10-K405
1
1994 FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994 Commission file number 1-4698
NEVADA POWER COMPANY
(Exact name of registrant as specified in its charter)
Nevada 88-0045330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6226 West Sahara Avenue 89102
Las Vegas, Nevada (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (702) 367-5000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, $1 Par Value New York Stock Exchange
Pacific Stock Exchange
Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Cumulative Preferred Stock, $20 Par Value, 5.40% Series
(Title of class)
Cumulative Preferred Stock, $20 Par Value, 5.20% Series
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. X
---
45,798,919 shares of Common Stock were outstanding as of March 23, 1995.
The aggregate market value of Common Stock, which is the only voting
stock, held by non-affiliates as of March 23, 1995, was $915,978,380.
(Computed by reference to the closing price on March 23, 1995, as reported
by the Wall Street Journal as New York Stock Exchange Composite
Transactions.)
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Registrant's Annual Report to Shareholders for the
year ended December 31, 1994 are incorporated by reference into Parts II and
IV hereof.
(2) Portions of the Registrant's definitive Proxy Statement dated March
14, 1995 for the Company's annual meeting of shareholders on May 12, 1995,
are incorporated by reference into Part III hereof.
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. Business ...................................... 1
Item 2. Properties .................................... 9
Item 3. Legal Proceedings ............................. 10
Item 4. Submission of Matters to a Vote of Security
Holders........................................ 10
Supplemental Item.
Executive Officers of Registrant ................. 10
PART II
Item 5. Market for the Registrant's Common Stock and
Related Security Holder Matters ............... 11
Item 6. Selected Financial Data ....................... 11
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation... 11
Item 8. Financial Statements and Supplementary Data ... 12
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure ........ 12
PART III
Item 10. Directors and Executive Officers of the
Registrant .................................... 12
Item 11. Executive Compensation ........................ 12
Item 12. Security Ownership of Certain Beneficial Owners
and Management ................................ 13
Item 13. Certain Relationships and Related Transactions. 13
PART IV
Item 14. Exhibits, Financial Statement Schedule, and
Reports on Form 8-K ........................... 13
SIGNATURES .................................................. 24
PART I
ITEM 1. BUSINESS
THE COMPANY
Nevada Power Company (Company), incorporated in 1929 under the laws of
Nevada, is an operating public utility engaged in the electric utility
business in the City of Las Vegas and vicinity in southern Nevada. Most of
the Company's operations are conducted in Clark County, Nevada (with an
estimated service area population of 999,000 at December 31, 1994) where
the Company furnishes electric service in the communities of Las Vegas,
North Las Vegas, Henderson, Searchlight, Laughlin and adjoining areas and
to Nellis Air Force Base (a permanent military installation northeast of
Las Vegas and the USAF Tactical Fighter Weapons Center). Electric service
is also supplied to the Department of Energy at Mercury and Jackass Flats
in Nye County, where the Nevada Test Site is located.
SOURCES OF ELECTRIC ENERGY SUPPLY
The electric energy obtained from the Company's own generating
facilities will be produced at the following plants:
NUMBER NET CAPACITY
PLANT OF UNITS (MEGAWATTS)
----- -------- ------------
Coal Fuel:
Reid Gardner (Steam).............. 3 330
Reid Gardner Unit No. 4 (Steam)... 1 275(1)
Mohave (Steam).................... 2 196(2)
Navajo (Steam).................... 3 255(3)
Natural Gas and Oil Fuel:
Clark (Steam)..................... 3 181
Clark (Gas Turbine)............... 1 50
Clark (Combined Cycle)............ 2 466
Sunrise (Steam)................... 1 80
Sunrise (Gas Turbine)............. 1 69
Harry Allen (Gas Turbine)......... 1 72(4)
-----
1,974
=====
_________________
(1) This represents 25 megawatts of base load capacity, 235 megawatts
of peaking capacity and 15 megawatts (MW) upgrade capacity. Reid
Gardner Unit No. 4, placed in service July 25, 1983, is a coal-
fired unit which is owned 32.2% by the Company and 67.8% by the
Department of Water Resources of the State of California. The
Company is entitled to use 100% of the unit's capacity for 1,500
hours each year excepting that from 1993 through 1997, the
Company has agreed to reduce its allocation of peaking capacity
by 20 MW. The Company is entitled to 9.6% of the first 260
megawatts of capacity and associated energy and is entitled to
all the 15 megawatt upgrade accomplished in 1990. Beginning in
1998, the Company has options for the use of increasing amounts
of energy from the unit so that the Company may be entitled to
use all of the unit's output 15 years from that date. The 1999
option for 10.17 MW was not exercised by the Company and has
expired.
(2) This represents the Company's 14% undivided interest in the
Mohave Generating Station as tenant in common without right of
partition with three other non-affiliated utilities.
1
(3) This represents the Company's 11.3% undivided interest in the
Navajo Generating Station as tenant in common without right of
partition with five other non-affiliated utilities.
(4) This additional capacity is expected to be operational in June
1995.
The Company purchases Hoover Dam power pursuant to a contract with the
State of Nevada which became effective June 1, 1987 and will continue
through September 30, 2017. The Company's allocation of capacity is 235 MW.
The peak electric demand experienced by the Company was 2,920
megawatts on June 30, 1994. This demand plus a reserve margin was served
by a combination of Company owned generation, and firm and short-term power
purchases.
For 1995, the Company has contracts to purchase power from an
independent power producer (IPP) and four qualifying facilities (QF) (also
known as cogenerators) as follows:
CONTRACT TERM NET CAPACITY
--------------------
FROM TO (MEGAWATTS)
-------- ------ --------------
Independent Power Producer:
--------------------------
Nevada Sun-Peak Limited
Partnership 06/08/91 05/31/16 210
Qualifying Facilities:
---------------------
Saguaro Power Company 10/17/91 04/30/22 90
Nevada Cogeneration
Associates #1 06/18/92 04/30/23 85
Nevada Cogeneration
Associates #2 02/01/93 04/30/23 85
Las Vegas Cogeneration
Limited Partnership 06/01/94 05/31/24 45
---
515
===
The Company's total generating capacity of 2,724 megawatts, including
235 megawatts of Hoover Dam power, 210 megawatts of IPP power and 305
megawatts of QF power, for the summer of 1995 will not be sufficient to
meet the 1995 anticipated peak load demand and reserve margin needs.
Accordingly, the Company has agreements with other suppliers to purchase
715 megawatts of firm capacity and associated energy.
FUEL SUPPLIES
The fuels used to provide energy for the Company's generating
facilities are coal, natural gas and oil. Its other sources of electricity
are hydroelectric (Hoover Dam) and purchased power.
The Company's primary fuel source for generation is coal. The
following table shows the actual sources of fuel for generation for 1994
and anticipated sources of fuel for generation in 1995 and 1996.
1994 1995 1996
---- ---- ----
Coal........................ 85% 85% 85%
Natural Gas................. 15 15 15
---- ---- ----
100% 100% 100%
==== ==== ====
The Company's average delivered cost per ton of coal burned was as
follows: 1992 - $34.54; 1993 - $34.43; 1994 - $32.96.
2
Coal for both the Mohave and Navajo Stations is obtained from surface
mining operations conducted by Peabody Coal Company (Peabody) on portions
of the Black Mesa in Arizona within the Navajo and Hopi Indian
reservations. The supply contracts with Peabody extend to December 31,
2005 for Mohave and to June 1, 2011 for Navajo, each contract having an
option to extend for an additional 15 years.
The anticipated full requirements for coal at the Reid Gardner
Generating Station are covered by contracts through 1995. Partial
requirements for coal are presently under contract through the year 2007.
The Company anticipates no major difficulties in purchasing the remainder
of its coal requirements based upon current coal market conditions in the
Western United States. All coal for Reid Gardner presently comes from
underground mines in Utah and Colorado.
The Company's natural gas supply is subject to curtailment due to
limited pipeline capacity. All the Company's plants using natural gas also
have the capability of burning oil on a sustained basis.
CONSTRUCTION AND FINANCING PROGRAMS
The Company carries on a continuing program to extend and enlarge its
facilities to meet current and future loads on its system. Gross plant
additions and retirements for the five years ended December 31, 1994
amounted to $945,494,000 and $53,412,000, respectively.
Excluding Allowance for Funds Used During Construction, the Company's
actual construction expenditures for 1994 were $180 million, and currently
estimated construction expenditures for 1995 and 1996 are $169 million and
$175 million, respectively.
The Company's construction program and estimated expenditures are
subject to continuing review and are revised from time to time due to
various factors, including the rate of load growth, escalation of
construction costs, availability of fuel types, changes in environmental
regulations, adequacy of rate relief and the Company's ability to raise
necessary capital.
To meet capital expenditure requirements through 1996, the Company
will utilize internally generated cash, the proceeds from industrial
development revenue bonds, first mortgage bonds, preferred securities and
common stock issues through public offerings and the Stock Purchase and
Dividend Reinvestment Plan (SPP).
The Company has the option of issuing new shares or using open market
purchases of its common stock to meet the requirements of the SPP. The
Company issued 1,825,120 shares of its common stock in 1994 under the SPP.
At the end of 1994, common equity represented 49.2% of total
capitalization. The Company sold 2.0 million shares of common stock for
net proceeds of $37.7 million through a negotiated public offering in 1994.
The net proceeds were used primarily for construction and general corporate
purposes including the repayment of any amounts incurred for those purposes
that were outstanding under the Company's bank revolving credit facility.
The Indenture under which the Company's first mortgage bonds are
issued provides that no additional bonds may be issued unless earnings as
defined equal at least two and one-half times the interest requirements on
all bonds to be outstanding after the new issue. Based on its earnings
through December 31, 1994 and assuming an 8 1/2 percent interest rate on
3
new bonds, the Company would be able to issue approximately $460 million of
additional first mortgage bonds. The Company's ability to issue additional
debt is also limited by the need to maintain a reasonable ratio of debt to
equity.
The Company's ability to sell additional preferred stock is limited by
the necessity to meet required dividend coverages. At December 31, 1994,
this test would permit the issuance of $407 million of additional preferred
stock at a dividend rate of 8 1/2 percent.
RESOURCE PLANNING
The Company's rate of customer growth, especially in recent years, has
been among the highest in the nation. The annual customer growth rate was
6.0 percent, 5.4 percent, and 4.6 percent in 1994, 1993 and 1992,
respectively.
The peak demand for electricity by the Company's customers increased
from 2,681 megawatts in 1993 to 2,920 megawatts in 1994. The Company's
1994 energy sales reached 11,942,724 megawatthours, an increase of 7.1
percent over 1993.
Every three years Nevada law requires the Company to file with the
Public Service Commission of Nevada (PSC) a forecast of electricity demands
for the next 20 years and the Company's plans to meet those demands. In
the third quarter of 1994, the Company filed with the PSC its 1994 Resource
Plan.
The Company introduced a Renewable Energy Program as part of the 1994
Resource Plan filing. This section of the plan requested approval for the
Company to utilize all appropriate incentives, resources, and expertise to
foster the development of economically competitive renewable energy systems
with the intent to provide southern Nevada customers with 20 megawatts of
solar-generated electricity by the year 2002. A stipulation on the
Renewable Energy Program was signed by the Company, PSC Staff, Office of
Consumer Advocate (OCA) and the Land and Water Fund of the Rockies. The
PSC subsequently approved the stipulation which includes establishing a
solar test facility on Company property where new solar technologies will
be installed and tested. The Company will also install several
photovoltaic units in the Las Vegas Valley and will serve on the Technical
Advisory Committee of the Solar II Project in Barstow, California.
At the time of the 1994 Resource Plan filing, the Company had yet to
complete its long-term supply-side request for proposal (RFP) process. The
PSC issued an order approving a stipulation between the Company, the PSC
Staff, the OCA and other intervenors allowing the Company to refile its
1994 Resource Plan when it completed the RFP process. The Company
completed the final analysis of the RFP in December 1994.
At the time of the final analysis of the RFP, there was tremendous
uncertainty about competitive changes in the electric utility industry.
The combination of the final analysis of the RFP, the current information
about the purchased power markets and the uncertainty of the changes in the
electric utility industry mandated a fundamental change in the Company's
resource planning strategy. The Company will rely on short-term power
purchases rather than proceed with the RFP process to meet its forecasted
increase in load.
4
On February 15, 1995, the Company filed its Refiled 1994 Resource
Plan. To support the Company's position in its decision to rely on short-
term markets for purchased power, the Company requested the following
projects to be approved by the PSC:
(1) the installation of a 230 kV transmission line on the
previously approved Northwest-Arden line;
(2) the construction of two new switchyards in the southern
portion of the Company's transmission system; and
(3) funds to study the development of transmission systems,
the Price and Availability Purchased Power Forecast,
modifications to existing generating facilities and the
stability of the Company's transmission system.
With the projections of future electricity costs decreasing, many of
the Demand-Side Management (DSM) programs offered by the Company are no
longer cost-effective. Therefore, the Company reevaluated its DSM
programs and requested approval to phase out three of its programs: air
conditioning replacement, attic insulation and energy efficient motors. In
addition, the Company requested approval to reduce incentives to numerous
other programs and suspend the air conditioning load management program in
1995. The DSM section of the Refiled 1994 Resource Plan also includes:
(1) DSM contracts with three energy service companies to
promote conservation among certain commercial
customers. The total targeted reduction in demand is
equivalent to 13.8 megawatts; and
(2) a limited residential new construction program offering
education and assistance to contractors on energy
efficiency measures in new homes.
Hearings on the Company's Refiled 1994 Resource Plan are scheduled to
begin in April 1995.
REGULATION AND RATES
The Company is subject to regulation by the PSC which has regulatory
powers with respect to rates, facilities, services, reports, issuance of
securities and other matters.
Following is a summary of the rate increases and decreases that have
been granted the Company during the past three years.
AMOUNT IN
EFFECTIVE MILLIONS
DATE NATURE OF INCREASE (DECREASE) OF DOLLARS
--------- ----------------------------- ----------
July 27, 1992 General rate increase $ 22.2
Energy and resource plan
net rate decrease (26.4)
June 28, 1993 Energy and resource plan
net rate increase 42.1
February 1, 1994 Energy rate increase 23.6
October 1, 1994 General rate decrease (6.3)
All amounts are on an annual basis.
On July 6, 1994, the PSC approved a stipulation between the Company,
PSC staff, OCA and other intervenors to settle an earnings investigation of
5
the Company and several other pending regulatory matters. The stipulation
reduced nonresidential rates by $6.25 million effective October 1, 1994
and provides for no additional rate changes before July 1, 1995. The
overall rate of return was reduced from 10.02 percent to 9.66 percent
although the allowed return on common equity remains at 12.5 percent. The
stipulation resulted in the withdrawal of the Company's $38.5 million
energy rate request and $1 million resource planning rate request filed
with the PSC on February 28, 1994. In addition, as part of the
stipulation, the Company is required to use billed and unbilled sales to
calculate deferred energy balances. Implementation of this methodology has
resulted in a credit adjustment to deferred energy costs and an offsetting
debit to unbilled customer receivables with no impact on the Company's
earnings.
The stipulation also completely resolved the Mohave accident
replacement power case. As a part of the stipulation, $11 million of the
reserved $17.4 million previously collected from customers for fuel and
purchased power costs and interest was transferred from other deferred
credits to deferred energy costs to offset increased fuel and purchased
power costs that have been deferred for collection. The balance of $6.4
million ($4.2 million net of tax) was reflected as other income in
miscellaneous, net for the second quarter of 1994.
As permitted by state statute, the Company defers differences between
the current cost of fuel and purchased power, and base energy costs as
defined. Under regulations adopted by the PSC, the balance in the deferred
energy account at the end of twelve months should be cleared, over a
subsequent period. Recovery of increased costs is permitted to the extent
that the Company has not realized its authorized overall rate of return.
If the Company has exceeded the authorized rate of return, the portion of
deferred energy costs represented in such excess is transferred to the next
deferred energy recovery period. The energy costs deferred are included as
a current item in determining taxable income for federal income tax
purposes. However, for financial statement purposes, the federal income
tax effect is deferred and amortized to income as the deferred energy
account is cleared. PSC regulations allow the fuel base portion of the
Company's general rates to be changed at the time of a hearing to clear the
balance in the deferred energy account. This permits the recovery of fuel
expenses on a deferred basis, however, recovery will have no effect on the
Company's earnings.
On July 11, 1991, Nevada Electric Investment Co. (NEICO), the
Company's unregulated subsidiary, sold a 50 percent undivided ownership
interest in certain coal mining assets to the Intermountain Power Agency
(IPA), and NEICO and IPA conducted the coal mining operations as joint
venturers under the name of the Crandall Canyon Project. On January 11,
1995, NEICO sold its remaining 50 percent undivided ownership interest in
the coal mining assets. The initial sale transaction has been inquired
into by the PSC, and no gain has been recorded pending regulatory review.
The Company is allowed to recover on an annual basis the costs of
developing its 20-year resource plan. Also, by an order of the PSC in June
1988, the Company is allowed to capitalize certain costs associated with
Commission approved conservation programs.
ENVIRONMENTAL MATTERS
The Company is subject to regulation by federal, state and local
authorities with regard to air and water quality control and other
environmental matters.
6
Environmental expenditures made by the Company are currently being
recovered through customer rates. Management believes environmental
expenditures will increase over time and the increased costs will also be
recovered as necessary utility expenses. A discussion of pending
environmental matters is provided below.
The Federal Clean Air Act Amendments of 1990 (Amendments) include
provisions which will affect the Company's existing steam generating
facilities and all new fossil fuel fired facilities. Title IV of the
Amendments provides a national cap on sulfur dioxide emissions by mandating
emissions reductions for many electric steam generating facilities. The
sulfur dioxide provisions of the Amendments will not adversely affect the
Company because the Company's steam units burn low sulfur fuels or have
sulfur dioxide control equipment. Title IV of the Amendments also provides
for reduction of emissions of oxides of nitrogen by establishing new
emission limits for coal-fired generating units. This Title will require
the installation of additional pollution-control technology at some of the
Reid Gardner Station generating units before 2000 at an estimated cost to
the Company of no more than $6 million.
The United States Congress authorized the U.S. Environmental
Protection Agency (EPA) to study the potential impact the Mohave Generating
Station (Mohave) and other sources and areas may have on visibility in
national parks and recreational areas of the Colorado Plateau. The Grand
Canyon Visibility Transport Commission is required to make a recommendation
to the EPA prior to November of 1995 regarding ways to improve regional
haze in these areas. A variety of actions are being considered including
further imposition of pollution controls or emissions limitations upon
large pollution sources. Also, the Nevada Division of Environmental
Protection has imposed more stringent stack opacity limits for Mohave.
This will affect the Company's utilization of resources, but, until more
experience is gained by operating at the new opacity levels, optimal
utilization cannot be determined. As a 14 percent owner of Mohave, the
Company will be required to fund any plant improvements that may result
from the EPA study and operation at the new opacity levels. The cost of
any potential improvements cannot be estimated at this time.
In 1991, the EPA published an order requiring the Navajo Generating
Station (Navajo) to install scrubbers to remove 90 percent of sulfur
dioxide emissions beginning in 1997. As an 11.3 percent owner of Navajo,
the Company will be required to fund an estimated $56.5 million for
installation of the scrubbers. In 1992, the Company received resource
planning approval from the PSC for its share of the cost of the scrubbers.
COMPETITION
Deregulation of the electric utility industry is accelerating with the
enactment of the National Energy Policy Act of 1992 (Act). Deregulation
will lead to further competition in the industry as generators of power
obtain greater access to transmission facilities linking them to potential
new customers. Most observers believe the electric utility beneficiaries
of the Act will be twofold; those who can provide low cost generation for
sale and those who have strategically located transmission highways that
can transmit low cost power from one area to another.
Within the region the Company's residential rates are competitive.
However, large industrial customer rates may require adjustment to remain
competitive in the changing environment. In recognition of the changing
regional competitive environment, the Company is focusing on the costs of
7
serving various classes of customers and the appropriate rates to be
charged based on those costs of service. The Company will seek through the
PSC any rate adjustments necessary to maintain a competitive position.
An opportunity exists given the Company's strategic location in the
center of a region of price diversity. As generators arrange for sales of
electricity to customers in other areas, much of the power may need to be
transmitted through the Company's service territory. The Company would
have an opportunity to charge generators for the transmission of energy
through its system. The Company is studying the feasibility of
constructing additional cost-effective transmission facilities to maximize
the advantage of its strategic location.
In November 1994, the PSC opened a docket to investigate and review
the issues associated with retail wheeling in Nevada. To date, the PSC has
solicited comments to some general questions regarding retail wheeling and
has held one workshop in that docket. As of this time, the PSC has not
established a schedule for completion of its review of these issues.
During the 1995 session, the Nevada Legislature is not expected to
pass retail wheeling legislation, however, related issues are expected
to be studied over the next two years. The Nevada Legislature is not
scheduled to meet again until 1997.
EMPLOYEES
The Company had 1,759 employees at December 31, 1994.
8
ITEM 2. PROPERTIES
The Company's generating facilities are described under "Item 1.
Business, Sources of Electric Energy Supply".
The Company shares ownership in a 59-mile, 500 kilovolt line and two
15-mile, 230 kilovolt lines that transmit power from the Mohave Generating
Station near Davis Dam on the Colorado River via Eldorado Substation to
Mead Substation located near Boulder City, Nevada. The Company has 32
miles of 230 kilovolt line from Mead Substation to Las Vegas. This line,
together with two Company-owned 230 kilovolt lines presently connected to
the Bureau of Reclamation lines between Mead Substation and Henderson,
Nevada, transmit the Mohave Generating Station power to the Las Vegas area.
A 25-mile, 230 kilovolt line between the Mead Substation and the Company's
Winterwood Substation was energized in 1988. This line brings the
additional Hoover energy to the Las Vegas Area and increases the Company's
interconnected transmission capabilities. The Company shares ownership in
76 miles of 500 kilovolt transmission line from the Navajo Generating
Station to the Moenkopi Switchyard in Coconino County, Arizona (the
Southern Transmission System) and 274 miles of 500 kilovolt transmission
line from the Navajo Generating Station to the McCullough Substation in
Clark County, Nevada (the Western Transmission System). Power is
transmitted from the McCullough Substation to the Las Vegas area via three
230 kilovolt lines of 23 miles, 25 miles and 32 miles in length,
respectively. The 25-mile line was energized in May 1992. Two 230 kilovolt
lines transmit power from the Reid Gardner Station located near Glendale,
Nevada. One is a 39 mile line to the Pecos Substation and the other a 25
mile line to the Harry Allen Substation. In 1994, 20 miles of a 230
kilovolt line from the Harry Allen Substation to the Pecos Substation was
energized. One 39-mile, 230 kilovolt line transmits power from the Reid
Gardner Station located near Glendale, Nevada to the Pecos Substation near
North Las Vegas. A 7 mile, 230 kilovolt line between Westside and Decatur
Substations, both located in Las Vegas, was energized in 1991. In addition
to the above, the Company has 277 miles of 138 kilovolt and 484 miles of 69
kilovolt transmission lines in service.
In 1990 the Company added a new transmission interconnection
consisting of a 345 kilovolt line from Harry Allen Substation in Southern
Nevada to the Nevada-Utah border where it connects with a PacifiCorp line
to Red Butte Substation in Southern Utah near the City of St. George and a
230 kilovolt line from Harry Allen Substation to Westside Substation which
is located in Las Vegas. The Company owns the 50-mile, 230 kilovolt line
and the 69 miles of the 345 kilovolt line from Harry Allen Substation to
the Nevada-Utah border; PacifiCorp owns the portion of the 345 kilovolt
line from the Nevada-Utah border to Red Butte Substation.
At December 31, 1994, the Company owned 101 transmission and
distribution substations with a total installed transformer capacity of
10,297,841 kilovolt-amperes. In addition it co-owns with others the above
mentioned Eldorado Substation with installed transformer capacity of
1,000,000 kilovolt-amperes, the McCullough Substation with installed
transformer capacity of 1,250,000 kilovolt-amperes and the Reid Gardner
Unit No. 4 Substation with installed capacity of 318,000 kilovolt-amperes.
At Harry Allen Substation, the Company has a 336,000 kilovolt-ampere
transformer and two 336,000 kilovolt-ampere 345 kilovolt phase shifting
transformers which are used for necessary voltage transformations and to
control flows on the interconnection.
9
As of December 31, 1994, there were approximately 3,071 miles of pole
line together with approximately 6,176 cable miles of underground in the
Company's distribution system with a total installed distribution
transformer capacity of 5,566,554 kilovolt-amperes.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in litigation arising in the normal course of
business. While the results of such litigation cannot be predicted with
certainty, management, based upon advice of counsel, believes that the
final outcome will not have a material adverse effect on the Company's
financial position and results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report, through the
solicitation of proxies or otherwise.
SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF REGISTRANT
The Company's executive officers are as follows:
AGE AS OF
NAME DECEMBER 31, 1994 POSITION
---- ----------------- --------
Charles A. Lenzie 57 Chairman of the Board and Chief
Executive Officer
James C. Holcombe 49 President and Chief Operating
Officer
David G. Barneby 49 Vice President, Power Delivery
Cynthia K. Gilliam 46 Vice President, Retail Customer
Operations
Richard L. Hinckley 39 Vice President, Secretary and
General Counsel
Steven W. Rigazio 40 Vice President, Finance and
Planning, Treasurer, Chief
Financial Officer
Gloria T. Banks Weddle 45 Vice President, Human Resources and
Corporate Services
Each of the executive officers has been actively engaged in the
business of the Company for more than five years.
Charles A. Lenzie was elected Chairman of the Board and Chief
Executive Officer on May 1, 1989. Prior to that time he was President of
the Company.
James C. Holcombe joined the Company as Executive Vice President on
March 1, 1989 and was elected President and Chief Operating Officer on May
1, 1989. Prior to joining the Company he was Vice President of Resource
Development for San Diego Gas and Electric Company.
David G. Barneby was elected Vice President, Power Delivery effective
October 14, 1993. He joined the Company in 1965 as a Student Engineer and
was made a Junior Engineer in 1967. He was promoted to Superintendent of
the Reid Gardner Generating Station in 1976; Project Manager - Reid Gardner
Unit 4 in 1979 and in 1985 appointed Manager - Generation Engineering and
Construction. He was elected Vice President - Generation in 1989. His
title was changed to Vice President - Power Supply later that year.
10
Cynthia K. Gilliam was elected Vice President, Retail Customer
Operations effective October 14, 1993. She joined the Company in 1974 as a
Rate Analyst and was promoted to Rates Administrator in 1979 and to Manager
of Financial Planning in 1983. In 1987, she was appointed Manager of Human
Resource Planning. She was elected Vice President - Personnel in 1988 and
her title was changed to Vice President - Human Resources in 1989. In
1992, she was elected Vice President - Customer Service.
Richard L. Hinckley was elected Vice President, Secretary and General
Counsel on May 15, 1991. He joined the Company as Staff Counsel in 1985
and was promoted to Assistant Secretary and Chief Counsel in 1989. Prior
to joining the Company, he served as Staff Attorney with the Nevada Public
Service Commission and as Assistant Attorney General in Utah.
Steven W. Rigazio was elected Vice President, Finance and Planning,
Treasurer, Chief Financial Officer effective October 14, 1993. He joined
the Company in 1984 as a Rates Administrator and was promoted to Supervisor
of Rates and Regulations in 1985, Manager of Rates and Regulatory Affairs
in 1986, Director of System Planning in 1990, Vice President - Planning in
1991 and Vice President and Treasurer, Chief Financial Officer in 1992.
Gloria T. Banks Weddle was elected Vice President, Human Resources and
Corporate Services effective October 14, 1993. She first joined the
Company in 1973, was promoted to Manager of Compensation and Benefits in
1988 and Director of Human Resources in 1991. She was elected Vice
President - Human Resources in 1992.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS
Information with respect to the principal market for the Company's
common stock, securities exchange, shareholders of record, quarterly high
and low sales prices and quarterly dividend payments for 1994 and 1993 are
hereby incorporated by reference from page 36 of the Company's Annual
Report to Shareholders for the year ended December 31, 1994, which is filed
herewith as Exhibit 13.
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is hereby incorporated by reference
from page 37 of the Company's Annual Report to Shareholders for the year
ended December 31, 1994, which is filed herewith as Exhibit 13.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The information required by Item 7 is hereby incorporated by reference
from pages 16 to 19 of the Company's Annual Report to Shareholders for the
year ended December 31, 1994, which are filed herewith as Exhibit 13.
11
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's financial statements for the years ended December 31,
1994, 1993 and 1992 together with the auditors' report thereon required by
Item 8 are incorporated by reference from the following pages of the
Company's Annual Report to Shareholders for the year ended December 31,
1994, which are filed herewith as Exhibit 13.
ANNUAL
REPORT
PAGE
------
Statements of Income for the Years Ended
December 31, 1994, 1993 and 1992...................... 20
Statements of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992...................... 21
Balance Sheets - December 31, 1994 and 1993............ 22-23
Schedules of Capitalization -
December 31, 1994 and 1993............................ 24
Schedules of Long-Term Debt -
December 31, 1994 and 1993............................ 25
Statements of Retained Earnings for the Years
Ended December 31, 1994, 1993 and 1992................ 26
Notes to Financial Statements.......................... 27-34
Independent Auditors' Report........................... 35
Report of Management................................... 35
See Note 11 of Notes to Financial Statements in the Company's Annual
Report to Shareholders for the unaudited selected quarterly financial data
required to be presented in this Item 8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There has been no Report on Form 8-K filed within the twenty-four
months prior to the date of the most recent financial statements, December
31, 1994, reporting a change of accountants.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by Item 10 with respect to the Company's
executive officers is set forth in Part I, Item 4., under the preceding
heading "Supplemental Item. Executive Officers of Registrant". The other
information required by Item 10 is hereby incorporated by reference from
the Company's definitive Proxy Statement dated March 14, 1995 and
heretofore filed with the Securities and Exchange Commission (SEC). (See
the heading therein "Election of Directors".)
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is hereby incorporated by
reference from the Company's definitive Proxy Statement dated March 14,
1995 and heretofore filed with the SEC. (See the heading therein
"Executive Compensation".)
12
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is hereby incorporated by
reference from the Company's definitive Proxy Statement dated March 14,
1995 and heretofore filed with the SEC. (See the heading therein "Security
Ownership of Management".)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Management of the Company has no knowledge of any transaction,
relationship or indebtedness which is required to be disclosed by Item 13.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
The Company's financial statements for the years ended December 31,
1994, 1993 and 1992 together with the auditors' report appearing on pages
20 to 35 of Nevada Power Company's 1994 Annual Report to Shareholders are
incorporated herein by reference and filed as Exhibit 13.
FINANCIAL STATEMENT SCHEDULE FOR THE
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992 PAGE
-------------------------------------------- ----
Independent Auditors' Consent and Report on Schedule.............. 22
Schedule VIII - Valuation and Qualifying Accounts................. 23
All other schedules are omitted because they are not applicable, not
required, or because the information is included in the financial
statements or notes thereto.
EXHIBITS
FILED DESCRIPTION
-------- -----------
13 Pages 16 to 37 of Nevada Power Company's Annual Report to
Shareholders for the Year Ended December 31, 1994
(incorporated by reference in Parts II and IV hereof)
10.72 Letter of Credit and Reimbursement Agreement dated as of
April 12, 1994 between Nevada Power Company and Societe
Generale, Los Angeles Branch and Amendment No. 1 thereto
dated as of May 3, 1994
10.73 Loan Agreement dated as of November 21, 1994 between Nevada
Power Company, certain banks, and First Interstate Bank of
Nevada, N.A. as the Administrative Agent
23 Independent Auditors' Consent and Report on Schedule
27 Financial Data Schedule - December 31, 1994
13
In addition to those Exhibits shown above, the Company hereby
incorporates the following Exhibits pursuant to Exchange Act Rule 12B-32
and Regulation #201.24 by reference to the filings set forth below:
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT File NO.
------- ----------- ---------------- --------
3.1 Restated Bylaws, as amended
January 14, 1993 4.10 to Form S-3 33-61608
3.2 Restated Articles of Incorporation 3.8 to Form 10-K 1-4698
filed June 10, 1988 Year 1988
3.3 Amendment to Restated Articles of 4.7 to Form S-8 33-32372
Incorporation filed May 23, 1989
3.4 Amendment to Restated Articles of 4.8 to Form S-3 33-55698
Incorporation filed June 8, 1992
4.1 Certificate of Designation of Cumulative
Preferred Stock as follows:
5.40% Series 2.1 to Form S-1 2-16968
5.20% Series 2.1 to Form S-1 2-20618
4.70% Series 3.2 to Form 8-K 1-4698
July 1965
8% Series 2.1 to Form S-7 2-44513
8.70% Series 2.1 to Form S-7 2-49622
11.50% Series 2.1 to Form S-7 2-52238
9.75% Series 2.1 to Form S-7 2-56788
Auction Series A 4.6 to Form S-3 33-15554
Auction Series A as amended
November 14, 1991 4.9 to Form S-3 33-44460
Auction Series A as amended
December 12, 1991 4.1 to Form 10-K 1-4698
Year 1992
9.90% Series 4.1 to Form 10-K 1-4698
Year 1992
4.2 Indenture of Mortgage and Deed of 4.2 to Form S-1 2-10932
Trust Providing for First Mortgage
Bonds, dated October 1, 1953 and
Twenty-Five Supplemental Indentures
as follows:
First Supplemental Indenture, 4.2 to Form S-1 2-11440
dated August 1, 1954
Second Supplemental Indenture, 4.9 to Form S-1 2-12566
dated September 1, 1956
Third Supplemental Indenture, 4.13 to Form S-1 2-14949
dated May 1, 1959
Fourth Supplemental Indenture, 4.5 to Form S-1 2-16968
dated October 1, 1960
Fifth Supplemental Indenture, 4.6 to Form S-16 2-74929
dated December 1, 1961
Sixth Supplemental Indenture, 4.6A to Form S-1 2-21689
dated October 1, 1963
Seventh Supplemental Indenture, 4.6B to Form S-1 2-22560
dated August 1, 1964
Eighth Supplemental Indenture, 4.6C to Form S-9 2-28348
dated April 1, 1968
Ninth Supplemental Indenture, 4.6D to Form S-1 2-34588
dated October 1, 1969
Tenth Supplemental Indenture, 4.6E to Form S-7 2-38314
dated October 1, 1970
Eleventh Supplemental Indenture, 2.12 to Form S-7 2-45728
dated November 1, 1972
14
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
------- ----------- ---------------- --------
Twelfth Supplemental Indenture, 2.13 to Form S-7 2-52350
dated December 1, 1974
Thirteenth Supplemental 4.14 to Form S-16 2-74929
Indenture, dated October 1,
1976
Fourteenth Supplemental 4.15 to Form S-16 2-74929
Indenture, dated May 1, 1977
Fifteenth Supplemental 4.16 to Form S-16 2-74929
Indenture dated September 1,
1978
Sixteenth Supplemental Indenture, 4.17 to Form S-16 2-74929
dated December 1, 1981
Seventeenth Supplemental 4.2 to Form 10-K 1-4698
Indenture, dated August 1, 1982 Year 1982
Eighteenth Supplemental Indenture, 4.6 to Form S-3 33-9537
dated November 1, 1986
Nineteenth Supplemental Indenture, 4.2 to Form 10-K 1-4698
dated October 1, 1989 Year 1989
Twentieth Supplemental Indenture, 4.21 to Form S-3 33-53034
dated May 1, 1992
Twenty-First Supplemental 4.22 to Form S-3 33-53034
Indenture, dated June 1, 1992
Twenty-Second Supplemental 4.23 to Form S-3 33-53034
Indenture, dated June 1, 1992
Twenty-Third Supplemental 4.23 to Form S-3 33-53034
Indenture, dated October 1, 1992
Twenty-Fourth Supplemental 4.23 to Form S-3 33-53034
Indenture, dated October 1, 1992
Twenty-Fifth Supplemental 4.23 to Form S-3 33-53034
Indenture, dated January 1, 1993
4.3 Instrument of Further Assurance 4.8 to Form S-1 2-12566
dated April 1, 1956 to Indenture
of Mortgage and Deed of Trust
dated October 1, 1953
4.4 Rights Agreement dated October 15, 4.1 to Form 8-A 1-4698
1990 between Manufacturers Hanover Year 1990
Trust Company and Nevada Power
Company
10.1 Contract for Sale of Electrical 13.9A to Form S-1 2-10932
Energy between State of Nevada
and the Company, dated October
10, 1941
10.2 Amendment dated June 30, 1953 to 13.9A to Form S-1 2-10932
Exhibit 10.1
10.3 Contract for Sale of Electrical 13.10 to Form S-1 2-10932
Energy between State of Nevada
and the Company, dated June 1,
1951
10.4 Agreement dated November 10, 1948 13.18 to Form S-1 2-12697
between the Company and Lincoln
County Power District No. 1 and
Overton Power District No. 5
10.5 Agreement dated October 21, 1949 13.19 to Form S-9 2-12697
between the Company and Lincoln
County Power District No. 1 and
Overton Power District No. 5
15
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
------- ----------- ---------------- --------
10.6 Mohave Project Plant Site 13.27 to Form S-9 2-28348
Conveyance and Co-tenancy
Agreement dated May 29, 1967
between the Company and Salt
River Project Agricultural
Improvement and Power District
Southern California Edison
Company
10.7 Eldorado System Conveyance and 13.30 to Form S-9 2-28348
Co-tenancy Agreement dated
December 20, 1967 between the
Company and Salt River Project
Agricultural Improvement and
Power District and Southern
California Edison Company
10.8 Mohave Operating Agreement dated 13.26F to Form S-1 2-38314
July 6, 1970 between the Company,
Salt River Project Agricultural
Improvement and Power District,
Southern California Edison
Company and Department of Water
and Power of the City of Los
Angeles
10.9 Navajo Project Participation 13.27A to Form S-1 2-38314
Agreement dated September 30,
1969 between the Company, the
United States of America,
Arizona Public Service Company,
Department of Water and Power of
the City of Los Angeles, Salt
River Project Agricultural
Improvement and Power District
and Tucson Gas & Electric
Company
10.10 Navajo Project Coal Supply 13.27B to Form S-1 2-38314
Agreement dated June 1, 1970
between the Company, the United
States of America, Arizona
Public Service Company,
Department of Water and Power
of the City of Los Angeles,
Salt River Project Agricultural
District, Tucson Gas & Electric
Company and the Peabody Coal
Company
10.11 Contract dated January 1, 1968 13.32 to Form S-1 2-34588
between the Company and United
States Bureau of Reclamation for
interconnections at Mead Station
10.12 Note Agreement dated December 11, 5.35 to Form S-7 2-49622
1973 relating to $25,000,000
8-1/2% Promissory Notes due 1998
16
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT File No.
------- ----------- ---------------- --------
10.13 Reclaimed Wastewater Purchase 5.36 to Form S-7 2-52238
Agreement dated June 21, 1974
among City of Las Vegas, Nevada,
Clark County Sanitation District
No. 1, County of Clark, Nevada
and Nevada Power Company
10.14 Equipment Lease dated as of 5.37 to Form 8-K 1-4698
March 1, 1974 between Nevada Power April 1974
Company, Lessor, and Clark County,
Nevada, Lessee
10.15 Sublease Agreement dated as of 5.38 to Form 8-K 1-4698
March 1, 1974 between Clark April 1974
County, Nevada, Sublessor,
and Nevada Power Company,
Sublessee
10.16 Guaranty Agreement dated as of 5.39 to Form 8-K 1-4698
March 1, 1974 between Nevada April 1974
Power Company and Commerce
Union Bank as Trustee
10.17 Navajo Project Co-tenancy 5.31 to Form 8-K 1-4698
Agreement dated March 23, 1976 April 1974
between the Company, Arizona
Public Service Company,
Department of Water and
Power of the City of Los Angeles,
Salt River Project Agricultural
Improvement and Power District,
Tucson Gas & Electric Company
and the United States of America
10.18 Amended Mohave Project Coal Supply 5.35 to Form S-7 2-56356
Agreement dated May 26, 1976
between the Company and Southern
California Edison Company,
Department of Water and Power of
the City of Los Angeles, Salt
River Project Agricultural
Improvement and Power District
and the Peabody Coal Company
10.19 Amended Mohave Project Coal Slurry 5.36 to Form S-7 2-56356
Pipeline Agreement dated May 26,
1976 between Peabody Coal Company
and Black Mesa Pipeline, Inc.
(Exhibit B to Exhibit 10.18)
10.20 Coal Supply Agreement dated October 5.38 to Form S-7 2-56356
15, 1975 between the Company and
United States Fuel Company
10.21 Amendment dated November 19, 1976 5.30 to Form S-7 2-62105
to Exhibit 10.20
10.22 Participation Agreement Reid 5.34 to Form S-7 2-65097
Gardner Unit No. 4 dated July
11, 1979 between the Company
and California Department of
Water Resources
10.23 Coal Supply Agreement dated 5.37 to Form S-7 2-62509
March 1, 1980 between the
Company and Beaver Creek
Coal Company
17
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
------- ----------- ---------------- --------
10.24 Coal Supply Agreement dated 5.38 to Form S-7 2-62509
March 1, 1980 between the
Company and Trail Mountain
Coal Company
10.25 Coal Supply Agreement dated 10.26 to Form 10-K 1-4698
December 8, 1980 between the Year 1981
Company and Plateau Mining
Company
10.26 Coal Supply Agreement dated 10.26 to Form 10-K 1-4698
August 31, 1982 between Year 1982
the Company and CO-OP
Mining Company
10.27 Coal Supply Agreement dated 10.27 to Form 10-K 1-4698
September 8, 1982 between the Year 1982
Company and Getty Mining
Company
10.28 Coal Supply Agreement dated 10.28 to Form 10-K 1-4698
September 8, 1982 between the Year 1982
Company and Tower Resources,
Inc.
10.29 Coal Supply Agreement dated 10.29 to Form 10-K 1-4698
September 22, 1982 between the Year 1982
Company and Beaver Creek Coal
Company
10.30 Memorandum of Understanding 10.30 to Form 10-K 1-4698
Concerning Interconnection Year 1983
between Utah Power & Light
Company and Nevada Power
Company dated February 2, 1984
10.31 Sublease Agreement between Powveg 10.31 to Form 10-K 1-4698
Leasing Corp., as Lessor and Year 1983
Nevada Power Company as Lessee,
dated January 11, 1984 for
lease of administrative
headquarters
10.32 Participation Agreement between 10.32 to Form 10-K 1-4698
Utah Power & Light Company and Year 1985
the Company dated December 19,
1985
10.33 Sale and Purchase Agreement dated 10.33 to Form 10-K 1-4698
as of December 23, 1985 by and Year 1985
between Nevada Power Company and
CP National Corporation
10.34 Restated Coal Sales Agreement as 10.34 to Form 10-K 1-4698
of July 1, 1985 by and between Year 1985
Nevada Power Company and Trail
Mountain Coal Company
10.35 Summary of Supplemental Executive 10.35 to Form 10-K 1-4698
Retirement Plan as approved Year 1985
November 14, 1985
10.36 Financing Agreement dated as of 10.36 to Form 10-K 1-4698
February 1, 1983 between Clark Year 1985
County, Nevada and Nevada Power
Company
18
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
------- ----------- ---------------- --------
10.37 Financing Agreement between Clark 10.37 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1985
Company dated as of December 1,
1985
10.38 Reimbursement Agreement dated 10.38 to Form 10-K 1-4698
as of December 1, 1985 between Year 1986
The Fuji Bank, Limited and
Nevada Power Company
10.39 Contract for Sale of Electrical 10.39 to Form 10-K 1-4698
Energy between the State of Year 1987
Nevada and the Company, dated
July 8, 1987
10.40 Power Sales Agreement between 10.40 to Form 10-K 1-4698
Utah Power & Light Company and Year 1987
the Company, dated August 17,
1987
10.41 Transmission Facilities Agreement 10.41 to Form 10-K 1-4698
between Utah Power & Light Year 1987
Company and the Company, dated
August 17, 1987
10.42 Financing Agreement between Clark 10.42 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1988
Company dated as of November 1,
1988
10.43 Reimbursement Agreement dated 10.43 to Form 10-K 1-4698
as of November 1, 1988 between Year 1988
The Fuji Bank, Limited and
Nevada Power Company
10.44 Power Purchase Contract dated 10.45 to Form 10-K 1-4698
February 15, 1990 between Year 1989
Mission Energy Company and
Nevada Power
Company
10.45 Contact for Long-Term Power 10.46 to Form 10-K 1-4698
Purchases from Qualifying Year 1989
Facilities dated May 1, 1989
between Oxford Energy of Nevada
and Nevada Power Company
10.46 Contract A for Long-Term Power 10.47 to Form 10-K 1-4698
Purchases from Qualifying Year 1989
Facilities dated May 2, 1989
between Bonneville Nevada
Corporation and Nevada Power
Company
10.47 Contract for Long-Term Power 10.48 to Form 10-K 1-4698
Purchases from Qualifying Year 1989
Facilities dated April 10, 1989
between Magna Energy Systems,
Eastern Sierra Energy Company
and Nevada Power Company
10.48 Contract B for Long-Term Power 10.49 to Form 10-K 1-4698
Purchases from a Qualifying Year 1989
Facility dated October 27, 1989
between Bonneville Nevada
Corporation and Nevada Power
Company
19
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
------- ----------- ---------------- --------
10.49 Contract for Long-Term Power 10.50 to Form 10-K 1-4698
Purchases from Qualified Year 1989
Facilities dated February 12,
1990 between Las Vegas
Co-generation, Inc. and Nevada
Power Company
10.50 Agreement for Transmission 10.51 to Form 10-K 1-4698
Service dated March 29, 1989 Year 1989
between Overton Power District
No. 5 , Lincoln County Power
District No. 1 and Nevada Power
Company
10.51 Contract dated June 30, 1988 10.52 to Form 10-K 1-4698
between United States Department Year 1989
of Energy Western Area Power
Administration and Nevada Power
Company
10.52 Executive Performance Incentive 10.53 to Form 10-K 1-4698
Plan dated as of January 1, 1989 Year 1989
10.53 Severance Allowance Plan 10.54 to Form 10-K 1-4698
adopted September 14, 1989 Year 1989
10.54 Power Purchase Contract dated 10.55 to Form 10-K 1-4698
July 5, 1990 between Year 1990
Mission Energy Company and
Nevada Power Company
10.55 Contract B for Long-Term Power 10.56 to Form 10-K 1-4698
Purchases from a Qualifying Year 1990
Facility dated May 24, 1990
between Bonneville Nevada
Corporation and Nevada Power
Company
10.56 Amendment dated June 15, 1989 to 10.57 to Form 10-K 1-4698
Exhibit 10.45 Year 1990
10.57 Amendment dated August 23, 1989 10.58 to Form 10-K 1-4698
to Exhibit 10.45 Year 1990
10.58 Amendment dated April 23, 1990 10.59 to Form 10-K 1-4698
to Exhibit 10.45 Year 1990
10.59 Exhibit H dated August 13, 1990 10.60 to Form 10-K 1-4698
to Exhibit 10.45 Year 1990
10.60 Western Systems Power Pool 10.61 to Form 10-K 1-4698
Agreement (Agreement) dated Year 1990
January 2, 1991 between
thirty-nine other Western
Systems Power Pool members as
listed on pages 1 and 2 of the
Agreement and Nevada Power
Company
10.61 Financing Agreement between Clark 10.62 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1990
Company dated June 1, 1990
10.62 Restated Power Sales Agreement 10.63 to Form 10-K 1-4698
dated March 25, 1991 between Year 1991
Pacificorp and Nevada Power
Company
10.63 Amendment dated July 17, 1990 to 10.64 to Form 10-K 1-4698
Exhibit 10.54 Year 1991
20
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
------- ----------- ---------------- --------
10.64 Financing Agreement between Clark 10.65 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1992
Company dated June 1, 1992
(Series 1992A)
10.65 Financing Agreement between Clark 10.66 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1992
Company dated June 1, 1992
(Series 1992B)
10.66 Financing Agreement between Clark 10.67 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1992
Company dated October 1, 1992
10.67 Power Sales Agreement dated 10.68 to Form 10-K 1-4698
October 19, 1992 between the Year 1992
Department of Water and Power
of the City of Los Angeles
and Nevada Power Company
10.68 Long-Term Incentive Plan dated 10.69 to Form 10-K 1-4698
as of January 1, 1993 Year 1993
10.69 Contract for Long-Term Power 10.70 to Form 10-K 1-4698
Purchases from Qualifying Year 1993
Facilities dated May 27, 1992
between Las Vegas Co-generation,
Inc. and Nevada Power Company
Replaces Exhibit 10.49
10.70 Settlement Agreement and Promissory 10.71 to Form 10-K 1-4698
Note between Mountain Coal Company Year 1993
and Atlantic Richfield Company and
Nevada Power Company dated
March 9, 1994
10.71 401(k) Savings Plan, as amended 99.1 to Form S-8 33-50809
and restated January 1, 1990
10.72 Amendment dated January 1, 1991 99.2 to Form S-8 33-50809
to Exhibit 10.71
REPORTS ON FORM 8-K
The Company filed no current report on Form 8-K during the quarter
ended December 31, 1994.
21
INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE
We consent to the incorporation by reference in Registration Statement
No. 33-18622 on Form S-3 and in Registration Statement No. 33-15554 on Form
S-3 of Nevada Power Company of our report dated February 10, 1995
incorporated by reference in this Annual Report on Form 10-K of Nevada
Power Company for the year ended December 31, 1994.
Our audits of the financial statements referred to in our
aforementioned report also included the financial statement schedule of
Nevada Power Company, listed in Item 14. This financial statement
schedule is the responsibility of Nevada Power Company's management. Our
responsibility is to express an opinion based on our audits. In our
opinion, such financial statement schedule, when considered in relation to
the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
March 24, 1995
22
NEVADA POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(IN THOUSANDS OF DOLLARS)
RESERVE FOR
DOUBTFUL
ACCOUNTS
-----------
BALANCE AT DECEMBER 31, 1991............................. $ 1,106
Provision charged to income............................. 2,068
Amounts written off, less recoveries.................... (2,371)
----------
BALANCE AT DECEMBER 31, 1992............................. $ 803
Provision charged to income............................. 3,161
Amounts written off, less recoveries.................... (2,839)
----------
BALANCE AT DECEMBER 31, 1993............................. $ 1,125
Provision charged to income............................. 4,302
Amounts written off, less recoveries.................... (4,032)
----------
BALANCE AT DECEMBER 31, 1994............................. $ 1,395
==========
23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
NEVADA POWER COMPANY
-------------------------------------
(Registrant)
March 27, 1995 By CHARLES A. LENZIE
-------------------------------------
Charles A. Lenzie
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
March 27, 1995 By CHARLES A. LENZIE
-------------------------------------
Charles A. Lenzie, Chairman of
the Board, Chief Executive
Officer and Director
(Principal Executive Officer)
March 27, 1995 By STEVEN W. RIGAZIO
-------------------------------------
Steven W. Rigazio, Vice President,
Finance and Planning, Treasurer,
Chief Financial Officer
(Principal Financial and
Principal Accounting Officer)
March 27, 1995 By MARY LEE COLEMAN
-------------------------------------
Mary Lee Coleman, Director
March 27, 1995 By FRED D. GIBSON JR.
-------------------------------------
Fred D. Gibson Jr., Director
March 27, 1995 By JOHN L. GOOLSBY
-------------------------------------
John L. Goolsby, Director
March 27, 1995 By JERRY HERBST
-------------------------------------
Jerry Herbst, Director
March 27, 1995 By JAMES C. HOLCOMBE
-------------------------------------
James C. Holcombe, President and
Director
March 27, 1995 By CONRAD L. RYAN
-------------------------------------
Conrad L. Ryan, Director
March 27, 1995 By FRANK E. SCOTT
-------------------------------------
Frank E. Scott, Director
March 27, 1995 By ARTHUR M. SMITH
-------------------------------------
Arthur M. Smith, Director
March 27, 1995 By JELINDO A. TIBERTI
-------------------------------------
Jelindo A. Tiberti, Director
24
EX-13
2
PAGES 16 TO 37 OF ANNUAL REPORT TO SHAREHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
RESOURCE DEVELOPMENT AND CONSTRUCTION PROGRAMS
Every three years Nevada law requires Nevada Power Company (company) to
file with the Public Service Commission of Nevada (PSC) a forecast of
electricity demands for the next 20 years and the company's plans to meet
those demands. In the third quarter of 1994, the company filed with the PSC
its 1994 Resource Plan.
The company introduced a Renewable Energy Program as part of the 1994
Resource Plan filing. This section of the plan requested approval for the
company to utilize all appropriate incentives, resources and expertise to
foster the development of economically competitive renewable energy systems
with the intent to provide southern Nevada customers with 20 megawatts of
solar-generated electricity by the year 2002. A stipulation on the
Renewable Energy Program was signed by the company, PSC Staff, Office of
Consumer Advocate (OCA) and the Land and Water Fund of the Rockies. The PSC
subsequently approved the stipulation which includes establishing a solar
test facility on company property where new solar technologies will be
installed and tested. The company will also install several photovoltaic
units in the Las Vegas Valley and will serve on the Technical Advisory
Committee of the Solar II Project in Barstow, California.
At the time of the 1994 Resource Plan filing, the company had yet to
complete its long-term supply-side request for proposal (RFP) process. The
PSC issued an order approving a stipulation between the company, the PSC
Staff, the OCA and other intervenors allowing the company to refile its
1994 Resource Plan when it completed the RFP process. The company completed
the final analysis of the RFP in December 1994.
At the time of the final analysis of the RFP, there were tremendous
changes anticipated in the electric utility industry. The combination of
the final analysis of the RFP, the current information about the purchased
power markets and the uncertainty of the changes in the electric utility
industry necessarily mandated a fundamental change in the company's
resource planning strategy. The company will rely on short-term power
purchases rather than proceed with the RFP process to meet its forecasted
increase in load.
On February 15, 1995, the company filed its Refiled 1994 Resource
Plan. To support the company's position in its decision to rely on
short-term markets for purchased power, the company requested the following
projects to be approved by the PSC:
- the installation of a 230 kV transmission line on the previously
approved Northwest-Arden line;
- the construction of two new switchyards in the southern portion of the
company's transmission system; and
- funds to study the development of transmission systems, the Price and
Availability Purchased Power Forecast, modifications to existing
generating facilities and the stability of the company's transmission
system.
With the projections of future electricity costs decreasing, many of
the Demand-Side Management (DSM) programs offered by the company are no
longer cost-effective. Therefore, the company reevaluated its DSM programs
and requested approval to phase out three of its programs: air conditioning
replacement, attic insulation and energy efficient motors. In addition, the
company requested approval to reduce incentives to numerous other programs
and suspend the air conditioning load management program in 1995. The DSM
section of the Refiled 1994 Resource Plan also includes:
- DSM contracts with three energy service companies to promote
conservation among certain commercial customers. The total targeted
reduction in demand is equivalent to 13.8 megawatts; and
- a limited residential new construction program offering education and
assistance to contractors on energy efficiency measures in new homes.
Hearings on the company's Refiled 1994 Resource Plan are scheduled to
begin in April 1995.
Budgeted construction expenditures for 1995 and 1996 are $169 million
and $175 million, respectively, excluding allowance for funds used during
construction.
