EXHIBIT 4.1
SIERRA PACIFIC RESOURCES
OFFICERS' CERTIFICATE
August 12, 2005
Pursuant to Sections 2.01, 13.04 and 13.05 of the Indenture dated as of
May 1, 2000 (as supplemented and amended from time to time, the "Indenture"),
between Sierra Pacific Resources (the "Company") and The Bank of New York, as
trustee (the "Trustee") and the authority granted in the Resolutions of the
Board of Directors of the Company dated August 2, 2005, the undersigned officers
of the Company, Michael W. Yackira, Corporate Executive Vice President, and
Chief Financial Officer, and William D. Rogers, Corporate Treasurer, hereby
certify as follows:
The terms and conditions of the securities described in this Officers'
Certificate (as amended, modified and supplemented from time to time, the
"Officers' Certificate") are as follows (the numbered paragraphs set forth below
corresponding to the numbered paragraphs of Section 2.01 of the Indenture,
except paragraph 20 below). Certain terms used herein are defined in paragraph
20 of this certificate. Capitalized terms used herein but not defined in said
paragraph 20 or elsewhere in this certificate shall have the meanings assigned
to them in the Indenture unless the context clearly requires otherwise
1. Title; Ranking. The Securities issued under the Indenture shall be
designated "6 3/4% Senior Notes due 2017" (the "Senior Notes"). The Senior
Notes shall constitute the senior, unsecured and unsubordinated debt
obligations of the Company and shall rank equally in right of payment with
all other existing and future senior, unsecured and unsubordinated debt
obligations of the Company. The form of Senior Notes, including the
related form of Trustee's certificate of authentication and any applicable
legends, is attached hereto as Exhibit A.
2. Maximum Aggregate Principal Amount. The maximum aggregate principal amount
of the Senior Notes that may be authenticated and delivered under the
Indenture (except for the Senior Notes authenticated and delivered upon
registration of transfer of or in exchange for, or in lieu of other Senior
Notes pursuant to Section 2.06, 2.07, 2.09 or 3.07 of the Indenture) shall
be $225,000,000.
3. Book-entry; Form, Etc. The Senior Notes initially will be issued in
book-entry form only. The Senior Notes will be represented by one or more
global securities deposited with The Depository Trust Company (the
"Depositary") and registered in the name of the Depositary's nominee. The
Depositary shall make book-entry transfers among its participants and
receive and transmit any payments on the global securities to such
participants; provided that, solely for the purposes of determining
whether the Holders of the requisite amount of the Senior Notes have voted
on any matter provided for in the Indenture, the Company may rely
conclusively on, and shall be protected in relying on, any written
instrument (including a proxy) delivered to the Company by the Depositary
setting forth the votes of the beneficial owners of the Senior Notes or
assigning the right to vote on any matter to any other Persons either in
whole or in part. The Company will
not issue the Senior Notes in definitive form unless the Depositary at any
time is unwilling or unable to continue as a depository and the Company
does not appoint a successor depository within 90 days. Under such
circumstances, the Company will issue Senior Notes in definitive form in
exchange for the entire global security. In addition, the Company may at
any time determine not to have Senior Notes represented by a global
security and, in such event, the Company will issue Senior Notes in
definitive form in exchange for the entire global security. Senior Notes
so issued in definitive form will be issued as registered Senior Notes in
denominations of $1,000 and integral multiples thereof, unless the Company
specifies otherwise. The Senior Notes may bear such legends as set forth
on Exhibit A hereto.
Each global security shall represent such of the outstanding Senior Notes
as shall be specified therein and each shall provide that it shall
represent the aggregate principal amount of outstanding Senior Notes from
time to time endorsed thereon and that the aggregate principal amount of
outstanding Senior Notes represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a global security to reflect the amount of
any increase or decrease in the aggregate principal amount of outstanding
Senior Notes represented thereby shall be made by the Trustee, as
custodian of the global security (the "Custodian"), in accordance with
instructions as further set forth below.
If any beneficial interest in a global security is exchanged for or
transferred to a person who will take delivery thereof in the form of a
beneficial interest in another global security, the principal amount of
Senior Notes represented by such global security shall be reduced
accordingly and an endorsement shall be made on such global security by
the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a
person who will take delivery thereof in the form of a beneficial interest
in another global security, such other global security shall be increased
accordingly and an endorsement shall be made on such global security by
the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
The Senior Notes have not been registered under the Securities Act and may
not be offered, sold or otherwise transferred in the absence of such
registration or an applicable exemption therefrom. No service charge shall
be made for the registration of transfer or exchange of the Senior Notes;
provided, however, that the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection with the exchange or transfer (other than in certain cases
provided in the Indenture).
4. Not applicable.
5. Not applicable.
6. Maturity. The principal amount of all outstanding Senior Notes shall be
payable at their Stated Maturity on August 15, 2017.
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7. Interest. The interest rate to be borne by the Senior Notes shall be
6 3/4% per annum from August 12, 2005 to, but excluding, the Stated
Maturity of the Senior Notes.
The Company shall pay interest semi-annually in arrears on February 15 and
August 15 of each such year, commencing February 15, 2006 or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Senior Notes shall accrue from
August 12, 2005. The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal
and premium, if any, from time to time on demand at a rate that is 1% per
annum in excess of the rate then in effect; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy
Law) on overdue installments of interest (without regard to any applicable
grace periods) from time to time on demand at the same rate to the extent
lawful. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
Any principal of or installment of interest on the Senior Notes that is
overdue shall bear interest at the interest rate then borne by the Senior
Notes (to the extent that the payment of such interest shall be legally
enforceable), from the dates such amounts are due until they are paid or
made available for payment, and such interest shall be payable on demand
by the Holders.
Interest shall be paid in arrears on each Interest Payment Date to the
Person in whose name the Senior Notes are registered on the Regular Record
Date for such Interest Payment Date; provided that, interest payable at
the Stated Maturity of principal as provided herein will be paid to the
Person to whom principal is payable. Any such interest that is not so
punctually paid or duly provided for will forthwith cease to be payable to
the Holders on such Regular Record Date and may either be paid to the
Person or Persons in whose name the Senior Notes are registered at the
close of business on a special record date (as such term is used in
Section 2.12 of the Indenture) for the payment of such defaulted interest
to be fixed by the Company, notice whereof shall be given to Holders of
the Senior Notes not less than ten days prior to such special record date,
or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange, if any, on which the Senior
Notes may be listed, and upon such notice as may be required by any such
exchange, all as set forth in Section 2.12 of the Indenture.
8. Place and Method of Payment. Payments of the principal of and interest on
the Senior Notes shall be made by the Company at the office of the Paying
Agent which shall initially be The Bank of New York, with any such payment
that is due at the Stated Maturity of any Senior Notes being made upon
surrender of such Senior Notes to the Paying Agent. Payments of interest
(including interest on any Interest Payment Date) will be made at the
option of the Company, (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register or
(ii) by wire transfer at such place and to such account at a banking
institution in the United States as may be designated in writing to the
Trustee at least sixteen days prior to the date for payment by the Person
entitled thereto.
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9. (i) Optional Redemption. Except as set forth in clause (ii) of this
Section 9, the Company shall not have the option to redeem the Senior
Notes pursuant to this Section 9 prior to August 15, 2010. Thereafter, the
Company shall have the option to redeem the Senior Notes, in whole or in
part, upon not less than 30, nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest and Liquidated Damages, if any, to
the applicable redemption date, if redeemed during the twelve-month period
beginning on August 15 of the years indicated below:
YEAR Percentage
- ---- ----------
2010.............................................................. 103.375%
2011.............................................................. 102.250%
2012.............................................................. 101.125%
2013 and thereafter............................................... 100.000%
(ii) Equity Claw-back. Notwithstanding the provisions of clause (i) of
this Section 9, at any time prior to August 15, 2008, the Company may on
any one or more occasions redeem up to 35% of the aggregate principal
amount of Senior Notes issued under the Indenture at a redemption price
equal to 106.75% of the principal amount thereof, plus accrued and unpaid
interest, if any, and Liquidated Damages, if any, to the Redemption Date,
with the net cash proceeds of any public or private offering of its Equity
Interests (other than Disqualified Stock); provided that (1) at least 65%
of the aggregate principal amount of Senior Notes remain outstanding
immediately after the occurrence of such redemption (excluding Senior
Notes held by the Company and its Subsidiaries); and (2) that each such
redemption shall occur within 120 days of the date of the closing of such
offering.
10. Mandatory Redemption/Redemption at Option of Holders/Repurchase at Option
of Holders.
(i) Mandatory Redemption. Except as set forth in clause (ii) of this
Section 10, the Company is not required to make mandatory redemption or sinking
fund payments with respect to the Senior Notes.
