; or
(j) Any Event of Default under (and as defined in) the General and
Refunding Mortgage Indenture shall occur; or
54
(i) Any Event of Default under (and as defined in) the First
Mortgage Indenture) shall occur, other than any such matured Event of Default
that (i) is of similar kind or character to the Events of Default described in
clauses (c) and (d) of this Section 7 and (ii) has not resulted in the
acceleration of the securities outstanding under the First Mortgage Indenture;
provided, however, that, anything in this Agreement to the contrary
notwithstanding, the waiver or cure of such Event of Default under the First
Mortgage Indenture and the rescission and annulment of the consequences thereof
under the First Mortgage Indenture shall constitute a cure of the corresponding
Event of Default under this paragraph (i) and a rescission and annulment of the
consequences thereof; or
(k) Any Change of Control shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Total Credit-Linked Deposit Amount shall be immediately
reduced to $0, the Borrower's right to request the making of a Loan shall
immediately terminate and the Loans hereunder (with accrued interest thereon)
and all other amounts owing under this Agreement and the other Loan Documents
shall immediately become due and payable, and (B) if such event is any other
Event of Default, either or both of the following actions may be taken: (i) with
the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Total Credit-Linked Deposit Amount to be reduced to $0
forthwith and declare the Borrower's right to request the making of a Loan to be
terminated forthwith, whereupon the Total Credit-Linked Deposit Amount shall be
immediately reduced to $0, and (ii) with the consent of the Required Lenders,
the Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents to be due and payable forthwith,
whereupon the same shall immediately become due and payable. Except as expressly
provided above in this Section, presentment, demand, protest and all other
notices of any kind are hereby expressly waived by the Borrower.
SECTION 8. THE AGENTS
8.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably authorizes
the Administrative Agent, in such capacity, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
8.2 Delegation of Duties. The Administrative Agent may execute any
of its
55
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
8.3 Exculpatory Provisions. Neither any Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
8.4 Reliance by the Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders (or, if so specified by this Agreement, all Lenders or any
other instructing group of Lenders specified by this Agreement) as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense that may be incurred by it by reason
of taking or continuing to take any such action. Each Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of the Required
Lenders (or, if so specified by this Agreement, all Lenders or any other
instructing group of Lenders specified by this Agreement), and such request and
any action taken or failure to act pursuant thereto shall be binding upon all
the Lenders and all future holders of the Loans.
8.5 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent shall have received notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent shall receive such a notice, the
Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall
56
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders or any other instructing group of Lenders specified by
this Agreement); provided that unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
8.6 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender expressly acknowledges that neither any of the Agents nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
any Agent hereafter taken, including any review of the affairs of the Borrower
or any affiliate of the Borrower, shall be deemed to constitute any
representation or warranty by any Agent to any Lender. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrower and its affiliates and made its own decision to
make its extensions of credit hereunder, provide its Credit-Linked Deposit
Amount and enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and its affiliates. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, no Agent shall have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower or any affiliate of the Borrower that may come into the possession
of such Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
8.7 Indemnification. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Applicable Percentages in effect on the date on which indemnification
is sought under this Section (or, if indemnification is sought after the date
upon which the Credit-Linked Deposit Amounts shall have terminated and the Loans
shall have been paid in full, ratably in accordance with such Applicable
Percentages immediately prior to such date), for, and to save each Agent
harmless from and against, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever that may at any time (including, without limitation, at
any time following the payment of the Loans) be imposed on, incurred by or
asserted against such Agent in any way relating to or arising out of, the
Credit-Linked Deposit Amounts, this Agreement, any of the other Loan Documents
or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
such Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are found by
57
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from such Agent's gross negligence or willful misconduct. The
agreements in this Section shall survive the payment of the Loans and all other
amounts payable hereunder.
8.8 Agent in Its Individual Capacity. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower as though such Agent were not an Agent. With respect
to its Loans made or renewed by it, each Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
8.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 7(a) or Section
7(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. After any retiring Agent's
resignation as Agent, the provisions of this Section 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents. Upon the effectiveness of the
retirement of the Administrative Agent, the retiring Administrative Agent may,
at its option (i) transfer the management of the Credit-Linked Account to the
successor Administrative Agent or (ii) close the Credit-Linked Account upon the
establishment of a new Credit-Linked Account with the successor Administrative
Agent (and the successor Administrative Agent shall establish such new account)
and transfer all amounts on deposit in the Credit-Linked Account to such new
account.