For the next five years customer growth is estimated to average 5.4
percent per year while demand for electricity is estimated to increase by
an average of 4.5 percent per year.
FINANCIAL STRATEGIES
The company's customer growth averaged over 5.3 percent annually during the
three years ended December 31, 1994. To meet the growth forecasted for the
company's service territory for the mid to late 1990s, the company will
continue to rely upon the financial markets to provide a substantial
portion of the funds to build necessary company-owned facilities.
The company is committed to maintaining shareholder value throughout
this period of continuing rapid growth. To achieve this goal the company
will:
- pursue a balanced financing approach utilizing low cost tax-exempt
financing when possible;
- maintain ongoing cost containment efforts; and
- seek legislative and regulatory support when necessary.
16 NEVADA POWER COMPANY 1994 Annual Report
COST CONTAINMENT - The company will continue to review all planned construction
and operating expenditures in an effort to reduce the level of external
financing required during this period of rapid growth. Management is constantly
reviewing expenditures in light of its commitment to provide shareholders with
returns that deliver long-term shareholder value, deliver quality service to
customers and provide a reliable supply of electricity at competitive prices.
CAPITALIZATION
To meet capital expenditure requirements through 1996, the company will
utilize internally generated cash, the proceeds from industrial development
revenue bonds (IDBs), first mortgage bonds (FMBs), preferred securities and
common stock issues through public offerings and the Stock Purchase and
Dividend Reinvestment Plan (SPP).
NEW FINANCING CAPACITY - Under the tests required by the company's FMBs and
the terms of its preferred stock issues, as of December 31, 1994, the
company could issue up to $460 million of additional FMBs at an assumed
interest rate of 8 1/2 percent and up to $407 million of additional
preferred stock at an assumed dividend of 8 1/2 percent.
In January 1995, the company received PSC approval to issue and sell up
to 2,750,000 shares of common stock, up to $195 million of debt for the
purpose of refinancing existing debt, up to $40 million of preferred stock
for the purpose of refinancing existing stock, up to $85 million of new
taxable debt and up to $35 million of new preferred stock as an alternative
to an equal amount of common stock and/or new taxable debt with such
authorization to expire on December 31, 1995.
EARNINGS TO INTEREST AND PREFERRED DIVIDENDS COVERAGE - For the year 1994,
the ratio of earnings to interest charges was 3.11 times compared to 2.90
times in 1993. The ratio of earnings to interest charges plus preferred
dividends was 2.82 times in 1994 compared to 2.63 times in 1993.
COMMON EQUITY - On November 9, 1994, the company sold 2,000,000 shares of
common stock through a negotiated public offering. Net proceeds of $37.7
million were used primarily for construction and general corporate purposes
including the repayment of any amounts incurred for those purposes that
were outstanding under the company's bank revolving credit facility.
The company has the option to issue new common shares or purchase shares
on the open market to satisfy the needs of the SPP. During 1994, the
company issued $38.2 million of common stock under the SPP. (See Note 5 of
"Notes to Financial Statements.") At year end, common equity represented
49.2 percent of total capitalization.
SHORT-TERM DEBT - The company has PSC approval for authority to issue
short-term unsecured promissory notes not to exceed $150 million with such
authorization to expire on December 31, 1997 and has a committed bank line
for $125 million which expires on November 21, 1997. The short-term
financing is expected to be utilized to fund some of the company's
construction expenditures until long-term financing is secured. At December
31, 1994, the company had no balance outstanding on this line.
LONG-TERM DEBT - On June 24, 1992, Clark County, Nevada issued $105 million
6.70% fixed rate 30-year IDBs (Nevada Power Company Project) Series 1992A.
Net proceeds from the sale of the IDBs were placed on deposit with a
trustee and are being used to finance the construction of certain
facilities which qualify for tax-exempt financing. At December 31, 1994,
$7.2 million remained on deposit with the trustee.
A discussion of long-term debt maturities, including sinking fund
requirements, is contained in Note 6 of "Notes to Financial Statements."
REGULATION
The PSC allows recovery of costs on an historical basis in setting rates
charged to customers for electrical service.
Environmental expenditures made by the company are currently being recovered
through customer rates. Management believes environmental expenditures will
increase over time and the increased costs will also be recovered as necessary
utility expenses. A discussion of pending environmental matters is contained
in Note 8 of "Notes to Financial Statements."
CONCLUDED RATE MATTERS - On July 6, 1994, the PSC approved a stipulation
between the company, PSC staff, OCA and other intervenors to settle an
earnings investigation of the company and several other pending regulatory
matters. The stipulation reduced nonresidential rates by $6.25 million
effective October 1, 1994 and provides for no additional rate changes
before July 1, 1995. The overall rate of return was reduced from 10.02
percent to 9.66 percent although the allowed return on common equity
remains at 12.5 percent. The stipulation resulted in the withdrawal of the
company's $38.5 million energy rate request and $1 million resource
planning rate request filed with the PSC on February 28, 1994. In addition,
as part of the stipulation, the company is required to use billed and
unbilled sales to calculate deferred energy balances. Implementation of
this methodology has resulted in a credit adjustment to deferred energy
costs and an offsetting debit to unbilled customer receivables with no
impact on the company's earnings.
The stipulation also completely resolved the Mohave accident replacement
power case. As a part of the stipulation, $11 million of the reserved $17.4
million previously collected from customers for fuel and purchased power
costs and interest was transferred from other deferred credits to deferred
energy costs to offset increased fuel and purchased power costs that have
been deferred for collection. The balance of $6.4 million ($4.2 million net
of tax) was
NEVADA POWER COMPANY 1994 Annual Report 17
reflected as other income in miscellaneous, net for the second
quarter of 1994.
The table below summarizes the rate adjustments that have been granted
to the company during the past three years.
SUMMARY OF RATE ADJUSTMENTS 1992 THROUGH 1994
Effective Date Nature of Increase (Decrease) Amount (In millions)
------------------------------------------------------------------------
July 27, 1992 General rate increase $ 22.2
Energy and resource plan
net rate decrease (26.4)
June 28, 1993 Energy and resource plan
net rate increase 42.1
February 1, 1994 Energy rate increase 23.6
October 1, 1994 General rate decrease (6.3)
DEREGULATION AND COMPETITION
Deregulation of the electric utility industry is accelerating with the
enactment of the National Energy Policy Act of 1992 (Act). Deregulation
will lead to further competition in the industry as generators of power
obtain greater access to transmission facilities linking them to potential
new customers. Most observers believe the electric utility beneficiaries of
the Act will be twofold; those who can provide low cost generation for sale
and those who have strategically located transmission highways that can
transmit low cost power from one area to another.
Within the region the company's residential rates are competitive.
However, large industrial customer rates may require adjustment to remain
competitive in the changing environment. In recognition of the changing
regional competitive environment, the company is focusing on the costs of
serving various classes of customers and the appropriate rates to be
charged based on those costs of service. The company will seek through the
PSC any rate adjustments necessary to maintain a competitive position.
An opportunity exists given the company's strategic location in the
center of a region of price diversity. As generators arrange for sales of
electricity to customers in other areas, much of the power may need to be
transmitted through the company's service territory. The company would have
an opportunity to charge generators for the transmission of energy through
its system. The company is studying the feasibility of constructing
additional cost-effective transmission facilities to maximize the advantage
of its strategic location.
In November 1994, the PSC opened a docket to investigate and review the
issues associated with retail wheeling in Nevada. To date, the PSC has
solicited comments to some general questions regarding retail wheeling and
has held one workshop in that docket. As of this time, the PSC has not
established a schedule for completion of its review of these issues.
RESULTS OF OPERATIONS
GENERAL
In 1994, earnings increased, as compared to 1993, due primarily to higher
revenues resulting from an increase in kilowatthour sales and settlement of
the replacement power case from the 1985 Mohave Generating Station
accident. In 1993, earnings increased, as compared to 1992, due primarily
to higher revenues resulting from an increase in general rates effective
July 1992 and an increase in kilowatthour sales.
Average shares of common stock outstanding for 1994 increased by 3.3
million shares compared to 1993, as a result of public offerings of 2
million shares in November of 1994 and 2.7 million shares in June of 1993
as well as the sale of shares through the SPP.
REVENUES
Revenues during 1994, 1993 and 1992 were $764 million, $652 million and
$601 million, respectively. The 17.2 percent increase in 1994, as compared
to 1993, was a result of a 7.1 percent increase in kilowatthour sales and
an increase in energy rates effective February 1994 and June 1993. Higher
revenues also resulted from recording unbilled revenues for the recovery of
energy costs in the amount of $11.6 million, with an offsetting increase in
the deferred energy cost adjustment and accordingly no impact on the
company's earnings, as required by the stipulation approved by the PSC on
July 6, 1994.
The 8.5 percent increase in 1993, as compared to 1992, was a result of a
5.8 percent increase in kilowatthour sales and an increase in energy rates
effective June 1993.
INCREASE (DECREASE) IN REVENUE FROM PRIOR YEAR
Nature of Increase (Decrease) (In millions) 1994 1993 1992
-------------------------------------------------------------------------
Kilowatthour sales $ 73.5 $28.2 $37.7
General rate changes (1.4) 12.3 20.5
Deferred energy adjustments 8.7 (13.3) (5.3)
Fuel cost base rate changes 33.3 22.4 0.4
Resource plan cost changes and
other (1.7) 1.3 1.2
-------------------------------------------------------------------------
Total increase $112.4 $50.9 $54.5
-----------------------------------------------==========================
18 NEVADA POWER COMPANY 1994 Annual Report
FUEL AND PURCHASED POWER
Fuel expense increased $7.3 million in 1994, as compared with 1993,
primarily due to increased generation at the Clark Station.
In 1994, as compared to 1993, and in 1993, as compared to 1992,
purchased power expense increased 6.1 percent and 21.1 percent,
respectively, due to increased purchases from qualifying facilities.
Effective February 1, 1994 and June 28, 1993, the PSC granted the
company increases of $23.6 million and $44.2 million, respectively, in the
energy portion of customer rates, and effective July 27, 1992, the PSC
granted the company a $28.3 million decrease in energy rates.
During 1994, 1993 and 1992, the company deferred $16.8 million, $48.5
million and $39.5 million, respectively, of increased energy costs for
collection in a later period and collected $44.7 million, $17 million and
$26.6 million, respectively, of energy cost increases which had previously
been deferred. Recovery of fuel expenses is administered under the state's
deferred energy cost accounting procedures. (See Note 1 of "Notes to
Financial Statements.") Under the deferred energy procedure, changes in the
costs of fuel and purchased power are reflected in customer rates through
annual rate adjustments and do not affect earnings.
The following tables summarize kilowatthour data.
1994 1993 1992
--------------------------------------------------------------------
SOURCE OF KILOWATTHOURS SOLD
Company generation 51% 49% 49%
Hoover Dam hydroelectric 4 4 4
Purchased power 45 47 47
--------------------------------------------------------------------
100% 100% 100%
-------------------------------------===============================
COMPANY GENERATED KILOWATTHOURS
BY FUEL SOURCE
Coal 85% 93% 94%
Natural Gas 15 7 5
Oil - - 1
--------------------------------------------------------------------
100% 100% 100%
-------------------------------------===============================
FUEL COSTS PER KILOWATTHOUR
Coal 1.55 cents 1.61 cents 1.63 cents
Natural Gas 2.01 2.98 3.83
Oil 4.89 4.21 4.74
OTHER OPERATING EXPENSES AND TAXES
Other operations expense increased $14.0 million in 1994, as compared with
1993, primarily due to an increase in employee benefit costs and the
provision for uncollectible accounts. Employee benefit costs were higher
primarily due to increased amounts for pensions, postretirement benefits
other than pensions and amortization of reorganization, early retirement
and severance costs.
Other operations expense increased by $5.1 million in 1993, as compared
with 1992, primarily due to an increase in labor costs, computer system
conversion costs and the provision for uncollectible accounts.
The level of maintenance and repair expenses depends primarily upon the
scheduling, magnitude and number of unit overhauls at the company's
generating stations. During 1993, these expenses decreased by $2.5 million
due primarily to lower maintenance costs at the Reid Gardner and Navajo
Generating Stations.
Depreciation expense increased $6.1 million in 1994 and $4.3 million in
1993 because of a growing electric plant asset base.
General taxes increased by $2.3 million in 1993 primarily due to higher
assessed property values and rates for property tax purposes.
OTHER INCOME AND EXPENSES
Other miscellaneous, net includes income of $4.2 million net of tax in 1994
for the resolution of the Mohave accident replacement power case.
Other miscellaneous, net includes a charge of $3.2 million net of tax in
1993 for a write-off of costs related to environmental and engineering
studies for the canceled coal-fired White Pine Power Project. A rate
decision by the PSC on January 24, 1994, resulted in a write-off of $2
million net of tax in 1993 for previously deferred energy costs.
Other miscellaneous, net includes a charge of $2.6 million net of tax in
1992 for a write-off of costs related to the property loss on a faulty
cooling tower at the company's Reid Gardner Generating Station unit 4 and
associated legal fees. On August 4, 1992, the PSC issued an order resulting
in a write-off of $2.4 million net of tax for previously deferred energy
costs.
NEVADA POWER COMPANY 1994 Annual Report 19
STATEMENTS OF INCOME
For the Years Ended December 31,
(In thousands, except per share amounts) 1994 1993 1992
-------------------------------------------------------------------------
ELECTRIC REVENUES (Note 1) $764,158 $651,772 $600,915
-------------------------------------------------------------------------
OPERATING EXPENSES AND TAXES:
Fuel 106,040 98,701 96,563
Purchased and interchanged power 257,517 242,803 200,344
Deferred energy cost adjustments,
net (Note 1) 27,849 (31,490) (12,834)
-------------------------------------------------------------------------
Net energy costs 391,406 310,014 284,073
Other production operations 17,128 17,715 17,594
Other operations 96,251 82,300 77,198
Maintenance and repairs 38,765 35,379 37,911
Provision for depreciation (Note 1) 50,357 44,216 39,949
General taxes (Note 2) 17,051 16,401 14,093
Federal income taxes (Notes 1 and 2) 39,403 37,278 29,975
-------------------------------------------------------------------------
650,361 543,303 500,793
-------------------------------------------------------------------------
OPERATING INCOME 113,797 108,469 100,122
-------------------------------------------------------------------------
OTHER INCOME (EXPENSES):
Allowance for other funds used during
construction (Note 1) 6,771 9,880 8,251
Other miscellaneous, net 4,317 (5,496) (10,127)
-------------------------------------------------------------------------
11,088 4,384 (1,876)
-------------------------------------------------------------------------
INCOME BEFORE INTEREST DEDUCTIONS 124,885 112,853 98,246
-------------------------------------------------------------------------
INTEREST DEDUCTIONS:
Interest on long-term debt 44,625 43,173 43,500
Other interest 2,572 1,931 2,185
Allowance for borrowed funds used
during construction (Note 1) (4,182) (5,799) (4,219)
-------------------------------------------------------------------------
43,015 39,305 41,466
-------------------------------------------------------------------------
NET INCOME 81,870 73,548 56,780
DIVIDEND REQUIREMENTS ON PREFERRED STOCK 3,976 3,986 4,262
-------------------------------------------------------------------------
EARNINGS AVAILABLE FOR COMMON STOCK $ 77,894 $ 69,562 $ 52,518
-----------------------------------------================================
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 42,784 39,482 35,652
-----------------------------------------================================
EARNINGS PER AVERAGE COMMON SHARE $ 1.82 $ 1.76 $ 1.47
-----------------------------------------================================
See Notes to Financial Statements.
20 NEVADA POWER COMPANY 1994 Annual Report
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
(In thousands) 1994 1993 1992
------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 81,870 $ 73,548 $ 56,780
Adjustments to reconcile net income
to net cash provided -
Depreciation and amortization 65,064 55,139 47,356
Deferred income taxes and
investment tax credits 5,474 16,504 12,030
Allowance for other funds used
during construction (6,771) (9,880) (8,251)
Changes in -
Receivables (21,516) (4,591) (2,635)
Fuel stock and materials
and supplies 2,689 5,490 5,928
Accounts payable and other
current liabilities 1,485 27,290 17,296
Deferred energy costs 23,980 (37,766) (8,916)
Accrued taxes and interest 3,801 1,868 (14,683)
Other assets and liabilities (11,806) 3,343 2,473
------------------------------------------------------------------------------
Net cash provided by operating
activities 144,270 130,945 107,378
------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures and
gross additions (183,856) (163,257) (171,074)
Investment in subsidiaries and other (303) (2,828) (4,531)
Salvage net of removal cost (190) 227 405
------------------------------------------------------------------------------
Net cash used in investing
activities (184,349) (165,858) (175,200)
------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of capital stock 75,818 107,329 78,066
Sale of long-term debt - 45,000 317,500
Change in funds held in trust 51,894 6,234 (21,135)
Coal contract buy-out (15,440) - -
Retirement of preferred stock and
long-term debt (7,441) (59,405) (175,745)
Decrease in short-term borrowing - - (71,000)
Cash dividends (71,688) (66,883) (60,596)
Other financing activities 6,914 2,623 738
------------------------------------------------------------------------------
Net cash provided by financing
activities 40,057 34,898 67,828
------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS (Note 1):
Net increase (decrease) during the period (22) (15) 6
Beginning of period 145 160 154
------------------------------------------------------------------------------
End of period $ 123 $ 145 $ 160
---------------------------------------------=================================
CASH PAID DURING THE PERIOD FOR:
Interest, net of amounts capitalized $ 52,074 $ 50,677 $ 55,926
---------------------------------------------=================================
Income taxes $ 32,500 $ 18,001 $ 13,793
---------------------------------------------=================================
See Notes to Financial Statements.
NEVADA POWER COMPANY 1994 Annual Report 21
BALANCE SHEETS
December 31, (In thousands) 1994 1993
------------------------------------------------------------------------------
ASSETS
Electrical Plant, at Original Cost (Notes 1, 8 and 10):
Production $ 765,339 $ 681,527
Transmission 286,679 277,543
Distribution 678,260 594,874
General 101,122 84,616
------------------------------------------------------------------------------
1,831,400 1,638,560
Less accumulated depreciation 495,691 451,302
------------------------------------------------------------------------------
Net plant in service 1,335,709 1,187,258
Construction work in progress 159,167 167,652
Property under capital leases 85,408 91,517
Plant held for future use 3,719 3,719
------------------------------------------------------------------------------
1,584,003 1,450,146
------------------------------------------------------------------------------
Investments (Notes 1 and 8) 21,602 21,822
------------------------------------------------------------------------------
Current Assets:
Cash and temporary cash investments 123 145
Customer receivables -
Billed 46,620 37,270
Unbilled (Note 1) 25,153 13,000
Reserve for doubtful accounts (1,395) (1,125)
Other receivables 6,033 15,465
Fuel stock, at average cost 11,434 16,613
Materials and supplies, at average cost 25,223 23,714
Deferred energy costs (Note 1) 25,714 58,783
Prepayments 9,657 8,313
------------------------------------------------------------------------------
148,562 172,178
------------------------------------------------------------------------------
Deferred Charges:
Debt expense, being amortized 27,316 28,645
Accumulated deferred taxes on proposed refund of
recovered energy costs - Mohave accident (Note 2) - 5,417
Other (Note 9) 125,906 131,129
------------------------------------------------------------------------------
153,222 165,191
------------------------------------------------------------------------------
$1,907,389 $1,809,337
--------------------------------------------------------======================
See Notes to Financial Statements.
22 NEVADA POWER COMPANY 1994 Annual Report
December 31, (In thousands) 1994 1993
------------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES
Capitalization
(See Schedules of Capitalization and Long-Term Debt):
Common shareholders' equity $ 731,749 $ 645,924
Redeemable cumulative preferred stock 38,000 38,000
Cumulative preferred stock with mandatory
sinking funds 4,064 4,264
Long-term debt 712,571 716,589
------------------------------------------------------------------------------
1,486,384 1,404,777
------------------------------------------------------------------------------
Current Liabilities:
Notes payable - 25,000
Current maturities and sinking fund requirements
(See Schedules of Capitalization and
Long-Term Debt) 57,551 7,496
Accounts payable, including salaries and wages 66,467 70,098
Accrued taxes 2,493 (1,131)
Accrued interest 6,239 6,212
Customers' service deposits 12,954 12,069
Accumulated deferred taxes on deferred energy costs 9,000 20,574
Other 26,405 19,372
------------------------------------------------------------------------------
181,109 159,690
------------------------------------------------------------------------------
Commitments and Contingencies (Note 8)
Deferred Credits and Other Liabilities:
Accumulated deferred investment tax
credits (Note 1) 33,924 35,384
Accumulated deferred taxes on income (Note 2) 135,152 126,133
Customers' advances for construction 34,896 28,455
Proposed refund of recovered energy costs -
Mohave accident - 16,698
Other (Note 9) 35,924 38,200
------------------------------------------------------------------------------
239,896 244,870
------------------------------------------------------------------------------
$1,907,389 $1,809,337
--------------------------------------------------------======================
See Notes to Financial Statements.
NEVADA POWER COMPANY 1994 Annual Report 23
SCHEDULES OF CAPITALIZATION
December 31, (Dollars in thousands) 1994 1993
------------------------------------------------------------------------------
COMMON SHAREHOLDERS' EQUITY
(NOTE 5):
Common stock, $1 par value,
authorized 70,000,000 shares;
issued and outstanding 45,382,370
and 41,505,195 shares at December 31,
1994 and 1993; stated at $ 48,587 $ 44,709
Premium on capital stock 568,315 496,367
Unamortized capital stock expense (4,753) (4,511)
Retained earnings 119,600 109,359
------------------------------------------------------------------------------
Total common shareholders' equity 731,749 49.2% 645,924 46.0%
------------------------------------------------------------------------------
REDEEMABLE CUMULATIVE PREFERRED
STOCK (NOTES 5 AND 7): $20 par
value, authorized 4,500,000 shares
for all series; Outstanding at
December 31, 1994 and 1993: 9.90%
Series, 1,900,000 shares 38,000 38,000
------------------------------------------------------------------------------
Total 38,000 2.6 38,000 2.7
------------------------------------------------------------------------------
CUMULATIVE PREFERRED STOCK WITH
MANDATORY SINKING FUNDS (NOTE 5):
Outstanding at December 31, 1994 and 1993:
5.40% Series, 44,669 and 46,669 shares 894 934
5.20% Series, 42,507 and 44,507 shares 850 890
4.70% Series, 126,000 and 132,000 shares 2,520 2,640
------------------------------------------------------------------------------
4,264 4,464
Current sinking fund requirement (200) (200)
------------------------------------------------------------------------------
Total 4,064 .3 4,264 0.3
------------------------------------------------------------------------------
LONG-TERM DEBT
(See Schedules of Long-Term Debt) 712,571 47.9 716,589 51.0
------------------------------------------------------------------------------
Total capitalization $1,486,384 100.0% $1,404,777 100.0%
-------------------------------------------===================================
24 NEVADA POWER COMPANY 1994 Annual Report
SCHEDULES OF LONG-TERM DEBT
December 31, (In thousands) 1994 1993
---------------------------------------------------------------------
LONG-TERM DEBT (NOTES 6, 7 AND 8):
First mortgage bonds:
7 1/8% Series I due 1998 $ 15,000 $ 15,000
7 5/8% Series L due 2002 15,000 15,000
7 1/8% Series N due 2006 13,000 13,000
6 3/4% Series O due 2007 6,700 7,100
8 3/4% Series P due 1995 402 423
7.80% Series T due 2009 15,000 15,000
6.92% Series U due 1995 50,000 50,000
6.70% Series V due 2022 105,000 105,000
6.60% Series W due 2019 39,500 39,500
7.20% Series X due 2022 78,000 78,000
6.93% Series Y due 1999 45,000 45,000
8.50% Series Z due 2023 45,000 45,000
---------------------------------------------------------------------
427,602 428,023
Industrial development revenue bonds:
7.80% due 2020 100,000 100,000
Floating rate weekly demand -
Due 2015 44,000 44,000
Due 2018 25,000 25,000
Due 2019 60,000 60,000
Less funds held in trust (7,158) (59,051)
6 3/8% pollution control revenue bonds due 2004 15,000 16,000
Obligations under capital leases 105,522 109,968
---------------------------------------------------------------------
769,966 723,940
Debt premium and discount, being amortized (44) (55)
Current maturities and sinking fund requirements (57,351) (7,296)
---------------------------------------------------------------------
Total long-term debt $712,571 $716,589
---------------------------------------------------==================
NEVADA POWER COMPANY 1994 Annual Report 25
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
(In thousands) 1994 1993 1992
--------------------------------------------------------------------------
BALANCE AT BEGINNING OF PERIOD $109,359 $102,493 $107,516
Add - Net Income 81,870 73,548 56,780
--------------------------------------------------------------------------
191,229 176,041 164,296
--------------------------------------------------------------------------
Deduct:
Dividends paid in cash:
Cumulative preferred stock -
5.40%, 5.20% and 4.70% Series 214 224 233
9.90% Series (Note 5) 3,762 3,762 4,572
Common stock 67,653 62,696 56,998
--------------------------------------------------------------------------
71,629 66,682 61,803
--------------------------------------------------------------------------
Balance at End of Period $119,600 $109,359 $102,493
--------------------------------------====================================
See Notes to Financial Statements.
26 NEVADA POWER COMPANY 1994 Annual Report
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
For ratemaking and other purposes, the company is subject to the
jurisdiction of the PSC and the Federal Energy Regulatory Commission (FERC).
The accounting records of the company are maintained in accordance with the
uniform system of accounts prescribed by the FERC and adopted by the PSC.
ELECTRIC REVENUES - The company bills its customers monthly on a cycle
basis and recognizes the estimated amount of revenue applicable to
kilowatthours of energy sold but not yet billed at the end of an accounting
period.
DEFERRED ENERGY COST ADJUSTMENTS - As permitted by state statute, the
company defers differences between the current cost of fuel plus net
purchased power and base energy costs as defined. Any over or under
recoveries are deferred in the balance sheet as a current asset or current
liability. Under regulations adopted by the PSC, deferred energy rates are
revised at least every 12 months to clear the accumulated deferred balance
over a future period.
ELECTRIC PLANT - The costs of betterments and additions to electric plant
and replacements of retirement units of property are capitalized. Such
costs include labor, payroll taxes, material, transportation, an allowance
for funds used during construction and, where applicable, property taxes.
Maintenance is charged with the cost of repairs and minor replacements.
Accumulated depreciation is charged for the cost of plant retired, less net
salvage.
Depreciation has been provided for financial statement purposes on a
straight-line basis at rates based upon the estimated useful lives of the
various classes of plant. The provisions for depreciation during 1994, 1993
and 1992 were equivalent to an annual rate of approximately 2.9 percent of
the average gross investment in depreciable plant.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION - The allowance for funds used
during construction (AFUDC) represents the estimated costs of borrowed and
equity funds applicable to electric plant construction.
The FERC has prescribed a specific computational method for determining
the AFUDC rate. The PSC has authorized the AFUDC rate to be the lesser of
the rate determined under the FERC computational method or the rate
equivalent to the overall rate of return authorized by the PSC. Through
December 31, 1992, the company used a rate of 10.02 percent to calculate
AFUDC on construction work in progress as authorized by the PSC, effective
July 1992. In January 1993, the company began using an AFUDC rate as
calculated under the FERC computational method which averaged 9.73 percent
for 1994 and 9.88 percent for 1993.
FEDERAL INCOME TAXES - Effective January 1, 1993, the company adopted the
provisions of FAS 109, Accounting for Income Taxes. FAS 109 requires
recognition of deferred tax liabilities and assets for the future tax
consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax
bases of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse. The cumulative
effect of the change in accounting for income taxes was not material to net
income.
In November 1991, the PSC issued an order which allows the company to
recover the previously flowed through tax benefits ratably over the
estimated remaining book life of the plant. Calculated at current rates,
approximately $37 million of income taxes will be allowed in future rates.
Investment tax credits earned have been deferred and are being amortized
to income ratably over the estimated service lives of the related property.
CASH FLOW INFORMATION - Cash equivalents, which generally are convertible
to cash at par on short notice and mature three months or less from the
date of acquisition, are reported as temporary cash investments.
The company had no material noncash investing or financing transactions
during 1994, 1993 or 1992.
OTHER ACCOUNTING POLICIES - The company uses the equity method of
accounting to report immaterial investments in subsidiaries.
Certain amounts in prior periods have been reclassified to conform to
the financial statement presentation for December 31, 1994.
NEVADA POWER COMPANY 1994 Annual Report 27
2. FEDERAL INCOME AND OTHER TAXES
The total federal income tax expense as set forth in the accompanying
Statements of Income results in an effective federal income tax rate
different than the statutory federal income tax rate for the following
reasons:
For the Years Ended December
31, (Dollars in thousands) 1994 1993 1992
-------------------------------------------------------------------------
Federal income tax at
statutory rate $44,305 35.0% $39,625 35.0% $29,241 34.0%
Adjustments:
Investment tax credit
amortization (1,460) (1.2) (1,303) (1.2) (1,618) (1.9)
Other items 1,871 1.5 1,344 1.2 1,600 1.9
-------------------------------------------------------------------------
Total recorded federal
income tax $44,716 35.3% $39,666 35.0% $29,223 34.0%
----------------------------=============================================
Federal income taxes
included in:
Operating expenses $39,403 $37,278 $29,975
Other income, net 5,313 2,388 (752)
-------------------------------------------------------------------------
$44,716 $39,666 $29,223
----------------------------=============================================
The current and deferred components of federal income taxes included in
operating expenses are as follows:
For the Years Ended December 31,
(In thousands) 1994 1993 1992
-------------------------------------------------------------------------
Current federal income taxes $35,516 $20,680 $18,213
-------------------------------------------------------------------------
Deferred federal income taxes:
Depreciation differences 13,134 8,899 13,823
Deferred energy costs (11,574) 11,765 (434)
Contributions in aid of
construction (3,028) (1,732) (1,437)
Coal contract buyout (1,039) (945) (1,009)
Other - net 7,854 (86) 2,437
-------------------------------------------------------------------------
5,347 17,901 13,380
-------------------------------------------------------------------------
Investment tax credit amortization (1,460) (1,303) (1,618)
-------------------------------------------------------------------------
Total $39,403 $37,278 $29,975
--------------------------------------===================================
General taxes charged to operating expenses are as follows:
For the Years Ended December 31,
(In thousands) 1994 1993 1992
-------------------------------------------------------------------------
Real estate and personal property $11,853 $11,338 $ 9,408
Payroll 4,968 4,748 4,285
Other 230 315 400
-------------------------------------------------------------------------
Total $17,051 $16,401 $14,093
--------------------------------------===================================
The company adopted FAS 109, Accounting for Income Taxes, effective January
1, 1993. As a result, the company's December 31, 1994 balance sheet
contains a net regulatory asset of $7.9 million. (See Note 9 of "Notes to
Financial Statements.")
The regulatory liability for temporary differences related to
liberalized depreciation will continue to be amortized using the average
rate assumption method required by the Tax Reform Act of 1986. The
regulatory liability for temporary differences caused by investment tax
credits will be amortized ratably in the same fashion as the accumulated
deferred investment credit under former Internal Revenue Code Section
46(f)(2).
The net accumulated deferred federal income tax liability consists of
accumulated deferred federal income tax liabilities less accumulated
deferred federal income tax assets related to:
December 31, (In thousands) 1994 1993
------------------------------------------------------------------------
ACCUMULATED DEFERRED FEDERAL INCOME
TAX LIABILITIES:
Temporary basis differences - plant $ (26,128) $ (33,058)
Investment tax credits (33,924) (35,384)
Excess of tax depreciation over book
depreciation (96,640) (83,309)
Coal contract buyout (1,212) (2,251)
Accrued taxes (1,880) (1,985)
Deferred energy (9,000) (20,574)
Demand-side program costs (4,301) (3,686)
Other (4,991) (1,844)
------------------------------------------------------------------------
Total (178,076) (182,091)
------------------------------------------------------------------------
ACCUMULATED DEFERRED FEDERAL INCOME
TAX ASSETS:
Unamortized investment tax credits 18,267 19,053
Refundable customer advances 11,700 9,867
Purchased power - 5,417
Nonrefundable contributions in aid
of construction 3,705 2,510
Capitalized expenses 985 1,439
Other 2,233 1,949
------------------------------------------------------------------------
Total 36,890 40,235
------------------------------------------------------------------------
Net accumulated deferred tax liability $(141,186) $(141,856)
----------------------------------------------==========================
28 NEVADA POWER COMPANY 1994 Annual Report
3. Employee Benefits
DEFINED CONTRIBUTION RETIREMENT PLAN - The company maintains an employee
investment plan (401(k) Plan) which was established January 1, 1990, under
Section 401(k) of the Internal Revenue Code. Employees who are at least 21
years old and who have completed one year of eligibility service may become
"participants" in the 401(k) Plan. The company matched 50 percent in 1994,
1993 and 1992 of any Management, Professional, Administrative and Technical
participant's contributions to the 401(k) Plan not to exceed 3 percent of
the participant's annual compensation. In the first two months of 1994 and
all of 1993 and 1992, the company matched 25 percent of any union-
represented participant's contributions to the 401(k) Plan not to exceed
1.5 percent of the participant's annual compensation. Effective March 1,
1994, the company matched 50 percent of any union-represented participant's
contributions to the 401(k) Plan not to exceed 3 percent of the
participant's annual compensation. All company contributions are invested
in common stock of the company. The amounts expensed for company matching
contributions to the 401(k) Plan were $1,276,000 for 1994, $921,000 for
1993 and $629,000 for 1992.
DEFINED BENEFIT RETIREMENT PLAN - The company has a non-contributory
defined benefit retirement plan (PLAN) designed to meet the provisions of
the Employee Retirement Income Security Act of 1974. All employees age 21
and over with one year of service and at least 1,000 hours worked are
covered by the PLAN. Benefits under the PLAN are dependent upon each
participant's salary for the highest consecutive 60 months of service and
length of service.
The company also has a Supplemental Executive Retirement Plan (SERP) in
addition to the regular PLAN. Participation is limited to such officers as
the Board of Directors may select. Presently, 27 active or retired
designated officers and employees participate in the SERP. The SERP will be
funded as benefits are disbursed.
The table below sets forth the funded status and amounts recognized in
the company's financial statements at December 31, 1994, 1993 and 1992 for
both the PLAN and SERP.
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligations for both the PLAN and SERP were 8.75 percent and 4.5 percent in
1994, 7.25 percent and 4.5 percent in 1993, and 8.25 percent and 5 percent
in 1992, respectively. The expected rate of return on PLAN assets was 8.5
percent in 1994, 1993 and 1992. PLAN assets are primarily invested in
listed stocks, fixed income securities and federal agencies securities.
RECONCILIATION OF FUNDED STATUS
PLAN SERP
--------------------------- -------------------------
For the Years Ended
December 31, (In thousands) 1994 1993 1992 1994 1993 1992
------------------------------------------------------------------------------
Actuarial present
value of:
Vested benefit
obligation $ 54,713 $ 54,434 $40,592 $ 3,202 $ 3,854 $ 2,814
Nonvested benefit
obligation 5,235 3,875 4,217 2,106 514 375
------------------------------------------------------------------------------
Accumulated benefit
obligation $ 59,948 $ 58,309 $44,809 $ 5,308 $ 4,368 $ 3,189
-------------------------=====================================================
Projected benefit
obligation $ 77,601 $ 80,575 $63,121 $ 6,253 $ 4,837 $ 3,452
Plan assets at
fair value 57,966 60,236 54,575 - - -
------------------------------------------------------------------------------
Plan assets less
than projected
benefit obligation (19,635) (20,339) (8,546) (6,253) (4,837) (3,452)
Unrecognized net
transition obligation
amortized over
approximately nine years - - - - 129 303
Unrecognized prior
service costs 7,792 5,577 6,005 692 412 166
Unrecognized net loss 3,763 8,949 2,925 1,895 1,267 209
------------------------------------------------------------------------------
Pension asset
(liability) $ (8,080) $ (5,813) $ 384 $(3,666) $(3,029) $(2,774)
-------------------------=====================================================
Net pension expense
was comprised of
the following:
Service cost $ 3,928 $ 3,284 $ 3,147 $ 175 $ 67 $ 76
Interest cost on
projected benefit
obligation 6,576 5,243 4,900 498 297 278
Return on plan assets 183 (5,371) (1,739) - - -
Net amortization and
deferral (4,433) 1,021 (2,117) 409 197 331
------------------------------------------------------------------------------
Net periodic pension
cost $ 6,254 $ 4,177 $ 4,191 $ 1,082 $ 561 $ 685
-------------------------=====================================================
NEVADA POWER COMPANY 1994 Annual Report 29
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS - The company adopted Statement
of Financial Accounting Standards No. 106 (FAS 106), Employers' Accounting
for Postretirement Benefits Other Than Pensions, effective January 1, 1993.
The costs of these benefits have been expensed on a pay-as-you-go basis
prior to the company adopting FAS 106. In July 1992, the PSC authorized the
company to continue recognizing these benefit costs on a pay-as-you-go basis
after adopting FAS 106 and to record any difference in costs resulting from
the implementation of FAS 106 as a deferred asset. As a result of the
stipulation approved by the PSC on July 6, 1994, the company is no longer
recognizing these benefit costs on a pay-as-you-go basis and began using
the accrual method. The company is amortizing the FAS 106 deferred asset at
March 31, 1994 over a period of eight years. The company has elected to
amortize its transition obligation at January 1, 1993 over a period of 20
years.
The company provides postretirement medical, dental and vision benefits
to employees who have retired or will retire and are eligible for an
immediate pension benefit. The postretirement health care plan is
contributory, and retirees' contributions can be adjusted annually for
increases in the cost of providing the benefits.
Net periodic postretirement benefit cost for the years ended December
31, 1994 and 1993 included the following components:
(In thousands) 1994 1993
-------------------------------------------------------------------------
Service cost benefit earned during the year $ 617 $ 614
Interest cost on projected benefit obligation 1,837 1,881
Amortization of transition obligation 1,139 1,166
-------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 3,593 $ 3,661
--------------------------------------------------=======================
A reconciliation of the funded status of the plan to the amounts recognized
in the Balance Sheets as of December 31, 1994 and 1993 is as follows:
(In thousands) 1994 1993
-------------------------------------------------------------------------
Retirees $(14,512) $(10,270)
Fully eligible active employees (1,879) (8,749)
Other active employees (5,642) (6,777)
-------------------------------------------------------------------------
Accumulated postretirement benefit obligation (22,033) (25,796)
Unrecognized transition obligation 20,983 22,149
Unrecognized (gain) loss (5,041) 542
-------------------------------------------------------------------------
Accrued postretirement benefit liability $ (6,091) $ (3,105)
--------------------------------------------------=======================
The medical cost trend rate assumed for 1995 was 9.5 percent, grading down
to 4.75 percent in 2001 and remaining at that level thereafter. The health
care cost trend rate has a significant effect on the accumulated
postretirement benefit obligation and net periodic cost. A one-percentage-
point increase in the assumed health care cost trend rate would increase
the accumulated postretirement benefit obligation at December 31, 1994 by
$1.8 million and would increase the aggregate of the service and interest
cost components of net periodic post-retirement benefit cost for 1994 by
$133,000. The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation at December 31, 1994 was 8.75
percent.
4. SHORT-TERM BORROWINGS
The company has a $125 million bank revolving credit facility which expires
on November 21, 1997, and pays commitment fees based on both the unused
amount of the facility and the company's first mortgage bond ratings.
Borrowing rates under the bank line are determined by both current market
rates and the company's first mortgage bond ratings. There were no short-
term borrowings outstanding on the bank line at December 31, 1994 and 1993.
5. Capital Stock
The changes in common stock shares for 1992, 1993 and 1994 are as follows:
Shares
--------------------------------------------------------------------------
Outstanding, December 31, 1991 32,975,467
Issued through public offering 2,990,000
Issued under 401(k) Savings Plan 27,644
Issued under Stock Purchase and Dividend Reinvestment Plan 1,139,706
--------------------------------------------------------------------------
Outstanding, December 31, 1992 37,132,817
Issued through public offering 2,700,000
Issued under 401(k) Savings Plan 32,052
Issued under Stock Purchase and Dividend Reinvestment Plan 1,640,326
--------------------------------------------------------------------------
Outstanding, December 31, 1993 41,505,195
Issued through public offering 2,000,000
Issued under 401(k) Savings Plan 52,055
Issued under Stock Purchase and Dividend Reinvestment Plan 1,825,120
--------------------------------------------------------------------------
Outstanding, December 31, 1994 45,382,370
----------------------------------------------------------------==========
30 NEVADA POWER COMPANY 1994 Annual Report
Premium on capital stock increased $72 million, $103 million and $73.9
million during 1994, 1993 and 1992, respectively, due to issuances of
common stock. Cash dividends paid per share on common stock were $1.60 each
year during 1994, 1993 and 1992.
On April 30, 1992, the company issued shares of Redeemable Cumulative
Preferred Stock, 9.90% Series consisting of the previously issued shares of
Auction Preferred Stock. The company elected to establish a 10-year
dividend period for this preferred stock, with mandatory redemption April 1,
2002. This preferred stock is redeemable at the option of the company, as a
whole or in part, on April 1, 1997. The dividend rate on the shares of
Redeemable Cumulative Preferred Stock, 9.90% Series was determined at an
auction held on April 23, 1992. Dividends on the shares are cumulative from
April 30, 1992, and will be payable when, as and if declared, quarterly on
January 1, April 1, July 1 and October 1 of each year commencing July 1,
1992.
Under the provisions of the 4.70%, 5.20% and 5.40% series cumulative
preferred stock with mandatory sinking funds, the company is obligated to
use its best efforts to purchase, each year, up to an aggregate of 6,000,
2,000 and 2,000 shares, respectively, at prices not in excess of $20.00 per
share. The obligations are not cumulative. The 5.20% series and 5.40%
series are presently redeemable at the option of the company at $21.00 per
share and the 4.70% series at $20.25 per share.
In October 1990, the company adopted a Stockholder Rights Plan and
issued through dividend to its common shareholders one stock purchase right
for each outstanding share of common stock. The rights expire in October
2000. The rights to purchase junior preference shares, common shares or
shares of a successor corporation are not exercisable unless certain events
occur and are intended to assure fair shareholder treatment in any takeover
of the company and to guard against abusive takeover tactics.
6. LONG-TERM DEBT
None of the long-term debt is held by or for the account of the company.
The amounts of long-term debt maturities, including sinking fund
requirements, are $57.3 million in 1995, $8 million in 1996, $7.9 million
in 1997, $22.1 million in 1998 and $52.8 million in 1999, including $5.2
million, $5.3 million, $5.2 million, $4.5 million and $4.9 million for
obligations under capital leases, respectively.
Generally, electric plant is subject to the first mortgage lien. It is
the company's intention to meet the sinking fund requirements for its
series I and L first mortgage bonds by pledging property additions in lieu
of cash payments. The N, O and P series first mortgage bonds provide for
annual payments sufficient to ratably retire the respective series by their
final due dates. Payments on the N series do not commence until 1996. The
series N, O, T, V, W and X first mortgage bonds correspond with respect to
their terms to four series of collateralized pollution control revenue
bonds and two series of industrial development revenue bonds issued by
various municipal authorities. The indentures under which the company's
first mortgage bonds were issued provide for an immaterial restriction as
to distributions to shareholders at December 31, 1994.
The fixed rate industrial development bonds and floating rate industrial
development bonds were issued by Clark County, Nevada and are guaranteed as
to payment of principal and interest by the company.
The indenture for the 6 3/8% pollution control revenue bonds due 2004
provides for annual sinking fund payments of $1 million to and including
March 1, 2003 and a final payment of $6 million on March 1, 2004.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
Disclosure by the company of the estimated fair value of financial
instruments is made in accordance with the requirements of Statement of
Financial Accounting Standards No. 107 (FAS 107), Disclosures about Fair
Value of Financial Instruments. At December 31, 1994 and 1993, the
provisions of FAS 107 apply only to the company's long-term debt and
redeemable cumulative preferred stock.
In accordance with FAS 107, the company estimates the fair value of its
redeemable cumulative preferred stock based on the per share closing price
times the number of shares outstanding and its long-term debt based on
quoted market prices for the same or similar issues or on current interest
rates available to the company for debt with similar terms and maturity.
The book value and estimated fair value of the redeemable cumulative
preferred stock were $38 million and $40.3 million at December 31, 1994 and
$38 million and $43.6 million at December 31, 1993, respectively. The book
value and estimated fair value of the company's long-term debt, including
current maturities and sinking fund requirements and excluding obligations
under capital leases, were $664 million and $664 million at December 31,
1994, and $614 million and $665 million at December 31, 1993, respectively.
The estimates presented herein are not necessarily indicative of the
amounts that the company could realize in a current market exchange. The
use of different market assumptions and/or estimation methodologies may
have an effect on the estimated fair value amounts.
NEVADA POWER COMPANY 1994 Annual Report 31
8. COMMITMENTS AND CONTINGENCIES
RATE MATTERS - On July 11, 1991, Nevada Electric Investment Co. (NEICO),
the company's unregulated subsidiary, sold a 50 percent undivided ownership
interest in certain coal mining assets to the Intermountain Power Agency
(IPA), and NEICO and IPA conducted the coal mining operations as joint
venturers under the name of the Crandall Canyon Project. On January 11,
1995, NEICO sold its remaining 50 percent undivided ownership interest in
the coal mining assets. The initial sale transaction has been inquired
into by the PSC, and no gain has been recorded pending regulatory
review.
LEGAL MATTERS - The company is involved in litigation arising in the
normal course of business. While the results of such litigation cannot be
predicted with certainty, management, based upon advice of counsel,
believes that the final outcome will not have a material adverse effect on
the company's financial position and results of operations.
ENVIRONMENTAL MATTERS - The Federal Clean Air Act Amendments of 1990
(Amendments) include provisions which will affect the company's existing
steam generating facilities and all new fossil fuel fired facilities. Title
IV of the Amendments provides a national cap on sulfur dioxide emissions by
mandating emissions reductions for many electric steam generating
facilities. The sulfur dioxide provisions of the Amendments will not
adversely affect the company because the company's steam units burn low
sulfur fuels or have sulfur dioxide control equipment. Title IV of the
Amendments also provides for reduction of emissions of oxides of nitrogen
by establishing new emission limits for coal-fired generating units. This
Title will require the installation of additional pollution-control
technology at some of the Reid Gardner Station generating units before 2000
at an estimated cost to the company of no more than $6 million.
The United States Congress authorized the U.S. Environmental Protection
Agency (EPA) to study the potential impact the Mohave Generating Station
(Mohave) and other sources and areas may have on visibility in national
parks and recreational areas of the Colorado Plateau. The Grand Canyon
Visibility Transport Commission is required to make a recommendation to the
EPA prior to November of 1995 regarding ways to improve regional haze in
these areas. A variety of actions are being considered including further
imposition of pollution controls or emissions limitations upon large
pollution sources. Also, the Nevada Division of Environmental Protection
has imposed more stringent stack opacity limits for Mohave. This will
affect the company's utilization of resources, but, until more experience
is gained by operating at the new opacity levels, optimal utilization
cannot be determined. As a 14 percent owner of Mohave, the company will be
required to fund any plant improvements that may result from the EPA study
and operation at the new opacity levels. The cost of any potential
improvements cannot be estimated at this time.
In 1991, the EPA published an order requiring the Navajo Generating
Station (Navajo) to install scrubbers to remove 90 percent of sulfur
dioxide emissions beginning in 1997. As an 11.3 percent owner of Navajo,
the company will be required to fund an estimated $56.5 million for
installation of the scrubbers. In 1992, the company received resource
planning approval from the PSC for its share of the cost of the scrubbers.
LEASES - In 1984, the company sold its administrative headquarters
facility, less furniture and fixtures, for $27 million and entered into a
30-year capital lease of that facility with five-year renewal options
beginning in year 31. The fixed rental obligation for the first 30 years is
$5.1 million per year. Future cash rental payments as of December 31, 1994,
are as follows:
(In thousands)
--------------------------------------------------------------------------
1995 $ 3,604
1996 3,605
1997 3,604
1998 3,605
1999 4,880
Thereafter 105,057
--------------------------------------------------------------------------
$124,355
------------------------------------------------------------------========
The amount of imputed interest necessary to reduce the future cash rental
payments to present value is $80.9 million as of December 31, 1994.
Total interest expense on the lease obligation was $4.9 million and
total amortization of the leased facility was $406,000 for the year ended
December 31, 1994. The total accumulated amortization of the leased
facility on December 31, 1994, was $9.4 million.
At December 31, 1994, the company has certain long-term noncancellable
operating lease agreements for which the future minimum lease payments are
immaterial.
FUEL AND PURCHASED POWER OBLIGATIONS - The company has nine long-term
contracts for the purchase of electric energy and/or capacity. The
contracts expire in years ranging from 1995 to 2016.
Total payments under these contracts were $58.3 million, $55.9 million
and $51.4 million in 1994, 1993 and 1992, respectively. The cost of power
obtained under these contracts is included in purchased power expense in
the Statements of Income.
32 NEVADA POWER COMPANY 1994 Annual Report
At December 31, 1994, the estimated future payments for capacity and
energy that the company is obligated to purchase under these contracts,
subject in part to certain conditions, are as follows:
Accounted for Accounted for
as Long-term as Long-term
(In thousands) Executory Contracts Capital Lease
------------------------------------------------------------------------
1995 $ 36,110 $ 13,986
1996 35,963 13,432
1997 39,626 12,902
1998 39,378 12,373
1999 20,345 11,844
Thereafter 11,319 133,787
------------------------------------------------------------------------
Total minimum payment $182,741 198,324
--------------------------------------========
Less amount representing estimated executory
costs included in total minimum payment (95,368)
------------------------------------------------------------------------
Net minimum payments 102,956
Less amount representing interest (40,870)
------------------------------------------------------------------------
Present value of net minimum payments $ 62,086
----------------------------------------------------------------========
Total interest expense on the purchase power obligation accounted for as a
capital lease was $6.2 million and total amortization was $5.6 million in
1994. Total accumulated amortization was $20.9 million as of December 31,
1994.
The company has contracted with various coal suppliers to provide coal
to the Reid Gardner Generating Station. The contracts expire in years
ranging from 1995 to 2007.
The costs of approximately $30.1 million, $34.7 million and $23.2
million were incurred under the long-term coal contracts in 1994, 1993 and
1992, respectively.
At December 31, 1994, the estimated future payments for coal that the
company is obligated to purchase under these contracts are as follows:
(In thousands)
------------------------------------------------------------------------
1995 $ 15,688
1996 14,644
1997 14,937
1998 15,236
1999 15,729
Thereafter 126,486
------------------------------------------------------------------------
$202,720
----------------------------------------------------------------========
CONSTRUCTION - Certain commitments have been incurred at December 31, 1994,
in connection with the 1995 construction budget. Construction expenditures
are estimated at $169 million, excluding AFUDC, for 1995.
9. OTHER DEFERRED CHARGES AND CREDITS
OTHER DEFERRED CHARGES - At December 31, 1994, as a result of the company
adopting FAS 109 effective January 1, 1993, other deferred charges include
a regulatory asset of $39.1 million and a deferred tax asset of $18.3
million. The regulatory asset represents future revenue to be received from
customers due to the flow-through of tax benefits of temporary differences
in prior years and the deferred tax asset is from temporary differences
caused by investment tax credits.
At December 31, 1994, organizational study, early retirement and
severance costs of $6.9 million are included in other deferred charges and
are being amortized over an eight-year period effective February 1994.
These costs are a result of the completion of a comprehensive
organizational study started in 1993.
In March 1994, the company bought out the remaining obligation under a
coal purchase contract with Mountain Coal Co. At December 31, 1994, $15.3
million for the company's portion of the buyout is included in other
deferred charges. Management believes the cost of the buyout will be
recovered through Nevada's deferred energy accounting procedures.
In May 1988, after securing PSC approval, the company paid United States
Fuel Company $23.5 million to terminate an existing coal supply agreement.
The amount paid plus carrying charges is being amortized over eight years
and the amounts included in other deferred charges and deferred energy
costs as of December 31, 1994, were $3.5 million and $2.5 million,
respectively.
Other deferred charges as of December 31, 1994, also include $15.4
million for deferred federal income taxes on customer advances for
construction and $11.5 million for conservation programs.
OTHER DEFERRED CREDITS - As of December 31, 1994, a credit of $3.5 million
for generating station spare parts is included in other deferred credits.
Effective January 1992, this credit is being amortized over a six-year
period.
Other deferred credits as of December 31, 1994, also include a
regulatory liability of $31.2 million representing amounts to be refunded to
customers in the future as a result of the company adopting FAS 109.
NEVADA POWER COMPANY 1994 Annual Report 33
10. INTERESTS IN JOINTLY OWNED ELECTRIC UTILITY FACILITIES
At December 31, 1994, the company owned the following undivided interests
in jointly owned electric utility facilities:
Company's Share of
-------------------------------------------------------------------------------
Percent Construction
Owned By Plant In Accumulated Net Plant Work In
(In thousands) Company Service Depreciation In Service Progress
-------------------------------------------------------------------------------
FACILITY
Navajo Project 11.3 $134,023 $ 63,063 $ 70,960 $10,579
Mohave Project 14.0 71,668 29,177 42,491 4,828
Reid Gardner
Plant Unit No. 4 32.2 136,143 33,312 102,831 2,535
-------------------------------------------------------------------------------
Total $341,834 $125,552 $216,282 $17,942
--------------------------------===============================================
The amounts above for Navajo and Mohave include the company's share of
transmission systems and general plant equipment and, in the case of
Navajo, the company's share of the jointly owned railroad which delivers
coal to the plant. Each participant provides its own financing for all of
these jointly owned facilities. The company's share of operating expenses
for these facilities is included in the corresponding operating expenses in
the Statements of Income.
11. QUARTERLY FINANCIAL DATA (UNAUDITED)
Earnings Earnings
Available per
for Average
(In thousands, except Electric Operating Net Common Common
per share amounts) Revenues Income Income Stock Share
---------------------------------------------------------------------------
QUARTER
1994: First $144,658 $12,196 $ 4,692 $ 3,697 $0.09
Second 195,788 28,161 23,193 22,199 0.53
Third 268,359 59,697 50,472 49,479 1.16
Fourth 155,353 13,743 3,513 2,519 0.06
1993: First 132,814 16,621 8,379 7,382 0.20
Second 142,318 23,022 15,238 14,241 0.37
Third 232,263 54,957 47,113 46,117 1.13
Fourth 144,377 13,869 2,818 1,822 0.04
The business of the company is seasonal in nature and it is management's
opinion that comparisons of earnings for the quarters do not give a true
indication of overall trends and changes in the company's operations.
The second quarter of 1994 reflects other income of $4.2 million net of
tax or 10 cents per average common share from the resolution of the PSC
investigation of replacement power costs resulting from a 1985 accident at
the Mohave Generating Station.
The fourth quarter of 1993 reflects write-offs of $5.6 million net of
tax or 14 cents per average common share for certain deferred amounts
including costs related to preliminary studies for the coal-fired White
Pine Power Project and for deferred energy.