(ii) Redemption at Option of Holders. The holders of at least 25% in
principal amount of then outstanding Senior Notes may deliver a notice to the
Company requiring the Company to redeem the Senior Notes immediately, at a
redemption price equal to 100% of the aggregate principal amount of the Senior
Notes plus accrued and unpaid interest, if any, on any such Senior Notes to the
date of redemption, upon the occurrence of any of the following events (the
"Triggering Events"):
A. failure for 30 days to pay when due interest on the Senior Notes;
B. failure to pay when due the principal of, or premium, if any, on
the Senior Notes;
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C. failure by the Company or any of its Restricted Subsidiaries to
comply with any of the provisions described in of Sections 18(A),
18(C) or 18 (L) hereof (under the headings "Covenants -- Restricted
Payments", "Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock" or "Covenants -- Merger Consolidation or Sale of
Assets");
D. failure by the Company or any of its Restricted Subsidiaries for
30 days after notice to comply with the provisions described in
Section 10(iii) or Section 10(iv) (under the headings "Offer to
Purchase Upon Change of Control" and "Offer to Purchase by
Application of Excess Proceeds");
E. failure by the Company or any of its Restricted Subsidiaries for
60 days after notice to observe or perform any of the other
agreements in this Officers' Certificate or the Senior Notes;
F. default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company whether such
Indebtedness or guarantee now exists, or is created after the Issue
Date, if that default:
(I) is caused by a failure to pay principal of, or interest
or premium, if any, on such Indebtedness prior to the
expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment
Default"); or
(II) results in the acceleration of such Indebtedness prior
to its express maturity,
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any such other Indebtedness
under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $25.0 million or more;
G. the Company or any of its Subsidiaries to pay final judgment
aggregating in excess of $50.0 million or more, which judgment is
not paid, discharged or stayed for a period of 60 days;
H. the Company or any of its Significant Subsidiaries or any group
of Restricted Subsidiaries that, taken as a whole, would constitute
a Significant Subsidiary pursuant to or within the meaning of
Bankruptcy Law:
(I) commences a voluntary case,
(II) consents to the entry of an order for relief against it
in an involuntary case,
(III) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
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(IV) makes a general assignment for the benefit of its
creditors, or
(V) generally is not paying its debts as they become due; or
I. a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(I) is for relief against the Company or any of its
Restricted Subsidiaries that is a Significant Subsidiary
in an involuntary case;
(II) appoints a Custodian of the Company or any of its
Restricted Subsidiaries that is a Significant Subsidiary
or for all or substantially all of the property of the
Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary; or
(III) orders the liquidation of the Company or any of its
Restricted Subsidiaries that is a Significant
Subsidiary; and the order or decree remains unstayed and
in effect for 60 consecutive days.
The holders of a majority in aggregate principal amount of the
then outstanding Senior Notes by notice to the Company and the
Trustee may on behalf of the holders of all of the Senior Notes
waive any existing Triggering Event and its consequences, except a
continuing Triggering Event related to the payment of interest on,
or the principal of, the Senior Notes.
In the case of any Triggering Event occurring by reason of any
willful action or inaction taken or not taken by or on behalf of the
Company with the intention of avoiding payment of the premium that
the Company would have had to pay if the Company then had elected to
redeem the Senior Notes pursuant to the provisions of this Officers'
Certificate relating to redemption at the option of the Company, an
equivalent premium will also become and be immediately due and
payable to the extent permitted by law upon the redemption of the
Senior Notes at the option of the holders.
(iii) Offer to Purchase Upon Change of Control.
A. Upon the occurrence of a Change of Control, each Holder of
Senior Notes shall have the right to require the Company to
purchase all or any part (equal to $1,000 in principal amount
or an integral multiple thereof) of such Holder's Senior Notes
pursuant to the offer described below (the "Change of Control
Offer") at an offer price in cash equal to 100% of the
aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any (the "Change of
Control Payment"). Within 10 days following any Change of
Control, the Company shall mail a notice to each Holder
describing the transaction or transactions that constitute the
Change of Control and stating: (i) that the Change of Control
Offer is being made pursuant to the provisions of this Section
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10(iii) and that all Senior Notes tendered shall be accepted
for payment; (ii) the purchase price and the purchase date,
which shall be no earlier than 30 days and no later than 60
days from the date such notice is mailed (the "Change of
Control Payment Date"); (iii) that any Senior Note not
tendered shall continue to accrue interest; (iv) that, unless
the Company defaults in the payment of the Change of Control
Payment, all Senior Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after
the Change of Control Payment Date; (v) that Holders electing
to have any Senior Notes purchased pursuant to a Change of
Control Offer shall be required to surrender the Senior Notes
to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day
preceding the Change of Control Payment Date; (vi) that
Holders shall be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on
the second Business Day preceding the Change of Control
Payment Date, a facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Senior Notes
delivered for purchase, and a statement that such Holder is
withdrawing his election to have the Senior Notes purchased;
and (vii) that Holders whose Senior Notes are being purchased
only in part shall be issued new Senior Notes equal in
principal amount to the unpurchased portion of the Senior
Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof.
B. On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment all Senior Notes or
portions thereof properly tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent an amount
equal to the Change of Control Payment in respect of all
Senior Notes or portions thereof so tendered and (iii) deliver
or cause to be delivered to the Trustee the Senior Notes so
accepted together with an officers' certificate stating the
aggregate principal amount of Senior Notes or portions thereof
being purchased by the Company. The Paying Agent shall
promptly mail to each Holder of Senior Notes so tendered the
Change of Control Payment for such Senior Notes, and the
Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Senior Note
equal in principal amount to any unpurchased portion of the
Senior Notes surrendered, if any; provided that each such new
Senior Note shall be in a principal amount of $1,000 or an
integral multiple thereof.
C. The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in the
Indenture applicable to a Change of Control Offer made by the
Company and purchases all Senior Notes validly tendered and
not withdrawn under such Change of Control Offer. The
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provisions under this Officers' Certificate or the Indenture
relative to the Company's obligations to make an offer to
repurchase the Senior Notes as a result of a Change of Control
may be waived or modified with the written consent of the
Holders of a majority in principal amount of the Senior Notes
then outstanding.
D. The Company shall comply, to the extent applicable, with the
requirements of Rule 14e-1 of the Exchange Act and any other
securities laws or regulations applicable to any Change of
Control Offer. To the extent that the provisions of any such
securities laws or securities regulations conflict with the
provisions of the covenant described above, the Company shall
comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the
covenant described above by virtue thereof.
(iv) Offer to Purchase by Application of Excess Proceeds.
A. In the event that, pursuant to Section 18(D) hereof, the
Company shall be required to commence an offer to all Holders
to purchase the maximum principal amount of Senior Notes and
all other Indebtedness that is pari passu with the Senior
Notes containing provisions similar to those set forth in this
Officers' Certificate or the Indenture (an "Asset Sale Offer")
it shall follow the procedures specified below.
B. The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except
to the extent that a longer period is required by applicable
law (the "Offer Period"). No later than five Business Days
after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of
Senior Notes and such other pari passu Indebtedness required
to be purchased pursuant to paragraph A above (the "Offer
Amount") or, if less than the Offer Amount has been tendered,
all Senior Notes and such other pari passu Indebtedness
tendered in response to the Asset Sale Offer. Payment for any
Senior Notes so purchased shall be made in the same manner as
interest payments are made.
C. If the Purchase Date is on or after an interest record date
and on or before the related interest payment date shall be
paid to the Person in whose name a Senior Note is registered
at the close of business on such record date, and no
additional interest shall be payable to Holders who tender
Senior Notes pursuant to the Asset Sale Offer.
D. Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and
each of the Holders, with a copy to the Trustee. The notice
shall contain all instructions and materials necessary to
enable such Holders to tender Senior Notes pursuant to the
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Asset Sale Offer. The Asset Sale Offer shall be made to all
Holders. The notice, which shall govern the terms of the Asset
Sale Offer, shall state:
I. that the Asset Sale Offer is being made pursuant to the
provisions of this Section 10(iv) and Section 18(D)
hereof (under the heading "Covenants -- Asset Sales")
and the length of time the Asset Sale Offer shall remain
open;
II. the Offer Amount, the purchase price and the Purchase
Date;
III. that any Senior Note not tendered or accepted for
payment shall continue to accrue interest;
IV. that, unless the Company defaults in making such
payment, any Senior Note accepted for payment pursuant
to the Asset Sale Offer shall cease to accrue interest
after the Purchase Date;
V. that Holders electing to have a Senior Note purchased
pursuant to an Asset Sale Offer may only elect to have
all of such Senior Note purchased and may not elect to
have only a portion of such Senior Note purchased;
VI. that Holders electing to have a Senior Note purchased
pursuant to any Asset Sale Offer shall be required to
surrender the Senior Note or transfer by book-entry
transfer, to the Company, a Depositary, if appointed by
the Company, or a Paying Agent at the address specified
in the notice at least three Business Days before the
Purchase Date;
VII. that Holders shall be entitled to withdraw their
election if the Company, the depositary or the Paying
Agent, as the case may be, receives, not later than the
expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Senior Note
the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such
Senior Note purchased;
VIII. that, if the aggregate principal amount of Senior Notes
and such other pari passu Indebtedness tendered by
Holders exceeds the Offer Amount, the Company shall
select the Senior Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by the
Company so that only Senior Notes in denominations of
$1,000, or integral multiples thereof, shall be
purchased); and
IX. that Holders whose Senior Notes were purchased only in
part shall be issued new Senior Notes equal in principal
amount to the
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unpurchased portion of the Senior Notes surrendered (or
transferred by book-entry transfer).