8.10 The Joint Lead Arrangers and Agents. None of the Joint Lead
Arrangers, the Syndication Agent or the Documentation Agent, in its capacity as
such, shall have any duties or responsibilities, or incur any liability, under
this Agreement and the other Loan Documents.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement or any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 9.1. The
Required Lenders and the Borrower
58
may, or (with the written consent of the Required Lenders) the Administrative
Agent and the Borrower may, from time to time, (a) enter into written
amendments, supplements or modifications hereto and to the other Loan Documents
(including amendments and restatements hereof or thereof) for the purpose of
adding any provisions to this Agreement or the other Loan Documents or changing
in any manner the rights of the Lenders or of the Borrower hereunder or
thereunder or (b) waive, on such terms and conditions as may be specified in the
instrument of waiver, any of the requirements of this Agreement or the other
Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall:
(i) forgive the principal amount or extend the final scheduled date
of maturity of any Loan, extend the date on which the amounts on deposit
in the Credit-Linked Account are required to be returned in full to the
Lenders, reduce the stated rate of any interest or fee payable hereunder
or the Fixed Return or extend the scheduled date of any payment thereof,
or increase the amount or extend the expiration date of any Credit-Linked
Deposit Amount of any Lender, in each case without the consent of each
Lender directly affected thereby;
(ii) reduce any percentage specified in the definition of Required
Lenders, consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement and the other Loan
Documents or take any action which would result in the G&R Series K
Mortgage Bond no longer being secured equally and ratably with all other
securities issued and outstanding under the General and Refunding Mortgage
Indenture or no longer being secured by direct and valid, duly perfected
Liens on and security interests in the Mortgaged Property (as defined in
the General and Refunding Mortgage Indenture), subject only to the prior
Lien of the First Mortgage Indenture and to Permitted Liens (as such term
is defined in the General and Refunding Mortgage Indenture); (iii) amend,
modify or waive any provision of Section 8 or any other provision
affecting the rights of any Agent without the consent of any Agent
directly affected thereby;
(iv) amend, modify or waive any provision of Section 2.10 without
the consent of each Lender directly affected thereby; or
(v) eliminate or reduce the voting rights of any Lender under this
Section 9.1 without the consent of such Lender.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Borrower, the
Lenders, the Administrative Agent and all future holders of the Loans. In the
case of any waiver, the Borrower, the Lenders and the Administrative Agent shall
be restored to their former position and rights hereunder and under the other
Loan Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon. Any
such waiver, amendment, supplement or modification shall be effected by a
written instrument signed by the parties
59
required to sign pursuant to the foregoing provisions of this Section; provided,
that delivery of an executed signature page of any such instrument by facsimile
transmission shall be effective as delivery of a manually executed counterpart
thereof. The Administrative Agent, as holder of the G&R Series K Mortgage Bond,
will not consent to any amendment or other modification of the General and
Refunding Mortgage Indenture that requires the consent of holders of all
securities issued thereunder, without the consent of each Lender.
9.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed (a) in the case of the Borrower and the Administrative
Agent, as follows and (b) in the case of the Lenders, to its address as set
forth in the Register or, in the case of a Lender which becomes a party to this
Agreement pursuant to an Assignment and Acceptance, in such Assignment and
Acceptance, or in the case of any party, to such other address as such party may
hereafter notify to the other parties hereto:
The Borrower: Sierra Pacific Power Company
6100 Neil Road
Reno, Nevada 89520
Attention: Kelly Langley
Telecopy: (775) 834-5462
Telephone: (775) 834-5643
The Administrative Agent: Merrill Lynch Capital Corporation
4 World Financial Center
New York, New York 10080
Attention: Carol Feeley, Portfolio
Management
Telecopy: (212) 738-1186
Telephone: (212) 449-8414;
provided that any notice, request or demand to or upon the any Agent or any
Lender shall not be effective until received; provided further that any notice,
report, certificate or information required to be delivered to the
Administrative Agent pursuant to this Agreement shall be delivered to the
Sub-agent as follows (with a copy to the Administrative Agent at its address set
forth above) or to such other address for the Sub-agent as the Sub-agent or
Administrative Agent may hereafter notify:
Deutsche Bank Trust Company Americas
Loans Services
60 Wall Street, 39th Floor
New York, New York 10005
Attention: Loan Services
Telecopy: (212) 797-0407
Telephone: (212) 250-1312.