34 NEVADA POWER COMPANY 1994 Annual Report
Independent Auditors' Report
To the Board of Directors and Shareholders of Nevada Power Company:
We have audited the balance sheets of Nevada Power Company as of December
31, 1994 and 1993, and the related statements of income, retained earnings
and cash flows for each of the three years in the period ended December 31,
1994. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of the company at December 31,
1994 and 1993, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1994 in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
February 10, 1995
REPORT OF MANAGEMENT
The management of Nevada Power Company is responsible for the financial
statements presented in this report. Management prepared the financial
statements in conformity with generally accepted accounting principles
applicable to public utilities which are consistent in all material
respects with the accounting prescribed by the Public Service Commission of
Nevada and the Federal Energy Regulatory Commission. In preparing the
financial statements, management made informed judgements and estimates
relating to events and transactions being reported.
The company has a system of internal accounting and financial controls
and procedures in place to insure that the financial records reflect the
transactions of the company and that assets are safeguarded. This system is
examined by management on a continuing basis for effectiveness and
efficiency and is reviewed on a regular basis by an internal audit staff
that reports directly to the Audit Committee of the Board of Directors.
The financial statements have been audited by Deloitte & Touche LLP,
independent auditors. The auditors provide an objective, independent review
as to management's discharge of its responsibilities as they relate to the
fairness of reported operating results and financial condition. Their audit
includes procedures which provide them reasonable assurance that the
financial statements are not misleading and includes a review of the
company's system of internal accounting and financial controls and a test
of transactions.
The Board of Directors has oversight responsibility for determining that
management has fulfilled its obligation in the preparation of financial
statements and the ongoing examination of the company's system of internal
accounting controls. The Audit Committee, which is composed solely of
outside directors, meets regularly with management, Deloitte & Touche LLP
and the internal audit staff to discuss accounting, auditing and financial
reporting matters. The Audit Committee reviews the program of audit work
performed by the internal audit staff. To insure auditor independence, both
Deloitte & Touche LLP and the internal audit staff have complete and free
access to the Audit Committee.
NEVADA POWER COMPANY 1994 Annual Report 35
STOCK PRICES ON NEW YORK STOCK EXCHANGE AND DIVIDENDS PER SHARE
1994 Quarters 1993 Quarters
-------------------------------- --------------------------------
First Second Third Fourth First Second Third Fourth
-------------------------------------------------------------------------------
Common
High $24 3/8 $22 1/4 $21 1/2 $20 7/8 $25 5/8 $25 3/4 $26 3/4 $26 1/4
Low 21 1/4 17 1/8 18 7/8 19 1/8 22 5/8 24 24 5/8 22 1/2
Dividend
paid .40 .40 .40 .40 .40 .40 .40 .40
High and low common stock prices shown are as reported by the Wall Street
Journal as New York Stock Exchange Composite Transactions. The common stock
is also listed on the Pacific Stock Exchange.
Holders of common stock are entitled to dividends as are declared by the
Board of Directors, subject to the rights of the cumulative preferred stock
and the preference stock of the company to quarterly cumulative dividends
as declared by the Board of Directors. The company has paid quarterly
dividends on its common stock since August 1954. See Note 6 of "Notes to
Financial Statements" for restriction on the company's ability to pay
dividends.
The company had 50,566 shareholders of record of common stock at December
31, 1994.
36 NEVADA POWER COMPANY 1994 Annual Report
STATISTICAL SUMMARY 1994-1990
1994 1993 1992 1991 1990
--------------------------------------------------------------------------------------------------------
SUMMARY OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS):
Electric Revenues:
Residential $ 331,671 $ 267,941 $ 245,160 $ 216,784 $ 194,911
Commercial and industrial 380,223 326,006 305,707 287,407 256,310
Other electric sales 43,732 48,504 42,011 34,459 35,057
Miscellaneous 8,532 9,321 8,037 7,761 6,043
----------- ----------- ----------- ---------- ----------
764,158 651,772 600,915 546,411 492,321
----------- ----------- ----------- ---------- ----------
Net Income (a) 81,870 73,548 56,780 35,176 24,992
Dividend Requirements on Preferred Stock 3,976 3,986 4,262 2,880 2,917
Earnings Available for Common Stock(a) $ 77,894 $ 69,562 $ 52,518 $ 32,296 $ 22,075
Weighted Average Number of Common
Shares Outstanding 42,784 39,482 35,652 30,855 28,330
Earnings Per Average Common Share(a) $ 1.82 $ 1.76 $ 1.47 $ 1.05 $ .78
Dividends Per Common Share $ 1.60 $ 1.60 $ 1.60 $ 1.60 $ 1.58
CAPITALIZATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS):
Long-Term Debt $ 712,571 $ 716,589 $ 715,451 $ 578,540 $ 521,340
Cumulative Preferred Stock 38,000 38,000 38,000 38,000 38,000
Cumulative Preferred Stock with Mandatory
Sinking Funds 4,064 4,264 4,464 4,664 4,864
Common Shareholders' Equity 731,749 645,924 532,473 460,307 406,291
Book Value Per Common Share $ 16.12 $ 15.56 $ 14.34 $ 13.96 $ 14.05
RETURN ON COMMON SHAREHOLDERS' EQUITY 10.64% 10.77% 9.86% 7.02% 5.43%
ELECTRIC PLANT INVESTMENT (IN THOUSANDS):
Gross $ 2,079,694 $ 1,901,448 $ 1,739,633 $1,562,921 $1,345,107
Depreciated 1,584,003 1,450,146 1,328,670 1,187,154 996,885
TOTAL ASSETS (IN THOUSANDS) $ 1,907,389 $ 1,809,337 $ 1,557,040 $1,410,022 $1,236,210
CONSTRUCTION EXPENDITURES
EXCLUDING AFUDC (IN THOUSANDS) $ 179,674 $ 157,458 $ 167,233 $ 145,271 $ 152,583
OPERATING AND SALES DATA:
Generating Capacity and Firm
Purchases (Megawatts) 3,462 3,488 2,989 2,719 2,534
Peak Load (Megawatts) 2,920 2,681 2,501 2,373 2,248
Electric Sales (Megawatthours) 11,942,724 11,155,270 10,541,204 9,834,952 9,619,723
Number of Customers (Year-End) 428,284 403,875 383,036 366,325 347,969
Average Annual Kilowatthour Sales
Per Residential Customer 13,605 13,008 13,343 13,213 13,331
NUMBER OF EMPLOYEES (YEAR-END) 1,759 1,741 1,734 1,689 1,639
(a) Amount for 1990 includes a provision for a proposed regulatory
disallowance and other adjustments.
Amount for 1991 includes write-offs for deferred energy and
environmental study costs.
Amount for 1993 includes write-offs for deferred energy costs and
preliminary study costs for a cancelled coal-fired generating
station project.
Amount for 1994 includes other income from the resolution of a
regulatory investigation of replacement power costs resulting from
a 1985 generating station accident.
NEVADA POWER COMPANY 1994 Annual Report 37
EX-10.72
3
LETTER OF CREDIT - SOCIETE GENERALE
[EXECUTION COPY]
------------------------------------------------------------
LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
dated as of April 12, 1994
between
NEVADA POWER COMPANY
and
SOCIETE GENERALE,
LOS ANGELES BRANCH
Relating to $60,000,000
Clark County, Nevada
Floating Rate Weekly Demand Industrial Development
Revenue Bonds
(Nevada Power Company Project)
Series 1989A
------------------------------------------------------------
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I.
DEFINITIONS . . . . . . . . . . . 2
SECTION 1.01. Certain Defined Terms . . . . . . . . 2
SECTION 1.02. Computation of Time Periods . . . . . 10
SECTION 1.03. Accounting Terms . . . . . . . . . . 10
SECTION 1.04. Internal References . . . . . . . . . 10
ARTICLE II.
AMOUNT AND TERMS OF THE LETTER OF CREDIT . . 10
SECTION 2.01. The Letter of Credit. . . . . . . . . 10
SECTION 2.02. Issuing the Letter of Credit. . . . . 10
SECTION 2.03. Commissions and Fees. . . . . . . . . 10
SECTION 2.04. Reimbursement On Demand . . . . . . . 12
SECTION 2.05. Advances and Interest . . . . . . . . 12
SECTION 2.06. Prepayments . . . . . . . . . . . . . 13
SECTION 2.07. Increased Costs . . . . . . . . . . . 13
SECTION 2.08. Increased Capital . . . . . . . . . . 14
SECTION 2.09. Payments and Computations . . . . . . 15
SECTION 2.10. Non-Business Days . . . . . . . . . . 15
SECTION 2.11. Extension of the Stated
Termination Date . . . . . . . . . 15
SECTION 2.12. Evidence of Debt. . . . . . . . . . . 16
SECTION 2.13. Obligations Absolute. . . . . . . . . 16
SECTION 2.14. Taxes . . . . . . . . . . . . . . . . 17
ARTICLE III.
CONDITIONS PRECEDENT . . . . . . . . . 18
SECTION 3.01. Conditions Precedent to Issuance
of the Letter of Credit . . . . . . . 18
SECTION 3.02. Additional Conditions Precedent to
Issuance of the Letter of Credit. . . 21
SECTION 3.03. Conditions Precedent to Each
Advance . . . . . . . . . . . . . . . 21
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES. . . . . . . 22
SECTION 4.01. Representations and Warranties of
the Company . . . . . . . . . . . . . 22
ARTICLE V.
COVENANTS OF THE COMPANY . . . . . . . . 27
SECTION 5.01. Affirmative Covenants . . . . . . . . 27
SECTION 5.02. Negative Covenants. . . . . . . . . . 34
ARTICLE VI.
EVENTS OF DEFAULT. . . . . . . . . . 35
SECTION 6.01. Events of Default . . . . . . . . . . 35
SECTION 6.02. Upon an Event of Default. . . . . . . 38
ARTICLE VII.
MISCELLANEOUS. . . . . . . . . . . 40
SECTION 7.01. Amendments, Etc.. . . . . . . . . . . 40
SECTION 7.02. Notices, Etc. . . . . . . . . . . . . 40
SECTION 7.03. No Waiver; Remedies . . . . . . . . . 40
SECTION 7.04. Right of Set-off. . . . . . . . . . . 40
SECTION 7.05. Indemnification . . . . . . . . . . . 41
SECTION 7.06. Bank Not Liable . . . . . . . . . . . 42
SECTION 7.07. Costs, Expenses and Taxes . . . . . . 43
SECTION 7.08. Binding Effect. . . . . . . . . . . . 44
SECTION 7.09. Severability. . . . . . . . . . . . . 44
SECTION 7.10. Governing Law; Submission to
Jurisdiction; etc. . . . . . . . . . 44
SECTION 7.11. Headings. . . . . . . . . . . . . . . 45
SECTION 7.12. Counterparts. . . . . . . . . . . . . 45
SECTION 7.13. Waiver of Jury Trial. . . . . . . . . 45
SECTION 7.14 Assignments and Participations. . . . 46
EXHIBIT A - Form of Irrevocable Letter of Credit with
Exhibits 1 through 5 thereto
EXHIBIT B - Form of Custodian Agreement
EXHIBIT C - Form of Opinion of General Counsel of the
Company
EXHIBIT D - Form of Opinion of Special Counsel to the
Company
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT,
dated as of April 12, 1994, between NEVADA POWER COMPANY, a
Nevada corporation (the "Company"), and SOCIETE GENERALE,
LOS ANGELES BRANCH (the "Bank").
PRELIMINARY STATEMENTS. (1) Clark County, Nevada
(the "Issuer") issued, pursuant to an Indenture of Trust,
dated as of April 1, 1989 (as amended, modified or
supplemented from time to time, the "Indenture"), by and
between the Issuer and United States Trust Company of New
York, as trustee (such entity, or its successor as trustee,
being the "Trustee"), $60,000,000 aggregate principal amount
of Floating Rate Weekly Demand Industrial Development
Revenue Bonds (Nevada Power Company Project), Series 1989A
(the "Bonds") to the Original Purchasers (as defined in the
Indenture).
(2) The Issuer and the Company entered into a
Financing Agreement, dated as of April 1, 1989 (as amended,
modified or supplemented from time to time, the "Financing
Agreement"), pursuant to which the Issuer loaned to the
Company substantially all of the proceeds resulting from the
issuance of the Bonds. The Issuer assigned the Financing
Agreement to the Trustee on behalf of the Bondholders to
secure the payment of the Bonds. In connection with the
issuance of the Bonds and pursuant to that certain letter of
credit and reimbursement agreement dated as of April 1, 1989
between Citibank, N.A. and the Company, Citibank, N.A.
issued an irrevocable letter of credit (the "Original Letter
of Credit") to support the payment of principal and interest
on the Bonds. The Original Letter of Credit is scheduled to
expire on April 12, 1994.
(3) The Company has requested that the Bank
issue, as a substitute letter of credit for the Original
Letter of Credit, its irrevocable, transferable letter of
credit in substantially the form of Exhibit A hereto (such
letter of credit, as it may from time to time be extended
pursuant to the terms of this Agreement, being the "Letter
of Credit"), in the amount of $61,602,740 (the "Stated
Amount"), of which (i) $60,000,000 shall support the payment
of principal of the Bonds (or the portion of the purchase
price of the Bonds corresponding to principal), and (ii)
$1,602,740 shall support the payment of up to 65 days'
interest on the principal amount of the Bonds (or the
portion of the purchase price of the Bonds corresponding to
interest), computed at 15% per annum on the basis of a year
of 365 days (the Bank's obligation to issue the Letter of
-1-
Credit as hereinafter provided being hereinafter referred to
as the Commitment (the "Commitment").
NOW, THEREFORE, in consideration of the premises
and in order to induce the Bank to issue the Letter of
Credit, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in
---------------------
this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"Advance" has the meaning provided in Section
-------
2.05(a) hereof.
"Affiliate" means any trade or business (whether
---------
or not incorporated) which is a member of a group of which
the Company is a member and which is under common control
within the meaning of the regulations under Section 414 of
the Code.
"Alternate Base Rate" means a fluctuating interest
-------------------
rate per annum equal at all times to the higher of:
(i) the rate of interest announced publicly
by the Bank in New York, New York, from time to
time as the Bank's Prime Rate; and
(ii) the rate equal to the sum of:
(x) the rate per annum obtained by
dividing (A) 1/2 of one percent above the
Federal Funds Rate in effect from time to
time by (B) a percentage equal to 100% minus
the Domestic Reserve Percentage, plus
(y) the Assessment Rate.
The Alternate Base Rate shall change concurrently with each
change in the Prime Rate or such calculated rate, as the
case may be.
-2-
"Applicable L/C Rate" shall mean (i) .625% for any
-------------------
day on which Level I Status exists, (ii) .375% for any day
on which Level II Status exists and (iii) .325% for any day
on which Level III Status exists.
"Assessment Rate" for any period means the annual
---------------
assessment rate per annum estimated by the Bank on the first
day of such period for determining the then current annual
assessment payable by the Bank to the Federal Deposit
Insurance Corporation (or any successor) for insuring U.S.
dollar deposits of the Bank in the United States.
"Authorized Representative" means (i) for the
-------------------------
Company, the Chairman of the Board, the President, the Vice
President, the Director, Treasury and the Secretary and (ii)
for any other Person, an authorized officer of such Person.
"Bond Purchase Agreement" means the Bond Purchase
-----------------------
Agreement, dated April 11, 1989, between the Issuer, on the
one hand, and Shearson Lehman Hutton Inc., Goldman, Sachs &
Co. and Merrill Lynch Capital Markets, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, on the other hand.
"Bonds" has the meaning assigned to that term in
-----
the first Preliminary Statement hereto.
"Business Day" means a day of the year on which
------------
banks are not required or authorized by law to close in New
York City or in Los Angeles, California.
"Cancellation Date" has the meaning assigned to
-----------------
that term in the Letter of Credit.
"Code" means the Internal Revenue Code of 1986, as
----
amended from time to time after the date hereof, and the
rules and regulations promulgated thereunder.
"Commitment" has the meaning assigned to that term
----------
in the third Preliminary Statement hereto.
"Commitment Termination Date" has the meaning
---------------------------
assigned to that term in Section 2.01.
"Common Equity" means the common stockholders'
-------------
equity of the Company, less the book value of all intangible
assets of the Company.
-3-
"Custodian Agreement" means the Custodian
-------------------
Agreement in substantially the form of Exhibit B hereto.
"D&P" means Duff and Phelps Credit Rating Company
---
or its successors and assigns.
"Debt" means (i) indebtedness for borrowed money
----
or for the deferred purchase price of property or services,
(ii) obligations as lessee under leases which shall have
been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, (iii)
obligations (contingent or otherwise) in respect of bankers'
acceptances or letters of credit, (iv) obligations under
direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire,
or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds
referred to in clause (i) through (iii) above, (v)
liabilities in respect of unfunded vested benefits under
plans covered by Title IV of ERISA, and (vi) withdrawal
liability incurred under ERISA by the Company or any of its
Affiliates to any Multiemployer Plan.
"Default Rate" means a fluctuating interest rate
------------
equal at all times to 1.5% per annum above the Prime Rate in
effect from time to time.
"Designated Rating" means, with respect to any
-----------------
Rating Agency for any day, the rating of the senior secured
long-term debt of the Company (a "Secured Rating")
outstanding and in effect on such day (including for this
purpose as separate categories "+" and "-" designations by
S&P or D&P or "1", "2" and "3" designations by Moody's). If
a Rating Agency does not have a Secured Rating outstanding
and in effect on any day, then there exists no Designated
Rating by such Rating Agency for such day.
"Domestic Reserve Percentage" means, for any
---------------------------
period, that percentage which is specified on the first day
of such period, as the case may be, by the Board of
Governors of the Federal Reserve System (or any successor)
for determining the maximum reserve requirement (including,
but not limited to, any marginal reserve requirement) for
the Bank with respect to liabilities consisting of or
including (among other liabilities) U.S. dollar nonpersonal
time deposits in the United States and with a maturity equal
to such period.
-4-
"Environmental Claim" means any allegation, notice
-------------------
of violation, claim, demand, or order by any governmental
authority or any Person for any damage or for fines,
penalties or restrictions, resulting from or based upon (i)
the existence of a Release of, or exposure to, any Hazardous
Material, in, into or onto the environment at, in, by, from
or related to any facility, (ii) the use, handling,
transportation, storage, treatment or disposal of Hazardous
Materials in connection with the operation of any facility,
or (iii) the violation of any Environmental Laws.
"Environmental Laws" means all laws relating to
------------------
environmental matters, including, without limitation, those
relating to fines, orders, injunctions, penalties, damages,
contribution, cost recovery compensation, losses or injuries
resulting from the Release or threatened Release of
Hazardous Materials and to the generation, use, storage,
transportation, or disposal of Hazardous Materials, in any
manner applicable to Company or any of its Subsidiaries or
any of their respective properties, including, without
limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Sec. 9601
et seq.), the Hazardous Material Transportation Act (49
-- ---
U.S.C. Sec. 1801 et seq.), the Resource Conservation and
-- ---
Recovery Act (42 U.S.C. Sec. 6901 et seq.), the Federal
-- ---
Water Pollution Control Act (33 U.S.C. Sec. 1251 et seq.),
-- ---
the Clean Air Act (42 U.S.C. Sec. 7401 et seq.), the Toxic
-- ---
Substances Control Act (15 U.S.C. Sec. 2601 et seq.), the
-- ---
Occupational Safety and Health Act (29 U.S.C. Sec. 651
et seq.) and the Emergency Planning and
-- ---
Community Right to Know Act (42 U.S.C. Sec. 11001 et seq.),
-- ---
each as amended or supplemented, and any analogous future or
present applicable local, state and federal statutes and
regulations promulgated pursuant thereto, each as in effect
as of the date of determination.
"ERISA" means the Employee Retirement Income
-----
Security Act of 1974, as amended from time to time.
"Event of Default" has the meaning assigned to
----------------
that term in Section 6.01.
"Federal Funds Rate" means, for any period, a
------------------
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on
overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers,
as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not
-5-
so published for any day which is a Business Day, the
average of the quotations for such day on such transactions
received by the Bank from three Federal funds brokers of
recognized standing selected by it.
"Fee Letter" means that certain letter agreement
----------
dated as of April 12, 1994 executed by the Company and
addressed to the Bank.
"Financing Agreement" has the meaning assigned to
-------------------
that term in the second Preliminary Statement hereto.
"Fixed Charges" means, for any fiscal quarter, the
-------------
sum of (i) all payments of interest (whether expensed or
capitalized) made or becoming due in the prior four fiscal
quarters in respect of all Debt of the Company, plus (ii)
----
the amortization expenses in respect of discounts or
premiums, if any, on any Debt of the Company during the
prior four fiscal quarters.
"Fixed Charge Coverage Ratio" means, for any
---------------------------
fiscal quarter, the amount (expressed as a percentage)
obtained, by dividing (a) Net Income Available for Fixed
Charges for such fiscal quarter by (b) Fixed Charges for
such fiscal quarter.
"Hazardous Materials" means (i) any chemical,
-------------------
material or substance defined as or included in the
definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," or "toxic substances" or words
of similar import under any applicable local, state or
federal law or under the regulations adopted or publications
promulgated pursuant thereto, including, without limitation,
Environmental Laws, (ii) any oil, petroleum or petroleum-
derived substance, any drilling fluids, produced waters and
other wastes associated with the exploration, development or
production of crude oil, any flammable substances or
explosives, any radioactive materials, any hazardous wastes
or substances, any toxic wastes or substances or any other
materials or pollutants which (A) pose a hazard to any
property of the Company or any of its Subsidiaries or to
Persons on or about such property or (B) cause such property
to be in violation of any Environmental Laws, (iii) asbestos
in any form which is or could become friable, urea
formaldehyde foam insulation, electrical equipment which
contains any oil or dielectric fluid containing levels of
polychlorinated biphyenyls in excess of fifty parts per
million, and (iv) any other
-6-
chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental
authority or may or could pose a hazard to the health and
safety of the owners, occupants or any Persons surrounding
any of the facilities.
"Indenture" has the meaning assigned to that term
---------
in the first Preliminary Statement hereto.
"Issuer" has the meaning assigned to that term in
------
the first Preliminary Statement hereto.
"Letter of Credit" has the meaning assigned to
----------------
that term in the third Preliminary Statement hereto.
"Level I Status" exists for any day if, on such
--------------
day, neither Level II Status nor Level III Status exists.
"Level II Status" exists for any day if, on such
---------------
day, (a) Level III Status does not exist and (b) the Company
has at least two of the following three Designated Ratings:
(i) a Designated Rating by S&P of BBB- or higher, (ii) a
Designated Rating by Moody's of Baa3 or higher and (iii) a
Designated Rating by D&P of BBB- or higher.
"Level III Status" exists for any day if, on such
----------------
day, the Company has at least two of the following three
Designated Ratings: (i) a Designated Rating by S&P of A-
or higher, (ii) a Designated Rating by Moody's of A3 or
higher and (iii) a Designated Rating by D&P of A- or higher.
"Lien" means, with respect to any asset, any lien,
----
security interest or other charge or encumbrance, or any
other type of preferential arrangement in respect of such
asset.
"Moody's" means Moody's Investors Service, Inc. or
-------
its successor and assigns.
"Multiemployer Plan" means a "multiemployer plan"
------------------
as defined in Section 4001(a)(3) of ERISA with respect to
which the Company or any Affiliate (i) has an obligation to
contribute to or (ii) could have liability.
"Net Income Available for Fixed Charges" means,
--------------------------------------
for any fiscal quarter, the sum of (i) net income before
federal and state taxes for the prior four fiscal quarters,
plus (ii) Fixed Charges for the prior four fiscal quarters,
----
-7-
minus (iii) allowance for equity and borrowed funds used
-----
during construction and other deferred revenue amounts for
the prior four fiscal quarters.
"Participant" has the meaning provided in Section
-----------
7.14 hereof.
"PBGC" means the Pension Benefit Guaranty
----
Corporation or any successor thereto.
"Person" means an individual, partnership,
------
corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture or
other entity, or a government or any political subdivision
or agency thereof.
"Plan" means an employee benefit plan (other than
----
a Multiemployer Plan) maintained or contributed to for
employees of the Company or any Affiliate and covered by
Title IV of ERISA or the minimum funding requirements of
Section 412 of the Code.
"Pledged Bond" has the meaning assigned to that
------------
term in the Custodian Agreement.
"Prime Rate" means a fluctuating annual rate of
----------
interest equal to the rate publicly announced by the Bank at
its principal New York office as its Prime Rate. For
purposes of this Agreement, any change in the Prime Rate
shall be effective on the date such change is announced and
the Company acknowledges that the Prime Rate is a reference
rate and does not necessarily reflect the lowest interest
rate at which the Bank offers loans to its customers.
"Principal Facility" means that certain Loan
------------------
Agreement dated as of February 13, 1992 by and among the
Company, First Interstate Bank of Nevada, N.A., as agent and
the financial institutions party thereto, as the same may be
amended, modified or supplemented from time to time.
"PSC" means the Public Service Commission of
---
Nevada, or any successor or other agency or authority of the
State of Nevada from time to time having a similar
jurisdiction.
"PSC Order" means, at any time, the order by the
---------
PSC in effect at such time that authorizes the Company to
enter into this Agreement and the Related Documents to which
it is, or is to be, a party, to request the Bank to
-8-
issue the Letter of Credit hereunder and to incur Debt to
the Bank hereunder in an amount not less than the Stated
Amount. The PSC Order, when given by PSC, shall be deemed
to include the application for such order by the Company.
"Rating Agency" means S&P, Moody's or D&P.
-------------
"Related Documents" has the meaning assigned to
-----------------
that term in Section 2.13.
"Release" means any release, emission, disposal,
-------
leaching, or migration into the environmental (including,
without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing
any Hazardous Material), or into or out of any of the
facilities.
"Remarketing Agent" has the meaning assigned to
-----------------
that term in the Indenture.
"S&P" means Standard & Poor's Corporation and its
---
successors and assigns.
"Stated Amount" has the meaning assigned to that
-------------
term in the third Preliminary Statement hereto.
"Stated Termination Date" means the expiration
-----------------------
date specified in clause (i) of section (1) of the Letter of
Credit, as such date may be extended pursuant to Section
2.11.
"Subsidiary" means, as to any Person, (i) any
----------
corporation of which more than 50% of the outstanding
capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation
(irrespective of whether or not at the time capital stock of
any other class or classes of such corporation shall or
might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by
such Person or by one or more Subsidiaries of such Person
and (ii) any partnership, association, joint venture or
other Person in which such Person and/or one or more
Subsidiaries of such Person has more than a 50% equity
interest at the time.
"Tender Drawing" has the meaning assigned to that
--------------
term in the Letter of Credit.
-9-
"Termination Event" means (i) a Reportable Event
-----------------
described in Section 4043 of ERISA and the regulations
issued thereunder (other than a Reportable Event not subject
to the provision for 30-day notice to the PBGC under such
regulations), or (ii) the withdrawal of the Company or any
of its Affiliates from a Plan during a plan year in which it
was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, or (iii) the filing of a notice of
intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, or
(iv) the institution of proceedings to terminate a Plan by
the PBGC, or (v) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Plan.
"Total Capitalization" means the total of Common
--------------------
Equity, preference and preferred stock and Debt of the
Company.
"Trustee" has the meaning assigned to that term in
-------
the first Preliminary Statement hereto.
SECTION 1.02. Computation of Time Periods. In
---------------------------
this Agreement, in the computation of a period of time from
a specified date to a later specified date, the word "from"
means From and including" and the words "to" and "until"
each means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting
----------------
terms not specifically defined herein shall be construed in
accordance with generally accepted United States accounting
principles consistent (except as otherwise stated herein)
with those applied in the preparation of the December 31,
1993 financial statements referred to in Section 4.01(f).
SECTION 1.04. Internal References. The words
-------------------
"herein", "hereof" and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any provision of this
Agreement, and "Article", "Section", "subsection",
"paragraph", and respective references are to this Agreement
unless otherwise specified.
ARTICLE II.
AMOUNT AND TERMS OF THE LETTER OF CREDIT
-10-
SECTION 2.01. The Letter of Credit. The Bank
--------------------
agrees, on the terms and conditions hereinafter set forth,
to issue the Letter of Credit to the Trustee on any Business
Day during the period from the date hereof to and including
April 12, 1994 (the "Commitment Termination Date").
SECTION 2.02. Issuing the Letter of Credit. The
----------------------------
Letter of Credit shall be issued on at least three Business
Days' notice from the Company to the Bank specifying the
Business Day of issuance thereof. On such Business Day
specified by the Company in such notice and upon fulfillment
of the applicable conditions precedent set forth in Article
III, the Bank will issue the Letter of Credit to the
Trustee.
SECTION 2.03. Commissions and Fees. (a) The
--------------------
Company hereby agrees to pay to the Bank a letter of credit
fee on the Stated Amount from the effective date of this
Agreement until the Cancellation Date, at the Applicable L/C
Rate as adjusted from time to time, which letter of credit
fee shall be payable on the effective date hereof (for the
period from the date hereof to and including June 30, 1994)
and thereafter quarterly in advance on the last Business Day
of each June, September, December and March commencing on
June 30, 1994. In the event that following the payment by
the Company of the letter of credit fee for any quarterly
period (or any part thereof) the Letter of Credit shall be
cancelled or otherwise terminate prior to the end of such
quarterly period (or any part thereof), the Bank agrees that
it will return to the Company (after applying any such
amounts to any unreimbursed drawings under the Letter of
Credit, unpaid Advances, interest thereon or any fees,
commissions or any other amounts then due and payable by the
Company to the Bank) the portion of the letter of credit fee
as shall be obtained by multiplying (i) the total amount of
letter of credit fee paid by the Company to the Bank for
such quarterly period (or part thereof) by (ii) the quotient
of (A) the number of days left during such quarterly period
(or part thereof) divided by (B) the total number of days in
such quarterly period (or part thereof).
(b) The Company hereby agrees to pay to the Bank
a transfer commission of $2,000 upon each transfer of the
Letter of Credit in accordance with its terms.
-11-
(c) The Company hereby agrees to pay to the Bank
a drawing fee of $150 in connection with, and at the time
of, each drawing under the Letter of Credit.
(d) The Company agrees to pay to the Bank the
fees and other amounts set forth in the Fee Letter on the
dates set forth therein.
SECTION 2.04. Reimbursement On Demand. Except as
-----------------------
otherwise specified in Section 2.05 (and provided the
conditions precedent specified therein shall have been
fulfilled), each amount paid by the Bank under the Letter of
Credit (including, without limitation, amounts in respect of
any reinstatement of the Interest Component (as defined in
the Letter of Credit) at the election of the Bank
notwithstanding any failure by the Company to reimburse the
Bank for any previous drawing to pay interest on the Bonds)
shall constitute a demand loan made by the Bank to the
Company on the date of such payment by the Bank under the
Letter of Credit. The Company agrees to pay each such
demand loan on the date of its making. Any such demand loan
(or any portion thereof) not so paid on such date shall bear
interest, payable on demand, from the date of making of such
demand loan until payment in full, at a fluctuating interest
rate per annum equal to the Default Rate.
SECTION 2.05. Advances and Interest. (a) If the
---------------------
Bank shall make any payment under the Letter of Credit in
response to a Tender Drawing submitted thereunder pursuant
to Section 401 of the Indenture and, on the date of such
payment, the conditions precedent set forth in Section 3.03
shall have been fulfilled, such payment shall constitute an
advance made by the Bank to the Company on the date and in
the amount of such payment (each such advance being an
"Advance"). The Company shall pay interest on the unpaid
principal amount of each Advance quarterly in arrears on the
last Business Day of March, June, September and December.
Each Advance shall bear interest (i) from the date of the
incurrence thereof until the earlier of (A) the date upon
which such Advance is paid in full and (B) the date which is
30 days after the date of the incurrence thereof, at the
Alternate Base Rate and (ii) from and after the 30th day
from the date of incurrence thereof until the date upon
which such Advance is paid in full, at the Prime Rate.
Notwithstanding any other provision to the contrary herein,
each Advance shall be due and payable by the Company to the
Bank on the Cancellation Date.
-12-
(b) Notwithstanding any provision to the contrary
herein, the Company shall pay interest on all past-due
amounts of principal and (to the fullest extent permitted by
law) interest, costs, fees and expenses hereunder, from the
date when such amounts became due until paid in full,
payable on demand, at the Default Rate in effect from time
to time.
SECTION 2.06. Prepayments. (a) The Company may, upon
-----------
at least two Business Days' notice to the Bank, prepay the
outstanding amount of any Advance in whole or in part with
accrued interest to the date of such prepayment on the
amount prepaid.
(b) Prior to or simultaneously with the resale of
all of the Bonds purchased with the proceeds of a Tender
Drawing under the Letter of Credit, the Company shall prepay
or cause to be prepaid in full the then outstanding
principal amount (pursuant to Section 2.04) or Advance
arising pursuant to such Tender Drawing, together with all
interest thereon to the date of such prepayment. If less
than all of such Bonds are resold, then prior to or
simultaneously with such resale the Company shall prepay or
cause to be prepaid a portion (as specified below) of the
then outstanding principal amount (pursuant to Section 2.04)
or Advance arising pursuant to such Tender Drawing, together
with all interest thereon to the date of such prepayment.
The portion of such principal amount or such Advance to be
prepaid shall be determined by multiplying such principal
amount or such Advance by a fraction, the numerator of which
shall be the face amount of the Bonds resold and the
denominator of which shall be the face amount of all of the
Bonds purchased with the proceeds of the relevant Tender
Drawing.
SECTION 2.07. Increased Costs. If either (i) the
---------------
introduction of or any change (including, without
limitation, any change by way of imposition or increase of
reserve requirements other than those referred to in the
definition of "Domestic Reserve Percentage" in or in the
interpretation of any law or regulation or (ii) the
compliance by the Bank with any guideline or request from
any central bank or other governmental authority (whether or
not having the force of law), shall either (A) impose,
modify or deem applicable any reserve, special deposit or
similar requirement against letters of credit issued by, or
assets held by, or deposits in or for the account of, the
Bank or participated in by any Participant or (B) impose on
the Bank any other condition regarding this Agreement, the
-13-
Letter of Credit, any amount outstanding hereunder or any
Advance, and the result of any event referred to in clause
(A) or (B), above, shall be to increase the cost to the Bank
or any Participant of issuing or maintaining the Letter of
Credit (or its participation therein) or agreeing to make or
making, funding or maintaining any Advance, then, upon
demand by the Bank, the Company shall pay to the Bank (for
its own account or for the account of such Participant, as
the case may be, within 10 days of receipt of such notice
and from time to time as specified by the Bank, all
additional amounts which shall be sufficient to compensate
the Bank for such increased costs. A certificate setting
forth such increased costs incurred by the Bank as a result
of any event referred to in clause (i) or (ii), above,
submitted by the Bank to the Company, shall constitute such
demand and shall, in the absence of manifest error, be
conclusive and binding for all purposes.
SECTION 2.08. Increased Capital. If the Bank
-----------------
determines (1) the adoption of any applicable law, rule or
regulation after the date hereof regarding capital adequacy,
or any change therein, or any change in the interpretation
or administration thereof by any court or administrative or
governmental authority charged with the interpretation or
administration thereof, or (2) compliance by the Bank with
any directive regarding capital adequacy of any such
administrative or governmental authority, generally affects
banks issuing letters of credit or entering into agreements
similar to or of the same type as this Agreement and has or
would have the effect of reducing the rate of return on the
Bank's capital as a consequence of issuing or maintaining
the Letter of Credit to a level below that which the Bank
would have achieved but for such adoption, change or
compliance (taking into consideration the Bank's policies
with respect to capital adequacy), then, upon demand by the
Bank, the Company shall immediately pay to the Bank, from
time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank in the light of such
circumstances, to the extent that the Bank reasonably
determined such capital to be allocable to this Agreement or
the issuance or maintenance of the Letter of Credit. In
determining such increased fee, the Bank may use reasonable
and customary averaging and attribution methods. A
certificate as to such amounts submitted to the Company by
the Bank shall constitute such demand and shall, in the
absence of manifest error, be conclusive and binding for all
purposes.
-14-
SECTION 2.09. Payments and Computations. The
-------------------------
Company shall make each payment hereunder not later than
12:00 noon (Los Angeles time) on the day when due in lawful
money of the United States of America to the Bank at its
address referred to in Section 7.02 in same day funds.
Computations of the Alternate Base Rate, the Prime Rate, the
Default Rate and the commissions and fees under Section 2.03
shall be made by the Bank on the basis of a year of 360 days
and the actual number of days (including the first day but
excluding the last day) elapsed.
SECTION 2.10. Non-Business Days. Whenever any
-----------------
payment to be made hereunder shall be stated to be due on a
day which is not a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of
interest, commission or fee, as the case may be.
SECTION 2.11. Extension of the Stated Termination
-----------------------------------
Date. Unless the Letter of Credit shall have expired in
----
accordance with its terms on the Cancellation Date, at least
75 but not more than 120 days before each anniversary of the
date of issuance of the Letter of Credit, commencing on the
anniversary thereof in 1995, the Company may request the
Bank in writing (each such request being irrevocable) to
extend for one year the Stated Termination Date. If the
Company shall make such request, the Bank shall, no later
than 30 days following the date on which the Bank shall have
received such request, notify the Company in writing (with a
copy of such notice to the Trustee) whether or not the Bank
consents to such request and, if the Bank does so consent,
the conditions of such consent (including conditions
relating to legal documentation). If the Bank shall not so
notify the Company, the Bank shall be deemed not to have
consented to such request. Upon the Bank's consenting to
any such extension, the Company shall cause the Trustee to
surrender the Letter of Credit to the Bank. Simultaneously
with such surrender, the Bank may at its option either (a)
return the Letter of Credit after amendment thereof to
reflect the extension of the scheduled expiration date or
(b) cancel the Letter of Credit and issue to the Trustee, in
substitution therefor, a substitute irrevocable letter of
credit in the form of Exhibit A hereto, dated the date of
such surrender, reflecting the extension of the scheduled
expiration date but otherwise having terms substantially
identical to the Letter of Credit being so extended.
-15-
SECTION 2.12. Evidence of Debt. The Bank shall
----------------
maintain, in accordance with its usual practice, an account
or accounts evidencing the indebtedness of the Company
resulting from each drawing under the Letter of Credit and
from each Advance made from time to time hereunder and the
amounts of principal and interest payable and paid from time
to time hereunder. In any dispute, legal action or
proceeding in respect of this Agreement, the entries made in
such account or accounts shall, in the absence of manifest
error, be conclusive evidence of the existence and amounts
of the obligations of the Company therein recorded.
SECTION 2.13. Obligations Absolute. The payment
--------------------
obligations of the Company under this Agreement shall be
unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or
enforceability of the Letter of Credit, the Bonds, the
Indenture, the Financing Agreement, the Custodian
Agreement, the Fee Letter or the Bond Purchase
Agreement (collectively, the "Related Documents") or
any other agreement or instrument relating thereto;
(ii) any amendment or waiver
of or any consent to or departure from all or any of
the Related Documents;
(iii) the existence of any claim,
set-off, defense or other right which the Company may
have at any time against the Trustee or any other
beneficiary, or any transferee, of the Letter of Credit
(or any Person for whom the Trustee, any such
beneficiary or any such transferee may be acting), the
Bank, or any other Person, whether in connection with
this Agreement, the transactions contemplated herein or
in the Related Documents, or any unrelated transaction;
(iv) any statement or any other document
presented under the Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by the Bank under the
Letter of Credit against presentation of a draft or
-16-
certificate which does not comply with the terms of the
Letter of Credit; or
(vi) any other circumstance or
happening whatsoever, whether or not similar to any of
the foregoing.
SECTION 2.14. Taxes. All payments made by the
-----
Company hereunder will be made without setoff, counterclaim
or other defense. All such payments will be made free and
clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein (but
excluding, except as provided below, any tax imposed on or
measured by the net income of the Bank pursuant to the laws
of the jurisdiction (or any political subdivision or taxing
authority thereof or therein) in which the principal office
or lending office of the Bank is located) and all interest,
penalties or similar liabilities with respect thereto
(collectively, "Taxes"). If the Company shall be required
by law to deduct any Taxes from or in respect of any sum
payable hereunder or under the Fee Letter, (i) the sum
payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to
additional sums payable under this Section 2.14) such Bank
receives an amount equal to the sum it would have receied
had no such decutions been made, (ii) the Company shall make
all such required deductions and shall pay the full amount
deducted to the relevant taxing authority in accordance with
applicable law and (iii) the Company will furnish to the
Bank within 45 days after the date the payment of any Taxes
is due certified copies of tax receipts evidencing such
payment by the Company. The Company will indemnify and hold
harmless the Bank, and reimburse the Bank upon its written
request, for the amount of any Taxes so levied or imposed
and paid by the Bank. The Bank represents and warrants to
the Company that either (1) it is entitled to the benefits
of an income tax treaty with the United States which
provides for an exemption from United States withholding tax
on interest and other payments to be made by the Company to
the Bank pursuant to the terms of this Agreement; or (2) all
interest and other payments to be made by the Company to the
Bank pursuant to the terms of this Agreement will be
effectively connected with the conduct by the Bank of a
trade or business within the United States (within the
meaning of Section 882 of the Code). Prior to the date of
issuance of the Letter of
-17-
Credit and thereafter upon the request of the Company, the
Bank agrees to furnish to the Company two copies of either
U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein the Bank claims
entitlement to complete exemption from U.S. federal
withholding tax on all interest and other payments
hereunder). In the event the Bank fails to provide
an accurate Form 4224 or Form 1001 as required by this
paragraph and which it is legally entitled to provide, the
Company shall not be required to pay any additional amounts
with respect to U.S. Federal income taxes to such Bank
pursuant to this paragraph. Notwithstanding any other
provisions of this Agreement and except in the event of a
change in applicable law, the representations, warranties
and obligations of the Bank set forth in this paragraph in
respect of any interest in this Agreement or the Letter of
Credit shall survive until the assignment, sale, payment or
other disposition of such interest or the Letter of Credit.
ARTICLE III.
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to Issuance of
-----------------------------------
the Letter of Credit. The obligation of the Bank to issue
--------------------
the Letter of Credit is subject to the conditions precedent
that the Bank shall have received on or before the date of
the issuance of the Letter of Credit the following, each
dated such date, in form and substance satisfactory to the
Bank:
(a) A copy of the Custodian Agreement, duly
executed by the Company and the Trustee.
(b) A copy of the Indenture and each
amendment thereto to the date hereof, in each case duly
executed by the Issuer and the Trustee and certified by
the Company as being a true and correct copy thereof.
(c) A copy of the Financing Agreement and
each amendment thereto to the date hereof, in each case
duly executed by the Issuer and the Company and
certified by the Company as being a true and correct
copy thereof.
(d) A copy of the Bond Purchase Agreement
and each amendment thereto to the date hereof, in each
-18-
case duly executed by all parties thereto and certified
by the Company as being a true and correct copy
thereof.
(e) Certified copies of the resolutions of
the Board of Directors of the Company approving this
Agreement, the Letter of Credit and the Custodian
Agreement and the transactions contemplated hereby and
thereby, and of all other documents evidencing any
other necessary corporate action.
(f) An original (or a duplicate copy
certified by the Company in a manner satisfactory to
the Bank to be a true copy) of the application filed by
the Company for the PSC Order and of each governmental
action and regulatory approval (including, without
limitation, the PSC Order and approvals or orders of
the Issuer and the PSC) necessary for the Company to
enter into this Agreement, the Letter of Credit and the
Custodian Agreement and for the transactions
contemplated hereby and thereby.
(g) A certificate of the Secretary or an
Assistant Secretary of the Company certifying the names
and true signatures of the officers of the Company
authorized to sign this Agreement and the other
documents to be delivered by it hereunder.
(h) A certificate from an authorized officer
of the Trustee certifying that (i) all of the Bonds are
currently outstanding, no Pledged Bonds are outstanding
and the Trustee is not in default under any of the
terms or provisions of the Indenture or any other
Related Document to which it is a party, (ii) each of
the Related Documents to which such Person is a party
is in full force and effect and is the legal, valid and
binding obligations of such Person and (iii) no
litigation or proceeding is pending, or to his
knowledge threatened, in respect of the Bonds, amounts
payable thereunder, any Related Document or any other
document or agreement delivered in connection
therewith.
(i) A certificate from an authorized officer
of the Trustee certifying, in form and substance
satisfactory to the Bank, that from and after the date
of issuance of the Letter of Credit and the acceptance
by the Trustee thereof to the date upon
-19-
which the Letter of Credit expires or is otherwise
cancelled, the Trustee will draw only on the Letter of
Credit and will not draw on the Original Letter of
Credit.
(j) A letter from Chapman and Cutler, Bond
Counsel, addressed to the Bank and stating therein that
the Bank may rely on the opinions of such firm
delivered pursuant to Section 619 of the Indenture and
pursuant to Section 3(c)(1) of the Bond Purchase
Agreement.
(k) A letter from Best, Best & Krieger,
Special Counsel to the Company, addressed to the Bank
and stating therein that the Bank may rely on the
opinion of such firm delivered pursuant to Section
3(c)(1)(c) of the Bond Purchase Agreement.
(l) A letter from Richard L. Hinckley, Esq.,
General Counsel to the Company, addressed to the Bank
and stating therein that the Bank may rely on the
opinion of M. Gene Matteucci delivered pursuant to
Section 3(c)(1)(d) of the Bond Purchase Agreement.
(m) An opinion of Richard L. Hinckley, Esq.,
General Counsel of the Company, in substantially the
form of Exhibit C hereto and as to such other matters
as the Bank may reasonably request.
(n) An opinion of Best, Best & Krieger,
Special Counsel to the Company, in substantially the
form of Exhibit D hereto and as to such other matters
as the Bank may reasonably request.
(o) Receipt by the Bank from the Company of
(i) the fees provided for in the Fee Letter which by
its terms are due and payable on or prior to the
issuance of the Letter of Credit, (ii) the letter of
credit fee payable for the period from the effective
date hereof to June 30, 1994 and (iii) receipt by White
& Case as counsel to the Bank of its fees and expenses
incurred to date on behalf of the Bank in connection
with the negotiation and drafting of this Agreement and
certain other documents.
(p) Written evidence from Moody's and S&P to
the effect that such Rating Agency reviewed the terms
and provisions of the Letter of Credit and that the
substitution of the Letter of Credit for the
-20-
Original Letter of Credit will not by itself result in
a reduction, withdrawal or suspension of its ratings of
the Bonds.
SECTION 3.02. Additional Conditions Precedent to
----------------------------------
Issuance of the Letter of Credit. The obligation of the
--------------------------------
Bank to issue the Letter of Credit shall be subject to the
further conditions precedent that on the date of the
issuance of the Letter of Credit:
(a) The following statements shall be true
and the Bank shall have received a certificate signed
by a duly authorized representative of the Company,
dated the date of such issuance, stating that:
(i) The representations
and warranties contained in Section 4.01 of this
Agreement are true and correct on and as of the
date of issuance of the Letter of Credit as though
made on and as of such date; and
(ii) No event has occurred and is
continuing, or would result from the issuance of
the Letter of Credit, which constitutes an Event
of Default or would constitute an Event of Default
but for the requirement that notice be given or
time elapse, or both;
(b) The Bonds shall remain outstanding, and
all legal matters incident to this Agreement and the
Related Documents shall be satisfactory to counsel for
the Bank; and
(c) The Bank shall have received such other
approvals, opinions or documents as the Bank may
reasonably request.
SECTION 3.03. Conditions Precedent to Each
----------------------------
Advance. The obligation of the Bank to make each Advance
-------
shall be subject to the conditions precedent that, on the
date of such Advance, the following statements shall be
true:
(a) The representations and warranties
contained in Section 4.01 of this Agreement are true
and correct on and as of the date of such Advance as
though made on and as of such date; and
-21-
(b) No event has occurred and is continuing,
or would result from such Advance, which constitutes an
Event of Default or would constitute an Event of
Default but for the requirement that notice be given or
time elapse, or both.
Unless the Company shall have previously advised the Bank in
writing that one or more of the statements contained in
clauses (a) and (b), above, is not true or will not be true
on the date of such Advance, the Company shall be deemed to
have represented and warranted, on and as of the date of
such Advance, that the above statements are true.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of
---------------------------------
the Company. The Company hereby represents and warrants, as
-----------
follows:
(a) The Company is a corporation duly
incorporated, validly existing and in good standing under
the laws of the State of Nevada and is duly qualified to do
business as a foreign corporation and is in good standing
under the laws of each state in which the ownership of its
properties and the conduct of its business makes such
qualification necessary. The Company has all requisite
power and authority to conduct its business as presently
conducted and to own its properties.
(b) The execution, delivery and performance
by the Company of this Agreement and the Related Documents
to which it is or is to be a party are within the Company's
corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) the Company's
charter or by-laws or (ii) law, rule, regulation, order,
writ, judgment or similar restriction (including, without
limitation, any order, rule or regulation of the PSC) or any
contractual restriction binding on or affecting the Company,
and do not result in or require the creation of any Lien
(except as may be created under the Related Documents) upon
or with respect to any of its properties.
-22-
(c) No authorization or approval or other
action by, and no notice to or filing with, any
governmental authority or regulatory body is required
for the due execution, delivery and performance by the
Company of this Agreement or any Related Document to
which the Company is or is to be a party, except for
the PSC Order, which, on the date of the issuance of
the Letter of Credit, has been duly obtained, is final
and in full force and effect and has not been, is not
and will not be the subject of appeal or reconsideration
or other review.
(d) This Agreement is, and the Related
Documents to which the Company is a party are, legal,
valid and binding obligations of the Company
enforceable against the Company in accordance with
their respective terms. Each of the Related Documents
is in full force and effect and no party to such
agreements has contested or challenged the validity or
enforceability thereof or refused to perform its
obligations thereunder.
(e) The Bonds have been duly authorized,
authenticated and issued and delivered, and are the
legal, valid and binding obligations of the Issuer.
All payments of principal and interest on the Bonds
have been made on the due dates thereof and no Bonds
are in default.
(f) The balance sheet (including the notes
thereto) of the Company as at December 31, 1993 and the
related statements of income and retained earnings of
the Company for the fiscal year then ended, certified
by Deloitte & Touche independent public accountants, in
each case as set forth in the annual report of the
Company contained in the Company's December 31, 1993
Report on Form 10-K as filed with the Securities and
Exchange Commission, a copy of which has been furnished
to the Bank, fairly present the financial condition of
the Company as at such date and the results of the
operations of the Company for the period ended on such
date, all in accordance with generally accepted
accounting principles consistently applied, and since
December 31, 1993, there has been no material adverse
change in the Company's financial condition, results of
operations, business, properties, operations, or
prospects.
-23-
(g) Except as disclosed in the Company's
December 31, 1993 Report on Form 10-K as filed with the
Securities and Exchange Commission, there is no pending
or threatened action or proceeding affecting the
Company or any of its Subsidiaries before any court,
governmental agency or arbitrator, which is likely to
have a material adverse effect on the financial
condition, results of operations, business, properties,
operations, or prospects of the Company and its
Subsidiaries, taken as a whole, and there has occurred
no material adverse developments in any such
action or proceeding so disclosed.
(h) No proceeds of any drawing under the
Letter of Credit will be used to acquire any security
in any transaction which is subject to Section 13 or
14 of the Securities Exchange Act of 1934, as amended.
(i) The Company is not engaged in the
business of extending credit for the purpose of buying
or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the
Federal Reserve System), and no proceeds of any drawing
under the Letter of Credit will be used to buy or carry
any margin stock or to extend credit to others for the
purpose of buying or carrying any margin stock.
(j) No Termination Event has occurred nor is
reasonably expected to occur with respect to any Plan.
(k) Schedule B (Actuarial Information) to
the 1992 annual report (Form 5500 Series) of the
Company with respect to each Plan, copies of which have
been filed with the Internal Revenue Service and
furnished to the Bank, is complete and accurate and
fairly presents the funding status of such Plan, and
since the date of such Schedule B there has been no
material adverse change in such funding status.
(l) Neither the Company nor any of its
Affiliates has incurred, or reasonably expects to
incur, any withdrawal liability under ERISA to any
Multiemployer Plan.
(m) Neither the Company nor any of its
Affiliates has incurred or reasonably expects to incur
material liability under Title IV of ERISA or pursuant
to Section 406, 409, 502(i), 502(l) or 515 of ERISA or
Section 401(a)(29), 4971 or 4975 of the Code.
-24-
(n) The Company and each Subsidiary have
filed all tax returns (Federal, state and local)
required to be filed and paid all taxes shown thereon
to be due, including interest and penalties, other than
such taxes that the Company or its Subsidiary is
contesting in good faith and by appropriate legal
proceedings and for which adequate reserves have been
set aside on the books of the Company or such
Subsidiary in accordance with generally accepted
accounting principles.
(o) Neither the Company nor any of its
Subsidiaries is a party to any indenture, loan or
credit agreement or any lease or other agreement or
instrument which would have a material adverse effect
on the ability of the Company to perform its
obligations under this Agreement or any of the Related
Documents to which it is, or is to be, a party.
(p) Except for information describing the
Bank contained in the Preliminary Official Statement,
the Official Statement or any other offering document
relating to the Bonds, as to which no representation is
made, such Official Statement, such Preliminary
Official Statement and such other offering document
was, and any supplement or amendment thereof shall be,
accurate in all material respects for the purposes for
which its use was or shall be authorized; and such
Official Statement, Preliminary Official Statement and
such other offering document as of its date did not,
and any such supplement or amendment shall not, contain
any untrue statement of a material fact or omit to
state any material fact necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading.
(q) Environmental Compliance. Except as set
------------------------
forth in Schedule 4.01(q) hereto:
(1) the operations of the Company and of
each of its Subsidiaries (including, without
limitation, all operations and conditions at or in the
facilities currently used by the Company and its
Subsidiaries) comply in all material respects with all
Environmental Laws;
-25-
(2) neither the Company nor any of its
Subsidiaries has received (A) any notice or claim
to the effect that it is or may be liable to any
person as a result of the Release or threatened
Release of any Hazardous Material or (B) any
letter or request for information under Section
104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Sec.
9604) or comparable state laws, and to the best
of the Company's knowledge, none of the operations
of the Company or any of its Subsidiaries is the
subject of any federal or state investigation
evaluating whether any remedial action is needed
to respond to a Release or threatened Release of
any Hazardous Material at any facility or at any
other location;
(3) the Company and each of its Subsidiaries
and all of their respective facilities or
operations are not subject to any outstanding
written order or agreement with any governmental
authority or private party respecting (A) any
Environmental Law or (B) any Environmental Claim;
(4) neither the Company nor any of its
Subsidiaries has any contingent obligation in
connection with any Release of any Hazardous
Material by the Company or any of its
Subsidiaries;
(5) except in the ordinary course of its
business and in compliance with all Environmental
Laws, neither the Company nor any of its
Subsidiaries nor any predecessor of the Company or
any of its Subsidiaries has filed any notice under
any Environmental Law indicating past or present
treatment or disposal of any Hazardous Material
at any facility, and none of the Company's or any
of its Subsidiaries' operations involves the
generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40
C.F.R. Parts 260-270 or any state equivalent or of
any other Hazardous Material;
(6) no Hazardous Material exists on, under
or around any facility in a manner that could give rise
to an Environmental Claim resulting in
-26-
a material adverse effect on the financial
condition or operations of the Company, and
neither the Company nor any of its Subsidiaries
has filed any notice or report of a Release of any
Hazardous Materials that could give rise to an
Environmental Claim resulting in a material
adverse effect on the financial condition or
operations of the Company;
(7) neither the Company nor any of its
Subsidiaries (nor any of their respective
predecessors) has disposed of any Hazardous
Material in a manner that may give rise to an
Environmental Claim resulting in a material
adverse effect on the financial condition or
operations of the Company; and
(8) neither the Company nor any of its
Subsidiaries maintains any underground storage
tanks or surface impoundments in a manner that may
give rise to an Evironmental Claim resulting in a
material adverse effect on the the financial
condition or operations of the Company.