E. On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the
extent necessary, the Offer Amount of Senior Notes and such
other pari passu Indebtedness or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Offer
Amount has been tendered, all Senior Notes, and such other
pari passu Indebtedness or portions thereof tendered, and
shall deliver to the Trustee an Officers' Certificate stating
that such Senior Notes, and such other pari passu Indebtedness
or portions thereof were accepted for payment by the Company
in accordance with the terms of this Section 10(iv). The
Company, the Depositary or the Paying Agent, as the case may
be, shall promptly (but in any case not later than five days
after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Senior
Notes tendered by such Holder and accepted by the Company for
purchase, and the Company shall promptly issue a new Senior
Note, and the Trustee, upon written request from the Company
shall authenticate and mail or deliver such new Senior Note to
such Holder, in a principal amount equal to any unpurchased
portion of the Senior Note surrendered. Any Senior Note not so
accepted shall be promptly mailed or delivered by the Company
to the Holder thereof. The Company shall publicly announce the
results of the Asset Sale Offer no later than the Purchase
Date.
F. Other than as specifically provided in this Section 10(iv),
any purchase pursuant to this Section 10(iv) shall be made
pursuant to the provisions of Sections 3.01 through 3.07 of
the Indenture.
11. Denominations. The Senior Notes shall be issued in denominations of
$1,000, or any integral multiple thereof, whether they are issued in
global or definitive form.
12. Not applicable.
13. Not applicable.
14. Not applicable.
15. Not applicable.
16. Not applicable.
17. Not applicable.
18. Covenants
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A. Restricted Payments.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:
(I) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including,
without limitation, any payment in connection with any
merger or consolidation involving the Company or any of
its Restricted Subsidiaries) or to the direct or
indirect holders of the Company's or any of its
Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified
Stock) of the Company) or to the Company or a Restricted
Subsidiary of the Company;
(II) purchase, redeem or otherwise acquire or retire for
value (including, without limitation, in connection with
any merger or consolidation involving the Company) any
Equity Interests of the Company or any direct or
indirect parent of the Company;
(III) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value
any Indebtedness that is subordinated to the Senior
Notes, except a payment of interest or principal at the
Stated Maturity thereof; or
(IV) make any Restricted Investment (all such payments and
other actions set forth in these clauses (I) through
(IV) above being collectively referred to as "Restricted
Payments"),
unless, at the time of and after giving effect to such
Restricted Payment:
(I) no Default or Event of Default has occurred and is
continuing or would occur as a consequence of such
Restricted Payment;
(II) the Company 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 the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 18(C)
(under the heading "Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock"); and
(III) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the
Company and its Restricted Subsidiaries after the Issue
Date (excluding Restricted Payments
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permitted by clauses (II), (III) (IV), (VI) and (X) of
the next succeeding paragraph), is less than the sum,
without duplication, of:
(a) 50% of the Consolidated Net Income of the Company
for the period (taken as one accounting period) from
April 1, 2004 to the end of the Company'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 Company (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 Company) since the Issue Date
as a contribution to its common equity capital or from
the issue or sale of Equity Interests of the Company
(other than Disqualified Stock and other than sales to a
Restricted Subsidiary of the Company) or from the issue
or sale of convertible or exchangeable Disqualified
Stock or convertible or exchangeable debt securities of
the Company that have been converted into or exchanged
for such Equity Interests (other than Disqualified Stock
or debt securities sold to a Subsidiary of the Company),
plus
(c) to the extent that any Restricted Investment that
was made after the Issue Date is sold for cash or
otherwise liquidated or repaid for cash, the lesser of
(i) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if
any) and (ii) the initial amount of such Restricted
Investment, plus
(d) to the extent that any Unrestricted Subsidiary of
the Company is redesignated as a Restricted Subsidiary
after the Issue Date, the lesser of (i) the fair market
value of all Investments of the Company and any
Restricted Subsidiary in such Subsidiary as of the date
of such redesignation and (ii) the fair market value of
the Company's and any Restricted Subsidiary's Investment
in such Subsidiary as of the date on which such
Subsidiary was originally designated as an Unrestricted
Subsidiary.
The preceding provisions shall not prohibit:
(I) 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 Officers' Certificate or the
Indenture;
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(II) the redemption, repurchase, retirement, defeasance or
other acquisition of any subordinated Indebtedness of
the Company or any Subsidiary Guarantor or of any
Equity Interests of the Company or any of its
Restricted Subsidiaries in exchange for, or out of the
net cash proceeds of the substantially concurrent sale
(other than to a Restricted Subsidiary of the Company)
of, Equity Interests of the Company (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 shall be excluded from clause (III)(b) of
the preceding paragraph;
(III) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness of the Company
with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness;
(IV) the payment of any dividend or other payment or
distribution by a Restricted Subsidiary of the Company
to the holders of its Equity Interests on a pro rata
basis;
(V) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the
Company or any Restricted Subsidiary of the Company
held by any member of the Company's (or any of its
Restricted 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 $10.0 million in any twelve-month period;
(VI) 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 Indebtedness of the
Company or any of its Restricted Subsidiaries held by
such trust;
(VII) payments on stock purchase contracts obligating the
holders thereof to purchase common stock of the
Company;
(VIII) the payment of any dividend by SPPC on the SPPC Class A
Series I preferred stock outstanding on the Issue Date
at a rate not exceeding the dividend rate in effect on
the Issue Date; and
(IX) the payment of any dividend on the Common Stock if
there shall be set forth in the resolutions of the
Board of Directors declaring
13
such dividend a finding by the Board of Directors, made
in good faith, to the effect that, on the basis of the
Dividend Considerations, the amount of such dividend
does not exceed the amount that the Board of Directors
would expect, subject to periodic consideration and
reevaluation of the Dividend Considerations, to be able
to declare, if the Board so determined, and to be
prudent, as a regular quarterly dividend on the Common
Stock; or
(X) other Restricted Payments in an aggregate amount since
the Issue Date not to exceed $100.0 million;
provided that, with respect to clauses (II), (III), (V), (IX) and
(X) above, no Default or Event of Default shall have occurred and be
continuing immediately after such transaction.
To the extent that the Company or any of its Restricted
Subsidiaries is obligated to make payments to holders of any of its
debt securities that are convertible into, or exchangeable for,
Capital Stock of the Company or any of its Restricted Subsidiaries
in respect of any dividend or other payment or distribution on
account of such Capital Stock that would have been payable to such
holders had they converted or exchanged their debt securities for
such Capital Stock, such payments shall be treated as Restricted
Payments.
The amount of all Restricted Payments (other than cash) shall
be the fair market value on the date of the Restricted Payment of
the asset(s) or securities proposed to be transferred or issued by
the Company or such Restricted 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
shall be determined by the Board of Directors whose resolution with
respect thereto shall 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 $25.0 million.
Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an officer's certificate
stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this "Restricted
Payment" covenant were computed, together with a copy of any
fairness opinion or appraisal required under this Officers'
Certificate.
B. Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or permit
to exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary to:
14
(I) pay dividends or make any other distributions on its
Capital Stock to the Company or any of its Restricted
Subsidiaries, or with respect to any other interest or
participation in, or measured by, its profits, or pay
any Indebtedness owed to the Company or any of its
Restricted Subsidiaries;
(II) make loans or advances to the Company or any of its
Restricted Subsidiaries; or
(III) transfer any of its properties or assets to the Company
or any of its Restricted Subsidiaries.
However, the preceding restrictions applicable to dividends
and other payment restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:
(I) agreements governing Existing Indebtedness and Credit
Facilities as in effect on the Issue Date and other
customary encumbrances and restrictions existing on or
after the Issue 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 Issue Date; provided that the
application of such restrictions or encumbrances to
additional Restricted Subsidiaries not subject thereto
on the Issue Date shall not be deemed to make such
restrictions or encumbrances more restrictive;
(II) this Officers' Certificate, the Indenture and the Senior
Notes and other customary encumbrances and restrictions
existing in indentures and notes of the Company after
the Issue 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 this Officers' Certificate, the Indenture
and the Senior Notes;
(III) 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
Company or any of its Subsidiaries or any of their
respective properties;
(IV) any instrument governing Indebtedness or Capital Stock
of a Person acquired by the Company or any of its
Restricted 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
restriction is not applicable to any Person, or the
15
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 this
Officers' Certificate or the Indenture to be incurred;
(V) customary non-assignment provisions in leases entered
into in the ordinary course of business and consistent
with past practices;
(VI) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on
that property of the nature described in clause (III)
of the preceding paragraph;
(VII) any Purchase Money Note or other Indebtedness or
contractual requirements incurred with respect to a
Qualified Receivables Transaction relating exclusively
to a Receivables Entity that, in the good faith
determination of the Board of Directors of the Company,
are necessary to effect such Qualified Receivables
Transaction;
(VIII) any agreement for the sale or other disposition of a
Restricted Subsidiary that restricts distributions or
dispositions of assets by that Restricted 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 the provisions of Section 18(F) (under
the heading "Covenants -- Liens") 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.
C. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, 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), and the Company
shall not issue any Disqualified Stock and shall not permit any of
its Restricted Subsidiaries to issue any shares of preferred stock;
provided, however,
16
that the Company may incur Indebtedness (including Acquired Debt) or
issue Disqualified Stock, and any Restricted Subsidiary may incur
Indebtedness (including Acquired Debt) or issue preferred stock if
the Fixed Charge Coverage Ratio for the Company'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.