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9.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All representations
and warranties made herein, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
9.5 Payment of Expenses. The Borrower agrees (a) to pay or reimburse
the Administrative Agent for all their reasonable out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement, the G&R
Series K Mortgage Bond, and the other Loan Documents and any other documents
prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements and other charges of
counsel to the Administrative Agent, (b) to pay or reimburse each Lender and the
Administrative Agent for all their costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement, the G&R
Series K Mortgage Bond, the other Loan Documents and any other documents
prepared in connection herewith or therewith, including, without limitation, the
fees and disbursements of counsel (including the allocated fees and
disbursements and other charges of in-house counsel) to each Lender and of
counsel to the Administrative Agent, (c) to pay, indemnify, or reimburse each
Lender and the Administrative Agent for, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the G&R Series K Mortgage Bond, the other Loan Documents and any
such other documents, and (d) to pay, indemnify or reimburse each Lender, each
Agent, their respective affiliates, and their respective officers, directors,
trustees, employees, advisors, agents and controlling persons (each, an
"Indemnitee") for, and hold each Indemnitee harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the G&R Series K Mortgage Bond, the other Loan
Documents and any such other documents, including, without limitation, any of
the foregoing relating to the use of proceeds of the Loans or the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of the Borrower any of its Subsidiaries or any of the Properties and
the fees and disbursements and other charges of legal counsel in connection with
claims, actions or proceedings by any Indemnitee against the Borrower hereunder
(all the foregoing in this clause (d), collectively, the "Indemnified
Liabilities"), provided, that the Borrower shall have no obligation hereunder to
any Indemnitee with respect to Indemnified
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Liabilities to the extent such Indemnified Liabilities are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such Indemnitee. No
Indemnitee shall be liable for any damages arising from the use by unauthorized
persons of Information or other materials sent through electronic,
telecommunications or other information transmission systems that are
intercepted by such persons or for any special, indirect, consequential or
punitive damages in connection with this Agreement. Without limiting the
foregoing, and to the extent permitted by applicable law, the Borrower agrees
not to assert and to cause its Subsidiaries not to assert, and hereby waives and
agrees to cause its Subsidiaries so to waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any Indemnitee. All amounts due under this Section
shall be payable not later than 30 days after written demand therefor.
Statements payable by the Borrower pursuant to this Section shall be submitted
to Kelly Langley (Telephone No. 775-834-5643) (Fax No. 775-834-5462), at the
address of the Borrower set forth in Section 9.2, or to such other Person or
address as may be hereafter designated by the Borrower in a notice to the
Administrative Agent. The agreements in this Section shall survive repayment of
the Loans and all other amounts payable hereunder.
9.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent, all future holders of the Loans and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Administrative Agent and each Lender.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "Participant") participating interests
in any Loan owing to such Lender, any Credit-Linked Deposit Amount of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents. In the event of any such sale by a Lender of a participating interest
to a Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by the Borrower therefrom, except to the extent that such amendment,
waiver or consent would require the consent of all Lenders pursuant to Section
9.1. The Borrower agrees that if amounts outstanding under this Agreement and
the Loans are due or unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall, to the maximum extent permitted by applicable law, be deemed to have the
right of setoff in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to have
agreed to share with the Lenders the proceeds thereof as provided in
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Section 9.7(a) as fully as if such Participant were a Lender hereunder. The
Borrower also agrees that each Participant shall be entitled to the benefits of
Sections 2.11, 2.12 and 2.13 with respect to its participation in the
Credit-Linked Deposit Amount and the Loans outstanding from time to time as if
such Participant were a Lender; provided that, in the case of Section 2.12, such
Participant shall have complied with the requirements of said Section, and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with applicable
law and upon written notice to the Administrative Agent, at any time and from
time to time assign to any Lender or any affiliate, Related Fund or Control
Investment Affiliate thereof or, with the consent of the Administrative Agent
(which, in each case, shall not be unreasonably withheld or delayed), to an
additional bank, financial institution or other entity (an "Assignee") all or
any part of its rights and obligations under this Agreement pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit D, executed by
such Assignee and such Assignor (and, where the consent of the Administrative
Agent is required pursuant to the foregoing provisions, by the Administrative
Agent) and delivered to the Administrative Agent for its acceptance and
recording in the Register; provided that no such assignment to an Assignee
(other than any Lender or any affiliate thereof or any Related Fund) shall be in
an aggregate principal amount of less than $500,000 (other than in the case of
(i) assignments made within 30 days of the Closing Date for the purpose of
consummating the primary syndication of the Credit-Linked Deposit Amount or (ii)
an assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Borrower and the Administrative Agent. Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with Credit-Linked Deposit Amounts and/or Loans as set forth therein, and (y)
the Assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such Assignor shall cease to be a party
hereto, except as to Section 2.11, 2.12, 2.13 and 9.5 in respect of the period
prior to such effective date). For purposes of the minimum assignment amounts
set forth in this paragraph, multiple assignments by two or more Related Funds
shall be aggregated. Without the consent of the Administrative Agent, the
Credit-Linked Deposit Amount of any Lender shall not be released in connection
with any assignment by such Lender, but shall instead be purchased by the
relevant assignee and continue to be held for application (to the extent not
already applied) in accordance with Section 2.2 to satisfy such assignee's
obligations in respect of the aggregate then outstanding principal amount of the
Loans. Each Lender agrees that, upon the effectiveness of any assignment by it
of all or any portion of its Credit-Linked Deposit Amount, the corresponding
portion of the assignor Lender's Applicable Percentage of the amount on deposit
in the Credit-Linked Account shall be deemed to have been transferred to the
assignee.