ARTICLE V.
COVENANTS OF THE COMPANY
SECTION 5.01. Affirmative Covenants. So long as
---------------------
(i) the Commitment Termination Date has not yet occurred,
(ii) any drawing is available under the Letter of Credit, or
(iii) the Company shall have any obligation to pay any
amount to the Bank hereunder, the Company will, unless the
Bank shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and
-------------------------
cause each of its Subsidiaries to comply, in all
material respects, with all applicable laws, rules,
regulations and orders, such compliance to include,
without limitation, paying before the same become
delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property, except to
the extent that any such noncompliance would not,
individually or in the aggregate, materially adversely
affect the financial condition, results of operations,
operations, business or credit of the Company or its
ability to perform its obligations hereunder or under
-27-
any Related Document to which it is or is to be a
party.
(b) Visitation Rights. At any reasonable
-----------------
time and from time to time, permit the Bank or any
agents or representatives thereof to examine and make
copies of and abstracts from the records and books of
account of, and visit the properties of, the Company
and any of its Subsidiaries, and to discuss the
affairs, finances and accounts of the Company and any
of its Subsidiaries, with any of their respective
officers or directors or with the independent auditors
of the Company.
(c) Intentionally Omitted.
---------------------
(d) Certain Covenants in Principal Facility.
---------------------------------------
Comply with each of the agreements, covenants and
obligations imposed on it pursuant to Sections 6.08,
6.11 and 6.12 of the Principal Facility as the
provisions of such Sections 6.08, 6.11 and 6.12 are
incorporated herein pursuant to the following sentence.
For purposes of this Agreement, Sections 6.08, 6.11 and
6.12 of the Principal Facility (together with all
definitions contained in the Principal Facility
relating to defined terms used therein and not
otherwise defined herein) are hereby incorporated into
this Section 5.01(d) as if such Sections were
separately restated herein and references to such
Sections in this Agreement shall be to such Sections as
so incorporated; provided that (i) in the event of any
--------
modification or amendment of such incorporated Sections
of the Principal Facility such Sections as incorporated
herein shall be deemed amended herein without any
action by any party to reflect such modification or
amendment, (ii) notwithstanding any termination or
cancellation of the Principal Facility, Sections 6.11
and 6.12, as incorporated herein, shall remain
effective and binding upon the Company hereunder and
(iii) upon any termination or cancellation of the
Principal Facility, this Section 5.01(d) shall be
deemed amended without any action by any party to
delete all references to Section 6.08 as incorporated
herein; provided, however, that notwithstanding clause
-----------------
(iii) above, in the event that (x) at the time of such
termination or cancellation the Company is the borrower
under any other agreement providing for indebtedness of
the Company which contains any restriction on the
-28-
Company's ability to pledge or encumber of any of its
assets or properties, or (y) at any time after such
termination or cancellation the Company becomes a
borrower under such an agreement with such a
restriction, then, in either case, such restrictions
contained in such agreements shall be deemed
incorporated in this Section 5.01(d) without any action
by any party in place of the references to such Section
6.08 with the effect that such restrictions shall be
incorporated herein without any action by any party.
To the extent that any such incorporated provisions are
inconsistent with each other or with any other
provision of this Agreement, then the Bank, by written
notice to the Company and in the Bank's sole
discretion, may designate the restriction which shall
be binding on the Company.
(e) Reporting Requirements. Furnish to the
----------------------
Bank the following:
(i) as soon as possible and in any event
within five Business Days after the occurrence of
each Event of Default and each event which, with
the giving of notice, lapse of time, or both,
would constitute any such Event of Default, the
statement of an authorized representative of the
Company setting forth details of such Event of
Default or event and the action which the Company
has taken and proposes to take with respect
thereto;
(ii) as soon as available and in any
event within 45 days after the close of each of
the first three quarters in each fiscal year of
the Company:
(A) an unaudited balance
sheet of the Company as at the end of such
quarter and statements of income and retained
earnings of the Company for the period
commencing at the end of the previous fiscal
year and ending with the end of such quarter,
fairly presenting the financial condition of
the Company as at such date and the results
of operations of the Company for such period
and setting forth in each case in comparative
form the corresponding figures for the
corresponding period of the preceding fiscal
year, all in reasonable
-29-
detail and duly certified (subject to year-
end audit adjustments) by the chief financial
officer (or the designee of such officer) of
the Company as having been prepared in
accordance with generally accepted accounting
principles consistently applied (it being
understood and agreed that the delivery by
the Company to the Bank within such 45 day
period of the Company's Quarterly Report on
Form 10-Q for such quarter, as filed with the
Securities and Exchange Commission,
containing such balance sheet and statements
shall be deemed to satisfy the requirements
of this subparagraph (A)); and
(B) a certificate of the chief
financial officer (or the designee of such
officer) of the Company setting forth the
calculation of the ratios contemplated by
this Agreement, as of the date of the most
recent financial statements accompanying such
certificate, to show the Company's compliance
with or the status of the financial
covenants, agreements, representations and
warranties contained herein, and a
certificate of such officer (or such
designee) stating whether he or she has any
knowledge of the occurrence at any time prior
to the date of such certificate of any Event
of Default not previously reported pursuant
to the provisions of paragraph (i) of this
subsection (e), or of the occurrence at any
time prior to such date of any event, except
events previously reported pursuant to the
provisions of paragraph (i) of this
subsection (e) and remedied, which, with
notice or lapse of time, or both, would
constitute an Event of Default and, if
so, setting forth the details of such Event
of Default or event and the action which the
Company has taken and proposes to take with
respect thereto;
(iii) (A) as soon as available and in
any event within 90 days after the end of each
fiscal year of the Company, a copy of the annual
report for such year for the Company, containing
financial statements for such year certified in a
-30-
manner acceptable to the Bank by Deloitte & Touche
or other independent public accountants acceptable
to the Bank (it being understood and agreed that
the delivery by the Company to the Bank within
such 90 day period of the Company's Annual Report
on Form 10-K for such year, as filed with the
Securities and Exchange Commission, containing
such financial statements shall be deemed to
satisfy the requirements of this subparagraph
(A)), and (B) a certificate of the chief financial
officer (or the designee of such officer) of the
Company stating whether he or she has any
knowledge of the occurrence at any time prior to
the date of such certificate of any Event of
Default not previously reported pursuant to the
provisions of paragraph (i) of this subsection
(e), or of the occurrence at any time prior to
such date of any such event, except events
previously reported pursuant to the provisions of
paragraph (i) of this subsection (e) and remedied,
which, with notice or lapse of time, or both,
would constitute an Event of Default and, if so,
setting forth the details of such Event of Default
or event and the action which the Company has
taken and proposes to take with respect thereto;
(iv) promptly after the sending or
filing thereof, (A) copies of all reports which
the Company sends to its securityholders (other
than to employees of the Company concerning stock
option plans, dividend investment plans and other
similar reports) and (B) copies of all reports
which the Company or any Subsidiary files with the
Securities and Exchange Commission or any national
securities exchange;
(v) as soon as possible and in any event
(i) within 30 days after the Company or any
Affiliate knows or has reason to know that any
Termination Event described in clause (i) of the
definition of Termination Event with respect to
any Plan has occurred and (ii) within ten days
after the Company or any Affiliate knows or has
reason to know that any other Termination Event
with respect to any Plan has occurred, a statement
of the chief financial officer (or the designee of
such officer) of the Company describing such
Termination Event and the action,
-31-
if any, which the Company or such Affiliate
proposes to take with respect thereto;
(vi) promptly and in any event within
two Business Days after receipt thereof by the
Company or any Affiliate from the PBGC, copies of
each notice received by the Company or any such
Affiliate concerning the PBGC's possible intention
to terminate any Plan or to have a trustee
appointed to administer any Plan;
(vii) promptly and in any event within
ten Business Days after the filing thereof with
the Internal Revenue Service, copies of each
Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) with respect to each
Plan which is a pension plan (other than a
Multiemployer Plan) maintained or contributed
to for employees of the Company or any Affiliate,
which provides payments at, or defers receipt of
payment until, retirement and is subject to Title
IV of ERISA;
(viii) promptly and in any event within
ten Business Days after receipt thereof by the
Company or any Affiliate from a Multiemployer Plan
sponsor, a copy of each notice received by the
Company or any Affiliate concerning (A) the
imposition of withdrawal liability by a
Multiemployer Plan pursuant to Section 4202
of ERISA, (B) the determination that a
Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of
ERISA, (C) the termination of a Multiemployer Plan
within the meaning of Title IV of ERISA,
or (D) the amount of liability incurred, or
expected to be incurred, by the Company or any
Affiliate in connection with any event described
in clause (A), (B) or (C), above;
(ix) promptly and in any event within
two Business Days after the Company or any
Affiliate knows or has reason to know that it has
incurred or could reasonably expect to incur
material liability under Title IV of ERISA or
pursuant to Section 406, 409, 502(i), 502(l) or
515 of ERISA or Section 401(a)(29), 4971 or 4975
of the Code;
-32-
(x) promptly and in each case within
five Business Days following the effectiveness
thereof, copies of each amendment, waiver, consent
or other modification to the Principal Facility or
to any other agreement from which provisions have
been incorporated herein pursuant to Section
5.01(d) hereof; and
(xi) such other information respecting
the condition or operations, financial or
otherwise, of the Company or any of its
Subsidiaries as the Bank may from time to time
reasonably request.
(f) Maintenance of Insurance. Maintain, and
------------------------
cause each of its Subsidiaries to maintain, insurance
with responsible and reputable insurance companies or
associations in such amounts and covering such risks as
is usually carried by companies engaged in similar
businesses and owning similar properties in the same
general areas in which the Company or such Subsidiary
operates and, upon the written request of the Bank, (1)
deliver to the Bank a certificate of an authorized
representative of the Company specifying the details of
such insurance in effect or (2) cause its insurance
agent to deliver to the Bank a certificate specifying
the details of such insurance in effect.
(g) Preservation of Corporate Existence, Etc.
----------------------------------------
Except to the extent not prohibited by Section
5.02(c), preserve and maintain, and cause each of its
Subsidiaries to preserve and maintain, its corporate
existence, rights (charter and statutory), franchises
and, to the extent required in connection with its
operations, foreign qualifications.
(h) Keeping of Books. Keep, and cause each
----------------
of its Subsidiaries to keep, proper books of record and
account, in which full and correct entries shall be
made of all financial transactions and the assets and
business of the Company and each of its Subsidiaries in
accordance with generally accepted accounting
principles consistently applied.
(i) Maintenance of Properties, Etc.
-------------------------------
Maintain and preserve, and cause each of its
Subsidiaries to maintain and preserve, all of its
properties which are used or useful in the conduct of
-33-
its business in good working order and condition,
ordinary wear and tear excepted.
(j) Performance and Compliance with Other
-------------------------------------
Covenants. Perform and comply with each of the
---------
covenants to be performed by the Company, as set forth
in Articles II, III, IV, V, VI and VII of the Financing
Agreement, without giving effect to any subsequent
amendment, modification or termination thereof after
the date hereof, unless such amendment, modification,
or termination was consented to by the Bank.
(k) Accounting Method. Continue to account
-----------------
for its Subsidiaries according to the equity method of
accounting.
SECTION 5.02. Negative Covenants. So long as (i)
------------------
the Commitment Termination Date has not yet occurred, (ii)
any drawing is available under the Letter of Credit, or
(iii) the Company shall have any obligation to pay any
amount to the Bank hereunder, the Company will not, without
the written consent of the Bank:
(a) Intentionally Omitted.
---------------------
(b) Sales, Etc. of Assets. Sell, lease,
---------------------
transfer or otherwise dispose of, directly or
indirectly, whether in one transaction or in a series
of transactions, all or any substantial part of the
assets of the Company or any of its Subsidiaries,
including, without limitation, all or substantially all
assets constituting the business of a division, branch
or other unit operation, except in the ordinary course
of business as presently conducted or in a transaction
not prohibited by subsection (c) below.
(c) Mergers, Etc. Merge or consolidate with
------------
or into, or acquire all of the assets of, any other
Person, except that (i) any Subsidiary may merge or
consolidate with or into, or acquire assets from, any
other Subsidiary, (ii) any Subsidiary may merge into
the Company and (iii) the Company may merge with or
into, and any Subsidiary may merge or consolidate with
or into, any other Person; provided, however, that (A)
in the case of any such merger, consolidation or
acquisition, both immediately before and after giving
effect thereto, no Event of Default or event which,
with the passage of time or the giving of
-34-
notice, or both, would constitute an Event of Default shall
have occurred and be continuing, (B) in the case of any
consolidation referred to in clause (i) or (iii), above, the
corporation formed by such consolidation shall be a
Subsidiary of the Company, and (C) in the case of any merger
to which the Company is a party, either the Company is the
surviving corporation or the corporation into which the
Company shall be merged shall (1) assume the Company's
obligations under this Agreement and the Related Documents
to which it is, or is to be, a party in a writing in form
and substance satisfactory to the Bank, (2) demonstrate to
the satisfaction of the Bank compliance with the covenants
set forth in Section 5.01(d), above, calculated on a pro
forma basis as of the last day of the immediately preceding
fiscal quarter and giving effect to such merger as if such
corporation were the Company and the Company were its
Subsidiary and (3) enter into written amendment to this
Agreement in form and substance satisfactory to the Bank for
the purpose of conforming, as closely as possible, the
substance of Articles III through VI of this Agreement to
the corporate structure of such corporation and its
Subsidiaries after giving effect to such merger.
(d) Related Documents. Amend or modify any
-----------------
Related Document to which the Company is or is to be a party
or consent to any amendment or modification of any Related
Document to which the Company is not or is not to be a party.
(e) Compliance with ERISA. (i) Terminate,
---------------------
or permit any Affiliate to terminate, any Plan so as to
result in any material (in the opinion of the Bank)
liability of the Company, or (ii) permit to exist any
occurrence of any Reportable Event (as defined in Title IV
of ERISA), or any other event or condition, which presents a
material (in the opinion of the Bank) risk of a Plan
termination by the PBGC.
ARTICLE VI.
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. The occurrence
-----------------
of any of the following events shall be an "Event of
Default" hereunder:
-35-
(a) The Company shall fail to pay any amount
payable under any provision of Article II when due; or
(b) Any representation or warranty made, or
deemed made, by the Company herein or by the Company (or any
of its officers) in connection with this Agreement or any of
the Related Documents shall prove to have been incorrect in
any material respect when made or deemed made; or
(c) The Company shall fail to perform or
observe any of its covenants and agreements contained in
Section 5.02 hereof; or
(d) The Company shall fail to perform or
observe any other covenant or agreement contained in this
Agreement, the Pledge Agreement or the Custodian Agreement
and, in any such case, such failure shall continue for ten
Business Days after written notice thereof from the Bank to
the Company; or
(e) The Company or any of its Subsidiaries
shall fail to pay any Debt (excluding Debt under this
Agreement) of the Company or such Subsidiary (as the case
may be), when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to
such Debt; or any other default under any agreement or
instrument relating to any such Debt, or any other default
or event shall occur and shall continue after the applicable
grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity
of such Debt; or any such Debt shall be declared to be due
and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the
stated maturity thereof; or
(f) A judgment or order for the payment of
money in excess of $5,000,000 shall be rendered against the
Company or any of its Subsidiaries and either (i)
enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be
any period of ten consecutive days during which a stay of
enforcement of such
-36-
judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(g) Any approval of the PSC (including the
PSC Order) or any governmental body, public board or public
body related to this Agreement or the Custodian Agreement
shall be modified, rescinded, revoked or set aside or
otherwise cease to remain in full force and effect or shall
otherwise not authorize the entirety of the Advances and
other amounts outstanding hereunder; or
(h) Any provision of this Agreement or the
Custodian Agreement shall at any time for any reason cease
to be valid and binding on the Company, or shall be declared
to be null and void, or the validity or enforceability
thereof shall be denied or contested by the Company, or a
proceeding shall be commenced by any governmental agency or
authority having jurisdiction over the Company seeking to
establish the invalidity or unenforceability thereof, or the
Company shall deny that it has any further liability or
obligation thereunder; or
(i) Any "Event of Default" under and as
defined in the Financing Agreement or the Indenture shall
have occurred and be continuing; or
(j) Any Termination Event with respect to a
Plan shall have occurred, and, 30 days after notice thereof
shall have been given to the Company by the Bank, (i) such
Termination Event (if correctable) shall not have been
corrected and (ii) the then present value of such Plan's
vested benefits exceeds the then current value of assets
accumulated in such Plan by more than the amount of
$10,000,000 (or in the case of a Termination Event involving
the withdrawal of a "substantial employer" (as defined in
Section 4001(a)(2) of ERISA), the Company's or any
Affiliate's withdrawing employer's proportionate share of
such excess shall exceed such amount); or
(k) The Company or any of its Affiliates as
employer under a Multiemployer Plan shall have made a
complete or partial withdrawal from such Multiemployer Plan
and the plan sponsor of such Multiemployer Plan shall have
notified such withdrawing employer that such employer has
incurred a withdrawal liability in an aggregate amount
exceeding $10,000,000; or
-37-
(l) The Company or any of its Affiliates
shall incur liability in an aggregate amount exceeding
$10,000,000 pursuant to any one or more of Title IV of ERISA
or pursuant to Section 406, 409, 502(i), 502(l) or 515 of
ERISA or Section 401(a)(29), 4971 or 4975 of the Code; or
(m) The Company or any of its Subsidiaries
shall generally not pay its debts as such debts become due,
or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted
by or against the Company or any of its Subsidiaries seeking
to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any
substantial part of its property; or the Company or any of
its Subsidiaries shall take any corporate action to
authorize any of the actions set forth above in this
subsection (m); or
(n) Any event which materially and adversely
affects the financial condition or results of operations of
the Company or the ability of the Company to observe and
perform the terms of this Agreement or any Related Document
to which the Company is or is to be a party shall have
occurred and be continuing.
SECTION 6.02. Upon an Event of Default. If any
------------------------
Event of Default shall have occurred and be continuing, the
Bank may (i) if the Letter of Credit shall not have been
issued, by notice to the Company declare the Commitment to
be terminated, whereupon the same shall forthwith terminate,
(ii) if the Letter of Credit shall have been issued, either
notify the Trustee of such Event of Default and direct that
the Trustee declare the mandatory purchase of all Bonds then
outstanding pursuant to Section 402(d) of the Indenture or
accelerate the Bonds pursuant to Section 902 of the
Indenture, or notify the Trustee of such Event of Default
and of the Bank's determination to terminate the Letter of
Credit on the 18th business day (as defined in the
Indenture) following the Trustee's receipt of such notice,
and, in either case, provide a copy of such notice
-38-
to the Company and the Issuer, (iii) if the Bank shall have
directed the Trustee to declare the mandatory purchase of
all Bonds under Section 402(d) of the Indenture pursuant to
the immediately preceding clause (ii), in a subsequent
notice to the Trustee, notify the Trustee of the Bank's
determination to terminate the Letter of Credit on the 18th
business day (as defined in the Letter of Credit) following
the Trustee's receipt of such notice, (iv) if the Letter of
Credit shall have been issued and a drawing to pay interest
on the Bonds shall have been made thereunder (other than
such a drawing in respect of the payment of interest upon
scheduled or accelerated maturity, or redemption, of the
Bonds), notify the Trustee prior to the sixteenth day
following such drawing that the Interest Component (as
defined in the Letter of Credit) in the amount of such
drawing will not be reinstated, (v) declare the Advances and
all other principal amounts outstanding hereunder, all
interest thereon and all other amounts payable hereunder to
be forthwith due and payable, whereupon the Advances and all
other principal amounts outstanding hereunder, all such
interest and all such other amounts shall become and be
forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are
hereby expressly waived by the Company, and (vi) exercise in
respect of the Pledged Bonds, in addition to other rights
and remedies provided for herein or in the Custodian
Agreement or otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform
Commercial Code in effect in the State of New York at that
time; provided, however, that in the event of an actual or
-------- -------
deemed entry of an order for relief with respect to the
Company or any of its Subsidiaries under the Federal
Bankruptcy Code, (A) the Commitment and the obligation of
the Bank to make Advances shall automatically be terminated,
and (B) the Advances and all amounts reimbursable on demand
pursuant to Section 2.04, all interest accrued and unpaid
thereon and all other amounts payable hereunder shall
automatically become due and payable, without presentment,
demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Company.
-39-
ARTICLE VII.
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment or
---------------
waiver of any provision of this Agreement, nor consent to
any departure by the Company therefrom, shall in any event
be effective unless the same shall be in writing and signed
by the Bank and then such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given.
SECTION 7.02. Notices, Etc. All notices and
------------
other communications provided for hereunder shall be in
writing (including telegraphic communication) and mailed,
telecopied, telexed, telegraphed or delivered, if to the
Company, to it at its address at 6226 West Sahara Avenue,
P.O. Box 230, Las Vegas, Nevada 89151, Attention: Mr.
Richard C. Schmalz, Director, Treasury, telecopy no. (702)
367-5864; and if to the Bank, to it at its address at 2029
Century Park East, Suite 2900, Los Angeles, California
90067, Attention: Mr. George Chen, telecopy number (310)
551-1537; or, as to each party, at such other address or
telecopy number as shall be designated by such party in a
written notice to the other party. All such notices and
communications shall, when mailed, telecopied or
telegraphed, be effective when deposited in the mails or
sent by telecopy or delivered to the telegraph company,
respectively, addressed as aforesaid, except that notices to
the Bank pursuant to the provisions of Article II shall not
be effective until received by the Bank.
SECTION 7.03. No Waiver; Remedies. No failure on
-------------------
the part of the Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 7.04. Right of Set-off. (a) Upon the
----------------
occurrence and during the continuance of any Event of
Default, the Bank is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Bank to or for the
credit or the account of the Company against any and
-40-
all of the obligations of the Company now or hereafter existing
under this Agreement, irrespective of whether or not the
Bank shall have made any demand hereunder and although such
obligations may be contingent or unmatured. The rights of
the Bank under this Section are in addition to other rights
and remedies (including, without limitation, other rights of
set-off) which the Bank may have.
(b) The Bank agrees promptly to notify the Company
after any such set-off and application referred to in
subsection (a) above; provided that the failure to give such
notice shall not affect the validity of such set-off and
application.
SECTION 7.05. Indemnification. The Company
---------------
hereby indemnifies and holds the Bank, its officers,
directors, employees and agents harmless from and against
any and all claims, damages, losses, liabilities, costs and
expenses which the Bank may incur or which may be claimed
against the Bank, its officers, directors, employees and
agents by any Person:
(a) by reason of or in connection with the
execution, delivery or performance of, or the sale or resale
of, the Bonds including those resulting from any
misstatement in or omission from any official statement or
other offering document or supplement thereto relating to
the Bonds (except any misstatement in or omission resulting
from information furnished in writing by the Bank expressly
for inclusion in such offering documents), the Indenture, or
the Financing Agreement, or any transaction contemplated by
the Indenture or the Financing Agreement, other than as
specified in subsection (b) below; or
(b) by reason of or in connection with the
execution and delivery, transfer or use of the proceeds of,
or payment or failure to make payment under, the Letter of
Credit; provided, however, that the Company shall not be
-----------------
required to indemnify the Bank pursuant to this Section
7.05(b) for any claims, damages, losses, liabilities, costs
or expenses to the extent caused by (i) the Bank's willful
misconduct or gross negligence in determining whether
documents presented under the Letter of Credit are genuine
or comply with the terms of the Letter of Credit or (ii) the
Bank's willful or grossly negligent failure to make lawful
payment under the Letter of Credit after
-41-
the presentation to it by the Trustee under the Indenture of
a draft and certificate strictly complying with the terms and
conditions of the Letter of Credit.
(c) The Company will also indemnify and hold
harmless the Bank from and against all losses and reasonable
costs or expenses which the Bank may incur by reason of
either (i) any failure of the Remarketing Agent to pay when
due the purchase price of any Bond for which the Remarketing
Agent has given the notice referred to in paragraph (1) of
Exhibit 4 of the Letter of Credit and/or (ii) any failure by
the Trustee promptly to turn over to the Bank in accordance
with the provisions of the Indenture the proceeds from the
sale of any such Bond received from the Remarketing Agent.
The Company shall pay to the Bank any such amounts not paid
by the Remarketing Agent or the Trustee, as the case may be,
upon demand.
Nothing in this Section 7.05 is intended to limit the
Company's obligations contained in Article II. Without
prejudice to the survival of any other obligation of the
Company hereunder, the indemnities and obligations of the
Company contained in this Section 7.05 shall survive the
payment in full of amounts payable pursuant to Article II
and the termination of the Letter of Credit.
SECTION 7.06. Bank Not Liable. (a) The Company
---------------
assumes all risks of the acts or omissions of the Trustee,
the Remarketing Agent and any beneficiary or transferee of
the Letter of Credit with respect to its use of the Letter
of Credit. Neither the Bank nor any of its officers,
directors, employees or agents shall be liable or
responsible for: (a) the use which may be made of the
Letter of Credit or any acts or omissions of the Trustee and
any other beneficiary or transferee in connection therewith;
(b) the validity, sufficiency or genuineness of documents,
or of any endorsement thereon, even if such documents should
prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by the Bank against
presentation of documents which do not comply with the terms
of the Letter of Credit, including failure of any documents
to bear any reference or adequate reference to the Letter of
Credit; or (d) any other circumstances whatsoever in making
or failing to make payment under the Letter of Credit,
except that the Company shall have a claim against the Bank,
------
and the Bank shall be liable to the Company, to the extent
of any direct, as
-42-
opposed to consequential, damages suffered by the Company which
the Company proves were caused by (i) the Bank's willful
misconduct or gross negligence in determining whether documents
presented under the Letter of Credit are genuine or comply with
the terms of the Letter of Credit or (ii) the Bank's willful or
grossly negligent failure to make lawful payment under the Letter
of Credit after the presentation to it by the Trustee under the
Indenture of a draft and certificate strictly complying with
the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, the Bank
may accept original or facsimile (including telecopy) sight
drafts and accompanying certificates presented under the
Letter of Credit that appear on their face to be in order,
without responsibility for further investigation, regardless
of any notice or information to the contrary.
(b) The Bank shall not have any liability to the
Company, and the obligations of the Company under this
Agreement shall not be affected by (1) the form,
sufficiency, correctness, validity, genuineness and legal
effect of any drafts, demands and other documents,
instruments and other papers relating thereto, (2) the good
faith and acts of any Person, (3) the existence, form,
sufficiency and breach of contracts of any nature
whatsoever, including the Related Documents, (4) the
solvency, standing and responsibility of any Person, (5) any
delay in giving or failure to give any notice, demand or
protest, (6) failure of any Person to comply with the terms
of the Letter of Credit, (7) errors, omissions or delays in
or nondelivery of any message, however sent, and (8) any
other error, neglect or omission, except as provided in the
last sentence of paragraph (a) of this Section.
(c) The Bank shall not have any liability to the
Company for, and the Company waives any right to object to,
payment made under the Letter of Credit against a demand
varying in punctuation, capitalization, spelling or similar
matters of form. The determination whether a demand has
been made before the expiration of the Letter of Credit and
whether a demand is in proper and sufficient form for
compliance with the Letter of Credit shall be made by the
Bank in its sole discretion, which determination shall be
conclusive and binding upon the Company except as otherwise
expressly provided in this Agreement.
SECTION 7.07. Costs, Expenses and Taxes. The
-------------------------
Company agrees to pay on demand all costs and expenses in
-43-
connection with the preparation, execution, delivery,
filing, recording, and administration (including any
amendment or waiver) of this Agreement and any other
documents which may be delivered in connection with this
Agreement, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for the Bank, and
local counsel who may be retained by said counsel, with
respect thereto and with respect to advising the Bank as to
its rights and responsibilities under this Agreement and
such other documents which may be delivered in connection
with this Agreement and all costs and expenses (including
counsel fees and expenses) in connection with (i) the
enforcement (whether through negotiations, legal proceedings
or otherwise) of this Agreement and such other documents
which may be delivered in connection with this Agreement or
(ii) any action or proceeding relating to a court order,
injunction, or other process or decree restraining or
seeking to restrain the Bank from paying any amount under
the Letter of Credit. In addition, the Company shall pay
any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement or the
Letter of Credit or any of such other documents, and agrees
to save the Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
SECTION 7.08. Binding Effect. This Agreement
--------------
shall become effective when it shall have been executed and
delivered by the Company and the Bank and thereafter shall
be binding upon and inure to the benefit of the Company and
the Bank and their respective successors and assigns, except
that the Company shall not have the right to assign its
rights hereunder or any interest herein without the prior
written consent of the Bank.
SECTION 7.09. Severability. Any provision of
------------
this Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting
the validity, enforceability or legality of such provision
in any other jurisdiction.
SECTION 7.10. Governing Law; Submission to
----------------------------
Jurisdiction; etc. This Agreement shall be governed by, and
------------------
construed in accordance with, the laws of the State of
-44-
California. Any action or proceeding arising out of or
relating to this Agreement or the Letter of Credit shall be
heard and determined in an appropriate state or federal
court in the State of California. The Company irrevocably
waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying
of venue of any such suit, action or proceeding brought in
such courts and any claim that any such suit, action or
proceeding has been brought in an inconvenient forum. The
Company also irrevocably consents to the service of any and
all process in any such suit, action or proceeding by
mailing of copies of such process to the Company at its
address provided in Section 7.02. The Company agrees that a
final judgment not stayed in any such action or proceeding
shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. All mailings under this Section 7.10 shall
be by certified mail, return receipt requested. Nothing in
this Section 7.10 shall affect the right of the Bank to
serve legal process in any other manner permitted by law or
affect the right of the Bank to bring any suit, action or
proceeding against the Company or its property in the courts
of any other jurisdiction.
SECTION 7.11. Headings. Section headings in this
--------
Agreement are included herein for convenience of reference
only and shall not constitute a part of this Agreement for
any other purpose.
SECTION 7.12. Counterparts. This Agreement may
------------
be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an
original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 7.13. Waiver of Jury Trial. EACH PARTY
--------------------
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS AGREEMENT. THE PARTIES HERETO (a)
CERTIFY THAT NO REPRESENTATIVE OR ATTORNEY OF ANY OTHER
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER, AND (b) ACKNOWLEDGE THAT THEY
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE OTHER
RELATED DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS CONTAINED IN THIS SECTION.
-45-
SECTION 7.14. Assignment and Participation. (a)
----------------------------
The Bank may with the consent of the Company (which consent
may not be unreasonably withheld) assign to one or more
financial institutions all, or a proportional part of all,
of its rights and obligations under this Agreement, as such
assignee shall assume such rights and obligations. Upon any
such assignment the assignee shall become a party to this
Agreement, shall be a "Bank" hereunder and shall be entitled
to all of the rights and benefits hereunder (including,
without limitation, the rights set forth in Sections 2.07,
2.08, 2.14, 7.04, 7.05 and 7.07).
(b) The Bank may, with the consent of the Company
(which consent may not be unreasonably withheld), sell
participations to one or more banks or other financial
institutions (each a "Participant") in all or a portion of
its rights and obligations under this Agreement; provided,
--------
however, (a) the Bank's obligations under this Agreement
-------
shall remain unchanged, (b) the Bank shall remain solely
responsible to the Company for the performance of such
obligations, (c) except as expressly set forth herein, any
such Participant shall be entitled to the benefit of the
cost and fee protection and indemnification provisions
contained in Sections 2.07, 2.08, 2.14, 7.04, 7.05 and 7.07
to the same extent as if the Participant were the Bank
hereunder, and (d) the Trustee and the Issuer shall continue
to deal solely and directly with the Bank in connection with
the Bank's rights and obligations under this Agreement and
the Related Documents and the Bank shall retain the sole
right to approve any amendment, modification or waiver of
any provisions of this Agreement or any Related Document
(other than amendments, modifications, releases or waivers
with respect to any amounts payable hereunder or the amount
of principal of or the rate at which interest is payable
hereunder or the dates fixed for payments of interest or
fees, or the termination of, or any change to the Stated
Amount).
(c) The Bank may disclose to any assignee or
Participant or proposed assignee or Participant any
information that the Company has delivered or is required to
deliver to the Bank pursuant to this Agreement or the other
Related Documents.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered by their
respective duly authorized representatives as of the date
first above written.
-46-
NEVADA POWER COMPANY
By RICHARD C. SCHMALZ
--------------------------
Title: Director, Treasury
SOCIETE GENERALE, LOS ANGELES
BRANCH
By
-----------------------
Title:
-47-
NEVADA POWER COMPANY
By
--------------------------
Title:
SOCIETE GENERALE, LOS ANGELES
BRANCH
By GEORGE CHEN
-----------------------
Title: V. P.
-47-
Schedule 4.01(q)
[Environmental Disclosure]
-48-
EXHIBIT A
FORM OF LETTER OF CREDIT
------------------------
IRREVOCABLE LETTER OF CREDIT
NO.
------------------
[Issuance date of the Letter of Credit]
United States Trust Company
of New York
45 Wall Street
New York, New York 10005
Attention: Corporate Trust Administration
Dear Sir or Madam:
We hereby establish, at the request and for the
account of Nevada Power Company (the "Company"), in your
favor, as Trustee under the Indenture of Trust, dated as of
April 1, 1989 (the "Indenture"), by and between Clark
County, Nevada (the "Issuer") and you, as Trustee, pursuant
to which $60,000,000 in aggregate principal amount of the
Issuer's Floating Rate Weekly Demand Industrial Revenue
Bonds (Nevada Power Company Project), Series 1989A (the
"Bonds"), are being issued, our Irrevocable Letter of Credit
No in the amount of $61,602,740 (subject
-----------------
to reduction and reinstatement as provided below).
(1) Cancellation Date. This Letter of Credit
-----------------
shall expire on the earliest to occur of (i) [April ,
--
1997] (the "Stated Termination Date"), 1/ (ii) the date upon
-
which we honor a draft accompanying a written and completed
certificate signed by you in substantially the form of
Exhibit 1 or Exhibit 3 attached hereto, and stating therein
that such draft is the final draft to be drawn
---------------------
1/ Insert date of third anniversary of date of issuance.
-
A-1
under this Letter of Credit and that, upon the honoring of such
draft, this Letter of Credit will expire in accordance with its
terms, (iii) the date upon which we receive a written
certificate signed by you and stating therein that no Bonds
are "outstanding" under the Indenture, (iv) on the second
business day (as hereinafter defined) following the
effective date of the conversion of the Bonds to a "Fixed
Rate" pursuant to Section 202(d) and (f) of the Indenture,
(v) the 18th business day following your having received a
notice from us that we are terminating this Letter of Credit
pursuant to Section 402(d) of the Indenture in connection
with the occurrence of an Event of Default under the
Reimbursement Agreement (as defined in paragraph (5), below)
and (vi) the date upon which we receive a written
certificate signed by you and stating therein that an
"Alternate Credit Facility" has been provided under the
Indenture (such earliest date being the "Cancellation
Date").
As used herein, "business day" shall mean any day
on which banks are not required or authorized by law to
close in New York City or Los Angeles, California and on
which the New York Stock Exchange is not closed and, for
purposes of clauses (iv) and (v) of the immediately
preceding paragraph, the location of your office specified
above or the principal corporate trust office designated to
us in a certificate substantially in form set forth in
Exhibit 5 by any transferee who has succeeded you as Trustee
under the Indenture.
(2) Principal and Interest Components. The
---------------------------------
aggregate amount which may be drawn under this Letter of
Credit, subject to reductions in amount and reinstatement as
provided below, is $61,602,740 (Sixty One Million Six
Hundred-Two Thousand Seven Hundred Forty Dollars), of which
the aggregate amounts set forth below may be drawn as
indicated.
(i) An aggregate amount not
exceeding $60,000,000 (Sixty Million Dollars), as such
amount may be reduced and restored as provided below,
may be drawn in respect of payment of principal (whether
upon scheduled or accelerated maturity, or upon
redemption) of the Bonds or the portion of the purchase
price of Bonds corresponding to principal (the
"Principal Component").
A-2
(ii) An aggregate amount not
exceeding $1,602,740 (One Million Six Hundred Two
Thousand Seven Hundred Forty Dollars), as such amount
may be reduced and restored as provided below, may be
drawn in respect of payment of interest on the Bonds or
the portion of the purchase price of Bonds corresponding
to interest, but not more than an amount equal to
accrued interest on the Bonds for the period of 65 days
immediately preceding the date of such drawing at a
maximum rate of fifteen percent (15%) per annum
calculated on the basis of a year of 365 days (the
"Interest Component").
(3) Drawings. Funds under this Letter of Credit
--------
are available to you against (i) your draft payable on the
date such draft is drawn on us, stating on its face: "Drawn
under Irrevocable Letter of Credit No. , dated
------------
[April , 1994]", and (ii) the appropriate certificate
--
specified below, duly executed by you and appropriately
completed.
Exhibit Setting Forth
Type of Drawing Form of Certificate Required
--------------- ----------------------------
Drawing in respect of Exhibit 1
regularly scheduled
interest payment or
payment of principal of
and interest on the Bonds
upon scheduled or
accelerated maturity
Tender Drawing (as Exhibit 2
hereinafter defined)
Redemption/Mandatory Exhibit 3
Purchase Drawing (as
hereinafter defined)
Drafts and certificates hereunder shall be dated
the date of presentation and shall be presented to Societe
Generale, Los Angeles Branch, Letter of Credit Department,
Attention: Ms. Minerva Arvisu, 2029 Century Park East,
Suite 2900, Los Angeles, California 90067 (or at such other
A-3
office as we may designate by written notice to you) or by
facsimile transmission received by us at the following
telephone number: (310) 203-0539 (or at such other
telephone number as we may designate by written notice to
you) subsequently confirmed in writing. If we receive your
draft(s) and certificate(s) at such office, all in strict
conformity with the terms and conditions of this Letter of
Credit, at or before 9:00 a.m. (Los Angeles time), on a
business day on or before the Cancellation Date, we will
honor such draft(s) at or before 12:00 noon (Los Angeles
time) on the same business day to your order in accordance
with your payment instructions; and draft(s) so received
following 9:00 a.m. (Los Angeles time) will be so honored at
or before 10:00 a.m. (Los Angeles time) on the next business
day (notwithstanding that such prior business day may have
been the Cancellation Date). If you request, by written
notice to us delivered in a timely fashion, payment under
this Letter of Credit will be made by wire transfer of
federal funds to your account with any bank that is a member
of the Federal Reserve System, or by deposit of immediately
available funds into a designated account that you maintain
with us. All payments made by us under this Letter of
Credit will be made with our own funds and not with any
funds of the Company or the Issuer.
(4) Reductions. The Principal Component and the
----------
Interest Component shall be reduced immediately following
our honoring any draft drawn hereunder (i) to pay principal
of, or interest on, the Bonds or to pay the purchase price
of Bonds that are subject to mandatory purchase by the
Company pursuant to Section 402(a), (b) or (c) of the
Indenture (any such drawing in respect of the payment of
principal of and interest, if any, on the Bonds upon
redemption of the Bonds in whole or in part or the purchase
price of Bonds that are so subject to mandatory purchase by
the Company being a "Redemption/Mandatory Purchase
Drawing"), or (ii) to pay the purchase price of Bonds that
are (A) purchased pursuant to an election by the holders
thereof pursuant to Section 401 of the Indenture or (B)
subject to mandatory purchase by the Company pursuant to
Section 402(d) of the Indenture (any such drawing in respect
of the circumstances referred to in this clause (ii) being a
"Tender Drawing"), in each case by an amount equal to the
respective component of the amount of such draft.
(5) Reinstatement. On the sixteenth day
-------------
following each drawing hereunder to pay interest on the
Bonds (other than a drawing in respect of the interest
component of a Tender Drawing or a Redemption/Mandatory
Purchase Drawing), the amount so drawn shall be reinstated
to the Interest Component, unless you shall have
A-4
theretofore received written notice from us that we will not
reinstate this Letter of Credit in the amount of such drawing
because (i) we have not been reimbursed in full by the Company for
the amount of such drawing, together with interest, if any,
owing thereon pursuant to the Letter of Credit and
Reimbursement Agreement, dated as of [April , 1994] (the
--
"Reimbursement Agreement"), between the Company and us, or
(ii) an Event of Default under the Reimbursement Agreement
has occurred and is then continuing; provided, however, that
-----------------
we shall not be entitled to give any such notice in the
event that, pursuant to our direction, you shall be required
to give notice of mandatory purchase of the Bonds in
accordance with Section 402 of the Indenture.
Immediately upon our notice to you by hand
delivery or facsimile transmission in the form set forth in
Exhibit 4 hereto that (a) we have been reimbursed by or for
the account of Company in respect of any Tender Drawing,
together with interest, if any, owing thereon pursuant to
the Reimbursement Agreement, the amounts of which we notify
you we have been reimbursed in respect of such Tender
Drawing shall be reinstated to the Principal Component and
the Interest Component, as specified in such notice, or (b)
that we have received notice from a person stating therein
that he or she is a representative of the "Remarketing
Agent" referred to in the Indenture and that such
Remarketing Agent has found a purchaser to whom it can
remarket Bonds pledged to us in connection with a Tender
Drawing for a purchase price sufficient, when added to
amounts, if any, theretofore reimbursed to us by or for the
account of the Company in respect of the purchase price of
such Bonds paid by us as part of such Tender Drawing and
interest, if any, owing thereon pursuant to the
Reimbursement Agreement, to reimburse us in full for such
purchase price theretofore paid by us and such interest, if
any, the Principal Component and the Interest Component
shall be reinstated to the extent of the principal and
interest components of the purchase price of such Bonds as
specified in such notice.
(6) Notices. Communications with respect to this
-------
Letter of Credit shall be in writing and shall be addressed
to us at 2029 Century Park East, Suite 2900, Los Angeles,
California 90067, Attention: Ms. Minerva Arvisu (or at such
other office as we may designate by written notice to you)
or by facsimile transmission received by us at the following
telephone number: (310) 203-0539 (or at such other
telephone number as we may designate by written
A-5
notice to you) specifically referring to the number of this Letter
of Credit.
(7) Transfer. This Letter of Credit is
--------
transferable in its entirety (but not in part) to any
transferee who has succeeded you as Trustee under the
Indenture and may be successively so transferred. Transfer
of the available balance under this Letter of Credit to such
transferee shall be effected by the presentation to us of
this Letter of Credit accompanied by a certificate
substantially in form set forth in Exhibit 5.
(8) Governing Laws, Etc. This Letter of Credit
--------------------
shall be governed by and construed in accordance with the
laws of the State of New York, including the Uniform
Commercial Code as in effect in the State of New York. This
Letter of Credit sets forth in full our undertaking, and
such undertaking shall not in any way be modified, amended,
amplified or limited by reference to any document,
instrument or agreement referred to herein (including,
without limitation, the Bonds, the Indenture and the
Reimbursement Agreement), except only the certificates and
the drafts referred to herein; and any such reference shall
not be deemed to incorporate herein by reference any
document, instrument or agreement except for such
certificates and such drafts. Whenever and wherever the
terms of this Letter of Credit shall refer to the purpose of
a draft hereunder, or the provisions of any agreement or
document pursuant to which such draft may be presented
hereunder, such purpose or provisions shall be conclusively
determined by reference to the certificate accompanying such
draft; in furtherance of this sentence, whether any drawing
is in respect of payment of regularly scheduled interest on
the Bonds or of principal of or interest on the Bonds upon
scheduled or accelerated maturity or is a Tender Drawing or
a Redemption/Mandatory Purchase Drawing shall be
conclusively determined by reference to the certificate
accompanying such drawing.
Very truly yours,
SOCIETE GENERALE, LOS ANGELES
BRANCH
By
-----------------------
Title:
A-6
EXHIBIT 1
TO THE LETTER OF CREDIT
CERTIFICATE FOR DRAWING IN RESPECT OF
REGULARLY SCHEDULED INTEREST PAYMENT OR
PAYMENT OF PRINCIPAL OF AND INTEREST ON THE
BONDS UPON SCHEDULED OR ACCELERATED MATURITY
OF THE BONDS
The undersigned, a duly authorized officer of
United States Trust Company of New York (the "Trustee"),
hereby certifies as follows to Societe Generale, Los Angeles
Branch (the "Bank"), with reference to Irrevocable Letter of
Credit No. (the "Letter of Credit") issued
---------------
by the Bank in favor of the Trustee. Terms defined in the
Letter of Credit and used but not defined herein shall have
the meanings given them in the Letter of Credit.
(1) The Trustee is the Trustee under the
Indenture for the holders of the Bonds.
(2) The Trustee is making a drawing under the
Letter of Credit in respect of [a regularly scheduled
interest payment]2/ [the payment of principal of and interest
-
on the Bonds upon the scheduled or accelerated maturity of
the Bonds]3/ in accordance with Section 605 of the Indenture.
-
Such Bonds are not registered in the name of the Company and
are not held or required to be held by the Trustee for the
account of the Company pursuant to the Indenture.
(3) The respective amounts of principal of and
interest on the Bonds which are due and payable (or which
have been declared to be due and payable) and with respect
to the payment of which the Trustee does not have available
amounts that, pursuant to Section 604 of the Indenture, are
to be applied to such payment prior to moneys drawn under
--------------------
2/ To be used for regularly scheduled interest payments.
-
3/ To be used upon scheduled or accelerated maturity of
-
the Bonds.
A-7
the Letter of Credit are as follows, and the amount of the
draft accompanying this Certificate does not exceed the sum
of such amounts:
Principal: $
-----------------
Interest: $
-----------------
(4) The portion of the amount of the draft
accompanying this Certificate being drawn in respect of
payment of principal of the Bonds, as indicated in paragraph
(3), above, does not exceed the Principal Component of the
Letter of Credit, and the portion of the amount of the draft
accompanying this Certificate being drawn in respect of
payment of interest on the Bonds, as indicated in paragraph
(3), above, does not exceed the Interest Component of the
Letter of Credit. The respective portions of the amount of
the draft accompanying this Certificate in respect of
payment of principal of and interest on the Bonds have been
computed in accordance with the terms and conditions of the
Bonds and the Indenture.
[(5) The draft accompanying this
Certificate being presented upon the [scheduled maturity of
the Bonds] [accelerated maturity of the Bonds pursuant to
Section 902 of the Indenture]4/ is the final draft to be drawn
-
under the Letter of Credit in respect of principal of and
interest on the Bonds. Upon the honoring of such draft, the
Letter of Credit will expire in accordance with its terms.]5/
-
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of
---- ---------.
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By
-----------------------
Title:
--------------------
4/ Insert appropriate bracketed language
-
5/ To be used upon scheduled or accelerated maturity of
-
the Bonds.
A-8
EXHIBIT 2
TO THE LETTER OF CREDIT
CERTIFICATE FOR TENDER DRAWING
UPON BONDHOLDER ELECTION
OR MANDATORY PURCHASE OF BONDS
AT THE DIRECTION OF BANK
The undersigned, a duly authorized officer of
United States Trust Company of New York (the "Trustee"),
hereby certifies as follows to Societe Generale, Los Angeles
Branch (the "Bank"), with reference to Irrevocable Letter of
Credit No. (the "Letter of Credit") issued
-----------------
by the Bank in favor of the Trustee. Terms defined in the
Letter of Credit and used but not defined herein shall have
the meanings given them in the Letter of Credit.
(1) The Trustee is the Trustee under the
Indenture for the holders of the Bonds.
[(2) The Trustee is making a Tender
Drawing under the Letter of Credit with respect to the
purchase price of Bonds delivered pursuant to an election by
Bondholders pursuant to Section 401 of the Indenture and the
Bonds. Such Bonds are not registered in the name of the
Company and are not held or required to be held by the
Trustee for the account of the Company pursuant to the
Indenture.]1/
-
[(2) The Trustee is making a Tender
Drawing under the Letter of Credit with respect to the
purchase price of Bonds subject to mandatory purchase by the
Company pursuant to Section 402(d) of the Indenture.]2/
-
--------------------
1/ To be used where the Tender Drawing is made in
-
connection with Bonds tendered by Bondholders and not
remarketed on the day they are tendered.
2/ To be used where the Tender Drawing is made in
-
connection with Bonds subject to mandatory purchase by the
Company at the direction of the Bank.
A-9
(3) The respective amounts of purchase price
corresponding to principal of and accrued interest, if any,
on such Bonds and with respect to the payment of which the
Trustee does not have available amounts that, pursuant to
Section 405 of the Indenture, are to be applied to such
payment prior to moneys drawn under the Letter of Credit are
as follows, and the amount of the draft accompanying this
Certificate does not exceed the sum of such amounts:
Principal: $
--------------
Interest: $
--------------
(4) The portion of the amount of the draft
accompanying this Certificate being drawn in respect of
purchase price corresponding to principal of the Bonds, as
indicated in paragraph (3), above, does not exceed the
Principal Component of the Letter of Credit, and the portion
of the amount of the draft accompanying this Certificate
being drawn in respect of purchase price corresponding to
interest on the Bonds, as indicated in paragraph (3), above,
does not exceed the Interest Component of the Letter of
Credit. The respective portions of the amount of the draft
accompanying this Certificate in respect of purchase price
corresponding to principal of and interest on such Bonds
have been computed in accordance with the terms and
conditions of the Bonds and the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of
----
, .
----------- ----
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By
-----------------------
Title:
A-10
EXHIBIT 3
TO THE LETTER OF CREDIT
CERTIFICATE FOR REDEMPTION/MANDATORY PURCHASE
DRAWING IN RESPECT OF PAYMENT OF
PRINCIPAL OF AND INTEREST ON
BONDS UPON REDEMPTION OR MANDATORY
PURCHASE NOT AT DIRECTION OF BANK
The undersigned, a duly authorized officer of
United States Trust Company of New York (the "Trustee"),
hereby certifies as follows to Societe Generale, Los Angeles
Branch (the "Bank"), with reference to Irrevocable Letter of
Credit No. (the "Letter of Credit")
-------------------
issued by the Bank in favor of the Trustee. Terms defined
in the Letter of Credit and used but not defined herein
shall have the meanings given them in the Letter of Credit.
(1) The Trustee is the Trustee under the
Indenture for the holders of the Bonds.
(2) The Trustee is making a Redemption/Mandatory
Purchase Drawing under the Letter of Credit with respect to
[the payment of principal of and accrued interest, if any,
on the Bonds upon redemption of the Bonds in accordance with
Section 301 of the Indenture]1/ [the purchase price of Bonds
-
subject to mandatory purchase by the Company pursuant to
Section 402[(a)][(b)][(c)] of the Indenture].2/ Such Bonds
-
are not registered in the name of the Company and are not
held or required to be held by the Trustee for the account
of the Company pursuant to the Indenture.
[(3) The respective amounts of principal
of and interest on the Bonds which are due and payable and
with respect to the payment of which the Trustee does not
have
--------------------
1/ To be used upon an optional or mandatory redemption of
-
the Bonds in whole or in part.
2/ To be used upon a mandatory purchase of the Bonds
-
pursuant to Sections 402(a), (b) or (c) of the Indenture.
A-11
available amounts that, pursuant to Section 604 of the
Indenture, are to be applied to such payment prior to moneys
drawn under the Letter of Credit are as follows, and the
amount of the draft accompanying this Certificate does not
exceed the sum of such amounts:
Principal: $
---------------
Interest: $ ]3/
--------------- -
[(3) The respective amounts of the
purchase price corresponding to principal of and accrued
interest, if any, on such Bonds and with respect to the
payment of which the Trustee does not have available amounts
that, pursuant to Section 405 of the Indenture, are to be
applied to such payment prior to moneys drawn under the
Letter of Credit are as follows, and the amount of the draft
accompanying this Certificate does not exceed the sum of
such amounts:
Principal: $
---------------
Interest: $ ]4/
--------------- -
[(4) The portion of the amount of the
draft accompanying this Certificate being drawn in respect
of payment of principal of the Bonds, as indicated in
paragraph (3), above, does not exceed the Principal
Component of the Letter of Credit, and the portion of the
amount of the draft accompanying this Certificate being
drawn in respect of payment of interest on the Bonds, as
indicated in paragraph (3), above, does not exceed the
Interest Component of the Letter of Credit. The respective
portions of the amount of the draft accompanying this
Certificate in respect of payment of principal of and
interest on the Bonds have been computed in accordance with
the terms and conditions of the Bonds and the Indenture.]3/
-
[(4) The portion of the amount of the
draft accompanying this Certificate being drawn in respect
of purchase price corresponding to principal of the Bonds,
as indicated in paragraph (3), above, does not exceed the
Principal Component of the Letter of Credit, and the
--------------------
3/ To be used upon an optional or mandatory redemption of
-
the Bonds in whole or in part.
4/ To be used upon a mandatory purchase of the Bonds
-
pursuant to Sections 402(a), (b) or (c) of the Indenture.
A-12
portion of the amount of the draft accompanying this Certificate
being drawn in respect of purchase price corresponding to
interest on the Bonds, as indicated in paragraph (3), above,
does not exceed the Interest Component of the Letter of
Credit. The respective portions of the amount of the draft
accompanying this Certificate in respect of purchase price
corresponding to principal of and interest on such Bonds
have been computed in accordance with the terms and
conditions of the Bonds and the Indenture.]5/
-
[(5) The draft accompanying this
Certificate is the final draft to be drawn under the Letter
of Credit in respect of principal of and interest on the
Bonds and, upon the honoring of such draft, the Letter of
Credit will expire in accordance with its terms.]6/
-
[(5) The draft accompanying this
Certificate is the final draft to be drawn under the Letter
of Credit in respect of the purchase price corresponding to
principal of and interest on the Bonds and, upon the
honoring of such draft, the Letter of Credit will expire in
accordance with its terms.]7/
-
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the day of
-----
, .
------------ ----
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By
-----------------------
Title:
--------------------
5/ To be used upon a mandatory purchase of the Bonds
-
pursuant to Sections 402(a), (b) or (c) of the Indenture.
6/ To be used in the case of all redemptions of the Bonds
-
other than redemptions in part.
7/ To be used in the case of mandatory purchases of the
-
Bonds pursuant to Sections 402(a), (b) (including a
mandatory purchase under Section 402(b) in connection with
notice given pursuant to clause (v) of paragraph (1) of the
Letter of Credit, or (c) of the Indenture.
A-13
EXHIBIT 4
TO THE LETTER OF CREDIT
NOTICE OF REINSTATEMENT
-----------------------
The undersigned, a duly authorized officer of
Societe Generale, Los Angeles Branch (the "Bank"), hereby
gives the following notice to United States Trust Company of
New York, as trustee and as custodian, with reference to
Irrevocable Letter of Credit No. (the
----------------
"Letter of Credit") issued by the Bank in favor of United
States Trust Company of New York, as trustee. Terms defined
in the Letter of Credit and used but not defined herein have
the meanings given them in the Letter of Credit.