The first paragraph of this Section 18(C) shall not prohibit
the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(I) the incurrence by the Company and any Restricted
Subsidiary pursuant to this clause (I) 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 Company and its Subsidiaries
thereunder), not to exceed $750.0 million at any time
outstanding;
(II) the incurrence by the Company and its Restricted
Subsidiaries of the Existing Indebtedness;
(III) the incurrence by the Company of Indebtedness
represented by the Senior Notes to be issued on the
Issue Date (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 those Senior Notes, any additional Senior
Notes of the same series and any related Exchange Notes;
(IV) the incurrence by the Company or any of its Restricted
Subsidiaries 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 Company or such
Restricted Subsidiary, in an aggregate principal amount,
including all Permitted Refinancing Indebtedness
incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (IV), not
to exceed $40.0 million at any time outstanding;
(V) the incurrence by the Company or any of its Restricted
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
17
was incurred under the first paragraph of this covenant
or clauses (II), (III) (V) or (XII) of this paragraph;
(VI) the incurrence by the Company or any of its Restricted
Subsidiaries (other than a Receivables Entity) of
intercompany Indebtedness between or among the Company
or any of its Restricted Subsidiaries (other than a
Receivables Entity); provided, however, that:
(a) if the Company is the obligor on such Indebtedness,
such Indebtedness must be expressly subordinated to the
prior payment in full in cash of all Obligations with
respect to the Senior Notes;
(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) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being
held by a Person other than the Company or a Restricted
Subsidiary and (ii) any sale or other transfer of any
such Indebtedness to a Person that is not either the
Company or a Restricted Subsidiary shall be deemed, in
each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted
Subsidiary, as the case may be, that was not permitted
by this clause (VI); and
(d) any Indebtedness issued by the Company or any of
its Restricted Subsidiaries to a Trust Preferred
Vehicle shall not be treated as intercompany
Indebtedness for purposes of this clause (VI) to the
extent of the face amount of the beneficial interests
of the Trust Preferred Vehicle that are not held by the
Company or any of its Restricted Subsidiaries;
(VII) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations;
(VIII) the guarantee by the Company or any Restricted
Subsidiary of Indebtedness of the Company or any
Restricted Subsidiary that was permitted to be incurred
by another provision of this covenant; provided that in
the event the Indebtedness that is being guaranteed is
subordinated in right of payment to the Senior Notes,
then the Guarantee of that Indebtedness by the Company
shall be subordinated in right of payment to the Senior
Notes;
(IX) the accrual of interest, the accretion or amortization
of original issue discount, the payment of interest on
any Indebtedness in the
18
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 shall not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for
purposes of this covenant; provided, in each such case,
that the amount thereof is included in the Fixed
Charges of the Company as accrued;
(X) Indebtedness in respect of bid, performance or surety
bonds issued for the account of the Company or any
Restricted Subsidiary thereof in the ordinary course of
business, including guarantees or obligations of the
Company or any Restricted Subsidiary thereof with
respect to letters of credit supporting such bid,
performance or surety obligations (in each case other
than for an obligation for money borrowed);
(XI) the incurrence by the Company's Unrestricted
Subsidiaries of Non-Recourse Debt; provided, however,
that if any such Indebtedness ceases to be Non-Recourse
Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company that was not
permitted by this clause (XI);
(XII) the incurrence by the Company or any Restricted
Subsidiary of additional Indebtedness consisting of
securities issued pursuant to the G&R Indentures in
respect of claims relating to the Company's or any
Restricted Subsidiary's obligations pursuant to
agreements with gas, electric power and other energy
suppliers that have been terminated as of the Issue
Date;
(XIII) the issuance by a Receivables Entity of a Purchase
Money Note in connection with a Qualified Receivables
Transaction;
(XIV) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness to finance
capital expenditures incurred pursuant to NPC's 2003
Resource Plan and SPPC'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 Company or any Restricted
Subsidiary of additional Indebtedness in an aggregate
principal amount (or accreted value, as applicable) at
any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance
19
or replace any Indebtedness incurred pursuant to this
clause (XV), not to exceed $200.0 million at any time
outstanding.
The Company shall not incur any Indebtedness (including
Permitted Debt) that is contractually subordinated in right of
payment to any other Indebtedness of the Company unless such
Indebtedness is also contractually subordinated in right of
payment to the Senior Notes on substantially identical terms;
provided, however, that no Indebtedness of the Company shall
be deemed to be contractually subordinated in right of payment
to any other Indebtedness of the Company solely by virtue of
being secured on a junior basis or by virtue of being
unsecured.
For purposes of determining compliance with this Section
18(C):
(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) above, or is entitled to be
incurred pursuant to the first paragraph of this Section
18(C), the Company shall 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 18(C); and
(II) for the purposes of determining compliance with any U.S.
dollar-denominated restriction on the incurrence of
Indebtedness denominated in a foreign currency, the U.S.
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.
D. Asset Sales.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless:
(I) the Company (or the Restricted Subsidiary, as the case
may be) receives consideration at the time of the Asset
Sale at least equal to the fair market value of the
assets or Equity Interests issued or sold or otherwise
disposed of; and
(II) at least 75% of the consideration received in the Asset
Sale by the Company or such Restricted Subsidiary is in
the form of (x) cash or Cash Equivalents or (y)
Permitted Assets or (z) any combination thereof. For
purposes of this provision, each of the following shall
be deemed to be cash:
20
(a) any liabilities, as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet, of
the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their
terms subordinated to the Senior Notes) that are assumed
by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company
or such Restricted Subsidiary from further liability;
and
(b) any securities, Senior Notes or other obligations
received by the Company or any such Restricted
Subsidiary from such transferee that are
contemporaneously, subject to ordinary settlement
periods, converted by the Company or such Restricted
Subsidiary into cash, to the extent of the cash received
in that conversion.
Within 365 days after the receipt of any Net Proceeds from an
Asset Sale, the Company or any applicable Restricted Subsidiary may
apply those Net Proceeds at its option:
(I) to repay senior Indebtedness of the Company or any
Indebtedness of its Restricted Subsidiaries;
(II) to acquire all or substantially all of the assets of, or
a majority of the Voting Stock of, another Permitted
Business;
(III) to make or enter into a definitive agreement to make a
capital expenditure; or
(IV) to acquire other long-term assets that are used or
useful in a Permitted Business.
Pending the final application of any Net Proceeds, the Company
may temporarily reduce revolving credit borrowings or otherwise
invest the Net Proceeds in any manner that is not prohibited by this
Officers' Certificate or the Indenture.
Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the preceding paragraph shall constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $50.0 million, the Company shall make an Asset Sale Offer to
all Holders of Senior Notes and all Holders of other Indebtedness
that is pari passu with the Senior Notes containing provisions
similar to those set forth in this Officers' Certificate and the
Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets to purchase the maximum principal amount
of Senior Notes and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds. The offer price in any Asset
Sale Offer shall be equal to 100% of principal amount of Senior
Notes plus accrued and unpaid interest and Liquidated Damages, if
any, to
21
the date of purchase, and shall be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, the
Company may use those Excess Proceeds for any purpose not otherwise
prohibited by this Officers' Certificate or the Indenture. If the
aggregate principal amount of Senior Notes and other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount
of Excess Proceeds, the Trustee shall select the Senior Notes and
such other pari passu Indebtedness to be purchased on a pro rata
basis subject to authorized denominations. Upon completion of each
Asset Sale Offer, the amount of Excess Proceeds (as identified by
the Company in an Officer's Certificate) shall be reset at zero.
To the extent that any Asset Sale constitutes the sale,
conveyance or other disposition of all or substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a
whole, such transaction shall be governed by the provisions of
Sections 10(iii) and 18(L) (under the headings "Mandatory
Redemption/Redemption at Option of Holders/Repurchase at Option of
Holders -- Offer to Purchase Upon Change of Control" and "Covenants
-- Merger, Consolidation or Sale of Assets") and not by the
provisions of this Section 18(D).
The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable
in connection with each repurchase of Senior Notes pursuant to an
Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with this Section, the
Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations
under the Asset Sale provisions of this Officers' Certificate by
virtue of such conflict.
E. Transactions with Affiliates.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to,
or purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate
(each, an "Affiliate Transaction"), unless:
(I) the Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Restricted
Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person; and
(II) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate
consideration in excess
22
of $10.0 million, a resolution of the Board of Directors
set forth in an officer's certificate certifying that
such Affiliate Transaction complies with this covenant
and that such Affiliate Transaction has been approved by
a majority of the disinterested members of the Board of
Directors; and
(b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate
consideration in excess of $20.0 million, an opinion as
to the fairness to the holders of such Affiliate
Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of
national standing.
The following items shall not be deemed to be Affiliate
Transactions and, therefore, shall not be subject to the provisions
of the prior paragraph:
(I) any employment agreement entered into by the Company or
any of its Restricted Subsidiaries in the ordinary
course of business and consistent with the past
practice of the Company or such Restricted Subsidiary;
(II) transactions between or among the Company and/or its
Restricted Subsidiaries (other than a Receivables
Entity);
(III) transactions with a Person that is an Affiliate of the
Company solely because the Company owns an Equity
Interest in such Person;
(IV) payment of reasonable directors fees to Persons who are
not otherwise Affiliates of the Company;
(V) sales of Equity Interests (other than Disqualified
Stock) to Affiliates of the Company;
(VI) Permitted Investments pursuant to this Officers'
Certificate and Restricted Payments that are permitted
by the provisions of this Officers' Certificate in
Section 18(A)(under the heading "Covenants --
Restricted Payments");
(VII) fees and compensation paid to and indemnity provided on
behalf of directors, officers or employees of the
Company or any Restricted Subsidiary of the Company in
the ordinary course of business;
(VIII) transactions pursuant to any agreement in effect on the
date of this Officers' Certificate as the same may be
amended from time to time in any manner not materially
less favorable to the Holders of the Senior Notes;
23
(IX) loans or advances to officers, directors and employees
of the Company or any Restricted Subsidiary made in the
ordinary course of business, consistent with past
practices of the Company and/or its Restricted
Subsidiaries and in compliance with applicable law in
aggregate amount not to exceed $2.0 million outstanding
at any one time; and
(X) sales or other transfers or dispositions of accounts
receivable and other related assets customarily
transferred in an asset securitization transaction
involving accounts receivable to a Receivables Entity in
a Qualified Receivables Transaction, and acquisitions of
Permitted Investments in connection with a Qualified
Receivables Transaction.
F. Liens.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or otherwise cause or suffer to exist or become effective any
Lien of any kind securing Indebtedness, Attributable Debt or trade
payables on any of their property or assets, now owned or hereafter
acquired, except Permitted Liens.
G. Business Activities.
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to the
Company and its Subsidiaries taken as a whole.
H. Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, enter into any sale and leaseback
transaction; provided that the Company or any Restricted Subsidiary
may enter into a sale and leaseback transaction if:
(I) the Company or that Restricted Subsidiary, as
applicable, could have incurred Indebtedness in an
amount equal to the Attributable Debt relating to such
sale and leaseback transaction under the Fixed Charge
Coverage Ratio test in the first paragraph of Section
18(C)(under the heading "Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock");
(II) the gross cash proceeds of that sale and leaseback
transaction are at least equal to the fair market value,
as determined in good faith by the Board of Directors
and set forth in an officer's certificate delivered to
the Trustee, of the property that is the subject of that
sale and leaseback transaction; and
24
(III) the transfer of assets in that sale and leaseback
transaction is permitted by, and the Company applies the
proceeds of such transaction in compliance with, Section
10(iv)(under the heading "Offer to Purchase by
Application of Excess Proceeds");
provided, however, that the foregoing clauses (I) and (III)
shall be suspended during any period in which the Company and
its Restricted Subsidiaries are not subject to the Suspended
Covenants.
I. Future Subsidiary Guarantees.
The Company shall not permit any Restricted Subsidiary to
guarantee the payment of any Indebtedness of the Company unless (i)
such Restricted Subsidiary simultaneously executes and delivers to
the Trustee on behalf of the holders of the Senior Notes a
Subsidiary Guarantee of such Restricted Subsidiary except that with
respect to a guarantee of Indebtedness of the Company if such
Indebtedness is by its express terms subordinated in right of
payment to the Senior Notes, any such guarantee of such Restricted
Subsidiary with respect to such Indebtedness shall be subordinated
in right of payment to such Restricted Subsidiary's Subsidiary
Guarantee with respect to the Senior Notes substantially to the same
extent as such Indebtedness is subordinated to the Senior Notes;
(ii) such Restricted Subsidiary waives and shall 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 Company or any other Restricted Subsidiary as a result of any
payment by such Restricted Subsidiary under its Subsidiary Guarantee
of the Senior Notes; and (iii) such Restricted Subsidiary shall
deliver to the Trustee an opinion of counsel to the effect that (A)
such Subsidiary Guarantee has been duly executed and authorized and
(B) such Subsidiary Guarantee constitutes a valid, binding and
enforceable obligation of such Restricted 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
paragraph shall not be applicable to any guarantee of any Restricted
Subsidiary that (A) existed at the time such Person became a
Restricted Subsidiary of the Company and (B) was not incurred in
connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary of the Company.
Notwithstanding the foregoing and the other provisions of this
Officers' Certificate and the Indenture, 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 Company or a Restricted
Subsidiary of the Company (other than a Receivables Entity), such
Subsidiary Guarantor shall be released from its obligations under
its Subsidiary Guarantee if:
25
(I) the sale or other disposition is in compliance with the
applicable provisions of this Officers' Certificate,
including Section 18(D)(under the heading "Covenants --
Asset Sales"); and
(II) the Subsidiary Guarantor is also released or discharged
from its obligations under the guarantee, which resulted
in the creation of such Subsidiary Guarantee, except a
discharge or release by or as a result of payment under
such guarantee.
J. Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if that designation would not cause
a Default; provided that in no event shall the businesses currently
operated by each of NPC and SPPC be transferred to or held by an
Unrestricted Subsidiary. If a Restricted Subsidiary is designated as
an Unrestricted Subsidiary, the aggregate fair market value of all
outstanding Investments owned by the Company and its Restricted
Subsidiaries in the Subsidiary properly designated shall be deemed
to be an Investment made as of the time of the designation and shall
reduce the amount available for Restricted Payments under the first
paragraph of Section 18(A)(under the heading "Covenants --
Restricted Payments"). That designation shall only be permitted if
the Investment would be permitted at that time and if the Restricted
Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (1) such Indebtedness is
permitted under Section 18(C)(under the heading "Covenants --
Incurrence of Indebtedness and Issuance of Preferred Stock")
calculated on a pro forma basis as if such designation had occurred
at the beginning of the four-quarter reference period; and (2) no
Default or Event of Default would be in existence following such
designation.
K. Payments for Consent.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder of Senior Notes
for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of this Officers' Certificate, the
Indenture or the Senior Notes unless such consideration is offered
to be paid and is paid to all Holders of the Senior Notes that
consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or
agreement.
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L. Merger, Consolidation or Sale of Assets.
The Company may not, directly or indirectly: (1) consolidate
or merge with or into another Person (whether or not the Company is
the surviving corporation); or (2) sell, assign, transfer, convey or
otherwise dispose of all or substantially all of the properties or
assets of the Company and its Restricted Subsidiaries taken as a
whole, in one or more related transactions, to another Person;
unless:
(I) either: (a) the Company is the surviving corporation; or
(b) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or
to which such sale, assignment, transfer, conveyance or
other disposition has been made is a corporation
organized or existing under the laws of the United
States, any state of the United States or the District
of Columbia;
(II) the Person formed by or surviving any such consolidation
or merger (if other than the Company) or the Person to
which such sale, assignment, transfer, conveyance or
other disposition has been made expressly assumes by
supplemental indenture executed and delivered to the
Trustee in form reasonably satisfactory to the Trustee;
(III) immediately after such transaction no Default or Event
of Default exists;
(IV) immediately after such transaction after giving pro
forma effect thereto and any related financing
transactions as if the same had occurred at the
beginning of the applicable four-quarter period, either
the Company or the Person formed by or surviving any
such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer,
conveyance or other disposition has been made shall be
permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section
18(C)(under the heading "Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock") or the
Fixed Charge Coverage Ratio of the Company or the
surviving Person, as applicable, or of the Person to
which such sale, assignment, transfer, conveyance or
other disposition has been made, would not be less than
the Fixed Charge Coverage Ratio of the Company
immediately prior to the transaction; provided, however,
that this clause (IV) shall be suspended during any
period in which the Company and its Restricted
Subsidiaries are not subject to the Suspended Covenants;
and
27
(V) the Company, or the Person formed by or surviving any
such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer,
conveyance or other disposition has been made, shall
have delivered to the Trustee an officer's certificate
and an opinion of counsel, each stating that such
transaction and any supplemental indenture entered into
in connection therewith complies with all of the terms
of this covenant and that all conditions precedent
provided for in this covenant relating to such
transaction or series of transactions have been complied
with.
In addition, the Company may not, directly or indirectly,
lease all or substantially all of its properties or assets, in one
or more related transactions, to any other Person. Clauses (IV) and
(V) of this Section 18(L) shall not apply to a sale, assignment,
transfer, conveyance or other disposition of assets between or among
the Company and any of its Restricted Subsidiaries.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Company in accordance with
this Section 18(L) hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so
that from and after the date of such consolidation, merger, sale,
lease, conveyance or other disposition, the provisions of this
Officers' Certificate and the Indenture referring to the Company
shall refer instead to the successor corporation and not to the
Company), and may exercise every right and power of the Company
under this Officers' Certificate and the Indenture with the same
effect as if such successor Person had been named as the Company
herein, provided, however, that the predecessor company shall not be
relieved from the obligation to pay the principal of and interest on
the Senior Notes (and its obligations to the Trustee pursuant to
Section 7.07 of the Indenture) except in the case of a sale of all
of the Company's assets that meets the requirements of this Section
18(L).