(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 9.2 a copy of each Assignment and
Acceptance delivered to it and
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a register (the "Register") for the recordation of the names and addresses of
the Lenders, and the principal amount of the Loans owing to, and the amount of
the Credit-Linked Deposit Amount of, each Lender from time to time. The entries
in the Register shall be conclusive, in the absence of manifest error, and the
Borrower, each Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of the Loans recorded therein, and
relevant Applicable Percentage of the amounts on deposit in the Credit-Linked
Account, for all purposes of this Agreement. Any assignment of any Loan or
Credit-Linked Deposit Amount shall be effective only upon appropriate entries
with respect thereto being made in the Register. The Register shall be available
for inspection by the Borrower or any Lender (with respect to any entry relating
to such Lender's Loans) at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor and an Assignee (and, in any case where the consent of any other Person
is required by Section 9.6(c), by each such other Person) together with payment
to the Administrative Agent of a registration and processing fee of $3,500
(payable by the Assignor or Assignee, as agreed between such parties) (treating
multiple, simultaneous assignments by two or more Related Funds as a single
assignment) (except that (i) if the parties to such assignment shall
electronically execute and deliver to the Administrative Agent an Assignment and
Acceptance via an electronic settlement system acceptable to the Administrative
Agent in its sole discretion (which initially shall be Clearpar, LLC) the
registration and processing fee shall be $500 and (ii) no such registration and
processing fee shall be payable (y) in connection with an assignment by or to a
Merrill Lynch Entity or (z) in the case of an Assignee which is already a Lender
or is an affiliate or Related Fund of a Lender or a Person under common
management with a Lender), the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Borrower.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Credit-Linked Deposit Amounts relate only to absolute assignments and that
such provisions do not prohibit assignments creating security interests in
Loans, including, without limitation, any pledge or assignment by a Lender of
any Loan to any Federal Reserve Bank in accordance with applicable law.
(g) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing from time to time by the Granting Lender
to the Administrative Agent and the Borrower, the option to provide to the
Borrower all or any part of any Loan that such Granting Lender would otherwise
be obligated to make to the Borrower pursuant to this Agreement; provided that
(i) nothing herein shall constitute a commitment by any SPC to make any Loan and
(ii) if an SPC elects not to exercise such option or otherwise fails to provide
all or any part of such Loan, the Granting Lender shall be obligated to make
such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder
shall utilize the Credit-Linked Deposit Amount of the Granting Lender to the
same extent, and as if, such Loan were made by such Granting Lender. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the
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Granting Lender). In furtherance of the foregoing, each party hereto hereby
agrees (which agreement shall survive the termination of this Agreement) that,
prior to the date that is one year and one day after the payment in full of all
outstanding commercial paper or other indebtedness of any SPC, it will not
institute against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any state thereof. In addition,
notwithstanding anything to the contrary in this Section 9.6(g), any SPC may (A)
with notice to, but without the prior written consent of, the Borrower and the
Administrative Agent and without paying any processing fee therefor, assign all
or a portion of its interests in any Loans to the Granting Lender, or with the
prior written consent of the Borrower and the Administrative Agent (which
consent shall not be unreasonably withheld) to any financial institutions
providing liquidity and/or credit support to or for the account of such SPC to
support the funding or maintenance of Loans, and (B) disclose on a confidential
basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, Guarantee or credit or
liquidity enhancement to such SPC; provided that non-public information with
respect to the Borrower may be disclosed only with the Borrower's consent which
will not be unreasonably withheld. This paragraph (g) may not be amended without
the written consent of any SPC with Loans outstanding at the time of such
proposed amendment.