[(1) We have received the amount of
$ today in reimbursement of amounts paid under the
----------
Letter of Credit with respect to Tender Drawings relating to
certain Bonds, together with interest, if any, owing thereon
pursuant to the Reimbursement Agreement. The respective
amounts of principal of and interest on such Bonds covered
by that reimbursement are as follows:
Principal: $
---------------
Interest: $ ]1/
--------------- -
[(1) We have received notice from the
Remarketing Agent that it has found a purchaser to whom it
can remarket Bonds pledged to us in connection with a Tender
Drawing pursuant to Section [401] [402(d)] of the Indenture.
The sum of (i) the principal amount of such Bonds and the
amount of accrued interest, if any, thereon, as communicated
to us by the Remarketing Agent, and (ii) amounts, if any,
heretofore reimbursed to us by or for the account of the
Company on account of such principal and interest are as
follows:
--------------------
1/ To be used in event of actual receipt of reimbursed
-
amounts.
A-14
Principal: $
---------------
Interest: $ ]2/
--------------- -
(2) In accordance with the provisions of the
Letter of Credit, the Principal Component and the Interest
Component have been reinstated to the extent of the
respective amounts specified in Paragraph (1) above.3/
-
IN WITNESS WHEREOF, the Bank has executed and
delivered this Notice as of the day of ,
---- ----------
.
----
SOCIETE GENERALE, LOS ANGELES
BRANCH
By
-----------------------
Title:
--------------------
2/ To be used in event of notification of Remarketing
-
Agent that it has found a prospective purchaser of Pledged
Bonds.
3/ After such reinstatement, the Interest Component must
-
be equal to an amount calculated by multiplying the
Principal Component by 15% and then multiplying the product
thereof by the quotient obtained by dividing 65 by 365.
A-15
EXHIBIT 5
TO THE LETTER OF CREDIT
INSTRUCTIONS TO TRANSFER
------------------------
,
------------- -----
Re: Irrevocable Letter of Credit No.
---------------
Gentlemen:
The undersigned, as Trustee under the Indenture of
Trust by and between Clark County, Nevada (the "Issuer") and
United States Trust Company of New York, dated as of April
1, 1989, is named as beneficiary in the Letter of Credit
referred to above (the "Letter of Credit"). The Transferee
named below has succeeded the undersigned as Trustee under
such Indenture.
----------------------------------
(Name of Transferee)
----------------------------------
(Address)
Therefore, for value received, the undersigned
hereby irrevocably instructs you to transfer to such
Transferee all rights of the undersigned to draw under the
Letter of Credit.
By this transfer, all rights of the undersigned in
the Letter of Credit, and all obligations of the undersigned
under the Custodian Agreement, dated as of April , 1994,
---
between the undersigned, as "Custodian", and you (the
"Custodian Agreement"), are transferred to such Transferee,
and such Transferee shall hereafter have the sole rights as
beneficiary under the Letter of Credit and the obligations
as "Custodian" under the Custodian Agreement; provided,
--------
however, that no rights shall be deemed to have been
-------
transferred to such Transferee until
A-16
such transfer complies with the requirements of the Letter of
Credit pertaining to transfers.
IN WITNESS WHEREOF, the undersigned has executed
and delivered this Certificate as of the day of
-----
, .
----------- ----
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By
-----------------------
Title:
The undersigned, [Name of Transferee], hereby
accepts the foregoing transfer of rights under the Letter of
Credit and obligations under the Custodian Agreement.
[Name of Transferee]
By
-----------------------
Title:
Address of Principal
Corporate Trust Office:
[insert address]
A-17
EXHIBIT B
FORM OF CUSTODIAN AGREEMENT
---------------------------
THIS CUSTODIAN AGREEMENT (the "Agreement"), dated
as of April , 1994, is made by and among NEVADA POWER
--
COMPANY (the "Company"), UNITED STATES TRUST COMPANY OF NEW
YORK, as custodian (such entity and any successor custodian
hereunder being the "Custodian") and SOCIETE GENERALE, LOS
ANGELES BRANCH (the "Bank").
WHEREAS, at the request of the Company, Clark
County, Nevada (the "Issuer") issued and sold $60,000,000 in
aggregate principal amount of the Issuer's Floating Rate
Weekly Demand Industrial Development Revenue Bonds (Nevada
Power Company Project), Series 1989A (the "Bonds"), pursuant
to an Indenture of Trust, dated as of April 1, 1989 (as
amended, modified or supplemented from time to time, the
"Indenture"), between the Issuer and United States Trust
Company of New York, as trustee (such trustee and any
successor trustee under the Indenture, in such capacity,
being the "Trustee"), for the purpose stated in the
Indenture; and
WHEREAS, to induce the Bank to issue a letter of
credit to support certain amounts payable on and in respect
of the Bonds (the "Letter of Credit") and to enter into a
Letter of Credit and Reimbursement Agreement, dated as of
April , 1994, between the Bank and the Company relating
--
thereto (the "Reimbursement Agreement"), the Company
proposes to pledge the Collateral (as hereinafter defined)
and to enter into this Agreement;
NOW, THEREFORE, the Company, the Custodian and the
Bank hereby agree as follows:
ARTICLE 1
DEFINITIONS; INTERPRETATION
SECTION 1.1. Definitions. For the purposes of
-----------
this Agreement, terms defined in the Reimbursement
B-1
Agreement and used but not otherwise defined herein have the
meanings given them in the Reimbursement Agreement, and the
following terms have the meanings indicated:
"Collateral" means each Pledged Bond, all payments
----------
of principal and interest payable on Pledged Bonds, all of
the Company's rights to receive Pledged Bonds and amounts
payable thereon and all of the Company's right, title and
interest in and to Pledged Bonds and such principal of and
interest thereon, and all proceeds thereof, as they may from
time to time be delivered to or held, pending payment by the
Custodian, the Remarketing Agent or the Trustee, in money,
securities or collections from or with respect to any or all
of the foregoing.
"Custodian" means United States Trust Company of
---------
New York, or such other Person appointed from time to time
by the Bank to act as Custodian hereunder and accepting such
appointment.
"Obligations" means (a) all amounts of principal
-----------
of and interest on each Advance, (b) all other amounts due
under or in respect of the Reimbursement Agreement and (c)
all amounts paid or costs or expenses incurred by the Bank
in the collection of any of the foregoing or for the
maintenance, preservation, protection or enforcement
(whether through negotiations, legal proceedings or
otherwise) of, or realization upon, the Collateral or in
connection with the enforcement or administration of this
Agreement or the Reimbursement Agreement, in each case
irrespective of whether the obligation to pay any such
amount is direct or indirect, absolute or contingent, joint
or several, due or not due, liquidated or unliquidated,
arises by operation of law or otherwise or is from time to
time reduced and thereafter reincurred. To the extent any
payment made with respect to an Obligation is rescinded or
recovered or is otherwise avoided or must be restored under
or by reason of any bankruptcy or insolvency proceedings of
the Company or any other Person or otherwise, the amount of
such payment so rescinded, recovered, restored or avoided
shall again constitute an Obligation, as if such payment had
never been made.
"Pledged Bond" means each Bond for which payment
------------
of the purchase price is made, in whole or in part, with the
proceeds of a drawing by the Trustee under the Letter of
Credit.
B-2
"Remarketing Agreement" means the Remarketing
---------------------
Agreement, dated as of April 1, 1989, between the Company,
on the one hand, and Shearson Lehman Hutton Inc., Goldman,
Sachs & Co. and Merrill Lynch Capital Markets, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, on the other
hand as the same shall have been amended, modified or
supplemented from time to time.
SECTION 1.2. Interpretation. The headings of the
--------------
articles and sections hereof are for convenience of
reference only and shall not limit or affect the meaning or
construction of any provision hereof.
ARTICLE 2
SECURITY INTEREST
SECTION 2.1. Grant of Security Interest. As
--------------------------
security for the due and punctual payment in full of each of
the Obligations, the Company hereby grants to the Bank a
continuing first lien on and security interest in the
Collateral.
SECTION 2.2. Interest Continuing and Absolute.
--------------------------------
Until payment in full of all the Obligations has been
indefeasibly made after the Cancellation Date, the Bank's
security interest in the Collateral hereunder shall continue
in full force and effect, and it and the Company's
obligations hereunder shall be effective irrespective of any
illegality, invalidity or unenforceability of the Bonds, the
Letter of Credit, the Reimbursement Agreement or any other
Related Document.
SECTION 2.3. Perfection. The Company shall
----------
perfect the security interest of the Bank in the Collateral
(a) in the case of Pledged Bonds, by delivering such Pledged
Bonds to the Custodian, (b) in the case of any other
certificated securities and cash proceeds forming part of
the Collateral, by delivering the Collateral to the Bank,
(c) in the case of uncertificated securities forming part of
the Collateral, by registering such securities in the name
of the Bank, or (d) by any other method permitted by the
Uniform Commercial Code as in effect in the State of New
York on the date of such perfection. All steps necessary
for such perfection shall be taken by the Company, in the
case of each Pledged Bond forming part of the Collateral, on
the day such Bond becomes a Pledged Bond and, in the case of
proceeds, immediately.
B-3
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. The
------------------------------
Company represents and warrants to the Bank and, so long as
any of the Obligations remains unpaid, shall be deemed
continuously to represent and warrant to the Bank and the
Custodian, as follows:
(a) At the time of delivery to the Bank or the
Custodian of any Collateral, the Company will have good and
marketable title to, and be the sole owner of, such
Collateral, free and clear of all liens and other
encumbrances, other than the security interest created
hereby, the Bank's security interest in such Collateral
shall have been perfected and no financing statement or
other instrument with respect to any of the Collateral shall
have been and continue to be recorded, registered or filed
and no security agreement with respect to any of the
Collateral shall have been executed by the Company, other
than with respect to such security interest in favor of the
Bank.
(b) The Bank has a valid and perfected first
priority security interest in the Collateral.
(c) The Collateral may be properly pledged
hereunder.
(d) No consents or approvals of any Person are
required for the assignment and transfer by the Company of
any of the Collateral to the Bank hereunder, or the
subsequent sale or transfer of the Collateral by the Bank
pursuant to the terms hereof.
(e) This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms.
B-4
ARTICLE 4
COVENANTS
SECTION 4.1. Protection of the Bank's Security
---------------------------------
Interest. The Company shall defend its title to, and the
--------
Bank's security interest in, the Collateral against all
claims of all other Persons, and shall keep the Collateral
free from all liens and encumbrances (other than the Bank's
security interest hereunder) and pay or cause to be paid
promptly when due all taxes, fees, assessments and other
charges now or hereafter imposed on or in respect of any of
the Collateral.
SECTION 4.2. Sale of Collateral. The Company
------------------
shall not, without the prior written consent of the Bank,
sell, transfer or otherwise dispose of, or permit any other
Person to sell, transfer or otherwise dispose of, any of the
Collateral or any of the Company's interests therein, except
in accordance with the terms of this Agreement, the
Indenture and the Remarketing Agreement. The receipt by the
Bank of all or any part of the proceeds of any sale,
transfer or other disposition of any of the Collateral,
except in accordance with the prior sentence, shall not be
deemed or construed to be a consent by the Bank to any such
sale, transfer or other disposition.
SECTION 4.3. Further Assurances. The Company
------------------
shall execute and deliver to the Bank or the Custodian such
assignments and other documents and instruments, and shall
take all other action relating to the Collateral and the
preservation, protection or perfection of the Bank's
security interest therein, as the Bank may request, and the
Company shall not file or permit to be filed any financing
statement (or amendment or continuation statement) or
execute any security agreement with respect to any of the
Collateral unless it names the Bank as the only secured
party. To the extent permitted by law, the Company hereby
appoints the Bank as its attorney-in-fact (without requiring
the Bank to act as such) to perform all acts that the Bank
deems appropriate to preserve, protect and perfect its
continuing security interest in the Collateral or to
preserve or protect the Collateral.
B-5
ARTICLE 5
REMEDIES UPON THE OCCURRENCE OF AN EVENT OF DEFAULT
SECTION 5.1. Default Remedies. If an Event of
----------------
Default under the Reimbursement Agreement shall occur and be
continuing, the Bank shall be entitled to exercise any one
or more (at the Bank's discretion, at one or more times) of
the following remedies:
(a) The Bank shall have the right to receive the
Collateral, if any, then held by the Custodian, the
Remarketing Agent, the Trustee or any other Person, endorse,
assign or deliver in its own name or the name of the Company
any and all checks, drafts and other instruments for the
payment of money relating to or constituting part of the
Collateral, and cause the Collateral to be registered in the
name of the Bank or its designee, and the Company hereby
waives presentment, protest and notice of nonpayment of any
instrument so endorsed. In furtherance of the foregoing,
the Company hereby irrevocably appoints the Bank, or any of
its officers or designees, the Company's lawful attorney-in-
fact (without requiring the Bank so to act), with power of
substitution, in the name of the Company or in the name of
the Bank (i) to endorse the name of the Company upon any of
the Collateral, including proceeds, and to cause any of the
Collateral to be registered in the name of the Bank or its
designee; (ii) to demand, collect, receive payment of,
receipt for and give discharges and releases of any of the
Collateral; (iii) to commence and prosecute any and all
actions or proceedings at law or in equity in any court to
collect or otherwise realize on any of the Collateral to
enforce any rights in respect thereof; (iv) to initiate,
settle, compromise, compound, adjust or defend any actions,
suits or proceedings relating or pertaining to any of the
Collateral; and (v) to sell, transfer, assign, discount,
negotiate or otherwise deal in all or any portion of the
Collateral or the proceeds thereof and generally to perform
all other acts necessary or desirable to realize on, and
obtain the benefits of, the Collateral and otherwise to
carry out the intention of this Agreement, as fully and
effectively as though the Bank were the absolute owner
thereof, and the Company hereby ratifies and confirms all
that the Bank shall do by virtue of this appointment. The
Bank shall not, under any circumstances, have any
B-6
liability for any error or omission made in the settlement,
collection or payment or other disposition of any or all of
the Collateral or of any instrument received in payment
therefor.
(b) The Bank may sell or cause to be sold, in one
or more sales, at such price as the Bank may deem adequate,
and for cash or on credit or for future delivery, with or
without assumption of any credit risk, all or any portion of
the Collateral, at public or private sale, without demand of
performance or notice of intention to sell or of time or
place of sale (except such notice as may be required by
applicable statute and cannot be waived), and the Bank may
be the purchaser of all or any portion of the Collateral so
sold; provided, however, that the Bank shall first give
-------- -------
notice to the Trustee that an Event of Default has occurred
and is continuing. The purchaser(s) at any such sale shall
thereafter hold the Collateral so sold absolutely, free from
any claim or right whatsoever, including any equity of
redemption, of the Company. Any such demand, notice, claim,
right or equity is hereby expressly waived and released by
the Company. Without limiting the foregoing, if any such
notice of the time or place of sale is so required, the
Company agrees that the Bank need not give more than ten
days' notice of the time and place of any public sale or of
the time after which a private sale or other intended
disposition is to take place and that such notice is
reasonable notification of such matters. The Bank shall
not, under any circumstances, incur any liability as a
result of the sale of the Collateral or any part thereof at
any sale conducted in accordance with the provisions of this
Agreement. The Company hereby waives any claims against the
Bank arising by reason of the fact that the price at which
the Collateral may have been sold at any private sale was
less than the price which might have been obtained at a
public sale or was less than the aggregate principal amount
of the Pledged Bonds or the then total unpaid Obligations.
(c) The Company recognizes that the Bank may not
deem it desirable to effect a public sale of any or all of
the Pledged Bonds or otherwise but may deem it desirable to
resort to one or more private sales thereof to a restricted
group of purchasers who will be obliged to agree, among
other things, to acquire such securities for their own
account for investment
B-7
and not with a view to the distribution or resale thereof.
The Bank shall be under no obligation to delay a sale of any
of the Pledged Bonds for the period of time necessary to
permit the Issuer to register them for public sale under the
Securities Act of 1933, as amended (the "Act"), or under
applicable state securities laws, even should the Issuer
agree to do so.
(d) The Company shall do or cause to be done all
such other acts and things as may be deemed necessary or
desirable by the Bank to make such sale or sales of any
portion or all of the Pledged Bonds valid and binding and in
compliance with all applicable laws, regulations, orders,
writs, injunctions, decrees or awards of any and all courts,
arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales,
including registering such Bonds under the Act, or any state
securities laws (to the extent necessary), all at the
Company's expense.
(e) The Company acknowledges that a breach of any
of the covenants contained in this Article 5 will cause
irreparable injury to the Bank and that the Bank has no
adequate remedy at law in respect of any such breach and, as
a consequence, agrees that each and every covenant contained
in this Article 5 shall be specifically enforceable against
the Company, and the Company hereby waives and agrees not to
assert any defenses against an action for specific
performance of such covenants except for a defense that no
Event of Default has occurred.
SECTION 5.2. Remedies Not Exclusive. (a) The
----------------------
remedies provided for herein are cumulative and are not
exclusive of any other rights, powers, privileges or
remedies provided by law or under the Reimbursement
Agreement, including, without limitation, all rights and
remedies of a secured party under Article 9 of the Uniform
Commercial Code as in effect in the State of New York on the
date of the exercise of any such remedy. The exercise by
the Bank of any one or more remedies under Section 5.1,
above, shall not constitute a waiver, or otherwise prohibit,
the exercise by the Bank of other remedies provided herein
or by law at the same or other times.
(b) The Bank shall not be required to exercise
any particular rights, powers, remedies or benefits
B-8
hereunder or under the Reimbursement Agreement or any
Related Document. Without limiting the generality of the
foregoing, the Bank (i) shall be entitled to seek to realize
upon or enforce the Collateral in such order as it may from
time to time determine and without regard to whether or not
any other collateral or security for any of the Obligations
shall have been resorted to, and (ii) shall not be required
to exhaust or enforce any particular portion of the
Collateral before seeking to realize or enforce upon any
other portion thereof.
ARTICLE 6
COLLECTIONS BY THE COMPANY AND APPLICATIONS
OF PROCEEDS IN RESPECT OF COLLATERAL
SECTION 6.1. Collections on Pledged Bonds by the
-----------------------------------
Company. (a) If, while any of the Obligations are
-------
outstanding, the Company becomes entitled to receive or
receives any payment in respect of any Pledged Bond, the
Company shall accept such payment as the Bank's agent, hold
it in trust on behalf of the Bank and deliver it forthwith
to the Bank for application to satisfaction of the
Obligations then due and payable. All sums of money so paid
in respect of any payment of interest on, or any portion of
purchase price equal to the amount of accrued interest on,
any Pledged Bond which are received by the Company and paid
to the Bank shall be credited against the obligation of the
Company to pay interest to the Bank set forth in Sections
2.04 and 2.05 of the Reimbursement Agreement. All sums of
money so paid in respect of any payment of principal of, or
any portion of purchase price equal to the principal amount
of, any Pledged Bond which are received by the Company and
paid to the Bank shall be credited against the obligation of
the Company to pay principal to the Bank set forth in
Sections 2.04 and 2.05 of the Reimbursement Agreement.
SECTION 6.2. Application of Proceeds. All
-----------------------
proceeds received from the sale or other disposition of, or
realization on or with respect to, all or any part of the
Collateral shall be applied by the Bank, in such order as
the Bank, in its sole discretion, may determine to the
payment of the costs and expenses of such sale, disposition
or realization, including, without limitation, reasonable
fees and expenses of counsel for the Bank and all expenses,
liabilities and advances of the Bank in connection
therewith, and to the payment of the remaining Obligations.
B-9
ARTICLE 7
RELEASE OF COLLATERAL; COMPANY'S LIABILITY
FOR DEFICIENCY
SECTION 7.1. Release of Collateral. If (a) the
---------------------
Company prepays or causes to be prepaid any Advance pursuant
to Section 2.06 of the Reimbursement Agreement, (b) the
Remarketing Agent causes Pledged Bonds at the time held
hereunder to be sold, or (c) the Obligations are otherwise
satisfied, upon receipt of such prepayment or of the
proceeds of such sale or other satisfaction of the
Obligations, Pledged Bonds in an aggregate principal amount
equal to the prepayment so made, or the principal amount of
Pledged Bonds so sold, or the Obligations so satisfied,
shall be automatically released from the lien of this
Agreement and the Company or its designee shall be entitled
to have the released Bonds delivered to the Remarketing
Agent, the Company or such other Person as designated by the
Company in accordance with the terms of the Indenture;
provided, however, that before any delivery of such released
-------- -------
Bonds, the Trustee and the Custodian shall have received
notice from the Bank, in the form of Exhibit 4 to the Letter
of Credit, of the reinstatement of the amounts so prepaid,
sold or satisfied as available under the Letter of Credit
and such notice shall constitute notice to the Custodian to
release the Pledged Bonds to the Trustee pursuant to Section
406(b)(ii) of the Indenture.
SECTION 7.2. Company's Liability for Deficiency.
----------------------------------
The Company shall in any event remain liable for any
deficiency remaining unpaid after the application of the
proceeds of the Collateral to the satisfaction of the
Obligations.
ARTICLE 8
GENERAL
SECTION 8.1. Expenses. The Company shall pay to
--------
the Bank all expenses (including reasonable fees and
expenses of counsel) of, or incident to, any actual or
attempted sale or other disposition of, or any exchange,
enforcement (whether through negotiations, legal proceedings
or otherwise), collection, compromise or settlement of or
with respect to, all or any of the Collateral, by litigation
or otherwise. The Company shall
B-10
reimburse the Bank on demand for all reasonable costs and expenses
incurred in connection with the negotiation, preparation,
execution and administration of this Agreement, including, without
limitation, any fees or expenses (including reasonable fees
and expenses of counsel to the Custodian) paid by the Bank
to the Custodian for its services in connection with this
Agreement.
SECTION 8.2. Notices. All notices and other
-------
communications provided for hereunder shall be in writing
(including telegraphic communication) and mailed,
telecopied, telexed, telegraphed or delivered to the parties
to the telex or telecopier number or address (as the case
may be) specified for the intended recipient on the
signature page hereof, or to such other number or address as
such recipient may have last specified by notice to the
other party. All such notices and communications shall,
when mailed, telecopied, telexed or telegraphed, be
effective when deposited in the mails or sent by telecopy or
telex or delivered to the telegraph company, respectively,
addressed as aforesaid.
SECTION 8.3. Remedies and Waivers. No failure or
--------------------
delay on the part of the Bank in exercising any right
hereunder shall operate as a waiver of, or impair, any such
right. No single or partial exercise of any such right
shall preclude any other or further exercise thereof or the
exercise of any other right. No waiver of any such right
shall be effective unless given in writing. No waiver of
any such right shall be deemed a waiver of any other right
hereunder. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
SECTION 8.4. Amendment. No amendment or waiver
---------
of any provision of this Agreement, nor consent to any
departure by the Company therefrom, shall in any event be
effective unless the same shall be in writing and signed by
the Custodian and the Bank, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 8.5. Assignment. (a) This Agreement
----------
shall be binding upon and inure to the benefit of the
Custodian, the Bank and the Company and their respective
successors and assigns; provided, however, that the Company
-------- -------
may not assign any of its rights or obligations under this
Agreement without the prior written consent of the Bank.
B-11
(b) If the Bank or the Custodian assigns or
otherwise transfers any of its rights and obligations
hereunder, each reference in this Agreement to the Bank or
the Custodian, as the case may be, shall be deemed to be a
reference to the Bank or the Custodian, as the case may be,
and the Person or Persons to which such rights and
obligations were assigned and transferred to the extent of
their respective interests.
SECTION 8.6. Governing Law. This Agreement shall
-------------
be governed by, and construed and interpreted in accordance
with, the laws of the State of California.
SECTION 8.7. Custodian Appointed Agent. The Bank
-------------------------
hereby appoints the Custodian as its agent to receive and
hold Pledged Bonds constituting Collateral granted hereunder
for the Bank's account. The Company acknowledges such
appointment and agrees with the Bank and the Custodian,
which by its execution of this Agreement accepts such
appointment, that, for so long as this Agreement shall
remain in full force and effect, all certificates or
instruments representing or evidencing the Pledged Bonds
shall be delivered to and held by the Custodian, as agent
for the Bank.
SECTION 8.8. Reasonable Care. The Custodian
---------------
shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession
if the Collateral is accorded treatment substantially equal
to that which the Custodian accords its own property.
SECTION 8.9. Integration of Terms. This
--------------------
Agreement contains the entire agreement between the parties
relating to the subject matter hereof and supersedes all
oral statements and prior writings with respect thereto.
SECTION 8.10. Counterparts. This Agreement may
------------
be executed in counterparts, and such counterparts taken
together shall be deemed to constitute one and the same
agreement.
SECTION 8.11. Severability. Any provision of
------------
this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision
in any other jurisdiction.
B-12
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first
above written.
NEVADA POWER COMPANY
6226 West Sahara Avenue
P.O. Box 230
Las Vegas, Nevada 89151
Telecopy: (702) 367-8803
Attention: Treasurer
By
----------------------
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK, as Custodian
45 Wall Street
New York, New York 10005
Telex: WU 620439
Telecopy: (212) 502-6913
Attention: Corporate Trust
Administration
By
-----------------------
Title:
SOCIETE GENERALE, LOS ANGELES
BRANCH
2029 Century Park East
Suite 2900
Los Angeles, California 90067
Telecopy: (310) 551-0539
Attention: Mr. George Chen
By
-----------------------
Title:
B-13
EXHIBIT C
[LETTERHEAD OF GENERAL COUNSEL OF THE COMPANY]
[Date of Issuance of
Letter of Credit]
SOCIETE GENERALE, LOS ANGELES BRANCH
2029 Century Park East
Suite 2900
Los Angeles, California 90067
Nevada Power Company
--------------------
Gentlemen:
This opinion is furnished to you pursuant to
Section 3.01(m) of the Letter of Credit and Reimbursement
Agreement, dated as of April , 1994 (the "Reimbursement
--
Agreement"), between Nevada Power Company (the "Company")
and Societe Generale, Los Angeles Branch (the "Bank").
Terms defined in the Reimbursement Agreement are used herein
as therein defined.
I am General Counsel of the Company and, as such,
have acted as counsel for the Company in connection with the
preparation, execution and delivery of, and the closing on
this date under, the Reimbursement Agreement.
In that connection, I have examined:
(1) The Reimbursement Agreement.
(2) The Related Documents.
(3) The other documents furnished by the Company
pursuant to Article III of the Reimbursement Agreement,
including the PUC Order.
(4) The Articles of Incorporation of the Company
and all amendments thereto (the "Charter").
C-1
(5) The by-laws of the Company and all amendments
thereto (the "By-laws").
(6) A certificate of the Secretary of State of
the State of Nevada, dated April , 1994, attesting to the
--
continued corporate existence and good standing of the
Company in that State.
I have also examined the originals, or copies
certified to my satisfaction, of all of the indentures, loan
or credit agreements, leases, guarantees, mortgages,
security agreements, bonds, notes and other agreements or
instruments, and all of the orders, writs, judgments,
awards, injunctions and decrees (each, a "Restrictive
Document"), which affect or purport to affect the Company's
right to borrow money or the Company's obligations under the
Reimbursement Agreement or the Related Documents to which it
is a party. In addition, I have examined the originals, or
copies certified to my satisfaction, of such other corporate
records of the Company, certificates of public officials and
of officers of the Company, and agreements, instruments and
other documents, as I have deemed necessary as a basis for
the opinions expressed below. As to questions of fact
material to such opinions, I have, when relevant facts were
not independently established by me, relied upon
certificates of the Company or its officers or of public
officials. I have assumed the due execution and delivery,
pursuant to due authorization, of the Reimbursement
Agreement and the Related Documents by the Bank and the
other parties thereto (other than the Company).
I am qualified to practice law in the State of
Nevada and I do not express any opinion on any laws other
than the laws of the State of Nevada and the Federal laws of
the United States.
Based upon the foregoing and upon such
investigation as I have deemed necessary, I am of the
following opinion:
1. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Nevada.
2. The execution, delivery and performance by the
Company of the Reimbursement Agreement and the Related
Documents to which it is a party are within the Company's
corporate powers, have been duly
C-2
authorized by all necessary corporate action, and do not
contravene (i) the Charter or the By-laws or (ii) any law,
rule or regulation applicable to the Company (including,
without limitation, Regulation X of the Board of Governors of
the Federal Reserve System) or (iii) any contractual or legal
restriction contained in any Restrictive Document or, to the
best of my knowledge, contained in any other similar
document. The Reimbursement Agreement and the Related
Documents to which it is a party have been duly executed and
delivered on behalf of the Company.
3. No authorization, approval or other action by,
and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution,
delivery and performance by the Company of the Reimbursement
Agreement and the Related Documents to which it is a party,
except for the PSC Order, which has been duly obtained, is
final and is in full force and effect. The PSC Order is not
the subject of appeal or reconsideration or other review,
and no subsequent appeal or reconsideration or other review
of the PSC Order will have any adverse effect upon the
legality, validity or enforceability of the Company's
obligations under the Reimbursement Agreement or the Related
Documents to which the Company is a party.
4. There are no pending or, to the best of my
knowledge, overtly threatened actions or proceedings against
the Company or any of its Subsidiaries before any court,
governmental agency or arbitrator (i) which purport to
affect the legality, validity, binding effect or
enforceability of the Reimbursement Agreement or any Related
Document to which the Company is a party or (ii) except as
disclosed in the Company's December 31, 1993 Report on Form
10-K as filed with the Securities and Exchange Commission,
which are likely to have a materially adverse effect upon
the financial condition or operations of the Company or any
of its Subsidiaries; and there has occurred no material
adverse developments in any such action or proceeding so
disclosed.
Very truly yours,
C-3
EXHIBIT D
[LETTERHEAD OF SPECIAL COUNSEL TO THE COMPANY]
[Dates of Issuance of
Letter of Credit]
SOCIETE GENERALE, LOS ANGELES BRANCH
2029 Century Park East
Suite 2900
Los Angeles, California 90067
Nevada Power Company
--------------------
Gentlemen:
This opinion is furnished to you pursuant to
Section 3.01(n) of the Letter of Credit and Reimbursement
Agreement, dated as of April , 1994 (the "Reimbursement
--
Agreement"), between Nevada Power Company (the "Company")
and Societe Generale, Los Angeles Branch (the "Bank").
Terms defined in the Reimbursement Agreement are used herein
as therein defined.
We have acted as Special Counsel to the Company in
connection with the preparation, execution and delivery of,
and the closing on this date under, the Reimbursement
Agreement.
In that connection, we have examined:
(1) The Reimbursement Agreement.
(2) The Related Documents.
(3) The other documents furnished by the Company
pursuant to Article III of the Reimbursement
Agreement, including the PUC Order.
D-1
In addition, we have examined the originals, or copies
certified to our satisfaction, of such other corporate
records of the Company, certificates of public officials and
of officers of the Company, and agreements, instruments and
other documents, as we have deemed necessary as a basis for
the opinions expressed below. As to questions of fact
material to such opinions, we have, when relevant facts were
not independently established by us, relied upon
certificates of the Company or its officers or of public
officials. We have assumed the due execution and delivery,
pursuant to due authorization, of the Reimbursement
Agreement and the Related Documents by the Bank and the
other parties thereto (other than the Company).
We are qualified to practice law in the State of
California and are familiar with the laws of the State of
Nevada to the extent necessary to permit us to express the
opinions hereinafter set forth in paragraph 3. Accordingly,
our opinions herein are limited to the laws of the State of
California, the State of Nevada and the Federal laws of the
United States.
For purposes of the opinions expressed below, we
have relied with your permission on the opinion of Richard
L. Hinckley, General Counsel of the Company, being delivered
to you on this date pursuant to Section 3.01(m) of the
Reimbursement Agreement.
Based upon the foregoing and upon such
investigation as we have deemed necessary, we are of the
opinion that
1. Each of the Reimbursement Agreement, the
Custodian Agreement and the other Related Documents to which
the Company is a party is the legal, valid and binding
obligation of the Company, enforceable against the Company
in accordance with its terms.
2. The Custodian Agreement is effective to create
a valid and perfected security interest in any right, title
and interest in the Bonds from time to time pledged
thereunder superior in right to any liens, existing or
future, which the Company, the Issuer, the Trustee, the
Remarketing Agent or any other Person may have against such
Bonds or any interest therein.
3. In any action or proceeding arising out of or
relating to the Reimbursement Agreement or the
D-2
Custodian Agreement in any court of the State of Nevada or in
any Federal court sitting in the State of Nevada, such court
would recognize and give effect to the provisions of Section
7.10 of the Reimbursement Agreement and Section 8.6 of the
Custodian Agreement wherein the parties thereto agree that
the Reimbursement Agreement and the Custodian Agreement, as
the case may be, shall be governed by, and construed in
accordance with, the laws of the State of California.
Without limiting the generality of the foregoing, a court of
the State of Nevada or a Federal court sitting in the State
of Nevada would apply the usury law of the State of
California, and would not apply the usury law of the State
of Nevada, to the Reimbursement Agreement. In this
connection, we call your attention to the fact that the
Supreme Court of Nevada has indicated in certain of its
opinions that it may decline to enforce laws of other
jurisdictions which it believes to be contrary to the public
policy of Nevada. Although the Supreme Court of Nevada has
sustained a decision enforcing the laws of another state,
including usury provisions, we cannot give any assurance
that, under any specific circumstances, the courts might not
decline to enforce California usury or other laws on public
policy grounds not previously indicated (although no facts
or circumstances have come to our attention in the context
of the present transaction that lead us to believe that the
present transaction would be contrary to public policy
considerations articulated by the Supreme Court of Nevada to
date). However, if a court were to hold that the
Reimbursement Agreement and the Custodian Agreement are
governed by, and to be construed in accordance with, the
laws of the State of Nevada, the Reimbursement Agreement and
the Custodian Agreement would be, under the laws of the
State of Nevada, legal, valid and binding obligations of the
Company enforceable against the Company in accordance with
their respective terms.
4. The offer, sale and delivery of the Bonds
under the circumstances contemplated by the Related
Documents do not require registration of the Bonds under the
Securities Act of 1933, as amended, and do not require
compliance with the qualification requirements of the Trust
Indenture Act of 1939, as amended.
D-3
5. No authorization, approval or other action by,
and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution,
delivery and performance by the Company of the Reimbursement
Agreement and the Related Documents to it is a party, expect
for the PSC Order, which has been duly obtained, is final
and is in full force and effect. The PSC Order is not the
subject of appeal or reconsideration or other review, and no
subsequent appeal or reconsideration or other review of the
PSC Order will have any adverse effect upon the legality,
validity or enforceability of the Company's obligations
under the Reimbursement Agreement or the Related Documents
to which the Company is a party.
Our opinions set forth in paragraphs 1 and 3, above, are
subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally and the effect of
general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
Very truly yours,
D-4
Amendment No. 1
Dated as of May 3, 1994
to
Letter of Credit and Reimbursement Agreement
Amendment No. 1 ("Amendment No. 1") dated as of
May 3, 1994 to Letter of Credit and Reimbursement Agreement
between Nevada Power Company (the "Company") and Societe
Generale, Los Angeles Branch (the "Bank").
WHEREAS, the Company and the Bank have heretofore
entered into the Letter of Credit and Reimbursement
Agreement dated as of April 12, 1994 (the "Letter of Credit
and Reimbursement Agreement"); and
WHEREAS, the Company and the Bank wish to amend
the Letter of Credit and Reimbursement Agreement (as
amended by Amendment No. 1 and as amended, modified or
supplemented from time to time hereafter, the
"Reimbursement Agreement");
NOW THEREFORE, the Company and the Bank hereby
agree as follows:
1. Section 7.14 of the Reimbursement Agreement
is hereby amended and restated in its entirety as follows:
"SECTION 7.14 Participation. (a) The Bank may,
-------------
without the consent of the Company, sell participations to
one or more banks or other financial institutions (each a
"Participant") in all or a portion of its rights and
obligations under this Agreement; provided, however, (a)
-------- -------
the Bank's obligations under this Agreement shall remain
unchanged, (b) the Bank shall remain solely responsible to
the Company for the performance of such obligations, (c)
except as expressly set forth herein, any such Participant
shall be entitled to the benefit of the cost and fee
protection and indemnification provisions contained in
Sections 2.07, 2.08, 2.14, 7.04, 7.05 and 7.07 to the same
extent as if the Participant were the Bank hereunder, and
(d) the Trustee and the Issuer shall continue to deal
solely and directly with the Bank in connection with the
Bank's rights and obligations under this Agreement and the
Related Documents and the Bank shall retain the sole right
to approve any amendment, modification or waiver of any
provisions of this Agreement or any Related Document (other
than amendments, modifications, releases or waivers with
respect to any amounts payable hereunder or the amount of
-1-
principal of or the rate at which interest is payable
hereunder or the dates fixed for payments of interest or
fees or the date of termination or expiration of the Letter
of Credit or any change to the Stated Amount).
(b) The Bank may disclose to any Participant or
proposed Participant any information that the Company has
delivered or is required to deliver to the Bank pursuant to
this Agreement or the other Related Documents."
2. The Company hereby represents and warrants
that the representations and warranties contained in
Article IV of the Reimbursement Agreement are true and
accurate as of the date hereof (except to the extent that
such representations and warranties expressly relate to a
prior date) and that no Event of Default has occurred and
is continuing on the date hereof.
3. This Amendment No. 1 may be executed in
counterparts, each of which when executed and delivered
shall be deemed an original and all of which counterparts,
taken together, shall constitute but one and the same
Amendment No. 1.
4. THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.
5. Except as provided herein, all provisions,
terms and conditions of the Reimbursement Agreement shall
remain in full force and effect. As amended hereby, the
Reimbursement Agreement is ratified and confirmed in all
respects.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
-2-
IN WITNESS WHEREOF, the parties hereto have
caused this Amendment No. 1 to be executed and delivered by
their duly authorized officers as of the day and year first
above written.
NEVADA POWER COMPANY
By: RICHARD C. SCHMALZ
--------------------------
Name: Richard C. Schmalz
Title: Director, Treasury
SOCIETE GENERALE,
LOS ANGELES BRANCH
By:
-------------------------
Name:
Title:
-3-
IN WITNESS WHEREOF, the parties hereto have
caused this Amendment No. 1 to be executed and delivered by
their duly authorized officers as of the day and year first
above written.
NEVADA POWER COMPANY
By:
--------------------------
Name:
Title:
SOCIETE GENERALE,
LOS ANGELES BRANCH
By: GEORGE CHEN
-------------------------
Name: George Chen
Title: Vice President
-3-
EX-10.73
4
LOAN AGREEMENT - FIRST INTERSTATE BANK
__________________________________________________________________
__________________________________________________________________
LOAN AGREEMENT
Dated as of November 21, 1994
between
NEVADA POWER COMPANY
as Borrower,
The Banks herein named
as the Banks,
and
FIRST INTERSTATE BANK OF NEVADA, N.A.
as the Administrative Agent.
__________________________________________________________________
__________________________________________________________________
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS . . . . . . 1
--------------------------------
1.1 Defined Terms . . . . . . . . . . . . . . . . . . 1
-------------
1.2 Use of Defined Terms . . . . . . . . . . . . . . . 24
--------------------
1.3 Accounting Terms . . . . . . . . . . . . . . . . . 24
----------------
1.4 Rounding . . . . . . . . . . . . . . . . . . . . . 24
--------
1.5 Exhibits and Schedules . . . . . . . . . . . . . . 25
----------------------
1.6 References to "Borrower and its Subsidiaries" . . 25
--------------------------------------------
1.7 Miscellaneous Terms . . . . . . . . . . . . . . . 25
-------------------
ARTICLE 2
LOANS . . . . . . . . . . . . . 26
2.1 Committed Loans and Swing Line Loans - General . . 26
----------------------------------------------
2.2 Competitive Advances . . . . . . . . . . . . . . . 28
--------------------
2.3 Swing Line Loans . . . . . . . . . . . . . . . . . 31
----------------
2.4 Base Rate Loans . . . . . . . . . . . . . . . . . 31
---------------
2.5 CD Rate Loans . . . . . . . . . . . . . . . . . . 31
-------------
2.6 Eurodollar Rate Loans . . . . . . . . . . . . . . 32
---------------------
2.7 Voluntary Reduction of the Commitment . . . . . . 32
-------------------------------------
2.8 Administrative Agent's Right to Assume Funds
--------------------------------------------
Available for Advances . . . . . . . . . . . . . 33
----------------------
ARTICLE 3
PAYMENTS AND FEES . . . . . . . . . . 34
-----------------
3.1 Principal and Interest . . . . . . . . . . . . . . 34
----------------------
3.2 Commitment Fees . . . . . . . . . . . . . . . . . 36
---------------
3.3 Agency and Arrangement Fees . . . . . . . . . . . 37
---------------------------
3.4 Increased Commitment Costs . . . . . . . . . . . . 37
--------------------------
3.5 CD Fees and Costs . . . . . . . . . . . . . . . . 38
-----------------
3.6 Eurodollar Fees and Costs . . . . . . . . . . . . 41
-------------------------
3.7 Default Rate . . . . . . . . . . . . . . . . . . . 44
------------
3.8 Computation of Interest and Fees . . . . . . . . . 44
--------------------------------
3.9 Non-Banking Days . . . . . . . . . . . . . . . . . 44
---------------
3.10 Manner and Treatment of Payments . . . . . . . . 45
--------------------------------
3.11 Funding Sources . . . . . . . . . . . . . . . . . 46
---------------
3.12 Failure to Charge Not Subsequent Waiver . . . . . 46
---------------------------------------
3.13 Administrative Agent's Right to Assume Payments
-----------------------------------------------
Will be Made by Borrower . . . . . . . . . . . . 47
------------------------
3.14 Fee Determination Detail . . . . . . . . . . . . 47
------------------------
3.15 Survivability . . . . . . . . . . . . . . . . . . 47
-------------
ARTICLE 4
REPRESENTATIONS AND WARRANTIES . . . . . . . 48
------------------------------
4.1 Existence and Qualification; Power; Compliance
----------------------------------------------
With Laws . . . . . . . . . . . . . . . . . . . 48
---------
-i-
4.2 Authority; Compliance With Other Agreements and
-----------------------------------------------
Instruments and Government Regulations . . . . . 48
--------------------------------------
4.3 No Governmental Approvals Required . . . . . . . . 49
----------------------------------
4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . 49
------------
4.5 Financial Statements . . . . . . . . . . . . . . . 49
--------------------
4.6 No Other Liabilities; No Material Adverse
-----------------------------------------
Effect . . . . . . . . . . . . . . . . . . . . . 50
------
4.7 Title to and Location of Property . . . . . . . . 50
---------------------------------
4.8 Intangible Assets . . . . . . . . . . . . . . . . 50
-----------------
4.9 Governmental Regulation . . . . . . . . . . . . . 50
-----------------------
4.10 Litigation . . . . . . . . . . . . . . . . . . . 50
----------
4.11 Binding Obligations . . . . . . . . . . . . . . . 51
-------------------
4.12 No Default . . . . . . . . . . . . . . . . . . . 51
----------
4.13 Pension Plans . . . . . . . . . . . . . . . . . 51
-------------
4.14 Regulations G, U and X . . . . . . . . . . . . . 51
----------------------
4.15 Disclosure . . . . . . . . . . . . . . . . . . . 51
----------
4.16 Tax Liability . . . . . . . . . . . . . . . . . . 52
-------------
4.17 Pari Passu Status . . . . . . . . . . . . . . . . 52
-----------------
4.18 Hazardous Materials . . . . . . . . . . . . . . . 52
-------------------
ARTICLE 5
AFFIRMATIVE COVENANTS
---------------------
(OTHER THAN INFORMATION AND
--------------------------
REPORTING REQUIREMENTS) . . . . . . . . 53
----------------------
5.1 Payment of Taxes and Other Potential Liens . . . . 53
------------------------------------------
5.2 Preservation of Existence . . . . . . . . . . . . 53
-------------------------
5.3 Maintenance of Properties . . . . . . . . . . . . 53
-------------------------
5.4 Maintenance of Insurance . . . . . . . . . . . . . 53
------------------------
5.5 Compliance With Laws . . . . . . . . . . . . . . . 54
--------------------
5.6 Inspection Rights . . . . . . . . . . . . . . . . 54
-----------------
5.7 Keeping of Records and Books of Account . . . . . 54
---------------------------------------
5.8 Compliance With Agreements . . . . . . . . . . . . 54
--------------------------
5.9 Use of Proceeds . . . . . . . . . . . . . . . . . 54
---------------
5.10 Hazardous Materials Laws . . . . . . . . . . . . 55
------------------------
ARTICLE 6
NEGATIVE COVENANTS . . . . . . . . . . 56
------------------
6.1 Disposition of Property . . . . . . . . . . . . . 56
-----------------------
6.2 Mergers . . . . . . . . . . . . . . . . . . . . . 56
-------
6.3 Investments and Acquisitions . . . . . . . . . . . 56
---------------------------
6.4 Hostile Tender Offers . . . . . . . . . . . . . . 56
---------------------
6.5 Distributions . . . . . . . . . . . . . . . . . . 57
-------------
6.6 ERISA Compliance . . . . . . . . . . . . . . . . . 57
----------------
6.7 Change in Nature of Business . . . . . . . . . . . 57
----------------------------
6.8 Indebtedness and Contingent Obligations . . . . . 57
---------------------------------------
6.9 Transactions with Affiliates . . . . . . . . . . . 57
----------------------------
6.10 Common Equity . . . . . . . . . . . . . . . . . . 58
-------------
6.11 Total Debt to Total Capitalization . . . . . . . 58
----------------------------------
6.12 Amendments to Certain Agreements . . . . . . . . 58
--------------------------------
ARTICLE 7
-ii-
INFORMATION AND REPORTING REQUIREMENTS . . . . . 59
--------------------------------------
7.1 Financial and Business Information . . . . . . . . 59
----------------------------------
ARTICLE 8
CONDITIONS . . . . . . . . . . . 61
----------
8.1 Initial Advances and Swing Line Loans . . . . . . 61
-------------------------------------
8.2 Any Advance or Swing Line Loan . . . . . . . . . . 63
------------------------------
ARTICLE 9
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT . 64
----------------------------------------------------
9.1 Events of Default . . . . . . . . . . . . . . . . 64
-----------------
9.2 Remedies Upon Event of Default . . . . . . . . . . 66
------------------------------
ARTICLE 10
THE ADMINISTRATIVE AGENT . . . . . . . . 69
------------------------
10.1 Appointment and Authorization . . . . . . . . . . 69
-----------------------------
10.2 Administrative Agent and Affiliates . . . . . . . 69
-----------------------------------
10.3 Proportionate Interest of the Banks in any
------------------------------------------
Collateral . . . . . . . . . . . . . . . . . . . 69
----------
10.4 Banks' Credit Decisions . . . . . . . . . . . . . 70
-----------------------
10.5 Action by Administrative Agent; Etc. . . . . . . 70
-----------------------------------
10.6 Liability of Administrative Agent and Arranger . 71
----------------------------------------------
10.7 Indemnification . . . . . . . . . . . . . . . . . 73
---------------
10.8 Successor Administrative Agent . . . . . . . . . 73
------------------------------
10.9 No Obligations of Borrower . . . . . . . . . . . 74
--------------------------
10.10 The Swing Line . . . . . . . . . . . . . . . . . 74
--------------
ARTICLE 11
MISCELLANEOUS . . . . . . . . . . . 76
-------------
11.1 Cumulative Remedies; No Waiver . . . . . . . . . 76
------------------------------
11.2 Amendments; Consents . . . . . . . . . . . . . . 76
--------------------
11.3 Costs, Expenses and Taxes . . . . . . . . . . . . 77
-------------------------
11.4 Nature of Banks' Obligations . . . . . . . . . . 77
----------------------------
11.5 Survival of Representations and Warranties . . . 78
------------------------------------------
11.6 Notices . . . . . . . . . . . . . . . . . . . . . 78
-------
11.7 Execution of Loan Documents; Counterparts . . . . 78
-----------------------------------------
11.8 Binding Effect; Assignment . . . . . . . . . . . 79
--------------------------
11.9 Setoff Rights . . . . . . . . . . . . . . . . . . 82
-------------
11.10 Sharing of Setoffs . . . . . . . . . . . . . . . 82
------------------
11.11 Indemnity by Borrower . . . . . . . . . . . . . 83
---------------------
11.12 Nonliability of the Banks . . . . . . . . . . . 83
-------------------------
11.13 No Third Parties Benefited . . . . . . . . . . . 85
--------------------------
11.14 Termination of Existing Loan Documents . . . . . 85
--------------------------------------
11.15 Further Assurances . . . . . . . . . . . . . . . 85
------------------
11.16 Integration . . . . . . . . . . . . . . . . . . 78
-----------
11.17 Governing Law . . . . . . . . . . . . . . . . . 78
-------------
11.18 Severability of Provisions . . . . . . . . . . . 79
--------------------------
11.19 Independent Covenants . . . . . . . . . . . . . 79
---------------------
11.20 Headings . . . . . . . . . . . . . . . . . . . . 79
--------
11.21 Time of the Essence . . . . . . . . . . . . . . 79
-------------------
-iii-
11.22 Purported Oral Amendments . . . . . . . . . . . 79
11.23 Jury Trial Waiver . . . . . . . . . . . . . . . 79
Exhibits
--------
A - Commitment Assignment and Acceptance
B - Committed Advance Note
C - Competitive Advance Note
D - Competitive Bid
E - Competitive Bid Request
F - Compliance Certificate
G - Opinion of Counsel
H - Request for Loan
I - Swing Line Note
Schedules
---------
1.1 Pro Rata Shares of the Main Commitment
4.4 Subsidiaries and other Investments
4.10 Litigation
4.13 ERISA
4.17 Existing Liens and Rights of Others
4.18 Hazardous Materials
6.8 Existing Indebtedness and Contingent Obligations
-iv-
LOAN AGREEMENT
--------------
Dated as of November 21, 1994
This LOAN AGREEMENT ("Agreement") is entered into by
and between Nevada Power Company, a Nevada corporation
("Borrower"), and each lender whose name is set forth on the
signature pages hereof or which may hereafter execute and
deliver a Commitment Assignment and Acceptance with respect to
this Agreement pursuant to Section 11.8 (collectively, the
"Banks" and individually, a "Bank"), and First Interstate Bank
of Nevada, N.A., as Administrative Agent. In consideration of
the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
--------------------------------
1.1 Defined Terms. As used in this Agreement, the
-------------
following terms shall have the meanings set forth below:
"Acquisition" means any transaction, or any
-----------
series of related transactions, by which Borrower and/or
any of its Subsidiaries directly or indirectly
(i) acquires any going business or all or substantially
all of the assets of any firm, partnership, joint ven-
ture, corporation or division thereof, whether through
purchase of assets, merger or otherwise, or (ii) acquires
(in one transaction or as the most recent transaction in a
series of transactions) control of at least a majority in
ordinary voting power of the securities of a corporation
which have ordinary voting power for the election of
directors, or (iii) acquires control of a 50% or more
ownership interest in any partnership or joint venture.
"Administrative Agent" means First Interstate
--------------------
Bank of Nevada, N.A., when acting in its capacity as the
Administrative Agent under any of the Loan Documents, and
any successor Administrative Agent.
"Administrative Agent's Office" means the
-----------------------------
Administrative Agent's address as set forth on the
signature pages of this Agreement, or such other address
as the Administrative Agent hereafter may designate by
written notice to Borrower and the Banks.
"Advance" means any Advance made or to be made
-------
by any Bank to Borrower as provided in Article 2, and
---------
includes each Base Rate Advance, each Eurodollar Rate
--------
-1-
Advance, each CD Rate Advance, and each Competitive
Advance.
"Affiliate" means, as to any Person, any other
---------
Person which directly or indirectly controls, or is under
common control with, or is controlled by, such Person.
As used in this definition, "control" (and the correlative
terms, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies
(whether through ownership of securities or partnership or
other ownership interests, by contract or otherwise);
provided that, in any event, any Person that owns, directly
--------
or indirectly, 5% or more of the securities having ordinary
voting power for the election of directors or other
governing body of a corporation having 100 or more record
owners of such securities (other than securities having such
power only by reason of the happening of a contingency), or
5% or more of the partnership or other ownership interests
of any other Person having 100 or more owners of such
partnership or other ownership interests (other than as a
limited partner of such other Person), will be deemed to
control such corporation or other Person.
"Agreement" means this Loan Agreement, either
---------
as originally executed or as it may from time to time be
supplemented, modified, amended, restated or extended.
"Arranger" means First Interstate Bank, Ltd.
--------
"Bank" means any of the banks signatory to
----
this Agreement, their successors and, upon the effective
date after registration with the Administrative Agent
pursuant to Section 11.8 of a Commitment Assignment and
----
Acceptance executed by an Eligible Assignee, such Eligible
Assignee.
"Banking Day" means any Monday, Tuesday,
-----------
Wednesday, Thursday or Friday, other than a day on which
----------
banks are authorized or required to be closed in Nevada or
New York.
"Base Rate" means, as of any date of
---------
determination, the higher of (a) the Prime Rate or (b) the
------
Federal Funds Rate plus one half of one percent per annum.
----
"Base Rate Advance" means a Committed Advance
-----------------
made hereunder and designated as a Base Rate Advance in
accordance with Article 2.
---------
-2-
"Base Rate Loan" means a Committed Loan made
--------------
hereunder and designated as a Base Rate Loan in accordance
with Article 2.
---------
"Base Rate Spread" means an additional
----------------
component of interest to be added to the Base Rate in
determining the interest rate payable with respect to Base
Rate Loans. As of each date of determination when the
aggregate principal Indebtedness evidenced by the Committed
Advance Notes and the Swing Line Note is more than 50% of
the then applicable Commitment, the Base Rate Spread shall
be .0625%. As of each other date of determination, the Base
Rate Spread shall be 0.00%.
"Borrower" means Nevada Power Company, a
--------
Nevada corporation, and its successors and permitted assigns.
"Capital Lease" means, as to any Person, a
-------------
lease of any Property by that Person as lessee that is, or
should be in accordance with Financial Accounting Standards
Board Statement No. 13, recorded as a "capital lease" on the
balance sheet of that Person prepared in accordance with
GAAP.
"Cash" means, when used in connection with
----
any Person, all monetary and nonmonetary items owned by
that Person that are treated as cash in accordance with
GAAP, consistently applied.
"Cash Equivalents" means, when used in
----------------
connection with any Person, that Person's Investments in:
(a) Government Securities due within one year
after the date of the making of the Investment;
(b) readily marketable direct obligations of any
State of the United States of America or any
political subdivision of any such State given on
the date of such investment a credit rating of at
least Aa by Moody's Investors Service, Inc. or AA
by Standard & Poor's Corporation, in each case due
within one year after the date of the making of the
Investment;
(c) certificates of deposit issued by, bank deposits
in, eurodollar deposits through, bankers' accep-
tances of, and reverse repurchase agreements
covering Government Securities executed by, any
Bank or any other bank, savings and loan or savings
bank doing business in and incorporated under the
Laws of the United States of America
-3-
or any State thereof and having on the date of such
Investment combined capital, surplus and undivided
profits of at least $250,000,000, in each case due
within one year after the date of the making of the
Investment;
(d) certificates of deposit issued by, bank
deposits in, eurodollar deposits through, bankers'
acceptances of, and reverse repurchase agreements
covering Government Securities executed by, any
branch or office located in the United States of
America of a bank incorporated under the Laws of
any jurisdiction outside the United States of
America having on the date of such
Investment combined capital, surplus and undivided
profits of at least $500,000,000, in each case due
within one year after the date of the making of the
Investment; and
(e) readily marketable commercial paper of
corporations doing business in and incorporated
under the Laws of the United States of America or
any State thereof given on the date of such
Investment the highest credit rating by Moody's
Investors Service, Inc. and Standard & Poor's
Corporation, in each case due within 270 days after
the date of the making of the Investment.
"CD Assessment Rate" means, with respect to
------------------
any CD Rate Loan, the percentage representing the maximum
per annum cost to the Administrative Agent (disregarding any
offsetting amounts that may be available to the
Administrative Agent to decrease such cost to the extent
that such offsetting amounts arose out of transactions other
than those contemplated by this Agreement) of providing
insurance for new nonpersonal time deposits (including,
---------
without limitation, insurance provided by the Federal
Deposit Insurance Corporation for such deposits) as of the
Banking Day prior to the first day of the applicable
CD Period. The determination by the Administrative Agent of
any applicable CD Assessment Rate shall be conclusive in the
absence of manifest error.
"CD Banking Day" means any Banking Day on
--------------
which dealings are conducted by New York City certificate of
deposit dealers.
"CD Base Rate" means, with respect to any
------------
CD Rate Loan, the rate per annum determined by the
Administrative Agent to be equal to the average (rounded
upward to the next 1/100 of 1%) of the bid (secondary)
-4-
rates quoted to the Administrative Agent by two recognized
New York City certificate of deposit dealers, selected by the
Administrative Agent, at or about 8:00 a.m. on the Banking
Day prior first day of the applicable CD Period, for the
purchase at face value of certificates of deposit issued by
the Administrative Agent in an aggregate amount
approximately equal to the amount of such CD Rate Loan and
for a period of time comparable to the number of days in the
applicable CD Period. The determination of the CD Base Rate
by the Administrative Agent shall be conclusive in the
absence of manifest error.
"CD Period" means, as to each CD Rate Loan,
---------
the period commencing on the date specified by Borrower pur-
suant to Section 2.1(c) and ending 30 days, 60 days, 90 days
-----
or 180 days thereafter, as specified by Borrower in the
applicable Request for Loan or Request for Redesignation of
Loans, provided that:
--------
(a) The first day of any CD Period
shall be a CD Banking Day;
(b) Any CD Period that would otherwise
end on a day that is not a CD Banking Day shall be extended
to the next succeeding CD Banking Day; and
(c) No CD Period shall extend beyond
the Maturity Date.
"CD Rate" means, with respect to any CD Rate
-------
Loan, the rate (rounded upward to the next 1/100 of 1%)
determined to be equal to the sum of:
(a) The CD Base Rate divided by [1
----------
minus the CD Reserve Percentage]; plus
----- ----
(b) The CD Assessment Rate.
"CD Rate Advance" means a Committed Advance
---------------
made hereunder and designated as a CD Rate Advance in
accordance with Article 2.
---------
"CD Rate Loan" means a Committed Loan made
------------
hereunder and designated or redesignated as a CD Rate Loan
in accordance with Article 2.
---------
"CD Rate Spread" means an additional
--------------
component of interest (which may vary over the term of any
CD Rate Loan) to be added to the CD Rate in determining the
interest rate payable with respect to CD Rate Loans. As of
each date of determination, the CD Rate Spread equals
-5-
the interest rate per annum set forth below opposite the
rating which is the lower of the credit ratings assigned to
the First Mortgage Bonds by Moody's Investors Service, Inc.
and Standard & Poor's Corporation, on that date:
Credit Rating CD Rate Spread
------------- --------------
S&P Moody's
--- -------
A- or A3 (or higher) .3750%
BBB+ or Baa1 .5000%
BBB or Baa2 .5250%
BBB- or Baa3 .6750%
BB+ or Ba1 (or lower) .8750%
provided that, as of each date of determination when
--------
the aggregate principal Indebtedness evidenced by the
Committed Advance Notes and the Swing Line Note is more than
50% of the then applicable Commitment, the CD Rate Spread at
each pricing level set forth above shall be increased by
.0625% per annum.
"CD Reserve Percentage" means, with respect
---------------------
to any CD Rate Loan, the percentage representing the maximum
aggregate incremental reserve, asset or special deposit
requirements of the Administrative Agent (disregarding any
offsetting amounts that may be available to the
Administrative Agent to decrease such requirements to the
extent that such offsetting amounts arose out of
transactions other than those contemplated by this
Agreement) under Regulation D and any other applicable Law
or regulation with respect to new nonpersonal time deposits
in an aggregate amount equal to the amount of such CD Rate
Loan and for a time period comparable to the number of days
in the applicable CD Period. The determination by the
Administrative Agent of any applicable CD Reserve Percentage
shall be conclusive in the absence of manifest error.
"Certificate of a Responsible Official" means
-------------------------------------
a certificate signed by a Responsible Official of the Person
providing the certificate.
"Closing Date" means the time and Banking Day
------------
on which the conditions set forth in Section 8.1 are
---
satisfied.
"Code" means the Internal Revenue Code of 1986,
----
as amended or replaced and as in effect from time to time.
-6-
"Commitment" means, the sum of the Main
----------
Commitment and the Swing Line Commitment.
"Commitment Assignment and Acceptance" means
------------------------------------
a Commitment Assignment and Acceptance executed by a Bank
and an Eligible Assignee substantially in the form of
Exhibit A and registered with the Administrative Agent
---------
pursuant to Section 11.8.
----
"Committed Advance" means an Advance made to
-----------------
Borrower by any Bank in accordance with its Pro Rata Share
of the Main Commitment pursuant to Section 2.1.
---
"Committed Advance Note" means any of the
----------------------
promissory notes made by Borrower in favor of a Bank
evidencing Committed Advances under that Bank's Pro Rata
Share of the Main Commitment, substantially in the form of
Exhibit B, either as originally executed or as the same may
---------
from time to time be supplemented, modified, amended,
renewed, extended or supplanted.
"Committed Loans" means Loans that are
---------------
comprised of Committed Advances.
"Common Stock" means the $1.00 par value
------------
common stock of Borrower.
"Competitive Advance" means an Advance made
-------------------
to Borrower by any Bank pursuant to a Competitive Bid under
Section 2.2 (and not in accordance with that Bank's Pro Rata
---
Share of the Main Commitment).
"Competitive Advance Note" means any of the
------------------------
promissory notes made by Borrower in favor of a Bank to
evidence Competitive Advances made by that Bank
substantially in the form of Exhibit C, either as originally
---------
executed or as the same may from time to time be
supplemented, modified, amended, renewed or extended.
"Competitive Bid" means (a) a written bid to
---------------
provide a Competitive Advance submitted to the
Administrative Agent substantially in the form of Exhibit D,
---------
and properly completed to provide all information required
to be included therein or (b), at the election of any Bank,
a bid to provide a Competitive Advance submitted to the
Administrative Agent by that Bank by telephone which, if so
made, shall be made by a Responsible Official of that Bank
and deemed to have been made incorporating the substance of
Exhibit D.
---------
-7-
"Competitive Bid Request" means (a) a written
-----------------------
request submitted by Borrower to the Administrative Agent to
provide a Competitive Bid, substantially in the form of
Exhibit E, signed by a Responsible Official of Borrower and
---------
properly completed to provide all information required to be
included therein or (b), at the election of Borrower, a
telephonic request by Borrower to the Administrative Agent
to provide a Competitive Bid which, if so made, shall be
made by a Responsible Official of Borrower and deemed to
have been made incorporating the substance of Exhibit E.
---------
"Compliance Certificate" means a certificate
----------------------
in the form of Exhibit F, properly completed and signed by a
---------
Senior Officer of Borrower.
"Contingent Obligation" means, as to any Per-
---------------------
son, any (a) direct or indirect guarantee of Indebtedness
of, or other obligation performable by, any other Person,
including any endorsement (other than for collection or
---------
deposit in the ordinary course of business), co-making or
sale with recourse of the obligations of any other Person,
or (b) assurance given to an obligee with respect to the
performance of an obligation by, or the financial condition
of, any other Person, whether direct, indirect or
contingent, including any purchase or repurchase agreement
---------
covering such obligation or any collateral security
therefor, any agreement to provide funds (by means of loans,
capital contributions or otherwise) to such other Person,
any agreement to support the solvency or level of any
balance sheet item to such other Person, or any "keep-well",
"take-or-pay", "through put" or other arrangement of what-
ever nature having the effect of assuring or holding harm-
less any obligee against loss with respect to any obligation
of such other Person, or (c) any obligation of a partnership
or joint venture of which such Person is a partner or joint
venturer. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable
amount of the related primary obligation (unless the
Contingent Obligation is limited by its terms to a lesser
amount, in which case to the extent of such amount) or, if
not stated or determinable, the maximum reasonably antici-
pated liability in respect thereof as determined by the
Person in good faith.
"Contractual Obligation" means, as to any
----------------------
Person, any provision of any outstanding Securities issued
by that Person or of any material agreement, instrument or
undertaking to which that Person is a party or by which it
or any of its Property is bound.
-8-
"Debtor Relief Laws" means the Bankruptcy
------------------
Code of the United States of America, as amended from time
to time, and all other applicable liquidation, conservator-
ship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief Laws
from time to time in effect affecting the rights of cred-
itors generally.
"Default" means any Event of Default or any
-------
event that, with the giving of any applicable notice or
passage of time specified in Section 9.1, or both, would be
---
an Event of Default.
"Default Rate" means the interest rate
------------
described in Section 3.7.
---
"Designated Deposit Account" means a demand
--------------------------
deposit account to be maintained by Borrower with the
Administrative Agent, as from time to time designated by
Borrower by written notification to the Administrative
Agent.
"Designated Employee" means any natural
-------------------
Person designated by Borrower as an employee of Borrower
authorized to make requests for Loans under this Agreement
on behalf of Borrower pursuant to a writing delivered to
Administrative Agent which conforms with Section 11.2.
----
"Designated Eurodollar Market" means, with
----------------------------
respect to any Eurodollar Rate Loan, the London interbank
market.
"Disposition" means the sale, transfer or
-----------
other disposition in any single transaction or series of
related transactions of any asset, or group of related
assets, of Borrower or any of its Subsidiaries that has or
have at the date of the Disposition either a book value or
fair market value (which shall be deemed to be equal to the
sales price for such asset or assets upon a sale to a Person
that is not an Affiliate of Borrower) equal to or greater
than $50,000,000, other than (i) the sale or other
----------
disposition of inventory in the ordinary course of business,
(ii) the sale or other disposition of equipment that is
replaced by equipment performing substantially the same
function not later than thirty (30) days after such sale or
disposition, and (iii) the sale or other disposition of Cash
Equivalents in the ordinary course of business.
"Distribution" means, with respect to any shares
------------
of capital stock or any warrant or right to acquire shares
-9-
of capital stock or any other equity security issued
by a Person, (a) the retirement, redemption, purchase, or
other acquisition for value (other than for common stock of
such Person) by such Person of any such security, (b) the
declaration or (without duplication) payment by such Person
of any dividend in Cash or in Property (other than in common
stock of such Person) on or with respect to any such
security, (c) any Investment by such Person in the holder of
any such security where such Investment is made in lieu of,
or to avoid characterization as, a Distribution described in
clauses (a) or (b) above, and (d) any other payment by such
--- ---
Person constituting a distribution under applicable Laws
with respect to such security.
"dollars" or "$" means United States dollars.
------- -
"Eligible Assignee" means (a) with respect to
-----------------
any Bank, any Affiliate of that Bank, (b) any other Person
(including any Bank) approved in writing by Borrower, which
---------
approval shall not be unreasonably withheld.
"ERISA" means the Employee Retirement Income
-----
Security Act of 1974, and any regulations issued pursuant
thereto, as amended or replaced and as in effect from time
to time.
"ERISA Affiliate" means, with respect to any
---------------
Person, any other Person (or any trade or business, whether
or not incorporated) that is under common control with that
Person within the meaning of Section 414 of the Code.
"Eurodollar Banking Day" means any Banking
----------------------
Day on which dealings in dollar deposits are conducted by
and among banks in the Designated Eurodollar Market.
"Eurodollar Base Rate" means, with respect to
--------------------
any Eurodollar Rate Loan, the interest rate per annum
(determined solely by the Administrative Agent and rounded
upward to the next 1/100 of 1%) at which deposits in dollars
are offered to prime banks by major banks in the Designated
Eurodollar Market at or about 11:00 a.m. local time in the
Designated Eurodollar Market, two (2) Eurodollar Banking
Days before the first day of the applicable Eurodollar
Period in an aggregate amount approximately equal to the
amount of such Eurodollar Rate Loan and for a period of time
comparable to the number of days in the applicable
Eurodollar Period. The determination of the Eurodollar Rate
by the Administrative Agent shall be conclusive in the
absence of manifest error.
-10-
"Eurodollar Lending Office" means, as to each
-------------------------
Bank, its office or branch so designated by written notice
to Borrower and the Administrative Agent as its Eurodollar
Lending Office. If no Eurodollar Lending Office is desig-
nated by a Bank, its Eurodollar Lending Office shall be its
office at its address for purposes of notices hereunder.
"Eurodollar Obligations" means eurocurrency
----------------------
liabilities, as defined in Regulation D.
"Eurodollar Period" means, as to each
-----------------
Eurodollar Rate Loan, the period commencing on the date
specified by Borrower pursuant to Section 2.1(c) and ending
------
1, 2, 3 or 6 months thereafter, as specified by Borrower in
the applicable Request for Loan; provided that:
--------
(a) The first day of any Eurodollar Period shall
be a Eurodollar Banking Day;
(b) Any Eurodollar Period that would otherwise
end on a day that is not a Eurodollar Banking Day
shall be extended to the next succeeding Eurodollar
Banking Day unless such Eurodollar Banking Day
falls in another calendar month, in which case such
Eurodollar Period shall end on the next preceding
Eurodollar Banking Day;
(c) No Eurodollar Period shall extend beyond the
Maturity Date.
"Eurodollar Rate" means, with respect to any
---------------
Eurodollar Rate Loan, the interest rate (rounded upward to
the next 1/100 of 1%) determined to be equal to the
Eurodollar Base Rate divided by [1 minus the Eurodollar
------- -- -----
Reserve Percentage].
"Eurodollar Rate Advance" means an Advance
-----------------------
made hereunder and designated as a Eurodollar Rate Advance
in accordance with Article 2.
---------
"Eurodollar Rate Loan" means a Committed Loan
--------------------
made hereunder and designated as a Eurodollar Rate Loan in
accordance with Article 2.
---------
"Eurodollar Rate Spread" means an additional
----------------------
component of interest (which may vary over the term of any
Eurodollar Rate Loan) to be added to the Eurodollar Rate in
determining the interest rate payable with respect to
Eurodollar Rate Loans. As of each date of determination,
the Eurodollar Rate Spread equals the interest rate per
-11-
annum set forth below opposite the rating which is the lower
of the credit ratings assigned to the First Mortgage Bonds
by Moody's Investors Service, Inc. and Standard & Poor's
Corporation, on that date:
Credit Rating Eurodollar Rate Spread
------------- ----------------------
S&P Moody's
--- -------
A- or A3 (or higher) .2500%
BBB+ or Baa1 .3750%
BBB or Baa2 .4000%
BBB- or Baa3 .5500%
BB+ or Ba1 or lower .7500%
provided that, as of each date of determination when
--------
the aggregate principal Indebtedness evidenced by the
Committed Advance Notes and the Swing Line Note is more than
50% of the then applicable Commitment, the Eurodollar Rate
Spread at each pricing level set forth above shall be
increased by .0625% per annum.
"Eurodollar Reserve Percentage" means, with
-----------------------------
respect to any Eurodollar Rate Loan, the percentage appli-
cable as of the date of determination of the Eurodollar Base
Rate representing the aggregate reserve requirements of the
Administrative Agent (disregarding any offsetting amounts
that may be available to the Administrative Agent to
decrease such requirements to the extent that such
offsetting amounts arose out of transactions other than
those contemplated by this Agreement) under Regulation D and
any other applicable Laws with respect to Eurodollar
Obligations in an aggregate amount equal to the amount of
such Eurodollar Rate Loan and for a time period comparable
to the number of months in the applicable Eurodollar Period.
The determination by the Administrative Agent of any
applicable Eurodollar Reserve Percentage shall be presumed
correct in the absence of manifest error.
"Event of Default" shall have the meaning
----------------
provided in Section 9.1.
---
"Existing Loan Documents" means the loan
-----------------------
documents executed in connection with that certain Loan
Agreement dated as of February 13, 1992 among Borrower, the
Banks (as therein defined) therein named and First
Interstate Bank of Nevada, N.A., as Administrative Agent, as
amended.
"Federal Funds Rate" means, as of any date of
------------------
determination, the interest rate per annum equal to the
-12-
weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day
(or, if such day is not a Banking Day, for the next
preceding Banking Day) by the Federal Reserve Bank of New
York in its statistical release H-15 or, if such rate is not
so published for any day which is a Banking Day, the average
of the quotations for such day on such transactions, as
received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"First Mortgage Bonds" means those certain
--------------------
First Mortgage Bonds of Borrower issued pursuant to the
Indenture.
"Fiscal Quarter" means the fiscal quarter of
--------------
Borrower consisting of a three month fiscal period ending on
each March 31, June 30, September 30 and December 31.
"Fiscal Year" means the fiscal year of
-----------
Borrower consisting of a twelve month fiscal period ending
on each December 31.
"GAAP" means, as of any date of
----
determination, accounting principles set forth as "generally
accepted" in then currently effective Statements of the
Auditing Standards Board of the American Institute of
Certified Public Accountants, or, if no such Statements are
then in effect, that are then approved by such other entity
as may be approved by a significant segment of the
accounting profession in the United States of America. The
term "consistently applied," as used in connection
--------------------
therewith, means that the accounting principles applied are
consistent in all material respects to those applied at
prior dates or for prior periods.
"Government Securities" means readily market-
---------------------
able direct full faith and credit obligations of the United
States of America or obligations unconditionally guaranteed
by the full faith and credit of the United States of America.
"Governmental Agency" means (a) any foreign,
-------------------
federal, state, county or municipal government, or political
subdivision thereof, (b) any governmental or
quasi-governmental agency, authority, board, bureau,
commission, department, instrumentality or public body,
(c) any court or administrative tribunal or (d) with respect
to any Person, any arbitration tribunal or other
-13-
non-governmental authority to whose jurisdiction that Person
has consented.
"Hazardous Materials" means substances
-------------------
defined as hazardous substances pursuant to the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. 9601 et seq., or as
hazardous, toxic or pollutant pursuant to the Hazardous
Materials Transportation Act, 49 U.S.C. 1801, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. 6901,
et seq., or any other applicable Law governing environmental
health and hygiene, in each case as such Laws are amended
from time to time.
"Hazardous Materials Laws" means all federal,
------------------------
state or local laws, ordinances, rules or regulations
governing the disposal of Hazardous Materials applicable to
any of the Property.
"Indebtedness" means, as to any Person,
------------
(a) all indebtedness of such Person for borrowed money,
(b) that portion of the obligations of such Person under
Capital Leases which is properly recorded as a liability on
a balance sheet of that Person prepared in accordance with
Generally Accepted Accounting Principles, (c) any obligation
of such Person that is evidenced by a promissory note or
other instrument representing an extension of credit to such
Person, whether or not for borrowed money, (d) any
obligation of such Person for the deferred purchase price of
Property or services (other than trade or other accounts
----------
payable in the ordinary course of business in accordance
with customary terms), (e) any obligation of such Person
that is secured by a Lien on assets of such Person, whether
or not that Person has assumed such obligation or whether or
not such obligation is non-recourse to the credit of such
Person, but only to the extent of the fair market value of
the assets so subject to the Lien, (f) obligations of such
Person arising under acceptance facilities or under
facilities for the discount of accounts receivable of such
Person and (g) obligations of such Person for unreimbursed
draws under letters of credit issued for the account of such
Person.
"Indenture" means that certain Indenture of
---------
Mortgage and Deed of Trust dated October 1, 1953 between
Borrower (under its prior name, Southern Nevada Power Co.)
and First Interstate Bank of Nevada, N.A. (under its prior
name, First National Bank of Nevada, Reno, Nevada), as
Trustee, as amended as of the Closing Date.
-14-
"Intangible Assets" means assets that are
-----------------
considered intangible assets under GAAP, including (a) any
---------
write-up in book value of any asset subsequent to its
acquisition and (b) customer lists, goodwill, computer
software, copyrights, trade names, trademarks, patents,
unamortized deferred charges, unamortized debt discount,
capitalized research and development costs and other
intangible assets.
"Interest Differential" means, with respect
---------------------
to any prepayment of a CD Rate Loan or a Eurodollar Rate
Loan on a day other than the last day of the applicable
Interest Period and with respect to the failure to borrow a
CD Rate Loan or a Eurodollar Rate Loan on the date or in the
amount specified in a Request for Loan, (a) the per annum
interest rate payable with respect to that CD Rate Loan or
Eurodollar Rate Loan as of the date of the prepayment or
failure to borrow, minus (b) the CD Rate or the Eurodollar
-----
Rate, as applicable, on or as near as practicable to, the
date of the prepayment or failure to borrow for a CD Rate
Loan or Eurodollar Rate Loan commencing on such date and
ending on the last day of the applicable Interest Period.
The determination of the Interest Differential by the
Administrative Agent shall be conclusive in the absence of
manifest error.
"Interest Period" means (a) with respect to
---------------
any CD Rate Loan, the related CD Period and (b) with respect
to any Eurodollar Rate Loan, the related Eurodollar Period.
"Investment" means, when used in connection
----------
with any Person, any investment by or of that Person,
whether by means of purchase or other acquisition of capital
stock or other Securities of any other Person or by means of
loan, advance, capital contribution, guaranty or other debt
or equity participation or interest, or otherwise, in any
other Person, including any partnership and joint venture
---------
interests of such Person in any other Person. "Investment"
shall include a repurchase by Borrower of its Common Stock.
The amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or
decreases in the value of such Investment.
"Laws" means, collectively, all foreign,
----
federal, state and local statutes, treaties, rules,
regulations, ordinances, codes and administrative or
controlling precedents of any Governmental Agency.
-15-
"Lien" means any mortgage, deed of trust,
----
pledge, hypothecation, assignment for security, security
interest, encumbrance, lien or charge of any kind, whether
voluntarily incurred or arising by operation of Law or
otherwise, affecting any Property, including any agreement
---------
to grant any of the foregoing, any conditional sale or other
title retention agreement, any lease in the nature of a
security interest, and/or the filing of or agreement to give
any financing statement under the Uniform Commercial Code or
comparable Law of any jurisdiction with respect to any
Property.
"Loan" means any group of Advances made at
----
any one time by the Banks under the Main Commitment pursuant
to Article 2.
---------
"Loan Documents" means, collectively, this
--------------
Agreement, the Notes, any Request for Loan, any Competitive
Bid Request and any other certificates, documents or
agreements of any type or nature heretofore or hereafter
executed and delivered by Borrower to the Administrative
Agent or to any Bank in furtherance of this Agreement, in
each case either as originally executed or as the same may
from time to time be supplemented, modified, amended,
restated, extended or supplanted.
"Main Commitment" means, subject to Section
---------------
2.7, $105,000,000, provided, that the amount of the Main
--- --------
Commitment shall increase on the date of any Event of
Default by the amount of the Swing Line Commitment
concurrently with the elimination of the Swing Line
Commitment. The respective Pro Rata Shares of the Banks
with respect to the Main Commitment as of the date hereof
are set forth in Schedule 1.1.
------------
"Majority Banks" means, as of any date of
--------------
determination, Banks whose aggregate Pro Rata Share or Swing
Line Commitment is at least 66 2/3% of the Commitment then
in effect or, if the Commitment is not then in effect, Banks
holding Notes evidencing at least 66 2/3% of the aggregate
Indebtedness evidenced by the Notes.
"Material Adverse Effect" means any set of
-----------------------
circumstances or events which (a) has or could reasonably be
expected to have any material adverse effect whatsoever upon
the validity or enforceability of any Loan Document, (b) is
or could reasonably be expected to be material and adverse
to the condition (financial or otherwise) or business
operations of Borrower and its Subsidiaries, taken as a
whole, or to the prospects of Borrower and its Subsidiaries,
taken as a whole, (c) materially impairs or could
-16-
reasonably be expected to materially impair the ability of
Borrower and its Subsidiaries, taken as a whole, to perform
its Obligations or (d) materially impairs or could
reasonably be expected to materially impair the ability of
any of the Banks to enforce any of its legal remedies
pursuant to the Loan Documents.
"Maturity Date" means the third anniversary
-------------
of the Closing Date, November 21, 1997.
"Maximum Competitive Advance" means, with
---------------------------
respect to any Competitive Bid made by a Bank, the amount
set forth therein as the maximum Competitive Advance which
that Bank is willing to make in response to the related
Competitive Bid Request.
"Multiemployer Plan" means any employee
------------------
benefit plan of a type described in Section 4001(a)(3) of
ERISA.
"Negative Pledge" means any covenant binding
---------------
on Borrower that prohibits the creation of Liens on any
Property of Borrower.
"Notes" means, collectively, the Competitive
-----
Advance Notes, the Committed Advance Notes and the Swing
Line Note.
"Obligations" means all present and future
-----------
obligations of every kind or nature of Borrower at any time
and from time to time owed to the Administrative Agent or
the Banks or any one or more of them under any one or more
of the Loan Documents, whether due or to become due, matured
or unmatured, liquidated or unliquidated, or contingent or
noncontingent, including obligations of performance as well
---------
as obligations of payment, and including interest that
---------
accrues after the commencement of any proceeding under any
Debtor Relief Law by or against Borrower or any Subsidiary
of Borrower.
"Opinion of Counsel" means the favorable
------------------
written legal opinion of Richard L. Hinckley, general
counsel to Borrower, substantially in the form of Exhibit G,
---------
together with copies of any officer's certificate or legal
opinion of another counsel or law firm relied upon by such
counsel in its opinion.
"Party" means any Person other than the
-----
Administrative Agent and the Banks, which now or hereafter
is a party to any of the Loan Documents.
-17-
"PBGC" means the Pension Benefit Guaranty
----
Corporation or any successor thereto established under
ERISA.
"Pension Plan" means any "employee pension
------------
benefit plan" that is subject to Title IV of ERISA and which
is maintained for employees of Borrower or any of its ERISA
Affiliates.
"Permitted Encumbrances" means:
----------------------
(a) inchoate Liens incident to construction
or maintenance of real property, or Liens incident to con-
struction or maintenance of real property, now or hereafter
filed of record for which adequate reserves have been set
aside and which are being contested in good faith by
appropriate proceedings and have not proceeded to judgment;
(b) Liens for taxes and assessments on real
property which are not yet past due, or Liens for taxes and
assessments on real property for which adequate reserves
have been set aside and are being contested in good faith by
appropriate proceedings and have not proceeded to judgment;
(c) easements, exceptions, reservations, or
other agreements granted or entered into after the date
hereof for the purpose of pipelines, conduits, cables, wire
communication lines, power lines and substations, streets,
trails, walkways, drainage, irrigation, water, and sewerage
purposes, dikes, canals, ditches, the removal of oil, gas,
coal, or other minerals, and other like purposes affecting
real property which in the aggregate do not materially
burden or impair the fair market value or use of such real
property for the purposes for which it is or may reasonably
be expected to be held;
(d) rights reserved to or vested in any
Governmental Agency by Law to control or regulate, or
obligations or duties under Law to any Governmental Agency
with respect to, the use of any real property;
(e) rights reserved to or vested in any
Governmental Agency by Law to control or regulate, or
obligations or duties under Law to any Governmental Agency
with respect to, any right, power, franchise, grant,
license, or permit;
-18-
(f) present or future zoning laws and ordi-
nances or other laws and ordinances restricting the
occupancy, use, or enjoyment of real property;
(g) statutory Liens, other than those
described in clauses (a) or (b) above, arising in the
ordinary course of business with respect to obligations
which are not delinquent or are being contested in good
faith by appropriate proceedings, provided that, if
--------
delinquent, adequate reserves have been set aside with
respect thereto and, by reason of nonpayment, no Property is
subject to a material risk of loss or forfeiture;
(h) Liens consisting of pledges or deposits
to secure obligations under workers' compensation laws or
similar legislation, including Liens of judgments thereunder
which are not currently dischargeable;
(i) Liens consisting of pledges or deposits
of Property to secure performance in connection with operat-
ing leases made in the ordinary course of business to which
Borrower or a Subsidiary is a party as lessee, provided the
--------
aggregate value of all such pledges and deposits in
connection with any such lease does not at any time exceed
16-2/3% of the annual fixed rentals payable under such
lease;
(j) Liens consisting of deposits of Property
to secure statutory obligations of Borrower or a Subsidiary
of Borrower in the ordinary course of its business; and
(k) Liens consisting of deposits of Property
to secure (or in lieu of) surety, appeal or customs bonds in
proceedings to which Borrower or a Subsidiary of Borrower is
a party in the ordinary course of its business
"Permitted Right of Others" means a Right of
-------------------------
Others consisting of (a) an interest (other than a legal or
equitable co-ownership interest, an option or right to
acquire a legal or equitable coownership interest and any
interest of a ground lessor under a ground lease) that does
not materially impair the value or use of Property for the
purposes for which it is or may reasonably be expected to be
held, (b) an option or right to acquire a Lien that would be
a Permitted Encumbrance, and (c) the reversionary interest
of a landlord under a lease of Property.
-19-
"Person" means any entity, whether an indi-
------
vidual, trustee, corporation, general partnership, limited
partnership, joint stock company, trust, estate, unincorpo-
rated organization, business association, tribe, firm, joint
venture, Governmental Agency, or otherwise.
"Preferred Stock" means each of (a) the
---------------
Cumulative Preferred Stock $20.00 par value 5.40% Series
Preferred Stock of Borrower, (b) the Cumulative Preferred
Stock $20.00 par value 5.20% Series Preferred Stock of
Borrower, (c) the Cumulative Preferred Stock $20.00 par
value 4.70% Preferred Stock of Borrower, and (d) the
Cumulative Preferred Stock $20.00 par value Auction Series A
of Borrower.
"Prime Rate" means the floating commercial
----------
loan rate of the Administrative Agent, announced from time
to time as its "prime rate", which interest rate may not
necessarily be the lowest interest rate at which the
Administrative Agent is willing to extend credit facilities.
"Property" means any interest in any kind of
--------
property or asset, whether real, personal or mixed, or tan-
gible or intangible.
"Pro Rata Share" means, with respect to each
--------------
Bank, the percentage of the Main Commitment set forth
opposite the name of that Bank on Schedule 1.1. Upon the
------------
occurrence of an Event of Default and increase in the amount
of the Main Commitment by the amount of the former Swing
Line Commitment, (i) the Pro Rata Share of the Bank which is
the Swing Line Bank shall ratably increase so that it
includes the former Swing Line Commitment, and (ii) the Pro
Rata Share of each other Bank shall ratably decrease.
"Quarterly Payment Date" means December 31,
----------------------
1994 and each subsequent March 31, June 30, September 30 and
December 31, through the Maturity Date.
"Regulations D, G, T, U and X" mean,
----------------------------
respectively, Regulations D, G, T, U and X, as at any time
amended, of the Board of Governors of the Federal Reserve
System, or any other regulation in substance substituted
therefor.
"Request for Loan" means a written request
----------------
for a Loan or a Swing Line Loan substantially in the form of
-20-
Exhibit H, signed by a Responsible Official of Borrower and
---------
properly completed to provide all information required to be
included therein.
"Requirement of Law" means, as to any Person,
------------------
the articles or certificate of incorporation and bylaws or
other organizational or governing documents of such Person,
and any Law, or judgment, award, decree, writ or determi-
nation of a Governmental Agency, in each case applicable to
or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Responsible Official" means (a) when used
--------------------
with reference to a Person other than an individual, any
corporate officer of such Person, general partner of such
Person, corporate officer of a corporate general partner of
such Person, or corporate officer of a corporate general
partner of a partnership that is a general partner of such
Person, or any other responsible official thereof duly
acting on behalf thereof, and (ba when used with reference
to a Person who is an individual, such Person or his
authorized agent acting through a power of attorney. Any
document or certificate hereunder that is signed or executed
by a Responsible Official of a Person shall be conclusively
presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of that Person.
"Right of Others" means, as to any Property
---------------
in which a Person has an interest, (a) any legal or
equitable right, title or other interest (other than a Lien)
----------
held by any other Person in or with respect to that
Property, and (b) any option or right (including any option
---------
or right to acquire a Lien) held by any other Person to
acquire any such right, title or other interest in or with
respect to that Property.
"Securities" means any capital stock, share,
----------
voting trust certificate, bond, debenture, note or other
evidence of indebtedness, limited partnership interest, or
any warrant, option or other right to purchase or acquire
any of the foregoing.
"Senior Officer" means the (a) chief
--------------
executive officer, (b) chief operating officer, (c) chief
financial officer, (d) vice president, or (e) treasurer, in
each case whatever the title nomenclature may be, of the
Person designated.
-21-
"Special CD Circumstance" means the
-----------------------
application or adoption of any Law or interpretation, or any
change therein or thereof, or any change in the
interpretation or administration thereof by any Governmental
Agency, central bank or comparable authority charged with
the interpretation or administration thereof, or compliance
by any Bank with any request or directive (whether or not
having the force of Law) of any such Governmental Agency,
central bank or comparable authority, or the existence or
occurrence of circumstances affecting the certificate of
deposit market generally that are beyond the reasonable
control of the Banks.
"Special Eurodollar Circumstance" means
-------------------------------
(a) the adoption of any Law by any Governmental Agency,
central branch or comparable authority with respect to
activities in the Designated Eurodollar Market, or (b) any
change in the interpretation or administration of any
existing Law by any Governmental Agency, central bank or
comparable authority charged with the interpretation or
administration thereof, or (ca compliance by any Bank or its
Eurodollar Lending Office with any request or directive
(whether or not having the force of Law) of any such
Governmental Agency, central bank or comparable authority,
or (d) the existence or occurrence of circumstances
affecting the Designated Eurodollar Market generally that
are beyond the reasonable control of the Banks.
"Subsidiary" means, as of any date of deter-
----------
mination and with respect to any Person, any corporation,
partnership or joint venture, whether now existing or
hereafter organized or acquired: (a) in the case of a
corporation, of which a majority of the securities having
ordinary voting power for the election of directors or other
governing body (other than securities having such power only
by reason of the happening of a contingency) are at the time
beneficially owned by such Person and/or one or more
Subsidiaries of such Person, or (b) in the case of a part-
nership or joint venture, of which such Person or a Sub-
sidiary of such Person is a general partner or joint ven-
turer or of which a majority of the partnership or other
ownership interests are at the time beneficially owned by
such Person and/or one or more of its Subsidiaries.
"Swing Line Bank" means First Interstate Bank
---------------
of Nevada, N.A.
"Swing Line Commitment" means (a) prior to
---------------------
the occurrence of an Event of Default, a $20,000,000 lending
commitment extended by the Swing Line Bank pursuant to
-22-
this Agreement in which each of the Banks shall have a
partial unfunded pro rata participation in accordance with
Section 10.10, and (b) thereafter $0.
-------------
"Swing Line Note" means a promissory note in
---------------
the form of Exhibit I made by Borrower in favor of the Swing
---------
Line Bank to evidence the Swing Line Loans, either as
originally executed or as it may from time to time be
supplemented, modified, amended, restated or extended.
"Swing Line Loan" means a loan made by the
---------------
Swing Line Bank hereunder in accordance with Section 2.3.
---
"Termination Event" means (a) a "reportable
-----------------
event" as defined in Section 4043 of ERISA (other than a
----------
"reportable event" that is not subject to the provision for
30 day notice to the PBGC), (b) the withdrawal of Borrower
or any of its ERISA Affiliates from a Pension Plan during
any plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, (ca the filing of a
notice of intent to terminate a Pension Plan or the
treatment of an amendment to a Pension Plan as a termination
thereof pursuant to Section 4041 of ERISA, (d) the
institution of proceedings to terminate a Pension Plan by
the PBGC or (e) any other event or condition which might
reasonably be expected to constitute grounds under ERISA for
the termination of, or the apportionment of a trustee to
administer, any Pension Plan.
"Total Capitalization" means, as of any date
--------------------
of determination, the sum of (a) Total Common Shareholders
---
Equity as of that date, plus (b) the book value of the
----
Preferred Stock as of that date, plus (c) the principal
----
amount as of that date of Borrower's Indebtedness for
borrowed money having an initial maturity in excess of one
year from the date of its incurrence.
"Total Common Shareholders Equity" means, as
--------------------------------
of any date of determination, the sum of (a) the book value
---
of the Common Stock of Borrower as of that date, determined
in accordance with GAAP, plus (b) the retained earnings of
----
Borrower as of that date, determined in accordance with
GAAP, plus (c) the premium on the capital stock of Borrower
----
which should, in accordance with GAAP, be reflected on the
balance sheet of Borrower as of that date, minus (y) the
-----
book value of treasury stock which should, in accordance
with GAAP, be reflected on the balance sheet of Borrower as
of that date, and minus (z) the amount of unamortized
-----
capital stock expense which should, in accordance with GAAP,
be reflected on the
-23-
balance sheet of Borrower as of that Date ; provided that
--------
there shall be excluded from Total Common Shareholders Equity
any amount attributable to Common Stock that is, directly or
indirectly, required to be redeemed or repurchased by
Borrower at a specified date or upon the occurrence of
specified events or at the election of the holder thereof.
"Total Debt" means, as of any date of
----------
determination, Borrower's Indebtedness for borrowed money on
that date, minus the amount of all cash and securities
-----
deposited in trust as security for such Indebtedness with
the lenders thereof on that date.
"type", when used with respect to any Loan or
----
Advance, means the designation of whether such Loan or
Advance is a Base Rate Loan or Advance, a Eurodollar Rate
Loan or Advance or a CD Rate Advance.
1.2 Use of Defined Terms. Any defined term used in the
--------------------
plural shall refer to all members of the relevant class, and any
defined term used in the singular shall refer to any one or more
of the members of the relevant class.
1.3 Accounting Terms. All accounting terms not specifically
----------------
defined in this Agreement shall be construed in conformity with,
and all financial data required to be submitted by this
Agreement shall be prepared in conformity with, GAAP applied
on a consistent basis, except as otherwise specifically
------
prescribed herein. In the event that GAAP changes during
the term of this Agreement such that the financial covenants
contained in Sections 6.10 through 6.11 would then be
---- ----
calculated in a different manner or with different
components, (a) Borrower and the Banks agree to promptly
amend this Agreement in such respects as are necessary to
conform those covenants as criteria for evaluating
Borrower's financial condition to substantially the same
criteria as were effective prior to such change in GAAP and
(b) unless and until such an amendment to the Loan Documents
is effected, Borrower shall report its performance with
respect to the affected covenants in accordance with GAAP as
in effect prior to such changes.
1.4 Rounding. Any financial ratios required to be
--------
maintained by Borrower pursuant to this Agreement shall be
calculated by dividing the appropriate component by the other
component, carrying the result to one place more than the number
of places by which such ratio is expressed in this Agreement and
rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by
which such ratio is expressed in this Agreement.
-24-
1.5 Exhibits and Schedules. All Exhibits and Schedules to
----------------------
this Agreement, either as originally existing or as the same may
from time to time be supplemented, modified or amended, are
incorporated herein by this reference. A matter disclosed
on any Schedule shall be deemed disclosed on all Schedules.
1.6 References to "Borrower and its Subsidiaries". Any
--------------------------------------------
reference herein to "Borrower and its Subsidiaries" or the like
shall refer solely to Borrower during such times, if any, as
Borrower shall have no Subsidiaries.
1.7 Miscellaneous Terms. The term "or" is disjunctive; the
-------------------
term "and" is conjunctive. The term "shall" is mandatory; the
term "may" is permissive. Masculine terms also apply to females;
feminine terms also apply to males. The term "including" is
by way of example and not limitation. Each reference to an
hour or time of the day set forth in any Loan Document shall
be deemed to be a reference to the hour or time of the day
in Las Vegas, Nevada.
-25-
ARTICLE 2
LOANS
2.1 Committed Loans and Swing Line Loans - General.
----------------------------------------------
(a) Subject to the terms and conditions set
forth in this Agreement, at any time and from time to time
from the Closing Date through the Maturity Date, each Bank
shall, pro rata according to its Pro Rata Share of the then
applicable Main Commitment, make Committed Advances to
Borrower under the Main Commitment in such amounts as
Borrower may request that do not exceed in the aggregate at
any one time outstanding the amount of that Bank's Pro Rata
Share of the then applicable Main Commitment; provided that
--------
giving effect to the Committed Loan of which such Advance is
a part, the outstanding principal amount of the Committed
Loans plus the outstanding principal amount of the
----
Competitive Advances shall not exceed the Main Commitment.
Subject to the limitations set forth herein, Borrower may
borrow and repay under the Commitment without premium or
penalty.
(b) Subject to the terms and conditions set
forth in this Agreement, at any time and from time to time
from the Closing Date through the Maturity Date, the Swing
Line Bank shall make Swing Line Loans to Borrower under the
Swing Line Commitment in such amounts as Borrower may
request that do not exceed in the aggregate at any one time
outstanding the amount of the Swing Line Commitment; pro-
---
vided that (i) giving effect to the requested Swing Line
-----
Loan, the outstanding principal amount of the Swing Line
Loans shall not exceed the Swing Line Commitment, and (ii)
Borrower shall not request the making of a Swing Line Loan
after the occurrence of any Event of Default. Subject to
the limitations set forth herein, Borrower may borrow and
repay under the Swing Line Commitment without premium or
penalty.
(c) Subject to the next sentence, each
Committed Loan and each Swing Line Loan shall be made
pursuant to a Request for Loan which shall specify the
requested (i) date of such Loan or Swing Line Loan,
(ii) type of Loan, (iii) amount of such Loan or Swing Line
Loan, and (iv) Interest Period for such Loan. Unless the
Administrative Agent has notified, in its sole and absolute
discretion, Borrower to the contrary, a Committed Loan or
Swing Line Loan may be requested by telephone, telecopier or
telex by a Responsible Official of Borrower or by any
Designated Employee, in which case Borrower shall promptly
confirm such request by transmitting a telecopy of, or at
Administrative Agent's request by
-26-
mailing, a Request for Loan conforming to the preceding sentence
to Administrative Agent.
(d) Promptly following receipt of a Request
for Loan, the Administrative Agent shall notify each Bank
(or, in the case of a Request for Loan specifying a Swing
Line Loan, the Swing Line Bank) by telephone, telecopier or
telex of the date and type of the Committed Loan or Swing
Line Loan, the applicable Interest Period, and that Bank's
Pro Rata Share of the Loan. Not later than 9:00 a.m., on
the date specified for any Committed Loan, each Bank shall
make its Pro Rata Share of the Committed Loan available to
the Administrative Agent at the Administrative Agent's
Office in immediately available funds. Upon fulfillment of
the applicable conditions set forth in Article 8, all
---------
Committed Advances and Swing Line Loans shall be credited in
immediately available funds to the Designated Deposit
Account.
(e) Unless the Majority Banks otherwise con-
sent, each Loan under the Main Commitment shall be an
integral multiple of $1,000,000 but not less than
$5,000,000. Unless the Swing Line Bank otherwise consents,
each Swing Line Loan shall be in an integral multiple of
$100,000 but not less than $500,000.
(f) The Committed Advances made by each Bank
under its Pro Rata Share of the Main Commitment shall be
evidenced by that Bank's Committed Advance Note. The Swing
Line Loans shall be evidenced by the Swing Line Note.
(g) A Request for Loan shall be irrevocable
upon the Administrative Agent's first notification thereof.
(h) If no Request for Loan (or telephonic or
other request for a Committed Loan or Swing Line Loan
referred to in the second sentence of Section 2.1(c), if
------
applicable) has been made within the requisite notice
periods set forth in Sections 2.3, 2.4 and 2.5 in connection
--- --- ---
with a Committed Loan which, if made, would not increase the
outstanding principal Indebtedness outstanding under the
Main Commitment, then Borrower shall be deemed to have
requested a Base Rate Loan in an amount equal to the amount
necessary to cause such outstanding principal Indebtedness
to remain the same and, subject to Section 8.2 the Banks
---
shall make the Advances necessary to make such Committed
Loan notwithstanding Sections 2.1(c) and 2.4.
------ ---
-27-
(i) If a Committed Loan is to be made on the
same date that another Committed Loan is due and payable,
Borrower or the Banks, as the case may be, shall make
available to the Administrative Agent the net amount of
funds giving effect to both such Committed Loans and the
effect for purposes of this Agreement shall be the same as
if separate transfers of funds had been made with respect to
each such Committed Loan.
2.2 Competitive Advances.
--------------------
(a) Subject to the terms and conditions hereof,
at any time and from time to time from the Closing Date
through the Maturity Date, each Bank may in its sole and
absolute discretion make Competitive Advances to Borrower in
such principal amounts as Borrower may request pursuant to a
Competitive Bid Request, provided that giving effect to the
--------
requested Competitive Advance, the outstanding principal
amount of the Committed Loans plus the outstanding principal
----
amount of the Competitive Advances shall not exceed the Main
Commitment.
(b) Borrower shall request Competitive Advances
by submitting a Competitive Bid Request to the
Administrative Agent, which Competitive Bid Request shall
specify the relevant date, amount and maturity for the
proposed Competitive Advance and shall state that a
Competitive Bid is requested on the basis of either an
absolute, all-in rate (an "All-In Bid") or the basis of a
margin over the Eurodollar Rate (a "Eurodollar Bid"). Any
Competitive Bid Request made by telephone shall promptly be
confirmed by the delivery to Administrative Agent in person
or by telecopier of a written Competitive Bid Request. The
Competitive Bid Request must be received by the
Administrative Agent not later than 9:00 a.m. on a Banking
Day that is (i) in the case of each All-In Bid, at least two
(2) Banking Days prior, and (ii) in the case of each
Eurodollar Bid, at least four (4) Banking Days prior, to the
date of the proposed Competitive Advance.
(c) Unless the Administrative Agent otherwise
agrees, in its sole and absolute discretion, no Competitive
Bid Request shall be made by Borrower if Borrower has,
within the immediately preceding five (5) Banking Days,
submitted another Competitive Bid Request.
(d) Each Competitive Bid Request must be made for
a Competitive Advance of at least $5,000,000 and shall be in
an integral multiple of $1,000,000.
-28-
(e) No Competitive Bid Request shall be made for
a Competitive Advance with a maturity of less than 14 days
or more than 180 days, or with a maturity date subsequent to
the Maturity Date.
(f) The Administrative Agent shall, promptly
after receipt of a Competitive Bid Request, notify the Banks
thereof by telephone and provide the Banks a copy thereof by
telecopier. Any Bank may, by written notice to the
Administrative Agent, advise the Administrative Agent that
it elects not to be so notified of Competitive Bid Requests,
in which case the Administrative Agent shall not notify such
Bank of the Competitive Bid Request.
(g) Each Bank receiving a Competitive Bid Request
may, in its sole and absolute discretion, make or not make a
Competitive Bid responsive to the Competitive Bid Request.
Each Competitive Bid shall be submitted to the
Administrative Agent not later than 9:00 a.m. (i) in the
case of each Absolute Bid on the Business Day of the
proposed Competitive Advance and (ii) in the case of each
Eurodollar Bid, on the date which is three Business Days
prior to the date of the requested Competitive Advance. Any
Competitive Bid received by the Administrative Agent after
9:00 a.m. on such dates shall be disregarded for purposes of
this Agreement. Any Competitive Bid made by telephone shall
promptly be confirmed by the delivery to the Administrative
Agent in person or by telecopier of a written Competitive
Bid.
(h) Each Competitive Bid shall specify the fixed
interest rate for the offered Maximum Competitive Advance
set forth in the Competitive Bid. The Maximum Competitive
Advance offered by a Bank in a Competitive Bid may be less
than the Competitive Advance requested by Borrower in the
Competitive Bid Request, but shall be an integral multiple
of $1,000,000. Any Competitive Bid which offers an interest
rate other than a fixed interest rate, is in a form other
-----
than set forth in Exhibit D or which otherwise contains any
---- ---------
term, condition or provision not contained in the
Competitive Bid Request shall be disregarded for purposes of
this Agreement. A Competitive Bid once submitted to the
Administrative Agent shall be irrevocable until 10:00 a.m.
on the date upon which Borrower must accept or reject such
Competitive Bid (as set forth in (j) below), and shall
expire by its terms at such time unless accepted by Borrower
prior thereto.
(i) Promptly after 9:00 a.m. on the date upon
which it receives Competitive Bids, the Administrative Agent
shall notify Borrower of the names of any Banks which have
-29-
providing Competitive Bids at or before 9:00 a.m. on that
date, provided that if the Bank which serves as the
--------
Administrative Agent intends to make a Competitive Bid, it
shall do so by notifying Borrower prior to 8:45 a.m. on that
date. In each case, the Administrative Agent shall inform
Borrower of the Maximum Competitive Advance and fixed
interest rate set forth by each Bank in their Competitive
Bid. The Administrative Agent shall promptly confirm such
notifications in writing delivered in person or by
telecopier to Borrower.
(j) Borrower may, in its sole and absolute
discretion, reject any or all of the Competitive Bids. If
Borrower accepts any Competitive Bid, the following shall
apply: (a) Borrower must accept all Competitive Bids at all
lower interest rates before accepting any portion of a
Competitive Bid at a higher interest rate, (b) if two or
more Banks have submitted a Competitive Bid at the same
interest rate, then Borrower must accept either all of such
Competitive Bids or accept such Competitive Bids in the same
proportion as the Maximum Competitive Advance of each Bank
bears to the aggregate Maximum Competitive Advances of all
such Banks, and (c) Borrower may not accept Competitive Bids
for an aggregate amount in excess of the requested
Competitive Advance set forth in the Competitive Bid
Request. Acceptance of a Competitive Bid by Borrower shall
be irrevocable upon communication thereof to the
Administrative Agent. The Administrative Agent shall
promptly notify each of the Banks whose Competitive Bid has
been accepted by Borrower by telephone, which notification
shall promptly be confirmed in writing delivered in person
or by telecopier to such Banks. Any Competitive Bid not
accepted by Borrower by 10:00 a.m. on the date of the
proposed Competitive Bid shall be deemed rejected.
(k) A Bank whose Competitive Bid has been
accepted by Borrower shall make the Competitive Advance in
accordance with the Competitive Bid Request and with its
Competitive Bid, subject to the applicable conditions set
forth in this Agreement by making funds immediately
available to the Administrative Agent at the Administrative
Agent's Office in the amount of such Competitive Advance not
later than 12 noon on the date of such acceptance. The
Administrative Agent shall then promptly credit the
Competitive Advance in immediately available funds to the
Designated Deposit Account.
(l) The Administrative Agent shall notify
Borrower and the Banks promptly after any Competitive
Advance is made of the amounts and maturity of such
Competitive
-30-
Advances and the identity of the Banks making such
Competitive Advances.
(m) The Competitive Advances made by a Bank shall
be evidenced by that Bank's Competitive Advance Note.
(n) Borrower shall pay to the Administrative
Agent a fee with respect to each Competitive Bid Request
submitted to the Administrative Agent, in the amounts and at
the times set forth in a letter agreement between Borrower
and Administrative Agent.
2.3 Swing Line Loans. Each request by Borrower for a Swing
----------------
Line Loan shall be made pursuant to a Request for Loan (or
telephonic or other request for a Loan referred to in the second
sentence of Section 2.1(c), if applicable) received by the
------
Administrative Agent, at the Administrative Agent's Office,
not later than 11:00 a.m. on the day of the requested Swing
Line Loan.
2.4 Base Rate Loans. Each request by Borrower for a Base
---------------
Rate Loan shall be made pursuant to a Request for Loan (or
telephonic or other request for a Loan referred to in the second
sentence of Section 2.1(c), if applicable) received by the
------
Administrative Agent, at the Administrative Agent's Office,
not later than 9:00 a.m. on the day prior to the date of the
requested Base Rate Loan. All Loans shall constitute Base
Rate Loans unless properly designated as CD Rate Loans or
Eurodollar Rate Loans.
2.5 CD Rate Loans.
-------------
(a) Each request by Borrower for a CD Rate
Loan shall be made pursuant to a Request for Loan (or
telephonic or other request for a Loan referred to in the
second sentence of Section 2.1(c), if applicable) received
------
by the Administrative Agent, at the Administrative Agent's
Office, not later than 9:00 a.m. at least one CD Banking Day
before the first day of the applicable CD Period.
(b) Prior to the first day of the applicable
CD Period, the Administrative Agent shall determine the
applicable CD Rate (which determination shall be conclusive
in the absence of manifest error) and promptly shall give
notice of the same to Borrower and the Banks by telephone,
telecopier or telex.
(c) Unless all of the Banks otherwise
consent, no CD Rate Loan may be requested during the contin-
uance of a Default or Event of Default.
-31-
(d) Unless the Majority Banks otherwise
consent, no more than eight (8) CD Rate Loans and Eurodollar
Loans, in the aggregate, shall be outstanding at any one
time.
(e) Nothing contained herein shall require
any Bank to fund any CD Rate Advance by acceptance of a non-
personal time deposit or issuance of a certificate of
deposit.
2.6 Eurodollar Rate Loans.
---------------------
(a) Each request by Borrower for a
Eurodollar Rate Loan shall be made pursuant to a Request for
Loan (or telephonic or other request for a Loan referred to
in the second sentence of Section 2.1(c), if applicable)
------
received by the Administrative Agent, at the Administrative
Agent's Office, not later than 9:00 a.m. at least three (3)
Eurodollar Banking Days before the first day of the
applicable Eurodollar Period.
(b) Prior to the first day of the applicable
Eurodollar Period, the Administrative Agent shall determine
the applicable Eurodollar Rate (which determination shall be
conclusive in the absence of manifest error) and promptly
shall give notice of the same to Borrower and the Banks by
telephone, telecopier or telex.
(c) Unless all of the Banks otherwise
consent, no Eurodollar Rate Loan may be requested during the
continuance of a Default or Event of Default.
(d) Unless the Majority Banks otherwise
consent, no more than eight (8) CD Rate Loans and Eurodollar
Loans, in the aggregate, shall be outstanding at any one
time.
(e) Nothing contained herein shall require
any Bank to fund any Eurodollar Rate Advance in the
Designated Eurodollar Market.
2.7 Voluntary Reduction of the Commitment. Borrower
-------------------------------------
shall have the right, at any time and from time to time,
without penalty or charge, upon at least three (3) Banking
Days' prior written notice to the Administrative Agent,
voluntarily to reduce, permanently and irrevocably, in
aggregate principal amounts in an integral multiple of
$5,000,000 which are not less than $25,000,000, all or a
portion of the then undisbursed portion of the Commitment;
provided that any such reduction shall be accompanied by
--------
payment of all accrued and unpaid commitment fees with
respect to the portion of the Commitment
-32-
being reduced. Any such reduction may be allocated between the
Main Commitment and the Swing Line Commitment by Borrower in
amounts which are integral multiples of $1,000,000.
2.8 Administrative Agent's Right to Assume Funds
--------------------------------------------
Available for Advances. Unless the Administrative Agent shall
----------------------
have been notified by any Bank no later than the Banking Day prior
to the funding by the Administrative Agent of any Loan that such
Bank does not intend to make available to the Administrative Agent
such Bank's Pro Rata Share of the total amount of such Loan (and
provided that the Administrative Agent has given such Bank
--------
notice of such Loan in accordance with Section 2.1(d)), the
-------
Administrative Agent may assume that such Bank has made such
amount available to the Administrative Agent on the date of
the Loan and the Administrative Agent may, in reliance upon
such assumption, make available to Borrower a corresponding
amount. If the Administrative Agent has made funds
available to Borrower based on such assumption and such cor-
responding amount is not in fact made available to the
Administrative Agent by such Bank, the Administrative Agent
shall be entitled to recover such corresponding amount on
demand from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Administrative
Agent's demand therefor, the Administrative Agent promptly
shall notify Borrower and Borrower shall pay such
corresponding amount to the Administrative Agent. The
Administrative Agent also shall be entitled to recover from
such Bank interest on such corresponding amount in respect
of each day from the date such corresponding amount was made
available by the Administrative Agent to Borrower to the
date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to the
Federal Funds Rate.
-33-
ARTICLE 3
PAYMENTS AND FEES
-----------------
3.1 Principal and Interest.
----------------------
(a) Interest shall be payable on the out-
standing daily unpaid principal amount of each Advance and
each Swing Line Loan from the date thereof until payment in
full is made and shall accrue and be payable at the rates
set forth herein before and after default, before and after
maturity, before and after judgment, and before and after
the commencement of any proceeding under any Debtor Relief
Law, with interest on overdue interest to bear interest at
the Default Rate to the fullest extent permitted by
applicable Laws.
(b) Interest accrued on each Base Rate Loan
through the last day of each calendar month shall be due and
payable on the fifth Banking Day following that day.
Interest accrued on each Swing Line Loan through the last
day of each calendar month shall be due and payable on that
day. Except as otherwise provided in Section 3.7, the
------ ---
unpaid principal amount of each Base Rate Loan and each
Swing Line Loan shall bear interest at a fluctuating rate
per annum equal to the Base Rate plus the Base Rate Spread.
----
Each change in the interest rate applicable to Base Rate
Loans and Swing Line Loans shall take effect simultaneously
with the corresponding changes in the Base Rate and the Base
Rate Spread. Each change in the Base Rate or the Base Rate
Spread shall be effective as of 12:01 a.m. on the Banking
Day on which such change the Base Rate or the Base Rate
Spread is announced, unless otherwise specified in such
announcement, in which case the change shall be effective as
so specified.
(c) Interest accrued on each CD Rate Loan
which is for a term of 90 days or less shall be due and
payable on the last day of the related CD Period. Interest
accrued on each other CD Rate Loan shall be due and payable
each Quarterly Payment Date and on the last day of the
related CD Period. Except as otherwise provided in
------
Section 3.7, the unpaid principal amount of any CD Rate Loan
---
shall bear interest at a rate per annum equal to the CD Rate
for that CD Rate Loan plus, the applicable CD Rate Spread.
----
(d) Interest accrued on each Eurodollar Rate
Loan which is for a term of three months or less shall be
due and payable on the last day of the related Eurodollar
Period. Interest accrued on each other Eurodollar Rate Loan
shall be due and payable each Quarterly Payment Date
-34-
and on the last day of the related Eurodollar Period. Except as
------
otherwise provided in Section 3.7, the unpaid principal
---
amount of any Eurodollar Rate Loan shall bear interest at a
rate per annum equal to the Eurodollar Rate for that
Eurodollar Rate Loan plus, the applicable Eurodollar
----
Rate Spread.
(e) Interest accrued on each Competitive
Advance shall be due and payable on the maturity date of the
Competitive Advance. Except as otherwise provided in
Section 3.7, the unpaid principal amount of each Competitive
---
Advance shall bear interest at the fixed interest rate
specified in the related Competitive Bid.
(f) If not sooner paid, the principal
Indebtedness evidenced by the Notes shall be payable as
follows:
(i) the principal amount of each CD
Rate Loan and each Eurodollar Rate Loan shall be payable
immediately on the last day of the Interest Period for such
Loan;
(ii) the principal amount of each
Competitive Advance shall be payable on the maturity date
specified in the related Competitive Bid;
(iii) the principal Indebtedness
evidenced by the Notes shall be payable immediately in
immediately available funds, to the extent that the
outstanding principal amount of the Loans at any time
exceeds the Commitment;
(iv) the principal Indebtedness
evidenced by the Committed Notes shall be payable
immediately in immediately available funds, to the extent
that the principal amount of the Loans made under the Main
Commitment plus the principal amount of any outstanding
----
Competitive Advances at any time exceeds the Main
Commitment;
(v) the principal Indebtedness amount
of each Competitive Advance shall be payable immediately in
immediately available funds on the last day of the interest
period for that Competitive Advance; and
(vi) the principal Indebtedness
evidenced by the Swing Line Note shall be payable
immediately in immediately available funds, to the extent
that the principal amount of the outstanding Swing Line
Loans at any time exceed the Swing Line Commitment; and
-35-
(vii) the principal Indebtedness
evidenced by the Notes shall in any event be payable
immediately in immediately available funds on the Maturity
Date.
(g) Subject to clause (h) of this Section,
the Notes may, at any time and from time to time,
voluntarily be paid or prepaid in whole or in part without
premium or penalty, except that with respect to any
------
voluntary prepayment under this subsection, (i) any partial
prepayment of Loans under the Main Commitment shall be in an
integral multiple of $1,000,000, but not less than
$5,000,000, (ii) any partial prepayment of the Loans under
the Swing Line Commitment shall be in an integral multiple
of $100,000, but not less than $500,000, (iii) the
Administrative Agent shall have received written notice of
any prepayment at least one (1) Banking Day, in the case of
a Base Rate Loan, and five (5) Banking Days, in the case of
a CD Rate Loan or a Eurodollar Rate Loan, before the date of
prepayment, which notice shall identify the date and amount
of the prepayment and the Loan(s) being prepaid, (iv) each
prepayment of principal in respect of a CD Rate Loan or a
Eurodollar Rate Loan shall be accompanied by payment of
interest accrued through the date of payment on the amount
of principal paid and (v) in any event, any payment or
prepayment of all or any part of any CD Rate Loan or
Eurodollar Rate Loan on a day other than the last day of the
applicable Interest Period shall be subject to
Sections 3.5(d) and 3.6(d).
------ ------
(h) No Competitive Advance Note may be
prepaid without the prior written consent of the Bank making
such Competitive Advance.
3.2 Commitment Fees. On each Quarterly Payment Date and on
---------------
the earlier of the Maturity Date and the date upon which the
Obligations are paid in full and the Commitment terminated,
Borrower shall pay to the Administrative Agent, for the account of
each Bank according to its Pro Rata Share of the Main Commitment,
commitment fees equal to the average daily difference
between the principal Indebtedness evidenced by the
Committed Advance Notes (other than Indebtedness consisting
of Swing Line Loans) and the Main Commitment times a
-----
percentage, equal for each relevant period to the percentage
set forth opposite the credit rating which is the lower of
the credit ratings assigned to the First Mortgage Bonds by
Moody's Investors Service, Inc. and Standard & Poor's
Corporation, during that period:
Credit Rating Percentage
------------- ----------
-36-
S&P Moody's
--- -------
A- or A3 (or higher) .1500%
BBB+ or Baa1 .1875%
BBB or Baa2 .2000%
BBB- or Baa3 .2500%
BB+ or Ba1 (or lower) .3750%
On each Quarterly Payment Date and on the earlier of the
Maturity Date and the date upon which the Obligations are
paid in full and the Swing Line Commitment is terminated,
Borrower shall also pay to the Swing Line Bank for the
account of the Swing Line Bank a commitment fee equal to the
difference between the average daily principal amount of the
Swing Line Loans and the Swing Line Commitment times the
-----
percentage set forth above.
3.3 Agency and Arrangement Fees. On the date of this
---------------------------
Agreement Borrower shall pay to the Administrative Agent, for the
sole account of the Administrative Agent, agency and arrangement
fees in the amounts heretofore agreed upon by letter
agreement between Borrower and Administrative Agent. The
agency and arrangement fees are for the sole account of the
Administrative Agent and are fully earned upon receipt and
are non-refundable.
3.4 Increased Commitment Costs. If any Bank determines in
--------------------------
good faith that compliance with any Law or regulation
enacted or promulgated after the Closing Date, or with any
guideline or request from any central bank or other
Governmental Agency issued or made after the Closing Date
(whether or not having the force of Law) has or would have
the effect of reducing the rate of return on the capital of
such Bank or any corporation controlling such Bank as a
consequence of, or with reference to, such Bank's portion of
the Commitment or its making or maintaining of Advances or
Swing Line Loans, below the rate which the Bank or such
other corporation could have achieved but for such
compliance (taking into account the policies of such Bank or
corporation with regard to capital), then the Borrower shall
from time to time, upon demand by such Bank (with a copy of
such demand to the Administrative Agent), immediately pay to
such Bank additional amounts sufficient to compensate such
Bank or other corporation for such reduction. A certificate
as to such amounts, submitted to the Borrower and the
Administrative Agent by such Bank, shall be conclusive and
binding for all purposes, absent manifest error. Each Bank
agrees promptly to notify the Borrower and the
Administrative Agent of any circumstances that would cause
the Borrower to pay additional amounts pursuant to this
Section, provided that the
--------
-37-
failure to give such notice shall not affect the Borrower's
obligation to pay such additional amounts hereunder.
3.5 CD Fees and Costs.
-----------------
(a) If, after the date hereof, the existence
or occurrence of any Special CD Circumstance:
(1) shall subject any Bank to any tax,
duty or other charge or cost with respect to any CD Rate
Advance, its Notes or its obligation to make CD Rate
Advances, or shall change the basis of taxation of
payments to any Bank of the principal of or interest on
any CD Rate Advance or any other amounts due under this
Agreement in respect of any CD Rate Advance, its Notes
or its obligation to make CD Rate Advances (except for
------
changes in the rate of tax on the overall net income,
gross income or gross receipts of such Bank imposed by
the jurisdiction in which such Bank's principal
executive office is located);
(2) shall impose, modify or deem appli-
cable any reserve (including, without limitation, any
---------
reserve imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirements
not already fully taken into account by the CD
Assessment Rate and the CD Reserve Percentage against
assets of, deposits with or for the account of, or
credit extended by, any Bank; or
(3) shall impose on any Bank or the
certificate of deposit market any other condition
affecting any CD Rate Advance, its Notes, its obligation
to make CD Rate Advances or this Agreement, or shall
otherwise affect any of the same;
and the result of any of the foregoing, as determined
by such Bank, increases the cost to such Bank of making or
maintaining any CD Rate Advance or in respect of any CD Rate
Advance, its Notes or its obligation to make CD Rate
Advances or reduces the amount of any sum received or
receivable by such Bank with respect to any CD Rate Advance,
its Notes or its obligation to make CD Rate Advances
(assuming such Bank had funded 100% of its CD Rate Advance
by accepting a nonpersonal time deposit for a corresponding
amount and term), then, upon demand by such Bank (with a
copy to the Administrative Agent), Borrower shall pay to
such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction
(determined as though such Bank had funded 100%
-38-
of its CD Rate Advance by accepting a nonpersonal time
deposit for a corresponding amount and term). Borrower
hereby indemnifies each Bank against, and agrees to hold each
Bank harmless from and reimburse each Bank on demand for,
all costs, expenses, claims, penalties, liabilities, losses,
legal fees and damages incurred or sustained by each Bank in
connection with this Agreement, or any of the rights,
obligations or transactions provided for or contemplated
herein, as a result of the existence or occurrence of any
Special CD Circumstance. A statement of any Bank claiming
compensation under this subsection shall be conclusive in the
absence of manifest error. Each Bank agrees to endeavor
promptly to notify Borrower of any event of which it has
actual knowledge, occurring after the Closing Date, which
will entitle such Bank to compensation pursuant to this
Section. If any Bank claims compensation under this Section,
Borrower may at any time, upon at least four (4) CD Banking
Days prior notice to the Administrative Agent and such Bank,
and upon payment in full of the amounts provided for in this
Section plus any prepayment fee required by Section 3.5(d),
---- ------
pay in full the affected CD Rate Advances of such Bank or
request that such CD Rate Advances be converted to Base Rate
Advances.
(b) If, after the date hereof, the existence
or occurrence of any Special CD Circumstance shall, in the
opinion of any Bank, make it unlawful, impossible or
impracticable for such Bank to make, maintain or fund its
portion of any CD Rate Loan, or materially restrict the
authority of such Bank to purchase or sell, or to take
deposits of, nonpersonal time deposits, or to determine or
charge interest rates based upon the CD Rate, and such Bank
shall so notify the Administrative Agent, then such Bank's
obligation to make CD Rate Advances shall be suspended for
the duration of such illegality, impossibility or imprac-
ticability and the Administrative Agent forthwith shall give
notice thereof to the other Banks and Borrower. Upon
receipt of such notice, the outstanding principal amount of
such Bank's CD Rate Advances, together with accrued interest
thereon, automatically shall be converted to Base Rate
Advances on either (1) the last day of the CD Period(s)
applicable to such CD Rate Advances if such Bank may
lawfully continue to maintain and fund CD Rate Advances to
such day(s) or (2) immediately if such Bank may not lawfully
continue to fund and maintain such CD Rate Advances to such
day(s), provided that in such event the conversion shall not
--------
be subject to payment of a prepayment fee under
Section 3.5(d). In the event that any Bank is unable, for
------
the reasons set forth above, to make, maintain or fund its
portion of any CD Rate Loan, such Bank shall fund such
amount as a Base Rate Advance,
-39-
and such amount shall be treated in all respects as a Base
Rate Advance.
(c) If, with respect to any proposed CD Rate
Loan:
(1) the Administrative Agent reasonably
determines that, by reason of circumstances affecting
the certificate of deposit market generally that are
beyond the reasonable control of the Banks, nonpersonal
time deposits (in the applicable amounts) are not being
offered to each of the Banks in the certificate of
deposit market for the applicable CD Period; or
(2) the Majority Banks advise the
Administrative Agent that the CD Rate as determined by
the Administrative Agent (i does not represent the
effective pricing to such Banks for nonpersonal time
deposits in the certificate of deposit market in the
relevant amount for the applicable CD Period, or (ii)
will not adequately and fairly reflect the cost to such
Banks of making the applicable CD Rate Advances;
then the Administrative Agent forthwith shall give
notice thereof to Borrower and the Banks, whereupon until
the Administrative Agent notifies Borrower that the
circumstances giving rise to such suspension no longer
exist, the obligation of the Banks to make any future CD
Rate Advances shall be suspended. If at the time of such
notice there is then pending a Request for Loan that
specifies a CD Rate Loan, such Request for Loan shall be
deemed to specify a Base Rate Loan.
(d) Upon payment or prepayment of any CD
Rate Advance, or conversion of a CD Rate Advance to a Base
Rate Advance (other than as the result of a conversion under
Section 3.5(b)), on a day other than the last day in the
-------
applicable CD Period (whether voluntarily, involuntarily, by
reason of acceleration, or otherwise), Borrower shall pay to
the appropriate Bank a prepayment fee calculated as follows
(and determined as though 100% of the CD Rate Advance had
been funded by acceptance of a nonpersonal time deposit for
a corresponding amount and term):
(1) principal amount of the CD Rate
Advance, times [number of days between the date of
-----
prepayment or conversion and the last day in the applicable
CD Period], divided by 360, times the applicable Interest
---------- -----
Differential; plus
----
-40-
(2) all out-of-pocket expenses incurred
by the Bank and reasonably attributable to such payment
or prepayment;
provided that no prepayment fee shall be payable (and
--------
no credit or rebate shall be required) if the product of the
foregoing formula is not positive. Each Bank's determina-
tion of the amount of any prepayment fee payable under this
Section 3.5(d) shall be conclusive in the absence of
------
manifest error.
3.6 Eurodollar Fees and Costs.
-------------------------
(a) If, after the date hereof, the existence
or occurrence of any Special Eurodollar Circumstance:
(1) shall subject any Bank or its Euro-
dollar Lending Office to any tax, duty or other charge
or cost with respect to any Eurodollar Rate Advance, its
Notes or its obligation to make Eurodollar Rate
Advances, or shall change the basis of taxation of
payments to any Bank of the principal of or interest on
any Eurodollar Rate Advance or any other amounts due
under this Agreement in respect of any Eurodollar Rate
Advance, its Notes or its obligation to make Eurodollar
Rate Advances (except for changes in any tax on the
------
overall net income, gross income or gross receipts of
such Bank or its Eurodollar Lending Office);
(2) shall impose, modify or deem appli-
cable any reserve (including, without limitation, any
---------
reserve imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirements
against assets of, deposits with or for the account of,
or credit extended by, any Bank or its Eurodollar
Lending Office; or
(3) shall impose on any Bank or its
Eurodollar Lending Office or the Designated Eurodollar
Market any other condition affecting any Eurodollar Rate
Advance, its Notes, its obligation to make Eurodollar
Rate Advances or this Agreement, or shall otherwise
affect any of the same;
and the result of any of the foregoing, as determined
by such Bank, increases the cost to such Bank or its
Eurodollar Lending Office of making or maintaining any Euro-
dollar Rate Advance or in respect of any Eurodollar Rate
Advance, its Notes or its obligation to make
-41-
Eurodollar Rate Advances or reduces the amount of any sum
received or receivable by such Bank or its Eurodollar
Lending Office with respect to any Eurodollar Rate Advance,
its Notes or its obligation to make Eurodollar Rate Advances
(assuming such Bank's Eurodollar Lending Office had funded
100% of its Eurodollar Rate Advance in the Designated
Eurodollar Market), then, upon demand by such Bank (with a
copy to the Administrative Agent), Borrower shall pay to
such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction
(determined as though such Bank's Eurodollar Lending Office
had funded 100% of its Eurodollar Rate Advance in the
Designated Eurodollar Market). A statement of any Bank
claiming compensation under this subsection shall be
conclusive in the absence of manifest error. Each Bank
agrees to endeavor promptly to notify Borrower of any event
of which it has actual knowledge, occurring after the Closing
Date, which will entitle such Bank to compensation pursuant
to this Section, and agrees to designate a different
Eurodollar Lending Office if such designation will avoid the
need for or reduce the amount of such compensation and will
not, in the judgment of such Bank, otherwise be
disadvantageous to such Bank. If any Bank claims
compensation under this Section, Borrower may at any time,
upon at least four (4) Eurodollar Banking Days' prior notice
to the Administrative Agent and Banks and upon payment in
full of the amounts provided for in this Section through the
date of such payment plus any prepayment fee required by
----
Section 3.6 (d), pay in full all Eurodollar Rate Advances or
-------
request that all Eurodollar Rate Advances be converted to
Base Rate Advances.
(b) If, after the date hereof, the existence
or occurrence of any Special Eurodollar Circumstance shall,
in the opinion of any Bank, make it unlawful, impossible or
impracticable for such Bank or its Eurodollar Lending Office
to make, maintain or fund its portion of any Eurodollar Rate
Loan, or materially restrict the authority of such Bank to
purchase or sell, or to take deposits of, dollars in the
Designated Eurodollar Market, or to determine or charge
interest rates based upon the Eurodollar Rate, and such Bank
shall so notify the Administrative Agent and the other
Banks, then the Banks' obligation to make Eurodollar Rate
Advances shall be suspended for the duration of such
illegality, impossibility or impracticability and the
Administrative Agent forthwith shall give notice thereof to
Borrower. Upon receipt of such notice, the outstanding
principal amount of all Eurodollar Rate Advances, together
with accrued interest thereon, automatically shall be
converted to Base Rate Advances
-42-
with Interest Periods corresponding to the Eurodollar Loans
of which such Eurodollar Rate Advances were a part on either
(1) the last day of the Eurodollar Period(s) applicable to
such Eurodollar Rate Advances if the affected Bank may
lawfully continue to maintain and fund such Eurodollar Rate
Advances to such day(s) or (2) immediately if the affected
Bank may not lawfully continue to fund and maintain such
Eurodollar Rate Advances to such day(s), provided that in
--------
such event the conversion shall not be subject to payment of
a prepayment fee under Section 3.6(d).
------
(c) If, with respect to any proposed
Eurodollar Rate Loan:
(1) the Administrative Agent reasonably
determines that, by reason of circumstances affecting
the Designated Eurodollar Market generally that are
beyond the reasonable control of the Banks, deposits in
dollars (in the applicable amounts) are not being
offered to each of the Banks in the Designated
Eurodollar Market for the applicable Eurodollar Period;
or
(2) the Majority Banks advise the
Administrative Agent that the Eurodollar Rate as
determined by the Administrative Agent (i) does not
represent the effective pricing to such Banks for
deposits in dollars in the Designated Eurodollar Market
in the relevant amount for the applicable Eurodollar
Period, or (ii) will not adequately and fairly reflect
the cost to such Banks of making the applicable
Eurodollar Rate Advances;
then the Administrative Agent forthwith shall give
notice thereof to Borrower and the Banks, whereupon until
the Administrative Agent notifies Borrower that the
circumstances giving rise to such suspension no longer
exist, the obligation of the Banks to make any future
Eurodollar Rate Advances shall be suspended. If at the time
of such notice there is then pending a Request for Loan that
specifies a Eurodollar Rate Loan, such Request for Loan
shall be deemed to specify a Base Rate Loan.
(d) Upon payment or prepayment of any
Eurodollar Rate Advance, (other than as the result of a
conversion required under Section 3.6(b)), on a day other
-------
than the last day in the applicable Eurodollar Period
(whether voluntarily, involuntarily, by reason of acceler-
ation, or otherwise), or upon the failure of Borrower to
borrow on the date or in the amount specified for a
Eurodollar Rate
-43-
Loan in any Request for Loan, Borrower shall
pay to the appropriate Bank a prepayment fee or failure to
borrow fee, as the case may be, calculated as follows (and
determined as though 100% of the Eurodollar Rate Advance had
been funded in the Designated Eurodollar Market):
(1) principal amount of the Eurodollar
Rate Advance, times [number of days between the date of
-----
prepayment and the last day in the applicable Eurodollar
Period], divided by 360, times the applicable Interest
---------- -----
Differential; plus
----
(2) all actual out-of-pocket expenses
(other than those taken into account in the calculation
of the Interest Differential) incurred by the Bank
(excluding allocations of any expense internal to that
---------
Bank) and reasonably attributable to such payment or
prepayment;
provided that no prepayment fee or failure to borrow
--------
fee shall be payable (and no credit or rebate shall be
required) if the product of the foregoing formula is not a
positive number. Each Bank's determination of the amount of
any prepayment fee or failure to borrow fee payable under
this Section 3.6(d) shall be conclusive in the absence of
------
manifest error.
3.7 Default Rate. From and after the occurrence of any
------------
Event of Default the Loans and the Swing Line Loans shall bear
interest at a fluctuating interest rate per annum at all times
equal to the sum of the Base Rate plus 3% per annum, to the
--- ----
fullest extent permitted by applicable Laws. Accrued and unpaid
interest on past due amounts (including, without limitation,
---------
interest on past due interest) shall be compounded
quarterly, on the last day of each calendar quarter, to the
fullest extent permitted by applicable Laws.
3.8 Computation of Interest and Fees. Computation of
--------------------------------
interest on Base Rate Loans, Swing Line Loans, Eurodollar Rate
Loans, CD Rate Loans, Competitive Advances and on commitment fees
shall be calculated on the basis of a year of 360 days and
the actual number of days elapsed. Borrower acknowledges
that this calculation method will result in a higher yield
to the Banks than a method based on a year of 365 or 366
days. Any Loan or Swing Line Loan that is repaid on the
same day on which it is made shall bear interest for one
day.
3.9 Non-Banking Days. If any payment to be made by Borrower
----------------
or any other Party under any Loan Document shall come due on a day
other than a Banking Day, payment shall instead be
-44-
considered due on the next succeeding Banking Day and the
extension of time shall be reflected in computing interest.
3.10 Manner and Treatment of Payments.
--------------------------------
(a) Each payment hereunder or on the Notes
or under any other Loan Document shall be made to the
Administrative Agent for the account of each of the Banks,
or the Administrative Agent, as the case may be, in immedi-
ately available funds not later than 9:00 a.m. (or, in the
case of payments with respect to Swing Line Loans, not later
than 12:00 noon) on the day of payment (which must be a
Banking Day). All payments received after 9:00 a.m. (or, in
the case of payments with respect to Swing Line Loans, not
later than 12:00 noon) on any particular Banking Day, shall
be deemed received on the next succeeding Banking Day. The
amount of all payments received by the Administrative Agent
for the account of each Bank shall be promptly paid by the
Administrative Agent to the applicable Bank in immediately
available funds. Should the Administrative Agent fail to
remit to any Bank any funds actually received by the
Administrative Agent and due to that Bank on the same
Banking Day upon which such funds are deemed received by the
Administrative Agent as set forth above, that Bank shall be
entitled to recover interest on such funds from the
Administrative Agent at a rate per annum equal to the
Federal Funds Rate. All payments shall be made in lawful
money of the United States of America.
(b) Each payment or prepayment on account of
any Committed Loan shall be applied pro rata according to
the outstanding Committed Advances made by each Bank
comprising such Committed Loan. Each payment or prepayment
of a Competitive Advance shall be applied to the Competitive
Advance Note held by the Bank which made such Competitive
Advance.
(c) Each Bank shall use its best efforts to
keep a record of Advances and Swing Line Loans made by it
and payments received by it with respect to its Notes and
such record shall be presumptive evidence of the amounts
owing. Notwithstanding the foregoing sentence, no Bank
shall be liable to any Party for any failure to keep such a
record.
(d) Each payment of any amount payable by
Borrower or any other Party under this Agreement or any
other Loan Document shall be made free and clear of, and
without reduction by reason of, any taxes, assessments or
other charges imposed by any Governmental Agency, central
-45-
bank or comparable authority (other than taxes on income or
gross receipts generally applicable to banks). To the
extent that Borrower is obligated by applicable Laws to make
any deduction or withholding on account of taxes,
assessments or other charges imposed by any Governmental
Agency from any amount payable to any Bank under any Loan
Document, Borrower shall (i) make such deduction or with-
holding and pay the same to the relevant Governmental Agency
and (ii) pay such additional amount to that Bank as is
necessary to result in that Bank's receiving a net after-tax
(or after-assessment or after-charge) amount equal to the
amount to which that Bank would have been entitled under the
Loan Document absent such deduction or withholding. If and
when receipt of such payment results in an excess payment or
credit to that Bank on account of such taxes, assessments or
other charges, that Bank shall refund such excess to
Borrower.
(e) Each Bank which is organized outside the
United States of America shall promptly deliver to Borrower
and the Administrative Agent a completed Internal Revenue
Service Form 4224 and any other certificate or statement or
exemption required by applicable Laws, properly completed
and duly executed by such Bank, to establish that such
payment is (1) not subject to withholding under the Code
because such payment is effectively connected with the
conduct by such Bank of a trade or business in the United
States of America or (2) totally exempt from United States
tax under a provision of an applicable tax treaty. Unless
Borrower and the Administrative Agent have received such
Form or other documents satisfactory to them indicating that
payments hereunder or under the Notes are not subject to
United States withholding tax or are subject to such tax at
a rate reduced by an applicable tax treaty, the
Administrative Agent shall withhold the taxes from such
payment at the applicable statutory rate in the case of
payments to or for any Bank organized under the Laws of a
jurisdiction outside the United States of America and
Section 3.10(d) shall not apply thereto.
-------
3.11 Funding Sources. Nothing in this Agreement shall be
---------------
deemed to obligate any Bank to obtain the funds for any Loan,
Swing Line Loan or Advance in any particular place or manner or to
constitute a representation by any Bank that it has obtained
or will obtain the funds for any Loan, Swing Line Loan or
Advance in any particular place or manner.
3.12 Failure to Charge Not Subsequent Waiver. Any
---------------------------------------
decision by the Administrative Agent or any Bank not to require
payment of any interest (including interest arising under
---------
-46-
Section 3.7), fee, cost or other amount payable under
---
any Loan Document, or to calculate any amount payable by a
particular method, on any occasion shall in no way limit or
be deemed a waiver of the Administrative Agent's or such
Bank's right to require full payment of any interest
(including interest arising under Section 3.7), fee, cost or
--------- ---
other amount payable under any Loan Document, or to
calculate an amount payable by another method, on any other
or subsequent occasion.
3.13 Administrative Agent's Right to Assume Payments
-----------------------------------------------
Will be Made by Borrower. Unless the Administrative Agent shall
------------------------
have been notified by Borrower prior to the date on which any
payment to be made by Borrower hereunder is due that Borrower does
not intend to remit such payment, the Administrative Agent may, in
its discretion, assume that Borrower has remitted such payment
when so due and the Administrative Agent may, in its
discretion and in reliance upon such assumption, make
available to each Bank on such payment date an amount equal
to such Bank's share of such assumed payment. If Borrower
has not in fact remitted such payment to the Administrative
Agent, each Bank shall forthwith on demand repay to the
Administrative Agent the amount of such assumed payment made
available to such Bank, together with interest thereon in
respect of each day from and including the date such amount
was made available by the Administrative Agent to such Bank
to the date such amount is repaid to the Administrative
Agent at a rate per annum equal to the actual cost to the
Administrative Agent of funding such amount as notified by
the Administrative Agent to such Bank.
3.14 Fee Determination Detail. The Administrative Agent,
------------------------
and any Bank, shall provide reasonable detail to Borrower
regarding the manner in which the amount of any payment to the
Banks, or that Bank, under Article 3 has been determined.
---------
3.15 Survivability. All of Borrower's obligations under
-------------
Sections 3.4, 3.5 and 3.6 shall survive the date on which all
--- --- ---
Loans and the Swing Line Loans are fully paid.
-47-
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower represents and warrants to the Banks that:
4.1 Existence and Qualification; Power; Compliance
----------------------------------------------
With Laws. Borrower is a corporation duly formed, validly
---------
existing and in good standing under the Laws of Nevada. Borrower
is duly qualified to transact business, and is in good standing,
in Nevada and each other jurisdiction in which the conduct of its
business or the ownership or leasing of its Properties makes such
qualification or registration necessary, except where the
------
failure so to qualify or register and to be in good standing
would not constitute a Material Adverse Effect. Borrower
has all requisite corporate power and authority to conduct
its business, to own and lease its Properties and to execute
and deliver each Loan Document to which it is a Party and to
perform the Obligations. All outstanding shares of capital
stock of Borrower are duly authorized, validly issued, fully
paid, nonassessable and issued in compliance with all applicable
state and federal securities and other Laws. Borrower is in
compliance with all Laws and other legal requirements applicable
to its business, has obtained all authorizations, consents,
approvals, orders, licenses and permits from, and has accomplished
all filings, registrations and qualifications with, or obtained
exemptions from any of the foregoing from, any Governmental
Agency that are necessary for the transaction of its
business, except where the failure so to comply, file,
------
register, qualify or obtain exemptions does not constitute a
Material Adverse Effect.
4.2 Authority; Compliance With Other Agreements and
-----------------------------------------------
Instruments and Government Regulations. The execution, delivery
--------------------------------------
and performance of the Loan Documents by Borrower have been duly
authorized by all necessary corporate action, and do not:
(a) Require any consent or approval not
heretofore obtained of any partner, director, stockholder,
security holder or creditor of Borrower;
(b) Violate or conflict with any provision
of Borrower's certificate of incorporation or bylaws;
(c) Result in or require the creation or
imposition of any Lien or Right of Others upon or with
respect to any Property now owned or leased or hereafter
acquired by Borrower;
(d) Violate any Requirement of Law
applicable to Borrower;
-48-
(e) result in a breach of or default under,
or would, with the giving of notice or the lapse of time or
both, constitute a breach of or default under, or cause or
permit the acceleration of any obligation owed under, any
indenture or loan or credit agreement or any other Con-
tractual Obligation to which Borrower is a party or by which
Borrower or any of its Property is bound or affected;
and Borrower is not in violation of, or default under, any
Requirement of Law or Contractual Obligation, or any indenture,
loan or credit agreement described in Section 4.2(e), in any
------
respect that constitutes a Material Adverse Effect.
4.3 No Governmental Approvals Required. Subject to the
----------------------------------
representations of the Banks contained in Section 11.8, no
----
authorization, consent, approval, order, license or permit
from, or filing, registration or qualification with, any
Governmental Agency is required to authorize or permit under
applicable Laws the execution, delivery and performance of
the Loan Documents by Borrower.
4.4 Subsidiaries.
------------
(a) Schedule 4.4 hereto correctly sets forth
------------
the names, the form of legal entity, number of shares of
capital stock issued and outstanding, jurisdictions of
organization and chief executive offices of all Subsidiaries
of Borrower. Except as described in Schedule 4.4, Borrower
------------
does not own any capital stock or equity interest in any
Person.
(b) Each Subsidiary of Borrower is in compliance
with all Laws and other requirements applicable to its
business and has obtained all authorizations, consents,
approvals, orders, licenses, and permits from, and each such
Subsidiary has accomplished all filings, registrations, and
qualifications with, or obtained exemptions from any of the
foregoing from, any Governmental Agency that are necessary
for the transaction of its business, except where the
------
failure so to comply, file, register, qualify or obtain
exemptions does not constitute a Material Adverse Effect.
4.5 Financial Statements. Borrower has furnished to the
--------------------
Banks (a) the audited consolidated financial statements of
Borrower and its Subsidiaries as at December 31, 1993 and for the
Fiscal Year then ended and (b) the unaudited consolidated
financial statements of Borrower and its Subsidiaries as at
September 30, 1994 and for the three Fiscal Quarters then
ended. Such financial statements fairly present the financial
-49-
condition and the results of operations of
Borrower and its Subsidiaries as at such dates and for such
periods in accordance with GAAP, consistently applied.
4.6 No Other Liabilities; No Material Adverse Effect.
------------------------------------------------
Borrower and its Subsidiaries do not have
any material liability or material contingent liability not
reflected or disclosed in the balance sheet or notes thereto
described in Section 4.5(b), other than liabilities and
------
contingent liabilities arising in the ordinary course of
business subsequent to September 30, 1994. No event or
circumstance has occurred that constitutes a Material
Adverse Effect with respect to Borrower and its Subsidiaries
since September 30, 1994 or the Closing Date.
4.7 Title to and Location of Property. Borrower and its
---------------------------------
Subsidiaries have good and valid title to all the Property
reflected in the balance sheet described in Section 4.5(b),
------
other than Property subsequently sold or disposed of in the
ordinary course of business, free and clear of all Liens and
Rights of Others, other than (i) Liens and Rights of Others
----------
permitted by Section 6.8.
---
4.8 Intangible Assets. Borrower owns, or possesses the
-----------------
right to use to the extent necessary in its business, all
trademarks, trade names, copyrights, patents, patent rights,
computer software, licenses and other Intangible Assets that are
used in the conduct of its business as now operated and which are
material to the condition (financial or otherwise), business
or operations of Borrower, and no such Intangible Asset, to
the best knowledge of Borrower, conflicts with the valid
trademark, trade name, copyright, patent, patent right or
Intangible Asset of any other Person to the extent that such
conflict constitutes a Material Adverse Effect.
4.9 Governmental Regulation. Borrower and its Subsidiaries
-----------------------
have obtained all approvals necessary under the Public
Utility Holding Company Act of 1935 and the Federal Power
Act to permit the execution, delivery and performance of the
Obligations under the Loan Documents. Neither Borrower nor
any of its Subsidiaries is subject to regulation under the
Interstate Commerce Act, the Investment Company Act of 1940
or to any other Law limiting or regulating its ability to
incur Indebtedness for money borrowed.
4.10 Litigation. Except for (a) any matter fully covered
---------- ------
(subject to applicable deductibles and retentions) by insurance
for which the insurance carrier has assumed full responsibility,
(b) any matter, or series of related matters, involving a claim
against Borrower or any of its Subsidiaries of less than
$5,000,000, (c) matters described in public documents filed
-50-
with Governmental Agencies and previously delivered to the
Banks, and (d) matters set forth in Schedule 4.10, there are
-------------
no actions, suits, proceedings or investigations pending as
to which Borrower or any of its Subsidiaries have been
served or have received notice or, to the best knowledge of
Borrower, threatened against or affecting Borrower or any of
its Subsidiaries or any Property of any of them before any
Governmental Agency. Except for matters set forth in
------
Schedule 4.10, there is no reasonable basis, to the best
-------------
knowledge of Borrower, for any action, suit, proceeding or
investigation against or affecting Borrower or any of its
Subsidiaries or any Property of any of them before any
Governmental Agency which would constitute a Material
Adverse Effect.
4.11 Binding Obligations. Each of the Loan Documents will,
-------------------
when executed and delivered by Borrower, constitute the legal,
valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, except as
------
enforcement may be limited by Debtor Relief Laws or
equitable principles relating to the granting of specific
performance and other equitable remedies as a matter of
judicial discretion.
4.12 No Default. No event has occurred and is continuing
----------
that is a Default or Event of Default.
4.13 Pension Plans. Schedule 4.13 correctly lists each
------------- -------------
Pension Plan which, as of the Closing Date, Borrower or any of its
ERISA Affiliates maintains or to which, as of the Closing Date,
Borrower or any ERISA Affiliate contributes or is required
to contribute. As of the Closing Date, all contributions
required to be made under any such Pension Plan have been
made to such plan or have been reflected as a liability on
the consolidated balance sheet described in Section 4.5(b).
------
There is no "accumulated funding deficiency" within the
meaning of Section 302 of ERISA or any liability to the PBGC
with respect to any Pension Plan other than a Multiemployer
Plan.
4.14 Regulations G, U and X. No part of the proceeds of any
----------------------
Advance or Swing Line Loan hereunder will be used to
purchase or carry, or to extend credit to others for the
purpose of purchasing or carrying, any "margin stock" (as
such term is defined in Regulation G) in violation of
Regulations G, U or X. Neither Borrower nor any of its
Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit
for the purpose of purchasing or carrying any such "margin
stock."
4.15 Disclosure. No written statement made by a Responsible
----------
Official of Borrower to the Administrative Agent, the Arranger,
the Swing Line Bank or any Bank in connection with this Agreement,
or in connection with any Advance or Swing Line
-51-
Loan, contains any untrue statement of a material fact or omits a
material fact necessary to make the statement made not misleading
in light of all the circumstances existing at the date the
statement was made. Borrower has not intentionally withheld from
the Banks any information with respect to any circumstance or
event which constitutes a Material Adverse Effect.
4.16 Tax Liability. Borrower and its Subsidiaries have filed
-------------
all tax returns which are required to be filed, and have paid, or
made provision for the payment of, all taxes with respect to the
periods, Property or transactions covered by said returns,
or pursuant to any assessment received by Borrower or any of
its Subsidiaries, except (a) taxes for which Borrower has
------
been fully indemnified and (b) such taxes, if any, as are
being contested in good faith by appropriate proceedings and
as to which adequate reserves have been established and
maintained. To the best knowledge of Borrower, there is no
tax assessment contemplated or proposed by any Governmental
Agency against Borrower or any of its Subsidiaries that
would constitute a Material Adverse Effect.
4.17 Pari Passu Status. No Indebtedness of Borrower is
-----------------
entitled to priority of payment over the Obligations, whether by
contract or by operation of law, provided that it is
--------
acknowledged that the First Mortgage Bonds have the benefit
of the collateral described in the Indenture. The Property
of Borrower is not subject to any Lien or Negative Pledge
not described on Schedule 4.17 or Schedule 6.8, other than
------------- ------------
Liens in favor of the Trustee under the Indenture securing
the obligations of Borrower under the Indenture.
4.18 Hazardous Materials. Except as described in Schedule
-------------------
4.18, (a) neither of Borrower nor any Subsidiary at any time has
----
disposed of, discharged, released or threatened the release
of any Hazardous Materials on, from or under the Property in
violation of any Hazardous Materials Law that would
individually or in the aggregate constitute a Material
Adverse Effect, (b) to the best knowledge of Borrower, no
condition exists that violates any Hazardous Material Law
affecting any Property except for such violations that would
not individually or in the aggregate have a Material Adverse
Effect, (c) no Property or any portion thereof is or has
been utilized by Borrower or any Subsidiary as a site for
the manufacture of any Hazardous Materials and (d) to the
extent that any Hazardous Materials are used, generated or
stored by Borrower or any Subsidiary on any Property, or
transported to or from such Property by Borrower or any
Subsidiary, such use, generation, storage and transportation
are in compliance in all material respects with all
Hazardous Materials Laws.
-52-
ARTICLE 5
AFFIRMATIVE COVENANTS
---------------------
(OTHER THAN INFORMATION AND
--------------------------
REPORTING REQUIREMENTS)
----------------------
So long as any Advance or Swing Line Loan remains
unpaid, or any other Obligation remains unpaid or
unperformed, or any portion of the Commitment remains in
force, Borrower shall, and shall cause each of its
Subsidiaries to, unless the Administrative Agent (with the
approval of the Majority Banks) otherwise consents in
writing:
5.1 Payment of Taxes and Other Potential Liens. Pay
------------------------------------------
and discharge promptly all taxes, assessments and
governmental charges or levies imposed upon any of them,
upon their respective Property or any part thereof, upon
their respective income or profits or any part thereof or
upon any right or interest of the Administrative Agent or
any Bank under any Loan Document, except that Borrower and
------
its Subsidiaries shall not be required to pay or cause to be
paid (a) any income or gross receipts tax or any other tax
on or measured by income generally applicable to banks or
(b) any tax, assessment, charge or levy that is not yet past
due, or is being contested in good faith by appropriate
proceedings, so long as the relevant entity has established
and maintains adequate reserves for the payment of the same
and by reason of such nonpayment and contest no material
item or portion of Property of Borrower and its
Subsidiaries, taken as a whole, is in jeopardy of being
seized, levied upon or forfeited.
5.2 Preservation of Existence. Preserve and maintain their
-------------------------
respective existences in the jurisdiction of their formation
and all authorizations, rights, franchises, privileges,
consents, approvals, orders, licenses, permits, or
registrations from any Governmental Agency that are
necessary for the transaction of their respective business,
and qualify and remain qualified to transact business in
each jurisdiction in which such qualification is necessary
in view of their respective business or the ownership or
leasing of their respective Properties except that a merger
------
permitted under Section 6.2 shall not constitute a violation
---
of this covenant.
5.3 Maintenance of Properties. Maintain, preserve and
-------------------------
protect all of their respective depreciable Properties in good
order and condition, subject to wear and tear in the ordinary
course of business, and not permit any waste of their
respective Properties.
5.4 Maintenance of Insurance. Maintain liability, casualty
------------------------
and other insurance (subject to customary deductibles and
retentions), with responsible insurance companies in such
-53-
amounts and against such risks as is carried by responsible
companies engaged in similar businesses and owning similar
assets in the general areas in which Borrower and its
Subsidiaries operate.
5.5 Compliance With Laws. Comply with all Requirements of
--------------------
Laws noncompliance with which constitutes a Material Adverse
Effect, except that Borrower and its Subsidiaries need not
------
comply with a Requirement of Law then being contested by any
of them in good faith by appropriate proceedings.
5.6 Inspection Rights. At any time during regular business
-----------------
hours and as often as requested (but not so as to materially
interfere with the business of Borrower or any of its
Subsidiaries), permit the Administrative Agent or any authorized
employee, agent or representative thereof, to examine, audit and
make copies and abstracts from the records and books of account
of, and to visit and inspect the Properties of, Borrower and
its Subsidiaries and to discuss the affairs, finances and
accounts of Borrower and its Subsidiaries with any of their
officers, key employees, accountants, customers or vendors.
Following the occurrence of any Default, (if in any event
the Administrative Agent does not obtain information
reasonably satisfactory to a Bank as a result of any
examination, audit, visit, inspection or discussion referred
to above) each Bank shall, upon written notice to
Administrative Agent, be permitted to exercise each of the
rights granted to the Administrative Agent by this Section.
5.7 Keeping of Records and Books of Account. Keep ade-
---------------------------------------
quate records and books of account reflecting all financial
transactions in conformity with GAAP, consistently applied,
and in material conformity with all applicable requirements
of any Governmental Agency having regulatory jurisdiction
over Borrower or any of its Subsidiaries.
5.8 Compliance With Agreements. Promptly and fully comply
--------------------------
with all Contractual Obligations under all material
agreements, indentures, leases and/or instruments to which
any one or more of them is a party, whether such material
agreements, indentures, leases or instruments are with a
Bank or another Person, except that Borrower and its
------
Subsidiaries need not comply with Contractual Obligations
(a) under any such agreements, indentures, leases or
instruments then being contested by any of them in good
faith by appropriate proceedings or (b) if the failure to
comply with such agreements, indentures, leases or
instruments does not constitute a Material Adverse Effect.
-54-
5.9 Use of Proceeds. Use the proceeds of Advances and Swing
---------------
Line Loans only for proper corporate purposes of Borrower.
5.10 Hazardous Materials Laws. Keep and maintain all
------------------------
Property and each portion thereof in compliance in all material
respects with all applicable Hazardous Materials Laws and
promptly notify the Administrative Agent in writing
(attaching a copy of any pertinent written material) of
(a) any and all material enforcement, cleanup, removal or
other governmental or regulatory actions instituted,
completed or threatened in writing by a Governmental Agency
pursuant to any applicable Hazardous Materials Laws, (b) any
and all material claims made or threatened in writing by any
Person against Borrower relating to damage, contribution,
cost recovery, compensation, loss or injury resulting from
any Hazardous Materials and (c) discovery by any Senior
Officer of Borrower of any material occurrence or condition
on any real property adjoining or in the vicinity of any
Property that could reasonably be expected to cause such
Property or any part thereof to be subject to any
restrictions on ownership, occupancy, transferability or use
of such Property under any applicable Hazardous Materials
Laws.
-55-
ARTICLE 6
NEGATIVE COVENANTS
------------------
So long as any Advance or Swing Line Loan remains
unpaid, or any other Obligation remains unpaid or
unperformed, or any portion of the Commitment remains in
force, Borrower shall not, and shall not permit any of its
Subsidiaries to, unless the Administrative Agent (with the
approval of the Majority Banks or, if required pursuant to
Section 11.2, all of the Banks) otherwise consents in
----
writing:
6.1 Disposition of Property. Make any Dispositions of its
-----------------------
Property, whether now owned or hereafter acquired, other than
-----
Dispositions of Property having an aggregate value of not
more than $100,000,000 during any Fiscal Year.
6.2 Mergers. Merge, consolidate or amalgamate with or into
-------
any Person, except:
------
(a) mergers, consolidations or amalgamations
of a Subsidiary of Borrower into Borrower;
(b) mergers, consolidations or amalgamations
in furtherance of Investments and Acquisitions permitted by
this Agreement;
provided, in each case, that (y) no Default or Event of
--------
Default occurs by reason of the consummation of such merger,
consolidation or amalgamation, and (z) Borrower is the
survivor of such merger, consolidation or amalgamation, or
Borrower's survivor expressly assumes the Obligations of
Borrower to the Administrative Agent and the Banks pursuant
to a written instrument which is in form and substance
acceptable to the Administrative Agent and the Majority
Banks.
6.3 Investments and Acquisitions. Make any Acquisition or
----------------------------
enter into any agreement to make any Acquisition, or make or
suffer to exist any Investment, except:
------
(a) Investments existing on the Closing Date
and disclosed in Schedule 4.4;
------------
(b) Investments consisting of Cash
Equivalents; and
(c) other Acquisitions and Investments in an
aggregate amount not in excess of $50,000,000.
6.4 Hostile Tender Offers. Make any offer to purchase or
---------------------
acquire, or consummate a purchase or acquisition of, 5% or more of
the capital stock of any corporation or other business
-56-
entity if the board of directors of such corporation or business
entity has notified Borrower that it opposes such offer or
purchase.
6.5 Distributions. Make any Distribution which would result
-------------
in a Default or, in any event following the occurrence of any
Event of Default, whether from capital, income or otherwise, and
whether in Cash or other Property.
6.6 ERISA Compliance. (a) Permit any Pension Plan, other
---------------- -----
than a Multiemployer Plan, to incur any material "accumulated
----
funding deficiency," as such term is defined in Section 302
of ERISA, whether or not waived, or (b in a manner which
could result in the imposition of a material Lien on any
Property of Borrower or any of its Subsidiaries pursuant to
Section 4068 of ERISA, (i) permit any Pension Plan
maintained by any of them to suffer a Termination Event or
(ii) incur withdrawal liability under any Multiemployer
Plan.
6.7 Change in Nature of Business. Make any material change
----------------------------
in the nature of the business of Borrower and its Subsidiaries,
taken as a whole, as at present conducted.
6.8 Indebtedness and Contingent Obligations. Create,
---------------------------------------
incur, assume or suffer to exist any Indebtedness or
Contingent Obligation, except:
------
(a) Indebtedness and Contingent Obligations
in favor of the Banks or the Administrative Agent under the
Loan Documents;
(b) Existing Indebtedness and Contingent
Obligations disclosed in Schedule 6.8 and, subject to
------------
Section 6.12, Indebtedness or Contingent Obligations which
----
refinance or replace such Indebtedness or Contingent
Obligations, provided, in each case, that the principal
--------
amount thereof is not increased;
(c) other unsecured Indebtedness in an
aggregate principal amount not to exceed $100,000,000
outstanding at any time; and
(d) Indebtedness pursuant to any series of
First Mortgage Bonds hereafter issued in accordance with the
terms of the Indenture.
6.9 Transactions with Affiliates. Enter into any
----------------------------
transaction of any kind with any Affiliate of Borrower other than
----- ----
(a) transactions between or among Borrower and its wholly-
owned Subsidiaries or between or among its wholly-owned Sub-
sidiaries and (b) transactions on terms at least as
favorable
-57-
to Borrower or its Subsidiaries as would be the case in an
arm's-length transaction between unrelated parties of equal
bargaining power.
6.10 Common Equity. Permit Total Common Shareholders
-------------
Equity, as of the last day of any Fiscal Quarter, to be less than
$575,000,000, plus thirty-three and one third percent (33 1/3%) of
----
the net cash proceeds to Borrower of any permanent equity capital
of Borrower issued following the Closing Date.
6.11 Total Debt to Total Capitalization. Permit the ratio
----------------------------------
of Total Debt to Total Capitalization, as of the last day of
any Fiscal Quarter, to be greater than 0.65 to 1.00.
6.12 Amendments to Certain Agreements. Amend the Indenture
--------------------------------
in a manner which is adverse to the interests of the Banks or,
in any event, to change the definition or means of
application of the definition of "Excluded Property" used
therein.
-58-
ARTICLE 7
INFORMATION AND REPORTING REQUIREMENTS
--------------------------------------
7.1 Financial and Business Information. So long as any
----------------------------------
Advance or Swing Line Loan remains unpaid, or any other
Obligation remains unpaid or unperformed, or any portion of
the Commitment remains in force, Borrower shall, unless the
Administrative Agent (with the approval of the Majority
Banks) otherwise consents in writing, deliver to the Banks,
at Borrower's sole expense:
(a) As soon as practicable, and in any event
concurrently with its submission to the Securities and
Exchange Commission, Borrower's quarterly report on form 10-
Q, together with a certificate executed by a Senior Officer
of Borrower stating that no Default or Event of Default has
occurred as of the date of such quarterly report;
(b) As soon as practicable, and in any event
concurrently with its submission to the Securities and
Exchange Commission, Borrower's annual report on form 10-K,
together with a certificate executed by a Senior Officer of
Borrower stating that no Default or Event of Default has
occurred as of the date of such annual report;
(c) As soon as practicable, and in any event
within 45 days after the end of each calendar quarter (other
than the last calendar quarter in each year, and then within
90 days after the end of such calendar quarter), a
Compliance Certificate;
(d) Promptly after the same are available,
copies of each proxy or financial statement or other report
or communication sent to the shareholders of Borrower, and
copies of all other regular, periodic and special reports
and registration statements which Borrower or a Subsidiary
of Borrower may file or be required to file under
Sections 13 or 15(d) of the Securities Exchange Act of 1934;
(e) Promptly after request by any Bank,
copies of any other specific report or other document that
was filed by Borrower or any of its Subsidiaries with any
Governmental Agency if such report or document would, under
applicable Laws, be available to any Person submitting a
request therefor to that Governmental Agency;
(f) As soon as practicable, and in any event
within one Banking Day after a Responsible Official of
Borrower obtains actual knowledge of the existence of any
-59-
condition or event which constitutes a Default or Event of
Default, written notice specifying the nature and period of
existence thereof and specifying what action Borrower or any
of its Subsidiaries are taking or propose to take with
respect thereto;
(g) Promptly upon a Senior Officer of
Borrower becoming aware, and in any event within five
Banking Days after becoming aware, of the occurrence of any
(i) "reportable event" (as such term is defined in
Section 4043 of ERISA) or (ii) "prohibited transaction" (as
such term is defined in Section 406 of ERISA or Section 4975
of the Code) in connection with any Pension Plan, other than
a Multiemployer Plan, or any trust created thereunder, a
written notice specifying the nature thereof, what action
Borrower and any of its Subsidiaries is taking or proposes
to take with respect thereto, and, when known, any action
taken by the Internal Revenue Service with respect thereto;
and
(h) Such other data and information as from
time to time may be reasonably requested by the
Administrative Agent or by any Bank.
-60-
ARTICLE 8
CONDITIONS
----------
8.1 Initial Advances and Swing Line Loans. The
-------------------------------------
obligation of each Bank to make the initial Advance to be
made by it hereunder and the obligation of the Swing Line
Bank to make the initial Swing Line Loan is subject to the
fulfillment of the following conditions precedent, each of
which shall be satisfied prior to the making of the initial
Advances and Swing Line Loans (unless all of the Banks, in
their sole and absolute discretion, shall agree otherwise):
(a) The Administrative Agent shall have
received all of the following, each of which shall be
originals unless otherwise specified, each properly executed
by a Responsible Official of each party thereto, each dated
as of the Closing Date and each in form and substance satis-
factory to the Administrative Agent, its legal counsel, and
the Banks (unless otherwise specified or, in the case of the
date of any of the following, unless the Administrative
Agent and each Bank otherwise agree or direct):
(1) executed counterparts of this
Agreement, sufficient in number for distribution to the
Banks and Borrower;
(2) the Committed Advance Notes
executed by Borrower in favor of each Bank, each in a
principal amount equal to that Bank's Pro Rata Share of
the Main Commitment (plus, in the case of the Note
delivered to the Swing Line Bank, the Swing Line
Commitment);
(3) the Competitive Advance Notes
executed by Borrower in favor of each Bank, each in a
principal amount equal to the Main Commitment;
(4) the Swing Line Note executed by
Borrower in favor of each Bank;
(5) such documentation as the
Administrative Agent may reasonably require to establish
the due organization, valid existence and good standing
of each of Borrower and its Subsidiaries, its
qualification to engage in business in each jurisdiction
in which it is engaged in business or required to be so
qualified, its authority to execute, deliver and perform
the Loan Documents, and the identity, authority and
capacity of each Responsible Official thereof authorized
to
-61-
act on its behalf, including, without limitation,
---------
certified copies of its certificate of incorporation and
amendments thereto, bylaws and amendments thereto,
certificates of good standing and/or qualification to
engage in business, tax clearance certificates,
certificates of corporate resolutions, incumbency
certificates, Certificates of Responsible Officials,
and the like;
(6) the Opinion of Counsel;
(7) a Certificate of a Responsible
Official signed by a Senior Officer of Borrower
certifying that the conditions specified in Sections
8.1(b), and 8.1(c) have been satisfied;
------ ------
(8) a Request for Loan;
(9) evidence that the execution,
delivery and performance of the Loan Documents has been
authorized and approved by the Nevada Public Service
Commission and any other Governmental Agencies, the
approval of which is required to permit Borrower to
legally enter into the Loan Documents;
(10) a Certificate of a Responsible
Official of Borrower certifying that the attached copies
of the Indenture and all amendments thereto are true,
correct and complete.
(11) such other assurances, certificates,
documents, consents or opinions as the Administrative
Agent reasonably may require.
(b) The representations and warranties of
Borrower contained in Article 4 shall be true and correct.
---------
(c) Borrower shall be in compliance with all
the terms and provisions of the Loan Documents, and no
Default or Event of Default shall have occurred and be
continuing.
(d) Borrower shall, concurrently with the
Closing Date repay in full the indebtedness to the other
lenders under the Existing Loan Documents, as well as all
interest, costs, fees and expenses associated therewith.
(e) Borrower shall have paid the fees
described in Section 3.3.
---
-62-
8.2 Any Advance or Swing Line Loan. In addition to any
------------------------------
applicable conditions precedent set forth elsewhere in this
Article 8, the obligation of each Bank to make any Advance, and
---------
the obligation of the Swing Line Bank to make any Swing Line
Loan, is subject to the following conditions precedent:
(a) except as disclosed by Borrower and
approved in writing by the Majority Banks, the represen-
tations and warranties contained in Article 4 (other than
--------- ----- ----
Sections 4.4(a), 4.6 (first sentence), and 4.10) shall be
------ --- ----
true and correct on and as of the date of the Advance or
Swing Line Loan as though made on that date;
(b) other than matters described in
Schedule 4.10, Schedule 4.18, or not required as of the
------------- -------------
Closing Date to be therein described, there shall not be
then pending or threatened any action, suit, proceeding or
investigation against or affecting Borrower or any of its
Subsidiaries or any Property of any of them before any
Governmental Agency that constitutes a Material Adverse
Effect;
(c) the Administrative Agent shall have
timely received a Request for Loan in compliance with
Article 2 (or telephonic or other request for loan referred
---------
to in the second sentence of Section 2.1(c), if applicable)
------
and shall have promptly notified each Bank that is to fund
such Advance or Swing Line Loan of such request;
(d) No Default or Event of Default, nor any
Material Adverse Effect, shall have occurred; and
(e) the Administrative Agent shall have
received, in form and substance satisfactory to the
Administrative Agent, such other assurances, certificates,
documents or consents related to the foregoing as the
Administrative Agent reasonably may require.
-63-
ARTICLE 9
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
----------------------------------------------------
9.1 Events of Default. The existence or occurrence of any
-----------------
one or more of the following events, whatever the reason therefor
and under any circumstances whatsoever, shall constitute an
Event of Default:
(a) Borrower fails to pay any principal on
any of the Notes, or any portion thereof, on the date when
due; or
(b) Borrower fails to pay any interest on
any of the Notes, or any portion thereof, within two (2)
Banking Days after the date when due; or fails to pay any
other fee or amount payable to Administrative Agent or the
Banks under any Loan Document, or any portion thereof,
within two (2) Banking Days after demand therefor; or
(c) Any failure to comply with Section 7.1(f); or
------
(d) Borrower, any of its Subsidiaries or any
other Party fails to perform or observe any covenant or
agreement contained in Article 6 of the Loan Agreement; or
---------
(e) Borrower, any of its Subsidiaries or any
other Party fails to perform or observe any other covenant
or agreement contained in the Loan Agreement or any other
Loan Document within thirty (30) days after the giving of
notice by the Administrative Agent or the Majority Banks of
such Default; or
(f) Any representation or warranty made in
any Loan Document proves to have been incorrect when made or
reaffirmed in any respect that is materially adverse to the
interests of the Administrative Agent or the Banks; or
(g) Borrower or any of its Subsidiaries
(i) fails to pay the principal, or any principal install-
ment, of any present or future indebtedness for borrowed
money (other than under the Notes) in an amount in excess of
----------
$15,000,000, or any guaranty of present or future
indebtedness for borrowed money in an amount in excess of
$15,000,000, on its part to be paid, when due (or within any
stated grace period), whether at the maturity, upon
acceleration, by reason of required prepayment or otherwise
or (ii) fails to perform or observe any other term, covenant
or agreement on its part to be performed or observed, or
suffers any event to occur, in connection
-64-
with any present or future indebtedness for borrowed money in
an amount in excess of $15,000,000, or of any guaranty of
present or future indebtedness for borrowed money in excess
of $15,000,000, if as a result of such failure or sufferance
any holder or holders thereof (or an agent or trustee on its
or their behalf) has the right to declare such indebtedness
due before the date on which it otherwise would become due;
or
(h) Any Loan Document, at any time after its
execution and delivery and for any reason other than the
agreement of the Banks or satisfaction in full of all the
Obligations, ceases to be in full force and effect or is
declared by a court of competent jurisdiction to be null and
void, invalid or unenforceable in any respect which, in any
such event in the reasonable opinion of the Majority Banks,
is materially adverse to the interests of the Banks; or
Borrower denies that it has any or further liability or
obligation under any Loan Document, or purports to revoke,
terminate or rescind same; or
(i) A judgment against Borrower or any of
its Subsidiaries is entered for the payment of money in
excess of $5,000,000 and, absent procurement of a stay of
execution, such judgment remains unbonded or unsatisfied for
thirty (30) calendar days after the date of entry of judg-
ment, or in any event, later than five (5) days prior to the
date of any proposed foreclosure sale thereunder; or
(j) Borrower or any of its Subsidiaries
institutes or consents to any proceeding under a Debtor
Relief Law relating to it or to all or any part of its
Property, or is unable or admits in writing its inability to
pay its debts as they mature, or makes an assignment for the
benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer
for it or for all or any part of its Property; or any
receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the
application or consent of that Person and the appointment
continues undischarged or unstayed for sixty (60) calendar
days; or any proceeding under a Debtor Relief Law relating
to any such Person or to all or any part of its Property is
instituted without the consent of that Person and continues
undismissed or unstayed for sixty (60) calendar days; or any
judgment, writ, warrant of attachment or execution or
similar process is issued or levied against all or any
material part of the Property of any such Person and is not
released, vacated or fully bonded within sixty (60) calendar
days after its issue or levy; or
-65-
(k) The occurrence subsequent to the Closing Date
of a Termination Event with respect to any Pension Plan,
maintained by Borrower or any ERISA Affiliate of Borrower if
the aggregate liability of Borrower and its ERISA Affiliates
under ERISA as a result thereof exceeds $5,000,000; or the
complete or partial withdrawal subsequent to the Closing
Date by Borrower or any of its ERISA Affiliates from any
Multiemployer Plan if the aggregate liability of Borrower
and its ERISA Affiliates as a result thereof exceeds
$5,000,000.
9.2 Remedies Upon Event of Default. Without limiting any
------------------------------
other rights or remedies of the Administrative Agent or the
Banks provided for elsewhere in this Agreement, or the Loan
Documents, or by applicable Law, or in equity, or otherwise:
(a) Upon the occurrence of any Event of
Default other than an Event of Default described in
Section 9.1(j):
------
(1) the commitment to make Advances and
Swing Line Loans and all other obligations of the
Administrative Agent, the Swing Line Bank or the Banks
and all rights of Borrower and any other Parties under
the Loan Documents shall be suspended without notice to
or demand upon Borrower, which are expressly waived by
Borrower, except that, subject to Section 11.2, the
------ ----
Majority Banks may waive the Event of Default or,
without waiving, determine, upon terms and conditions
satisfactory to the Majority Banks (or all of the Banks,
as the case may be), to reinstate the Commitment and
make further Advances and Swing Line Loans, which waiver
or determination shall apply equally to, and shall be
binding upon, all the Banks; and
(2) the Majority Banks may request the
Administrative Agent to, and the Administrative Agent
thereupon shall, terminate the Commitment and declare
all or any part of the unpaid principal of all Notes,
all interest accrued and unpaid thereon and all other
amounts payable under the Loan Documents to be forthwith
due and payable, whereupon the same shall become and be
forthwith due and payable, without protest, presentment,
notice of dishonor, demand or further notice of any
kind, all of which are expressly waived by Borrower.
(b) Upon the occurrence of any Event of Default
described in Section 9.1(j):
------
-66-
(1) the commitment to make Advances and
Swing Line Loans and all other obligations of the
Administrative Agent, the Swing Line Bank or the Banks
and all rights of Borrower and any other Parties under
the Loan Documents shall terminate without notice to or
demand upon Borrower, which are expressly waived by
Borrower, except that all the Banks may waive the Event
------
of Default or, without waiving, determine, upon terms
and conditions satisfactory to all the Banks, to
reinstate the Commitment and make further Advances and
Swing Line Loans, which waiver or determination shall
apply equally to, and shall be binding upon, all the
Banks; and
(2) the unpaid principal of all Notes,
all interest accrued and unpaid thereon and all other
amounts payable under the Loan Documents shall be
forthwith due and payable, without protest, presentment,
notice of dishonor, demand or further notice of any
kind, all of which are expressly waived by Borrower.
(c) Upon the occurrence of any Event of
Default, the Banks and the Administrative Agent, or any of
them, without notice to or demand upon Borrower, which are
expressly waived by Borrower, may proceed to protect,
exercise and enforce their rights and remedies under the
Loan Documents against Borrower and any other Party and such
other rights and remedies as are provided by Law or equity.
(d) The order and manner in which the Banks'
rights and remedies are to be exercised shall be determined
by the Majority Banks in their sole discretion, and all
payments received by the Administrative Agent and the Banks,
or any of them, shall be applied first to the costs and
expenses (including attorneys' fees and disbursements) of
the Administrative Agent, acting as Administrative Agent,
and of the Banks, and thereafter paid pro rata to the Banks
in the same proportions that the aggregate Obligations owed
to each Bank under the Loan Documents bear to the aggregate
Obligations owed under the Loan Documents to all the Banks,
without priority or preference among the Banks. Regardless
of how each Bank may treat payments for the purpose of its
own accounting, for the purpose of computing Borrower's
Obligations hereunder and under the Notes, payments shall be
applied first, to the costs and expenses (including
-----
attorneys' fees and disbursements) of the Administrative
Agent, acting as the
-67-
Administrative Agent, and then to the Banks, as set forth
above, second, to the payment of accrued and unpaid interest
------
due under any Loan Documents to and including the date of
such application (ratably, and without duplication, according
to the accrued and unpaid interest due under each of the Loan
Documents), and third, to the payment of all other amounts
-----
(including principal and fees) then owing to the
Administrative Agent or the Banks under the Loan Documents.
No application of payments will cure any Event of Default, or
prevent acceleration, or continued acceleration, of amounts
payable under the Loan Documents, or prevent the exercise, or
continued exercise, of rights or remedies of the Banks
hereunder or thereunder or at law or in equity.
-68-
ARTICLE 10
THE ADMINISTRATIVE AGENT
------------------------
10.1 Appointment and Authorization. Each Bank hereby
-----------------------------
irrevocably appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise
such powers under the Loan Documents as are delegated to the
Administrative Agent by the terms thereof or are reasonably
incidental, as determined by the Administrative Agent,
thereto. This appointment and authorization is intended
solely for the purpose of facilitating the servicing of the
Advances and does not constitute appointment of the
Administrative Agent as trustee for any Bank or as
representative of any Bank for any other purpose and, except
------
as specifically set forth in the Loan Documents to the
contrary, the Administrative Agent shall take such action
and exercise such powers only in an administrative and
ministerial capacity. The Administrative Agent is the agent
of the Banks only and does not assume any agency
relationship with Borrower, express or implied.
10.2 Administrative Agent and Affiliates. First
-----------------------------------
Interstate Bank of Nevada, N.A. (and each successor
Administrative Agent) has the same rights and powers under
the Loan Documents as any other Bank and may exercise the
same as though it was not the Administrative Agent, and the
term "Bank" or "Banks" includes First Interstate Bank of
Nevada, N.A. in its individual capacity. First Interstate
Bank of Nevada, N.A. (and each successor Administrative
Agent) and its Affiliates may accept deposits from, lend
money to and generally engage in any kind of banking, trust
or other business with Borrower, any Subsidiary thereof, or
any Affiliate of Borrower or any Subsidiary thereof, as if
it was not the Administrative Agent and without any duty to
account therefor to the Banks. First Interstate Bank of
Nevada, N.A. (and each successor Administrative Agent) need
not account to any other Bank for any monies received by it
for reimbursement of its fees, costs and expenses as
Administrative Agent hereunder, or for any monies received
by it in its capacity as a Bank hereunder. Neither the
Arranger, the Swing Line Bank nor the Administrative Agent
shall be deemed to hold a fiduciary relationship with any
Bank and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Administrative
Agent, the Swing Line Bank or the Arranger.
10.3 Proportionate Interest of the Banks in any
------------------------------------------
Collateral. The Administrative Agent, on behalf of all the Banks,
----------
shall hold in accordance with the Loan Documents all collateral or
interests therein, if any, received or held by the Administrative
Agent. Subject to the Administrative Agent's, the Swing Line
Bank's and the Bank's rights to reimbursement
-69-
for their costs and expenses hereunder (including attorneys' fees
---------
and disbursements and other professional services) and subject to
the application of payments in accordance with Section 9.2(d),
------
each Bank (including the Swing Line Bank) shall have an interest
in any collateral or interests therein in the same proportions
that the aggregate Obligations beneficially owed such Bank
under the Loan Documents bear to the aggregate Obligations
owed under the Loan Documents to all the Banks, without
priority or preference among the Banks.
10.4 Banks' Credit Decisions. Each Bank agrees that it has,
-----------------------
independently and without reliance upon the Administrative
Agent, the Arranger, the Swing Line Bank, any other Bank or
the directors, officers, agents, employees or attorneys of
the Administrative Agent, the Arranger, the Swing Line Bank
or of any other Bank, and instead in reliance upon
information supplied to it by or on behalf of Borrower and
upon such other information as it has deemed appropriate,
made its own independent credit analysis and decision to
enter into this Agreement. Each Bank also agrees that it
shall, independently and without reliance upon the
Administrative Agent, the Arranger, the Swing Line Bank any
other Bank or the directors, officers, agents, employees or
attorneys of the Administrative Agent, the Arranger, the
Swing Line Bank or of any other Bank, continue to make its
own independent credit analyses and decisions in acting or
not acting under the Loan Documents.
10.5 Action by Administrative Agent; Etc..
------------------------------------
(a) The Administrative Agent and the Swing
Line Bank may assume that no Default has occurred and is
continuing, unless the Administrative Agent and the Swing
Line Bank have received written notice from Borrower stating
the nature of the Default or has received written notice from
a Bank stating the nature of the Default and that such Bank
considers the Default to have occurred and to be continuing.
(b) The Administrative Agent has only those
obligations under the Loan Documents as are expressly set
forth therein. The Arranger has no obligations under the
Loan Documents, although it is an intended third party
beneficiary of those Sections of this Agreement which refer
to the Arranger.
(c) Except for any obligation expressly set
------
forth in the Loan Documents and as long as the
Administrative Agent may assume that no Event of Default has
occurred and is continuing, the Administrative Agent may,
but shall not be required to, exercise its discretion to act
or not act, except that the Administrative Agent
------
-70-
shall be required to act or not act upon the instructions of
the Majority Banks (or of all the Banks, to the extent
required by this Agreement) and those instructions shall be
binding upon the Administrative Agent and all the Banks,
provided that the Administrative Agent shall not be required
--------
to act or not act if to do so would be contrary to any Loan
Document or to applicable Law or would result, in the
reasonable judgment of the Administrative Agent, in
substantial risk of liability to the Administrative Agent.
(d) If the Administrative Agent has received
a written notice specified in clause (a), the Administrative
---
Agent shall give notice thereof to the Banks and shall act
or not act upon the instructions of the Majority Banks (or
of all the Banks, to the extent required by Section 11.2),
----
provided that the Administrative Agent shall not be required
--------
to act or not act if to do so would be contrary to any Loan
Document or to applicable Law or would result, in the
reasonable judgment of the Administrative Agent, in
substantial risk of liability to the Administrative Agent,
and except that if the Majority Banks (or all the Banks, if
------
required under this Agreement) fail, for five (5) Banking
Days after the receipt of notice from the Administrative
Agent, to instruct the Administrative Agent, then the
Administrative Agent, in its sole discretion, may act or not
act as it deems advisable for the protection of the
interests of the Banks.
(e) The Administrative Agent shall have no
liability to any Bank for acting, or not acting, as
instructed by the Majority Banks (or all the Banks, if
required under this Agreement), notwithstanding any other
provision hereof.
10.6 Liability of Administrative Agent and Arranger.
----------------------------------------------
Neither the Administrative Agent, the Arranger,
nor any of their respective directors, advisors, officers,
agents, employees or attorneys shall be liable for any
action taken or not taken by them under or in connection
with the Loan Documents, except for their own gross
------
negligence or willful misconduct. Without limitation on the
foregoing, the Administrative Agent, the Arranger and their
respective directors, advisors, officers, agents, employees
and attorneys:
(a) May treat the payee of any Note as the
holder thereof until the Administrative Agent receives
written notice of the assignment or transfer thereof, in
form satisfactory to the Administrative Agent, signed by the
payee, and may treat each Bank as the owner of that Bank's
interest in the Obligations for all purposes of this
Agreement until the Administrative Agent receives
-71-
written notice of the assignment or transfer thereof, in form
satisfactory to the Administrative Agent, signed by that
Bank.
(b) May consult with legal counsel
(including in-house legal counsel), accountants (including
--------- ---------
in-house accountants) and other professionals or experts
selected by it, or with legal counsel, accountants or other
professionals or experts for Borrower and/or its
Subsidiaries or the Banks, and shall not be liable for any
action taken or not taken by it in good faith in accordance
with any advice of such legal counsel, accountants or other
professionals or experts.
(c) Shall not be responsible to any Bank for
any statement, warranty or representation made in any of the
Loan Documents or in any notice, certificate, report,
request or other statement (written or oral) given or made
in connection with any of the Loan Documents, unless such
------
statement, warranty or representation is an independent
statement, warranty or representation of the Administrative
Agent which is not based upon information received by the
Administrative Agent from Borrower or any other Person not
affiliated with the Administrative Agent.
(d) Except to the extent expressly set forth
------
in the Loan Documents, shall have no duty to ask or inquire
as to the performance or observance by Borrower or its
Subsidiaries of any of the terms, conditions or covenants of
any of the Loan Documents or to inspect any collateral or
the Property, books or records of Borrower or its
Subsidiaries.
(e) Will not be responsible to any Bank for
the due execution, legality, validity, enforceability, gen-
uineness, effectiveness, sufficiency or value of any Loan
Document, any other instrument or writing furnished pursuant
thereto or in connection therewith, or any collateral.
(f) Will not incur any liability by acting
or not acting in reliance upon any Loan Document, notice,
consent, certificate, statement, request or other instrument
or writing believed by it to be genuine and signed or sent
by the proper party or parties.
(g) Will not incur any liability for any
arithmetical error in computing any amount paid or payable
by the Borrower or any Subsidiary or Affiliate thereof or
paid or payable to or received or receivable from any Bank
under any Loan Document, including, without limitation,
---------
-72-
principal, interest, commitment fees, Advances, Swing Line
Loans and other amounts; provided that, promptly upon
--------
discovery of such an error in computation, the
Administrative Agent, the Banks and (to the extent
applicable) Borrower and/or its Subsidiaries or Affiliates
shall make such adjustments as are necessary to correct such
error and to restore the parties to the position that they
would have occupied had the error not occurred.
10.7 Indemnification. Each Bank and the Swing Line Bank
---------------
shall, ratably in accordance with their respective portions of the
Commitment, indemnify and hold the Administrative Agent, and
the Arranger and their respective directors, advisors,
officers, agents, employees and attorneys harmless against
any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including,
---------
without limitation, attorneys' fees and disbursements) that
may be imposed on, incurred by or asserted against it or
them in any way relating to or arising out of the Loan
Documents (other than losses incurred by reason of the
failure of Borrower to pay the indebtedness represented by
the Notes and interest thereon or to pay the fees described
in Sections 3.2 and 3.3) or any action taken or not taken by
--- ---
First Interstate Bank of Nevada, N.A. as Administrative
Agent thereunder, except such as result from their own gross
------
negligence or willful misconduct. Without limitation on the
foregoing, each Bank shall reimburse the Administrative
Agent and the Arranger upon demand for that Bank's ratable
share of any cost or expense incurred by the Administrative
Agent or the Arranger in connection with the negotiation,
preparation, execution, delivery, amendment, waiver,
restructuring, reorganization (including a bankruptcy reor-
---------
ganization), enforcement or attempted enforcement of the
Loan Documents, to the extent that Borrower or any other
Party is required by Section 11.3 to pay that cost or
----
expense but fails to do so upon demand.
10.8 Successor Administrative Agent. If the Administrative
------------------------------
Agent determines that for it to continue as Administrative
Agent would result in a conflict of interest affecting the
Administrative Agent, or would create an unacceptable risk
of significant liability of the Administrative Agent to a
third party, or would otherwise be inadvisable under
prevailing standards of banking prudence, it may resign as
such at any time upon prior written notice to Borrower and
the Banks, to be effective upon a successor's acceptance of
appointment as Administrative Agent. The Administrative
Agent may also resign as such absent such a determination by
it with the consent of Borrower, which shall not be
unreasonably withheld, to be likewise effective. The Majority
Banks at any time may remove the Administrative Agent
-73-
by written notice to that effect to be effective on
such date as the Majority Banks designate. In either event:
(a) the Majority Banks shall appoint a successor
Administrative Agent, who must be from among the Banks,
provided that any resigning Administrative Agent shall be
--------
entitled to appoint a successor Administrative Agent from
among the Banks, subject to acceptance of appointment by
that successor Administrative Agent, if the Majority Banks
have not appointed a successor Administrative Agent within
thirty (30) days after the date the resigning Administrative
Agent gave notice of resignation; (b) upon a successor's
acceptance of appointment as Administrative Agent, the
successor will thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the
resigning Administrative Agent or the removed Administrative
Agent; and (c) upon the effectiveness of any resignation or
removal, the resigning Administrative Agent or the removed
Administrative Agent thereupon will be discharged from its
duties and obligations thereafter arising under the Loan
Documents other than obligations arising as a result of any
action or inaction of the resigning Administrative Agent or
the removed Administrative Agent prior to the effectiveness
of such resignation or removal.
10.9 No Obligations of Borrower. Nothing contained in this
--------------------------
Article 10 shall be deemed to impose upon Borrower any
----------
obligation in respect of the due and punctual performance by
the Administrative Agent of its obligations to the Banks
under any provision of this Agreement, and Borrower shall
have no liability to the Administrative Agent or any of the
Banks in respect of any failure by the Administrative Agent
or any Bank to perform any of its obligations to the
Administrative Agent or the Banks under this Agreement.
Without limiting the generality of the foregoing, where any
provision of this Agreement relating to the payment of any
amounts due and owing under the Loan Documents provides that
such payments shall be made by Borrower to the
Administrative Agent for the account of the Banks,
Borrower's obligations to the Banks in respect of such
payments shall be deemed to be satisfied upon the making of
such payments to the Administrative Agent in the manner
provided by this Agreement.
10.10 The Swing Line. It is intended that each Bank and the
--------------
Swing Line Bank shall have a proportionate credit risk with
respect to the credit facilities extended pursuant to this
Agreement (other than any Competitive Advances) equal for each
-----
Bank to the proportion which (a) the amount of that Bank's Pro
Rata Share of the Main Commitment plus in the case of the Swing
----
Line Bank, the Swing Line Commitment, bears to (b) the
Commitment. To the extent, if any, that the aggregate
principal amount of the Obligations (other than any
-----
Competitive Advances) owed to any Bank are ratably in excess
of its
-74-
proportionate share of the Obligations (determined in
accordance with the foregoing sentence), then each Bank
shall be deemed to have purchased a ratable unfunded
participation in the excess such Obligations owed to that
Bank. Upon the occurrence of an Event of Default, each Bank
and the Swing Line Bank agree that (x) the amount of the
Main Commitment shall be increased by the amount of the
Swing Line Commitment and the Swing Line Commitment
terminated, (y) each Bank (or, in the appropriate case, the
Swing Line Bank) shall pay to the Swing Line Bank (or, in
the appropriate case, to the Banks) such amounts as are
necessary to result in the Obligations (other than any
-----
outstanding Competitive Advances) owed to each Bank being
ratably equal, provided however, that in no event shall any
--------
Bank be obligated to make Advances to Borrower which are
greater than its pro rata share of the total Commitment.
-75-
ARTICLE 11
MISCELLANEOUS
-------------
11.1 Cumulative Remedies; No Waiver. The rights, powers,
------------------------------
privileges and remedies of the Administrative Agent and the
Banks provided herein or in any Note or other Loan Document
are cumulative and not exclusive of any right, power,
privilege or remedy provided by Law or equity. No failure
or delay on the part of the Administrative Agent or any Bank
in exercising any right, power, privilege or remedy may be,
or may be deemed to be, a waiver thereof; nor may any single
or partial exercise of any right, power, privilege or remedy
preclude any other or further exercise of the same or any
other right, power, privilege or remedy. The terms and
conditions of Article 8 hereof are inserted for the sole
---------
benefit of the Administrative Agent and the Banks; the same
may be waived in whole or in part, with or without terms or
conditions, in respect of any Loan without prejudicing the
Administrative Agent's or the Banks' rights to assert them
in whole or in part in respect of any other Loan.
11.2 Amendments; Consents. No amendment, modification,
--------------------
supplement, extension, termination or waiver of any provision of
this Agreement or any other Loan Document, no approval or consent
thereunder, and no consent to any departure by the Borrower
or any other Party therefrom, may in any event be effective
unless in writing signed by the Administrative Agent with
the approval in writing of the Majority Banks and Borrower,
and then only in the specific instance and for the specific
purpose given; and, without the approval in writing of all
the Banks, no amendment, modification, supplement,
termination, waiver or consent may be effective:
(a) To amend or modify the principal of, or
the amount of principal, or the rate of interest payable on,
any Note, or the amount of the Main Commitment, the Swing
Line Commitment or the Commitment or of any commitment fee
payable to any Bank, or any other fee or amount payable to
any Bank under the Loan Documents;
(b) To postpone any date fixed for any
payment of principal of, prepayment of principal of or any
installment of interest on, any Note or any installment of
any commitment fee, or any other fee or amount payable to
any Bank under the Loan Documents, or to extend the term of
the Commitment, or to release any collateral for the
Obligations;
(c) To amend or modify the provisions of the
definitions of "Commitment", "Main Commitment", "Majority
---------- --------------- --------
-76-
Banks", or "Swing Line Commitment", Section 6.8 or this
----- --------------------- ---
Section; or
(d) To amend or modify any provision of this
Agreement that expressly requires the consent or approval of
all the Banks.
Any amendment, modification, supplement, termination, waiver or
consent pursuant to this Section shall apply equally to, and shall
be binding upon, all the Banks and the Administrative Agent.
11.3 Costs, Expenses and Taxes. Borrower shall pay on
-------------------------
demand the reasonable costs and expenses of the Administrative
Agent (including the fees and expenses of counsel to the
Administrative Agent) in connection with the negotiation,
preparation, execution and delivery of the Loan Documents,
and of the Administrative Agent, the Swing Line Bank and the
Banks in connection with any amendment, waiver, refinancing,
restructuring, reorganization (including a bankruptcy reor-
---------
ganization), enforcement or attempted enforcement of the
Loan Documents, and any matter related thereto, including,
---------
without limitation, filing fees, recording fees, title
insurance fees, appraisal fees, search fees and other out-
of-pocket expenses and the reasonable fees and out-of-pocket
expenses of any legal counsel, independent public
accountants and other outside experts retained by the
Administrative Agent or any Bank, and including, without
---------
limitation, any costs, expenses or fees incurred or suffered
by the Administrative Agent or any Bank in connection with
or during the course of any bankruptcy or insolvency
proceedings of Borrower or any Subsidiary thereof. Borrower
shall pay any and all documentary and other taxes (other
than income or gross receipts taxes generally applicable to
banks) and all costs, expenses, fees and charges payable or
determined to be payable in connection with the filing or
recording of this Agreement, any other Loan Document or any
other instrument or writing to be delivered hereunder or
thereunder, or in connection with any transaction pursuant
hereto or thereto, and shall reimburse, hold harmless and
indemnify the Administrative Agent and the Banks from and
against any and all loss, liability or legal or other expense with
respect to or resulting from any delay in paying or failure to pay
any tax, cost, expense, fee or charge or that any of them may
suffer or incur by reason of the failure of any Party to perform
any of its Obligations. Any amount payable to the Administrative
Agent or any Bank under this Section shall bear interest from the
second Banking Day following the date of demand for payment at the
Default Rate.
11.4 Nature of Banks' Obligations. The obligations of the
----------------------------
Banks hereunder are several and not joint or joint and
-77-
several. Nothing contained in this Agreement or any other
Loan Document and no action taken by the Administrative
Agent or the Banks or any of them pursuant hereto or thereto
may, or may be deemed to, make the Banks a partnership, an
association, a joint venture or other entity, either among
themselves or with the Borrower or any Affiliate of the
Borrower. Each Bank's several obligation to make Committed
Advances is conditioned upon the performance by all other
Banks of their obligations to make similar Committed
Advances. A default by any Bank will not increase the amount
of the Commitment attributable to any other Bank, and any
Bank not in default may, if it desires, assume in such
proportion as the nondefaulting Banks agree the obligations
of any Bank in default, but is not obligated to do so.
11.5 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties contained herein or in any
other Loan Document, or in any certificate or other writing
delivered by or on behalf of any one or more of the Parties
to any Loan Document, will survive the making of the Advances
hereunder and the execution and delivery of the Notes, and have
been or will be relied upon by the Administrative Agent and each
Bank, notwithstanding any investigation made by the Administrative
Agent or any Bank or on their behalf.
11.6 Notices. Except as otherwise expressly provided in the
------- ------
Loan Documents: (a) All notices, requests, demands, directions
and other communications provided for hereunder or under any other
Loan Document must be in writing and must be mailed,
telecopied, or personally delivered to the appropriate party
at the address set forth on the signature pages of this
Agreement or other applicable Loan Document or, as to any
party to any Loan Document, at any other address as may be
designated by it in a written notice sent to all other
parties to such Loan Document in accordance with this
Section and (b) Any notice, request, demand, direction or
other communication given by telecopier, must be confirmed
within 48 hours by letter mailed or delivered to the
appropriate party at its respective address. Except as
------
otherwise expressly provided in any Loan Document, if any
notice, request, demand, direction or other communication
required or permitted by any Loan Document is given by mail
it will be effective on the earlier of receipt or the third
calendar day after deposit in the United States mail with
first class or airmail postage prepaid; if given by telex or
telecopier, when sent; or if given by personal delivery,
when delivered.
11.7 Execution of Loan Documents; Counterparts. Unless the
-----------------------------------------
Administrative Agent otherwise specifies with respect to any Loan
Document, this Agreement and any other Loan Document may be
executed in any number of counterparts and any party hereto or
thereto may execute any counterpart, each of which
-78-
when executed and delivered will be deemed to
be an original and all of which counterparts of this
Agreement or any other Loan Document, as the case may be,
when taken together will be deemed to be but one and the
same instrument. The execution of this Agreement or any
other Loan Document by any party hereto or thereto will not
become effective until counterparts hereof or thereof, as
the case may be, have been executed by all the parties
hereto or thereto.
11.8 Binding Effect; Assignment.
--------------------------
(a) This Agreement and the other Loan Documents
to which Borrower is a Party will be binding upon and inure
to the benefit of Borrower, the Administrative Agent, each
of the Banks, and their respective successors and assigns,
except that Borrower may not assign its rights hereunder or
------
thereunder or any interest herein or therein without the
prior written consent of all the Banks. Each Bank
represents that it is not acquiring its Notes with a view to
the distribution thereof within the meaning of the
Securities Act of 1933, as amended (subject to any
requirement that disposition of such Notes must be within
the control of such Bank). Any Bank may at any time pledge
its Notes or any other instrument evidencing its rights as a
Bank under this Agreement to a Federal Reserve Bank, but no
such pledge shall release that Bank from its obligations
hereunder or grant to such Federal Reserve Bank the rights
of a Bank hereunder absent foreclosure of such pledge.
(b) From time to time following the Closing Date,
each Bank may assign to one or more Eligible Assignees all
or any portion of its Pro Rata Share of the Main Commitment;
provided that (i) such Eligible Assignee, if not then a
--------
Bank, shall be reasonably acceptable to the Administrative
Agent, (ii) such assignment shall be evidenced by a
Commitment Assignment and Acceptance, a copy of which shall
be furnished to the Administrative Agent for registration as
hereinbelow provided, (iii) the assignment shall not assign
a Pro Rata Share of the Main Commitment equivalent to less
than $10,000,000 unless the assigning Bank thereby assigns
its entire Pro Rata Share and (iv) the effective date of any
such assignment shall be as specified in the Commitment
Assignment and Acceptance, but without the consent of the
Administrative Agent not earlier than the date which is
ten (10) Banking Days after the date the Administrative
Agent has registered the Commitment Assignment and
Acceptance in the register kept for that purpose by the
Administrative Agent described below. Upon the effective
date of such Commitment Assignment and Acceptance, the
Eligible
-79-
Assignee named therein shall be a Bank for all
purposes of this Agreement, with the Pro Rata Share of the
Main Commitment therein set forth and, to the extent of such
Pro Rata Share, the assigning Bank shall be released from
its obligations under this Agreement. Borrower agrees that
it shall execute and deliver (against delivery by the
assigning Bank to Borrower of its Notes) to such assignee
Bank, Note evidencing that assignee Bank's Pro Rata Share of
the Main Commitment and any Competitive Advances to be made
by that Bank, and to the assigning Bank, a Note evidencing
the remaining balance Pro Rata Share retained by the
assigning Bank.
(c) By executing and delivering a Commitment
Assignment and Acceptance, the Eligible Assignee thereunder
acknowledges and agrees that: (i) other than the
representation and warranty that it is the legal and
beneficial owner of the Pro Rata Share of the Main
Commitment being assigned thereby free and clear of any
adverse claim, the assigning Bank has made no representation
or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality,
validity, enforceability, genuineness or sufficiency of this
Agreement or any other Loan Document; (ii) the assigning
Bank has made no representation or warranty and assumes no
responsibility with respect to the financial condition of
Borrower or the performance by Borrower of the Obligations;
(iii) it has received a copy of this Agreement, together
with copies of the most recent financial statements
delivered pursuant to Section 7.1 and such other documents
and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Commitment
Assignment and Acceptance; (iv) it will, independently and
without reliance upon the Administrative Agent or any Bank
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this
Agreement; (v) it appoints and authorizes the Administrative
Agent to take such action and to exercise such powers under
this Agreement as are delegated to the Administrative Agent
by this Agreement; and (vi) it will perform in accordance
with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a
Bank.
(d) The Administrative Agent shall maintain
at the Administrative Agent's Office a copy of each
Commitment Assignment and Acceptance delivered to it and a
-80-
register for recordation of the names and addresses of the
Banks and their respective Pro Rata Shares of the Main
Commitment. Upon receipt of a completed Commitment
Assignment and Acceptance executed by any Bank and an
Eligible Assignee, and upon receipt of a registration fee of
$3,000 from such Eligible Assignee, Administrative Agent
shall record the making of the assignments contemplated in
such Commitment Assignment and Acceptance in such register.
The entries in such register shall be conclusive in the
absence of manifest error, and the Borrower, the
Administrative Agent and the Banks may treat each Person
whose name is recorded in the register as a Bank hereunder
for all purposes of this Agreement.
(e) Each Bank may from time to time without
the consent of Borrower or the Administrative Agent grant
participations to one or more banks or other financial
institutions in a portion of its Pro Rata Share of the Main
Commitment; provided, however, that (i) such Bank's
-------- -------
obligations under this Agreement shall remain unchanged,
(ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations,
(iii) the participating banks or other financial
institutions shall not be a Bank hereunder for any purpose
except, if the participation agreement so provides, for the
------
purposes of Sections 3.4, 3.5, 3.6, and 11.11 but only to
--- --- --- -----
the extent that the cost of such benefits to Borrower does
not exceed the cost which Borrower would have incurred in
respect of such Bank absent the participation,
(iv) Borrower, the Administrative Agent and the other Banks
shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under
this Agreement, (v) the consent of the holder of such
participation interest shall not be required for amendments
or waivers of provisions of the Loan Documents other than
----------
those which (A) increase the monetary amount of any of the
Commitment, (B) extend the Maturity Date or any other date
upon which any payment of money is due to the Banks or
(C) reduce the rate of interest on the Notes, or any fee or
any other monetary amount payable to the Banks and (vi) such
Bank shall notify the Administrative Agent in writing of the
identity of the participant and the amount of the
participation interest within five Banking Days after the
date granted.
(f) The Swing Line Bank may assign the
entire Swing Line Commitment subject to the conditions and
in the manner applicable to assignments of portions of the
Main Commitment set forth above.
-81-
11.9 Setoff Rights. If an Event of Default has occurred and
-------------
is continuing, the Administrative Agent or any Bank (but only
with the consent of the Majority Banks) may, to the extent
permitted by applicable Laws, exercise its rights under
applicable Laws to setoff and apply any funds in any deposit
account maintained with it by Borrower and/or any Property of
Borrower in its possession against the Obligations.
11.10 Sharing of Setoffs. Each Bank severally agrees that
------------------
if it, through the exercise of any right of setoff, banker's
lien or counterclaim against Borrower, or otherwise, receives
payment, through any means, of the Obligations held by it
that is in excess of that Bank's Pro Rata Share of such
payment, then: (a) The Bank exercising the right of setoff,
banker's lien or counterclaim or otherwise receiving such
payment shall purchase, and shall be deemed to have simulta-
neously purchased, from the other Bank a participation in
the Obligations held by the other Bank and shall pay to the
other Bank a purchase price in an amount so that the share
of the Obligations held by each Bank after the exercise of
the right of setoff, banker's lien or counterclaim or
receipt of payment shall be in the same proportion that
existed prior to the exercise of the right of setoff,
banker's lien or counterclaim or receipt of payment; and
(b) Such other adjustments and purchases of participations
shall be made from time to time as shall be equitable to
ensure that all of the Banks share any payment obtained in
respect of the Obligations ratably in accordance with each
Bank's share of the Obligations immediately prior to, and
without taking into account, the payment; provided that, if
--------
all or any portion of a disproportionate payment obtained as
a result of the exercise of the right of setoff, banker's
lien, counterclaim or otherwise is thereafter recovered from
the purchasing Bank by Borrower or any Person claiming
through or succeeding to the rights of Borrower, the
purchase of a participation shall be rescinded and the
purchase price thereof shall be restored to the extent of
the recovery, but without interest. Each Bank that
purchases a participation in the Obligations pursuant to
this Section shall from and after the purchase have the
right to give all notices, requests, demands, directions and
other communications under this Agreement with respect to
the portion of the Obligations purchased to the same extent
as though the purchasing Bank were the original owner of the
Obligations purchased. Borrower expressly consents to the
foregoing arrangements and agrees that any Bank holding a
participation in an Obligation so purchased may exercise any
and all rights of setoff, banker's lien or counterclaim with
respect to the participation as fully as if the Bank were
the original owner of the Obligation purchased; provided,
--------
however, that each Bank agrees that it shall not exercise
any right of setoff, banker's lien or counterclaim without
first obtaining the consent of the Majority Banks.
-82-
11.11 Indemnity by Borrower. Borrower agrees to indemnify,
---------------------
save and hold harmless the Administrative Agent, the Arranger, the
Swing Line Bank and each Bank and their directors, officers,
agents, advisors, attorneys and employees (collectively the
"Indemnitees") from and against: (a) Any and all claims,
-----------
demands, actions or causes of action that are asserted
against any Indemnitee by any Person (other than the
Administrative Agent, the Arranger, the Swing Line Bank or a
Bank) if the claim, demand, action or cause of action
directly or indirectly relates to a claim, demand, action or
cause of action that such Person has or asserts against Bor-
rower, any Affiliate of Borrower or any officer, director or
shareholder of Borrower; (b) Any and all claims, demands,
actions or causes of action that are asserted against any
Indemnitee if the claim, demand, action or cause of action
arises out of or relates to the relationship between
Borrower and the Banks under any of the Loan Documents or
the transactions contemplated thereby; (c) Any and all
administrative or investigative proceedings by any
Governmental Agency arising out of or related to any claim,
demand, action or cause of action described in clauses (a)
or (b) above; and (d) Any and all liabilities, losses, costs
or expenses (including attorneys' fees and disbursements and
---------
other professional services) that any Indemnitee suffers or
incurs as a result of the assertion of any of the foregoing;
provided that no Indemnitee shall be entitled to indemnifi-
--------
cation for any loss caused by its own gross negligence or
willful misconduct. Each Indemnitee is authorized to employ
counsel of its own choosing in enforcing its rights
hereunder and in defending against any claim, demand,
action, cause of action or administrative or investigative
proceeding covered by this Section; provided that each
--------
Indemnitee shall endeavor, in connection with any matter
covered by this Section which also involves other
Indemnitees, to use reasonable efforts to avoid unnecessary
duplication of effort by counsel for all Indemnitees. Any
obligation or liability of Borrower to any Indemnitee under
this Section shall be and hereby is covered and secured by
the Loan Documents and the Collateral, and shall survive the
expiration or termination of this Agreement and the
repayment of all Loans and Swing Line Loans and the payment
and performance of all other Obligations owed to the Banks.
11.12 Nonliability of the Banks. Borrower acknowledges and
-------------------------
agrees that:
(a) Any inspections of any Property of
Borrower made by or through the Administrative Agent, the
Arranger, the Swing Line Bank or the Banks are for purposes
of administration of the Loan Documents only and Borrower is
not entitled to rely upon the same;
-83-
(b) By accepting or approving anything
required to be observed, performed, fulfilled or given to
the Administrative Agent or the Banks pursuant to the Loan
Documents, neither the Administrative Agent nor the Banks
shall be deemed to have warranted or represented the
sufficiency, legality, effectiveness or legal effect of the
same, or of any term, provision or condition thereof, and
such acceptance or approval thereof shall not constitute a
warranty or representation to anyone with respect thereto by
the Administrative Agent or the Banks;
(c) The relationship between Borrower and
the Administrative Agent, the Arranger, the Swing Line Bank
and the Banks is, and shall at all times remain, solely that
of a borrower and lenders; neither the Administrative Agent,
the Arranger, the Swing Line Bank nor the Banks shall under
any circumstance be construed to be partners or joint
venturers of Borrower or its Affiliates; neither the
Administrative Agent, the Arranger, the Swing Line Bank nor
the Banks shall under any circumstance be deemed to be in a
relationship of confidence or trust or a fiduciary
relationship with Borrower or its Affiliates, or to owe any
fiduciary duty to Borrower or its Affiliates; neither the
Administrative Agent, the Arranger, the Swing Line Bank nor
the Banks undertake or assume any responsibility or duty to
Borrower or its Affiliates to select, review, inspect,
supervise, pass judgment upon or inform Borrower or its
Affiliates of any matter in connection with their Property
or the operations of Borrower or its Affiliates; Borrower
and its Affiliates shall rely entirely upon their own
judgment with respect to such matters; and any review,
inspection, supervision, exercise of judgment or supply of
information undertaken or assumed by the Administrative
Agent, the Arranger, the Swing Line Bank or the Banks in
connection with such matters is solely for the protection of
the Administrative Agent, the Arranger, the Swing Line Bank
and the Banks and neither Borrower nor any other Person is
entitled to rely thereon; and
(d) The Administrative Agent, the Arranger,
the Swing Line Bank and the Banks shall not be responsible
or liable to any Person for any loss, damage, liability or
claim of any kind relating to injury or death to Persons or
damage to Property caused by the actions, inaction or
negligence of Borrower and/or its Affiliates and Borrower
hereby indemnifies and holds the Administrative Agent, the
Arranger, the Swing Line Bank and the Banks harmless from
any such loss, damage, liability or claim.
-84-
11.13 No Third Parties Benefited. This Agreement is made
--------------------------
for the purpose of defining and setting forth certain obligations,
rights and duties of Borrower, the Administrative Agent, the
Arranger, the Swing Line Bank and the Banks in connection
with the Loans, the Swing Line Loans and Advances, and is
made for the sole benefit of Borrower, the Administrative
Agent, the Arranger, the Swing Line Bank and the Banks, and
the Administrative Agent's, the Arranger's, the Swing Line
Bank's and the Banks' successors and assigns. Except as
------
provided in Sections 11.8 and 11.11, no other Person shall
---- -----
have any rights of any nature hereunder or by reason hereof.
11.14 Termination of Existing Loan Documents. Borrower
--------------------------------------
agrees for the benefit of the lenders and the administrative
agent under the Existing Loan Documents that, concurrently
with the execution and delivery of this Agreement, the
lending commitments under the Existing Loan Documents shall
be deemed terminated. On the Closing Date, the
Administrative Agent is hereby authorized and directed to
effect a net settlement of the amounts due to the Borrower,
the Banks and the lenders under the Existing Loan Documents.
11.15 Further Assurances. Borrower and its Subsidiaries
------------------
shall, at their expense and without expense to the Banks or the
Administrative Agent, do, execute and deliver such further
acts and documents as any Bank or the Administrative Agent
from time to time reasonably requires for the assuring and
confirming unto the Banks or the Administrative Agent of the
rights hereby created or intended now or hereafter so to be,
or for carrying out the intention or facilitating the
performance of the terms of any Loan Document.
11.16 Integration. This Agreement, together with the other
-----------
Loan Documents, comprises the complete and integrated agreement of
the parties on the subject matter hereof and supersedes all
prior agreements, written or oral, on the subject matter
hereof. In the event of any conflict between the provisions
of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control and govern;
provided that the inclusion of supplemental rights or
--------
remedies in favor of the Administrative Agent or the Banks
in any other Loan Document shall not be deemed a conflict
with this Agreement. Each Loan Document was drafted with
the joint participation of the respective parties thereto
and shall be construed neither against nor in favor of any party,
but rather in accordance with the fair meaning thereof.
11.17 Governing Law. Except to the extent otherwise
------------- ------
expressly provided therein, each loan document shall be
-85-
governed by, and construed and enforced in accordance with, the
local Laws of Nevada.
11.18 Severability of Provisions. Any provision in any Loan
--------------------------
Document that is held to be inoperative, unenforceable or
invalid as to any party or in any jurisdiction shall, as to
that party or jurisdiction, be inoperative, unenforceable or
invalid without affecting the remaining provisions or the
operation, enforceability or validity of that provision as
to any other party or in any other jurisdiction, and to this
end the provisions of all Loan Documents are declared to be
severable.
11.19 Independent Covenants. Each covenant in Articles 5, 6
--------------------- ---------- -
and 7 is independent of the other covenants in those Articles;
-
the breach of any such covenant shall not be excused by the
fact that the circumstances underlying such breach would be
permitted by another such covenant.
11.20 Headings. Article and Section headings in this
--------
Agreement and the other Loan Documents are included for
convenience of reference only and are not part of this Agreement
or the other Loan Documents for any other purpose.
11.21 Time of the Essence. Time is of the essence of the
-------------------
Loan Documents.
11.22 Purported Oral Amendments. BORROWER EXPRESSLY
-------------------------
ACKNOWLEDGES THAT THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS MAY ONLY BE AMENDED OR MODIFIED, OR THE PROVISIONS
HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN INSTRUMENT
IN WRITING THAT COMPLIES WITH SECTION 11.2. BORROWER AGREES
----
THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF
PERFORMANCE, OR ORAL OR WRITTEN STATEMENTS BY ANY
REPRESENTATIVE OF THE ADMINISTRATIVE AGENT OR ANY BANK THAT
DOES NOT COMPLY WITH SECTION 11.2 TO EFFECT AN AMENDMENT,
----
MODIFICATION, WAIVER OR SUPPLEMENT TO THE AGREEMENT OF THE
OTHER LOAN DOCUMENTS.
11.23 Jury Trial Waiver. EACH PARTY TO THIS AGREEMENT
-----------------
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT
OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT
TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH
PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY TRIAL
COURT WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH
-86-
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first
above written.
BORROWER:
NEVADA POWER COMPANY, a Nevada corporation
By: STEVEN W. RIGAZIO
-------------------------------
Steven W. Rigazio, Vice
President, Finance and Planning,
Treasurer, and Chief Financial
Officer
Address:
Nevada Power Company
626 West Sahara Avenue
Las Vegas, Nevada 89102
Attention: Richard Schmalz
Telecopier: (702) 367-5036
Telephone: (702) 367-5608
-87-
BANKS:
FIRST INTERSTATE BANK OF NEVADA, N.A.,
individually, as the Swing Line Bank
and as Administrative Agent
By: STEVEN M. DASTRUP
---------------------------------
Steven M. Dastrup
Vice President
Address:
First Interstate Bank of Nevada, N.A.
Corporate Banking Division
3800 Howard Hughes Parkway
Las Vegas, Nevada 89193
Attn: Steven M. Dastrup
Vice President
Mary Beth Higgins
Vice President and Manager
Telecopier: (702) 791-6248
Telephone: (702) 791-6263
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:
-----------------------------------
Michael McCutchin
Vice President
Address:
Bank of America NT&SA
Corporate Banking
Energy/Utilities Department
555 South Flower Street, 49th Floor
Los Angeles, California 90071
Attn: Michael McCutchin
Vice President
Telecopier: (213) 228-4062
Telephone: (213) 228-4092
-88-
BANKS:
FIRST INTERSTATE BANK OF NEVADA, N.A.,
individually, as the Swing Line Bank
and as Administrative Agent
By:
---------------------------------
Steven M. Dastrup
Vice President
Address:
First Interstate Bank of Nevada, N.A.
Corporate Banking Division
3800 Howard Hughes Parkway
Las Vegas, Nevada 89193
Attn: Steven M. Dastrup
Vice President
Mary Beth Higgins
Vice President and Manager
Telecopier: (702) 791-6248
Telephone: (702) 791-6263
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: MICHAEL MCCUTCHIN
-----------------------------------
Michael McCutchin
Vice President
Address:
Bank of America NT&SA
Corporate Banking
Energy/Utilities Department
555 South Flower Street, 49th Floor
Los Angeles, California 90071
Attn: Michael McCutchin
Vice President
Telecopier: (213) 228-4062
Telephone: (213) 228-4092
-88-
NBD BANK, N.A.
By: JAMES R. FRYE
----------------------------------
James R. Frye
First Vice President
Address:
NBD Bank, N.A.
611 Woodward Avenue
Detroit, Michigan 48226
Attn: Passi Rassa
Assistant Vice President
Telecopier: (313) 225-2649
Telephone: (313) 225-1424
BARCLAYS BANK PLC
By:
----------------------------------
Vijay Rajguru
Vice President
Address:
Barclays Bank PLC
222 Broadway
New York, New York 10038
Attn: Vijay Rajguru
Vice President
Telecopier: (212) 412-7511
Telephone: (212) 412-7509
-89-
NBD BANK, N.A.
By:
----------------------------------
James R. Frye
First Vice President
Address:
NBD Bank, N.A.
611 Woodward Avenue
Detroit, Michigan 48226
Attn: Passi Rassa
Assistant Vice President
Telecopier: (313) 225-2649
Telephone: (313) 225-1424
BARCLAYS BANK PLC
By: VIJAY RAJGURU
----------------------------------
Vijay Rajguru
Vice President
Address:
Barclays Bank PLC
222 Broadway
New York, New York 10038
Attn: Vijay Rajguru
Vice President
Telecopier: (212) 412-7511
Telephone: (212) 412-7509
-89-
BANK ONE, ARIZONA, N A
By: CLIFFORD A. PAYSON
----------------------------------
Clifford A. Payson
Vice President
Address:
Bank One, Arizona, N A
241 No. Central, A714
P.O. Box 71
Phoenix, Arizona 85001
Attn: Clifford A. Payson
Vice President
Telecopier: (702) 221-2632
Telephone: (702) 221-1773
BANK OF MONTREAL
By:
----------------------------------
Warren Wimmer
Director
Address:
Bank of Montreal
Natural Resources Division
601 South Figueroa Street, Suite 4900
Los Angeles, California 90017
Attn: Warren Wimmer
Director
Telecopier: (213) 239-0680
Telephone: (213) 239-0635
-90-
BANK ONE, ARIZONA, N A
By:
----------------------------------
Clifford A. Payson
Vice President
Address:
Bank One, Arizona, N A
241 No. Central, A714
P.O. Box 71
Phoenix, Arizona 85001
Attn: Clifford A. Payson
Vice President
Telecopier: (702) 221-2632
Telephone: (702) 221-1773
BANK OF MONTREAL
By: WARREN R. WIMMER
----------------------------------
Warren Wimmer
Director
Address:
Bank of Montreal
Natural Resources Division
601 South Figueroa Street, Suite 4900
Los Angeles, California 90017
Attn: Warren Wimmer
Director
Telecopier: (213) 239-0680
Telephone: (213) 239-0635
-90-
NATIONS BANK OF TEXAS, N.A.
By: STAN REYNOLDS FOR FRANK M. JOHNSON
----------------------------------
Frank M. Johnson
Vice President
Address:
Nationsbank of Texas, N.A.
901 Main Street, 67th Floor
P.O. Box 831000
Dallas, Texas 75283-1000
Attn: Frank M. Johnson
Vice President
Telecopier: (214) 508-0980
Telephone: (214) 508-3091
MELLON BANK, N.A.
By:
----------------------------------
A. J. Sabatelle
Vice President
Address:
Mellon Bank, N.A.
One Mellon Center, Suite 4425
Energy and Utilities Group
Pittsburgh, Pennsylvania 15258-0001
Attn: A. J. Sabatelle
Vice President
Telecopier: (412) 234-8888
Telephone: (412) 236-2784
-91-
NATIONS BANK OF TEXAS, N.A.
By:
----------------------------------
Frank M. Johnson
Vice President
Address:
Nationsbank of Texas, N.A.
901 Main Street, 67th Floor
P.O. Box 831000
Dallas, Texas 75283-1000
Attn: Frank M. Johnson
Vice President
Telecopier: (214) 508-0980
Telephone: (214) 508-3091
MELLON BANK, N.A.
By: A. J. SABATELLE
----------------------------------
A. J. Sabatelle
Vice President
Address:
Mellon Bank, N.A.
One Mellon Center, Suite 4425
Energy and Utilities Group
Pittsburgh, Pennsylvania 15258-0001
Attn: A. J. Sabatelle
Vice President
Telecopier: (412) 234-8888
Telephone: (412) 236-2784
-91-
EX-27
5
FINANCIAL DATA SCHEDULE
UT
1,000
YEAR
DEC-31-1994
DEC-31-1994
PER-BOOK
$1,584,003
21,602
148,562
153,222
0
1,907,389
48,587
563,562
119,600
731,749
38,000
4,064
612,299
0
0
0
52,101
200
100,272
5,250
363,454
1,907,389
764,158
39,403
610,958
650,361
113,797
11,088
124,885
43,015
81,870
3,976
77,894
67,653
44,625
144,270
1.82
0
INAPPLICABLE