M. Corporate Existence.
Subject to Section 18(L) hereof, the Company shall do or cause
to be done all things necessary to preserve and keep in full force
and effect (i) its corporate existence, and the corporate,
partnership or other existence of each of its Restricted
Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the
Company or any such Restricted Subsidiary and (ii) the rights
(charter and statutory), licenses and franchises of the Company and
its Subsidiaries; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Restricted
Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the
business of the Company and its Restricted
28
Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders of the Senior Notes.
N. Taxes.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent all material
taxes, assessments, and governmental charges levied or imposed upon
the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, except such as are
contested in good faith and by appropriate proceedings or where the
failure to pay or discharge the same would not have a material
adverse effect on the ability of the Company to perform its
obligations under the Senior Notes, this Officers' Certificate or
the Indenture.
O. Suspension of Certain Covenants.
During any period of time that the Senior Notes have an
Investment Grade Rating from both of the Rating Agencies and no
Default or Event of Default has occurred and is continuing under the
Indenture, the Company and its Restricted Subsidiaries shall not be
subject to the following provisions of this Officers' Certificate:
Section 10(iv)(under the heading "Offer to Purchase by Application
of Excess Proceeds"), Section 18(A)(under the heading "Covenants --
Restricted Payments"), Section 18(B)(under the heading "Covenants --
Dividend and Other Payment Restriction Affecting Subsidiaries"),
Section 18(C)(under the heading "Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock"), Section 18(E)(under
the heading "Covenants -- Transactions with Affiliates"), Section
18(J)(under the heading "Covenants -- Designation of Restricted and
Unrestricted Securities") and Section 18(G)(under the heading
"Covenants -- Business Activities") (collectively, the "Suspended
Covenants"); provided, however, that the provisions in Section 4.04
of the Indenture and Section 10(iii)(under the heading "Mandatory
Redemption/Redemption at Option of Holders/Repurchase at Option of
Holders -- Change of Control"), Section 18(H)(under the heading
"Covenants -- Sale and Leaseback Transactions"), Section 18(L)(under
the heading "Covenants -- Merger, Consolidation or Sale of Assets"),
Section 18(I)(under the heading "Covenants -- Future Subsidiary
Guarantees"), Section 18(F)(under the heading "Covenants -- Liens")
and Section 18(K)(under the heading "Covenants -- Payments for
Consent") of this Officers' Certificate shall not be so suspended.
If the Company and its Restricted Subsidiaries are not subject
to the Suspended Covenants for any period of time as a result of the
preceding paragraph and, subsequently, either of the Rating Agencies
withdraws its ratings or downgrades the ratings assigned to the
Senior Notes below the Investment Grade Ratings so that the Senior
Notes do not have an Investment Grade Rating from both Rating
Agencies, or a Default or Event of Default (other than with respect
to the Suspended Covenants) occurs and is continuing, the Company
and
29
its Restricted Subsidiaries shall thereafter again be subject to the
Suspended Covenants, subject to the terms, conditions and
obligations set forth in this Indenture (each such date of
reinstatement being the "Reinstatement Date"), including the
preceding sentence. Compliance with the Suspended Covenants with
respect to Restricted Payments made after the Reinstatement Date
shall be calculated in accordance with the terms of Section 18(A) as
though such covenant had been in effect during the entire period of
time from which the Senior Notes are issued, provided, however, that
no immediate Default or Event of Default shall occur as a result of
such reinstatement of the Suspended Covenants.
19. No Recourse Against Others.
No director, officer, employee, incorporator or stockholder of the Company
or any Subsidiary, as such, will have any liability for any obligations of
the Company or any Subsidiary Guarantor under the Senior Notes, the
Indenture, any Subsidiary Guarantees, or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each
holder of Senior Notes by accepting a Senior Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Senior Notes. The waiver may not be effective to waive
liabilities under the federal securities laws.
20. Definitions. Set forth below are certain defined terms used in this
Officers' Certificate. Reference is made to the Indenture for the
definitions of any capitalized used herein for which no definition is
provided herein.
"Acquired Debt" means, with respect to any specified Person:
(i) 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
(ii) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings.
"Asset Sale" means:
30
(i) 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; provided that the sale, conveyance or other
disposition of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole shall be governed by the provisions of
Section 10(iii) (under the heading "Repurchase at the Option of Holders -- Offer
to Purchase upon Change of Control") and/or the provisions of Section 18(L)
(under the heading "Mandatory Redemption/Redemption at Option of
Holders/Repurchase at Option of Holders -- Covenants -- Merger, Consolidation or
Sale of Assets") and not by the provisions of Section 18(D)(under the heading
"Covenants -- Asset Sales"); and
(ii) the issuance of Equity Interests in any of the Company's Subsidiaries
or the sale of Equity Interests in any of its Subsidiaries.
Notwithstanding the preceding, the following items shall 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 $5.0 million;
(ii) a transfer of assets between or among the Company and its Restricted
Subsidiaries;
(iii) an issuance of Equity Interests by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary;
(iv) a Restricted Payment or Permitted Investment that is permitted by the
provisions of Section 18(A)(under the heading "Covenants -- Restricted
Payments");
(v) sales of accounts receivable and related assets or an interest therein
of the type specified in the definition of Qualified Receivables Transaction to
or by a Receivables Entity;
(vi) sales, transfers or other dispositions of assets, including Capital
Stock of Restricted 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 Restricted
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 Company and its Restricted Subsidiaries existing on the date of
such sale or other disposition; provided, however, that any cash received by the
Company shall be treated as Net Proceeds and applied as set forth in the
provisions of Section 18(D); provided further that the fair market value of the
assets sold or disposed of is determined as provided in the final paragraph of
Section 18(A)(under the heading "Covenants -- Restricted Payments"); and
(vii) transfers of assets by the Company and its Restricted Subsidiaries
required under statute or regulation in connection with renewable energy
contracts.
31
"Attributable Debt" in respect of a sale and leaseback transaction means,
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.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" have a corresponding meaning.
"Board of Directors" means:
(i) with respect to a corporation, the board of directors of the
corporation or any committee of such board of directors duly authorized to act
for the corporation;
(ii) with respect to a partnership, the Board of Directors of the general
partner of the partnership; and
(iii) with respect to any other Person, the board or committee of such
Person serving a similar function.
"Capital Lease Obligation" means, at the time any determination is to be
made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock;
(iii) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(iv) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means:
32
(i) United States dollars;
(ii) 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;
(iii) 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 $500.0
million and a Thomson Bank Watch Rating of "B" or better;
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above;
(v) commercial paper having the highest rating obtainable from Moody's or
S&P and in each case maturing within 270 days after the date of acquisition; and
(vi) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (i) through (v) of this
definition.
"Change of Control" means the occurrence of any of the following:
(i) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the properties or assets of the
Company and its Restricted Subsidiaries taken as a whole to any "person" (as
that term is used in Section 13(d)(3) of the Exchange Act, including any "group"
with the meaning of the Exchange Act);
(ii) the adoption of a plan relating to the liquidation or dissolution of
the Company;
(iii) the consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any "person" (as
defined above) becomes the Beneficial Owner, directly or indirectly, of more
than 30% of the Voting Stock of the Company, measured by voting power rather
than number of shares;
(iv) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors;
(v) the first day on which the Company ceases to be a Beneficial Owner of
a majority of the Voting Stock of either NPC or SPPC; or
(vi) so long as any of the 7.25% Convertible Notes due 2010 are
outstanding, a Change of Control as defined in the Company's Indenture dated
February 14, 2003, between the Company and The Bank of New York, as trustee,
governing the 7.25% Convertible Notes due 2010, as amended, modified or
supplemented from time to time.
33
"Commission" means the Securities and Exchange Commission or any successor
agency.
"Common Stock" means the Common Stock, $1.00 par value per share, of the
Company.
"Consolidated Cash Flow" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus:
(i) 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
(ii) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such provision for
taxes was deducted in computing such Consolidated Net Income; plus
(iii) consolidated interest expense of such Person and its Restricted
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
(iv) 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 Restricted 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
(v) all extraordinary, unusual or non-recurring items of loss or expense;
minus
(vi) all extraordinary, unusual or non-recurring items of gain or revenue;
minus
(vii) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of business,
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 shall not be added to Consolidated Net Income.
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
34
(i) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the specified Person or a Restricted Subsidiary of the Person;
(ii) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar distributions by
that Restricted Subsidiary of that 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 that Restricted Subsidiary or its
stockholders; and
(iii) the cumulative effect of a change in accounting principles shall be
excluded.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who:
(i) was a member of such Board of Directors on the Issue Date; or
(ii) was nominated for election or elected to such Board of Directors with
the approval of a majority of the Continuing Directors who were members of such
Board at the time of such nomination or election.
"Credit Facilities" means one or more debt facilities or commercial paper
facilities, 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, and includes any securities issued pursuant to an
indenture in order to secure any amounts outstanding under a Credit Facility
from time to time; provided that the obligation of the Company 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 Company has paid such amount under such Credit Facility;
provided further that any amounts the Company is obligated to pay under such
securities shall not be included for purposes of determining the aggregate
amount outstanding under Credit Facilities that is permitted under Section
18(C)(under the heading "Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock").
"Disqualified Stock" means 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
35
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 date on which the Senior Notes mature.
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 Company to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 18(A)(under the
heading "Covenants--Restricted Payments").
"Dividend Considerations" means all factors which are considered by the
Board of Directors in declaring dividends on the Common Stock, including,
without limitation, the Company's current and prospective earnings, cash flows
and financial condition, current and prospective business conditions, regulatory
factors and other matters within the discretion of the Board of Directors, as
well as contractual restrictions on the payment of dividends by the Company and
contractual and regulatory restrictions on the payment of dividends to the
Company by its subsidiaries.
"Equity Interests" means 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).
"Exchange Notes" means if and when issued, each series of the Senior Notes
issued in exchange for any Initial Notes in an Exchange Offer or upon transfer
pursuant to a Shelf Registration Statement.
"Exchange Offer" has the meaning set forth in a corresponding Registration
Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Existing Indebtedness" means all Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under a Credit Facility) in existence on
the Issue Date, until such amounts are repaid.
"First Mortgage Indentures" means (i) the Indenture of Mortgage, dated as
of October 1, 1953, between Nevada Power and Deutsche Bank Trust Company
Americas, as trustee, as modified, amended or supplemented at any time or from
time to time by supplemental indentures and (ii) the Indenture of Mortgage,
dated as of December 1, 1940, between SPPC and Deutsche Bank Trust Company
Americas, as trustee, as modified, amended or supplemented at any time or from
time to time by supplemental indentures.
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:
36
(i) the consolidated interest expense of such Person and its Restricted
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
(ii) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
(iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries, whether or
not such Guarantee or Lien is called upon; plus
(iv) the product of (a) 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
Restricted Subsidiaries, other than dividends on Equity Interests payable solely
in Equity Interests of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company, times (b) 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
(v) all distributions by a Trust Preferred Vehicle to persons other than
the Company or any of its Restricted Subsidiaries of amounts received as
interest by such trust on the subordinated Indebtedness of such Person or any of
its Restricted Subsidiaries held by such trust; plus
(vi) any payments on stock purchase contracts obligating the holders
thereof to purchase common stock of the Company.
"Fixed Charge Coverage Ratio" means with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the specified
Person or any of its Restricted 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 shall 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:
37
(i) acquisitions that have been made by the specified Person or any of its
Restricted 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
shall 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 Company (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 or any other regulation or policy of the Commission
related thereto);
(ii) 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, shall be excluded; and
(iii) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges shall not be obligations of
the specified Person or any of its Restricted Subsidiaries following the
Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date.
"G&R Indentures" means (i) the General and Refunding Mortgage Indenture,
dated as of May 1, 2001, as amended and supplemented to the date hereof ,
between NPC and The Bank of New York, as trustee, and (ii) the General and
Refunding Mortgage Indenture, dated as of May 1, 2001, as amended and
supplemented to the date hereof, between SPPC and The Bank of New York, as
trustee.
"Guarantee" means 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.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person incurred in the normal course of business and
consistent with past practices and not for speculative purposes under:
(i) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements designed to protect the person or entity
entering into the agreement against fluctuations in interest rates with respect
to Indebtedness incurred and not for purposes of speculation;
38
(ii) foreign exchange contracts and currency protection agreements entered
into with one of more financial institutions designed to protect the person or
entity entering into the agreement against fluctuations in currency exchange
rates with respect to Indebtedness incurred and not for purposes of speculation;
(iii) any commodity futures contract, commodity option or other similar
agreement or arrangement designed to protect against fluctuations in the price
of commodities used by that entity at the time; and
(iv) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates or currency exchange rates.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(i) in respect of borrowed money;
(ii) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(iii) in respect of banker's acceptances;
(iv) representing Capital Lease Obligations;
(v) 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
(vi) 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 the specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(i) the accreted value of the Indebtedness, in the case of any
Indebtedness issued with original issue discount; and
(ii) the principal amount of the Indebtedness, together with any interest
on the Indebtedness that is more than 30 days past due, in the case of any other
Indebtedness.
"Issue Date" means August 12, 2005.
39
"Initial Notes" means additional Senior Notes for original issue from time
to time after the Issue Date in such principal amounts as may be set forth in a
Company Order, together with the Original Notes.
"Initial Purchaser" has the meaning set forth in the Purchase Agreement.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) by Moody's or BBB- (or the equivalent) by S&P.
"Investments" means, 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 Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall 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 an
amount determined as provided in the final paragraph of Section 18(A)(under the
heading "Covenants--Restricted Payments"). The acquisition by the Company or any
Subsidiary of the Company of a Person that holds an Investment in a third Person
shall be deemed to be an Investment by the Company 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 18(A)(under the heading "Covenants--Restricted
Payments").
"Lien" means, 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.
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 2.5 of the Registration Rights Agreement.
"Moody's" means Moody's Investors Service, Inc. or any successor to the
rating agency business thereof.
"Net Income" means, with respect to any specified 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:
(i) any gain (but not loss), together with any related provision for taxes
on such gain (but not loss), realized in connection with: (a) any Asset Sale; or
(b) the disposition of any
40
securities by such Person or any of its Subsidiaries or the extinguishment
of any Indebtedness of such Person or any of its Subsidiaries; and
(ii) any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result of the Asset Sale, taxes paid or payable as a result of the
Asset Sale, in each case, after taking into account any available tax credits or
deductions and any tax sharing arrangements, and amounts required to be applied
to the repayment of Indebtedness, other than Senior Debt secured by a Lien on
the asset or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"Non-Recourse Debt" means Indebtedness:
(i) as to which neither the Company nor any of its Restricted Subsidiaries
(a) provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (b) is directly or indirectly
liable as a guarantor or otherwise, or (c) constitutes the lender;
(ii) no default with respect to which (including any rights that the
holders of the Indebtedness may have to take enforcement action against an
Unrestricted Subsidiary) would permit upon notice, lapse of time or both any
holder of any other Indebtedness (other than the Senior Notes) of the Company or
any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment of the Indebtedness to be accelerated or
payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they
shall not have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.
"NPC" means Nevada Power Company, a Nevada corporation.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Assets" means any facilities for the generation, transmission
or distribution of electric energy or for the transportation or distribution of
natural or manufactured gas which are acquired and are to be used by the Company
or any of its Restricted Subsidiaries in any Permitted Business.
41
"Permitted Business" means any business that derives a majority of its
revenues from any business engaged in by the Company and its Restricted
Subsidiaries on the Issue 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 Company and its
Restricted Subsidiaries are engaged on the Issue Date, as determined in good
faith by the Board of Directors of the Company.
"Permitted Investments" means:
(i) any Investment in the Company or in a Restricted Subsidiary of the
Company (other than a Receivables Entity);
(ii) any Investment in Cash Equivalents;
(iii) any Investment by the Company or any Restricted Subsidiary of the
Company in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of the Company
(other than a Receivables Entity); or
(b) 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 Company or a Restricted Subsidiary of the Company
(other than a Receivables Entity);
(iv) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 10(iv)(under the heading "Offer to Purchase by Application of
Excess Proceeds");
(v) any acquisition of assets to the extent it is in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of the Company;
(vi) 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;
(vii) Hedging Obligations;
(viii) Investments by the Company or a Restricted Subsidiary in a
Receivables Entity or any Investment by a Receivables Entity in any other
Person, in each case, in connection with a Qualified Receivables Transaction,
provided however, that any Investment in any Receivables Entity or such other
Person is in the form of a Purchase Money Note, or any equity interests,
directly or indirectly, in accounts receivable and related assets generated by
the Company or a Restricted Subsidiary and transferred to any Person in
connection with a Qualified Receivables Transaction or any such Person owning
such accounts receivable;
(ix) any Investments made in accordance with clause (vi) of the definition
of "Asset Sales";
42
(x) any Investments by the Company or any Restricted Subsidiary in
Tuscarora Gas Transmission Company 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 (x) since the Issue Date, not to exceed $50.0
million; and
(xi) other Investments in any Person that is not also a Restricted
Subsidiary of the Company 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 (xi) since the Issue Date, not to exceed $50.0 million.
"Permitted Liens" means:
(i) Liens securing any Indebtedness under a Credit Facility that was
permitted by the terms of this Indenture to be incurred, and all Obligations and
Hedging Obligations relating to such Indebtedness;
(ii) Liens in favor of the Company or any Subsidiary Guarantors;
(iii) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the Company or any Restricted
Subsidiary of the Company; 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
Company or the Restricted Subsidiary;
(iv) Liens on property existing at the time of acquisition of the property
by the Company or any Restricted Subsidiary of the Company, provided that such
Liens were in existence prior to the contemplation of such acquisition;
(v) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature incurred
in the ordinary course of business;
(vi) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (IV) of the second paragraph of Section 18(C)(under the
heading "Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock")
covering only the assets acquired with such Indebtedness;
(vii) Liens existing on the Issue Date and Liens under the First Mortgage
Indentures and the G&R Indentures;
(viii) 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;
43
(ix) Liens incurred in the ordinary course of business of the Company or
any Restricted Subsidiary with respect to obligations (including Hedging
Obligations) that do not exceed $35.0 million at any one time outstanding;
(x) Liens to secure Indebtedness permitted by clauses (VII), (XIV) or (XV)
of the second paragraph of Section 18(C)(under the heading
"Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock");
(xi) Liens securing any Indebtedness issued or to be issued under the G&R
Indentures that was permitted to be incurred under the terms of Section
18(C)(under the heading "Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock");
(xii) 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;
(xiii) Liens on assets transferred to a Receivables Entity or on assets of
a Receivables Entity, in either case, incurred in connection with a Qualified
Receivables Transaction; and
(xiv) 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
Company or any of its Subsidiaries in connection with any deposit account,
investment account or cash management service (including ACH, Fedwire, CHIPS,
concentration and zero balance accounts, and controlled disbursement, lockbox or
restricted accounts) now or hereafter provided by any financial and/or
depository institutions to or for the benefit of the Company, any of its
Subsidiaries or any special purpose entity directly or indirectly providing
loans to or making receivables purchases from the Company or any of its
Subsidiaries.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:
(i) 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);
(ii) if such Permitted Refinancing Indebtedness is issued on or after the
first anniversary of the Issue Date, such Permitted Refinancing Indebtedness has
a final maturity date
44
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;
(iii) if such Permitted Refinancing Indebtedness is issued on or after the
first anniversary of the Issue Date, and the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is contractually
subordinated in right of payment to the Senior Notes, 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 Senior Notes on terms at least
as favorable to the Holders of Senior Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and
(iv) such Indebtedness is incurred either by the Company or by the
Subsidiary that is the obligor on the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
Permitted Refinancing Indebtedness shall also include any Indebtedness of
SPPC, not to exceed $50.0 million, incurred by SPPC at the same time and with
the same terms as any Indebtedness of SPPC issued to refinance its Indebtedness
maturing by 2005.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Purchase Agreement" means the Purchase Agreement dated August 10, 2005
among the Company and each Initial Purchaser relating to the Offering.
"Purchase Money Note" means a promissory note of a Receivables Entity
evidencing a line of credit, which may be irrevocable, from the Company or any
Restricted Subsidiary of the Company in connection with a Qualified Receivables
Transaction to a Receivables Entity, which note is repayable from cash available
to the Receivables Entity, other than amounts required to be established as
reserves pursuant to agreements, amounts paid to investors in respect of
interest, principal and other amounts owing to such investors and amounts owing
to such investors and amounts paid in connection with the purchase of newly
generated accounts receivable.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to (1) a Receivables Entity (in the case
of a transfer by the Company or any of its Restricted Subsidiaries) and (2) any
other Person (in the case of a transfer by a Receivables Entity), or may grant a
security interest in, any accounts receivable (whether now existing or arising
in the future) of the Company or any of its Restricted Subsidiaries, and any
assets related thereto including, without limitation, all collateral securing
such accounts receivable, all contracts and all guarantees or other obligations
in respect of such accounts receivable, the proceeds of such receivables and
other assets which are customarily transferred, or in respect of which security
45
interests are customarily granted in connection with asset securitization
involving accounts receivable.
"Rating Agencies" means S&P and Moody's, or if S&P or Moody's or both
shall not make a rating on the notes publicly available, a nationally recognized
statistical rating agency or agencies, as the case may be, selected by the
Company (as certified by a resolution of its Board of Directors) which shall be
substituted for S&P or Moody's or both, as the case may be.
"Receivables Entity" means a Wholly-Owned Subsidiary of the Company or any
of its Restricted Subsidiaries (or another Person in which the Company or any
Restricted Subsidiary of the Company makes an Investment and to which the
Company or any Restricted Subsidiary of the Company transfers accounts
receivable and related assets) which engages in no activities other than in
connection with the financing of accounts receivable and which is designated by
the Board of Directors of the Company (as provided below) as a Receivables
Entity:
(i) no portion of the Indebtedness or any other obligations (contingent or
otherwise) of which:
(a) is guaranteed by the Company or any Restricted Subsidiary of the
Company (excluding guarantees of Obligations (other than the principal of,
and interest on, Indebtedness) pursuant to Standard Securitization
Undertakings);
(b) is recourse to or obligates the Company or any Restricted
Subsidiary of the Company in any way other than pursuant to Standard
Securitization Undertakings; or
(c) subjects any property or asset of the Company or any Restricted
Subsidiary of the Company, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings;
(ii) which is not party to any agreement, contract, arrangement or
understanding (except in connection with a Purchase Money Note or Qualified
Receivables Transaction) with the Company or any Restricted Subsidiary of the
Company other than on terms no less favorable to the Company or such Restricted
Subsidiary than those that might be obtained at the time from Persons that are
not Affiliates of the Company, other than fees payable in the ordinary course of
business in connection with servicing accounts receivable; and
(iii) to which neither the Company nor any Restricted Subsidiary of the
Company has any direct or indirect obligation (a) to subscribe for additional
Equity Interests or (b) to maintain or preserve such entity's financial
condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an officer's certificate
certifying that such designation complied with the foregoing conditions.
46
"Registration Rights Agreement" means (i) the Registration Rights
Agreement, dated as of the Issue Date, by and among the Company and the other
parties named on the signature pages thereof relating to the Original Notes and
(ii) any similar agreement that the Company and other parties may enter into in
relation to any other Initial Notes, in each case as such agreement may be
amended, modified or supplemented from time to time.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"S & P" means Standard & Poor's Rating Group, Inc., or any successor to
the rating agency business thereof
"SPPC" means Sierra Pacific Power Company, a Nevada corporation.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by the Company or any Restricted
Subsidiary of the Company which are reasonably customary in securitization of
accounts receivable transactions.
"Stated Maturity" means, 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 shall 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.
"Subsidiary" means, with respect to any specified Person:
(i) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees of the corporation, association or other
business entity is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and
(ii) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are that Person or one or more Subsidiaries of that
Person (or any combination thereof).
"Subsidiary Guarantee" means any Guarantee of the Senior Notes to be
executed by any Subsidiary of the Company pursuant to Section 18(I).
47
"Subsidiary Guarantors" means any Subsidiary of the Company that executes
a Subsidiary Guarantee in accordance with the provisions of this Indenture, and
their respective successors and assigns.
"Trust Preferred Vehicle" means NVP Capital I, NVP Capital III or any
future similar trust, the only assets of which are subordinated Indebtedness of
the Company or any of its Restricted Subsidiaries.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary:
(i) has no Indebtedness other than Non-Recourse Debt;
(ii) is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the terms of
any such agreement, contract, arrangement or understanding are no less favorable
to the Company or such Restricted Subsidiary than those that might be obtained
at the time from Persons who are not Affiliates of the Company;
(iii) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe
for additional Equity Interests or (b) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results;
(iv) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; and
(v) has at least one director on its Board of Directors that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries.
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
officer's certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 18(C)(under the heading
"Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock"). If, at
any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described under Section 18(C)(under
the heading "Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock"), the Company shall be in default of such covenant.
48
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(i) the sum of the products obtained by multiplying (a) 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 (b) the number of years (calculated to the nearest one-twelfth)
that shall elapse between such date and the making of such payment; by
(ii) the then outstanding principal amount of such Indebtedness.
Other Definitions.
Defined in
Term Section
----------
"Affiliate Transaction"............................................ 18(E)
"Asset Sale Offer"................................................. 10(iv)
"Change of Control Offer".......................................... 10(iii)
"Change of Control Payment"........................................ 10(iii)
"Change of Control Payment Date"................................... 10(iii)
"Excess Proceeds".................................................. 18(D)
"incur"............................................................ 18(C)
"Interest Payment Date"............................................ 7
"Offer Amount"..................................................... 10(iv)
"Offer Period"..................................................... 10(iv)
"Payment Default".................................................. 10(ii)
"Permitted Debt"................................................... 18(C)
"Purchase Date".................................................... 10(iv)
"Reinstatement Date"............................................... 18(O)
"Restricted Payments".............................................. 18(A)
"Suspended Covenants".............................................. 18(O)
"Triggering Event" ................................................ 10(ii)
The undersigned officers of the Company do hereby further certify,
pursuant to Sections 13.04 and 13.05 of the Indenture, as follows:
(i) We have read the covenants and conditions of the Indenture relating
to the issuance authentication and delivery of the Senior Notes and
in respect of compliance with which this certificate is furnished,
and the definitions in the Indenture relating thereto;
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(ii) The statements contained in this certificate are based upon our
familiarity with the Indenture, the documents accompanying this
certificate and, as to factual matters, upon our discussions with
officers and employees of the Company familiar with the facts
relating to the matters set forth herein;
(iii) In our opinion, we have made such examination or investigation as is
necessary to enable us to express an informed opinion as to whether
or not such covenants and conditions have been complied with; and
(iv) In our opinion, such conditions and covenants, and all conditions
precedent, if any (including any covenants compliance with which
constitutes a condition precedent) relating to the authentication
and delivery by the Trustee of the Senior Notes requested to be
authenticated and delivered on the date hereof, have been complied
with.
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IN WITNESS WHEREOF, the undersigned has executed this Officers'
Certificate as of the date first written above.
---------------------------------
Michael W. Yackira
Corporate Executive Vice President and
Chief Financial Officer
---------------------------------
William D. Rogers
Corporate Treasurer
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EXHIBIT A
A-1
D-1