9.7 Adjustments; Set-off. (a) If any Lender (a "Benefitted Lender")
shall at any time receive any payment of all or part of the Obligations owing to
it, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 7(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Obligations, such Benefitted Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender's Obligations, or shall provide such other Lenders with the
benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably with
each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to or the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise), to set off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such setoff and application.
9.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts
65
taken together shall be deemed to constitute one and the same instrument.
Delivery of an executed signature page of this Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof. A set of the copies of this Agreement signed by all the parties shall be
lodged with the Borrower and the Administrative Agent.
9.9 Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Borrower, the Administrative Agent, the
Joint Lead Arrangers and the Lenders with respect to the subject matter hereof
and thereof, and there are no promises, undertakings, representations or
warranties by any Joint Lead Arranger, any Agent or any Lender relative to
subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 9.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
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9.13 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither any Joint Lead Arranger, any Agent nor any Lender has
any fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Joint Lead Arrangers, the Agents and the Lenders, on
one hand, and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Joint Lead Arrangers, the Agents and the Lenders or among the Borrower
and the Lenders.
9.14 Confidentiality. Each of the Administrative Agent and the
Lenders agrees to keep confidential all non-public information provided to it by
the Borrower pursuant to this Agreement that is designated by the Borrower as
confidential; provided that nothing herein shall prevent any Agent or any Lender
from disclosing any such information (a) to any Joint Lead Arranger, any Agent,
any other Lender or any affiliate of any thereof, (b) to any Participant or
Assignee (each, a "Transferee") or prospective Transferee that agrees to comply
with the provisions of this Section or substantially equivalent provisions, (c)
to any of its employees, directors, Administrative Agent, attorneys, accountants
and other professional advisors, (d) to any financial institution that is a
direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty agrees to
be bound by the provisions of this Section), (e) upon the request or demand of
any Governmental Authority having jurisdiction over it, (f) in response to any
order of any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law, (g) in connection with any
litigation or similar proceeding, (h) that has been publicly disclosed other
than in breach of this Section, (i) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender or (j) in
connection with the exercise of any remedy hereunder or under any other Loan
Document. Notwithstanding anything herein to the contrary, any party to this
Agreement (and any employee, representative, or other agent of any party to this
Agreement) may disclose to any and all persons, without limitation of any kind,
the tax treatment and tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure. However, any such information relating to the tax treatment or tax
structure is required to be kept confidential to the extent necessary to comply
with any applicable federal or state securities laws.
9.15 USA Patriot Act. Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the "Act"), it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with the Act.
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9.16 Accounting Changes. In the event that any "Accounting Change"
(as defined below) shall occur and such change results in a change in the method
of calculation of standards or terms in this Agreement, then the Borrower and
the Administrative Agent agree to enter into negotiations in order to amend such
provisions of this Agreement so as to equitably reflect such Accounting Change
with the desired result that the criteria for evaluating the Borrower's
financial condition shall be the same after such Accounting Change as if such
Accounting Change had not been made. Until such time as such an amendment shall
have been executed and delivered by the Borrower, the Administrative Agent and
the Required Lenders, all standards and terms in this Agreement shall continue
to be calculated or construed as if such Accounting Change had not occurred.
"Accounting Change" refers to any change in accounting principles required by
the promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board of the American Institute of Certified
Public Accountants or, if applicable, the SEC.
9.17 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
9.18 Covenant of the Lenders. Each Lender represents and warrants,
as to itself, to the Borrower that such Lender has not granted any Liens on any
of the funds on deposit in the Credit-Linked Account and covenants for the
benefit of the Borrower that such Lender shall not grant any Lien on any such
funds on deposit but shall instead keep such funds free and clear of any Liens.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
SIERRA PACIFIC POWER COMPANY
By:
------------------------------------
Name:
Title:
Borrower Taxpayer ID:
MERRILL LYNCH CAPITAL CORPORATION,
as Documentation Agent and
Administrative Agent
By:
------------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER INC., as
Syndication Agent
By:
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Name:
Title: